<PAGE> 1
\ UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 0-26976
PIXAR
(Exact name of registrant as specified in its charter)
California 68-0086179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 West Cutting Boulevard, Richmond, California 94804
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (510) 236-4000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ( X ) No ( )
The number of shares outstanding of the registrant's Common Stock as of August
7, 1997 was 41,753,138
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
PIXAR
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets:
Cash and short-term investments $ 178,779 $ 160,969
Trade and other accounts receivable, net 3,016 4,328
Capitalized film production costs, current portion 121 1,372
Prepaid expenses and other current assets 619 982
Net assets from discontinued operations (see Note 5) 297 1,469
------------ ------------
Total current assets 182,832 169,120
Property and equipment, net 17,911 4,655
Capitalized film production costs, net of current portion 19,512 1,578
Other assets 129 1,588
------------ ------------
Total assets $ 220,384 $ 176,941
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,717 $ 1,060
Income taxes payable 4,826 --
Film costs payable 7,500 --
Accrued liabilities 5,147 4,740
Unearned revenue 535 337
------------ ------------
Total current liabilities 19,725 6,137
------------ ------------
Commitments and contingencies
Shareholders' equity:
Preferred stock; no par value; 5,000,000 shares
authorized and no shares issued and outstanding -- --
Common stock; no par value; 100,000,000 shares authorized
and 41,464,542 shares issued and outstanding 202,699 187,308
Other adjustments (710) (1,097)
Accumulated deficit (1,330) (15,407)
------------ ------------
Total shareholders' equity 200,659 170,804
------------ ------------
Total liabilities and shareholders' equity $ 220,384 $ 176,941
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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<PAGE> 3
PIXAR
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Software $ 1,060 $ 722 $ 2,478 $ 1,633
Animation services 269 799 269 1,584
Film 11,596 5,000 17,897 5,076
Patent licensing 1,451 396 1,599 6,891
-------- -------- -------- --------
Total revenues 14,376 6,917 22,243 15,184
-------- -------- -------- --------
Cost of revenues:
Software 14 7 22 61
Animation services 174 785 174 1,501
Film 769 414 1,327 423
-------- -------- -------- --------
Total cost of revenues 957 1,206 1,523 1,985
-------- -------- -------- --------
Gross margin 13,419 5,711 20,720 13,199
-------- -------- -------- --------
Operating expenses:
Research and development 1,427 1,209 2,508 2,310
Sales and marketing 353 600 605 1,019
General and administrative 1,026 1,068 2,253 2,056
-------- -------- -------- --------
Total operating expenses 2,806 2,877 5,366 5,385
-------- -------- -------- --------
Income from continuing operations 10,613 2,834 15,354 7,814
Other income, net 1,912 1,922 4,046 3,790
-------- -------- -------- --------
Income from continuing operations before
income taxes 12,525 4,756 19,400 11,604
Income tax expense 3,596 239 5,246 580
-------- -------- -------- --------
Net income from continuing operations 8,929 4,517 14,154 11,024
-------- -------- -------- --------
Discontinued operations:
Income (loss) from discontinued
operations (see Note 5) -- 273 (77) 45
-------- -------- -------- --------
Net income $ 8,929 $ 4,790 $ 14,077 $ 11,069
======== ======== ======== ========
Shares used in computing net income per share 48,020 47,002 47,553 47,028
======== ======== ======== ========
Net income per share from continuing
operations (see Note 2) $ 0.19 $ 0.09 $ 0.30 $ 0.24
-------- -------- -------- --------
Net income (loss) per share from discontinued
operations (see Note 2) $ -- $ 0.01 $ -- $ --
-------- -------- -------- --------
Net income per share (see Note 2) $ 0.19 $ 0.10 $ 0.30 $ 0.24
======== ======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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<PAGE> 4
PIXAR
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 14,077 $ 11,069
Adjustments to reconcile net income to net cash
provided by continuing operating activities:
Discontinued operations 77 (45)
Amortization of deferred compensation 365 704
Non-cash revenue attributable to film overbudget -- (2,324)
Depreciation and amortization 887 251
Loss on disposition of property and equipment 423 --
Amortization of capitalized film production costs 1,327 423
Credits from patent license, net of expense items (1,491) (891)
Changes in operating assets and liabilities:
Trade and other accounts receivable 1,312 (3,385)
Prepaid expenses and other current assets 450 (145)
Accounts payable 657 (318)
Income taxes payable 4,826 295
Accrued liabilities 407 41
Unearned revenue 259 366
-------- --------
Net cash provided by continuing operations 23,576 6,041
Net cash provided by discontinued operations 1,095 45
-------- --------
Net cash provided by operating activities 24,671 6,086
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (11,690) (276)
Maturities of investments in short-term securities 56,422 42,032
Purchases of short-term securities, net of unrealized losses (56,276) (76,999)
Capitalized film production costs (10,497) (475)
Change in other assets (74) (374)
-------- --------
Net cash used in investing activities (22,115) (36,092)
-------- --------
Cash flows from financing activities:
Net proceeds from issuance of common stock and warrants, net 14,885 --
Repayment of note payable to shareholder -- (2,373)
Proceeds from exercised stock options 506 36
-------- --------
Net cash provided by (used in) financing activities 15,391 (2,337)
-------- --------
Net increase (decrease) in cash and cash equivalents 17,947 (32,343)
Cash and cash equivalents at beginning of period 44,648 97,286
-------- ========
Cash and cash equivalents at end of period $ 62,595 $ 64,943
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 280 $ 305
======== ========
Supplemental disclosure of non-cash investing and financing activities:
Credits from patent license $ 1,599 $ 891
======== ========
Film overbudget reductions $ -- $ 3,324
======== ========
Non-cash film production costs capitalized $ 7,514 $ 27
======== ========
Unrealized gain (loss) on investments $ (9) $ (150)
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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<PAGE> 5
PIXAR
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the accompanying unaudited financial statements reflect
all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of Pixar's financial condition, results of
operations, and cash flows for the periods presented. These financial statements
should be read in conjunction with the audited financial statements as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, including notes thereto, incorporated by reference into
Pixar's Annual Report on Form 10-K for the year ended December 31, 1996.
The results of operations for the three- and six-month periods ended June
30, 1997, are not necessarily indicative of the results expected for the
current year or any other period.
Certain amounts reported in previous periods have been reclassified to
conform to the 1997 financial statement presentation.
(2) NET INCOME PER SHARE
Net income per share is computed using net income from continuing
operations, and net income (loss) from discontinued operations, and is based on
the weighted average number of shares of common stock outstanding and common
equivalent shares from stock options (under the treasury stock method, if
dilutive).
The Financial Accounting Standards Board (FASB) recently issued Statement
of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No.
128 requires the presentation of basic earnings per share (EPS) and, for
companies with potentially dilutive securities, such as options and warrants,
diluted EPS. SFAS No. 128 is effective for annual and interim periods ending
after December 15, 1997. The Company expects basic EPS for profitable periods
will be higher than primary EPS as presented in the accompanying financial
statements and diluted EPS for profitable periods will not differ materially
from primary EPS as presented in the accompanying financial statements.
Computations for loss periods should not change significantly.
(3) PATENT LICENSING ARRANGEMENTS
In March 1996, Pixar delivered all rights to utilize certain technology
underlying a patent license to Silicon Graphics, Inc. (SGI), and received a
non-refundable fixed-fee payment of $6.0 million in cash and $5.0 million in the
form of credits for products to be purchased from SGI by Pixar over four years.
Following the release of the rights to utilize the patents to SGI, Pixar
maintained no significant vendor obligations to the licensee; therefore, as of
June 30, 1996, the Company recognized as revenue the fixed and determinable
amounts of the $6.0 million cash payment received, plus $891,000 which
represented that portion of the credits Pixar had used through June 30, 1996.
For the six months ended June 30, 1997, revenue of $1.6 million was recognized
representing credits used by Pixar during that period. Since March 1996, Pixar
has used a total of $4.7 million worth of credits, with $270,000 of credits
remaining which are expected to be used during 1997.
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<PAGE> 6
(4) FEATURE FILM PRODUCTION AND CO-PRODUCTION AGREEMENT
FEATURE FILM AGREEMENT
In 1991, Pixar entered into a feature film agreement with Walt Disney
Pictures, a wholly owned subsidiary of The Walt Disney Company (together with
its subsidiaries and affiliates collectively referred to herein as "Disney") to
develop and produce up to three computer animated feature films (the Feature
Film Agreement). The first feature film, Toy Story, was released in November
1995. Under the Feature Film Agreement Pixar is entitled to receive compensation
based on the revenue from the distribution of animated feature films and related
products, and recognized revenues on Toy Story of $5.1 million and $17.9 million
for the six months ended June 30, 1996 and 1997, respectively, for a total of
$36.7 million since the film's release.
Pixar incurred film production costs that were reimbursed by Disney,
inclusive of salaries and overhead. All payments to Pixar from Disney for costs
of feature film production were recorded as cost reimbursements; accordingly, no
revenues were recorded for such reimbursements; rather, Pixar netted the
reimbursements against the related costs.
CO-PRODUCTION AGREEMENT
On February 24, 1997, Pixar and Disney entered into a co-production
agreement (Co-Production Agreement) which will now govern the second and third
feature films planned under the Featue Film Agreement, three additional films,
sequels, and other derivative works. The second and third feature films, and a
made-for-home video sequel to Toy Story, were in production as of June 30, 1997.
Under the Co-Production Agreement, Pixar, on an exclusive basis, will produce
five computer animated feature-length theatrical motion pictures (the Pictures)
for distribution by Disney over approximately the next ten years. Pixar and
Disney will co-own and co-brand the Pictures and co-finance the production
costs. Pixar and Disney will share equally in the profits of each Picture and
any related merchandise and other ancillary products, after recovery of all
marketing and distribution costs (which will be financed by Disney), a
distribution fee paid to Disney and any other fees or costs, including
participations provided to talent and the like. The Co-Production Agreement
generally provides that Pixar will produce each Picture and Disney will control
all decisions relating to marketing, promotion, publicity, advertising and
distribution of each Picture. The first Picture under the Co-Production
Agreement is A Bug's Life. The Co-Production Agreement also contemplates that
with respect to interactive media products and other derivative works related to
the Pictures, Pixar will have the opportunity to co-finance and produce such
products or to earn passive royalties on such products.
(5) DISCONTINUED OPERATIONS
Pixar determined in March 1997 to discontinue its business of producing
CD-ROM and other interactive products and redirect the approximately 60
employees in this division to film and related projects within Pixar. In the
three months ended March 31, 1997, the net loss from the CD-ROM division was
$77,000. In the three months ended June 30, 1997, no gain or loss has been
recorded for the disposal of the CD-ROM division as the Company anticipates
future royalty income will exceed future expenses. In the six months ended June
30, 1996 the division produced net income of $45,000. Net assets of the
discontinued operations of $297,000 and $1.5 million at June 30, 1997 and
December 31, 1996, respectively, primarily consist of reimbursements and
royalties receivable from Disney.
(6) EQUITY TRANSACTIONS
In connection with the Co-Production Agreement, Pixar sold to Disney
1,000,000 shares of the Company's Common Stock which Disney has agreed to hold
for at least three years. Pixar also granted two warrants to Disney: one warrant
to purchase 750,000 shares of Common Stock at an exercise price of $20 per
share, and another warrant to purchase 750,000 shares of Common Stock at $25 per
share. Pixar granted certain registration rights for the shares issuable upon
exercise of the warrants. Gross proceeds on the transaction were $15.0 million.
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<PAGE> 7
(7) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". This Statement establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the statement, but requires the
Company to display an amount representing total comprehensive income for the
period in that financial statement. The Company is in the process of determining
its preferred format. This Statement is effective for fiscal years beginning
after December 15, 1997.
Also, in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Statement establishes
standards for the manner in which public business enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to shareholders. This Statement is effective for
financial statements for periods beginning after December 15, 1997, and is not
expected to have a significant impact on the Company's reporting of segment
information.
-7-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward-looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on current expectations,
estimates and projections about Pixar's industry, management's beliefs, and
assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements. Such risks
and uncertainties include those set forth in the Form 10-K (as defined below)
under "Certain Factors Affecting Business, Operating Results and Financial
Condition" on pages 15 through 26, as well as those noted in the documents
incorporated therein by reference. Particular attention should be paid to the
cautionary language in the Form 10-K entitled "Certain Factors Affecting
Business, Operating Results and Financial Condition--Anticipated Decline in
Operating Results in 1997 and Net Losses in 1998," "--Dependence on Toy Story, A
Bug's Life and Toy Story Video Sequel," "--Liquidity Risks," "--Scheduled
Concurrent Release of Films; Management of Growth" and "--Risks Associated With
Co-Production Agreement." Unless required by law, Pixar undertakes no obligation
to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
The Company's operating performance each quarter is subject to various
risks and uncertainties as discussed in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Form 10-K"). The following discussion
should be read in conjunction with the sections entitled "Certain Factors
Affecting Business, Operating Results and Financial Condition" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Form 10-K. In particular, the factors set forth below in "Factors Affecting
Operating Results and Financial Condition" could affect the Company's operating
results and financial condition.
NEW AGREEMENT WITH DISNEY
On February 24, 1997, Pixar and Walt Disney Pictures, a wholly owned
subsidiary of The Walt Disney Company (together with its subsidiaries and
affiliates collectively referred to herein as "Disney") entered into a
co-production agreement (the "Co-Production Agreement") pursuant to which Pixar,
on an exclusive basis, will produce five computer animated feature-length
theatrical motion pictures (the "Pictures"), for distribution by Disney over
approximately the next ten years. Pixar and Disney will co-finance the
production costs of the Pictures, co-own the Pictures (with Disney having
exclusive distribution and exploitation rights), co-brand the Pictures and share
equally in the profits of each Picture and any related merchandise and other
ancillary products, after recovery of all marketing and distribution costs
(which will be financed by Disney), a distribution fee paid to Disney and any
other fees or costs, including participations provided to talent and the like.
The Co-Production Agreement generally provides that Pixar will produce each
Picture and that Disney will control all decisions relating to marketing,
promotion, publicity, advertising and distribution of each Picture. Disney and
Pixar have agreed that the first Picture under the Co-Production Agreement is
the Picture with the working title "A Bug's Life". The Co-Production Agreement
also contemplates that with respect to interactive media products and other
derivative works related to the Pictures, Pixar will have the opportunity to
co-finance and produce such products or to earn passive royalties on such
products. Disney and Pixar have also agreed to produce a made-for-home-video
sequel to Toy Story (the "Toy Story Video Sequel"), and Pixar is working on the
production under the terms of the Co-Production Agreement. Pixar will not share
in any theme park revenues generated as a result of the Pictures. Pixar does not
expect to receive revenues under the Co-Production Agreement from either A Bug's
Life nor the Toy Story Video Sequel until 1999 at the earliest.
In May 1991, Pixar entered into a feature film agreement (the "Feature Film
Agreement") with Disney, pursuant to which Toy Story and the Toy Story home
video were developed, produced and distributed. The Feature Film Agreement was
largely superseded by the Co-Production Agreement above. However, the Feature
Film Agreement remains in effect with respect to Pixar's financial participation
in Toy Story and related products.
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<PAGE> 9
RESULTS OF OPERATIONS
REVENUES
Total revenues increased 108% to $14.4 million in the three months ended
June 30, 1997 from $6.9 million in the same period of the prior year, and
increased by 46% to $22.2 million in the six months ended June 30, 1997 from
$15.2 million in the same period of the prior year. The increase for the three
months ended June 30, 1997 was primarily due to higher film revenue of $11.6
million compared to $5.0 million in the same period of the prior year. The
increase in total revenues of $7.1 million for the six months ended June 30,
1997 over the same period in the prior year was primarily attributable to an
increase in film revenue of $12.8 million, offset by a decrease in patent
licensing revenue of $5.3 million and a decrease in animation services revenue
of $1.3 million.
Software revenues consist mainly of software license revenue, principally
from RenderMan. Software revenues increased 47% to $1.1 million in the three
months ended June 30, 1997 from $722,000 in the prior year period and increased
52% to $2.5 million in the six months ended June 30, 1997 from $1.6 million in
the same period of the prior year. The increase in software revenues resulted
from a general increase in the number of RenderMan software licenses. Due to
Pixar's focus on content creation for animated feature films and related
products, Pixar expects that revenue derived from software licenses may decline.
All historical and future royalty income associated with Pixar's discontinued
CD-ROM division is now and will continue to be excluded from software revenue
and presented in results of discontinued operations. See "Results From
Discontinued Operations."
Animation services revenues of $799,000 and $1.6 million in the three and
six months ended June 30, 1996, respectively, was primarily attributable to
revenue generated from the production of animated television commercials. In
July 1996, Pixar announced plans to substantially discontinue its production of
television commercials for third parties and to redirect the talent in its
television commercial group to animated feature films and related products.
Accordingly, there has been no television commercials revenue generated in 1997,
and animation services revenues of $269,000 in the three and six months ended
June 30, 1997 represents revenue for projects related to A Bug's Life. Pixar
expects that revenue in this area will vary significantly from quarter to
quarter. There are likely to be individual quarters, such as occurred in the
first quarter of 1997, or possibly even prolonged periods of time, in which
Pixar generates no animation services revenue.
Film revenues increased 132% to $11.6 million in the three months ended
June 30, 1997 from $5.0 million in the prior year period and 253% to $17.9
million in the six months ended June 30, 1997 from $5.1 million in the prior
year period. Film revenues in 1997 were higher than in prior year periods for
two reasons. First, during the three and six months ended June 30, 1997, Pixar
received the majority of its share of Toy Story home video revenue. Pixar does
not expect to recognize significant revenue from the Toy Story home video in the
third and fourth quarters of 1997 or in any quarter in 1998. Second, film
revenues represent Pixar's share of Toy Story home video revenues as determined
under the original Feature Film Agreement in which Pixar's percentage of Toy
Story revenues is calculated on a sliding scale. Lower percentages were earned
by Pixar at the outset while Disney recovered related production, marketing and
distribution costs for the film, and higher percentages are earned once Disney
has recovered these costs. Disney's costs were recovered in the quarter ended
June 30, 1997 which increased Pixar's revenue in the quarter. Pixar expects a
substantial decline in Toy Story-related revenue in the second half of 1997 as
most revenues have been received. Since the Toy Story home video is the last
major release window for Toy Story, and since Pixar's next feature film is not
targeted for release until the end of 1998 at the earliest, Pixar's revenue and
earnings will decrease in subsequent periods as compared to 1996 and the first
half of 1997.
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<PAGE> 10
Patent licensing revenues of $1.5 million in the three months ended June
30, 1997 and $1.6 million in the six months ended June 30, 1997 include almost
all of the remaining revenue from Pixar's 1996 patent license with Silicon
Graphics, Inc. ("SGI"), whereby Pixar granted to SGI and its subsidiaries a
non-exclusive license to use certain of Pixar's patents covering techniques for
creating computer-generated photorealistic images. Under the agreement, SGI
agreed to pay Pixar total compensation of $11.0 million, of which $6.0 million
was paid in cash in March 1996 and $5.0 million was to be paid in the form of
purchase credits for SGI hardware and software through the year 2000.
Recognition of the $5.0 million in credits depends upon purchases of the
hardware and software to be obtained from SGI in lieu of payment. In the six
months ended June 30, 1996, Pixar recognized the $6.0 million cash payment from
SGI, and $891,000 representing that portion of the $5.0 million in hardware and
software credits Pixar had used through June 30, 1996. In the six months ended
June 30, 1997, revenue of $1.6 million was recognized representing credits used
during that period. Of the original $5.0 million in credits, Pixar has credits
of $270,000 remaining to be recognized as revenue in future periods as credits
are used.
In the three and six months ended June 30, 1997, Disney accounted for 83%
and 82%, respectively, of Pixar's total revenue. The revenues from Disney
consisted primarily of film, animation services and software revenues. Pixar
expects to continue to be dependent upon Disney for at least a majority of its
revenue. In the three months ended June 30, 1996, and in the six months ended
June 30, 1996, Disney accounted for 77% and 38%, respectively, of Pixar's total
revenues. All patent revenues in periods presented were generated from a
one-time patent license sale to SGI. In the three and six month periods ended
June 30, 1997, SGI accounted for 10% and 7% of total revenues, respectively, and
in the three and six month periods ended June 30, 1996, SGI accounted for 6% and
45% of total revenues, respectively. Pixar expects that revenue from SGI will
not be generated on an ongoing basis.
COST OF REVENUES
Cost of software revenues consists of the direct costs and manufacturing
overhead required to reproduce and package software products. Cost of software
revenues as a percentage of the related revenues was 1% in both the three and
six months ended June 30, 1997. As compared to the prior year periods, in which
cost of software revenues were 1% and 4%, respectively, the change was
insignificant. Cost of software revenues includes no amortization of capitalized
software development expenses.
Cost of animation services revenues consists of production costs, which
include salaries and benefits and, to a lesser extent, facility expenses and
department overhead costs. Costs of animation services revenues as a percentage
of related revenues decreased to 65% in the three months ended June 30, 1997
from 98% in the same period of the prior year and decreased to 65% for the six
months ended June 30, 1997 from 95% in the same period of the prior year. These
decreases reflect Pixar's decision in July 1996 to substantially discontinue the
animated television commercials division, which had higher associated costs, in
favor of working on animated productions related to feature films, which have
relatively lower associated costs. Pixar's focus is now on other short term
animation services projects related to its feature films. Pixar expects that
costs in this area will vary significantly from quarter to quarter.
Cost of film revenues represent amortization of film costs capitalized by
Pixar. See "Capitalized Film Production Costs." Cost of film revenues as a
percentage of the related revenues remained relatively flat at 7% in the three
and six months ended June 30, 1997, as compared to 8% in the prior year periods.
There were no costs of revenue associated with patent licensing revenues,
which resulted in an unusually high overall gross margin in the three and six
months ended June 30, 1997 and in the prior year period.
OPERATING EXPENSES
While Pixar has continued to increase its spending levels, total operating
expenses for the three and six months ended June 30, 1997 were slightly lower
than in the prior year periods. This is a result of the Co-Production Agreement
signed in February, 1997 pursuant to which Disney pays half of total film
production costs and certain allocations of Pixar's operating expenses that
benefit the productions, such as certain research and development and certain
general and administrative expenses. The result is that certain of Pixar's
operating expenses are now partially funded by Disney.
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<PAGE> 11
Pixar intends to continue to increase its spending levels in a number of
areas. First, as a result of intense competition for animators, Pixar continues
to have to pay higher salaries to attract new creative personnel and technical
directors. Pixar expects compensation for such new and existing personnel to
continue to increase substantially. In the three and six months ended June 30,
1997, Pixar expanded its administrative staff and facilities and expanded other
operations. Pixar expects continued growth in operating expenses in these areas.
To the extent that such expenses are not capitalized by Pixar, nor allocated to
and paid for by Disney under the Co-Production Agreement, and precede or are not
subsequently followed by an increase in revenues, Pixar's business, operating
results and financial condition will be materially adversely affected.
Research and development expenses consist primarily of salaries and support
for personnel conducting research and development for the RenderMan product and
for Pixar's proprietary Marionette and Ringmaster software. Research and
development expenses increased 18% to $1.4 million in the three months ended
June 30, 1997 from $1.2 million in the prior year period, and increased 9% to
$2.5 million in the six months ended June 30, 1997 from $2.3 million in the
prior year period. In each period, this reflects increased personnel costs
offset by recovery of certain research and development costs that were
reimbursed by Disney under the Co-Production Agreement. To date, all software
development costs have been expensed as incurred.
Sales and marketing expenses consist primarily of salaries and related
overhead, as well as advertising, technical support, public relations and trade
show costs required to support the software segment. Sales and marketing
expenses decreased 41% to $353,000 in the three months ended June 30, 1997 from
$600,000 in the prior year period and decreased 41% to $605,000 in the six
months ended June 30, 1997 from $1.0 million in the prior year period due to
discontinued marketing efforts for television commercials. Pixar expects that
marketing expenses may increase in absolute dollars in future periods,
particularly in the areas of corporate marketing and public relations.
General and administrative expenses consist primarily of salaries of
management and administrative personnel, insurance costs and professional fees.
General and administrative expenses decreased 4% to $1.0 million in the three
months ended June 30, 1997 from $1.1 million in prior year period, and increased
10% to $2.3 million in the six months ended June 30, 1997 from $2.1 million in
the prior year period. For the three months ended June 30, 1997, general and
administrative expenses were relatively flat as compared to the prior year
period. The increase in the six months ended June 30, 1997 was primarily due to
increased staffing, increased professional fees associated with the protection
of intellectual property and increased costs associated with being a public
company. Growth in these costs was somewhat offset by the recovery of certain
general and administrative costs reimbursed by Disney under the Co-Production
Agreement. Pixar continues to expect general and administrative expenses to
increase in absolute dollars in future periods as Pixar incurs additional costs
to expand its administrative staff and facilities.
OTHER INCOME, NET
In both 1996 and 1997, other income consisted primarily of interest income
on investments. Other income, net was $1.9 million and $4.0 million in the three
and six months ended June 30, 1997, respectively. These amounts reflect the
impact of a loss on the disposal of certain computer equipment of approximately
$350,000. Other income net in the three and six months ended June 30, 1996 was
$1.9 million and $3.8 million, respectively.
INCOME TAXES
Income tax expense for the three and six months ended June 30, 1997
reflects Pixar's federal and state income tax liability after utilization of
available federal net operating loss carryforwards and federal and state tax
credits. Income taxes increased in the three and six months ended June 30, 1997
due to expected full utilization of the net operating loss carryforwards in
1997.
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<PAGE> 12
RESULTS OF DISCONTINUED OPERATIONS
After the Co-Production Agreement was executed in February 1997, Pixar
evaluated the merits of staying in the business of producing CD-ROM products and
compared those opportunities with opportunities in film and other potential
projects under the Co-Production Agreement. Management determined that, despite
the fact that Pixar's first CD-ROM titles were successful on relative terms, the
resources devoted to its interactive products division would be better allocated
to other projects arising from the Co-Production Agreement which Pixar believes
will have greater potential than the CD-ROM titles, such as theatrical films,
home video sequels and short animation projects. Moreover, the CD-ROM and
interactive product market is not growing as fast as expected, the production
costs of such products are increasing and one project under negotiation with a
third party was canceled. For these reasons, Pixar determined in March 1997 to
discontinue its business of producing CD-ROM and other interactive products and
redirect the approximately 60 employees in the division to film and related
projects within Pixar. Because the CD-ROM business previously represented an
ongoing potential source of revenue, this decision is expected to have a
material adverse impact on Pixar's future revenues and results of operations in
the future.
In the first quarter ended March 31, 1997, Pixar recorded a loss from
discontinued operation of its CD-ROM division of $77,000, net of tax. In the
three months ended June 30, 1997, no gain or loss was recorded for the
anticipated discontinuation of the CD-ROM division as Pixar anticipates future
royalty income will exceed costs incurred during the three months ended June 30,
1997 and related costs incurred in all future periods. In the three and six
month periods ended June 30, 1996, income from discontinued operations was
$45,000 and $273,000, respectively, net of taxes.
FACTORS AFFECTING OPERATING RESULTS AND FINANCIAL CONDITION
The following is a discussion of certain factors which currently impact or
may impact Pixar's business, operating results and/or financial condition.
Anyone making an investment decision with respect to Pixar's capital stock or
other securities is cautioned to carefully consider these factors.
ANTICIPATED DECLINE IN OPERATING RESULTS IN 1997 AND NET LOSSES IN 1998
A number of factors are expected to lead to a substantial decline in
Pixar's operating results in the remainder of 1997 and net losses in 1998, as
discussed more fully below.
END OF TOY STORY REVENUES
As of June 30, 1997, Pixar has recognized the vast majority of the revenue
it expects to receive from the domestic and international theatrical releases of
Toy Story and substantially all of the home video revenue from Toy Story. Pixar
does not expect to recognize significant revenue from the Toy Story home video
in the third or fourth quarters of 1997 or in any quarter in 1998.
REDUCED CD-ROM ROYALTIES
Although its first two CD-ROM products were successful on relative
terms, Pixar determined in March 1997 to discontinue its business of producing
CD-ROM and other interactive products in favor of other opportunities arising,
in part, as a result of entering into the Co-Production Agreement. This
decision is expected to continue to have a material adverse impact on Pixar's
operating results in the remainder of 1997 and in 1998. Pixar has not and will
not recognize any CD-ROM income from this discontinued operation in 1997 or
1998, other than royalty income attributable to the two Toy Story CD-ROM
products, and Pixar continues to expect to receive less CD-ROM royalty income
than was previously anticipated. Pixar has reassigned most of the approximately
60 employees previously employed in the CD-ROM division to feature film
productions and other departments within Pixar.
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<PAGE> 13
TIMING OF A BUG'S LIFE AND TOY STORY VIDEO SEQUEL RELEASES
A Bug's Life is not expected to be released until the end of 1998 at
the earliest, and revenue from A Bug's Life is not expected to be recognized
until all marketing and distribution costs and fees have been recovered
by Disney. Recovery of all costs depends on many factors and may not occur
until six to twelve months after its release at the earliest, ensuring that
Pixar will not recognize any revenue from A Bug's Life until the second half of
1999 at the earliest. The Toy Story Video Sequel is currently targeted for
completion in the second half of 1998, but its release date could be at the end
of 1998 or later depending on a number of factors. First, Pixar may be unable,
for technical or other reasons, to complete the production of the Toy Story
Video Sequel in the second half of 1998. Second, even if completed, Disney and
Pixar may choose to delay release of the Toy Story Video Sequel until the 1998
holiday season or thereafter. Depending on the timing of receipt of revenues by
Disney, Pixar may not recognize revenue from the Toy Story Video Sequel until
three to six months after its release at the earliest, meaning that if the Toy
Story Video Sequel were released in late 1998 or thereafter, Pixar would not
recognize any revenue from the Toy Story Video Sequel until 1999 at the
earliest. Third, it is possible that the Toy Story Video Sequel could be
released to the theaters instead of as a made-for-home video. In such event,
Pixar would not expect to recognize any revenue until six to twelve months
after the theatrical release, with the result that Pixar would not recognize
any revenue from such film until the second half of 1999 at the earliest.
POSSIBLE DECLINE IN LICENSING OF RENDERMAN DUE TO SHIFT IN FOCUS
As a result of Pixar's reduced emphasis on the commercialization of
software in favor of products sold for their content, Pixar continues to expect
to dedicate less time and resources to distributing and marketing RenderMan than
it has in the past and further expects that licensing of RenderMan may decline.
INCREASE IN OPERATING EXPENSES AND TAX RATE
In 1996, Pixar significantly increased its operating expenses, and Pixar
plans to continue to increase its operating expenses to fund greater levels of
research and development and to expand operations. Specifically, Pixar expects
its spending levels to increase significantly due to continued investment in
proprietary software systems, increased compensation costs as a result of
intense competition for animators, creative personnel, technical directors and
other personnel, and increased costs associated with the expansion of its
facilities. To the extent that such expenses are not capitalized by Pixar nor
allocated to and paid for by Disney, Pixar's operating expenses would
significantly increase in the remainder of 1997 and in 1998. Finally, Pixar's
tax rate has increased in the six months ended June 30, 1997 and may continue to
increase in the remainder of 1997 and future years as the result of utilization
of net operating losses in 1997.
IMPACT ON OPERATING RESULTS
As a result of the above factors, Pixar expects revenue to decline
substantially in the third and fourth quarters of 1997 and to not recognize
substantial revenue in 1998. At the same time, Pixar's operating expenses may
increase in the third and fourth quarters of 1997 and in 1998, even after giving
effect to the allocation of certain operating expenses to Disney under the
Co-Production Agreement. Therefore, Pixar expects revenue and operating results
in the third and fourth quarters of 1997 to decline substantially from the first
and second quarters of 1997 and from the third and fourth quarters of 1996. It
is possible that Pixar could even incur operating and net losses in each of the
last two quarters of 1997. Pixar also expects to incur operating and net losses
throughout 1998.
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<PAGE> 14
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
In addition to the factors set forth above, Pixar continues to expect to
generally experience significant fluctuations in its future annual and quarterly
operating results caused by a variety of factors. Pixar expects that its annual
and quarterly operating results, particularly its revenue, will fluctuate due to
factors such as the timing of the domestic and international releases of the
animated feature films, the success of the animated feature films (which can
fluctuate significantly from film to film), the timing of the release of related
products into their respective markets, the demand for the related products
(which is often a function of the success of the related animated feature film),
film production costs, Disney's costs to distribute and promote the feature
films and related products, Disney's success at marketing the films and related
products, the timing of receipt of proceeds from the animated feature films and
related products by Disney, the timing of revenue recognition under the
Co-Production Agreement, the Feature Film Agreement or the CD-ROM Agreement, as
the case may be, the introduction of new feature films or products by Pixar's
competitors, and general economic conditions. In particular, since Pixar's
revenue under the Co-Production Agreement is directly related to the success of
a feature film, Pixar's operating results are likely to fluctuate depending on
the level of success of its animated feature films and related products. The
revenues derived from the production and distribution of an animated feature
film depend primarily on the film's acceptance by the public, which cannot be
predicted and does not necessarily bear a direct correlation to the production
or distribution costs incurred. The commercial success of a motion picture also
depends upon promotion and marketing, production costs and other factors.
Further, the theatrical success of a feature film can be a significant factor in
determining the amount of revenues generated from the sale of the related
products.
Moreover, Pixar's operating expenses will continue to be extremely
difficult to forecast. The direct costs of film production are budgeted in
agreement with Disney and shared equally. Pixar's share of these direct costs of
film production are capitalized by Pixar in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 53, "Financial Reporting by
Producers and Distributors of Motion Picture Films." A substantial portion of
all of Pixar's other costs are incurred for the benefit of feature films
("Pixar's Overhead"), including research and development expenses and general
and administrative expenses. Portions of Pixar's Overhead are included in the
budgets for the Pictures and will be shared equally with Disney under the
Co-Production Agreement. The portion of Pixar's Overhead that is not reimbursed
by Disney is either capitalized as film production costs, if required under SFAS
No. 53, or charged to operating expense in the period incurred. Because a
substantial portion of Pixar's Overhead is allocated to the Pictures and
reimbursed by Disney and other amounts are capitalized by Pixar in accordance
with SFAS No. 53, Pixar's future reported operating expenses will not reflect
the true level of spending on the production of animated feature films, related
products and overhead.
Pixar may not be able to recognize the tax benefits of net operating losses
to be generated in the future. Pixar had a valuation allowance as of December
31, 1996 which fully offset its gross deferred tax assets due to Pixar's
historical losses and the fact that there is no guarantee Pixar will generate
sufficient taxable income in the future to be able to realize all of its
deferred tax assets.
As a result of all of the foregoing, Pixar believes that period-to-period
comparisons of its results of operations are not necessarily meaningful, and its
annual and quarterly results of operations should not be relied upon as any
indication of future performance. Due to all of the foregoing factors, it is
likely that in some future period Pixar's operating results will be below the
expectations of public market analysts and investors. In such event, the price
of Pixar's Common Stock would likely be materially adversely affected.
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<PAGE> 15
DEPENDENCE ON TOY STORY, A BUG'S LIFE AND TOY STORY VIDEO SEQUEL
DEPENDENCE ON TOY STORY
For at least 1997, Pixar's revenue and operating results have been and
will continue to be almost entirely dependent upon the success of the Toy Story
home video and merchandising of Toy Story products. Pixar recognized
substantially all of the Toy Story home video revenue in the first two quarters
of 1997 and expects little revenue from Toy Story or related products
thereafter. In its discontinued CD-ROM operations, Pixar also expects limited
royalty income from its Toy Story CD-ROM products in the last two quarters of
1997 and little or no income from such products in 1998. Because A Bug's Life
and the Toy Story Video Sequel are not expected to be released until the end of
1998 at the earliest, all other revenues in the last half of 1997 and for all
of 1998 will be primarily dependent upon Pixar's other businesses, from which
Pixar expects limited revenue.
DEPENDENCE ON A BUG'S LIFE AND TOY STORY VIDEO SEQUEL
Beyond 1998, Pixar expects to be significantly dependent upon the success
of A Bug's Life and the Toy Story Video Sequel (the "Current Projects") and
related products. Although production on each of the Current Projects is
underway, there can be no assurance that either of the Current Projects will be
successfully produced and released when scheduled or thereafter. In addition,
given the escalation in compensation rates of people required to work on the
Current Projects, the number of people required to work on the Current Projects,
and the equipment needs, the budget for the Current Projects and subsequent
films and related products will be substantially greater than the budget for Toy
Story and will be financed equally by Pixar and Disney under the Co-Production
Agreement. There can be no assurance that Pixar will not experience difficulties
that could delay or prevent the successful development or production of either
of the Current Projects or subsequent animated feature films or related
products. If Pixar is unable to produce and develop on a timely basis the
Current Projects and subsequent animated feature films and related products that
meet with broad market acceptance, Pixar's business, operating results and
financial condition will be materially adversely affected.
RISKS ASSOCIATED WITH A BUG'S LIFE.
Under the Co-Production Agreement, Pixar shares the production costs of A
Bug's Life. These costs will initially be capitalized as film production costs
under SFAS No. 53 and then be amortized over A Bug's Life's expected revenue
stream when revenue is recognized. If A Bug's Life is not an extraordinary box
office success similar to Toy Story, the amount of revenue recognized will not
be significant, and the capitalized production costs will have to be amortized
in large amounts over a limited number of quarters, resulting in significant
costs of film revenue in those quarters and, potentially, significant quarterly
operating and net losses. Animated feature films that become extraordinary box
office successes are rare. Pixar believes, based on available information, that
there is a reasonable basis to conclude that of the more than 40 animated
feature films introduced since 1990, only two movies generated domestic box
office revenues greater than Toy Story, and both of those films were produced
and distributed solely by Disney. During at least the last five years, Pixar
believes that there has been no fully animated feature film (other than Toy
Story) produced or developed by a studio other than Disney that has achieved
more than $25 million in domestic box office revenues. While A Bug's Life will
be co-financed, promoted and marketed by Disney, it will have a different look,
theme and musical style than Disney's other recent animated films (except for
Toy Story), and there can be no assurance that it will have the same audience
appeal as Disney's other animated films. For example, The Nightmare Before
Christmas, released in 1993, was an animated feature film with a different
appearance than traditional, hand drawn cel animated feature films such as
Beauty and the Beast, The Lion King, Aladdin, Pocahontas, The Hunchback of Notre
Dame and Hercules and did not experience the same box office returns as those
films. As a result, A Bug's Life and related products may not generate
significant revenue and operating results for Pixar, even if A Bug's Life is
critically acclaimed and achieves substantial, but not extraordinary, box office
success.
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<PAGE> 16
RISKS ASSOCIATED WITH TOY STORY VIDEO SEQUEL.
There are several additional risks unique to the Toy Story Video Sequel.
First, Pixar has no experience developing sequels, either theatrical or
made-for-home video. Moreover, the made-for-home video market has only recently
begun to develop. As is typical in the case of an undeveloped market, demand and
market acceptance are uncertain. Competition in this market is expected to
increase dramatically. Disney alone has announced its intention to distribute
several made-for-home video sequels in the next year, as have other studios.
Pixar is at a disadvantage in the made-for-home video sequel market as compared
to other animation studios in that Pixar cannot produce low cost animation,
which typically characterizes sequels to animated feature films. Finally, the
Toy Story Video Sequel will need to be an extraordinary success on relative
terms in order to generate profits for Pixar. If the Toy Story Video Sequel is
not an extraordinary success on relative terms, Pixar will incur substantial
costs of film revenue in those quarters in which revenue is recognized, which
will have a material adverse effect on its results of operations. There can be
no assurance that the Toy Story Video Sequel will be an extraordinary success on
relative terms, particularly given the recent emergence and uncertainty of the
made-for-home video market.
LIQUIDITY RISKS
Pursuant to the Co-Production Agreement, Pixar will co-finance the next
five animated feature films which it produces, including A Bug's Life and the
second theatrical film being developed under the Co-Production Agreement (the
"Second Theatrical Film"), and will also co-finance the Toy Story Video Sequel.
In the future, Pixar may co-finance other derivative works such as theatrical
sequels, interactive products and television productions. As Pixar does not
expect to generate substantial, if any, cash from operations in the second half
of 1997 and in 1998, the production costs of A Bug's Life, the Second Theatrical
Film and the Toy Story Video Sequel are expected to have a material adverse
impact on Pixar's cash and short-term investment balances. As of June 30, 1997,
Pixar had approximately $178.8 million in cash and short-term investments. Pixar
believes that these funds will be sufficient to meet its anticipated cash needs
for working capital and capital expenditures, including the production costs of
A Bug's Life, the Second Theatrical Film and the Toy Story Video Sequel, until
Pixar begins receiving cash from the release of these films (which is generally
not expected to occur until 1999 at the earliest). However, even if these films
generate cash, unless each is a success such that Pixar recovers on a timely
basis its share of the production costs, as well as other operating expenses and
capital expenditures, Pixar will be required to seek financing for its ongoing
commitments under the Co-Production Agreement and any other requirements of its
operations. Pixar may also seek additional financing in connection with the
expansion of its facilities (See Liquidity and Capital Resources). The sale of
additional equity or convertible debt securities would result in additional
dilution to Pixar's shareholders. Moreover, there can be no assurance that Pixar
will be successful in obtaining future financing, or even if such financing is
available, that it will be obtained on terms favorable to Pixar or on terms
providing Pixar with sufficient funds to meet its obligations and objectives.
The failure to obtain such financing would have a material adverse effect on
Pixar's business, operating results and financial condition.
CAPITALIZED FILM PRODUCTION COSTS
Although Disney funded the entire production of Toy Story, Pixar
contractually guaranteed certain of the film budget overages and was liable to
Disney for those amounts under the Feature Film Agreement. Because these are
"production costs" under Statement of Financial Accounting Standards (SFAS) No.
53, "Financial Reporting by Producers and Distributors of Motion Picture Films,"
the costs were capitalized and amortized against film revenue. In the three and
six months ended June 30, 1997, $769,000 and $1.3 million of these costs,
respectively, were amortized against film revenues. As of June 30, 1997, Pixar
had approximately $19.6 million of capitalized film production costs, consisting
primarily of costs related to A Bug's Life and the Toy Story Video Sequel, both
of which are being co-financed by Pixar under the Co-Production Agreement.
RECENTLY-ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". This Statement establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the statement, but requires the
Company to display an amount representing total comprehensive income for the
period in that financial statement. The Company is in the process of
determining its preferred format. This Statement is effective for fiscal years
beginning after December 15, 1997.
Also, in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Statement establishes
standards for the manner in which public business enterprises report
information about operating segments in annual financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to shareholders. This Statement is
effective for financial statements for periods beginning after December
15, 1997, and is not expected to have a significant impact on the Company's
reporting of segment information.
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<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments increased $17.8 million to $178.8 million
at June 30, 1997 from $161.0 million at December 31, 1996. Working capital
increased slightly to $163.1 million at June 30, 1997 from $163.0 million at
December 31, 1996.
Net cash provided by operations in the six months ended June 30, 1997 was
primarily attributable to cash received from film revenues and other operations.
Net cash used in investing activities was due primarily to the purchase of real
property and computer equipment of $11.7 million and funding of film production
costs of $10.5 million. Net cash provided by financing activities was due
primarily to $14.9 million of net proceeds from issuance of common stock and
warrants to Disney.
In May 1997, Pixar exercised its option (which option Pixar purchased in
1996) and paid $5.8 million to purchase land in Emeryville, California to build
a new headquarters and studio facility. To construct the facility, Pixar
currently expects to incur capital expenditures of more than $10 million in 1997
and more than $12 million in 1998. Pixar may choose to use its existing cash
resources for such expenditures or to finance such capital expenditures through
the issuance of additional equity or debt securities, by obtaining a credit
facility or by some other financing mechanism.
Further utilization of cash in the last half of 1997 will occur when Pixar
reimburses Disney for Pixar's share of the production costs incurred to date for
A Bug's Life. This obligation to Disney is currently included in film cost
payable of $7.5 million.
As of June 30, 1997, Pixar's principal source of liquidity was
approximately $178.8 million in cash and short-term investments. Pixar believes
that these funds will be sufficient to meet the Company's operating requirements
through the next twelve months. Thereafter, if cash generated by operations is
insufficient to satisfy Pixar's liquidity requirements, Pixar may sell
additional equity or debt securities or obtain credit facilities. The sale of
additional equity or convertible debt securities will result in additional
dilution to Pixar's shareholders. There can be no assurance that financing will
be available to Pixar in an amount and on terms acceptable to Pixar.
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<PAGE> 18
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following matters were submitted to the shareholders at Pixar's Annual
Meeting of Shareholders held June 25, 1997. Each of these matters was approved
by a majority of the shares present at the meeting.
1. The uncontested election of four directors to serve a one-year term
until their successors are duly elected and qualified. The following is a
summary of the nominees and voting results:
<TABLE>
<CAPTION>
Votes For Votes Withheld
---------- --------------
<S> <C> <C>
Steven P. Jobs 37,687,142 93,539
Larry W. Sonsini 37,690,060 90,621
Skip M. Brittenham 37,691,292 89,389
Joseph A. Graziano 37,691,448 89,233
</TABLE>
2. The adoption of an amendment to the 1995 Stock Plan to: (i) increase the
number of shares reserved for issuance by an additional 1,000,000 shares of
Common Stock, for an aggregate of 14,000,000 shares reserved for issuance
thereunder and (ii) increase the size of the annual adjustment (beginning
January 1, 1998) from two percent of the number of shares of Common Stock
outstanding on the first day of each calendar year to three percent of such
number. Results of the voting included 36,448,989 shares for, 862,317 shares
against, 95,162 shares abstained and 374,213 shares broker non-votes.
3. The ratification of the appointment of KPMG Peat Marwick LLP as the
independent auditors for the Company for the fiscal year ending December 31,
1997. Results of the voting included 37,698,226 shares for, 44,218 shares
against and 38,237 shares abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.4 Amended and Restated Bylaws, as amended.
10.1 1995 Stock Plan, as amended.
10.19 Agreement of Purchase and Sale between the Registrant and
Del Monte Corporation dated as of September 6, 1996, as
amended.
11.1 Statement of Computation of Net Income Per Share.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Pixar during the quarter
ended June 30, 1997.
ITEMS 1, 2, 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
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<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PIXAR
Date: AUGUST 14 , 1997 By: /s/ Lawrence B. Levy
--------------------------- --------------------------------------
Lawrence B. Levy,
Executive Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer and Duly Authorized Officer)
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<PAGE> 20
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBITS
- ------- --------
3.4 Amended and Restated Bylaws, as amended
10.1 1995 Stock Plan, as amended
10.19 Agreement of Purchase and Sale between the Registrant and Del
Monte Corporation dated as of September 6, 1996, as amended.
11.1 Statement of Computation of Net Income Per Share
27.1 Financial Data Schedule
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<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
PIXAR
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE
The board of directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
Meetings of shareholders shall be held at any place within or outside
the State of California designated by the board of directors. In the absence of
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of shareholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the third
Wednesday of May in each year at 10 am. However, if such day falls on a legal
holiday, then the meeting
<PAGE> 2
shall be held at the same time and place on the next succeeding full business
day. At the meeting, directors shall be elected, and any other proper business
may be transacted.
2.3 SPECIAL MEETING
A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
All notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) (or,
if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty
(30)) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper
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<PAGE> 3
matter may be presented at the meeting for such action). The notice of any
meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal
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executive office of the corporation for a period of one (1) year from the date
of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting, either in person or by proxy. In the
absence of a quorum, no other business may be transacted at that meeting except
as provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than forty-five (45) days from the date
set for the original meeting, then notice of the adjourned meeting shall be
given. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
2.8 VOTING
The shareholders entitled to vote at any meeting of shareholders shall
be determined in accordance with the provisions of
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Section 2.11 of these bylaws, subject to the provisions of Sections 702 through
704 of the Code (relating to voting shares held by a fiduciary, in the name of a
corporation or in joint ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as may
be otherwise provided in the articles of incorporation, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of the shareholders. Any shareholder entitled to vote on any matter may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or, except when the matter is the election of directors, may
vote them against the proposal; but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit.
The candidates receiving the highest number of affirmative votes, up to the
number of directors to be elected,
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shall be elected; votes against any candidate and votes withheld shall have no
legal effect.
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of shareholders, except that if action is taken
or proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors. However, a director may be elected at any time to fill
any vacancy on the board of directors, provided that it was not created by
removal of a director and that it has not been filled by the directors, by the
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ten consent of the holders of a majority of the outstanding shares entitled to
vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of
shares required to authorize the proposed action have been filed with the
secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writing and shall be given in the manner specified in Section 2.5
of these bylaws. In the case of approval of (i) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant
to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of the Code, and (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, pursuant to
Section 2007 of the Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
CONSENTS
For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
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If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and
(b) the record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, (i) when no
prior action by the board has been taken, shall be the day on which the first
written consent is given, or (ii) when prior action by the board has been taken,
shall be at the close of business on the day on which the board adopts the
resolution relating to that action, or the sixtieth (60th) day before the date
of such other action, whichever is later.
The record date for any other purpose shall be as provided in Article
VIII of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's
attorney-in-fact. A validly executed proxy which does not state that it is
irrevocable shall continue in full force and effect unless (i) the person who
executed the proxy revokes it prior to the time of voting by delivering a
writing to the corporation stating that the proxy is revoked or by executing a
subsequent proxy and presenting it to the meeting or by voting in person at the
meeting, or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
eleven (11) months from the date of the proxy, unless otherwise provided in the
proxy. The dates contained on the forms of proxy presumptively determine the
order of execution, regardless of the postmark dates on the envelopes in which
they are mailed. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of
the Code.
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2.13 INSPECTORS OF ELECTION
Before any meeting of shareholders, the board of directors may appoint
an inspector or inspectors of election to act at the meeting or its
adjournment. If no inspector of election is so appointed, then the chairman of
the meeting may, and on the request of any shareholder or a shareholder's proxy
shall, appoint an inspector or inspectors of election to act at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting pursuant to the request of one (1) or more shareholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (1) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, then the chairman of the meeting may, and upon the request of
any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence
of a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
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ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Code and any limitations in the
articles of incorporation and these bylaws relating to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than two
(2) nor more than three (3). The exact number of directors shall be two (2)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw duly adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the authorized number of directors
is five (5) or more, an amendment reducing the fixed number or the minimum
number of directors to a number less than five (5) cannot be adopted if the
votes cast against its adoption at a meeting, or the shares not consenting in
the case of an action by written consent, are equal to more than sixteen and
two-thirds percent (16-2/3%) of the outstanding shares entitled to vote thereon.
No amendment may change the stated maximum number of authorized directors to a
number greater than two (2) times the stated minimum number of directors minus
one (1).
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Directors shall be elected at each annual meeting of shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
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3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony, (iii) if the authorized number of directors is increased, or (iv)
if the shareholders fail, at any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
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State of California that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act
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of the board of directors, subject to the provisions of Section 310 of the Code
(as to approval of contracts or transactions in which a director has a direct or
indirect material financial interest), Section 311 of the Code (as to
appointment of committees), Section 317(e) of the Code (as to indemnification
of directors), the articles of incorporation, and other applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty-four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors.
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Such written consent and any counterparts thereof shall be filed with the
minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS*
The corporation may, upon the approval of the board of directors
alone, make loans of money or property to, or guarantee the obligations of, any
officer of the corporation or its parent or subsidiary, whether or not a
director, or adopt an employee benefit plan or plans authorizing such loans or
guaranties provided that (i) the board of directors determines that such a loan
or guaranty or plan may reasonably be expected to benefit the corporation, (ii)
the corporation has outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code) on the date of approval by
the board of directors, and (iii) the approval of the board of directors is by a
vote sufficient without counting the vote of any interested director or
directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires
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* This section is effective only if it has been approved by the
shareholders in accordance with Sections 315(b) and 152 of the Code.
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the vote of a majority of the authorized number of directors. Any committee, to
the extent provided in the resolution of the board, shall have all the authority
of the board, except with respect to:
(a) the approval of any action which, under the Code,
also requires shareholders' approval or approval of the outstanding
shares;
(b) the filling of vacancies on the board of directors
or in any committee;
(c) the fixing of compensation of the directors for
serving on the board or any committee;
(d) the amendment or repeal of these bylaws or the
adoption of new bylaws;
(e) the amendment or repeal of any resolution of the
board of directors which by its express terms is not so amendable
or repealable;
(f) a distribution to the shareholders of the
corporation, except at a rate or in a periodic amount or within a price
range determined by the board of directors; or
(g) the appointment of any other committees of the board
of directors or the members of such committees.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government
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of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of
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the receipt of that notice or at any later time specified in that notice; and,
unless otherwise specified in that notice, the acceptance of the resignation
shall not be necessary to make it effective. Any resignation is without
prejudice to the rights, if any, of the corporation under any contract to which
the officer is a party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or non-
existence of a chairman of the board, at all meetings of the board of directors.
He shall have the general powers and duties of management usually vested in the
office of president of a corporation, and shall have such other powers and
duties as may be prescribed by the board of directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to
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all the restrictions upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with
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such depositaries as may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered by the board of
directors, shall render to the president and directors, whenever they request
it, an account of all of his transactions as chief financial officer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or
these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the Code, indemnify each of its directors and officers against
expenses (as defined in Section 317(a) of the Code), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding (as defined in Section 317(a) of the Code), arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Article VI, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Article VI, an "employee" or "agent" of the
corporation (other than a director or officer) includes any person (i) who is or
was an employee or agent of the corporation, (ii) who is or was serving at the
request of
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the corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or (iii) who was an employee or agent
of a corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1 or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors shall be paid by the
corporation in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of the indemnified party to
repay such amount if it shall ultimately be determined that the indemnified
party is not entitled to be indemnified as authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Articles of
Incorporation.
6.5 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation against any liability asserted against or incurred by such
person in such capacity or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of this Article VI.
6.6 CONFLICTS
No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:
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(1) That it would be inconsistent with a provision of the
Articles of Incorporation, these bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition
expressly imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
The corporation shall keep either at its principal executive office or
at the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose
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reasonably related to the holder's interests as a shareholder or as the holder
of a voting trust certificate.
Any inspection and copying under this Section 7.1 may be made in person
or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS
The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of California, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or
by an agent or attorney and shall include the right to copy and make extracts.
Such rights of inspection shall extend to the records of each subsidiary
corporation of the corporation.
7.4 INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as
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well as the physical properties of the corporation and each of its subsidiary
corporations. Such inspection by a director may be made in person or by an agent
or attorney. The right of inspection includes the right to copy and make
extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER
The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meeting of shareholders to be held during the next fiscal
year and in the manner specified in Section 2.5 of these bylaws for giving
notice to shareholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.
7.6 FINANCIAL STATEMENTS
If no annual report for the fiscal year has been sent to shareholders,
then the corporation shall, upon the written request of any shareholder made
more than one hundred twenty (120) days after the close of such fiscal year,
deliver or mail to the person making the request, within thirty (30) days
thereafter, a copy of a balance sheet as of the end of such fiscal year and an
income statement and statement of changes in financial position for such fiscal
year.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared,
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if not already prepared, and shall deliver personally or mail that statement or
statements to the person making the request within thirty (30) days after the
receipt of the request. If the corporation has not sent to the shareholders its
annual report for the last fiscal year, the statements referred to in the first
paragraph of this Section 7.6 shall likewise be delivered or mailed to the
shareholder or shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a
meeting), the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days before any such action. In that case,
only shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be,
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notwithstanding any transfer of any shares on the books of the corporation after
the record date so fixed, except as otherwise provided in the Code.
If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 CERTIFICATES FOR SHARES
A certificate or certificates for shares of the corporation shall be
issued to each shareholder when any of such shares are fully paid. The board of
directors may authorize the issuance of certificates for shares partly paid
provided that these certificates shall state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the corporation by the chairman of the board or
the vice chairman of the board or the president or a vice president and by the
chief financial officer or an assistant treasurer or the secretary or an
assistant secretary, certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the
certificate may be facsimile.
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In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New bylaws may be adopted or these bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
then the authorized number of directors may be changed only by an amendment of
the articles of incorporation.
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9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders as provided in Section 9.1
of these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing
the authorized number of directors (except to fix the authorized number of
directors pursuant to a bylaw providing for a variable number of directors),
may be adopted, amended or repealed by the board of directors.
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AMENDMENT TO PIXAR'S BYLAWS
Effective upon this corporation's becoming a "listed corporation"
within the meaning of Section 301.5 of the California Corporations Code,
Section 2.8 of the Bylaws of this corporation shall be amended in its entirety
to read as follows:
"2.8 VOTING
The shareholders entitled to vote at any meeting of shareholders shall
be determined in accordance with the provisions of Section 2.11 of these
bylaws, subject to the provisions of Sections 702 through 704 of the Code
(relating to voting shares held by a fiduciary, in the name of a corporation or
in joint ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the articles of incorporation, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote of the shareholders. Any shareholder entitled to vote on
any matter may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or, except when the matter is the election of
directors, may vote them against the proposal; but, if the shareholder fails to
specify the number of shares which the shareholder is voting affirmatively, it
will be conclusively presumed that the shareholder's approving vote is with
respect to all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote
by classes is required by the Code or by the articles of incorporation.
No shareholder entitled to vote at any election of directors shall be
entitled to cumulate votes for candidates in nomination either (i) by giving
one candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit.
This paragraph shall become effective only when the corporation becomes a
"listed corporation" within the meaning of Section 301.5 of the California
Corporations Code. This paragraph may not be modified, amended, rescinded or
repealed except by a duly adopted amendment to the articles of incorporation or
by an amendment to this bylaw duly adopted by the vote or written consent of
the holders of a majority of the outstanding shares entitled to vote."
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CERTIFICATE OF
THE SECRETARY OF
PIXAR
I, Larry W. Sonsini, being the duly elected and acting Secretary of
Pixar (the "Company"), do hereby certify that the following is a true and
correct copy of a resolution adopted by the Company's Board of Directors by
unanimous written consent dated June 1, 1995, and by the Company's sole
shareholder by written consent effective June 1, 1995 and that such resolution
has not been amended or rescinded, and is now in full force and effect:
RESOLVED: That the Board approves the amendment of Article III, Section
3.2 of the Corporation's Bylaws such that the first two sentences of such
section shall read in full as follows:
"The number of directors of the corporation shall be not less than four
(4) nor more than seven (7). The exact number of directors shall be
four (4) until changed, within the limits specified above, by a bylaw
amending this Section 3.2, duly adopted by the board of directors or by
the shareholders."
IN WITNESS WHEREOF, I have hereunto subscribed my name.
DATE: June 1, 1995 /s/ LARRY W. SONSINI
----------------------
Larry W. Sonsini
Secretary
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CERTIFICATE OF
THE SECRETARY OF
PIXAR
I, Lawrence B. Levy, being the duly elected and acting Secretary of
Pixar (the "Company"), do hereby certify that the following is a true and
correct copy of a resolution of the Company adopted by the Board of Directors by
unanimous written consent dated July 7, 1997, and that such resolution has not
been amended or rescinded, and is now in full force and effect:
RESOLVED: That the Board hereby approves an amendment to Article III,
Section 3.2 of the Company's Bylaws such that the second sentence of the section
shall read in full as follows:
"The exact number of directors shall be five (5) until
changed, within the limits specified above, by a bylaw
amending this Section 3.2, duly adopted by the board of
directors or by the shareholders."
IN WITNESS WHEREOF, I have hereunto subscribed my name.
DATE: July 15, 1997 /s/ LAWRENCE B. LEVY
------------------------
Lawrence B. Levy
Executive Vice President,
Chief Financial Officer and
Secretary
<PAGE> 1
EXHIBIT 10.1
PIXAR 1995 STOCK PLAN
(as amended April 16, 1997)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant of an Option and subject to the applicable provisions of Section 422 of
the Code and the regulations promulgated thereunder. Stock Purchase Rights may
also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the Board
of Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means PIXAR, a California corporation.
(g) "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services. The term Consultant shall not include
Directors who are not compensated for their services or are paid only a
Director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship with the Company, any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no such leave may exceed
90 days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract, including Company policies. If reemployment upon expiration
of a leave of absence approved by the Company is not so guaranteed, on the 91st
day of such leave any
<PAGE> 2
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.
(i) "Director" means a member of the Board of Directors
of the Company.
(j) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(l) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the time of determination and reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the Nasdaq National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
(m) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(n) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
(o) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "Option" means a stock option granted pursuant to the
Plan.
(q) "Optioned Stock" means the Common Stock subject to an
Option or a Stock Purchase Right.
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(r) "Optionee" means an Employee or Consultant who
receives an Option or Stock Purchase Right.
(s) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(t) "Plan" means this 1995 Stock Plan.
(u) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(v) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 12 below.
(w) "Stock Purchase Right" means a right to purchase
Common Stock pursuant to Section 11 below.
(x) "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to Section 12, the maximum
aggregate number of Shares which may be subject to option and sold under the
Plan is 14,000,000 Shares provided, however, that beginning January 1, 1998, the
number of Shares shall be increased each January 1 by three percent (3%) of the
total issued and outstanding Shares on such date. In no event, except as subject
to Section 12, shall more than 14,000,000 Shares be issued upon the exercise of
Incentive Stock Options under the Plan.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, and the original purchaser of such Shares did
not receive any benefits of ownership of such Shares, such Shares shall become
available for future grant under the Plan. For purposes of the preceding
sentence, voting rights shall not be considered a benefit of Share ownership.
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<PAGE> 4
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If
permitted by Rule 16b-3, the Plan may be administered by different bodies with
respect to Directors and Officers, and Employees and Consultants who are neither
Directors nor Officers.
(ii) Administration With Respect to Directors and
Officers. With respect to grants of Options and Stock Purchase Rights to
Employees who are also Officers or Directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan in compliance
with Rule 16b-3 promulgated under the Exchange Act or any successor thereto
("Rule 16b-3") with respect to a plan intended to qualify thereunder as a
discretionary plan, or (B) a Committee designated by the Board to administer the
Plan, which Committee shall be constituted in such a manner as to permit the
Plan to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended
to qualify thereunder as a discretionary plan.
(iii) Administration With Respect to Other
Employees and Consultants . With respect to grants of Options and Stock Purchase
Rights to Employees or Consultants who are neither Directors nor Officers of the
Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which committee shall be constituted in such a manner
as to satisfy the legal requirements relating to the administration of incentive
stock option plans, if any, of California corporate and securities laws, of the
Code, and of any applicable stock exchange (the "Applicable Laws"). Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority in
its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(l) of the Plan;
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(ii) to select the Consultants and Employees to
whom Options and Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what
extent Options and Stock Purchase Rights or any combination thereof, are granted
hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the shares of Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to reduce the exercise price of any Option
or Stock Purchase Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was granted;
(viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock
Purchase Right (subject to Section 14 of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf
of the Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xii) to determine the terms and restrictions
applicable to Options and Stock Purchase Rights and any Restricted Stock; and
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(xiii) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or
Stock Purchase Right may, if otherwise eligible, be granted additional Options
or Stock Purchase Rights.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to an Optionee's Incentive Stock Options
granted by the Company, any Parent or Subsidiary, which become exercisable for
the first time during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds the limit imposed by Section 422(d) of the Code or
any successor thereto, such excess Options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall
be taken into account in the order in which they were granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon any Optionee any right with respect to continuation of his or
her employment or consulting relationship with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
his or her employment or consulting relationship at any time, with or without
cause.
(d) Upon the Company or a successor corporation issuing any
class of common equity securities required to be registered under Section 12 of
the Exchange Act or upon the Plan being assumed by a corporation having a class
of common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:
(i) No Employee shall be granted, in any fiscal
year of the Company, Options and Stock Purchase Rights to purchase more than
3,000,000 Shares.
(ii) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12.
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(iii) If an Option or Stock Purchase Right is
cancelled in the same fiscal year of the Company in which it was granted (other
than in connection with a transaction described in Section 12), the cancelled
Option shall be counted against the limit set forth in Section 5(d)(i). For this
purpose, if the exercise price of an Option is reduced, such reduction will be
treated as a cancellation of the Option and the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(1) granted to an Employee who, at the
time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(2) granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option,
the per Share exercise price shall be determined by the Administrator.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the
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aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and a broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price, (6) a reduction in the
amount of any Company liability to the Optionee, including any liability
attributable to the Optionee's participation in any Company-sponsored deferred
compensation program or arrangement, or (7) any combination of the foregoing
methods of payment. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 8(b)
hereof. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote, receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the Option.
No adjustment shall be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided in
Section 12 hereof.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. In
the event of termination of an Optionee's Continuous Status as an Employee or
Consultant (but not in the event of an Optionee's change of status from Employee
to Consultant (in which case an Employee's Incentive Stock Option shall
automatically convert to a Nonstatutory Stock Option on the ninety-first (91st)
day following such change of status) or from Consultant to Employee), such
Optionee may, but only within such period of time as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
not exceeding three (3) months after the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
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<PAGE> 9
the Option Agreement), exercise his or her Option to the extent that the
Optionee was entitled to exercise it at the date of such termination. To the
extent that the Optionee was not entitled to exercise the Option at the date of
such termination, or if the Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event of termination
of an Optionee's Continuous Status as an Employee or Consultant as a result of
his or her "Disability," as such term is
defined in Section 22(c)(3) of the Code, the Optionee may, but only within
twelve (12) months from the date of such termination (and in no event later than
the expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or if the Optionee
does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant) by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee was entitled to
exercise the Option on the date of death. If, at the time of death, the Optionee
was not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall immediately revert to the Plan. If,
after the Optionee's death, the Optionee's estate or a person who acquires the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options and Stock Purchase Rights. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
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11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator makes the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock
Purchase Right shall be referred to herein as "Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
(c) Rule 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3. An
Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(d) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(e) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.
12. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted
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<PAGE> 11
or which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company. The conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the extent
it has not been previously exercised, the Option or Stock Purchase Right shall
terminate immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall have the right to exercise the Option
or Stock Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. If an Option or Stock Purchase
Right is exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the
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Option or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be
made which would impair the rights of any Optionee under any grant theretofore
made, without his or her consent. In addition, to the extent necessary and
desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422
of the Code (or any other applicable law or regulation, including the
requirements of the NASD or an established stock exchange), the Company shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted, and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
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16. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
17. Agreements. Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall approve
from time to time.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
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<PAGE> 1
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (the "Agreement") is made
and entered into as of this 6th day of September, 1996, by and between DEL
MONTE CORPORATION, a New York corporation ("Del Monte"), and PIXAR ANIMATION
STUDIOS, a California corporation ("Pixar").
RECITALS:
This Agreement is entered into on the basis of the following
facts, understandings and intentions of the parties:
A. Del Monte is the owner of certain real property more
particularly described in Exhibit A hereto (the "Real Property"). Pixar
desires to purchase from Del Monte the Real Property, all appurtenances to the
Real Property (the "Appurtenances"), and all intangible property pertaining to
the Real Property and Appurtenances (the "Intangible Property"; the Real
Property, Appurtenances and Intangible Property being hereinafter collectively
referred to as the "Property").
B. Pixar desires to develop the Real Property for its
headquarters facility (the "Headquarters Facility"). Such development is
dependent upon Pixar assuring itself, in its sole discretion, that the Real
Property, and Appurtenances and Intangible Property, to the extent applicable,
may be developed for the Headquarters Facility. Specifically, but without
limiting the generality of the foregoing, Pixar desires to assure that it can
obtain the governmental and other approvals necessary
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<PAGE> 2
or appropriate to develop and construct the Headquarters Facility; that the
soils and environmental conditions on, and access and utilities available to,
the Real Property are suitable for development, construction, operation and use
of the Real Property for the Headquarters Facility; and that the state of title
of the Property is acceptable to Pixar. Pixar desires to enter into this
Agreement to purchase the Property, subject to performance of due diligence
necessary in Pixar's sole discretion to satisfy itself with respect to such
matters.
C. Del Monte is willing to sell the Property to Pixar,
subject to Pixar satisfying itself with respect to such matters. In order to
effectuate the foregoing, the parties desire to enter into this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the foregoing Recitals,
and the mutual covenants and obligations of the parties herein contained, the
parties agree as follows:
1. Purchase and Sale. Del Monte shall sell the Property to
Pixar, and Pixar shall purchase the Property from Del Monte, upon all of the
terms, covenants and conditions set forth in this Agreement.
2. Purchase Price. Pixar shall pay, as the "Purchase Price" for
the Property, the sum of Six Million Three Hundred Thirty-Two Thousand Forty
Dollars ($6,332,040.00). Pixar shall pay the Purchase Price, after crediting
against the Purchase Price the Deposit paid under Section 3(a) below (the "Net
Purchase Price"), and subject to any withhold effected pursuant to Section 8(c)
below, in cash through escrow as hereinafter provided.
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<PAGE> 3
3. Deposit: Liquidated Damages.
(a) Deposit. As an earnest money deposit on account of
the Purchase Price, Pixar shall, (i) concurrently with the execution of this
Agreement by the parties, deposit with Chicago Title Company of Alameda County,
One Kaiser Plaza, Oakland, California ("Title Company"), the sum of One Hundred
Fifty Thousand Dollars ($150,000.00) (the "Initial Deposit"); and (ii) within
ninety (90) days after the date of this Agreement, if Pixar has not previously
terminated this Agreement pursuant to Section 4(c) below, instruct Title
Company to (A) pay to Del Monte the Initial Deposit, and (B) pay to Del Monte
the additional sum of One Hundred Fifty Thousand Dollars ($150,000.00) (the
"Additional Deposit"; the Initial Deposit, Additional Deposit and, if made
pursuant to Section 8(b) below, the Demolition Contribution, being hereinafter
collectively referred to as the "Deposit"; and the date on which Pixar is
obligated to pay the Additional Deposit to Del Monte or may terminate this
Agreement pursuant to Section 4(c) below being hereinafter referred to as the
"Additional Deposit Date"). The Deposit shall be applied against the Purchase
Price for the Property. If Pixar terminates this Agreement pursuant to Section
4(c) below within the time period therein specified, then the Initial Deposit
shall be promptly repaid by Title Company to Pixar.
(b) Non-Refundable Deposit: Liquidated Damages. THE
PARTIES ACKNOWLEDGE THAT, AS OF THE ADDITIONAL DEPOSIT DATE, AND AT ALL TIMES
THEREAFTER, THE DEPOSIT IS NON-REFUNDABLE,
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EXCEPT IN THE EVENT OF A DEFAULT BY DEL MONTE ON ITS OBLIGATIONS UNDER THIS
AGREEMENT WHICH PREVENTS THE CLOSE OF ESCROW. UPON ANY TERMINATION OF THIS
AGREEMENT FROM ANY CAUSE WHATSOEVER AFTER THE ADDITIONAL DEPOSIT DATE
(INCLUDING THE DEFAULT OF PIXAR ON ITS OBLIGATIONS UNDER THIS AGREEMENT, SUCH
AS THE OBLIGATION TO MAKE THE ADDITIONAL DEPOSIT IF PIXAR DOES NOT TIMELY
TERMINATE THIS AGREEMENT PURSUANT TO SECTION 4(c) BELOW), DEL MONTE SHALL HAVE
THE ABSOLUTE, UNCONDITIONAL RIGHT TO RETAIN THE DEPOSIT AS COMPENSATION IN FULL
FOR ALL COSTS, EXPENSES AND DAMAGES RESULTING FROM TERMINATION OF THIS
AGREEMENT, INCLUDING ON ACCOUNT OF THE DEFAULT OF PIXAR IN THE PERFORMANCE OF
ITS OBLIGATIONS UNDER THIS AGREEMENT. THE PARTIES HAVE DETERMINED, AFTER DUE
CONSIDERATION OF ALL FACTS AND CIRCUMSTANCES PERTAINING AS OF THE DATE OF THIS
AGREEMENT THAT, IN THE EVENT OF A DEFAULT OF PIXAR IN THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, THE DAMAGES WHICH DEL MONTE WOULD SUFFER AS A
RESULT OF SUCH DEFAULT WOULD BE IMPRACTICABLE OR IMPOSSIBLE TO ASCERTAIN.
THEREFORE, AFTER DUE CONSIDERATION OF ALL SUCH FACTS AND CIRCUMSTANCES, THE
PARTIES HAVE DETERMINED THAT THE AMOUNT OF THE DEPOSIT IS A FAIR AND REASONABLE
AMOUNT TO COMPENSATE DEL MONTE FOR ALL SUCH DAMAGES AND SHALL CONSTITUTE DEL
MONTE'S LIQUIDATED DAMAGES ON ACCOUNT OF SUCH DEFAULT IN LIEU OF ANY OTHER
RIGHT OR REMEDY AVAILABLE AT LAW OR IN EQUITY (INCLUDING THE RIGHT TO PURSUE
SPECIFIC ENFORCEMENT OF THIS AGREEMENT OR OTHER EXTRAORDINARY EQUITABLE RELIEF)
WHICH DEL MONTE MIGHT HAVE ON ACCOUNT OF SUCH DEFAULT OF PIXAR, AND DEL MONTE
HEREBY KNOWINGLY, AFTER FULL ADVICE FROM COUNSEL AND OTHER CONSULTANTS
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OF ITS CHOICE, WAIVES ANY RIGHT TO PROCEED IN LAW OR IN EQUITY ON ANY CAUSE OF
ACTION OR FOR EXTRAORDINARY RELIEF, OTHER THAN TO RECOVER THE AMOUNT OF THE
DEPOSIT HEREUNDER AS LIQUIDATED DAMAGES PURSUANT TO THIS SECTION 3(b). TO
EVIDENCE THE FOREGOING AGREEMENT, THE PARTIES HAVE INITIALED THIS Section 3(b)
WHERE INDICATED BELOW.
_______ INITIALS OF DEL MONTE ______ INITIALS OF PIXAR
4. Conditions Precedent.
(a) Right to Review Property. Pixar's obligation to
purchase the Property is conditioned upon Pixar's review and approval, in
Pixar's sole discretion, of all aspects of the Property related or germane, in
Pixar's sole judgment, to Pixar's contemplated development, construction, use
and operation of the Property for the Headquarters Facility. Specifically, but
without limiting the generality of the foregoing, Pixar shall have the right to
review and satisfy itself, in its sole discretion, that (i) it will have the
ability to obtain all governmental and quasi-governmental (such as public
utilities) approvals, consents and permits upon terms and conditions acceptable
to Pixar, in its sole discretion, necessary or appropriate to develop,
construct, use, operate and maintain the Headquarters Facility; (ii) the soils
and environmental conditions on, under and about the Real Property are
satisfactory for development, construction, use, operation and maintenance of
the Headquarters Facility; (iii) utilities and services sufficient to support
the Headquarters Facility are available and with sufficient capacity; (iv) Del
Monte is in a position to
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fulfill the covenants concerning title set forth in Section 5 below in the
manner and within the time periods therein specified; (v) the cost to Pixar for
the design, construction, development, use, operation and maintenance of the
Headquarters Facility is feasible and appropriate; and (vi) all other matters
germane to Pixar's decision to proceed with the purchase and sale of the
Property pursuant to this Agreement in order to develop, construct, use,
maintain and operate the Headquarters Facility on the Real Property are
satisfactory.
(b) Efforts to Review Property. Pixar shall conduct and
complete its review of the Property under Section 4(a) above with due diligence
and within ninety (90) days after the date of this Agreement (the "Review
Period"). Should Pixar determine at any time during the Review Period not to
purchase the Property as a result of its due diligence review under Section
4(a) above, Pixar shall promptly so notify Del Monte. The parties shall
cooperate in Pixar's review of the Property, communicating with each other on
the progress of such review and making timely requests for cooperation where
such cooperation would be useful in such review. Del Monte shall execute any
and all documents reasonably necessary to assist Pixar in conducting such
review, including serving as the applicant for governmental approvals to the
extent required by applicable laws, ordinances, rules and regulations. Del
Monte's cooperation with Pixar hereunder shall be without cost or expense to
Del Monte, and to the extent such cooperation creates any liabilities for Del
Monte, Pixar shall indemnify, defend, protect
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and hold Del Monte harmless from any and all such liabilities, including
losses, claims, damages, causes of action, costs and expenses (such as
reasonable attorneys' fees), associated with such liabilities.
(c) Fulfillment and Waiver. If Pixar determines within
the Review Period not to purchase the Property as a result of its due diligence
review of the Property pursuant to Section 4(a) above, then Pixar shall
terminate this Agreement by notice to Del Monte given within and prior to the
expiration of the Review Period. The due diligence review of the Property is
solely for the benefit of Pixar, and Pixar may waive such review at any time
during the Review Period, but only by a notice signed by Pixar. If Pixar has
not given notice of its approval of the Property or termination of this
Agreement within the Review Period, then Pixar shall be deemed to have approved
the Property, Pixar shall have no further right to terminate this Agreement
pursuant to this Section 4(c), and the Deposit shall become nonrefundable as
specified in Section 3(b) above. If Pixar terminates this Agreement as
provided in this Section 4(c), then the parties shall have no further rights,
obligations or liability hereunder, except for the express indemnity
obligations contained in this Agreement.
(d) Right of Entry: Applications for Approvals
Indemnification. Del Monte shall at all times allow Pixar, and its authorized
representatives and agents, full and complete access to all documents and
records prepared by or on behalf of Del Monte, and surveys, inspection reports,
tests and test
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results, relating to the physical and environmental condition, and utility
availability and capacity, of the Real Property, (the "Property Data"). Del
Monte shall, within one (1) week after the execution of this Agreement by the
parties, deliver to Pixar true, correct and complete copies of all Property
Data (i) previously delivered to Del Monte by Kaiser Foundation Health Plan,
Inc. ("Kaiser"), in connection with Kaiser's due diligence investigation of the
Property for Kaiser's contemplated acquisition of the Property, or (ii)
received, prepared or generated by, or on behalf of, Del Monte in connection
with its ownership, occupancy, use or sale of the Property. In addition to the
Property Data from Kaiser delivered pursuant to clause (i) above, Del Monte
shall, from time to time upon request of Pixar, use reasonable good faith
efforts to obtain such additional surveys, inspections, reports, tests and test
results from Kaiser which Kaiser may have prepared or received from consultants
in connection with Kaiser's due diligence investigation of the Property for
Kaiser's contemplated acquisition of the Property, but, except for using such
good faith due diligence efforts, Del Monte shall have no liability to Pixar
for any refusal or failure of Kaiser to supply such Property Data to Del Monte
for delivery to Pixar. Pixar, and its authorized representatives and agents,
shall have the right at all times, after reasonable advance notice to Del Monte
and, at Del Monte's option, in the company of a Del Monte representative, to
enter the Property in order to perform such tests, inspections, sampling or
surveys deemed necessary or appropriate by Pixar, in its sole discretion, in
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connection with Pixar's analysis of the Real Property or attainment of
governmental or other approvals for its development. As soon as reasonably
practicable after performing any test, inspection or survey hereunder, Pixar
shall restore the affected portion of the Real Property to a condition
reasonably similar to that immediately prior to such test, inspection or
survey, taking into consideration the Demolition Work to be performed by Del
Monte pursuant to Section 8(b) below. Pixar shall effect entry under this
Section 4(d) so as to minimize any interference with the performance of Del
Monte's remediation of the Real Property under the Remediation Plan pursuant to
Section 7(a)(iii) below, or with the performance of the Demolition Work. Del
Monte shall cooperate with Pixar in connection with any sampling, test,
inspection or survey hereunder. Del Monte shall be responsible for disposal of
any drilling spoils which are generated as a result of any test, inspection or
survey undertaken by Pixar hereunder, if such spoils contain hazardous
materials. Del Monte shall effect such disposal pursuant to the applicable
provisions of Section 7(a)(ii) below. Pixar shall indemnify, defend, protect
and hold Del Monte harmless from and against any and all claims, losses,
damages, liabilities, injuries, costs or expenses (including reasonable
attorneys' fees) arising out of or related to such entry, or performance of
such tests, sampling, inspections or surveys, except that Pixar shall have no
liability under this Section 6 for any decrease in the value of the Real
Property due to the discovery of any previously undiscovered hazardous
materials contamination or
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other previously undiscovered property defect.
(e) Hazardous Materials Tests. Notwithstanding the
provisions of Section 4(d) above, if Pixar desires to perform any test,
sampling or inspection with respect to the presence of hazardous materials (as
defined in Section 7(a)(vi) below) in, about, on or under the Real Property,
then Pixar shall so notify Del Monte, and Del Monte shall promptly perform such
testing, sampling or inspection on behalf of Pixar in accordance with Pixar's
specifications, utilizing Del Monte's consultants, and shall provide Pixar with
the results of such testing, sampling or inspection. The reasonable cost and
expense of such testing, survey or inspection (and restoration of the Real
Property, if necessary) shall be paid by Pixar. Prior to commencing any
testing, survey or inspection hereunder, Del Monte shall deliver to Pixar the
estimate of costs and expenses thereof, and Pixar shall have the right to
review and approve the amount of such costs and expenses; and if Pixar
disapproves, then it shall have the right to modify the scope and/or
specifications of such testing, survey or inspection, or decline to have such
testing, survey or inspection performed. Pixar shall have the right to have
its consultants observe, review and approve any testing, sampling or inspection
performed on Pixar's behalf by Del Monte hereunder and to require Del Monte's
consultants to perform at Pixar's cost as herein provided any additional
testing, sampling or inspection resulting from such observation, review and
approval. If Del Monte believes that performing such testing, sampling or
inspection is unreasonable, it shall so
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notify Pixar and the parties shall confer and consult in good faith (together
with their respective consultants, if necessary or appropriate) to attempt to
agree on whether or what testing, sampling or inspection is reasonable. If the
parties are unable to agree within five (5) days of Del Monte's notice to
Pixar, the issue of the reasonableness of the testing, sampling or inspection
requested by Pixar shall be submitted to arbitration pursuant to Section 15
below. For purposes of the foregoing, it shall be reasonable for Pixar to
request and Del Monte shall not refuse to approve, as unreasonable, the
following testing, sampling or inspection: (i) testing requested by any
governmental agency to allow Pixar's development of the Real Property pursuant
to applicable law, ordinance, order, policy, rule or regulation; (ii) soil
sampling and analysis for halogenated volatile organic compounds, petroleum
hydrocarbons, and/or industrial solvents, or other chemical compounds that may
be related to historic activities at that location, in the vicinity of the
former paint and oil storage area, located north of the former boiler house on
the Real Property; (iii) sampling and analysis for polychlorinated biphenyls in
the vicinity of any former or existing electrical transformers; (iv)
groundwater sampling and analysis for volatile organic compounds and/or
petroleum hydrocarbons on the northern and eastern property boundaries; and (v)
testing, sampling, analysis and/or inspection for newly discovered conditions
as a result of performance by Del Monte of the Demolition Work pursuant to
Section 8 below.
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5. Title Matters.
(a) Manner of Conveyance. Title to the Real Property and
Appurtenances shall be conveyed from Del Monte to Pixar by grant deed in fee
simple absolute (the "Deed"), subject to no exceptions to title of any kind or
character other than: (i) a lien to secure payment of real estate taxes not
delinquent; and (ii) the exceptions to title listed in Exhibit B hereto
(collectively, the "Conditions of Title").
(b) Survey. At any time within forty-five (45) days
after the date of this Agreement, Pixar may, at Pixar's cost and expense,
procure an ALTA survey of the Real Property, prepared by a licensed surveyor or
civil engineer acceptable to Pixar, and in form and substance acceptable, and
properly certified, to Pixar and Title Company, so as to enable Title Company
to issue to Pixar an Owner's ALTA 1970 Form B extended coverage title insurance
policy on Close of Escrow pursuant to Section 6 below. If (i) the results of
such survey show an encroachment, easement or other title defect not comprised
in the Conditions of Title, and (ii) any such matter is not acceptable to Pixar
in its sole discretion, Pixar shall notify Del Monte of such unacceptable
condition within thirty (30) days after Pixar's receipt of the survey
hereunder. Del Monte shall have thirty (30) days after receipt of Pixar's
notice to cure the unacceptable defect in title to Pixar's sole satisfaction.
If within such 30-day period Del Monte cannot make reasonably adequate
arrangements to remove and/or relocate such matter, or obtain title insurance
protection with respect thereto, then
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Pixar may either terminate this Agreement or consummate the purchase of the
Property pursuant to this Agreement. If Pixar elects to consummate this
transaction, any matter disclosed by the Survey shall constitute a Condition of
Title.
(c) Intangible Property. Del Monte shall convey the
Intangible Property to Pixar by the Assignment of Intangible Property attached
hereto as Exhibit C (the "Assignment").
(d) Title Insurance. Evidence of delivery of title to
the Real Property in accordance with this Section 5 shall be the willingness of
Title Company to issue, upon payment of its regularly scheduled premium, its
Owner's 1970 Form B ALTA extended coverage policy of title insurance, with any
endorsements specified by Pixar, in the amount of the Purchase Price (or such
greater amount as Pixar may specify and Title Company may accept), showing
title to the Real Property and Appurtenances, as applicable, vested of record
in Pixar, subject to no exceptions, conditions, easements, reservations or
encumbrances of any kind or character, other than the Conditions of Title (the
"Title Policy").
6. Consummation of Transaction Through Escrow. The parties shall
consummate the transactions under this Agreement through escrow established at
the offices of Title Company. The parties shall close escrow (the "Close of
Escrow") on the date which is not later than (i) the date which is six (6)
months after the date of this Agreement, or (ii) if Pixar exercises its right
to cause Del Monte to commence the Demolition Work prior to the close of escrow
pursuant to Section 8(b) below within ten
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(10) days after the Additional Deposit Date, then the later of (A) the date
established under clause (i) above, or (B) the date of full and final
completion of the Demolition Work by Del Monte pursuant to Section 8(b) below
(the date established under either of the foregoing clauses (i) or (ii) being
hereinafter referred to as the "Closing Date"). The parties shall make the
following deposits and close escrow in the following manner:
(a) Del Monte. Del Monte shall deposit into escrow: (i)
the Deed, duly executed and acknowledged by Del Monte; (ii) the Assignment,
duly executed and acknowledged by Del Monte; and (iii) such other documents as
are necessary to close escrow in accordance with the terms and conditions of
this Agreement, including appropriate escrow instructions.
(b) Pixar. Pixar shall deposit into escrow: (i) the Net
Purchase Price, together with such other funds as are required to pay Pixar's
share of closing costs and prorations, all in immediately available funds; and
(ii) such other documents as are necessary to close escrow in accordance with
the terms and conditions of this Agreement, including appropriate escrow
instructions.
(c) Close. Title Company shall close escrow by
performing the following steps in the order set forth below:
(i) Record Deed. Record the Deed in the
appropriate Official Records and deliver it to Pixar;
(ii) Delivery of Assignment. Deliver the
Assignment to Pixar;
(iii)Purchase Price. After deducting Del
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Monte's share of closing costs and prorations, and effecting any withhold
required pursuant to Section 8(c) below, pay the balance of the Net Purchase
Price to or for the account of Del Monte;
(iv) Title Insurance. Issue and deliver to Pixar
one (1) original and two (2) duplicate copies of the Title Policy; and
(v) Conformed Copies. Deliver to each party
certified and conformed copies of all documents and instruments deposited by
either party in escrow under this Section 6.
(d) Costs and Fees. Del Monte shall pay one half (1/2)
of the escrow fee, the premium for the CLTA premium attributable to the Title
Policy in the amount of the Purchase Price and the cost of any endorsements to
ensure against title defects under Section 5(b) above, recording costs for the
Deed, all documentary transfer taxes and conveyancing taxes (other than
transfer taxes imposed by the City of Emeryville), and one half (1/2) of any
transfer taxes imposed by the City of Emeryville. Pixar shall pay the cost of
any survey procured by it under Section 5(b) above, one half (1/2) of the
escrow fee, and one half (1/2) of any transfer taxes imposed by the City of
Emeryville, the premium for the Title Policy above the CLTA premium
attributable to the Title Policy in excess of the Purchase Price and for ALTA
extended coverage thereunder, together with endorsements requested by Pixar as
part of the Title Policy. Any other costs or expenses of escrow shall be paid
in accordance with custom and usage in the County of Alameda, California. Real
estate taxes and assessments for the
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Real Property shall be prorated as of the date the Deed is recorded.
(e) Delivery of Possession. Upon Close of Escrow, Del
Monte shall deliver to Pixar exclusive possession of the Real Property and
Appurtenances, free and clear of any rights, claims or occupancy of third
parties, subject, however, to the Conditions of Title.
7. Del Monte's Covenants. Warranties and Representations. Del
Monte covenants, represents and warrants to Pixar as follows:
(a) Hazardous Materials.
(i) Warranty and Representation. To Del Monte's
knowledge, and except as disclosed by the "Environmental Reports" listed in
Exhibit D hereto, there are no hazardous materials on, in, under, at or from,
the Real Property, nor has any release of hazardous materials occurred or come
to be located on, in, under, at or from the Real Property, and no such release
threatens to enter the Real Property. Del Monte shall be solely responsible
for the investigation, monitoring, removal, treatment, disposal, transport, and
remediation, in accordance with all applicable laws, ordinances, rules and
regulations, of all hazardous materials located on, in, under, at or from, the
Real Property, or of those hazardous materials which come on to, or are
released on, in, under or at the Real Property, on or before the Close of
Escrow under this Agreement. Del Monte shall undertake and accomplish the
foregoing in a manner acceptable to, and obtain no further action letters from,
all governmental
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agencies having jurisdiction over such hazardous materials under applicable
laws, ordinances, rules and regulations.
(ii) Remediation of Real Property. Except as
otherwise provided in Section 7(a)(iii) below, if, after the Close of Escrow
under this Agreement, any hazardous material covered by this Section 7(a)(ii),
regardless of whether it was previously disclosed to Pixar, remains on the Real
Property, or is uncovered, encountered or discovered or otherwise revealed
(including as a result of Pixar's development of the Real Property, such as
grading of the Real Property for construction of improvements thereon), and
Pixar is either required to perform or undertake some act or prevented from
undertaking or doing some act by a governmental agency (including undertaking
development, construction, use, operation or maintenance of the Headquarters
Facility) on account of such hazardous materials under any applicable law,
ordinance, order, policy, rule or regulation, then Pixar shall so notify Del
Monte. At Pixar's option, Pixar may prepare a construction and
post-construction risk management plan in consultation with governmental
agencies having jurisdiction which, if prepared by Pixar, Pixar shall submit to
Del Monte for review and comment and, to the extent it relates to performance
by Del Monte of its obligations under this Section 7(a)(ii), for approval by
Del Monte. Upon approval thereof by governmental agencies having jurisdiction
and Del Monte, such risk management plan shall govern, to the extent
applicable, performance by Del Monte of its obligations following Close of
Escrow under this Section 7(a)(ii). Del Monte shall review,
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comment on, and approve, such risk management plan within ten (10) days after
receipt thereof from Pixar and, if Del Monte fails to notify Pixar of any
comment or approval thereon within such 10-day period, Del Monte shall be
deemed to have approved the same. Upon receipt of Pixar's notice, Del Monte
shall promptly apply for and obtain any and all necessary permits and approvals
from governmental agencies having jurisdiction (including remediation,
monitoring, removal, treatment, health and safety risk management and other
plans related to the presence of hazardous materials on, in, under, at or from
the Property) and, immediately after obtaining such permits and approvals,
perform its obligations under this Section 7(a)(ii) using all due diligence.
Prior to submitting any application or other information to any governmental
agency to fulfill its obligations under this Section 7(a)(ii) following Close
of Escrow, Del Monte shall submit such application and/or information to Pixar
for review, comment and approval. Pixar shall render any approval within five
(5) business days after receipt thereof from Del Monte; Pixar shall approve
such application and/or information if it is consistent with the obligations of
Del Monte and the applicable standards and requirements of this Section
7(a)(ii); and if Pixar has not approved such application and/or information
within such 5 business-day period, then Pixar will be deemed to have approved
such application and/or information. Pixar will cooperate with Del Monte in
Del Monte's efforts to obtain the necessary permits and approvals from
governmental agencies having jurisdiction. If
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Del Monte does not, within ten (10) days after obtaining such permits and
approvals (or if none are required, within thirty (30) days after receipt of
notice from Pixar), commence to perform such obligations and thereafter
diligently pursue such obligations to completion, then Pixar shall have the
right, at its sole option, to perform on behalf of Del Monte the obligations of
Del Monte under this Section 7(a)(ii), utilizing those methods Pixar reasonably
deems acceptable, and Del Monte shall promptly upon demand reimburse to Pixar
all reasonable costs and expenses incurred by Pixar in the performance of such
obligations on behalf of Del Monte. Pixar grants a non-exclusive license to
Del Monte, and its authorized representatives and agents, to enter the Real
Property under such terms and conditions as Pixar may from time to time
reasonably prescribe to perform Del Monte's obligations hereunder. Prior to
effecting such entry, Del Monte shall notify Pixar of its request to enter the
Real Property hereunder, describe the purpose for which entry is requested and
the activities to be undertaken by Del Monte, and provide to Pixar for its
review and approval all plans, specifications, reports, criteria or other
relevant information with respect to such activities on the Real Property
hereunder. Pixar shall have ten (10) business days after receipt to comment on
and approve such information; and if Del Monte has not received such comment
and approval within such ten (10) business day period, then Pixar will be
deemed to have approved such information. Del Monte shall effect entry solely
to perform the activities described in its notice hereunder, and solely within
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the scope of the information approved by Pixar hereunder. If any portion or
condition of the Real Property, or any improvements then located thereon, are
damaged by any activities of Del Monte in effecting such entry or carrying out
its activities hereunder, Del Monte shall restore the affected portion of the
Real Property and/or improvements to the condition which existed immediately
prior to such entry utilizing methods and within a time frame for performance
acceptable to Pixar. Del Monte shall effect entry under this Section 7(a)(ii)
so as to minimize any interference with the use and occupancy by Pixar of, or
conduct of business by Pixar on, the Real Property and the improvements then
located thereon. Del Monte shall indemnify, defend, protect and hold Pixar
harmless from and against any and all claims, liens, losses, damages,
liabilities, injuries, costs or expenses (including reasonable attorneys' fees)
arising out of or related to any entry effected hereunder. To the extent
applicable, transportation and disposal of hazardous materials from the Real
Property (including pursuant to Section 7(a)(iii) below) shall take place under
a hazardous waste manifest designating Del Monte as the generator and utilizing
Del Monte's hazardous waste generator number or, if a hazardous waste manifest
is not applicable to the hazardous material, pursuant to a substantially
equivalent non-hazardous material manifest showing that Del Monte is the party
responsible for the generation, shipment, transportation and disposal of the
hazardous material. All costs and expenses of compliance by Del Monte with its
obligations under this Section 7(a)(ii) shall be borne solely by Del Monte.
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In addition, if as a result of an occurrence or circumstance pursuant to which
Del Monte must perform its obligations under this Section 7(a)(ii) and (i) as a
result thereof, Pixar is required to uncover or reperform work of construction
in its Headquarters Facility, or (ii) the completion of the critical path
construction schedule for construction of the Headquarters Facility is delayed
by more than five (5) days, then in either such event Del Monte shall reimburse
Pixar for all actual, reasonable out-of-pocket expenses incurred by Pixar on
account of such occurrence or events. Subject to the foregoing, Del Monte
shall have no liability to Pixar for consequential damages arising out of any
occurrence or events giving rise to performance by Del Monte, or the actual
performance by Del Monte, of its obligations under this Section 7(a)(ii).
(iii) Remediation of Existing Conditions. With
respect to the conditions identified in the Environmental Reports (other than
the Asbestos Reports identified in Exhibit F hereto), Del Monte has developed
and implemented a plan to remediate all such conditions (the "Remediation
Plan"). The Remediation Plan has been preliminarily approved by the California
Regional Water Quality Control Board for the San Francisco Bay Region (the
"Regional Board") and Alameda County Department of Environmental Health (the
"Alameda County DEH") and Del Monte is in the process of obtaining, and shall
obtain as soon as possible after the date of this Agreement, the Regional
Board's and Alameda County DEH's final approval of implementation of the
Remediation Plan. Promptly after obtaining such final
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approval, Del Monte shall complete implementation of the Remediation Plan as
required by the Regional Board, Alameda County DEH and any other agencies
having jurisdiction over such activities (the Regional Board, Alameda County
DEH and such other agencies being hereinafter collectively referred to as the
"Jurisdictional Agencies"), and shall diligently continue to perform the
Remediation Plan to completion in accordance with its terms, subject only to
the monitoring and any further actions hereinafter specified. If Pixar elects
to require Del Monte to perform the Demolition Work prior to the Close of
Escrow pursuant to Section 8(b) below, then Del Monte shall complete the
Remediation Plan as herein specified on or before Close of Escrow (subject to
extensions only for force majeure causes beyond Del Monte's reasonable control,
in which event the Closing Date determined in accordance with Section 6 above
shall be delayed by one day for each day of delay in completion of the
Remediation Plan in accordance with the foregoing provisions); and if Pixar
does not elect to require Del Monte to perform the Demolition Work prior to the
Close of Escrow pursuant to Section 8(b) below, then Del Monte shall complete
the Remediation Plan as herein specified as soon as possible after the
completion of the Demolition Work. Upon completion of the Remediation Plan
hereunder, Del Monte shall obtain and provide to Pixar a true, correct and
complete copy of all no further action letters from the Jurisdictional
Agencies, in standard form and substance (exemplars of which are attached
hereto as Exhibit E), which approves Del Monte's remediation activities, the
Remediation
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Plan, and the implementation of the Remediation Plan, and which requires no
further remediation action, other than monitoring of wells, if any, pursuant to
the Remediation Plan (the "No Action Letters"). Del Monte shall continue to
undertake those actions (including monitoring of wells if required) necessary
to complete the Remediation Plan, obtain any final approvals or sign-offs from
any Jurisdictional Agencies as may be required under applicable laws,
ordinances, rules and regulations, and remediate all hazardous materials as
required by the Remediation Plan, consistent with the requirements of all
Jurisdictional Agencies. If, after completion of the Remediation Plan and
issuance of the No Action Letters, monitoring, remediation, removal or
investigatory work is required by the Jurisdictional Agencies for any hazardous
materials which were located on, in, under, at or from the Real Property on or
before the Close of Escrow under this Agreement, whether or not covered by the
Remediation Plan, then Del Monte shall promptly perform such work pursuant to
Section 7(a)(ii) above. If any of the Jurisdictional Agencies requires
continued maintenance or installation of monitoring wells on the Real Property
which will remain in place after Close of Escrow, Pixar shall have the right to
review and approve the location of such monitoring wells and shall have the
right to decline to approve the location of such monitoring wells if such
monitoring wells are to be located under planned buildings, improvements or
structures which Pixar intends to locate on the Property. If, after approval
of the location of such monitoring wells, a Jurisdictional Agency requires that
a monitoring well be
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relocated, then Del Monte shall be responsible for affecting such relocation
pursuant to Section 7(a)(ii) above and shall pay the cost of such relocation;
but if Pixar desires to relocate a monitoring well after Pixar's approval of
the location thereof, then Pixar shall, subject to obtaining the prior approval
of the Jurisdictional Agencies, be responsible for affecting such relocation
and the cost thereof. Upon approval by the Jurisdictional Agencies of closure
of any monitoring well maintained hereunder, Del Monte shall effect such
closure in accordance with the applicable requirements of the Jurisdictional
Agencies, and any other governmental agencies having jurisdiction. To the
extent applicable, the provisions of Section 7(a)(ii) shall apply to Del
Monte's obligations hereunder, including the access license granted thereunder
and the use of Del Monte's hazardous waste generator number for effecting the
Hazardous Materials Plans described hereunder. Del Monte shall bear all costs
and expenses of performing its obligations under this Section 7(a)(iii).
(iv) Disclaimer. Subject to the matters set forth
in Sections 7(a)(i) and (iii), Del Monte has not received any notice of any
action or proceeding relating to any hazardous materials or any release thereof
on, in, under, at or from the Real Property. Except as disclosed by the
Environmental Reports, neither Del Monte, nor to Del Monte's best knowledge,
any predecessor in interest as owner, occupant or operator of the Real
Property, or any portion of the Real Property, or any facility located thereon,
nor any other third person, used,
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generated, manufactured, stored, released or disposed of on, in, at or under
the Real Property, or transported to or from the Real Property, any hazardous
materials.
(v) Indemnification by Del Monte. Del Monte
shall retain and assume responsibility for, and shall indemnify, defend,
protect and hold harmless, Pixar and its directors, officers, employees,
agents, licensees, invitees, contractors, and their respective directors,
officers, employees and agents, from and against any and all liabilities,
losses, damages, claims, causes of action, costs or expenses arising out of or
relating to the presence or release of hazardous materials on, under, at or
from the Real Property on or before the Close of Escrow under this Agreement,
including: (i) all damages directly or indirectly arising out of the use,
generation, storage, release or disposal of hazardous materials; (ii) all
reasonable attorneys' and consultants' fees; and (iii) the costs of preparing,
obtaining approval of and implementing the Remediation Plan or the measures
described in Section 7(a)(ii), or of any other repair, cleanup, removal or
decontamination required of Del Monte by this Section 7(a), and the preparation
and implementation of any closure plans, whether such action is required of Del
Monte prior to or following transfer of title of the Real Property to Pixar or
the issuance of any No Action Letter.
(vi) Definition of Hazardous Materials. As used
herein, "hazardous materials" includes: petroleum; asbestos; radioactive
materials; and all substances defined as
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"hazardous substances," "hazardous materials," "hazardous wastes," "solid
wastes," "pollutants" or "contaminants" (or words of similar import) in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Section 9601, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Porter-Cologne Water
Quality Control Act (California Water Code 13000, et seq.), the Hazardous Waste
Control Law (California Health and Safety Code 25100, et seq.), and any other
similar applicable laws or the regulations promulgated thereunder.
(vii) Successors Bound. In addition to the
provisions of Section 13 below regarding successors to and assigns of the
parties, if a third-party acquires all or substantially all of Del Monte's
assets by a transaction other than the acquisition of all or substantially all
of the outstanding shares of Del Monte (or such portion thereof that such
third-party obtains effective control of the management and affairs of Del
Monte), then Del Monte shall in connection with such transaction require that
such third-party assume in writing all of the obligations and be bound by the
provisions of this Section 7(a). In the event of such a transaction, Del Monte
shall deliver to Pixar such written assumption agreement promptly after the
consummation of such transaction.
(b) Pending Assessments and Eminent Domain. Del Monte
has no knowledge, and has received no notice, of any pending proceeding for the
imposition of any special assessment,
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or the formation of a special assessment district, or for a proceeding in
eminent domain, any of which would affect in any manner the Real Property, or
any portion thereof.
(c) Copies of Documents. All of the plans,
specifications, documents, reports, studies and other materials which Del Monte
has prepared and provides to Pixar under this Agreement are complete, true and
correct copies thereof; and all of the plans, specifications, documents,
reports, studies and other materials prepared by third parties which Del Monte
provides to Pixar under this Agreement are, to Del Monte's knowledge, complete,
true and correct copies thereof.
(d) Non-Foreign Status. Del Monte is not a foreign
person, foreign corporation, foreign partnership, foreign trust or foreign
estate, as those terms are defined in the Internal Revenue Code and Regulations
thereunder. At the Close of Escrow, Del Monte shall deliver to Pixar a fully
executed affidavit in the form attached hereto as Exhibit H.
(e) Authority. Del Monte has full power and authority,
and has obtained all necessary consents, to enter into this Agreement, to sell
and transfer the Property to Pixar and to otherwise perform its obligations
under this Agreement. The persons executing this Agreement on behalf of Del
Monte have full power and authority so to do in accordance with the foregoing.
(f) No Litigation or Other Breach. No litigation,
proceeding (administrative or otherwise), order, or judgment is pending or
outstanding against, or affects, Del Monte, or the Real Property, or any
portion thereof, and Del
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Monte has not committed any breach of any agreement, document or instrument to
which Del Monte is a party, any of which could in any manner adversely affect
the Real Property, or any portion thereof, or adversely affect Del Monte's
ability to perform its obligations under this Agreement.
(g) Compliance With Laws. To Del Monte's knowledge, the
Real Property, and every portion thereof, is in compliance with all laws,
ordinances, rules and regulations governing the use and operation thereof and
Del Monte has not received any notice of violation of any such laws,
ordinances, rules or regulations, except as disclosed in the Environmental
Reports.
(h) Agreements With Respect to Property. On or before
the Close of Escrow, Del Monte shall not enter into any contracts, agreements
or leases which would create any rights in or encumbrance on the Property, or
any portion thereof or interest therein, which would survive the Close of
Escrow. On or before the Close of Escrow, Del Monte shall terminate all
contracts, agreements or leases which would create any rights in or
encumbrances on the Property, or any portion thereof or interest therein. On
or before the Close of Escrow, Del Monte shall perform all obligations which
pertain to the Property, or the ownership, use or occupancy thereof, and shall
indemnify, defend, protect and hold harmless Pixar, and its directors,
officers, employees, agents and authorized representatives, from and against
any and all claims, liabilities, losses, damages, causes of action, costs or
expenses (including reasonable
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attorneys' fees), arising out of or in connection with the Property, or the use
or occupancy thereof, and accruing on or before the Close of Escrow, other than
those arising out of Pixar's entry of the Real Property pursuant to Section
4(d) above.
(i) Disclosure by Del Monte of Material Information. To
Del Monte's knowledge, Del Monte has, or will, prior to the Close of Escrow,
disclose to Pixar all material information regarding the physical condition and
state of title of, and utility availability to, the Real Property.
The warranties and representations of Del Monte under this Section 7 shall be
deemed restated and remade by Del Monte in their entirety as of Close of Escrow
under this Agreement. In addition to the other indemnities contained in this
Section 7, Del Monte shall indemnify, defend, protect and hold harmless Pixar,
and its directors, officers, employees, agents, and authorized representatives,
from and against all liabilities, losses, damages, claims, causes of action,
costs or expenses (including reasonable attorneys' fees), arising out of or
relating to any breach by Del Monte of any of the warranties, representations
or covenants contained in this Section 7. Whenever in this Section 7 reference
is made to the "knowledge" of Del Monte in connection with Del Monte's
warranties and representations contained in this Section 7, such reference
shall mean the actual knowledge, as of the date of this Agreement, of Steven P.
Ronzone, Director of Property Management of Del Monte,
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and any former and current employee of Del Monte that Del Monte could
reasonably expect to have such knowledge and in connection with the
environmental condition of the Real Property also the knowledge of CH2MHill,
Inc., or any other consultant retained by Del Monte in connection with
rendering services to Del Monte on the environmental condition of the Real
Property, which has been communicated in writing or otherwise by such
consultant to any employee of Del Monte.
8. Demolition and Asbestos Removal: Pixar Right to Grade Site.
(a) Del Monte Demolition Work and Asbestos Removal. Del
Monte has informed Pixar that the improvements on the Real Property contain
asbestos, and that some asbestos has been removed by Environmental Control
Industries under the supervision of Clayton Environmental pursuant to the
requirements of governmental agencies having jurisdiction over such activities
and pursuant to the Asbestos Reports and specifications prepared by Clayton
Environmental identified in Exhibit F hereto (the "Asbestos Specifications").
Except as otherwise provided in Section 8(b), Del Monte shall, using a
qualified, reputable, experienced, licensed contractor or contractors selected
by Del Monte in its sole discretion, promptly after the Close of Escrow,
demolish all improvements located on the Real Property (the "Demolition Work")
in accordance with the specifications attached hereto as Exhibit G (the
"Demolition Specifications") and, in connection with the Demolition Work,
remove and dispose of all debris and all asbestos from the Real Property in
accordance with
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the requirements of the Demolition Specifications and of governmental agencies
having jurisdiction, all applicable laws, ordinances, rules and regulations,
and the Asbestos Reports and Asbestos Specifications. Prior to bidding or
negotiating a contract for performance of the Demolition Work, Del Monte shall
provide to Pixar complete copies of all plans and specifications prepared by or
on behalf of Del Monte for the Demolition Work; and Pixar shall have the right
to review and comment on such plans and specifications to ensure consistency
with the Asbestos Specifications and Demolition Specifications. Pixar shall
complete such review and comment within ten (10) days after receipt of such
plans and specifications from Del Monte and, if Pixar has not notified Del
Monte of any comments thereon within such 10-day period, then Pixar shall be
deemed to have no comments thereon. Del Monte shall complete the Demolition
Work (including removal and disposal of all debris and all asbestos from the
Real Property) not later than four (4) months after the Close of Escrow
(subject to extensions only for force majeure causes beyond Del Monte's
reasonable control). Transportation and disposal of the asbestos from the
demolished improvements shall take place under a hazardous waste manifest
designating Del Monte as the generator and utilizing Del Monte's hazardous
waste generator number. Upon completion of the Demolition Work, Del Monte
shall deliver to Pixar all permits, notices, approvals and sign-offs required
from or by governmental agencies having jurisdiction under applicable laws,
ordinances, rules and regulations and copies of all manifests and receipts with
respect
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to completion of the Demolition Work and the removal and disposal of asbestos
and other materials from the Real Property. If, after the Close of Escrow,
Pixar discovers during the course of initial development of the Real Property
for Pixar's intended purposes any materials or structures which were required
to be removed by Del Monte in accordance with the Demolition Specifications,
Pixar shall so notify Del Monte and shall upon giving such notice have the
right to effect such removal, transport and disposal, and Del Monte shall
reimburse Pixar for all reasonable costs and expenses incurred by Pixar for
such removal, transport and disposal; or, upon written notice from Pixar to Del
Monte, Del Monte shall promptly effect such removal, transport and disposal at
Del Monte's sole cost and expense, but without undue interference with the
performance by Pixar of its development activities on the Real Property. If,
upon receipt by Del Monte of Pixar's notice hereunder, Del Monte disputes that
it was required to remove any or all of the materials or structures identified
in Pixar's notice in accordance with the Demolition Specifications, such
dispute shall be resolved by arbitration pursuant to Section 15 below.
(b) Performance of Demolition Work and Asbestos Removal
Prior to Close of Escrow. Pixar may elect, at any time after the date of this
Agreement and before ten (10) days after the Additional Deposit Date, to
require that Del Monte perform the Demolition Work (including removal and
disposal of all debris and all asbestos from the Real Property) pursuant to
Section 8(a) above, in accordance with the terms and conditions of this
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Section 8(b). Pixar shall make such election by written notice to Del Monte
and, if Pixar makes such election prior to the Additional Deposit Date, such
election shall be accompanied by the Additional Deposit, the instructions to
title company to pay to Del Monte the Initial Deposit and a waiver by Pixar of
any right to terminate this Agreement pursuant to Section 4(c) above. Promptly
after receipt of Pixar's notice, Del Monte shall commence the Demolition Work
and complete the Demolition Work not later than four (4) months after the date
of Pixar's notice (subject to force majeure causes beyond Del Monte's
reasonable control) in accordance with the provisions of Section 8(a) above.
Pixar shall reimburse Del Monte for fifty percent (50%) of the cost of
performing the Demolition Work up to an amount not exceeding Two Hundred
Thousand Dollars ($200,000) (the "Maximum Reimbursement Amount").
Reimbursement to Del Monte by Pixar of the cost of the Demolition Work
hereunder shall be effected on a progress payments basis as the Demolition Work
proceeds upon receipt by Pixar of Del Monte's contractor's applications for
payment, conditional (or final, if applicable) lien releases and waivers from
such contractor and all subcontractors and material suppliers in the form
required by applicable California law, and a certification by an authorized
officer or representative of Del Monte that the costs shown due by the
contractor's application for payment have been duly incurred and are due and
owing by Del Monte, and that the Demolition Work has progressed to the point
indicated in accordance with the contractor's application in accordance with
the
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requirements of Section 8(a) above. Within twenty (20) days after receipt of
such information by Pixar, Pixar shall reimburse Del Monte for fifty percent
(50%) of the amount shown due on the contractor's application for payment up
to, but not exceeding in the aggregate, the Maximum Reimbursement Amount. Upon
reimbursement by Pixar of the Maximum Reimbursement Amount, Del Monte shall
bear all further costs for performance of the Demolition Work hereunder. All
amounts paid by Pixar to Del Monte as reimbursement for the cost of the
Demolition Work hereunder shall be credited against the Net Purchase Price at
the Close of Escrow.
(c) Establishment of Cost of Demolition Work and Asbestos
Removal: Withhold at Escrow. The cost for performance of the Demolition Work
by Del Monte pursuant to Section 8(a) shall be established either by
competitive bidding, or by a negotiated bid. Del Monte shall have the right,
in its sole discretion, to utilize either procedure, and shall establish the
cost for the performance of the Demolition Work in all events prior to the
Close of Escrow (or if Pixar elects to cause Del Monte to perform the
Demolition Work prior to the close of escrow pursuant to Section 8(b) above, in
a manner which enables Del Monte to perform the Demolition Work in accordance
with the time period for completion therein specified). Upon establishment of
the cost of the Demolition Work hereunder, Del Monte shall provide to Pixar a
copy of the contract with the contractor performing the Demolition Work,
setting forth the cost of the Demolition Work. Unless Pixar exercises its
option to require
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Del Monte to commence the Demolition Work prior to the Close of Escrow pursuant
to Section 8(b) above, an amount equal to one hundred-twenty-five percent
(125%) of the cost of the Demolition Work as established hereunder shall be
withheld with Title Company in escrow until completion by Del Monte of the
Demolition Work pursuant to the provisions of Section 8(a) above. Upon
submission by Del Monte to Title Company and to Pixar of the final application
for payment from the contractor performing the Demolition Work, final lien
releases and waivers in accordance with applicable California law from such
contractor and all subcontractors and material suppliers, and a certification
by an authorized officer or representative of Del Monte that final payment is
due such contractor, and that the Demolition Work (including removal and
disposal of all debris and all asbestos from the Real Property) has been
completed in accordance with Section 8(a) above, then the amount withheld in
escrow hereunder shall be released and paid to Del Monte within five (5)
business days after such submission in accordance with its instructions.
(d) Pixar Right to Grade Site. Upon completion by Del
Monte of the Demolition Work, Pixar shall have the right to enter the Real
Property in order to commence grading of the Real Property pursuant to Pixar's
grading specifications therefor. Pixar shall effect entry hereunder pursuant
to the applicable provisions of Section 4(d) above (including the indemnity
provisions therein contained), shall pay all costs and expenses of its grading
activities hereunder (unless such cost or expense is attributable to, or any
other liability arises as a
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consequence of, the presence of hazardous materials on, in, under or about the
Real Property covered by Section 7(a)(ii) above), and shall perform grading
activities in order to prepare the Real Property for development by Pixar of
the improvements thereon for Pixar's intended use of the Real Property in
accordance with applications made by Pixar for .applicable governmental permits
and approvals for such development. Pixar shall provide to Del Monte copies of
all specifications for such grading work for Del Monte's review and approval
prior to effecting entry to commence grading hereunder.
9. Pixar Covenants, Warranties and Representations. Pixar
covenants, represents and warrants to Del Monte as follows:
(a) Authority. Pixar has full power and authority, and
has obtained all necessary consents, to enter into this Agreement, to purchase
the Real Property to Pixar and to otherwise perform its obligations under this
Agreement. The persons executing this Agreement on behalf of Pixar have full
power and authority so to do in accordance with the foregoing.
(b) No Litigation or Other Breach. No litigation,
proceeding (administrative or otherwise), order, or judgment is pending or
outstanding against, or affects, Pixar, and Pixar has not committed any breach
of any agreement, document or instrument to which Pixar is a party, any of
which could adversely affect Pixar's ability to perform its obligations under
this Agreement.
(c) Agreements with Respect to Property. Except as
provided in Sections 7(a) and (h) and Section 8s, after the
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Close of Escrow, Pixar shall assume all obligations with respect to the
Property transferred to Pixar under this Agreement, and shall, except as
otherwise provided in Sections 7(a) and (h) and Section 8 above, indemnify,
defend, protect and hold harmless Del Monte, and its directors, officers,
employees, agents and authorized representatives, from and against any and all
claims, liabilities, losses, damages, causes of action, costs or expenses
(including reasonable attorneys' fees), arising out of or in connection with
the Property, or the use or occupancy thereof, and accruing after the Close of
Escrow.
(d) As-Is Transaction. Except for the warranties and
representations made by Del Monte under Section 7 above, Pixar understands and
acknowledges, and hereby warrants and represents, that it is purchasing the
Property in its "as-is" condition as of the date of Close of Escrow and that,
except for Del Monte's warranties and representations contained in this
Agreement, it has relied entirely on its own independent investigation of the
condition of the Property and the utility of the Property for Pixar's intended
use.
The warranties and representations of Pixar under this Section
8 shall be deemed restated and remade by Pixar in their entirety as the date of
Close of Escrow under this Agreement. In addition to the other indemnity
contained in this Section 9, Pixar shall indemnify, defend, protect and hold
harmless Del Monte, and its directors, officers, employees, agents, and
authorized representatives, from and against all liabilities, losses,
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damages, claims, causes of action, costs or expenses (including reasonable
attorneys' fees), arising out of or relating to any breach by Pixar of any of
the warranties, representations or covenants contained in this Section 8.
10. Exclusive Rights. The parties understand and acknowledge
that, prior to the Additional Deposit Date (or earlier waiver of the right of
Pixar to terminate this Agreement pursuant to Section 4(c) above), the parties
have a material interest in not actively negotiating with third-parties, in the
case of Pixar for alternative sites for its Headquarters Facility, and in the
case of Del Monte for backup offers for the purchase and sale of the Property.
Accordingly, prior to the Additional Deposit Date (or if earlier, the date
Pixar waives its right to terminate this Agreement pursuant to Section 4(c)
above), Pixar shall not pursue or investigate any alternative sites for its
Headquarters Facility, or respond to proposals for, or engage in, negotiations
for such acquisition, or physical or environmental review of any such
alternative sites, and Del Monte shall not undertake any activities to market
the Property to third-parties, including negotiation with third-parties who may
have an interest in acquiring the Property, soliciting offers therefore or
engaging real estate brokers or finders for such purpose.
11. Confidentiality Agreement. Concurrently with the execution of
this Agreement by the parties, the parties shall enter into the Confidentiality
Agreement in the form attached hereto as Exhibit I, pursuant to which the
information,
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documents, data, studies and reports covered by the Confidentiality Agreement
shall be kept confidential. The provisions of the Confidentiality Agreement
are incorporated into and made a part of this Agreement as if set forth in full
in this Agreement. Pixar shall provide its consultants and agents who inspect,
study and evaluate the Property with a copy of this Section 11 and the
Confidentiality Agreement and obtain such consultants and/or agents' agreement
to be bound by the terms of this Section 11 and the Confidentiality Agreement.
12. Brokerage Commission. Pixar has informed Del Monte that Pixar
retained AMB Corporate Real Estate Advisors ("AMB") as a real estate broker in
connection with the transactions contemplated by this Agreement. Del Monte has
informed Pixar that Del Monte has retained the Koll Company ("Koll") and Gray &
Reynolds ("G&R") as real estate brokers in connection with the transactions
contemplated by this Agreement. Pixar shall pay to AMB any commissions or fees
due AMB on account of the transactions under this Agreement pursuant to
separate agreements entered into between Pixar and AMB; and Del Monte shall pay
to Koll and G&R any commissions or fees due Koll and/or G&R on account of the
transactions under this Agreement pursuant to separate agreements entered into
between Del Monte and Koll and G&R. Subject to the foregoing, Pixar and Del
Monte each warrant and represent to the other that they have dealt with no real
estate broker, agent or finder in connection with the transactions contemplated
by this Agreement, in a manner which would give rise to a claim by any such
person as a procuring
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cause of the transactions contemplated by this Agreement, or payment of any fee
or commission on account thereof. Each party shall indemnify, defend, protect
and hold the other party harmless from and against any and all claims,
liabilities, losses, causes of action, costs or expenses (including reasonable
attorneys' fees), arising out of- the breach by the indemnifying party of the
foregoing warranty and representation.
13. Successors and Assigns. Neither party shall have the right to
assign this Agreement, or any of its rights, duties, or obligations hereunder,
except that Pixar shall have the right, without Del Monte's written approval,
to assign this Agreement, or any of its rights, duties or obligations
hereunder, or to direct that title to the Property be conveyed directly without
an assignment of this Agreement to any of the following (each of which is
referred to herein as a "Permitted Pixar Transferee"): (i) a subsidiary or
affiliate of Pixar formed for the purpose of acquiring the Property pursuant to
this Agreement, or to a third party which acquires all or substantially all of
Pixar's assets or stock, or into which Pixar is merged (a "Pixar Entity"); or
(ii) an entity, whether or not a Pixar Entity, in connection with the
implementation of any financing for the purchase of the Property, including a
sale/leaseback, any transaction commonly known as a "synthetic lease," "tax
ownership/operating lease," or "off balance sheet financing," or any other
arrangement with a related or unrelated entity pursuant to which the assignee
grants to Pixar (or any Pixar Entity) the right to lease the Property following
Close of Escrow under this Agreement. In connection
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with any assignment by Pixar permitted by this Section 13, Pixar shall not be
required to delegate any of its duties under this Agreement, nor shall the
Permitted Pixar Transferee be required to assume any of the obligations or
liabilities of Pixar under this Agreement (including liability for Pixar's
representations, indemnity obligations and warranties under this Agreement,
except the obligations of Pixar under Section 7(a)(ii) which arise after the
Close of Escrow, which the Permitted Pixar Transferee shall either assume or
expressly delegate to Pixar the responsibility and obligation for performance
of such obligations), but whether or not such duties are delegated or assumed,
the obligations, indemnities, representations and warranties made by Del Monte
pursuant to this Agreement (including the provisions of Section 7(a) above)
shall inure to the benefit of and be enforceable by any Permitted Pixar
Transferee to the extent of the assignment thereof effected by Pixar to such
Permitted Pixar Transferee hereunder. Del Monte shall have the right, without
Pixar's written approval, but subject to the provisions of Section 7(a)(vii),
above to assign this Agreement, and the rights and obligations of Del Monte
under this Agreement, to any parent, subsidiary or affiliate of Del Monte,
which concurrently receives title to the Real Property. In the event either
party effects an assignment of this Agreement in whole or in part, pursuant to
the foregoing provisions, then the assigning party shall provide to the other
party notice of such assignments, together with the name and principals of the
assignee, a copy of the documents assigning the Agreement in whole or in part
(including any rights
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assigned), and the basis on which the assignee satisfies the conditions of this
Section 13. Subject to the foregoing, the terms, covenants and conditions
herein contained shall be binding upon and inure to the benefit of the parties,
and their respective heirs, successors and assigns, except that (i) the
obligations of a party shall only be binding on an assignee of such party to
the extent they are expressly assumed in writing by such assignee, (ii) no
assignment effected by a PARTY SHALL diminish the rights of either Del Monte or
Pixar or enlarge the obligations of either Del Monte or Pixar under this
Agreement, and (iii) the assigning party shall remain personally liable for the
performance of all of its obligations under this Agreement following any such
assignment. Any assignments made in violation of the provisions of this
Section 13 shall null and void and in no force or effect.
14. Notices. All notices required to be given, or otherwise
formally given, under this Agreement shall, to be effective, be in writing.
The address of each party for the purpose of all notices permitted or required
by this Agreement is as follows:
To Del Monte: One Market Plaza
P.O. Box 193575
San Francisco, California 94119
Attn: Steven P. Ronzone,
Director of Property Management
With copies to: Del Monte Corporation
One Market Plaza
P.O. Box 193575
San Francisco, California 94119
Attn: Janet E. Shestakov,
Associate Counsel
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To Pixar: 1001 West Cutting
Richmond, California 94804
Attn: Thomas G. Carlisle,
Facilities Director
With copies to: Cassidy, Cheatham, Shimko & Dawson
20 California Street, Suite 500
San Francisco, California 94111
Attn: Stephen K. Cassidy
The notice address of either party set forth above may be changed by written
notice given not less than five (5) days prior to the date such change is to be
effected. All notices under this Agreement shall be in writing, shall be
properly addressed and shall be sent by personal delivery, by United States
Mail (registered, certified, or Express Mail, return receipt requested and
postage prepaid), or by courier delivery service. All such notices shall be
considered delivered: (i) if personally delivered, on the date of delivery;
(ii) if sent by United States Mail in the manner prescribed above, on the date
shown on the return receipt for acceptance or rejection; or (iii) if sent by
courier delivery service, on the date of delivery as shown by the written
delivery record of such service.
15. Arbitration of Dispute. All disputes ensuing under this
Agreement shall be made by arbitration, conducted in accordance with this
Section 15, except that a party may seek prohibitory injunctive relief without
first submitting such matter or dispute to arbitration. The parties may
mutually agree to a different alternative dispute resolution mechanism by
jointly executing an agreement in writing describing such alternative
mechanism.
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(a) Selection of Arbitrators. By written notice to the
other party, a party shall request a meeting to be held within twenty (20) days
after sending such notice, to be attended by the other party for the purpose of
resolving any such dispute. At such meeting, the parties shall attempt in good
faith to resolve the dispute. If the dispute is not resolved at such meeting,
or if the meeting is not held, either party may, within ten (10) days after the
date of (or set for) such meeting, make a written request to resolve such
dispute by arbitration.
(b) Selection of Arbitrators. Within ten (10) days after
the date of receipt of such notice, each party shall select an arbitrator.
Such arbitrators shall meet within twenty (20) days after selection for the
purpose of resolving the dispute. If, within such 20-day period such
arbitrators are unable to resolve the dispute, then within an additional 5-day
period after the expiration of such 20-day period, they shall select a third
neutral arbitrator. If such arbitrators are unable, within such 5-day period,
to appoint the third arbitrator hereunder, the parties shall jointly appoint
such third arbitrator within an additional 5-day period. If the parties are
unable to appoint such third arbitrator within such additional 5-day period,
then either party may request appointment of such third arbitrator by the then
head official of the San Francisco office of the American Arbitration
Association, and neither party shall raise any objections as to the appointment
made by such official or as to such official's full power and jurisdiction to
entertain the application for and make the appointment. Within
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twenty (20) days after selection of the third arbitrator hereunder, the
arbitrators shall meet for the purpose of resolving the dispute and shall
render a decision resolving the dispute within thirty (30) days after the
selection of the third arbitrator hereunder. Upon appointment of a third
arbitrator hereunder, a majority decision shall be final at any stage of the
proceeding, absent fraud or gross error. The arbitrators shall resolve the
dispute solely in accordance with the applicable provisions of this Agreement
with respect to the matter or dispute in arbitration, and the arbitrators shall
have no power to modify any of the provisions of this Agreement. If an
arbitrator appointed hereunder dies, resigns, refuses to act or becomes legally
incapacitated, his or her replacement or successor shall be appointed in like
manner specified in this Section 15. In any arbitration proceeding hereunder,
each arbitrator shall have substantial training and professional experience in
the subject matter of the arbitration, but shall not have been employed by a
party for at least five (5) years prior to the arbitration proceeding. The
losing party in the arbitration as determined by the arbitrators shall bear the
costs and expense of all arbitrators.
(c) Decision: Effect of Decision. The arbitrators shall
render their decision in writing and as promptly as possible after the
designation of the last arbitrator, but in no event later than
one-hundred-eighty (180) days after the date of the designation of the last
arbitrator. A copy of the decision of the arbitrators shall be signed by at
least a majority of the
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arbitrators and given to each party in the manner provided in Section 14 for
the giving of notice. The decision of the arbitrators shall be final,
conclusive and binding on the parties, absent fraud or gross error. The
decision of the arbitrators may be entered as a judgment in a court of
competent jurisdiction.
(d) Procedural Rules. All arbitration under this Section
15 shall be conducted in accordance with the applicable rules of the American
Arbitration Association, to the extent such provisions do not conflict with the
procedures herein set forth. Except as provided in this Section 15, compliance
with this Section 15 is a condition precedent to the commencement by a party of
judicial proceeding arising out of a matter or dispute which is subject to
arbitration hereunder. All statutes of limitation that would otherwise be
applicable shall apply to any arbitration proceeding hereunder. Any
attorney-client privilege and other protections against disclosure of
confidential information, including any protection afforded by the work product
privilege for attorneys that could otherwise be claimed by a party shall be
available to and may be claimed by such party in any arbitration proceeding
hereunder. California Code of Civil Procedure 1283.05, and any successor
statute, shall apply to any and all discovery matters in any arbitration
proceeding hereunder. Neither party waives any attorney-client privilege or any
other privilege against disclosure of confidential information by reason of
anything contained in or done pursuant to or in connection with this Section 15.
All arbitration
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<PAGE> 47
proceedings hereunder may be reported by a certified shorthand court reporter
and written transcripts of such proceedings made available to a party at its
cost:. Any arbitration proceeding hereunder shall be conducted in the City and
County of San Francisco, California.
16. Entire Agreement; Amendment. This Agreement, together with
the Exhibits hereto, contains all the representations and the entire
understanding between the parties with respect to the subject matter hereof.
Any prior correspondence, memoranda or agreements are replaced in total by this
Agreement and the Exhibits hereto. This Agreement may be amended only by a
written agreement so specifying, executed by both parties.
17. Construction and Interpretation. This Agreement has been
fully negotiated at arms' length between the parties, after advice by counsel
and other representatives chosen independently by each party, and the parties
are fully informed with respect thereto. Therefore, neither party shall be
deemed the scrivener of this Agreement, and the provisions of this Agreement
and Exhibits hereto shall be construed as a whole according to their common
meaning and not strictly for or against either party. The captions preceding
the text of each Section and subsection are included for convenience of
reference only and shall be disregarded in the construction and interpretation
of this Agreement. Use in this Agreement of the words "including", "such as",
or words of similar import, when following any general term, statement or
matter, shall not be construed to limit such
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<PAGE> 48
statement, term or matter to the specific items or matter, whether or not
language of non-limitation such as "without limitation" or "but not limited
to", or words of similar import, are used with reference thereto, but rather
shall refer to all other terms or matters that could reasonably fall within the
broadest possible scope of such statement, term or matter. Unless otherwise
stated, all references to "Sections" and "Exhibits" are references to the
Sections and Exhibits of this Agreement.
18. No Merger. Notwithstanding anything to the contrary contained
in this Agreement, all representations, warranties, indemnities and obligations
contained in this Agreement, intended by their terms to survive the Close of
Escrow hereunder, shall survive the Close of Escrow and shall not merge into
any instrument conveying the Property, or any interest therein, to Pixar.
19. Exhibits. The following Exhibits, to which reference is made
in this Agreement, are deemed incorporated into this Agreement in their
entirety:
Exhibit A - Description of Property
Exhibit B - Conditions of Title
Exhibit C - Assignment
Exhibit D - Environmental Reports
Exhibit E - Exemplar Closure Letters
Exhibit F - Asbestos Reports and Specifications
Exhibit G - Demolition Specifications
Exhibit H - Non-Foreign Status Affidavit
Exhibit I - Confidentiality Agreement
20. Standard of Approval and Performance. Unless otherwise
provided in this Agreement, (i) each party shall act in a reasonable manner in
exercising or undertaking its rights,
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<PAGE> 49
duties and obligations under this Agreement, and (ii) whenever approval,
consent or satisfaction (collectively, an "approval") is required of a party
pursuant to this Agreement, such approval shall not be unreasonably withheld or
delayed. Unless provision is made for a specific time period, approval (or
disapproval) shall be given within thirty (30) days after receipt of the
request for approval. Nothing contained in this Agreement, however, shall
limit the right of a party to exercise its business judgment, or act, in a
subjective manner, with respect to any matter as to which it has specifically
been granted the right to act in its sole discretion or sole judgment, whether
"objectively" reasonable under the circumstances, and any such exercise shall
not be deemed inconsistent with any covenant of good faith and fair dealing
otherwise implied by law to be part of this Agreement. Where the parties have
stated a specific standard or procedure with respect to their rights, duties
and obligations in this Agreement, the parties intend such standard or
procedure to set forth their entire understanding with respect to which those
rights, duties and obligations are to be judged and the performance of those
rights, duties and obligations are to be measured.
21. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.
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<PAGE> 50
IN WITNESS WHEREOF, Del Monte and Pixar have executed this
Agreement as of the day and year first above written.
"DEL MONTE"
DEL MONTE CORPORATION, a New York
corporation
By [SIG] 9-5-96
--------------------------
Its DIR. / PROP. MGMT.
--------------------------
By [SIG]
--------------------------
Its EXEC. VICE PRESIDENT
--------------------------
"PIXAR"
PIXAR ANIMATION STUDIOS,
a California corporation
By [SIG]
--------------------------
Its CEO
--------------------------
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<PAGE> 51
EXHIBIT A
(Description of Property)
REAL PROPERTY in the City of Emeryville, County of Alameda, State of California,
described as follows:
PARCEL ONE:
Commencing at a point on the eastern line of Hollis Street, distant thereon Two
Hundred and Fifty feet northerly from the northern line of Park Avenue; thence
northerly along said eastern line of Hollis Street, Seventy-five feet; thence at
a right angle easterly One Hundred Twenty-five feet; thence at a right angle
southerly Seventy-five feet; thence at a right westerly One Hundred Twenty-five
feet to the point of commencement.
Being a portion of Block Numbered 16, as said block is laid down on that
certain map entitled "Map of Part of Plot 6, Kellersberger's Survey of Vicente
& Domingo Peralta Rancho Property of J.S. Emery, June 1876, T.J. Arnold C.E.
Oakland" - filed March 1, 1889 in the Office of the County Recorder of Alameda
County in Liber 19 of Maps, Page 68.
A.P. No. 049-1031-004
PARCEL TWO:
Beginning at a point on the western line of Haven Street, distant thereon One
Hundred Twenty-five feet northerly from the point of intersection of said
western line of Haven Street with the northern line of Park Avenue, as said
Haven Street and said Park Avenue are laid down, delineated and so designated
upon that certain map entitled, "Map of Part of Plot 6" etc., hereinafter
referred to; and running thence northerly along said westerly line of Haven
Street Two Hundred feet; thence westerly and parallel with said northerly line
of said Park Avenue One Hundred Twenty-five feet; thence southerly and parallel
with said westerly line of said Haven Street, Two Hundred feet; and thence
easterly and parallel with said northerly line of said Park Avenue One Hundred
Twenty-Five feet to the point of beginning.
Being a portion of Block Numbered 16, as said block is laid down, delineated and
so designated upon that certain map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery" etc. filed March 1, 1889 in the Office of the County Recorder of said
County of Alameda.
<PAGE> 52
PARCEL THREE:
Beginning at a point on the easterly line of Hollis Street, distant thereon One
Hundred Twenty-Five feet northerly from the point of intersection of said
eastern line of said Hollis Street with the northern line of Park Avenue, as
said Hollis Street and said Park Avenue are laid down, delineated and so
designated upon that certain Map entitled, "Map of Plot 6" etc. hereinafter
referred to: and running thence northerly along said easterly line of said
Hollis Street Forty feet; thence easterly and parallel with said northern line
of said Park Avenue One Hundred Twenty-five feet, thence southerly and parallel
with said eastern line of said Hollis Street Forty feet; and thence westerly
and parallel with said northerly line of said Park Avenue. One Hundred
Twenty-five feet to the point of beginning.
Being a portion of Block Numbered 16, as said block is laid down, delineated
and so designated upon that certain Map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery", etc. filed March 1, 1889, in the Office of the County Recorder of the
said County of Alameda.
PARCEL FOUR:
Beginning at a point on the eastern line of Hollis Street, distant thereon Two
Hundred Fifteen feet northerly from the point of intersection of said easterly
line of said Hollis Street with the northerly line of Park Avenue, as said
Hollis Street and said Park Avenue are laid down, delineated and so designated
upon that certain Map entitled, "Map of Part of Plot 6", etc. hereinafter
referred to; and running thence northerly along said eastern line of Hollis
Street Thirty-five feet; thence easterly and parallel with said northerly line
of said Park Avenue One Hundred Twenty-five feet, thence southerly and parallel
with said easterly line of said Hollis Street Thirty-five feet, and thence
westerly and parallel with said northern line of said Park Avenue One Hundred
Twenty-five feet to the point of beginning.
Being a portion of Block Numbered 16 as said block is laid down, delineated and
so designated upon that certain Map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery" etc., filed March 1, 1889, in the Office of the County Recorder of the
said County of Alameda.
PARCEL FIVE:
Beginning at a point in the easterly line of Hollis Street, distant thereon One
Hundred and Sixty-five feet northerly from the point of intersection of said
easterly line of Hollis Street with the northerly line of Park Avenue as said
Hollis Street and said Park Avenue are delineated and designated upon that
certain Map entitled, "Map of Part of Plot 6" etc., hereinafter referred to;
running thence northerly along the easterly line of said Hollis Street Fifty
feet; thence easterly and parallel with said northerly line of said Park Avenue
One Hundred and Twenty-five feet; thence southerly and parallel with said
easterly line of said Hollis Street fifty feet; and thence westerly and
parallel with said northerly line of said Park Avenue One Hundred and
Twenty-five feet to the point of beginning.
<PAGE> 53
Being a portion of Block Numbered 16, as said Block is delineated and so
designated upon that certain Map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery" etc. filed March 1st, 1889 in the Office of the County Recorder of
Alameda County.
PARCEL SIX:
Beginning at the point of intersection of the northern line of Park Avenue,
with the eastern line of Hollis Street, as said avenue and street are shown on
the Map hereinafter referred to; and running thence northerly along said line
of Hollis Street, One Hundred Twenty-five feet; thence at right angles easterly
One Hundred feet, thence at right angles southerly one Hundred Twenty-five feet
to said line of Park Avenue; and thence westerly along said line of Park Avenue
One Hundred feet to the point of beginning.
Being a portion of block numbered 16, as said block is delineated and so
designated upon that certain map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho" - filed March 1,
1889 in Book 19 of Maps, at Page 68, in the Office of the County Recorder of
Alameda County.
PARCEL SEVEN:
All those certain lots, pieces or parcels of land, situate, lying and being in
the Town of Emeryville, County of Alameda, State of California, and bounded and
particularly described as follows to-wit:
Parcel A: Beginning at a point on the northern line of Park Avenue, distant
thereon One Hundred Sixty-seven and 50/100 feet easterly from the point of
intersection thereof, with the eastern line of Hollis Street; and running
thence easterly along said line of Park Avenue Fifty-seven and 50/100 feet;
thence at right angles northerly One Hundred and Twenty-five feet; thence at
right angles westerly Fifty-seven and 5/100 feet; and thence at right angles
southerly One Hundred Twenty-five feet, to the point of beginning.
Being a portion of Block numbered 16, as said block is delineated and so
designated upon that certain Map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho property of J.S.
Emery, etc.", filed March 1, 1889 in Book 19 of Maps, at Page 65, in the Office
of the County Recorder of Alameda County.
Parcel B: Beginning at a point on the northern line of Park Avenue, distant
thereon easterly one hundred feet from the intersection thereof with the
eastern line of Hollis Street; running thence easterly along said line of Park
Avenue Sixty-seven feet, six inches; thence at right angles northerly One
Hundred Twenty-five feet; thence at right angles westerly Sixty-seven feet, six
inches; and thence at right angles southerly One Hundred Twenty-five feet to
the point of beginning. Being a portion of Block numbered 16, as the said block
is delineated and so designated upon that certain Map entitled, "Map of part of
Plot 6, Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property
of J.S. Emery, June 1876, T.J. Arnold C.E. Oakland filed March 1, 1889 in the
Office of the County Recorder of Alameda County.
<PAGE> 54
PARCEL EIGHT:
Beginning at the intersection of the northern line of Park Avenue with the
western line of Haven Street, as said avenue and street are shown on the Map
hereinafter referred to; running thence westerly along said line of Park Avenue
25 feet, thence northerly parallel with said line of Haven Street 125 feet,
thence easterly parallel with said line of Park Avenue 25 feet, to said western
line of Haven Street, thence southerly along said last named line, 125 feet to
the point of beginning.
Being a portion of Block 16, as said block is shown on the "Map of Part of Plot
6, Kellersberger's Survey of Vicente and Domingo Peralta Rancho, property of
J.S. Emery", filed March 1, 1889, in Book 19 of Maps, at Page 68, in the
Office of the County Recorder of Alameda County.
PARCEL NINE:
That portion of Haven Street lying northwesterly on the northwestern line of
Park Avenue, as said street and avenue are shown on the "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery", filed March 1, 1889 in Book 19 of Maps, at Page 68, in the Office of
the County Recorder of Alameda County.
A.P. No. 049-1031-003-01 Affects Parcels 2 thru 9
PARCEL TEN:
Beginning at a concrete monument set at the southeast corner of angle point of
the property of the Mee Estate at Emeryville, Alameda County, California;
running thence along the easterly boundary line of said property of the Mee
Estate north 28 degrees 17' west One Hundred Ninety-eight and 178/1000 feet to
the south line of 45th Street; thence parallel with the south line of the said
property of the Mee Estate south 72 degrees 28' west Four Hundred Thirty-one and
178/1000 feet to the easterly boundary line of the property of the Southern
Pacific Company; thence at a right angle and along said easterly boundary line
of said Southern Pacific Company land and to a point on the southern boundary
line of the property of the Mee Estate south 17 degrees 32' east One Hundred
Ninety-four and 70/100 feet, said point being north 72 degrees 28' east
Twenty-one and 5/10 feet from the point of intersection of the center line of
Haven Street and the south line of the Mee Estate property; thence along said
southern boundary line of the property of the Mee Estate north 72 degrees 28'
East Four Hundred Sixty-eight and 50/100 feet to the point of beginning.
PARCEL ELEVEN:
Beginning at the intersection of the western line of Harlan Street with the
northern line of Park Avenue; running thence westerly along said northern line
of Park Avenue Two Hundred Seventy feet to the eastern line of Haven Street;
thence northerly along said eastern line of Haven Street Four Hundred
Twenty-eight feet; five inches, more or less, to the northern line of Plot
Numbered 6, as said plot is shown on the Map hereinafter referred to; thence
easterly along the last named line Two Hundred Seventy feet, more or less, to
the western line of Harlan Street; thence southerly along the western line of
Harlan Street Four Hundred Forty-two feet, more or less to the point of
beginning.
<PAGE> 55
Beginning Block Numbered 23, as said block is delineated and so designated upon
that certain Map entitled, "Map of Part of Plot 6, Kellersberger's Survey of
Vicente & Domingo Peralta Rancho property of J.S. Emery, June 1876, T.J.
Arnold, C.E. Oakland", filed March 1, 1889 in the Office of the County
Recorder of said County of Alameda.
PARCEL TWELVE:
Beginning at a point on the eastern line of Harlan Street, distant thereon
northerly Two Hundred Seventy-five feet from the intersection thereof with the
northern line of Park Avenue; running thence easterly at right angles to said
eastern line of Harlan Street One Hundred Thirty feet; thence at right angles
northerly One Hundred Eighty feet, more or less, to the northern line of Plot
Numbered 6, as said Plot is shown on the Map hereinafter referred to; thence
westerly along said last named line One Hundred Thirty feet, more or less, to
said eastern line of Harlan Street; thence southerly along said eastern line
of Harlan Street One Hundred Seventy feet more or less, to the point of
beginning.
Being a portion of Block Numbered 10, as said block is delineated and so
designated upon that certain Map entitled, "Map of Plot 6, Kellersberger's
Survey of Vicente & Domingo Peralta Rancho, property of J.S. Emery, June 1876,
T.J. Arnold, C.E. Oakland", filed March 1, 1889 in the Office of the County
Recorder of Alameda County.
PARCEL THIRTEEN:
Beginning at a point on the eastern line of Harlan Street, distant thereon
northerly Two Hundred Fifty feet from the intersection thereon with the
northern line of Park Avenue, as said street and avenue are shown on the map
hereinafter referred to; running thence northerly along said line of Harlan
Street, Twenty-five feet; thence at right angles easterly One Hundred Thirty
feet; thence at right angles southerly Twenty-five feet; thence at right angles
westerly One Hundred Thirty feet to the point of beginning.
Being a portion of Block Numbered 10, as said block is delineated and so
designated on that certain Map entitled, "Map of Plot 6, Kellersberger's Survey
of Vicente & Domingo Peralta Rancho, Property of J.S. Emery", filed March 1,
1889 in Liber 19 of Maps, at Page 68 in the Office of the County Recorder of
said County of Alameda County.
PARCEL FOURTEEN:
Beginning at a point on the eastern line of Harlan Street, distant thereon
northerly One Hundred Twenty-five feet from the intersection thereof with the
northern line of Park Avenue, as said street and avenue are shown on the Map
hereinafter referred to; running thence northerly along said line of Harlan
Street One Hundred Twenty-five feet; thence at right angles easterly One
Hundred Thirty feet thence at right angles southerly One Hundred Twenty-five
feet; thence at right angles westerly One Hundred Thirty feet to the point of
beginning.
<PAGE> 56
Being a portion of Block Numbered 10, as said block is delineated and so
designated upon that certain Map entitled, "Map of Part of Plot 6,
Kellersberger's Survey of Vincent & Domingo Peralta Rancho Property of J.S.
Emery" filed March 1, 1889 in Liber 19 of Maps, at Page 68 in the Office of the
County Recorder of the said County of Alameda.
PARCEL FIFTEEN:
That portion of Harlan Street which lies northwesterly of the northwestern line
of Park Avenue, extended across said street, as said street and avenue are shown
on the "Map of Part of Plot 6, Kellersberger's Survey of Vincent & Domingo
Peralta Rancho, property of J.S. Emery" filed March 1, 1889 in Book 19 of Maps,
at Page 68, in the Office of the County Recorder of Alameda County.
PARCEL SIXTEEN:
Portion of Block 10, as said block is shown on the "Map of Part of Plot 6,
Kellersberger's Survey of Vicente & Domingo Peralta Rancho, property of J.S.
Emery" - filed March 1, 1889 in Book 19 of Maps at Page 68, in the Office of
the County Recorder of Alameda County, described as follows:
Beginning at the intersection of the northern line of Park Avenue with the
eastern line of Harlan Street, as said avenue and street are shown on said map;
running thence along said line of Harlan Street northerly 125 feet; thence at
right angles easterly 60 feet; thence at right angles southerly 125 feet to said
line of Park Avenue; thence along the last named westerly to feet to the point
of beginning.
A.P. No. 049-1029-001-04 Affects Parcels Ten thru Sixteen and a portion of
Parcel 17.
PARCEL SEVENTEEN:
Lot 3 and a portion of Lot 2 in Block 4, as said lots and block are shown on the
"Map of Portion of the Coggseshell Tract, lying west of San Pablo Avenue", filed
May 14, 1883 in Book 4 of Maps, at Page 13, a portion of Plot 38, as said plot
is shown on the "Map of Ranchos of Vicente & Domingo Peralta", filed January 21,
1857, in Book 17 of Maps, at Page 12 and a portion of Block 10, as said block is
shown on the "Map of Part of Plot 6, Kellersberger's Survey of Vincent & Domingo
Peralta Rancho, property of J.S. Emery" filed March 1, 1869 in Book 19 of Maps,
at Page 68, in the Office of the County Recorder of Alameda County, described as
follows:
<PAGE> 57
Beginning at a point on the western line of Watts Street, distant thereon
southerly 65 feet from the southern line of 45th Street, as said streets are
shown on the first mentioned map; and running thence along said line of Watts
Street southerly 579.12 feet to the northern line of Park Avenue, as said
avenue is shown on said "Map of Part of Plot 6"; thence along the last named
line westerly 200 feet to a point distant thereon easterly 60 feet from the
eastern line of Harlan Street, as said street is shown on said "Map of Part of
Plot 6"; thence at right angles northerly 125 feet; thence at right angles
easterly 65 feet; thence at right angles northerly 150 feet; thence at right
angles easterly 5 feet; thence at right angles northerly 176.60 feet to the
northern line of said Block 10; thence along the last named line easterly 5
feet to a line drawn parallel with and distant at right angles 125 feet westerly
from said western line of Watts Street; thence along the line so drawn
northerly 127.27 feet to a line drawn westerly from the point of beginning
parallel with said line of 45th Street; thence along the last drawn line
easterly 125 feet to the point of beginning.
PARCEL EIGHTEEN:
Lot 1 and portion of Lot 2, in Block 4, as said lots and block are shown on the
"Map of a portion of the Coggeshall Tract lying west of San Pablo Avenue,
Oakland Township", filed May 14, 1883, in Book 4 of Maps, at Page 13, in the
Office of the County Recorder of Alameda County, described as follows:
Beginning at the intersection of the southern line of 45th Street with the
western line of Watts Street; said streets are shown on said map; and running
thence along said line of Watts Street southerly 65 feet; thence parallel with
said line of 45th Street westerly 125 feet; thence parallel with said line of
Watts Street northerly 65 feet to said line of 45th Street; and thence along
the last named line easterly 125 feet to the point of beginning.
PARCEL NINETEEN:
Beginning at a point on the southern line of 45th Street, distant thereon south
75 degrees 20' 10" west one hundred and twenty-five feet from the point of
intersection thereof with the western line of Watts Street, as said streets are
delineated and so designated upon that certain map entitled, "Map of a portion
of the Coggeshall Tract lying west of San Pablo Avenue Oakland Township", filed
May 14, 1883 in Book 4 of Maps at Page 13, in the Office of the County Recorder
of Alameda County; running thence south 75 degrees 20' 10" west along the
southern line of 45th Street Fifty-One and 73/100 feet to the western boundary
line of Plot Numbered 38, as said plot is shown on the Map hereinafter referred
to; thence south 28 degrees 12' east along the last named line One Hundred
Ninety-eight and 03/100 feet to the southern boundary line of said Plot Numbered
38; thence north 72 degrees 28' east along the last named line Five and 39/100
feet to a line drawn south 14 degrees 39' 50" east from the point of beginning
thence north 14 degrees 39' 50" west one hundred ninety-two and 27/100 feet to
the point of beginning.
Being a portion of Plot Numbered 38, as said plot is delineated and so
designated upon that certain Map entitled, "Map of the Ranchos of Vicente &
Domingo Peralta", filed January 21, 1857, in Book 17 of Maps at Page 12 in the
Office of the County Recorder of Alameda County.
A.P. No. 49-1029-1-3
<PAGE> 58
PARCEL TWENTY:
Beginning at the point of intersection of the easterly line of Watts Street,
with the northerly line of Park Avenue, as said Watts Street and said Park
Avenue are laid down, delineated and so designated upon that certain Map
entitled, "Map of Part of Plot 6, Kellersberger's Survey of Vicente & Domingo
Peralta Rancho Property of J.S. Emery, etc," filed March 1, 1889 in the Office
of the County Recorder of Alameda County; and running thence along said easterly
line of Watts Street north 14 degrees 30' west 465.10 feet to the point of
intersection of said easterly line of Watts Street, with the dividing line
between Plots 6 and 38, as said Plots 6 and 38 are laid down and delineated upon
that certain Map entitled "Map of the Ranchos of Vicente & Domingo Peralta,"
etc., hereinafter mentioned; thence north 75 degrees 30' east 200 feet to a
point distant at right angles westerly 390 feet from the westerly line of San
Pablo Avenue as said San Pablo Avenue is laid down, delineated and so designated
upon that certain Map entitled, "Map of Part of Plot 6" etc. hereinafter
mentioned; thence south 14 degrees 30' east and parallel with said westerly line
of San Pablo Avenue 465.19 feet to said northerly line of said Park Avenue; and
thence along said northerly line of said Park Avenue south 75 degrees 31-1/2'
west 200 feet to the point of beginning.
Being a portions of Plot 6, as said plot is shown on "Map of the Ranchos of
Vicente & Domingo Peralta, containing 16970.68 acres, surveyed by Julius
Kellersberger", etc., filed January 21, 1857 in the Office of the County
Recorder of Alameda County, State of California.
A.P. No. 049-1027-022-01
PARCEL TWENTY-ONE:
Portion of Lots 23 and 24 in Block 5, as said lots and block are shown on the
"Map of a Portion of the Coggeshell Tract lying west of San Pablo Avenue,
Oakland Township", filed May 14, 1883 in Book 4 of Maps, Page 13, in the Office
of the County Recorder of Alameda county, described as follows:
Beginning at the intersection of the southern line of 45th Street, with the
eastern line of Watts Street, as said streets are shown on said map; running
thence along said line of 45th Street easterly 50 feet; thence parallel with
said line of Watts Street southerly 54 feet; thence parallel with said line of
45th Street westerly 50 feet to the eastern line of Watts Street; thence along
the last named line northerly 54 feet to the point of beginning.
<PAGE> 59
PARCEL TWENTY-TWO:
Portion of Lot 23 in Block S, as said lot and block are shown on the "Map of a
portion of Coggeshall Tract lying west of San Pablo Avenue, Oakland Township",
filed May 14, 1883, in Book 4 of Maps, Page 13, in the Office of the County
Recorder of Alameda County, described as follows:
Beginning at a point on the eastern line of Watts Street distant thereon
southerly 54 feet from the southern line of 45th Street, as said streets are
shown on said Map; and running thence along said line of Watts Street southerly,
31 feet; thence parallel with said line of 45th Street easterly 50 feet, thence
parallel with said line of Watts Street northerly 31 feet; thence parallel with
said line of 45th Street westerly 50 feet to the point of beginning.
PARCEL TWENTY-THREE:
A portion of Lot 22 in Block S, as said lot and block are shown on the "Map of
a portion of the Coggeshall Tract, lying west of San Pablo Avenue, Oakland
Township, filed May 1, 1883 in Book 4 of Maps, at Page 13, in the Office of
the County Recorder of Alameda County, and also
A portion of Plots 6 and 38, as said Plots are shown on the "Map of the Ranchos
of Vicente & Domingo Peralta", filed January 21, 1857 in Book 17 of Maps, at
Page 12, in the Office of the County Recorder of Alameda County, described as
follows:
Beginning at a point on the eastern line of Watts Street, distant thereon south
14 degree 30' east 85.00 feet from the southern line of 45th Street, as said
streets are shown on the said "Map of a portion of the Coggeshall Tract";
running thence along the said line of Watts Street and along the eastern line
of Watts Street, as said street is shown on the "Map of Part of Plot 6,
Kellersbergers Survey of Vicente & Domingo Peralta Rancho Property of J.S.
Emery", filed March 1, 1889 in Book 19 of Maps, at Page 68, in the Office of
the County Recorder of Alameda County, south 14 degree 30' east 94.00 feet to a
point on the line dividing said Plots 6 and 38; thence north 75 degree 30' east
150.00 feet; thence north 14 degree 30' west 54.00 feet; thence south 75 degree
30' west 50.00 feet to a point on the eastern boundary line of that certain
parcel of land described in Deed from Mario Chembero and Jean Chembero, husband
and wife, to Louis A. Lavenbarg and wife, dated March 30, 1953 and recorded
April 9, 1953 under Recorder's Series No. AH/31359 in Book 6997 of Official
Records of Alameda County, Page 244, and/or of the direct production southerly
of the said eastern boundary line; thence along the said last mentioned line
north 14 degree 30' west 40.00 feet, more or less, to a point on the northern
boundary line of the said Lavenbarg parcel of land; thence westerly along the
said last mentioned line and parallel with the said southern line of 45th
Street, 100.00 feet to the point of beginning.
A.P. No. 049-1027-028
*****
EXHIBIT A
<PAGE> 60
FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
THIS FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE (the
"Amendment") is made and entered into as of this 1st day of November, 1996, by
and between DEL MONTE CORPORATION, a New York corporation ("Del Monte"), and
PIXAR ANIMATION STUDIOS, a California corporation ("Pixar").
RECITALS:
This Amendment is entered into on the basis of the following facts,
understandings and intentions of the parties:
A. Del Monte and Pixar have previously entered into that certain
Agreement of Purchase and Sale, dated September 6, 1996 (the "Agreement"),
pursuant to the terms and conditions of which Del Monte has agreed to sell to
Pixar, and Pixar has agreed to purchase from Del Monte, the Property therein
identified.
B. Due to the occurrence of certain circumstances, the parties desire
to extend the Review Period for completion by Pixar of its due diligence
investigation of the Property and related time periods with respect to review
and investigation of the state of title of the Real Property.
C. In order to effectuate the foregoing, the parties desire to enter
into this Amendment.
NOW, THEREFORE, IN CONSIDERATION of the foregoing Recitals, and the
mutual covenants and promises of the parties contained in this Amendment, the
parties agree to amend the Agreement as follows:
-1-
<PAGE> 61
1. Defined Terms. Unless otherwise specified in this Amendment, all
terms defined in the Agreement shall have the same meaning when used in this
Amendment.
2. Extension of Additional Deposit Date. The phrase reading "ninety
(90)" in clause (ii) of Section 3(a) is amended to read "one-hundred-nineteen
(119)".
3. Extension of Review Period. The first sentence of Section 4(b) of
the Agreement is amended in full to read as follows:
Pixar shall conduct and complete its review of the Property under
Section 4(a) above with due diligence and within one-hundred-nineteen
(119) days after the date of this Agreement (the "Review Period").
Based on the foregoing amendment to Section 4(b), the last day of the Review
Period is January 3, 1997, and Pixar shall give any notice of termination under
Section 4(c) not later than the close of business on January 3, 1997.
4. Extension of Time for Procurement of Survey. The introductory
phrase of Section 5(b) of the Agreement reading, "At any time within forty-five
(45) days after the date of this Agreement,..." is hereby amended in its
entirety to read as follows: "At any time on or before November 1, 1996,..."
5. Interpretation of Amendment. This Amendment and the Agreement shall
be construed as a whole in order to effectuate the intent of the parties to
amend the Agreement in the manner specified in this Amendment. All provisions of
the Agreement affected by this Amendment shall be deemed amended regardless of
whether so specified in this Amendment. Subject to the foregoing, if any
provision of the Agreement conflicts with
-2-
<PAGE> 62
any provision of this Amendment, the provision of this Amendment shall control.
6. No Further Amendment. Except as amended by this Amendment, the
Agreement shall continue in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
"DEL MONTE"
DEL MONTE CORPORATION, a New York
corporation
By ______________________________
Its _____________________________
By ______________________________
Its _____________________________
"PIXAR"
PIXAR ANIMATION STUDIOS, a
California corporation
By ______________________________
Its _____________________________
-3-
<PAGE> 1
EXHIBIT 11.1
PIXAR
STATEMENT OF COMPUTATIONS OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average number of shares 41,261 38,350 40,503 38,318
outstanding
Common stock equivalents 6,759 8,652 7,050 8,710
---------- ---------- ---------- ----------
Total shares used in computing net income
(loss) per share 48,020 47,002 47,553 47,028
========== ========== ========== ==========
Net income from continuing operations $ 8,929 $ 4,517 $ 14,154 11,024
========== ========== ========== ==========
Net income per share from continuing
operations $ 0.19 $ 0.09 $ 0.30 $ 0.24
========== ========== ========== ==========
Net income (loss) from discontinued
operations $ -- $ 273 $ (77) $ 45
========== ========== ========== ==========
Net income (loss) per share from
discontinued operations $ -- $ 0.01 $ -- $ --
========== ========== ========== ==========
Net income $ 8,929 $ 4,790 $ 14,077 $ 11,069
========== ========== ========== ==========
Net income per share $ 0.19 $ 0.10 $ 0.30 $ 0.24
========== ========== ========== ==========
</TABLE>
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 62,595
<SECURITIES> 116,184
<RECEIVABLES> 3,309
<ALLOWANCES> 293
<INVENTORY> 0
<CURRENT-ASSETS> 182,832
<PP&E> 21,175
<DEPRECIATION> 3,264
<TOTAL-ASSETS> 220,384
<CURRENT-LIABILITIES> 19,725
<BONDS> 0
0
0
<COMMON> 202,699
<OTHER-SE> (2,040)
<TOTAL-LIABILITY-AND-EQUITY> 220,384
<SALES> 0
<TOTAL-REVENUES> 22,243
<CGS> 0
<TOTAL-COSTS> 1,523
<OTHER-EXPENSES> 5,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,400
<INCOME-TAX> 5,246
<INCOME-CONTINUING> 14,154
<DISCONTINUED> (77)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,077
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
