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): June 11, 1999
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The Panda Project, Inc.
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(Exact name of registrant specified in Charter)
Florida 0-24030 65-0323354
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
951 Broken Sound Parkway NW
Boca Raton, Florida 33487
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(Address of principal executive offices) Zip Code
Registrant's telephone, including area code: 561-994-2300
(Former name and former address, if changed since last report)
Item 5. Other Events.
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On Friday, June 11, 1999, The Panda Project, Inc. (the
"Company") entered into agreements with Silicon Bandwidth, Inc.
("SBI") pursuant to which SBI will lend the Company $300,000. In
connection with the loan, the Company granted to SBI a security
interest in substantially all of the assets of the Company
pursuant to the Security Agreement, dated June 11, 1999, by and
between the Company and SBI. The loan bears an interest rate of
6% per annum and is due and payable on September 30, 1999.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
10.1 Security Agreement dated June 11, 1999, by and
between The Panda Project, Inc. and Silicon
Bandwidth, Inc.
10.2 Promissory Note dated June 11, 1999, issued to
Silicon Bandwidth, Inc.
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/ Melissa F. Crane
---------------------------
Melissa F. Crane
Acting Chief Financial
Officer
Dated: June 17, 1999
Exhibit 10.1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 11,
1999, is made between The Panda Project, Inc., a Florida
corporation ("Debtor") and Silicon Bandwidth, Inc., a Delaware
corporation ("Secured Party").
Debtor and Secured Party hereby agree as follows:
SECTION 1 Definitions; Interpretation.
(a) All capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings assigned to
them in the Note.
(b) As used in this Agreement, the following terms
shall have the following meanings:
"Collateral" has the meaning set forth in Section 2.
"Documents" means this Agreement, the Note, and all
other certificates, documents, agreements and instruments
delivered to Secured Party under the Note or in connection with
the Obligations.
"Lien" means any mortgage, deed of trust, pledge,
security interest, assignment, deposit arrangement, charge or
encumbrance, lien, or other type of preferential arrangement.
"Note" means that certain Secured Promissory Note dated
of even date herewith made by Debtor in favor of Secured Party,
as amended, modified, renewed, extended or replaced from time to
time.
"Obligations" means the indebtedness, liabilities and
other obligations of Debtor to Secured Party under or in
connection with this Agreement, the Note and the other Documents,
whether now existing or hereafter arising, and whether due or to
become due, absolute or contingent, liquidated or unliquidated,
determined or undetermined.
"Permitted Lien" means (i) any Lien in favor of Secured
Party; (ii) any Liens existing as of the date hereof and
disclosed in writing to Secured Party; (iii) Liens upon or in any
property acquired or held by Debtor or any of its subsidiaries to
secure the purchase price of such property or indebtedness
incurred solely for the purpose of financing the acquisition of
such property, provided that the Lien is confined solely to the
property so acquired and improvements thereon; and (iv) other
Liens which arise in the ordinary course of business and do not
materially impair Debtor's ownership or use of the Collateral or
the value thereof.
"Person" means an individual, corporation, partnership,
joint venture, trust, unincorporated organization, governmental
agency or authority, or any other entity of whatever nature.
"UCC" means the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of New York;
provided, however, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or
priority of the security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of
definitions related to such provisions.
(c) Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the
meanings assigned to them in the UCC. In this Agreement, (i) the
meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined; and (ii) the
captions and headings are for convenience of reference only and
shall not affect the construction of this Agreement.
SECTION 2 Security Interest.
(a) As security for the payment and performance of
the Obligations, Debtor hereby pledges, assigns, transfers,
hypothecates and sets over to Secured Party, and hereby grants to
Secured Party a security interest in, all of Debtor's right,
title and interest in, to and under the following property,
wherever located and whether now existing or owned or hereafter
acquired or arising (collectively, the "Collateral"):
(i) all personal property of the Debtor including,
without limitation, all accounts, rights to payment, chattel
paper, contract rights, instruments, documents, money, investment
property, deposits and deposit accounts, goods, equipment,
inventory and general intangibles (including all patents,
trademarks, service marks, copyrights, mask works, registrations
or applications for registration of any of the foregoing and all
rights, licenses or agreements relating thereto);
(ii) all books, records and other written,
electronic or other documentation in whatever form maintained by
or for Debtor in connection with the ownership of its assets or
the conduct of its business or evidencing or containing
information relating to the Collateral; and
(iii) all products and proceeds, including
insurance proceeds, and proceeds of proceeds and products of
products of any and all of the foregoing.
(b) Anything herein to the contrary
notwithstanding, (i) Debtor shall remain liable under any
contracts, agreements and other documents included in the
Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by
Secured Party of any of the rights hereunder shall not release
Debtor from any of its duties or obligations under such
contracts, agreements and other documents included in the
Collateral, and (iii) Secured Party shall not have any obligation
or liability under any contracts, agreements and other documents
included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or
duties of Debtor thereunder or to take any action to collect or
enforce any such contract, agreement or other document included
in the Collateral hereunder.
(c) This Agreement shall create a continuing
security interest in the Collateral which shall remain in effect
until terminated in accordance with Section 18 hereof.
SECTION 3 Financing Statements, Etc. Debtor shall
execute and deliver to Secured Party concurrently with the
execution of this Agreement, and at any time and from time to
time thereafter, all financing statements, assignments,
continuation financing statements, termination statements,
account control agreements, and other documents and instruments,
in form satisfactory to Secured Party, and take all other action,
as Secured Party may reasonably request, to perfect and continue
perfected, maintain the priority of or provide notice of the
security interest of Secured Party in the Collateral and to
accomplish the purposes of this Agreement.
SECTION 4 Representations and Warranties. Debtor
represents and warrants to Secured Party that:
(a) The execution, delivery and performance by the
Debtor of the Note, this Agreement and the other Documents have
been duly authorized by all necessary corporate action. The
Note, this Agreement and the other Documents have been duly
executed on behalf of the Debtor and constitute the legal, valid
and binding obligations of the Debtor enforceable in accordance
with their respective terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or concerning equitable
remedies. No consents, authorizations, approvals, licenses or
exemptions are necessary for the authorization, execution or
performance of the Note, this Agreement or the other Documents .
(b) The Debtor is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite power to
perform its obligations under the Note, this Agreement and the
other Documents and to own and operate its assets and conduct its
business where currently conducted.
(c) None of the documents or materials relating to
the Debtor provided to the Secured Party in connection with the
Note, this Agreement or the other Documents contains any untrue
statement of material fact or omits to state any fact necessary
in order to make the statements contained therein not materially
misleading.
(d) Since March 31, 1999, there has been no
material adverse change in the business, operations or financial
condition of the Debtor and its subsidiaries taken as a whole.
(e) Debtor's chief executive office and principal
place of business is located at the address set forth in Schedule
1; all other locations where Debtor conducts business or
Collateral is kept are set forth in Schedule 1; and all trade
names and fictitious names under which Debtor at any time in the
past has conducted or presently conducts its business operations
are set forth in Schedule 1.
(f) Debtor is the sole and complete owner of the
Collateral, free from any Lien other than Permitted Liens.
(g) All of Debtor's U.S. and foreign patents and
patent applications, copyrights (whether or not registered),
applications for copyright, trademarks, service marks and trade
names (whether registered or unregistered), and applications for
registration of such trademarks, service marks and trade names,
are set forth in Schedule 2.
SECTION 5 Covenants. So long as any of the
Obligations remain unsatisfied, Debtor agrees that:
(a) Debtor shall appear in and defend any action,
suit or proceeding which may affect to a material extent its
title to, or right or interest in, or Secured Party's right or
interest in, the Collateral, and shall do and perform all
reasonable acts that may be necessary and appropriate to
maintain, preserve and protect the Collateral.
(b) Debtor shall comply in all material respects
with all laws, regulations and ordinances, and all policies of
insurance, relating in a material way to the possession,
operation, maintenance and control of the Collateral.
(c) Debtor shall give prompt written notice to
Secured Party (and in any event not later than 30 days following
any change described below in this subsection) of: (i) any
change in the location of Debtor's chief executive office or
principal place of business, (ii) any change in the locations set
forth in Schedule 1; (iii) any change in its name, (iv) any
changes in, additions to or other modifications of its trade
names and trade styles set forth in Schedule 1 or Schedule 2, and
(v) any changes in its identity or structure in any manner which
might make any financing statement filed hereunder incorrect or
misleading.
(d) Debtor shall carry and maintain in full force
and effect, at its own expense and with financially sound and
reputable insurance companies, insurance with respect to the
Collateral in such amounts, with such deductibles and covering
such risks as is customarily carried by companies engaged in the
same or similar businesses and owning similar properties in the
localities where Debtor operates.
(e) Debtor shall not surrender or lose possession
of (other than to Secured Party), sell, lease, rent, license or
otherwise dispose of or transfer any of the Collateral or any
right or interest therein, except in the ordinary course of
business; provided that no such disposition or transfer of
Collateral consisting of investment property or instruments shall
be permitted while any Event of Default exists.
(f) Debtor shall keep the Collateral free of all
Liens except Permitted Liens.
(g) Upon the request of Secured Party, Debtor shall
(i) immediately deliver to Secured Party, or an agent designated
by it, appropriately endorsed or accompanied by appropriate
instruments of transfer or assignment, all documents and
instruments, all certificated securities with respect to any
investment property, all letters of credit and all accounts and
other rights to payment at any time evidenced by promissory
notes, trade acceptances or other instruments, (ii) cause any
securities intermediaries to show on their books that Secured
Party is the entitlement holder with respect to any investment
property, and/or obtain account control agreements in favor of
Secured Party from such securities intermediaries, in form and
substance satisfactory to Secured Party, with respect to any
investment property, as requested by Secured Party, (iii) mark
all documents and chattel paper with such legends as Secured
Party shall reasonably specify, and (iv) obtain consents from any
letter of credit issuers with respect to the assignment to
Secured Party of any letter of credit proceeds.
(h) Debtor shall at any reasonable time and from
time to time permit Secured Party or any of its agents or
representatives to visit the premises of Debtor and inspect the
Collateral and to examine and make copies of and abstracts from
the records and books of account of Debtor.
(i) If and when Debtor shall obtain rights to any
new patents, trademarks, service marks, trade names or
copyrights, or otherwise acquire or become entitled to the
benefit of, or apply for registration of, any of the foregoing,
Debtor (i) shall promptly notify Secured Party thereof and (ii)
hereby authorizes Secured Party to modify, amend, or supplement
Schedule 2 and from time to time to include any of the foregoing
and make all necessary or appropriate filings with respect
thereto.
(j) Debtor shall not enter into any agreement
(including any license or royalty agreement) pertaining to any of
its patents, copyrights, trademarks, service marks and trade
names, except for non-exclusive licenses in the ordinary course
of business
(k) Debtor shall give Secured Party immediate
notice of the establishment of any new deposit account and any
new securities account with respect to any investment property.
SECTION 6 Authorization; Secured Party Appointed
Attorney-in-Fact. Secured Party shall have the right to, in the
name of Debtor, or in the name of Secured Party or otherwise,
without the requirement of assent by Debtor, and Debtor hereby
constitutes and appoints Secured Party (and any of Secured
Party's officers, employees or agents designated by Secured
Party) as Debtor's true and lawful attorney-in-fact, with full
power and authority to: (i) sign any of the financing statements
and other documents and instruments to be executed or filed to
perfect or continue perfected, maintain the priority of or
provide notice of Secured Party's security interest in the
Collateral (including any notices to or agreements with any
securities intermediary); (ii) assert, adjust, sue for,
compromise or release any claims under any policies of insurance;
and (iii) execute any and all such other documents and
instruments, and do any and all acts and things for and on behalf
of Debtor, which Secured Party may deem reasonably necessary or
advisable to maintain, protect, realize upon and preserve the
Collateral and Secured Party's security interest therein and to
accomplish the purposes of this Agreement. Secured Party agrees
that, except upon and during the continuance of an Event of
Default, it shall not exercise the power of attorney, or any
rights granted to Secured Party, pursuant to clauses (ii) and
(iii). The foregoing power of attorney is coupled with an
interest and irrevocable so long as the Obligations have not been
paid and performed in full. Debtor hereby ratifies, to the
extent permitted by law, all that Secured Party shall lawfully
and in good faith do or cause to be done by virtue of and in
compliance with this Section 6.
SECTION 7 Remedies.
(a) Upon the occurrence and continuance of any
Event of Default, Secured Party may declare any of the
Obligations to be immediately due and payable and shall have, in
addition to all other rights and remedies granted to it in this
Agreement, the Note or any other Document, all rights and
remedies of a secured party under the UCC and other applicable
laws. Without limiting the generality of the foregoing, Secured
Party may sell, resell, lease, use, assign, license, sublicense,
transfer or otherwise dispose of any or all of the Collateral in
its then condition or following any commercially reasonable
preparation or processing (utilizing in connection therewith any
of Debtor's assets, without charge or liability to Secured Party
therefor) at public or private sale, by one or more contracts, in
one or more parcels, at the same or different times, for cash or
credit, or for future delivery without assumption of any credit
risk, all as Secured Party deems advisable; provided, however,
that Debtor shall be credited with the net proceeds of sale only
when such proceeds are finally collected by Secured Party.
Secured Party shall have the right upon any such public sale,
and, to the extent permitted by law, upon any such private sale,
to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption, which right or equity of
redemption Debtor hereby releases, to the extent permitted by
law. Debtor hereby agrees that the sending of notice by ordinary
mail, postage prepaid, to the address of Debtor set forth herein,
of the place and time of any public sale or of the time after
which any private sale or other intended disposition is to be
made, shall be deemed reasonable notice thereof if such notice is
sent ten days prior to the date of such sale or other disposition
or the date on or after which such sale or other disposition may
occur, provided that Secured Party may provide Debtor shorter
notice or no notice, to the extent permitted by the UCC or other
applicable law.
(b) For the purpose of enabling Secured Party to
exercise its rights and remedies under this Section 7 or
otherwise in connection with this Agreement, Debtor hereby grants
to Secured Party an irrevocable, non-exclusive and assignable
license (exercisable without payment or royalty or other
compensation to Debtor) to use, license or sublicense any
intellectual property Collateral.
(c) The cash proceeds actually received from the
sale or other disposition or collection of Collateral, and any
other amounts received in respect of the Collateral the
application of which is not otherwise provided for herein, shall
be applied first, to the payment of the reasonable costs and
expenses of Secured Party in exercising or enforcing its rights
hereunder and in collecting or attempting to collect any of the
Collateral, and to the payment of all other amounts payable to
Secured Party pursuant to Section 11 hereof; and second, to the
payment of the Obligations. Any surplus thereof which exists
after payment and performance in full of the Obligations shall be
paid over to Debtor or otherwise disposed of in accordance with
the UCC or other applicable law. Debtor shall remain liable to
Secured Party for any deficiency which exists after any sale or
other disposition or collection of Collateral.
SECTION 8 Certain Waivers. Debtor waives, to the
fullest extent permitted by law, (i) any right of redemption with
respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling of the
Collateral or other collateral or security for the Obligations;
(ii) any right to require Secured Party (A) to proceed against
any Person, (B) to exhaust any other collateral or security for
any of the Obligations, (C) to pursue any remedy in Secured
Party s power, or (D) to make or give any presentments, demands
for performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the
Collateral; and (iii) all claims, damages, and demands against
Secured Party arising out of the repossession, retention, sale or
application of the proceeds of any sale of the Collateral
SECTION 9 Notices. All notices or other
communications hereunder shall be given in accordance with the
notice provisions in the Note.
SECTION 10 No Waiver; Cumulative Remedies. No
failure on the part of Secured Party to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude
any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights and remedies
under this Agreement are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be
available to Secured Party.
SECTION 11 Costs and Expenses.
(a) Debtor agrees to pay on demand:
(i) all title, appraisal, survey, audit,
consulting, search, recording, filing and similar costs, fees and
expenses incurred or sustained by Secured Party in connection
with this Agreement or the Collateral; and
(ii) all costs and expenses of Secured Party, and
the fees and disbursements of counsel, in connection with the
enforcement or attempted enforcement of, and preservation of any
rights or interests under, this Agreement and the Note, including
in any out-of-court workout or other refinancing or restructuring
or in any bankruptcy case, and the protection, sale or collection
of, or other realization upon, any of the Collateral, including
all expenses of taking, collecting, holding, sorting, handling,
preparing for sale, selling, or the like, and other such expenses
of sales and collections of Collateral.
(b) Any amounts payable to Secured Party under this
Section 11 or otherwise under this Agreement if not paid upon
demand shall bear interest from the date of such demand until
paid in full, at the default rate of interest set forth in the
Note.
SECTION 12 Binding Effect. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by
Debtor, Secured Party and their respective successors and
assigns.
SECTION 13 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the law of the
State of New York, except as required by mandatory provisions of
law and to the extent the validity or perfection of the security
interests hereunder, or the remedies hereunder, in respect of any
Collateral are governed by the law of a jurisdiction other than
New York.
SECTION 14 Waiver of Jury Trial. The parties
hereby agree to waive their respective rights to a trial by jury
of any claim or cause of action based upon or arising out of or
related to this Agreement, the Note or the other Documents or the
transactions contemplated hereby or thereby in any action,
proceeding or other litigation of any type brought by any of the
parties against any other party or parties. The parties hereby
agree that any such claim or cause of action shall be tried by a
court trial without a jury. Without in any way limiting the
foregoing, the parties further agree that their respective right
to a trial by jury is waived by operation of this section as to
any action, counterclaim or other proceeding which seeks, in
whole or in part, to challenge the validity or enforceability of
this Agreement, the Note or any other Document or any provision
thereof.
SECTION 15 Entire Agreement; Amendment. This
Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and shall not be amended
except by the written agreement of the parties.
SECTION 16 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under all applicable laws and
regulations. If, however, any provision of this Agreement shall
be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified,
it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction.
SECTION 17 Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.
SECTION 18 Termination. Upon irrevocable payment
and performance in full of all Obligations, this Agreement shall
terminate and Secured Party shall promptly, at the cost of the
Debtor, execute and deliver to Debtor such documents and
instruments reasonably requested by Debtor as shall be necessary
to evidence termination of all security interests given by Debtor
to Secured Party hereunder; provided, however, that the
obligations of Debtor under Section 11 hereof shall survive such
termination.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE PANDA PROJECT, INC.
By /s/ Melissa F. Crane
----------------------
Title: Acting Chief
Financial Officer
SILICON BANDWIDTH, INC.
By /s/ Alan Salzman
----------------------
Title: Chairman
Exhibit 10.2
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS. IT
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNDER CIRCUMSTANCES THAT
WOULD RESULT IN A VIOLATION OF THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933 OR SUCH OTHER LAWS.
SECURED PROMISSORY NOTE
U.S. $ 300,000 Dated: June 11, 1999
FOR VALUE RECEIVED, the undersigned, THE PANDA PROJECT, INC., a
Florida corporation (the "Borrower"), HEREBY UNCONDITIONALLY
PROMISES TO PAY to the order of SILICON BANDWIDTH, INC., a
Delaware corporation (the "Lender"), the principal sum of THREE
HUNDRED THOUSAND UNITED STATES DOLLARS (U.S. $300,000), on
September 30, 1999 (the "Maturity Date").
The Borrower further promises to pay interest on the
outstanding principal amount of this Promissory Note (this
"Note") from the date hereof until maturity, at a rate per annum
equal at all times to six per cent (6%) per annum. Accrued
interest shall be payable on the Maturity Date. In the event
that any amount of principal or interest, or any other amount
payable hereunder, is not paid in full when due (whether at
stated maturity, by acceleration or otherwise), the Borrower
shall pay interest on such unpaid principal, interest or other
amount, from the date such amount becomes due until the date such
amount is paid in full, payable on demand, at a rate per annum
equal at all times to ten per cent (10%) per annum. All
computations of interest shall be made on the basis of a year of
365 or 366 days, as the case may be, for the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
This Note is secured by certain collateral more
specifically described in the Security Agreement dated of even
date herewith between Borrower and Lender (the "Security
Agreement"). Capitalized terms not otherwise defined in this
Note shall have the meanings ascribed to them in the Security
Agreement.
All payments hereunder shall be made in lawful money of
the United States of America and in same day or immediately
available funds, to the Lender, at 1001 Bayhill Drive, Suite 140,
San Bruno, California 94066, or to such other office and account
of the Lender as it from time to time shall designate in a
written notice to the Borrower.
Whenever any payment hereunder shall be stated to be
due, or whenever any interest payment date or any other date
specified hereunder would otherwise occur, on a day other than a
Business Day (as defined below), then, except as otherwise
provided herein, such payment shall be made, and such interest
payment date or other date shall occur, on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of payment of interest hereunder. As
used herein, "Business Day" means a day (i) other than Saturday
or Sunday, and (ii) on which commercial banks are open for
business in New York, New York.
All payments shall be made hereunder unconditionally in
full without deduction, setoff, counterclaim or other defense,
including, without limitation, any deduction or setoff arising
out of or in connection with the Letter of Intent dated as of May
14, 1999 by and between Lender and Borrower (the "Letter of
Intent"), and the Asset Purchase Agreement by and between Lender
and Borrower to be executed pursuant to the Letter of Intent (the
"Asset Purchase Agreement"); provided, however, that no payment
hereunder shall be deemed to be a waiver of any right or claim
that the Borrower may have under such agreements. The Borrower
represents and warrants to the Lender that, to the best of
Borrower's knowledge, there is no claim, defense, counterclaim or
set-off which could be asserted by or is available to the
Borrower against the Lender.
Borrow further agrees with Lender that notwithstanding
the Exclusivity Period set forth in Section 16 of the Letter of
Intent, the Exclusivity Period defined therein shall terminate on
September 30, 1999.
The Borrower shall pay all amounts due under this Note
free and clear of, and without reduction for or on account of,
any present and future taxes, levies, imposts, duties, fees,
assessments, charges, deductions or withholdings and all
liabilities with respect thereto (collectively "Taxes"). If any
Taxes shall be required by law to be deducted or withheld from
any payment, the Borrower shall increase the amount paid so that
the Lender receives when due (and is entitled to retain), after
deduction or withholding for or on account of such Taxes
(including deductions or withholdings applicable to additional
sums payable under this paragraph), the full amount of the
payment provided for in this Note.
If the Lender is required by law to make any payment on
account of Taxes, or any liability in respect of any Tax is
imposed, levied or assessed against the Lender, the Borrower
shall indemnify the Lender for and against such payment or
liability, together with any incremental taxes, interest or
penalties, and all costs and expenses, payable or incurred in
connection therewith, including Taxes imposed on amounts payable
under this paragraph whether or not such payment or liability was
correctly or legally asserted. A certificate of the Lender as to
the amount of any such payment shall, in the absence of manifest
error, be conclusive and binding for all purposes.
Anything herein to the contrary notwithstanding, if
during any period for which interest is computed hereunder, the
amount of interest computed on the basis provided for in this
Note, together with all fees, charges and other payments which
are treated as interest under applicable law, as provided for
herein or in any other document executed in connection herewith,
would exceed the amount of such interest computed on the basis of
the Highest Lawful Rate, the Borrower shall not be obligated to
pay, and the Lender shall not be entitled to charge, collect,
receive, reserve or take, interest in excess of the Highest
Lawful Rate, and during any such period the interest payable
hereunder shall be computed on the basis of the Highest Lawful
Rate. As used herein, "Highest Lawful Rate" means the maximum
non-usurious rate of interest, as in effect from time to time,
which may be charged, contracted for, reserved, received or
collected by the Lender in connection with this Note under
applicable law.
Any of the following events which shall occur shall
constitute an "Event of Default":
(a) The Borrower shall fail to pay when due any amount
of principal or interest on this Note or any other amount payable
under this Note, the Security Agreement or any other Document.
(b) Any representation or warranty by the Borrower under
or in connection with this Note, the Security Agreement or any
other Document shall prove to have been incorrect in any material
respect when made or deemed made.
(c) The Borrower shall fail to perform or observe any
other term, covenant or agreement contained in this Note, the
Security Agreement or any other Document on its part to be
performed or observed and any such failure shall remain
unremedied for a period of 10 days from the occurrence thereof.
(d) The Borrower shall fail to make payment when due on
any other indebtedness for money borrowed with an aggregate
principal amount outstanding of $ 10,000.00 or more, or otherwise
fails to perform any covenant in or otherwise breaches the terms
of any instrument relating to such indebtedness which failure or
breach permits the holder of such indebtedness to accelerate the
maturity of such indebtedness.
(e) Any levy upon, seizure or attachment of the
Collateral or any part thereof, or any material impairment in the
value of the Collateral or the priority of the Lender's lien
thereon.
(f) The Borrower or any other Person shall challenge the
validity of this Note, or the Security Agreement, or the grant of
the security interest thereunder.
(g) The Borrower shall (i) liquidate, wind up or
dissolve (or suffer any liquidation, wind-up or dissolution),
(ii) suspend its operations other than in the ordinary course of
business, or (iii) take any corporate action to authorize any of
the actions or events set forth above in this paragraph (g).
(h) A final judgment or order for the payment of money
in excess of $10,000.00 (excluding the settlement of the lawsuit
between Borrower and Promethean LLC for up to $35,000.00) which
is not fully covered by third-party insurance shall be rendered
against the Borrower; or any non-monetary judgment or order shall
be rendered against the Borrower which has or would reasonably be
expected to have a material adverse effect upon the operations,
properties, business or condition (financial or otherwise) of the
Borrower; and in each case there shall be any period of 20
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect.
(i) The Borrower shall merge with or consolidate into or
acquire all or a substantial part of the assets of another Person
or sell, lease, transfer or otherwise dispose of all or a
substantial part of its assets.
(j) The Borrower shall form any subsidiaries, alter its
capital structure, declare or pay any dividends or purchase,
redeem or retire or otherwise acquire for value any of its
capital stock now or hereafter outstanding, return capital to its
shareholders or distribute assets to its shareholders; provided,
however, that the Borrower may, pursuant to the terms and
conditions of its existing stock option and stock purchase
agreements between the Borrower and its employees and
consultants, issue stock options and repurchase unvested shares
of common stock of the Borrower.
If any Event of Default shall occur, the Lender may (i)
by notice to the Borrower, declare the entire unpaid principal
amount of this Note, all interest accrued and unpaid hereon and
all other amounts payable hereunder to be forthwith due and
payable, whereupon all unpaid principal under this Note, all such
accrued interest and all such other amounts shall become and be
forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (ii) whether or not the actions
referred to in clause (i) have been taken, exercise any or all of
the Lender's rights and remedies under the Security Agreement and
proceed to enforce all other rights and remedies available to the
Lender under applicable law.
No amendment or waiver of any provision of this Note,
nor any consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and
signed by the Lender and then such amendment, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing
(including by facsimile) and mailed, sent or delivered to the
respective parties hereto at or to the following addresses or
facsimile numbers (or at or to such other address or facsimile
number as shall be designated by any party in a written notice to
the other parties hereto):
If to the Lender: Silicon Bandwidth, Inc.
1001 Bayhill Drive, Suite
San Bruno, CA 94066
Attn: Chief Executive Officer
Facsimile: (650) 869-6078
If to the Borrower: The Panda Project, Inc.
951 Broken Sound Parkway
Boca Raton, FL 33487
Attn: Chief Executive Officer
Facsimile: (561) 994-0191
All such notices and communications shall be effective (i) if
delivered by hand, upon delivery; (ii) if sent by mail, upon the
earlier of the date of receipt or five Business Days after
deposit in the mail, first class (or air mail, with respect to
communications to be sent to or from the United States), postage
prepaid; and (iii) if sent by facsimile, when sent.
No failure on the part of the Lender to exercise, and
no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights and
remedies under this Note are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be
available to the Lender.
Whenever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of
this Note shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid
only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Note, or the validity
or effectiveness of such provision in any other jurisdiction.
The Borrower agrees to pay on demand all costs and
expenses of the Lender, and the fees and disbursements of counsel
(including the allocated costs of internal counsel), in
connection with (i) any amendments, modifications or waivers of
the terms hereof, (ii) any Event of Default, (iii) the
enforcement or attempted enforcement of, and preservation of any
rights under, this Note, and (iv) any out-of-court workout or
other refinancing or restructuring or in any bankruptcy case,
including, without limitation, any and all losses, costs and
expenses sustained by the Lender as a result of any failure by
the Borrower to perform or observe its obligations contained
herein. In addition, the Borrower agrees to indemnify the Lender
against and hold it harmless from any and all present and future
stamp, transfer, documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction by reason
of the execution, delivery, performance and enforcement of this
Note.
This Note shall be binding upon, inure to the benefit
of and be enforceable by the Borrower, the Lender and their
respective successors and assigns.
The Borrower shall not have the right to assign its
rights and obligations hereunder or any interest herein without
the prior written consent of the Lender. The Lender may sell,
assign, transfer or grant participations in all or any portion of
the Lender's rights and obligations hereunder. In the event of
any such assignment the assignee shall be deemed the "Lender" for
all purposes of this Note and any other documents and instruments
relating hereto with respect to the rights and obligations
assigned to it. The Borrower agrees that in connection with any
such grant or assignment, the Lender may deliver to the
prospective participant or assignee financial statements and
other relevant information relating to the Borrower and its
Subsidiaries.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
THE BORROWER AND LENDER HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS NOTE, THE
SECURITY AGREEMENT OR ANY OTHER DOCUMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTIES THERETO. THE BORROWER AND LENDER HEREBY AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
BORROWER AND LENDER FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS PARAGRAPH AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS NOTE, THE SECURITY AGREEMENT OR ANY OTHER DOCUMENT OR ANY
PROVISION THEREOF.
IN WITNESS WHEREOF, the Borrower has duly executed this
Note, as of the date first above written.
THE PANDA PROJECT, INC.
By /s/ Melissa F. Crane
Title: Acting Chief
Financial Officer
