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Exhibit 2.1
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.
Table Of Contents
Page
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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
i
Table Of Contents--(Continued)
Page
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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
ii
Table Of Contents--(Continued)
Page
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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
iii
Table Of Contents--(Continued)
Page
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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
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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 xxxx 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,"
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"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
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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
(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 xxxx 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
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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 Xxxxxx 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
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(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
B-15
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;
B-17
(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 Xxxxxxx & 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 Xxxxxxxxx Xxxxxxxx & Co. and Xxxxxxx & 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
Xxxxxxxxx Xxxxxxxx & Co. and Xxxxxxx & Co., Inc., and all fees, commissions and
other amounts that may become payable to Xxxxxxxxx Xxxxxxxx & Co. and Xxxxxxx &
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 Xxxxxxxxx Xxxxxxxx & Co. and Xxxxxxx & 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 Xxxxxx Xxxxxxx & 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.
B-19
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);
B-20
(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 required by law to make
any such disclosure; and (b) if the Seller is required by law to make any such
disclosure, the Seller shall advise Parent and the Purchaser, at least two
business days (or such shorter notice as necessary to comply with applicable
law requiring such disclosure) before making such disclosure, of the nature and
content of the intended disclosure.
4.8 Satisfaction of Liabilities. The Seller Corporations shall pay in full
or otherwise satisfy all indebtedness, liabilities, obligations and all amounts
owed by the Seller Corporations that are not Designated Contractual Obligations
(whether or not such indebtedness or amounts are then due).
5. Additional Covenants of the Parties.
5.1 Registration Statement; Prospectus/Proxy Statement. As promptly as
practicable after the date of this Agreement, Parent and the Seller shall
prepare and cause to be filed with the SEC a prospectus/proxy statement with
respect to the Transactions (the "Prospectus/Proxy Statement") and Parent shall
prepare and cause to be filed with the SEC a Form S-4 registration statement
with respect to the registration of the Stock Consideration (the "Form S-4
Registration Statement"), in which the Prospectus/Proxy Statement will be
included as a prospectus. Each of Parent and the Seller shall use all
reasonable efforts to cause the Form S-4 Registration Statement and the
Prospectus/Proxy Statement to comply with the rules and regulations promulgated
by the SEC, to respond promptly to any comments of the SEC or its staff and to
have the Form S-4 Registration Statement declared effective under the
Securities Act as promptly as practicable after it is filed with the SEC. The
Seller will use all reasonable efforts to cause the Prospectus/Proxy Statement
to be mailed to the Seller's shareholders as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act.
The Seller shall promptly furnish to Parent all information concerning the
Seller Corporations and the Seller's shareholders that may be required or
reasonably requested in connection with any action contemplated by this Section
5.1. The Seller shall ensure that: (1) none of the information supplied or to
be supplied by or on behalf of the Seller for inclusion or incorporation by
reference in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement is filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any 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 are made, not misleading; (2) none of the
information supplied or to be supplied by or on behalf of the Seller for
inclusion or incorporation by reference in the Prospectus/Proxy Statement will,
at the time the Prospectus/Proxy Statement is mailed to the shareholders of the
Seller or at the time of the Shareholders' Meeting (or any adjournment or
postponement thereof), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make
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the statements therein, in the light of the circumstances under which they are
made, not misleading; and (3) the Prospectus/Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated by the SEC thereunder. If any event relating
to any of the Seller Corporations or Parent occurs, or if either the Seller or
Parent becomes aware of any information, that should be disclosed in an
amendment or supplement to the Form S-4 Registration Statement or the
Prospectus/Proxy Statement, then the Seller or Parent shall promptly inform the
other party thereof and the parties shall cooperate with each other in filing
such amendment or supplement with the SEC and, if appropriate, in mailing such
amendment or supplement to the shareholders of Seller.
5.2 Regulatory Approvals. Each party shall (i) use all reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed by such party with any
Governmental Body with respect to the Transactions, and to submit promptly any
additional information requested by any such Governmental Body and (ii)
cooperate with the other parties hereto and, subject to Section 5.3(b), use its
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement and applicable Legal Requirements to consummate and make effective
the Transactions. Without limiting the generality of the foregoing, the Seller
and Parent shall, promptly after the date of this Agreement, prepare and file
the notifications required under the HSR Act and any applicable foreign
antitrust laws or regulations in connection with the Transactions. The Seller
and Parent shall respond as promptly as practicable to (i) any inquiries or
requests received from the Federal Trade Commission or the Department of
Justice for additional information or documentation and (ii) any inquiries or
requests received from any state attorney general, foreign antitrust authority
or other Governmental Body in connection with antitrust or related matters.
Each of the Seller and Parent shall (1) give the other party prompt notice of
the commencement or known threat of commencement of any Legal Proceeding by or
before any Governmental Body with respect to the Transactions, (2) keep the
other party informed as to the status of any such Legal Proceeding or threat,
and (3) promptly inform the other party of any communication to or from the
Federal Trade Commission, the Department of Justice or any other Governmental
Body regarding the Transactions. Except as may be prohibited by any
Governmental Body or by any Legal Requirement, (a) the Seller and Parent will
consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or
submitted in connection with any Legal Proceeding under or relating to the HSR
Act or any other foreign, federal or state antitrust or fair trade law, and (b)
in connection with any such Legal Proceeding, each of the Seller and Parent
will permit authorized Representatives of the other party to be present at each
meeting or conference with governmental representatives relating to any such
Legal Proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding. The Seller and Parent may, as each
reasonably deems advisable and necessary, reasonably designate any
competitively sensitive material provided to the other under this Section as
"outside counsel only." Such materials and the information contained therein
shall be given only to the outside legal counsel to the recipient and will not
be disclosed by such outside counsel to employees, officers or directors of the
recipient unless express permission is obtained in advance from the source of
the materials (the Seller or Parent, as the case may be) or its legal counsel.
At the request of Parent, the Seller shall agree to divest, sell, dispose of,
hold separate or otherwise take or commit to take any action that limits its
freedom of action with respect to its ability to operate or retain any of the
businesses, product lines or assets of the Seller Corporations, provided that
any such action is conditioned upon the consummation of the Transactions.
5.3 Additional Agreements.
(a) Subject to Section 5.3(b), the Seller, Parent and the Purchaser
shall use all reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Transactions. Without limiting the generality
of the foregoing, but subject to Section 5.3(b), each party to this
Agreement (i) shall make all filings (if any) and give all notices (if any)
required to be made and given by such party in connection with the
Transactions, (ii) shall use all reasonable efforts to obtain each Consent
(if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in
B-25
connection with the Transactions, and (iii) shall use all reasonable
efforts to lift any restraint, injunction or other legal bar to the
consummation of the Transactions. Each party shall promptly deliver to the
other party a copy of each such filing made, each such notice given and
each such Consent obtained by the first party during the Pre-Closing
Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall have any obligation under
this Agreement: (i) to dispose of or transfer or cause any of its
subsidiaries to dispose of or transfer any assets; (ii) to discontinue or
cause any of its subsidiaries to discontinue offering any product or
service; (iii) to license or otherwise make available, or cause any of its
subsidiaries to license or otherwise make available, to any Person, any
technology, software or other Proprietary Asset; (iv) to hold separate or
cause any of its subsidiaries to hold separate any assets or operations
(either before or after the Closing Date), or to commit to cause any of the
Acquired Corporations to hold separate any assets or operations; (v) to
make or cause any of its subsidiaries to make any commitment (to any
Governmental Body or otherwise) regarding its future operations; or (vi) to
contest any Legal Proceeding relating to the Transactions if Parent or the
Purchaser determines in good faith that contesting such Legal Proceeding
may, if adversely determined, have a material adverse effect on the
business, operations, financial condition or prospects of Parent or the
Purchaser.
5.4 Certain Employment Arrangements.
(a) The Seller shall be solely responsible for ensuring compliance with
the WARN Act (to the extent applicable), payment of accrued vacation or
paid time off, and all other Legal Requirements in connection with any
reductions in force or other terminations of employees of any of the Seller
Corporations.
(b) The Seller hereby covenants and agrees that except to the extent
legally or contractually obligated, it will not pay or permit to be paid to
any officers, directors or members of senior management of any of the
Seller Corporations any bonuses otherwise payable upon a change of control
of Seller or termination unless and until Seller shall have fully paid or
cause to be paid or otherwise provided for (in a manner satisfactory to the
Purchaser) all other Liabilities of the Seller Corporations.
5.5 Consolidated Tax Return. The Seller hereby agrees that it shall file a
consolidated federal income tax return covering the Seller and its subsidiaries
for the fiscal year ending January 31, 2001.
5.6 Delivery of Additional Documents. On or before December 18, 2000, the
Seller shall deliver to the Purchaser and Parent all proposed schedules and
exhibits under this Agreement, none of which shall be deemed to be a part
hereof without the written consent of the Purchaser and Parent.
6. Conditions Precedent to the Purchaser's Obligation to Close.
The Purchaser's obligation to purchase the Specified Assets and the
obligation of Parent and the Purchaser to take the other actions required to be
taken by them at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Parent and the Purchaser, in whole or in part, in writing or by otherwise
effecting the Closing):
6.1 Accuracy Of Representations. The representations and warranties made by
the Seller in this Agreement shall have been accurate in all material respects
as of the date of this Agreement and shall be accurate in all material respects
as of the Closing Date as if made on the Closing Date, without giving effect to
any update to the Disclosure Schedule, except for any such representations and
warranties made as of a specific date, which shall have been accurate in all
material respects as of such date.
6.2 Performance Of Obligations. All of the covenants and obligations that
the Seller is required to comply with or to perform at or prior to the Closing
shall have been duly complied with and performed in all material respects.
B-26
6.3 Shareholder Approval. The Acquisition and the Plan of Dissolution shall
have been duly approved by the Required Shareholder Vote.
6.4 Consents. Each of the Consents identified in Part 6.4 of the Disclosure
Schedule, and all other Consents required or which Parent or the Purchaser
reasonably determines it appropriate to be obtained in connection with the
Transactions, shall have been obtained and shall be in full force and effect.
6.5 No Material Adverse Change. There shall have been no material adverse
change in the business, condition, assets, liabilities, operations, financial
performance, net income or prospects of the Seller Corporations (taken as a
whole) or the Specified Assets and the Graphics Business (taken as a whole)
since October 31, 2000, and no event shall have occurred and no condition or
circumstance shall exist that could reasonably be expected to give rise to any
such material adverse change, with the exception of the decision of the board
of directors of the Seller to adopt the Plan of Dissolution.
6.6 Additional Documents. Parent and the Purchaser shall have received the
following documents:
(a) the Assignment and Assumption Agreement in substantially the form of
Exhibit D, executed by the Seller;
(b) 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;
(c) a legal opinion from Xxxxx, Xxxxxxx & Xxxx LLP, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchaser (which
legal opinion may rely, with respect to certain matters of California law,
on the opinion of California counsel reasonably acceptable to the
Purchaser);
(d) upon the written request of the Purchaser, a solvency opinion with
respect to the Seller from a nationally-recognized investment banking firm
in form and substance satisfactory to the Purchaser;
(e) the Stipulation and Proposed Order to Dismiss with Prejudice in
substantially the form of Exhibit F, executed by the Seller (as well as any
other Seller Corporations which are parties to the subject litigation);
(f) the Seller Closing Certificate; and
(g) such other documents as Parent or the Purchaser may request in good
faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by the Seller, (ii) evidencing the compliance by the
Seller with, or the performance by the Seller of, any covenant or
obligation set forth in this Agreement, (iii) evidencing the satisfaction
of any condition set forth in this Section 6, or (iv) otherwise
facilitating the consummation or performance of any of the Transactions.
6.7 Repayment of Credit Facility. The Seller shall have repaid or shall
repay at Closing all amounts outstanding under the Credit Facility (subject to
the terms of the Credit Agreement).
6.8 No Prohibition. Neither the consummation nor the performance of any the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause Parent
or the Purchaser or any Person affiliated with either of them to suffer any
adverse consequence under, any applicable Legal Requirement or Order.
6.9 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.
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6.10 HSR Act. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated; any
similar waiting period under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have expired or been terminated;
and any Consent required under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have been obtained.
6.11 Governmental Litigation. There shall not be pending or threatened any
Legal Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Transactions; (b) relating to the
Transactions and seeking to obtain from Parent or the Purchaser any damages or
other relief that may be material to the Purchaser; (c) that could materially
and adversely affect the right of the Purchaser to own or use the Specified
Assets; or (e) seeking to compel the Purchaser to dispose of or hold separate
any material assets as a result of the Transactions.
6.12 Release of Liens. The Purchaser shall have received evidence
satisfactory to it of the release by any Person who held any Encumbrance on
the Specified Assets of all Encumbrances on the Specified Assets.
7. Conditions Precedent to the Seller's Obligation to Close
The Seller's obligation to sell the Specified Assets and to take the other
actions required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Seller, in whole or in part, in writing or
by otherwise effecting the Closing):
7.1 Accuracy Of Representations. The representations and warranties made by
Parent and the Purchaser in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in
all material respects as of the Closing Date as if made on the Closing Date,
except for any such representations and warranties made as of a specific date,
which shall have been accurate in all material respects as of such date, and
except that any inaccuracies in such representations and warranties will be
disregarded if, after aggregating all inaccuracies of such representations and
warranties (without duplication), such inaccuracies and the circumstances
giving rise to all such inaccuracies do not constitute a material adverse
effect on Parent.
7.2 Purchaser's Performance. All of the covenants and obligations that
Parent and the Purchaser is required to comply with or to perform at or prior
to the Closing shall have been duly complied with and performed in all
material respects.
7.3 Shareholder Approval. The Acquisition and the Plan of Dissolution
contemplated by this Agreement shall have been duly approved by the Required
Shareholder Vote.
7.4 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.
7.5 HSR Act. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated; any
similar waiting period under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have expired or been terminated;
and any Consent required under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have been obtained.
7.6 Stipulation and Proposed Order to Dismiss. The Seller shall have
received the Stipulation and Proposed Order to Dismiss with Prejudice in
substantially the form of Exhibit F, executed by Parent.
7.7 Purchaser Closing Certificate. The Seller shall have received the
Purchaser Closing Certificate.
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7.8 Governmental Litigation. There shall not be pending or threatened any
Legal Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Transactions or (b) relating to the
Transactions and seeking to obtain from the Seller any damages or other relief
that may be material to the Seller.
8. Termination.
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by mutual written consent of Parent, the Purchaser and the Seller;
(b) by either Parent and the Purchaser or the Seller if the Transactions
shall not have been consummated by May 15, 2001 (the "Termination Date");
provided, however, that (i) a party shall not be permitted to terminate
this Agreement pursuant to this Section 8.1(b) if the failure to consummate
the Transactions by the Termination Date is attributable to a failure on
the part of such party to perform any covenant in this Agreement required
to be performed by such party at or prior to the Closing Date, and (ii) the
Seller shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(b) unless the Seller shall have made any payment required to be
made to the Purchaser pursuant to Section 8.4(a) and shall have paid to the
Purchaser any fee required to be paid to the Purchaser pursuant to Section
8.4(c);
(c) by either Parent and the Purchaser or the Seller if a court of
competent jurisdiction or other Governmental Body shall have issued a final
and nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Transactions;
(d) by either Parent and the Purchaser or the Seller if (i) the
Shareholders' Meeting (including any adjournments and postponements
thereof) shall have been held and completed and the Seller's shareholders
shall have taken a final vote on a proposal to approve the Acquisition and
the Plan of Dissolution, and (ii) the Acquisition and the Plan of
Dissolution shall not both have been approved at the Shareholders' Meeting
(or at any adjournment or postponement thereof) by the Required Shareholder
Vote; provided, however, that (A) a party shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(d) if the failure to
have the Acquisition and the Plan of Dissolution approved by the Required
Shareholder Vote is attributable to a failure on the part of such party to
perform any covenant in this Agreement required to be performed by such
party at or prior to the Closing Date, and (B) the Seller shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(d)
unless the Seller shall have made the payment required to be made to the
Purchaser pursuant to Section 8.4(a) and shall have paid to the Purchaser
the fee required to be paid to the Purchaser pursuant to Section 8.4(c);
(e) by Parent and the Purchaser (at any time prior to the approval of
the Acquisition and the Plan of Dissolution by the Required Shareholder
Vote) if a Triggering Event shall have occurred;
(f) by Parent and the Purchaser if (i) any of the Seller's
representations and warranties contained in this Agreement shall be
inaccurate as of the date of this Agreement, or shall have become
inaccurate as of a date subsequent to the date of this Agreement (as if
made on such subsequent date), such that the condition set forth in Section
6.1 would not be satisfied (it being understood that, for purposes of
determining the accuracy of such representations and warranties as of the
date of this Agreement or as of any subsequent date, any update of or
modification to the Disclosure Schedule made or purported to have been made
after the date of this Agreement shall be disregarded), or (ii) any of the
Seller's covenants contained in this Agreement shall have been breached
such that the condition set forth in Section 6.2 would not be satisfied;
provided, however, that if an inaccuracy in any of the Seller's
representations and warranties as of a date subsequent to the date of this
Agreement or a breach of a covenant by the Seller is curable by the Seller
and the Seller is continuing to exercise all reasonable efforts to cure
such inaccuracy or breach, then Parent and the Purchaser may not terminate
this Agreement under this Section 8.1(f) on account of such inaccuracy or
breach; or
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(g) by the Seller if (i) any of the representations and warranties of
Parent and the Purchaser contained in this Agreement shall be inaccurate as
of the date of this Agreement, or shall have become inaccurate as of a date
subsequent to the date of this Agreement (as if made on such subsequent
date), such that the condition set forth in Section 7.1 would not be
satisfied, or (ii) if any of the covenants of Parent and the Purchaser
contained in this Agreement shall have been breached such that the
condition set forth in Section 7.2 would not be satisfied; provided,
however, that if an inaccuracy in any of the representations and warranties
of Parent and the Purchaser as of a date subsequent to the date of this
Agreement or a breach of a covenant by Parent or the Purchaser is curable
by Parent or the Purchaser and Parent or the Purchaser is continuing to
exercise all reasonable efforts to cure such inaccuracy or breach, then the
Seller may not terminate this Agreement under this Section 8.1(g) on
account of such inaccuracy or breach.
8.2 Termination Procedures. If Parent and the Purchaser wishes to terminate
this Agreement pursuant to Section 8.1(a), Section 8.1(b), Section 8.1(c),
Section 8.1(d) or Section 8.1(f), Parent and the Purchaser shall deliver to the
Seller a written notice stating that they are terminating this Agreement and
setting forth a brief description of the basis on which they are terminating
this Agreement. If the Seller wishes to terminate this Agreement pursuant to
Section 8.1(b), Section 8.1(c), Section 8.1(d) or Section 8.1(g), the Seller
shall deliver to Parent and the Purchaser a written notice stating that the
Seller is terminating this Agreement and setting forth a brief description of
the basis on which the Seller is terminating this Agreement.
8.3 Effect of Termination.
(a) Except as expressly provided elsewhere in this Agreement or in any
of the other Transactional Agreements, and subject to Section 8.3(b), if
this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement shall terminate; provided,
however, that: (a) no party shall be relieved of any obligation or other
Liability arising from any Breach by such party of any provision of this
Agreement; and (b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 11 that
continue pursuant to their terms.
(b) If this Agreement is terminated pursuant to any provision of Section
8.1, other than (i) by the parties pursuant to Section 8.1(a), (ii) by the
Seller pursuant to Section 8.1(b) by reason of the failure of the Closing
to occur by the date set forth therein solely as a result of the failure of
Parent or the Purchaser to comply with its obligations under this
Agreement, (iii) by the parties pursuant to Section 8.1(c), or (iv) by the
Seller pursuant to Section 8.1(g), then immediately upon such termination
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.
8.4 Termination Fees.
(a) Except as set forth in this Section 8.4, all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Transactions are consummated; provided,
however, that:
(i) Parent and the Purchaser (on the one hand) and the Seller (on
the other hand) shall share equally all fees and expenses, other than
attorneys' fees and securities registration fees, incurred in
connection with (A) the filing, printing and mailing of the Form S-4
Registration Statement and the Prospectus/Proxy Statement and any
amendments or supplements thereto and (B) the filing by the parties
hereto of the premerger notification and report forms relating to the
Transactions under the HSR Act and the filing of any notice or other
document under any applicable foreign antitrust law or regulation; and
(ii) if this Agreement is terminated by Parent and the Purchaser or
the Seller pursuant to Section 8.1(b) and at or prior to the time of
the termination of this Agreement an Acquisition Proposal shall have
been disclosed, announced, commenced, submitted or made (and shall not
have
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been withdrawn or terminated pursuant to a public announcement at least
five days before the Shareholders' Meeting), or if this Agreement is
terminated by Parent and the Purchaser or the Seller pursuant to
Section 8.1(d) or by Parent and the Purchaser pursuant to Section
8.1(e), then (without limiting any obligation of the Seller to pay any
fee payable pursuant to Section 8.4(c)), the Seller shall make a
nonrefundable cash payment to the Purchaser, at the time specified in
Section 8.4(b), in an amount equal to the aggregate amount of all
reasonable fees and expenses (including all reasonable attorneys' fees,
accountants' fees, financial advisory fees and filing fees) that have
been paid or that may become payable by or on behalf of Parent or the
Purchaser in connection with the preparation and negotiation of this
Agreement and the other Transactional Agreements and otherwise in
connection with the Transactions.
(b) In the case of termination of this Agreement by the Seller pursuant
to Section 8.1(b) or Section 8.1(d), any nonrefundable payment required to
be made pursuant to clause "(ii)" of the proviso to Section 8.4(a) shall be
made, by the Seller prior to the time of such termination; and in the case
of termination of this Agreement by the Purchaser pursuant to Section
8.1(b), Section 8.1(d) or Section 8.1(e), any nonrefundable payment
required to be made pursuant to clause "(ii)" of the proviso to Section
8.4(a) shall be made by the Seller within two business days after such
termination.
(c) If (i) this Agreement is terminated by the Purchaser or the Seller
pursuant to Section 8.1(b) or Section 8.1(d) and at or prior to the time of
the termination of this Agreement an Acquisition Proposal shall have been
disclosed, announced, commenced, submitted or made, or (ii) this Agreement
is terminated by Parent and the Purchaser pursuant to Section 8.1(e), then
the Seller shall pay to the Purchaser, in cash at the time specified in the
next sentence (and in addition to the amounts payable pursuant to
Section 8.4(a)), a nonrefundable fee in an amount equal to $3,300,000. In
the case of termination of this Agreement by the Seller pursuant to Section
8.1(b) or Section 8.1(d), the fee referred to in the preceding sentence
shall be paid by the Seller prior to the time of such termination; and in
the case of termination of this Agreement by Parent and the Purchaser
pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(e), the fee
referred to in the preceding sentence shall be paid by the Seller within
two business days after such termination.
(d) If the Seller fails to pay when due any amount payable under this
Section 8.4, then (i) the Seller shall reimburse Parent and the Purchaser
for all reasonable costs and expenses (including reasonable fees and
disbursements of counsel) incurred in connection with the collection of
such overdue amount and the enforcement by Parent or the Purchaser of its
rights under this Section 8.4, and (ii) the Seller shall pay to Parent or
the Purchaser interest on such overdue amount (for the period commencing as
of the date such overdue amount was originally required to be paid and
ending on the date such overdue amount is actually paid to Parent or the
Purchaser in full) at a rate per annum equal to the "prime rate" (as
announced by Bank of America or any successor thereto) in effect on the
date such overdue amount was originally required to be paid.
8.5 Nonexclusivity Of Termination Rights. The termination rights provided in
Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise by
any party of its right to terminate this Agreement pursuant to Section 8.1
shall not be deemed to be an election of remedies and shall not be deemed to
prejudice, or to constitute or operate as a waiver of, any other right or
remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
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9. Indemnification, Etc.
9.1 Survival Of Representations And Covenants.
(a) The representations, warranties, covenants and obligations of each
party to this Agreement shall survive (without limitation): (i) the Closing
and the sale of the Specified Assets to the Purchaser; (ii) any sale or
other disposition of any or all of the Specified Assets by the Purchaser;
and (iii) the dissolution or liquidation of any party to this Agreement.
Except as set forth in Section 9.1(c), all of said representations,
warranties, covenants and obligations shall remain in full force and effect
and shall survive for a period of one year following the distribution of
the Stock Consideration to the shareholders of the Seller pursuant to the
Plan of Dissolution.
(b) The representations, warranties, covenants and obligations of the
Seller, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result
of any information furnished to, or any investigation made by or any
knowledge of, any of the Indemnitees or any of their Representatives.
(c) The representations and warranties set forth in Sections 2 and 3
shall expire on the first anniversary of the Closing Date; provided,
however, that notwithstanding the foregoing, the representations and
warranties of Parent and the Purchaser shall expire not later than the date
on which the Stock Consideration is paid to the Seller; and provided
further, that if a Claim Notice (as defined below) relating to any
representation or warranty set forth in any of said Sections is given to
the Seller on or prior to the first anniversary of the Closing Date, then,
notwithstanding anything to the contrary contained in this Section 9.1(c),
such representation or warranty shall not so expire, but rather shall
remain in full force and effect until such time as each and every claim
(including any indemnification claim asserted by any Indemnitee under
Section 9.2) that is based directly or indirectly upon, or that relates
directly or indirectly to, any Breach or alleged Breach of such
representation or warranty has been fully and finally resolved, either by
means of a written settlement agreement executed on behalf of the Seller,
Parent and the Purchaser or by means of a final, non-appealable judgment
issued by a court of competent jurisdiction.
(d) For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty shall be deemed to have been given if
any Indemnitee, acting in good faith, delivers to the Seller a written
notice stating that such Indemnitee believes that there is or has been a
possible Breach of such representation or warranty and containing (i) a
brief description of the circumstances supporting such Indemnitee's belief
that there is or has been such a possible Breach, and (ii) a non-binding,
preliminary estimate of the aggregate dollar amount of the actual and
potential Damages that have arisen and may arise as a direct or indirect
result of such possible Breach.
(e) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty
made by the Seller in this Agreement.
9.2 Indemnification By The Seller. The Seller shall hold harmless and
indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages that are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of
the Indemnitees may otherwise become subject at any time (regardless of whether
or not such Damages relate to any third-party claim) and that arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:
(i) any Breach of any of the representations or warranties made by the
Seller in this Agreement (without giving effect to any update to the
Disclosure Schedule), both as of the date of this Agreement and as of the
Closing Date as if made on and as of the Closing Date, or in the Seller
Closing Certificate or any of the other Transactional Agreements;
(ii) any Breach of any representation, warranty, statement, information
or provision contained in the Disclosure Schedule or in any other document
delivered or otherwise made available to Parent or the Purchaser or any of
their Representatives by or on behalf of the Seller or any Representative
of the Seller;
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(iii) any Breach of any covenant or obligation of the Seller contained
in any of the Transactional Agreements;
(iv) any Liability of the Seller or of any Related Party, other than the
Designated Contractual Obligations;
(v) any Liability (other than the Designated Contractual Obligations) to
which Parent, the Purchaser or any of the other Indemnitees may become
subject and that arises directly or indirectly from or relates directly or
indirectly to (A) any product produced or sold or any services performed by
or on behalf of the Seller, (B) the presence of any Hazardous Material at
any site owned, leased, occupied or controlled by the Seller on or at any
time prior to the Closing Date, (C) the generation, manufacture,
production, transportation, importation, use, treatment, refinement,
processing, handling, storage, discharge, release or disposal of any
Hazardous Material (whether lawfully or unlawfully) by or on behalf of the
Seller, (D) the operation by the Seller of its business, or (E) any failure
to comply with any bulk transfer law or similar Legal Requirement in
connection with any of the Transactions; or
(vi) any Proceeding relating directly or indirectly to any Breach,
alleged Breach, Liability or matter of the type referred to in clause
"(i)," "(ii)," "(iii)," "(iv)," "(v)" or "(vi)" above (including any
Proceeding commenced by any Indemnitee for the purpose of enforcing any of
its rights under this Section 9).
9.3 Setoff. In addition to any rights of setoff or other rights that Parent,
the Purchaser or any of the other Indemnitees may have at common law or
otherwise, Parent and the Purchaser shall have the right to withhold and deduct
any sum that may be owed to any Indemnitee under this Section 9 from any amount
(including all or any portion of the Stock Consideration) otherwise payable by
any Indemnitee to the Seller. The withholding and deduction of any such sum
shall operate for all purposes as a complete discharge (to the extent of such
sum) of the obligation to pay the amount from which such sum was withheld and
deducted and a release of the Seller from further liability with respect to
such obligation to the extent of such setoff. The exercise of such right of
setoff by Parent or the Purchaser in good faith, whether or not ultimately
determined to be justified, will not constitute an event of default under this
Agreement or any of the other Transactional Agreements.
9.4 Nonexclusivity Of Indemnification Remedies. The indemnification remedies
and other remedies provided in this Section 9 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 9 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under
this Agreement, under any other Contract, under any statute, rule or other
Legal Requirement, at common law, in equity or otherwise).
9.5 Defense Of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against Parent
or the Purchaser, against any other Indemnitee or against any other Person)
with respect to which the Seller may become obligated to indemnify, hold
harmless, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent and the Purchaser shall have the right, at its election, to designate
the Seller to assume the defense of such claim or Proceeding at the sole
expense of the Seller. If Parent or the Purchaser so elects to designate the
Seller to assume the defense of any such claim or Proceeding:
(a) the Seller shall proceed to defend such claim or Proceeding in a
diligent manner with counsel satisfactory to Parent and the Purchaser;
(b) Parent and the Purchaser shall make available to the Seller any non-
privileged documents and materials in the possession of Parent or the
Purchaser that may be necessary to the defense of such claim or Proceeding;
(c) the Seller shall keep Parent and the Purchaser informed of all
material developments and events relating to such claim or Proceeding;
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(d) Parent and the Purchaser shall have the right to participate in the
defense of such claim or Proceeding;
(e) the Seller shall not settle, adjust or compromise such claim or
Proceeding without the prior written consent of the Purchaser, which shall
not be unreasonably withheld or delayed; and
(f) Parent and the Purchaser may at any time (notwithstanding the prior
designation of the Seller to assume the defense of such claim or
Proceeding) assume the defense of such claim or Proceeding.
If Parent and the Purchaser does not elect to designate the Seller to assume
the defense of any such claim or Proceeding (or if, after initially designating
the Seller to assume such defense, Parent or the Purchaser elects to assume
such defense), Parent or the Purchaser may proceed with the defense of such
claim or Proceeding on its own. If Parent or the Purchaser so proceeds with the
defense of any such claim or Proceeding on its own:
(i) all expenses relating to the defense of such claim or Proceeding
(whether or not incurred by Parent or the Purchaser) shall be borne and
paid exclusively by the Seller;
(ii) the Seller shall make available to Parent or the Purchaser any
documents and materials in the possession or control of the Seller that may
be necessary to the defense of such claim or Proceeding;
(iii) Parent and the Purchaser shall keep the Seller informed of all
material developments and events relating to such claim or Proceeding; and
(iv) Parent and the Purchaser shall have the right to settle, adjust or
compromise such claim or Proceeding with the consent of the Seller;
provided, however, that the Seller shall not unreasonably withhold or delay
such consent.
9.6 Threshold. The Seller shall not be required to make any indemnification
payment pursuant to Section 9.2 for any inaccuracy in or breach of any of the
representations and warranties made by the Seller set forth in this Agreement
until such time as the total amount of all Damages (including, without
limitation, the Damages arising from such inaccuracy or breach and all other
Damages arising from any other inaccuracies in or breaches of any
representations or warranties) that have been directly or indirectly suffered
or incurred by any one or more of the Indemnitees, or to which any one or more
of the Indemnitees has or have otherwise become subject, exceeds $1,000,000 in
the aggregate. (If the total amount of such Damages exceeds $1,000,000, then
the Indemnitees shall be entitled to be indemnified against and compensated and
reimbursed for the full amount of such Damages).
9.7 Exercise Of Remedies By Indemnitees Other Than Parent or the
Purchaser. No Indemnitee (other than Parent or the Purchaser or any successor
thereto or assign thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Parent or the
Purchaser (or any successor thereto or assign thereof) shall have consented to
the assertion of such indemnification claim or the exercise of such other
remedy.
10. Certain Post-Closing Covenants.
10.1 Further Actions. From and after the Closing Date, the Seller shall
cooperate with the Purchaser and their affiliates and Representatives, and
shall execute and deliver such documents and take such other actions as the
Purchaser may reasonably request, for the purpose of evidencing the
Transactions and putting the Purchaser in possession and control of all of the
Specified Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, the Seller shall promptly remit to the Purchaser any
funds that are received by the Seller and that are included in, or that
represent payment of receivables included in, the Specified Assets. The Seller:
(a) hereby irrevocably authorizes the Purchaser, at all times on and after the
Closing Date, to endorse in the name of the Seller any check or other
instrument that is made payable to the Seller and that represents funds
included in, or that represents the payment of any receivable included in, the
Specified Assets; and (b) hereby irrevocably nominates, constitutes and
appoints the Purchaser as the true and lawful attorney-in-fact of the Seller
(with full power of substitution) effective as of the Closing Date, and
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hereby authorizes the Purchaser, in the name of and on behalf of the Seller, to
execute, deliver, acknowledge, certify, file and record any document, to
institute and prosecute any Proceeding and to take any other action (on or at
any time after the Closing Date) that the Purchaser may deem appropriate for
the purpose of (i) collecting, asserting, enforcing or perfecting any claim,
right or interest of any kind that is included in or relates to any of the
Specified Assets, (ii) defending or compromising any claim or Proceeding
relating to any of the Specified Assets, or (iii) otherwise carrying out or
facilitating any of the Transactions. The power of attorney referred to in the
preceding sentence is and shall be coupled with an interest and shall be
irrevocable, and shall survive the dissolution or insolvency of the Seller.
10.2 Publicity. Unless otherwise permitted by this Agreement, the Seller,
Parent and the Purchaser shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
nonconfidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the Transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior written consent of the other (which approval shall
not be unreasonably withheld), except as may be required by law. If either the
Seller, Parent or the Purchaser is required to make any such public disclosure,
the party required to make the disclosure shall use its reasonable efforts to
give the other party prior notice and an opportunity to review the disclosure
prior to the public release of information.
10.3 Plan of Dissolution. The Seller shall comply in all respects with ,and
carry out in accordance with its terms, the Plan of Dissolution, and shall 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.
10.4 Continued Payment of Liabilities. Following the Closing, without
limiting the provisions of Section 10.3, the Seller shall promptly pay in full
all indebtedness, obligations, amounts owed by the Seller and other Liabilities
that are not expressly assumed by the Purchaser under this Agreement.
10.5 Change Of Name. Immediately after the Closing, the Seller shall change
its name to a name that does not include the word "3dfx" or the word "Voodoo"
or any variation of either of the foregoing and that is reasonably satisfactory
to Purchaser.
11. Miscellaneous Provisions.
11.1 Further Assurances. Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
11.2 Fees and Expenses.
(a) The Seller shall bear and pay all fees, costs and expenses
(including all legal fees and expenses payable to Xxxxx, Xxxxxxx & Xxxx LLP
and Crosby, Heafey, Xxxxx & May) that have been incurred or that are in the
future incurred by, on behalf of or for the benefit of the Seller in
connection with: (i) the negotiation, preparation and review of any letter
of intent or similar document relating to any of the Transactions; (ii) the
investigation and review conducted by Parent and the Purchaser and its
Representatives with respect to the business of the Seller (and the
furnishing of information to Parent, the Purchaser and their
Representatives in connection with such investigation and review); (iii)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule), the other Transactional Agreements and all bills of
sale, assignments, certificates, opinions and other instruments and
documents delivered or to be delivered in connection with the Transactions;
(iv) the preparation and submission of any filing or notice required to be
made or given in connection with any of the Transactions, and the obtaining
of any Consent required to be obtained in connection with any of the
Transactions; and (v) the consummation and performance of the Transactions.
B-35
(b) Subject to the reimbursement and indemnity provisions of Sections 8
and 9, Parent and the Purchaser shall bear and pay all fees, costs and
expenses (including all legal fees and expenses payable to Xxxxxx Godward
llp) that have been incurred or that are in the future incurred by or on
behalf of Parent or the Purchaser in connection with: (i) the negotiation,
preparation and review of any letter of intent or similar document relating
to any of the Transactions; (ii) the investigation and review conducted by
Parent or the Purchaser and their Representatives with respect to the
business of the Seller; (iii) the negotiation, preparation and review of
this Agreement, the other Transactional Agreements and all bills of sale,
assignments, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the Transactions; (iv) the
preparation and filing of documents under the HSR Act in connection with
the Transactions; and (v) the consummation and performance of the
Transactions.
11.3 Attorneys' Fees. If any legal action or other legal proceeding relating
to any of the Transactional Agreements or the enforcement of any provision of
any of the Transactional Agreements is brought against any party to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
11.4 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to the Seller:
3dfx Interactive, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
if to Parent or the Purchaser:
NVIDIA Corporation
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Chief Executive Officer
11.5 Time Of The Essence. Time is of the essence of this Agreement.
11.6 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
11.8 Governing Law; Venue.
(a) This Agreement shall be construed in accordance with, and governed
in all respects by, the internal laws of the State of Delaware (without
giving effect to principles of conflicts of laws).
(b) In any action between any of the parties arising out of or relating
to this Agreement or any of the transactions contemplated by this
Agreement, each of the parties irrevocably and unconditionally consents
B-36
and submits to the exclusive jurisdiction and venue of the state and
federal courts located in Santa Xxxxx County, California. Each party to
this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in Santa Xxxxx
County, California (and each appellate court located in the State of
California) in connection with any such legal proceeding;
(ii) agrees that each state and federal court located in Santa Xxxxx
County, California shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or
federal court located in Santa Xxxxx County, California, any claim that
such party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that this Agreement or
the subject matter of this Agreement may not be enforced in or by such
court.
(c) Parent, the Purchaser and the Seller agree that, if any Proceeding
is commenced against any Indemnitee by any Person in or before any court or
other tribunal anywhere in the world, then such Indemnitee may proceed
against the Seller in or before such court or other tribunal with respect
to any indemnification claim or other claim arising directly or indirectly
from or relating directly or indirectly to such Proceeding or any of the
matters alleged therein or any of the circumstances giving rise thereto.
11.9 Successors And Assigns; Parties In Interest.
(a) This Agreement shall be binding upon: the Seller and its successors
and assigns (if any) and Parent, the Purchaser and their successors and
assigns (if any). This Agreement shall inure to the benefit of: the Seller;
Parent; the Purchaser; the other Indemnitees (subject to Section 9.6); and
the respective successors and assigns (if any) of the foregoing.
(b) Parent and the Purchaser may freely assign any or all of their
respective rights under this Agreement (including their indemnification
rights under Section 9), in whole or in part, to any other Person without
obtaining the consent or approval of any other Person. The Seller shall not
be permitted to assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of Parent and the
Purchaser.
(c) Except for the provisions of Section 9 hereof, none of the
provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the parties to this Agreement and their respective
successors and assigns (if any). Without limiting the generality of the
foregoing, (i) no employee of the Seller shall have any rights under this
Agreement or under any of the other Transactional Agreements, and (ii) no
creditor of the Seller shall have any rights under this Agreement or any of
the other Transactional Agreements.
11.10 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The Seller agrees
that: (a) in the event of any Breach or threatened Breach by the Seller of any
covenant, obligation or other provision set forth in this Agreement, Parent and
the Purchaser shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such Breach or threatened Breach;
and (b) neither Parent, the Purchaser nor any other Indemnitee shall be
required to provide any bond or other security in connection with any such
decree, order or injunction or in connection with any related action or
Proceeding.
11.11 Waiver.
(a) No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy
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under this Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it
is given.
11.12 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent, the Purchaser and the Seller.
11.13 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.14 Entire Agreement. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof, including without limitation
that certain letter regarding confidentiality and nonsolicitation of employees
from the Seller to Parent dated November 20, 2000, which shall be deemed to
have been terminated as of the date of this Agreement and shall be of no
further force or effect.
11.15 Knowledge. For purposes of this Agreement, a Person shall be deemed to
have "knowledge" of a particular fact or other matter if any Representative of
such Person has actual knowledge of such fact or other matter.
11.16 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender
shall include the masculine and neuter genders; and the neuter gender shall
include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
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The parties to this Agreement have caused this Agreement to be executed and
delivered as of the date first set forth above.
3dfx Interactive, Inc.,
a California corporation
/s/ Xxxx Xxxxx
By: ________________________________
President & CEO
Title: _____________________________
NVIDIA Corporation,
a Delaware corporation
/s/ Xxx-Xxxx-Xxxxx
By: ________________________________
President & CEO
Title: _____________________________
Titan Acquisition Corp. No. 2,
a Delaware corporation
/s/ Xxx-Xxxx Xxxxx
By: ________________________________
President & CEO
Title: _____________________________
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Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Proposal. "Acquisition Proposal" shall mean any offer,
proposal, inquiry or indication of interest (other than an offer, proposal,
inquiry or indication of interest made or submitted by Parent or the
Purchaser) contemplating or otherwise relating to any Acquisition
Transaction.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving: (a) the sale or other disposition of all or a
material portion of the business or assets of the Seller or any direct or
indirect subsidiary or division of the Seller; (b) the issuance, sale or
other disposition of (i) any capital stock or other securities of the
Seller other than as a result of the exercise of stock options previously
granted, (ii) any option, call, warrant or right (whether or not
immediately exercisable) to acquire any capital stock or other securities
of the Seller, or (iii) any security, instrument or obligation that is or
may become convertible into or exchangeable for any capital stock or other
securities of the Seller; or (c) any merger, consolidation, business
combination, share exchange, reorganization or similar transaction
involving the Seller or any direct or indirect subsidiary of the Seller;
provided, however, that "Acquisition Transaction" shall not include the
disposition by any Seller Corporation of any Excluded Asset.
Agreement. "Agreement" shall mean the Asset Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may
be amended from time to time.
Acquisition. "Acquisition" shall mean (a) the sale of the Specified
Assets by the Seller to the Purchaser in accordance with the Agreement; (b)
the assumption of the Designated Contractual Obligations by the Purchaser
pursuant to the Assignment and Assumption Agreement; and (c) the
performance by the Seller and the Purchaser of their respective obligations
under the Agreement, and the exercise by the Seller and the Purchaser of
their respective rights under the Agreement, with respect to the Specified
Assets.
Assumed Contracts. "Assumed Contracts" shall mean the Seller Contracts
(if any) identified during the Pre-Closing Period by the Purchaser, in its
sole discretion, and which the Purchaser agrees in writing to assume at the
Closing.
Breach. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been
(a) any inaccuracy in or breach (including any inadvertent or innocent
breach) of, or any failure (including any inadvertent failure) to comply
with or perform, such representation, warranty, covenant, obligation or
other provision, or (b) any claim (by any Person) or other circumstance
that is inconsistent with such representation, warranty, covenant,
obligation or other provision; and the term "Breach" shall be deemed to
refer to any such inaccuracy, breach, failure, claim or circumstance.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
Closing Date. "Closing Date" shall mean the time and date as of which
the Closing actually takes place.
Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
Comparable Entities. "Comparable Entities" shall mean Entities (other
than the Seller) that are engaged in businesses similar to the business of
the Seller.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization).
Contract. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note,
guaranty, indemnity, representation, warranty, deed,
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assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or
undertaking of any nature.
Credit Agreement. "Credit Agreement" shall mean the credit agreement
entered into contemporaneously with the execution and delivery of the
Agreement by the Purchaser and the Seller pursuant to which the Purchaser
is providing the Seller with the Credit Facility.
Credit Facility. "Credit Facility" shall mean the immediate borrowing
availability in the amount of $15,000,000 provided by the Purchaser to the
Seller pursuant to the Credit Agreement.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, Liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or
expense of any nature.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Parent and the
Purchaser on behalf of the Seller, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
Employee Benefit Plan. "Employee Benefit Plan" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred
compensation, retirement benefits, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including each "employee benefit plan," within the meaning of Section 3(3)
of ERISA (whether or not ERISA is applicable thereto), which is or has been
maintained, contributed to, or required to be contributed to, by the Seller
Corporations or any affiliate of the Seller Corporations for the benefit of
any employee of the Seller Corporations, or with respect to which the
Seller Corporations have or may have any liability or obligation.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option,
right of first refusal, preemptive right, community property interest,
legend, defect, impediment, exception, reservation, limitation, impairment,
imperfection of title, condition or restriction of any nature (including
any restriction on the transfer of any asset, any restriction on the
receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of
any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation,
society, political party, union, company (including any limited liability
company or joint stock company), firm or other enterprise, association,
organization or entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
ERISA Affiliate. "ERISA Affiliate" shall mean any Person that is, was or
would be treated as a single employer with any of the Specified Entities
under Section 414 of the Code.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
Excluded Assets. "Excluded Assets" shall mean the assets identified on
Exhibit C that are (a) owned by the Seller on the Closing Date, and (b)
directly and exclusively related to the graphics board business of the
Seller.
GAAP. "GAAP" shall mean generally accepted accounting principles.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or
authorization issued,
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granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation,
principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental
division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal); (d) multi-national organization or body; or (e) individual,
Entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or
taxing authority or power of any nature.
Hazardous Material. "Hazardous Material" shall include: (a) any
petroleum, waste oil, crude oil, asbestos, urea formaldehyde or
polychlorinated biphenyl; (b) any waste, gas or other substance or material
that is explosive or radioactive; (c) any "hazardous substance,"
"pollutant," "contaminant," "hazardous waste," "regulated substance,"
"hazardous chemical" or "toxic chemical" as designated, listed or defined
(whether expressly or by reference) in any statute, regulation or other
Legal Requirement (including CERCLA and any other so-called "superfund" or
"superlien" law and the respective regulations promulgated thereunder); (d)
any other substance or material (regardless of physical form) or form of
energy that is subject to any Legal Requirement which regulates or
establishes standards of conduct in connection with, or which otherwise
relates to, the protection of human health, plant life, animal life,
natural resources, property or the enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, noise or form
of energy; and (e) any compound, mixture, solution, product or other
substance or material that contains any substance or material referred to
in clause "(a)", "(b)", "(c)" or "(d)" above.
Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
(b) the Purchaser; (c) Parent's and the Purchaser's current and future
affiliates; (d) the respective Representatives of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above; and (e) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)", "(c)" and
"(d)" above.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion
or interpretation issued, enacted, adopted, passed, approved, promulgated,
made, implemented or otherwise put into effect by or under the authority of
any Governmental Body.
Liability. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied,
vicarious, derivative, joint, several or secondary liability), regardless
of whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP and
regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
Order. "Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or
otherwise put into effect by or under the authority of any court,
administrative agency or other Governmental Body or any arbitrator or
arbitration panel; or (b) Contract with any Governmental Body entered into
in connection with any Proceeding.
Ordinary Course of Business. An action taken by or on behalf of the
Seller shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is consistent with the past
practices of the Seller and is taken in the ordinary course of the
normal day-to-day operations of the Seller;
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(b) such action is taken in accordance with sound and prudent
business practices;
(c) such action is not required to be authorized by the shareholders
of the Seller, the board of directors of the Seller or any committee of
the board of directors of the Seller and does not require any other
separate or special authorization of any nature; and
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in
the ordinary course of the normal day-to-day operations of Comparable
Entities.
Parent Pending Litigation. "Parent Pending Litigation" shall mean
Parent's existing patent infringement lawsuit against the Seller in Civil
Action No. C-00-3373 VRW pending in the United States District Court for
the Northern District of California.
Patent Standstill Agreement. "Patent Standstill Agreement" shall mean
that certain Patent Standstill Agreement of even date herewith between
Parent and the Purchaser.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall mean the period from the
date of the Agreement through the Closing Date.
Proceeding. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination or
investigation commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or any arbitrator or arbitration
panel.
Proprietary Asset. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or
not relating to a published work), trademark application, trade name,
fictitious business name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, know-how, customer list, franchise, system, computer software,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or
intangible asset.
Related Party. Each of the following shall be deemed to be a "Related
Party": (a) each individual who is, or who since January 1, 1999 has been,
an officer of any of the Seller Corporations; (b) each member of the family
of each of the individuals referred to in clause "(a)" above; and (c) any
Entity (other than the Seller Corporations) in which any one of the
individuals referred to in clauses "(a)" and "(b)" above holds or held (or
in which more than one of such individuals collectively hold or held),
beneficially or otherwise, a controlling interest or a material voting,
proprietary or equity interest.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933,
as amended.
Seller Common Stock. "Seller Common Stock" shall mean the Common Stock,
no par value, of the Seller.
Seller Contract. "Seller Contract" shall mean any Contract: (a) to which
any Seller Corporation is a party; (b) by which any Seller Corporation or
any of its assets is or may become bound or under which any Seller
Corporation has, or may become subject to, any obligation; or (c) under
which any Seller Corporation has or may acquire any right or interest.
Seller Corporations. "Seller Corporations" shall mean Seller and its
subsidiaries.
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Seller Pending Litigation. "Seller Pending Litigation" shall mean
Seller's existing patent infringement lawsuit against Parent in combined
Civil Actions No. C-98-03627 MHP and No. C-99-2460 MHP pending in the
United States District Court for the Northern District of California.
Seller Proprietary Asset. "Seller Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Seller or otherwise used by
the Seller Corporations.
Stay Order. "Stay Order" shall mean the Stipulation and Proposed Order
to Stay being filed by Parent and the Seller immediately following the
execution of this Agreement in the Seller Pending Litigation and the Parent
Pending Litigation.
Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase all of the outstanding
shares of common stock of the Seller or substantially all of the assets of
the Seller on terms that the board of directors of the Seller determines,
in its reasonable judgment, based upon a written opinion of an independent
financial advisor of nationally recognized reputation, to be more favorable
to the Seller's shareholders than the terms of the Transactions; provided,
however, that any such offer shall not be deemed to be a "Superior Offer"
if any financing required to consummate the transaction contemplated by
such offer is not committed or is not reasonably capable of being obtained
by such third party.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
tax, property tax, business tax, occupation tax, inventory tax, occupancy
tax, withholding tax or payroll tax), levy, assessment, tariff, impost,
imposition, toll, duty (including any customs duty), deficiency or fee, and
any related charge or amount (including any fine, penalty or interest),
that is, has been or may in the future be (a) imposed, assessed or
collected by or under the authority of any Governmental Body, or (b)
payable pursuant to any tax-sharing agreement or similar Contract.
Tax Return. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information that is, has been or may in the future be filed with or
submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal Requirement
relating to any Tax.
Transactional Agreements. "Transactional Agreements" shall mean: (a) the
Agreement; (b) the Assignment and Assumption Agreement; (c) the Voting
Agreements; (d) the Credit Agreement; (e) the Patent License Agreement; (f)
the Patent Standstill Agreement; and (g) the Stay Orders.
Transactions. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including: (i) the
sale of the Specified Assets by the Seller to the Purchaser in accordance
with the Agreement; (ii) the assumption of the Designated Contractual
Obligations by the Purchaser pursuant to the Assignment and Assumption
Agreement; and (iii) the performance by the Seller, Parent and the
Purchaser of their respective obligations under the Transactional
Agreements, and the exercise by the Seller, Parent and the Purchaser of
their respective rights under the Transactional Agreements.
Triggering Event. "Triggering Event" shall be deemed to have occurred
if: (i) the board of directors of the Seller shall have failed to
unanimously recommend that the Seller's shareholders vote to approve the
Acquisition or the Plan of Dissolution, or shall have withdrawn or modified
the recommendation of the board of directors of the Seller, or shall have
taken any other action that becomes generally known to the shareholders of
the Seller and that would be reasonably construed to suggest that the board
of directors of the Seller does not support the Acquisition and the Plan of
Dissolution or does not believe that the Acquisition and the Plan of
Dissolution are in the best interests of the shareholders of the Seller;
(ii) the Seller shall have failed to include in the Prospectus/Proxy
Statement a statement to the effect that the board of directors of the
Seller has unanimously determined and believes that the
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Acquisition and the Plan of Dissolution are in the best interests of the
shareholders of the Seller; (iii) the board of directors of the Seller
fails to reaffirm the Seller Board Recommendation, or fails to reaffirm its
determination that the Acquisition and the Plan of Dissolution are in the
best interests of the Seller's shareholders, within five business days
after Parent or the Purchaser reasonably requests in writing that such
recommendation or determination be reaffirmed; (iv) the board of directors
of the Seller shall have approved, endorsed or recommended any Acquisition
Proposal; (v) the Seller shall have entered into any letter of intent or
similar document or any Contract providing for or otherwise contemplating
an Acquisition Transaction; or (vi) a tender or exchange offer relating to
securities of the Seller shall have been commenced and the Seller shall not
have sent to its shareholders, within ten business days after the
commencement of such tender or exchange offer, a statement disclosing that
the Seller recommends rejection of such tender or exchange offer.
Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
mean the unaudited consolidated balance sheet of the Seller included in the
Unaudited Interim Financial Statements.
Unaudited Interim Financial Statements. "Unaudited Interim Financial
Statements" shall mean the unaudited consolidated balance sheet of the
Seller as of October 31, 2000, and the related unaudited consolidated
income statement of the Seller for the three-month period ended October 31,
2000, together with the notes (if any) thereto, in substantially the form
attached as Exhibit E.
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