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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): April 23, 1998
Digital Equipment Corporation
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(Exact name of registrant as specified in its charter)
Massachusetts 1-5296 04-2226590
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
111 Powdermill Road, Maynard, Massachusetts 01754
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 493-5111
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(Former name or former address, if changed since last report)
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Item 5. Other Information
On April 23, 1998, the Federal Trade Commission ("FTC") notified the
Corporation and Intel Corporation ("Intel") that it will not seek to enjoin the
settlement of the legal dispute between the companies. The settlement includes
Intel's acquisition of assets of the Corporation's semiconductor manufacturing
operations. As part of the FTC review process, the Corporation agreed to a
consent order that provides for the licensing of the Corporation's Alpha
technology to other semiconductor manufacturers.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit No. 99.1 Press Release dated April 23, 1998.
Exhibit No. 99.2 Agreement Containing Consent Order.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
DIGITAL EQUIPMENT CORPORATION
(Registrant)
/s/ Gail S. Mann
------------------------------------
Gail S. Mann
Vice President, Assistant General Counsel,
Secretary and Clerk
Date: April 24, 1998
2
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EXHIBIT 99.1
FEDERAL TRADE COMMISSION WILL NOT SEEK TO ENJOIN
DIGITAL/INTEL SETTLEMENT AGREEMENT
....Companies Plan to Complete Transaction As Soon As Possible....
SANTA CLARA, Calif/MAYNARD, Mass.--(BUSINESS WIRE)--April 23, 1998--Intel
Corporation and Digital Equipment Corporation today announced that the Federal
Trade Commission (FTC) has notified the companies that the commission will not
seek to enjoin settlement of the legal dispute between the companies. The
settlement includes Intel's acquisition of assets of Digital's Semiconductor
manufacturing operations, and Intel's role as a foundry for multiple generations
of Alpha microprocessors. As part of the FTC review process, Digital agreed to a
consent order that provides for the licensing of the Alpha technology to other
semiconductor manufacturers.
The settlement was announced on October 27, 1997, and was subject to FTC
review under provisions of the Hart Scott Rodino Improvements Act. Digital and
Intel plan to complete the transaction as soon as possible.
The transaction includes the sale of Digital's semiconductor manufacturing
facility in Hudson, Massachusetts to Intel, a cross-license of patents, and an
agreement by Intel to manufacture Alpha microprocessors for Digital. In
addition, Digital has agreed to develop future systems based on Intel's 64-bit
microprocessors.
Digital will retain the Alpha technology, Alpha, and Alpha-related
semiconductor design teams to develop future generations of Alpha. Digital will
also work with Intel to port its Digital UNIX operating system to run systems
using Intel's future 64-bit microprocessors, and work with Intel and Microsoft
to establish a common programming environment for 64-bit applications on Alpha
and IA-64 platforms.
Also under terms of the agreement, the companies will take appropriate
actions to drop the pending litigation's between Intel and Digital.
Intel, the world's largest chip maker, is also a leading manufacturer of
personal computer, networking and communications products. Additional
information about Intel is available at www.intel.com/pressroom.
Digital Equipment Corporation, recognized for product and service
excellence, is a leading supplier of high-performance, Web-based computing
solutions which help enterprises compete in the global marketplace. Digital
gives its customers a winning Internet advantage through a comprehensive
portfolio of Internet solutions based on award-winning systems, advanced
networking infrastructure, innovative software, and industry applications
include those from business partners.
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The expertise and experience of Digital employees help customers plan,
design, implement and manage and support Internet solutions in countries
throughout the world. For the latest company information, visit Digital on the
World Wide Web at http://www.digital.com and/or newsdesk.com
Note to Editors: Other brands or products are trademarks or registered
trademarks of their respective holders.
CONTACT: Intel Corporation
Chuck Mulloy, 408/765-3484
[email protected]
or
Digital Equipment Corporation
Dan Kaferle, 978/493-2195
[email protected]
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EXHIBIT 99.2
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the matter of
DIGITAL EQUIPMENT CORPORATION, a corporation.
File No. 981-0040
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission") having initiated an investigation of
the proposed transaction through which Intel Corporation ("Intel") is to acquire
certain assets of Digital Equipment Corporation ("Digital"), including the
semiconductor fabrication facility at which Digital manufactures its Alpha
family of microprocessors; and Digital having represented to the Commission its
plans to continue developing and promoting Alpha microprocessors despite the
sale of the microprocessor facility; and Digital having licensed Samsung
Electronics Co., Ltd. to develop, manufacture and sell Alpha microprocessors and
having entered into a Memorandum of Understanding with Advanced Micro Devices,
Inc., that contemplates a comparable license; and it now appearing that Digital,
sometimes referred to as the "proposed respondent," is willing to enter into
this Agreement Containing Consent Order ("Agreement") in order to confirm its
future plans for Alpha and to provide for other relief,
IT IS HEREBY AGREED by and between Digital, by its duly authorized officers and
attorneys, and counsel for the Commission that:
1. Proposed respondent Digital is a corporation organized, existing, and doing
business under and by virtue of the laws of the Commonwealth of Massachusetts,
with its office and principal place of business located at 111 Powdermill Road,
Maynard, Massachusetts 01754.
2. Proposed respondent admits all the jurisdictional facts set forth in the
draft of Complaint here attached.
3. Proposed respondent waives:
(a) any further procedural steps;
(b) the requirement that the Commission's decision contain a statement of
findings of fact and conclusions of law;
(c) all rights to seek judicial review or otherwise to challenge or to
contest the validity of the Order entered pursuant to this Agreement; and
(d) any claim under the Equal Access to Justice Act.
4. This Agreement shall not become part of the public record of the proceeding
unless and until it is accepted by the Commission. If this Agreement is accepted
by the Commission it, together with the draft of Complaint contemplated thereby,
will be placed on the public record for a period of sixty (60) days and
information in respect thereto will be publicly released. The
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Commission thereafter may either withdraw its acceptance of this Agreement and
so notify proposed respondent, in which event it will take such action as it may
consider appropriate, or issue and serve its Complaint (in such form as the
circumstances may require) and decision, in disposition of the proceeding.
5. This Agreement is for settlement purposes only and does not constitute an
admission by proposed respondent that the law has been violated as alleged in
the draft Complaint here attached, or that the facts alleged in the draft
Complaint, other than jurisdictional facts, are true.
6. This Agreement contemplates that, if it is accepted by the Commission, and if
such acceptance is not subsequently withdrawn by the Commission pursuant to the
provisions of ss. 2.34 of the Commission's Rules, the Commission may, without
further notice to the proposed respondent, (1) issue its Complaint corresponding
in form and substance with the draft of Complaint here attached and its decision
containing the following Order in disposition of the proceeding and (2) make
information public with respect thereto. When so entered, the Order shall have
the same force and effect and may be altered, modified or set aside in the same
manner and within the same time provided by statute for other orders. The Order
shall become final upon service. Delivery by the U.S. Postal Service of the
Complaint and decision containing the agreed-to Order to proposed respondent at
the addresses stated in this Agreement shall constitute service. Proposed
respondent waives any rights they may have to any other manner of service. The
Complaint may be used in construing the terms of the Order. No agreement,
understanding, representation, or interpretation not contained in the Order or
the Agreement may be used to vary or contradict the terms of the Order.
7. By signing this Agreement, proposed respondent represents that it can
accomplish the full relief contemplated by this Order.
8. Proposed respondent has read the proposed Complaint and Order contemplated
hereby. Proposed respondent understands that once the Order has been issued, it
will be required to file one or more compliance reports showing that it has
fully complied with the Order.
9. Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the Order after it
becomes final. Proposed respondent agrees to be bound by the terms of the
proposed Order pending its final approval by the Commission.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions shall
apply:
A. "Respondent" or "Digital" means Digital Equipment Corporation, its
directors, officers, employees, agents and representatives, predecessors,
successors, and assigns; its subsidiaries, divisions, groups and affiliates
controlled by Digital Equipment Corporation and the respective directors,
officers, employees, agents, representatives, successors, and assigns of
each.
B. "Intel" means Intel Corporation, a corporation organized, existing, and
doing business under and by virtue of the laws of the State of Delaware,
with its office and principal place of business located at 2200 Mission
College Boulevard, Santa Clara, California 95052.
C. "AMD" means Advanced Micro Devices, Inc., a corporation organized,
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existing, and doing business under and by virtue of the laws of the State
of Delaware, with its office and principal place of business located at One
AMD Place, P.O. Box 3453, Sunnyvale, California 94088-3453.
D. "IBM" means International Business Machines, Inc., a corporation
organized, existing, and doing business under and by virtue of the laws of
the State of Delaware, with its office and principal place of business
located at 1 New Orchard Road, Armonk, New York, 10504.
E. "Samsung" means Samsung Electronics Co., Ltd., a Korean corporation with
offices located at San #24, Nongaeo-Lee, Kiheung-Eup, Yonginn-Si,
Kyungki-Do, Korea.
F. "Digital's Alpha RISC Architecture" means the architecture as defined by
the current edition, or previous edition, of Digital's Alpha AXP
Architecture Reference Manual, published by or on behalf of Digital.
G. "Digital Alpha Implementation" means a microprocessor implementation of
Digital's Alpha RISC Architecture designed by or for Digital. For purposes
of illustration only and without limiting the foregoing, each of the
following implementations constitutes a distinct and separate Digital Alpha
Implementation: EV4, EV5, EV6, EV67, EV68, EV7.
H. "Alpha Device" means a 64-bit microprocessor that implements the same
design and circuitry as, and is equivalent in form, fit and function to, a
Digital Alpha Implementation, and that 1) conforms to Digital's Alpha RISC
Architecture, 2) executes Digital's Alpha instruction set and 3) meets
appropriate Digital quality and branding criteria.
I. "Device Specifications" means the product specifications for a Digital
Alpha RISC Architecture implementation from and after EV56 (e.g., EV56,
EV6, EV67, EV68, EV7, etc.), as set forth in the Device Data Sheet and the
Device Quality and Reliability Data Sheet to be provided by Digital as
amended from time to time, which define the specific functional,
performance, electrical, timing, mechanical, environmental, reliability,
and other requirements of the Digital Device and which may refer to, and
thereby incorporate, other specifications, including without limitation,
logic or other design and/or layout specifications.
J. "Digital Device" means a semiconductor integrated circuit device meeting
the applicable Device Specification and embodying the applicable specific
logic design of Digital's Alpha RISC Architecture implementation for EV56,
EV6 and for any Future Alpha Implementation as designed and manufactured by
or on behalf of Digital.
K. "Future Alpha Implementation" means a semiconductor integrated circuit
device meeting the applicable Device Specification and embodying the
applicable specific logic design of a Digital Alpha RISC Architecture
implementation beyond EV56 and EV6 (e.g., EV67, EV68, EV7, etc.) as
designed and manufactured by or on behalf of Digital.
L. "AMD Device" means a 64-bit microprocessor designed by or for AMD that
1) conforms to Digital's Alpha RISC Architecture, 2) executes Digital's
Alpha instruction set and 3) meets appropriate Digital quality and branding
criteria.
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M. "AMD Derivative" means a 64-bit microprocessor derived from an Alpha
Device or AMD Device, that incorporates a modification or improvement
designed by or for AMD and 1) conforms to Digital's Alpha RISC
Architecture, 2) executes Digital's Alpha instruction set and 3) meets
appropriate Digital quality and branding criteria.
N. "AMD Licensed Products" means integrated circuits designed by or for AMD
including, but not limited to Alpha Devices, AMD Devices and AMD
Derivatives. AMD Licensed Products shall exclude SPARC, PA RISC, POWER PC
and MIPS families of microprocessors.
O. "AMD 64-bit Microprocessor" means an AMD Licensed Product that is a
64-bit microprocessor.
P. "Samsung Device" means a fully qualified, packaged and tested
semiconductor integrated circuit, that 1) is based upon and conforms to and
incorporates Digital's Alpha RISC Architecture, 2) embodies a specific
logic design provided to Samsung by Digital corresponding to the Digital
Device, including updates by Digital thereto, and 3) conforms to the Device
Specification, Branding Standard and Product Qualification Procedures.
Q. "Samsung Alpha Architecture Device" means a microprocessor manufactured
and designed by or on behalf of Samsung and that 1) conforms to Digital's
Alpha RISC Architecture, as specified in Digital's Alpha Architecture
Reference Manual, as revised from time to time by Digital, 2) executes
Digital's Alpha instruction set, and 3) conforms to the Branding Standard
and Product Qualification Procedures.
R. "Samsung Derivative" means a semiconductor integrated circuit device
embodying the design of Digital's EV56 or EV6 Alpha RISC Architecture
implementation (or any Future Alpha Implementation licensed to Samsung) as
the case may be, including updates made thereto by Digital and updates made
thereto by Samsung to a Samsung Device, and with such additions, deletions,
modifications, improvements and redesigns made by Samsung to a Samsung
Device including, but not limited to, design package, testing or die size
changes, as result in a final device having any of the following changes
(but no other changes) to a Samsung Device:
(i) change in die size due to mask size change and/or due to employing
any CMOS process technology;
(ii) modification, reduction, addition, or replacement of SRAM cell;
(iii) change or redesign of cache memory architecture, including
necessary implementation to change I/O interfaces;
(iv) change to form, fit or function of the EV56 or the EV6 Device
Specification other than changes or modifications to the EV6 or EV56
"core," which, for purposes of this subsection shall be defined to
mean the Samsung Device, excluding the I/O pad ring and caches; and/or
(v) any change to the Alpha RISC Architecture, or any change not
included in (i), (ii), (iii) or (iv) above, to the Device
Specification, Product Qualification Procedures or the form, fit or
function of the
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EV56 or EV6 Device Specification, in either case, which has been
specifically approved by Digital in its sole discretion, in accordance
with the provisions of Section 3.3 (b)(ii) of the Samsung License
Agreement referred to in Paragraph III.A. of this Order.
S. "Alpha Microprocessor Technology" means the information, materials, and
technology relating to any Digital Alpha Implementation and associated
Alpha architectural specification including, but not limited to, layout
database and schematics, test programs and vectors, models, design data
simulation results, all HAL, PAL, and BIOS codes, design documentation and
customer product documentation, and including all updates.
T. "Software Products" means Digital commercial software products necessary
to generate or optimize binary code for Digital Alpha Implementations.
U. "CAD Tools" means Digital CAD Tools, including all updates, applicable
to the design, development and manufacture of Digital Alpha
Implementations.
V. "Software Tools" means Digital software tools as to which Digital has
the right to grant a license, including all updates, used to generate or
optimize binary code for Digital Alpha Implementations.
W. "Digital Technology" means Alpha Microprocessor Technology, Software
Products (in both source and object code form), Software Tools (in both
source and object code form), FX!32 Software (in both source and object
code form) and CAD Tools (in both source and object code form).
X. "Digital Intellectual Property Rights" with regard to Paragraph II of
this Order means all patents, patent applications, copyrights, mask works,
know-how and trade secrets owned by Digital covering 1) Digital Alpha
Implementation, 2) Digital's Alpha RISC Architecture or 3) Digital
Technology; and, with regard to Paragraph III of this Order, "Digital
Intellectual Property Rights" has the same meaning as set forth in Section
1.16 of the Samsung License Agreement referred to in Paragraph III.A. of
this Order, covering 1) Digital Alpha Implementation, 2) Digital's Alpha
RISC Architecture or 3) Digital Technology.
Y. "Commission" means the Federal Trade Commission.
Z. "Intel/Digital Settlement" means all transactions and agreements
contemplated by, or necessary to implement, the Settlement Agreement
Between Digital Equipment Corporation and Intel Corporation, dated October
26, 1997.
AA. "FX!32 Software" shall mean the Digital software known as FX!32 for
runtime emulation and background binary translation of x86 binaries to
native Alpha code and associated documentation, including updates, meaning
all corrections, bug fixes, modifications, and enhancements to the FX!32
Software, in both object or source code form, made by or for Digital.
II.
IT IS FURTHER ORDERED that:
A. Respondent shall grant a license, by the date this Order becomes final,
to Advanced Micro Devices, Inc. ("AMD"), or to a licensee that receives the
prior
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approval of the Commission, and only in a manner that receives the prior
approval of the Commission and is consistent with the framework of the
Memorandum of Understanding entered into between Digital and AMD, dated
March 30, 1998 (the "MOU"), which provides, inter alia:
1. under Digital Intellectual Property Rights, a non-exclusive,
non-transferable, perpetual license, without the right to sublicense
(except as otherwise provided herein) to design, develop, manufacture
and have manufactured, and to market, distribute and sell worldwide
AMD Licensed Products;
2. under Digital Intellectual Property Rights, a non-exclusive,
non-transferable, perpetual license, without the right to sublicense
(except as otherwise provided herein), to use, modify, copy, and
create derivative works of the Alpha Microprocessor Technology for the
purpose of and to the extent required to enable AMD's exercise of the
licenses to be granted pursuant to Paragraph II.A.1. of this Order;
3. the right to grant sublicenses (without the right to grant further
sublicenses) to no more than two third parties (as agreed to by
Digital and AMD in the MOU) under rights granted to AMD in Paragraph
II.A.1. above, to manufacture, use and sell AMD 64-bit
Microprocessors;
4. the right to provide Infrastructure Partners technology designed or
developed by AMD, even if such technology incorporates certain Digital
trade secrets or know-how contained in the Alpha Microprocessor
Technology, and to grant sublicenses (without the right to grant
further sublicenses) such third parties under such technology to make,
have made, use or sell products (other than AMD 64-bit
Microprocessors) based upon or incorporating such technology.
"Infrastructure Partners" shall mean (subject to the terms of the MOU)
chipset vendors, BIOS vendors, independent software vendors and other
companies in the business of designing and selling products designed
to operate with AMD Licensed Products;
5. under Digital Intellectual Property Rights, a non-exclusive,
non-transferable, perpetual license (without the right to sublicense)
to use the CAD Tools, in object code form, and CAD Tool Documentation,
for the sole purpose of assisting AMD internally in the design,
development and manufacture of AMD Licensed Products and to make
copies of the CAD Tool Documentation solely to the extent necessary to
enable AMD to implement the terms of internal use licenses. Digital
shall also grant AMD a non-exclusive, non-transferable license
(without the right to sublicense) to one copy of the source code for
each licensed CAD Tool for evaluation purposes only;
6. under Digital Intellectual Property Rights, a non-exclusive,
non-transferable, perpetual license (without the right to sublicense)
to use internally the Software Products, in object code form, for the
sole purpose of assisting AMD in the design, development and
manufacture of Alpha Devices, AMD Devices and AMD Derivatives and in
the generation and optimization of binary code for Alpha Devices, AMD
Devices and AMD Derivatives;
7. under Digital Intellectual Property Rights, a non-exclusive,
non-transferable, perpetual license (without the right to sublicense)
to modify, copy and create derivative works of the Software Tools, in
object code and source code form, for internal use only, for the sole
purpose of the generation and optimization of software code for Alpha
Devices, AMD Devices and AMD Derivatives. AMD shall have the further
right to provide and sublicense the Software Tools and modified
versions thereof, in object code form, to independent software vendors
("ISVs") for internal use only, for the sole
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purpose of generating and optimizing the ISVs' own binary code for
operation on a computer system having an Alpha Device, AMD Device or
AMD Derivative as a central processing unit. AMD and such ISVs will
not have the right to market, distribute or sell any Software Tools,
and shall not use the Software Tools to develop, market, distribute or
sell a product similar to the Software Tools. Digital will also grant
AMD a non-exclusive, non-transferable, perpetual license (without the
right to sublicense) to one copy of the source code for each licensed
Software Tool for evaluation purposes only;
8. under Digital Intellectual Property Rights, (i) a non-exclusive,
non-transferable, perpetual license (without the right to sublicense)
to modify, copy and create derivative works of FX!32 Software, in
object code and source code form, for internal use only, and (ii) a
non-exclusive, non-transferable, perpetual license to reproduce and
distribute FX!32 Software, in object code form, either directly or
through AMD's authorized distribution channels in conjunction with
sales to third parties of Alpha branded products. Digital FX!32
Software Updates shall be furnished by Digital to AMD on a
royalty-free basis. Any modification, enhancements or adaptations to
FX!32 Software developed by AMD shall be furnished by AMD to Digital
under a non-exclusive, perpetual, transferable, royalty-free license,
with the right to sublicense in object code or source code form; and
9. under Digital Intellectual Property Rights, the right to modify or
extend Digital's Alpha RISC Architecture, without approval from
Digital, and to produce AMD Devices and AMD Derivatives implemented in
accordance with such modified or extended architecture, if Digital
fails to establish and implement a roadmap that advances the
performance, as measured by speed, of then-current SPECint and/or
then-current SPECfp, as appropriate, of the highest Alpha
microprocessor by at least 25 percent every three years.
B. Digital shall agree, if requested by the licensee, to submit all
disputes of any license agreement described in Paragraph II.A. of this
Order to binding arbitration. Respondent agrees to provide the Commission
with ten (10) days notice of an intention to terminate any license
agreement described in Paragraph II.A. of this Order. Other than the above
limitations, nothing in this paragraph shall limit Digital's rights to seek
redress for any breach of the license agreement described in Paragraph
II.A. of this Order.
C. A purpose of Paragraph II of this Order is to establish the Commission
approved licensee as an independent provider of Alpha Devices in order to
promote the Alpha Architecture and Alpha Devices as a viable and
competitive microprocessor and to remedy the lessening of competition
resulting from the effects of the Intel/Digital Settlement, as alleged in
the Commission's complaint. Another purpose of Paragraph II of this Order
is to establish the licensee as an independent provider of innovation in
Alpha Device design while maintaining the ability of computer systems based
on Alpha Devices supplied by Digital and computer systems based on Alpha
Devices supplied by the licensee to run the same software and use the same
non-microprocessor components.
D. A condition of approval by the Commission of the licensee shall be the
submission by the proposed licensee to the Commission of an acceptable
business plan demonstrating that the licensee will use the Alpha
Microprocessor Technology to develop, manufacture, market and sell a viable
and competitive Alpha Device free of all direct or indirect continuing
relationships with Intel in the
<PAGE> 8
manufacture or sale of Alpha Devices.
E. A condition of approval by the Commission of the license shall be the
submission by Digital to the Commission of an acceptable business plan
demonstrating the manner in which Digital shall support the licensee's
efforts as required by Paragraph II of this Order.
F. On reasonable notice to Digital from the licensee, Digital shall provide
technical assistance and know-how related to such assistance to the
licensee with respect to the manufacture of, and the provision of technical
and engineering support for, all Alpha Devices to be manufactured or sold
by the licensee. Such technical assistance shall include, without
limitation, consultation with knowledgeable employees of Digital and
training at the facilities of Digital. Digital may charge the reasonable
costs incurred in providing such technical assistance, including
reimbursement (commensurate with the salary and benefits of Digital
personnel involved) for the time plus expenses of Digital personnel
providing the technical assistance. Digital shall continue to provide such
technical assistance until AMD is satisfied that it is capable of
producing, and of developing for production, commercially saleable Alpha
Devices; provided, however, Digital shall not be required to continue
providing such technical assistance and training for more than two (2)
years after the date on which the license required by Paragraph II.A. of
this Order is approved by the Commission.
G. Until expiration of the technical assistance obligations of Paragraph
II.F. of this Order, Respondent shall take such actions as are necessary to
maintain the viability and marketability of the Alpha Microprocessor
Technology and Digital's Alpha RISC Architecture and to prevent the
destruction, removal, wasting, deterioration, or impairment of any of these
intellectual property assets.
III.
IT IS FURTHER ORDERED that:
A. Respondent shall grant a license, by the date this Order becomes final,
to Samsung Electronics Co., Ltd. ("Samsung"), or a licensee that receives
the prior approval of the Commission, and only in a manner that receives
the prior approval of the Commission and is consistent with the framework
of the License Agreement Between Digital and Samsung, dated June 5, 1996,
the Supplemental License Agreement entered into between Digital and
Samsung, dated April 4, 1998 (the "License Agreement") and the Alpha
Marketing and Technology License Agreement entered into between Digital and
Samsung, dated April 4, 1998 (the "Marketing Agreement"), which provide,
inter alia:
1. under applicable Digital Intellectual Property Rights, a
non-exclusive, non-transferable, perpetual license, without the right
to sublicense, to design, develop, and manufacture, and market,
distribute and sell worldwide Samsung Devices and Samsung Alpha
Architecture Devices;
2. the right to receive from Digital the product technology package as
set forth in the License Agreement and Digital know-how (specified in
the License Agreement) necessary for the design of Samsung Devices;
such technology package may be used by Samsung to design, develop and
manufacture Samsung Alpha Architecture Devices and Samsung Derivatives
under the terms of the License Agreement;
3. the right to have a third party design a portion of the Samsung Alpha
<PAGE> 9
Architecture Device, provided that the third party design is
undertaken for and on behalf of Samsung in accordance with the terms
and conditions set forth in Section 4 of the License Agreement;
4. under applicable Digital Intellectual Property Rights, a
non-exclusive, non-transferable, perpetual license (without the right
to sublicense) to use the CAD Tools, in object code form, and related
documentation, for the sole purpose of assisting Samsung internally in
the design, development and manufacture of Samsung Devices, Samsung
Alpha Architecture Devices, Samsung Derivatives and Other Integrated
Circuits in accordance with the terms and conditions set forth in
Section 5 of the License Agreement, and to make copies of such
documentation solely to the extent necessary to enable Samsung to
implement the terms of such internal use licenses; and
5. under applicable Digital Intellectual Property Rights, the right to
reproduce and distribute FX!32 Software, in object code form
(including any improvements and derivatives thereto made by Digital)
for use with Alpha branded products.
B. Digital shall agree, if requested by the licensee, to submit all
disputes of any license agreement described in Paragraph III.A. of this
Order to binding arbitration. Respondent agrees to provide the Commission
with ten (10) days notice of an intention to terminate any license
agreement described in Paragraph III.A. of this Order. Other than the above
limitations, nothing in this paragraph shall limit Digital's rights to seek
redress for any breach of the license agreement described in Paragraph
III.A. of this Order.
C. Digital shall enter into an agreement whereby it shall grant the
licensee the non-exclusive right to market and sell the licensee's Alpha
Devices under Digital's "AlphaPowered" trademark.
D. Digital shall procure Alpha Devices from the licensee in accordance with
Section 8 of the Marketing Agreement.
E. A purpose of Paragraph III of this Order is to establish the licensee as
an independent provider of Alpha Devices in order to promote the Alpha
Architecture and Alpha Devices as a viable and competitive microprocessor
and to remedy the lessening of competition resulting from the effects of
the Intel/Digital Settlement, as alleged in the Commission's complaint.
Another purpose of Paragraph III of this Order is to establish the licensee
as an independent provider of innovation in Alpha Device design while
maintaining the ability of computer systems based on Alpha Devices supplied
by Digital and computer systems based on Alpha Devices supplied by the
licensee to run the same software and use the same non-microprocessor
components.
F. A condition of approval by the Commission of the licensee shall be the
submission by the proposed licensee to the Commission of an acceptable
business plan demonstrating that the licensee will use the Alpha
Microprocessor Technology to develop, manufacture, market and sell as a
viable and competitive Alpha Device free of all direct or indirect
continuing relationships with Intel in the manufacture or sale of Alpha
Devices.
G. A condition of approval by the Commission of the license shall be the
submission by Digital to the Commission of an acceptable business plan
demonstrating the manner in which Digital shall support the licensee's
efforts as required by Paragraph III of this Order.
<PAGE> 10
H. Digital shall provide the licensee consulting services and training as
described in Section 2.1(c) of the License Agreement.
I. Until expiration of the technical assistance obligations of Paragraph
III.H. of this Order, Respondent shall take such actions as are necessary
to maintain the viability and marketability of the Alpha Microprocessor
Technology and Digital's Alpha RISC Architecture and to prevent the
destruction, removal, wasting, deterioration, or impairment of any of
these intellectual property assets.
IV.
IT IS FURTHER ORDERED that within six months after the date this Order becomes
final, Digital shall, subject to the prior approval of the Commission, enter
into an agreement with IBM or some other company, whereby Digital will work with
IBM or such other company to evaluate it as a foundry and provide IBM or such
other company a report setting forth the steps necessary to become a qualified
supplier of Digital Devices, Alpha Devices, and Digital Alpha Implementations to
Digital under Digital's quality, performance and production criteria within six
(6) months after the date the Commission approves such agreement; provided,
however, if Digital demonstrates to the Commission that the agreement is not
necessary to achieve this purpose, then Digital need not submit any agreement
pursuant to this Paragraph IV.
V.
IT IS FURTHER ORDERED that Respondent shall comply with all requirements of any
licenses or agreements entered pursuant to this Order, and such licenses or
agreements are incorporated by reference into this Order and made a part hereof.
Any failure by Respondent to comply with the requirements of such licenses or
agreements shall constitute a failure to comply with this Order.
VI.
IT IS FURTHER ORDERED that:
At any time after Respondent has signed the Agreement Containing Consent Order
in this matter, the Commission may appoint an Interim Trustee to monitor
Respondent's performance of its responsibilities as required by this Order and
by any license or agreement implementing this Order, including, but not limited
to, any license agreement between Digital and any licensee, as provided in
Paragraphs II and III of this Order. Within ten (10) days after acceptance by
the Commission for public comment of the Agreement Containing Consent Order,
Respondent shall submit the name and qualifications of and contract with a
person to serve as Interim Trustee.
1. The Interim Trustee shall have the power and authority to monitor
Respondent's compliance with the terms of this Order and with the terms and
compliance with any other agreement implementing this Order, including, but
not limited to, any license agreement provided in Paragraphs II and III.
The Interim Trustee may be the same trustee appointed pursuant to Paragraph
VII.A. of this Order.
2. Respondent's agreement with the Interim Trustee shall confer on the Interim
Trustee all the rights and powers necessary to permit the Interim Trustee
to monitor Respondent's compliance with the terms of this order and any
other agreement implementing this Order, including, but not limited to, any
license agreement as provided in Paragraphs II and III.
3. The Interim Trustee shall serve until the licensees approved pursuant to
Paragraphs II and III of this Order have received all the technology and
assistance provided for in those Paragraphs. In no event, however, shall
the Interim Trustee serve for more than two (2)
<PAGE> 11
years from the date this Order becomes final.
4. The Interim Trustee shall have full and complete access to Respondent's
personnel, books, records, documents, facilities and technical information
relating to the research, development, manufacture, importation,
distribution and sale of any product or technology covered by this Order,
or to any other relevant information, as the Interim Trustee may reasonably
request, including, but not limited to, all documents and records kept in
the normal course of business that relate to the manufacture of any product
covered by this Order. Respondent shall take no action to interfere with or
impede the Interim Trustee's ability to monitor Respondent's compliance
with Paragraphs II and III of this Order or any other agreement
implementing this order, including, but not limited to, any license
agreement as provided in Paragraphs II and III in this Order.
5. The Interim Trustee shall serve, without bond or other security, at the
expense of Respondent, on such reasonable and customary terms and
conditions as the Commission may set. The Interim Trustee shall have
authority to employ, at the expense of Respondent, such consultants,
accountants, attorneys and other representatives and assistants as are
reasonably necessary to carry out the Interim Trustee's duties and
responsibilities. The Interim Trustee shall account for all expenses
incurred, including fees for his or her services, subject to the approval
of the Commission.
6. Respondent shall indemnify the Interim Trustee and hold the Interim Trustee
harmless against any losses, claims, damages, liabilities or expenses
arising out of, or in connection with, the performance of the Interim
Trustee's duties, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for, or defense of,
any claim whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
misfeasance, gross negligence, willful or wanton acts, or bad faith by the
Interim Trustee.
7. If the Commission determines that the Interim Trustee has ceased to act or
failed to act diligently, the Commission may appoint a substitute trustee.
8. The Commission may on its own initiative or at the request of the Interim
Trustee issue such additional orders or directions as may be necessary or
appropriate to assure compliance with the requirements of this Order and
any other agreement implementing this Order, including, but not limited to,
any license agreement as provided in Paragraphs II and III of this Order.
9. The Interim Trustee shall evaluate reports submitted to it or the
Commission by Digital. The Interim Trustee shall report in writing
concerning compliance by Respondent with the provisions of Paragraphs II
and III of this Order to the Commission every three (3) months from the
date Respondent signs the Agreement Containing Consent Order until the term
of the Interim Trustee expires, as provided above. Such reports shall
include at least the following:
a. whether Respondent has executed the licenses and agreements
required under Paragraphs II and III of this Order;
b. whether Respondent has given the Interim Trustee access to records
as required by Paragraph VI.4. of this Order;
c. whether licensees have issued any sublicenses under Paragraphs II
and III of this Order; the names, addresses, and phone numbers of any
such sublicensee; and the purpose and terms under which these persons
have been given sublicenses;
d. whether and the degree to which Digital has provided the technical
assistance and know-how to licensees as required under Paragraphs
II.F. and III.H. of this Order;
<PAGE> 12
e. whether Digital has refused to allow any licensee to sublicense any
person;
f. whether licensees are making any good faith efforts to develop or
sell any of the products covered by licenses under Paragraphs II and
III of this Order, and, to the extent such sales have been made, the
gross sales levels; and
g. the progress of Digital and any licensee in implementing their
Commission-approved business plans and the extent to which the
agreement is satisfying Paragraphs II.D. and E. and III.F. and G. of
this Order.
VII.
IT IS FURTHER ORDERED that:
A. If Digital has not executed the licenses and agreements, and received
the Commission's approval for such licenses and agreements, required by
Paragraphs II and III of this Order, then the Commission may appoint a
trustee to grant the licenses or enter into agreements consistent with the
terms set forth in Paragraphs II and III of this Order. The trustee shall
have all rights and powers necessary to permit the trustee to enter into
the licenses and agreements so as to expeditiously accomplish the remedial
purposes of this Order. In the event the Commission or the Attorney General
brings an action pursuant to Section 5(l) of the Federal Trade Commission
Act, 15 U.S.C. ss. 45(l), or any other statute enforced by the Commission,
Digital shall consent to the appointment of a trustee in such action.
Neither the appointment of a trustee nor a decision not to appoint a
trustee under this Paragraph shall preclude the Commission or the Attorney
General from seeking civil penalties or any other relief (including, but
not limited to, a court-appointed trustee) pursuant to the Federal Trade
Commission Act or any other statute, for any failure by any of the
Respondent to comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant to
Paragraph VII.A. of this Order, Digital shall consent to the following
terms and conditions regarding the trustee's powers, duties, authority, and
responsibilities:
1. The Commission shall select the trustee, who shall be a person with
experience and expertise in acquisitions and licenses.
2. Subject to the prior approval of the Commission, the trustee shall
have the exclusive power and authority to enter into the licenses and
agreements required by Paragraphs II and III of this Order in order to
accomplish the remedial purposes of this Order.
3. Within ten (10) days after appointment of the trustee, Respondent
shall execute a trust agreement that, subject to the prior approval of
the Commission (and, in the case of a court-appointed trustee, of the
court), transfers to the trustee all rights and powers necessary to
permit the trustee to enter into the licenses and agreements required
by Paragraphs II and III of this Order so as to expeditiously
accomplish the remedial purposes of this Order.
4. The trustee shall have twelve (12) months from the date the trust
agreement is approved by the Commission to accomplish the license
required by this Order, which shall be subject to the prior approval
of the Commission. If,
<PAGE> 13
however, at the end of the twelve (12) month period, the trustee has
submitted a plan of license or believes that license can be achieved
within a reasonable time, the license period may be extended by the
Commission (or, in the case of a court-appointed trustee, by the
court); provided, however, the Commission may extend this period only
two (2) times.
5. The trustee shall have full and complete access to the personnel,
books, records, and facilities related to the Alpha Devices or
Digital, or to any other relevant information, as the trustee may
request. Digital shall develop such financial or other information as
such trustee may request and shall cooperate with the trustee.
Respondent shall take no action to interfere with or impede the
trustee's accomplishment of the license. Any delays in licensing
caused by the Respondent shall extend the time for licensing under
this Paragraph VII in an amount equal to the delay, as determined by
the Commission (or, in the case of a court-appointed trustee, by the
court).
6. The trustee shall use his or her best efforts to negotiate the most
favorable price and terms available in each contract that is submitted
to the Commission, subject to the absolute and unconditional
obligation of Digital to license at no minimum price; provided,
however, that the trustee shall not negotiate any price or terms with
AMD less favorable to Respondent than those set forth in the MOU
referred to in Paragraph II of this Order. The license shall be made
in the manner, and to the licensee or licensees, as set out in
Paragraphs II and III of this Order; provided, however, if the trustee
receives bona fide offers from more than one licensee, and if the
Commission approves more than one such licensee, then the trustee
shall license to the entity or entities selected by Digital from among
those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the cost
and expense of Digital, on such reasonable and customary terms and
conditions as the Commission or a court may set. The trustee shall
have authority to employ, at the cost and expense of Digital, such
consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
necessary to carry out the trustee's duties and responsibilities. The
trustee shall account for all monies derived from the license and all
expenses incurred. After approval by the Commission (and, in the case
of a court-appointed trustee, by the court) of the account of the
trustee, including fees for his or her services, all remaining monies
shall be paid at the direction of Digital and the trustee's power
shall be terminated. The trustee's compensation shall be based at
least in significant part on a commission arrangement (based on sales
price) contingent on the trustee's accomplishing the license required
by this Order.
8. Digital shall indemnify the trustee and hold the trustee harmless
against any losses, claims, damages, liabilities, or expenses arising
out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result
from misfeasance, gross negligence, willful or wanton acts, or bad
faith by the trustee.
9. If the trustee ceases to act or fails to act diligently, a substitute
trustee shall be appointed in the same manner as provided in Paragraph
VII.A. of this Order.
10. The Commission (or, in the case of a court-appointed trustee, the
court) may on its own initiative or at the request of the trustee
issue such additional orders or directions as may be necessary or
appropriate to accomplish the
<PAGE> 14
license required by this Order.
11. The trustee shall have no obligation or authority to operate or
maintain the Alpha Microprocessor Technology.
12. The trustee shall report in writing to Digital and the Commission
every thirty (30) days concerning the trustee's efforts to accomplish
the license.
VIII.
IT IS FURTHER ORDERED that within thirty (30) days after the date this Order
becomes final, and every thirty (30) days thereafter until Respondent has
granted the licenses and agreements required by the provisions of Paragraphs II,
III and IV of this Order, Respondent shall submit to the Commission verified
written reports setting forth in detail the manner and form in which Respondent
intends to comply, is complying, and has complied with Paragraphs II, III and IV
of this Order. Respondent shall include in its compliance reports, among other
things that are required from time to time, a full description of the efforts
being made to comply with Paragraphs II, III and IV of the Order, including a
description of all substantive contacts or negotiations for the license and the
identity of all parties that have contacted Respondent or that have been
contacted by Respondent.
IX.
IT IS FURTHER ORDERED that one (1) year from the date this Order becomes final,
annually for the next six (6) years on the anniversary of the date this Order
becomes final, and at such other times as the Commission may require, Respondent
shall file a verified written report with the Commission setting forth in detail
the manner and form in which it has complied and is complying with the licenses
and agreements required by Paragraphs II, III, and IV of this Order.
X.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate Respondent, such
as dissolution, assignment, sale resulting in the emergence of a successor
corporation, the creation or dissolution of subsidiaries, or any other change in
Respondent that may affect compliance obligations arising out of the Order.
XI.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, Respondent shall permit any duly authorized
representatives of the Commission:
A. During office hours and in the presence of counsel, access to facilities
and access to inspect and copy all books, ledgers, accounts,
correspondence, memoranda and other records and documents in the possession
or under the control of Respondent relating to any matters contained in
this Order; and
B. Upon five (5) days notice to Respondent, and without restraint or
interference, to interview officers, employees, or agents of Respondent.
XII.
IT IS FURTHER ORDERED that this order shall terminate on June 16, 2005.
Signed this 17th day of April, 1998.
<PAGE> 15
DIGITAL EQUIPMENT CORPORATION
By: /s/ Thomas C. Siekman
-------------------------------
Thomas C. Siekman
Senior Vice President and
General Counsel
By: /s/ James P. Shaughnessy
-------------------------------
James P. Shaughnessy
Vice President and Assistant
General Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
By: /s/ C. Benjamin Crisman, Jr.
-------------------------------
C. Benjamin Crisman, Jr.
/s/ Michael L. Weiner
- ----------------------------------
Michael L. Weiner
1440 New York Avenue, N.W.
Washington, D.C. 20005
Counsel for Digital Equipment
Corporation
BUREAU OF COMPETITION
/s/ John O'Hara Horsley
- ----------------------------------
John O'Hara Horsley
Deputy Assistant Director
Counsel for the
Federal Trade Commission
APPROVED:
/s/ Joseph G. Krauss
- ----------------------------------
Joseph G. Krauss
Assistant Director
Bureau of Competition
/s/ Willard K. Tom
- ----------------------------------
Willard K. Tom
Deputy Director
Bureau of Competition
/s/ William J. Baer
- ----------------------------------
William J. Baer
Director
Federal Trade Commission
