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
TABLE OF CONTENTS
(CONTINUED)
PAGE
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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PAGE
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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TABLE OF CONTENTS
(CONTINUED)
PAGE
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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TABLE OF CONTENTS
(CONTINUED)
PAGE
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
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 contemplated by this
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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) alleged to have been lost, stolen or destroyed.
The affidavit and any bond which may be required hereunder
5
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.
6
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 contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action on
7
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.
8
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.
9
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 maintained,
10
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; (ii)
11
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
Employees; (iii) is not liable for any material arrears of wages or any
material taxes or any material penalty
12
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 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
13
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 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
14
property holding corporation" with he 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.
15
(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
16
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).
17
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
18
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
19
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
20
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
21
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
22
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.
23
(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
24
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
25
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
26
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
27
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
28
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
29
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 (other than
sales of assets
30
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
32
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.
33
(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
the same
34
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 Effective
35
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.
36
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,
37
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, have a Material Adverse Effect on STB; provided,
however, that this Section 6.2(c) shall not apply to any
38
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;
(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
39
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 untrue, PROVIDED, that if such
inaccuracy in STB's representations and warranties or breach by STB is
curable
40
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
41
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):
42
(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.
43
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.
44
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:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
VOODOO MERGER SUB, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
STB SYSTEMS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
45
EXHIBIT A
FORM OF STB OPTION AGREEMENT
46
EXHIBIT B
FORM OF STB VOTING AGREEMENT
47
EXHIBIT C
FORM OF 3Dfx VOTING AGREEMENT
48
EXHIBIT D
FORM OF ARTICLES OF MERGER
49
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.
50
EXHIBIT F
FORM OF STB AFFILIATE AGREEMENT
51
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
52
