As filed with the Securities and Exchange Commission on December 31, 1996
Registration No. 333-14931
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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
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(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.
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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
January ___, 1997, 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 January __, 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 January ___, 1997.
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TABLE OF CONTENTS
PAGE
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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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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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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;
(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996; and
(5) 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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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. WITHOUT
LIMITING THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. 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 and $837,359 of revenues recognized in
the quarter ended June 30, 1996 and September 30, 1996, respectively, $326,752
and $539,091 related to a barter transaction with a software developer wherein
the Company accepted software licenses, consulting and training services, and
services associated with the certification of the Company's 4s server to use the
software developer's CAD program and porting the software onto the 4s product,
in exchange for 53 of its Archistrat 4s servers. Management believes the amount
of revenue recognized reflects the fair value of the licenses and other services
received and approximated the normal selling price of the servers. Since
inception (April 8, 1992), the Company has incurred significant net losses,
including losses of $1,800,340, $6,931,346, $23,894,426 and $13,838,133 during
the fiscal year ended March 31, 1994, the fiscal year ended March 31, 1995, the
fiscal year ended March 31, 1996, and the six months ended September 30, 1996
respectively, resulting in an accumulated deficit of $46,879,933 as of September
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; POSSIBLE NEED FOR ADDITIONAL
FINANCING. The Company's capital requirements in connection with its operations
and development activities have been and may continue to be significant. The
Company has been dependent primarily 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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warrants, and from the exercise of warrants. Since June 1996, the Company has
entered into five agreements to license its VSPA and Compass Connector
technologies and began to receive revenues under one of these agreements during
the quarter ending December 31, 1996. The Company anticipates receiving revenues
under one or more of the other agreements by the end of the first quarter of the
Company's fiscal year which begins on April 1, 1997. In addition, the Company
has taken actions to significantly reduce its expenses in all areas including
compensation and benefits, research and development and selling and
administrative expenses. The Company anticipates, based on current plans and
assumptions relating to its operations, including the planned reductions in
expenses, that its working capital at September 30, 1996, as augmented by
anticipated revenues, should be sufficient to satisfy the Company's anticipated
cash requirements.
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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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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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's agreement with Group Technologies
Corporation to manufacture and assemble the Company's Archistrat 4s servers has
expired, the Company has identified certain other potential manufacturers and
suppliers for its subassembly and component needs, however, the Company 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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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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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 November 30,
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.
CHANGES IN MANAGEMENT. In November 1996, Mr. Butler resigned as a
director of the Company and T. Scott Shamlin resigned as President of the
Company's Technologies Division. The Company has not yet appointed a successor
for Mr. Butler and Mr. Crane assumed Mr. Shamlin's responsibilities.
LICENSE AND DEVELOPMENT 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 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. The license granted to LG is non-exclusive except for certain limited
exclusive manufacturing rights with respect to specified Asian countries. 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.
In October 1996, the Company entered into a cooperative development
agreement with the Defense Advanced Research Projects Agency to develop the
Company's VSPA electronics package whereby the government will contribute
approximately $1.8 million to the project over a period of 12 months.
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.
- 16 -
<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
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<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:
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<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 has duly caused this Amendment No. 1 to the
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 31st day
of December, 1996.
THE PANDA PROJECT, INC.
By: *
-----------------------------
Stanford W. Crane, Jr.
President
*By: /s/ C. DARYL HOLLIS
-------------------
C. Daryl Hollis
Attorney-in-fact
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
- --------- ----- ----
*
- ----------------------- Chief Executive Officer, ) December 31, 1996
Stanford W. Crane, Jr. President and Director )
(Principal Executive )
Officer) )
/s/ C. DARYL HOLLIS )
- ----------------------- Executive Vice President ) December 31, 1996
C. Daryl Hollis and Chief Financial Officer)
(Principal Financial and )
Accounting Officer) )
*
- ----------------------- Director ) December 31, 1996
James T.A. Wooder )
)
II-5
<PAGE>
*
- ----------------------- Director ) December 31, 1996
Claud L. Gingrich )
)
*
- ----------------------- Director ) December 31, 1996
Rao R. Tummala )
*By: /s/ C. DARYL HOLLIS
-------------------
C. Daryl Hollis
Attorney-in-fact
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..............................................
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.+..................................
99.10 -- Cooperative Agreement, dated October 22, 1996
between the Company and The United States of
America, U.S. Air Force, Air Force Materiel
Command+........................................................
99.11 -- Reseller Agreement, dated November 1996 between
the Company and Siemens Nixdorf Information
Systems+........................................................
- -----------------
* Incorporated herein by reference.
+ Confidential treatment requested.
**Previously filed.
II-8
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the 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
December 30, 1996
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 $10.80 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
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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
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<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
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<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
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<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
- 5 -
<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
- 6 -
<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>
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
$250,000.
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 99.9
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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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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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 LIMITED EXCLUSIVITY OF CRANE'S LICENSE GRANT AND PANDA'S
LICENSE GRANT. The license granted to LGC by Crane and Panda in Section 3.00
shall be exclusive with respect to manufacturing only for a period of five (5)
years from the Effective Date in the following territory: Thailand, Malaysia,
Indonesia, Australia, New Zealand, Singapore, Japan, Korea, Vietnam, Cambodia,
Laos, The Philippines, Macao, The People's Republic of China, and The Republic
of China (hereinafter the "Exclusive Territory"). Notwithstanding the foregoing,
upon request by Panda for up to two additional non-exclusive licensees with the
right to manufacture in the Exclusive Territory other than Korea commencing
after two (2) years from the Effective Date, after discussion of such request
with LGC, Panda shall have the right to grant such licenses. 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 $1,000,000 (one million dollars) as an initial payment (the "License Fee" or
"Initial Payment"). The US $1,000,000 (one million dollars) 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 $200,000 (two hundred
thousand dollars);
ii) at one year from the Effective Date of this Agreement,
LGC will pay to Panda and Crane US $200,000 (two hundred
thousand dollars);
iii) at two years from the Effective Date of this Agreement,
LGC will pay to Panda and Crane US $200,000 (two hundred
thousand dollars);
iv) at three years from the Effective Date of this
Agreement, LGC will pay to Panda and Crane US $200,000 (two
hundred thousand dollars); 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 $200,000 (two hundred
thousand dollars).
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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<PAGE>
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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<PAGE>
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.
- ----------------------------
Date: 9/30/96
- ----------------------------
LG Cable & Machinery Ltd.
By: Moon Ku Kwon
- ----------------------------
Date: 9/30/96
- ----------------------------
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Cooperative Agreement
between
The United States of America
U.S. Air Force, Air Force Materiel Command
2530 C Street
Wright-Patterson AFB
Dayton, OH 45433-7607
and
The Panda Project, Inc.
901 Yamato Road
Boca Raton, FL 33431-4425
Concerning Strategic Packaging for Single and Multi-Chip
Modules Very Small Peripheral Array (VSPA)
Agreement No.: F33615-96-2-5110
PR/DARPA Order No.: GWLMLFT-96-05162/AO A453-16
Total Amount of the Agreement: $4,034,625.00
Government share: $1,792.800.00
Recipient share: $2,241,825.00
Authority: 10 U.S.C. 2358, Pursuant to 10 U.S.C. 2371
Effective Date: Mail Date
Catalog of Federal Domestic Assistance number: 12.910
For The Panda Project For the United States of
America Wright Laboratory
/s/ Stanford W. Crane, Jr.10/18/96 /s/ Bruce J. Miller 96OCT22
Signature Date Signature Date
Stanford W. Crane, Jr. Bruce J. Miller
Name Title: President & CEO Name, Grants Officer
<PAGE>
Agreement No: F33615-96-2-5110
Page 2
Table of Contents
ARTICLES PAGE
- -------- ----
Part I ADMINISTRATIVE INFORMATION
Article 1 Definitions 4
Article 2 Administrative Requirements 4
Article 3 Administrative Responsibilities 4
PART II TERM
Article 4 Recognition of Pre-Award Costs 5
Article 5 Term of the Agreement 5
Article 6 Termination 6
Article 7 Extending the Term 6
Article 8 Additional Effort 6
PART III MANAGEMENT OF THE PROJECT
Article 9 Scope and Management of the Program 7
Article 10 Program Management Planning Process 7
Article 11 Modifications 8
Article 12 Title to Property 8
PART IV FINANCIAL MATTERS
Article 13 Cost Principles 8
Article 14 Standards for Financial Management Systems 9
Article 15 Allotted Funding 9
Article 16 Payment 9
Article 17 Program Income 10
Article 18 Cost Sharing and Matching 10
PART V DISPUTES
Article 19 Disputes 10
PART VI INTELLECTUAL PROPERTY RIGHTS
Article 20 Patent Infringement 11
Article 21 Inventions 11
Article 22 Data Rights 12
Article 23 Foreign Access to Technology 13
PART VII TECHNICAL AND FINANCIAL REPORTING
Article 24 Quarterly Reports 15
Article 25 Annual Program Plan 15
Article 26 Special Technical Reports 15
<PAGE>
Article 27 Final Report 15
Article 28 Payable Milestone Reports and Invoices 16
PART VIII MISCELLANEOUS PERFORMANCE ISSUES
Article 29 Using Technical Information Resources 16
Article 30 Procurement Standards 16
PART IX CERTIFICATIONS
Article 31 Certification 16
ATTACHMENTS
1 Statement of Work 18
2 Schedule of Payable Milestones 19
3 Cost Matching Summary and Schedule 20
<PAGE>
PART I. ADMINISTRATIVE INFORMATION
ARTICLE 1. DEFINITIONS
The term "parties" as used herein shall refer to The Panda Project and the
United States of America, hereinafter called the Government, represented by
Wright Laboratory.
The term "agreement" as used herein shall refer to these articles and the
attachments hereto.
The term "agreement year" as used herein shall refer to each consecutive twelve
month period from the effective date of this agreement throughout the term of
the agreement.
The term "recipient" shall refer to The Panda Project.
The term "program" shall refer to the Strategic Packaging for Single and
Multi-Chip Modules Very Small Peripheral Array (VSPA).
ARTICLE 2. ADMINISTRATIVE REQUIREMENTS
A. This agreement will be administered in accordance with, and recipients shall
comply with the requirements of, the Interim-Guidance draft of DOD 3210.6-R, the
DOD Grant and Agreement Regulations (DODGARs) (4 Feb 94), Parts 22, 25, 28, 31,
34, 36, and 37.
B. In the event of a conflict between the terms of this agreement and other
governing documents, the following shall be the order of precedence, in
descending order:
1. The DODGARs
2. The articles in this agreement
3. The attachments to this agreement
ARTICLE 3. ADMINISTRATIVE RESPONSIBILITIES
Grant Officer: Bruce J. Miller
WL/MLKT, Bldg. 7
2530 C Street
Wright-Patterson AFB, OH 45433-7607
(513) 255-7143
(513) 255-4434 Fax
Grants Administration Office: DCMC Seattle
ATTN: Cristina Austin
3009 112th Ave., NE. Suite 200
Bellevue, WA 98004-8019
<PAGE>
Government Program Manager: Bob Cross
WL/MTMC, Bldg. 653
2977 P Street, Suite 6
Wright-Patterson AFB, OH 45433-7739
(513) 255-2461
(513) 476-4420 Fax
Payment Office: DFAS-CO-JSA/Southeast
P. O. Box 182225
Columbus, OH 43218-2225
1-800-832-9976
Servicing Staff Judge Advocate's office (for invention reporting):
Staff Judge Advocate
Patents Monitoring Office
ATTN: AFMC LO/JAZI
Bldg. 11,2240 B Street, Suite 5
Wright-Patterson AFB, OH 45433-7109
(513) 255-5270
Recipient's Program Manager: John Bartoszek
Archistrat Technologies Division
The Panda Project
901 Yamato Road
Boca Raton, FL 33431-4425
(561) 989-4075
(561) 994-0191 Fax
PART II. TERM
ARTICLE 4. RECOGNITION OF PRE-AWARD COSTS
Costs may be incurred by the recipient up to 90 days prior to the effective date
of this agreement to the same extent as if incurred after award.
ARTICLE 5. TERM OF THE AGREEMENT
The term of this agreement commences on the effective date shown on the face of
the agreement, and continues for 12 months. If all funds are expended prior to
the end of the term (including recipient contributions, both cash and in-kind),
the parties have no obligation to continue performance and may elect to cease
development at that point. Articles in this agreement which by their express
terms or by necessary implication, apply for periods of time other than as
specified in this article shall be
<PAGE>
given effect, notwithstanding this article.
ARTICLE 6. TERMINATION
A. The grants officer may terminate this agreement by written notice to the
recipient upon a finding that the recipient has failed to comply with the
material provisions of this agreement.
B. Additionally, this agreement may be terminated by either party upon written
notice to the other party, based upon a reasonable determination that the
project will not produce beneficial results commensurate with the expenditure of
resources. Such written notice shall be preceded by consultation between the
parties. In the event of a termination, the Government shall have a paid-up
Government purpose license in any subject invention, copyright work, data and
technical data made or developed under this agreement.
C. The government and the recipient will negotiate in good faith an equitable
reimbursement for work performed toward accomplishment of program goals. The
Government will allow full credit to the recipient for the Government share of
the obligations properly incurred by the recipient prior to termination, and
those noncancellable obligations that remain after the termination. The cost
principles and procedures described in the article entitled "Cost Principles"
shall govern all costs claimed, agreed to, or determined under this article.
ARTICLE 7. EXTENDING THE TERM
If the parties agree, the term of this agreement may be extended if funds are
available and research opportunities reasonably warrant. Any extension shall be
formalized through modification of the agreement by the grants officer and the
recipient.
ARTICLE 8. ADDITIONAL EFFORT
A. Before the completion date of the current performance period, the Government
may elect to support one period of additional effort. The Government's election
will be in the form of a bilateral modification to this agreement. Performance
of the additional effort will be based upon the statement of work and the
following terms and conditions:
1. The performance period for this additional effort will be 12 months.
2. The Government and recipient's share for the period of additional effort
will be negotiated prior to adding any additional effort.
B. If the Government elects to support additional effort,
<PAGE>
provisions of this agreement will be amended accordingly.
PART III. MANAGEMENT OF THE PROJECT
ARTICLE 9. SCOPE AND MANAGEMENT OF THE PROGRAM
A. The Government and the recipient are bound to each other by a duty of good
faith and best effort in achieving the goals of this agreement. This agreement
is not intended to be, nor shall it be construed as, by implication or
otherwise, a partnership, a corporation, or other business organization.
B. The recipient shall perform a coordinated research and development program
carried out in accordance with the Statement of Work entitled "Strategic
Packaging for Single and Multi-Chip Modules Very Small Peripheral ARRAY (VSPA),"
Attachment 1.B. to this agreement. The recipient shall submit all documentation
required by Part VII, Technical and Financial Reporting.
C. The overall management, including technical, programmatic, reporting,
financial and administrative matters, of the coordinated research program
established under this agreement shall be accomplished by the recipient. The
Government program manager may, at his/her discretion, interact with the
recipient to promote effective collaboration between the recipient and the
Government. All technical and/or funding changes to this agreement must first be
approved by the Government, and the agreement modified in accordance with the
articles entitled "MODIFICATIONS."
D. A kickoff meeting will be conducted within thirty days following the
cooperative agreement award date. The recipient will establish a schedule of
quarterly technical meetings, and notify the Government program manager of the
schedule. The subject matter for these meetings will include but not be limited
to technical progress, associated research, and possible options that require
further exploration in future work. Both Government and the recipient will
jointly review the subject matter and make decisions on how the planned research
will proceed within the scope of the effort. The Government program manager
shall participate in all technical meetings. Other Government personnel, as
deemed appropriate, may also participate.
ARTICLE 10 PROGRAM MANAGEMENT PLANNING PROCESS
A. For the first agreement year, the recipient will follow the annual program
plan that is contained in the Statement of Work (Attachment 1.B.), and the
Schedule of Payable Milestones in
<PAGE>
Attachment 2.
B. The recipient, with Government program manager involvement, will prepare an
Annual Program Plan in the first quarter of each subsequent agreement year. This
Plan will be presented for review and approval at the appropriate quarterly
technical meeting, attended by the Government program manager and other
Government personnel as appropriate.
C. The Annual Program Plan provides a detailed schedule of project activities,
commits the recipient to use its best efforts to meet specific performance
objectives, includes forecasted expenditures and describes the payable
milestones. The Annual Program Plan will consolidate all prior adjustments in
the program schedule, including revisions/modifications to payable milestones.
ARTICLE 11. MODIFICATIONS
A. Modifications to this agreement may be proposed by either party. Only the
grants officer has the authority to act on behalf of the Government to modify
this agreement. The recipient will make recommendations for any modifications to
this agreement in writing, including justifications to support any changes to
the statement of work, and/or the payable milestones, and submit them to the
government program manager with a copy to the grants officer. The recipient
shall detail the technical, chronological, and financial impact of the proposed
modification to the program.
B. The Government is not obligated to pay for additional or revised payable
milestones until the payable milestone schedule (Attachment 2) is formally
revised by the grants officer and made a part of this agreement.
C. The grants officer may unilaterally make minor or administrative agreement
modifications (e.g., changes in the paying office or appropriation data, changes
to Government personnel identified in the agreement).
ARTICLE 12. TITLE TO PROPERTY
Title to all real property and nonexpendable tangible personal property
purchased by the recipient with federal funds under this agreement is vested in
the Government. The recipient must obtain the prior approval of the grants
officer before making any such purchases of real property or nonexpendable
tangible personal property with federal funds under this award.
PART IV. FINANCIAL MATTERS
ARTICLE 13. COST PRINCIPLES
<PAGE>
Federal funds and funds counted as the recipient's cost share or match shall be
used only for costs that:
A. A reasonable and prudent person would incur, in carrying out the project
contemplated by this agreement; and
B. Are consistent with the purposes stated in the governing Congressional
authorizations and appropriations.
ARTICLE 14. STANDARDS FOR FINANCIAL MANAGEMENT SYSTEMS
A. The recipient shall maintain adequate records to account for the control and
expenditure of Federal funds received and cost matching required under this
agreement.
B. The recipient shall establish and maintain an accounting system that:
1. Complies with Generally Accepted Accounting Principles.
2. Controls and properly documents all cash receipts and disbursements.
C. The recipient's relevant financial records are subject to examination or
audit by or for the Government for a period not to exceed three years after
expiration of the term of this agreement. The grants officer or designee shall
have direct access to sufficient records and information of the recipient's
activities to ensure full accountability for all funding under this agreement.
Such audit, examination, or access shall be performed during business hours on
business days upon prior written notice and shall be subject to the security
requirements of the audited party.
ARTICLE 15. ALLOTTED FUNDING
The following funds are allotted to this agreement:
FUND CITE(S) AMOUNT
------------ ------
9760400 1302 D16 47WL 6L1000 0A4530 00000 63226E
503000 F03000 $1,792,800.00
ARTICLE 16. PAYMENT
A. The recipient shall be paid for each payable milestone accomplished in
accordance with the schedule of payable milestones at Attachment 2 and the
procedures of this article.
<PAGE>
B. The recipient shall document the accomplishment of each payable milestone by
submitting or otherwise providing the payable milestone report required by the
article entitled "PAYABLE MILESTONE REPORTS AND INVOICES." The recipient shall
concurrently submit an original and 2 copies of the associated invoice to the
grants officer. The government program manager will review the report, verify
the accomplishment of the payable milestone, and notify the grants officer of
such in writing. After receipt of this verification by the Government program
manager, the grants officer will approve the payment in writing and forward the
invoice to the payment office. All invoices will be forwarded to the payment
office within thirty calendar days of receipt by the grants officer.
C. It is recognized that the quarterly accounting of current expenditures
reported in the "Quarterly Business Status Report" submitted in accordance with
the article entitled "Quarterly Reports" is not necessarily intended or required
to match the payable milestones until submission of the Final Report; however,
payable milestones may be revised during the course of the program to reflect
current and revised projected expenditures.
D. The Schedule of Payable Milestones is shown at Attachment 2.
17. PROGRAM INCOME
The provisions of Attachment D to OMB Circular A-110 (30 Jul 76) apply. All
program income earned during the project period shall be used to finance the
non-Government share of the project.
ARTICLE 18. COST SHARING AND MATCHING
A. The parties estimate that the statement of work for this agreement can only
be accomplished with the recipient aggregate resource contribution of
$4,034,625.00 from the effective date of this agreement through 12 months
thereafter. The recipient intends, and by entering into this agreement,
undertakes to cause to be provided these resources. Recipient contributions will
be provided as shown in Attachment 3. Failure of either party to provide its
respective total contribution may result in a unilateral amendment to the
agreement by the grants officer to reflect a proportional reduction in funding
for the other party.
B. The provisions of 32 CFR 34.2(a)(2) apply. The recipient's contributions may
count as cost sharing or matching only to the extent that they are used for
authorized purposes of the agreement, and such purposes are consistent with
applicable cost principles.
PART V. DISPUTES
ARTICLE 19. DISPUTES
<PAGE>
A. General. Parties shall communicate with one another in good faith and in a
timely and cooperative manner when raising issues under this article. The
Department of Defense's policy is to try to resolve all issues concerning
agreements by mutual agreement at the grants officer's level.
B. Dispute Resolution Process.
1. Any disagreement, claim or dispute between the Government and the
recipient concerning questions of fact or law arising from or in connection with
this agreement, whether or not involving an alleged breach of this agreement,
may be raised only under this Article.
2. Whenever disputes, disagreements, or misunderstandings arise, the
parties shall attempt to resolve the issue(s) involved by discussion and mutual
agreement as soon as practicable. Failing resolution by mutual agreement, the
recipient shall submit to the grants officer, in writing, the relevant facts,
identifying unresolved issues and specifying the clarification or remedy sought.
Within 60 days of receipt of the written claim or issue in dispute, the grants
officer shall either:
a. Prepare a written decision on the issue, including the basis for the
decision, or
b. Notify the recipient of a specific date when he or she will render a
written decision, if more time is required to do so. The notice will include the
reason for delaying the decision.
3. In the event the recipient decides to appeal the decision of the grants
officer, they must do so within 30 calendar days of receipt of the decision. The
appeal must be submitted, in writing, to the Wright Laboratory Commander. The
Commander shall conduct a review of the matter and render a decision in writing
within 30 calendar days of receipt of the written appeal. Any such decision is
not subject to further administrative review and shall be final and binding
subject to judicial review.
PART VI. INTELLECTUAL PROPERTY RIGHTS
ARTICLE 20. PATENT INFRINGEMENT
The recipient agrees not to hold the U.S. Government responsible for any and all
patent infringement cases which may arise under any research projects conducted
under this agreement. In
<PAGE>
addition, the recipient shall indemnify the Government against all claims and
proceedings for actual or alleged direct or contributory infringement of, or
inducement to infringe, any U.S. or foreign patent, trademark, or copyright
arising under this agreement and the consortium shall hold the government
harmless from any resulting liabilities and losses provided the recipient is
reasonably notified of such claims and proceedings. At its expense, the
recipient will have control of the defense or settlement of any such claim or
proceeding.
ARTICLE 21. INVENTIONS
A. The clause entitled "Rights to Inventions Made by Nonprofit Organizations and
Small Business Firms," (37 CFR 401) is hereby incorporated by reference and the
clauses in paragraph 401.14 are modified as follows: replace the word
"contractor" with "recipient"; replace the words "agency," "Federal Agency" and
"funding Federal Agency" with "government"; replace the word "contract" with
"agreement"; delete paragraphs (g)(2), (g)(3) and the words "to be performed by
a small business firm or domestic nonprofit organization" from paragraph (g)(1);
paragraph (1), Communications, point of contact on matters relating to this
clause will be the servicing Staff Judge Advocate's office identified elsewhere
in this agreement.
B. The recipient shall file Invention (Patent) Reports as of the close of the
performance year and at the end of the term for this Agreement. Annual reports
are due 60 days after the end of each year of performance and final reports are
due 60 days after the expiration of the final performance period. The recipient
shall use DD Form 882, Report of Inventions and Subcontracts, to file an
inventions report. Negative reports are also required. The recipient shall
submit the original and one copy to the servicing Staff Judge Advocate's office,
one copy to the Grants Administration Office, and one copy to the grants
officer, if different than the Grants Administration Office.
C. Final payment cannot be made nor can the agreement be closed out until the
recipient delivers to the Government all disclosures of subject inventions
required by this agreement, an acceptable final report pursuant to the article
entitled "FINAL REPORT", and all confirmatory instruments.
ARTICLE 22. DATA RIGHTS
A. Ownership rights to data and technical data, as defined in 48 CFR 27.401,
generated under this agreement shall vest in the recipient.
B. The recipient hereby grants to the U.S. Government a non-exclusive,
non-transferable, royalty-free, fully paid-up license to use, duplicate, or
disclose for governmental purposes any
<PAGE>
data, technology and inventions, whether patented or not, made or developed
under this agreement. Government purposes include competitive procurement, but
do not include the right to have or permit others to use any data, technology
and inventions for commercial purposes.
C. The recipient reserves the right to protect by copyright original works
developed under this agreement. All such copyrights will be in the name of the
recipient. The recipient hereby grants the U.S. Government a non-exclusive,
non-transferable, royalty-free, fully paid-up license to reproduce, prepare
derivative works, distribute copies to the public, and perform publicly and
display publicly, for governmental purposes, any copyrighted materials developed
under this agreement, and to authorize others to do so. The recipient also
grants non-exclusive, non-transferable, royalty-free, fully paid-up licenses to
project subrecipients to use any copyrighted material developed under this
agreement for research purposes as necessary to fulfill the requirements of this
agreement.
D. The recipient is responsible for affixing appropriate markings indicating
rights on all data and technical data delivered under the agreement. The
Government shall be deemed to have unlimited rights in all data and technical
data delivered without markings.
ARTICLE 23. FOREIGN ACCESS TO TECHNOLOGY
This article shall remain in effect during the term of the agreement and for 2
years thereafter.
A. Definitions
"Foreign firm or institution" means a firm or institution organized or
existing under the laws of a country other than the United States, its
territories, or possessions. The term includes, for purposes of this agreement,
any agency or instrumentality of a foreign government; and firms, institutions
or business organizations which are owned or substantially controlled by foreign
governments, firms, institutions, or individuals.
"Know-how" means all information including, but not limited to discoveries,
formulas, materials, inventions, processes, ideas, approaches, concepts,
techniques, methods, software, programs, documentation, procedures, firmware,
hardware, technical data, specifications, devices, apparatus and machines.
<PAGE>
"Technology" means discoveries, innovations, know-how and inventions,
whether patentable or not, including computer software, recognized under U.S.
law as intellectual creations to which rights of ownership accrue, including,
but not limited to, patents, trade secrets, mask works, and copyrights developed
under this agreement.
B. General. The parties agree that research findings and technology developments
in VSPA technology may constitute a significant enhancement to the national
defense, and to the economic vitality of the United States. Accordingly, access
to important technology developments under this agreement by foreign firms or
institutions must be carefully controlled. The controls contemplated in this
article are in addition to, and are not intended to change or supersede, the
provisions of the International Traffic in Arms Regulation (22 CFR pt. 121 et
seq.), the DOD Industrial Security Regulation (DOD 5220.22-R) and the Department
of Commerce Export Regulation (15 CFR pt. 770 et.seq.)
C. Restrictions on Sale or Transfer of Technology to Foreign Firms or
Institutions.
1. In order to promote the national security interests of the United States
and to effectuate the policies that underlie the regulations cited above, WITH
THE EXCEPTION OF ANY TRANSFER OF TECHNOLOGY IDENTIFIED IN THE "CONSENTS OF THE
GOVERNMENT UNDER ARTICLE 23.C.," SIGNED BY THE GRANTS OFFICER ON 17 OCT 96, the
procedures stated in subparagraphs C.2, C.3, and C.4 below shall apply to any
transfer of technology. For purposes of this paragraph, a transfer includes a
sale of the company, and sales or licensing of technology. Transfers do not
include:
a. sales of products or components, or
b. licenses of software or documentation related to sales of products
or components, or
c. transfer to foreign subsidiaries of the recipient for purposes
related to this agreement, or
d. transfer which provides access to technology to a foreign firm or
institution which is an approved source of supply or source for the conduct of
research under this agreement provided that such transfer shall be limited to
that necessary to allow the firm or institution to perform its approved role
under this agreement.
2. The recipient shall provide timely notice to the Government of any
proposed transfer from the recipient of technology developed with Government
funding under this agreement to foreign firms or institutions. If the Government
determines that the transfer may have adverse consequences to the national
security interests of the United States, the recipient, its vendors, and the
Government shall jointly endeavor to find
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
alternatives to the proposed transfer which obviate or mitigate potential
adverse consequences of the transfer but which provide substantially equivalent
benefits to the recipient.
3. In any event, the recipient shall provide written notice to the
Government program manager of any proposed transfer to a foreign firm or
institution at least 60 calendar days prior to the proposed date of transfer.
Such notice shall cite this article and shall state specifically what is to be
transferred and the general terms of the transfer. Within thirty calendar days
of receipt of the recipient's written notification, the grants officer shall
advise the recipient whether it consents to the proposed transfer. In cases
where the Government does not concur or sixty calendar days after receipt and
the Government provides no decision, the recipient may utilize the procedures
under the article entitled "DISPUTES." No transfer shall take place until a
decision is rendered.
4. Except as provided in subparagraph C.1 above-***************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
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**********************************************************************. A
statement of fees generated from a Government approved foreign license will be
provided to the Government Grants Officer.
D. Lower Tier Agreements. The recipient shall include this article, suitably
modified, to identify the parties, in all subcontracts or lower tier agreements,
regardless of tier, for experimental, development, or research work.
PART VII. TECHNICAL AND FINANCIAL REPORTING
ARTICLE 24. QUARTERLY REPORTS
On or before ninety calendar days after the effective date of this agreement and
quarterly thereafter throughout the term of this agreement, the recipient shall
submit a quarterly report. Two copies shall be submitted or otherwise provided
to the Government program manager, and one copy shall be submitted to the grants
officer. The report will have two major sections:
A. Technical Status Report. The technical status report will detail technical
progress to date and report on all problems,
<PAGE>
technical issues or major developments during the reporting period.
B. Business Status Report. The business status report shall provide summarized
details of the resource status of this agreement, including the status of the
contributions by both parties. This report will include a quarterly accounting
of current expenditures as outlined in the Annual Program Plan. Any major
deviations shall be explained along with discussion of proposed actions to
address the deviations.
ARTICLE 25. ANNUAL PROGRAM PLAN
The recipient shall submit to the Government program manager one copy of the
Annual Program Plan described in the article entitled "PROGRAM MANAGEMENT
PLANNING PROCESS." This plan shall be submitted not later than 30 calendar days
following the annual site review as described in the article entitled PROGRAM
MANAGEMENT PLANNING PROCESS."
ARTICLE 26. SPECIAL TECHNICAL REPORTS
As agreed to by the recipient and the Government program manager, the recipient
shall submit to the Government program manager one copy of special reports on
significant events such as significant target accomplishments by the recipient,
significant tests, experiments, or symposia.
ARTICLE 27. FINAL REPORT
A. Within 60 calendar days of completion or termination of this agreement, the
recipient shall submit a Final Report consisting of two parts, one addressing
the technical achievements and the second recapping the business/financial
aspects of the agreement. The technical portion of the report should be suitable
for publication and is to provide a recap of the program, discussing program
accomplishments. With the approval of the Government program manager, reprints
of published articles may be submitted or attached to the technical portion of
the Final Report. The business portion of the report shall contain a separate
discussion of total costs incurred, and total costs contributed by the recipient
with an explanation for any deviations from the original business plan. The
original and two copies shall be submitted to the Government program manager.
B. The recipient shall mark all data delivered with the following distribution
statement in accordance with MIL STD 1806:
"Distribution authorized to U.S. Government Agencies and their contractors;
Administrative or Operational Use, Oct 1996. Other requests for this document
shall be referred to WL/MTMC, Bldg. 653, 2977 P Street, Suite 6,
Wright-Patterson AFB, OH
<PAGE>
45433-7739."
ARTICLE 28. PAYABLE MILESTONE REPORTS AND INVOICES
The recipient shall submit to the Government program manager two copies of
documentation describing the extent of accomplishment of payable milestones.
This information shall be as required by the article entitled "PAYMENT," and
shall be sufficient for the Government program manager to verify the
accomplishment of the milestone event in accordance with the statement of work.
Each report shall have an associated invoice, which shall be submitted
concurrently to the grants officer (see article entitled "PAYMENT)
PART VIII. MISCELLANEOUS PERFORMANCE ISSUES
ARTICLE 29. USING TECHNICAL INFORMATION RESOURCES
To the extent practical, the recipient will use the technical information
resources of the Defense Technical Information Center (DTIC) and other
Government or private facilities to investigate recent and on-going research and
avoid needless duplication of scientific and engineering effort.
ARTICLE 30. PROCUREMENT STANDARDS
The recipient will:
A. Follow basic principles of business intended to produce rational decisions
and fair treatment in all contracts entered into under this agreement.
B. Comply with federal statutes, executive orders, regulations, and other legal
requirements applicable to contracts entered into under this agreement.
PART IX. CERTIFICATIONS
ARTICLE 31. CERTIFICATION
By signing the agreement or accepting funds under the agreement, the recipient
provides the:
A. Certification at Appendix C, 32 CFR Part 25 regarding Drug-Free Workplace
Requirements.
B. Certification at Appendix A, 32 CFR Part 25 regarding Debarment, Suspension,
and Other Responsibility Matters--Primary
<PAGE>
Covered Transactions.
C. Certification at Appendix A, 32 CFR Part 28 regarding Lobbying.
D. Assurance at 32 CFR Part 56.9(b) regarding Nondiscrimination on the Basis of
Handicap in Programs and Activities Assisted or Conducted by the Department of
Defense.
E. Assurance at 32 CFR 195.6 regarding Nondiscrimination in Federally Assisted
Programs of the Department of Defense--Effectuation of Title IV of the Civil
Rights Act of 1964.
<PAGE>
VISION STATEMENT
STRATEGIC PACKAGING FOR SINGLE AND MULTI-CHIP MODULES USING
VERY SMALL PERIPHERAL ARRAYS (VSPA)
The Defense Advanced Research Projects Agency's (DARPA) funding of this effort,
if successful, will overtake the Pacific Rim-based electronic package module
design and manufacturing infrastructure with the development of the Very Small
Peripheral Array (VSPA) packaging, a U.S.-based breakthrough technology. This
packaging technology is extremely flexible and will have wide and deep
applications from Single Chip Modules (SCMs) to Multi-Chip Modules (MCMs), for
use in high frequency applications like cellular communications, Charge Coupled
Devices (CCDs) for solid state cameras, Personal Computer Memory Card
International Association (PCMCIA) cards, personal information appliances, and
other military applications. VSPA technology has the potential to leapfrog ALL
existing packaging technologies in both civilian and military applications.
This project dovetails well with DARPA's overall goals outlined in its mission
statement for packaging and interconnect, as well as with DARPA's prior
investments in the area of electronic packaging. It also clearly addresses the
concerns expressed in the Administration's report, ENHANCING THE COMPETITIVENESS
OF THE U.S. ELECTRONIC PACKAGING INDUSTRY (March 29, 1994) about the United
States lagging behind other countries in many important packaging areas,
particularly thin, small packages (i.e., VSPA packages). Finally, this project
addresses many of the goals outlined in the solicitation. VSPA is ideally suited
for the military and dual-use mixed signal products, in particular wireless
communications, PCMCIA cards and personal data assistants. Because of its low
unit cost, VBSPA could facilitate a significant cost reduction for the Armed
Services products.
The current cornerstone of the Integrated Circuit (IC) packaging industry is the
Quad Flat Pack (QFP) style of packaging. However, this package technology is
approaching its limits with respect to performance and the need for increased
leads. WFP, while currently the lowest cost style of packaging in the industry,
has 4 major drawbacks:
1. Large size (36 mm/superior 2/ at 304 I/Os)
2. Limited power dissipation capability
3. Degrading electrical performance as lead count (& size) increases
4. Decreasing reliability and assembly yields as lead count increases
1
<PAGE>
The above drawbacks associated with QFPs has spawned the development of
alternative packaging technologies, the most notable of which is Ball Grid
Arrays (BGAs). However, BGAs suffer from drawbacks as well including
questionable Printed Wiring Board (PWB) assembly reliability, limited heat
dissipation capability, and not fitting into current IC packaging and PCB
assembly manufacturing infrastructure. An important added drawback that could
impact military use is the ability to survive a more harsh environment.
The proposed VSPA package is a U.S. invention that can provide many improvements
over existing packaging technologies. The development of this packaging
technology will yield the following benefits to the government and to the
electronics industry in general:
<TABLE>
<S> <C>
/bullet/ Small footprint (28 mm/superior 2/ at 312 I/Os) /bullet/ Low Weight
/bullet/ High I/O count (/greater than or equal to/ 600) /bullet/ Lower Card Cost
/bullet/ Reduced Design Time (Modular) /bullet/ Robust Construction
/bullet/ Reduced Manufacturing Cost /bullet/ Lower Overall "Use" Costs
(Preformed Package) /bullet/ Design Flexibility (Ease
/bullet/ Improved Mechanical and Electrical of Customization)
Characteristics
/bullet/ U.S. based Manufacturing Capability
</TABLE>
<PAGE>
STATEMENT OF WORK
STRATEGIC PACKAGING FOR SINGLE AND MULTI-CHIP MODULES
USING VERY SMALL PERIPHERAL ARRAYS (VSPA)
1. SCOPE
1.1 The objective of this program is to develop a set of Very Small Peripheral
Array (VSPA) products and process technologies, including a variety of multichip
modules, and to define the infrastructure to manufacture these packages on a
high volume, low cost basis.
The program objectives can be divided into four focus areas:
1. The design, development, and production of a family of VSPA-based
semiconductor packages.
2. The assembly of the chip to the package and the package to the Printed
Wiring Board (PWB).
3. Characterization and simulation of the package technology.
4. Demonstrating the viability of VSPA and ensuring the reliability of the
technology.
The specific objectives of the first year of the program are to:
/bullet/ complete the design, development and testing of the initial single chip
package technology
/bullet/ develop automated manufacturing processes that provide a significant
reduction in assembly cost, and to demonstrate fully automated chip placement
and wirebonding as well as encapsulation processes
/bullet/ insert a VSPA into a real application, and to measure user acceptance
and field reliability
In year two, the objectives are to deliver additional VSPA package versions,
including Multi-Chip Modules (MCM) version, alternative single chip version, a
flip chip version (referred to as C4), and test the viability of commercial
versions in a military environment. In year three, the objective is to develop 4
and 5 tier versions, and to explore reductions in cost by exploring alternative
materials and manufacturing processes.
1.2 BACKGROUND
The Panda Project has developed a package technology, called VSPA, that differs
from existing semiconductor packaging technologies in that it can provide more
I/Os in a smaller space, has improved electrical and thermal performance, is
more rugged, and has the
1
<PAGE>
potential for overall lower costs than currently available technologies. Panda
has demonstrated an initial proof of concept with a 320 pin, staggered leaded
version of the VSPA technology. In addition, preliminary characterization work
has been done by Georgia Tech which verifies the potential for VSPA to deliver
better electrical and thermal performance than existing technologies. The
complete characterization of the technology is yet to be accomplished, as is the
design, testing, and manufacturability of the technology, in order to verify its
viability and reliability as a semiconductor packaging technology. The extension
of the single chip package concept to multichip packages, high frequency
(referred to as RF) specific packages and militarized versions needs to be
accomplished. In essence, the extensibility of the VSPA technology needs to be
developed and demonstrated if the industry, as well as the government, is to
take full advantage of this strategic packaging technology.
2.0 APPLICABLE DOCUMENTS
2.1 None
3.0 PHASE I - TECHNICAL REQUIREMENTS
3.1 TASK 1: ALTERNATIVE PINNING CONFIGURATIONS AND
PROCESSES
The recipient shall perform the following subtasks:
3.1.1 Define alternative hole and pin configurations for the VSPA SCM (Single
Chip Module) design with the objective of improving and enhancing the
manufacturability and reliability of the VSPA SCM technology.
3.1.2 Procure engineering test vehicles and evaluate configurations defined in
3.1.1 with respect to pin insertion, pin retention, wire bondability, and
overall design attributes.
3.1.3 Upgrade the current concept pin insertion equipment to incorporate
previously defined design improvements. Evaluate performance to incorporate
learning into next generation equipment.
3.1.4 Define requirements and design for a lead straightening tool. Demonstrate
the lead straightening tool for use with VSPA after device assembly.
3.1.5 Define specifications and design for second generation assembly machine.
3.1.6 Design and demonstrate automated pin feeder concepts.
3.1.7 Design and demonstrate automated plastic frame feeder concepts.
<PAGE>
3.1.8 Design and demonstrate ganged pin insertion concepts.
3.1.9 Issue reports documenting the findings for each of the following subtasks:
3.1.2, 3.1.3, 3.1.7, 3.1.8, 3.1.9.
3.2 TASK 2: WIRE BONDING PROCESSES
The recipient shall work with a subrecipient, a contract package assembly
manufacturer and perform the following subtasks:
3.2.1 Define the die attach and wirebond assembly requirements and document as
process and equipment specifications.
3.2.2 Verify the assembly process defined in 3.2.1 on VSPA-264 design and
determine projected throughput and yield.
3.2.3 Develop and evaluate die attach and wire bond processes for selected MCM
substrates and applications.
3.3 TASK 3: DIE ATTACH AND ENCAPSULATING MATERIALS The recipient shall work with
a subrecipient as well as with selected materials vendors and perform the
following subtasks:
3.3.1 Define and verify the die attach and encapsulation materials combination
and associated dispense and curing processes to be used with the initial
VSPA-264 product. Incorporate into process specifications defined in 3.2.1.
3.3.2 Investigate and select alternative die attach and encapsulation materials
systems, and dispense and curing processes for general VSPA SCM applications.
3.3.3 Evaluate candidate materials systems and processes defined in 3.3.2.
3.3.4 Select and evaluate die attach and encapsulation materials systems and
processes for application to VSPA MCM (Multi-Chip Module) designs.
3.3.5 Issue reports documenting the findings for each of the following subtasks:
3.3.3 and 3.3.4.
3.4 TASK 4: ELECTRICAL AND MECHANICAL CHARACTERIZATION AND SIMULATION
The recipient shall work with one or more subrecipients and perform the
following subtasks:
3
<PAGE>
3.4.1 Create two-dimensional (2-D), finite element models of the package and PCB
system and exercise those models to determine first order fatigue and mechanical
stresses.
3.4.2 Update model as required to reflect new designs, material and design
changes.
3.4.3 Create a three-dimensional (3-D), finite element model of package and PCB
structure, including solder joints, and compare results with the 2-D model.
3.4.4 Evaluate various material systems, mechanical configurations, and
alternative designs using both 2-D and 3-D models, as appropriate, to predict
electrical and mechanical performance.
3.4.5 Modify existing electrical models and evaluate alternative VSPA designs,
including RF versions and MCM versions, relative to electrical performance, and
perform experiments, as required, to verify modeling results.
3.4.6 Issue reports documenting the findings for each of the following subtasks:
3.4.1 and 3.4.3; issue periodic reports, as appropriate, documenting the
findings of subtasks 3.4.4 and 3.4.5.
3.5 TASK 5: SOCKETS AND PACKAGING
The recipient shall work with a subrecipient, socket vendors and perform the
following subtasks:
3.5.1 Evaluate qualification sockets using particle interconnect and compliant
interposers for use with prototype and production VSPA SCM applications.
3.5.2 Investigate and select alternative socket technologies for use in VSPA SCM
applications.
3.5.3 Procure and evaluate socket technology(s) selected in 3.5.2.
3.5.4 Define and procure SMC Joint Electron Device Engineering Council (JEDEC)
registered trays using VSPA-264 design as the baseline.
3.5.5 Define VSPA packaging and handling requirements relative to cleanliness,
humidity protection, and mechanical protection.
3.5.6 Define and evaluate alternative handling systems and procedures for piece
part and bare package handling and shipping.
3.5.7 Issue reports documenting the findings for each of the following subtasks:
3.5.1, 3.5.3, 3.5.5, and 3.5.6.
<PAGE>
3.6 TASK 6: PRINTED WIRING BOARD (PWB) ASSEMBLY
The recipient shall work with selected PWB manufacturers, selected PWB assembly
equipment manufacturers and perform the following subtasks:
3.6.1 Define the PWB assembly process for SCM applications.
3.6.2 Verify compatibility with existing equipment and document as process
specifications.
3.6.3 Evaluate yield and cost as a function of footprint variations and solder
deposition and volumes.
3.6.4 Issue a report documenting the findings for subtask 3.6.3.
3.7 TASK 7: QUALIFICATION AND RELIABILITY
The recipient shall work with a subrecipient and qualified test labs and perform
the following subtasks:
3.7.1 Demonstrate technology readiness by executing a subset of the JEDEC
defined semiconductor package qualification tests using the VSPA-320 development
package with an electrically "live" chip.
3.7.2 Demonstrate product readiness by executing a series of qualification tests
as defined by a selected semiconductor manufacturer or the generally accepted
JEDEC testing series with a production level device and package assembly.
3.7.3 Demonstrate package-to-PWB assembly reliability by executing a series of
JEDEC defined tests designed for determining solder joint integrity.
3.7.4 Issue reports documenting the findings of each of the following subtasks:
3.7.1, 3.72, and 3.7.3.
3.8 TASK 8: PIN FABRICATION
The recipient shall work with selected pin fabrication vendors and perform the
following subtasks:
3.8.1 Define pin plating requirements and acceptable plating systems and process
for initial VSPA-264 production parts.
3.8.2 Evaluate selective plating techniques for Gold (Au) and Lead-Tin (PbSn)
systems as an alternative to all gold.
5
<PAGE>
3.8.3 Evaluate alternative plating systems, including, as a minimum, palladium,
for application to VSPA SCM technology.
3.8.4 Evaluate alternative pin materials for potential improvement in overall
manufacturability, reliability, and cost.
3.8.5 Define and evaluate alternative pin singulation processes.
3.8.6 Issue reports documenting the findings of each of the following subtasks:
3.8.2, 3.8.3, 3.8.4, and 3.8.5.
3.9 TASK 9: PLASTIC MOLDING
The recipient shall work with selected plastic molders and perform the following
subtasks:
3.9.1 Define and design insert mold techniques and molding processes using the
VSPA-264 design.
3.9.2 Procure and evaluate parts produced with system(s) defined in 3.9.1.
3.9.3 Investigate and select alternative plastic materials for use with VSPA
technology.
3.9.4 Procure and evaluate parts fabricated using materials defined in 3.9.3 for
manufacturability, extensibility and cost reduction potential.
3.9.5 Investigate and select candidate alternative molding processes for
evaluation for use with VSPA SCM and MCM applications.
3.9.6 Issue reports documenting the findings of each of the following subtasks:
3.9.2 and 3.9.4.
3.10 TASK 10: DIE ATTACH TO SUBSTRATES
The recipient shall perform the following subtasks:
3.10.1 Investigate and select for evaluation alternative substrate materials for
potential SCM application.
3.10.2 Evaluate materials selected in 3.10.1 for manufacturability, performance,
and cost reduction.
3.10.3 Evaluate selective plating techniques and systems for use with the die
attach plate.
3.10.4 Investigate and select candidate substrate materials and technologies for
use in VSPA MCM wirebond applications.
<PAGE>
3.10.5 Procure and evaluate technologies identified in 3.10.4.
3.10.6 Issue reports documenting the findings for each of the following
subtasks: 3.10.2, 3.10.3, and 3.10.5.
4.0 PHASE II - TECHNICAL REQUIREMENTS
4.1 TASK 1: ALTERNATIVE PINNING CONFIGURATIONS AND PROCESSES
The recipient shall perform the following subtasks:
4.4.1 Define and procure parts. Evaluate RF specific pin and hole designs
4.1.2 Verify application of automated assembly concepts developed in Phase I for
SCM assembly to MCM assembly.
4.1.3 Define equipment requirements for high volume (/less than/1 million parts
per year) production of SCM VSPA products; document as an equipment
specification.
4.1.4 Define equipment requirements for high volume (/less than/100,000 parts
per year) production of MCM VSPA products; document as an equipment
specification.
4.1.5 Design high volume equipment to meet defined specifications for SCM
assembly.
4.1.6 Design high volume equipment to meet defined specifications for MCM
assembly.
4.1.7 Issue reports documenting the findings for subtask 4.1.1.
4.2 TASK 2: WIRE BONDING PROCESSES
The recipient shall work with a subrecipient, a contract package assembly
manufacturer, and selected equipment manufacturers, and perform the following
subtasks:
4.2.1 Verify the assembly process for wire bonded, MCM applications; determine
yields and throughput; document as a process specification.
4.2.2 Define and verify the assembly process for RF specific applications, both
SCM and MCM as appropriate; document as a process specification.
4.2.3 Verify compatibility of selected wire bonded MCM processes
7
<PAGE>
and designs with existing equipment and processes.
4.3 TASK 3: DIE ATTACH AND ENCAPSULATING MATERIALS
The recipient shall work with a subrecipient as well as with selected materials
vendors and perform the following subtasks:
4.3.1 Verify compatibility of material systems selected for SCM applications to
wire bonded MCM design and applications.
4.3.2 Evaluate applicability of selected material systems for commercial
applications to a more rugged military environment and requirements.
4.3.3 Investigate and select alternative material systems adaptable for more
robust, military type applications.
4.3.4 Issue reports documenting the findings of the following subtasks: 4.3.2
and 4.3.3.
4.4 TASK 4: ELECTRICAL AND MECHANICAL CHARACTERIZATION AND SIMULATION
The recipient shall work with one or more subrecipients and perform the
following subtasks:
4.4.1 Develop RF specific models for analyzing design tradeoffs and predicting
resulting electrical and mechanical performance.
4.4.2 Define recommended RF specific designs for further hardware design
evaluation and process development.
4.4.3 Develop C4, MCM models for evaluating design tradeoffs and predicting
electrical and mechanical performance.
4.4.4 Issue reports documenting the findings of each of the following subtasks:
4.4.1, 4.4.2 and 4.4.3.
4.5 TASK 5: SOCKETS AND PACKAGING
The recipient shall work with a subrecipient and with selected vendors and
perform the following subtasks:
4.5.1 Investigate and evaluate socket technologies for RF specific VSPA designs
and applications.
4.5.2 Select and evaluate socket technologies for MCM applications.
4.5.3 Define handling requirements and procure and evaluate trays and/or
carriers for MCM designs and applications.
<PAGE>
4.6 TASK 6: PWB ASSEMBLY
The recipient shall work with selected PWB assembly manufacturers and selected
PWB assembly equipment manufacturers and perform the following subtasks:
4.6.1 Define and verify assembly process for RF specific designs; document as a
process specification.
4.6.2 Define and verify assembly process for MCM designs; document as a process
specification.
4.7 TASK 7: QUALIFICATION AND RELIABILITY
The recipient shall work with a subrecipient and qualified test labs and perform
the following subtasks:
4.7.1 Demonstrate MCM technology readiness by executing a subset of the JEDEC
defined semiconductor package qualification tests.
4.7.2 Demonstrate product readiness by executing a series of qualification tests
as defined by a selected MCM manufacturer or the generally accepted JEDEC
testing series with production level devices and package assembly.
4.7.3 Demonstrate package-to-PWB assembly reliability for MCM designs by
executing a series of JEDEC defined tests designed for determining solder joint
integrity.
4.7.4 Demonstrate technology readiness for military applications by executing a
series of qualification tests as defined by appropriate military documents.
4.7.5 Issue reports documenting the findings of each of the following subtasks:
4.7.1, 4.7.2, 4.7.3 and 4.7.4.
4.8 TASK 8: PIN FABRICATION
The recipient shall work with selected pin fabrication vendors and perform the
following subtasks:
4.8.1 Evaluate alternative pin fabrication techniques, such as etching and wire
machining, with the objective of reduced costs, increased flexibility, and
improved reliability and manufacturability.
4.8.2 Define and demonstrate the pin fabrication process for RF specific
designs.
9
<PAGE>
4.8.3 Issue reports documenting the findings of subtask 4.8.1.
4.9 TASK 9: PLASTIC MOLDING
The recipient shall work with selected plastic molding vendors and perform the
following subtasks:
4.9.1 Procure parts for evaluation of alternative molding processes as defined
in Phase I.
4.9.2 Evaluate parts procured in task 4.9.1.
4.10 TASK 10: DIE ATTACH TO SUBSTRATES
The recipient shall work with selected substrate vendors and perform the
following subtasks:
4.10.1 Define and procure alternative heat sink/die attach design and materials.
4.10.2 Evaluate alternative designs and materials for compatibility and
performance in MCM and SCM applications.
4.10.3 Procure and evaluate selected substrate concepts for C4, MCM
applications.
4.10.4 Issue reports documenting the findings for each of the following
subtasks: 4.10.2 and 4.10.3.
5.0 RECIPIENT'S PROPOSAL
The recipient's proposal reference number 9526-113 is hereby incorporated in its
entirety by reference.
<PAGE>
Attachment 1
A. VISION STATEMENT
B. STATEMENT OF WORK
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
ATTACHMENT 2
SCHEDULE OF PAYABLE MILESTONES
PAYABLE
MILESTONE SCHEDULE DARPA RECIPIENT TOTAL
- --------- -------- ----- --------- -----
********* Agreement $***** $****** $******
********* Start
************
************
*********** ****** after $***** $****** $******
********* award
********
********
************ ****** after $****** $****** $*****
********** award
*********
************
*********** ******** after $******* $****** $******
********** award
***********
***********
***********
********** ******* after $****** $****** $******
award ------- ------- -------
Total $1,792,800 $2,241,825 $4,034,625
19
<PAGE>
Attachment 3
Cost Matching and Schedule
The recipient agrees to cost share or match as shown below. This schedule may be
amended annually to reflect changes or updates resulting from the annual program
planning process.
1. Contributions Summary:
Cash $2,041,825.00
In-Kind 200,000.00
IR&D
Total Cost Share/Match $2,241,825.00
2. Cost Match Contribution Schedule - See Attachment 2 for Breakout.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Agreement No. F33615-96-2-5110
PR/ARPA Order No.: GWLMLFT-96-05162/AO A453-16
CONSENTS OF THE GOVERNMENT UNDER ARTICLE 23.C
Article 23.C. of the above-referenced Agreement provides for the Government
to consent to the sale or transfer of technology to foreign firms or
institutions and for other matters. The below-referenced Grants Officer, acting
on behalf of the United States Government pursuant to this Agreement, hereby
consents to the sale or transfer of technology to foreign firms or institutions,
from the date hereof through the termination of the Cooperative Agreement and
the restriction period, and to waiver of the other terms contained within
Subsection C, under the following conditions:
1. All research and development (knowledge creation) under this agreement,
including that undertaken with funds contributed by the recipient, shall
take place within the United States.
2. The technology developed under this Agreement ************************
**********************************************************************
**********************************************************************
**********************************. Recipient will provide quarterly
reports summarizing new licensing Agreements.
3. The recipient recognizes the Government's goal of establishing in the
United States a manufacturing base for technology developed under this
Agreement. To this end, ***********************************************
***********************************. **********************************
***********************************************************************
***************.
4. Recipient agrees that funds it expends for the development of manufacturing
equipment for technology developed under this Agreement
***********************************************************************
*********************************************************************.
5. Panda will use reasonable efforts to ensure that for the restriction
period, ***********************************************************
***********************************************************************
***********************************************************************
**************************************. Quarterly reports will be provided
by the recipient summarizing in-house production and royalty payments.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
6. All funds obtained from the license of technology developed under this
Agreement to foreign firms or institutions shall be used by the recipient
for **********************************************************.
7. The recipient ********************************************************.
For purposes of this consent, all terms shall have the same meaning as
under the above-referenced Cooperative Agreement.
For the United States of America
Wright Laboratory
---------------------------------
Signature Date
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
THE PANDA PROJECT, INC.
RESELLER AGREEMENT
This Reseller Agreement ("Agreement") is between The Panda Project,
Inc., a Florida corporation ("The Panda Project"), and Siemens Nixdorf
Information Systems, Inc., a Massachusetts corporation, having its principal
place of business at 200 Wheeler Road, Burlington, MA 01803 ("Reseller").
The term "Archistrat Products" as used in this Agreement shall mean
items described in the applicable Reseller price list published by The Panda
Project ("Price List"), as updated and revised by The Panda Project from time to
time, the current version of which will be provided to Reseller and deemed
attached as Exhibit A hereto and incorporated herein by this reference,
including all upgrades and enhancements thereto, and in any configuration or
system type in current production.
1. APPOINTMENT AS RESELLER
1.1 The Panda Project appoints Reseller as an Authorized Reseller for
Archistrat Products worldwide, and Reseller agrees to become a Reseller for the
Archistrat Products in such area, in accordance with the terms and subject to
the conditions set forth herein. Reseller acknowledges and agrees that nothing
in this Agreement shall prevent The Panda Project from engaging any other
reseller for the Archistrat Products in the United States or in any other
location. In addition, to the extent the Archistrat Products are sold under the
terms of this Agreement with software products, The Panda Project shall grant to
Reseller for delivery to the end user a limited, non-exclusive sublicense to use
such software products. Reseller shall at all times comply with any
authorization requirements mutually agreed to in writing and with all applicable
federal, state and local laws and regulations applicable to the performance of
the Reseller's services (the "Applicable Laws").
In addition to the above-referenced appointment, The Panda Project
appoints Reseller as the sole and exclusive Authorized Reseller for the
Archistrat Products identified hereinbelow (the "Exclusive Products") for and to
all Siemens Affiliates worldwide; provided, that the parties acknowledge and
agree that certain existing Panda resellers may from time to time offer and sell
Archistrat Products to Siemens Affiliates. The Panda Project will notify
Reseller of such sales as it becomes aware of them.
<PAGE>
Furthermore, The Panda Project shall have the right to sell Archistrat Products
directly to Siemens Affiliates in the event The Panda Project notifies Reseller
of any such proposed sale and Reseller does not within 30 days thereafter notify
The Panda Project that Reseller has decided to sell the Archistrat Products to
such Siemens Affiliate. "Siemens Affiliates" for the purposes of this Agreement
shall mean any entity controlled by, controlling, or under common control of
Reseller (with "control" defined as 51% ownership). The Exclusive Products are:
4s Server, 4b Workstation product lines and all upgrades and enhancements
thereto.
1.2 Reseller is an independent contractor and not a legal
representative, employee or agent of The Panda Project for any purpose
whatsoever and Reseller shall determine and have sole control over the manner,
means and method of performance of its services under this Agreement. Reseller
represents that it is a reseller of computer products and that it shall purchase
the equipment and license the software products under this Agreement (or in the
case of other software products, other agreements) for incorporation into
systems which Reseller then markets to third-party users in the regular course
of its business. It is agreed that Reseller's systems may include the
significant addition of other equipment or software which Reseller manufactures,
acquires or develops for inclusion into Reseller's systems and that these
additions must represent functional and value enhancements to Archistrat
Products. The Panda Project makes no warranty with respect to any such additions
or enhancements.
2. TERM
The term ("Term") of this Agreement shall be 24 months, commencing on
the date The Panda Project executes this Agreement ("Effective Date"). This
Agreement will be automatically renewed at the conclusion of the initial
24-month period for successive 12-month periods unless either Reseller or The
Panda Project indicates by written notice to the other party not less than 30
days prior to the end of the Term or any such 12-month period that it does not
intend to renew. Notwithstanding the foregoing, this Agreement may be terminated
by either party pursuant to Section 13 of this Agreement.
3. DUTIES OF RESELLER
In addition to the other duties set forth in this Agreement, Reseller
shall have the following duties:
<PAGE>
3.1 Reseller agrees that it shall exert reasonable efforts to market,
advertise, promote, sell, install, service and support Archistrat Products for
Reseller's customers in accordance with the terms of this Agreement. In
performing its marketing, promotional and selling functions under this
Agreement, Reseller shall not use any materials or advertisements which have not
been approved previously in writing by The Panda Project's authorized
representatives. The Panda Project shall provide to the Reseller at no cost
fifty (50) copies of the current versions of all available marketing materials
for the Archistrat Products. Thereafter, Reseller shall purchase such marketing
materials as it deems necessary at the List Price therefor. Reseller agrees that
prior to accepting a purchase order from a customer for Archistrat Products,
that it shall have provided to the customer written materials containing the
material features of the Product, including the material terms relating to the
warranty of the Archistrat Product. In addition, Reseller agrees to consult with
The Panda Project periodically with respect to The Panda Project's production
and delivery process for the Archistrat Products.
The Panda Project shall provide on loan at no cost to Reseller at
Reseller's location(s) of choice five (5) demonstration/seed server systems
(base models) ("Loaner Equipment") for the purposes of demonstrating the
Products and use as prospect lab equipment. Reseller agrees to pay for any
extras or upgrades. Reseller will at the end of six (6) months from the date of
this Agreement either pay for (at Reseller's price pursuant to Section 6.4) or
return the Loaner Equipment to The Panda Project in good condition, reasonable
wear and tear excepted. The parties may mutually agree on the terms of
additional Loaner Equipment. Any Loaner Equipment that is shipped to a
customer's premises for testing must be shipped for use in a configuration
approved by The Panda Project in writing and pursuant to an Evaluation Equipment
Agreement substantially in the form attached hereto as Exhibit E. The Panda
Project makes no warranty of any kind with respect to any Loaner Equipment.
3.2 Reseller shall perform all service on Archistrat Products sold and
installed by Reseller. In performing these duties under this Agreement, Reseller
shall ensure that any installation, support or warranty services will be
performed only by qualified personnel which have been certified to perform such
services by The Panda Project.
3.3 In connection with the support and warranty services which Reseller
is required to provide to its customers relating to the Archistrat Products,
Reseller shall maintain 24-hour toll-free telephone service to respond to
questions and schedule on-site
<PAGE>
services, as necessary. Support services, including, without limitation,
telephone communications with customers and with The Panda Project's technical
support personnel and engineers, shall be provided by Reseller at its sole cost
and expense. Warranty services that are provided by Reseller on-site shall be
reimbursed by The Panda Project, within 30 days after receipt of invoices (with
labor charges to be reimbursed at the rates shown on Exhibit B).
3.4 The Panda Project shall provide the parts listed on The Panda
Project approved part list, a current copy of which is attached as Exhibit C and
which The Panda Project shall have the right to update and revise from time to
time at its sole discretion (the "Parts List"), on a consignment basis to
Reseller; such parts shall be supplied in kits in mutually agreed quantities.
The terms and conditions of the consignment of such parts shall be as set forth
herein and in the Consigned Inventory Agreement attached hereto as Exhibit D and
incorporated herein by reference (the "Consigned Inventory Agreement"). To the
extent Reseller is reasonably required to supply a replacement part (from such
consigned inventory or otherwise) to replace a part covered by The Panda
Project's limited warranty, Reseller shall notify The Panda Project at a number
to be designated by The Panda Project (or if The Panda Project designates in
writing a different entity, such other entity) of the problem and the required
part, by description and number based on the Parts List, and obtain a return
material authorization number ("RMA") from The Panda Project or such other
entity. The Panda Project (or another designee of The Panda Project) will
deliver such part to Reseller for installation or to replace the part supplied
by Reseller from the consigned inventory, as the case may be, in connection with
Reseller's warranty service. Reseller shall return the original part with proof
of purchase and the RMA to The Panda Project promptly following replacement at
The Panda Project's cost and expense, including the reasonable labor charges of
Reseller (at the rates shown on Exhibit B).
3.5 To the extent the parties have been unable to resolve a customer
problem and mutually determine that performance of services covered by The Panda
Project's limited warranty under Section 9.1 will require replacement of the
Archistrat Product, Reseller shall notify The Panda Project (or if The Panda
Project designates in writing a different entity, such other entity) of the
problem and obtain an RMA from The Panda Project or such other entity. The Panda
Project (or another designee of The Panda Project) will deliver the replacement
Archistrat Product to Reseller for installation and completion of the warranty
service. Reseller shall return the original product with proof of purchase
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
and the RMA to The Panda Project promptly following replacement at The Panda
Project's cost and expense, including the reasonable labor charges of Reseller
(at the rates shown Exhibit B).
3.6 (a) To the extent Reseller requires replacement parts to replace
parts which Reseller has supplied to third parties from consigned inventory
pursuant to the Consigned Inventory Agreement other than (i) in connection with
services covered by The Panda Project's limited warranty or (ii) for replacement
of parts damaged while under consignment, Reseller shall notify The Panda
Project (or, if the Panda Project designates in writing a different entity, such
other entity) of the part based on the Parts List and The Panda Project (or
another designee of The Panda Project) will deliver the replacement part to
Reseller. The Panda Project shall invoice Reseller for the cost of the
replacement part, at the price shown on the Parts List (provided, Reseller shall
receive ************************************************ ************ following
the Triggering Event, as defined in Section 6.4 below) off the price shown on
the Parts List for parts purchased by Reseller for resale to Siemens Affiliates
and * *********************************************************** following the
Triggering Event, as defined in Section 6.4 below) off the price shown on the
Parts List for parts purchased by Reseller for resale to parties other than
Siemens Affiliates), and Reseller shall pay The Panda Project for such part
within thirty days of the date of the invoice.
(b) To the extent Reseller requires replacement parts or a
replacement Archistrat Product other than (i) in connection with services
covered by The Panda Project's limited warranty or (ii) for replacement of parts
damaged while under consignment, and any such replacement parts are not in
consigned inventory pursuant to the Consigned Inventory Agreement, Reseller
shall notify The Panda Project (or if The Panda Project designates in writing a
different entity, such other entity) of the part based on the Parts List or the
product and The Panda Project (or another designee of The Panda Project) will
deliver the replacement part or product to Reseller for installation and
completion. The Panda Project shall invoice Reseller for the cost of the (x)
replacement part, at the price shown on the Parts List (provided, Reseller shall
receive *********************************************** ************* following
the Triggering Event, as defined in Section 6.4 below) off the price shown on
the Parts List for parts purchased by Reseller for resale to Siemens Affiliates
and * ************************************************************ following the
Triggering Event, as defined in Section 6.4 below) off the price shown on the
Parts List for parts purchased by Reseller for resale to parties other than
Siemens Affiliates) or
<PAGE>
(y) product, at the then applicable price pursuant to Section 6.4, and Reseller
shall pay The Panda Project for such part or product within 30 days of the date
of the invoice.
3.7 Should The Panda Project's examination and testing of parts or
products returned by Reseller pursuant to Section 3.4 or 3.5 not disclose any
defect covered by warranty, The Panda Project shall so advise Reseller and
dispose of or return the parts or products in accordance with Reseller's
instructions and at Reseller's sole expense, and Reseller shall reimburse The
Panda Project for transportation and testing expenses and expenses incurred by
The Panda Project pursuant to Section 3.4 or 3.5 at The Panda Project's then
current non-warranty repair rates.
4. FORECAST OF SALES OF ARCHISTRAT PRODUCTS
Within 60 days after the Effective Date, Reseller shall provide to The
Panda Project a reasonably detailed written business plan (the "Business Plan")
containing a forecast of anticipated orders of the Archistrat Products by
Reseller for the next 12 months and specifying the following information: (a)
monthly estimates of the number and types of systems expected to be ordered
setting forth any assumptions; and (b) any other information which Reseller
deems relevant to the forecasting process. In addition, Reseller shall meet with
a representative of The Panda Project designated by The Panda Project on the
third week of each month to review and revise the Business Plan, including
developing better estimates for the two months following the next month (the
"Confirmed Orders") and agreeing on a commitment schedule for the subsequent
month's period (the "Commitment Schedule"), which schedule will set forth the
minimum number and types of systems expected to be ordered during such period.
Based on customer orders received, Reseller shall forward to The Panda Project
purchase orders ("Reseller Purchase Orders") which shall specify (1) a purchase
order number and date; (2) the number and types of systems ordered (including
any specific requirements and bundled products); (3) the unit prices and
extended prices based on the Price List and whether or not the customer is a
Siemens Affiliate; (4) shipping information (including delivery points and
contact persons) provided, that The Panda Project shall have sole discretion
concerning method of shipment, identity of carrier and any other matters
relating to shipping; (5) date(s) of delivery; (6) that the terms and conditions
of this Agreement govern such Reseller Purchase Order; and (7) authorized
signature. The Panda Project shall manufacture Archistrat Products based on
Reseller Purchase Orders. The Panda Project shall apply the numbers set forth in
such Reseller Purchase Orders against the minimums contained in the Commitment
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Schedule. To the extent the amounts set forth in the Reseller Purchase Orders
for the month exceed the minimum amounts contained in the Commitment Schedule,
The Panda Project and Reseller acknowledge that The Panda Project may defer
delivery of such excess units; such orders shall be completed and delivered on a
sequential basis (i.e., first-in, first-out), and Reseller shall notify the
customers of such fact. The Panda Project reserves the right to supply all or a
portion of Reseller's forecast and the Reseller Purchase Orders, consistent with
availability and other factors as determined by The Panda Project at its sole
discretion. The Panda Project shall have no liability or obligation to Reseller
for partial or late delivery or for failure to deliver unless such partial or
late delivery or failure to deliver were for products contained in Reseller
Purchase Orders, in which event, if Reseller has incurred damages, Reseller may
claim as its sole remedy liquidated damages of 0.5% of the invoice price of the
delayed products for every complete week of delay up to an overall total of 10%
of such price.
5. ORDERING ARCHISTRAT PRODUCTS
5.1 Reseller shall order Archistrat Products pursuant to Reseller
Purchase Orders. Subject to Section 4 above, all Reseller Purchase Orders shall
be accepted by The Panda Project, provided, such Reseller Purchase Orders are in
conformance with this Agreement and do not contain inaccuracies. All Reseller
Purchase Orders shall be governed solely by the terms of this Agreement. No
additional or different provisions contained in the Reseller Purchase Orders or
other business forms or correspondence shall be of any force whatsoever.
5.2 Reseller agrees to use best efforts to purchase a minimum of
********************************* worth of the Products during the Term.
5.3 The Panda Project shall have the right to impose a cancellation or
reschedule charge for any order which is canceled or deferred by Reseller
(including cancellations resulting from termination of this Agreement) at a rate
of **** of the amount set forth in the Reseller Purchase Order, provided that
Reseller shall be liable for the invoice price with respect to any order that is
cancelled or deferred within 30 days prior to the date scheduled for delivery.
Reseller may reflect any such charges in the purchase orders executed by
Reseller's customers.
6. PAYMENT AND PRICES; TITLE; RISK OF LOSS
6.1 Payment in full for each Archistrat Product from Reseller shall be
due and payable within 30 days of the date of
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
The Panda Project's invoice (the "Due Date"), which invoice shall not be dated
prior to the delivery of the Archistrat Product. Any late payments shall bear
interest at the rate of 1% per month. In the event Reseller fails to make
payments after 30 days of the Due Date to The Panda Project for the Archistrat
Products ordered, The Panda Project reserves the right to require prepayment or
other payment arrangements satisfactory to The Panda Project prior to delivery
of other Archistrat Products.
6.2 Subject to Section 6.4, Reseller shall pay The Panda Project for
Archistrat Products in United States Dollars at the applicable prices specified
in the Price List in effect on the date the Reseller Purchase Order for such
products is received or such products are shipped by The Panda Project,
whichever is less, provided however, that if publication of a new Price List
results in an increase in the price of any Archistrat Product which is listed on
the preceding Price List, the increased price shall apply to any order for such
Archistrat Product placed by Reseller after the effective date of the Price List
which effective date shall not be any earlier than 60 days after receipt in
writing by Reseller of such price increase. Reseller Purchase Orders received by
The Panda Project prior to the effective date of any increased price shall not
be affected by the proposed price increase. The Panda Project shall have the
right to amend the Price List without the consent of Reseller. The prices of
Archistrat Products or enhancements thereto not previously listed on the Price
List from time to time shall be effective upon publication.
6.3 Reseller agrees to promptly pay any taxes resulting from this
Agreement or the activities contemplated hereunder, exclusive of taxes based on
the net income of The Panda Project. Reseller agrees to provide The Panda
Project with valid reseller-exemption documentation for each applicable taxing
jurisdiction to which Archistrat Products are shipped. In the event Reseller
fails to do so or such exemption is revoked, modified or not recognized,
Reseller will pay to The Panda Project all applicable state and local taxes and
duties.
6.4 Reseller shall receive *********************************
*************************** after the Triggering Event, as defined below) off
the list price shown on The Panda Project's Price List for all Archistrat
Products purchased by Reseller for resale to Siemens Affiliates. Reseller shall
receive ******************** **************************************** after the
Triggering Event, as defined below) off the list price shown on The Panda
Project's Price List for all Archistrat Products purchased by Reseller for
resale to parties other than Siemens Affiliates. As
<PAGE>
used in this Agreement, the term "Triggering Event" shall mean the purchase by
Siemens from The Panda Project of 25 Archistrat 4s Servers under this Agreement.
For any special projects that call for deliveries over a period of time not
longer than 24 months from initial delivery and that involve substantially
higher volumes of the products, The Panda Project and Reseller shall negotiate
in good faith mutually agreeable special discounts in excess of the discounts
set forth hereinabove.
6.5 With respect to shipments within the continental United States,
title and risk of loss to each Archistrat Product shall pass to Reseller upon
delivery by The Panda Project F.O.B. the point of delivery specified in the
applicable Reseller Purchase Order. With respect to shipments outside the
continental United States, title and risk of loss to each Archistrat Product
shall pass to Reseller upon delivery by The Panda Project to the point of
delivery specified in the applicable Reseller Purchase Order, but The Panda
Project shall have the right to charge Reseller such incremental shipping and
transportation charges, including without limitation packing, freight, storage,
insurance and documentation charges, as The Panda Project shall reasonably deem
appropriate.
6.6 The Panda Project shall have the right at its expense to nominate
an independent certified or chartered public accountant, acceptable in the
reasonably exercised discretion of Reseller, who shall have access to the
records of Reseller and its affiliates, during reasonable business hours, solely
for the purpose of verifying amounts payable to The Panda Project under this
Agreement.
7. LICENSE
Reseller acknowledges that the software and firmware resident in the
Products is confidential, proprietary and/or copyrighted by The Panda Project.
The Panda Project hereby grants to Reseller a non-exclusive and royalty-free
license, under all patents, copyrights and proprietary interests owned or
controlled by The Panda Project to use and sell the Products. The Panda Project
may revoke any license if Reseller fails to meet any of its obligations
hereunder.
The software and firmware provided hereunder, including any subsequent
improvements or updates, are furnished to Reseller under a non-exclusive and
royalty-free license for use in a single Product. Reseller agrees that all
software and firmware shall not be sold or distributed or otherwise made
available to customers or other third parties separate from the Product in which
it is resident, nor copied or tampered with nor shall its removal be attempted.
<PAGE>
Upon any default by Reseller under this Agreement, all licensed
software and firmware of The Panda Project's within Reseller's possession shall
be returned without copying by Reseller to The Panda Project, except for
software and firmware resident in Products previously purchased by Reseller or
its customers.
Reseller agrees that, in connection with the transfer of any Product to
its customer and in connection with any subsequent transfer by its customer to a
third party, it will contractually restrict all such transferees such that they
shall:
(i) limit the use of the software and firmware thereof to
that Product transferred by Reseller, and
(ii) not reverse assemble or reverse compile any of the
software or firmware.
8. DUTIES OF THE PANDA PROJECT
In addition to the other duties set forth in this Agreement, The Panda
Project shall have the following duties:
8.1 TRAINING
The Panda Project will provide a reasonable number of training courses
relating to Archistrat Products at Reseller's facilities in the United States
within sixty (60) days of the effective date of this Agreement; provided that
The Panda Project shall not be obligated to provide more than an aggregate of
sixteen (16) man-hours of its personnel time to all of such courses. The Panda
Project shall not charge Reseller for such courses; provided The Panda Project
shall not be responsible for any personnel, travel or other costs incurred by
Reseller in connection with such courses. The course outlines for such training
courses will be submitted to Reseller for approval and input. The Panda Project
agrees to provide training in subjects specifically requested by Reseller. Each
course shall be for no more than ten (10) students, and shall cover, in detail,
the installation, adjustment, operation, testing and maintenance of said
Products. Each course shall include a reasonable amount of hands-on experience
with the Products in addition to the classroom type of training. Further, when
new Products or enhancements are introduced, The Panda Project agrees, when
requested by Reseller, to provide Reseller with initial training courses, not to
exceed sixteen (16) man-hours of Panda personnel time, on said new Product or
enhancements. The Panda Project shall not charge
<PAGE>
Reseller for such courses; provided The Panda Project shall not be responsible
for any personnel, travel or other costs incurred by Reseller in connection with
such courses.
The Panda Project agrees to provide training courses in addition or
subsequent to the initial training courses described above at a cost to be
mutually agreed upon when requested to provide such by Reseller. For training
courses taught at locations other than Reseller's or The Panda Project's
facilities, Reseller agrees to reimburse The Panda Project for the travel and
living expenses of the instructor at The Panda Project's prevailing standard
rates. Travel and per diem expenses of the trainees will be paid by Reseller.
8.2 EMERGENCY SUPPORT
In the event of an emergency involving the Archistrat Products at
Reseller's facilities or Reseller's customers' site, The Panda Project will
provide to Reseller qualified factory technical support when such assistance is
required on a best efforts basis within twenty-four (24) hours, not to exceed
forty-eight (48) hours upon notice given; provided, that Reseller has sent
qualified service support to such site and has been unable to resolve the
problem under Article III or Section 8.3. The Panda Project shall designate one
or more contact persons who will be responsible for assuring that the emergency
support is provided. Whether the cost of the emergency assistance shall be borne
by The Panda Project or Reseller depends on whether the Products are under
warranty and in compliance with The Panda Project's specifications. If the
Product is in compliance with the specifications, or if the Product is not under
warranty, then Reseller will bear the cost and will be billed (except in
situations involving epidemic failures as described in Section 9.3 below) at The
Panda Project's then prevailing published rates. If the Product is under
warranty and not in compliance with The Panda Project's specifications, then The
Panda Project shall bear the cost of the emergency assistance.
8.3 TECHNICAL SUPPORT AND DOCUMENTATION
The Panda Project will provide the following support to Reseller's
plant or Reseller's customer site:
(A) Engineering Support, at no charge, to Reseller's
Engineering personnel in the form of telephone consultation by The Panda
Project's Engineering personnel during The Panda Project's normal working hours.
<PAGE>
(B) Field Support, at no charge, to Reseller's Field
Engineering personnel in the form of telephone or telex consultation by The
Panda Project's support organizations and technical assistance specialists
during The Panda Project's normal working hours.
(C) It is recognized that Reseller may wish to undertake its
own major refurbishment or subassembly repair. The Panda Project agrees to
extend to Reseller the option to acquire at Reseller's sole expense the
technical expertise as defined below and as may be required to establish
internal repair capabilities. Reseller reserves the right to exercise this
option at any time during this Agreement and The Panda Project agrees to assist
Reseller in doing so through an equitable negotiation process. Reseller's
typical needs will consist of, but not be limited to:
(1) test specifications
(2) test routines
(3) repair procedures
(4) technical support/training as required
(5) piece part support
(6) tools and test equipment
(7) documentation updates
(8) schematics/logic diagrams
(9) illustrated parts breakdown
Concurrent with the date of this Agreement, The Panda Project will
provide Reseller with a list of all documentation/manuals available or planned
for general information, training and for maintenance of the Archistrat
Products. Such documentation shall include, but not be limited to, maintenance
manuals (which include site preparation, installation, operation, functional
description, preventative maintenance, maintenance procedures, logic block
diagrams for the Products), logic card manuals which include card layout,
technical memos or bulletin files, and copies of documentation covering any
product changes. The Panda Project hereby grants at no charge to Reseller the
right to reproduce, translate into other languages, and prepare derivative
works, distribute, sell, perform and display, in whole or in part, manuals and
documentation specified herein, solely for the purpose of performing Reseller's
responsibilities under this Agreement. Throughout the term of this Agreement,
The Panda Project shall provide Reseller with timely notification in writing of
changes to documentation which may be incorporated at Reseller's option. Any
user guides, marketing materials or other documentation used by Reseller in
connection with the Archistrat Product and not supplied by The Panda Project
shall be approved by The Panda
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Project prior to their use. The Panda Project makes no warranty with respect to
any such refurbishment or major subassembly repair. No right is or shall be
granted for Reseller to resell any such refurbished product.
8.4 REPLACEMENT PARTS
The Panda Project agrees to provide the parts listed on the Parts List
(or functional equivalents thereof) to Reseller in accordance with Section 16.11
for *************** after expiration or termination of this Agreement.
9. LIMITED WARRANTY
9.1 The Panda Project hereby warrants to Reseller that the Archistrat
Products delivered hereunder shall be free from defects in materials and
workmanship when given normal, proper and intended usage, for three years after
the date of delivery to Reseller. Replacement parts or replacement products
shall be warranted only for the remainder of such warranty period. The Panda
Project does not warrant error-free or uninterrupted operation of the Archistrat
Products. Such warranty is subject to the exclusions set forth in Sections 1.2,
3.1 and 8.3 and does not include warranty services to correct any damage caused
by improper installation, unsuitable physical or operating environment, improper
maintenance, removal of product identification labels, accidents, disaster,
misuse, abuse or modifications or additions approved in writing by The Panda
Project. The Panda Project assumes no responsibility to provide warranty
services outside of the 48 contiguous states of the United States unless
otherwise stipulated in a written purchase order. ALL OTHER WARRANTIES,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED. Except as set forth in
Section 9.3 below, in all situations involving the performance or nonperformance
of Archistrat Products, Reseller's exclusive remedy will be to have The Panda
Project repair or replace the Archistrat Products as set forth in Article III or
Exhibit B. Reseller acknowledges and agrees that The Panda Project's aggregate
liability for all claims, losses, damages, costs, expenses, fines or penalties,
whether arising from contract, tort or any other legal or equitable theory, due
to the acts or omissions of The Panda Project hereunder shall not exceed the
lesser of (i) Reseller's actual damages resulting therefrom, or (ii) the amount
paid by Reseller to The Panda Project under this Agreement. In no event shall
either party be liable to the other for lost profits or other consequential,
incidental, indirect or special damages of any nature whatsoever, including,
without limitation, loss of
<PAGE>
data, loss of profits, loss of business, or anticipatory profits, even if such
party has been apprised of the likelihood of such damages. The Panda Project's
liability, if any, under the warranty contained herein shall only be to
Reseller, but it is understood that Reseller shall have the right in its own
capacity to make the warranty contained herein to its customers.
9.2 Warranty services performed by Reseller and reimbursement terms for
such services are set forth in Paragraphs 3.2 - 3.5 and Exhibit B of this
Agreement.
9.3 If within twelve months after the date of this Agreement, an
epidemic of failures of functional specifications or of conformities of the
Archistrat Products, due to the same specifically identified and documented
defect or malfunction, occur at a rate greater than the applicable MTBF figures
published by The Panda Project or five percent (5%) of the same or similar type
products, whichever is less, and occur within any two (2) month period
regardless of whether the Products are in or out of warranty, The Panda Project
and Reseller shall consult with each other to determine whether such defects or
malfunctions result from manufacturing inadequacies or the use of unsuitable
materials by The Panda Project. If such determination is made, The Panda Project
agrees to provide, at its expense, the technical personnel and assistance
necessary to remedy the failed Archistrat Products and to prevent the problem
from occurring in future deliveries.
In the event that The Panda Project is unable to remedy the problem in
the Products, Reseller may, at its option, cancel any and all purchase orders or
portions thereof for Archistrat Products which are experiencing the epidemic
failures and Reseller may return, for full credit, the Archistrat Products which
have already been received by Reseller. Further, Reseller may cancel any and all
purchase orders or portions thereof for Archistrat Products which were used in,
or in conjunction with, the Archistrat Products experiencing the epidemic of
failures (e.g., spare parts, accessories, etc.), and Reseller may return freight
collect and for full credit, such Archistrat Products which have already been
received.
9.4 The Panda Project and Reseller may agree on alternative warranty
provisions from time to time by amendment to this Agreement.
10. TRADEMARKS AND RELATED MATTERS
10.1 No rights are granted to Reseller to use trademarks and trade
names of The Panda Project ("Trademarks") or trademarks or
<PAGE>
trade names of third parties used in conjunction with the Archistrat Products
except to identify Archistrat Products purchased from The Panda Project pursuant
to this Agreement. Unless otherwise agreed by the parties, all Archistrat
Products will be sold under Panda Trademarks.
11. PATENTS AND COPYRIGHTS
11.1 The Panda Project will defend Reseller against a claim that
Archistrat Products infringe a United States patent or copyright or trade secret
and will pay resulting costs, damages, and attorneys' fees finally awarded by a
court, provided that (i) Reseller promptly notifies The Panda Project in writing
of the claim; and (ii) The Panda Project has sole control of the defense and all
related settlement discussions.
11.2 If the Archistrat Products or the operation thereof become or in
the opinion of The Panda Project are likely to become, the subject of such a
claim, Reseller will permit The Panda Project, at the sole option and expense of
The Panda Project, either to procure the right for the Reseller to continue
marketing and using the Archistrat Products or to replace or modify them so that
they become non-infringing but without any impairment in quality or
functionality.
11.3 The Panda Project shall have no liability for any claim based
solely upon the combination, operation or use of any Archistrat Product supplied
hereunder with equipment, data, or programming not supplied by The Panda
Project, or based upon any alteration or modification of the Archistrat
Products.
11.4 The foregoing states the entire obligation of The Panda Project to
Reseller with respect to infringement of patents and copyrights and trade
secrets.
12. CONFIDENTIAL INFORMATION
12.1 Confidential information shall mean all information designated as
such in writing by The Panda Project, whether by letter or by the use of an
appropriate proprietary stamp or legend, which relates to the present or future
development and business activities of The Panda Project, including, but not
limited to, all sales, promotional, advertising, and support programs and all
inventions, products, processes, methods and other technical information.
Without limiting the foregoing, all information referred to in Sections 7 and
8.3(C) above and Section 16.13 below is confidential information.
Notwithstanding the foregoing, information which is orally disclosed to Reseller
<PAGE>
by The Panda Project, or is disclosed in writing without an appropriate letter,
proprietary stamp or legend, shall constitute confidential information if,
within ten (10) days after such disclosure, The Panda Project delivers to
Reseller a written document designating such information as confidential.
Reseller shall hold such confidential information in trust and confidence for
The Panda Project and shall not use or reproduce it except in furtherance of the
relationship set forth in this Agreement, nor publish, copy, disclose or
disseminate it, except to customers, employees or contractors who have a need to
know such information and are bound by written agreement to protect the
confidentiality of such information, or as may be authorized by The Panda
Project in writing. Upon the expiration or termination of this Agreement,
Reseller shall promptly deliver to The Panda Project all confidential
information or written or descriptive matter containing any such confidential
information.
13. TERMINATION
13.1 Reseller shall have the right to terminate this Agreement at any
time after the first six (6) months, for any reason or no reason whatsoever,
including breach by The Panda Project of its obligations under this Agreement,
at such party's sole discretion, said termination to be effective 30 days from
the date written notice of termination is received by the non-terminating party.
13.2 Upon the occurrence of any of the following enumerated
circumstances, termination of this Agreement by The Panda Project shall be
effective immediately upon receipt by Reseller of written notice of termination.
13.2.1 Reseller is adjudged or becomes bankrupt or insolvent,
is unable to pay its debts as they become due, has substantially all of its
assets seized or makes an assignment for the benefit of its creditors; or
13.2.2 Reseller is dissolved or liquidated; or
13.2.3 Reseller breaches any of its obligations under this
Agreement and such breach is not cured within 30 days after notice from The
Panda Project.
13.3 If The Panda Project terminates this Agreement, The Panda Project
may, upon mutual agreement of the parties, repurchase some or all of the
Archistrat Products in Reseller's inventory at prices to be agreed upon by The
Panda Project and Reseller, but in no event greater than the price invoiced to
and
<PAGE>
actually paid by Reseller less any credits received by Reseller in respect to
such products and The Panda Project shall be responsible for any delivery
charges resulting from the delivery of these products to a location designated
by The Panda Project.
13.4 Notwithstanding any termination, all pending unfilled orders will
be filled and performed by the parties.
14. INDEMNIFICATION
Reseller agrees to indemnify and hold harmless The Panda Project and
its directors, officers, employees, representatives and agents (collectively,
the "The Panda Project Indemnitees") from and against all liabilities,
obligations, losses, damages, penalties, interest, claims, actions, suits,
investigations, proceedings, judgments, orders, or injuries (including death to
any person or damage to property) of whatever nature, and including court costs
and attorneys' fees and disbursements, whether suit is instituted or not, and,
if instituted, whether at any trial or appellate level, imposed on, incurred by
or asserted against The Panda Project Indemnitees or any of them, arising out
of, in connection with or based upon the acts, omissions or breach by Reseller
and its employees, officers, directors, agents and representatives of Reseller's
representations, warranties, covenants, duties and obligations under or pursuant
to this Agreement; provided, that Reseller shall not be obligated to indemnify
The Panda Indemnities with respect to any matter arising out of The Panda
Project's intentional misconduct, negligence or breach of warranty. These
indemnification obligations shall survive the termination of this Agreement.
With respect to claims for which indemnification is payable under this
Agreement, such indemnification shall be paid by Reseller on a current basis
upon receipt of such vouchers and other supporting documentation as may
reasonably be requested.
15. INSURANCE
15.1 At all times during the term of this Agreement, Reseller shall
maintain, in full force and effect with insurance carriers duly authorized to do
business in the states and countries where its services are to be performed, the
following types and minimum coverage limits of insurance (or such greater limits
as are required by the applicable laws): (i) commercial general liability
insurance for death, bodily injury, property damage and for personal injury
(including libel, slander defamation of character and violation of the right of
privacy) in limits of not less than $1,000,000 per occurrence; (ii)
<PAGE>
comprehensive automobile liability (included hired, owned and non-owned
vehicles) in limits of not less than $1,000,000 per occurrence, for bodily
injury and property damage; and (iii) workers' compensation in compliance with
the applicable laws, including employer's liability in limits of not less than
$100,000 per accident. By appropriate riders or endorsements to such policies,
The Panda Project shall be included as an additional insured (with the exception
of the workers' compensation policy).
15.2 If any of the coverages are on a claims made basis, Reseller's
maintenance of such coverages shall survive the termination of this Agreement
until the expiration of the maximum statutory period of limitations in the state
where the services are performed for actions based in contract or in tort. Upon
the execution of this Agreement, Reseller shall furnish The Panda Project a
certificate of insurance from its insurance carriers reflecting the Reseller's
insurance coverages are consistent with all requirements under this Agreement
and providing that such insurance carriers will notify The Panda Project in
writing at least 30 days prior to any cancellation, termination, non-renewal or
modification to Reseller's policies. Reseller shall provide The Panda Project
with renewal or replacement certificate(s) not less than 30 days prior thereto.
16. GENERAL
16.1 Reseller shall not have the right to assign, delegate or
subcontract the services to be performed hereunder, or any part thereof, without
the prior written consent of The Panda Project, and notwithstanding such
assignment, delegation or subcontracting, Reseller shall not be released from
its duties and obligations hereunder.
16.2 This Agreement and the exhibits hereto constitute the entire
agreement between the parties hereto and supersede all prior agreements,
understandings and commitments. This Agreement can be modified only by a written
amendment executed by Reseller and The Panda Project, and shall not be
interpreted, supplemented or modified by any course of dealing or trade usage.
This Agreement has been negotiated freely and openly by the parties, and it
shall be interpreted without regard to any presumption or rule requiring
construction against the party causing this Agreement to be drafted.
16.3 Any obligations and duties which by their nature extend beyond the
expiration or termination of this Agreement shall survive any expiration or
termination and remain in effect,
<PAGE>
including, without limitation, those set forth in Paragraphs 6.1-6.3, 7, 8.4,
9.1-9.3, 10.1, 11.1-11.4, 12, 13.2-13.4, 14, 15.1, 15.2, 16.2, 16.4, 16.5 and
16.7-16.13.
16.4 If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, such provision shall be enforced to the
fullest extent permitted by applicable law and the validity, legality, and
enforceability of the remaining provision shall not in any way be affected or
impaired thereby.
16.5 In the event a party is unable to perform any of its obligations
under this Agreement due to the occurrence of any event or contingency beyond
its reasonable control, the affected party's performance shall be extended for
the period of delay or inability to perform due to such occurrence.
16.6 Notices required or permitted hereunder shall be in writing and
deemed given and received when properly posted by registered or certified mail,
postage prepaid, first class in an envelope properly addressed (i) if to The
Panda Project, to 901 Yamato Road, Boca Raton, Florida, 33431 Attention:
President, Archistrat Systems Division, (ii) if to Reseller, to the address set
forth in the introduction of this Agreement Attention: Gerry Pasko; or to such
other addresses as Reseller or The Panda Project specify in writing to the other
party.
16.7 Except as otherwise provided herein, no waiver of any of the
provisions of the Agreement shall be valid or effective unless in writing and
signed by the waiving party; and no waiver of any breach or condition of the
Agreement shall be deemed to be a continuing waiver or a waiver of any other
breach or condition.
16.8 THIS AGREEMENT AND ALL TRANSACTIONS EXECUTED HEREUNDER SHALL BE
GOVERNED EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF FLORIDA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
16.9 This Agreement is The Panda Project Confidential.
16.10 The Panda Project represents that the terms and conditions and
the prices for Archistrat Products contained in this Agreement are no less
favorable to Reseller than the most favorable terms and conditions and prices
offered to any other reseller or customer of The Panda Project for Archistrat
Products outside governmental channels which reseller or customer is performing
services or providing benefits to The Panda Project that are not materially more
extensive than those being performed by Reseller hereunder.
<PAGE>
16.11 Subject to the provisions of Section 8.4, in the event of
termination of the Agreement for any reason, The Panda Project agrees to sell
spare parts to Reseller at the lowest prices offered to any other reseller or
customer outside governmental channels in order for Reseller to maintain
products for its customers; provided such reseller or customer is performing
services or providing benefits to The Panda Project that are not materially more
extensive than those being performed by Reseller.
16.12 Reseller understands that the products to be purchased and
programs to be licensed hereunder may require a validated export license.
Reseller agrees to assist The Panda Project to obtain any such required license
by supplying appropriate documentation requested by The Panda Project. Reseller
agrees to comply with U.S. Export Administration Regulations as in effect from
time to time and will not re-export any products without first gaining approval
from The Panda Project and until approval is obtained from the United States
Department of Commerce or other applicable authority. Reseller agrees to obtain
similar assurances from its customers. Reseller will also maintain the necessary
records to comply with United State Export Administration Regulations.
16.13 The parties acknowledge and agree that the ACT database supplied
to Reseller by Panda shall be the joint property of the parties and The Panda
Project shall have full and free access to any sales information relating to the
Archistrat Products.
16.14 In the event The Panda Project becomes subject to bankruptcy or
insolvency proceedings which are not dismissed within 45 days and fails to
supply Archistrat Products as provided hereunder for a period of 30 days after
written notice from Reseller, Reseller shall be granted a conditional license to
such documentation as is necessary to manufacture the Archistrat Products and
which The Panda Project has the right to license to Reseller. Such license shall
be for the limited purpose of permitting Reseller to manufacture Archistrat
Products to fill
<PAGE>
Reseller Purchase Orders under this Agreement as of the date of such notice,
shall extend only for the period of time needed to fill such orders and shall be
nontransferable.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT AND AGREE TO BE BOUND
BY ITS TERMS AND CONDITIONS.
RESELLER
SIEMENS NIXDORF INFORMATION THE PANDA PROJECT, INC.
SYSTEMS, INC.
By: By:
Title: Title:
Date: Date:
__________________
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<TABLE>
<CAPTION>
EXHIBIT A
CONFIDENTIAL
THE PANDA PROJECT/Trademark/
OFFICIAL PRICE LIST
ARCHISTRAT/Registered trademark/ SYSTEMS PRICE LIST
- ---------------------------------------------------------------------------------------------------------------------------------
ARCHISTRAT/Registered DESCRIPTION DEALER LIST QTY EXTENDED
trademark/ PART NUMBER PRICE PRICE PRICE
- ------------------------ ------------------------------------- ------ ----- --- --------
<S> <C> <C> <C>
SERVER (Must select)
TBD Archistrat 4s Base Unit $**** $****
PLATFORM (Must select one platform: 1 CPU card &
1 Bridge card)
48260040 Intel Pentium 100 MHz CPU card $**** $****
48260098 Intel Pentium 166 MHz CPU card $**** $****
48260033 Intel Bridge card $**** $****
48260090 DEC Alpha CPU card w/L3 Cache 2 MB $**** $****
48260088 DEC Bridge Alpha card $**** $****
MEMORY (SELECT AT LEAST ONE)
48260029 32MB Memory Module $**** $****
48260030 64MB Memory Module $**** $****
TBD DIMMS, 32 MB Memory $**** $****
TBD DIMMS, 64 MB Memory $**** $****
VIDEO (SELECT ONE)
48260056 Boca PCI SVGA 2 MB Video Card $**** $****
48260119 Dynamic Pictures V192 3D Video Card $**** $****
SCSI CONTROLLERS (SELECT ONE)
48260123 Adaptec PCI Fast/Wide SCSI Controller $**** ****
48260121 Mylex PCI Dual-Channel Fast/Wide RAID $**** $****
Adapter w/ 4 MB EDRAM
</TABLE>
SEPTEMBER 16, 1996
PRICES SUBJECT TO CHANGE
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<TABLE>
<S> <C> <C> <C>
HARD DRIVES (SELECT AT LEAST ONE)
48220032 2 GB Fast/Wide SCSI-2 HD - 7200RPM $**** $****
48220033 4 GB Fast/Wide SCSI-2 HD - 7200RPM $**** $****
CIRCLE ONE: UPPER DRIVE BAY
LOWER DRIVE BAY
COMMUNICATIONS (SELECT ONE)
48260072 Cogent EM110TX PCI Ethernet Adapter $**** $****
48260073 Cogent EM400 Quartet Ethernet Adapter $**** $****
OPTIONAL PARTS
MODEM
48260118 Boca Research 28.8 V.341 $**** $****
SOFTWARE
48270079 Windows NT 3.51 Workstation $**** $****
DISPLAY
48200002 Nokia Multigraph 447X 21" Monitor $**** $****
Total
</TABLE>
*ARCHISTRAT/Registered trademark SYSTEM BASE UNIT INCLUDES:
**4X CD-ROM
**3.5" FLOPPY DRIVE
**CACHE MEMORY - 16KB INTERNAL & 512KB EXTERNAL
**EXPANSION SLOTS - SIX 32/64 BIT PCI & FOUR 16 BIT ISA SLOTS TOTAL
**UPPER DRIVE BAYS - FOUR BAY TOTAL
**LOWER DRIVE BAYS - 12 LOW PROFILE OR 10 HALF BAYS
**I/O PORTS
**BACKPLANE
**KEYBOARD, MOUSE, AND 400 WATT POWER SUPPLY
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXHIBIT B
WARRANTY REIMBURSEMENT PROGRAM
On-site warranty services that are provided by the Reseller shall be
reimbursed by Panda within 30 days after receipt of warranty repair
documentation and the defective product, in accordance with the reimbursement
schedule set forth below:
REIMBURSEMENT SCHEDULE
ITEM(S) OF REPAIR/REPLACEMENT REIMBURSEMENT AMOUNT
- ----------------------------- --------------------
Power Supply $ ***** 1
Back Plane $ ***** 1
All Other Components $ ***** 1
Diagnostics Charge 2 $*****/hour with cap of $*****
1 Includes all chargeable labor and overhead costs.
2 Applies only to repairs where Reseller service technician is unable to resolve
problem and Panda Technical Support determines appropriate amount for
reimbursement under the warranty coverage.
WARRANTY REIMBURSEMENT PROCEDURES
The following procedures must be followed to receive The Panda Project, Inc.
warranty reimbursement:
1. All warranty reimbursements MUST be submitted on the standard "Computer
Industry" Parts Exchange/Warranty Reimbursement Form to be provided by The Panda
Project.
2. The Parts Exchange/Warranty Reimbursement Form must be completed in full with
proof of purchase attached to the form.
3. All service parts used must be shipped to and received by The Panda Project
at the below listed address for reimbursement payment to be processed. A copy of
the Parts Exchange/Warranty Reimbursement Form MUST accompany all parts
shipments:
B-1
<PAGE>
EXHIBIT B
WARRANTY REIMBURSEMENT PROGRAM (CONTINUED)
THE PANDA PROJECT, INC.
ATTN: WARRANTY PARTS RETURN/REIMBURSEMENT
1121 HOLLAND DRIVE, BAY 16
BOCA RATON, FLORIDA 33487
4. Warranty reimbursement will be paid only when the Parts Exchange/Warranty
Reimbursement Form has been completed AND the replaced service part has been
received by The Panda Project.
B-3
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<TABLE>
<CAPTION>
EXHIBIT C
THE PANDA PROJECT, INC. CONFIDENTIAL
SPARE PARTS LIST
- ----------------- ------------------------------------------------------ --------------------- ------------
<S> <C> <C> <C>
48010000 Battery $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48200004 Keyboard PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48200005 Mouse $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220004 DAT Drive HP $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220009 Hard Drive 2GB Fast SCSI-7200 SEAGATE
- ----------------- ------------------------------------------------------ --------------------- ------------
48220010 Hard Drive 4GB FAST scsi-7200 SEGATE $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220025 CD-ROM Drive SONY $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220026 3.5 Floppy Drive SONY $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220032 2 GB Fast & Wide SCSI hard drive SEGATE $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48220033 4 GB Fast & Wide SCSI hard drive SEGATE $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48230002 60 MM Fan $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48230007 400 W. Power Supply TEKTRIS $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48230012 80 MM Fan $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48240061 12 V DC Motor $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260001 Backplane System Board (REV 5.X OR HIGHER) PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260025 SCSI Controller, Adapter PCI ADAPTEC $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260029 32MB Memory Module IBM $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260030 64MB Memory Module IBM $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260032 Network Interface Card, D-Link D-Link $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260033 Bridge Card PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260040 100 MHz. CPU Card PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260056 Video Adapter Card BOCA RES. $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260072 Fast Ethernet Adapter 10/100 COGENT $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260073 Ethernet Adapter, 4-Ch TX400 Quartet COGENT $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260086 DEC Alpha bridge board PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260090 DEC Alpha CPU board w/L3 cache PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260098 166 MHz. CPU Card PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
</TABLE>
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<TABLE>
<CAPTION>
- ----------------- ------------------------------------------------------ --------------------- ------------
<S> <C> <C> <C>
48260118 Modem, 28.8 BOCA RES. $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260119 Video Adapter Card DYN.PIC $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260121 Mylex RAID controller w/ 4 MB EDRAM MYLEX $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48260123 Adaptec 2940W SCSI controller ADAPTEC $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48280004 Staircase Signal Cable PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48280007 HDD Signal Cable PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48280019 Speaker Assembly 2/Cable PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48280042 Power Cable PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
48280055 Fast & Wide SCSI cable PANDA $***
- ----------------- ------------------------------------------------------ --------------------- ------------
</TABLE>
<PAGE>
EXHIBIT D
CONSIGNED INVENTORY AGREEMENT
CONSIGNOR: The Panda Project Inc.
901 Yamato Road
Boca Raton, Florida 33431
CONSIGNEE: Siemens Nixdorf Information Systems, Inc.
200 Wheeler Road
Burlington, Ma. 01803
1.0 SCOPE
The terms expressed below form the key elements of an agreement between
Siemens Nixdorf Information Systems, Inc. ("Siemens") and The Panda Project,
Inc. ("Panda"), establishing a service parts consignment inventory program for
the various items utilized in the servicing of Archistrat computer servers and
workstations.
2.0 TERM
The term of this agreement shall be concurrent with the Term of the
Reseller Agreement. This agreement will be considered in full force unless
terminated as per the termination terms of the Reseller Agreement. A three (3)
month pilot program will be used to demonstrate the viability of the process.
After such three-month pilot program, the parties shall consult to determine the
feasibility of continuing the program.
In the event this agreement is terminated, all service parts inventory
is to be returned to Panda within 10 working days, freight collect. All
inventory not returned to Panda after this time will be considered Siemens'
inventory and payment will be due as noted in Section 6.0.
3.0 SERVICE PARTS INVENTORY LEVELS
Subject to the terms of the Reseller Agreement, Panda will stock
service parts on consignment at Siemens. Panda and Siemens will assign a
specific person from each company that will be responsible for the levels of
inventory, the accuracy of the inventory and demand requirements for the
inventory. Should a need arise to adjust any of the levels or type of inventory
required to support customer service requirements, a mutually agreeable
adjustment will be made to this agreement and an official change made.
D-1
<PAGE>
4.0 INVENTORY LOCATION/SECURITY
Siemens will provide a security location at:
Cerplex
270 Merrimack Street
Lawrence, Ma. 01843
Siemens will conduct all physical inventories and stock inventory under
lock and key to safeguard the inventory. It is the responsibility of Siemens to
maintain the security of this location. Panda will retain access privileges and
periodically conduct security audits of this location to insure compliance. All
breaches in security must be reported to Panda immediately and a full security
report and inquiry will be conducted between Panda and Siemens.
Siemens will be responsible for theft, loss or damages while the
inventory resides in the consignment location as previously stated. The dollar
amount of any loss will be determined by the current Panda standard cost at the
time of the loss.
Siemens will physically count inventory using Panda service part
numbers on a regular basis and a full cycle count program will be utilized for
this location. Any discrepancies between book quantity on hand and the actual
quantity on hand will be resolved to both parties satisfaction within
forty-eight (48) hours.
Siemens will also maintain its own inventory control procedures and
records for the consigned service parts inventory and will allow Panda to audit
these records as required. Siemens will submit their formal cycle count
procedures that are currently in place. They are considered part of this
agreement.
Siemens represents and warrants that it has, and during the term of
this agreement will have, adequate insurance to cover all consigned inventory
hereunder against loss for its full replacement value.
5.0 PURCHASE ORDERS
Panda will provide a purchase order showing all parts that are expected
to be received at the consignment location. Upon receipt of the service parts,
Siemens will inspect for freight damage, conduct a physical count to the packing
slip counts and notify Panda of any discrepancies or shipment issues within
forty-eight (48) hours from receipt. Should any of the consigned service parts
in inventory require any further inspection, this will be defined by Siemens'
Quality Engineer and should be covered under Siemens' receiving inspection
criteria for the specific parts identified. Siemens will maintain a service
parts receiving log for all incoming shipments.
D-3
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
6.0 GENERAL
Any inventory that has not been returned to Panda as directed by this
agreement will be subject to billing by Panda. Pricing will be determined as set
forth in the Reseller Agreement. In addition to this, any consigned service
parts inventory will be subject to a handling charge of ***** of the list price
of the parts, as discounted pursuant to Section 3.6 of the Agreement.
Siemens shall, at Panda's request, execute and cooperate in the filing
of an appropriate statement under the Uniform Commercial Code evidencing the
consignment relationship created hereby.
7.0 REPORTING
A weekly service parts inventory report of the consigned location will
be required by Panda. It should clearly show the Panda service part numbers,
description of the product, quantity on hand and the date of the last cycle
count. Other reports will be required for DOA/Defective bad service parts
replaced on service hard calls. All in and out inventory must have inventory
tracking reports.
D-5
<PAGE>
EXHIBIT E
EVALUATION EQUIPMENT AGREEMENT
The undersigned ("Customer") hereby acknowledges that the products
listed below (the "Equipment") will be delivered to ______________, located at
______________________, for an evaluation period not to exceed 60 days from the
date of receipt of equipment. The following terms and conditions are agreed upon
by both parties regarding the term, conditions and confidentiality of the
evaluation and use of the Equipment.
1. Customer agrees that the Equipment is on loan to Customer for the
sole purpose of performance testing, software compatibility, etc. The Equipment
is to be returned to Siemens Nixdorf in good condition, reasonable wear and tear
excepted. Customer further agrees that if, at the end of the test period, the
Equipment is not returned to Siemens Nixdorf, or Customer has not requested
additional time in writing, then Siemens Nixdorf will invoice the Customer at
the then current Siemens Nixdorf published list price of the Equipment. Siemens
Nixdorf will not invoice the Customer published list price if the Customer has
chosen Siemens Nixdorf and issued a purchase order for the Equipment. Siemens
would then invoice the Customer at the agreed upon purchase price. Siemens
Nixdorf has no responsibility whatsoever for Customer's results or claims
arising from test process. Testing is at Customer's risk and expense.
2. Siemens Nixdorf agrees to pay freight for the Equipment delivered to
Customer with the right to select the method and carrier for shipment. Customer
agrees to pay freight for the Equipment upon return to Siemens Nixdorf in the
event Customer does not elect to purchase the Equipment. Customer has no
ownership rights with respect to the Equipment.
3. Evaluation testing, test data and performance data on the Equipment
tested at Customer's site is confidential and proprietary information governed
by the terms of that certain nondisclosure agreement between the parties.
Siemens Nixdorf Information Systems, Inc.
Defined Equipment
Qty. Model Serial No. Description
E-1
<PAGE>
The below authorized agents of Siemens Nixdorf Information Systems, Inc. and
Customer agree to the terms and conditions stated herein regarding the defined
Equipment.
SIEMENS NIXDORF INFORMATION CUSTOMER
SYSTEMS, INC.
By:_________________________ By:________________________
E-3
