EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT ("Registration Rights
Agreement"), entered into as of February 11, 1998, between the
entities listed below (each, a "Purchaser" and collectively, the
"Purchasers"), and THE PANDA PROJECT, INC., a Florida corporation with
offices at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the "Company").
W I T N E S S E T H:
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WHEREAS, in connection with the Subscription Agreement of
even date herewith by and among the parties hereto (the "Subscription
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Subscription Agreement, to issue and sell to the
Purchasers shares of the Company's Series A Convertible Preferred
Stock (the "Preferred Shares"), which will be convertible into shares
of the Company's common stock, par value $0.01 per share (the "Common
Stock") (as converted, the "Conversion Shares"), in accordance with
the terms of the Company's Fourth Articles of Amendment of Amended and
Restated Articles of Incorporation (the "Certificate of
Designations"), and deliver warrants to purchase Common Stock (the
"Warrants") pursuant to the terms of the Subscription Agreement (as
exercised, the "Warrant Shares");
WHEREAS, pursuant to the terms of, and in partial
consideration for, Purchasers, purchase of the Preferred Shares and
receipt of the Warrants, the Company has agreed to provide the
Purchasers with certain registration rights with respect to the
Conversion Shares and the Warrant Shares as set forth in this
Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Subscription Agreement and this Registration Rights Agreement, the
Company and each of the Purchasers agrees as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"Holder" shall include each Purchaser and any
transferee of Preferred Shares, Warrants or Registrable Securities
which have not been sold to the public to whom the registration rights
conferred by this Agreement have been transferred in compliance with
Section 11 of this Agreement.
The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or
ordering of the effectiveness of such registration statement.
"Registrable Securities" shall mean the (i) Conversion
Shares issued or issuable upon conversion of the Preferred Shares
(including those received pursuant to a PIK Dividend (as defined in
the Certificate of Designations)), (ii) Warrant Shares issued or
issuable upon exercise of the Warrants, and (iii) shares of Common
Stock issued pursuant to Section 6 of this Agreement and (iv) any
shares of capital stock issued or issuable with respect to the
Conversion Shares, the Preferred Shares, or the Warrant Shares or the
shares of Common Stock issued pursuant to Section 6 of this Agreement
as a result of any stock split, stock dividend, recapitalization,
exchange, combination, merger, consolidation, or similar event or
otherwise.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with a Holder's exercise of its
registration rights under this Agreement, including, without
limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and
expenses, reasonable fees and disbursements of counsel to the Holder
for a "due diligence" examination of the Company and review of the
Registration Statement and related documents and the expense of any
special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which
shall be paid in any event by the Company). With respect to the "due
diligence" examination of the Company, the Registration Expenses shall
include only fees and disbursements for one (1) designated counsel for
all the Holders.
"Registration Statement" shall have the meaning set
forth in Section 2(a) herein.
"Regulation D" shall mean Regulation D as promulgated
pursuant to the Securities Act, and as amended from time to time.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and disbursements of counsel for
Holders not included within the definition of "Registration Expenses".
Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the
Subscription Agreement.
2. REGISTRATION REQUIREMENTS. The Company shall use its
diligent best efforts to effect the registration of the Registrable
Securities contemplated by this Registration Rights Agreement
(including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities
Act) as would permit or facilitate the sale or distribution of all the
Registrable Securities in the manner (including manner of sale) and in
all states reasonably requested by the Holder for purposes of
maximizing the proceeds realizable by the Holder for such sale or
distribution. Such best efforts by the Company shall include without
limitation the following:
(a) The Company shall, as soon as practicable after each
date of issuance of Preferred Shares and Warrants under the
Subscription Agreement, but in no event later than thirty (30) days
after the date of each such issuance, prepare and file (i) a
registration statement with the Commission pursuant to Rule 415 under
the Securities Act on Form S-3 under the Securities Act (or in the
event that the Company is ineligible to use such form, such other form
as the Company is eligible to use under the Securities Act, subject to
the consent of the Holders holding a majority of the Registrable
Securities, which consent will not be unreasonably withheld) covering
the Registrable Securities to be registered by the Holder
("Registration Statement"); (ii) such blue sky filings as shall have
been requested by the Holder; and (iii) any required filings with the
National Association of Securities Dealers, Inc. or exchange or market
where the Common Stock is traded. Thereafter, the Company shall use
its best efforts to have such Registration Statement and other filings
declared effective as promptly as practicable, but in no event later
than 120 days after the issuance of the relevant Preferred Shares and
Warrants.
(b)(i) The Company shall file a Registration Statement
complying with the requirements of this Registration Rights Agreement
within 30 days from the date specified in subsection (a) above. If
such Registration Statement has not become effective within 120 days
from the applicable Closing Date referred to in the Subscription
Agreement, the Holder shall have, in addition to and without limiting
any other rights it may have at law, in equity or under the
Subscription Agreement, the Certificate of Designations, the Warrants
or this Registration Rights Agreement (including the right to specific
performance), the right to receive, as liquidated damages, the
payments as provided in subparagraph (ii) of this Section 2(b).
(ii) If after 120 days from the applicable Closing
Date, the Registration Statement has not been declared
effective by the SEC, then the Company shall pay to the
Holders an amount equal to 2% of the Purchase Price (as
defined in the Certificate of Designations), in cash, for
each 30-day period after such 120-day period that such
Registration Statement is not effective (which payment shall
be pro rated for any period less than 30 days) (the
"Additional Dividend"). In addition to the foregoing, if
after 270 days from the applicable Closing Date the
Registration Statement has not been declared effective by
the SEC, then (i) at the Company's election, the Company
may, and (ii) if Company has not used its best efforts to
have the Registration Statement declared effective by the
SEC, upon demand of such Holder the Company shall, redeem
all the Preferred Shares and Warrants held by such Holder at
a redemption price equal to the greater of 115% of the
Purchase Price and the value of the underlying Common Stock;
and further, if subsequent to the aforementioned 270-day
period no such redemption occurs, the rate of the Additional
Dividend shall be increased from 2% to 5%.
(c) The Company shall enter into such customary agreements
and take all such other reasonable actions in connection therewith in
order to expedite or facilitate the disposition of such Registrable
Securities and, in such connection:
(i) make such representations and warranties to the
Holder as the Holder may reasonably request;
(ii) cause to be delivered to the sellers of
Registrable Securities opinions of counsel to the Company,
dated the effective date of the Registration Statement
(which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the appointed
representative or counsel of the Holders), addressed to the
Holders covering the matters customarily covered in opinions
requested in secondary underwritten offerings; and
(iii) the Company shall deliver such documents and
certificates as may be reasonably requested by the Holders
to evidence compliance with clause (i) above and with any
customary conditions contained in any agreement entered into
by the Company in connection herewith;
the foregoing in this paragraph 2(c) shall be done at each closing as
and to the extent required thereunder.
(d) The Company shall make available for inspection by a
representative or representatives of each Holder and any attorney or
accountant retained by such Holder, all financial and other records
customary for such purposes, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such representative, attorney or accountant in connection with such
Registration Statement. The Holder will agree to keep all non-public
information supplied to it confidential until such information is
included in the Registration Statement, unless (a) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under
the Securities Act, (b) the release of such information is ordered
pursuant to a final non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) such information has
been made generally available to the public other than by disclosure
in violation of this or any other agreement of which the Holder has
knowledge.
3. EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or
compliance with registration pursuant to this Agreement shall be borne
by the Company, and all Selling Expenses shall be borne by the Holder.
4. REGISTRATION ON FORM S-3. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable
or successor form or forms, or in the event that the Company is
ineligible to use such form, such form as the Company is eligible to
use under the Securities Act covering the resale of all of the
Registrable Securities. The foregoing is not intended to require the
Company to pay dividends in order to use Form S-3.
5. REGISTRATION PROCEDURES. In the case of each
registration effected by the Company pursuant to this Agreement, the
Company will keep the Holder advised in writing as to the initiation
of each registration and as to the completion thereof. At its
expense, the Company will use its best efforts to:
(a) Keep such registration effective for the period ending
sixty (60) months, as extended pursuant to Section 6 hereof, after the
applicable Closing Date or until the Holder has sold all the
Registrable Securities and none of the Warrants and Preferred Shares
is outstanding (the "Registration Period").
(b) Furnish to each Holder whose Registrable Securities
are included in any Registration Statement and its legal counsel
without charge (i) promptly after the same is prepared and filed with
the Commission at least one copy of such Registration Statement and
any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus included in such Registration Statement
(including each preliminary prospectus) and, with regard to such
Registration Statement(s), any correspondence by or on behalf of the
Company to the Commission or the staff of the Commission and any
correspondence from the Commission or the staff of the Commission to
the Company or its representatives, and such additional copies of each
of the foregoing and such other documents incident thereto, as such
Holder from time to time may reasonably request;
(c) Prepare and file with the Commission such amendments
and post-effective amendments to a Registration Statement as may be
necessary to keep such Registration Statement effective for the
Registration Period; cause the related prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act and the rules and regulations
thereunder applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement during
the Registration Period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to such Prospectus and, in the event the
number of shares available under a Registration Statement filed
pursuant to this Registration Rights Agreement is insufficient to
cover all of the Registrable Securities, amend such Registration
Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in
any event within fifteen (15) business days after the necessity
therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to
rely), and use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as reasonably
practicable following the filing thereof;
(d) As promptly as practicable after becoming aware of
such event, notify each Holder of Registrable Securities included in
the Registration Statement and their counsel and (if requested by any
such person) confirm such notice (a "Notice") in writing, (1) when a
prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (2) of
any request by the Commission for amendments or supplements to a
Registration Statement or related prospectus or for additional
information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for such purposes, (4) if at any time
the representations and warranties of the Company contained in
agreements contemplated by Section 2(c) cease to be true and correct,
(5) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (6) of the happening
of any event as a result of which the prospectus included in the
Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus or any preliminary Prospectus,
in light of the circumstances under which they were made) not
misleading and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate or that there exist circumstances not yet disclosed to the
public which make further sales under such Registration Statement
inadvisable pending such disclosure and post-effective amendment;
(e) Upon the occurrence of any event contemplated by
Section 5(d)(2)-(7) and immediately upon the expiration of any
Blocking Period (as defined in Section 6), prepare, if the occurrence
of such event or period requires such preparation, a supplement or
post-effective amendment to the Registration Statement or related
prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein not misleading;
(f) Use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the
Registration Statement, or the lifting of any suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment;
(g) Insure that all Registrable Securities subject to the
Registration Statement shall at all times be registered or qualified
for offer and sale under the securities or "blue sky" laws of such
jurisdictions as any Holder reasonably requests in writing; use its
best efforts to keep each such registration or qualification
effective, including through new filings or amendments or renewals,
during the Registration Period and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by the applicable Registration
Statement; provided, however, that the Company will not be required to
qualify to do business or take any action that would subject it to
taxation or general service of process in any jurisdiction where it is
not then so qualified or subject;
(h) Use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities in accordance with the
chosen method or methods of distribution; and
(i) Cause all Registrable Securities included in such
Registration Statement to be listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on the
principal securities exchange or automated interdealer system on which
the same type of securities of the Company are then listed or traded.
(j) The Company shall permit the Holders and their counsel
to review and comment upon a Registration Statement and all amendments
and supplements thereto at least seven business days prior to their
filing with the Commission.
(k) The Company shall provide a transfer agent and
registrar for all such Registrable Securities not later than the
effective date of such Registration Statement.
6. SUSPENSION OF EFFECTIVENESS. The Company may suspend
dispositions under the Registration Statement and notify each Holder
that it may not sell the Registrable Securities pursuant to any
Registration Statement or Prospectus (a "Blocking Notice") if the
Company's management determines in its reasonable good faith judgment
that the Company's obligation to ensure that such Registration
Statement and Prospectus are current and complete would require the
Company to take actions that might reasonably be expected to have a
materially adverse detrimental effect on the Company and its
stockholders; provided that such suspension pursuant to a Blocking
Notice or the Notice described below or as a result of the
circumstances described in 5(d)(2)-(7) may not exceed thirty (30) days
(whether or not consecutive) in any twelve (12) month period. Each
Holder agrees by acquisition of the Registrable Securities that, upon
receipt of a Blocking Notice or "Notice" from the Company of the
existence of any fact of the kind described in the following sentence,
such Holder shall not dispose of, sell or offer for sale the
Registrable Securities pursuant to the Registration Statement until
such Holder receives (i) copies of the supplemented or amended
prospectus, or until counsel for the Company shall have determined
that such disclosure is not required due to subsequent events, (ii)
notice in writing (the "Advice") from the Company that the use of the
prospectus may be resumed and (iii) copies of any additional or
supplemental filings that are incorporated by reference in the
Prospectus. Pursuant to the immediately preceding sentence, the
Company may provide such Notice to the Holders upon the determination
by the Company of the existence of any fact or the happening of any
event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue in
any material respect, or that requires the making of any additions to
or changes in the Registration Statement or the Prospectus, in order
to make the statements therein not misleading in any material respect.
If so directed by the Company in connection with any such Notice, each
Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities
that was current immediately prior to the time of receipt of such
notice. In the event the Company shall give any such Blocking Notice
or Notice, the time regarding the effectiveness of such Registration
Statement set forth in Section 5(a), the final conversion date of the
Preferred Shares and the final exercise date of the Warrants shall be
extended by one and one-half (1-1/2) times the number of days during
the period from and including the date of the giving of such Blocking
Notice or Notice to and including the date when the Holder shall have
received the copies of the supplemented or amended Prospectus, the
Advice and any additional or supplemental filings that are
incorporated by reference in the Prospectus. Delivery of a Blocking
Notice or Notice and the related suspension of any Registration
Statement shall not constitute a default under this Agreement and
shall not create any obligation to pay liquidated damages under
Section 2 hereof. However, if the Holder's ability to sell under the
Registration Statement is suspended for more than the 30-day periods
described above (an "Excess Blocking Period"), then the Company shall
pay to the Holder two percent (2%) of the Purchase Price of the
Preferred Shares for each 30 day period commencing on the first day of
the thirty (30) day period (or part thereof) following the beginning
of an Excess Blocking Period until the Excess Blocking Period
terminates. Such payment will be payable either, at the option of the
Company as evidenced by irrevocable notice to the Holder to be
delivered not later than the first day following the beginning of a
Excess Blocking Period, in cash or in shares of Common Stock valued at
the average of the high and low trading prices of the Common Stock on
the Primary Market for each of the five trading days immediately
preceding the first day following the beginning of the Excess Blocking
Period, in each case within five (5) business days of the end of each
30 day period. In addition, if the Excess Blocking Period continues
for more than an aggregate of 180 days in any 360-day period, or the
payment is not made within 5 business days of the end of each 30 day
period, then at each Holder's option upon written notice from such
Holder following such 180th day or fifth business day, as the case may
be, the Company shall redeem Holder's Preferred Shares at a redemption
price equal to the greater of 125% of the Purchase Price and the
underlying value of the Common Stock, together with all payments due
under this paragraph and under the Certificate of Designations and the
Subscription Agreement. The Company shall deliver the applicable
redemption price to such Holder within ten days of receipt of such
notice by the Holder.
7. INDEMNIFICATION.
(a) COMPANY INDEMNITY. The Company will indemnify each
Holder, each of its officers, directors, employees, agents and
partners, and each person controlling such Holder, within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant
to this Agreement, against all claims, losses, damages, liabilities,
judgments, penalties, fines, charges, costs, attorneys' fees, amounts
paid in settlement and expenses (or actions in respect thereof)
(collectively, "Claims") arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document (including any
related registration statement (or any post-effective amendment
thereto), notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not
misleading, or any violation by the Company of the Securities Act, the
Exchange Act or any state securities law or, in either case, any rule
or regulation thereunder applicable to the Company, and will reimburse
such Holder, each of its officers, directors, employees, agents and
partners, and each person controlling such Holder, for any legal and
any other costs and expenses reasonably incurred in connection with
investigating and defending any Claim, provided that the Company will
not be liable in any such case to the extent that any such Claim
arises out of or is based on any untrue statement or omission (or
alleged untrue statement or omission) that is made in reliance upon
and in conformity with written information furnished to the Company by
such Holder and stated to be specifically for use therein. In
addition to any other information furnished in writing to the Company
by the Holder, the information in the Registration Statement
concerning such Holder under the captions "Selling Shareholders" (or
any similarly captioned section containing the information required
pursuant to Item 507 of Regulation S-K promulgated pursuant to the
Securities Act) and "Plan of Distribution" (or any similarly captioned
section containing information required pursuant to Item 508 of
Regulation S-K) shall be deemed information furnished in writing to
the Company by such Holder to the extent it conforms to information
actually supplied in writing by such Holder. The indemnity agreement
contained in this Section 7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company (which
consent will not be unreasonably withheld).
(b) HOLDER INDEMNITY. Each Holder will, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, severally
and not jointly indemnify the Company, each of its directors, each of
the officers of the Company who shall have signed the Registration
Statement and each person who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and the rules and regulations thereunder, against any Claim
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration
statement (or any post-effective amendment thereto), prospectus or
other document, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which the
statements therein were made, not misleading, and will reimburse the
Company and its directors, officers, or control persons for any legal
or any other expenses reasonably incurred in connection with
investigating and defending any such Claim, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus or other document in reliance upon
and in conformity with written information furnished to the Company by
such Holder and stated to be specifically for use therein, and
provided that no Holder shall be liable under this indemnity for an
amount in excess of the proceeds received by such Holder from the sale
of the Registrable Securities pursuant to such registration statement.
In addition to any other information furnished in writing to the
Company by the Holder, the information in the Registration Statement
concerning such Holder under the captions "Selling Shareholders" (or
any similarly captioned section containing the information required
pursuant to Item 507 of Regulation S-K promulgated pursuant to the
Securities Act) and "Plan of Distribution" (or any similarly captioned
section containing information required pursuant to Item 508 of
Regulation S-K) shall be deemed information furnished in writing to
the Company by such Holder to the extent it conforms to information
actually supplied in writing by such Holder. The indemnity agreement
contained in this Section 7(b) shall not apply to amounts paid in
settlement of any such Claims if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) PROCEDURE. Each party entitled to indemnification
under this Section 7 (the "Indemnified Party") shall give notice to
the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of
any Claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such Claim in any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such Claim shall
be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Section 7 except to the extent that the Indemnifying Party is
materially and adversely affected by such failure to provide notice.
The Indemnifying Party shall not, in connection with any one such
action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such
Indemnified Party; provided, however, that if separate firm(s) of
attorneys are required due to a conflict of interest, then the
Indemnifying Party shall be liable for the reasonable fees and
expenses of each such separate firm. No Indemnifying Party, in the
defense of any such Claim, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such Claim. Each Indemnified
Party shall furnish such information regarding itself or the Claim in
question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with the defense of
such Claim and litigation resulting therefrom.
8. CONTRIBUTION. To the extent the indemnification
provided for in Section 7 herein is unavailable to the Indemnified
Parties in respect of any Claims referred to herein (other than by
reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Claims in such proportion as is appropriate
to reflect the relative fault of the Company and of each Holder in
connection with the statements or omissions which resulted in such
Claims as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one
hand and each Holder on the other shall be deemed to be in the same
proportion as the proceeds from the offering (net of discounts and
commissions but before deducting expenses) received by the Company
from the initial sale of the Registrable Securities by the Company to
such Holder pursuant to this Registration Rights Agreement bear to the
proceeds received by such Holder from the sale of Registrable
Securities pursuant to the Registration Statement. The relative fault
of the Company on the one hand and of the Holder on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company, by such Holder.
In no event shall the obligation of any Indemnifying Party
to contribute under this Section 8 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections
7(a) or 7(b) hereof had been available under the circumstances.
The Company and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraphs. The amount paid or
payable by an Indemnified Party as a result of the Claims referred to
in the immediately preceding paragraphs shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Holder shall be
required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities offered by such Holder
and distributed to the public, or offered to the public, exceeds the
amount paid by such Holder for the Preferred Shares or Warrants
converted into such shares of Common Stock. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
9. SURVIVAL. The indemnity and contribution agreements
contained in Sections 7 and 8 and the representations and warranties
of the Company contained herein shall remain operative and in full
force and effect regardless of (i) any termination of the Subscription
Agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company and (iii) the
consummation of the sale or successive resales of the Registrable
Securities.
10. INFORMATION BY HOLDER. Each Holder shall promptly
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this
Agreement. All information provided to the Company by such Holder
shall be accurate and complete in all material respects and such
Holder shall promptly notify the Company if any such information
becomes incorrect or incomplete. If such Holder does not timely
provide all such reasonably requested information, such Holder shall
not be entitled to the liquidated damages contemplated by paragraph
2(b)(ii) to the extent that such delay in the Registration Statement
becoming effective is caused by such failure to timely provide
information unless such Holder shall be able to demonstrate to the
Company's reasonable satisfaction that such failure to timely provide
did not proportionately contribute to the event giving rise to the
indemnity obligation. The Company shall hold in confidence and not
make any disclosure of information concerning a Holder provided to the
Company unless (i) disclosure of such information is necessary to
comply with any federal or state securities law, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-
appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
Registration Rights Agreement or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such
information concerning a Holder is sought in or by a court or
governmental body of competent jurisdiction or through other means,
give prompt written notice to such Holder and allow such Holder, at
the Holder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
11. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The
rights granted to the Purchaser by the Company under this Registration
Rights Agreement to cause the Company to register Registrable
Securities may be transferred or assigned to any permitted transferee
or assignee of the Warrants, Preferred Shares, Warrant Shares and
Conversion Shares or any permitted transferee or assignee of the
Warrants, provided that the Company is given written notice by the
Holder at the time of or within a reasonable time after said transfer
or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned; and provided
that the transferee or assignee of such rights agrees to be bound by
this Registration Rights Agreement.
12. MISCELLANEOUS.
(a) SECTION 9 OF THE SECURITIES EXCHANGE ACT. So long as
a Holder holds any Preferred Shares, such Subscriber will comply at
all times with the provisions of Section 9 of the 1934 Act, and the
rules and regulations promulgated thereunder with respect to
transactions involving the securities of the Company.
(b) ENTIRE AGREEMENT. This Registration Rights Agreement
and the Subscription Agreement contain the entire understanding and
agreement of the parties with respect to the subject matter hereof and
thereof. This Registration Rights Agreement and the Subscription
Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
(c) NOTICES. Any notice or other communication given or
permitted under this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or sent by registered
or certified mail, return receipt requested, postage prepaid or by air
courier, (a) if to Purchaser, at its address set forth in the
Warrants, (b) if to the Company, to The Panda Project, Inc., at its
address hereinabove set forth, and (c) if to a Holder other than
Purchaser, at the address thereof furnished by like notice to the
Company, or (d) to any such addresses at such other address or
addresses as shall be so furnished to the other parties by like
notice.
(d) GENDER OF TERMS. All terms used herein shall be
deemed to include the feminine and the neuter, and the singular and
the plural, as the context requires.
(e) GOVERNING LAW, CONSENT OF JURISDICTION; WAIVER OF TAX-
TRIAL. This Registration Rights Agreement and the validity and
performance of the terms hereof shall be governed by and construed in
accordance with the laws of the State of New York without regard to
principles of conflicts of law or choice of law, except to the extent
that the law of Florida regulates the Company's issuance of
securities. The parties hereto hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with
this Registration Rights Agreement shall be litigated only in the
Supreme Court of the State of New York or the United States District
Court for the Southern District of New York located in New York
County, New York. To the extent permitted by applicable law, the
parties hereto consent to the jurisdiction and venue of the foregoing
courts and consent that any process or notice of motion or other
application to either of said courts or a judge thereof may be served
inside or outside the State of New York or the Southern District of
New York by registered mail, return receipt requested, directed to the
such party at its address set forth in this Registration Rights
Agreement (and service so made shall be deemed complete five (5) days
after the same has been posted as aforesaid) or by personal service or
in such other manner as may be permissible under the rules of said
courts. The parties hereto hereby waive any right to a jury trial in
connection with any litigation arising out of this Registration Rights
Agreement.
(f) TITLES. The titles used in this Registration Rights
Agreement are used for convenience only and are not to be considered
in construing or interpreting this Registration Rights Agreement.
(g) AMENDMENT. Provisions of this Registration Rights
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of
the Purchasers (to the extent such Purchaser still owns Registrable
Securities) and Holders who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 12(g) shall be binding upon each Holder
and the Company.
(h) SUCCESSORS AND ASSIGNS. Subject to the requirements
of Section 11, this Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the
parties hereto and, with respect to Section 7, to the benefit of the
indemnitees named therein.
(i) COUNTERPARTS. This Registration Rights Agreement may
be executed in two or more identical counterparts, each of which shall
be deemed an original but all of which shall constitute one and the
same agreement. This Registration Rights Agreement, once executed by
a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Registration Rights Agreement bearing
the signature of the party so delivering this Registration Rights
Agreement.
(j) 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
Registration Rights Agreement and the consummation of the transactions
contemplated hereby.
(k) REMEDIES. Failure of any party to exercise any right
or remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date first
above written.
COMPANY: PURCHASERS:
THE PANDA PROJECT, INC. AGR HALIFAX FUND, LTD.
By: AG Ramius Partners, LLC
Investment Advisor
By: /s/ Xxxxxxxx X. Xxxxx, Xx. By:
--------------------------- ---------------------
Name: Xxxxxxxx X. Xxxxx, Xx. Name:
Title: President and CEO 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: Chief Operating
Officer
PINE STREET ASSET MANAGEMENT, L.P.
By:
---------------------
Name:
Title:
