As filed with the Securities and Exchange Commission on July __, 1996.
File No. 0-24030
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE PANDA PROJECT, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE PANDA PROJECT, INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or [ ]
Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy
pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing party:
----------------------------------------------------------
(4) Date filed:
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<PAGE>
Preliminary Copy for the Information of the
Securities and Exchange Commission Only
THE PANDA PROJECT, INC.
5201 CONGRESS AVENUE
BOCA RATON, FLORIDA 33487
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON FRIDAY, AUGUST 16, 1996
The Annual Meeting of Shareholders of The Panda Project, Inc. (the
"Company") will be held on August 16, 1996 at the Marriott Crocker Center Hotel
& Resort, 5150 Town Center Circle, Boca Raton, Florida at 10:00 a.m., local
time, to consider and act upon the following matters:
1. To elect five directors to serve for the ensuing year.
2. To approve the Company's 1995 Employee Stock Incentive Plan.
3. To consider and act upon a proposed amendment to the
Company's Amended and Restated Articles of Incorporation
to increase the authorized number of shares of Common
Stock from 20,000,000 shares to 50,000,000 shares.
4. To ratify the selection by the Board of Directors of Price
Waterhouse LLP as the Company's independent accountants for
the current fiscal year.
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on June 20, 1996 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. The stock transfer books of the Company will remain open following the
record date.
All shareholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors,
Stanford W. Crane, Jr.
President and Chief Executive Officer
Boca Raton, Florida
July 22, 1996
<PAGE>
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
THE PROXY IS MAILED IN THE UNITED STATES.
-2-
<PAGE>
THE PANDA PROJECT, INC.
5201 CONGRESS AVENUE
BOCA RATON, FLORIDA 33487
(407) 994-2300
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 16, 1996
This Proxy Statement has been prepared and is furnished by the Board
of Directors of The Panda Project, Inc. (the "Company") in connection with the
solicitation of proxies for the Annual Meeting of Shareholders of the Company to
be held on August 16, 1996, and at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Meeting.
It is anticipated that this Proxy Statement and the accompanying form
of proxy will be mailed to shareholders on or about July 22, 1996. The Company's
Annual Report, including audited financial statements for the fiscal year ended
March 31, 1996, is being mailed or delivered concurrently with this Proxy
Statement. The Annual Report is not to be regarded as proxy soliciting material.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED MARCH 31, 1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCEPT FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON
WRITTEN REQUEST TO THE PANDA PROJECT, INC., 5201 CONGRESS AVENUE, BOCA RATON,
FLORIDA 33487, ATTENTION: CHIEF FINANCIAL OFFICER. EXHIBITS WILL BE PROVIDED
UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
Only holders of record of the Company's common stock, $.01 par value
(the "Common Stock"), on the books of the Company at the close of business on
June 20, 1996, are entitled to vote at the Annual Meeting. On that date, there
were 8,923,675 issued and outstanding shares of Common Stock entitled to vote on
each matter to be presented at the meeting.
Shares represented by a properly executed proxy received in time to
permit its use at the Annual Meeting or any adjournment thereof will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, the shares represented by the proxy will be voted for the election of
all nominees for director, for approval of the Company's 1995 Employee Stock
Incentive Plan, for increase of the authorized number of shares of Common Stock
from 20,000,000 shares to 50,000,000 shares, for the ratification of the
appointment of Price Waterhouse LLP as the independent certified public
accountants of the Company for the fiscal year ending March 31, 1997, and in the
discretion of the proxy holders as to any other matter which may properly come
before the Annual Meeting. A shareholder who has given a proxy may revoke it at
any time before it is voted at the Annual Meeting by giving written notice of
revocation to the Secretary, by submitting a proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
<PAGE>
The expense of soliciting proxies will be borne by the Company.
Proxies will be solicited principally by mail, but directors, officers and
regular employees of the Company may solicit proxies personally, by telephone or
by facsimile transmission. The Company will reimburse custodians, nominees or
other persons for their out-of-pocket expenses in sending proxy material to
beneficial owners.
In determining the presence of a quorum at the Annual Meeting,
abstentions are counted and broker non-votes are not. The Company's By-Laws
provide that the affirmative vote of a majority of the shares represented, in
person or by proxy, and entitled to vote on a matter shall be the act of the
shareholders, except as otherwise provided by law. The current Florida Business
Corporation Act (the "Act") provides that directors are elected by a plurality
of the votes cast and all other matters are approved if the votes cast in favor
of the action exceed the votes cast against the action (unless the matter is one
for which the Act or the Company's Articles of Incorporation require a greater
vote). Therefore, under the Act, as to all matters to be voted on by
shareholders at the Annual Meeting, abstentions and broker non-votes have no
legal effect on whether a matter is approved.
In addition to the votes required to approve the adoption of the 1995
Employee Stock Incentive Plan, in order for this plan to qualify under Rule
16b-3, which provides an exemption from Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for certain employee benefit
plans, the adoption of the 1995 Employee Stock Incentive Plan must be approved
by the affirmative vote of the holders of a majority of the votes represented by
the shares of Common Stock present, or represented, and entitled to vote at the
Annual Meeting. For these purposes, an abstention will be treated the same as a
vote against the proposal and a broker non-vote will not be considered as
entitled to vote and will have no effect on the voting on such proposal.
You are requested, regardless of the number of shares you hold, to
sign the proxy and return it promptly in the enclosed envelope.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The table below is based on information obtained from the persons
named below with respect to the shares of Common Stock beneficially owned, as of
May 31, 1996 (except as noted below), by (i) each person known by the Company to
be the owner of more than 5% of the outstanding shares of Common Stock, (ii)
each director and nominee for director, (iii) each executive officer included in
the Summary Compensation Table and (iv) all executive officers and directors of
the Company as a group.
-2-
<PAGE>
AMOUNT AND
NATURE OF PERCENTAGE
BENEFICIAL OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) SHARES OWNED(2)
- ------------------------------------ ------------ ---------------
Stanford W. Crane, Jr. (3).............. 2,480,860 27.2%
William E. Ahearn ...................... 0 *
T. Scott Shamlin (4).................... 15,000 *
James T.A. Wooder (5)................... 1,106,554 12.2%
Robert C. Butler ....................... 0 *
Claud L. Gingrich....................... 0 *
Rao R. Tummala.......................... 0 *
Philippi Investments Ltd.
70 York Street
Suite 1700
Toronto, Ontario M5J1S9 (6)........... 1,086,622 11.9%
All executive officers and directors as
a group (7 persons) (7)................. 3,708,924 40.7%
- ------------
* Less than 1%.
(1) The number of shares of Common Stock beneficially owned by each
person is determined under the rules of the Securities and
Exchange Commission, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power
and also any shares of Common Stock which the individual has the
right to acquire within 60 days after May 31, 1996 through the
exercise of any stock option or other right. The inclusion herein
of any shares of Common Stock deemed beneficially owned does not
constitute an admission of beneficial ownership of those shares.
Unless otherwise indicated, the persons named in the table have
sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) The number of shares deemed outstanding includes 8,916,363 shares
outstanding as of May 31, 1996 plus any shares subject to options
held by the person in question that are currently exercisable within
60 days after May 31, 1996.
(3) Includes 197,860 shares purchased by Mr. Crane in March 1996. See
"Certain Transactions."
(4) Includes 15,000 shares issuable upon exercise of outstanding stock
options exercisable within 60 days after May 31, 1996.
-3-
<PAGE>
(5) Includes 1,086,622 shares deemed to be beneficially owned by
Philippi Investments Ltd. Mr. Wooder 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.
(6) Includes 171,022 shares issuable upon exercise of outstanding
warrants.
(7) See footnotes (3) through (6) above.
ELECTION OF DIRECTORS
The persons named in the accompanying form of proxy intend to vote
all valid proxies received in favor of the election of each of the persons named
below as nominees for director unless authority is withheld. Directors elected
at the Annual Meeting will serve until the next Annual Meeting of Shareholders
and until their successors are elected and qualified, subject to the election
and qualification of their successors and to their earlier death, resignation or
removal. In the event that any nominee is unable or unwilling to serve,
discretionary authority is reserved to the persons named in the accompanying
form of proxy to vote for substitute nominees. Management does not anticipate
that such an event will occur. Each director shall be elected by a plurality of
the votes cast.
NOMINEES FOR DIRECTOR
The Company's Bylaws authorize the Board of Directors to set the size
of the board at between three and seven persons. On July __, 1996, the Board of
Directors set the size of the Board at five persons and nominated the following
persons for election as directors. Mr. Robert C. Butler is not standing for
reelection as a director. His service is deeply appreciated.
STANFORD W. CRANE, JR., age 45, has served as President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its inception in April 1992 and, since November 1993, as Senior Vice President -
Product Design and Development. From May 1990 to April 1992, Mr. Crane was
self-employed, principally engaged in the development of the Compass Connector.
From 1984 to April 1990, Mr. Crane was president of Crane Electronics, Inc.,
which supplied advanced interconnection technology for military and commercial
products. From 1980 until 1984, Mr. Crane was an executive at Molex Corporation,
a publicly-held corporation manufacturing and selling electronic interconnect
devices, and served from 1982 to 1984 on the Chairman's staff for the Advanced
Development Committee and assisted in marketing and strategic planning for
domestic and international operations. From 1976 to 1980, Mr. Crane served as a
sales executive for AMP Incorporated, a manufacturer of electronic components.
JAMES T.A. WOODER, age 41, has been a director of the Company since
September 1994. Since November 1993, Mr. Wooder has served as Vice President of
Helix Investments (Canada) Inc., and from December 1989 to November 1993, Mr.
Wooder served as Vice President of Citibank Canada. Helix Investments (Canada)
Inc. is sole shareholder of Helix (PEI) Inc., which is the sole shareholder of
Philippi Investments Ltd., an owner of more than 5% of the Company's outstanding
Common Stock.
-4-
<PAGE>
CLAUD GINGRICH, age 50, has been a director of the Company since
July 1, 1996. Since 1985, Mr. Gingrich has been a Vice President and
partner of L.A. Motley and Company, a consulting and lobbying firm with
a practice in international trade and investment, which Mr. Gingrich
co-founded. From 1983 to 1984, Mr. Gingrich was General Counsel to United
States Trade Representative and Ambassador William E. Brock.
RAO R. TUMALLA, age __, has been___________________________
since ___________. He _____________________________________.
_____________________, age __, has been___________________________
since ___________. He _____________________________________.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL NOMINEES FOR DIRECTOR.
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company held 11 meetings during its
fiscal year ended March 31, 1996. The Board has a standing Audit Committee and a
standing Compensation and Stock Option Committee. The Compensation and Stock
Option Committee and the Audit Committee each met twice during the fiscal year
ended March 31, 1996. The Company does not have a nominating committee. During
the most recent fiscal year, each director attended at least 75% of the meetings
of the Board and any committee on which such director served.
Mr. Butler and Mr. Wooder comprise the Audit Committee of the Board
of Directors, the members of which make recommendations concerning the
engagement of independent public accountants, review with the independent public
accountants the results of the audit engagement, approve professional services
provided by the independent accountants, review the independence of the
independent public accountants, consider the range of audit and non-audit fees
and review the adequacy of the Company's internal accounting controls.
Mr. Butler and Mr. Wooder comprise the Compensation and Stock Option
Committee of the Board of Directors, which makes recommendations to the Board
regarding the executive and employee compensation programs of the Company and
which administers the 1993 Performance Incentive Plan, the 1995 Employee Stock
Incentive Plan and the Nonemployee Director Stock Option Plan. See "Report of
Compensation and Stock Option Committee On Executive Compensation" below.
DIRECTORS' COMPENSATION
All directors hold office until the next annual meeting of
shareholders and the election and qualification of their successors. Directors
who are not employees and do not otherwise receive compensation from the Company
are entitled to a retainer of $2,000 per month for serving on the Board of
Directors in addition to the reimbursement of reasonable expenses incurred at
any meetings.
-5-
<PAGE>
See "Stock Incentive Plans" below for a description of the Company's
Nonemployee Director Stock Option Plan.
SECTION 16 REPORTING
Federal securities laws require the Company's directors, certain of
its officers, and persons owning beneficially more than ten percent of the
Company's Common Stock to file reports of initial ownership and is required to
disclose into this Proxy Statement any failure of the foregoing persons to file
timely those reports during its fiscal year ended March 31, 1996. To the best of
the Company's knowledge, based solely upon a review of copies of reports
furnished to it and written representations that no other reports were required,
all of the Company's directors, officers required to report, and greater than
ten percent beneficial owners made all such filings timely, except that Joseph
A. Sarubbi, William J. Sarubbi and Helix (PEI), Inc. each filed Form 4 late on
three occasions; Kathy M. Klock, Donald C. Webster and Bruce A. Smith each filed
Form 4 late on two occasions; James T. A. Wooder filed Form 4 late on one
occasion; and Roberto Barbosa, Ralph Marrison, William E. Ahearn, Dave Raves,
Robert C. Butler, William J. Sarubbi, Bruce A. Smith, Philippi Investments
Ltd., Helix Investments (Canada), Inc., Donald C. Webster and H.L. Sparks each
filed Form 3 late.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION. The following table sets forth the
compensation paid by the Company for services performed on the Company's behalf
during the last three fiscal years with respect to the Company's Chief Executive
Officer and the Company's most highly compensated executive officers as of March
31, 1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------------------------
FISCAL YEAR LONG-TERM
ENDED OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL MARCH 31 SALARY BONUS COMPENSATION OPTIONS (#) COMPENSATION
- ------------------ ---------- ------ ----- ------------ ------------ ------------
POSITION
- ------------------
<S> <C> <C> <C> <C> <C> <C>
Stanford W. Crane, Jr. 1996 $ 150,000 - - - -
President, 1995 $ 150,000 $ 25,000(1) - - -
Chief Executive Officer and 1994 $ 150,000 - $350,000(2) -
Chairman of the Board
William E. Ahearn(3) 1996 $8,814 - - - -
President, Archistrat 1995 - - - - -
Systems Division 1994 - - - - -
T. Scott Shamlin(4) 1996 $ 89,671 $50,000(5) - 75,000 $6,338(6)
President, Archistrat 1995 - - - - -
Technologies Division 1994 - - - - -
- ---------------------------------
</TABLE>
(1) Bonus paid to Mr. Crane in connection with completion of a
prototype of the Company's Archistrat 4s server and its
installation at two beta test sites.
-6-
<PAGE>
(2) Represents the value in February 1994 of the assignment by the
Company to Mr. Crane of the Company's rights to purchase 197,860
outstanding shares of Common Stock in connection with his employment
agreement Mr. Crane purchased these shares in March 1996 for an
aggregate purchase price of $312,000.
(3) Mr. Ahearn's employment with the Company commenced in March 1996.
Mr. Ahearn's current annual salary is $150,000.
(4) Mr. Shamlin's employment with the Company commenced in November
1995. Mr. Shamlin's current annual salary is $200,000.
(5) Bonus paid to Mr. Shamlin in connection with his recruitment by
the Company.
(6) Consists of car allowance of $6,338.
-7-
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
Option Grants. The following table summarizes option grants
during 1995 to the Named Executive Officers:
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE AT
PERCENT ASSUMED
OF TOTAL ANNUAL
OPTIONS RATES OF
GRANTED STOCK PRICE
TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR
GRANTED IN FISCAL PRICE EXPIRATION OPTION TERM (3)
NAME (#)(1) YEAR ($/SHARE)(2) DATE 5%($) 10%($)
- ---- ------- --------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stanford W. Crane, Jr.................. - - - - - -
William E. Ahearn...................... - - - - - -
T. Scott Shamlin....................... 75,000 14.2% $24.00 11/2/05 $387,750 $835,000
- --------------------------
</TABLE>
(1) Identified options were granted under the Company's 1995 Employee
Stock Incentive Plan on November 2, 1995. Options to purchase
15,000 shares are exercisable as of the date of grant and options to
purchase the remaining 60,000 shares and become exercisable in annual
installments of 15,000 shares each on the first, second, third and
fourth anniversary of grant with full vesting occurring on the fourth
anniversary date.
(2) Equals fair market value of Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These
gains are based on assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date of grant to their
expiration date. Actual gains, if any, on stock option exercises will
depend upon the future performance of the Common Stock and the date
on which the options are exercised.
Option Exercises and Year-End Values. None of the Named
Executive Officers exercised any stock options during the fiscal year
ended March 31, 1996. The following table summarizes the value of
options held by such persons at the end of fiscal year 1996:
-8-
<PAGE>
<TABLE>
<CAPTION>
YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
-------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stanford W. Crane, Jr. - - -
William E. Ahearn................... - - - -
T. Scott Shamlin.................... 15,000 60,000 -(1) -(1)
- -----------------------------
</TABLE>
(1) As of March 29, 1996, the last trading day of 1996, the applicable
option exercise price ($24.00) exceeded the closing sales price
($17.25) of the Company's Common Stock.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee"), which is composed of two non-employee Directors. The Committee is
responsible for establishing and administering the policies which govern both
annual compensation and equity ownership programs. All decisions by the
Committee relating to the compensation of the Company's executive officers are
reviewed by the full Board of Directors. This report is submitted by the
Committee and addresses the Company's policies for 1996 as they apply to
Stanford W. Crane, Jr., the President and Chief Executive Officer of the
Company, and the other two Named Executive Officers.
OVERVIEW AND PHILOSOPHY
The Company's executive compensation program is designed to promote
the following objectives:
- To provide competitive compensation that will help attract,
retain and reward highly qualified executives who contribute
to the long-term success of the Company.
- To align management's interests with the success of the
Company by placing a portion of the executive's compensation
at risk in relation to the Company's performance.
- To align management's interests with stockholders by
including long-term equity incentives.
The Committee believes that the Company's executive compensation
program provides an overall level of compensation that is competitive within its
industry and among companies of comparable size and complexity. To ensure that
compensation is competitive, the Company regularly compares its compensation
practices with those of other similar companies and sets its compensation
guidelines based on this review. The Committee also seeks to achieve an
appropriate balance of the compensation paid to a particular individual and the
compensation paid to other executives both inside the Company and at comparable
companies and attempts to maintain an appropriate mix of salary and incentive
-9-
<PAGE>
compensation. While compensation data are useful guides for comparative
purposes, the Company believes that a successful compensation program also
requires the application of judgment and subjective determinations of individual
performance.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program consists of base salary,
periodic incentive compensation and long-term equity incentives in the form of
stock options. Executive officers also are eligible to participate in certain
benefit programs which are generally available to all employees of the Company,
such as medical and 401(k) savings plans.
BASE SALARY
At the beginning of each fiscal year, the Committee establishes an
annual salary plan for the Company's senior executive officers based on
recommendations made by the Company's Chief Executive Officer. The Committee
attempts to set base salary compensation within its perceived range of salaries
of executive officers with comparable qualifications, experience and
responsibilities at other companies in the same or similar businesses and of
comparable size and success. Because of the Company's limited operating history,
the Committee has not previously reviewed compensation for comparable positions
by reviewing published compensation data as part of its efforts to set the
annual cash compensation for Company executives. Instead, the Committee has
attempted to base salary determinations both upon the Company's financial
performance and upon the individual's performance as measured by certain
subjective non-financial objectives. These non-financial objectives include the
individual's contribution to the Company as a whole, including his or her
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success.
ANNUAL AND LONG-TERM INCENTIVE COMPENSATION
The Company has no formal bonus program for its key employees,
although it is likely the Committee will consider adopting such a program during
the current fiscal year. Occasionally, bonus payments may be made to key
employees based on the achievement of agreed upon performance objectives or as a
part of the recruitment process. During 1996, no bonuses were awarded to Company
executives, except for a recruiting bonus of $50,000 paid to Mr. Shamlin.
The Company's stock option plan is designed to promote the identity
of long-term interests between the Company's employees and its stockholders and
to assist in the retention of executives. The size of option grants is generally
intended by the Committee to reflect the executive's position with the Company
and his or her contributions to the Company. Stock options generally vest over a
four-year period in order to encourage key employees to continue in the employ
of the Company. Stock options are granted at an option price equal to the fair
market value of the Company's Common Stock on the date of grant; however, the
Company reserves the right to grant stock options having exercise prices less
than the fair market value of the Common Stock on the date of grant, to modify
the terms of existing options and to reprice the options as an incentive for
employees to remain with the Company.
-10-
<PAGE>
BENEFITS
The Company's executive officers are entitled to receive medical and
life insurance benefits and to participate in the Company's 401(k) Retirement
Savings Plan on the same basis as other full-time employees of the Company.
The amount of perquisites, as determined in accordance with the rules
of the Securities Exchange Commission relating to executive compensation, did
not exceed 10% of salary and bonus for 1996 for any of the Named Executive
Officers.
SUMMARY OF COMPENSATION OF CHIEF EXECUTIVE OFFICER.
In 1996, Mr. Crane, the Company's President and Chief Executive
Officer, received a salary of $150,000. This amount represents his base salary
for 1996, and no bonus payments were made to him during that year. The amount of
Mr. Crane's base salary and provisions for bonus payments to him are included in
an employment agreement between the Company and him. See "Employment Agreement".
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Company does not believe Section 162(m) of the Internal Revenue
Code, which disallows a tax deduction for certain compensation in excess of $1
million, will generally have an effect on the Company. The Compensation
Committee intends to review the potential effect of Section 162(m) periodically
and in the future may decide to structure the performance-based portion of its
executive officer compensation to comply with Section 162(m).
COMPENSATION AND STOCK OPTION COMMITTEE
James T. A. Wooder
Robert C. Butler
COMPARATIVE STOCK PERFORMANCE
The graph below compares cumulative total stockholder return on the
Company's Common Stock during the period from May 17, 1994 (the date on which
the Company's Common Stock was first registered under the Exchange Act) through
March 31, 1996 with the cumulative total return over the same period of (i) the
Nasdaq Computer Index and (ii) a peer group of publicly-traded companies*
selected by the Company for purposes of this comparison (the "Peer Group"). This
graph assumes the investment of $100 at the close of trading on May 17, 1994 in
the Company's Common Stock, the Russell 2000 Index and the Peer Group
- ---------------------------
* The Peer Group includes the following companies ________________________,
________________________ and ________________________. The stockholder returns
of each such companyu have been weighted to reflect relaative stock market
capitalization.
-11-
<PAGE>
and assumes reinvestment of dividends. Measurement points are May 17, 1994,
March 31, 1995 and March 31, 1996.
COMPARATIVE STOCKHOLDER RETURNS
The Panda Project, Inc., Nasdaq Computer Index and Peer Group*
(Performance results from 5/17/94 through 3/31/96)
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Stock Option Committee are
Robert C. Butler and James T. A. Wooder. No member of the Compensation and
Stock Option Committee was at any time during 1995, or formerly, an officer or
employee of the Company or any subsidiary of the Company. Mr. Wooder 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. See
"Principal Shareholders and Security Ownership of Management" and "Certain
Relationships and Related Transactions."
EMPLOYMENT AGREEMENTS
Mr. Crane entered into an employment agreement with the Company on
November 8, 1993, as amended and restated on February 22, 1994, which expires
on January 1, 1999 (subject to certain termination provisions). Under this
agreement Mr. Crane receives an annual base salary of $150,000, which will
automatically increase to $300,000 in 1997 if the Company's revenues for the
immediately preceding year exceed $75,000,000. In addition, Mr. Crane is
entitled to receive a bonus of $75,000 for the year ending December 31, 1996 if
the Company achieves revenues of $75,000,000 for such year. The revenue goals
contained in Mr. Crane's employment agreement were determined by negotiations
between the Company and Mr. Crane and should not be construed in any way to
imply or predict future revenues of the Company. Mr. Crane is also eligible to
receive discretionary bonuses as determined by the Board of Directors.
Furthermore, the agreement provides that Mr. Crane is entitled to participate in
any medical, stock option and benefit plans that the Company may establish.
Mr. Crane's employment is terminable at will by Mr. Crane upon six
months' prior notice, and is terminable by the Company for cause at any time or
in the event that Mr. Crane becomes disabled and, as a result, is unable to
perform his obligations under the agreement for three consecutive months. In the
event that the agreement is terminated other than as a result of Mr. Crane's
death or disability or for cause, Mr. Crane will be entitled to receive
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an amount equal to the greater of $150,000 or his annual compensation for the
preceding calendar year. In addition, Mr. Crane has agreed not to compete with
the Company for a period of two years after the termination of his employment
provided he receives payments during that period equal to twice the greater of
$150,000 or his salary at the time of such termination, calculated on an
annualized basis.
Mr. Crane has assigned to the Company all improvements or related
discoveries or inventions developed or conceived by him during the term of the
agreement and the two-year non-competition period which (i) the technology
assigned by Mr. Crane to the Company pursuant to the assignment by Mr. Crane in
November 1993 of all of his rights to certain prefabricated semiconductor
packaging, printed circuit board technology and computer technologies and
products, including VSPA, Compass PGA, Well Tech printed circuit board
technology, and Archistrat 4 Computers, as well as certain other products and
technology being developed by him on behalf of the Company, and all related
proprietary information (the "Crane Assignment"), or (ii) would enable the
development of replacements for the products developed by the Company. See
"Certain Relationships and Related Transactions."
Mr. Crane's employment agreement also provides that he may develop
products or technologies ("Unrelated Investigations") unrelated to the Company's
technology and proposed products provided that the cost to the Company of such
Unrelated Investigations is not significant in the reasonable judgment of the
Company's Board of Directors. Mr. Crane has agreed to disclose the results of
any Unrelated Investigations to the Company and negotiate in good faith the
terms pursuant to which the Company may participate in any such products or
technology. If no agreement is reached, Mr. Crane may independently
commercialize such products or technology, but will pay the Company a 5% royalty
on any sales, licensing fees or other remuneration he receives with respect to
Unrelated Investigations.
The Company also has an employment agreement with Mr. Shamlin. This
agreement, which is terminable by either party, provides for (a) payment to Mr.
Shamlin of (i) a $200,000 annual salary, (ii) a one-time sign-on bonus of
$50,000 and (iii) an annual bonus based on attainment of mutually agreed-to
targets and (b) the issuance to Mr. Shamlin of an option to purchase 75,000
shares of the Common Stock of the Company. Such option was issued in November
1995 and is exercisable immediately as to 15,000 shares with the balance
becoming exercisable in four annual installments of 15,000 shares each. See
"Stock Option Grants in Last Fiscal Year." In the event Mr. Shamlin's employment
is terminated without cause, he is entitled to receive six months salary paid on
a monthly basis, and will have the right to exercise the above option for all
shares as to which it is then exercisable, plus 15,000 additional shares (but
not more than 75,000 shares in aggregate).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Upon the formation of the Company in April 1992, the Company issued
2,283,000 shares of Common Stock to Mr. Crane in connection with Mr. Crane's
agreement to assign and license to the Company certain technology and products.
Such license agreement (the "Crane-Panda License") was amended in January 1996.
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Under 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 the Compass PGA product. The Crane-Panda License was
executed in connection with the conversion to a nonexclusive license of the 3M
License described below. 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 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. Pursuant to the 3M License, Mr. Crane is entitled to
receive from 3M, in general, a 5% royalty (decreasing to 2.5% after five years,
and to 2% after ten years) on net sales of the Compass Connector (including
sales to the Company). The 3M License provides in certain circumstances for the
payment of a royalty to Mr. Crane. As of the date of this Memorandum, Mr. Crane
had received no such payments.
In October 1993, the Company settled litigation with Jack R. Moore
and Gary Marvel, former officers and promoters of the Company. In connection
with the settlement, the former officers, or their designees, received 197,860
shares of the Company's Common Stock which were being held by an escrow agent
(the "Escrowed Shares") subject to the Company's or its assignee's right to
repurchase them. In February 1994, the Company's rights to purchase the Escrowed
Shares were assigned to Mr. Crane in connection with his employment
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agreement. In March 1996, Mr. Crane purchased the Escrowed Shares for an
aggregate purchase price of $312,000.
In July 1995, Helix (PEI) Inc., a holder of more than 10% of the
Company's outstanding Common Stock and an affiliate of Mr. Wooder, purchased
54,348 Units from the Company at a purchase price of $73.60 per Unit in
connection with a private placement of the financing, resulting in the issuance
to Helix (PEI) Inc. of 163,044 shares of Common Stock and warrants to purchase
54,348 shares of Common Stock for an ag- gregate consideration of approximately
$4.0 million.
With respect to each transaction between the Company and an affiliate
of the Company, a majority of the disinterested members of the Board of
Directors determined that such transactions were on terms at least as fair as
had they been consummated with unrelated third parties.
AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Company's Board of Directors has adopted a resolution
recommending that the shareholders adopt an amendment to Article III of the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation") to increase the authorized number of shares of the Company's
Common Stock from 20,000,000 to 50,000,000 (the "Amendment"). If the Amendment
is approved, the first paragraph of the Articles of Incorporation, which sets
forth the Company's presently authorized capital stock, will be deleted and the
following will be substituted therefor:
"The total number of shares of capital stock which this
Corporation shall have authority to issue is 50,000,000
of Common Stock, par value $.01 per share."
The Board of Directors believes that the authorized number of shares
of Common Stock should be increased to provide sufficient shares for such
corporate purposes as may be determined by the Board of Directors, including
facilitating broader ownership of the Company's Common Stock by effecting a
stock split or issuing a stock dividend; flexibility for possible future
financing; recruiting and retaining valuable employees and directors by the
issuance of additional stock options or awards; acquiring other businesses in
exchange for shares of the Company's Common Stock; and entering into
collaborative research and development arrangements with other companies in
which Common Stock or the right to acquire Common Stock is part of the
consideration. The Company at present has no commitments, agreements or
undertakings to issue any such additional shares. The Board of Directors
considers the authorization of additional shares of Common Stock advisable to
ensure prompt availability of shares for issuance should the occasion arise. If
required by law or regulation, the Company will seek shareholder approval prior
to any issuance of shares.
The Company intends to apply to the Nasdaq Stock Market, on which the
shares of the Company's Common Stock are currently listed, for the listing
thereon of the additional shares to be issued and reserved for future issuance
as a result of the amendment. Shares of the Company's Common Stock, including
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the additional shares proposed for authorization, do not have preemptive or
similar rights. The issuance of additional shares of Common Stock could have the
effect of diluting existing stockholder earnings per share, book value per share
and voting power.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE AMENDMENT TO
THE ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK.
ADOPTION OF 1995 EMPLOYEE STOCK INCENTIVE PLAN
On November 2, 1995, the Company's Board of Directors adopted,
subject to shareholder approval, the 1995 Employee Stock Incentive Plan (the
"1995 Incentive Plan"), pursuant to which officers and key employees of the
Company and certain of its subsidiaries may be granted stock options, stock
appreciation rights and shares of restricted stock. The Board of Directors
adopted the 1995 Incentive Plan in order to provide officers and key employees
with incentives to make significant and extraordinary contributions to the
long-term growth of the Company, to join the interests of the key employees with
the interests of the Company's shareholders and to facilitate attracting and
retaining key employees. The maximum number of shares with respect to which
stock options or stock appreciation rights may be granted or which may be issued
pursuant to restricted stock awards under the 1995 Incentive Plan shall not
exceed 500,000 shares. The maximum number of shares issuable pursuant to the
1995 Incentive Plan will be increased by the number of shares with respect to
which rights previously granted have expired unexercised. The Compensation and
Stock Option Committee administers the 1995 Incentive Plan and determines the
price and other terms upon which awards will be made. Stock options under the
1995 Incentive Plan may be granted either the form of incentive stock options or
nonstatutory stock options. The option exercise price of incentive stock options
may not be less than the fair market value of the Common Stock on the date of
grant. While the Company currently anticipates that most grants under the 1995
Incentive Plan will consist of stock options, the Company may grant stock
appreciation rights, which represent rights to receive any excess in value of
shares of Common Stock over the exercise price, or restricted stock awards,
which entitle recipients to acquire shares of Common Stock, subject to the right
of the Company to repurchase all or part of such shares at their purchase price
in the event that the conditions specified in the award are not satisfied. As of
May 31, 1996, options to purchase an aggregate of 254,500 shares of Common Stock
at exercise prices ranging from $19.75 to $46.88 per share were outstanding
under the 1995 Incentive Plan. Under a letter agreement between Mr. Ahearn and
the Company, Mr. Ahearn is entitled, subject to the approval of the Board of
Directors, to receive an option under the 1995 Incentive Plan to purchase 20,000
shares of Common Stock. For a discussion of tax consequences of the 1995
Incentive Plan, see "Federal Income Tax Consequences of Incentive Plans."
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ADOPTION OF THE
1995 INCENTIVE PLAN.
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STOCK INCENTIVE PLANS
1993 PERFORMANCE INCENTIVE PLAN
On December 29, 1993, the Company's Board of Directors adopted and
its shareholders subsequently approved the 1993 Performance Incentive Plan (the
"1993 Incentive Plan") pursuant to which officers and key employees of the
Company and certain of its subsidiaries may be granted stock options, stock
appreciation rights and shares of restricted stock. The 1993 Incentive Plan
provides that, at any given time, the maximum number of shares of Common Stock
of the Company with respect to which stock options or stock appreciation rights
may be granted or which may be issued pursuant to restricted stock awards will
equal the greater of 5% of the number of shares of Common Stock that were
outstanding as of the end of the immediately preceding fiscal year of the
Company or 250,000 shares; however, the maximum number of shares issuable
pursuant to the 1993 Incentive Plan will be increased by the number of shares
with respect to which rights previously granted have expired unexercised. As of
May 31, 1996 there were 146,649 shares of Common Stock available for grant under
the 1993 Incentive Plan. The Compensation and Stock Option Committee administers
the 1993 Incentive Plan and determines the price and other terms upon which
awards will be made. Stock options may be granted either in the form of
incentive stock options or nonstatutory stock options. The option exercise price
of incentive stock options may not be less than the fair market value of the
Common Stock on the date of grant. While the Company currently anticipates that
most grants under the 1993 Incentive Plan will consist of stock options, the
Company may grant stock appreciation rights, with represent rights to receive
any excess in value of shares of Common Stock over the exercise price, or
restricted stock awards, which entitle recipients to acquire shares of Common
Stock, subject to the right of the Company to repurchase all or part of such
shares at their purchase price in the event that the conditions specified in the
award are not satisfied. As of May 31, 1996, options to purchase an aggregate of
220,837 shares of Common Stock at exercise prices ranging from $5.50 to $24.50
per share were outstanding under the 1993 Incentive Plan.
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
On December 29, 1993, the Company adopted and its shareholders
approved a Nonemployee Director Stock Option Plan (the "Nonemployee Director
Plan") pursuant to which certain directors of the Company may be granted
nonstatutory stock options to purchase Common Stock of the Company. The
Nonemployee Director Plan provides that on the date of each annual meeting of
shareholders, eligible directors will be granted nonstatutory stock options to
purchase 2,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock at the time of grant. Options granted under the
Nonemployee Director Plan vest annually in four equal installments beginning in
the first anniversary of grant and, unless sooner terminated, expire five years
from the date of grant. An aggregate of 50,000 shares of Common Stock are
authorized to be issued to eligible nonemployee directors under the Nonemployee
Director Plan. As of May 31, 1996, options to purchase 2,000 shares of Common
Stock were outstanding under the Nonemployee Director Plan, with an exercise
price of $42.00 per share. Currently, Mr. Wooder and Mr. Butler are the only
directors eligible to participate in the Nonemployee Director Plan. On August 9,
1995, Mr. Wooder received an option under the Nonemployee Director Plan to
purchase
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an aggregate of 2,000 shares of Common Stock of the Company at an exercise price
of $42.00 per share.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK INCENTIVE PLANS
The Company understands that, under current federal income tax rules,
awards under the 1993 Incentive Plan, 1995 Incentive Plan and Nonemployee
Director Plan have the consequences described below:
The holder of an incentive stock option will not be treated as
receiving taxable income upon either the grant or exercise of such option;
however, the excess of the fair market value of the stock subject to the option
at the time of exercise over the option price is a tax preference item in the
year of exercise and is thus a component of alternative minimum taxable income
in the year of exercise. Provided that the stock acquired pursuant to an
incentive stock option is not sold or otherwise disposed of within two years
from the date of grant of the option and is held for at least one year after the
date of exercise of the option, any gain or loss resulting upon disposition of
the shares will be treated as capital gain or loss and will be treated as long
term capital gain or loss if such stock is held for more than one year. If stock
acquired upon exercise of an incentive stock option is disposed of prior to the
expiration of such holding periods, the optionee will realize ordinary income in
the year of such disposition in an amount equal to the excess of the fair market
value of the stock on the date of exercise over the option price. Any gain in
excess of such ordinary income amount generally will be taxed as capital gains.
The Company would be entitled to a tax deduction at the time of sale equal to
the amount that compensation income is realized by the participant.
The holder of a nonstatutory stock option will not be treated as
receiving taxable income upon the grant of such option. Upon exercise thereof
the optionee will realize ordinary income (except where restricted stock is
acquired upon exercise of the option) in an amount measured by the excess of the
fair market value of the shares on the date of exercise over the option price,
and the Company will be entitled to a corresponding deduction. Assuming the
shares of Common Stock received upon exercise of a nonstatutory stock option
constitute capital assets in the optionee's hands, any gain or loss upon
disposition of the shares will be treated as capital gain or loss, which will be
long-term if the shares of Common Stock have been held longer than one year.
To the extent that the aggregate fair market value of stock with
respect to which incentive stock options are exercisable for the first time in
any calendar year exceeds $100,000, the options will be treated as nonstatutory
stock options.
An employee who has been granted the right to exercise a stock
appreciation right will not realize taxable income at the time of the grant, and
the Company will not be entitled to a deduction at that time; however, shares or
cash delivered upon exercise of such stock appreciation right generally will be
taxable as ordinary income to the employee, and the Company will be entitled to
a corresponding deduction.
Generally, an employee receiving restricted stock realizes ordinary
income in an amount equal to the fair market value of such stock less any amount
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paid for such stock at the time when the employee's rights with respect to such
stock are no longer subject to a substantial risk of forfeiture. However, the
recipient may make a special election provided in the Internal Revenue Code to
be taxed at the time of the receipt of the award (as if the restrictions did not
exist), but the recipient will not be allowed any deduction if the restricted
stock is later forfeited. Dividends, if any, paid to the holder of the
restricted stock award during the restriction period will be taxable as ordinary
compensation income (or as dividend income if the election referred to in the
preceding sentence has been made). The Company also believes that it will be
entitled to a tax deduction at the time and equal to the amount that ordinary
compensation income is realized by the recipient of the restricted stock.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Price Waterhouse LLP
to continue as independent certified public accountants for the Company for the
fiscal year ending March 31, 1997. Price Waterhouse LLP has been acting as
independent certified public accounts of the Company since 1993. Unless other-
wise indicated, properly executed proxies will be voted for the ratification of
the appointment of Price Waterhouse LLP, independent certified public
accountants, to audit the books and accounts of the Company for the fiscal year
ending March 31, 1997.
Representatives of Price Waterhouse LLP are expected to be present
at the Annual Meeting, will be given an opportunity to make a statement if they
desire to do so, and will also be available to respond to appropriate questions
from shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1997.
SHAREHOLDER PROPOSALS
Shareholder proposals which are to be considered for inclusion in the
proxy materials of the Company for its 1997 Annual Meeting of Shareholders must
be received by the Company by March 24, 1997.
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ADDITIONAL INFORMATION
The Board of Directors is not aware of any matters to be presented
at the meeting other than the matters described herein and does not intend to
bring any other matters before the meeting. However, if any other matters should
come before the meeting, or any adjournment thereof, the persons named in the
enclosed proxy will have discretionary authority to vote all proxies in
accordance with their best judgment.
Kindly date, sign and return the enclosed proxy card.
By Order of the Board of Directors
STANFORD W. CRANE, JR.
President and
Chief Executive Officer
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THE PANDA PROJECT, INC
1995 EMPLOYEE STOCK INCENTIVE PLAN
1. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "Plan" shall mean The Panda Project, Inc. 1995 Employee Stock
Incentive Plan.
(b) "Corporation" shall mean The Panda Project, Inc., a Florida
corporation, or any successor thereof.
(c) "Committee" shall mean a committee consisting of two or more
"disinterested directors" as such term is defined in Rule
16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any similar successor
rule, appointed by the Board of Directors of the Corporation
to administer the Plan or, if no such committee is appointed,
the Board of Directors as a whole shall be the Committee.
(d) "Participant" shall mean any individual designated by the
Committee under Paragraph 6, for participation in the Plan.
(e) "Nonqualified Option" shall mean an option to purchase Common
Stock of the Corporation which meets the requirements set
forth in the Plan but does not meet the definition of an
incentive stock option set forth in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The
stock option agreement for a Nonqualified Option shall state
that the option is intended to be a Nonqualified Option.
(f) "Incentive Option" shall mean an option to purchase Common
Stock of the Corporation which meets the requirements set
forth in the Plan and also meets the definition of an
incentive stock option set forth in Section 422 of the Code.
The stock option agreement for an Incentive Option shall state
that the option is intended to be an Incentive Option.
(g) "Stock appreciation right" shall mean a right to receive the
appreciation in value, or percent thereof, of a specified
number of shares of the Common Stock of the Corporation, as
provided in Paragraph 12.
(h) "Subsidiary" shall mean any corporation in which the
Corporation owns, directly or indirectly, stock possessing
more than twenty-five percent of the combined voting power of
all classes of stock, provided, however, that an Incentive
Option may be granted to an employee of a Subsidiary only if
the Corporation owns, directly or indirectly, 50% or more of
the total combined voting power of all classes of stock of the
Subsidiary.
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(i) "Restricted stock award" shall mean a grant of Common Stock of
the Corporation which is subject to restrictions against
transfer, forfeiture and such other terms and conditions
determined by the Committee, as provided in Paragraph 18.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide key employees
(including officers who are also key employees) of the Corporation and its
Subsidiaries with incentives to make significant and extraordinary contributions
to the long-term performance and growth of the Corporation and its Subsidiaries,
to join the interests of the key employees with the interests of the
shareholders of the Corporation, and to facilitate attracting and retaining key
employees.
3. ADMINISTRATION: The Plan shall be administered by the Committee. Subject
to the provisions of the Plan, the Committee shall determine, from those
eligible to be Participants under the Plan, the persons to be granted stock
options, stock appreciation rights and restricted stock, the amount of stock or
rights to be optioned or granted to each such person, and the terms and
conditions of any stock options, stock appreciation rights and restricted stock.
The Committee may delegate to the Chief Executive Officer and/or the Chief
Financial Officer of the Corporation such administrative duties under the Plan
as may permissibly be delegated under applicable laws and regulations, as well
as the authority to determine, from those persons who (i) are eligible to be
Participants under the Plan, and (ii) are not subject to the provisions of
Section 16(b) of the Exchange Act with respect to the Corporation, the persons
to be granted stock options, stock appreciation rights and restricted stock, the
amount of stock or rights to be optioned or granted to each such person, and the
terms and conditions of any stock options, stock appreciation rights and
restricted stock. Such delegation, if made by the Committee, may be made subject
to conditions and limitations adopted by the Committee from time to time.
Subject to the provisions of the Plan, the Committee is authorized to interpret
the Plan, to promulgate, amend and rescind rules and regulations relating to the
Plan and to make all other determinations necessary or advisable for its
administration. Interpretation and construction of any provision of the Plan by
the Committee shall be final and conclusive. Acts approved by a majority of the
members present at any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee, shall be the acts of the Committee.
4. INDEMNIFICATION OF COMMITTEE MEMBERS: In addition to such other rights
of indemnification as they may have, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any option,
stock appreciation right or restricted stock granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by the Board of Directors of the Corporation) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member has acted in bad faith;
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provided, however, that within sixty days after receipt of notice of institution
of any such action, suit or proceeding a Committee member shall offer the
Corporation in writing the opportunity, at its own cost, to handle and defend
the same.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number of shares
of Common Stock which may be issued pursuant to restricted stock awards or with
respect to which stock options or stock appreciation rights may be granted under
the Plan shall be five hundred thousand (500,000) shares. Shares of Common Stock
shall be made available for issuance pursuant to the Plan either from shares of
Common Stock reacquired by the Corporation in the open market or by private
purchase or from authorized but unissued shares. Any shares of Common Stock with
respect to which stock options or stock appreciation rights have expired or
terminated for any reason other than exercise of such stock options (or related
stock appreciation rights) or such stock appreciation rights, and the number of
shares of Common Stock covered by a restricted stock award which are forfeited
back to the Corporation, shall again be available for issuance pursuant to the
Plan.
The number of shares of Common Stock subject to each outstanding stock option or
stock appreciation right or restricted stock award, the option price with
respect to outstanding stock options, the grant value with respect to
outstanding stock appreciation rights, and the aggregate number of shares
available at any time under the Plan shall be subject to such adjustment as the
Committee, in its discretion, deems appropriate to reflect such events as stock
dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by the Corporation; provided, however, that no fractional
shares shall be issued pursuant to the Plan, no rights may be granted under the
Plan with respect to fractional shares, and any fractional shares resulting from
such adjustments shall be eliminated from any outstanding stock option, stock
appreciation right, or restricted stock award.
6. PARTICIPANTS: The Committee shall determine and designate from time to
time, in its sole discretion, those key employees (including officers who are
also key employees) of the Corporation or any Subsidiary to whom stock options,
stock appreciations rights, or restricted stock are to be granted or awarded and
who thereby become Participants under the Plan; provided, however, that
Incentive Options may be granted to (i) key employees of a Subsidiary only if
the Corporation owns, directly or indirectly, 50% or more of the total combined
voting power of all classes of stock of the Subsidiary; and (ii) in all
circumstances, only to key employees eligible to receive Incentive Options
pursuant to Section 422 of the Code.
7. WRITTEN AGREEMENT: Each stock option, stock appreciation right and
restricted stock award shall be evidenced by a written agreement between the
Corporation and the Participant and shall contain such provisions as may be
approved by the Committee. Such agreements shall constitute binding contracts
between the Corporation and the Participant, and every Participant, upon
acceptance of such agreement, shall be bound by the terms and restrictions of
the Plan and of such agreement. The terms of each such agreement shall be in
accordance with the Plan, but the agreements may include such additional
provisions and restrictions determined by the Committee,
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provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan.
8. ALLOTMENT OF SHARES: The Committee shall determine and fix the number
of shares of stock with respect to which each Participant may be granted stock
options and stock appreciation rights and the number of shares of restricted
stock which each Participant may be awarded; provided, however, that no
Incentive Option may be granted under the Plan to any one Participant which
would result in the aggregate fair market value, determined as of the date the
option is granted, of underlying stock with respect to which Incentive Options
are exercisable for the first time by such Participant during any calendar year
under any plan maintained by the Corporation (or any parent or subsidiary
corporation of the Corporation) exceeding $100,000.
9. STOCK OPTIONS: Subject to the terms of the Plan, the Committee may grant
to Participants either Incentive Options, Nonqualified Options or any
combination thereof. Each option granted under the Plan shall designate the
number of shares covered thereby, if any, with respect to which the option is an
Incentive Option, and the number of shares covered thereby, if any, with respect
to which the option is a Nonqualified Option. Incentive Options granted pursuant
to the Plan shall be subject to approval of the Plan by the shareholders of the
Corporation within 12 months of the date as of which the Board of Directors of
the Corporation adopts the Plan. Although Incentive Options may be granted prior
to shareholder approval of the Plan, no Incentive Option may be exercised prior
to shareholder approval. If shareholder approval is not obtained within the
above-mentioned 12 month period, all stock options theretofore granted pursuant
to the Plan shall be Nonqualified Options.
10. STOCK OPTION PRICE: Subject to the rules set forth in this Paragraph 10,
at the time any stock option is granted, the Committee shall establish the price
per share for which the shares covered by the option may be purchased. With
respect to an Incentive Option, such option price shall not be less than 100% of
the fair market value of the stock on the date on which such option is granted;
provided, however, that with respect to an Incentive Option granted to an
employee who at the time of the grant owns (after applying the attribution rules
of Section 424(d) of the Code) more than 10% of the total combined voting stock
of the Corporation or of any parent or subsidiary, the option price shall not be
less than 110% of the fair market value of the stock on the date such option is
granted. With respect to a Nonqualified Option, the option price shall not be
less than the par value of the stock. Fair market value of a share shall be
determined by the Committee and may, among other methods, be established as the
last bid price for the Corporation's Common Stock, as reported on any exchange
or other market on which the shares of Common Stock of the Corporation shall be
traded on the date the option is granted. The option price shall be subject to
adjustment in accordance with the provisions of Paragraph 5 of the Plan.
11. PAYMENT OF STOCK OPTION PRICE: At the time of the exercise in whole or
in part of any stock option granted hereunder, payment of the option price in
full in cash or, with the consent of the Committee, in Common Stock of the
Corporation or by a promissory note payable to the order of the Corporation
which is acceptable to the Committee, shall be made by the Participant for all
shares so purchased. Such payment may, with the consent of the Committee, also
consist of a cash down
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payment and delivery of such a promissory note in the amount of the unpaid
exercise price. In the discretion of and subject to such conditions as may be
established by the Committee, payment of the option price may also be made by
the Corporation retaining from the shares to be delivered upon exercise of the
stock option that number of shares having a fair market value on the date of
exercise equal to the option price of the number of shares with respect to which
the Participant exercises the stock option. Such payment may also be made in
such other manner as the Committee determines is appropriate, in its sole
discretion. No Participant shall have any of the rights of a shareholder of the
Corporation under any stock option until the actual issuance of shares to said
Participant, and prior to such issuance no adjustment shall be made for
dividends, distributions or other rights in respect of such shares, except as
provided in Paragraph 5.
12. STOCK APPRECIATION RIGHTS: Subject to the terms of the Plan, the
Committee may grant stock appreciation rights to Participants either in
conjunction with, or independently of, any stock options granted under the Plan.
A stock appreciation right granted in conjunction with a stock option may be an
alternative right wherein the exercise of the stock option terminates the stock
appreciation right to the extent of the number of shares purchased upon exercise
of the stock option and, correspondingly, the exercise of the stock appreciation
right terminates the stock option to the extent of the number of shares with
respect to which the stock appreciation right is exercised. Alternatively, a
stock appreciation right granted in conjunction with a stock option may be an
additional right wherein both the stock appreciation right and the stock option
may be exercised; provided, however, that a stock appreciation right may not be
granted in conjunction with an Incentive Option under circumstances in which the
exercise of the stock appreciation right affects the right to exercise the
Incentive Option or vice versa, unless the stock appreciation right, by its
terms, meets all of the following requirements:
(a) The stock appreciation right will expire no later than the
Incentive Option;
(b) The stock appreciation right may be for no more than the
difference between the option price of the Incentive Option
and the fair market value of the shares subject to the
Incentive Option at the time the stock appreciation right is
exercised;
(c) The stock appreciation right is transferable only when the
Incentive Option is transferable, and under the same
conditions;
(d) The stock appreciation right may be exercised only when the
Incentive Option is eligible to be exercised; and
(e) The stock appreciation right may be exercised only when the
fair market value of the shares subject to the Incentive
Option exceeds the option price of the Incentive
Option.
Upon exercise of a stock appreciation right, a Participant shall be entitled to
receive, without payment to the Corporation (except for applicable withholding
taxes), an amount equal to the applicable
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percentage, as specified in the stock appreciation right, of the excess of (i)
the then aggregate fair market value of the number of shares with respect to
which the Participant exercises the stock appreciation right, over (ii) the
aggregate fair market value of such number of shares at the time the stock
appreciation right was granted. This amount shall be payable by the Corporation,
in the sole discretion of the Committee or as provided in the grant of the stock
appreciation right, in cash, in shares of Common Stock of the Corporation or any
combination thereof, at the times provided in the grant of the right.
13. GRANTING AND EXERCISE OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS:
Each stock option and stock appreciation right granted hereunder shall be
exercisable at any such time or times or in any such installments as may be
determined by the Committee at the time of the grant. In addition, the aggregate
fair market value (determined at the time the option is granted) of the stock
with respect to which Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
A Participant may exercise a stock option or stock appreciation right, if then
exercisable, in whole or in part by delivery to the Corporation of written
notice of the exercise, in such form as the Committee may prescribe,
accompanied, in the case of a stock option, by (i) full payment for the shares
with respect to which the stock option is exercised, or (ii) in the sole
discretion of the Committee, irrevocable instructions to a stock broker to
promptly deliver to the Corporation full payment for the shares with respect to
which the stock option is exercised from the proceeds of the stock broker's sale
of or loan against the shares. Except as provided in Paragraph 17, stock options
and stock appreciation rights may be exercised only while the Participant is an
employee of the Corporation or a Subsidiary.
Successive stock options and stock appreciation rights may be granted to the
same Participant, whether or not the stock option(s) and stock appreciation
right(s) previously granted to such Participant remain unexercised. A
Participant may exercise a stock option or a stock appreciation right, if then
exercisable, notwithstanding that stock options and stock appreciation rights
previously granted to such Participant remain unexercised.
14. NON-TRANSFERABILITY OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: No
stock option or stock appreciation right (or any interest therein) granted under
the Plan to a Participant shall be transferable by such Participant otherwise
than by will, or by the laws of descent and distribution, and such option and
stock appreciation right shall be exercisable, during the lifetime of the
Participant, only by the Participant.
15. TERM OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: If not sooner
terminated, each stock option and stock appreciation right granted hereunder
shall expire not more than 10 years from the date of the granting thereof;
provided, however, that with respect to an Incentive Option or a related stock
appreciation right granted to a Participant who, at the time of the grant, owns
(after applying the attribution rules of Section 424(d) of the Code) more than
10% of the total combined
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voting stock of all classes of stock of the Corporation or of any parent or
subsidiary, such option and stock appreciation right shall expire not more than
five (5) years after the date of granting thereof.
16. CONTINUATION OF EMPLOYMENT: The Committee may require, in its
discretion, that any Participant under the Plan to whom a stock option or stock
appreciation right shall be granted shall agree in writing as a condition of the
granting of such stock option or stock appreciation right to remain in the
employ of the Corporation or a Subsidiary for a designated minimum period from
the date of the granting of such stock option or stock appreciation right as
shall be fixed by the Committee.
17. TERMINATION OF EMPLOYMENT: If the employment of a Participant by the
Corporation or a Subsidiary shall be terminated, the Committee may, in its
discretion, permit the exercise of stock options and stock appreciation rights
granted to such Participant (i) for a period not to exceed one year following
such termination of employment with respect to Incentive Options, and (ii) for a
period not to extend beyond the expiration date with respect to Nonqualified
Options; provided, however, that no Incentive Option or related stock
appreciation right may be exercised after three months following a Participant's
termination of employment, unless such termination of employment is due to the
Participant's death or permanent disability, in which event the Incentive Option
and related stock appreciation right may be permitted to be exercised for up to
one year following the Participant's termination of employment for such reason.
In no event, however, shall a stock option or stock appreciation right be
exercisable subsequent to its expiration date and, furthermore, a stock option
or stock appreciation right may only be exercised after termination of a
Participant's employment to the extent exercisable on the date of termination of
employment or as a result of termination of employment.
18. RESTRICTED STOCK AWARDS: Subject to the terms of the Plan, the
Committee may award shares of restricted stock to Participants. All shares of
restricted stock granted to Participants under the Plan shall be subject to the
following terms and conditions (and to such other terms and conditions
prescribed by the Committee):
(a) At the time of each award of restricted shares, there shall be
established for the shares a restricted period, which shall be
no less than six months. Such restricted period may differ
among Participants and may have different expiration dates
with respect to portions of shares covered by the same award.
(b) Shares of restricted stock awarded to Participants may not be
sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered during the restricted period applicable
to such shares.
Except for such restrictions on transfer, a Participant shall
have all of the rights of a stockholder in respect of
restricted shares awarded to him including, but not limited
to, the right to receive dividends on, and the right to vote,
the shares.
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(c) If a Participant ceases to be employed by the Corporation or
a Subsidiary for any reason other than death or permanent
disability, all shares theretofore awarded to the Participant
which are still subject to the restrictions imposed by
paragraph 18(b) shall upon such termination of employment be
forfeited and transferred back to the Corporation, without
payment of any consideration by the Corporation; provided,
however, that in the event such employment is terminated by
action of the Corporation or a Subsidiary without cause or by
agreement between the Corporation or a Subsidiary and the
Participant, the Committee may, in its discretion, release
some or all of the shares from the restrictions.
(d) If a Participant ceases to be employed by the Corporation or a
Subsidiary by reason of death or permanent disability, the
restrictions imposed by Paragraph 18(b) shall lapse with
respect to shares then subject to such restrictions, unless
otherwise determined by the Committee.
(e) Stock certificates shall be issued in respect of shares of
restricted stock awarded hereunder and shall be registered in
the name of the Participant. Such certificates shall be
deposited with the Corporation or its designee, together with
a stock power endorsed in blank, and, in the discretion of the
Committee, a legend shall be placed upon such certificates
reflecting that the shares represented thereby are subject to
restrictions against transfer and forfeiture.
(f) At the expiration of the restricted period applicable to the
shares, the Corporation shall deliver to the Participant or
the legal representative of the Participant's estate the stock
certificates deposited with it or its designee and as to which
the restricted period has expired. If a legend has been placed
on such certificates, the Corporation shall cause such
certificates to be reissued without the legend.
In the case of events such as stock dividends, stock splits, recapitalizations,
mergers, consolidations or reorganizations of or by the Corporation, any stock,
securities or other property which a Participant receives or is entitled to
receive by reason of his ownership of restricted shares shall, unless otherwise
determined by the Committee, be subject to the same restrictions applicable to
the restricted shares and shall be deposited with the Corporation or its
designee.
19. INVESTMENT PURPOSE: If the Committee in its discretion determines that
as a matter of law such procedure is or may be desirable, it may require a
Participant, upon any acquisition of stock hereunder (whether by reason of the
exercise of stock options or stock appreciation rights or the award of
restricted shares) and as a condition to the Corporation's obligation to deliver
certificates representing such shares, to execute and deliver to the Corporation
a written statement, in form satisfactory to the Committee, representing and
warranting that the Participant's acquisition of shares of stock shall be for
such person's own account, for investment and not with a view to the resale or
distribution thereof and that any subsequent offer for sale or sale of any such
shares shall be made either pursuant to (a) a Registration Statement on an
appropriate form under the Securities Act of
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1933, as amended (the "Securities Act"), which Registration Statement has become
effective and is current with respect to the shares being offered and sold, or
(b) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the Participant shall, prior to any offer
for sale or sale of such shares, obtain a favorable written opinion from counsel
for or approved by the Corporation as to the availability of such exemption. The
Corporation may endorse an appropriate legend referring to the foregoing
restriction upon the certificate or certificates representing any shares issued
or transferred to the Participant under this Plan.
20. RESTRICTIONS UNDER RULE 16B-3: Unless a Participant could otherwise
transfer a stock option, stock appreciation right, shares of Common Stock issued
upon exercise of a stock option or stock appreciation right, or restricted stock
granted under the Plan without incurring liability under Section 16(b) of the
Exchange Act, (i) Common Stock issued under the Plan, other than Common Stock
issued upon exercise or conversion of a stock option or stock appreciation right
granted under the Plan, shall be held for at least six months from the date of
acquisition; (ii) with respect to a stock option or stock appreciation right
issued under the Plan, at least six months shall elapse from the date of
acquisition of a stock option or stock appreciation right to the date of
disposition of the stock option or stock appreciation right (other than upon
exercise or conversion) or the underlying Common Stock; and (iii) any grant in
the nature of a stock appreciation right must be held for six months from the
date of grant to the date of cash settlement.
It is the intent of the Corporation that this Plan comply in all respects with
Rule 16b-3 in connection with any grant of stock options, stock appreciation
rights or restricted stock to a person who is subject to Section 16 of the
Exchange Act. Accordingly, if any provision of this Plan or any written
agreement entered into pursuant to Section 7 does not comply with the
requirements of Rule 16b-3 as then applicable to any such person, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements with respect to such person.
If a Participant who is granted a stock appreciation right is subject to Section
16 of the Exchange Act, then any election to exercise as well as any actual
exercise of his stock appreciation right shall be made only during the period
beginning on the third business day and ending on the twelfth business day
following the release for publication by the Corporation of quarterly or annual
summary statements of sales and earnings. Notwithstanding anything contained in
the Plan to the contrary, stock appreciation rights shall always be granted and
exercised in such a manner as to conform to the provisions of Rule 16b-3(e), or
any replacement rule, adopted pursuant to the provisions of the Exchange Act.
21. RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in the Plan or in any
stock option, stock appreciation right or restricted stock granted or awarded
pursuant to the Plan, nor any action taken by the Committee hereunder, shall
confer upon any Participant any right with respect to continuation of employment
by the Corporation or a Subsidiary as an employee nor interfere in any way with
the right of the Corporation or a Subsidiary to terminate such person's
employment as an employee at any time with or without cause.
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22. WITHHOLDING PAYMENTS: If upon the exercise of a Nonqualified Option or
stock appreciation right, or upon the award of restricted stock or the
expiration of restrictions applicable to restricted stock, or upon a
disqualifying disposition (within the meaning of Section 422 of the Code) of
shares acquired upon exercise of an Incentive Option, there shall be payable by
the Corporation or a Subsidiary any amount for income tax withholding, in the
Committee's sole discretion, either the Corporation shall appropriately reduce
the amount of stock or cash to be paid to the Participant or the Participant
shall pay such amount to the Corporation or Subsidiary to reimburse it for such
income tax withholding. The Committee may, in its sole discretion, permit
Participants to satisfy such withholding obligations, in whole or in part, by
electing to have the amount of Common Stock delivered or deliverable by the
Corporation upon exercise of a stock option or stock appreciation right or upon
award of restricted stock appropriately reduced, or by electing to tender Common
Stock back to the Corporation subsequent to exercise of a stock option or stock
appreciation right or award of restricted stock, to reimburse the Corporation
for such income tax withholding, subject to such rules and regulations as the
Committee may adopt. The Committee may make such other arrangements with respect
to income tax withholding as it shall determine.
23. EFFECTIVENESS OF PLAN: The Plan shall be effective as of the date the
Board of Directors of the Corporation adopts the Plan. Stock options, stock
appreciation rights and restricted stock may be granted or awarded to a
Participant who is subject to Section 16 of the Exchange Act prior to
shareholder approval of the Plan, but each such stock option, stock appreciation
right or restricted stock grant shall be subject to shareholder approval of the
Plan No stock option or stock appreciation right granted to such a Participant
may be exercised prior to shareholder approval, and any restricted stock awarded
to such a Participant is subject to forfeiture if such shareholder approval is
not obtained.
24. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be abandoned
or terminated at any time by the Board of Directors of the Corporation. Unless
sooner terminated, the Plan shall terminate on the date ten years after its
adoption by the Board of Directors, and no stock options, stock appreciation
rights or restricted stock may be granted or awarded thereafter. The termination
of the Plan shall not affect the validity of any stock option, stock
appreciation right or restricted stock outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law or governmental
regulations, or for any other lawful purpose, the Board of Directors shall have
the right, without approval of the shareholders of the Corporation, to amend or
revise the terms of the Plan at any time; provided, however, that no such
amendment or revision shall, except as contemplated by Paragraph 5, (i) increase
the maximum number of shares in the aggregate that are subject to the Plan, (ii)
change the class of persons who are eligible to be Participants under the Plan,
or (iii) or alter or impair any stock option, stock appreciation right, or
restricted stock which shall have been previously granted or awarded under the
Plan, without the consent of the holder thereof.
As adopted by the Board of Directors on November 2, 1995.
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Preliminary Copy
CONFIDENTIAL
For use of
the Commission Only
THE PANDA PROJECT, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 16, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Stanford
W. Crane, Jr. and C. Daryl Hollis, and each of them, with full power of
substitution, as proxies to represent and vote, as designated herein, all shares
of stock of THE PANDA PROJECT, INC. (the "Company"), which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
of the Company to be held at the Marriott Crocker Center Hotel & Resort, 5150
Town Center Circle, Boca Raton, Florida on Friday, August 16, 1996 at 10:00
a.m., local time, and at any adjournment thereof (the "Meeting").
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given, this
proxy will be voted FOR all proposals. Attendance of the undersigned at the
meeting or at any adjournment thereof will not be deemed to revoke this proxy
unless the undersigned shall revoke this proxy in writing or shall deliver a
subsequently dated proxy to the Secretary of the Company or shall vote in
person at the Meeting.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE.
1. To elect the following five (5) directors (except as marked below) for
the ensuing year.
NOMINEES: Stanford W. Crane, Jr., James T.A. Wooder, Claud Gingrich,
_______________________ and _____________________________
[ ] FOR all nominees (except as marked below)
[ ] WITHHOLD authority to vote for all nominees
For all nominees except the following nominee(s):
________________________________________________________________________________
(CONTINUED AND TO BE SIGNED, ON REVERSE SIDE)
<PAGE>
2. To approve the Company's 1995 Employee Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Company's Amended and Restated Articles
of Incorporation to increase the authorized number of shares of Common
Stock from 20,000,000 shares to 50,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection by the Board of Directors of Price Waterhouse
LLP as the Company's independent accountants for the current fiscal
year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _______________________ , 1996
______________________________________
Signature
______________________________________
Signature if held jointly
Please sign exactly as name appears
hereon. If the stock is registered
in the names of two or more persons,
each should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers
should add their titles.
