<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
The Panda Project, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
69833F104
- --------------------------------------------------------------------------------
(CUSIP Number)
Alan E. Salzman
Silicon Bandwidth, Inc.
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
(650) 866-3100
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 14, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
<PAGE> 2
(continued on following pages)
CUSIP NO. 69833F104 13D
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SILICON BANDWIDTH, INC.
SEE ITEM 2 FOR IDENTIFICATION OF CONTROLLING PERSON.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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(7) SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 24,997,606
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,997,606
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(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 3
CUSIP NO. 69833F104 13D
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
VANTAGE POINT VENTURE PARTNERS 1996, L.P.
SEE ITEM 2 FOR IDENTIFICATION OF GENERAL PARTNER.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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(7) SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 24,997,606
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,997,606
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
PA
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*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 4
CUSIP NO. 69833F104 13D
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
VANTAGE POINT ASSOCIATES, L.P.
SEE ITEM 2 FOR IDENTIFICATION OF MANAGING MEMBERS.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 24,997,606
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,997,606
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
OO
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 5
CUSIP NO. 69833F104 13D
---------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JAMES D. MARVER
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES CITIZEN
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 24,997,606
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,997,606
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 6
CUSIP NO. 69833F104 13D
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ALAN E. SALZMAN
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
CANADIAN CITIZEN
---------------------------------------------------------------------
(7) SOLE VOTING POWER
NUMBER OF 0
SHARES --------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 24,997,606
EACH --------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON WITH 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,997,606
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE> 7
Neither the filing of this Schedule 13D nor any of its contents shall be deemed
to constitute an admission by any of the above reporting persons that it or he
is the beneficial owner of any of the Common Stock of The Panda Project, Inc.
referred to herein for purposes of Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Act"), or for any other purpose, and such beneficial
ownership is expressly disclaimed.
<PAGE> 8
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the common stock, par
value $.01 per share (the "Issuer Common Stock"), of The Panda Project, Inc., a
Florida corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 951 Broken Sound Parkway, Boca Raton, FL 33487.
ITEM 2. IDENTITY AND BACKGROUND.
Set forth below is the following information with respect to each
of the persons filing this Schedule 13D and each such person's general partners
or members, as the case may be (the "Reporting Persons"): (a) name; (b) address
of principal offices (if entity) or residence or business address (if
individual); (c) principal business (if entity) or principal occupation and
name, business and address of employer (if individual); (d) information
concerning criminal convictions during the last five years; (e) information
concerning civil or administrative proceedings during the past five years with
respect to any state or federal securities laws and (f) state of organization or
citizenship.
I. Silicon Bandwidth, Inc.
(a) The name of the person filing this statement is Silicon Bandwidth,
Inc., a Delaware corporation ("SBI"). The sole stockholder of SBI is
VantagePoint Venture Partners 1996, L.P., a Delaware limited partnership.
(b) The address of the principal office and principal business of SBI is
1001 Bayhill Drive, Suite 140, San Bruno, CA 94066.
(c) SBI is a newly created corporation that has been formed to acquire
certain assets of the Issuer as described in Item 3.
(d) No criminal convictions or proceedings. (1)
(e) No civil or administrative proceedings. (1)
(f) Delaware.
II. VantagePoint Venture Partners 1996, L.P.
(a) The name of the person filing this statement is VantagePoint Venture
Partners 1996, L.P. a Delaware limited partnership ("VPVP"). The general partner
of VPVP is VantagePoint Associates, L.L.C., a Delaware limited liability
company.
(b) The address of the principal office and principal business of VPVP
is 1001 Bayhill Drive, Suite 140, San Bruno, CA 94066.
(c) VPVP is a limited partnership investment fund whose primary business
is investing in promising technology companies.
(d) No convictions or criminal proceedings. (1)
1
<PAGE> 9
(e) No civil or administrative proceedings. (1)
(f) Delaware.
III. VantagePoint Associates, L.L.C.
(a) The name of the person filing this statement VantagePoint
Associates, L.L.C., a Delaware limited liability company ("VPAssociates"). The
managing members of VPAssociates are James D. Marver and Alan E. Salzman.
(b) The address of the principal office and principal business of
VPAssociates is 1001 Bayhill Drive, Suite 140, San Bruno, CA 94066.
(c) VP Associates is a limited liability investment fund manager.
(d) No convictions or criminal proceedings. (1)
(e) No civil or administrative proceedings.
(f) Delaware.
IV. James D. Marver
(g) The name of the person filing this statement is James D. Marver.
(h) The business address of Mr. Marver is 1001 Bayhill Drive, Suite 140,
San Bruno, CA 94066.
(i) Mr. Marver is a managing member of VPAssociates. VPAssociates is a
limited liability company investment fund manager.
(j) No convictions or criminal proceedings. (1)
(k) No civil or administrative proceedings.
(l) California.
V. Alan E. Salzman
(a) The name of the person filing this statement is Alan E. Salzman.
(b) The business address of Mr. Salzman is 1001 Bayhill Drive, Suite
140, San Bruno, CA 94066.
(c) Mr. Salzman is a managing member of VPAssociates. VPAssociates is a
limited liability company investment fund manager.
(d) No convictions or criminal proceedings. (1)
2
<PAGE> 10
(e) No civil or administrative proceedings.
(f) California.
Footnote to Item 2.
(1) During the last five years, no person listed above has been
convicted in a criminal proceeding (excluding traffic violations or
similar infractions or misdemeanors), nor has any such person been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction that resulted in such person becoming subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Letter of Intent date May 14, 1999 (the "Letter of
Intent"), by and between SBI and the Issuer, the Issuer agreed to sell and SBI
agreed to purchase subject in each case to customary closing conditions
described in the Letter of Intent and as will be described in the Asset Purchase
Agreement (as defined below), the Issuer's intellectual property portfolio as
well as the fixed assets related to the issuer's interconnect and semiconductor
business (the "Assets"). As part of the sale of the Assets to SBI (the "Sale"),
the Issuer has agreed to restructure its outstanding loans with Helix PEI
("Helix") that have been in default since February 15, 1999. As consideration
for the Sale, SBI has agreed to assume such Helix loans upon the closing of the
Sale (the "Closing"). As further consideration for the Sale, SBI has agreed to
issue to the Issuer a 10% ownership interest in SBI upon the Closing. The Sale
is subject to customary closing conditions, including the preparation of a
definitive asset purchase agreement (the "Asset Purchase Agreement") and the
approval of the Sale by the Issuer's shareholders.
The foregoing summary of the Sale is qualified in its entirety by
reference to the copy of the Letter of Intent included as Exhibit 1 to this
Schedule 13D and incorporated herein in its entirety by reference.
ITEM 4. PURPOSE OF TRANSACTION.
(a)-(c) As described in Item 3 above, this statement relates to the
Sale of the Assets to SBI.
As an inducement to SBI to enter into the Letter of Intent, certain
shareholders (collectively, the "Voting Agreement Shareholders") of the Issuer
have entered into a Voting Agreement, dated as of May 14, 1999 (the "Voting
Agreement"), with SBI and have, by executing the Voting Agreement, irrevocably
appointed the directors of SBI (or any nominee of the directors of SBI) as his,
hers or its lawful attorney and proxy. Such proxy gives the SBI the limited
right to vote each of the 24,997,606 shares of Issuer Common Stock beneficially
and collectively owned by the Voting Agreement Shareholders in all matters
related to the Merger. The shared voting power with the certain shareholders of
Issuer relates to 24,997,606 shares of Issuer Common Stock (the "Shares"). The
Voting Agreement Shareholders and the number of shares beneficially owned by
each of them is set forth in Schedule B hereto which is hereby incorporated by
this reference. The foregoing summary of the Voting Agreement is qualified in
3
<PAGE> 11
its entirety by reference to the copy of the form of Voting Agreement included
as Exhibit 2 to this Schedule 13D and incorporated herein in its entirety by
reference.
In exercising its right to vote the Shares as lawful attorney and
proxy of the Voting Agreement Shareholders, SBI (or any nominee of SBI) will be
limited, at every Issuer shareholders meeting and every written consent in lieu
of such meeting to vote the shares (i) in favor of approval of the Sale and (ii)
against any proposal for any recapitalization, merger, sale of assets or other
business combination (other than the Sale) between Issuer and any person or
entity other than SBI or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of Issuer under the Asset Purchase Agreement or which could result in
any of the conditions to Issuer's obligations under the Asset Purchase Agreement
not being fulfilled. The Voting Agreement Shareholders may vote the Shares on
all other matters. The Voting Agreement terminates upon the earlier to occur of
(i) such date and time as the Sales shall become effective in accordance with
the terms and provisions of the Asset Purchase Agreement and (ii) six months
after the date of termination of the Letter of Intent.
(d) Not applicable.
(e) See (a)-(c) above.
(f)-(i) Not applicable
(j) Other than described above, SBI currently has no plan or proposals
which relate to, or may result in, any of the matters listed in Items 4(a)-(j)
of Schedule 13D (although SBI reserves the right to develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) As a result of the Voting Agreement, SBI may be deemed to be
the beneficial owner of at least 24,997,606 shares of Issuer Common Stock. Such
Issuer Common Stock constitutes approximately 52.0% of the issued and
outstanding shares of Issuer Common Stock.
SBI has sole power to vote all of the Shares for the limited
purposes described above. SBI does not have the power to dispose or to direct
the disposition of any shares of Issuer Common Stock. SBI (i) is not entitled to
any rights as a shareholder of Issuer as to the Shares covered by the Voting
Agreement and (ii) disclaims any beneficial ownership of the shares of Issuer
Common Stock which are covered by the Voting Agreement. To the best of SBI's
knowledge, no shares of Issuer Common Stock are beneficially owned by any of the
persons named in Schedule A.
(c) Neither the Reporting Persons hereunder nor, to the knowledge of
such persons, any person named in Schedule A, has affected any transaction in
the Issuer Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
4
<PAGE> 12
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Other than the Letter of Intent and the Voting Agreement, to the
knowledge of SBI, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 and between
such persons and any person with respect to any securities of the Issuer,
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Letter of Intent dated as of May 14, 1999 by and between
Silicon Bandwidth, Inc., a Delaware corporation and The
Panda Project, Inc., a Florida corporation.
2. Voting Agreement dated as of May 14, 1999 by and among
Silicon Bandwidth, Inc., a Delaware corporation and
certain shareholders of The Panda Project, Inc., a Florida
corporation.
3. Restructuring Agreement dated as of March 12, 1999 by and
among The Panda Project, a Florida corporation, Helix
(PEI) Inc., a Prince Edward Island, Canada corporation,
and Silicon Bandwidth, Inc., a Delaware corporation.
4. Press release of The Panda Project, Inc. dated May 18,
1999.
<PAGE> 13
SIGNATURE
The undersigned hereby agree that they are filing jointly,
pursuant to Rule 13d-1(f)(1) of the Securities Exchange Act of 1934, as
amended, the statement dated May 24, 1999 containing the information required
by Schedule 13D, relating to 27,997,606 shares of the common stock The Panda
Project, Inc. subject to the Voting Agreement attached hereto as an exhibit.
Dated: May 24, 1999
SILICON BANDWIDTH, INC., a Delaware
corporation
By: /s/ Alan Salzman
----------------------------------------
Alan Salzman, Chairman
VantagePoint Venture Partners 1996, L.P.,
a Delaware limited partnership
By VANTAGEPOINT ASSOCIATES, L.L.C.,
a Delaware limited liability company, its
General Partner
By: /s/ James D. Marver
----------------------------------------
James D. Marver
Managing Member
By VANTAGEPOINT ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: /s/ James D. Marver
----------------------------------------
James D. Marver
Managing Member
/s/ James D. Marver
---------------------------------------------
James D. Marver
/s/ Alan E. Salzman
---------------------------------------------
Alan E. Salzman
6
<PAGE> 14
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
SILICON BANDWIDTH, INC.
<TABLE>
<CAPTION>
Present Principal Occupation
Name and Title Including Name of Employer
-------------- --------------------------
<S> <C>
Alan Salzman, Director and Chairman Managing Member, VPAssociates
Jason Strober, Director and Secretary Associate, VPAssociates
</TABLE>
7
<PAGE> 15
SCHEDULE B
<TABLE>
<CAPTION>
SHAREHOLDER SHARES BENEFICIALLY OWNED
- ----------- -------------------------
<S> <C>
Helix (PEI), Inc. 1,000,000
AG Ramius Partners, LLC 23,997,606
</TABLE>
8
<PAGE> 1
EXHIBIT 1
EXECUTION COPY
SILICON BANDWIDTH, INC.
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
May 14, 1999
The Panda Project, Inc.
951 Broken Sound Parkway
Boca Raton, FL 33487
Re: Acquisition by Silicon Bandwidth, Inc. of Assets of
The Panda Project, Inc.
Gentlemen:
This letter, upon your execution and delivery of a copy to
Silicon Bandwidth, Inc., a Delaware corporation ("Purchaser"), shall constitute
and confirm the binding agreement between The Panda Project, Inc., a Florida
corporation ("Seller"), and Purchaser regarding the acquisition (the
"Acquisition") by Purchaser from Seller (and its subsidiary corporations and
related divisions, if applicable) of the Assets (as defined in Exhibit A),
including, without limitation, substantially all of the assets of Seller
including, but not limited to, trade names, intellectual property, patents,
trade secrets, accounts receivable, equipment and inventories used in, or
necessary for, the operation of the semiconductor packaging and interconnect
devices business of Seller (the "Business"), as further described below.
Concurrently with the execution of this Agreement, and as a
condition and inducement to Purchaser's willingness to enter into this
Agreement, certain securityholders of Seller, which, in the aggregate, own, or
will own after the exercise or conversion of securities of Seller owned by such
securityholders, sufficient shares of capital stock of Seller to assure all
necessary Seller shareholder approvals of the Acquisition, are entering into a
voting agreement in the form attached hereto as Exhibit B (the "Voting
Agreement.")
Section 1. Purchase of Assets. Purchaser shall purchase from
Seller, and Seller shall sell, convey and assign to Purchaser, free and clear of
all claims, liens and interests except as is provided for herein, all of
Seller's right, title and interest in and to the Assets; provided, that, Seller
shall not assign to Purchaser any Excluded Assets (as defined in Exhibit A).
Section 2. Assignment and Assumption of Contracts. The term
"Assets" includes any and all contracts and other rights (the "Contracts") used
in, or necessary for, the operation of the Business, except for contracts which
are Excluded Assets.
<PAGE> 2
Section 3. Liabilities. On the Closing Date, Purchaser shall
assume (i) liabilities and obligations arising out of the ownership, use and
operation of the Business after the Closing Date; and (ii) the other liabilities
and obligations specified in Exhibit C (the "Assumed Liabilities"). Purchaser
shall not be liable for any other liabilities or obligations of Seller or its
respective affiliates except as is otherwise specifically set forth herein.
Section 4. Payment of Purchase Price. On the Closing Date, in
consideration of the sale by Seller of the Business and Assets to Purchaser,
Purchaser will: (i) issue to Seller the shares of common stock of Purchaser (the
"Purchaser Common Stock") initially representing 10% of the capital stock of
Purchaser on a fully diluted basis (counting the shares underlying the options
pool referred to in Section 9 hereof as outstanding as well as the 7,000,000
shares of Series A Preferred Stock referred to in Section 7(iii) hereof); and
(ii) assume the liabilities specified in Section 3 hereof.
Section 5. Closing Date. The term "Closing Date" means a day set
for the closing of the Acquisition and mutually agreeable to Purchaser and
Seller; provided, that in no event shall the Closing Date be later than October
31, 1999. If the Closing Date shall not have occurred by October 31, 1999, this
agreement (or the Definitive Agreement) shall terminate by written notice by
either party, with no continuing obligations of any party, except pursuant to
Sections 17, 18 and 19 hereof.
Section 6. Representations and Warranties of Seller. Seller
hereby represents and warrants to Purchaser that:
(i) Organization and Qualification. Seller and each
directly and indirectly owned subsidiary of Seller has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, as the case may be,
and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to
carry on its agreements, limitations on voting rights, charges and
encumbrances of any nature whatsoever.
(ii) Authority Relative to This Letter. Seller has
all necessary corporate power and authority to execute and deliver this
letter and to perform its obligations hereunder and to consummate the
Acquisition. The execution and delivery of this letter by Seller and the
consummation by Seller of the Acquisition have been duly and validly
authorized by all necessary corporate action, and, to Seller's
knowledge, no other corporate proceedings on the part of Seller are
necessary to authorize this letter or to consummate the Acquisition
except the approval of the Definitive Agreement and the Acquisition by
holders of a majority of the common stock of Seller and the holders of
66 2/3 % of the Series A Preferred Stock of Seller. The securityholders
of Seller who are entering into the Voting Agreement own, or will own
after the exercise or conversion of securities of Seller owned by such
securityholders, sufficient shares of capital stock of Seller to assure
all necessary Seller shareholder approvals of the Acquisition. This
letter has been duly executed and delivered by Seller and, assuming the
due authorization, execution and delivery by Purchaser, constitutes the
legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.
2.
<PAGE> 3
(iii) No Conflict; Required Filings and Consents.
a. The execution and delivery of this letter
by Seller do not, and the performance by Seller of its obligations hereunder and
the consummation of the Acquisition will not, (i) conflict with or violate any
provision of the articles of incorporation or bylaws of Seller or any equivalent
organizational documents of any subsidiary of Seller, (ii) conflict with or
violate any law applicable to Seller or any Seller subsidiaries or by which any
property or asset of Seller or any Seller subsidiaries is bound or affected or
(iii) result in any breach of or constitute a default (or an event which, with
the giving of notice or lapse of time or both, could reasonably be expected to
become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Seller or any Seller subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for the Helix security interest and for any
such conflicts, violations, breaches, defaults or other occurrences which are
not reasonably expected, individually or in the aggregate, to prevent or
materially delay the performance by Seller of its obligations pursuant to this
letter or the consummation of the Acquisition.
b. The execution and delivery of this letter
by Seller do not, and the performance by Seller of its obligations hereunder and
the consummation of the Acquisition will not, require any consent, approval,
authorization or permit of, or filing by Seller with or notification by Seller
to, any governmental entity.
(iv) Properties. Seller has good and marketable
title, free and clear of all liens, to all their material properties and
assets, whether tangible or intangible, real, personal or mixed, except
liens arising in the ordinary course of business and except for the
Helix security interest. All buildings, and all fixtures, equipment and
other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Seller or any
subsidiary of Seller are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable laws of
bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a
proceeding in law or equity). Substantially all of Seller's and Seller's
subsidiaries' equipment in regular use, which is to be purchased by
Purchaser, has been reasonably maintained and is in serviceable
condition, reasonable wear and tear excepted.
(v) Disclosure. No representation or warranty of
Seller in this letter contains any untrue statement of a material fact,
or omits to state a material fact necessary to make the statements
contained herein not misleading.
Section 7. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller that:
(i) Organization and Qualification. Purchaser
has been duly organized and is validly existing and in good standing
under the laws of the state of Delaware.
3.
<PAGE> 4
(ii) Authority Relative to This Letter. Purchaser has
all necessary corporate power and authority to execute and deliver this
letter and to perform its obligations hereunder and to consummate the
Acquisition. The execution and delivery of this letter by Purchaser and
the consummation by Purchaser of the Acquisition have been duly and
validly authorized by all necessary corporate action, and, to
Purchaser's knowledge, no other corporate proceedings on the part of
Purchaser are necessary to authorize this letter or to consummate the
Acquisition. This letter has been duly executed and delivered by
Purchaser and, assuming the due authorization, execution and delivery by
Seller, constitutes the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
(iii) Capitalization. As of the Closing Date, the
authorized capital stock of Purchaser shall consist of 10,000,000 shares
of preferred stock, 7,000,000 of which shall be issued and outstanding,
and 30,000,000 shares of common stock, 1,000,000 of which shall be
issued and outstanding to Seller pursuant to Section 4 hereof.
(iv) Financing Commitments. Purchaser has received
irrevocable commitments from investors to provide Purchaser equity
capital of not less than $6,000,000 in cash and commitments, subject
only to the closing of the Acquisition in accordance with the terms and
conditions of this Agreement.
(v) Purchaser's Business. Purchaser has not engaged
in any business of any kind or nature and will not engage in any
business, except as may be contemplated by this Agreement. Purchaser has
no indebtedness or liabilities of any kind or nature and will not incur
any indebtedness or liabilities from the date hereof through the Closing
Date, except as contemplated by this Agreement.
Section 8. Interim Period. From the date hereof to the Closing
Date, Purchaser and Seller will consult on all action reasonably necessary or
appropriate to preserve the value of the Business and the Assets and to operate
the Business in the ordinary course; Seller will operate the Business in the
ordinary course, consistent with past practice and with a view to preserving its
value and goodwill and will not implement any material changes to the operation
of the Business without notifying Purchaser's prior written approval, provided,
that, ultimate control of the Business shall remain exclusively with Seller
until after the Closing Date. Subject to the foregoing proviso, the Definitive
Agreement will contain other customary restrictions on the operation of the
Business prior to the Closing Date, and provided further, that Seller may take
any action with respect to Excluded Assets and excluded liabilities
notwithstanding the foregoing. Seller shall take no action nor allow any action
to be taken to cause any of the representations or warranties of Seller under
this Agreement to be untrue.
Section 9. Employee Matters. Following the Closing Date Purchaser
shall offer employment to all of the employees of the Business other than
selected individuals to be identified by Purchaser at least 5 days prior to the
Closing Date (collectively, the "Employees"). Shares of Purchaser Common Stock
equal to 20% of the initial capital stock of Purchaser (computed on a fully
diluted basis including the issuance to Seller and the issuance of 7,000,000
shares of Series A Preferred) will be reserved for issuance to Purchaser's
employees, officers and directors (specifically including the Employees) upon
the exercise of employee stock options with
4.
<PAGE> 5
terms and conditions, including vesting tied to continued employment by
Purchaser, customary to venture capital backed start-up companies.
Section 10. Conditions to Acquisition. (a) Unless waived in
writing by Purchaser, Purchaser's obligation to consummate the Acquisition shall
be subject to the satisfaction of the following conditions, among others, to be
contained in the Definitive Agreement:
(i) completion of, and satisfaction with the results
of, financial, business, technical and legal due diligence reviews of
Seller by the Purchaser;
(ii) Seller shall have solicited and received the
approval of the holders of common stock of Seller necessary to effect
the sale of substantially all of the assets of Seller;
(iii) if necessary to consummate the Acquisition,
Seller shall have solicited and received the approval of the holders of
66-2/3% of the shares of Series A Preferred Stock of Seller;
(iv) Purchaser shall have received all permits,
authorizations, consents, agreements and approvals of all foreign or
domestic governmental agencies and other third parties which are
necessary or appropriate to permit Purchaser to use and operate the
Assets in a manner consistent with the manner in which they were used
and operated by Seller prior to the Closing Date (the "Approvals"),
which Approvals shall not contain any condition or restriction which
materially impairs Purchaser's ability to use, operate or enjoy the
Assets;
(v) there shall not be in effect any injunction, stay
or restraining order issued by a court of competent jurisdiction,
whether foreign or domestic, staying the effectiveness of any Approval,
and there shall not be any pending request for such an injunction, stay
or restraining order;
(vi) there shall not be threatened or pending any
suit, action, investigation, inquiry or other proceeding by or before
any court of competent jurisdiction or governmental agency which, in
Purchaser's reasonable judgment, could have a material adverse effect on
Purchaser's ability to acquire, use, operate or enjoy the Assets;
(vii) Seller shall have delivered to Purchaser
appropriate closing documents, including a bill of sale and other title
documents, satisfactory in form and substance to Purchaser;
(viii) Seller shall have delivered to Purchaser a
signed counterpart of a stockholders' agreement including the terms set
forth in Exhibit D hereto and otherwise satisfactory to Purchaser (the
"Stockholders' Agreement");
(ix) Purchaser shall be satisfied that applicable
bulk sale or similar requirements shall have been complied with by
Seller on a timely basis;
5.
<PAGE> 6
(x) No material adverse change in the Business or the
Assets shall have occurred since the date hereof;
(xi) Purchaser shall have received audited financial
statements of Seller for the fiscal year ended December 31, 1998;
(xii) the Contracts shall have been assigned as
contemplated by Section 2;
(xiii) All of the employees of Seller prior to the
Closing Date designated by the Purchaser as key employees on Exhibit E
("Key Employees") shall have accepted the offer of employment by
Purchaser made pursuant to Section 9 above;
(xiv) Purchaser shall be satisfied in its sole
discretion that Seller is able to sell, convey and assign to Purchaser,
free and clear of all claims, liens and interests except as is provided
for herein, all of Seller's right, title and interest in and to the
Assets; and
(xv) Seller shall have complied in all material
respects with its covenants and agreements hereunder.
(b) Unless waived in writing by Seller, Seller's obligation to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of the following conditions, among others to be contained in the
Definitive Agreement:
(i) the conditions set forth in subsections (a)(ii)
and (iii) shall have been satisfied;
(ii) Purchaser and its current stockholders shall
each have delivered to Seller a signed counterpart of the Stockholders'
Agreement;
(iii) Purchaser shall have been capitalized with
equity capital of not less than $6,000,000 in cash and commitments; and
(iv) Purchaser shall have complied in all material
respects with its covenants and agreements hereunder.
Section 11. Definitive Agreement. Seller and Purchaser agree to
negotiate in good faith and use their respective best efforts towards the
execution and delivery of the Definitive Agreement as promptly as is practicable
after the date hereof. The Definitive Agreement shall contain terms and
provisions, including representations, warranties, warranty termination periods,
indemnities, etc., as are consistent with the terms hereof and as are customary
for transactions of this type.
Section 12. Due Diligence. Seller will provide Purchaser,
together with its accountants, counsel and other authorized representatives,
full and complete access during normal business hours to all properties, books,
records, agreements and facilities of Seller (insofar as the same are relevant
to the Business or the Assets), wherever located, and Seller will make its
6.
<PAGE> 7
officers, employees, attorneys, agents, independent accountants and actuaries
available to discuss with Purchaser and its accountants, counsel and other
authorized representatives such aspects of the business, financial condition or
prospects of the Business and the Assets as Purchaser may deem necessary or
desirable. To the extent that the transactions contemplated hereby are not
consummated, all written information provided by Seller to Purchaser or its
aforementioned representatives will promptly be returned following Seller's
written request to Purchaser. All material non-public information provided by
Seller will be treated as confidential and will not be disclosed by Purchaser or
its representatives to any third party (other than its accountants, counsel and
authorized representatives and prospective debt and equity investors for the
sole purpose of evaluating the transactions contemplated herein) without the
prior written consent of Seller, except as required by law or in connection with
any civil, administrative, criminal or other legal proceedings and
investigations.
Section 13. Sales, Transfer and Recording Taxes. Purchaser and
Seller shall equally bear sales, transfer or recording taxes and recording fees
imposed in connection with the Acquisition.
Section 14. Affiliates. To the extent that any of the Assets are
owned or controlled by Seller's subsidiary corporations or other affiliates,
Seller shall cause such persons to convey such Assets to Purchaser pursuant to
the Definitive Agreement.
Section 15. Public Announcements. Seller and Purchaser will
cooperate in making, and coordinate the making of, any public announcements of
the terms hereof, the Definitive Agreement and/or the Acquisition. Seller and
Purchaser have agreed that upon the execution and acceptance of this letter,
Seller shall file a Form 8-K with the Securities and Exchange Commission and
issue a press release announcing the Acquisition, the form of each of which has
been agreed upon by Seller and Purchaser.
Section 16. Exclusivity. From the date of execution of this
agreement until August 1, 1999 or, if earlier, until such time as Purchaser
shall state in writing to Seller that the Acquisition will not be consummated
and that negotiations are terminated unless the parties shall have entered into
the Definitive Agreement (the "Exclusivity Period"), none of Seller nor any of
its respective directors, officers, agents or representatives will (i) solicit,
encourage, initiate or participate in any negotiations or discussions with
respect to, any offer or proposal to acquire all or any portion of the Business
or the Assets whether by purchase of assets or otherwise, (ii) disclose any
information not customarily disclosed to any person concerning the Business or
the Assets or afford to any person or entity access to the properties, books or
records of the Business or the Assets or (iii) cooperate with any person to make
any proposal to purchase all or any part of the assets of the Business or the
Assets (directly or indirectly) other than inventory or non-essential or excess
assets sold in the ordinary course of business. The Exclusivity Period may be
extended to September 30, 1999 at Purchaser's option by written notice to Seller
if, on or prior to August 1, 1999, Purchaser offers to extend a loan of $500,000
to Seller to help finance the continued operations of Seller pending the closing
of the Acquisition. The terms of any such loan shall provide that the loan be
secured by a first priority perfected security interest in all assets of Seller,
bear interest at the rate of 6% per annum, be due and payable September 30,
1999, and be convertible, at Purchaser's option, into Seller's Common Stock at
then current market prices.
7.
<PAGE> 8
Section 17. Expenses. Except as is otherwise provided herein,
each party hereto shall be responsible for its own expenses incurred in
connection with this agreement, the Definitive Agreement and the consummation of
the transactions contemplated hereby and thereby. This provision shall survive
the termination of this agreement. In the event that (i) Seller shall determine
after the date hereof to terminate negotiations regarding the Acquisition
(whether or not permitted hereby) in order to seek or entertain a proposal for
the purchase of all or a portion of the Business or the Assets or (ii) Seller
sells, or agrees to sell, all or a portion of the Business or the Assets within
the twelve month period following the termination hereof or the Definitive
Agreement, Seller shall promptly reimburse to Purchaser, upon receipt of
invoices, Purchaser's and its affiliates' out-of-pocket expenses incurred in
connection with the Acquisition including, without limitation, legal fees,
accounting fees, independent consultant fees and other miscellaneous
out-of-pocket expenses. There shall be no obligation of Seller under clause (ii)
of this Section 17 if Purchaser terminates negotiations with Seller regarding
the Acquisition in a manner not permitted by this Agreement or if Seller
determines that a condition set forth in Section 10(b) above has not been
satisfied and such failure of condition is not attributable to the failure of
Seller to use it best efforts.
Section 18. Specific Performance; Injunctive Relief. Purchaser
and Seller acknowledge that Purchaser will be irreparably harmed and that there
will be no adequate remedy at law for a violation of any of the covenants or
agreements of Seller set forth herein. Therefore, it is agreed that, in addition
to any other remedies that may be available to Purchaser upon any such
violation, Purchaser shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Purchaser at law or in equity and Seller hereby waives any and all
defenses which could exist in its favor in connection with such enforcement and
waives any requirement for the security or posting of any bond in connection
with such enforcement.
Section 19. Reservation of Rights. Payment of the expenses
specified in Section 17 shall not in any manner limit any remedies against
Seller that Purchaser may have hereunder or under the Definitive Agreement, or
against Purchaser that Seller may have hereunder or the Definitive Agreement,
for breach hereof.
Section 20. Governing Law, Amendments, Etc. This agreement and
the Definitive Agreement shall in all respects be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflicts or choice of law. This agreement may only be amended by
a written instrument signed by authorized representatives of each of the parties
hereto, and may only be terminated by a written instrument signed by the party
purporting to terminate the agreement. Purchaser may assign all or a portion of
this agreement or the Definitive Agreement to any subsidiary of Purchaser, or
any corporation formed by the stockholders of Purchaser. None of such
assignments shall relieve Purchaser of any obligations it may have hereunder or
under the Definitive Agreement. This agreement may be executed by the parties
hereto in counterparts and by telecopy, each of which shall be deemed to
constitute an original, but all of which together shall constitute one and the
same instrument.
8.
<PAGE> 9
Please indicate your acceptance of and agreement to the above by
signing as indicated below.
Very truly yours,
SILICON BANDWIDTH, INC.
By:
--------------------------------
Alan E. Salzman
Chairman
Accepted and Agreed to this ________ day of May, 1999.
THE PANDA PROJECT, INC.
By:
-------------------------------
Name:
Title:
9.
<PAGE> 10
EXHIBIT A
Assets
The Assets include all assets and property used in, or necessary for the
operation of, the Business, including, without limitation, the Approvals, the
Equipment, the Contracts, Intellectual Property, Inventory, Receivables,
Documents and the Intellectual Property, and the Intellectual Property used in,
or necessary for the operation of, the computer systems business of Seller, but
excluding the Excluded Assets.
Approvals means all permits, authorizations, licenses and other governmental and
third party rights and privileges necessary to operate the Business as currently
conducted.
Contracts has the meaning described in the agreement.
Documents means all books, records, diskettes or other electronics media, logos
and manuals owned or, to the extent legally transferable, used by the Business
and related to its operations.
Equipment means all furniture, fixtures and all equipment supporting the
Business (including remanufacturing equipment).
Intellectual Property means patents, trade and service marks, designs, drawings,
software, tradenames, copyrights, mask works, applications therefor, licenses
thereof, and similar intangible property.
Inventory means all inventory used in connection with the Business.
Receivables means all accounts receivable of Seller outstanding as of the
Closing Date.
Excluded Assets means cash, bank accounts, minutes books and other corporate
documents and tax refunds, plus those assets (other than assets constituting
Intellectual Property) exclusively used in the computer systems business of
Seller which are not necessary or useful to carry on the Business, as now
conducted or as to be conducted by Purchaser in the future.
A-1
<PAGE> 11
EXHIBIT B
Form of Voting Agreement
B-1
<PAGE> 12
EXHIBIT C
Assumed Liabilities
(i) The trade accounts payable of Seller outstanding
on the Closing Date (up to a maximum amount of $300,000);
(ii) Specific items included in the accrued payroll
and benefits account of Seller outstanding on the Closing, which shall
not exceed $100,000;
(iii) Specific items included in the "other current
liabilities" account of Seller outstanding on the Closing Date, which
shall not exceed $100,000;
(iv) The executory liabilities and obligations of
Seller to be performed after the Closing Date under each Contract in
effect on the Closing Date; and
(v) Up to $2,000,000 of indebtedness of Seller to
Helix (PEI) Inc., effective upon such indebtedness' restructuring as
described in Section 4 of the Voting Agreement.
C-1
<PAGE> 13
EXHIBIT D
Terms of Stockholders Agreement
Transfer Restrictions. Any Purchaser Common Stock held by Seller would not
be transferable for a period of five years from the
Closing Date, except pursuant to the drag along and
registration rights referred to below or, after
Purchaser is a publicly traded Company, to the
shareholders of Seller.
Voting. Seller shall agree to vote its shares of Purchaser
Common Stock proportionately in accordance with the
vote of all other holders of the Capital Stock of
Purchaser.
Drag Rights. Holders of 50% or more of Purchaser Series A
Preferred Stock, in connection with the disposition
of 50% or more of Purchaser Series A Preferred
Stock, may require the holders of Purchaser Common
Stock to sell their shares on the same terms as the
50% or more holders.
First Refusal. Right of first refusal in favor of Purchaser and
other holders in all sales (other than drag sales
and registered sales).
Registration Rights. Available to holders of Common Stock on
substantially the same terms as Purchaser Series A
Preferred Stock subject to customary underwriter
cutbacks and other customary terms.
Purchaser Series A Non-cumulative 6% dividends (will not ever be
Preferred Stock Terms. declared); participating preferred on Purchaser
liquidation (including merger or sale); weighted
average anti-dilution protection; pro-rata right of
first refusal on future Purchaser stock issuances;
ability to appoint majority of Purchaser Board of
Directors.
D-1
<PAGE> 1
EXHIBIT 2
EXECUTION COPY
VOTING AGREEMENT
This Voting Agreement (the "Agreement") is made and entered into
as of May 14, 1999, among Silicon Bandwidth, Inc., a Delaware corporation
("Purchaser"), each undersigned shareholder ("Shareholder") of The Panda
Project, Inc., a corporation existing under the laws of Florida ("Seller"), and
Seller.
RECITALS
WHEREAS, pursuant to a letter of agreement dated as of even date
herewith, by and between Purchaser and Seller (such agreement as it may be
amended or restated is hereinafter referred to as the "Letter Agreement"), the
parties agreed that on the signing of the Letter Agreement, Purchaser and each
Shareholder would execute and deliver a Voting Agreement containing the terms
and conditions set forth in the Letter Agreement together with such other terms
and conditions as may be agreed to by the parties to the Letter Agreement acting
reasonably;
WHEREAS, a special committee of the board of directors of Seller
has determined that the transactions contemplated by the Letter Agreement are
fair to, and in the best interests of, the shareholders of Seller and has
approved such transactions;
WHEREAS, Purchaser has agreed to acquire substantially all of the
assets of Seller (the "Acquisition") in exchange for common stock of Purchaser
("Purchaser Common Stock") and the assumption of certain Seller liabilities by
Purchaser;
WHEREAS, in order to induce Purchaser to consummate the
Acquisition, Seller has agreed to use its best efforts to solicit the proxy of
certain shareholders of Seller on behalf of Purchaser, and to cause certain
shareholders of Seller to execute and deliver voting agreements to Purchaser;
WHEREAS, each Shareholder is the registered and beneficial owner
of at least such number of (i) shares of the outstanding capital stock of Seller
as is indicated on the signature page of this Agreement (the "Shares") and/or
(ii) securities convertible into or exercisable for shares of capital stock of
Seller as indicated on the signature page of the Agreement (the "Share
Equivalents");
WHEREAS, Helix (PEI), Inc. ("Helix") is an undersigned
Shareholder and holder of a security interest in certain assets of Seller (the
"Security Interest"); and
WHEREAS, in order to induce Purchaser to consummate the
Acquisition, Helix and Seller have agreed to renegotiate the terms of the
Security Interest.
NOW, THEREFORE, the parties agree as follows:
<PAGE> 2
1. Share Ownership and Agreement to Retain Shares.
1.1 Transfer and Encumbrance.
(a) Purchaser acknowledges and agrees that, subject
to Section 1.2 hereof, this Agreement only pertains to the number of Shares and
Share Equivalents indicated on the signature page and that Shareholder may be
the beneficial owner of Shares and Share Equivalents which are not subject to
this Agreement.
(b) Each Shareholder is the beneficial owner of
that number of Shares and Share Equivalents set forth opposite such
Shareholder's name on the signature page hereto and, except as otherwise set
forth on the signature page hereto, has held such Shares and Share Equivalents
at all times since the date set forth on such signature page. No other person or
entity not a signatory to this Agreement has a beneficial interest in or a right
to acquire such Shares or Share Equivalents or any portion of such Shares or
Share Equivalents. The Shares and Share Equivalents are and will be at all times
up until the Expiration Date free and clear of any liens, claims, options,
charges or other encumbrances.
(c) Each Shareholder agrees not to transfer (except
as may be specifically required by this Agreement, court order or by operation
of law), sell, exchange, pledge or otherwise dispose of or encumber the Shares,
Share Equivalents or any New Shares (as defined below), or to make any offer or
agreement relating thereto, at any time prior to the Expiration Date. As used
herein, the term "Expiration Date" shall mean the earlier to occur of (i) the
Closing Date (as defined in the Letter Agreement) of the Acquisition, and (ii)
six months after the date of the termination of the Letter Agreement.
1.2 New Shares. Each Shareholder agrees that to the extent
necessary to achieve approval of such matters (if it is described in Section
(a)(i) or rejection of such matters described in Section 2(a)(ii)) shares of
capital stock of Seller that such Shareholder purchases or with respect to which
such Shareholder otherwise acquires beneficial ownership after the date of this
Agreement and prior to the Expiration Date ("New Shares") (such New Shares to
exclude an aggregate of 1,057,471 shares of Common Stock of Seller to be issued
to AGR Halifax Fund, Ltd., Leonardo, L.P., GAM Arbitrage Investments, Inc., AG
Super Fund International Partners, L.P., Raphael, L.P. and Ramius Fund, L.P.
upon the conversion of 27.6 shares of Series A Preferred Stock of Seller) shall
be subject to the terms and conditions of this Agreement to the same extent as
if they constituted Shares.
2. Agreements Regarding Shares and Share Equivalents.
(a) Prior to the Expiration Date, at every meeting
of the shareholders of Seller called with respect to any of the following, and
at every adjournment thereof, and on every action or approval by written
resolution of the shareholders of Seller with respect to any of the following,
each Shareholder shall vote the Shares and any New Shares (i) in favor of
approval of the Acquisition and any matter that could reasonably be expected to
facilitate the Acquisition and (ii) against any proposal for any
recapitalization, merger, sale of assets or other business combination (other
than the Acquisition) between Seller and any person or entity other than
Purchaser.
2
<PAGE> 3
(b) Prior to the record date set for the first
shareholders meeting relating to any matter covered by Section 2(a) above, each
undersigned holder of Share Equivalents shall exercise or convert such number of
Share Equivalents, as the case may be, into capital stock of Seller, pro rata in
the amount determined by Purchaser to be necessary to achieve approval of such
matters (if it is described in Section 2(a)(i)) or rejection of such matters (if
it is described in Section 2(a)(ii)), and vote such shares as set forth in
Section 2(a) above.
3. Irrevocable Proxy. Each Shareholder is hereby delivering to
Purchaser a duly executed proxy in the form attached hereto as Exhibit 1 (the
"Proxy") with respect to each meeting of shareholders of Seller, such Proxy to
cover the total number of Shares and New Shares in respect of which each
Shareholder is entitled to vote at any such meeting. Upon the execution of this
Agreement by each Shareholder, each Shareholder hereby revokes any and all prior
proxies given by it with respect to the Shares and agrees not to grant any
subsequent proxies with respect to the Shares or any New Shares until after the
Expiration Date.
4. Agreements Regarding Security Interest.
(a) Prior to the record date set for the first
shareholders meeting relating to any matter covered by Section 3(a) above,
Seller and Helix shall enter into an agreement to restructure the indebtedness
of Seller (the "Secured Debt") currently secured by Helix's security interest in
certain assets of Seller in the form attached hereto as Exhibit 2 (the
"Restructuring Agreement"), and effective as of the Closing Seller and Helix
shall effectuate such restructuring.
(b) The Restructuring Agreement shall provide that
(i) Helix shall release its security interest in all assets of Seller other than
its intellectual property assets and (ii) the terms of the Secured Debt shall be
modified so that (A) the Secured Debt accrues interest after the Closing at a
rate of 6% per annum, calculated on a monthly basis, (B) any interest accrued
with respect to the Secured Debt prior to the Closing is forgiven by Helix and
(C) the Secured Debt shall be subject to (x) a principal payment obligation of
$1,000,000 immediately after the Closing and (y) principal and interest payments
aggregating $100,000 per month on each of the monthly anniversaries of the
Closing (and such lesser amount on the eleventh monthly anniversary of the
Closing as shall satisfy all remaining principal and interest on the Secured
Debt).
5. Representations and Warranties of Shareholder. Each
Shareholder hereby represents and warrants to Purchaser as follows: (a) such
Shareholder has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby; (b) this Agreement has
been duly authorized, executed and delivered by such Shareholder and constitutes
a valid and binding obligation of such Shareholder enforceable against such
Shareholder in accordance with its terms; (c) if such Shareholder is a natural
person and is married, and the Shares constitute community property or otherwise
need spousal or other approval for this Agreement to be legal, valid and
binding, this Agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, such Shareholder's spouse,
enforceable against such spouse in accordance with its terms, and (d) no trust
of which such Shareholder is a trustee requires the consent of any beneficiary
to the
3
<PAGE> 4
execution and delivery of this Agreement or to the consummation of the
transactions contemplated hereby.
6. Additional Documents. Each Shareholder hereby covenants and
agrees to execute and deliver any additional documents reasonably required for
the consummation of the Acquisition or to carry out the purpose and intent of
this Agreement.
7. Consent and Waiver. Each Shareholder hereby gives any consents
or waivers that are reasonably required for the consummation of the Acquisition
under the terms of any agreement to which such Shareholder is a party or
pursuant to any rights such Shareholder may have.
8. Termination. This Agreement and the Proxy delivered in
connection herewith shall terminate and shall have no further force or effect as
of the Expiration Date.
9. Miscellaneous.
9.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
9.2 Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without the prior written consent of the other. This
Agreement is intended to bind each Shareholder as a shareholder of Seller only
with respect to the specific matters set forth herein.
9.3 Amendment and Modification. This Agreement may not be
modified, amended, altered or supplemented except by the execution and delivery
of a written agreement executed by the parties hereto.
9.4 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Purchaser will be irreparably harmed and that there will
be no adequate remedy at law for a violation of any of the covenants or
agreements of each Shareholder set forth herein. Therefore, it is agreed that,
in addition to any other remedies that may be available to Purchaser upon any
such violation, Purchaser shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to Purchaser at law or in equity and each Shareholder hereby waives
any and all defenses which could exist in its favor in connection with such
enforcement and waives any requirement for the security or posting of any bond
in connection with such enforcement.
9.5 Notices. All notices, requests, demands or other
communications that are required or may be given pursuant to the terms of this
Voting Agreement shall be in writing and shall be deemed to have been duly given
upon receipt by delivery in person, by
4
<PAGE> 5
telecopy or facsimile, by registered or certified mail or by a nationally
recognized courier service to the respective parties as follows:
(a) If to a Shareholder, at the address set forth
below such Shareholder's signature at the end hereof.
(b) if to Purchaser, to:
Silicon Bandwidth, Inc.
1001 Bayhill Drive, Suite 140
San Bruno, CA 94066
Attention: Alan E. Salzman
Facsimile No.: (650) 869-6078
with a copy to:
Brobeck, Phleger & Harrison LLP
One Market Plaza
Spear Street Tower
San Francisco, CA 94105
Attention: Steve L. Camahort
Facsimile No.: (415) 442-1010
(c) if to Seller, to:
The Panda Project
951 Broken Sound Parkway
Boca Raton, FL 33487
with a copy to:
5300 First Union Financial Center
200 South Biscayne Blvd.
Miami, FL 33131-2339
Attention: John Fletcher
Facsimile No.: (305) 579-0321
or to such other address as any party hereto may designate for itself by notice
given as herein provided.
9.6 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York,
except to the extent mandatorily governed by the laws of the State of Florida.
9.7 Entire Agreement. This Agreement and the Proxy contain
the entire understanding of the parties in respect of the subject matter hereof,
and supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
5
<PAGE> 6
9.8 Counterpart. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
9.9 Effect of Headings. The section headings herein are
for convenience only and shall not affect the construction or interpretation of
this Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
executed as of the date first above written.
SILICON BANDWIDTH, INC. SHAREHOLDER
By:
------------------------------ -------------------------------------
(Signature)
Name:
---------------------------- -------------------------------------
(Print Name)
Title:
--------------------------- -------------------------------------
(Print Address)
THE PANDA PROJECT, INC.
-------------------------------------
(Print Address)
By:
------------------------------
-------------------------------------
(Print Telephone Number)
Name:
----------------------------
Title:
--------------------------- -------------------------------------
(Social Security or Tax I.D. Number)
Total Number of Shares and Share Equivalents owned on the date hereof:
Common Stock:
----------------------------------
Series A Preferred Stock:
----------------------------------
- --------------------------------- ----------------------------------
(Print type of Share Equivalents) (Number of Share Equivalents)
[SIGNATURE PAGE TO VOTING AGREEMENT]
7
<PAGE> 1
EXHIBIT 3
AGREEMENT
---------
THIS AGREEMENT is made and entered into as of May 12, 1999, by and among
THE PANDA PROJECT, INC., a Florida corporation (the "Company"), HELIX (PEI)
INC., a Prince Edward Island, Canada corporation ("Helix"), and SILICON
BANDWIDTH, INC., a Delaware corporation ("SBI").
WHEREAS, Helix holds the three promissory notes (the "Notes") payable to
it by the Company described below:
<TABLE>
<CAPTION>
Principal Amount Date of the Note
---------------- ----------------
<S> <C>
US$750,000 May 28, 1998
US$1,000,000 June 22, 1998; and
US$250,000 July 17, 1998
</TABLE>
WHEREAS, the Notes are in default and the parties desire to provide for
the actions described in this Agreement in order to settle the default;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto do hereby agree as follows:
1. Initial Payment and Accrued Interest Forgiveness. Upon the closing of
the acquisition of certain assets of the Company by SBI (the "Closing"), SBI
will pay $1,000,000 to Helix, with such payment being applied solely toward
principal on the Notes. In consideration of such payment and the issuance of
Panda common stock to Helix pursuant to the Letter Agreement attached as
Exhibit A, Helix hereby forgives and irrevocably releases Panda from payment of
all accrued interest on the Notes remaining unpaid as of the date of such
payment of $1,000,000.
2. Forbearance. Helix agrees that all of the accrued and unpaid interest
and principal amount of each of the Notes shall be due and payable in eleven
payments. The first ten payments will be in the amount of $100,000 each and are
due on the first day of each of the first ten months following the Closing.
Helix will apply these ten payments first toward accrued and unpaid interest
and then principal on the Notes. The eleventh and final payment will be in an
amount equal to all unpaid principal and interest outstanding on the Notes and
will be due on the first day of the eleventh month following Closing. Helix
agrees that, as a result, the Notes are no longer in default. Interest on the
Notes shall accrue at a rate of 6% per annum
<PAGE> 2
from the Closing until the Notes are repaid. Immediately after execution of
this Agreement, Helix agrees to mark each of the Notes as follows: "This
Promissory Note has been modified and amended by that certain Agreement dated
as of May 12, 1999, by and between Payor, Payee and Silicon Bandwidth, Inc."
3. Release of Security Interest. On the Closing Date, Helix agrees to
release its security interest in all royalties and fees arising from the use or
license of the Collateral as defined in that certain Intellectual Property
Security Agreement dated as of May 28, 1998 between Helix and the Company and
that certain Intellectual Property Security Agreement dated as of June 22, 1998
between Helix and the Company. Helix's remaining security interest in the
assets of the Company will be released upon repayment in full of the Notes
pursuant to the terms of this Agreement or any promissory notes replacing, or
substituted for, the Notes provided for in Section 4 hereof.
4. Assumption. Helix agrees that the obligation to pay the Notes may,
at the Company's option, be assumed, without recourse to the Company, by SBI.
In the event of such assumption, Helix agrees to cause SBI to issue a new note
in lieu of the Notes, and to return the original of each of the Notes to the
Company, marked "Replaced." Except for any different terms or conditions
provided for in this Agreement, Helix and SBI agree that such new note will
include the same terms and conditions as the Notes, as modified and amended by
this Agreement.
5. Indemnification. The Company, on the one hand, and Helix, on the
other hand, shall indemnify the other against any loss, cost or damages
(including reasonable attorneys' fees and expenses) suffered or incurred as a
result of such party's breach of any representation, warranty, covenant or
agreement in this Agreement. The Company shall indemnify Helix against any
loss, cost or damages (including reasonable attorneys' fees and expenses)
suffered or incurred as a result of Helix's (i) entrance into this Agreement or
(ii) entrance into the Voting Agreement.
6. Governing Law; Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Florida without regard to the
principles of conflict of laws.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, each or all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other
<PAGE> 3
(c) Entire Agreement; Amendments. This Agreement, together with the Notes,
the Voting Agreements of even date among SBI, the Company and certain Company
shareholders, and the letter agreements, supersede all other prior oral or
written agreements between Helix, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and
contain the entire understanding of the parties with respect to the matters
covered therein.
(d) Termination. If the Closing Date has not occurred by October 31,
1999, this agreement will terminate by written notice by either party, with no
continuing obligations of either party.
(e) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
IN WITNESS WHEREOF, the Company and Helix have caused this Agreement to be
duly executed of the date first written above.
THE PANDA PROJECT, INC.
By
-------------------------------------
Name: Stanford W. Crane, Jr.
Title: President
HELIX (PEI) INC.
By
-------------------------------------
Name:
Title:
SILICON BANDWIDTH, INC.
By
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4
PRESS RELEASE
The Panda Project, Inc. (the "Company") has entered into an agreement with
Silicon Bandwidth, Inc. to sell its intellectual property portfolio as well as
the fixed assets related to its interconnect and semiconductor business. As part
of the sale, The Panda Project, Inc. has restructured its outstanding loans with
Helix PEI ("Helix") that have been in default since February 15, 1999. Silicon
Bandwidth, Inc. will assume such Helix loans upon closing. Additionally, the
Company has entered into an agreement with the Convertible Preferred A Holders
for conversion of the outstanding preferred shares into 21,333,333 common shares
at a fixed price of $.261. Additionally, the Company will issue 4,441,828 common
shares. The restructuring of both agreements is contingent upon the closing of
the sale to Silicon Bandwidth, Inc. The transaction is subject to customary
closing conditions, including the approval of the Company's shareholders. Helix
and the Convertible Preferred A holders have entered into a Voting Agreement
with Silicon Bandwidth, Inc. and such holders own sufficient shares to assure
the approval of the transaction by the Company's shareholders. The Company will
receive an 10% ownership in Silicon Bandwidth, Inc. which will initially be
capitalized with $6,000,000.
