EXHIBIT 10.38
3DFX INTERACTIVE, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (this "AGREEMENT") is
made as of June 13, 2002, by and among 3dfx Interactive, Inc., a California
corporation (the "COMPANY"), and SF Capital Partners Ltd., a limited company
formed under the laws of the British Virgin Islands (the "INVESTOR").
WHEREAS, the Company is a party to that certain Asset Purchase
Agreement dated as of December 15, 2000 (the "ASSET PURCHASE AGREEMENT"), by and
among the Company, NVIDIA Corporation, a Delaware corporation ("NVIDIA"), and
NVIDIA US Investment Company, a Delaware corporation, f/k/a Titan Acquisition
Corp. No. 2 ("NVIDIA SUB");
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, the
Company is entitled to receive two million (2,000,000) shares of the common
stock, par value $.001 per share, of NVIDIA ("NVIDIA STOCK") upon the
satisfaction of certain conditions described therein;
WHEREAS, the Board of Directors of the Company deems it advisable and
in the Company's best interest to issue shares of Series B Stock (as defined
below) to the Investor in order to generate sufficient cash proceeds to satisfy
the Liabilities (as defined in Section 3.5 hereof), thereby enabling the Company
to expeditiously wind up, settle and liquidate its affairs and dissolve in
accordance with its Plan of Dissolution; and
WHEREAS, the generation of cash from the issuance of the shares of
Series B Stock, the satisfaction of the Liabilities and the receipt of shares of
NVIDIA Stock by the Company should allow the Company to pay its creditors and
maximize the value it is able to deliver to its common shareholders.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
PURCHASE AND SALE OF STOCK
1.1 Certificate of Determination. The Company shall adopt and file with
the Secretary of State of the State of California on or before the Closing Date
(as defined below) the Certificate of Determination of the Rights, Preferences,
Privileges and Restrictions of Series B Preferred Stock of the Company in the
form attached hereto as Exhibit A (the "CERTIFICATE").
1.2 Authorization and Issuance of Series B Stock. Subject to the terms
and conditions of this Agreement, the Investor agrees to acquire, and the
Company agrees to authorize and issue to the Investor, at the Closing Date (as
defined below), that number of shares (the "SHARES") of the Company's Series B
Preferred Stock, no par value ("SERIES B STOCK"), which equals the quotient
obtained by dividing (a)(i) the sum of the Funding Amount (as defined below) and
(ii) the specified percentage of the Funding Amount indicated in the table below
(the "SPECIFIED PERCENTAGE") by (b) the average closing price of NVIDIA Stock
for the five (5) trading days
immediately preceding the Closing Date (the "NVIDIA CLOSING PRICE"), with any
resulting fraction of a Share to be rounded up to the next whole Share;
provided, however, that if the NVIDIA Closing Price is greater than $70, the
number of Shares to be issued to the Investor on the Closing Date shall equal
that number of Shares to which the Investor would have been entitled had the
NVIDIA Closing Price been $70. The calculation of the number of Shares of Series
B Stock to be issued to the Investor shall be determined in accordance with the
preceding sentence, with reference to the Specified Percentages set forth below
that vary based on the NVIDIA Closing Price:
NVIDIA CLOSING PRICE ($) SPECIFIED PERCENTAGE (%)
------------------------ ------------------------
35.01 to 70.00 40
34.51 to 35.00 40
34.01 to 34.50 39
33.51 to 34.00 38
33.01 to 33.50 37
32.51 to 33.00 36
32.01 to 32.50 35
31.51 to 32.00 34
31.01 to 31.50 33
30.51 to 31.00 32
30.01 to 30.50 31
29.51 to 30.00 30
29.01 to 29.50 29
28.51 to 29.00 28
28.01 to 28.50 27
27.51 to 28.00 26
27.01 to 27.50 25
26.51 to 27.00 25
26.01 to 26.50 25
As provided in Section 8.1 hereof, in the event the NVIDIA Closing Price is at
or below $26.00, the Company or the Investor is entitled to terminate this
Agreement.
1.3 Purchase Price. The purchase price of the Shares to be delivered by
the Investor to the Company on the Closing Date shall be cash in immediately
available funds equal to the Funding Amount (as defined below).
-2-
For purposes of this Agreement, the "Funding Amount" shall be the sum
of (a) the fixed and determinable amount of Liabilities upon the Closing Date,
(b) the maximum amount of all undetermined Liabilities, as shall be reasonably
known upon the Closing Date, and (c) that amount of expenses reasonably
necessary to complete the liquidation, winding-up and dissolution of the Company
and otherwise address the expenses associated with resolving all undetermined
Liabilities through a liquidating trust or otherwise, after taking into account
the Company's assets then on hand.
As provided in Section 8.1 hereof, in the event that the Funding Amount
is greater than $35,000,000 or less than $25,000,000, the Investor may terminate
this Agreement at its option. The Funding Amount shall be applied exclusively to
the payment of Liabilities, with any residual amount being applied to the
resolution of any undetermined Liabilities and the expenses referred to in
clause (c) above (with any further residual amount distributed to the Company's
shareholders).
SECTION 2
ESCROW AND CLOSING
2.1 Escrow and Closing. Once (a) the amount of all Liabilities is
determined, or if some Liabilities are not determinable then the maximum amount
of all undetermined Liabilities shall be reasonably known to the Company and the
Investor (as determined by the parties in good faith); and (b) upon satisfaction
of one of the conditions precedent specified in clauses (i) - (iv) below, then
the Investor will promptly deliver the Funding Amount in immediately available
funds to an escrow agent reasonably satisfactory to the Company and the Investor
pursuant to an escrow agreement reasonably satisfactory to the Company and the
Investor (the "Cash Funding Escrow"). Without limiting the foregoing, such
escrow agreement shall provide that subject to the satisfaction of the
conditions described in Sections 5 and 6 of this Agreement (it being understood
and agreed that the Investor shall have the right to waive any of the conditions
set forth in Section 5 and the Company shall have the right to waive any of the
conditions set forth in Section 6), upon satisfaction of the conditions
stipulated in the escrow agreement for release to the Company of the Funding
Amount from the escrow, the purchase and sale of the Series B Stock shall take
place at the offices of the Company or another mutually agreeable location on
the first reasonably practicable business day (the "Closing Date").
Without limiting the foregoing, such escrow agreement shall further
provide for the return to the Investor of the Funding Amount, plus any other
amounts provided for in the escrow agreement, in the event (x) of the
termination of this Agreement by the Investor or the Company in accordance with
the terms of Section 8.1 hereof or (y) that the NVIDIA Stock has not been
delivered to the Company, or to an escrow agent or other third party reasonably
acceptable to Investor pursuant to an escrow agreement or other arrangement
reasonably acceptable to Investor (the "Stock Escrow"), within 3 business days
after the Investor's delivery of the Funding Amount to the Cash Funding Escrow;
provided that in the event that the Funding Amount is returned to Investor
pursuant to clause (y), Investor acknowledges that the terms of this Section 2.1
shall continue to have full effect and Investor may again be required to deliver
the Funding Amount in accordance with this Section 2.1 until such time as this
Agreement is terminated in accordance with Section 8.1 hereof.
The conditions precedent specified in clause (b) above are:
(i) the delivery of the NVIDIA Stock to the Company or to the
Stock Escrow; or
(ii) NVIDIA's and/or NVIDIA Sub's delivery of an agreement,
certificate or other document pursuant to which one or both of
them agree with the Company and with the Investor, or pursuant
to which one or both of them expressly represents to the
Company and the Investor, that (a) upon the Company's receipt
of the purchase price for the Shares and NVIDIA's and NVIDIA
Sub's receipt of a Company certificate or other document in
which the Company certifies and covenants as to certain
matters in satisfaction of its certification obligation set
forth in Section 1.3(a) of the Asset Purchase Agreement
(provided, that the required contents of the Company's
certificate or other document must be reasonably satisfactory
to the Investor), that provision for the payment of the
Liabilities of the Company and its Subsidiaries will be deemed
to have been made and (b) NVIDIA Sub will deliver the NVIDIA
Stock to the Company or the Stock Escrow on the same business
day as the Company receives the purchase price for the Shares
and NVIDIA and NVIDIA Sub receives the Company's certificate
or other document referred to in subclause (a) above; or
(iii) the issuance of a court order by a court of competent
jurisdiction directing NVIDIA or NVIDIA Sub to deliver the
NVIDIA Stock to the Company or into the Stock Escrow; or
(iv) Investor has received such other assurances that are
satisfactory to it, in its sole discretion.
2.2 Issuance of Shares against Payment. At the Closing, the Company
shall deliver to the Investor a certificate representing that number of Shares
determined in accordance with Section 1.2 hereof against payment of the purchase
price therefor as specified in Section 1.3.
-3-
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise described in the Schedule of Exceptions attached
hereto, the Company hereby represents and warrants to, and covenants with, the
Investor as of the date hereof, as follows:
3.1 Organization. Each of the Company and its Subsidiaries (as defined
in Rule 405 promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT")), is duly incorporated and validly existing under the laws of
the jurisdiction of its organization, whether contained within or outside of the
United States of America. Each of the Company and its Subsidiaries has full
power and authority to conduct its business as presently conducted, and no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
3.2 Due Authorization. The Company has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement,
and this Agreement has been duly authorized and validly executed and delivered
by the Company and constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.3 Non-Contravention. The execution and delivery of this Agreement,
the issuance and sale of the Shares to be sold by the Company under this
Agreement, the fulfillment of the terms of this Agreement and the consummation
of the transactions contemplated hereby will not conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) the
Asset Purchase Agreement or any bond, debenture, note or other evidence of
indebtedness, or any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective properties are bound, where such conflict,
violation or default is reasonably expected to have a material adverse effect
upon the Company and its subsidiaries taken as a whole, or the business,
financial condition, properties, operations or assets of the Company and its
Subsidiaries, taken as a whole, or the Company's ability to perform its
obligations under this Agreement ("MATERIAL ADVERSE EFFECT"), (ii) the Articles
of Incorporation, bylaws or other organizational documents of the Company or any
of its Subsidiaries, or (iii) any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or authority
binding upon the Company or any of its Subsidiaries or their respective
properties, where such conflict, violation or default is likely to result in a
Material Adverse Effect
3.4 Capitalization. The capitalization of the Company as of January 31,
2002 is as described in the unaudited consolidated financial statements of the
Company as of and for the fiscal year ended January 31, 2002 (the "2002
FINANCIAL STATEMENTS"). The Company has not issued any capital stock since
January 31, 2002 (other than the Shares contemplated by this
-4-
Agreement). The Shares to be sold pursuant to this Agreement have been duly
authorized, and when issued and paid for in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and nonassessable. Except
for options currently outstanding and up to 500,000 additional options that may
be issued under the Company's stock option and incentive plans, there are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
unissued shares of capital stock or other equity interest in the Company or any
of its Subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind, in either case to which the Company or any of its
Subsidiaries is a party and providing for the issuance or sale of any capital
stock of the Company or any of its Subsidiaries, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, registration right,
right of first refusal or other similar right exists with respect to the
issuance and sale of the Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company's common
stock, no par value per share, to which the Company is a party. Other than STB
de Mexico, S.A. de C.V., in which Xxxx Xxxxx Ferriz, Esq. owns 0.10% of the
capital stock, the Company owns the entire equity interest in its Subsidiaries,
or in the Subsidiaries of its Subsidiaries, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest.
3.5 Liabilities. As of January 31, 2002, neither the Company nor its
Subsidiaries was subject to any Liabilities, other than as set forth on the
Schedule of Exceptions. For purposes of this Agreement, "Liabilities" shall
mean, with respect to the Company and its Subsidiaries, 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 generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable; provided, that "Liabilities" shall not for purposes
of this Agreement include any taxes arising out of the Company's and its
Subsidiaries' sale of assets under the Asset Purchase Agreement.
3.6 Legal Proceedings. There is no legal or governmental proceeding
pending, or to the knowledge of the Company, threatened, concerning the Asset
Purchase Agreement, this Agreement or any other matter whatsoever, to which the
Company or any of its Subsidiaries is a party or of which the business or
property of the Company or any of its Subsidiaries is subject. Neither the
Company nor any Subsidiary is a party to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other government body.
3.7 No Violations. Neither the Company nor any of its Subsidiaries is
in violation of its Articles of Incorporation, bylaws or other organizational
documents, or its Plan of Dissolution or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or any of its Subsidiaries, which
violation, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect, nor is the Company or any of its Subsidiaries in
default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) under the terms of the Company's Plan of
Dissolution or in the performance of any bond, debenture, note or any other
evidence of indebtedness or any indenture, mortgage, deed of trust
-5-
or any other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or by which the property of the Company or any of its Subsidiaries is
bound, which is reasonably likely to have a Material Adverse Effect.
3.8 Financial Statements. The 2002 Financial Statements present fairly,
in accordance with generally accepted accounting principles, the consolidated
financial position of the Company and its Subsidiaries as of the date indicated,
subject to normal year-end audit adjustments and the absence of footnotes
required by generally accepted accounting principles.
3.9 No Material Adverse Change. Since January 31, 2002, there has not
been (i) a change that has had or is reasonably likely to have a Material
Adverse Effect, (ii) any obligation, direct or contingent, that is material to
the Company or any of its Subsidiaries considered as one enterprise, incurred by
the Company or any of its Subsidiaries, except obligations incurred in the
ordinary course of business, (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (iv) any loss or damage (whether or not insured) to the
physical property of the Company or any of its Subsidiaries which has been
sustained which has a Material Adverse Effect.
3.10 SEC Filings. The Company has timely made all filings required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
during the period of February 1, 2001 through the date of this Agreement (the
"SEC REPORTS"), and all of the SEC Reports complied in all material respects
with the SEC's requirements as of their respective filing dates, and the
information contained therein as of the respective dates thereof did not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
3.11 Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares hereunder will be, or will have been, fully
paid or provided for by the Company and the Company will have complied with all
laws imposing such taxes.
3.12 Insurance. The Company and its Subsidiaries maintain insurance of
the types and in the amounts that the Company reasonably believes is adequate
for its businesses, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, all of which insurance is in
full force and effect.
3.13 Related Party Transactions. Except as disclosed in the SEC
Reports, no transaction has occurred between or among the Company, any of the
Subsidiaries and their affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that with the passage of time will be
required to be disclosed pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
-6-
3.14 Books and Records. The books, records and accounts of the Company
and the Subsidiaries accurately and fairly reflect, in all material respects,
the transactions in, and dispositions of, the assets of, the Liabilities of, and
the operations of, the Company and the Subsidiaries. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.15 No Consent. Except as otherwise contemplated hereby, the
execution, delivery and performance of this Agreement, and the consummation of
the sale of the Shares contemplated hereby, do not require the consent, approval
or authorization of any third party, including, but not limited to, the common
shareholders of the Company.
3.16 Ownership of NVIDIA Stock. The Company does not presently own any
shares of NVIDIA Stock and will not, prior to the Closing Date, own any shares
of NVIDIA Stock, other than any shares of NVIDIA Stock delivered to the Company
pursuant to the Asset Purchase Agreement.
3.17 Affiliate Status. The Company is not an affiliate (as that term is
defined under Rule 144 promulgated under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), of NVIDIA.
3.18 Offering. Assuming the accuracy of the Investor's representations
in Section 4 hereof, the offer, sale and issuance of the Shares to be issued in
accordance with the terms of this Agreement are exempt from the registration
requirements of Section 5 of the Securities Act and in compliance with
applicable state securities laws.
3.19 Registered Shares. The issuance of the shares of NVIDIA Stock
pursuant to the Asset Purchase Agreement is registered pursuant to a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") that remains
effective in accordance with the provisions of the Securities Act, and no stop
order has been issued or is pending, and no proceeding for that purpose has been
initiated or threatened by the SEC with respect to such Registration Statement.
3.20 NVIDIA Information. Within the meaning of the federal securities
laws, the Company has not disclosed to the Investor any material, nonpublic
information regarding NVIDIA.
-7-
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as of the date
hereof and as of the Closing Date as follows:
4.1 Investment Experience. The Investor has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company such that the Investor is capable of evaluating
the merits and risks of its investment in the Company and has the capacity to
protect its own interests. The Investor is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act
under one or more of the categories set forth therein.
4.2 Investment. The Investor is acquiring the Shares for investment for
the Investor's own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. The Investor
understands that the Shares have not been, and will not be when issued,
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of the representations as expressed herein. The Investor acknowledges
that the Shares must be held indefinitely unless subsequently registered under
the Securities Act or unless an exemption from such registration is available.
4.3 No Public Market. The Investor understands that no public market
now exists, and that a market will never exist, for the Shares.
4.4 Access to Information. The Investor has had an opportunity to
discuss the Company's current business operations, Liabilities and financial
condition with the Company's management. The Investor understands that a
purchase of the Shares involves a high degree of risk.
4.5 Authorization; Corporate Power. The Investor has all requisite
legal and corporate or partnership power and authority to execute and deliver
this Agreement and to carry out and perform its obligations under the terms of
this Agreement and the transactions contemplated hereby and thereby. This
Agreement, when executed and delivered by the Investor, will constitute a valid
and legally binding obligation of such Investor, enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.6 Broker's and Finders' Fees. The Investor has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
-8-
4.7 Legends. It is understood that each certificate representing the
Shares shall bear the following legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED (OTHER THAN IN A
BONA FIDE MARGIN ACCOUNT) OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SHARES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RIGHTS,
PREFERENCES, PRIVILEGES AND RESTRICTIONS SET FORTH IN THE CERTIFICATE
OF DETERMINATION OF RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF
THE SERIES B PREFERRED STOCK. A COPY OF THE CERTIFICATE OF
DETERMINATION IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Shares upon which it is
stamped, if in connection with a sale transaction, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a sale, assignment or transfer of such Shares may be made without
registration under the Securities Act.
4.8 Principal Place of Business. The principal place of business of the
Investor in which its investment decision was made is located in Wisconsin.
SECTION 5
CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT THE CLOSING
The obligation of the Investor under this Agreement is subject to the
fulfillment at or before the Closing Date of each of the following conditions:
5.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 3 were true and correct as of the date of
execution of this Agreement, and except with respect to the representations and
warranties set forth in Sections 3.5, 3.6, 3.7 and 3.9, the representations and
warranties of the Company contained in Section 3 were true and correct at the
Closing Date.
5.2 Performance. The Company shall have performed or fulfilled all
agreements, obligations and conditions contained herein required to be performed
or fulfilled by the Company before the Closing Date, including, but not limited
to, those described in Section 2.1, which are incorporated herein by reference.
-9-
5.3 Securities Law Compliance. The offer and sale of the Shares
pursuant to this Agreement shall be in compliance with all federal and state
securities laws applicable thereto.
5.4 Opinion of Counsel. The Investor shall have received opinions of
the Company's several legal counsel in form and substance reasonably
satisfactory to the Investor opining as to (i) the Company's ability, power and
authority to effectuate this Agreement, (ii) the validity of the authorization
and issuance of the Shares, (iii) the absence of a need for shareholder approval
to enter into this Agreement or to issue the Shares, (iv) the entry into the
Agreement and the issuance of the Shares does not give rise to any violation of
California usury laws, (v) the validity of the exemption of the issuance of the
Shares from the registration requirements of Section 5 of the Securities Act and
applicable state securities laws, (vi) the effectiveness of the Registration
Statement, and (vii) the free transferability of shares of NVIDIA Stock to
Investor.
5.5 Compliance Certificate. The Company shall have delivered to the
Investor (i) an Officers' Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 5.1 and 5.2 have been fulfilled, (ii)
certified copies of the resolutions adopted by the Company's Board of Directors
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated by this Agreement, and (iii) certified copies of the
Company's Articles of Incorporation as in effect at the Closing.
5.6 Certificate of Determination. Prior to or at the Closing, the
Certificate shall have been duly filed under the laws of the State of
California
and shall be in full force and effect and shall not have been otherwise amended
or modified.
5.7 No Actions Pending. There shall be no suit, action, investigation,
inquiry or other proceeding by any governmental authority or any other third
party or any other legal or administrative proceeding pending or threatened
which (i) questions the validity or legality of the transactions contemplated by
this Agreement, or seeks damages in connection therewith, and also (ii) names or
threatens to name Investor as a party thereto and, in Investor's reasonable
judgment, constitutes a credible risk of material liability to Investor;
provided, that it is agreed that a suit, action or other legal proceeding to
which NVIDIA is a party shall not constitute a condition to closing under this
Section 5.7.
5.8 NVIDIA Stock. The certificate representing the shares of NVIDIA
Stock to be delivered to the Company under the Asset Purchase Agreement shall
represent fully registered shares (covered by the Registration Statement) and
shall not be subject to any legends restricting the resale of the shares
represented thereby, or the Investor shall have received reasonable assurances
that the certificate representing shares of NVIDIA Stock to which it may be
entitled under the terms of the Certificate shall be free from any such legends.
The NVIDIA Stock shall continue to be listed on the Nasdaq National Market or a
national securities exchange, and shall not be the subject of any suspension in
trading.
5.9 Approvals. The Company shall have received all necessary approvals
to consummate the transactions contemplated by this Agreement.
-10-
SECTION 6
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT EACH CLOSING
The obligations of the Company under this Agreement are subject to the
fulfillment on or before the Closing Date of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties
of the Investor contained in Section 4 shall be true and correct when made and
on and as of the Closing with the same effect as though said representations and
warranties had been made on and as of the Closing Date.
6.2 Performance. The Investor shall have performed or fulfilled all
agreements, obligations and conditions contained herein and required to be
performed or fulfilled by the Investor as of the Closing, including payment of
the required consideration for the Shares as set forth in Section 1.3 hereof.
SECTION 7
PRE-CLOSING COVENANTS
Up to and including the Closing Date, the parties covenant and agree
with each other as follows:
7.1 Best Efforts. The Company and the Investor shall use all reasonable
best efforts to take, or cause to be taken, all actions necessary to consummate
the sale of the Shares contemplated by this Agreement.
7.2 Form D. The Company shall file Form D, Notice of Sales of
Securities Pursuant to Regulation D, Section 4(6), and/or the Uniform Limited
Offering Exemption, with the Securities and Exchange Commission and any
applicable state securities authorities on the Closing Date.
7.3 Filings. The Company shall timely make all filings required under
the Exchange Act following the date of this Agreement, and all such documents
shall comply in all material respects with the Securities and Exchange
Commission's requirements as of their respective filing dates (provided, that
nothing in this Section 7.3 shall prohibit the Company from making delayed
filings to the extent the Company complies with Rule 12b-25 promulgated under
the Exchange Act).
7.4 Issuance of New Equity or Debt Securities. The Company shall not,
prior to the Closing Date, create (by reclassification or otherwise) a new
series of preferred stock or otherwise issue any equity security of the Company,
other than up to 500,000 additional options that may be issued under the
Company's stock option and incentive plans and other than securities issuable
upon the exercise of (i) currently outstanding options or warrants (ii)
additional options issued within the previously specified limit. Further, the
Company shall not, prior to the Closing Date, incur any additional indebtedness
for borrowed money.
-11-
7.5 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the sale of
the Shares contemplated hereby.
SECTION 8
MISCELLANEOUS
8.1 Termination. The Investor may terminate this Agreement in the event
that: (i) the NVIDIA Stock is de-listed from the Nasdaq National Market without
being simultaneously listed on a national securities exchange, (ii) the Funding
Amount, as determined at the time of satisfaction of the conditions precedent
specified in Section 2.1(i) and (ii) or at such other time as the parties shall
mutually agree, is greater than $35,000,000 or less than $25,000,000, (iii) the
Closing Date has not occurred on or prior to the one (1) year anniversary of the
date of this Agreement, (iv) the NVIDIA Closing Price is at or below than
$26.00, or (v) the Company is in material default under this Agreement and the
Company has not cured such default within 30 days of Investor's written notice
to the Company advising it of the default. The Company may terminate this
Agreement in the event (x) the Closing Date has not occurred on or prior to the
one (1) year anniversary of the date of this Agreement, (y) the NVIDIA Closing
Price is at or below $26.00 or (z) the Investor is in material default of this
Agreement, and the Investor has not cured such default within 30 days of the
Company's written notice to the Investor advising it of the default.
8.2 Entire Agreement; Successors and Assigns; Assignment of Rights.
This Agreement and the Schedule of Exceptions and exhibit hereto constitute the
entire agreement between the Company and the Investor relative to the subject
matter hereof and supersede any previous agreement between the Company and the
Investor. Subject to the exceptions specifically set forth in this Agreement,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective executors, administrators, heirs, successors and
assigns of the parties. The rights and obligations under this Agreement of a
party hereto are not assignable without the prior written consent of the other
party hereto. Prior to or soon after the Closing Date, the Investor shall be
entitled to assign any of its Shares or rights hereunder, in whole or in part,
upon the reasonable satisfaction of the Company that such assignment will not
violate applicable securities laws, to any of its affiliates, who shall sign a
counterpart signature page agreeing to be bound by this Agreement and to be
entitled to the rights and obligations hereunder as if it were an Investor
hereunder.
8.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of
California applicable to contracts entered into and wholly to be
performed within the State of
California by
California residents. The parties
hereto irrevocably agree that any legal action or proceeding arising out of or
in connection with this Agreement shall be brought in the federal or state
courts located in the State of
California, and shall be brought in no other
court. By the execution and delivery of this Agreement, the parties to this
Agreement hereby irrevocably accept and submit to the jurisdiction of such
courts in person, generally and unconditionally, in connection with any
-12-
legal action or proceeding arising out of or in connection with this Agreement.
The parties hereto waive all right to trial by jury in any action, suit or
proceeding brought to enforce or defend any rights or remedies arising under or
in connection with this Agreement, whether grounded in tort, contract or
otherwise.
8.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
8.5 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
8.6 Notices. Any notice required or permitted hereunder shall be given
in writing and shall be conclusively deemed effectively given (i) upon personal
delivery, (ii) upon delivery by overnight courier, (iii) five (5) days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to the Company, as set forth below the Company's name
on the signature page of this Agreement, and (b) if to the Investor, as set
forth below the Investor's name on the signature page of this Agreement, or at
such other address as the Company or the Investor may designate by ten (10)
days' advance written notice to the other party.
8.7 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by the Company and the Investor.
8.8 Confidentiality. Investor shall, and shall cause each of its
employees and directors to, safeguard and maintain as confidential all
Confidential Information (as defined herein) disclosed to or otherwise obtained
by it in strict confidence, including, without limitation, information in
written, magnetic or other physical form, and shall take reasonable precautions
to protect such Confidential Information (including, without limitation, all
precautions the Investor employs with respect to its own proprietary
information). Investor shall not, and shall cause each of its employees and
directors not to, copy, transmit, or disclose the Confidential Information, or
any information derived therefrom, to any other party, including, but not
limited to, an affiliate, agent or representative of the Investor, without the
written approval of the Company. The Investor shall not, and the Investor shall
cause each of its employees and directors not to, buy, sell or trade Company
securities based on possession or knowledge of Confidential Information until
such time as such Confidential Information is made public by the Company. Any
Investor affiliate, employee or director given access to any such Confidential
Information must have a legitimate "need to know" and the Investor will notify
such employee or director in writing that they are bound by the same
restrictions as the Investor regarding such Confidential Information. Nothing in
this Section 8.8 shall prohibit the Investor from trading in NVIDIA Stock or any
derivatives thereof. "Confidential Information" shall include (i) all of the
Investor's dealings with the Company concerning this Agreement and its
background and negotiation, (ii) all of the Company's and the Investor's
dealings with NVIDIA concerning this Agreement, the Asset Purchase Agreement and
the transactions contemplated hereby and thereby, (iii) all facts and
circumstances surrounding the Company's liquidation, winding-up and dissolution
and (iv) all information concerning the Company and its business and financial
affairs.
-13-
8.9 Indemnification. In consideration of Investor's execution and
delivery of this Agreement and Investor's agreements contained herein, and in
addition to all of the Company's other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless Investor from and
against any and all losses, costs, penalties, fees, liabilities and damages, and
expenses including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by the Investor as a result of, or arising
out of, or relating to (i) any misrepresentation or breach of any representation
or warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby, (ii) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement or any other
certificate, instrument or document contemplated hereby and (iii) any suit,
action, investigation, inquiry or other legal or administrative proceeding by
any governmental authority or any other third party described in Section 5.7
hereof; provided, that, notwithstanding the foregoing, the Company shall not
indemnify the Investor from any Indemnified Liabilities that arise from or are
attributable to any act or omission of the Investor that constitutes fraud,
willful misconduct, gross negligence or a breach of the provisions of this
Agreement. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
In consideration of the Company's execution and delivery of this
Agreement and the Company's agreements contained herein, and in addition to all
of the Investor's other obligations under this Agreement, the Investor shall
defend, protect, indemnify and hold harmless the Company from and against any
and all losses, costs, penalties, fees, liabilities and damages, and expenses
including reasonable attorneys' fees and disbursements (the "INDEMNIFIED
LIABILITIES"), incurred by the Company as a result of, or arising out of, or
relating to (i) any misrepresentation or breach of any representation or
warranty made by Investor in this Agreement or any other certificate, instrument
or document contemplated hereby, or (ii) any breach of any covenant, agreement
or obligation of Investor contained in this Agreement or any other certificate,
instrument or document contemplated hereby; provided, that, notwithstanding the
foregoing, the Investor shall not indemnify the Company for any Indemnified
Liabilities that arise from or are attributable to any act or omission of the
Company that constitutes fraud, willful misconduct, gross negligence or a breach
of the provisions of this Agreement. To the extent that the foregoing
undertaking by the Investor may be unenforceable for any reason, the Investor
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.
Promptly after its receipt of notice of the commencement of any action,
the indemnified party will, if a claim in respect thereof is made against the
indemnified party hereunder, notify in writing the indemnifying party of the
commencement thereof; but omission so to notify the indemnifying party will not
relieve the indemnifying party from any liability hereunder which it may have to
the indemnified party unless such omission results in the indemnifying party's
forfeiture of substantive rights or defenses. If the indemnifying party so
elects, the indemnifying party may assume the defense of the Indemnified
Liabilities in a timely manner, including the employment of counsel (reasonably
satisfactory to the indemnified party) and payment of expenses, provided the
indemnifying party acknowledges in writing its unconditional obligation pursuant
to this Agreement to indemnify the indemnified party in respect of such
Indemnified Liabilities and permits the indemnified party and counsel retained
by the indemnified party at its
-14-
expense to participate in such defense. Notwithstanding the foregoing, in the
event the indemnified party determines in its reasonable discretion that there
may be a conflict between the positions of the indemnifying party and the
indemnified party or that there may be defenses available to the indemnified
party that are different from or in addition to those available to the
indemnifying party, then the indemnified party may employ a single separate
counsel (and local counsel as necessary) to represent or defend it in such
action, claim, proceeding or investigation and the indemnifying party will pay
the fees and disbursements of such separate counsel as incurred.
8.10 Survival. The representatives, warranties, covenants and
agreements of each party to this Agreement shall survive the closing of the sale
of the Shares, but shall expire upon the Company's distribution to the Investor
of the "Liquidation Preference Amount" specified in the Certificate of
Determination relating to the Series B Stock.
8.11 Press Releases. Without restricting the Company's ability to make
full and timely disclosure to its public shareholders, the Investor and the
Company will work together to develop mutually agreeable press releases relating
to this transaction.
8.12 Expenses. Each of the Company and the Investor shall be
responsible for the payment of its own fees in connection with the transaction
contemplated by this Agreement.
[The next page is the signature page]
-15-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date above set forth.
"COMPANY"
3DFX INTERACTIVE, INC., A
CALIFORNIA CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Company Signature Page
"INVESTOR"
SF CAPITAL PARTNERS LTD., A LIMITED COMPANY
UNDER THE LAWS OF THE BRITISH VIRGIN ISLANDS
By: /s/ XXXXX X. XXXXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
----------------------------------------
Title:
---------------------------------------
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Investor Signature Page
INDEX OF SCHEDULE AND EXHIBIT
SCHEDULES:
Schedule of Exceptions
EXHIBITS:
Exhibit A - Certificate of Determination of the Rights, Preferences,
Privileges and Restrictions of Series B Preferred Stock
EXHIBIT A
CERTIFICATE OF DETERMINATION
OF THE RIGHTS, PREFERENCES, PRIVILEGES
AND RESTRICTIONS OF THE SERIES B PREFERRED STOCK
OF
3DFX INTERACTIVE, INC.
PURSUANT TO SECTION 401 OF THE GENERAL CORPORATION LAW
OF THE STATE OF
CALIFORNIA
Xxxxxxx X. Xxxxxxxxx certifies that:
A. Xxxxxxx X. Xxxxxxxxx is the President, Chief Executive Officer and
Chief Financial Officer of 3dfx Interactive, Inc., a California corporation (the
"CORPORATION").
B. It is the intention that this Certificate of Determination state the
rights, preferences, privileges and restrictions of the Series B Preferred Stock
of the Corporation.
C. No shares of the Series B Preferred Stock have been issued.
D. Pursuant to the authority granted to the Board of Directors of the
Corporation by Article 3 of the Restated Articles of Incorporation, and in
accordance with the provisions of Section 401 of the General Corporation Law of
the State of California, the Board of Directors of the Corporation has adopted
the following resolution setting forth the rights, preferences, privileges and
restrictions of a new series of preferred stock designated as the Series B
Preferred Stock, no par value:
RESOLVED, that a series of authorized Preferred Stock, no par
value, designated Series B Preferred Stock of the Corporation, be hereby
created, and that the designations and amounts thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof are as follows:
1. Designation and Ranking. The Corporation shall have authority to
issue One Million Four Hundred Thousand (1,400,000) shares of Series B Preferred
Stock, no par value per share (the "SERIES B PREFERRED Stock"). The Series B
Preferred Stock shall, with respect to rights on liquidation, dissolution or
winding up, rank (i) senior to the Series A Preferred Stock, and (ii) senior to
all other subsequently designated series of Preferred Stock of the Corporation,
and senior to the common stock of the Corporation.
2. Dividend Provisions. The holders of the outstanding shares of Series
B Preferred shall not be entitled to receive any dividends.
3. Liquidation Preferences. In connection with the liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of any equity securities of the Corporation other than shares of the
Series B Preferred Stock unless, prior thereto, the holders of shares of the
Series B Preferred Stock shall have received the Liquidation Preference Amount
specified below. If the Corporation is in the process of liquidating, dissolving
or winding up, immediately upon the Corporation's receipt of 500,000 or more
shares of the common stock of NVIDIA Corporation ("NVIDIA STOCK"), the
Corporation shall distribute to the holders of the Series B Preferred Stock, at
the Corporation's election, either (i) $90.00 cash per share of Series B
Preferred Stock or (ii) one share of NVIDIA Stock per share of Series B
Preferred Stock (the "LIQUIDATION PREFERENCE AMOUNT"). A merger, acquisition,
sale of shares of capital stock having voting power with respect to thirty-five
percent (35%) or more of the Company's outstanding capital stock or sale of
substantially all of the assets of the Corporation shall be deemed to be a
liquidation under this Section 3 and, if upon consummation thereof, the Company
does not at that time hold any shares of NVIDIA Stock then the holders of Series
B Preferred Stock will be entitled to receive the cash amount provided above.
4. Redemption Provisions. The Series B Preferred shall not have the
right, nor be subject to, redemption.
5. Conversion. The Series B Preferred Stock shall not be convertible
into other securities of the Corporation.
6. Voting Rights. The holders of the Series B Preferred Stock shall
have no voting rights, except as otherwise provided by applicable law.
7. Protective Provisions. The consent of a majority (51%) of the Series
B Preferred Stock shall be required for any action which (i) alters or changes
the rights, preferences or privileges of the Series B Preferred Stock, (ii)
increases or decreases the authorized number of shares of Series B Preferred,
(iii) creates (by reclassification or otherwise) a new series of preferred
stock, (iv) results in the issuance of any equity security of the Company, other
than equity securities issuable upon the exercise of options or warrants
outstanding as of the date of this Certificate of Determination and other than
up to 500,000 additional options that may be issued under the Company's stock
option and incentive plans (and any equity securities issuable upon the exercise
of such additional options), (v) results in any merger, sale of shares of
capital stock having voting power with respect to thirty-five percent (35%) or
more of the Company's outstanding capital stock, or any transaction in which all
or substantially all of the assets of the Corporation are sold, (vi) amends or
waives any provision of the Corporation's Restated Articles of Incorporation or
Bylaws that affect the rights or privileges of the Series B Preferred
shareholders or which create a new investor level with priority over the Series
B Preferred shareholders or (vii) results in the Company's incurrence of any
additional indebtedness for borrowed money. The Company shall not, by amendment
of its Restated Articles of Incorporation or through any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Certificate of Determination, but shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders as
provided for herein and shall not attempt to do indirectly what it cannot do
directly under the terms hereof.
8. Restriction on Redemption and Cash Dividends with respect to Other
Capital Stock. Until the Liquidation Preference is fully satisfied, the Company
shall not, directly or indirectly, declare or pay any cash dividend or
distribution on its common stock or on any other security or redeem any such
securities issued by the Company without the prior express written consent of
the holders of not less than a majority (51%) of the then outstanding Series B
Preferred Shares.
9. Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Stock Certificate(s) representing the Series B Preferred Shares, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Stock Certificate(s), the Company shall execute and deliver
new Stock Certificate(s) of like tenor and date (without requiring holder to
post an indemnity bond).
Each of the undersigned declares under penalty of perjury and
under the laws of the State of California that the above resolution was duly
adopted by the Board of Directors of the Corporation pursuant to Section 401 of
the California General Corporation Law and that the matters set forth in this
Certificate are true and correct to my own knowledge.
The undersigned have executed and subscribed this certificate
this ____ day of ____________, 2002 at Palo Alto, California.
------------------------------------------------
Xxxxxxx X. Xxxxxxxxx, President, Chief Executive
Officer and Chief Financial Officer
