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EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
3DFX INTERACTIVE, INC.,
VOODOO MERGER SUB, INC.
AND
STB SYSTEMS, INC.
DATED AS OF DECEMBER 13, 1998
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER........................................................................1
1.1 The Merger........................................................................1
1.2 Effective Time of the Merger......................................................2
1.3 Closing...........................................................................2
1.4 Effect of the Merger..............................................................2
1.5 Articles of Incorporation and Bylaws of Surviving Corporation.....................2
1.6 Directors and Officers............................................................2
1.7 Tax-Free Reorganization; Accounting...............................................2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES................................3
2.1 Effect on Capital Stock...........................................................3
2.2 Exchange of Certificates..........................................................4
2.3 Taking of Necessary Action; Further Action........................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF STB.............................................6
3.1 Organization and Qualification; Subsidiaries......................................6
3.2 Articles of Incorporation and Bylaws..............................................7
3.3 Capitalization....................................................................7
3.4 Authority Relative to this Agreement..............................................7
3.5 No Conflict; Required Filings and Consents........................................8
3.6 Compliance; Permits...............................................................8
3.7 SEC Filings; Financial Statements.................................................9
3.8 Absence of Certain Changes or Events..............................................9
3.9 No Undisclosed Liabilities.......................................................10
3.10 Absence of Litigation............................................................10
3.11 Employee Matters and Benefit Plans...............................................10
3.12 Labor Matters....................................................................13
3.13 Registration Statement; Proxy Statement..........................................13
3.14 Restrictions on Business Activities..............................................14
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3.15 Title to Property................................................................14
3.16 Taxes............................................................................14
3.17 Environmental Matters............................................................15
3.18 Brokers..........................................................................16
3.19 Intellectual Property............................................................16
3.20 Change of Control Payments.......................................................16
3.21 Insurance........................................................................16
3.22 Opinion of Financial Advisor.....................................................17
3.23 Board Approval...................................................................17
3.24 Vote Required....................................................................17
3.25 Year 2000 Compliance.............................................................17
3.26 Texas Business Combination Law Not Applicable....................................17
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF 3DFX AND SUB...................................17
4.1 Organization and Qualification; Subsidiaries.....................................17
4.2 Articles of Incorporation and Bylaws.............................................18
4.3 Capitalization...................................................................18
4.4 Authority Relative to this Agreement.............................................19
4.5 No Conflict; Required Filings and Consents.......................................19
4.6 Compliance; Permits..............................................................20
4.7 SEC Filings; Financial Statements................................................20
4.8 Absence of Certain Changes or Events.............................................21
4.9 No Undisclosed Liabilities.......................................................21
4.10 Absence of Litigation............................................................21
4.11 Employee Matters and Benefit Plans...............................................22
4.12 Labor Matters....................................................................24
4.13 Registration Statement; Proxy Statement..........................................25
4.14 Restrictions on Business Activities..............................................25
4.15 Title to Property................................................................25
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4.16 Taxes............................................................................25
4.17 Environmental Matters............................................................26
4.18 Brokers..........................................................................26
4.19 Intellectual Property............................................................27
4.20 Insurance........................................................................27
4.21 Opinion of Financial Advisor.....................................................27
4.22 Board Approval...................................................................27
4.23 Vote Required....................................................................27
4.24 Interim Operations of Sub........................................................28
4.25 Year 2000 Compliance.............................................................28
4.26 Change of Control Payments.......................................................28
ARTICLE 5 CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS............................................................28
5.1 Information and Access...........................................................28
5.2 Conduct of Business of the Companies.............................................28
5.3 Negotiation With Others..........................................................30
5.4 Preparation of S-4 and the Proxy Statement; Other Filings........................32
5.5 Advice of Changes; SEC Filings...................................................32
5.6 Letter of STB's Independent Auditors.............................................32
5.7 Letter of 3Dfx's Independent Auditors............................................32
5.8 Shareholders Meetings............................................................33
5.9 Agreements to Take Reasonable Action.............................................33
5.10 Consents.........................................................................34
5.11 Nasdaq Additional Shares Listing.................................................34
5.12 Public Announcements.............................................................34
5.13 Affiliates.......................................................................34
5.14 STB Options......................................................................35
5.15 STB Employee Stock Purchase Plan.................................................36
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5.16 Indemnification and Insurance....................................................36
5.17 Notification of Certain Matters..................................................36
5.18 Tax-Free Reorganization..........................................................37
5.19 STB 401(k) Plan..................................................................37
5.20 Amended Employment Agreements....................................................37
ARTICLE 6 CONDITIONS PRECEDENT.............................................................37
6.1 Conditions to Each Party's Obligation to Effect the Merger.......................37
6.2 Conditions of Obligations of 3Dfx and Sub........................................38
6.3 Conditions of Obligation of STB..................................................39
ARTICLE 7 TERMINATION......................................................................40
7.1 Termination......................................................................40
7.2 Effect of Termination............................................................41
7.3 Fees and Expenses................................................................41
ARTICLE 8 GENERAL PROVISIONS...............................................................42
8.1 Amendment........................................................................42
8.2 Extension; Waiver................................................................42
8.3 Nonsurvival of Representations, Warranties and Agreements........................42
8.4 Entire Agreement.................................................................42
8.5 Severability.....................................................................42
8.6 Notices..........................................................................42
8.7 Headings.........................................................................43
8.8 Counterparts.....................................................................44
8.9 Benefits; Assignment.............................................................44
8.10 Governing Law....................................................................44
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EXHIBITS
A Form of STB Option Agreement
B Form of STB Voting Agreement
C Form of 3Dfx Voting Agreement
D Form of Articles of Merger
E STB Affiliates
F Form of STB Affiliate Agreement
G 3Dfx Board of Directors
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is dated as of
December 13, 1998, among 3DFX INTERACTIVE, INC., a California corporation
("3DFX"), VOODOO MERGER SUB, INC., a Texas corporation and wholly-owned
subsidiary of 3Dfx ("SUB"), and STB SYSTEMS, INC., a Texas corporation ("STB").
3Dfx and STB are sometimes referred to individually as a "COMPANY" and
collectively as the "COMPANIES."
RECITALS:
A. The Boards of Directors of STB, 3Dfx and Sub have each approved the
terms and conditions of the business combination between 3Dfx and STB to be
effected by the merger (the "MERGER") of Sub with and into STB, pursuant to the
terms and subject to the conditions of this Agreement and the Texas Business
Corporation Act (the "TEXAS STATUTE").
B. Concurrently with the execution of this Agreement, and as a condition
and inducement to 3Dfx's willingness to enter into this Agreement, 3Dfx and STB
are entering into a STB Stock Option Agreement in the form attached as Exhibit A
(the "STB OPTION AGREEMENT"), pursuant to which STB is granting to 3Dfx an
option to purchase shares of Common Stock of STB upon the occurrence of certain
conditions.
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to 3Dfx's and STB's willingness to enter into this Agreement,
certain affiliates of STB and 3Dfx are entering into Voting Agreements in
substantially the forms attached hereto as Exhibit B, (the "STB VOTING
AGREEMENT") and Exhibit C (the "3DFX VOTING AGREEMENT"), respectively.
D. The Boards of Directors of STB and 3Dfx have each approved the STB
Option Agreement.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth in this Agreement, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement and in accordance with the Texas Statute, Sub shall be merged with and
into STB. STB and Sub shall execute Articles of Merger, in substantially the
form attached as Exhibit D (the "ARTICLES OF MERGER") immediately prior to the
Closing. Following the Merger, STB shall continue as the surviving corporation
(the "SURVIVING
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CORPORATION") and the separate corporate existence of Sub shall cease. Sub and
STB are collectively referred to as the "CONSTITUENT CORPORATIONS."
1.2 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement and the Articles of Merger, the Articles of Merger, together with any
required certificates, shall be duly filed in accordance with the Texas Statute
simultaneously with or as soon as practicable following the Closing (as defined
in Section 1.3 below). The Merger shall become effective (the "EFFECTIVE TIME")
upon the filing of the Articles of Merger (together with any required
certificates) with the Secretary of State of the State of Texas.
1.3 CLOSING. Unless this Agreement shall have been terminated pursuant to
Section 7.1, the closing of the Merger (the "CLOSING") will take place at 10:00
a.m. on a date (the "CLOSING DATE") to be mutually agreed upon by the parties,
which date shall be no later than the third Business Day (as defined below)
after all of the conditions set forth in Article 6 shall have been satisfied (or
waived in accordance with Section 8.2), unless another date is agreed to in
writing by the parties. The Closing shall take place at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx,
00000-0000, unless another place is agreed to in writing by the parties. As used
in this Agreement, "BUSINESS DAY" shall mean any day, other than a Saturday,
Sunday or legal holiday on which banks are permitted to close in the City and
State of New York.
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the
Texas Statute. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of STB and Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of STB and Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.5 ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION. At the
Effective Time, (i) the Articles of Incorporation of Sub, as in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until thereafter altered, amended or repealed as
provided in the Texas Statute and such Articles of Incorporation of Surviving
Corporation provided that at the Effective Time the Articles of Incorporation of
the Surviving Corporation shall be amended so that the name of the Surviving
Corporation shall be "STB Systems, Inc." and (ii) the Bylaws of Sub shall become
the Bylaws of the Surviving Corporation until thereafter altered, amended or
repealed as provided in the Texas Statute or in the Articles of Incorporation or
Bylaws of the Surviving Corporation.
1.6 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the director's of Sub immediately prior to the Effective
Time, until their respective successors are duly elected or appointed and
qualified. The initial officers of the Surviving Corporation shall be the
officers of Sub immediately prior to the Effective Time, until their respective
successors are duly appointed.
1.7 TAX-FREE REORGANIZATION; ACCOUNTING. The parties intend that the Merger
be treated as a tax free reorganization under Section 368(a) of the Code, and to
be accounted for as a purchase for accounting purposes.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, subject and pursuant to
the terms of this Agreement, by virtue of the Merger and without any action on
the part of the Constituent Corporations or the holders of any shares of capital
stock of the Constituent Corporations:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of the
common stock, $.001 par value, of Sub shall be converted into one validly
issued, fully paid and nonassessable share of common stock, $.001 par value, of
the Surviving Corporation. Each stock certificate of Sub evidencing ownership of
any such shares shall continue to evidence ownership of such shares of common
stock of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN SHARES OF STB COMMON STOCK. Each share of
STB Common Stock (as defined in Section 2.1(c)) that is owned by STB as treasury
stock and each share of STB Common Stock that is owned by 3Dfx, Sub or any other
subsidiary of 3Dfx or STB shall be canceled and no capital stock of 3Dfx or
other consideration shall be delivered in exchange therefor.
(c) EXCHANGE RATIO FOR STB COMMON STOCK. Each share of common stock,
$.01 par value, of STB ("STB COMMON STOCK") issued and outstanding immediately
prior to the Effective Time (other than shares canceled pursuant to Section
2.1(b)), will be canceled and extinguished and automatically converted (subject
to Sections 2.1(e) and (f)) into the right to receive .65 (the "EXCHANGE RATIO")
share of common stock, no par value, of 3Dfx ("3DFX COMMON STOCK") upon
surrender of the certificate representing such share of STB Common Stock in the
manner provided in Section 2.2 (or in the case of a lost, stolen, or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 2.2(g)).
(d) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN. At the Effective
Time: (x) all options to purchase STB Common Stock then outstanding under STB's
1995 Amended and Restated Long Term Incentive Plan (the "OPTION PLAN") and STB's
Amended and Restated Stock Option Plan for Non-Employee Directors (the "DIRECTOR
PLAN" and together with the Option Plan, the "STB STOCK OPTION PLANS") shall be
treated as set forth in Section 5.14; and (y) rights outstanding under STB's
1996 Employee Stock Option Purchase Plan (the "STB ESPP") shall be treated as
set forth in Section 5.15.
(e) WARRANTS. At the Effective Time, that certain warrant to purchase
up to an aggregate of 420,000 shares of Common Stock of STB (the "STB WARRANT"),
shall be assumed by 3Dfx in accordance with the terms hereof. In this regard,
STB agrees to provide the holder of the STB Warrant with any and all notices
required as a result of the Merger and the transactions contemplated thereby.
(f) ADJUSTMENT OF EXCHANGE RATIO. If between the date of this
Agreement and the Effective Time, the outstanding shares of 3Dfx Common Stock or
STB Common Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, split-up,
stock dividend, stock combination, exchange of shares, readjustment or
otherwise,
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then the Exchange Ratio shall be correspondingly adjusted; provided, however,
that any such changes shall be subject to Section 5.2 below.
(g) NO ISSUANCE OF FRACTIONAL SHARES. No certificates or scrip for
fractional shares of 3Dfx Common Stock shall be issued, but in lieu thereof each
holder of shares of STB Common Stock who would otherwise be entitled to receive
certificates or scrip for a fraction of a share of 3Dfx Common Stock shall
receive from 3Dfx, at such time as such holder shall receive a certificate
representing shares of 3Dfx Common Stock, an amount of cash equal to the per
share market value of 3Dfx Common Stock determined by multiplying (i) the
closing price of one share of 3Dfx Common Stock as reported on the NASDAQ
National Market ("NASDAQ") on the last full trading day prior to the Effective
Time by (ii) the fraction of a share of 3Dfx Common Stock to which such holder
would otherwise be entitled. The fractional share interests of each shareholder
of STB shall be aggregated, so that no STB shareholder shall receive cash in an
amount equal to or greater than the value of one full share of 3Dfx Common
Stock.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, 3Dfx shall select a
bank or trust company to act as exchange agent (the "EXCHANGE AGENT") in the
Merger. Immediately following the Effective Time, 3Dfx shall deposit with the
Exchange Agent, for the benefit of the holders of shares of STB Common Stock,
for exchange in accordance with this Article 2, certificates representing the
shares of 3Dfx Common Stock (such shares of 3Dfx Common Stock, together with any
dividends or distributions with respect thereto, are referred to as the
"EXCHANGE FUND") issuable pursuant to this Article 2 in exchange for outstanding
shares of STB Common Stock, and cash in an amount sufficient for payment in lieu
of fractional shares pursuant to Section 2.2(e).
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record (other than STB,
any subsidiary of STB, Sub, 3Dfx and any other subsidiary of 3Dfx) (including
holders of record pursuant to purchases made under the STB Purchase Plan (as
defined in Section 3.3) immediately prior to the Effective Time pursuant to
Section 5.15) of a certificate or certificates which immediately prior to the
Effective Time represented issued and outstanding shares of STB Common Stock
(collectively, the "CERTIFICATES") whose shares are being converted into 3Dfx
Common Stock pursuant to Section 2.1(c) of this Agreement, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as 3Dfx and STB may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing 3Dfx Common Stock. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with a duly executed letter of transmittal and
such other documents as may be reasonably required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of 3Dfx Common Stock which
such holder has the right to receive pursuant to the provisions of this Article
2 and the Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of shares of STB Common Stock which is not registered
on the transfer records of STB, a certificate representing the proper number of
shares of 3Dfx Common Stock may be issued to a transferee if the Certificate
representing such STB Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as
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contemplated by this Section 2.2, each Certificate shall be deemed, on and after
the Effective Time, to represent only the right to receive upon such surrender
the certificate representing shares of 3Dfx Common Stock and cash in lieu of any
fractional shares of 3Dfx Common Stock as contemplated by this Article 2, and
the Texas Statute.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to 3Dfx Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of 3Dfx Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.1(f)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect, if any, of applicable laws, following surrender of any
such Certificate, there shall be paid to the record holder of the certificates
representing whole shares of 3Dfx Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of 3Dfx Common Stock to which such holder
is entitled pursuant to Section 2.1(f) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of 3Dfx Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of 3Dfx Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN STB COMMON STOCK. All shares of
3Dfx Common Stock issued upon the surrender for exchange of shares of STB Common
Stock in accordance with the terms of this Article 2 (including any cash paid
pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of STB Common Stock.
There shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of STB Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 2.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the shareholders of STB for twelve months after
the Effective Time shall be delivered to 3Dfx, upon demand, and any former
shareholders of STB who have not previously complied with this Article 2 shall
thereafter look only to 3Dfx for payment of their claim for 3Dfx Common Stock,
any cash in lieu of fractional shares of 3Dfx Common Stock and any dividends or
distributions with respect to 3Dfx Common Stock.
(f) NO LIABILITY. Neither the Exchange Agent, 3Dfx, Sub nor STB shall
be liable to any holder of shares of STB Common Stock or 3Dfx Common Stock, as
the case may be, for shares (or dividends or distributions with respect thereto)
from the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates evidencing shares of STB Common Stock shall have been lost, stolen
or destroyed, the holder of such lost, stolen or destroyed Certificate(s) shall
execute an affidavit of that fact upon request. The holder of any such lost,
stolen or destroyed Certificate(s) shall also deliver a bond in such sum as 3Dfx
may reasonably require as indemnity against any claim that may be made against
3Dfx or the Exchange Agent with respect to the Certificate(s)
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alleged to have been lost, stolen or destroyed. The affidavit and any bond which
may be required hereunder shall be delivered to the Exchange Agent, who shall be
responsible for making payment for such lost, stolen or destroyed
Certificate(s).
2.3 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of STB and Sub, the officers and directors of STB and Sub are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF STB
STB represents and warrants to 3Dfx and Sub, except as set forth in the STB
SEC Reports (as defined in Section 3.7), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (i) Each of STB and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
STB and its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("APPROVALS") necessary to own, lease and operate the properties it
purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below). Each of STB and its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect. When used in connection with STB or any of its
subsidiaries, the term "MATERIAL ADVERSE EFFECT" means any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), liabilities, financial condition or results of operations of STB and
its subsidiaries taken as a whole; provided, however, that a "Material Adverse
Effect" shall not include any (i) adverse effect on the results of operations or
financial condition of STB that is attributable to the transactions or resulting
business enterprise contemplated by this Agreement, including, without
limitation, delay of, reduction in, or cancellation or change in the terms of
product orders by customers of STB or an increase in the price of, a delay of,
reduction in or cancellation of or change in terms with respect to products or
components supplied by, or any deterioration in or termination of a relationship
by, vendors of STB, (ii) change arising out of conditions in or affecting the
industries in which the parties to this Agreement compete or (iii) decline in
STB's stock price. Other than wholly-owned subsidiaries and except as permitted
after the date of this Agreement under Section 5.2 of this Agreement and except
with respect to investments of less than a twenty percent (20%) interest in any
corporation, partnership, joint venture or other business, association or
entity, STB does not directly or indirectly own any equity or similar interest
in, or any interest convertible or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
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3.2 ARTICLES OF INCORPORATION AND BYLAWS. STB has previously furnished to
3Dfx a complete and correct copy of its Articles of Incorporation and Bylaws as
amended to date. Such Articles of Incorporation, Bylaws and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Neither STB nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
3.3 CAPITALIZATION. The authorized capital stock of STB consists of
25,000,000 shares of STB Common Stock and 2,000,000 shares of Preferred Stock
("STB PREFERRED STOCK"), each having a par value of $.01 per share. At the close
of business on December 11, 1998, (i) approximately 12,605,887 shares of STB
Common Stock were issued and outstanding all of which are validly issued, fully
paid and nonassessable, (ii) 696,800 shares of STB Common Stock were held in
treasury by STB or by subsidiaries of STB, (iii) approximately 422,088 shares of
STB Common Stock were available for future issuance pursuant to STB's 1995
Employee Stock Option Purchase Plan (the "STB PURCHASE PLAN"), (iv)
approximately 2,084,529 shares and approximately 71,250 shares of STB Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase STB Common Stock under the Option Plan and the Director Plan,
respectively, (v) approximately 330,396 shares and approximately 153,750 shares
of STB Common Stock were available for future grant under the Option Plan and
the Director Plan, respectively, (vii) 1,890,883 shares of STB Common Stock were
reserved for future issuance pursuant to the STB Option Agreement, and (viii)
420,000 shares were reserved for issuance upon exercise of the STB Warrant. As
of the date hereof, no shares of STB Preferred Stock were issued or outstanding.
No change in such capitalization has occurred between December 31, 1998 and the
date hereof except (A) the issuance of shares of STB Common Stock pursuant to
the exercise of outstanding options, (B) shares issued under the STB Purchase
Plan, and (C) the issuance of options as permitted under Section 5.2(c) hereof
(and exercise of such options). As of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of STB or any of
its subsidiaries or obligating STB or any of its subsidiaries to issue or sell
any shares of capital stock of, or other equity interests in, STB or any of its
subsidiaries. All shares of STB Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable. Other than with respect to such actions as are permitted
under Section 5.2, there are no obligations, contingent or otherwise, of STB or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
STB Common Stock or the capital stock of any subsidiary or to provide funds to
or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees of
obligations of subsidiaries entered into in the ordinary course of business. All
of the outstanding shares of capital stock (other than directors' qualifying
shares) of each of STB's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and all such shares (other than directors' qualifying
shares) are owned by STB or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in STB's voting
rights, charges or other encumbrances of any nature whatsoever.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. STB has all necessary corporate
power and authority to execute and deliver this Agreement and the STB Option
Agreement and to perform its obligations hereunder and thereunder and, subject
to obtaining the approval of the shareholders of STB of the Merger, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the STB Option Agreement by STB and the
consummation by STB of the transactions
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contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of STB and no other corporate proceedings
on the part of STB are necessary to authorize this Agreement, the STB Option
Agreement or to consummate the transactions so contemplated (other than, with
respect to the Merger, the approval and adoption of this Agreement by holders of
a majority of the outstanding shares of STB Common Stock in accordance with the
Texas Statute and STB's Articles of Incorporation and Bylaws). This Agreement
and the STB Option Agreement have been duly and validly executed and delivered
by STB and, assuming the due authorization, execution and delivery by 3Dfx and
Sub, constitute legal and binding obligations of STB, enforceable against STB in
accordance with their respective terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors rights generally and (ii) the availability of injunctive relief and
other equitable remedies.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the STB Option
Agreement by STB do not, and the performance of this Agreement and the STB
Option Agreement by STB shall not, (i) conflict with or violate the Articles of
Incorporation or Bylaws or equivalent organizational documents of STB or any of
its subsidiaries, (ii) subject to obtaining the approval of STB's shareholders
of the Merger and compliance with the requirements set forth in Section 3.5(b)
below, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to STB or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair STB's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of STB or
any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which STB or any of its subsidiaries is a party or
by which STB or any of its subsidiaries or its or any of their respective
properties are bound or affected, except for any such breaches, defaults or
other occurrences that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(b) The execution and delivery of this Agreement and the STB Option
Agreement by STB do not, and the performance of this Agreement by STB shall not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any court, administrative agency, commission, governmental or
regulatory authority, domestic or foreign (a "GOVERNMENTAL ENTITY"), except (A)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS"), the pre-merger
notification requirements (the "HSR APPROVAL") of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and of foreign
Governmental Entities and the rules and regulations thereunder, the rules and
regulations of Nasdaq and the filing and recordation of the Articles of Merger
as required by the Texas Statute and (B) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, (i) would not prevent consummation of the Merger or otherwise
prevent STB from performing its obligations under this Agreement or (ii) could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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3.6 COMPLIANCE; PERMITS.
(a) Neither STB nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to STB or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which STB or any of its subsidiaries is a
party or by which STB or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any conflicts, defaults
or violations which could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. To the best knowledge of STB, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened against STB or its subsidiaries, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same,
other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) STB and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to operation of the business of STB and its subsidiaries taken as a
whole (collectively, the "STB PERMITS"). STB and its subsidiaries are in
compliance with the terms of the STB Permits, except where the failure to so
comply could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) STB has made available to 3Dfx a correct and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
STB with the Securities and Exchange Commission ("SEC") on or after January 1,
1997 and prior to the date of this Agreement (the "STB SEC REPORTS"), which are
all the forms, reports and documents required to be filed by STB with the SEC
since January 1, 1997. The STB SEC Reports (A) were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (B) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of STB's subsidiaries is required to file any reports or other
documents with the SEC.
(b) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the STB SEC Reports was prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents the consolidated financial
position of STB and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
adjustments which were not or are not expected to be material in amount.
(c) STB has previously furnished to 3Dfx a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by STB with the SEC pursuant to the
Securities Act or the Exchange Act.
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3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since July 31, 1998, STB and its
subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date, there has not been
(i) any Material Adverse Effect (provided, however, that for the purposes of
this Section 3.8, "Material Adverse Effect" shall not include any Material
Adverse Effect arising out of financial results of STB for the quarter ended
October 31, 1998) or (ii) any material change by STB in its accounting methods,
principles or practices except as required by concurrent changes in GAAP.
3.9 NO UNDISCLOSED LIABILITIES. Neither STB nor any of its subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of STB and its subsidiaries taken as a whole,
except liabilities (i) provided for in STB's balance sheet or in the related
notes as of July 31, 1998, or (ii) incurred since July 31, 1998 in the ordinary
course of business, none of which are material to the business, results of
operations or financial condition of STB and its subsidiaries, taken as a whole.
3.10 ABSENCE OF LITIGATION. Except for that certain class action
shareholder litigation instituted on October 9, 1998 (Xxxx Xxxxx, et al. v. STB
Systems, Inc., et al.) and as set forth in Section 3.19, there are no claims,
actions, suits or proceedings pending or, to the best knowledge of STB,
threatened (or, to the best knowledge of STB, any investigation pending or
threatened) against STB or any of its subsidiaries, or any properties or rights
of STB or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
3.11 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definitions of "Affiliate"
and "International Employee Plan" set forth in Section 3.11(a)(i) and (iii)
below (such definitions shall only apply to this Section 3.11), for purposes of
this Agreement, the following terms shall have the meanings set forth below:
(i) "AFFILIATE," as used in this Section 3.11, shall mean any
other person or entity under common control with STB within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(iii) "INTERNATIONAL EMPLOYEE PLAN" shall mean each STB Employee
Plan that has been adopted or maintained by STB, whether informally or formally,
for the benefit of STB Employees outside the United States;
(iv) "STB EMPLOYEE PLAN" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether formal or informal, funded or unfunded, including without
limitation, each "employee benefit plan," within the meaning of Section 3(3) of
ERISA, which is or has been
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maintained, contributed to, or required to be contributed to, by STB or any
Affiliate for the benefit of any "STB Employee" (as defined below), and pursuant
to which STB or any Affiliate has or may have any material liability contingent
or otherwise;
(v) "STB EMPLOYEE" shall mean any current, former or retired
employee, officer, or director of STB or any Affiliate;
(vi) "STB EMPLOYEE AGREEMENT" shall refer to each management,
employment, severance, consulting, relocation, repatriation, expatriation, visa,
work permit or similar agreement or contract between STB or any Affiliate and
any STB Employee or consultant;
(vii) "IRS" shall mean the Internal Revenue Service;
(viii) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA; and
(ix) "STB PENSION PLAN" shall refer to each STB Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) SCHEDULE. STB does not have any plan or commitment to establish
any new STB Employee Plan or STB Employee Agreement, to modify any STB Employee
Plan or STB Employee Agreement (except to the extent required by law or to
conform any such STB Employee Plan or STB Employee Agreement to the requirements
of any applicable law, in each case as previously disclosed to 3Dfx in writing,
or as required by this Agreement), or to enter into any STB Employee Plan or STB
Employee Agreement, nor does it have any intention or commitment to do any of
the foregoing.
(c) DOCUMENTS. STB has provided to 3Dfx (i) correct and complete
copies of all documents embodying or relating to each STB Employee Plan and each
STB Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each STB Employee Plan; (iii) the three most recent annual
reports (Series 5500 ad all schedules thereto), if any, required under ERISA or
the Code in connection with each STB Employee Plan or related trust; (iv) if STB
Employee Plan is funded, the most recent annual and period accounting of STB
Employee Plan assets; (v) the most recent summary plan description together with
the most recent summary of material modifications, if any, required under ERISA
with respect to each STB Employee Plan; (vi) all IRS determination letters and
rulings relating to STB Employee Plans and copies of all applications and
correspondence to or from the IRS or the Department of Labor ("DOL") with
respect to any STB Employee Plan; (vii) all communications material to any STB
Employee or STB Employees relating to any STB Employee Plan and any proposed STB
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to STB; and (viii) all registration statements and prospectuses prepared in
connection with each STB Employee Plan.
(d) STB EMPLOYEE PLAN COMPLIANCE. (i) STB has performed in all
material respects all obligations required to be performed by it under each STB
Employee Plan and each STB Employee Plan has been established and maintained in
all material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code;
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(ii) to STB's knowledge no "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with respect to
any STB Employee Plan; (iii) there are no actions, suits or claims pending, or,
to the knowledge of STB, threatened or anticipated (other than routine claims
for benefits) against any STB Employee Plan or against the assets of any STB
Employee Plan; (iv) each STB Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability to STB, the Surviving Corporation, 3Dfx or any Affiliates
(other than ordinary administration expenses typically incurred in a termination
event); (v) there are no inquiries or proceedings pending or, to the knowledge
of STB or any Affiliates, threatened by the IRS or DOL with respect to any STB
Employee Plan; and (vi) neither STB nor any Affiliate is subject to any penalty
or tax with respect to any STB Employee Plan under Section 402(i) of ERISA or
Section 4975 through 4980 of the Code.
(e) STB PENSION PLANS. STB does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any STB Pension Plan
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code.
(f) MULTIEMPLOYER PLANS. At no time has STB contributed to or been
requested to contribute to any Multiemployer Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. No STB Employee Plan provides, or
has any liability to provide, life insurance, medical or other medical benefits
to any STB Employee upon his or her retirement or termination of employment for
any reason, except as may be required by statute, and STB has never represented,
promised or contracted (whether in oral or written form) to any STB Employee
(either individually or to STB Employees as a group) that such STB Employee(s)
would be provided with life insurance, medical or other employee welfare
benefits upon their retirement or termination of employment, except to the
extent required by statute.
(h) EFFECT OF TRANSACTION.
(i) Except as provided in Section 2.1 of this Agreement, the
execution of this agreement and the consummation of the transactions
contemplated hereby will not (either along or upon the occurrence of any
additional or subsequent events) constitute an event under any STB Employee Plan
(except the Option Plan, the Director Plan and any stock option agreements
entered into thereunder), STB Employee Agreement, trust or loan that will or may
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligations to fund benefits with respect to any STB Employee.
(ii) No payment or benefit which will or may be made by STB or
3Dfx or any of their respective Affiliates with respect to any STB Employee will
be characterized as an "excess parachute payment," within the meaning of Section
280G(b)(1) of the Code.
(i) EMPLOYMENT MATTERS. STB and each of its subsidiaries (i) is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
in each location in which STB or any of its subsidiaries employs persons; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to STB
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Employees; (iii) is not liable for any material arrears of wages or any material
taxes or any material penalty for failure to comply with any of the foregoing;
and (iv) is not liable for any material payment to any trust or other fund or to
any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for STB
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice).
(j) VIOLATIONS. To STB's knowledge and reasonable belief, no employee
of STB has violated any employment contract, patent disclosure agreement or
non-competition agreement between such employee and any former employer of such
employee due to such employee being employed by STB and disclosing to STB trade
secrets or proprietary information of such employer. STB and its subsidiaries
are in compliance in all material respects with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, ERISA, WARN or any similar state or local law).
(k) INTERNATIONAL EMPLOYEE PLAN. Each International Employee Plan has
been established, maintained and administered in material compliance with its
terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent STB or 3Dfx
from terminating or amending any International Employee Plan at any time for any
reason.
3.12 LABOR MATTERS. (i) There are no controversies pending or, to the best
knowledge of each of STB and its respective subsidiaries, threatened, between
STB or any of its subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a Material Adverse
Effect; (ii) as of the date of this Agreement, neither STB nor any of
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by STB or its subsidiaries nor
does STB or its subsidiaries know of any activities or proceedings of any labor
union to organize any such employees (A) as of the date of this Agreement and
(B) which, as of the Closing Date, have or could reasonably be expected to have
a Material Adverse Effect on STB and its subsidiaries; and (iii) as of the date
of this Agreement, neither STB nor any of its subsidiaries has any knowledge of
any strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or
with respect to any employees of STB or any of its subsidiaries (X) as of the
date of this Agreement and (Y) which, as of the Closing Date, have or could
reasonably be expected to have a Material Adverse Effect on STB and its
subsidiaries.
3.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by STB for inclusion or incorporation by reference in
(i) the registration statement on Form S-4 to be filed with the SEC by 3Dfx in
connection with the issuance of the 3Dfx Common Stock in or as a result of the
Merger (the "S-4") will, at the time the S-4 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 light of the circumstances under which they are made,
not misleading; and (ii) the Proxy Statement (the "PROXY STATEMENT") to be filed
with the SEC by 3Dfx and STB pursuant to Section 5.4 hereof will, at the dates
mailed to the shareholders of 3Dfx and STB, at the times of the shareholders
meetings of 3Dfx and STB (each a "SHAREHOLDERS MEETING" and collectively, the
"SHAREHOLDERS MEETINGS") in connection with the transactions contemplated hereby
and as of the Effective
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Time, 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 light of the circumstances under which they are made, not
misleading. The 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.
3.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as may be permitted
under Section 5.9, there is no material agreement, judgment, injunction, order
or decree binding upon STB or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of STB or any of its subsidiaries, any acquisition of
property by STB or any of its subsidiaries or the conduct of business by STB or
any of its subsidiaries as currently conducted.
3.15 TITLE TO PROPERTY. STB owns no material real property. STB and each of
its subsidiaries have good and defensible title to all of their material
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; and all leases pursuant to which STB or any of its
subsidiaries lease from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing material default or
event of default (or any event which with notice or lapse of time, or both,
would constitute a material default and in respect of which STB or subsidiary
has not taken adequate steps to prevent such default from occurring) except
where the lack of such good standing, validity and effectiveness or the
existence of such default or event of default could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. All the
plants, structures and equipment of STB and its subsidiaries, except such as may
be under construction, are in good operating condition and repair, except where
the failure of such plants, structures and equipment to be in such good
operating condition and repair could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.16 TAXES. STB and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined below) purposes of
which STB or any of its subsidiaries is or has been a member, have timely filed
all Tax Returns required to be filed by them and have paid all Taxes shown
thereon to be due. STB has provided adequate accruals in accordance with
generally accepted accounting principles in its financial statements for any
Taxes that have not been paid, whether or not shown as being due on any Tax
Returns. There is (i) no material claim for Taxes that is a lien against the
property of STB or any of its subsidiaries or is being asserted against STB or
any of its subsidiaries other than liens for Taxes not yet due and payable, (ii)
no audit of any Tax Return of STB or any of its subsidiaries being conducted by
a Tax authority, (iii) no extension of the statute of limitations on the
assessment of any Taxes granted by STB or any of its subsidiaries and currently
in effect, and (iv) no agreement, contract or arrangement to which STB or any of
its subsidiaries is a party that may result in the payment of any amount that
would not be deductible by reason of Sections 162(m), 280G or 404 of the Code.
STB has not been and will not be required to include any material adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions, events or accounting methods employed prior to the
Merger. Neither STB nor any of its subsidiaries has ever been a member of any
combined, controlled, consolidated or affiliated group (other than the group of
which STB is the parent) for Tax purposes. Neither STB nor any of its
subsidiaries is a
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party to any tax sharing or tax allocation agreement nor does STB or any of its
subsidiaries owe any amount under any such agreement. Neither STB nor any of its
subsidiaries has been at any time, a "United States real property holding
corporation" with the meaning of Section 897(c)(2) of the Code. For purposes of
this Agreement, the following terms have the following meanings: "TAX" (and,
with correlative meaning, "TAXES" and "TAXABLE") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "TAX AUTHORITY") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person. As used herein, "TAX RETURN" shall mean any return, statement, report or
form (including, without limitation,) estimated Tax Returns and reports,
withholding Tax Returns and reports and information reports and Returns required
to be filed with respect to Taxes.
3.17 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would result in any material
liability to STB under Environmental Laws (as defined below), no underground
storage tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable Environmental Laws to be radioactive,
toxic, hazardous or otherwise a danger to health or the environment, including,
without limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to
Environmental Laws, but excluding office and janitorial supplies maintained in
accordance with Environmental Laws (a "HAZARDOUS MATERIAL") are present, as a
result of the actions of STB or any of its subsidiaries or any affiliate of STB,
or, to STB's knowledge, as a result of any action of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that STB or any of its
subsidiaries has at any time owned, operated, occupied or leased. For the
purposes of this Agreement, "ENVIRONMENTAL LAWS" shall mean all federal, state,
local and foreign laws, ordinances, treaties, rules, regulations, guidelines and
permit conditions relating to contamination, pollution or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata) or the protection of human health and worker safety, including, without
limitation, laws and regulations relating to Hazardous Materials Activities (as
hereinafter defined) or emissions, discharges, releases or threatened releases
of Hazardous Materials.
(b) HAZARDOUS MATERIALS ACTIVITIES. Neither STB nor any of its
subsidiaries has (i) transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of Environmental Laws, or (ii) disposed of, transported, sold, used, released,
exposed its employees or others to or manufactured any product contained a
Hazardous Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation
of any Environmental Laws in effect prior to or as of the date hereof except for
which violation has not heretofore been cured or for which there is any
remaining liability.
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(c) PERMITS. STB and its subsidiaries hold all environmental
approvals, permits, licenses, clearances and consents (the "STB ENVIRONMENTAL
PERMITS") necessary for the conduct of STB's and its subsidiaries' Hazardous
Material Activities and other businesses of STB and its subsidiaries as such
activities and businesses are currently being conducted. STB and its
subsidiaries are and at all times have been in compliance in all material
respects with the terms of the STB Environmental Permits except for which
noncompliance has heretofore been cured or for which there is any remaining
liability.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ, claim or injunction is pending, and to
STB's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ, claim or injunction has been threatened by any Governmental
Entity against STB or any of its subsidiaries concerning any STB Environmental
Permit, Hazardous Material or any Hazardous Materials Activities of STB or any
of its subsidiaries.
3.18 BROKERS. No broker, finder or investment banker (other than Xxxx
Xxxxxxxxx Xxxxxxxx & Co. ("XXXX XXXXXXXXX")) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
STB.
3.19 INTELLECTUAL PROPERTY. STB or its subsidiaries owns each of the
patents and patent applications referred to in the STB SEC Reports and, except
as disclosed in the STB SEC Reports, (i) each of STB and its subsidiaries owns
or possesses, or could obtain ownership or possession of (on terms not
materially adverse to the consolidated financial position, shareholders' equity,
results of operations of STB and its subsidiaries taken as a whole) adequate and
enforceable rights to use all other patent applications, patents, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and proprietary
knowledge (collectively with the patents and patent applications described in
the STB SEC Reports, the "Intangibles") necessary for the conduct of their
businesses and (ii) neither STB nor any subsidiary, to its knowledge, has
infringed, is infringing, or has received any notice of infringement of any
Intangible of any other person that, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to (or, with respect to pending
patent litigation as of the date hereof, STB does not believe will) have a
Material Adverse Effect and STB knows of no basis therefor. The expiration of
any Intangibles would not have a Material Adverse Effect on STB and its
subsidiaries taken as a whole. Except as set forth in the STB SEC Reports, STB
has received no notice of potential indemnity claims from customers based upon a
notice of infringement any such customer has received from a patent owner
relating to an assertion of infringement of a patent other than potential
indemnity claims which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
3.20 CHANGE OF CONTROL PAYMENTS. Other than as excepted in Section 3.18
hereof or contemplated by Section 5.14, there are no amounts that will become
payable (whether currently or in the future) to current or former employees,
officers and directors of STB under any plan or agreement of STB as a result of
or in connection with the Merger.
3.21 INSURANCE. STB maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of STB and its subsidiaries (collectively, the "INSURANCE
POLICIES") which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of STB and its subsidiaries. There is no
material claim by STB or any
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of its subsidiaries pending under any of the material Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds.
3.22 OPINION OF FINANCIAL ADVISOR. STB has been advised in writing by its
financial advisor, Xxxx Xxxxxxxxx, that in its opinion, as of the date hereof,
the Exchange Ratio is fair from a financial point of view, to the shareholders
of STB.
3.23 BOARD APPROVAL. The Board of Directors of STB has, as of the date of
this Agreement (i) approved this Agreement and the STB Option Agreement and the
transactions contemplated hereby and thereby, (ii) determined that the Merger is
in the best interests of the shareholders of STB and is on terms that are fair
to such shareholders and (iii) recommended that the shareholders of STB approve
this Agreement and the Merger.
3.24 VOTE REQUIRED. The affirmative vote of a majority of the votes that
holders of the outstanding shares of STB Common Stock are entitled to vote
thereon is the only vote of the holders of any class or series of STB's capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
3.25 YEAR 2000 COMPLIANCE. Except as would not reasonably be expected to
have a Material Adverse Effect on STB, all of STB's Information Technology (as
defined below) effectively addresses the Year 2000 issue, and will not cause an
interruption in the ongoing operations of STB's business on or after January 1,
2000. For purposes of the foregoing, the term "INFORMATION TECHNOLOGY" shall
mean and include all software, hardware, firmware, telecommunications systems,
network systems, embedded systems and other systems, components and/or services
that are owned or used by STB in the conduct of its business, or purchased by
STB from third party suppliers.
3.26 TEXAS BUSINESS COMBINATION LAW NOT APPLICABLE. The STB Board has taken
all actions so that the restrictions contained in the Texas Business Combination
Law ("TBCL") applicable to entering into or engaging in a "business combination"
(as defined in such the TBCL) will not apply to the execution, delivery or
performance of this Agreement, the STB Option Agreement, or to the consummation
of the Merger or the other transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF 3DFX AND SUB
3Dfx and Sub jointly and severally represent and warrant to STB, except as
set forth in the 3Dfx SEC Reports (as defined in Section 4.7), as follows:
4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of 3Dfx and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
3Dfx and its subsidiaries is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below).
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Each of 3Dfx and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect.
When used in connection with 3Dfx or any of its subsidiaries, the term "MATERIAL
ADVERSE EFFECT" means any change, event or effect that is materially adverse to
the business, assets (including intangible assets), liabilities, financial
condition or results of operations of 3Dfx and its subsidiaries taken as a
whole; provided, however, that a "Material Adverse Effect" shall not include any
(i) adverse effect on the results of operations or financial condition of 3Dfx
that is attributable to the transactions or resulting business enterprise
contemplated by this Agreement, including, without limitation, delay of,
reduction in, or cancellation or change in the terms of product orders by
customers of 3Dfx or an increase in the price of, a delay of, reduction in or
cancellation of or change in terms with respect to products or components
supplied by, or a deterioration in or termination of a relationship by, vendors
of 3Dfx, (ii) change arising out of conditions in or affecting the industries in
which the parties to this Agreement compete or (iii) decline in 3Dfx's stock
price. Other than wholly-owned subsidiaries and except as permitted after the
date of this Agreement under Section 5.2 of this Agreement and except with
respect to an investment of less than a twenty percent (20%) interest in any
corporation, partnership, joint venture or other business, association or
entity, 3Dfx does not directly or indirectly own any equity or similar interest
in, or any interest convertible or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
4.2 ARTICLES OF INCORPORATION AND BYLAWS. 3Dfx has previously furnished to
STB a complete and correct copy of its Articles of Incorporation and Bylaws as
amended to date. Such Articles of Incorporation, Bylaws and equivalent
organizational documents of each of its subsidiaries are in full force and
effect. Neither 3Dfx nor any of its subsidiaries is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
4.3 CAPITALIZATION. The authorized capital stock of 3Dfx consists of (i)
50,000,000 shares of 3Dfx Common Stock and of (ii) 5,000,000 shares of Preferred
Stock, no par value per share ("3DFX PREFERRED STOCK"), 60,000 of which have
been designated as 3Dfx Series A Participating Preferred. At the close of
business on November 30, 1998, (i) approximately 15,592,912 shares of 3Dfx
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) approximately 349,919 shares of 3Dfx Common Stock
were reserved for future issuance pursuant to 3Dfx's employee stock purchase
plan, (iii) approximately 3,422,609 shares of 3Dfx Common Stock were reserved
for issuance upon the exercise of outstanding options ("3DFX OPTIONS") to
purchase 3Dfx Common Stock, approximately 1,287,185 shares of 3Dfx Common Stock
were reserved for future grant under the 1995 Stock Option Plan, the 1997
Supplemental Stock Option Plan and the 1997 Director Option Plan and (iv) 93,636
shares of 3Dfx Common Stock were reserved for issuance upon exercise of
warrants. No change in such capitalization has occurred between September 30,
1998 and the date hereof except issuances of 3Dfx Common Stock that would be
permitted pursuant to Section 5.2(c) hereof. As of the date hereof, no shares of
3Dfx Preferred Stock were issued or outstanding. The authorized capital stock of
Sub consists of 10,000 shares of common stock, par value $0.10 per share, 100
shares of which, as of the date hereof, are issued and outstanding. All of the
outstanding shares of 3Dfx's and Sub's respective capital stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 4.3, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any
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character relating to the issued or unissued capital stock of 3Dfx or any of its
subsidiaries or obligating 3Dfx or any of its subsidiaries to issue or sell any
shares of capital stock of, or other equity interests in, 3Dfx or any of its
subsidiaries. All shares of 3Dfx Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall, and the shares of 3Dfx Common Stock to be
issued pursuant to the Merger will be, duly authorized, validly issued, fully
paid and nonassessable. Except for such actions as are permitted under Section
5.2, there are no obligations, contingent or otherwise, of 3Dfx or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of 3Dfx
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity other than guarantees of obligations
of subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of 3Dfx's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by 3Dfx or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in 3Dfx's voting rights, charges
or other encumbrances of any nature whatsoever.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of 3Dfx and Sub has all
necessary corporate power and authority to execute and deliver this Agreement
and the STB Option Agreement, and to perform its obligations hereunder and
thereunder, subject to obtaining the approval of 3Dfx's shareholders of the
issuance of 3Dfx Common Stock in the Merger, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the STB Option Agreement by 3Dfx and Sub and the consummation by 3Dfx and
Sub of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of 3Dfx and Sub
and no other corporate proceedings on the part of 3Dfx or Sub are necessary to
authorize this Agreement and the STB Option Agreement, or to consummate the
transactions so contemplated (other than with respect to the Merger, the
approval by the holders of a majority of the outstanding shares of 3Dfx Common
Stock of the issuance of 3Dfx Common Stock in the Merger in accordance with the
applicable rules of Nasdaq and 3Dfx's Articles of Incorporation and Bylaws).
This Agreement and the STB Option Agreement have been duly and validly executed
and delivered by 3Dfx and Sub and, assuming the due authorization, execution and
delivery by STB, constitute legal and binding obligations of 3Dfx and Sub,
enforceable against 3Dfx and Sub in accordance with their respective terms,
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by 3Dfx and Sub and
the STB Option Agreement by 3Dfx do not, and the performance of this Agreement
by 3Dfx and Sub and the STB Option Agreement by 3Dfx shall not, (i) conflict
with or violate the Articles of Incorporation, Bylaws or equivalent
organizational documents of 3Dfx or any of its subsidiaries, (ii) subject to
obtaining 3Dfx's shareholders approval of the issuance of the shares of 3Dfx
Common Stock in the Merger and compliance with the requirements set forth in
Section 4.5(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to 3Dfx or any of its subsidiaries or by which it
or their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair 3Dfx's or any such subsidiary's
rights or alter
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the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of 3Dfx or
any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which 3Dfx or any of its subsidiaries is a party or
by which 3Dfx or any of its subsidiaries or its or any of their respective
properties are bound or affected, except for any such breaches, defaults or
other occurrences that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
(b) The execution and delivery of this Agreement by 3Dfx and Sub and
the STB Option Agreement by 3Dfx do not, and the performance of this Agreement
by 3Dfx and Sub shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
Blue Sky Laws, the pre-merger notification requirements of the HSR Act and of
foreign governmental entities and the rules and regulations thereunder, the
rules and regulations of Nasdaq, and the filing and recordation of the Articles
of Merger as required by the Texas Statute and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, (i) would not prevent consummation of the Merger or otherwise
prevent 3Dfx or Sub from performing their respective obligations under this
Agreement or (ii) could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.6 COMPLIANCE; PERMITS.
(a) Neither 3Dfx nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to 3Dfx or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which 3Dfx or any of its subsidiaries is a
party or by which 3Dfx or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the best
knowledge of 3Dfx, no investigation or review by any governmental or regulatory
body or authority is pending or threatened against 3Dfx or any of its
subsidiaries, nor has any governmental or regulatory body or authority indicated
an intention to conduct the same, other than, in each such case, those the
outcome of which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) 3Dfx and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to the operation of the business of 3Dfx and its subsidiaries taken as
a whole (collectively, the "3DFX PERMITS"). 3Dfx and its subsidiaries are in
compliance with the terms of the 3Dfx Permits, except where the failure to so
comply could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
4.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) 3Dfx has made available to STB a correct and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
3Dfx with the SEC on or after June 25, 1997 and prior to the date of this
Agreement (the "3DFX SEC REPORTS"), which are all the forms, reports and
documents required to be filed by 3Dfx with the SEC since June 25, 1997. The
3Dfx SEC Reports (A) were
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prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (B) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of 3Dfx's subsidiaries is required to file
any reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the 3Dfx SEC Reports was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of 3Dfx and its subsidiaries as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to adjustments which were not or are
not expected to be material in amount.
(c) 3Dfx has previously furnished to STB a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by 3Dfx with the SEC pursuant to the
Securities Act or the Exchange Act.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998, 3Dfx
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been (i) any Material Adverse Effect or (ii) any material change by 3Dfx in
its accounting methods, principles or practices except as required by concurrent
changes in GAAP.
4.9 NO UNDISCLOSED LIABILITIES. Neither 3Dfx nor any of its subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of 3Dfx and its subsidiaries taken as a whole,
except liabilities (i) provided for in 3Dfx's balance sheet or the related notes
as of September 30, 1998 or (ii) incurred since September 30, 1998 in the
ordinary course of business, none of which are material to the business, results
of operations or financial condition of 3Dfx and its subsidiaries, taken as a
whole.
4.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings pending or, to the best knowledge of 3Dfx, threatened (or to the
best knowledge of 3Dfx, any investigation pending or threatened) against 3Dfx or
any of its subsidiaries, or any properties or rights of 3Dfx or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.11 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definitions of "Affiliate"
and "International Employee Plan" set forth in Section 4.11(a)(i) and (ii) below
(such definitions shall only apply to this
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Section 4.11), for the purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "AFFILIATE," as used in this Section 4.11, shall mean any
other person or entity under common control with 3Dfx within the meaning of
Section 414(b), (c), (m) or (o) of the Code and regulations thereunder;
(ii) "INTERNATIONAL EMPLOYEE PLAN" shall mean each 3Dfx Employee
Plan that has been adopted or maintained by 3Dfx, whether informally or
formally, for the benefit of 3Dfx Employees outside the United States;
(iii) "3DFX EMPLOYEE PLAN" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether formal or informal, funded or unfunded, including without
limitation, each "employee benefit plan," within the meaning of Section 3(3) of
ERISA, which is or has been maintained, contributed to, or required to be
contributed to, by 3Dfx or any Affiliate for the benefit of any "3Dfx Employee"
(as defined below), and pursuant to which 3Dfx or any Affiliate has or may have
any material liability contingent or otherwise;
(iv) "3DFX EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of 3Dfx or any Affiliate;
(v) "3DFX EMPLOYEE AGREEMENT" shall refer to each management,
employment, severance, consulting, relocation, repatriation, expatriation, visa,
work permit or similar agreement or contact between 3Dfx or any Affiliates and
any 3Dfx Employee or consultant; and
(vi) "3DFX PENSION PLAN" shall refer to each 3Dfx Employee
Plan which is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA.
(b) SCHEDULE. 3Dfx does not have any plan or commitment to establish
any new 3Dfx Employee Plan or 3Dfx Employee Agreement, to modify any 3Dfx
Employee Plan or 3Dfx Employee Agreement (except to the extent required by law
or to conform any such 3Dfx Employee Plan or 3Dfx Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to STB
in writing, or as required by this Agreement), or to enter into any 3Dfx
Employee Plan or 3Dfx Employee Agreement, nor does it have any intention or
commitment to do any of the foregoing.
(c) DOCUMENTS. 3Dfx has provided to STB (i) correct and complete
copies of all documents embodying or relating to each 3Dfx Employee Plan and
each 3Dfx Employee Agreement including all amendments thereto and written
interpretations thereof, (ii) the most recent annual actuarial valuations, if
any, prepared for each 3Dfx Employee Plan; (iii) the three most recent annual
reports (Series 5500 and all schedules thereto), if any, required under ERISA or
the Code in connection with each 3Dfx Employee Plan or related trust; (iv) if
any 3Dfx Employee Plan is funded, the most recent annual and periodic accounting
of 3Dfx Employee Plan assets; (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each 3Dfx Employee Plan; (vi) all IRS
determination letters and rulings relating to 3Dfx Employee Plans and copies of
all applications
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and correspondence to or from the IRS or the DOL with respect to any 3Dfx
Employee Plan; (vii) all communications material to any 3Dfx Employee or 3Dfx
Employees relating to any 3Dfx Employee Plan and any proposed 3Dfx Employee
Plans, in each case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any material liability to 3Dfx;
and (viii) all registration statements and prospectuses prepared in connection
with each 3Dfx Employee Plan.
(d) 3DFX EMPLOYEE PLAN COMPLIANCE. (i) 3Dfx has performed in all
material respects all obligations required to be performed by it under each 3Dfx
Employee Plan and each 3Dfx Employee Plan has been established and maintained in
all material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) to 3Dfx's knowledge no "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any 3Dfx Employee Plan; (iii) there are no
actions, suits or claims pending, or, to the knowledge of 3Dfx, threatened or
anticipated (other than routine claims for benefits) against any 3Dfx Employee
Plan or against the assets of any 3Dfx Employee Plan; (iv) each 3Dfx Employee
Plan can be amended, terminated or otherwise discontinued after the Effective
Time in accordance with its terms, without liability to 3Dfx, STB, the Surviving
Corporation or any Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (v) there are no inquiries or
proceedings pending or, to the knowledge of 3Dfx or any Affiliates, threatened
by the IRS or DOL with respect to any 3Dfx Employee Plan; and (vi) to 3Dfx's
knowledge neither 3Dfx nor any Affiliate is subject to any penalty or tax with
respect to any 3Dfx Employee Plan under Section 402(i) of ERISA or Section 4975
through 4980 of the Code.
(e) 3DFX PENSION PLANS. 3Dfx does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any 3Dfx
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of ERISA or Section 412 of the Code.
(f) MULTIEMPLOYER PLANS. At no time has 3Dfx contributed to or been
requested to contribute to any Multiemployer Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. No 3Dfx Employee Plan provides, or
has any liability to provide, life insurance, medical or other employee benefits
to any 3Dfx Employee upon his or her retirement or termination of employment for
any reason, except as may be required by statute, and 3Dfx has never
represented, promised or contracted (whether in oral or written form) to any
3Dfx Employee (either individually or to 3Dfx Employees as a group) that such
3Dfx Employee(s) would be provided with life insurance, medical or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by statute.
(h) EFFECT OF TRANSACTION.
(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) constitute an event under any 3Dfx
Employee Plan, 3Dfx Employee Agreement, trust or loan 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 3Dfx Employee.
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(ii) No payment or benefit which will or may be made by 3Dfx or
3Dfx or any of their respective Affiliates with respect to any 3Dfx Employee
will be characterized as an "excess parachute payment," within the meaning of
Section 280G(b)(1) of the Code.
(i) EMPLOYMENT MATTERS. 3Dfx and each of its subsidiaries (i) is in
compliance in all material respects with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
in each location in which 3Dfx or any of its subsidiaries employs persons; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to 3Dfx Employees; (iii) is not liable for
any material arrears of wages or any material taxes or any material penalty for
failure to comply with any of the foregoing; and (iv) is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for 3Dfx Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice).
(j) VIOLATIONS. To 3Dfx's knowledge and reasonable belief, no employee
of 3Dfx has violated any employment contract, patent disclosure agreement or non
competition agreement between such employee and any former employer of such
employee due to such employee being employed by 3Dfx and disclosing to 3Dfx
trade secrets or proprietary information of such employer. 3Dfx is not, and has
never been, a party to any collective bargaining agreement. 3Dfx and its
subsidiaries are in compliance in all material respects with all applicable laws
regarding employment practices, terms and conditions of employment, and wages
and hours (including, without limitation, ERISA, WARN or any similar state or
local law).
(k) INTERNATIONAL EMPLOYEE PLAN. Each International Employee Plan has
been established, maintained and administered in material compliance with its
terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or fully accrued.
Except as required by law, no condition exists that would prevent 3Dfx from
terminating or amending any International Employee Plan at any time for any
reason.
4.12 LABOR MATTERS. (i) There are no controversies pending or, to the best
knowledge of each of 3Dfx and its respective subsidiaries, threatened, between
3Dfx or any of its subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a Material Adverse
Effect; (ii) as of the date of this Agreement, neither 3Dfx nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by 3Dfx or its subsidiaries nor
does 3Dfx or its subsidiaries know of any activities or proceedings of any labor
union to organize any such employees (A) as of the date of this Agreement and
(B) which, as of the Closing Date, have or could reasonably be expected to have
a Material Adverse Effect on 3Dfx and its subsidiaries; and (iii) as of the date
of this Agreement, neither 3Dfx nor any of its subsidiaries has any knowledge of
any strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or
with respect to any employees of 3Dfx or any of its subsidiaries (X) as of the
date of this Agreement and (Y) which, as of the Closing Date, have or could
reasonably be expected to have a Material Adverse Effect on 3Dfx and its
subsidiaries.
4.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the information
supplied or to be supplied by 3Dfx for inclusion or incorporation by reference
(i) in the S-4 will, at the time the S-4 becomes
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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 light of the circumstances
under which they are made, not misleading; and (ii) the Proxy Statement will, at
the dates mailed to the shareholders of 3Dfx and STB, at the times of the
Shareholders Meetings and as of the Effective Time, 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 light of the
circumstances under which they are made, not misleading. The 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,
and the S-4 will comply as to form in all material respects with the provisions
of the Securities Act and the rules and regulations promulgated by the SEC
thereunder.
4.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as may be permitted
under Section 5.9, there is no material agreement, judgment, injunction, order
or decree binding upon 3Dfx or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of 3Dfx or any of its subsidiaries, any acquisition of
property by 3Dfx or any of its subsidiaries or the conduct of business by 3Dfx
or any of its subsidiaries as currently conducted.
4.15 TITLE TO PROPERTY. 3Dfx owns no material real property. 3Dfx and each
of its subsidiaries have good and defensible title to all of their material
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; and all leases pursuant to which 3Dfx or any of its
subsidiaries lease from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing material default or
event of default (or any event which with notice or lapse of time, or both,
would constitute a material default and in respect of which 3Dfx or its
subsidiary has not taken adequate steps to prevent such default from occurring)
except where the lack of such good standing, validity and effectiveness or the
existence of such default or event of default could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. All the
plants, structures and equipment of 3Dfx and its subsidiaries, except such as
may be under construction, are in good operating condition and repair, except
where the failure of such plants, structures and equipment to be in such good
operating condition and repair could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.16 TAXES. 3Dfx and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which 3Dfx or any of
its subsidiaries is or has been a member, have timely filed all Tax Returns
required to be filed by them and have paid all Taxes shown thereon to be due.
3Dfx has provided adequate accruals in accordance with generally accepted
accounting principles in its financial statements for any Taxes that have not
been paid, whether or not shown as being due on any Tax Returns. There is (i) no
material claim for Taxes that is a lien against the property of 3Dfx or any of
its subsidiaries or is being asserted against 3Dfx or any of its subsidiaries
other than liens for Taxes not yet due and payable, (ii) no audit of any Tax
Return of 3Dfx or any of its subsidiaries being conducted by a Tax authority,
(iii) no extension of the statute of limitations on the assessment of any Taxes
granted by 3Dfx or any of its subsidiaries and currently in effect, and (iv) no
agreement, contract or arrangement to which 3Dfx or any of its subsidiaries is a
party that may result in the payment of any amount that would not be deductible
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by reason of Sections 162(m), 280G or 404 of the Code. 3Dfx has not been and
will not be required to include any material adjustment in Taxable income for
any Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. Neither
3Dfx nor any of its subsidiaries has ever been a member of any combined,
controlled, consolidated or affiliated group (other than the group of which 3Dfx
is the parent) for Tax purposes. Neither 3Dfx nor any of its subsidiaries is a
party to any tax sharing or tax allocation agreement nor does 3Dfx or any of its
subsidiaries owe any amount under any such agreement. Neither 3Dfx nor any of
its subsidiaries has been at any time, a "United States real property holding
corporation" with the meaning of Section 897(c)(2) of the Code.
4.17 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in any material
liability to 3Dfx under Environmental Laws, no underground storage tanks and no
Hazardous Materials are present, as a result of the actions of 3Dfx or any of
its subsidiaries or any affiliate of 3Dfx, or, to 3Dfx's knowledge, as a result
of any actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that 3Dfx or any of its subsidiaries has at any time owned, operated, occupied
or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Neither 3Dfx nor any of its
subsidiaries has (i) transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of Environmental Law, or (ii) engaged in any Hazardous Materials Activities in
violation of any Environmental Law in effect prior to or as of the date hereof
except for which violation has not heretofore been cured or for which there is
any remaining liability.
(c) PERMITS. 3Dfx and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "3DFX
ENVIRONMENTAL PERMITS") necessary for the conduct of 3Dfx's and its
subsidiaries' Hazardous Material Activities and other businesses of 3Dfx and its
subsidiaries as such activities and businesses are currently being conducted.
3Dfx and its subsidiaries are in compliance in all material respects with the
terms of the 3Dfx Environmental Permits, except for which noncompliance has not
heretofore been cured or for which there is any remaining liability.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ, claim or injunction is pending, and to
3Dfx's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ, claim or injunction has been threatened by any Governmental
Entity against 3Dfx or any of its subsidiaries concerning any 3Dfx Environmental
Permit, Hazardous Material or any Hazardous Materials Activities of 3Dfx or any
of its subsidiaries.
4.18 BROKERS. No broker, finder or investment banker (other than BancBoston
Xxxxxxxxx Xxxxxxxx ("BANCBOSTON")) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of 3Dfx or Sub.
4.19 INTELLECTUAL PROPERTY. 3Dfx or its subsidiaries owns each of the
patents and patent applications referred to in the 3Dfx SEC Reports and, except
as disclosed in the 3Dfx SEC Reports, (i) each of 3Dfx and its subsidiaries owns
or possesses, or could obtain ownership or possession of (on terms not
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materially adverse to the consolidated financial position, shareholders' equity,
results of operations of 3Dfx and its subsidiaries taken as a whole) adequate
and enforceable rights to use all other patent applications, patents,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively with the patents and patent applications
described in the 3Dfx SEC Reports, the "Intangibles") necessary for the conduct
of their businesses and (ii) neither 3Dfx nor any subsidiary, to its knowledge,
has infringed, is infringing, or has received any notice of infringement of any
Intangible of any other person that, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to (or, with respect to pending
patent litigation as of the date hereof, 3Dfx does not believe will) have a
Material Adverse Effect and 3Dfx knows of no basis therefor. The expiration of
any Intangibles would not have a Material Adverse Effect on 3Dfx and its
subsidiaries taken as a whole. Except as set forth in the 3Dfx SEC Reports, 3Dfx
has received no notice of potential indemnity claims from customers based upon a
notice of infringement any such customer has received from a patent owner
relating to an assertion of infringement of a patent other than potential
indemnity claims which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
4.20 INSURANCE. 3Dfx maintains insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, employees,
officers and directors of 3Dfx and its subsidiaries ("3DFX INSURANCE POLICIES")
which are of the type and in amounts customarily carried by persons conducting
businesses similar to those of 3Dfx and its subsidiaries. There is no material
claim by 3Dfx or any of its subsidiaries pending under any of the material 3Dfx
Insurance Policies.
4.21 OPINION OF FINANCIAL ADVISOR. 3Dfx has been advised in writing by its
financial advisor, BancBoston, that in its opinion as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to 3Dfx.
4.22 BOARD APPROVAL. The Board of Directors of 3Dfx has, as of the date
hereof, (i) approved this Agreement and the STB Option Agreement and the
transactions contemplated hereby and thereby, (ii) determined that the Merger is
in the best interests of the shareholders of 3Dfx and is on terms that are fair
to such shareholders and (iii) recommended that the shareholders of 3Dfx approve
the issuance of 3Dfx Common Stock in connection with the Merger.
4.23 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of 3Dfx Common Stock present in person or represented by proxy at the
meeting of 3Dfx's shareholders contemplated by Section 5.8 (provided that the
shares so present or represented constitute a majority of the shares of 3Dfx
Common Stock) is the only vote of the holders of any class or series of 3Dfx's
capital stock necessary to approve the Merger and the issuance of 3Dfx Common
Stock in connection with the Merger.
4.24 INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
4.25 YEAR 2000 COMPLIANCE. Except as would not reasonably be expected to
have a Material Adverse Effect on 3Dfx, all of 3Dfx's Information Technology (as
defined below) is effectively addresses the Year 2000 issues Year, and will not
cause an interruption in the ongoing operations of 3Dfx's business on or after
January 1, 2000. For purposes of the foregoing, the term "INFORMATION
TECHNOLOGY" shall mean and
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include all software, hardware, firmware, telecommunications systems, network
systems, embedded systems and other systems, components and/or services that are
owned or used by 3Dfx in the conduct of its business, or purchased by 3Dfx from
third party suppliers.
4.26 CHANGE OF CONTROL PAYMENTS. Other than as excepted in Section 4.18
hereof or contemplated by Section 5.14, there are no amounts that will become
payable (whether currently or in the future) to current or former employees,
officers and directors of 3Dfx under any plan or agreement of 3Dfx as a result
of or in connection with the Merger.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
5.1 INFORMATION AND ACCESS. Subject to and in accordance with the terms and
conditions of those certain letter agreements dated December 5, 1998 and
December 7, 1998, between 3Dfx and STB (collectively the "CONFIDENTIALITY
AGREEMENT"), from the date of this Agreement and continuing until the Effective
Time, each Company shall afford and, with respect to clause (b) below, such
Company shall cause its independent auditors to afford, (a) to the officers,
independent auditors, counsel and other representatives of the other Company
reasonable access to the properties, books, records (including Tax Returns filed
and those in preparation) and personnel of such Company and its subsidiaries in
order that the other Company may have a full opportunity to make such
investigation as it reasonably desires to make of such Company and its
subsidiaries and (b) to the independent auditors of the other Company,
reasonable access to the audit work papers and other records of the independent
auditors of such Company and its subsidiaries. Additionally, subject to and in
accordance with the Confidentiality Agreement, each Company and its subsidiaries
will permit the other Company to make such reasonable inspections of such
Company and its subsidiaries and their respective operations during normal
business hours as the other Company may reasonably require and each Company and
its subsidiaries will cause its officers and the officers of its subsidiaries to
furnish the other Company with such financial and operating data and other
information with respect to the business and properties of such Company and its
subsidiaries as the other Company may from time to time reasonably request. No
investigation pursuant to this Section 5.1 shall affect or otherwise obviate or
diminish any representations and warranties of any party or conditions to the
obligations of any party.
5.2 CONDUCT OF BUSINESS OF THE COMPANIES. Except as contemplated by this
Agreement, during the period from the date of this Agreement and continuing
until the Effective Time or until the termination of this Agreement pursuant to
Section 7.1, (i) each Company shall use reasonable efforts promptly to report to
the other on the status of operational matters and changes of materiality
(subject to the terms of the Confidentiality Agreement) and (ii) each Company
and its subsidiaries shall conduct their respective businesses in the ordinary
and usual course consistent with past practice and each Company and its
subsidiaries shall use reasonable efforts to maintain and preserve intact its
business organization, to keep available the services of its officers and
employees and to maintain satisfactory relations with licensors, franchisees,
licensees, suppliers, contractors, distributors, customers and others having
business relationships with it. Without limiting the generality of the foregoing
and except as provided in this Agreement, prior to the Effective Time, neither
Company nor any of its subsidiaries shall, unless this Agreement is terminated
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pursuant to Section 7.1, without the prior written consent of the other Company
(which consent shall not be unreasonably withheld):
(a) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock except (i) as permitted by
subsection (c) below, (ii) dividends or distributions by subsidiaries of 3Dfx to
3Dfx or any subsidiary of 3Dfx, (iii) contributions or distributions by STB to a
subsidiary of STB to support the operations of such subsidiary in the ordinary
course of business consistent with past practice and (iv) the distributions of
funds in satisfaction of STB obligations owed in respect of the STB Options as
set forth in Section 5.14;
(b) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance or authorization of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
repurchase, redeem (except in compliance with Section 5.2(n) below) or otherwise
acquire any shares of its capital stock;
(c) issue, deliver, pledge, encumber or sell, or authorize or propose
the issuance, delivery, pledge, encumbrance or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or rights, warrants or options to acquire, any such shares of capital stock or
other convertible securities (other than (i) the issuance of such capital stock
upon the exercise or conversion of 3Dfx Options or STB Options (as defined in
Section 5.14), as the case may be, outstanding on the date of this Agreement in
accordance with their present terms or pursuant to the 3Dfx Employee Stock
Purchase Plan or the STB Purchase Plan, as the case may be, in accordance with
their present terms, (ii) the grant of 3Dfx Options in the ordinary course of
business consistent with past practice, pursuant to 3Dfx Employee Plans in
effect on the date of this Agreement, and the issuance of 3Dfx Common Stock upon
exercise thereof, (iii) increases in the number of shares reserved for issuance
under the 3Dfx Employee Plans provided that such increases are in connection
with, or subject to, shareholder approval at an Annual or Special Meeting of
shareholders, (iv) the grant of STB Options to purchase up to an aggregate of
50,000 shares of STB Common Stock in the ordinary course of business consistent
with past practice, pursuant to STB Employee Plans in effect on the date of this
Agreement or authorize or propose any change in its equity capitalization and
(v) the purchase by 3Dfx of up to an aggregate of $20 million worth of its
Common Stock in the open market pursuant to a stock repurchase program adopted
by the 3Dfx Board of Directors and administered in compliance with Rule 10b-18
under the Exchange Act;
(d) except as otherwise provided in this Agreement, amend its Articles
of Incorporation or Bylaws in any manner adverse to the other Company;
(e) acquire or agree to acquire by merging or consolidating with, or
by purchasing any material portion of the capital stock or assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(f) sell, lease, pledge or otherwise dispose of or encumber any of its
assets, except in the ordinary course of business (including, without
limitation, any indebtedness owed to it or any claims held by it);
(g) transfer the stock of any subsidiary to any other subsidiary or
any assets or liabilities to any new or, except in the ordinary course of
business consistent with past practice, existing subsidiary, or in
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the case of 3Dfx, in connection with international subsidiaries established for
the purposes of achieving tax benefits;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any of its debt securities or guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of
others, or make loans or advances, other than in the ordinary course of business
consistent with past practice;
(i) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than (i)
the payment, discharge or satisfaction of liabilities in the ordinary course of
business and (ii) the payment of the fees and expenses of counsel and financial
advisors relating to this Agreement and the transactions contemplated hereby;
(j) with respect to STB only, adopt or amend in any material respect
any collective bargaining agreement or STB Employee Plan, enter into or amend
any employment, severance, special pay arrangement with respect to termination
of employment or other similar arrangements or agreements with any directors,
officers or key employees of STB, or enter into or amend any severance or
termination arrangement that provides for payments to any person other than as
contemplated by this Agreement;
(k) change in any material respect the accounting methods or practices
followed by such Company, including any material change in any assumption
underlying, or method of calculating, any bad debt, contingency or other
reserve, except as may be required by changes in GAAP; make any material Tax
election or settle or compromise any material federal, state, local or foreign
income tax liability or agree to an extension of a statute of limitations;
(l) enter into any material contract or agreement, except in the
ordinary course of business, other than as expressly permitted in this Section
5.2 and other than renewals or replacements of leases scheduled to expire in the
near-term in the ordinary course of business; or
(m) authorize or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Nothing contained herein shall restrict STB from entering into such
reasonable contracts as are necessary in connection with furnishing the STB's
headquarters.
5.3 NEGOTIATION WITH OTHERS.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, STB shall not, directly or indirectly, through any officer, director,
employee, representative or agent of STB or any of its subsidiaries, solicit or
encourage (including by way of furnishing nonpublic information) or take other
action, either directly or indirectly, to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to an
Acquisition Proposal (as defined below) from any person, or engage in any
discussions or negotiations relating thereto or in furtherance thereof or accept
any Acquisition Proposal. For purposes of this Agreement, "ACQUISITION PROPOSAL"
means any inquiries or proposals regarding (i) any merger, consolidation, sale
of substantial assets or similar transactions involving STB or any subsidiaries
of STB
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(other than sales of assets or inventory in the ordinary course of business),
(ii) purchase of 20% or more of the outstanding shares of capital stock of STB
(including without limitation by way of a tender offer or an exchange offer) or
similar transactions involving STB or any subsidiaries of STB, (iii) the
acquisition by any person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of 20%
or more of the then outstanding shares of capital stock of STB; or (iv) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
(b) Notwithstanding Section 5.3(a), the restrictions set forth in this
Agreement shall not prevent the Board of Directors of STB, in the exercise of
and as required by its fiduciary duties as determined by the Board of Directors
of STB after consultation with its outside legal counsel, engaging in
discussions or negotiations with, and furnishing information concerning STB and
its business, properties and assets (but not directly or indirectly soliciting
or initiating such discussions or negotiations or directly or indirectly
encouraging inquiries or the making of any Acquisition Proposal), to a third
party who makes a written, unsolicited, bona fide Acquisition Proposal that is
reasonably capable of being consummated and is reasonably likely to be
financially superior to the Merger, as determined in each case in good faith by
STB's Board of Directors after consultation with STB's financial advisors (a
"SUPERIOR PROPOSAL"), provided that 3Dfx shall have been notified in writing of
such Acquisition Proposal, including the principal financial terms and
conditions thereof and the identity of the person or group making such
Acquisition Proposal.
Upon compliance with the foregoing, STB shall be entitled to (1) withdraw,
modify or refrain from making its recommendation referred to in Section 5.4
following receipt of a Superior Proposal, and approve and recommend to the
shareholders of STB a Superior Proposal and (2) enter into an agreement with
such third party concerning a Superior Proposal; provided, however, that STB
shall immediately make payment in full to 3Dfx of the Breakup Fee as defined in
Section 7.3 below.
(c) If STB or any of its subsidiaries receives any unsolicited offer
or proposal to enter negotiations relating to an Acquisition Proposal, STB shall
immediately notify 3Dfx thereof, including information as to the identity of the
offeror or the party making any such offer or proposal and the principal
financial terms and conditions of such offer or proposal, as the case may be.
(d) Notwithstanding the foregoing, STB shall not provide any
non-public information to a third party as described above unless STB provides
such non-public information pursuant to a nondisclosure agreement with terms
regarding the protection of confidential information at least as restrictive as
such terms in the Confidentiality Agreement previously entered into between 3Dfx
and STB.
(e) STB shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than 3Dfx and Sub)
conducted prior to the date of this Agreement with respect to any of the
foregoing.
(f) 3Dfx shall immediately cease and cause to be terminated any
existing discussions or negotiations with any parties (other than STB) regarding
any merger, consolidation, sale of substantial assets or similar transactions
involving 3Dfx.
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5.4 PREPARATION OF S-4 AND THE PROXY STATEMENT; OTHER FILINGS. As promptly
as practicable after the date of this Agreement, 3Dfx and STB shall prepare and
file with the SEC a preliminary Proxy Statement in form and substance
satisfactory to each of 3Dfx and STB and 3Dfx shall prepare and file with the
SEC the S-4, in which the Proxy Statement will be included as a prospectus. Each
of 3Dfx and STB shall use its reasonable efforts to respond to any comments of
the SEC, to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing and to cause the Proxy Statement to be mailed
to such Company's shareholders at the earliest practicable time. As promptly as
practicable after the date of this Agreement, 3Dfx and STB shall prepare and
file any other filings required under the Exchange Act, the Securities Act or
any other federal or Blue Sky Laws relating to the Merger and the transactions
contemplated by this Agreement and the Articles of Merger, including, without
limitation, under the HSR Act and state takeover laws (the "OTHER FILINGS").
Each Company will notify the other Company promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff or
any other government officials for amendments or supplements to the S-4, the
Proxy Statement or any Other Filing or for additional information and will
supply the other Company with copies of all correspondence between such Company
or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the S-4, the
Proxy Statement, the Merger or any Other Filing. The Proxy Statement, the S-4
and the Other Filings shall comply in all material respects with all applicable
requirements of law. Whenever any event occurs which is required to be set forth
in an amendment or supplement to the Proxy Statement, the S-4 or any Other
Filing, 3Dfx or STB, as the case may be, shall promptly inform the other Company
of such occurrence and cooperate in filing with the SEC or its staff or any
other government officials, and/or mailing to shareholders of 3Dfx and STB, such
amendment or supplement. The Proxy Statement shall include the recommendations
of the Board of Directors of 3Dfx in favor of the issuance of 3Dfx Common Stock
in connection with the Merger and of the Board of Directors of STB in favor of
the Merger, provided that the recommendation of the Board of Directors of STB
may not be included or may be withdrawn if previously included if the Board of
Directors of STB has accepted a Superior Proposal in accordance with the terms
of Section 5.3.
5.5 ADVICE OF CHANGES; SEC FILINGS. Each Company shall promptly provide the
other Company (or its counsel) copies of all filings made by such Company with
any Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and thereby.
5.6 LETTER OF STB'S INDEPENDENT AUDITORS. STB shall use all reasonable
efforts to cause to be delivered to 3Dfx a letter of PricewaterhouseCoopers,
LLP, STB's independent auditors, dated a date within two Business Days before
the date on which the S-4 shall become effective and addressed to 3Dfx, in form
and substance reasonably satisfactory to 3Dfx and customary in scope and
substance for letters delivered by independent auditors in connection with
registration statements similar to the S-4.
5.7 LETTER OF 3DFX'S INDEPENDENT AUDITORS. 3Dfx shall use all reasonable
efforts to cause to be delivered to STB a letter of PricewaterhouseCoopers, LLP,
3Dfx's independent auditors, dated a date within two Business Days before the
date on which the S-4 shall become effective and addressed to STB, in form and
substance reasonably satisfactory to STB and customary in scope and substance
for letters delivered by independent auditors in connection with registration
statements similar to the S-4.
5.8 SHAREHOLDERS MEETINGS. 3Dfx and STB each shall call a meeting of its
respective shareholders to be held as promptly as practicable for the purpose of
voting upon, in the case of 3Dfx, the
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issuance of 3Dfx Common Stock in connection with the Merger and, in the case of
STB, this Agreement. 3Dfx and STB shall coordinate and cooperate with respect to
the timing of the Shareholders Meetings and shall use their respective
reasonable efforts to hold the Shareholders Meetings on the same day as soon as
practicable after the date of this Agreement.
5.9 AGREEMENTS TO TAKE REASONABLE ACTION.
(a) STB shall take, and shall cause its subsidiaries to take, all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on STB or its subsidiaries with respect to the Merger
(including furnishing the information required under the HSR Act) and shall take
all reasonable actions necessary to cooperate promptly with and furnish
information to 3Dfx in connection with any such requirements imposed upon 3Dfx
or Sub or any subsidiary of 3Dfx or Sub in connection with the Merger. STB shall
take, and shall cause its subsidiaries to take, all reasonable actions necessary
(i) to obtain (and will take all reasonable actions necessary to promptly
cooperate with 3Dfx or Sub and their subsidiaries in obtaining) any clearance,
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity, or other third party, required to be obtained or made by
STB or any of its subsidiaries (or by 3Dfx or any of its subsidiaries) in
connection with the Merger or the taking of any action contemplated by this
Agreement; (ii) to lift, rescind or mitigate the effect of any injunction or
restraining order or other order adversely affecting the ability of STB to
consummate the transactions contemplated hereby; (iii) to fulfill all conditions
applicable to STB or 3Dfx pursuant to this Agreement reasonably within that
party's control; and (iv) to prevent, with respect to a threatened or pending
temporary, preliminary or permanent injunction or other order, decree or ruling
or statute, rule, regulation or executive order, the entry, enactment or
promulgation thereof, as the case may be; provided, however, that with respect
to clauses (i) through (iv) above, STB and its subsidiaries will take only such
curative measures (such as licensing and divestiture) as 3Dfx and STB mutually
determine, in good faith, to be reasonable.
(b) 3Dfx and Sub shall take, and shall cause their subsidiaries to
take, all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on them or their subsidiaries with respect to
the Merger (including furnishing the information required under the HSR Act) and
shall take all reasonable actions necessary to cooperate promptly with and
furnish information to STB in connection with any such requirements imposed upon
STB or any subsidiary of STB in connection with the Merger. 3Dfx and Sub shall
take, and shall cause their subsidiaries to take, all reasonable actions
necessary (i) to obtain (and will take all reasonable actions necessary to
promptly cooperate with STB and its subsidiaries in obtaining) any clearance,
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity, or other third party, required to be obtained or made by
3Dfx or any of its subsidiaries (or by STB or any of its subsidiaries) in
connection with the Merger or the taking of any action contemplated by this
Agreement; (ii) to lift, rescind or mitigate the effect of any injunction or
restraining order or other order adversely affecting the ability of 3Dfx or Sub
to consummate the transactions contemplated hereby; (iii) to fulfill all
conditions applicable to 3Dfx or Sub or STB pursuant to this Agreement; and (iv)
to prevent, with respect to a threatened or pending temporary, preliminary or
permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order, the entry, enactment or promulgation thereof, as
the case may be; provided, however, that with respect to clauses (i) through
(iv) above 3Dfx and its subsidiaries will take only such curative measures (such
as licensing and divestiture) as 3Dfx determines, in good faith, to be
reasonable.
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(c) Subject to the terms and conditions of this Agreement, each of the
parties shall use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
subject to the appropriate approval of the shareholders of 3Dfx and STB. 3Dfx
and STB will use their reasonable best efforts to resolve any competitive issues
relating to or arising under the HSR Act or any other federal or state antitrust
or fair trade law raised by any Governmental Entity including making offers of
curative divestitures and/or licensing of technology which 3Dfx determines, in
good faith, to be reasonable. If such offers are not accepted by such
Governmental Entity, 3Dfx (with STB's cooperation) shall pursue all litigation
resulting from such issues. The parties hereto will consult and cooperate with
one another, and consider in good faith the views of one another, in connection
with any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act or any other
federal or state antitrust or fair trade law.
5.10 CONSENTS. 3Dfx, Sub and STB shall each use best efforts to obtain the
consent and approval of, or effect the notification of or filing with, each
person or authority whose consent or approval is required of any of 3Dfx, STB or
Sub in order to permit the consummation of the Merger and the transactions
contemplated by this Agreement and to enable the Surviving Corporation to
conduct and operate the business of STB and its subsidiaries substantially as
presently conducted and as contemplated to be conducted.
5.11 NASDAQ ADDITIONAL SHARES LISTING. 3Dfx will cause the shares of 3Dfx
Common Stock issuable to the shareholders of STB in the Merger to be listed for
trading on the NASDAQ National Market.
5.12 PUBLIC ANNOUNCEMENTS. 3Dfx, Sub and STB shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to the Merger and shall not issue any such press release or make any
such public statement prior to such consultation except as may be required by
law.
5.13 AFFILIATES. Set forth on Exhibit E hereto is a list of those persons
who may be deemed to be, in STB's reasonable judgment, affiliates of STB within
the meaning of Rule 145 promulgated under the Securities Act (each a "STB RULE
145 AFFILIATE"). STB will provide 3Dfx with such information and documents as
3Dfx reasonably requests for purposes of reviewing such list. STB will use its
reasonable best efforts to deliver or cause to be delivered to 3Dfx, as promptly
as practicable on or following the date hereof, from each STB Rule 145 Affiliate
an executed affiliate agreement in substantially the form attached hereto as
Exhibit F (the "STB AFFILIATE AGREEMENT"), each of which will be in full force
and effect as of the Effective Time. 3Dfx will be entitled to place appropriate
legends on the shares of 3Dfx Common Stock to be received by a STB Affiliate
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the 3Dfx Common Stock, consistent with
the terms of the STB Affiliate Agreement.
5.14 STB OPTIONS.
(a) At the Effective Time, each outstanding option to purchase shares
of STB Common Stock issued pursuant to (i) the STB Option Plan that vested prior
to the Merger other than Accelerated Options as defined in Section 5.14(d) and
(ii) the STB Director Plan that is not exercised as described in Section 5.14(e)
below, shall be assumed by 3Dfx (collectively, the "Converting STB Options").
Accordingly, each Converting STB Option so assumed shall be deemed to constitute
an option to acquire, on
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the same terms and conditions as were applicable immediately prior to the
Effective Time under such Converting STB Option, the number, rounded down to the
nearest whole integer, of full shares of 3Dfx Common Stock equal to the product
of the number of shares of STB Common Stock that were issuable upon the full
exercise of such Converting STB Option multiplied by the Exchange Ratio at a
price per share equal to (y) the exercise price per share for the shares of STB
Common Stock otherwise purchasable pursuant to such Converting STB Option
divided by (z) the Exchange Ratio, with such exercise price per share rounded up
to the nearest whole cent.
(b) As soon as practicable after the Effective Time, 3Dfx shall
deliver to each holder of a Converting STB Option a document evidencing the
foregoing assumption of such Converting STB Option by 3Dfx.
(c) As soon as practicable after the Effective Time, 3Dfx shall file a
registration statement on Form S-8 (or any successor or other appropriate form),
or another appropriate form with respect to the shares of 3Dfx Common Stock
subject to such Converting STB Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such Converting STB Options remain outstanding.
(d) STB agrees to solicit all of its employees who hold options
granted under the STB Option Plan that will accelerate and become fully vested
and exercisable as a result of the Merger (the "Accelerated Options") to make an
election not less than five (5) Business Days prior to the Effective Date to
either (i) exercise any or all of the Accelerated Options held by such employee
upon the acceleration of such Accelerated Options and purchase the related
shares of STB Common Stock (which shares shall convert into shares of 3Dfx
Common Stock pursuant to the Merger upon the Effective Date) or (ii) receive a
cash payment from STB on the Effective Date equal to the amount, if any, by
which the exercise price of each of the Accelerated Options held by such
employee that were not exercised is exceeded by the average of the per share
closing prices of the STB Common Stock reported on the Nasdaq National Market
for the ten (10) trading days immediately preceding the Effective Date. STB
shall on the Effective Date pay to each employee who elects to receive a cash
payment the amount of such cash payment as provided above. Except as addressed
above, all Accelerated Options shall terminate on the Effective Date, and in any
event shall not be assumed by 3Dfx.
(e) STB shall take all actions necessary to ensure that all options
granted under the STB Director Plan shall become fully vested and exercisable
five (5) Business Days prior to the Effective Date. STB also agrees to solicit
all of its directors who hold options granted under the STB Director Plan to
provide notice not less than five (5) Business Days prior to the Effective Date
of his intent to exercise any or all of such options and purchase shares of STB
Common Stock (which shares shall convert into shares of 3Dfx Common Stock
pursuant to the Merger upon the Effective Date), with any such options not so
exercised becoming Converting STB Options that will be treated in accordance
with Section 5.14(a) above.
5.15 STB EMPLOYEE STOCK PURCHASE PLAN. STB agrees that it shall not effect
any new offering periods effective as of March 31, 1999 immediately after the
exercise of all Options whose Exercise Period ends on March 31, 1999;
Participants in the STB Purchase Plan with outstanding Options whose 12-month
"Exercise Period" (as such term is defined in the STB Purchase Plan) commences
April 1, 1999 and ends March 31, 2000 (the "Outstanding Purchase Options") shall
not have their rights under such Plan impaired or affected. Holders of
Outstanding Purchase Options shall have such options assumed by 3Dfx at the
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Effective Time. Accordingly, each Outstanding Purchase Option shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under the STB Purchase Plan, a number of full shares of 3Dfx Common
Stock determined as provided in the STB Purchase Plan at a price per share equal
to (y) the option price per share for the shares of STB Common Stock otherwise
purchasable pursuant to such Plan divided by (z) the Exchange Ratio rounded up
to the nearest whole cent. 3Dfx agrees that from and after the Effective Time,
STB employees may participate in the 3Dfx Employee Stock Purchase Plan, subject
to the terms and conditions of such plan. Notwithstanding anything to the
contrary contained herein, in the event that the termination date of the
offering period occurs on any date other than March 31, all dates in this
Section 5.15 shall be adjusted accordingly.
5.16 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, 3Dfx will, and will also cause
the Surviving Corporation to, fulfill and honor in all respects the obligations
of STB pursuant to any indemnification agreements between STB and its present
and former directors and officers in effect immediately prior to the Effective
Time (the "INDEMNIFIED PARTIES") and any indemnification provisions under STB's
Articles of Incorporation or Bylaws as in effect on the date hereof. The
Articles of Incorporation and Bylaws of the Surviving Corporation will contain
provisions with respect to exculpation and indemnification that are at least as
favorable to the Indemnified Parties as those contained in the Articles of
Incorporation and Bylaws of STB as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who, immediately prior to the Effective Time,
were directors, officers, employees or agents of STB, unless such modification
is required by law.
(b) For a period of six years after the Effective Time, 3Dfx will, or
will cause the Surviving Corporation to, use all commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by STB's directors'
and officers' liability insurance policy on terms substantially similar to those
applicable to the current directors and officers of STB; provided, however, that
in no event will 3Dfx or the Surviving Corporation be required to expend in
excess of 125% of the annual premium currently paid by STB for such coverage (or
such coverage as is available for such 125% of such annual premium).
(c) The provisions of this Section 5.16 are intended to be in addition
to the rights otherwise available to the Indemnified Parties by law, charter,
statute, bylaw, resolution of the Board of Directors of STB or agreement, and
shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
5.17 NOTIFICATION OF CERTAIN MATTERS. STB shall give prompt notice to 3Dfx,
and 3Dfx and Sub shall give prompt notice to STB, of the occurrence, or failure
to occur, of any event, which occurrence or failure to occur would be likely to
cause (a) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Effective Time, or (b) any material failure of STB or 3Dfx and
Sub, as the case may be, or of any officer, director, employee or agent thereof,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement. Notwithstanding the above, the
delivery of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
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5.18 TAX-FREE REORGANIZATION. From and after the date of this Agreement,
each of 3Dfx, Sub and STB shall use best efforts to cause the Merger to qualify,
and shall not, without the prior written consent of the other party hereto,
knowingly take any actions or cause any actions to be taken which could prevent
the Merger from qualifying as a reorganization under the provisions of Section
368(a) of the Code. In particular, 3Dfx and Sub represent and warrant that they
have no plan to cause the Surviving Corporation to issue additional shares of
its Stock, or dispose of stock, that would result in 3Dfx or Surviving
Corporation losing control of the Surviving Corporation within the meaning of
Section 368(c) of the Code.
5.19 STB 401(K) PLAN. At the request of 3Dfx, STB shall take all necessary
corporate action terminate, or cause its subsidiaries to terminate, as the case
may be, all 401(k) plans maintained by STB or any of its subsidiaries.
5.20 AMENDED EMPLOYMENT AGREEMENTS. 3Dfx agrees to assume, and be bound by,
each of the employment agreements between STB and each of Messrs. Ogle,
Eisenbach, Xxxxxxx and Long, as amended in contemplation of the Merger.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) HSR ACT. Any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and no action
shall have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of the Merger,
which action shall not have been withdrawn or terminated.
(b) SHAREHOLDER APPROVAL. The issuance of 3Dfx Common Stock in
connection with the Merger shall have been approved by the requisite vote of the
shareholders of 3Dfx (as described in Section 4.25) and this Agreement shall
have been approved and adopted by the requisite vote of the shareholders of STB
(as described in Section 3.25), in each case in accordance with applicable law
and the rules and, with respect to 3Dfx, in accordance with the regulations of
Nasdaq.
(c) EFFECTIVENESS OF THE S-4. The S-4 shall have been declared
effective by the SEC under the Securities Act and shall not be the subject of
any stop order or proceeding by the SEC seeking a stop order.
(d) GOVERNMENTAL ENTITY APPROVALS. All material authorizations,
consents, orders or approvals of, or declarations or filings with, or expiration
of waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, expired or been obtained, other than those that, individually or in the
aggregate, the failure to be filed,
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expired or obtained would not, in the reasonable opinion of 3Dfx, have a
Material Adverse Effect on STB or 3Dfx.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "INJUNCTION")
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order (whether temporary, preliminary or permanent)
enacted, entered or enforced which makes the consummation of the Merger illegal
or prevents or prohibits the Merger.
(f) TAX OPINIONS. 3Dfx and STB shall each have received written
opinions from their respective counsel Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation and Xxxxx Xxxxxxx Rain Xxxxxxx in form and substance
reasonably satisfactory to them to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code with respect to
the 3Dfx Common Stock to be received by holders of STB Common Stock in the
Merger. In rendering such opinions, counsel may rely upon (and 3Dfx, Sub and STB
shall be required to make) reasonably requested representations of 3Dfx, Sub and
STB.
(g) LISTING OF SHARES. 3Dfx will have amended its listing application
with the NASDAQ Stock Market to include the shares of Common Stock issued under
this Agreement.
6.2 CONDITIONS OF OBLIGATIONS OF 3DFX AND SUB. The obligations of 3Dfx and
Sub to effect the Merger are subject to the satisfaction of the following
additional conditions, unless waived in writing by 3Dfx:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of STB set forth in this Agreement shall be true and correct (determined without
regard to any materiality qualifiers in any particular representation or
warranty, including without limitation "Material Adverse Effect") (i) as of the
date hereof and (ii) as of the Closing Date, as though made on and as of the
Closing Date (provided that in the cases of clauses (i) and (ii) any such
representation and warranty made as of a specific date shall be true and correct
as of such specific date), except for such inaccuracies as individually or in
the aggregate which would not have a Material Adverse Effect (x) in the case of
clause (i) on STB and subsidiaries taken as a whole and (y) in the case of
clause (ii) on 3Dfx, STB and their respective subsidiaries taken as a whole (as
if the Merger were consummated); and 3Dfx shall have received a certificate
signed by the chief executive officer and the chief financial officer of STB to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF STB. STB shall have performed in all
material respects all obligations and covenants required to be performed by it
under this Agreement prior to or as of the Closing Date, and 3Dfx shall have
received a certificate signed by the chief executive officer and the chief
financial officer of STB to such effect.
(c) CONSENTS. 3Dfx and Sub shall have received duly executed copies of
all third-party consents and approvals contemplated by this Agreement in form
and substance reasonably satisfactory to 3Dfx and Sub, except those consents
that the failure to so receive would not, individually or in the aggregate,
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have a Material Adverse Effect on STB; provided, however, that this Section
6.2(c) shall not apply to any consent required under or in connection with the
Participation Agreement dated as of November 14, 1997 among Asset XVII Holdings,
L.L.C., as lessor, STB Systems, Inc., as lessee, and Bank One, Texas, N.A., as
lender, required by other agreements related thereto, or contemplated in
connection with transactions thereunder.
(d) SHAREHOLDER CONSENT. This Agreement and the Merger shall have been
approved by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of the STB Common Stock.
6.3 CONDITIONS OF OBLIGATION OF STB. The obligation of STB to effect the
Merger is subject to the satisfaction of the following conditions, unless waived
in writing by STB:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of 3Dfx and Sub set forth in this Agreement shall be true and correct
(determined without regard to any materiality qualifiers in any particular
representation or warranty, including without limitation "Material Adverse
Effect") (i) as of the date hereof and (ii) as of the Closing Date, as though
made on and as of the Closing Date (provided that in the cases of clauses (i)
and (ii) any such representation and warranty made as of a specific date shall
be true and correct as of such specific date), except for such inaccuracies as
individually or in the aggregate which would not have a Material Adverse Effect
(x) in the case of clause (i) on 3Dfx and its subsidiaries taken as a whole and
(y) in the case of clause (ii) on 3Dfx, STB and their respective subsidiaries
taken as a whole (as if the Merger were consummated); and STB shall have
received a certificate signed by the chief executive officer and the chief
financial officer of 3Dfx and the president of Sub to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF 3DFX AND SUB. Each of 3Dfx and Sub
shall have performed in all material respects all obligations and covenants
required to be performed by it under this Agreement prior to or as of the
Closing Date, and STB shall have received a certificate signed by the chief
executive officer and the chief financial officer of 3Dfx and the president of
Sub to such effect.
(c) CONSENTS. STB shall have received duly executed copies of all
material third-party consents and approvals contemplated by this Agreement in
form and substance satisfactory to STB, except those consents that the failure
to so receive, would not, individually or in the aggregate, have a Material
Adverse Effect on 3Dfx.
(d) ELECTION OF BOARD. 3Dfx shall have reconstituted its Board,
effective as of the Effective Time, such that its membership consists of those
persons listed in Exhibit G to this Agreement.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time of the Merger, whether before or after approval of the Merger by
the shareholders of 3Dfx and STB:
(a) by mutual written consent duly authorized by the Boards of
Directors of 3Dfx and STB;
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(b) by either 3Dfx or STB if the Merger shall not have been consummated by May
31, 1999 (provided that if the Merger shall not have been consummated due to the
waiting period (or any extension thereof) under the HSR Act not having expired
or been terminated, or due to an action having been instituted by the Department
of Justice or Federal Trade Commission challenging or seeking to enjoin the
consummation of the Merger, then such date shall be extended to July 31, 1999,
and provided further that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose action or failure to
act has been the cause of or resulted in the failure of the Merger to occur on
or before such date and such action or failure to act constitutes a breach of
this Agreement);
(c) by either 3Dfx or STB if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall (i) have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree or ruling is final and nonappealable or (ii) seek to
enjoin the Merger and the terminating party reasonably believes that the time
period required to resolve such governmental action and the related uncertainty
is reasonably likely to have a Material Adverse Effect on either 3Dfx or STB; or
(d) by either 3Dfx or STB if the required approvals of the
shareholders of 3Dfx or STB contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of shareholders duly convened therefor or at any adjournment
thereof (provided that the right to terminate this Agreement under this Section
7.1(d) shall not be available to any party where the failure to obtain
shareholder approval of such party shall have been caused by the action or
failure to act of such party in breach of this Agreement); or
(e) by either 3Dfx or STB, if STB (A) shall have accepted or
recommended to the shareholders of STB a Superior Proposal, and (B) in the case
of the termination of this Agreement by STB, STB shall have paid to 3Dfx all
amounts owing by STB to 3Dfx under Section 7.3(b); or
(f) by 3Dfx, if the Board of Directors of STB shall have withdrawn,
modified or refrained from making its recommendation concerning the Merger
referred to in Section 5.4 or if a third party other than 3Dfx or any of its
affiliates (including a person or a group as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) acquires beneficial
ownership of, or the right to acquire beneficial ownership of, at least
thirty-three percent (33%) of STB's outstanding voting equity securities; or
(g) by STB, upon a breach of any representation, warranty, covenant or
agreement on the part of 3Dfx set forth in this Agreement, or if any
representation or warranty of 3Dfx shall have become untrue, in either case such
that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided that if such inaccuracy in 3Dfx's
representations and warranties or breach by 3Dfx is curable by 3Dfx through the
exercise of its reasonable efforts and for so long as 3Dfx continues to exercise
such reasonable efforts, STB may not terminate this Agreement under this Section
7.1(g); or
(h) by 3Dfx, upon a breach of any representation, warranty, covenant
or agreement on the part of STB set forth in this Agreement, or if any
representation or warranty of STB shall have become untrue, in either case such
that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become
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untrue, provided, that if such inaccuracy in STB's representations and
warranties or breach by STB is curable by STB through the exercise of its
reasonable efforts and for so long as STB continues to exercise such reasonable
efforts, 3Dfx may not terminate this Agreement under this Section 7.1(h).
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 7.2, Section 7.3 and
Article 8, each of which shall survive the termination of this Agreement, and
(ii) nothing herein shall relieve any party from liability for any breach of
this Agreement. No termination of this Agreement shall affect the obligations of
the parties contained in the Confidentiality Agreement, all of which obligations
shall survive the termination of this Agreement in accordance with its terms.
7.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that 3Dfx and STB shall share equally
all fees and expenses, other than attorneys' fees, incurred in relation to the
printing and filing of the Proxy Statement (including any preliminary materials
related thereto) and the S-4 (including financial statements and exhibits) and
any amendments or supplements thereto.
(b) Upon the occurrence of any of the following events, STB shall
immediately make payment to 3Dfx (by wire transfer or cashiers check) of a
breakup fee in the amount of $5.0 million (the "BREAKUP FEE"): (i) STB shall
have accepted a Superior Proposal; (ii) the Board of Directors of STB shall have
withdrawn, modified or refrained from making its recommendation concerning the
Merger referred to in Section 5.4, or shall have disclosed publicly its
intention to change such recommendation; or (iii) a third party other than 3Dfx
or its affiliates (including a person or a group as defined under Section 13(d)
of the Exchange Act and the rules and regulations thereunder) acquires
beneficial ownership of, or the right to acquire beneficial ownership of, at
least thirty-three percent (33%) of STB's outstanding voting equity securities.
Payment of the Breakup Fee shall be subject to offset as described in the STB
Option Agreement.
(c) Upon the occurrence of a termination pursuant to Sections 7.1(d),
(g) or (h), the terminating party shall be entitled to receive from the
non-terminating party all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby; provided, however, that this
Section 7.3(c) shall not apply if, as a result of such termination by 3Dfx under
Sections 7.1(d) or (h), STB shall become obligated to pay the Breakup Fee in
accordance with Section 7.3(b).
(d) Payment of the fees described in Section 7.3(b) above shall not be
in lieu of damages incurred in the event of breach of this Agreement.
ARTICLE 8
GENERAL PROVISIONS
8.1 AMENDMENT. This Agreement may be amended prior to the Effective Time by
the parties, by action taken by their respective Boards of Directors, at any
time before or after approval of the Merger by the shareholders of 3Dfx and STB
but, after any such approval, no amendment shall be made which by law
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requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
8.2 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties, by action taken by their respective Boards of Directors, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties, (ii) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (iii) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
8.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be conditions
to the Merger and shall not survive the Merger, except for the agreements
contained in Sections 2.3 (further assurances) 5.14 (options), 5.15 (employee
stock purchase plan), 5.16 (indemnification), 5.18 (tax-free reorganization) and
7.3 (fees and expenses), each of which shall survive the Merger.
8.4 ENTIRE AGREEMENT. This Agreement, the STB Option Agreement, (and the
other exhibits hereto), the Confidentiality Agreement and the other documents
referenced herein contain the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior arrangements and
understandings, both written and oral, with respect thereto.
8.5 SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.6 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if contained
in a written instrument and shall be deemed given if delivered personally,
faxed, sent by nationally-recognized, overnight courier or mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
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(a) if to 3Dfx or Sub, to:
3Dfx Interactive, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq./Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to STB, to:
STB Systems, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
cc: Legal Department
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a fax, when the party receiving such fax shall have confirmed receipt of
the communication, (c) in the case of delivery by nationally-recognized,
overnight courier, on the Business Day following dispatch and (d) in the case of
mailing, on the third Business Day following such mailing.
8.7 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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8.9 BENEFITS; ASSIGNMENT. This Agreement is not intended to confer upon any
person other than the parties any rights or remedies hereunder and shall not be
assigned by operation of law or otherwise; provided, however, that (i) the
holders of STB Options and the participants under the STB Purchase Plan are
intended beneficiaries of the covenants and agreements contained in Sections
5.14 and 5.15; (ii) the officers and directors of STB are intended beneficiaries
of the covenants and agreements contained in Section 5.16; (iii) certain
officers of STB are intended beneficiaries of the Agreements described in
Section 5.20; and (iv) Sub may assign all or any portion of its rights hereunder
to any other newly-formed, wholly-owned subsidiary of 3Dfx, and STB shall
execute any amendment to this Agreement necessary to provide the benefits of
this Agreement to any such assignee.
8.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California where applicable to
contracts made and to be performed therein except to the extent that the laws of
the State of Texas shall govern the Merger.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized, as of the date first
written above.
3DFX INTERACTIVE, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
-----------------------------------
Title: President & CEO
----------------------------------
VOODOO MERGER SUB, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
-----------------------------------
Title: President & CEO
----------------------------------
STB SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------------
Title: Chief Executive Officer
----------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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EXHIBIT A
FORM OF STB OPTION AGREEMENT
54
STOCK OPTION AGREEMENT
THE OPTION EVIDENCED BY THIS OPTION AGREEMENT MAY NOT BE TRANSFERRED EXCEPT TO A
WHOLLY-OWNED SUBSIDIARY OF 3DFX.
THIS STOCK OPTION AGREEMENT (the "Option Agreement") is dated as of
December 13, 1998, between STB Systems, Inc., a Texas corporation ("STB"), and
3Dfx Interactive, Inc., a California corporation ("3Dfx").
RECITALS
A. 3Dfx, Vodoo Merger Sub, a Texas Corporation and a wholly-owned
subsidiary of 3Dfx ("Sub"), and STB are simultaneously herewith entering into an
Agreement and Plan of Reorganization (the "Reorganization Agreement") which
provides, among other things, that, upon the terms and subject to the conditions
thereof, Sub will be merged with and into STB (the "Merger"), pursuant to which
each issued and outstanding share of common stock, par value $0.01 per share, of
STB (the "STB Common Stock") outstanding immediately prior to the Merger will be
converted into .65 shares (the "Exchange Ratio") of common stock of 3Dfx, no par
value per share.
B. As a condition to their willingness to enter into the Reorganization
Agreement, 3Dfx and Sub have required that STB agree, and STB has agreed, to
enter into this Option Agreement, which provides, among other things, that STB
grant 3Dfx an option to purchase shares of STB Common Stock upon the terms and
subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Option Agreement and the Reorganization Agreement,
the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this Option
Agreement, STB hereby grants to 3Dfx an irrevocable option (the "Option") to
purchase 1,890,883 shares of STB Common Stock (the "Option Shares") at an
exercise price of $5.7813 per share of STB Common Stock, subject to adjustment
as provided below (the "Option Price"). Capitalized terms used herein but not
defined herein shall have the meanings set forth in the Reorganization
Agreement.
2. EXERCISE OF OPTION.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 9 of this Option Agreement, prior to the termination of this Option
Agreement in accordance with its terms, 3Dfx or its designee (which shall be a
wholly-owned subsidiary of 3Dfx) may exercise the Option, in whole or in part,
at any time or from time to time on or after the public disclosure of, or 3Dfx
shall have learned of, the earliest event to occur of the following:
55
(i) any person or group other than 3Dfx or its affiliates shall
have acquired or become the beneficial owners (within the meaning of Section
13(d)(3) of the Exchange Act) of more than 20% of the outstanding shares of STB
Common Stock, or shall have been granted any option or right, conditional or
otherwise, to acquire more than 20% of the outstanding shares of STB Common
Stock (provided that in the event that such option or right expires unexercised,
then to the extent the Option has not already been exercised, it shall no longer
be exercisable except as otherwise provided in this Option Agreement);
(ii) any person other than 3Dfx and its affiliates shall have
made a tender offer or exchange offer (or entered into an agreement to make such
a tender offer or exchange offer) for at least 20% of the then outstanding
shares of STB Common Stock (provided that in the event that such tender offer or
exchange offer or other proposal is withdrawn or terminates prior to
consummation of such offer or proposal, then to the extent the Option has not
already been exercised, it shall no longer be exercisable except as otherwise
provided in this Section 2(a)); or
(iii) STB shall have entered into a written definitive agreement
or written agreement in principle in connection with a liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or a
material portion of the assets of STB and its subsidiaries, taken as a whole or
all or a material portion of the equity interest in STB and its subsidiaries,
taken as a whole, or other similar transaction or business combination.
(b) In the event 3Dfx wishes to exercise the Option at such time as
the Option is exercisable, 3Dfx shall deliver written notice (the "Exercise
Notice") to STB specifying its intention to exercise the Option, the total
number of Option Shares it wishes to purchase and a date and time for the
closing of such purchase (a "Closing") not later than thirty (30) business days
from the later of (i) the date such Exercise Notice is given and (ii) the
expiration or termination of any applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). If prior to the Expiration Date (as defined in Section 11 below) any
person or group (other than 3Dfx or its affiliates) shall have made a bona fide
proposal that becomes publicly disclosed, with respect to a tender offer or
exchange offer for 50% or more of the then outstanding shares of STB Common
Stock (a "Share Proposal"), a merger, consolidation or other business
combination (a "Merger Proposal") or any acquisition of a material portion of
the assets of STB (an "Asset Proposal"), or shall have acquired 50% or more of
the then outstanding shares of STB Common Stock (a "Share Acquisition"), and
this Option is then exercisable then 3Dfx, in lieu of exercising the Option,
shall have the right at any time thereafter (for so long as the Option is
exercisable under Section 2(a)) to request in writing that STB pay, and promptly
(but in any event not more than five (5) business days) after the giving by 3Dfx
of such request, STB shall, subject to Section 2(c) below, pay to 3Dfx, in
cancellation of the Option, an amount in cash (the "Cancellation Amount") equal
to (i) the excess over the Option Price of the greater of (A) the last sale
price of a share of STB Common Stock as reported on the Nasdaq Stock Market on
the last trading day prior to the date of the Exercise Notice, or (B)(1) the
highest price per share of STB Common Stock offered to be paid or paid by any
such person or group pursuant to or in connection with a Share Proposal, a Share
Acquisition or a Merger Proposal or (2) the aggregate consideration offered to
be paid or paid in any transaction or proposed transaction in connection with an
Asset Proposal, divided by the
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number of shares of STB Common Stock then outstanding, multiplied by (ii) the
number of Option Shares then covered by the Option. If all or a portion of the
price per share of STB Common Stock offered paid or payable or the aggregate
consideration offered paid or payable for the assets of STB, each as
contemplated by the preceding sentence, consists of noncash consideration, such
price or aggregate consideration shall be the cash consideration, if any, plus
the fair market value of the non-cash consideration as determined by the
investment bankers of STB and the investment bankers of 3Dfx.
(c) Following exercise of the Option by 3Dfx, in the event that 3Dfx
sells, pledges or otherwise disposes (including, without limitation, by merger
or exchange) any of the Option Shares (a "Sale") then (i) any Breakup Fee due
and payable by STB following such time shall be offset by the amount received
(whether in cash, loan proceeds, securities or otherwise) by 3Dfx in such Sale
less the exercise price of such Option Shares sold in the Sale (the "Offset
Amount"), and (ii) if STB has paid to 3Dfx the Breakup Fee prior to the Sale,
then 3Dfx shall immediately remit to STB the Offset Amount. Further,
notwithstanding Section 2(b) above, in the event that 3Dfx receives the
Cancellation Amount in lieu of exercising the Option, then (A) any Breakup Fee
due and payable by STB following such time shall be reduced by the Cancellation
Amount (the "Cancellation Offset Amount"), and (B) if STB has paid to 3Dfx the
Breakup Fee prior to 3Dfx's receipt of such Cancellation Amount, then 3Dfx shall
only be entitled to receive that portion of the Cancellation Offset Amount that
exceeds the Breakup Fee. Notwithstanding the above, in no event shall the Offset
Amount or the Cancellation Offset Amount be greater than the Breakup Fee.
3. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings under
Section 2 of this Option Agreement shall be held at the offices of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 650 Page Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000-0000, or at such other place as STB and 3Dfx may agree.
At any Closing hereunder, (a) 3Dfx or its designee will make payment to STB of
the aggregate price for the Option Shares being so purchased by delivery of a
certified check, official bank check or wire transfer of funds pursuant to STB's
instructions payable to STB in an amount equal to the product obtained by
multiplying the Option Price by the number of Option Shares to be purchased, and
(b) upon receipt of such payment STB will deliver to 3Dfx or its designee (which
shall be a wholly-owned subsidiary of 3Dfx) a certificate or certificates
representing the number of validly issued, fully paid and non-assessable Option
Shares so purchased, in the denominations and registered in such names (which
shall be 3Dfx or a wholly-owned subsidiary of 3Dfx) designated to STB in writing
by 3Dfx.
4. REGISTRATION AND LISTING OF OPTION SHARES.
(a) STB agrees to use its reasonable best efforts to (i) effect as
promptly as possible upon the request of 3Dfx and (ii) cause to become and
remain effective for a period of not less than six (6) months (or such shorter
period as may be necessary to effect the distribution of such shares), the
registration under the Securities Act of 1933, as amended (the "Securities Act")
and any applicable state securities laws, of all or any part of the Option
Shares as may be specified in such request, provided, however, that (i) 3Dfx
shall have the right to select the managing underwriter for
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any such offering after consultation with STB, which managing underwriter shall
be reasonably acceptable to STB and (ii) 3Dfx shall not be entitled to more than
one (1) effective registration statement hereunder.
(b) In addition to such demand registration, if STB proposes to effect
a registration of STB Common Stock for its own account or for the account of any
other stockholder of STB, STB will give prompt written notice to all holders of
Options or Option Shares of its intention to do so and shall use its reasonable
best efforts to include therein all Option Shares requested by 3Dfx to be so
included. No registration effected under this Section 4(b) shall relieve STB of
its obligations to effect a demand registration under Section 4(a) hereof.
(c) Registrations effected under this Section 4 may be effected only
during the two (2) year period following the date of the Closing and shall be
effected at STB's expense, including the fees and expenses of counsel to the
holder of Options or Option Shares but excluding underwriting discounts and
commissions to brokers or dealers. In connection with each registration under
this Section 4, STB shall indemnify and hold each holder of Options or Option
Shares participating in such offering (a "Holder"), its underwriters and each of
their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including, without limitation, investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which such Holder, its underwriters and each of their respective
affiliates may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement (including
any prospectus therein), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, other than such loss, claims, damages, liabilities or expenses
(or actions in respect thereof) which arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in written
information furnished by a Holder to STB expressly for use in such registration
statement.
(d) In connection with any registration statement pursuant to this
Section 4, each Holder agrees to furnish STB with such information concerning
itself and the proposed sale or distribution as shall reasonably be required in
order to ensure compliance with the requirements of the Securities Act. In
addition, 3Dfx shall indemnify and hold STB, its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including without limitation investigation expenses
and fees and disbursements of counsel and accountants), joint or several, to
which STB, its underwriters and each of their respective affiliates may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in written information furnished by any Holder to STB expressly
for use in such registration statement.
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(e) Upon the issuance of Option Shares hereunder, STB will use its
reasonable best efforts promptly to list such Option Shares with the Nasdaq
Stock Market or on such national or other exchange on which the shares of STB
Common Stock are at the time listed.
5. REPRESENTATIONS AND WARRANTIES OF STB. STB hereby represents and
warrants to 3Dfx as follows:
(a) STB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has requisite power and
authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of STB and no other corporate proceedings
on the part of STB are necessary to authorize this Option Agreement or to
consummate the transactions contemplated hereby. The Board of Directors of STB
has duly approved the issuance and sale of the Option Shares, upon the terms and
subject to the conditions contained in this Option Agreement, and the
consummation of the transactions contemplated hereby. This Option Agreement has
been duly and validly executed and delivered by STB and, assuming this Option
Agreement has been duly and validly authorized, executed and delivered by 3Dfx,
constitutes a valid and binding obligation of STB enforceable against STB in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally; the availability of injunctive relief and other equitable remedies;
and limitations imposed by law on indemnification for liability under federal
securities laws.
(c) STB has taken all necessary action to authorize and reserve for
issuance and to permit it to issue, and at all times from the date of this
Option Agreement through the date of expiration of the Option will have reserved
for issuance upon exercise of the Option, 1,890,883 authorized shares of STB
Common Stock (or such other amount as may be required pursuant to Section 10
hereof), each of which, upon issuance pursuant to this Option Agreement and when
paid for as provided herein, will be validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all claims, liens,
charges, encumbrances and security interests and not subject to any preemptive
rights.
(d) The execution, delivery and performance of this Option Agreement
by STB and the consummation by it of the transactions contemplated hereby except
as required by the HSR Act (if applicable), and, with respect to Section 4,
compliance with the provisions of the Securities Act and any applicable state
securities laws, do not require the consent, waiver, approval, license or
authorization of or result in the acceleration of any obligation under, or
constitute a default under, any term, condition or provision of any charter or
bylaw, or any indenture, mortgage, lien, lease, agreement, contract, instrument,
order, judgment, ordinance, regulation or decree or any restriction to which STB
or any property of STB or its subsidiaries is bound, except where failure to
obtain such consents, waivers, approvals, licenses or authorizations or where
such acceleration or defaults could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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6. REPRESENTATIONS AND WARRANTIES OF 3DFX. 3Dfx hereby represents and
warrants to STB that:
(a) 3Dfx is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has requisite power and
authority to enter into and perform this Option Agreement.
(b) The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of 3Dfx and no other corporate proceedings
on the part of 3Dfx are necessary to authorize this Option Agreement or to
consummate the transactions contemplated hereby. This Option Agreement has been
duly and validly executed and delivered by 3Dfx and, assuming this Option
Agreement has been duly executed and delivered by STB, constitutes a valid and
binding obligation of 3Dfx enforceable against 3Dfx in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally; the
availability of injunctive relief and other equitable remedies; and limitations
imposed by law on indemnification for liability under federal securities laws.
(c) 3Dfx or its designee is acquiring the Option and it will acquire
the Option Shares issuable upon the exercise thereof for its own account and not
with a view to the distribution or resale thereof in any manner not in
accordance with applicable law.
7. COVENANTS OF 3DFX. 3Dfx agrees not to transfer or otherwise dispose of
the Option or the Option Shares, or any interest therein, except in compliance
with the Securities Act and any applicable state securities law. 3Dfx further
agrees to the placement of the following legend on the certificate(s)
representing the Option Shares (in addition to any legend required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (ii) ANY
APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO TRANSFER OR
OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN, MAY BE MADE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH
OTHER STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
8. REASONABLE BEST EFFORTS. 3Dfx and STB shall take, or cause to be taken,
all reasonable action to consummate and make effective the transactions
contemplated by this Option Agreement, including, without limitation reasonable
best efforts to obtain any necessary consents of third parties and governmental
agencies and the filing by 3Dfx and STB promptly after the date hereof of any
required HSR Act notification forms and the documents required to comply with
the HSR Act, subject to the applicable provisions of the Reorganization
Agreement.
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9. CERTAIN CONDITIONS. The obligation of STB to issue Option Shares
under this Option Agreement upon exercise of the Option shall be subject to the
satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by 3Dfx pursuant to this Option Agreement under the HSR Act shall have
expired or been terminated;
(b) the representations and warranties of 3Dfx made in Section 6 of
this Option Agreement shall be true and correct in all material respects as of
the date of the Closing for the issuance of such Option Shares; and
(c) no order, decree or injunction entered by any court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
in the United States shall be in effect which prohibits the exercise of the
Option or acquisition of Option Shares pursuant to this Option Agreement.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change
in the number of issued and outstanding shares of STB Common Stock by reason of
any stock dividend, stock split, recapitalization, merger, rights offering,
share exchange or other change in the corporate or capital structure of STB,
3Dfx shall receive, upon exercise of the Option, the stock or other securities,
cash or property to which 3Dfx would have been entitled if 3Dfx had exercised
the Option and had been a holder of record of shares of STB Common Stock on the
record date fixed for determination of holders of shares of STB Common Stock
entitled to receive such stock or other securities, cash or property at the same
aggregate price as the aggregate Option Price of the Option Shares. In the event
that any additional shares of Common Stock are issued after December 11, 1998
(other than pursuant to an event described in the preceding sentence of this
Option Agreement), the number of shares of Common Stock subject to the Option
shall be adjusted so that, after such issuance, the number of shares of Common
Stock subject to the Option (ignoring any exercise of this Option) equals at
least fifteen percent (15%) of the number of shares of STB Common Stock then
issued and outstanding (other than shares of STB Common Stock issued pursuant to
the Option); provided, however, that nothing contained in this Section 10 shall
be deemed to authorize STB to issue any shares of STB Common Stock in violation
of the provisions of the Reorganization Agreement.
11. EXPIRATION. The Option shall expire at the earlier of (i) the Effective
Time (as defined in the Reorganization Agreement) or (ii) 180 days after
termination of the Reorganization Agreement in accordance with the terms thereof
(such expiration date is referred to as the "Expiration Date").
12. GENERAL PROVISIONS.
(a) Survival. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing, except for the
representations and warranties in Section 5(d) hereof which shall be deemed to
have been made only as of the date hereof.
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(b) Further Assurances. If 3Dfx exercises the Option, or any portion
thereof, in accordance with the terms of this Option Agreement, STB and 3Dfx
will execute and deliver all such further documents and instruments and use
their reasonable best efforts to take all such further action as may be
necessary in order to consummate the transactions contemplated thereby.
(c) Severability. It is the desire and intent of the parties that the
provisions of this Option Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Option Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Option Agreement or affecting the validity or enforceability
of such provision in any other jurisdiction. Notwithstanding the foregoing, if
such provision could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Option
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
(d) Assignment. This Option Agreement shall be binding on and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided that STB shall not be entitled to assign or otherwise transfer any of
its rights or obligations hereunder without the written consent of 3Dfx.
(e) Specific Performance. The parties agree and acknowledge that in
the event of a breach of any provision of this Option Agreement, the aggrieved
party would be without an adequate remedy at law. The parties therefore agree
that in the event of a breach of any provision of this Option Agreement, the
aggrieved party may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Option Agreement. By seeking or obtaining any such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
(f) Amendments. This Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by 3Dfx and STB.
(g) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given if
delivered personally, telecopied, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the other party at the following addresses (or such other
address for a party as shall be specified by like notice):
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If to 3Dfx:
3Dfx Interactive, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq./Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to STB:
STB Systems, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
(h) Headings. The headings contained in this Option Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Option Agreement.
(i) Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
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63
(j) Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of California without giving
effect to the conflicts of laws principles thereof.
(k) Jurisdiction and Venue. Each of STB and 3Dfx hereby agrees that
any proceeding relating to this Option Agreement shall be brought in a state
court of California. Each of STB and 3Dfx hereby consents to personal
jurisdiction in any such action brought in any such California court, consents
to service of process by registered mail made upon such party and such party's
agent and waives any objection to venue in any such California court or to any
claim that any such California court is an inconvenient forum.
(l) Entire Agreement. This Option Agreement, the Reorganization
Agreement and any documents and instruments referred to herein and therein
constitute the entire agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and thereof. This Option Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the successors and
permitted assigns of the parties hereto. Nothing in this Option Agreement shall
be construed to give any person other than the parties to this Option Agreement
or their respective successors or permitted assigns any legal or equitable
right, remedy or claim under or in respect of this Option Agreement or any
provision contained herein.
(m) Expenses. Except as otherwise provided in this Option Agreement,
each party shall pay its own expenses incurred in connection with this Option
Agreement.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Option Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
3DFX INTERACTIVE, INC.
By:
-----------------------------------------
Name: L. Xxxxxxx Xxxxxxx
Title: President and Chief Executive Officer
STB SYSTEMS, INC.
By:
-----------------------------------------
Name:
Title:
[Stock Option Agreement Signature Page]
65
EXHIBIT B
FORM OF STB VOTING AGREEMENT
66
STB SYSTEMS, INC.
VOTING AGREEMENT
This Voting Agreement ("AGREEMENT") is made and entered into as of
December 13, 1998 between 3Dfx Interactive, Inc., a California corporation
("3DFX"), and the undersigned shareholder ("SHAREHOLDER") of STB Systems, Inc. a
Texas corporation (the "STB").
RECITALS
A. Concurrently with the execution of this Agreement, 3Dfx, STB and
Voodoo Merger Sub, a Texas corporation and a wholly owned subsidiary of 3Dfx
("MERGER SUB"), have entered into an Agreement and Plan of Reorganization of
even date herewith (the "MERGER AGREEMENT") which provides for the merger (the
"MERGER") of Merger Sub with and into STB. Pursuant to the Merger, shares of
Common Stock of STB will be converted into the right to receive shares of Common
Stock of 3Dfx in the manner set forth in the Merger Agreement.
B. The Shareholder is the record holder and beneficial owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) of such number of shares of the outstanding Common Stock of STB
as is indicated on the final page of this Agreement (the "SHARES").
C. As a material inducement to enter into the Merger Agreement, 3Dfx
desires the Shareholder to agree, and the Shareholder is willing to agree, not
to transfer or otherwise dispose of any of the Shares, or any other shares of
capital stock of STB acquired hereafter and prior to the Expiration Date (as
defined in Section 1.1 below), except as otherwise permitted hereby, and to vote
the Shares and any other such shares of capital stock of STB so as to facilitate
consummation of the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, the parties agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Shareholder agrees not to transfer
(except as may be specifically required by court order), sell, exchange, pledge
or otherwise dispose of or encumber any of the Shares or any New Shares as
defined in Section 1.2 below, or to make any offer or agreement relating
thereto, at any time prior to the Expiration Date. As used herein, the term
"EXPIRATION DATE" shall mean the earlier to occur of (i) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Merger Agreement and (ii) such date and time as the Merger Agreement shall
be terminated in accordance with its terms.
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67
1.2 Additional Purchases. Shareholder agrees that any shares of
capital stock of STB that Shareholder purchases or with respect to which
Shareholder otherwise acquires beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) after the execution of this Agreement and
prior to the Expiration Date ("NEW SHARES") shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the shareholders of STB
called with respect to any of the following, and at every adjournment thereof,
and on every action or approval by written consent of the shareholders of STB
with respect to any of the following, Shareholder shall vote the Shares and any
New Shares: (i) in favor of approval of the Merger Agreement and the Merger and
any matter that could reasonably be expected to facilitate the Merger; and (ii)
against approval of any proposal made in opposition to or competition with
consummation of the Merger and against any merger, consolidation, sale of
assets, reorganization or recapitalization, with any party other than with 3Dfx
and its affiliates and against any liquidation or winding up of STB (each of the
foregoing is hereinafter referred to as an "OPPOSING PROPOSAL"). Shareholder
agrees not to take any actions contrary to Shareholder's obligations under this
Agreement.
3. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Shareholder agrees to deliver to 3Dfx a proxy in the form attached hereto as
Annex A (the "Proxy"), which shall be irrevocable, with respect to the total
number of shares of capital stock of STB beneficially owned (as such term is
defined in Rule 13d-3 under the Exchange Act) by Shareholder set forth therein.
4. Representations, Warranties and Covenants of the Shareholder.
Shareholder hereby represents, warrants and covenants to 3Dfx as follows:
4.1 Ownership of Shares. Shareholder (i) is the beneficial owner
of the Shares, which at the date hereof and at all times up until the Expiration
Date will be free and clear of any liens, claims, options, charges or other
encumbrances; (ii) does not beneficially own any shares of capital stock of STB
other than the Shares (excluding shares as to which Shareholder currently
disclaims beneficial ownership in accordance with applicable law); and (iii) has
full power and authority to make, enter into and carry out the terms of this
Agreement and the Proxy.
4.2 No Proxy Solicitations. Shareholder will not, and will not
permit any entity under Shareholder's control to: (i) solicit proxies or become
a "participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) with respect to an Opposing Proposal or otherwise
encourage or assist any party in taking or planning any action that would
compete with, restrain or otherwise serve to interfere with or inhibit the
timely consummation of the Merger in accordance with the terms of the Merger
Agreement; (ii) initiate a shareholders' vote or action by consent of STB
shareholders with respect to an Opposing Proposal; or (iii) become a member of a
"group" (as such term is used in Section 13(d) of the Exchange Act) with respect
to any voting securities of STB with respect to an Opposing Proposal.
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68
5. Additional Documents. Shareholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of 3Dfx and Shareholder, as the case may be, to carry out the
intent of this Agreement.
6. Consent and Waiver. Shareholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Merger under the terms
of any agreements to which Shareholder is a party or pursuant to any rights
Shareholder may have.
7. Termination. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
8. Miscellaneous.
8.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
8.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
8.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
8.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that 3Dfx will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreement of
Shareholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to 3Dfx upon any such violation, 3Dfx shall
have the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to 3Dfx at law or in equity.
8.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier (prepaid)
to the respective parties as follows:
If to 3Dfx: 3Dfx Interactive, Inc.
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69
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq./
Xxxxx X. Xxxxxxx, Esq.
If to the Shareholder: At the address provided on the signature
page hereto
With a copy to: Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
8.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the conflicts of laws principles thereof.
8.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
8.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
8.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction of interpretation of this
Agreement.
[Remainder of This Page Intentionally Left Blank]
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70
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
3DFX INTERACTIVE, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
SHAREHOLDER
-----------------------------------------
Name:
Shareholder's Address for Notice:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Number of Shares Beneficially Owned:
_________________ shares of Common Stock
[Voting Agreement Signature Page]
71
ANNEX A
IRREVOCABLE PROXY
The undersigned Shareholder of STB Systems, Inc., a Texas corporation
("STB"), hereby irrevocably appoints the directors on the Board of Directors of
3Dfx Interactive, Inc., a California corporation ("3DFX"), and each of them, as
the sole and exclusive attorneys and proxies of the undersigned, with full power
of substitution and resubstitution, to the full extent of the undersigned's
rights with respect to the shares of capital stock of STB beneficially owned by
the undersigned, which shares are listed on the final page of this Irrevocable
Proxy (the "SHARES"), and any and all other shares or securities issued or
issuable in respect thereof on or after the date hereof, until the earlier to
occur of (i) such time as that certain Agreement and Plan of Reorganization
dated as of December 13, 1998 (the "MERGER AGREEMENT"), among 3Dfx, Voodoo
Merger Sub, Inc., a Texas corporation and a wholly-owned subsidiary of 3Dfx
("MERGER SUB"), and STB, shall be terminated in accordance with its terms or
(ii) the Merger (as defined in the Merger Agreement) is effective. Upon the
execution hereof, all prior proxies given by the undersigned with respect to the
Shares and any and all other shares or securities issued or issuable in respect
thereof on or after the date hereof are hereby revoked and no subsequent proxies
will be given.
This proxy is irrevocable, is granted pursuant to the Voting Agreement
dated as of December 13, 1998 between 3Dfx and the undersigned Shareholder (the
"VOTING AGREEMENT"), and is granted in consideration of 3Dfx entering into the
Merger Agreement. 3Dfx and the undersigned Shareholder agree and acknowledge
that the grant of this irrevocable proxy is a material inducement for 3Dfx to
enter into the Merger Agreement and is therefore coupled with an interest and
irrevocable. The attorneys and proxies named above will be empowered at any time
prior to termination of the Merger Agreement to exercise all voting and other
rights (including, without limitation, the power to execute and deliver written
consents with respect to the Shares) of the undersigned at every annual, special
or adjourned meeting of STB shareholders, and in every written consent in lieu
of such a meeting, or otherwise, in favor of approval of the Merger and the
Merger Agreement and any matter that could reasonably be expected to facilitate
the Merger, and against any proposal made in opposition to or competition with
the consummation of the Merger and against any merger, consolidation, sale of
assets, reorganization or recapitalization of STB with any party other than 3Dfx
and its affiliates and against any liquidation or winding up of STB.
The attorneys and proxies named above may only exercise this proxy to
vote the Shares subject hereto at any time prior to termination of the Merger
Agreement at every annual, special or adjourned meeting of the shareholders of
STB and in every written consent in lieu of such meeting, in favor of approval
of the Merger and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger, and against any merger, consolidation, sale
of assets, reorganization or recapitalization of STB with any party other than
3Dfx and its affiliates, and against any liquidation or winding up of STB, and
may not exercise this proxy on any other matter. The undersigned Shareholder may
vote the Shares on all other matters.
72
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: December __, 1998
Signature of Shareholder:____________________________
Print Name of Shareholder:___________________________
Shares beneficially owned:
_______________________________shares of Common Stock
73
EXHIBIT C
FORM OF 3DFX VOTING AGREEMENT
74
3DFX INTERACTIVE, INC.
VOTING AGREEMENT
This Voting Agreement ("AGREEMENT") is made and entered into as of
December 13, 1998 between STB Systems, Inc., a Texas corporation ("STB"), and
the undersigned shareholder ("SHAREHOLDER") of 3Dfx Interactive, Inc., a
California corporation ("3DFX").
RECITALS
A. Concurrently with the execution of this Agreement, 3Dfx, STB, and
Voodoo Merger Sub, a Texas corporation and a wholly owned subsidiary of 3Dfx
("MERGER SUB"), have entered into an Agreement and Plan of Reorganization of
even date herewith (the "MERGER AGREEMENT") which provides for the merger (the
"MERGER") of Merger Sub with and into STB. Pursuant to the Merger, shares of
Common Stock of STB will be converted into the right to receive shares of Common
Stock of 3Dfx in the manner set forth in the Merger Agreement.
B. The Shareholder is the record holder and beneficial owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) of such number of shares of the outstanding Common Stock of
3Dfx as is indicated on the final page of this Agreement (the "SHARES").
C. As a material inducement to enter into the Merger Agreement, STB
desires the Shareholder to agree, and the Shareholder is willing to agree, not
to transfer or otherwise dispose of any of the Shares, or any other shares of
capital stock of 3Dfx acquired hereafter and prior to the Expiration Date (as
defined in Section 1.1 below), except as otherwise permitted hereby, and to vote
the Shares and any other such shares of capital stock of 3Dfx so as to
facilitate consummation of the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, the parties agree as follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Shareholder agrees not to transfer
(except as may be specifically required by court order), sell, exchange, pledge
or otherwise dispose of or encumber any of the Shares or any New Shares as
defined in Section 1.2 below, or to make any offer or agreement relating
thereto, at any time prior to the Expiration Date. As used herein, the term
"EXPIRATION DATE" shall mean the earlier to occur of (i) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Merger Agreement and (ii) such date and time as the Merger Agreement shall
be terminated in accordance with its terms.
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75
1.2 Additional Purchases. Shareholder agrees that any shares of
capital stock of 3Dfx that Shareholder purchases or with respect to which
Shareholder otherwise acquires beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) after the execution of this Agreement and
prior to the Expiration Date ("NEW SHARES") shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares.
2. Agreement to Vote Shares. At every meeting of the shareholders of
3Dfx called with respect to, and at every adjournment thereof, and on every
action or approval by written consent of the shareholders of 3Dfx with respect
to, approval of the Merger Agreement, Shareholder shall vote the Shares and any
New Shares in favor of approval of the Merger Agreement and the Merger and any
matter that could reasonably be expected to facilitate the Merger. Shareholder
agrees not to take any actions contrary to Shareholder's obligations under this
Agreement.
3. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Shareholder agrees to deliver to STB a proxy in the form attached hereto as
Annex A (the "Proxy"), which shall be irrevocable, with respect to the total
number of shares of capital stock of 3Dfx beneficially owned (as such term is
defined in Rule 13d-3 under the Exchange Act) by Shareholder set forth therein.
4. Representations, Warranties and Covenants of the Shareholder.
Shareholder hereby represents, warrants and covenants to STB that Shareholder
(i) is the beneficial owner of the Shares, which at the date hereof and at all
times up until the Expiration Date will be free and clear of any liens, claims,
options, charges or other encumbrances; (ii) does not beneficially own any
shares of capital stock of 3Dfx other than the Shares (excluding shares as to
which Shareholder currently disclaims beneficial ownership in accordance with
applicable law); and (iii) has full power and authority to make, enter into and
carry out the terms of this Agreement and the Proxy.
5. Additional Documents. Shareholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of STB and Shareholder, as the case may be, to carry out the
intent of this Agreement.
6. Consent and Waiver. Shareholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Merger under the terms
of any agreements to which Shareholder is a party or pursuant to any rights
Shareholder may have.
7. Termination. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
8. Miscellaneous.
8.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the
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76
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
8.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
8.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
8.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that STB will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreement of
Shareholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to STB upon any such violation, STB shall
have the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to STB at law or in equity.
8.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier (prepaid)
to the respective parties as follows:
If to STB: STB Systems, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxxxx Rain Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Shareholder: At the address provided on the
signature page hereto
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq./
Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
8.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the conflicts of laws principles thereof.
8.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
8.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
8.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction of interpretation of this
Agreement.
[Remainder of This Page Intentionally Left Blank]
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78
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
STB SYSTEMS, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
SHAREHOLDER
-----------------------------------------
Name:
Shareholder's Address for Notice:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Number of Shares Beneficially Owned:
_________________ shares of Common Stock
[Voting Agreement Signature Page]
79
ANNEX A
IRREVOCABLE PROXY
The undersigned Shareholder of 3Dfx Interactive, Inc., a California
corporation ("3DFX"), hereby irrevocably appoints the directors on the Board of
Directors of STB Systems, Inc., a Texas corporation ("STB"), and each of them,
as the sole and exclusive attorneys and proxies of the undersigned, with full
power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to the shares of capital stock of 3Dfx
beneficially owned by the undersigned, which shares are listed on the final page
of this Irrevocable Proxy (the "SHARES"), and any and all other shares or
securities issued or issuable in respect thereof on or after the date hereof,
until the earlier to occur of (i) such time as that certain Agreement and Plan
of Reorganization dated as of December 13, 1998 (the "MERGER AGREEMENT"), among
3Dfx, Voodoo Merger Sub, Inc., a Texas corporation and a wholly-owned subsidiary
of 3Dfx ("MERGER SUB"), and STB, shall be terminated in accordance with its
terms or (ii) the Merger (as defined in the Merger Agreement) is effective. Upon
the execution hereof, all prior proxies given by the undersigned with respect to
the Shares and any and all other shares or securities issued or issuable in
respect thereof on or after the date hereof are hereby revoked and no subsequent
proxies will be given.
This proxy is irrevocable, is granted pursuant to the Voting Agreement
dated as of December 13, 1998 between STB and the undersigned Shareholder (the
"VOTING AGREEMENT"), and is granted in consideration of STB entering into the
Merger Agreement. STB and the undersigned Shareholder agree and acknowledge that
the grant of this irrevocable proxy is a material inducement for STB to enter
into the Merger Agreement and is therefore coupled with an interest and
irrevocable. The attorneys and proxies named above will be empowered at any time
prior to termination of the Merger Agreement to exercise all voting and other
rights (including, without limitation, the power to execute and deliver written
consents with respect to the Shares) of the undersigned at every annual, special
or adjourned meeting of 3Dfx shareholders, and in every written consent in lieu
of such a meeting, or otherwise, in favor of approval of the Merger and the
Merger Agreement and any matter that could reasonably be expected to facilitate
the Merger.
The attorneys and proxies named above may only exercise this proxy to
vote the Shares subject hereto at any time prior to termination of the Merger
Agreement at every annual, special or adjourned meeting of the shareholders of
3Dfx and in every written consent in lieu of such meeting, in favor of approval
of the Merger and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger, and may not exercise this proxy on any other
matter. The undersigned Shareholder may vote the Shares on all other matters.
80
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: December __, 1998
Signature of Shareholder:___________________________________
Print Name of Shareholder:__________________________________
Shares beneficially owned:
______________________________________shares of Common Stock
[Irrevocable Proxy]
81
EXHIBIT D
FORM OF ARTICLES OF MERGER
82
EXHIBIT D
ARTICLES OF MERGER
OF
VOODOO MERGER SUB, INC.
INTO
STB SYSTEMS, INC.
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act (the "TBCA"), the undersigned corporations adopt the following
Articles of Merger for the purpose of effecting a merger in accordance with the
provisions of Article 5.01 of the TBCA.
1. The name of each of the corporations and other entities that is a
party to the plan of merger, the type of each such corporation or entity, and
the laws under which they are organized, are:
NAME OF
CORPORATION TYPE OF ENTITY STATE
--------------------------------------------------------------------------------
Voodoo Merger Sub, Inc. Corporation Texas
3Dfx Interactive, Inc. Corporation California
STB Systems, Inc. Corporation Texas
--------------------------------------------------------------------------------
2. An Agreement and Plan of Reorganization (the "Plan") has been approved
in accordance with the provisions of Article 5.03 of the TBCA, providing for the
plan of merger of Voodoo Merger Sub, Inc., a Texas corporation ("Acquisition
Corporation"), a wholly-owned subsidiary of 3Dfx Interactive, Inc., a California
corporation, with and into STB Systems, Inc., a Texas corporation (the
"Surviving Corporation"), such that the Surviving Corporation will be the
surviving corporation in the merger.
3. The Plan provides that the articles of incorporation of the
Acquisition Corporation shall be the articles of incorporation of the Surviving
Corporation.
4. An executed copy of the Plan is on file at the principal place of
business of the Surviving Corporation, at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxx 00000. A copy of the Plan will be furnished by the Surviving Corporation,
on written request and without cost, to any shareholder of any domestic party to
the Plan.
5. As to each of the undersigned domestic corporations, the approval of
whose shareholders is required, the number of outstanding shares of each class
or series of stock of such corporation entitled to vote, with other shares or as
a class, on the Plan, are:
83
NUMBER OF
SHARES
NUMBER OF CLASS ENTITLED TO
NAME OF SHARES OR VOTE AS A
CORPORATION OUTSTANDING SERIES CLASS OR SERIES
----------------------------------------------------------------------------------
Voodoo Merger Sub, Inc. 10,000 Common None
STB Systems, Inc.
----------------------------------------------------------------------------------
6. As to each of the undersigned domestic corporations the approval of
whose shareholders is required, the number of shares, not entitled to vote only
as a class, voted for and against the Plan, respectively, and, if the shares of
any class or series are entitled to vote thereon as a class, the number of
shares of each such class or series voted for and against the Plan,
respectively, are as follows:
NUMBER OF SHARES
ENTITLED TO VOTE AS
TOTAL CLASS A CLASS OR SERIES
NAME OF TOTAL VOTED OR VOTED VOTED
CORPORATION VOTED FOR AGAINST SERIES FOR AGAINST
--------------------------------------------------------------------------------------
Voodoo Merger Sub, Inc. 0 Xxxxxx X/X X/X
XXX Systems, inc.
--------------------------------------------------------------------------------------
7. The Plan and the performance of its terms and the approval of the Plan
were duly authorized by all action required by the laws under which each foreign
corporation or other entity that is a party to the merger was incorporated or
organized and by its constituent documents.
8. The Surviving Corporation shall be responsible for the payment of all
fees and franchise taxes as required by law to be paid by Acquisition
Corporation and the Surviving Corporation shall be obligated to pay such fees
and franchise taxes if the same are not timely paid.
2
84
9. The merger is to be effective when these Articles are filed with the
Secretary of State.
DATE:__________________, 1999
STB SYSTEMS, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
VOODOO MERGER SUB, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
3DFX INTERACTIVE, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
85
EXHIBIT E
AFFILIATES OF STB
Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
J. Xxxxx Xxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxx Xxxx
Xxxxxxxx Xxxxxxxx
Twin Lakes Partners, L.P.
86
EXHIBIT F
FORM OF STB AFFILIATE AGREEMENT
87
STB AFFILIATE AGREEMENT
STB AFFILIATE AGREEMENT ("Agreement") dated as of December 13, 1998,
between 3Dfx Interactive, Inc., a California corporation ("3Dfx"), and the
undersigned affiliate ("Affiliate") of STB Systems, Inc., a Texas corporation
("STB").
WHEREAS, 3Dfx and STB propose to enter into an Agreement and Plan of
Reorganization ("Merger Agreement") pursuant to which a subsidiary of 3Dfx will
merge into STB ("Merger"), and STB will become a subsidiary of 3Dfx (capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Merger Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time outstanding
shares of STB Capital Stock, including any shares owned by Affiliate, will be
converted into the right to receive shares of Common Stock of 3Dfx;
WHEREAS, the execution and delivery of this Agreement by Affiliate is a
material inducement to 3Dfx to enter into the Merger Agreement;
WHEREAS, it is intended that the Merger will constitute a reorganization
within the meaning of Section 368(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will be a condition to effectiveness of the
Merger that legal counsel for each of STB and 3Dfx deliver written opinions to
such effect;
WHEREAS, Affiliate has been advised and understands that the Merger
constitutes a transaction covered by Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as Amended (the "Securities Act"), the Affiliate may be
deemed to be an "affiliate" of STB, as the term "affiliate" is used (i) for
purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") and (ii) in the Commission's Accounting Series Releases 130 and
135, as amended, and the 3Dfx Common Stock that the Affiliate will acquire in
connection with the Merger may be disposed of only in conformity with Rule 145
and other provisions described herein, although nothing contained herein shall
be construed as an admission by Affiliate that Affiliate is in fact an affiliate
of STB.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree
as follows:
1. Acknowledgments by Affiliate.
(a) Affiliate has full power to execute this Agreement and to
make the representations, warranties and agreements herein and to perform the
Affiliate's obligations hereunder.
(b) Affiliate acknowledges and understands that the
representations, warranties and covenants by Affiliate set forth herein will be
relied upon by 3Dfx, STB, and their respective Affiliates, counsel and
accounting firms, and that substantial losses and damages may be incurred by
88
these persons if Affiliate's representations, warranties or covenants are
breached. Affiliate has carefully read this Agreement and the Merger Agreement
and has discussed the requirements of this Agreement with his professional
advisors, who are qualified to advise him with regard to such matters.
2. Compliance with Rule 145 and the Act.
(a) Affiliate has been advised that (i) the issuance of shares
of 3Dfx Common Stock in connection with the Merger is expected to be effected
pursuant to a Registration on Form S-4 to be filed with Commission to register
the shares of 3Dfx Common Stock under the Securities Act, and as such will not
be deemed "restricted securities" within the meaning of Rule 144 promulgated
under the Securities Act, and resale of such shares will not be subject to any
restrictions other than as set forth in Rule 145 promulgated under the
Securities Act (which will not apply if such shares are otherwise transferred
pursuant to an effective registration statement under the Securities Act or an
appropriate exemption from registration), and (ii) Affiliate may be deemed to be
an "affiliate" of STB within the meaning of the Securities Act and, in
particular, Rule 145 promulgated thereunder. Affiliate accordingly agrees not to
sell, transfer or otherwise dispose of any 3Dfx Common Stock issued to Affiliate
in the Merger unless (i) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 145(d) promulgated under the Securities
Act; (ii) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Securities Act; or (iii) Affiliate
delivers to 3Dfx a written opinion of counsel, reasonably acceptable to 3Dfx in
form and substance, that such sale, transfer or other disposition is otherwise
exempt from registration under the Securities Act. In connection with the
obligations of Affiliate hereunder, 3Dfx agrees to file all reports required
under the Exchange Act of 1934, as amended, to satisfy all the requirements of
Rule 144(c) as long as Affiliate shall be subject to the requirements of Rule
145.
(b) 3Dfx will give stop transfer instructions to its transfer
agent with respect to any 3Dfx Common Stock received by Affiliate pursuant to
the Merger and there will be placed on the certificates representing such Common
Stock, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH
RULE 145(D), PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR IN
ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO
THE ISSUER IN FORM AND SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and 3Dfx shall so instruct its transfer agent,
if Affiliate delivers to 3Dfx (i) satisfactory written evidence that the shares
have been sold in compliance with Rule 145 (in which case, the
89
substitute certificate will be issued in the name of the transferee), or (ii) an
opinion of counsel, in form and substance reasonably satisfactory to 3Dfx, to
the effect that public sale of the shares by the holder thereof is no longer
subject to Rule 145.
3. Beneficial Ownership of Stock. Except for the STB Common Stock and
options to purchase STB Common Stock set forth in Appendix A hereto, Affiliate
does not beneficially own any shares of STB Common Stock or any other equity
securities of STB or any options, warrants or other rights to acquire any equity
securities of STB.
4. Notices.
(a) All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered by hand or delivered by
overnight courier, freight prepaid, or sent via facsimile (with acknowledgment
of complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by the notice):
(i) If to 3Dfx, to:
3Dfx Interactive, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq./
Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) If to the undersigned Affiliate, to:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------------
Facsimile:
---------------------------
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective when received, and shall in any event be deemed to have
been received (i) when delivered, if delivered personally, or sent by facsimile
and confirmed in writing, or (ii) three business days after the business day of
deposit with overnight courier, addressed and shipped as aforesaid.
90
5. Miscellaneous.
(a) For the convenience of the parties hereto, this Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
(b) This Agreement shall be enforceable by, and shall inure to
the benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, subsidiaries, heirs, executors,
administrators, trustees and successor trustees, and personal and other
representatives.
(c) This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of California
without reference to the conflicts of laws principles thereof.
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or is enforceable only if limited
in time and/or scope, this Agreement shall continue in full force and effect
with such provision stricken or so limited.
(e) Counsel to and accountants for the parties to the Agreement
shall be entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any
right hereunder waived or any obligation excused, except by a written agreement
signed by both parties.
(g) The capitalized terms used and not defined herein shall have
the same meanings set forth in the Merger Agreement.
(h) The headings contained in this Agreement are for reference
only and shall not affect in any way the meaning or interpretation of this
Agreement
[Remainder of This Page Intentionally Left Blank]
91
Executed as of the date shown on the first page of this Agreement.
3DFX INTERACTIVE, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
AFFILIATE
By:
--------------------------------------
Name of Affiliate:
Name of Signatory (if different from
name of Affiliate):
----------------------
Title of Signatory
(if applicable):
-------------------------
[STB Systems, Inc. Affiliate Agreement Signature Page]
92
APPENDIX A
Affiliate:
----------------------------------------------------------------------
Total Number of shares of STB Common Stock owned on the date hereof:
-----------------------------------
Total Number of options to purchase STB Common Stock owned on the date hereof
(including the dates of grant, vesting, exercise prices and expiration dates):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
93
EXHIBIT G
3DFX BOARD OF DIRECTORS
L. Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Xxxx Xxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxx Xxx
Xxxxxx Xxxxx
Xxxxx Xxxxx
