EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated
as of August 13, 1998 by and among THE PANDA PROJECT, INC., a
Florida corporation, with headquarters located at 000 Xxxxxx
Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the "Company"), and the Buyers
set forth on the signature page hereto (the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"), and Rule 506
under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the
1933 Act;
B. Buyers desire, upon the terms and conditions stated
in this Agreement, (a) to purchase shares of the Company's common
stock, par value $0.01 per share (the "Common Stock" or "Common
Shares"), for $1.63 per share for an aggregate purchase price
from all investors of up to Four million U.S. Dollars
($4,000,000) (the "Purchase"); and (b) to receive Stock Purchase
Warrants (the "Warrants"), in the form attached hereto as Exhibit
A, to acquire additional shares of Common Stock. The shares of
Common Stock issuable upon exercise of or otherwise pursuant to
the Warrants are referred to herein as "Warrant Shares"; and
C. Contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement in the form attached hereto as
EXHIBIT B (the "Registration Rights Agreement"), pursuant to
which the Company has agreed to provide certain registration
rights under the Securities Act, the rules and regulations
promulgated thereunder and applicable state securities laws.
NOW, THEREFORE, the Company and each Buyer hereby agree as
follows:
ARTICLE I
PURCHASE
1.1 PURCHASE OF COMMON SHARES AND WARRANTS. Subject to
the terms and conditions of this Agreement, the Common Stock and
Warrants issuable in connection with the Purchase shall be issued
and delivered in a closing (the "Closing"). On the date of the
Closing, subject to the satisfaction or waiver of the conditions
set forth in Article VII and Article VIII, the Company shall
issue and sell to the Buyers, and each Buyer agrees, on a several
and not a joint basis, to purchase from the Company, shares of
Common Stock (the "Purchase Common Shares"), at a purchase price
per share equal to 80% of the "Closing Price," which is defined
as the average closing bid price for the Common Stock (as
reported by Bloomberg, LP) over the five (5) trading days
immediately preceding the Closing Date, and Warrants to purchase
One Common Share for each Common Share purchased in the Closing.
1.2 [This Section intentionally left blank.]
1.3 FORM OF PAYMENT. The Buyers shall pay their
respective purchase price for the Purchase Common Shares, by wire
transfer to the account designated pursuant to the Escrow
Agreement by and among the Company, the Buyers, and the escrow
agent ("Escrow Agent") designated therein in the form attached
hereto as EXHIBIT C (the "Escrow Agreement"), upon delivery to
the Escrow Agent of the applicable Common Shares and Warrants or
irrevocable instructions to the Company's transfer agent to
deliver such securities, all in accordance with the terms of the
Escrow Agreement, and upon satisfaction of the other conditions
to the Closing.
1.4 CLOSING DATE. Subject to the satisfaction (or
waiver) of the conditions thereto set forth in Article VII and
Article VIII below, and further subject to the terms and
conditions of the Escrow Agreement, the date and time of the
Closing shall be 10:00 a.m., Pacific Standard Time, on August 13,
1998 (the "Closing Date"), or such other mutually agreed upon
date or time.
ARTICLE II
FILL-UP AND ISSUANCE LIMITATIONS
2.1 ADDITIONAL SHARES. If on either the six month or
the one year anniversary of the date of the Closing (each an
"Anniversary Date") the 20 trading day average closing bid price
of the Common Stock (as reported by Bloomberg, L.P.) for the
period ending on the trading day prior to the applicable
Anniversary Date (the "Anniversary Price") is less than the
Closing Price or the prior Anniversary Price, respectively, then
the Company shall issue a number of shares of Common Stock,
within 10 days after the Anniversary Date, equal to the product
of (i) the dollar amount that would result from the calculations
in the following formula, with respect to such Buyer, divided by
(ii) (x) the applicable Anniversary Price multiplied by (y) .85.
P = ((C - A) * .85) * S
where:
P = the aggregate dollar value of shares to be
issued;
C = the Closing Price or, if the measurement date is
the 12 month Anniversary Date and the six month
Anniversary Price was less than the Closing
Price, the six month Anniversary Price;
A = the applicable Anniversary Price; and
S = the aggregate number of the Common Shares
purchased by Buyer and not sold or assigned
(other than to an affiliate of the Purchaser).
The foregoing P, C, A and S shall be equitably adjusted to
reflect the effect of any stock dividends, stock splits, reverse
stock splits, discounted equity offerings or actions similar to
any of the foregoing. The issuance of Common Stock hereunder
will only be required or permitted to the extent that (x) such
issuance will not result in any Buyer, or any group which such
entity will be deemed under the Securities Act to be a part of,
solely as a result of the issuance of such additional shares, the
Common Shares and the Warrant Shares, having beneficial ownership
(as defined in Section 13(d) of the Securities Act) of more than
4.9% of the Common Stock, provided that this condition may be
waived in the sole discretion of the applicable Buyer (except
that a Buyer that is subject to the Bank Holding Company Act of
1956, as amended may not waive this condition except to the
extent permitted under such act and the regulations thereunder),
or Buyer in its discretion may, by notice to the Company, defer
such Buyer's receipt of such number of Common Shares as indicated
by it for a period of up to 180 days from the date of
determination that such shares are due for delivery; and (y) the
Company shall issue only freely tradable, registered and
unlegended Common Stock. The Company shall provide each Buyer,
prior notice of an issuance of Common Stock hereunder.
Notwithstanding anything in this Section 2.1 to the
contrary, no holder of any shares of Common Stock other than the
initial Buyers signatory hereto and any permitted assignee who
receives restricted securities pursuant to Section 9.7 shall be
entitled to payments or additional shares of Common Stock from
the Company pursuant to this Section 2.1. The Company shall have
no obligation under this Section 2.1 with respect to the Warrants
or the Warrant Shares.
2.2 ISSUANCE LIMITATIONS. Prior to closing the Escrow
the Company will have obtained the approval for listing of
2,500,000 Purchase Common Shares on the Nasdaq representing 19.9%
of the current outstanding shares of Common Stock (the "Common
Share Limit"). Notwithstanding anything else in this Agreement
to the contrary, the issuance and listing of Common Shares or
Warrant Shares in excess of the Common Share Limit under this
Agreement will only be required upon the Company obtaining the
Requisite Shareholder Approval (as defined in Section 5.7).
Thereafter such issuance and listing shall be required in
accordance with the terms hereof and the Common Share Limit shall
cease to apply or be effective for any purpose.
2.3 ADDITIONAL RIGHTS. If (x) the Purchase Common
Shares are delisted or suspended from trading on Nasdaq, AMEX or
NYSE, (y) the Common Shares issuable pursuant to Section 2.1 and
Warrant Shares that are to be issuable and listed (on any of such
exchanges) after the October, 1998 shareholders' meeting, are not
so issuable (if and to the extent they are to be issued) or
listed within 12 days of such meeting, for any reason, including
pursuant to Section 2.2 hereof because of failure to receive the
Requisite Shareholder Approval or (z) if the Company fails to
issue Additional Shares pursuant to Section 2.1, then the Company
shall pay to the Buyers their pro rata share (based on purchases
hereunder) of $100,000 for each full 30-day period that either of
the conditions in (x) ,(y) or (z) continues.
ARTICLE III
BUYER'S REPRESENTATIONS AND WARRANTIES
Each Buyer represents and warrants to the Company as of the
date hereof and as of the Closing, severally and solely with
respect to itself and its purchase hereunder and not with respect
to any other Buyer, as set forth in this Article III. Each Buyer
makes no other representations or warranties, express or implied,
to the Company in connection with the transactions contemplated
hereby, and any and all prior representations and warranties, if
any, which may have been made by the Buyers to the Company in
connection with the transactions contemplated hereby shall be
deemed to have been merged in this Agreement, and any such prior
representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
3.1 INVESTMENT PURPOSE. Buyer (for this article III to
include Buyer or those for whom Buyer is acting as agent) is
purchasing the Common Shares and the Warrant Shares
(collectively, the "Securities") for its own account for
investment only and not with a view towards the public sale or
distribution thereof, except pursuant to sales registered or
exempted from registration under the 1933 Act.
3.2 ACCREDITED INVESTOR STATUS. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D.
3.3 RELIANCE ON EXEMPTIONS. The Buyer understands that
the Securities are being offered and sold to it in reliance upon
specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein
in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Securities.
3.4 INFORMATION. The Buyer and its advisors, if any,
have been furnished with (or have had access to) 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 the Buyer or its advisors including,
without limitation, the SEC Documents (as defined below). The
Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received
what the Buyer believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer's right to
rely on the Company's representations and warranties contained in
Article IV below. The Buyer acknowledges and understands that
its investment in the Securities involves a significant degree of
risk, including the risks reflected in the SEC Documents.
3.5 GOVERNMENTAL REVIEW. The Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Securities.
3.6 TRANSFER OR RESALE. The Buyer understands that (i)
except as provided in the Registration Rights Agreement, the
Securities have not been and are not being registered under the
1933 Act or any applicable state securities laws and consequently
the Buyer may have to bear the risk of owning the Securities for
an indefinite period of time, and the Securities may not be
transferred unless (a) subsequently included in an effective
registration statement under the 1933 Act, (b) the Buyer shall
have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect
that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration, (c)
sold under Rule 144 promulgated under the 1933 Act (or a
successor rule) or (d) sold or transferred to an affiliate (as
defined in Rule 144) of the Buyer; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such 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 (in each case,
other than pursuant to the Registration Rights Agreement).
Notwithstanding the foregoing or anything else contained herein
to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending
arrangement. The Buyer covenants it will not make any sale,
transfer or other disposition of the Securities in violation of
federal or state securities laws.
3.7 LEGENDS. The Buyer understands that the certificates
representing the Purchase Common Shares, Warrants and, until such
time as the Warrant Shares have been registered under the 1933
Act or otherwise may be sold by the Buyer under Rule 144, as
contemplated by the Registration Rights Agreement, the Warrant
Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against
transfer of the certificates for such Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD
OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of
any certificate upon which it is stamped, if, unless otherwise
required by applicable state securities laws, (a) the Securities
represented by such certificate are registered for sale under an
effective registration statement filed under the 1933 Act, or (b)
such holder provides the Company with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or
transfer of such Securities may be made without registration
under the 1933 Act and such sale either has occurred or may occur
without restriction on the manner of such sale or transfer or (c)
such holder provides the Company with assurances in form and
substance reasonably satisfactory to the Company that such
Security can be sold under Rule 144(k) under the 1933 Act (or a
successor rule thereto). The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from
which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any, or otherwise in
compliance with the requirements for an exemption from
registration under the 1933 Act and the rules and regulations
promulgated thereunder.
3.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the
Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of the Buyer and are
valid and binding agreements of the Buyer enforceable in
accordance with their terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and the
application of general principles of equity.
3.9 RESIDENCY. The Buyer is a resident of or has its
principal place of business in the jurisdiction set forth
immediately below such Buyer's name on the signature pages
hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyers that:
4.1 ORGANIZATION AND QUALIFICATION. Each of the Company
and its Subsidiaries (as defined below), if any, is duly
incorporated, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated, with full
power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. SCHEDULE 4.1
sets forth a list of all of the Subsidiaries of the Company and
the jurisdiction in which each is incorporated. Each of the
Company and its Subsidiaries is duly qualified 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 where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on (i) the business,
operations, assets or financial condition of the Company or its
Subsidiaries, if any, taken as a whole, or (ii) the ability of
the Company to perform its obligations hereunder or under the
agreements or instruments to be entered into or filed in
connection herewith, or (iii) the Securities. "Subsidiaries"
means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or
indirectly, 50% or more of the equity or other ownership
interests.
4.2 AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform
its obligations under this Agreement, the Registration Rights
Agreement, the Escrow Agreement and the Warrants, to consummate
the transactions contemplated hereby and thereby, and to issue
the Securities, in accordance with the terms hereof and thereof,
(ii) the execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Warrants by the
Company, and the consummation by it of the transactions
contemplated hereby and thereby (including, without limitation,
the issuance of the Purchase Common Shares and the Warrants, and
the issuance and reservation for issuance of 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 of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement, the Registration
Rights Agreement, the Escrow Agreement and the Warrants have been
duly executed, and (iv) each of this Agreement, the Registration
Rights Agreement, the Escrow Agreement, and the Warrants
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the
rights of creditors generally and the application of general
principles of equity.
4.3 CAPITALIZATION. As of July 20, 1998, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of
Common Stock of which 12,255,122 shares are issued and
outstanding, 1,579,326 shares are reserved for issuance pursuant
to the Company's employee and director stock option plans,
2,926,112 shares are reserved for issuance pursuant to securities
(other than securities issued under the foregoing plans, the
Preferred Shares and the Warrants) exercisable for, or
convertible into or exchangeable for shares of Common Stock and
3,000,000 shares are reserved for issuance upon conversion of the
Preferred Shares and exercise of the Warrants (subject to
antidilution adjustment); (ii) 2,000,000 shares of preferred
stock par value $.01 of which 600 shares designated as Series A-2
Convertibles Preffered Stocks are issued and outstanding. All of
such outstanding shares of capital stock are, or upon issuance
will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company,
including the Securities, are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any
liens or encumbrances imposed through the actions or failure to
act of the Company. Except as disclosed in SCHEDULE 4.3 (or in
the SEC Documents) and except for the transactions contemplated
hereby, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into,
exercisable for, or exchangeable for any shares of capital stock
of the Company or any of its Subsidiaries, 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, and (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights
Agreement) and (iii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the
Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Purchase
Common Shares, Warrants or Warrant Shares. The Company has
furnished to the Buyers true and correct copies of the Company's
Articles of Incorporation, as amended, as in effect on the date
hereof ("Articles of Incorporation"), 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 of
the Company and the material rights of the holders thereof in
respect thereto.
4.4 ISSUANCE OF SECURITIES. The Purchase Common Shares,
Warrants and Warrant Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement
(including, without limitation any additional shares of Common
Stock issuable as a result of Section 2(c) of the Registration
Rights Agreement) will be validly issued, fully paid and non-
assessable, and free from all taxes, liens, claims, encumbrances,
and charges with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal
liability on the holders thereof.
4.5 NO CONFLICTS. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement,
the Escrow Agreement and the Warrants by the Company and the
consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance
and reservation for issuance of the Purchase Common Shares,
Warrants, and Warrant Shares) will not (i) conflict with or
result in a violation of any provision of the Articles of
Incorporation or By-laws or (ii) except as described in SCHEDULE
4.5 (or in the SEC Documents), violate or conflict with, or
result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of
termination, amendment (including, without limitation, the
triggering of any anti-dilution provision), acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and
regulations, and regulations of any self-regulatory organizations
to which the Company or its securities are subject) 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 for such conflicts, breaches, defaults,
terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect). Neither the Company nor any of its
Subsidiaries is in violation of its Articles of Incorporation,
By-laws or other organizational documents, and neither the
Company nor any of its Subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could put
the Company or any of its Subsidiaries in default) under, and
neither the Company nor any of its Subsidiaries has taken any
action or failed to take any action that (and no event has
occurred which, without notice or lapse of time or both) would
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 by
which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults
as would not, individually or in the aggregate, have a Material
Adverse Effect. The businesses of the Company and its
Subsidiaries, if any, are not being conducted, and shall not be
conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental
entity, the failure to comply with which would, individually or
in the aggregate, have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under
the 1933 Act and any applicable state securities laws or any
listing agreement with any securities exchange or automated
quotation system, 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 or any
regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement,
the Registration Rights Agreement or the Warrants in each case in
accordance with the terms hereof or thereof. Except as set forth
in SCHEDULE 4.5 (or in the SEC Documents), or as contemplated by
this Agreement, 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 the date hereof. Except as set forth on SCHEDULE 4.5 (or in
the SEC Documents), the Company is not in violation of the
listing requirements of Nasdaq (as defined below) and does not
reasonably anticipate that the Common Stock will be delisted by
Nasdaq in the foreseeable future. Except as set forth in
SCHEDULE 4.5 (or in the SEC Documents), the Company and its
Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. Prior to closing the
Escrow the Company will have obtained approval from Nasdaq for
the listing of the Purchase Common Shares.
4.6 SEC DOCUMENTS, FINANCIAL STATEMENTS. Since December
31, 1997, the Company has timely 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
Securities Exchange Act of 1934, as amended (the "1934 Act") (all
of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto
and documents (other than exhibits) incorporated by reference
therein, being hereinafter referred to herein as the "SEC
Documents"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits
and incorporated documents. As of their respective dates, the
SEC Documents complied in all material respects with the
requirements of the 1934 Act or the 1933 Act, as the case may be,
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 U.S. 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 not
include footnotes or may be condensed or summary statements) and
fairly present in all material respects the consolidated
financial position of the Company and its consolidated
Subsidiaries as of the dates thereof, the consolidated results of
their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the financial
statements included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities
incurred in the ordinary course of business subsequent to
December 31, 1997, of the type required under generally accepted
accounting principles to be reflected in such financial
statements. Such liabilities incurred subsequent to December 31,
1997 are not, in the aggregate, material to the financial
condition or results of operations of the Company.
4.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
the SEC Documents, since December 31, 1997, there has been no
material adverse change and no material adverse development in
the assets, liabilities, business, properties, operations,
financial condition, prospects or results of operations of the
Company or any of its Subsidiaries.
4.8 ABSENCE OF LITIGATION. There is no action, suit,
claim, 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 or any of its Subsidiaries or any of its officers or
directors acting as such that could, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries are aware of any facts or
circumstances which would reasonably be expected to give rise to
any action or proceeding described in the foregoing sentence.
SCHEDULE 4.8 contains a complete list and summary description of
any pending or, to the knowledge of the Company, threatened
litigation against the Company or any of its Subsidiaries (or
litigation in which the Company or any of its Subsidiaries is
named), without regard to whether it could have a Material
Adverse Effect.
4.9 PATENTS, COPYRIGHTS, ETC. Each of the Company and
its Subsidiaries owns or possesses the requisite licenses or
rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and
copyrights ("Intellectual Property") necessary to enable it to
conduct its business as now operated (and, except as set forth in
SCHEDULE 4.9 hereof (or in the SEC Documents), to the best of the
Company's knowledge, as presently contemplated to be operated in
the future); there is no claim or action by any person pertaining
to, or proceeding pending or, to the Company's knowledge,
threatened, which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to
enable it to conduct its business as now operated (and, except as
set forth in SCHEDULE 4.9 hereof (or in the SEC Documents), to
the best of the Company's knowledge, as presently contemplated to
be operated in the future); to the best of the Company's
knowledge, the Company's or its Subsidiaries' products, services
and processes do not infringe on any Intellectual Property or
other rights held by any person; and the Company is unaware of
any facts or circumstances which might be reasonably expected to
give rise to any of the foregoing. Each of the Company and its
Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of their Intellectual
Property.
4.10 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 reasonable judgment of the
Company's officers has or is expected in the future, individually
or in the aggregate, to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is a party to any
contract or agreement which, in the reasonable judgment of the
Company's officers, has or is expected to have a Material Adverse
Effect.
4.11 TAX STATUS. Except as set forth in Schedule 4.11
(or in the SEC Documents), each of the Company and its
Subsidiaries has made or filed all federal, state and foreign
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 each of the Company and 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 provisions
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. The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment
or collection of any foreign, federal, state or local tax.
Except as set forth in Schedule 4.11 (or in the SEC Documents),
none of the Company's tax returns is presently being audited by
any taxing authority.
4.12 CERTAIN TRANSACTIONS. Except as disclosed in the SEC
Documents or as set forth in Schedule 4.12 and except for
arm's-length transactions pursuant to which the Company or any of
its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Company or any of
its Subsidiaries could obtain from third parties and other than
the grant of stock options or the ownership of other securities
and rights disclosed in SCHEDULE 4.3 (or in the SEC Documents),
none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of
its Subsidiaries (other than for services as employees, officers
and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer,
director, or employee has a substantial interest or is an
officer, director, trustee or partner.
4.13 DISCLOSURE. All information relating to or
concerning the Company or any of its Subsidiaries set forth in
this Agreement and provided to the Buyers pursuant to Section 3.4
hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects,
and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not
misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming
for this purpose that the Company's reports filed under the 1934
Act are being incorporated into an effective registration
statement filed by the Company under the 1933 Act).
4.14 ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF
SECURITIES. The Company acknowledges and agrees that each Buyer
is acting solely in the capacity of an arm's-length purchaser
with respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that no Buyer is acting
as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the
transactions contemplated hereby, and any advice given by any
Buyer or any of its representatives or agents in connection with
this Agreement and the transactions contemplated hereby is merely
incidental to the Buyer's purchase of the Securities and has not
been relied on by the Company in any way. The Company further
represents to each Buyer that the Company's decision to enter
into this Agreement has been based solely on an independent
evaluation by the Company and its representatives.
4.15 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 in any
security or solicited any offers to buy any security under
circumstances that would require registration under the 1933 Act
of the issuance of the Securities to the Buyers. To the
knowledge of the Company the issuance of the Securities to the
Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of
the 1933 Act or any applicable rules of Nasdaq.
4.16 NO BROKERS. The Company has taken no action which
would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby, except for
fees to be paid in connection with the investments of certain of
the Buyers, except for fees payable to Xxxxxxx Xxxxx Capital
Partners, LP.
4.17 PERMITS; COMPLIANCE. Each of the Company and its
Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted except those the
failure of which to possess would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, the
"Company Permits"), and there is no action pending or, to the
knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Since December 31, 1997, neither the Company nor
any of its Subsidiaries has received any notification with
respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible
conflicts, defaults or violations, which conflicts, defaults or
violations would not have a Material Adverse Effect.
4.18 TITLE TO PROPERTY. 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 which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE
4.18 (or in the SEC Documents) or such as would not have a
Material Adverse Effect. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such
exceptions as would not have a Material Adverse Effect.
4.19 INSURANCE. Each of the Company and its Subsidiaries
is 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 such Subsidiary 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.
4.20 INTERNAL ACCOUNTING CONTROLS. Each of the Company
and its Subsidiaries maintains a system of internal accounting
controls sufficient, in the judgment of the Company's board of
directors, 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.
4.21 EMPLOYMENT MATTERS. The Company and its Subsidiaries
are in compliance with all federal, state, local and foreign laws
and regulations respecting employment and employment practices,
terms and conditions of employment, and wages and hours except
where failure to be in compliance would not have a Material
Adverse Effect. There are no pending investigations involving
the Company or any of its Subsidiaries by the U.S. Department of
Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and
regulations. There is no unfair labor practice charge or
complaint against the Company or any of its Subsidiaries pending
before the National Labor Relations Board, or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or
threatened against or involving the Company or any of its
Subsidiaries. Except as set forth in SCHEDULE 4.21 (or in the
SEC Documents), no representation question exists respecting the
employees of the Company or any of its Subsidiaries, and no
collective bargaining agreement or modification thereof is
currently being negotiated by the Company or any of its
subsidiaries. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of
the Company or any of its Subsidiaries. No material labor
dispute with the employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is
imminent.
4.22 ERISA Matters. Except as set forth in Schedule 4.22
(or in the SEC Documents), the Company has no "employee benefit
plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, or intended
to be qualified under Section 401(a) of the Internal Revenue
Code.
4.23 INVESTMENT COMPANY STATUS. The Company is not and,
upon consummation of the sale of the Securities, will not be an
"investment company," a company controlled by an "investment
company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such
terms are defined in the Investment Company Act of 1940, as
amended.
4.24 NO GENERAL SOLICITATION. Neither the Company nor any
distributor participating on the Company's behalf in the
transactions contemplated hereby (if any) nor any person acting
for the Company, or any such distributor, has conducted any
"general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
ARTICLE V
COVENANTS
5.1 COMMERCIALLY REASONABLE EFFORTS. The parties shall
use their commercially reasonable efforts to satisfy timely each
of the conditions described in Sections 7 and 8 of this
Agreement.
5.2 FORM D; BLUE SKY LAWS. 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 Buyer promptly
after such filing. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine
is necessary to qualify the Securities for sale to the Buyers
pursuant to this Agreement under applicable securities or "blue
sky" laws of the states of the United States (or to obtain an
exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing
Date. The Company agrees to file a Form 8-K or 10-Q disclosing
this Agreement and the transactions contemplated hereby with the
SEC within ten (10) business days following the Closing Date.
5.3 REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. The
Company's Common Stock is registered under Section 12(b) of the
1934 Act. Throughout the Registration Period (as defined in the
Registration Rights Agreement), the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934
Act, and 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 permit such
termination. The Company currently meets, and will take all
reasonably necessary action to continue to meet, the "registrant
eligibility" requirements set forth in the general instructions
to Form S-3.
5.4 USE OF PROCEEDS. The Company shall use the proceeds
from the sale of the Common Shares and Warrants in the manner set
forth in SCHEDULE 5.4 attached hereto and made a part hereof and
shall not otherwise, directly or indirectly, use such proceeds
for any loan to or investment in any other corporation,
partnership, enterprise or other person (except in connection
with its direct or indirect Subsidiaries), except for certain
broker's fees to be paid in connection with investments made by
certain of the Buyers.
5.5 EXPENSES. The Company and the Buyers shall each be
liable for their own expenses incurred in connection with the
negotiation, preparation, execution and delivery of this
Agreement and the other agreements to be executed in connection
herewith, including, without limitation, attorneys' and
consultants' fees and expenses.
5.6 FINANCIAL INFORMATION. The Company agrees to file
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. The financial statements of the
Company will be prepared in accordance with generally accepted
accounting principles, consistently applied, and will fairly
present in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries and
results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). The Company agrees to send the
following reports to each Buyer until such Buyer transfers,
assigns, or sells all of the Securities: (i) within ten (10)
days after the filing with the SEC, a copy of its Annual Report
on Form 10-K, its Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K; (ii) within one (1) day after release,
copies of all press releases issued by the Company or any of its
Subsidiaries; and (iii) contemporaneously with the making
available or giving to the stockholders of the Company, copies of
any notices or other information the Company makes available or
gives to such stockholders.
5.7 RESERVATION OF SHARES. Subject to the Common Share
Limit (unless authorization is given to issue additional Common
Shares), the Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full exercise of the
Warrants and the issuance of the Warrant Shares in connection
therewith (based upon the Exercise Price of the Warrants in
effect from time to time). The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon
exercise of the Warrants without the consent of the Buyers
(unless required to comply with the rules or regulations of the
NASD), which consent will not be unreasonably withheld. The
Company shall at all times maintain the number of shares of
Common Stock so reserved for issuance at no less than the lesser
of (i) the Common Share Limit and (ii) the number of Common
Shares that are then issuable based upon the number of Warrant
Shares that are then issuable upon exercise of all of the
outstanding Warrants (based on the Exercise Price of the Warrants
in effect from time to time). If at any time the number of
shares of Common Stock authorized and reserved for issuance is
below the number of Common Shares calculated pursuant to the
foregoing formula, including without limitation because of the
Common Share Limit, the Company will promptly take all corporate
action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting
of shareholders to authorize additional shares to meet the
Company's obligations under this Section 5.7, in the case of an
insufficient number of authorized shares, and using its best
efforts to obtain shareholder approval of an increase in such
authorized number of shares. In this regard the Company shall
include in its October, 1998 shareholders' meeting a motion for
approvals necessary to permit the issuance and listing on Nasdaq
of all Common Shares (including those pursuant to Article II) and
Warrant Shares contemplated by this Agreement (the "Requisite
Shareholder Approval").
5.8 LISTING. The Company shall, on or before 12
business days following the date it obtains the Requisite
Shareholder Approval, secure the listing of the Common Shares and
Warrant Shares to be issued pursuant to the terms of this
Agreement upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall
maintain a listing on the Nasdaq, AMEX or NYSE (as defined below)
of all Common Shares and Warrant Shares from time to time
issuable upon exercise of the Warrants. The Company will use
commercially reasonable efforts to obtain and maintain the
listing and trading of its Common Stock on the Nasdaq National
Market System or the Nasdaq Small Cap Market (collectively,
"Nasdaq"), the American Stock Exchange ("AMEX") or the New York
Stock Exchange ("NYSE"), and to comply in all respects with the
Company's reporting, filing and other obligations under the
bylaws or rules of the Nasdaq or other exchanges, as applicable.
The Company shall promptly provide to each Buyer copies of any
notices it receives regarding the continued eligibility of the
Common Stock for listing on the Nasdaq or other principal
exchange or quotation system on which the Common Stock is listed
or traded.
5.9 SOLVENCY; COMPLIANCE WITH LAW. The Company (both
before and after giving effect to the transactions contemplated
by this Agreement) is solvent (i.e., its assets have a fair
market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and
matured) and, currently, the Company has no information that
would lead it to reasonably conclude that the Company would not
have, nor does it intend to take any action that would impair,
its ability to pay its debts from time to time incurred in
connection therewith as such debts mature. The Company will
conduct its business in compliance with all applicable laws,
rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all
applicable local, state and federal environmental laws and
regulations the failure to comply with which would have a
Material Adverse Effect.
5.10 INSURANCE. The Company shall maintain liability,
casualty and other insurance (subject to customary deductions and
retentions) with responsible insurance companies against such
risk of the types and in the amounts customarily maintained by
companies of comparable size to the Company.
5.11 No Integration: The Company will not conduct any
future offering of securities that will be integrated with the
issuance of Securities hereunder such that the offer and sale of
the Securities issued hereunder would be required to be
registered under the 1933 Act.
5.12 EQUITY LINE. In the event that the Company
formalizes an equity line facility currently contemplated by the
Company, then the Company will not utilize such equity line prior
to January 1, 1999.
ARTICLE VI
TRANSFER AGENT INSTRUCTIONS
Subject to the Common Share Limit, the Company shall issue
irrevocable instructions to its transfer agent to issue
certificates, registered in the name of each Buyer or its
nominee, for the Warrant Shares in such amounts as specified from
time to time by such Buyer to the Company upon exercise of the
Warrants on and following the date that is 90 days following the
Closing Date, or such earlier date as a registration statement is
effective with respect to the Purchase Common Shares and/or
Warrant Shares, respectively (the "Irrevocable Transfer Agent
Instructions"). All such certificates shall bear the restrictive
legend as and when specified in Section 3.7 of this Agreement.
The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this
Article VI, and stop transfer instructions to give effect to
Section 3.7 hereof (in the case of the Purchase Common Shares or
Warrant Shares, prior to registration of the Purchase Common
Shares or Warrant Shares under the 1933 Act), will be given by
the Company to its transfer agent, and that the Securities shall
otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section shall
affect in any way the Buyer's obligations and agreement set forth
in Section 3.7 hereof to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Securities. If
a Buyer provides the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in
comparable transactions, that registration of a resale by such
Buyer of any of the Securities is not required under the 1933
Act, or the Buyer provides the Company with reasonable assurance
that such Securities may be sold under Rule 144, the Company
shall permit the transfer, and, in the case of the Purchase
Common Shares or Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer. The Company
acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyer, 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 Article VI will be inadequate, and
agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Buyer shall
be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate
transfer, without the necessity of showing economic loss and
without any bond or other security being required.
ARTICLE VII
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to issue and sell
the Common Shares and the Warrants to a Buyer at the Closing and
pursuant to the Fill-Up provisions is subject to the
satisfaction, at or before such date of each of the following
conditions thereto, 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:
7.1 On or before the Closing, the applicable Buyer shall
have executed this Agreement, the Registration Rights Agreement
and the Escrow Agreement, and delivered the same to the Company
and the Escrow Agent.
7.2 The applicable Buyer shall have delivered the
Purchase Price to the Escrow Agent in accordance with this
Agreement.
7.3 [This Section intentionally left blank.]
7.4 The representations and warranties of the applicable
Buyer shall be true and correct in all material respects as of
the Closing as though made at that time (except for
representations and warranties that speak as of a specific date
which representations and warranties shall be correct as of such
date), and the applicable Buyer 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 the applicable Buyer at
or prior to the Closing.
7.5 No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
ARTICLE VIII
CONDITIONS TO THE BUYERS' OBLIGATION TO PURCHASE
The obligation of each Buyer hereunder to purchase the
Common Shares and the Warrants on the Closing is subject to the
satisfaction, at or before each such date of each of the
following conditions, provided that these conditions are for each
such Buyer's respective benefit and may be waived by each such
Buyer at any time in its sole discretion:
8.1 On or before the Closing, the Company shall have
executed this Agreement, the Registration Rights Agreement and
the Escrow Agreement, and delivered the same to the Buyer.
8.2 [This section intentionally left blank.]
8.3 The Company shall have delivered to the Escrow Agent
duly executed certificates (in such denominations as the
applicable Buyer shall reasonably request) representing the
Common Shares and/or the Warrants being so purchased or
irrevocable instructions to deliver such certificates to the
Company's transfer agent.
8.4 The representations and warranties of the Company
shall be true and correct in all material respects as of the
Closing as though made at such time (except for representations
and warranties that speak as of a specific date which
representations and warranties shall be true and correct as of
such date), and the Company 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 the Company at or prior to the
Closing Date.
8.5 No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any self-
regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of
the transactions contemplated by this Agreement.
8.6 Trading and listing of the Common Stock on Nasdaq
shall not have been suspended by the SEC or Nasdaq and 2,500,000
of the Purchase Common Shares will have been approved for listing
by Nasdaq, prior to closing the Escrow.
8.7 The Buyers shall have received an opinion of the
Company's counsel, dated as of the Closing, respectively, in
form, scope and substance reasonably satisfactory to the Buyers
and in substantially the same form as EXHIBIT D attached hereto.
8.8 The Common Stock required to be authorized and
reserved pursuant to this Agreement shall have been duly
authorized and reserved by the Company.
8.9 The Buyers shall have received proxies or other
evidence satisfactory to the Buyers of a commitment to vote for
the Requisite Shareholder Approval agenda items from each of Mr.
and Xxx. Xxxxx and such other shareholders as identified by the
Buyers to the Company prior to the date hereof.
8.10 The Buyers shall have received evidence that Helix
has agreed to extend the terms of its loan to the Company.
ARTICLE IX
GOVERNING LAW; MISCELLANEOUS
9.1 GOVERNING LAW; JURISDICTION. This Agreement shall
be governed by and interpreted in accordance with the laws of New
York State without regard to the principles of conflicts of law.
The parties hereto hereby submit to the exclusive jurisdiction of
the United States federal and state courts located in New York,
New York, with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or
the transactions contemplated hereby or thereby.
9.2 COUNTERPARTS; SIGNATURES BY FACSIMILE. This
Agreement may be executed in two or more counterparts, 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. This Agreement, once executed
by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
9.3 HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.
9.4 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 or the validity
or enforceability of this Agreement in any other jurisdiction.
9.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and
the 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 Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
party to be charged with enforcement.
9.6 NOTICES. Any notices required or permitted to be
given under the terms of this Agreement shall be sent by
certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be
effective five days after being placed in the mail, if mailed by
regular U.S. mail, or upon receipt, if delivered personally or by
courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
The Panda Project, Inc.
000 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to a Buyer: To the address set forth immediately below
such Buyer's name on the signature pages hereto.
Each party shall provide notice to the other party of any
change in address.
9.7 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties and their
successors and assigns. Neither the Company nor any Buyer shall
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding
the foregoing, the Buyer may assign all or part of its rights and
obligations hereunder to any of its "affiliates," as that term is
defined under the Securities Act, without the consent of the
Company so long as such affiliate is an accredited investor
(within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement. This provision
shall not limit the Buyer's right to transfer the Securities
pursuant to the terms of this Agreement or to assign the Buyer's
rights hereunder to any such transferee pursuant to the terms of
the Agreement.
9.8 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.
9.9 SURVIVAL/REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company and the agreements
and covenants set forth herein shall survive the closing
hereunder. The Company makes no representations or warranties in
any oral or written information provided to Buyers, other than
the representations and warranties included herein. The Company
agrees to indemnify and hold harmless each Buyer and all such
Buyer's respective officers, directors, employees, partners,
members, affiliates, and agents for loss or damage arising as a
result of or related to any breach by the Company of any of its
representations, warranties, covenants and obligations under this
Agreement or the Registration Rights Agreement.
9.10 PUBLICITY. The Company and each Buyer shall have
the right to review, in a reasonable period of time before
issuance thereof, any press releases, relevant portions of any
SEC or Nasdaq filings, 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 the Buyers, to make any press release or SEC or
Nasdaq filings with respect to such transactions as are required
by applicable law and regulations including NASD requirements
(although the Company shall make reasonable efforts to consult
with the Buyers in connection with any such press release prior
to its release and filing, and shall be provided with a copy
thereof and be given an opportunity to comment thereon).
9.11 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.
9.12 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict
construction will be applied against any party.
9.13 EQUITABLE RELIEF. The Company recognizes that in
the event that it fails to perform, observe, or discharge any or
all of its obligations under this Agreement, any remedy at law
may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to temporary
and permanent injunctive relief in any such case without the
necessity of proving actual damages.
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IN WITNESS WHEREOF, the undersigned Buyers and the Company
have caused this Agreement to be duly executed as of the date
first above written.
COMPANY:
THE PANDA PROJECT, INC.
000 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
By:
Name:
Title:
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