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Sample Business ContractsHome: Sample Business Contracts: Featured Asset Purchase Agreements
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ASSET PURCHASE AGREEMENT
by and among:
3dfx Interactive, Inc.,
a California corporation,
NVIDIA Corporation,
a Delaware corporation,
and
Titan Acquisition Corp. No. 2
a Delaware corporation,
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Dated as of December 15, 2000
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Note: Subsequent to the execution of this agreement, Titan Acquisition Corp.
No. 2 changed its name to NVIDIA US Investment Company.
<PAGE>
Table Of Contents
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1. Sale of Specified Assets; Related Transactions......................... B-1
1.1 Sale of Specified Assets......................................... B-1
1.2 Consideration.................................................... B-2
1.3 Payment of Stock Consideration; Adjustment....................... B-2
1.4 No Assumed Liabilities........................................... B-3
1.5 Credit Facility.................................................. B-4
1.6 Stay Order; Standstill Agreement................................. B-4
1.7 Taxes............................................................ B-4
1.8 Allocation....................................................... B-4
1.9 Closing.......................................................... B-5
1.10 Dissenting Shares................................................ B-6
1.11 Further Action................................................... B-6
2. Representations and Warranties of the Seller........................... B-6
2.1 Subsidiaries; Due Organization; Etc.............................. B-6
2.2 Articles of Incorporation and Bylaws; Records.................... B-6
2.3 SEC Filings; Financial Statements................................ B-7
2.4 Absence Of Changes............................................... B-7
2.5 Title To Specified Assets........................................ B-8
2.6 Receivables...................................................... B-8
2.7 Inventory........................................................ B-9
2.8 Equipment, Etc................................................... B-9
2.9 Real Property; Environmental Matters............................. B-9
2.10 Proprietary Assets............................................... B-9
2.11 Contracts........................................................ B-11
2.12 Liabilities; Major Suppliers..................................... B-11
2.13 Compliance with Legal Requirements............................... B-12
2.14 Governmental Authorizations...................................... B-13
2.15 Tax Matters...................................................... B-13
2.16 Employee And Labor Matters....................................... B-13
2.17 Benefit Plans; ERISA............................................. B-14
2.18 Sale of Products................................................. B-15
2.19 Performance Of Services.......................................... B-15
2.20 Insurance........................................................ B-16
</TABLE>
i
<PAGE>
Table Of Contents--(Continued)
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2.21 Proceedings; Orders.............................................. B-16
2.22 Authority; Binding Nature Of Agreements.......................... B-17
2.23 Non-Contravention; Consents...................................... B-17
2.24 Transactions with Affiliates..................................... B-18
2.25 No Discussions................................................... B-18
2.26 Opinion of Financial Advisor..................................... B-18
2.27 Brokers.......................................................... B-18
2.28 Full Disclosure.................................................. B-18
2.29 Sufficiency of Cash Consideration................................ B-19
3. Representations and Warranties of Parent and the Purchaser............. B-19
3.1 Due Organization; Etc............................................ B-19
3.2 Authority; Binding Nature Of Agreements.......................... B-19
3.3 SEC Filings...................................................... B-19
3.4 Non-Contravention; Consents...................................... B-19
3.5 Valid Issuance................................................... B-19
3.6 Brokers.......................................................... B-19
4. Pre-Closing Covenants of the Seller.................................... B-20
4.1 Access And Investigation......................................... B-20
4.2 Operation Of Business............................................ B-20
4.3 Filings and Consents............................................. B-21
4.4 Notification; Updates to Disclosure Schedule..................... B-21
4.5 No Solicitation.................................................. B-22
4.6 Shareholders' Meeting............................................ B-23
4.7 Confidentiality.................................................. B-24
4.8 Satisfaction of Liabilities...................................... B-24
5. Additional Covenants of the Parties.................................... B-24
5.1 Registration Statement; Prospectus/Proxy Statement............... B-24
5.2 Regulatory Approvals............................................. B-25
5.3 Additional Agreements............................................ B-25
5.4 Certain Employment Arrangements.................................. B-26
5.5 Consolidated Tax Return.......................................... B-26
5.6 Delivery of Additional Documents................................. B-26
</TABLE>
ii
<PAGE>
Table Of Contents--(Continued)
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6. Conditions Precedent to the Purchaser's Obligation to Close............ B-26
6.1 Accuracy Of Representations...................................... B-26
6.2 Performance Of Obligations....................................... B-26
6.3 Shareholder Approval............................................. B-27
6.4 Consents......................................................... B-27
6.5 No Material Adverse Change....................................... B-27
6.6 Additional Documents............................................. B-27
6.7 Repayment of Credit Facility..................................... B-27
6.8 No Prohibition................................................... B-27
6.9 Effectiveness of Registration Statement.......................... B-27
6.10 HSR Act.......................................................... B-27
6.11 Governmental Litigation.......................................... B-28
6.12 Release of Liens................................................. B-28
7. Conditions Precedent to the Seller's Obligation to Close............... B-28
7.1 Accuracy Of Representations...................................... B-28
7.2 Purchaser's Performance.......................................... B-28
7.3 Shareholder Approval............................................. B-28
7.4 Effectiveness of Registration Statement.......................... B-28
7.5 HSR Act.......................................................... B-28
7.6 Stipulation and Proposed Order to Dismiss........................ B-28
7.7 Purchaser Closing Certificate.................................... B-28
7.8 Governmental Litigation.......................................... B-29
8. Termination............................................................ B-29
8.1 Termination Events............................................... B-29
8.2 Termination Procedures........................................... B-30
8.3 Effect of Termination............................................ B-30
8.4 Termination Fees................................................. B-30
8.5 Nonexclusivity Of Termination Rights............................. B-31
9. Indemnification, Etc................................................... B-32
9.1 Survival Of Representations And Covenants........................ B-32
9.2 Indemnification By The Seller.................................... B-32
9.3 Setoff........................................................... B-33
9.4 Nonexclusivity Of Indemnification Remedies....................... B-33
</TABLE>
iii
<PAGE>
Table Of Contents--(Continued)
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9.5 Defense Of Third Party Claims................................. B-33
9.6 Threshold..................................................... B-34
Exercise Of Remedies By Indemnitees Other Than Parent or the
9.7 Purchaser..................................................... B-34
10. Certain Post-Closing Covenants...................................... B-34
10.1 Further Actions............................................... B-34
10.2 Publicity..................................................... B-35
10.3 Plan of Dissolution........................................... B-35
10.4 Continued Payment of Liabilities.............................. B-35
10.5 Change Of Name................................................ B-35
11. Miscellaneous Provisions............................................ B-35
11.1 Further Assurances............................................ B-35
11.2 Fees and Expenses............................................. B-35
11.3 Attorneys' Fees............................................... B-36
11.4 Notices....................................................... B-36
11.5 Time Of The Essence........................................... B-36
11.6 Headings...................................................... B-36
11.7 Counterparts.................................................. B-36
11.8 Governing Law; Venue.......................................... B-36
11.9 Successors And Assigns; Parties In Interest................... B-37
11.10 Remedies Cumulative; Specific Performance..................... B-37
11.11 Waiver........................................................ B-37
11.12 Amendments.................................................... B-38
11.13 Severability.................................................. B-38
11.14 Entire Agreement.............................................. B-38
11.15 Knowledge..................................................... B-38
11.16 Construction.................................................. B-38
</TABLE>
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of December 15, 2000, by
and among 3dfx Interactive, Inc. a California corporation (the "Seller"), and
NVIDIA Corporation, a Delaware corporation ("Parent") and Titan Acquisition
Corp. No. 2, a Delaware corporation and an indirect wholly-owned subsidiary of
Parent (the "Purchaser"). Certain capitalized terms used in this Agreement are
defined in Exhibit A.
Recitals
A. Parent, the Purchaser and the Seller wish to provide for the sale by the
Seller to the Purchaser of the Specified Assets (as defined in Section 1.1),
the stay and ultimate settlement of certain patent infringement litigation
between Parent and the Seller, and certain other related transactions among the
parties, all on the terms and subject to the conditions set forth in this
Agreement.
B. In order to induce Parent and the Purchaser to enter into this Agreement
and to consummate the transactions contemplated by this Agreement, concurrently
with the execution and delivery of this Agreement, certain shareholders of the
Seller are entering into Voting Agreements and related proxies in favor of
Parent and the Purchaser (the "Voting Agreements").
C. Concurrently with the execution and delivery of this Agreement, the
Seller and the Purchaser are entering into a Credit Agreement (as defined in
Section 1.5) pursuant to which the Purchaser is providing a $15 million credit
facility to the Seller.
D. The board of directors of the Seller has adopted a plan of dissolution
("Plan of Dissolution") which contemplates that the Seller will, subject to the
approval of its shareholders at the Shareholders' Meeting (as defined herein),
elect voluntarily to wind up and dissolve pursuant to the California
Corporations Code.
Agreement
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. Sale of Specified Assets; Related Transactions.
1.1 Sale of Specified Assets. The Seller shall cause to be sold, assigned,
transferred, conveyed and delivered to the Purchaser, at the Closing (as
defined in Section 1.9), good and valid title to the Specified Assets (as
defined below), free and clear of any Encumbrances, on the terms and subject to
the conditions set forth in this Agreement. For purposes of this Agreement, the
term "Specified Assets" shall mean and include all of the properties, rights,
interests and other tangible and intangible assets (wherever located and
whether or not required to be reflected on a balance sheet prepared in
accordance with GAAP), including any such assets acquired by the Seller
Corporations during the Pre-Closing Period, that are or were used in, needed
for the conduct of or material to, or that otherwise directly or indirectly
relate to, the graphics business of the Seller Corporations (the "Graphics
Business"); provided, however, that the Specified Assets shall not include any
Excluded Assets. Without limiting the generality of the foregoing, the
Specified Assets shall include the following:
(a) Patents and Patent Applications; Trademarks: All of the patents,
patent applications, trademarks, trademark applications, trade names,
service marks and service mark applications of the Seller Corporations,
including those identified on Exhibit B, and any counterparts, reissues,
extensions, continuations and continuations in part related to the
foregoing;
(b) Other Proprietary Assets: All Proprietary Assets and goodwill of the
Seller Corporations (including the right to use the names "3dfx," "Voodoo,"
"GigaPixel Corporation," "STB Systems,"
B-1
<PAGE>
"STB Assembly" and "Symmetric Simulation Systems" and variations thereof,
and the Proprietary Assets identified in Part 2.10 of the Disclosure
Schedule), all of the copyrights, trade secrets, know-how, computer
software, inventions, designs, drawings, existing and in-development chip
designs and related specifications, source codes, verification and
validation environments, manufacturing specifications and databases, in
process research and development, product reviews and other Proprietary
Assets identified on Exhibit B;
(c) Inventory; Equipment; Other Tangible Assets: The inventories
(including raw materials, work-in-progress and finished goods), equipment,
materials, prototypes, tools, supplies, vehicles, furniture, fixtures,
improvements and other tangible assets of the Seller Corporations
identified on Exhibit B, including the tangible assets identified in Part
2.8 of the Disclosure Schedule, the entire inventory of graphics chips of
the Seller Corporations as of the date hereof and all advertising and
promotional materials of the Seller Corporations relating to its Graphics
Business;
(d) Contracts: All rights of the Seller Corporations under the Seller
Contracts (including the Seller Contracts identified in Part 2.11 of the
Disclosure Schedule) relating to the Graphics Business;
(e) Governmental Authorizations: All Governmental Authorizations held by
the Seller Corporations (including the Governmental Authorizations
identified in Part 2.14 of the Disclosure Schedule) relating to the
Graphics Business;
(f) Claims: All claims (including claims for past infringement of
Proprietary Assets) and causes of action of the Seller Corporations against
other Persons relating to the Graphics Business (regardless of whether or
not such claims and causes of action have been asserted by the Seller
Corporations), and all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other rights
of recovery possessed by the Seller Corporations relating to the Graphics
Business (regardless of whether such rights are currently exercisable);
(g) Other Assets: All of the Seller Corporations' existing and in-
development chip designs and related specifications, source codes,
verification and validation environments, manufacturing specifications and
databases and customer lists;
(h) Books and Records: All books, records, files and data of the Seller
Corporations relating directly or indirectly to the Graphics Business; and
(i) Proceeds: Without limiting any restriction contained herein on any
such sale or other disposition, an amount of cash and receivables equal to
the gross proceeds from the sale or other disposition of any of the
foregoing after the date hereof.
1.2 Consideration. As consideration for the sale of the Specified Assets to
the Purchaser, the Purchaser has agreed (a) to pay to the Seller at the Closing
(as defined herein) cash in the amount of $70,000,000 (the "Cash
Consideration"), (b) subject to Section 1.3, to deliver to the Seller (but only
upon and subject to the conditions set forth in Section 1.3, and subject to
adjustment as provided therein) one million shares of the common stock, par
value $.001 per share ("Parent Common Stock"), of Parent (the "Stock
Consideration"), and (c) to assume at the Closing the Designated Contractual
Obligations (as defined in Section 1.4(b)) of the Seller by entering into with
the Seller (and, if applicable, other Seller Corporations) an Assignment and
Assumption Agreement in substantially the form of Exhibit D (the "Assignment
and Assumption Agreement").
1.3 Payment of Stock Consideration; Adjustment.
(a) The Stock Consideration will be issued by Parent promptly following
the Closing and contributed by Parent to the Purchaser, but shall only
become deliverable by the Purchaser to the Seller upon and subject to the
completion of the winding up of the business of the Seller pursuant to the
Plan of Dissolution, and delivery to the Purchaser of a certificate
executed by the Chief Executive Officer or Chief Financial Officer of the
Seller certifying that the shareholders of the Seller have duly adopted
resolutions
B-2
<PAGE>
approving the wind-up and dissolution of the Seller pursuant to the
California Corporations Code, that all Liabilities of the Seller
Corporations have been paid in full or otherwise provided for (in a manner
satisfactory to the Purchaser) from sources other than the Stock
Consideration and that the Seller has been validly dissolved (or will upon
the filing of a Certificate of Dissolution and subject to no other
conditions be dissolved) under the California Corporations Code.
Notwithstanding the foregoing, in no event will any portion of the Stock
Consideration become payable unless and until the Purchaser is satisfied
that the Seller shall have first paid in full or otherwise provided for (in
a manner satisfactory to the Purchaser) all Liabilities of the Seller
Corporations that are not included among the Designated Contractual
Obligations (as defined below).
(b) Following and subject to the Closing, and prior to any payment to
the Seller of the Stock Consideration, in the event that the Seller is not
in breach of this Agreement (excluding Section 2.29 for purposes of the
foregoing), has expended all or substantially all of the Cash Consideration
in payment of Liabilities of the Seller Corporations, and reasonably and in
good faith determines (i) that the then-remaining Cash Consideration is or
will be insufficient to enable the Seller Corporations to pay in full all
then-remaining Liabilities of the Seller Corporations, and (ii) that all
then-remaining Liabilities of the Seller Corporations could and would be
paid in full if Seller had access to additional funds in an amount not in
excess of $25,000,000 and applied such funds exclusively to the payment of
such Liabilities, the Seller shall be entitled to request in writing that
the Purchaser advance to the Seller up to a maximum of $25,000,000 (the
"Post-Closing Advance"). Subject to the foregoing conditions, the Purchaser
shall be obligated to make the Post-Closing Advance, within ten business
days after receipt of such written request, unless it determines in good
faith that the funds requested would not permit the Seller to pay in full
all then-remaining Liabilities of the Seller Corporations. A maximum of one
Post-Closing Advance shall ever be required to be made by the Purchaser. In
the event that the Purchaser makes a Post-Closing Advance to the Seller,
the number of shares of Parent Common Stock constituting the Stock
Consideration shall be reduced automatically (and without any action on the
part of any party) by the number of shares equal to the quotient determined
by dividing (1) the amount of the Post-Closing Advance by (2) $50.00.
(c) If, between the date of this Agreement and the date on which the
Stock Consideration (or any portion thereof) is issued to the Seller, the
outstanding shares of Parent Common Stock are changed into a different
number or class of shares by reason of any stock split, division or
subdivision of shares, stock dividend, reverse stock split, consolidation
of shares, reclassification, recapitalization or other similar transaction,
then the number of shares of Parent Common Stock constituting the Stock
Consideration, and the dollar amount set forth in clause (2) of the last
sentence of Section 1.3(b), shall be appropriately adjusted.
1.4 No Assumed Liabilities.
(a) Subject to Section 1.4(b), neither Parent nor the Purchaser shall
assume any Liabilities of the Seller whatsoever, whether relating to the
Specified Assets, the Graphics Business or otherwise.
(b) Notwithstanding Section 1.4(a), pursuant to the Assignment and
Assumption Agreement, at and following the Closing the Purchaser will
become obligated to perform the obligations of the Seller under any Assumed
Contracts, but only to the extent such obligations: (i) arise after the
Closing Date; (ii) do not arise from or relate to any Breach by the Seller
of any provision of any of the Assumed Contracts; (iii) do not arise from
or relate to any event, circumstance or condition occurring or existing on
or prior to the Closing Date that, with notice or lapse of time, would
constitute or result in a Breach of any of the Assumed Contracts; and (iv)
are ascertainable (in nature and amount) solely by reference to the express
terms of the Assumed Contracts (the "Designated Contractual Obligations");
provided, however, that notwithstanding the foregoing, and notwithstanding
anything to the contrary contained in this Agreement, the "Designated
Contractual Obligations" shall not include, and neither Parent nor the
Purchaser shall be required to assume or to perform or discharge:
(1) any Liability of any Person under the Assumed Contracts, except
for the Seller Corporations;
B-3
<PAGE>
(2) any Liability of the Seller Corporations arising from or
relating to any action taken by the Seller Corporations, or any failure
on the part of the Seller Corporations to take any action, at any time
prior to the Closing Date;
(3) any Liability of the Seller Corporations for the payment of any
Tax;
(4) any Liability of the Seller Corporations to any employee or
former employee of the Seller Corporations under the WARN Act, or under
or with respect to any Employee Benefit Plan, profit sharing plan or
dental plan or for severance pay, or for accrued vacation pay or wages;
(4) any Liability of the Seller Corporations to any Related Party;
(5) any Liability under any Assumed Contract, if the Seller shall
not have obtained, prior to the Closing Date, any Consent required to
be obtained from any Person with respect to the assignment or
delegation to the Purchaser of any rights or obligations under such
Assumed Contract;
(6) any Liability that is inconsistent with or constitutes an
inaccuracy in, or that arises or exists by virtue of any Breach of, (x)
any representation or warranty made by the Seller in any of the
Transactional Agreements, or (y) any covenant or obligation of the
Seller contained in any of the Transactional Agreements; or
(7) any other Liability of the Seller Corporations not expressly
assumed by the Purchaser pursuant to the provisions of any of the
Transactional Agreements.
1.5 Credit Facility. Contemporaneously with the execution and delivery of
this Agreement, the Purchaser and the Seller are entering into a Credit
Agreement (the "Credit Agreement") pursuant to which the Purchaser is providing
the Seller with immediate borrowing availability in the amount of $15,000,000
(the "Credit Facility"). In consideration of the execution of the Credit
Agreement and the establishment of the Credit Facility, (a) the Seller is
granting to the Purchaser a non-exclusive, perpetual, fully-paid license for
all of the Seller's patents, patent applications and inventions, which are held
by Seller free and clear of any Encumbrances (other than as may be asserted by
virtue of the Parent Pending Litigation), pursuant to a patent license
agreement (the "Patent License Agreement") of even date herewith, and (b) the
Seller is causing to be sold, assigned, transferred, conveyed and delivered to
the Purchaser good and valid title, free and clear of any Encumbrances, to all
of the trademarks, trademark applications, trade names, service marks and
service mark applications of the Seller Corporations.
1.6 Stay Order; Standstill Agreement.
(a) Contemporaneously with the execution hereof, the Seller has agreed
to stay the Seller Pending Litigation, and Parent has agreed to stay the
Parent Pending Litigation, pursuant to and by executing and filing with the
court the Stay Order.
(b) Contemporaneously with the execution hereof, the Seller and Parent
have agreed to refrain from bringing litigation against the other with
respect to certain patents, patent applications and inventions, pursuant to
the Patent Standstill Agreement.
1.7 Taxes. The Seller shall bear and pay, and shall reimburse the Purchaser
and the Purchaser's affiliates for, any sales taxes, use taxes, transfer taxes,
income taxes, documentary charges, filing fees, recording fees or similar
taxes, charges, fees or expenses that may become payable in connection with the
sale of the Specified Assets to the Purchaser or in connection with any of the
other Transactions. The Seller shall cooperate with the Purchaser to file all
requests for certifications of sales and use tax due, including, without
limitation, pursuant to Section 6812 of the California Revenue and Taxation
Code.
1.8 Allocation. At or prior to the Closing, the Purchaser shall deliver to
the Seller a statement setting forth the Purchaser's good faith determination
of the manner in which the consideration referred to in Section 1.2 is to be
allocated among the Specified Assets. The allocation prescribed by such
statement shall be conclusive and binding upon the Seller for all purposes. The
Seller and the Purchaser acknowledge that the
B-4
<PAGE>
Transactions do not constitute a reorganization described in Section 368 of the
Code. The Seller shall not file any Tax Return or other document with, or make
any statement or declaration to, any Governmental Body that is inconsistent
with such allocation or that is inconsistent with the Transactions not
constituting a reorganization.
1.9 Closing.
(a) The closing of the sale of the Specified Assets and the other
Transactions to be consummated contemporaneously therewith to the Purchaser
(the "Closing") shall take place at the offices of Cooley Godward llp in
Palo Alto, California, at 10:00 a.m. on such date (after the expiration of
the applicable waiting period under the HSR Act and the satisfaction or
waiver of the other conditions to the Closing set forth herein) as the
Purchaser may designate in a written notice delivered to the Seller;
provided, however, that if any condition set forth in Section 6 has not
been satisfied as of the date designated by the Purchaser, then the
Purchaser may, at its election, unilaterally postpone the Closing to such
other date prior to the Termination Date as it reasonably deems
appropriate.
(b) At the Closing, without limiting any of the conditions to the
Closing set forth in Section 6 or Section 7:
(i) the Seller shall execute and deliver, or shall cause to be
executed and delivered, to the Purchaser such bills of sale,
endorsements, assignments (including patent assignments) and other
documents as may (in the reasonable judgment of the Purchaser or its
counsel) be necessary or appropriate to assign, convey, transfer and
deliver to the Purchaser good and valid title to the Specified Assets
free of any Encumbrances;
(ii) the Purchaser shall pay to the Seller the Cash Consideration,
subject to Section 4.8, and provided that the Purchaser will be entitled
to set off, subject to the terms of the Credit Agreement, against the
Cash Consideration any amount outstanding under the Credit Facility at
the Closing;
(iii) the parties hereto shall execute and deliver the Assignment and
Assumption Agreement;
(iv) the Seller shall execute and deliver to Parent and the Purchaser
a certificate (the "Seller Closing Certificate"), executed by the Chief
Executive Officer or the Chief Financial Officer of the Seller,
certifying that (A) each of the representations and warranties made by
the Seller in this Agreement was accurate in all material respects as of
the date of this Agreement, (B) except as expressly set forth in the
Seller Closing Certificate, each of the representations and warranties
made by the Seller in this Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date, (C) each
of the covenants and obligations that the Seller is required to have
complied with or performed pursuant to this Agreement at or prior to the
Closing has been duly complied with and performed in all material
respects, and (D) except as expressly set forth in the Seller Closing
Certificate, each of the conditions set forth in Sections 6.3 and 6.4
has been satisfied in all material respects;
(v) the Purchaser and Parent shall execute and deliver to the Seller
a certificate (the "Purchaser Closing Certificate"), executed by the
Chief Executive Officer or the Chief Financial Officer of the Purchaser
and Parent, certifying that (A) each of the representations and
warranties made by the Purchaser and Parent in this Agreement was
accurate in all material respects as of the date of this Agreement, (B)
except as expressly set forth in the Purchaser Closing Certificate, each
of the representations and warranties made by the Purchaser and Parent
in this Agreement is accurate in all material respects as of the Closing
Date as if made on the Closing Date, and (C) each of the covenants and
obligations that the Purchaser and Parent are required to have complied
with or performed pursuant to this Agreement at or prior to the Closing
has been duly complied with and performed in all material respects; and
B-5
<PAGE>
(vi) Parent shall dismiss with prejudice the Parent Pending
Litigation and the Seller shall dismiss with prejudice the Seller
Pending Litigation, each by executing and filing with the court the
Stipulation and Proposed Order to Dismiss with Prejudice in
substantially the form of Exhibit F.
1.10 Dissenting Shares.
(a) Notwithstanding anything to the contrary contained in this Agreement
(but without limiting the effect of Section 6.3), to the extent that the
provisions of Chapter 13 of the California Corporations Code are applicable
to the Acquisition, the holders of any shares of Seller Common Stock that,
as of the Closing Date, are or may become "dissenting shares" within the
meaning of Section 1300(b) of the California Corporations Code shall be
entitled to such rights as may be granted to such holder or holders in
Chapter 13 of the California Corporations Code.
(b) The Seller shall give the Purchaser (i) prompt notice of any written
demand received by the Seller to require the Seller to purchase shares of
Seller Common Stock pursuant to Chapter 13 of the California Corporations
Code and of any other demand, notice or instrument delivered to the Seller
pursuant to the California Corporations Code, and (ii) full information
concerning all communications between the Seller and any shareholder which
has delivered any such demand. The Seller shall not make any payment or
settlement offer with respect to any such demand unless the Seller shall
first have notified the Purchaser in writing of such payment or settlement
offer.
1.11 Further Action. If, at any time after the Closing Date, any further
action is determined by Parent or the Purchaser to be necessary or desirable to
carry out the purposes of this Agreement or to vest the Purchaser with full
right, title and possession of and to all of the Specified Assets and the
Assumed Contracts, the officers and directors of Parent and the Purchaser shall
be fully authorized (in the name of the Seller and otherwise) to take such
action.
2. Representations and Warranties of the Seller.
The Seller represents and warrants, to and for the benefit of Parent and the
Purchaser, as follows:
2.1 Subsidiaries; Due Organization; Etc.
(a) The Seller has no subsidiaries, except for the Entities identified
in Part 2.1 of the Disclosure Schedule; and neither the Seller nor the
other Entity identified in Part 2.1 of the Disclosure Schedule owns any
capital stock of, or any equity interest of any nature in, any other
Entity, other than the Entities identified in Part 2.1(a) of the Disclosure
Schedule.
(b) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The
Seller is not required to be qualified, authorized, registered or licensed
to do business as a foreign corporation in any jurisdiction other than the
jurisdictions listed in Part 2.1 of the Disclosure Schedule, and is in good
standing as a foreign corporation in each of the jurisdictions listed in
Part 2.1 of the Disclosure Schedule. The Seller Corporations have never
conducted any business under or otherwise used, for any purpose or in any
jurisdiction, any fictitious name, assumed name, trade name or other name,
other than "3dfx" and "Voodoo."
2.2 Articles of Incorporation and Bylaws; Records. The Seller has delivered
to Parent accurate and complete copies of: (a) the articles of incorporation
and bylaws of the Seller Corporations, including all amendments thereto; (b)
the stock records of the Seller Corporations; and (c) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the shareholders of the
Seller Corporations, the boards of directors of the Seller Corporations and all
committees of the board of directors of the Seller Corporations. There have
been no meetings or other proceedings of the shareholders of the Seller
Corporations, the board of directors of the Seller Corporations or
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any committee of the board of directors of the Seller Corporations that are not
fully reflected in such minutes or other records, other than the meeting of the
board of directors of Seller held immediately prior to the execution of, and to
approve, this Agreement. The books of account, stock records, minute books and
other records of the Seller Corporations are accurate, up-to-date and complete,
and have been maintained in accordance with sound and prudent business
practices. All of the records of the Seller Corporations are in the actual
possession and direct control of the Seller.
2.3 SEC Filings; Financial Statements.
(a) The Seller has delivered or made available to Parent accurate and
complete copies of all registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed by the
Seller with the SEC since July 1, 1999, and all amendments thereto (the
"Seller SEC Documents"), as well as the Unaudited Interim Financial
Statements. The Seller SEC Documents have been filed by the Seller with the
SEC on a timely basis. As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the Seller SEC Documents complied
in all material respects with the applicable requirements of the Securities
Act or the Exchange Act (as the case may be); and (ii) none of the Seller
SEC Documents 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 the light of the circumstances
under which they were made, not misleading.
(b) The financial statements (including any related notes) contained in
the Seller SEC Documents (at the time they were filed with the SEC or, if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) and the Unaudited Interim Financial Statements
(as of the date of this Agreement): (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable
thereto (other than the Unaudited Interim Financial Statements); (ii) were
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited financial statements, as permitted by Form 10-Q of the SEC, and
except that the unaudited financial statements may not contain footnotes
and are subject to normal and recurring year-end adjustments that will not,
individually or in the aggregate, be material in amount), and (iii) fairly
present the consolidated financial position of the Seller and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of the Seller and its
consolidated subsidiaries for the periods covered thereby.
2.4 Absence Of Changes. Except as set forth in Part 2.4 of the Disclosure
Schedule and except as expressly contemplated by this Agreement, since July 31,
2000:
(a) there has not been any adverse change in, and no event has occurred
that could reasonably be expected to have an adverse effect on, the
business, condition, assets, liabilities, operations, financial performance
or net income of the Seller Corporations;
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of the assets of the Seller Corporations
(whether or not covered by insurance);
(c) the Seller Corporations have not (i) declared, accrued, set aside or
paid any dividend or made any other distribution in respect of any shares
of capital stock or other securities, or (ii) repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities;
(d) the Seller Corporations have not purchased or otherwise acquired any
asset from any other Person, except for supplies acquired by the Seller
Corporations in the Ordinary Course of Business;
(e) the Seller Corporations have not leased or licensed any asset from
any other Person;
(f) the Seller Corporations have not made any capital expenditure;
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(g) the Seller Corporations have not sold or otherwise transferred, or
leased or licensed, any asset to any other Person;
(h) the Seller Corporations have not written off as uncollectible, or
established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(i) the Seller Corporations have not made any loan or advance to any
other Person;
(j) the Seller Corporations have not (i) established or adopted any
Employee Benefit Plan, or (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary,
commissions, fees, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers, employees or independent
contractors;
(k) no Contract by which the Seller Corporations or any of the assets
owned or used by the Seller Corporations is or was bound, or under which
the Seller Corporations have or had any rights or interest, has been
amended or terminated;
(l) the Seller Corporations have not incurred, assumed or otherwise
become subject to any Liability, other than accounts payable (of the type
required to be reflected as current liabilities in the "liabilities" column
of a balance sheet prepared in accordance with GAAP) incurred by the Seller
Corporations in bona fide transactions entered into in the Ordinary Course
of Business;
(m) the Seller Corporations have not discharged any Encumbrance or
discharged or paid any indebtedness or other Liability, except for accounts
payable that (i) are reflected as current liabilities in the "liabilities"
column of the Unaudited Interim Balance Sheet or have been incurred by the
Seller Corporations since July 31, 2000, in bona fide transactions entered
into in the Ordinary Course of Business, and (ii) have been discharged or
paid in the Ordinary Course of Business;
(n) the Seller Corporations have not forgiven any debt or otherwise
released or waived any right or claim;
(o) the Seller Corporations have not changed any of its methods of
accounting or accounting practices in any respect;
(p) the Seller Corporations have not entered into any transaction or
taken any other action outside the Ordinary Course of Business; and
(q) the Seller Corporations have not agreed, committed or offered (in
writing or otherwise) to take any of the actions referred to in clauses
"(c)" through "(p)" above.
2.5 Title To Specified Assets. The Seller owns (and will own as of the
Closing Date), and has (and will have as of the Closing Date) good and valid
title to, all of the Specified Assets. Except as set forth on Part 2.5 of the
Disclosure Schedule, all of the Specified Assets are owned (and will be owned
as of the Closing Date) by the Seller free and clear of any Encumbrances. The
Specified Assets collectively constitute, as of the date hereof, and will
collectively constitute, as of the Closing Date, all of the properties, rights,
interests and other tangible and intangible assets necessary to enable the
Seller to conduct the Graphics Business in the manner in which the Graphics
Business is currently being conducted and in the manner in which the Graphics
Business is proposed to be conducted.
2.6 Receivables. Part 2.6 of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of the Seller Corporations as of November 30, 2000.
Except as set forth in Part 2.6 of the Disclosure Schedule, all existing
accounts receivable of the Seller Corporations (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet that have not yet
been collected and those accounts receivable that have arisen since October 31,
2000, and have not yet been collected): (i) represent valid obligations of
customers of the Seller Corporations arising from bona fide transactions
entered into in the Ordinary Course of Business; and (ii) are current.
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2.7 Inventory. All of the Seller's existing inventory included within the
Specified Assets (including all such inventory that is reflected on the
Unaudited Interim Balance Sheet and that has not been disposed of by the Seller
since October 31, 2000): (a) is of such quality and quantity as to be usable
and saleable by the Seller in the Ordinary Course of Business; and (b) is free
of any defect or deficiency that would impair its intended use in any material
respect.
2.8 Equipment, Etc. Part 2.8 of the Disclosure Schedule accurately
identifies all equipment, materials, prototypes, tools, supplies, vehicles,
furniture, fixtures, improvements and other tangible assets owned by the Seller
and included within the Specified Assets, and accurately sets forth the date of
acquisition, original cost and book value of each of said assets. Part 2.8 of
the Disclosure Schedule also accurately identifies all tangible assets leased
to the Seller and included within the Specified Assets. Each asset identified
or required to be identified in Part 2.8 of the Disclosure Schedule: (i) is
structurally sound, free of defects and deficiencies and in good condition and
repair (ordinary wear and tear excepted); (ii) complies in all material
respects with, and is being operated and otherwise used in full compliance
with, all applicable Legal Requirements; and (iii) is adequate and appropriate
for the uses to which it is being put. The assets identified in Part 2.8 of the
Disclosure Schedule and included within the Specified Assets are adequate for
the conduct of the Graphics Business of the Seller in the manner in which the
Graphics Business is currently being conducted.
2.9 Real Property; Environmental Matters.
(a) The Seller does not own any real property or any interest in real
property, except for the leaseholds created under the real property leases
identified in Part 2.9 of the Disclosure Schedule (the "Leased Real
Property"). Part 2.9 of the Disclosure Schedule provides an accurate and
complete description of the premises covered by said leases and the
facilities located on such premises. The Seller enjoys peaceful and
undisturbed possession of such premises.
(b) To the Seller's knowledge, the Leased Real Property (i) is free of
any Hazardous Material and any harmful chemical or physical conditions and
(ii) is free of any environmental contamination of any nature.
2.10 Proprietary Assets.
(a) Part 2.10(a) of the Disclosure Schedule lists all Seller Proprietary
Assets included within the Specified Assets.
(b) Part 2.10(b) of the Disclosure Schedule (i) lists each Seller
Proprietary Asset that (A) is owned by any other Person, (B) is licensed to
or used by the Seller as of the date of this Agreement and (C) is or was
used in or material to (or that relates to) the Graphics Business (except
for any Seller Proprietary Asset that is licensed to the Seller under any
third party software license that (1) is generally available to the public,
and (2) imposes no future monetary obligation on the Seller) and (ii)
identifies the license agreement or other agreement under which such Seller
Proprietary Asset is being licensed to or used by the Seller.
(c) The Seller has good and valid title to all of the Seller Proprietary
Assets identified in Part 2.10(a) of the Disclosure Schedule, free and
clear of any Encumbrances, and has a valid right to use and otherwise
exploit, and to license others to use and otherwise exploit, all Seller
Proprietary Assets identified in Part 2.10(b) of the Disclosure Schedule
except as set forth in Part 2.10(c) of the Disclosure Schedule. Except as
set forth in Part 2.10(c) of the Disclosure Schedule, the Seller is not
obligated to make any payment to any Person for the use or other
exploitation of any Seller Proprietary Asset included within the Specified
Assets. Except as set forth in Part 2.10(c) of the Disclosure Schedule, the
Seller is free to use, modify, copy, distribute, sell, license or otherwise
exploit each of the Seller Proprietary Assets included within the Specified
Assets on an exclusive basis (other than Seller Proprietary Assets
consisting of software licensed to the Seller under third party licenses
generally available to the public, with respect to which the Seller's
rights are not exclusive). No current or former employee, officer,
director, shareholder, consultant or
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independent contractor has any valid right, claim or interest in or with
respect to any Seller Proprietary Asset included within the Specified
Assets.
(d) The Seller has taken all reasonable measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all
Seller Proprietary Assets included within the Specified Assets and
otherwise to maintain and protect the value of all Seller Proprietary
Assets included within the Specified Assets. Except as set forth in Part
2.l0(d) of the Disclosure Schedule, the Seller has not disclosed or
delivered or permitted to be disclosed or delivered to any Person, and no
Person (other than the Seller) has access to or has any rights with respect
to, the source code, or any portion or aspect of the source code, of any
such Seller Proprietary Asset. Without limiting the generality of the
foregoing, (i) each current or former employee of the Seller who is or was
involved in, or who has contributed to, the creation or development of any
Seller Proprietary Asset has executed and delivered to the Seller an
agreement (containing no exceptions to or exclusions from the scope of its
coverage) that is substantially identical to the form of Confidential
Information and Invention Assignment Agreement previously delivered by the
Seller to Parent, and (ii) each current and former consultant and
independent contractor to the Seller who is or was involved in, or who has
contributed to, the creation or development of any material Proprietary
Asset has executed and delivered to the Seller or one of the Seller
Corporations an agreement (containing no exceptions to or exclusions from
the scope of its coverage) that is substantially identical to the form of
Consultant Confidential Information and Invention Assignment Agreement
previously delivered to Parent.
(e) Except as set forth in Part 2.10(e) of the Disclosure Schedule, with
respect to each patent, patent application and copyright held or purported
to be held by the Seller: (i) no Proceeding is pending or, to the best of
the knowledge of the Seller, threatened, nor has any claim or demand been
made, which challenges or challenged the legality, validity, enforceability
or use by the Seller of such patent, patent application or copyright; and
(ii) all maintenance, annuity and other fees have been fully paid and all
filings have been properly made.
(f) All patents, trademarks, service marks and copyrights that are
registered with any Governmental Body and held by the Seller Corporations
are valid and subsisting (without reference to the Parent Pending
Litigation or the Seller Pending Litigation). None of the Seller
Proprietary Assets infringes, misappropriates, or conflicts with any
Proprietary Asset owned or used by any other Person (without reference to
the Parent Pending Litigation or the Seller Pending Litigation). To the
best of the knowledge of the Seller, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset
owned or used by any other Person infringes or conflicts with, any Seller
Proprietary Asset (without reference to the Parent Pending Litigation or
the Seller Pending Litigation). The Seller has never misappropriated or, to
the best of the knowledge of the Seller, made unlawful use of any
Proprietary Asset. The Seller has never received any notice or other
communication that any of the Seller Proprietary Assets, or its use or
ownership thereof, infringed upon, misappropriated or made unlawful use of,
any Proprietary Asset owned or used by any other Person.
(g) Except as set forth in Part 2.10(g) of the Disclosure Schedule, the
Seller has not disclosed or delivered to any Person, or permitted the
disclosure or delivery to any Person, of the source code, or any portion or
aspect of the source code, or any proprietary information or algorithm
contained in any source code, of any Seller Proprietary Asset. No event has
occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to, result
in the disclosure or delivery to any Person of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in any source code, of any Seller Proprietary Asset.
(h) Each computer program and other item of software that is or was used
in or material to (or that relates to) the Graphics Business is Year 2000
Compliant. The Seller has conducted sufficient Year 2000 compliance testing
for each computer program and item of software referred to in the preceding
sentence to be able to determine whether such computer program and item of
software is Year 2000 Compliant. For purposes of this Section 2.10, a
computer program or other item of software shall be deemed to be "Year 2000
Compliant" only if (i) the functions, calculations and other computing
processes of such program or
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software perform in a consistent and correct manner without interruption
regardless of the date on which such functions, calculations and processes
are actually performed and regardless of the date input to the applicable
computer system (whether before, on or after January 1, 2000); (ii) such
program or software accepts and responds to year input in a manner that
resolves any ambiguities as to century in a defined, predetermined and
appropriate manner; and (iii) such program or software determines leap
years in accordance with the following standard: (A) if dividing the year
by 4 yields an integer, it is a leap year, except for years ending in 00,
but (B) a year ending in 00 is a leap year if dividing it by 400 yields an
integer.
(i) Except with respect to demonstration or trial copies, no product,
system, program or software module that is or was used in or material to
(or that relates to) the Graphics Business contains any "back door," "time
bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized
access or to disable or erase software, hardware or data without the
consent of the user.
2.11 Contracts.
(a) Part 2.11(a) of the Disclosure Schedule identifies each Contract
directly or indirectly relating to the Specified Assets or the Graphics
Business (the "Seller Contracts"). The Seller has delivered to Parent
accurate and complete copies of all Seller Contracts, including all
amendments thereto. Each Seller Contract is valid and in full force and
effect.
(b) Except as set forth in Part 2.11(b) of the Disclosure Schedule: (i)
no Person has violated or breached, or declared or committed any default
under, any Seller Contract; (ii) the consummation of the Acquisition shall
not, and no event has occurred, and no circumstance or condition exists,
that could reasonably be expected to (with or without notice or lapse of
time) (A) result in a violation or breach of any of the provisions of any
Seller Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Seller Contract, (C) give any Person the
right to accelerate the maturity or performance of any Seller Contract, or
(D) give any Person the right to cancel, terminate or modify any Seller
Contract; (iii) the Seller has not received any notice or other
communication (in writing or otherwise) regarding any actual, alleged,
possible or potential violation or breach of, or default under, any Seller
Contract; and (iv) the Seller has not waived any right under any Seller
Contract.
(c) To the best of the knowledge of the Seller, each Person against
which the Seller has or may acquire any rights under any Seller Contract is
solvent and is able to satisfy all of such Person's current and future
monetary obligations and other obligations and Liabilities thereunder.
(d) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to the Seller under any Seller Contract or any other
term or provision of any Seller Contract.
(e) The Seller has no knowledge of any basis upon which any party to any
Seller Contract may object to (i) the assignment to the Purchaser of any
right under such Seller Contract, or (ii) the delegation to or performance
by the Purchaser of any obligation under such Seller Contract.
2.12 Liabilities; Major Suppliers.
(a) The Seller is not now insolvent, and will not be rendered insolvent
by any of the Transactions. As used in this section, "insolvent" means that
the sum of the present fair saleable value of the Seller's assets does not
and will not exceed its debts and other probable Liabilities.
(b) Immediately after giving effect to the consummation of the
Transactions, (i) the Seller will be able to pay its Liabilities as they
become due in the usual course of its business, (ii) the Seller will not
have unreasonably small capital with which to conduct its present or
proposed business, (iii) the Seller will have assets (calculated at fair
market value) that exceed its Liabilities, and (iv) taking into account all
pending and threatened litigation, final judgments against the Seller in
actions for money damages are not reasonably anticipated to be rendered at
a time when, or in amounts such that, the Seller will be unable to
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satisfy any such judgments promptly in accordance with their terms (taking
into account the maximum probable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered) as well as all other obligations of the Seller. The cash
available to the Seller, after taking into account all other anticipated
uses of the cash, will be sufficient to pay all such debts and judgments
promptly in accordance with their terms.
(c) Except as set forth in Part 2.12 of the Disclosure Schedule, the
Seller Corporations have no material Liabilities, except for: (i)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (ii) accounts payable (of the type required to be
reflected as current liabilities in the "liabilities" column of a balance
sheet prepared in accordance with GAAP) incurred by the Seller Corporations
in bona fide transactions entered into in the Ordinary Course of Business
since July 31, 2000; and (iii) obligations under the Contracts listed in
Part 2.11 of the Disclosure Schedule, to the extent that the existence of
such obligations is ascertainable solely by reference to such Contracts.
(d) Part 2.12 of the Disclosure Schedule: (i) provides an accurate and
complete breakdown and aging of the accounts payable of the Seller
Corporations as of July 31, 2000; (ii) provides an accurate and complete
breakdown of any customer deposits or other deposits held by the Seller
Corporations as of the date of this Agreement; and (iii) provides an
accurate and complete breakdown of all notes payable and all other
indebtedness of the Seller Corporations as of the date of this Agreement.
(e) Except as set forth in Part 2.12 of the Disclosure Schedule, the
Seller Corporations have not paid, and the Seller Corporations are not and
will not become liable for the payment of, any fees, costs or expenses of
the type referred to in Section 2.27.
(f) None of the Seller Corporations has, at any time, (i) made a general
assignment for the benefit of creditors, (ii) filed, or had filed against
it, any bankruptcy petition or similar filing, (iii) suffered the
attachment or other judicial seizure of all or a substantial portion of its
assets, (iv) admitted in writing its inability to pay its debts as they
become due, (v) been convicted of, or pleaded guilty or no contest to, any
felony, or (vi) taken or been the subject of any action that could
reasonably be expected to have an adverse effect on its ability to comply
with or perform any of its covenants or obligations under any of the
Transactional Agreements.
2.13 Compliance with Legal Requirements. Except as set forth in Part 2.13 of
the Disclosure Schedule: (a) the Seller Corporations are in compliance in all
material respects with each Legal Requirement that is applicable to them or to
the conduct of their businesses or the ownership or use of any of their assets;
(b) the Seller Corporations have at all times been in compliance in all
material respects with each Legal Requirement that is or was applicable to them
or to the conduct of their business or the ownership or use of any of their
assets; (c) no event has occurred, and, to the knowledge of the Seller, no
condition or circumstance exists, that could reasonably be expected to (with or
without notice or lapse of time) constitute or result directly or indirectly in
a violation by the Seller Corporations of, or a failure on the part of the
Seller Corporations to comply with, any material Legal Requirement applicable
to them; and (d) the Seller Corporations have not received, at any time, any
notice or other communication (in writing or otherwise) from any Governmental
Body or any other Person regarding (i) any actual, alleged, possible or
potential violation of, or failure to comply with, any material Legal
Requirement, or (ii) any actual, alleged, possible or potential obligation on
the part of the Seller Corporations to undertake, or to bear all or any portion
of the cost of, any cleanup or any remedial, corrective or response action of
any nature. The Seller Corporations have delivered to Parent an accurate and
complete copy of each report, study, survey or other document to which the
Seller Corporations have access that addresses or otherwise relates to the
compliance of the Seller Corporations with, or the applicability to the Seller
Corporations of, any Legal Requirement. To the best of the knowledge of the
Seller, no Governmental Body has proposed or is considering any Legal
Requirement that, if adopted or otherwise put into effect, (i) could reasonably
be expected to have an adverse effect on the business, condition, assets,
liabilities, operations, financial performance, net income or prospects of
either of the Seller Corporations or on the ability of the Seller to comply
with or perform any covenant or obligation under any of the Transactional
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Agreements, or (ii) could reasonably be expected to have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
2.14 Governmental Authorizations. Part 2.14 of the Disclosure Schedule
identifies: (a) each Governmental Authorization that is held by the Seller and
that relates directly or indirectly to the Graphics Business; and (b) each
other Governmental Authorization that, to the best of the knowledge of the
Seller, is held by any employee of the Seller and relates to or is useful in
connection with the Graphics Business of the Seller. The Seller has delivered
to Parent accurate and complete copies of all of the Governmental
Authorizations identified in Part 2.14 of the Disclosure Schedule, including
all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Part 2.14 of the
Disclosure Schedule is valid and in full force and effect. Except as set forth
in Part 2.14 of the Disclosure Schedule: (i) the Seller is and has at all times
been in full compliance in all material respects with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule; (ii) no event has occurred,
and no condition or circumstance exists, that could reasonably be expected to
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule; (iii) the Seller has never
received any notice or other communication (in writing or otherwise) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization; and (iv) all
applications required to have been filed for the renewal of the Governmental
Authorizations required to be identified in Part 2.14 of the Disclosure
Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been
given or made with respect to such Governmental Authorizations has been duly
given or made on a timely basis with the appropriate Governmental Body. The
Governmental Authorizations identified in Part 2.14 of the Disclosure Schedule
constitute all of the Governmental Authorizations necessary (i) to enable the
Seller to conduct the Graphics Business in the manner in which such business is
currently being conducted and in the manner in which such business is proposed
to be conducted, and (ii) to permit the Seller to own and use the Specified
Assets in the manner in which they are currently owned and used.
2.15 Tax Matters.
(a) Each Tax required to have been paid, or claimed by any Governmental
Body to be payable, by the Seller Corporations has been duly paid in full
on a timely basis. Except as set forth in Part 2.15 of the Disclosure
Schedule, no claim or other Proceeding is pending or has been threatened
against or with respect to the Seller Corporations in respect of any Tax.
There are no unsatisfied Liabilities for Taxes (including liabilities for
interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency or similar document received by or on
behalf of the Seller Corporations. The Seller has delivered to (or made
available for inspection by) Parent accurate and complete copies of all Tax
Returns that have been filed on behalf of or with respect to the Seller
Corporations since December 31, 1997. The information contained in such Tax
Returns is accurate and complete in all respects.
(b) The Seller has sufficient tax attributes, including, without
limitation, adjusted basis in its assets and net operating loss carryovers,
such that any Taxes incurred by the Seller as a result of the Transactions
shall not have an adverse effect on the Seller.
2.16 Employee And Labor Matters.
(a) Part 2.16 of the Disclosure Schedule accurately sets forth, with
respect to each current employee of the Seller Corporations who performs or
has performed any services or who engages in or has engaged
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in any activity related to the Specified Assets or the Graphics Business
(including any employee who is on a leave of absence or on layoff status):
(i) the name and title of such employee; (ii) the aggregate dollar amounts
of the compensation (including wages, salary, commissions, director's fees,
fringe benefits, bonuses, profit-sharing payments and other payments or
benefits of any type) received by such employee from the Seller
Corporations with respect to services performed in or activities engaged in
1999 or 2000; and (iii) such employee's annualized compensation as of the
date of this Agreement.
(b) Except as set forth in Part 2.16 of the Disclosure Schedule, the
Seller Corporations are not a party to or bound by, and have never been a
party to or bound by, any employment contract or any union contract,
collective bargaining agreement or similar Contract.
(c) The employment of the employees of the Seller Corporations is
terminable by the Seller Corporations at will, and no employee is entitled
to severance pay or other benefits upon or following termination or
resignation, except as otherwise provided by law. The Seller has delivered
to Parent accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements and other materials
relating to the employment of the current and former employees of the
Seller Corporations.
(d) To the best of the knowledge of the Seller: (i) no employee of the
Seller Corporations intends to terminate his or her employment and (ii) no
employee of the Seller Corporations is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract (with
any Person) that could reasonably be expected to have an adverse effect on
(A) the performance by such employee of any of his or her duties or
responsibilities as an employee of the Seller Corporations or as a
prospective employee of the Purchaser, or (B) the business of the Seller
Corporations or the Purchaser.
(e) The Seller Corporations are not engaged in any unfair labor practice
of any nature. There has never been any slowdown, work stoppage, labor
dispute or union organizing activity, or any similar activity or dispute,
affecting the Seller Corporations or any of their employees, and no Person
has threatened to commence any such slowdown, work stoppage, labor dispute
or union organizing activity or any similar activity or dispute.
(f) Except as set forth in Part 2.16 of the Disclosure Schedule, (i) the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events other than events occurring after the
Closing that are caused by acts or omissions of the Seller Corporations)
constitute an event under any Employee Benefit Plan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee and (ii) no
payment or benefit that will or may be made by the Seller Corporations with
respect to any employee will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
2.17 Benefit Plans; ERISA.
(a) Part 2.17 of the Disclosure Schedule identifies and provides an
accurate and complete description of each Employee Benefit Plan. The Seller
Corporations have never established, adopted, maintained, sponsored,
contributed to, participated in or incurred any Liability with respect to
any Employee Benefit Plan, except for the Employee Benefit Plans identified
in Part 2.17 of the Disclosure Schedule; and the Seller Corporations have
never provided or made available any fringe benefit or other benefit of any
nature to any of its employees, except as set forth in Part 2.17 of the
Disclosure Schedule.
(b) The Seller has caused to be delivered to Parent, with respect to
each Employee Benefit Plan: (i) an accurate and complete copy of such
Employee Benefit Plan and all amendments thereto (including any amendment
that is scheduled to take effect in the future); (ii) an accurate and
complete copy of each Contract (including any trust agreement, funding
agreement, service provider agreement, insurance agreement, investment
management agreement or recordkeeping agreement) relating to such Employee
Benefit Plan; (iii) an accurate and complete copy of any description,
summary, notification, report or other
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document that has been furnished to any employee of the Seller with respect
to such Employee Benefit Plan; (iv) an accurate and complete copy of any
form, report, registration statement or other document that has been filed
with or submitted to any Governmental Body with respect to such Employee
Benefit Plan; and (v) an accurate and complete copy of any determination
letter, notice or other document that has been issued by, or that has been
received by the Seller from, any Governmental Body with respect to such
Employee Benefit Plan.
(c) Each Employee Benefit Plan is being and has at all times been
operated and administered in full compliance with the provisions thereof.
Each contribution or other payment that is required to have been accrued or
made under or with respect to any Employee Benefit Plan has been duly
accrued and made on a timely basis. Each Employee Benefit Plan has at all
times complied and been operated and administered in full compliance with
all applicable reporting, disclosure and other requirements of ERISA and
the Code and all other applicable Legal Requirements. The Seller
Corporations have never incurred any Liability to the Internal Revenue
Service or any other Governmental Body with respect to any Employee Benefit
Plan; and no event has occurred, and no condition or circumstance exists,
that could reasonably be expected to (with or without notice or lapse of
time) give rise directly or indirectly to any such material Liability.
Neither the Seller Corporations nor any Person that is or was an
administrator or fiduciary of any Employee Benefit Plan (or that acts or
has acted as an agent of the Seller Corporations or any such administrator
or fiduciary) has engaged in any transaction or has otherwise acted or
failed to act in a manner that has subjected or may subject the Seller to
any material Liability for breach of any fiduciary duty or any other duty.
No Employee Benefit Plan, and no Person that is or was an administrator or
fiduciary of any Employee Benefit Plan (or that acts or has acted as an
agent of any such administrator or fiduciary): (i) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code; (ii) has failed to perform any of the
responsibilities or obligations imposed upon fiduciaries under Title I of
ERISA; or (iii) has taken any action that (A) may subject such Employee
Benefit Plan or such Person to any Tax, penalty or Liability relating to
any "prohibited transaction," or (B) may directly or indirectly give rise
to or serve as a basis for the assertion (by any employee or by any other
Person) of any claim under, on behalf of or with respect to such Employee
Benefit Plan.
(d) No inaccurate or misleading representation, statement or other
communication has been made or directed (in writing or otherwise) to any
current or former employee of the Seller Corporations (i) with respect to
such employee's participation, eligibility for benefits, vesting, benefit
accrual or coverage under any Employee Benefit Plan or with respect to any
other matter relating to any Employee Benefit Plan, or (ii) with respect to
any proposal or intention on the part of the Seller Corporations to
establish or sponsor any Employee Benefit Plan or to provide or make
available any fringe benefit or other benefit of any nature.
(e) The Seller Corporations have not advised any of their employees (in
writing or otherwise) that they intend or expect to establish or sponsor
any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature in the future.
2.18 Sale of Products. Each product that has been sold by the Seller
Corporations to any Person: (i) conformed and complied in all respects with the
terms and requirements of any applicable warranty or other Contract and with
all applicable Legal Requirements; and (ii) was free of any material design
defects, construction defects or other defects or deficiencies at the time of
sale. No product manufactured or sold by the Seller Corporations has been the
subject of any recall or other similar action; and no event has occurred, and
no condition or circumstance exists, that could reasonably be expected to (with
or without notice or lapse of time) directly or indirectly give rise to or
serve as a basis for any such recall or other similar action relating to any
such product.
2.19 Performance Of Services. All services that have been performed on
behalf of the Seller Corporations were performed properly and in conformity in
all material respects with the terms and requirements of all applicable
warranties and other Contracts and with all applicable Legal Requirements.
Neither Parent nor the Purchaser will incur or otherwise become subject to any
Liability arising directly or
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indirectly from any services performed by the Seller Corporations. There is no
claim pending or, to the knowledge of the Seller, threatened against the Seller
Corporations relating to any services performed by the Seller Corporations,
and, to the best of the knowledge of the Seller, there is no basis for the
assertion of any such claim.
2.20 Insurance.
(a) Part 2.20 of the Disclosure Schedule accurately sets forth, with
respect to each insurance policy maintained by or at the expense of, or for
the direct or indirect benefit of, the Seller Corporations: (i) the name of
the insurance carrier that issued such policy and the policy number of such
policy; (ii) whether such policy is a "claims made" or an "occurrences"
policy; (iii) a description of the coverage provided by such policy and the
material terms and provisions of such policy (including all applicable
coverage limits, deductible amounts and co-insurance arrangements and any
non-customary exclusions from coverage); (iv) the annual premium payable
with respect to such policy, and the cash value (if any) of such policy;
and (v) a description of any claims pending, and any claims that have been
asserted since January 1, 1998, with respect to such policy or any
predecessor insurance policy. Part 2.20 of the Disclosure Schedule also
identifies (1) each pending application for insurance that has been
submitted by or on behalf of the Seller Corporations, (2) each self-
insurance or risk-sharing arrangement affecting the Seller Corporations or
any of the assets of the Seller Corporations, and (3) all material risks
(of the type customarily insured by Comparable Entities) for which the
Seller Corporations do not maintain insurance coverage. The Seller has
delivered to Parent accurate and complete copies of all of the insurance
policies identified in Part 2.20 of the Disclosure Schedule (including all
renewals thereof and endorsements thereto) and all of the pending
applications identified in Part 2.20 of the Disclosure Schedule. Each of
the policies identified in Part 2.20 of the Disclosure Schedule is valid,
enforceable and in full force and effect, and has been issued by an
insurance carrier that, to the best of the knowledge the Seller, is
solvent, financially sound and reputable. All of the information contained
in the applications submitted in connection with said policies was (at the
times said applications were submitted) accurate and complete, and all
premiums and other amounts owing with respect to said policies have been
paid in full on a timely basis.
(b) Part 2.20 of the Disclosure Schedule identifies each insurance claim
made by the Seller Corporations since January 31, 1999. No event has
occurred, and no condition or circumstance exists, that could reasonably be
expected to (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any such insurance claim.
The Seller Corporations have not received: (i) any notice or other
communication (in writing or otherwise) regarding the actual or possible
cancellation or invalidation of any of the policies identified in Part 2.20
of the Disclosure Schedule or regarding any actual or possible adjustment
in the amount of the premiums payable with respect to any of said policies;
(ii) any notice or other communication (in writing or otherwise) regarding
any actual or possible refusal of coverage under, or any actual or possible
rejection of any claim under, any of the policies identified in Part 2.20
of the Disclosure Schedule; or (iii) any indication that the issuer of any
of the policies identified in Part 2.20 of the Disclosure Schedule may be
unwilling or unable to perform any of its obligations thereunder.
2.21 Proceedings; Orders. Except as set forth in Part 2.21 of the Disclosure
Schedule, there is no pending Proceeding, and, to the knowledge of the Seller,
no Person has threatened in writing to commence any Proceeding: (i) that
involves the Seller Corporations or that otherwise relates to or could
reasonably be expected to affect the business of the Seller Corporations or any
of the Specified Assets or the Graphics Business (whether or not any Seller
Corporation is named as a party thereto); or (ii) that challenges, or that
could reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Transactions. Except as set
forth in Part 2.21 of the Disclosure Schedule, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that could reasonably
be expected to directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding. Except as set forth in Part 2.21 of the
Disclosure Schedule, since January 1, 1998, no Proceeding has been commenced by
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or against the Seller Corporations. The Seller has delivered to Parent accurate
and complete copies of all pleadings, correspondence and other written
materials (to which the Seller has access) that relate to the Proceedings
identified in Part 2.21 of the Disclosure Schedule. There is no Order to which
the Seller Corporations, or any of the assets owned or used by the Seller
Corporations, is subject, and no Related Party is subject to any Order that
relates to the Seller Corporations' businesses or to any of the assets of the
Seller Corporations. To the best of the knowledge of the Seller, no employee of
the Seller Corporations is subject to any Order that may prohibit employee from
engaging in or continuing any conduct, activity or practice relating to the
business of the Seller Corporations. There is no proposed Order that, if issued
or otherwise put into effect, (i) could reasonably be expected to have an
adverse effect on the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of the Seller or on the ability
of the Seller to comply with or perform any covenant or obligation under any of
the Transactional Agreements, or (ii) could reasonably be expected to have the
effect of preventing, delaying, making illegal or otherwise interfering with
any of the Transactions.
2.22 Authority; Binding Nature Of Agreements.
(a) The Seller has the absolute and unrestricted right, power and
authority to enter into and (subject to the approval of the Acquisition and
the Plan of Dissolution by the Required Shareholder Vote) to perform its
obligations under each of the Transactional Agreements to which it is or
may become a party; and, subject to the approval of the Acquisition and the
Plan of Dissolution by the Required Shareholder Vote (as defined in Section
2.22(b)), the execution, delivery and performance by the Seller of the
Transactional Agreements to which it is or may become a party have been
duly authorized by all necessary action on the part of the Seller and its
board of directors and officers. This Agreement constitutes the legal,
valid and binding obligation of the Seller, enforceable against the Seller
in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii)
rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements to
which the Seller is a party will constitute the legal, valid and binding
obligation of the Seller and will be enforceable against the Seller in
accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii)
rules of law governing specific performance, injunctive relief and other
equitable remedies.
(b) The affirmative vote of the holders of a majority of the shares of
capital stock of the Seller outstanding on the record date for the Persons
entitled to vote on the Acquisition are the only votes of the holders of
any class or series of the Seller's capital stock necessary to approve the
Acquisition and the Plan of Dissolution (the "Required Shareholder Vote.")
2.23 Non-Contravention; Consents. Neither the execution and delivery by the
Seller of any of the Transactional Agreements, nor the consummation or
performance by the Seller of any of the Transactions, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any
Legal Requirement or any Order to which the Seller, or any of the assets of
the Seller, is subject;
(b) cause the Purchaser or any affiliate of the Purchaser to become
subject to, or to become liable for the payment of, any Tax;
(c) cause any of the Specified Assets to be reassessed or revalued by
any taxing authority or other Governmental Body;
(d) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is to be included in the Specified Assets or is held by
the Seller Corporations or any employee of the Seller Corporations;
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(e) except as set forth on Part 2.11(b) of the Disclosure Schedule,
contravene, conflict with or result in a violation or breach of, or result
in a default under, any provision of any Contract;
(f) except as set forth on Part 2.11(b) of the Disclosure Schedule, give
any Person the right to (i) declare a default or exercise any remedy under
any Contract, (ii) accelerate the maturity or performance of any Contract,
or (iii) cancel, terminate or modify any Contract; or
(g) result in the imposition or creation of any Encumbrance upon or with
respect to any of the Specified Assets.
Except as may be required by the Exchange Act, the California Corporations
Code, the HSR Act, any foreign antitrust law or regulation, the WARN Act and
the NASD Bylaws (as they relate to the Form S-4 Registration Statement and the
Prospectus/Proxy Statement), the Seller neither was, is or will be required to
make any filing with or give any notice to, or to obtain any Consent from, any
Person in connection with the execution and delivery of any of the
Transactional Agreements or the consummation or performance of any of the
Transactions.
2.24 Transactions with Affiliates. Except as set forth in the Seller SEC
Documents filed prior to the date of this Agreement, between the date of the
Seller's last proxy statement filed with the SEC and the date of this
Agreement, no event has occurred that would be required to be reported by the
Seller pursuant to Item 404 of Regulation S-K promulgated by the SEC.
2.25 No Discussions. Neither the Seller Corporations nor any Representative
of the Seller Corporations is engaged, directly or indirectly, in any
discussions or negotiations with any other Person relating to any Acquisition
Proposal. The Seller Corporations have not waived, and will not waive, any
rights under any confidentiality, "standstill", nonsolicitation or similar
agreement with any third party to which any of the Seller Corporations is a
party or under which the Seller Corporations have any rights.
2.26 Opinion of Financial Advisor. The Seller's board of directors has
received the written opinion of Needham & Co., Inc., financial advisor to the
Seller, dated the date of this Agreement, to the effect that, as of such date,
the terms of the Transactions are fair, from a financial point of view, to the
Seller. The Seller has furnished an accurate and complete copy of such written
opinion to Parent.
2.27 Brokers. Except for Robertson Stephens & Co. and Needham & Co., Inc.,
whose fees and expenses shall be the responsibility of the Seller, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of any of the Seller Corporations or any of their
Representatives. The total of all fees, commissions and other amounts that have
been paid by the Seller Corporations with respect to the Transactions to
Robertson Stephens & Co. and Needham & Co., Inc., and all fees, commissions and
other amounts that may become payable to Robertson Stephens & Co. and Needham &
Co., Inc. by the Seller Corporations if the Transactions are consummated will
not exceed $2,500,000 plus reasonable out-of-pocket expenses. The Seller has
furnished to Parent accurate and complete copies of all agreements under which
any such fees, commissions or other amounts have been paid to may become
payable and all indemnification and other agreements related to the engagement
of Robertson Stephens & Co. and Needham & Co., Inc.
2.28 Full Disclosure. None of the Transactional Agreements contains or will
contain any untrue statement of material fact; and none of the Transactional
Agreements omits or will omit to state any material fact necessary to make any
of the representations, warranties or other statements or information contained
therein not misleading. All of the information set forth in the Disclosure
Schedule, and all other information regarding the Seller Corporations and their
respective businesses, condition, assets, liabilities, operations, financial
performance, net income and prospects that has been furnished to Parent or any
of Parent's Representatives by or on behalf of the Seller or by any
Representative of the Seller, is accurate and complete in all material
respects.
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2.29 Sufficiency of Cash Consideration. The Cash Consideration will be
sufficient to enable the Seller Corporations to pay in full all Liabilities of
the Seller Corporations (other than the Designated Contractual Obligations),
including, without limitation, any Taxes due and other amounts owed as a result
of the Transactions and any amounts due with respect to dissenting shares as
described in Section 1.10, and to otherwise satisfy in full all actual or
potential claims of creditors of the Seller Corporations.
3. Representations and Warranties of Parent and the Purchaser.
Parent and the Purchaser represent and warrant, to and for the benefit of
the Seller, as follows:
3.1 Due Organization; Etc. Each of Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
3.2 Authority; Binding Nature Of Agreements. Each of Parent and the
Purchaser has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under each of the Transactional Agreements
to which it is or may become a party; and the execution, delivery and
performance by each of Parent and the Purchaser of the Transactional Agreements
to which it is or may become a party have been duly authorized by all necessary
action on the part of Parent and the Purchaser and their respective boards of
directors and officers. This Agreement constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser, enforceable against Parent and
the Purchaser in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements to which
each of Parent and the Purchaser is a party will constitute the legal, valid
and binding obligation of Parent or the Purchaser (as the case may be) and will
be enforceable against Parent or the Purchaser (as the case may be) in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.3 SEC Filings. Parent has delivered or made available to the Seller
accurate and complete copies of all registration statements, proxy statements
and other statements, reports, schedules, forms and other documents filed by
Parent with the SEC since July 1, 1999, and all amendments thereto.
3.4 Non-Contravention; Consents. Neither the execution and delivery by
Parent and the Purchaser of any of the Transactional Agreements, nor the
consummation or performance by Parent and the Purchaser of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time) conflict with or result in any breach of any provision of the certificate
of incorporation or bylaws of Parent or the Purchaser. Except as may be
required by the Exchange Act, the California Corporations Code, the HSR Act,
any foreign antitrust law or regulation and the NASD Bylaws (as they relate to
the Form S-4 Registration Statement and the Prospectus/Proxy Statement),
neither Parent nor the Purchaser was, is or will be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
3.5 Valid Issuance. The Parent Common Stock to be issued in connection with
the Transactions will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
3.6 Brokers. Except for Morgan Stanley & Co. Incorporated, whose fees and
expenses shall be the responsibility of Parent, neither Parent nor the
Purchaser has become obligated to pay, and has not taken any action that might
result in any Person claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in connection with any of
the Transactions.
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4. Pre-Closing Covenants of the Seller.
4.1 Access And Investigation. The Seller shall ensure that, at all times
during the Pre-Closing Period: (a) the Seller and its Representatives provide
Parent, the Purchaser and their Representatives with free and complete access
to the Seller's Representatives, personnel and assets and to all existing
books, records, Tax Returns, work papers and other documents and information
relating to the Seller Corporations, the Graphics Business, the Specified
Assets and such other information as Parent or the Purchaser may reasonably
request; (b) the Seller and its Representatives provide the Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to the Seller and its
business as Parent or the Purchaser may request in good faith; and (c) the
Seller and its Representatives compile and provide the Purchaser and its
Representatives with such additional financial, operating and other data and
information relating to the Seller and its business as Parent or the Purchaser
may request in good faith.
4.2 Operation Of Business. The Seller shall ensure that, except as otherwise
expressly contemplated by the Transactional Agreements, during the Pre-Closing
Period:
(a) the Seller Corporations conduct their respective businesses and
operations in accordance with prudent practices and in compliance with all
applicable Legal Requirements and the requirements of all Seller Contracts,
and except as expressly contemplated by this Agreement, they (i) preserve
intact the current business organization relating to the Specified Assets
and the Graphics Business, (ii) keep available the services of the current
officers and employees relating to the Specified Assets and the Graphics
Business, (iii) maintain good relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees,
independent contractors and other Persons having business relationships
with them relating to the Specified Assets and the Graphics Business, and
(iv) promptly repair, restore or replace any Specified Assets that are
destroyed or damaged;
(b) the Seller shall use its best efforts to (i) develop a Plan of
Dissolution, (ii) comply in all respects with, and carry out in accordance
with its terms, the Plan of Dissolution, (iii) not take any action
prohibited by the Plan of Dissolution or omit to take any action required
to be taken by the Plan of Dissolution, and (iv) obtain the approval of the
shareholders of the Seller with respect to the Plan of Dissolution;
(c) the Seller keeps in full force all insurance policies identified in
Part 2.21 of the Disclosure Schedule;
(d) the officers of the Seller confer regularly with the Purchaser
concerning operational matters and otherwise report regularly to the
Purchaser concerning the status of the Seller's business, condition,
assets, liabilities, operations, financial performance and prospects;
(e) the Purchaser is notified within forty-eight hours of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(f) the Seller Corporations do not effect or become a party to any
Acquisition Transaction;
(g) the Seller Corporations do not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(h) the Seller Corporations do not make any capital expenditure;
(i) the Seller Corporations do not enter into or permit any of the
Specified Assets or the Graphics Business to become bound by any Contract
other than in the Ordinary Course of Business;
(j) the Seller Corporations do not incur, assume or otherwise become
subject to any Liability, except for current liabilities (of the type
required to be reflected in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred in the Ordinary Course of
Business (taking into account the wind-up and dissolution of the Seller);
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(k) the Seller Corporations do not establish or adopt any Employee
Benefit Plan, or pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions, fees,
fringe benefits or other compensation or remuneration payable to, any of
their directors, officers, employees or independent contractors;
(l) the Seller Corporations do not change any of their methods of
accounting or accounting practices in any respect;
(m) except for the stay of the Seller Pending Litigation and the Parent
Pending Litigation pursuant to the Stay Order, the Seller Corporations do
not commence or settle any Proceeding;
(n) the Seller Corporations do not enter into any transaction or take
any other action of the type referred to in Section 2.4;
(o) except as expressly contemplated by the Plan of Dissolution, the
Seller Corporations do not enter into any transaction or take any other
action outside the Ordinary Course of Business;
(p) the Seller Corporations pay in full all indebtedness, liabilities,
obligations and other amounts when due;
(q) none of the Seller Corporations shall (i) make a general assignment
for the benefit of creditors, (ii) file, or consent to the filing against
it, any bankruptcy or insolvency petition or similar filing, (iii) suffer
the attachment or other judicial seizure of all or a substantial portion of
its assets, (iv) admit in writing its inability to pay its debts as they
become due, (v) become convicted of, or plead guilty or no contest to, any
felony, (vi) take or become the subject of any action that may have an
adverse effect on its ability to comply with or perform any of its
covenants or obligations under any of the Transactional Agreements, or
(vii) except as contemplated by the Plan of Dissolution, voluntarily wind
up and dissolve;
(r) the Seller Corporations do not directly or indirectly assign,
transfer, sell or convey to any third party, or otherwise dispose of, any
graphics chips described in the Disclosure Schedule or otherwise owned by
any of the Seller Corporations on the date of this Agreement (including by
combining any such graphics chips with any other materials or inventory of
the Seller Corporations or by installing any such graphics chips on any
board), and the Seller takes reasonable and responsible security measures
to safeguard the entire inventory of the Seller's graphics chips;
(s) the Seller Corporations do not enter into any transaction or take
any other action that causes or constitutes a Breach of any representation,
warranty or covenant made by the Seller in this Agreement or in the Seller
Closing Certificate; and
(t) the Seller Corporations do not agree, commit or offer (in writing or
otherwise) to take any of the actions described in clauses "(i)" through
"(s)" of this Section 4.2.
4.3 Filings and Consents. The Seller shall ensure that: (a) as soon as
possible after the date of this Agreement, the Seller files with the
appropriate Governmental Bodies the notification form required to be filed by
the Seller under the HSR Act with respect to the Transactions, together with a
request for early termination of the applicable waiting period; (b) all
filings, notices and Consents required to be made, given and obtained in order
to consummate the Transactions are made, given and obtained on a timely basis;
and (c) during the Pre-Closing Period, the Seller and its respective
Representatives cooperate with Parent and the Purchaser and with their
Representatives, and prepare and make available such documents and take such
other actions as Parent or the Purchaser may request in good faith, in
connection with any filing, notice or Consent that Parent or the Purchaser is
required or elects to make, give or obtain.
4.4 Notification; Updates to Disclosure Schedule. During the Pre-Closing
Period, the Seller shall promptly notify Parent and the Purchaser in writing
of: (a) the discovery by the Seller of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that causes or constitutes a Breach of any representation or warranty made
by the Seller in this Agreement; (b) any event, condition, fact or circumstance
that occurs, arises or exists after the date of this Agreement and that would
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cause or constitute a Breach of any representation or warranty made by the
Seller in this Agreement if (i) such representation or warranty had been made
as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (ii) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; (c) any Breach of any covenant or obligation of the Seller; and (d)
any event, condition, fact or circumstance that may make the timely
satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely. If any event, condition, fact or circumstance that is
required to be disclosed pursuant to this Section 4.4 requires any change in
the Disclosure Schedule, or if any such event, condition, fact or circumstance
would require such a change assuming the Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Seller shall promptly deliver to Parent and the
Purchaser an update to the Disclosure Schedule specifying such change. No such
update shall be deemed to supplement or amend the Disclosure Schedule for the
purpose of (i) determining the accuracy of any representation or warranty made
by the Seller in this Agreement or in the Seller Closing Certificate, or (ii)
determining whether any of the conditions set forth in Section 6 has been
satisfied.
4.5 No Solicitation.
(a) The Seller Corporations shall not directly or indirectly, and shall
not authorize or permit any of their Representatives directly or indirectly
to, (i) solicit, initiate, encourage, induce or facilitate the making,
submission or announcement of any Acquisition Proposal or take any action
that could reasonably be expected to lead to an Acquisition Proposal, (ii)
furnish any information regarding any of the Seller Corporations to any
Person in connection with or in response to an Acquisition Proposal or an
inquiry or indication of interest that could lead to an Acquisition
Proposal, (iii) engage in discussions or negotiations with any Person with
respect to any Acquisition Proposal, (iv) approve, endorse or recommend any
Acquisition Proposal or (v) enter into any letter of intent or similar
document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that this Section 4.5 shall not
be deemed to prevent the Seller or its board of directors from complying
with its legal obligations under Rules 14d-9 and 14e-2 as promulgated under
the Exchange Act with regard to an Acquisition Proposal (it being
understood that such compliance may constitute a Triggering Event under
certain circumstances); and provided, further, that prior to the approval
of the Acquisition and the Plan of Dissolution by the Required Shareholder
Vote, this Section 4.5(a) shall not prohibit the Seller from furnishing
nonpublic information regarding the Seller to, or entering into discussions
with, any Person in response to a Superior Offer that is submitted to the
Seller by such Person (and not withdrawn) if (1) neither the Seller nor any
Representative of the Seller shall have breached or taken any action
inconsistent with any of the provisions set forth in this Section 4.5, (2)
the board of directors of the Seller concludes in good faith, after having
consulted with its outside legal counsel, that such action is required in
order for the board of directors of the Seller to comply with its fiduciary
obligations to the Seller's shareholders under applicable law, (3) at least
five business days prior to furnishing any such nonpublic information to,
or entering into discussions with, such Person, the Seller gives Parent and
the Purchaser written notice of the identity of such Person and of the
Seller's intention to furnish nonpublic information to, or enter into
discussions with, such Person, and the Seller receives from such Person an
executed confidentiality agreement containing customary limitations on the
use and disclosure of all nonpublic written and oral information furnished
to such Person by or on behalf of the Seller and containing provisions no
less favorable to the Seller than the provisions contained in Sections 1, 2
or 4 of that certain Confidentiality Agreement dated November 20, 2000
between the Seller and Parent (the "Confidentiality Agreement"), and (4) at
least five business days prior to furnishing any such nonpublic information
to such Person, the Seller furnishes such nonpublic information to Parent
and the Purchaser (to the extent such nonpublic information has not been
previously furnished by the Seller to Parent and the Purchaser). Without
limiting the generality of the foregoing, the Seller acknowledges and
agrees that any action inconsistent with any of the provisions set forth in
the preceding sentence by any Representative of the Seller, whether or not
such Representative is purporting to act on behalf of the Seller, shall be
deemed to constitute a breach of this Section 4.5 by the Seller.
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(b) The Seller shall promptly (and in no event later than 48 hours after
receipt of any Acquisition Proposal, any inquiry or indication of interest
that could reasonably be expected to lead to an Acquisition Proposal or any
request for nonpublic information) advise Parent and the Purchaser orally
and in writing of any Acquisition Proposal, any inquiry or indication of
interest that could reasonably be expected to lead to an Acquisition
Proposal or any request for nonpublic information relating to the Seller
(including the identity of the Person making or submitting such Acquisition
Proposal, inquiry, indication of interest or request, and the terms
thereof) that is made or submitted by any Person during the Pre-Closing
Period. The Seller shall keep Parent and the Purchaser fully informed with
respect to the status of any such Acquisition Proposal, inquiry, indication
of interest or request and any modification or proposed modification
thereto.
(c) The Seller shall immediately cease and cause to be terminated any
discussions existing at the time of this Agreement with any Person that
relate to any Acquisition Proposal.
(d) The Seller agrees not to release or permit the release of any Person
from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill", nonsolicitation or similar agreement to
which the Seller is a party or under which the Seller has any rights, and
will use its best efforts to enforce or cause to be enforced each such
agreement at the request of Parent or the Purchaser. The Seller also will
promptly request each Person that has executed a confidentiality agreement
in connection with its consideration of a possible Acquisition Transaction
or equity investment to return all confidential information heretofore
furnished to such Person by or on behalf of the Seller.
4.6 Shareholders' Meeting.
(a) The Seller shall, in accordance with its articles of incorporation
and bylaws and the applicable provisions of the California Corporations
Code, call and hold a special meeting of its shareholders (on a date
selected by the Seller in consultation with the Purchaser) as promptly as
reasonably practicable after the Form S-4 Registration Statement is
declared effective under the Securities Act for the purpose of permitting
them to consider and to vote upon and approve the Acquisition and the Plan
of Dissolution (the "Shareholders' Meeting"). The Seller shall ensure that
all proxies solicited in connection with the Shareholders' Meeting are
solicited in compliance with all applicable Legal Requirements.
(b) Subject to Section 4.6(c): (i) the Prospectus/Proxy Statement shall
include a statement to the effect that the board of directors of the Seller
unanimously recommends that the Seller's shareholders vote to approve the
Acquisition and the Plan of Dissolution at the Shareholders' Meeting (the
recommendation of the Seller's board of directors that the Seller's
shareholders vote to approve the Acquisition and the Plan of Dissolution
being referred to as the "Seller Board Recommendation"); and (ii) the
Seller Board Recommendation shall not be withdrawn or modified in a manner
adverse to Parent or the Purchaser, and no resolution by the board of
directors of the Seller or any committee thereof to withdraw or modify the
Seller Board Recommendation in a manner adverse to Parent or the Purchaser
shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section
4.6(b), at any time prior to the approval of the Acquisition and the Plan
of Dissolution by the Required Shareholder Vote, the Seller Board
Recommendation may be withdrawn or modified in a manner adverse to Parent
or the Purchaser if: (i) an unsolicited, bona fide written offer to
purchase all of the outstanding shares of Seller Common Stock or
substantially of the assets of the Seller is made to the Seller and is not
withdrawn; (ii) the Seller provides Parent and the Purchaser with at least
two business days' prior notice of any meeting of the Seller's board of
directors at which such board of directors will consider and determine
whether such offer is a Superior Offer; (iii) the Seller's board of
directors determines in good faith (based upon a written opinion of an
independent financial advisor of nationally recognized reputation) that
such offer constitutes a Superior Offer; (iv) the Seller's board of
directors determines in good faith, after having taken into account the
written advice of the Seller's outside legal counsel, that, in light of
such Superior Offer, and taking into account any offer made by Parent or
the Purchaser pursuant to clause (vii) below, the withdrawal or
modification of the Seller Board Recommendation is required in order for
the Seller's board of directors to comply with its fiduciary obligations to
the Seller's shareholders under applicable law; (v)
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the Seller Board Recommendation is not withdrawn or modified in a manner
adverse to Parent or the Purchaser at any time within two business days
after Parent or the Purchaser receives written notice from the Seller
confirming that the Seller's board of directors has determined that such
offer is a Superior Offer; (vi) neither the Seller nor any of its
affiliates or Representatives shall have breached or taken any action
inconsistent with any of the provisions set forth in this Section 4.6; and
(vii) prior to the withdrawal or modification of the Seller Board
Recommendation, neither Parent nor the Purchaser submits a written proposal
to the Seller's board of directors that is at least as favorable to the
Seller in the aggregate as such Superior Offer.
(d) The Seller's obligation to call, give notice of and hold the
Shareholders' Meeting in accordance with Section 4.6(a) shall not be
limited or otherwise affected by the commencement, disclosure, announcement
or submission of any Superior Offer or other Acquisition Proposal, or by
any withdrawal or modification of the Seller Board Recommendation.
4.7 Confidentiality. The Seller shall ensure that, except with respect to
the press release announcing the execution of this Agreement, during the Pre-
Closing Period: (a) neither the Seller Corporations nor any Representative of
the Seller Corporations, issues or disseminates any press release or other
publicity or otherwise makes any disclosure of any nature (to any supplier,
customer, landlord, creditor or employee of the Seller Corporations or to any
other Person) regarding any of the Transactions or the existence or terms of
this Agreement, except to the extent that the Seller is |
