EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of
February 11, 1998, by and among The Panda Project, Inc., a Florida
corporation (the "COMPANY"), and the investors listed on the Schedule
of Subscribers attached hereto (individually, a "SUBSCRIBER" and
collectively, the "SUBSCRIBERS").
WHEREAS:
A. The Company and the Subscribers are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 506 of Regulation D
("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended (the "1933 Act");
B. The Company has authorized the following new series of
its Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"):
the Company's Series A Convertible Preferred Stock (the "SERIES A
PREFERRED SHARES"), which shall be convertible into shares of the
Company's Common Stock, par value $.01 per share (the "COMMON STOCK")
(as converted, the "CONVERSION SHARES"), in accordance with the terms
of the Fourth Articles of Amendment and Restated Articles of
Incorporation of the Company, substantially in the form attached
hereto as Exhibit A (the "CERTIFICATE OF DESIGNATIONS");
C. The Subscribers wish to purchase, upon the terms and
conditions stated in this Agreement, initially an aggregate of 600 of
the Series A Preferred Shares (the "INITIAL PREFERRED SHARES") and, in
connection with such purchase, shall receive warrants (the
"WARRANTS"), in the form attached hereto as Exhibit B, to purchase an
aggregate of 150,000 shares of Common Stock (the "INITIAL WARRANT
SHARES");
D. Subject to the terms and conditions set forth in this
Agreement, the Company shall on one occasion have the right to cause
the Subscribers to purchase an aggregate of 400 Series A Preferred
Shares (pro rata based on the number of Initial Preferred Shares each
Subscriber purchased in relation to the aggregate number of Initial
Preferred Shares purchased by all of the Subscribers) (the "PUT
PREFERRED SHARES") (the Initial Preferred Shares and the Put Preferred
Shares collectively are referred to in this Agreement as the
"PREFERRED SHARES") and, in connection with such purchase, the
Subscribers shall receive WARRANTS to purchase an aggregate of 100,000
shares of Common Stock (pro rata based on the number of Put Preferred
Shares each Subscriber purchased in relation to the aggregate number
of Put Preferred Shares purchased by all of the Subscribers) (the "PUT
WARRANT SHARES") (the Initial Warrant Shares and the Put Warrant
Shares collectively are referred to in this Agreement as the "WARRANT
SHARES"); and
E. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement substantially in the form attached
hereto as Exhibit C (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Subscribers hereby agree
as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to
satisfaction (or waiver) of the conditions set forth in Sections 6(a)
and 7(a) below, (i) the Company shall issue and sell to the
Subscribers and the Subscribers severally shall purchase from the
Company an aggregate of 600 Initial Preferred Shares, and (ii) the
Company shall deliver to the Subscribers Warrants to purchase the
Initial Warrant Shares, each in the respective amounts set forth
opposite each Subscriber's name on the Schedule of Subscribers (the
"INITIAL CLOSING"). Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 1(d), 1(e), 6(b) and 7(b) below, the
Company may require that each Subscriber purchase its pro rata portion
of the Put Preferred Shares (based on the number of Initial Preferred
Shares each Subscriber purchased in relation to the aggregate number
of Initial Preferred Shares purchased by all of the Subscribers) (the
"PUT CLOSING"). The Initial Closing and the Put Closing collectively
are referred to in this Agreement as the "CLOSINGS." The purchase
price (the "PURCHASE PRICE") of each Preferred Share at each of the
Closings shall be $10,000.00.
b. The Initial Closing Date. The date and time of the
Initial Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m.
Eastern Standard Time, within two (2) business days following the date
hereof, subject to satisfaction (or waiver) of the conditions to the
Initial Closing set forth in Sections 6(a) and 7(a) below (or such
later date as is mutually agreed to by the Company and the
Subscribers). The Initial Closing shall occur on the Initial Closing
Date at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
c. The Put Closing Date. The date and time of the Put
Closing (the "PUT CLOSING DATE") shall be 10:00 a.m. Eastern Standard
Time, on the date specified in the Company's Put Share Notice (as
defined below), subject to satisfaction (or waiver) of the conditions
to the Put Closing set forth in Sections 6(b) and 7(b) and the
conditions set forth in Section 1(d) (or such later date as is
mutually agreed to by the Company and the Subscribers). During the
period beginning on and including the date on which the first
Registration Statement (as defined in the Registration Rights
Agreement) becomes effective and ending on the date which is one year
subsequent to such date (the "PUT NOTICE PERIOD"), but subject to the
requirements of Sections 6(b) and 7(b) and satisfaction of the Put
Notice Conditions (as defined in Section 1(d) below), the Company on
only one occasion may require each Subscriber to purchase Put
Preferred Shares by delivering written notice to each of the
Subscribers (a "PUT SHARE NOTICE") during the Put Notice Period at
least 45 days (the "PUT SHARE NOTICE DATE") prior to the Put Closing
Date set forth in the Company's Put Share Notice. The Company's Put
Share Notice shall set forth (i) each Subscriber's pro rata portion
(based on the number of Initial Preferred Shares each Subscriber
purchased in relation to the aggregate number of Initial Preferred
Shares purchased by all of the Subscribers) of the aggregate number of
Put Preferred Shares, which aggregate number shall not exceed 400
Preferred Shares, (ii) the aggregate Purchase Price for each such
Subscriber's Put Preferred Shares and (iii) the date selected by the
Company for the Put Closing Date. The Put Closing shall occur on the
Put Closing Date at the offices set forth in Section 1(b). The
Initial Closing Date and the Put Closing Date collectively are
referred to in this Agreement as the "CLOSING DATES."
d. The Put Notice Conditions. Notwithstanding anything
in this Agreement to the contrary, the Company shall not be entitled
to deliver a Put Share Notice and require the Subscribers to purchase
the Put Preferred Shares unless, in addition to the satisfaction of
the requirements of Sections 6(b) and 7(b), all of the following
conditions (the "PUT NOTICE CONDITIONS") are satisfied:
(i) The Company's stockholders shall have approved the
issuance of the Securities (as defined below) on or prior to the Put
Share Notice Date, unless the Company shall have been advised in
writing by The Nasdaq Stock Market, Inc. (or The New York Stock
Exchange, Inc. ("NYSE") or The American Stock Exchange, Inc. ("AMEX"),
if the Common Stock is then listed on such exchange) that the rules of
such exchange would not require the approval of the stockholders of
the Company for the issuance of a number of Conversion Shares equal to
at least 19.99% of the number of shares of Common Stock issued and
outstanding on the Initial Closing Date.
(ii) During the period beginning 60 days prior to the Put
Closing Date and ending on and including the Put Closing Date, a
Registration Statement (as defined in the Registration Rights
Agreement) at all times shall be effective and available for the sale
of no less than 150% of the sum of (A) the number of Conversion Shares
that would be issuable upon the conversion of all outstanding Initial
Preferred Shares at a conversion price of $6.00 (subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such
shares) and (B) the Initial Warrant Shares.
(iii) During the period beginning 90 days prior to the Put
Closing Date and ending on and including the Put Closing Date, the
Common Stock is designated for quotation on the Nasdaq National
Market, NYSE or AMEX and is not suspended from trading on such market
or such exchange.
(iv) No event constituting a Paragraph 4 Transaction or a
Triggering Event (each as defined in the Certificate of Designations),
including an agreement to consummate a Paragraph 4 Transaction, or a
Triggering Event shall have occurred during the period beginning on
the Initial Closing Date and ending on and including the Put Closing
Date.
(v) On each day during the period beginning 20 days prior
to the Put Notice Date and ending on and including the Put Closing
Date, the Market Price for shares of Common Stock (as defined in the
Certificate of Designations) shall not be less than $6.00 (subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization affecting such
Shares).
(vi) During the period beginning on the Initial Closing
Date and ending on and including the Put Closing Date, the Company
shall have at all times delivered Conversion Shares upon conversion of
the Preferred Shares on a timely basis as set forth in the Certificate
of Designations and otherwise shall have been in compliance with and
shall not have breached the provisions of the Transaction Documents
(as defined below) and the Certificate of Designations.
(vii) The Company shall not have previously delivered a Put
Share Notice.
(viii) The Company will be in compliance with Section 5
below with respect to transfers of the Conversion Shares and Warrant
Shares and all restrictions on trading of Conversion Shares issued or
issuable upon conversion of such Preferred Shares shall have been
lifted prior to delivery by the Company of the applicable Put Share
Notice to the Subscribers.
(ix) There is no action, suit, claim, investigation,
occurrence or proceeding pending, or to the knowledge of the Company,
threatened which, if adversely determined would have a Material
Adverse Effect, as defined below.
e. Form of Payment. On each of the Closing Dates, (i)
each Subscriber shall pay the aggregate Purchase Price to the Company
for the Preferred Shares to be issued and sold to such Subscriber at
the respective Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and
(ii) the Company shall deliver to each Subscriber, stock certificates
(in the denominations as such Subscriber shall request) (the "STOCK
CERTIFICATES") representing such number of the Preferred Shares which
such Subscriber is then purchasing (as indicated opposite such
Subscriber's name on the Schedule of Subscribers), duly executed on
behalf of the Company and registered in the name of such Subscriber or
its designee, together with Warrants to purchase 25,000 Warrant Shares
for each $1,000,000 of Purchase Price paid by the Subscribers to the
Company on such Closing Date.
2. SUBSCRIBER'S REPRESENTATIONS AND WARRANTIES.
Each Subscriber represents and warrants with respect to only
itself that:
a. Investment Purpose. Such Subscriber (i) is acquiring
the Preferred Shares and the Warrants and (ii) upon conversion of the
Preferred Shares or the Warrants, will acquire the Conversion Shares
or Warrant Shares, as the case may be, then issuable (the Preferred
Shares, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "SECURITIES"), for its own
account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Subscriber
does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at
any time in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.
b. Accredited Investor Status. Such Subscriber is an
"accredited investor" as that term is defined in Rule 501(a)(3) of
Regulation D and has delivered an Investor Questionnaire to the
Company in the form set forth as Exhibit F hereto.
c. Reliance on Exemptions. Such Subscriber understands
that the Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and such Subscriber's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Subscriber set forth herein
in order to determine the availability of such exemptions and the
eligibility of such Subscriber to acquire such Securities.
d. Information. Such Subscriber and its advisors, if any,
have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the
offer and sale of the Securities which have been requested by such
Subscriber, including all SEC Documents (as defined below). Such
Subscriber and its advisors, if any, have been afforded the
opportunity to review materials and to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations
conducted by such Subscriber or its advisors, if any, or its
representatives shall modify, amend or affect such Subscriber's right
to rely on the Company's representations and warranties contained in
Section 3 below. Such Subscriber understands that its investment in
the Securities involves a high degree of risk and such Subscriber has
sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.
e. No Governmental Review. Such Subscriber understands
that no United States federal or state agency or any other government
or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
f. Transfer or Resale. Such Subscriber understands that
except as provided in the Registration Rights Agreement: (i) the
Securities have not been and are not being registered under the 1933
Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered
thereunder, (B) such Subscriber shall have delivered to the Company an
opinion of counsel, in a form reasonably acceptable to the Company, to
the effect that such Securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Subscriber provides the Company with
reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act (or a
successor rule thereto)("Rule 144"); (ii) any sale of the Securities
made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any
resale of the Securities under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules
and regulations of the SEC thereunder; and (iii) neither the Company
nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Subscriber understands that the
certificates or other instruments representing the Preferred Shares
and the Warrants and, until such time as the sale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act
as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant
Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by
state securities laws, (i) such Securities are sold pursuant to
registration under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of such Securities may be made without
registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances that such Securities can be sold
pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be
immediately sold. Each Subscriber acknowledges, covenants and agrees
to sell the Securities represented by a certificate(s) from which the
legend has been removed, only pursuant to (i) a registration statement
effective under the 1933 Act, or (ii) advice of counsel that such sale
is exempt from registration required by Section 5 of the 1933 Act.
h. Authorization; Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such
Subscriber and is a valid and binding agreement of such Subscriber
enforceable in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar
laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Subscriber is a resident of that
country specified in the Schedule of Subscribers.
j. Section 9 of the Securities Exchange Act. So long as a
Subscriber holds any Preferred Shares, such Subscriber will comply at
all times with the provisions of Section 9 of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the rules and
regulations promulgated thereunder with respect to transactions
involving the securities of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Subscribers that:
a. Organization and Qualification. The Company and its
subsidiaries (a complete list of which is set forth in Schedule 3(a))
are corporations duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and
have the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the Company
and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or
be in good standing would not have a Material Adverse Effect. As used
in this Agreement, "MATERIAL ADVERSE EFFECT" means any material
adverse effect on the business, properties, assets, operations,
results of operations, financial condition or prospects of the Company
and its subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be entered
into in connection herewith. The corporate status of the Company's
sole subsidiary listed on Schedule 3(a) is inactive and such
corporation is immaterial to the business of the Company.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as
defined in Section 7(a)(x)) and each of the other agreements entered
into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue, sell and deliver the Securities in
accordance with the terms hereof and thereof, (ii) the execution and
delivery of the Transaction Documents and the Certificate of
Designations by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without
limitation the issuance of the Preferred Shares and the Warrants and
the reservation for issuance and the issuance of the Conversion Shares
issuable upon conversion thereof and the Warrant Shares issuable upon
exercise of the Warrants, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) the
Transaction Documents have been duly executed and delivered by the
Company, (iv) the Transaction Documents constitute the valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors'
rights and remedies, and (v) prior to each of the Closing Dates, the
Certificate of Designations has been filed with the Secretary of State
of the State of Florida and will be in full force and effect,
enforceable against the Company in accordance with its terms.
c. Capitalization. As of the date of this Agreement, the
authorized capital stock of the Company consists of (i) 50,000,000
shares of Common Stock, of which 12,215,522 shares are issued and
outstanding, 3,613,103 shares are reserved and available for issuance
pursuant to the Company's stock option and purchase plans and
outstanding warrants to purchase Common Stock, and no shares are
reserved for issuance pursuant to any other securities (other than the
Preferred Shares and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 2,000,000 shares of
Preferred Stock, of which, as of the date hereof, none are issued and
outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and outstanding and fully paid and
nonassessable. Except as disclosed in Schedule 3(c), no shares of
Common Stock or Preferred Stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company. Except as disclosed in Schedule 3(c), as of
the date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, any shares of capital stock of the Company
or any of its subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities, (iii)
there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights
Agreement) and (iv) there are no outstanding securities of the Company
or any of its subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may
become bound to redeem or purchase a security of the Company or any of
its subsidiaries. Except as disclosed in Schedule 3(c), there are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities as
described in this Agreement. The Company has furnished to the
Subscribers true and correct copies of the Company's Articles of
Incorporation, as amended and as in effect on the date hereof (the
"ARTICLES OF INCORPORATION"), and the Company's By-laws, as in effect
on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto. The Company owns
all of the outstanding stock of each of its subsidiaries. There are
no securities of the Company or any of its subsidiaries which have
been issued in violation of federal or state securities laws.
d. Issuance of Securities. The Preferred Shares and the
Warrants are duly authorized and, upon issuance in accordance with the
terms hereof, shall be (i) validly issued, fully paid and non-
assessable, (ii) free from all taxes, liens and charges with respect
to the issue thereof and (iii) entitled to the rights and preferences
set forth in the Certificate of Designations and the Warrants,
respectively. 2,775,000 shares of Common Stock (subject to adjustment
pursuant to the Company's covenant set forth in Section 4(f) below)
have been duly authorized and reserved for issuance upon conversion of
the Preferred Shares and 225,000 shares of Common Stock have been duly
authorized and reserved for issuance upon exercise of the Warrants.
Upon conversion in accordance with the Certificate of Designations,
the Conversion Shares and, upon exercise in accordance with the terms
of the Warrants, the Warrant Shares, will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of Common Stock. The issuance by the
Company of the Securities is exempt from registration under the 1933
Act.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by
the Company and the consummation by the Company of the transactions
contemplated thereby (including, without limitation, the reservation
for issuance and issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of the Articles of
Incorporation, any Certificate of Designations, Preferences and Rights
of any outstanding series of Preferred Stock of the Company or the By-
laws, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the
Common Stock is traded or listed) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or
any of its subsidiaries is bound or affected, except to the extent
that matters within clauses (ii) and (iii) immediately above would not
have a Material Adverse Effect. Except as disclosed in Schedule 3(e),
neither the Company nor any of its subsidiaries is in violation of any
term of or in default under (i) the Articles of Incorporation, any
Certificate of Designation, Preferences and Rights of any outstanding
series of Preferred Stock or the By-laws or their organizational
charter or by-laws, respectively, or (ii) any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or
its subsidiaries, except to the extent that such violation (with
respect to clause (ii) only) or default would not have a Material
Adverse Effect. The business of the Company and its subsidiaries is
not being conducted, and shall not be conducted, in violation of any
law, ordinance, rule or regulation of any governmental entity. Except
as specifically contemplated by this Agreement and as required under
the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver
or perform any of its obligations under or contemplated by the
Transaction Documents, the Certificate of Designations or the Warrants
in accordance with the terms hereof or thereof. Except as disclosed
in Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to each
of the Closing Dates hereof and are in full force and effect. The
Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company is not in
violation of the listing requirements of the Nasdaq National Market as
in effect on each of the Closing Dates and is not aware of any facts
which would reasonably lead to delisting of the Common Stock by the
Nasdaq National Market in the foreseeable future, including, without
limitation, the issuance of the Initial Preferred Shares, the
Conversion Shares, the Warrants and the Initial Warrant Shares.
f. SEC Documents; Financial Statements. Since December 31,
1995, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to each of the Closing Dates and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
"SEC DOCUMENTS"). The Company has made available to each Subscriber
or its respective representatives true and complete copies of the SEC
Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments). No other information provided by or on behalf
of the Company to the Subscribers which is not included in the SEC
Documents, including, without limitation, information referred to in
Section 2(d) of this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading. Neither the Company nor
any of its subsidiaries or any of their officers, directors, employees
or agents have provided the Subscribers with any material, nonpublic
information.
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g), since December 31, 1995 there has been no material
adverse change and no material adverse development in the business,
properties, assets, operations, results of operations, financial
condition or prospects of the Company or its subsidiaries. The
Company has not taken any steps, and does not currently expect to take
any steps, to seek protection pursuant to any bankruptcy law for
itself or any of its subsidiaries nor does the Company or any of its
subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock or any
of the Company's subsidiaries or any of the Company's or the Company's
subsidiaries' officers or directors in their capacities as such,
except as expressly set forth in Schedule 3(h).
i. Acknowledgment Regarding Subscribers' Purchase of
Preferred Shares. The Company acknowledges and agrees that each of
the Subscribers is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges
that each Subscriber is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and
any advice given by any of the Subscribers or any of their respective
representatives or agents in connection with the Transaction Documents
and the transactions contemplated thereby is merely incidental to such
Subscriber's purchase of the Securities. The Company further
represents to each Subscriber that the Company's decision to enter
into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. No material event, liability, development or
circumstance has occurred or exists, with respect to the Company or
its subsidiaries or their respective business, properties, prospects,
operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a
registration statement (including by way of incorporation by
reference) filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced.
k. No General Solicitation. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection
with the offer or sale of the Securities.
l. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act
or cause this offering of Securities to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any
applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Nasdaq National
Market, nor will the Company or any of its subsidiaries take any
action or steps that would require registration of the Securities
under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any union labor dispute nor, to the
knowledge of the Company or any of its subsidiaries, is any such
dispute threatened. Neither the Company nor any of its subsidiaries
is a party to a collective bargaining agreement, and the Company and
its subsidiaries believe that relations with their employees are good.
Each of the Company and its subsidiaries is in compliance in all
material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
rules and regulations thereunder ("ERISA"); all "employee benefit
plans" (as defined in ERISA) under which the Company or any of its
subsidiaries has or could have any liability have been administered in
accordance with their terms in all material respects; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company or any of its
subsidiaries has or could have any liability; neither the Company nor
any of its subsidiaries (i) has incurred or expects (or should expect)
to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan" or (ii) is in
default in the timely payment of all amounts required to be paid under
Section 412 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company would have
any liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
n. Intellectual Property Rights. To the knowledge of the
Company, the Company and its subsidiaries own or possess adequate
rights or licenses to use all trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights to conduct their respective
businesses as now conducted, except to the extent that the failure to
possess such rights or licenses would not have a Material Adverse
Effect, and except further to the extent that the Company or its
subsidiaries lack such rights or licenses, they are using or shall use
commercially reasonable efforts to secure such rights or licenses.
The Company and its subsidiaries do not have any knowledge of any
infringement by the Company or any of its subsidiaries of any
trademark, trade name, right, patent, patent right, copyright,
invention, license, service name, service xxxx, service xxxx
registration, trade secret or other similar rights of others, or of
any such development of similar or identical trade secrets or
technical information by others and, except as set forth on Schedule
3(n), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the
Company or any of its subsidiaries regarding any trademark, trade
name, right, patent, patent right, copyright, invention, license,
service name, service xxxx, service xxxx registration, trade secret or
other infringement; and the Company and its subsidiaries are unaware
of any facts or circumstances which might give rise to any of the
foregoing, except for such facts and circumstances which would not
have a Material Adverse Effect.
o. Environmental Laws. The Company and its subsidiaries
(i) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except to the
extent that the matters within clauses (i), (ii) and (iii) above would
not have a Material Adverse Effect.
p. Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, except to the
extent that the failure to have good and marketable title would not
have a Material Adverse Effect, in each case free and clear of all
liens, encumbrances and defects, except such as are described in
Schedule 3(p) or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries. Any
real property and facilities held under lease by the Company or any of
its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries. The security
interest granted to Helix (PEI) Inc. ("Helix") described in Schedule
3(p) will be released upon repayment of the loans made by Helix to the
Company referred to in Schedule 3(p).
q. Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any
of its subsidiaries has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect.
r. Regulatory Permits. The Company and its subsidiaries
possess all certificates, authorizations, approvals, licenses and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, except
to the extent that the failure to possess such certificates,
authorizations, approvals, licenses and permits would not have a
Material Adverse Effect; and neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization,
approval, license or permit.
s. Internal Accounting Controls. The Company and each of
its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
t. No Materially Adverse Contracts, Etc. Neither the
Company nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has
or is expected in the future to have a Material Adverse Effect.
u. Tax Status. Except as set forth on Schedule 3(u), the
Company and each of its subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only
to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of
all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to
provide a copy thereof to each Subscriber promptly after such filing.
The Company shall, on or before each of the Closing Dates, take such
action as the Company shall reasonably determine is necessary to
qualify the Securities for, or obtain exemption for the Securities
for, sale to the Subscribers at each of the Closings pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states
of the United States, and shall provide evidence of any such action so
taken to the Subscribers on or prior to the Closing Date.
c. Reporting Status. Until the date as of which no
Warrants are exercisable and the Investors (as that term is defined in
the Registration Rights Agreement) shall have sold all the Conversion
Shares and none of the Preferred Shares is outstanding (the
"REGISTRATION PERIOD"), the Company shall file all reports required to
be filed with the SEC pursuant to the 1934 Act, and, unless as a
result of a merger, sale of assets or other reorganization
transaction, the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or
the rules and regulations thereunder would otherwise permit such
termination.
d. Use of Proceeds. The Company will use the proceeds from
the sale of the Preferred Shares for substantially the same purposes
and in substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following during the Registration Period to each of Ramius Capital
Group, L.L.C., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx Xxxxxxx, and Xxxxxx, Xxxxxx & Co., L.P., 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
Xxxx (together, the "Subscriber Representatives") or at such other
addresses as such parties shall inform the Company in writing: (i)
within two (2) days after the filing thereof with the SEC, a copy of
its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q,
any Current Reports on Form 8-K and any registration statements or
amendments filed pursuant to the 1933 Act; (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the
Company or any of its subsidiaries and (iii) copies of any notices and
other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or
giving thereof to the stockholders.
f. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 175% of the aggregate number of
shares of Common Stock needed to provide for the issuance of the
Conversion Shares and the Warrant Shares.
g. Right of First Refusal. In the event that at any time or
from time to time during the six (6) month period immediately
following the Initial Closing Date, the Company proposes to issue or
sell (a "FUTURE OFFERING") any shares of Common Stock or any of its
securities which are convertible into or exchangeable for Common Stock
or any convertible security, or any warrants or other rights to
subscribe for or to purchase or any options for the purchase of Common
Stock (other than the Conversion Shares, the Warrant Shares, shares or
options issued or which may be issued pursuant to the Company's
employee, officer, director or consultant stock or option or similar
equity-based compensation plans or shares issued upon exercise of
options, warrants or rights outstanding on the Closing Date consisting
of options and warrants to purchase 3,613,103 shares of Common Stock
which are currently issued and outstanding or available for grant,
securities issued pursuant to any future stock option or equity plan
or arrangement for compensating employees, officers, directors or
consultants, and securities issued in a registered public offering or
as part of an investment by any licensee, prospective licensee,
director, officer, or employee of the Company or members of their
immediate families, or options or warrants which are not issued in
connection with the raising of capital , securities issued to a
corporate partner or other strategic investor or securities issued in
a merger, acquisition or other reorganization transaction), whether
singly or together with other securities at purchase price per share
of Common Stock which is at a discount to the lowest reported sales
price per share of Common Stock on the date of valuation, then the
Company shall give written notice (the "FUTURE OFFERING NOTICE") to
each Subscriber Representative, at the address provided in Section
4(e) of this Agreement, of such proposed Future Offering, specifying
the terms and conditions thereof in reasonable detail, and each
Subscriber shall have the right, exercisable by written notice
delivered within seven (7) business days of the date of receipt by
such Subscriber Representative of the Future Offering Notice, to
subscribe for and purchase all (or such lesser portion as such
Subscriber shall specify in writing) of the Common Stock or other
securities proposed to be issued (pro rata based on the number of
Initial Preferred Shares each Subscriber purchased in relation to the
aggregate number of Initial Preferred Shares purchased by all of the
Subscribers), on terms and conditions no less favorable to the
Subscriber than those specified in the Future Offering Notice.
h. Listing. The Company shall promptly secure the listing
of all of the Registrable Securities (as defined in the Registration
Rights Agreement) upon the Nasdaq National Market, NYSE or the AMEX,
upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stock's
authorization for quotation on the Nasdaq National Market, NYSE or
AMEX. Neither the Company nor any of its subsidiaries shall take any
action which may result in the delisting or suspension of the Common
Stock on the Nasdaq National Market, NYSE or AMEX. The Company shall
promptly provide to each Subscriber copies of any notices it receives
from the Nasdaq National Market, NYSE or AMEX regarding the continued
eligibility of the Common Stock for listing on such automated
quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under
this Section 4(h).
i. Expenses. Subject to Section 9(l) below, the Company
shall pay Subscribers' reasonable expenses (including attorneys fees
and expenses) in connection with negotiating and preparing the
Transaction Documents and consummating the transactions contemplated
thereby up to an aggregate of $25,000.
j. Filing of Form 8-K. On or before the tenth (10th) day
following each of the Closing Dates, the Company shall file a Form 8-K
with the SEC describing the terms of the transaction contemplated by
the Transaction Documents and consummated at such Closing, in each
case in the form required by the 1934 Act.
k. Filing of Certificate of Designations. On or before the
Closing Date, the Company shall file with the Secretary of the State
of the State of Florida the Certificate of Designations, in the form
attached hereto as Exhibit A.
5. TRANSFER AGENT INSTRUCTIONS.
In connection with any sales pursuant to the Registration
Statement, the Company will promptly instruct its transfer agent, upon
surrender of the Warrants or Common Stock issuable upon conversion of
the Preferred Shares or exercise of the Warrants, to remove the
restrictive legend from such shares of Common Stock. In addition, and
if applicable, the Company shall reissue certificates representing the
Securities without the legend set forth above at such time as (i) the
Holder thereof is permitted to dispose of such Securities pursuant to
Rule 144(k) under the 1933 Act or (ii) the Securities are sold to a
purchaser or purchasers in a transaction exempt from registration
under the 1933 Act, as evidenced by an opinion of counsel to the
transferor delivered to and reasonably satisfactory to the Company.
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Subscribers by vitiating
the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and
agrees, in the event of a breach or threatened breach by the Company
of the provisions of this Section 5, that the Subscribers shall be
entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without
any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. Initial Closing Date. The obligation of the Company
hereunder to issue and sell the Initial Preferred Shares and deliver
the Warrants to purchase the Initial Warrant Shares to each Subscriber
at the Initial Closing is subject to the satisfaction, at or before
the Initial Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion by
providing each Subscriber with prior written notice thereof:
(i) Such Subscriber shall have executed each of the
Transaction Documents and delivered the same to the Company.
(ii) The Certificate of Designations shall have been filed
with the Secretary of State of the State of Florida.
(iii) Such Subscriber shall have delivered to the Company the
Purchase Price for the Preferred Shares being purchased by such
Subscriber at the Initial Closing by wire transfer of immediately
available funds pursuant to wire transfer instructions provided by the
Company.
(iv) The representations and warranties of such Subscriber
contained in this Agreement shall be true and correct in all material
respects as of the date when made and as of the Initial Closing Date
as though made at that time (except for representations and warranties
that speak as of a specific date), and such Subscriber shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Subscriber at or prior
to the Initial Closing Date.
b. Put Closing Date. The obligation of the Company
hereunder to issue and sell the Put Preferred Shares to each
Subscriber at the Put Closing and to deliver the Warrants to purchase
the Put Warrant Shares is subject to the satisfaction, at or before
the Put Closing Date, of each of the following conditions, provided
that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing
each Subscriber with prior written notice thereof:
(i) Such Subscriber shall have delivered to the Company the
Purchase Price for the Put Preferred Shares being purchased by such
Subscriber at the Put Closing by wire transfer of immediately
available funds pursuant to wire transfer instructions provided by the
Company.
(ii) The representations and warranties of such Subscriber
contained in this Agreement shall be true and correct in all material
respects as of the date when made and as of the Put Closing Date as
though made at that time (except for representations and warranties
that speak as of a specific date), and such Subscriber shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Subscriber at or prior
to the Put Closing Date.
7. CONDITIONS TO EACH SUBSCRIBER'S OBLIGATION TO PURCHASE.
a. Initial Closing Date. The obligation of each Subscriber
hereunder to purchase the Initial Preferred Shares at the Initial
Closing is subject to the satisfaction, at or before the Initial
Closing Date, of each of the following conditions, provided that these
conditions are for each Subscriber's sole benefit and may be waived by
such Subscriber at any time in its sole discretion:
(i) The Company shall have executed each of the Transaction
Documents, and delivered the same to such Subscriber.
(ii) The Certificate of Designations shall have been filed
with the Secretary of State of the State of Florida, and a copy
thereof certified by such Secretary of State shall have been delivered
to counsel for such Subscriber.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq National Market, NYSE or AMEX, trading in the Common Stock
shall not have been suspended by the SEC, The Nasdaq Stock Market,
Inc., NYSE or AMEX and all of the Conversion Shares issuable upon
conversion of the Initial Preferred Shares and all of the Initial
Warrant Shares shall be listed upon the Nasdaq National Market, NYSE
or AMEX and the Subscribers shall have received evidence of such
listing in a form acceptable to the Subscribers.
(iv) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above,
in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as
of the Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to
the Initial Closing Date. Such Subscriber shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the Initial Closing Date, to the foregoing effect and as
to such other matters as may be reasonably requested by such
Subscriber including, without limitation, an update as of the Initial
Closing Date regarding the representations contained in Sections 3(c)
and 3(g) above.
(v) Such Subscriber shall have received the opinion of the
Company's counsel dated as of the Initial Closing Date, in form, scope
and substance reasonably satisfactory to such Subscriber and in
substantially the form of Exhibit D attached hereto.
(vi) Such Subscriber shall have received the certificate of
an officer of the Company in the form set forth as Exhibit E hereto.
(vii) The Company shall have executed and delivered to such
Subscriber the Stock Certificates (in such denominations as such
Subscriber shall request) for the Initial Preferred Shares being
purchased by such Subscriber at the Initial Closing and the Warrants
to be issued to such Subscriber at the Initial Closing.
(viii) The Board of Directors of the Company shall have
adopted resolutions consistent with Section 3(b)(ii) above and in a
form reasonably acceptable to such Subscriber (the "RESOLUTIONS").
(ix) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares and
the issuance of the Initial Warrant Shares, at least 3,000,000 shares
of Common Stock.
(x) The Company shall have delivered to such Subscriber a
certificate evidencing the incorporation and good standing of the
Company in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date within
10 days of the Initial Closing.
(xi) The Company shall have delivered to such Subscriber a
secretary's certificate certifying as to (a) the Resolutions, (b) the
Articles of Incorporation and (c) By-laws, each as in effect at the
Initial Closing.
(xii) The Company shall have delivered to such Subscriber
such other documents relating to the transactions contemplated by the
Transaction Documents as such Subscriber or its counsel may reasonably
request.
b. Put Closing Date. The obligation of each Subscriber
hereunder to purchase the Put Preferred Shares at the Put Closing is
subject to the satisfaction, at or before the Put Closing Date, of
each of the following conditions, provided that these conditions are
for each Subscriber's sole benefit and may be waived by such
Subscriber at any time in its sole discretion:
(i) The Company shall have complied with the requirements of
Section l(c) and all of the Put Notice Conditions set forth in Section
l(d) shall have been satisfied.
(ii) The Certificate of Designations shall be in full force
and effect and shall not have been amended since the Initial Closing
Date, and a copy thereof certified by the Secretary of State of the
State of Florida shall have been delivered to such Subscriber.
(iii) The Common Stock shall be authorized for quotation on
the Nasdaq National Market, NYSE or AMEX, trading in the Common Stock
shall not have been suspended by the SEC, The Nasdaq Stock Market,
Inc., NYSE or AMEX and all of the Conversion Shares issuable upon
conversion of the Put Preferred Shares and all of the Put Warrant
Shares shall be listed upon the Nasdaq National Market, NYSE or AMEX
and the Subscribers shall have received evidence of such listing in a
form acceptable to the Subscribers.
(iv) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects (except to the extent that any of such representations and
warranties is already qualified as to materiality in Section 3 above,
in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as
of the Put Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to
the Put Closing Date. Such Subscriber shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the Put Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Subscriber
including, without limitation, an update as of the Put Closing Date
regarding the representations contained in Sections 3(c) and 3(g)
above.
(v) Such Subscriber shall have received the opinion of the
Company's counsel dated as of the Put Closing Date, in form, scope and
substance reasonably satisfactory to such Subscriber and in
substantially the form of Exhibit D attached hereto.
(vi) The Company shall have executed and delivered to such
Subscriber the Stock Certificates (in such denominations as such
Subscriber shall request) for the Put Preferred Shares being purchased
by such Subscriber at the Put Closing and the Warrants to be issued to
such subscriber at the Put Closing.
(vii) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions in a form
reasonably acceptable to such Subscriber.
(viii) As of the Put Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares and
exercise of the Warrants, a number of shares of Common Stock equal to
at least 150% of the number of shares of Common Stock which would be
issuable upon conversion of the then outstanding Preferred Shares and
upon exercise of the then outstanding Warrants, including for such
purposes any Preferred Shares and Warrants to be issued at such Put
Closing.
(ix) During the period beginning on and including the Put
Share Notice Date and ending on and including the Put Closing Date,
the Market Price of the Common Stock shall not be less than the
greater of (A) $6.00 or (B) 75% of the Market Price on the Put Share
Notice Date;
(x) The Company shall have delivered to such Subscriber a
certificate evidencing the incorporation and good standing of the
Company and each subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within 10 days of the Put Closing.
(xi) The Company shall have delivered to such Subscriber a
secretary's certificate certifying as to (a) the Resolutions, (b) the
Articles of Incorporation and (c) By-laws, each as in effect at the
Put Closing.
(xii) The Registration Statement with respect to the Common
Stock issuable upon conversion of the Initial Preferred Shares and the
Initial Warrant Shares shall have been declared effective under the
1933 Act by the SEC for at least sixty (60) trading days prior to the
Put Closing Date and including the Put Closing Date.
(xiii) The trading in securities generally shall not have
been suspended by the National Association of Securities Dealers, Inc.
(the "NASD") and trading in the Common Stock shall not have been
suspended by the SEC or the NASD.
(xiv) The representations of the Company set forth in Section
3(h) hereof shall be true and correct as of the Put Closing Date.
(xv) The Company shall have delivered to such Subscriber such
other documents relating to the transactions contemplated by this
Agreement as such Subscriber or its counsel may reasonably request.
(xvi) During the period beginning on the Initial Closing Date
and ending on and including the Put Closing Date, the Company shall
have at all times delivered Conversion Shares upon conversion of the
Preferred Shares on a timely basis as set forth in the Certificate of
Designations and otherwise shall have been in compliance with and
shall not have breached the provisions of the Transaction Documents
and the Certificate of Designations.
8. INDEMNIFICATION.
The Company, on the one hand, and each Subscriber (severally
and not jointly), on the other hand, shall indemnify the other against
any loss, cost or damages (including reasonable attorney's fees and
expenses) suffered or incurred as a result of such party's breach of
any representation, warranty, covenant or agreement in this Agreement.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing
a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law.
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
party.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between the Subscribers,
the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and any other instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor any Subscriber makes
any representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the holders
of at least two-thirds (2/3) of the Preferred Shares then outstanding,
and no provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement of such waiver is
sought. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Preferred Shares then
outstanding.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission
is mechanically generated and kept on file by the sending party);
(iii) three (3) days after being sent by U.S. certified mail, return
receipt requested, or (iv) one (1) day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
The Panda Project, Inc.
000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Xx.
With a copy to:
Xxxx and Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx XX
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx
If to a Subscriber, to its address and facsimile number on
the Schedule of Subscribers, with copies to such Subscriber's
representatives as set forth on the Schedule of Subscribers.
Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Preferred
Shares or Warrant Shares. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the holders of two-thirds (2/3) of the Preferred Shares
then outstanding, including by merger or consolidation, except
pursuant to a Paragraph 4 Transaction (as defined in the Certificate
of Designations) in compliance with the Certificate of Designations.
A Subscriber may assign some or all of its rights hereunder to
affiliates or associates of such Subscriber, without the consent of
the Company, and to others, with the consent of the Company; provided,
however, that any such assignment shall not release such Subscriber
from its obligations hereunder unless such obligations are assumed by
such assignee and the Company has consented to such assignment and
assumption.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and
the Subscribers contained in Sections 2 and 3, the agreements and
covenants set forth in Sections 4, 5 and 9, and the indemnification
provisions set forth in Section 8, shall survive each of the Closings
notwithstanding any investigation made by any party hereto. Each
Subscriber shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.
j. Publicity. The Company and the Subscribers shall have
the right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without
the prior approval of any Subscriber, to make any press release or
other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Subscriber
shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be
provided with a copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
l. Termination. In the event that the Initial Closing
shall not have occurred with respect to a Subscriber on or before
three (3) business days from the date hereof due to the Company's or
such Subscriber's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party's failure to waive
such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any
party to any other party; provided, however, that if this Agreement is
terminated pursuant to this Section 9(l) pursuant to such a breach by
the Company, the Company shall remain obligated to pay the expenses of
the Subscriber described in Section 4(i) above.
m. Placement Agent. Each of the Company and the
Subscribers, on their own behalf, acknowledges that, except for the
retention of Xxxxxxx Xxxxx Capital Partners, LP by the Subscribers, it
has not engaged a placement agent in connection with the sale of the
Preferred Shares.
IN WITNESS WHEREOF, the Subscribers and the Company have
caused this Securities Purchase Agreement to be duly executed as of
the date first written above.
COMPANY: SUBSCRIBERS:
THE PANDA PROJECT, INC. AGR HALIFAX FUND, LTD.
By:/s/ Xxxxxxxx X. Xxxxx, Xx. By: AG Ramius Partners, LLC
Name: Xxxxxxxx X. Xxxxx, Xx. Investment Advisor
Title: President and CEO
By:
--------------------------
Name:
Title: Managing Officer
XXXXXXXX, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
General Partner
By:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: Xxxxxx, Xxxxxx & Co., L.P.
Investment Advisor
By:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
By: Xxxxxx, Xxxxxx & Co., L.P.
General Partner
By:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
RAPHAEL, L.P.
By:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Investment Advisor
By:
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Officer
PINE STREET ASSET MANAGEMENT, L.P.
By:
--------------------------
Name:
Title:
