SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): APRIL 14, 1997
THE PANDA PROJECT, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-24030 65-0323354
(State of other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
901 YAMATO ROAD
BOCA RATON, FLORIDA 33431
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 994-2300
-------------------------------
(Former name or former address, if changed since last report)
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
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4.1 Form of 4% Subordinated
Convertible Debenture of the
Company
4.2 Form of Common Stock Purchase
Warrant Issued to Dusseldorf
99.1 Offshore Securities Subscription
Agreement dated April 2, 1997
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
On April 14, 1997, The Panda Project, Inc. (the "Company") completed a
private placement of subordinated convertible debentures (the "Debentures") in
the aggregate principal amount of $4,800,000.
The Company plans to use the proceeds of this transaction to expand
manufacturing capacity for the Company's VSPA semiconductor package and for
working capital and general corporate purposes.
In connection with the transaction, the Company paid a fee of $384,000
to Dusseldorf Securities Limited ("Dusseldorf"), of which $192,000 was paid in
cash and the balance by the issuance to Dusseldorf of 30,918 shares of Common
Stock (the "DSL Shares"). In addition, the Company agreed to issue to Dusseldorf
and Jefferies & Company, Inc. ("Jefferies"), warrants (the "Warrants"),
exercisable during the period beginning April 2, 1997 and ending April 2, 2002
to purchase 42,667 shares and 27,429 shares, respectively, of Common Stock of
the Company ("Common Stock") at respective exercise prices of $6.75 and $7.00
per share. The Debentures, the DSL Shares and the Dusseldorf warrant have been
issued pursuant to an exemption from registration under Regulation S under the
Securities Act of 1933; such issuance was made solely to non-U.S. persons in an
offshore transaction and resale of such securities is restricted in the manner
provided in Regulation S.
The principal amount of the Debentures is convertible into shares of
Common Stock at a price equal to the lesser of $5.625 or 82% of the average
closing bid price for the Common Stock for the five days preceding the date of
conversion. Transfer of the Debentures and the shares issuable upon conversion
thereof is prohibited until May 29, 1997 with respect to the first $2,400,000 of
principal, and until June 13, 1997 with respect to the remaining $2,400,000 of
principal, except pursuant to registration under the Securities Act of 1933 or
an exemption therefrom. The Debentures bear interest at the rate of 4% per
annum, payable in cash or Common Stock, and mature on April 2, 1999, at which
time all outstanding principal and accrued but unpaid interest
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shall be converted to Common Stock. Any conversion of the Debentures is subject
to the condition that in no event shall the aggregate number of shares issuable
upon conversion of the Debenture equal or exceed 2,071,249 shares, i.e. 20% of
the Company's outstanding stock before the transaction. The Company shall have
the right to redeem the Debentures with 60 days notice to the purchasers at a
redemption price equal to 122% of the outstanding principal amount.
In connection with this transaction, the Company has agreed to file a
Registration Statement on Form S-3 with the Securities and Exchange Commission
to effect the registration of the DSL Shares for resale. The Company has also
agreed to effect the registration of the shares issuable upon conversion of the
Debentures in the event of certain amendments to Regulation S and has granted
certain piggyback registration rights to the holders of the Warrants.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PANDA PROJECT, INC.
By: /s/ C. DARYL HOLLIS
---------------------------
C. Daryl Hollis
Dated: April 21, 1997 Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Form of 4% Subordinated Convertible Debenture of the Company
4.2 Form of Common Stock Purchase Warrant Issued to Dusseldorf
99.1 Offshore Securities Subscription Agreement dated April 2, 1997
EXHIBIT 4.1
THIS SUBORDINATED CONVERTIBLE DEBENTURE (THE "DEBENTURE") AND THE SHARES OF
COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE LAWS OF ANY OTHER
JURISDICTION, IN RELIANCE UPON REGULATION S UNDER THE ACT. UNTIL THE FORTY-FIFTH
(45TH) DAY AFTER ISSUANCE OF THE DEBENTURES WITH RESPECT TO 50% OF THE PRINCIPAL
AMOUNT OF THE DEBENTURES AND THE SIXTIETH (60TH) DAY AFTER ISSUANCE OF THE
DEBENTURES WITH RESPECT TO THE BALANCE OF SUCH PRINCIPAL AMOUNT, AND AS
OTHERWISE PROVIDED HEREIN, AFTER THE SALE OF THIS DEBENTURE PURSUANT TO
REGULATION S IS COMPLETED, NEITHER THIS CONVERTIBLE DEBENTURE NOR THE SHARES
ISSUABLE HEREUNDER MAY BE OFFERED, SOLD OR TRANSFERRED (INCLUDING ANY INTEREST
THEREIN) IN THE UNITED STATES OR TO A "U.S. PERSON" (AS DEFINED IN REGULATION S
PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON,
EXCEPT AS PROVIDED IN SAID REGULATION S. ANY RESALE THEREAFTER MUST BE PURSUANT
TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. NEITHER THE PANDA PROJECT, INC. (THE "CORPORATION") NOR
ITS TRANSFER AGENT SHALL BE OBLIGATED TO REMOVE THIS LEGEND UNLESS IT SHALL HAVE
RECEIVED AN OPINION OF COUNSEL TO HOLDER REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS TRANSFER AGENT STATING THAT SUCH REMOVAL COMPLIES WITH THE
REQUIREMENTS OF REGULATION S.
THE PANDA PROJECT, INC.
A Florida corporation
4% Subordinated Convertible Debenture due April 2 , 1999
Total debenture: $4,800,000 U.S.
Debenture __ of ____
Amount of this Debenture: $50,000.00 U.S.
Dated April, 1997
The Panda Project, Inc., a Florida corporation (the "Corporation"), is
indebted and, for value received, promises to pay (subject to the conversion
provisions set forth herein) to the order of __________________________
__________________________
__________________________ (or its Nominee), on April 2, 1999 (the
"Due Date"), upon presentation of this Convertible Debenture, fifty thousand
dollars ($50,000.00) (the "Principal Amount"), payable in shares of Common Stock
of the Corporation, as provided below in Section 2, and to pay interest in
arrears on the Principal Amount from time to time outstanding at the rate of 4%
per annum as provided herein.
The Corporation covenants, promises and agrees as follows:
1. INTEREST. Interest which shall accrue on the outstanding Principal
Amount shall be payable, in arrears, in four quarterly installments on the first
day of each fiscal quarter of the
EXHIBIT A
<PAGE>
Corporation for the accrued interest of the prior quarter, with the first
payment of such interest to be made on July 1, 1997. Interest shall be payable
in cash or shares of Common Stock of the Corporation at the Corporation's
option. All payments of principal and interest or principal or interest shall be
made at the above stated address, or at such other places as may be designated
in writing by the holder hereof.
2. CONVERSION AND REDEMPTION.
2.1 The holder of this Debenture shall have the right, at such
holder's option, at any time, commencing after 45 days from the date hereof to
convert up to 50% of the principal of this Debenture into such number of fully
paid and nonassessable shares of Common Stock of the Corporation as shall be
provided herein and after 60 days from the date hereof all of such principal.
2.2 The holder of this Debenture may exercise the conversion
right provided in this Section 2 by giving written notice in the form attached
hereto (the "Conversion Notice") to the Corporation of the exercise of such
right, in whole or in part, and stating the name or names in which the stock
certificate or stock certificates for the shares of Common Stock are to be
issued and the address to which such certificates shall be delivered. The
Conversion Notice shall be accompanied by the Debenture. The number of shares of
Common Stock that shall be issuable upon conversion of the Debenture shall equal
the amount of the outstanding principal for which a Conversion Notice is given,
divided by a conversion price (the "Conversion Price") equal to the lesser of
(x) $5.625 or (y) 82% of the average closing bid price of the Common Stock as
reported by NASDAQ for the five (5) consecutive trading days immediately
preceding the Date of Conversion (as defined below), subject to adjustment as
provided in Section 4. Notwithstanding anything to the contrary contained herein
or in that certain Offshore Securities Subscription Agreement among the
Corporation, the Purchasers identified therein, Dusseldorf Securities Limited
("Dusseldorf") and Loselle Greenawalt Kaplan Blair & Adler dated as of April 2,
1997, in no event shall the holder of this Debenture exercise the conversion
right provided in this Section 2 to the extent that (i) the number of shares of
Common Stock issuable to such holder pursuant to such conversion and to any
other holder simultaneously converting a Debenture issued as part of the same
series as this Debenture, plus (ii) the number of shares of Common Stock
previously issued to such holder and any other holder of Debentures issued as
part of the same series as this Debenture pursuant to any previous conversion
plus (iii) the total number of shares of Common Stock issuable pursuant to that
certain Warrant issued by the Corporation to Dusseldorf dated as of the date
hereof (whether or not such shares have then been issued), would equal or exceed
2,071,249 shares of Corporation Common Stock or such conversion would otherwise
cause the Corporation to be in violation of applicable rules of the National
Association of Securities Dealers, Inc. ("NASD"). In the event that, due to the
operation of the immediately preceding sentence, the holder hereof is unable to
convert some portion of the principal due under this Debenture (the "Outstanding
Balance"), the Corporation shall, if requested by Purchaser, use its best
efforts to obtain an exemption from applicable NASD rules or to obtain
shareholder approval of the transaction in order to permit conversion of the
Outstanding Balance. In the event that more than one (1) holder of Debentures
issued in this series elects to convert one or more Debentures on the same day
and the aggregate
<PAGE>
amount to be converted by such holders cannot be so converted due to the
provisions set forth above, the aggregate amount that may be converted shall be
apportioned between or among such holders in the same proportion as the amount
to be converted by each holder bears to the total amount to be so converted.
2.3 Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of this Debenture. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall round up to the nearest whole share. In the case of a dispute
as to the calculation of the Conversion Price, the Corporation's calculation
shall be deemed conclusive absent manifest error. In order to convert this
Debenture into full shares of Common Stock, the holder shall surrender this
Debenture, duly endorsed, by overnight courier to the Corporation, together with
the Conversion Notice that it elects to convert the same, the amount of
principal to be so converted, and a calculation of the Conversion Price (with an
advance copy of the Debenture(s) and the notice by facsimile); provided,
however, that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Debenture is delivered to the Corporation as provided above, or the
holder notifies the Corporation that such Debenture has been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with such Debenture.
Within three (3) business days after receiving a properly
submitted Conversion Notice, the Corporation shall instruct American Stock
Transfer & Trust Company or any duly appointed transfer agent of the Corporation
subsequently designated to Dusseldorf (the "Transfer Agent") to issue and
deliver as promptly as practicable to such holder at the address of the holder
on the debenture records of the Corporation, a certificate or certificates for
the number of shares of Common Stock to which it shall be entitled (subject to
the delivery of the original Debenture to the Corporation). In the absence of an
opinion of counsel to the holder reasonably acceptable to the Corporation
indicating that the securities underlying this Debenture may be issued without
restrictive legends pursuant to an exemption from the Act, the certificate or
certificates representing such underlying securities shall bear a legend
substantially similar to that set forth on this Debenture. The date of
conversion (the "Date of Conversion") shall be the date on which the Conversion
Notice is received by the Corporation and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
2.4 Liquidated Damages for Late Conversion. The Corporation
shall use all reasonable efforts to issue and deliver, within seven (7) business
days after the holder has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form required for conversion (the
"Deadline"), to the holder or any transferee of the holder at the address of the
holder on the books of the Corporation, a certificate or certificates for the
number of Shares of Common Stock to which the holder shall be entitled. The
Corporation understands that a delay in the issuance of the Shares of Common
Stock beyond the Deadline could result in economic loss to the holder. As
compensation to the holder for such loss, the Corporation agrees to pay
liquidated damages to the holder for the late issuance of Shares upon conversion
in accordance with the following schedule (where "No. of Business Days Late" is
defined as the
<PAGE>
number of business days beyond seven (7) business days from the date of receipt
by the Corporation of a Notice of Conversion and receipt by the Transfer Agent
of all necessary documentation duly executed and in proper form required for
conversion, including the original Debentures to be converted, all in accordance
with this Agreement):
NO. OF BUSINESS DAYS LATE LIQUIDATED DAMAGES
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1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
more than 10 $5,000 + $1,000 for each
Business Day Late beyond 10 days.
The Corporation shall pay the holder any liquidated
damages incurred under this Section by check upon the earlier to occur of (i)
issuance of the Shares to the holder or (ii) each monthly anniversary of the
receipt by the Corporation of such holder's Notice of Conversion. Nothing herein
shall limit the holder's right to pursue actual damages for the Corporation
failure to issue and deliver shares of Common Stock to the holder in accordance
with the terms of this Debenture.
2.5 Reservation of Shares. The Corporation shall at all
times reserve and keep available, free from preemptive rights, unissued or
treasury shares of Common Stock sufficient to effect the conversion of this
Debenture; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding principal and interest of this Debenture, the Corporation will take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
2.6 Redemption. The Corporation shall have the right but
not the obligation to redeem the Debenture upon 60 days written notice to the
holder of the Debenture at a redemption price equal to 122% of the outstanding
principal amount. The notice of redemption shall specify the date and place
designated for redemption. On or after the redemption date fixed in the notice
of redemption, no further interest shall accrue on the principal amount so
redeemed and this Debenture, to the extent so redeemed, shall cease to be
convertible as set forth herein. Payment of the redemption price shall be made
to the registered holder of this Debenture upon presentation and surrender of
this Debenture, accompanied by a duly executed instrument of transfer in blank
at the principal executive office of the Corporation.
<PAGE>
2.7 Maturity. At the Due Date, any outstanding principal
hereunder shall be converted into shares of Common Stock at the then effective
Conversion Price in the manner provided herein and the Due Date shall be deemed
to be the Date of Conversion with respect to such conversion.
3. DEFAULT.
3.1 Conversion of this Debenture shall, at the election of
the holder, be accelerated immediately upon the occurrence of any of the
following events (a "Default Event"):
(a) The non-payment by the Corporation when due of
principal and interest or of any other payment as provided in this Debenture.
(b) If the Corporation (i) applies for or consents in
writing to the appointment of, or if there shall be a taking of possession by, a
receiver, trustee or liquidator for the Corporation of all or substantially all
of its property; (ii) admits in writing its inability to pay its debts as they
become due; (iii) makes a general assignment for the benefit of creditors; (iv)
files any petition for relief under the Bankruptcy Code or any similar federal
or state statute; or (v) has assessed or imposed against it, or if there shall
exist, any general or specific lien for any federal, state or local taxes
against any of its property or assets other than liens for taxes not yet due or
being contested in good faith.
(c) Any failure by the Corporation to issue and deliver
shares of Common Stock as provided herein upon conversion of this Debenture.
Notwithstanding the foregoing, the Corporation shall have
thirty (30) days from the receipt of a written Notice of Default to cure said
Default Event, and no acceleration of conversion hereunder shall be deemed to
have occurred until the thirtieth day after the Corporation's receipt of a
written Notice of Default from the holder of this Debenture. Upon such cure, the
terms of this Debenture shall continue in effect.
3.2 Each right, power or remedy of the holder hereof upon
the occurrence of any Default Event as provided for in this Debenture or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for it this Debenture or now or hereafter existing at law or in equity
or by statute, and the exercise or beginning other exercise by the holder or
transferee hereof of any one or more of such rights, powers or remedies shall
not preclude the simultaneous or later exercise by the holder hereof of any or
all such other rights, powers or remedies.
4. ANTI-DILUTION ADJUSTMENTS. The Conversion Price shall be subject to
adjustment as follows:
(a) In case the Corporation shall at any time subdivide
the outstanding shares of Common Stock issuable upon conversion of the
Debenture, the conversion price in effect
<PAGE>
immediately prior to such subdivision shall be proportionately decreased, and in
case the Corporation shall at any time combine the outstanding shares of Common
Stock issuable upon conversion of the Debenture, the conversion price in effect
immediately prior to such combination shall be proportionately increased. Any
such adjustment shall be effective at the close of business on the date such
subdivision or combination shall become effective.
(b) In case of any reclassification or change of
outstanding shares of Common Stock issuable upon conversion of this Debenture
(other than a change in par value, or from par value to no par value, or from no
par value to par value), or in case of a consolidation or merger of the
Corporation with or into another corporation (other than a merger or
consolidation in which the Corporation is the continuing corporation and which
does not result in a reclassification of outstanding shares of Common Stock of
the class issuable upon the conversion of this Debenture except where the
security holders of the Company are entitled to receive securities of another
issuer), or in case of any sale or conveyance to another corporation of the
property of the Corporation as an entirety or substantially as an entirety, the
Corporation or such successor or purchasing corporation, as the case may be,
shall execute an instrument providing that the holder of this Debenture shall
have the right thereafter to convert this Debenture into the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, consolidation, merger, sale, or conveyance by the holder of
the number of shares of Common Stock of the Corporation into which this
Debenture might have been converted immediately prior to such reclassification,
consolidation, merger, sale, or conveyance. Such interest shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The foregoing provisions of this Debenture
shall similarly apply to successive reclassification of shares of Common Stock
and to successive consolidations, mergers, sales, or conveyances.
5. SUBORDINATION.
(a) Subordination to Senior Indebtedness. The indebtedness
evidenced by this Debenture, and the payment of any amounts hereunder, are
wholly subordinated, junior and subject in right of payment, to the extent and
in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred. "Senior
Indebtedness" means the principal of, and premium, if any, and interest on all
indebtedness of the Company for monies borrowed from banks, trust companies,
insurance companies, leasing companies and other financial institutions,
including commercial paper and accounts receivable sold or assigned by the
Company to such institutions, and (ii) deferrals, renewals, extensions and
refundings of any such indebtedness.
(b) No Payment if Default in Senior Indebtedness. No
payment hereunder shall be made if at the time of such payment or purchase or
immediately after giving effect thereto, (i) there shall exist a default in any
payment with respect to any Senior Indebtedness or (ii) there shall have
occurred an event of default (other than a default in the payment of amounts due
thereon) with respect to any Senior Indebtedness, as defined in the instrument
under which the same is outstanding, permitting the holders thereof to
accelerate the maturity thereof, and such event of default shall not have been
cured or waived or shall not have ceased to exist. The
<PAGE>
holder of this Debenture shall deliver to the holder of any Senior Indebtedness
any such instrument as such holder of Senior Indebtedness may request to confirm
the subordination of this Debenture upon the terms set forth herein.
6. FAILURE TO ACT AND WAIVER. No failure or delay by the holder hereof
to insist upon the strict performance of any term of this Debenture or to
exercise any right, power or remedy consequent upon a Default Event hereunder
shall constitute a waiver of any such term or of any such breach, or preclude
the holder hereof from exercising any such right, power or remedy at any later
time or times. By accepting payment after the due date of any amount payable
under this Debenture, the holder hereof shall not be deemed to waive the right
either to require payment when due of all other amounts payable under this
Debenture, or to declare a Default Event for failure to effect such payment of
any such other amount.
The failure of the holder of this Debenture to give
notice of any failure or breach of the Corporation under this Debenture shall
not constitute a waiver of any right or remedy in respect of such continuing
failure or breach or any subsequent failure or breach.
7. CONSENT TO JURISDICTION. The Corporation hereby agrees and consents
that any action, suit or proceeding arising out of this Debenture shall be
brought in any appropriate court in the State of Florida, and by the issuance
and execution of this Debenture the Corporation irrevocably consents to the
jurisdiction of each such court.
8. TRANSFER/NEGOTIABILITY. This Debenture shall be transferred on the
books of the Corporation only by the registered holder hereof or by his/her
attorney duly authorized in writing or by delivery to the Corporation of a duly
executed Assignment substantially in the form attached hereto as Exhibit A-1.
The foregoing notwithstanding, the Corporation shall not transfer this Debenture
nor any of the shares of Common Stock issuable hereunder except pursuant to
registration under the Act or an available exemption from the registration
requirements under the Act. Neither the Corporation or its Transfer Agent shall
be obligated effect any such transfer unless it shall have received an opinion
of counsel to holder reasonably satisfactory to the Corporation and its Transfer
Agent stating that such removal complies with the provisions of the Act. The
Corporation shall be entitled to treat any holder of record of the Debenture as
the holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in this Debenture in the name of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the Laws of Florida.
9. NOTICES. All notices and communications under this Debenture shall
be in writing and shall be either delivered in person or accompanied by a signed
receipt therefor or mailed first-class United States certified mail, return
receipt requested, postage prepaid, and addressed as follows:
<PAGE>
if to the Corporation, to:
The Panda Project, Inc.
901 Yamato Road
Boca Raton, Florida 33431-4425
Attn: Chief Financial Officer & CEO
with a copy to: Gilbert B. Kaplan, Esq.
Hale and Dorr, LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C 20004
and, if to the holder of this Debenture, to the address of such holder as it
appears in the books of the Corporation. Any notice of communication shall be
deemed given and received as of the date of such delivery or three days after
deposit with an overnight courier service or five (5) days after deposit with
the U.S. Postal Service as first class air mail.
10. DENOMINATIONS. The Debentures are issuable in minimum denominations
of $50,000 principal amount and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures for different
authorized denominations as requested by the holder surrendering the same. No
service charge will be made for such exchange.
11. GOVERNING LAW. This Debenture shall be governed by and construed
and enforced in accordance with the laws of the State of Florida, or, where
applicable, the laws of the United States, without regard to conflicts of law.
12. TAX WITHHOLDING. The Corporation shall be entitled to withhold from
all payments of principal of, and interest on, the Debentures, amounts, if any,
required to be withheld under applicable provisions of the United States income
tax or other applicable laws at the time of such payments.
13. INCORPORATION BY REFERENCE. The terms and conditions set forth in
that certain Offshore Securities Subscription Agreement between the Corporation,
Dusseldorf, the Purchasers identified therein and Loselle Greenawalt Kaplan
Blair & Adler dated as of April 2, 1997 are incorporated herein by this
reference, and any transferee or subsequent holder of this Debenture (or the
shares of Common Stock issued upon conversion thereof) shall be subject to and
bound by the provisions of such agreement.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Debenture to be duly
executed.
THE PANDA PROJECT, INC.
By:_____________________________
Attest
_____________________________
Secretary
EXHIBIT 4.2
Warrant to
Purchase 42,667
Shares of Common Stock
THE PANDA PROJECT, INC
Common Stock Purchase Warrant
April, 1997
THIS WARRANT AND THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT) OR UNDER THE LAWS OF ANY OTHER JURISDICTION, IN RELIANCE UPON REGULATION S
UNDER THE ACT. UNTIL THE FORTY-FIFTH (45TH) DAY AFTER THE SALE OF THIS WARRANT
IS COMPLETED, NEITHER THIS WARRANT NOR THE UNDERLYING SHARES MAY BE OFFERED,
SOLD OR TRANSFERRED (INCLUDING ANY INTEREST THEREIN) IN THE UNITED STATES OR TO
A "U.S. PERSON" (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR
THE ACCOUNT AND BENEFIT OF A U.S. PERSON, EXCEPT AS PROVIDED IN REGULATION S
PROMULGATED UNDER THE ACT. ANY RESALE THEREAFTER MUST BE PURSUANT TO
REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION, FURTHER, THIS WARRANT MAY
NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSONS, UNLESS REGISTERED UNDER
THE ACT OR EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. NEITHER THE PANDA
PROJECT, INC. (THE "COMPANY") NOR ITS TRANSFER AGENT SHALL BE OBLIGATED TO
REMOVE THIS LEGEND UNLESS IT SHALL HAVE RECEIVED AN OPINION OF COUNSEL TO THE
HOLDER HEREOF REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT
STATING THAT SUCH REMOVAL COMPLIES WITH THE REQUIREMENTS OF THE SECURITIES ACT
INCLUDING REGULATION S.
THIS CERTIFIES THAT Dusseldorf Securities Limited (or its Nominees) (hereinafter
sometimes called the "Holder"), is entitled to purchase from The Panda Project,
Inc., a Florida corporation (the "Company"), at the price and during the periods
as hereinafter specified, the number of shares set forth above of the Company's
Common Stock, (the "Common Stock").
This Warrant is subject to adjustment in accordance with Section 6 of
this Warrant.
1. The rights represented by this Warrant shall be exercisable at any
time commencing forty-five days after the date hereof (the "Exercise Period") at
an exercise price equal to $6.75 per share (the "Exercise Price"), subject to
adjustment in accordance with Section 6 and shall expire at 5:00 p.m. at Boca
Raton, Florida on April 2, 2002 (the "Expiration Date"). After the Expiration
Date, the Holder shall have no right to purchase any shares of Common Stock
underlying this Warrant.
2. The rights represented by this Warrant may be exercised at any time
or from time to time within the Exercise Period specified above, in whole or in
part, by (i) the surrender of this Warrant (with the purchase form properly
executed) at the principal executive office of the Company (or such
EXHIBIT B
<PAGE>
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company): and (ii) payment in full in United States Dollars in immediately
available funds to the Company of the Exercise Price then in effect for the
number of shares of Common Stock specified in the above mentioned purchase form
together with applicable stock transfer taxes, if any. This Warrant shall be
deemed to have been exercised, in whole or in part to the extent specified,
immediately prior to the close of business on the date this Warrant is
surrendered and payment is made in accordance with the foregoing provisions of
this Section 2, and the person or persons in whose name or names the
certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder of record of such shares of Common Stock at that time
and date. The certificate or certificates for the shares of Common Stock so
purchased shall be delivered to such person or persons within a reasonable time,
not exceeding thirty (30) days, after this Warrant shall have been exercised.
This Warrant may not be exercised (i) by or on behalf of a person who
is a U.S. Person (as defined in Regulation S promulgated under the Act), (ii) if
a U.S. Person has any interest in the Warrant being exercised or the underlying
securities to be issued upon exercise or (iii) by any person if exercised within
the United States or if the shares issuable upon exercise of the Warrant are to
be delivered within the United States. If the above cannot be complied with,
then the Warrant can be exercised only if a written opinion of counsel to the
Holder, the form and substance of which is acceptable to the Company, is
delivered to the Company prior to exercise of the Warrants being exercised, and
the underlying securities delivered upon exercise have been registered under the
Act, or the securities are exempt from registration thereunder. In the absence
of an opinion of counsel to the Holder reasonably acceptable to the Company
indicating that the certificates representing the securities underlying this
Warrant may be issued without restrictive legends pursuant to an exemption from
the Act, such underlying securities shall bear a legend individually similar to
that set forth on this Warrant.
In connection with the exercise of this Warrant by the holder in
accordance with the terms hereof, the Company and the Holder shall first use
their reasonable efforts to cause the issuance of the shares of Common Stock
issuable upon exercise of the Warrant to be exempt from registration by virtue
of Regulation S promulgated under the Act and in such event, the holder will
resell such shares only in compliance with the applicable holding period,
restrictions and other provisions of Regulation S. In the event that an
exemption from registration under Regulation S is not then available in
connection with the issuance of the underlying shares of Common Stock upon
exercise of the Warrant, the Company agrees to grant to the holder of the
Warrant the registration rights set forth on Exhibit B-1 attached hereto.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Act nor under any state or
foreign securities law and shall not be transferred, sold, assigned or
hypothecated in violation thereof. If permitted by the foregoing, any such
transfer, sale, assignment or hypothecation shall be effected by the Holder
surrendering this Warrant for cancellation at the office or agency of the
Company referred to in section 2 hereof, accompanied by an opinion of counsel to
the Holder satisfactory to the Company and its counsel, stating that such
transferee is a permitted transferee under this Section 3 and that such transfer
does
2
<PAGE>
not violate the Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attache to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant; provided, however, that, if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the exercise of all shares of Common Stock underlying the Warrant, the Company
will take such corporate action as may be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitations, voting rights, as a shareholder of the Company.
6. The Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as follows:
a. If the Company shall (i)declare a dividend or make a
distribution on its outstanding shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (iv) issue by reclassification of its shares of Common Stock other securities
of the Company, then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Company which he would have owned immediately following
such action if such Warrant had been exercised immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Section 6(a) above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
d. The Company may, but under no circumstances is obligated, to
modify the terms of this Warrant to extend the Exercise Period or to lower the
Exercise Price, at any time prior to the expiration of this warrant.
3
<PAGE>
e. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale, transfer or
lease to another corporation of all or substantially all the property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute with the Holder an agreement that the Holder shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities, cash and property which he would have
owned or would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such Warrant been exercised
immediately prior to such action; PROVIDED, HOWEVER, that no adjustment in
respect of dividends, interest or other income on or from such shares or other
securities, cash and property shall be made during the term of a Warrant or upon
the exercise of a Warrant. Such agreement shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 6. The provisions of this Section 6(e) shall similarly apply
to successive consolidations, mergers, sales, transfers and leases.
7. The Company shall not be required to issue fractional shares of
Common Stock upon exercise of the Warrants. If more than one Warrant shall be
presented for exercise in full at the same time by the same Holder, the number
of full shares of Common Stock which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of shares purchasable
upon exercise of the Warrants so presented. If any fraction of a share would,
except for the provisions of this Section 7, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the closing price for one share of the Common stock, as reported by
NASDAQ on the trading day immediately preceding the exercise date, multiplied by
such fraction.
This Warrant shall be governed by and in accordance with the laws of
the State of Florida.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officers and as of the ___ day of April, 1997.
THE PANDA PROJECT INC.
By: _______________________
Attest
_______________________
Secretary
4
<PAGE>
REGISTRATION RIGHTS
1. PIGGY-BACK REGISTRATION RIGHTS. If at any time prior to the
termination date (as defined below) (1) the Company proposes to register any of
its securities under the Act (other than in connection with a merger,
acquisition or exchange offer or pursuant to Form S-8 or successor form), it
will give written notice by certified or registered mail, at least thirty (30)
days prior to the filing of the registration statement to the holder of record
of the Warrant (the "Registered Holder") of its intention to do so. Upon the
written request of the Registered Holder, given within fifteen (15) days after
receipt of any such notice of his, her or its desire to include the sale of any
shares of Common Stock underlying the Warrant ("Warrant Shares") in such
proposed registration statement, the Company shall, subject to registration
rights of other holders of securities of the Company existing as of the date of
the Warrant (the "Prior Holders"), use its best efforts to obtain the necessary
consents or waivers from the Prior Holders such that the Registered Holder's
Warrant Shares may be included in such registration.
The "piggy-back" registration rights described in this Exhibit B-1
shall terminate on the earlier of (i) the first anniversary of the Expiration
Date, (ii) the first anniversary of the date when Warrants shall have been
exercised in full, (iii) the date when all Warrant Shares have been sold by the
Registered Holder, and (iv) such time as all of the Warrant Shares held by the
Registered Holder can be sold by such Register Holder within a given three (3)
month period without compliance with the registration requirements of the Act,
pursuant to Rule 144 promulgated thereunder (the Termination Date); provided,
however, that a Registered Holder shall only be entitled pursuant to this
paragraph to have the Warrant Shares registered and shall not be entitled to
have the Warrant registered.
Notwithstanding anything to the contrary contained in the provisions of
this Exhibit B-1, the Company shall have the right at any time after it shall
have given written notice pursuant to this Section 1 (irrespective of whether a
written request for inclusion of any securities shall have been made), to elect
not to file any such proposed registration statement, or to withdraw the same
after the filing but prior to the effective date thereof.
2. INDEMNIFICATION. The Company shall indemnify and hold harmless the
Registered Holder who registers Warrant Shares pursuant to this Exhibit B-1,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or a material fact contained in any registration statement
filed by the Company under the Act in accordance with this Exhibit B-1, any
EXHIBIT B-1
<PAGE>
post-effective amendment to such registration statement, or any prospectus
included therein, or caused by any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission based upon information furnished
or required to be furnished in writing to the Company by the Registered Holder
(or the authorized representatives or agents of the Registered Holder) expressly
for use therein which indemnification shall include each person, if any, who
controls the Registered Holder within the meaning of the Act and each officer,
director, employee and agent of the Registered Holder; provided, however, that
the indemnification in this Section 2 with respect to any prospectus shall not
inure to the benefit of the Registered Holder (or to the benefit of any person
controlling the Registered Holder) on account of any such loss, claim, damage or
liability arising from the sale of Warrant Shares by such Registered Holder, if
a copy of a subsequent prospectus correcting the untrue statement or omission in
such earlier prospectus was provided to such Register Holder by the Company
prior to the subject sale and the subsequent prospectus was not delivered or
sent by the Registered Holder to the purchaser of such securities prior to such
sale; and provided further, that the Company shall not be obligated to so
indemnify the Registered Holder or any other person referred to above unless the
Registered Holder or other person as the case may be, shall at the same time
indemnify the Company, its directors, each officer signing the registration
statement and each person, if any, who controls the Company within the meaning
of the Act, from and against any and all losses, claims, damages and liabilities
caused by any untrue statement or a material fact contained in any registration
statement or any prospectus required to be filed or furnished in connection with
the public offering or caused by any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, insofar as such losses, claims, damages or liabilities are caused by
any untrue statement or omission based upon information furnished in writing to
the Company by the Registered Holder expressly for use therein.
If for any reason the indemnification provided for in the preceding
subparagraph is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damages liability or
expense referred to therein, then the indemnifying party in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable consideration.
3. OFFERING EXPENSES. All expenses, filing fees and other costs
incurred by the company in connection with the registration
<PAGE>
of securities pursuant to this exhibit B-1 (exclusive of underwriting discounts
and selling commissions applicable to any sale of Warrant Shares and any fees
and costs of legal counsel engaged by the Registered Holder) shall be borne by
the Company.
4. DELIVERY OF PROSPECTUS. In the case of each registration effected by
the Company pursuant to the provisions of this exhibit B-1, the Company will (i)
furnish to the Registered Holder of the Warrant Shares registered such numbers
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act and such other documents as such Registered
Holder may reasonably request in order to facilitate the disposition of the
Warrant Shares so registered, and (ii) notify the Registered Holder of
securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Act or the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, included an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.
5. DEFINED TERMS. Capitalized terms used but not defined herein shall
have the meanings ascribed such words in the Warrant to which this exhibit B-1
is attached.
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS FORM
The Panda Project, Inc.
901 Yamato Road
Boca Raton, Florida 33431
ATTN: C. Daryl Hollis, Chief Financial Officer
RE: THE PANDA PROJECT, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
The Panda Project, Inc. (the "Company") is hereby requested to effect the
registration with the Securities and Exchange Commission on Form S-3 (the
"Registration Statement") of the shares of Common Stock, par value $0.01 per
share ("Common Stock"), of the Company described on SCHEDULE A attached hereto
(the "Registrable Shares").
This will advise you that (i) the undersigned has had no position, office
or other material relations during the past three years with the Company or an
affiliate of the Company except as described on SCHEDULE A and (ii) the
undersigned does not presently beneficially own any shares of Common Stock
except as described on SCHEDULE A.
The Registrable Shares may be offered for sale from time to time by the
undersigned to various purchasers, or they may be retained. The undersigned may
elect to sell Registrable Shares in negotiated transactions at prices and on
terms related to the then-current market price or otherwise, or in market
transactions, in each case without the participation of underwriters, brokers or
dealers. The undersigned may also from time to time offer the Registrable Shares
through brokers, dealers or agents, or with the permission of the Company
through underwriters, who may receive underwriting discounts, concessions or
commissions from the undersigned and/or the purchasers for whom they act as
agent. In that event, the offers or sales may be made by a block trade in which
a broker or dealer, engaged for the purpose, will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; by purchases by a broker or dealer as principal and
resale by such broker or dealer for its own account; by ordinary brokerage
transactions or transactions in which the broker solicits purchasers; with the
permission of the Company, in an underwritten transaction; or
<PAGE>
otherwise. In the event that brokers or dealers are engaged by the undersigned,
such brokers or dealers may arrange for other brokers or dealers to participate.
Any of the Registrable Shares that qualify for sale pursuant to Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"), may be sold
under Rule 144 rather than pursuant to the Registration Statement.
At the time the undersigned makes a particular offer of the Registrable
Shares, to the extent required, the undersigned will provide the Company with
information sufficient to prepare a Prospectus Supplement which will set forth
the aggregate amount of shares being offered and the terms of the offering,
including the name or names of any brokers or dealers, or underwriters if
permitted, any discounts, commissions and other items constituting compensation
from the undersigned, and any discounts, commissions or concessions allowed or
re-allowed or paid to dealers.
The undersigned agrees that, so long as the undersigned is engaged in the
distribution of Common Stock of the Company, the undersigned will comply with
Regulation M under the Securities Exchange Act of 1934 (the "Exchange Act") and,
in connection therewith, the undersigned agrees: (a) not to engage in any
stabilization activities in connection with the securities of the Company; (b)
to cause to be furnished to each broker through which Registrable Shares may be
offered such copies of the Prospectus to be included in the Registration
Statement as may be required by such broker; and (c) not to bid for or purchase
any securities of the Company other than as permitted under the Exchange Act.
The undersigned also advises the Company that (a) the undersigned will act
independently of the Company and the other Selling Securityholders as may be
named in the Registration Statement in making decisions with respect to the
timing, manner and size of each sale; (b) the undersigned has not entered into
any arrangement with a broker-dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution of a
purchase by a broker-dealer; and (c) the undersigned will inform the Company and
any broker-dealers through whom sales of the Registrable Shares may be made when
each distribution of the shares is over.
In making the foregoing statements, the undersigned specifically disclaims
any liability, responsibility or obligation for the acts or omissions of any
other Selling Securityholder named in the Registration Statement.
-2-
EXHIBIT 99.1
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
THE SUBORDINATED CONVERTIBLE DEBENTURES (THE "DEBENTURES") AND THE WARRANT
ISSUED AND SOLD PURSUANT TO THIS SUBSCRIPTION AGREEMENT (THE "WARRANT"), THE
SHARES OF COMMON STOCK ISSUABLE UNDER SUCH INSTRUMENTS AND/OR THE SHARES OF
COMMON STOCK REFERRED TO IN SECTION 5.6 BELOW (SUCH DEBENTURES, WARRANT AND
SHARES ARE REFERRED TO HEREIN COLLECTIVELY AS, THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR UNDER THE LAWS OF ANY JURISDICTION IN RELIANCE UPON REGULATION S UNDER
THE ACT. UNTIL THE FORTY-FIFTH (45TH) DAY AFTER ISSUANCE OF THE DEBENTURES WITH
RESPECT TO 50% OF THE PRINCIPAL AMOUNT OF THE DEBENTURES AND THE SIXTIETH (60TH)
DAY AFTER ISSUANCE OF THE DEBENTURES WITH RESPECT TO THE BALANCE OF SUCH
PRINCIPAL AMOUNT AND AS OTHERWISE PROVIDED HEREIN OR IN THE DEBENTURES OR THE
WARRANT, THE SECURITIES MAY NOT BE OFFERED , SOLD OR TRANSFERRED (INCLUDING ANY
INTEREST THEREIN) IN THE UNITED STATES OR TO A "U.S. PERSON" (AS DEFINED IN
REGULATION S PROMULGATED UNDER THE ACT) OR FOR THE ACCOUNT AND BENEFIT OF ANY
U.S. PERSON, EXCEPT AS PROVIDED IN REGULATION S PROMULGATED UNDER THE ACT. ANY
RESALE THEREAFTER MUST BE PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT, FURTHER, NEITHER THE
PANDA PROJECT, INC. (THE "COMPANY") NOR ITS TRANSFER AGENT SHALL BE OBLIGATED TO
REMOVE ANY LEGEND ON CERTIFICATES REPRESENTING SUCH SECURITIES UNLESS IT SHALL
HAVE RECEIVED AN OPINION OF COUNSEL TO THE HOLDER OF ANY SUCH SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT STATING THAT SUCH
REMOVAL COMPLIES WITH THE REQUIREMENTS OF REGULATION S.
THIS AGREEMENT is made as of the 2nd day of April, 1997, by and between
The Panda Project, Inc., a Florida corporation (the "Company"), Dusseldorf
Securities Limited ("Dusseldorf"), a corporation organized under the laws of The
British Virgin Islands and the Purchasers set forth on Schedule 1 hereto
(collectively "Purchasers", "Purchaser") and Loselle Greenawalt Kaplan Blair &
Adler ("Escrow Agent"). Unless otherwise defined herein, capitalized terms used
herein and not otherwise defined shall have the meanings given to them in
Regulation S ('Regulation S") promulgated under the Act.
WITNESSETH:
WHEREAS in reliance upon the respective representations and warranties
of the Company and Purchaser, and the terms and conditions hereinafter set
forth, the Purchasers (in the principal amount set forth on Schedule 1 hereto)
desire to acquire, and the Company desires to issue, $4,800,000 principal amount
of the Company's 4% Subordinated Convertible Debentures due April 2, 1999
convertible into shares of common stock of the Company, $.01 par value ("Common
Stock"), in the form of Exhibit "A" (the "Debentures") at the purchase price of
U.S. $4,800,000 (the "Purchase Price"); and
WHEREAS Dusseldorf will be issued, in exchange for certain placement
services provided by Dusseldorf to the Company, a warrant (the "Warrant") to
purchase 42,667 shares of the Company's Common Stock exercisable from forty-five
(45) days after the date hereof to five (5)
<PAGE>
years after the date hereof with an exercise price set forth in and otherwise in
the form of Exhibit "B". The shares of the Company Common Stock issuable upon
conversion of the Debentures or upon exercise of the Warrant are referred to
herein as the "Shares."
NOW, THEREFORE, in consideration of the premises and the respective
covenants hereinafter set forth, the Company, Purchaser and Escrow Agent hereby
agree as follows:
SALE AND PURCHASE OF SECURITIES.
1.1 The Company agrees to sell to Purchasers and Purchasers hereby
agree to purchase from the Company the Debentures set forth above and in the
amount set forth opposite their names on Schedule 1 hereto. Such sale and
purchase shall take place upon payment of the aggregate $4,800,000 Purchase
Price for the Debentures by electronic transfer of immediately available funds
to the Escrow Agent as follows:
Name of Account: Loselle Greenawalt Kaplan Blair & Adler
IOLA Account,
Bank: Chase Manhattan Bank
ABA No. 021-000021
Account No. 128074204665.
The Company hereby acknowledges that it has been advised by the Escrow
Agent that the Escrow Agent is representing Dusseldorf in the transaction
contemplated by this Agreement but is acting herein solely as an Escrow Agent.
1.2. At the closing (the "Closing"), the Company shall deliver the
Debentures and the Warrant to the Escrow Agent. Upon delivery of the Debentures
and Warrant, immediately available funds representing the Purchase Price shall
be wire transferred by the Escrow Agent to a bank account or bank accounts
specified by the Company. The Escrow Agent shall then deliver the Debentures to
the Purchaser in accordance with the Purchaser's instructions and the Warrant to
Dusseldorf in accordance with Dusseldorf's instructions. Closing shall occur no
later than 10 days after the date of this Agreement.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
To the Company's knowledge, which for purposes of this Section 2. shall
include all of its subsidiaries on a consolidated basis, except as set forth in
the attached Schedule of Exceptions, the Company hereby represents, warrants and
covenants to Purchaser and Dusseldorf that as of the date hereof and at the
Closing:
2
<PAGE>
2.1. The Company has been duly organized, is validly existing
and is in good standing under the laws of the State of Florida.
2.2. The Company has full corporate right, power and authority
to enter into this Agreement, perform its obligations hereunder and to sell the
Debentures to the Purchaser and the Warrant to Dusseldorf. This Agreement, the
Debentures and the Warrant are binding agreements and enforceable against the
Company in accordance with their terms.
2.3. The Company's public filings under the Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (collectively
the "Disclosure Documents"), when read together, do not contain any untrue
statement of any material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
2.4 The Company's common stock is registered pursuant to Section
12(g) of the Exchange Act.
2.5. The Company is, to the best of its knowledge and belief, in
compliance in all material respects with all applicable laws and regulations of
federal, state and local government agencies having jurisdiction over it other
than non-compliance that would not have a material adverse effect on the
Company.
2.6. If the Debentures are converted into Shares and/or the
Warrant is exercised, the Shares, when issued, will be duly authorized, validly
issued, fully paid and non-assessable. Upon delivery to Purchaser of the Shares
pursuant to the provisions of this Agreement and receipt of payment therefor,
Purchaser will acquire valid title in said Shares, free and clear of all liens,
encumbrances, restrictions, claims and commitments of every kind, except for
restrictions arising under federal, state, local and foreign securities laws or
as set forth in this Agreement or the Debenture.
2.7. Neither the execution or delivery of this Agreement nor the
performance by the Company of the transactions contemplated herein violates any
provision of law applicable to the Company or conflicts with or will result in a
breach or termination of any provision of, or constitutes a default, or will
result in the creation of any lien, charge or encumbrance upon any of the
property or assets of the Company under the Company's Articles of Incorporation
(subject to the total authorized number of shares of Common Stock therein and
any increase in such authorized number as may be necessary to provide for the
conversion of the Debentures and exercise of the Warrant) or By-Laws, mortgage,
deed of trust, indenture or other material agreement or instrument, or any
order, judgment, decree, statute, regulation or any other restriction of any
governmental authority to which the Company is a party or by which any of the
assets of the Company may be bound with or without the giving of notice, the
passage of time or both, except with respect to applicable laws affecting
creditors' rights.
2.8. (i) The Company is a Reporting Issuer. The Company is in
full compliance, to the extent applicable, with all reporting obligations under
Section 13(a) or 15(d) of the Exchange Act.
3
<PAGE>
(ii) The Company has not offered the Debentures, the
Warrant or the Shares to any person in the "United States" (hereinafter, as
defined under Regulation S) or to any identifiable groups of U.S. citizens
abroad or to any U.S. Person.
(iii) At the time the buy order was originated, the
Company and/or its agent reasonably believed the Purchaser was outside of the
United States and was not a U.S. Person.
(iv) The Company and/or its agent believe that the
transaction has not been prearranged with a buyer in the United States.
(v) In regard to this transaction, the Company has not
nor to its knowledge has any affiliate or person acting on behalf of itself or
the Company conducted any "directed selling efforts" as that term is defined in
Rule 902 of Regulation S nor has the Company conducted any general solicitation
relating to the offer and sale of the Debentures, the Warrant or the Shares to
persons resident within the United States or elsewhere.
(vi) The sale of the Debentures, the Warrant and the
Shares are not part of a plan or scheme to evade the registration requirements
of the Act. The Company believes that the Purchase Price is reasonable after
consideration of the applicable restricted period under Regulation S, the
historical volatility of the market price of the Common Stock of the Company,
the current financial condition of the Company, the dilution represented by the
sale of the Debentures, the Warrant, the Shares and any other sales of
debentures, warrant or shares of the Common Stock of the Company occurring
concurrently herewith, current stock market conditions and other relevant
information concerning the Company.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
The Purchaser and only Dusseldorf with respect to the Warrant and the
Shares referred to in Section 5.6 (collectively for purposes of this Section 3,
the "Purchaser") hereby represent, warrant and covenant to the Company that as
of the date hereof and at the Closing:
3.1. The Purchaser understands and acknowledges that the
Securities (as defined in the legend at the beginning of this Agreement)
acquired pursuant to this Agreement have not been registered under the Act, and
are being sold in reliance upon an exemption from registration afforded by
Regulation S promulgated under the Act; and that the Securities have not been
registered with, passed on, reviewed or recommended by any state or foreign
securities commission or authority. The Purchaser: (i) will not, during the
applicable restricted period under Regulation S (the "Restricted Period"),
offer, sell, pledge or otherwise transfer the Securities in the United States,
or to a U.S. Person or for the account or benefit of a U.S. Person; (ii) will,
during the Restricted Period, offer, sell, pledge or otherwise transfer the
Securities only in accordance with Rules 903 or 904 of Regulation S under the
Act, pursuant to registration under the Act or pursuant to an available
exemption from the registration requirements of the Act (and based upon an
opinion of counsel to such Purchaser which is satisfactory to the Company if the
Company so requests), and in accordance
4
<PAGE>
with all applicable state and foreign securities laws; and (iii) will, after the
expiration of the Restricted Period, offer, sell, pledge or otherwise transfer
the Securities (or create or maintain any derivative position equivalent thereto
only pursuant to registration under the Act or an available exemption therefrom
(and based upon an opinion of counsel to such Purchaser which is satisfactory to
the Company if the Company so requests) and, in any case, in accordance with all
applicable federal, state and foreign securities laws. The Company will not
honor or register and will not be obligated to honor or register any transfer in
violation of these provisions.
3.2. (i) The Purchaser is not a U.S. Person and is not
acquiring the Securities for the account or benefit of any U.S. Person; (ii) if
a corporation, it is not organized or incorporated under the laws of the United
States; (iii) if a corporation, no director or executive officer is a national
or citizen of the United States; and (iv) it is not otherwise deemed to be a
U.S. Person.
3.3. The Purchaser was not formed specifically for the purpose
of acquiring the Securities purchased pursuant to this Agreement. At the time
the offer and buy orders for the Securities were originated, including, without
limitation, at the time Purchaser executed and delivered this Agreement and
otherwise subscribed for or agreed to purchase the Securities Purchaser was
located outside the United States. The transactions contemplated by this
Agreement have not been pre-arranged with a buyer located in the United States
or with a U.S. Person, and are not part of a plan or scheme on the part of
Purchaser, any of its affiliates or any person acting on its or their behalf, to
evade the registration requirements of the Securities Act.
3.4. The Purchaser acknowledges that it has, either alone
and/or through its agents, been afforded access to all material information
concerning the Company and has received responses to all questions specifically
posed to the Company relevant to Purchaser's decision to acquire the Securities.
Without limiting the foregoing, it has alone and/or through its agents, had
adequate opportunity to ask questions of and receive answers from, responsible
officers and/or directors of the Company and to conduct any other investigation
it deems necessary and appropriate concerning the acquisition of the Securities.
Except as set forth herein, the Company has made no representations or
warranties to Purchaser which have induced, persuaded or stimulated it to
subscribe for and acquire the Securities hereunder.
3.5 The Purchaser has received copies of the following
Disclosure Documents: The Company's Form 10-K for the year ended March 31, 1996
as filed with the Securities and Exchange Commission, the Proxy Statement for
Annual Meeting of Stockholders held on August 16, 1996 and its quarterly report
on Form 10-Q for the quarter ended December 31, 1996 and the Company has made
available to the Purchaser all other public documents filed with the Commission
which have been requested by Purchaser. The Purchaser has received and is
familiar with the risk factors contained in the Company's Form 10-K for the year
ended March 31, 1996 and the Company's Registration Statement on Form S-3
(Registration No. 333-14931).
3.6. The Purchaser acknowledges that the Company is relying
upon the truth and accuracy of the representations, warranties and covenants of
Purchaser made herein in selling the Securities hereunder without registration
and in reliance upon Regulation S promulgated under the Act. It is
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familiar with Regulation S and has consulted with legal counsel familiar with
Regulation S in connection with this transaction.
3.7. The Purchaser has been duly organized, is validly existing
and is in good standing under the laws of the jurisdictions set forth on
Schedule 1 hereto, was not formed for the express purpose of acquiring the
Securities, and if a corporation, all corporate action on its part, necessary
for the authorization, execution, delivery and performance of Purchaser's
obligations under this Agreement has been or shall be taken prior to the closing
of this transaction, and this Agreement, when executed and delivered, shall
constitute a valid and legally binding obligation of the Purchaser enforceable
against Purchaser in accordance with its terms.
3.8. The Purchaser is purchasing the Securities for its own
account, not with a view to any distribution thereof and not for the account or
benefit of a U.S. Person, and no other person has any interest in or
participation in the Securities or any right, option, security interest, pledge
or other interest in or to the Securities. It understands, acknowledges and
agrees it must bear the economic risk of its investment in the Securities for an
indefinite period of time and that prior to any offer or sale of such
securities, the Company may require, as a condition to effecting a transfer of
the Securities, an opinion of counsel to Purchaser acceptable to the Company, as
to the registration or exemption therefrom under the Act. It also understands
that the Company is under no obligation to register the Securities on behalf of
Purchaser or Dusseldorf or to assist it in complying with any exemption from
registration except as provided herein.
3.9. The offer leading to the sale evidenced hereby was made in
an "offshore transaction", for purposes of Regulation S. At the time of the
origination of contact concerning this Agreement and the date of the execution
and delivery of this Agreement, Purchaser was outside the United States.
3.10. Neither the Purchaser nor any affiliate of the Purchaser
or any person acting on its behalf, has made or is aware of any or will make any
"directed selling efforts" (as defined in Regulation S) in the United States or
any activity undertaken for the purpose of, or that could reasonably be expected
to have the effect of, conditioning the market in the United States for any of
the securities being purchased hereby. Purchaser and its affiliates and agents
have complied and will comply with the "offering restrictions" requirements of
Regulation S in making offers and sales of the Securities.
3.11. Except as set forth in the Agreement, no representations
or warranties have been made to the Purchaser by the Company, the officers or
directors of the Company, or any agent, employee or affiliate of any of them,
and in entering into this transaction the Purchaser is not relying upon any
other information, and the results of its own independent investigation. The
Purchaser, in making the decision to purchase the Securities, has relied upon
independent investigations made by it and has not relied on any information or
representations made by third parties and the Buyer believes that the Purchase
Price is reasonably related to the Restricted Period, the historical volatility
of the market price of the Common Stock of the Company, the current financial
condition of the Company, the dilution represented by the sale of the Securities
and any other sales of debentures, warrants or shares of the Common Stock of the
Company occurring concurrently herewith, current stock market
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conditions and other relevant information concerning the Company. The Purchaser
acknowledges that it is a sophisticated investor, that it has invested in other
Regulation S transactions by other issuers, and that an investment in the
Securities involves a high degree of risk.
3.12. If the Purchaser is a corporation or trust or other
entity, the officer or trustee or other person executing this Agreement
represents and warrants that he or she is duly authorized to so sign this
Agreement and to consummate the transactions contemplated hereby and that
Purchaser is authorized by its governing documents to make this investment.
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Securities, and it is able to bear the economic risk of losing up to the entire
amount of its investment therein.
3.13. The Purchaser consents to the Company placing an
appropriate stop transfer order against the certificate representing the
Debentures and acknowledges that such certificates will bear a legend in
substantially the following form:
THIS SUBORDINATED CONVERTIBLE DEBENTURE (THE "DEBENTURE") DEBENTURE AND
THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR UNDER THE LAWS OF ANY OTHER JURISDICTION, IN RELIANCE UPON
REGULATION S UNDER THE ACT. UNTIL THE FORTY-FIFTH (45TH) DAY AFTER
ISSUANCE OF THE DEBENTURES WITH RESPECT TO 50% OF THE PRINCIPAL AMOUNT
OF THE DEBENTURES AND THE SIXTIETH (60TH) DAY AFTER ISSUANCE OF THE
DEBENTURES WITH RESPECT TO THE BALANCE OF SUCH PRINCIPAL AMOUNT, AND AS
OTHERWISE PROVIDED HEREIN, AFTER THE SALE OF THIS DEBENTURE PURSUANT TO
REGULATION S IS COMPLETED, NEITHER THIS CONVERTIBLE DEBENTURE NOR THE
SHARES ISSUABLE HEREUNDER MAY BE OFFERED, SOLD OR TRANSFERRED
(INCLUDING ANY INTEREST THEREIN) IN THE UNITED STATES OR TO A "U.S.
PERSON" (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) OR FOR
THE ACCOUNT OR BENEFIT OF ANY U.S. PERSON, EXCEPT AS PROVIDED IN SAID
REGULATION S. ANY RESALE THEREAFTER MUST BE PURSUANT TO REGISTRATION
UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. NEITHER THE PANDA PROJECT, INC. (THE
"CORPORATION") NOR ITS TRANSFER AGENT SHALL BE OBLIGATED TO REMOVE THIS
LEGEND UNLESS IT SHALL HAVE RECEIVED AN OPINION OF COUNSEL TO HOLDER
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS TRANSFER AGENT
STATING THAT SUCH REMOVAL COMPLIES WITH THE REQUIREMENTS OF REGULATION
S.
3.14. In connection with the issuance of the Warrants and the
Shares issuable upon the exercise of the Warrants, the Dusseldorf consents to
the Company placing an appropriate stop transfer order against such Warrant and
agrees to satisfy the following requirements as set forth in
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Rule 902(m) of Regulation S: (i) Each Warrant shall bear a legend stating that
the Warrant and the securities to be issued upon its exercise have not been
registered under the Act and that the Warrant may not be exercised by or on
behalf of any U.S. Person unless registered under the Act or an exemption from
such registration is available; (ii) each person exercising a Warrant will be
required to give: (A) written certification that is not a U.S. Person and the
Warrant is not being exercised on behalf of a U.S. Person; or (B) a written
opinion of counsel acceptable to the Company to the effect that the Warrant and
Shares delivered upon exercise thereof have been registered under the Act or are
exempt from registration thereunder; and (iii) Dusseldorf shall agree to be
bound by procedures to ensure that the Warrant may not be exercised within the
United States and that the securities may not be delivered within the United
States upon exercise, other than in offerings deemed by counsel to the Company
to meet the definition of "offshore transaction" pursuant to paragraph (i)(3) of
Rule 902 of Regulation S, unless registered under the Act or an exemption from
such registration is available. The Company will not honor or register and will
not be obligated to honor or register any transfer in violation of these
provisions.
3.15. Neither the Purchaser nor any of its affiliates directly
or indirectly have within the past ninety (90) days nor will such persons
directly or indirectly enter into any short selling of any equity security of
the Company (including without limitation, the Common Stock) or any hedging
transaction with respect to any equity security of the Company, including
without limitation, puts, calls, or other option transactions, option writing
and equity swaps.
4. APPOINTMENT OF ESCROW AGENT
4.1. The Company, Purchaser and Dusseldorf hereby appoint the
Escrow Agent and the Escrow Agent hereby accepts its appointment as Escrow Agent
pursuant to the terms and conditions hereinafter set forth.
4.2. The Company shall issue the Debenture and the Warrants
with the appropriate Regulation S legend thereon, in the name of the Purchaser,
and deliver the Debenture and the Warrants to the Escrow Agent. Escrow Agent
shall hold the Debenture and the Warrants until it receives, by wire transfer as
hereinbefore set forth, the Purchase Price. Upon receipt of the Purchase Price,
Escrow Agent shall disburse the Purchase Price in accordance with instructions
it receives from the Company. Escrow Agent shall simultaneously therewith,
deliver the Debenture and the Warrants to the Purchaser and Dusseldorf,
respectively, pursuant to their instructions or with respect to the Debenture,
should Dusseldorf received written instructions for reissuance of the Debenture
in the respective principal amount of Dusseldorf's designated accounts, the
Escrow Agent shall deliver such instructions and the Debenture to the Company
within 10 days of the closing for reissuance to Dusseldorf and such accounts as
set forth in such instructions.
4.3. It is understood and agreed by the parties to this
Agreement as follows:
(a) The Escrow Agent is not and shall not be deemed to be a
trustee for any party for any purpose and is merely acting as a depository and
in a ministerial capacity hereunder with the limited duties herein prescribed.
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(b) The Escrow Agent does not have and shall not be deemed to
have any responsibility in respect of any instruction, certificate or notice
delivered to it other than faithfully to carry out the obligations undertaken in
this Agreement and to follow the directions in such instruction or notice
provided in accordance with the terms hereof.
(c) The Escrow Agent is not and shall not be deemed to be
liable for any action taken or omitted by it in good faith and may rely upon,
and act in accordance with, the advice of its counsel without liability on its
part for any action taken or omitted in accordance with such advice. In any
event, its liability hereunder shall be limited to liability for gross
negligence, willful misconduct or bad faith on its part.
(d) The Escrow Agent may conclusively rely upon and act in
accordance with any certificate, instruction notice, letter, telegram, cablegram
or other written instrument believed by it to be genuine and signed by the
Company and Purchaser.
(e) The Company and Purchaser agree to hold harmless, indemnify
and defend the Escrow Agent for, from and against any loss, damage, liability,
judgment, cost and expense whatsoever, including attorney's fees, suffered or
incurred by it by reason of, or on account of, any misrepresentation made to it
or as to its status or activities as Escrow Agent under this Agreement except
for any loss, damage, liability, judgment, cost or expense resulting from gross
negligence, willful misconduct or bad faith on the part of the Escrow Agent.
(f) The Escrow Agent shall not be required to defend any legal
proceeding which may be instituted against it in respect of the subject matter
of this Agreement. If any such legal proceeding is instituted against it, the
Escrow Agent agrees promptly to give notice of such proceeding to the Company
and Purchaser. The Escrow Agent shall not be required to institute legal
proceedings of any kind.
(g) The Escrow Agent shall not, by act, delay, omission or
otherwise, be deemed to have waived any right or remedy it may have either under
this Agreement or generally, unless such waiver be in writing, and no waiver
shall be valid unless it is in writing, signed by the Escrow Agent, and only to
the extent expressly therein set forth. A waiver by the Escrow Agent under the
terms of this Agreement shall not be construed as a bar to, or waiver of, the
same or any other such right or remedy which it would otherwise have on any
other occasion.
(h) The Escrow agent may refrain from taking any action other
than keeping all property held by it in escrow if it is uncertain concerning its
duties or rights under this Escrow Agreement or receives claims or demands from
any person or entity or receives a final judgment by a court of competent
jurisdiction if it deems that necessary or advisable.
5. MISCELLANEOUS.
5.1. The terms and conditions of this Agreement shall inure to
the benefit of and be binding
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upon the respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied is intended to confer upon any party, other
than the parties hereto, and their respective successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
5.2. Any notice under the provisions of this Agreement shall be
given in writing and delivered by hand, overnight courier or messenger service,
against signed receipt or acknowledgment of receipt, or by registered or
certified mail, return receipt requested, or telecopier or similar means of
communication if receipt is confirmed or if transmission is confirmed by mail as
provided in this paragraph 5.2, to the Purchaser at its address set forth above
and/or its telecopier number set forth on the signature page hereof or to the
Company at its address set forth above and/or its telecopier number set forth on
the signature page hereof, or to the Escrow Agent at its address set forth above
and/or its telecopier number set forth on the signature page hereof. Any party
may by like notice, change the address to which notice should be given. This
Agreement and the Debentures and Warrant may be executed by the parties hereto
by exchange of signatures by telecopier or similar means in the manner provided
herein.
5.3 This Agreement shall be governed by and construed in
accordance with the laws of the state of Florida.
5.4 This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
5.5 The warranties and representations of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the closing hereunder.
5.6 The Company agrees to pay Dusseldorf a fee in the amount of
8% of $4,800,000, equal to a fee of $384,000 whereof $192,000 will be paid in
cash out of Escrow on the date of closing, and the remaining $192,000 will be
paid by the Company issuing 30,918 shares of common stock registered on Form S-8
or Form S-3 (provided a form S-3 is filed with the SEC no later than 30 days
after the date of closing). Dusseldorf undertakes not to sell such shares
registered under such registration statement for a period of, at a minium, four
(4) months after the date of execution of the Subscription Agreement.
5.7 The Company represents and warrants that it is not at
present engaged in discussions, and will not be so engaged through August 31,
1997 with any persons, except Dusseldorf, for the placement of any equity
financing for the Company pursuant to a Regulation S or offshore (outside North
America) Regulation D offering and the Company will not be permitted to issue
any of its equity securities (or instruments convertible into or exercisable for
equity securities) in any Regulation S or offshore (outside North America)
Regulation D offering except to Dusseldorf or the Purchasers or other parties
contacted by Dusseldorf in a period from today's date until August 31, 1997. For
the period August 31, 1997 until February 28, 1998, the Company shall give
Dusseldorf fifteen (15) business days prior written notice ("Company Notice") of
its intention to conduct any Regulation S
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or offshore Regulation D offering and Dusseldorf shall have right of first
refusal with respect to any such offerings. If Dusseldorf declines to exercise
its rights of first refusal, or fails to do so within the prescribed time
periods, the Company may proceed with the proposed offering on the terms
described in the Company Notice. Nothing in this section shall be deemed to
prevent the Company from conducting, of onshore Regulation D offerings or an
offshore offering to a strategic major corporate investor.
5.8. In the event that the Securities and Exchange Commission
amends Regulation S under the Act to increase the 40-day restricted period under
Regulation S (the "Amendment"), the Amendment is effective within 45 days of the
date hereof, and the Amendment extends the holding period applicable to the
Shares underlying the Debentures and the Warrant held by the Purchaser and
Dusseldorf then, upon receipt of a written request by the Company from the
Purchaser to effect registration of the Shares, the Company shall, subject to
the limitations set forth below, within thirty (30) days, use reasonable efforts
to file a registration statement covering all Shares that the Purchaser has
requested to be registered. The Company may require each Purchaser and
Dusseldorf as a condition of participating in such registration to execute and
deliver a letter in the form of Exhibit C. The Company shall not be obligated to
effect, or take any action to effect, any such registration under this section
5.8 if (i) in the good faith judgment of the Board of Directors of the Company
such registration would adversely affect the Company and the Board of Directors
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to the
Purchaser a certificate signed by the President or the Chief Executive Officer
of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would adversely affect the Company for such registration
statement to be filed in the near future and that it is, therefore, essential to
defer the filing of such registration statement, then the Company shall have the
right to defer such filing for the period during which such filing would
adversely affect the Company, provided that the Company may not defer the filing
for a period of more than one hundred and eighty (180) days after the receipt of
the request by the Purchaser. The registration statement filed pursuant to the
request of the Purchaser may include other securities of the Company, with
respect to which registration rights have been granted, and may include
securities of the Company being sold for the account of the Company. The Company
shall not be required to effect a registration pursuant to this Section 5.8 on
more than one occasion, but shall be required to keep the registration statement
effective until all shares are sold or can be sold pursuant to Rule 144(k) under
the act, or to cause any registration of the Debentures or the Warrant. In
addition, the Company shall not be obligated to effect, or to take any action to
effect, any such registration during the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred twenty (120) days after the effective date of,
a registration statement otherwise filed by the Company covering shares newly
issued by the Company or held by selling shareholders, or both; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such prior registration statement to become effective.
5.9 Except as herein provided, any provision of this Agreement
may be amended or waived by a written instrument signed by the parties hereto.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals as
of the date and year first written above.
Country in which this Agreement is executed by Purchaser:
Dusseldorf Securities Limited
By: _______________________________________
Name: Title:
Telecopier: No.:___________________________
___________________________________________
By: _______________________________________
Name: Title:
Telecopier No.:____________________________
___________________________________________
By:________________________________________
Name: Title:
Telecopier No.:____________________________
___________________________________________
By:________________________________________
Name: Title:
The Panda Project, Inc.
By:
----------------------------------------
Name: Title:
Telecopier No.: ___________________________
Loselle Greenawalt Kaplan Blair & Adler
By:
---------------------------------------
(Escrow Agent)
Telecopier No.: (212) 986-6852
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