SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
September 27, 1999
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FRANKLIN ELECTRONIC PUBLISHERS, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania
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(State or other jurisdiction of incorporation)
0-14841 22-2476703
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(Commission File Number) (IRS Employer Identification Number)
One Franklin Plaza, Burlington, N.J. 08016-4907
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(Address of Principal Executive Offices)
Registrant's telephone number (609) 386-2500
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Exhibit Index located on page 4
Page 1 of 61 pages
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 27, 1999, Franklin Electronic Publishers Inc., a Pennsylvania
Corporation (the "Company") completed the sale of certain assets in connection
with the Company's REX line of connected organizers to Xircom, Inc., a
California corporation ("Xircom"), for a price of $13,250,000 which was paid in
cash at the closing. The purchase price was the result of substantial arms'
length negotiations between the Company and Xircom.
There were no existing material relationships between the Company and
Xircom or any of their respective affiliates, directors, officers or associates
at the time of the transaction.
Xircom is a manufacturer of electronic products.
The transaction was approved by the Company's Board of Directors on
September 27, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
+10.1.1 Asset Purchase Agreement, dated September 27, 1999, between Xircom
and the Company.
+10.1.2 License Agreement, dated September 27, 1999, between the Company and
Xircom.
+10.1.3 Services Agreement, dated September 27, 1999, between the Company
and Xircom.
99.1 Franklin Electronic Publishers, Inc. Press Release, dated September
27, 1999.
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+ Confidential treatment has been requested with respect to certain portions
of this exhibit, which have been omitted therefrom and have been
separately filed with the Commission.
Page 2 of 61 pages
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SIGNATURES
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 hereunto duly authorized.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By: Gregory J. Winsky
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Name: Gregory J. Winsky
Title: Executive Vice President
Date: October 12, 1999
Page 3 of 61 pages
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EXHIBIT INDEX
Document Page No.
+10.1.1 Asset Purchase Agreement, dated September 27, 1999,
between Xircom and the Company. 5
+10.1.2 License Agreement, dated September 27, 1999, between
the Company and Xircom. 43
+10.1.3 Services Agreement, dated September 27, 1999, between
the Company and Xircom. 54
99.1 Franklin Electronic Publishers, Inc. Press Release,
dated September 27, 1999. 60
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+ Confidential treatment has been requested with respect to certain portions
of this exhibit, which have been omitted therefrom and have been
separately filed with the Commission.
Page 4 of 61 pages
Exhibit 10.1.1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated September 27th, 1999, between
XIRCOM, INC., a California corporation ("Xircom"), and FRANKLIN ELECTRONIC
PUBLISHERS, INCORPORATED, a Pennsylvania corporation ("Franklin").
W I T N E S S E T H :
WHEREAS, Franklin is engaged in, among other things, the business of
designing, developing, producing and marketing electronic organizers and related
products under the REX and REX PRO brand names (the "REX Products") [+]
(collectively, the "REX Business"); and
WHEREAS, Xircom desires to purchase, and Franklin desires to sell,
all of Franklin's right, title and interest in and to the assets, business and
properties used in whole or primarily in connection with the REX Business on the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, Xircom and Franklin hereby agree as follows:
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First: Closing; Exchange.
1.1. The Closing. The closing (the "Closing") of the transactions
set forth in Sections 1.2 and 1.3 shall take place at 10:00 a.m., eastern time,
on the date hereof at the offices of Rosenman & Colin LLP, 575 Madison Avenue,
New York, New York 10022. (Hereinafter, such date is referred to as the "Closing
Date" and such time on the Closing Date is referred to as the "Closing Time.")
1.2. Sale and Purchase of the Assets. At the Closing, Franklin shall
sell, convey, transfer, assign and deliver to Xircom all of Franklin's right,
title and interest in and to the following described assets (collectively, the
"REX Assets"):
(i) All of the inventory identified on Schedule 1.2(a) (it
being understood that such inventory shall be conveyed to Xircom F.O.B.
Franklin);
(ii) All of Franklin's rights under the contracts, agreements
and commitments identified on Schedule 1.2(a);
(iii) The registered and unregistered trademarks, trademark
applications, trade names, registered and unregistered copyrights,
know-how, patents, patent applications, trade secrets, domain names and
other intellectual property and proprietary rights and processes
(collectively, "Intellectual Property") identified on Schedule 1.2(a);
(iv) All sales and promotional materials, advertising
literature, advertising rights, customer orders, quotations and bids
relating to the REX Assets and the REX Business; and
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(v) All other assets used in whole or primarily in connection
with the REX Business.
The REX Assets shall not include (1) any assets listed on Schedule 1.2(a) as
excluded from this transaction (the "Excluded Assets") and (2) any of Franklin's
assets which would otherwise constitute a part of the REX Assets, the assignment
or attempted assignment of which would be invalid or would constitute a breach
of any contract, agreement or commitment to which it is a party or by which it
may be bound; provided, however, that any such asset referred to in this clause
(2) shall be held by Franklin for the benefit of Xircom. The sale, conveyance,
transfer, assignment and delivery of the REX Assets by Franklin to Xircom
hereunder shall be effected by such assignments, transfers of title, bills of
sale and other instruments as shall be reasonably requested by Xircom.
1.3. Purchase Price and Liabilities.
(a) Purchase Price. At the Closing, Xircom shall pay to or for the
benefit of Franklin $13,250,000 (the "Purchase Price"), which shall be paid by
wire transfer of immediately available Federal funds to accounts designated by
Franklin.
(b) Liabilities. At the Closing, Xircom shall assume and agree to
pay, perform and discharge the liabilities and obligations (the "Assumed
Liabilities") (I) under the contracts, agreements and commitments set forth on
Schedule 1.2(a) which are assigned to Xircom (or held for the benefit of Xircom)
arising or accruing after the Closing Time or which are to be performed after
the Closing Time, (II) relating to sales commissions resulting from REX Products
sold by Xircom following the Closing Date, (III) relating to credits for
cooperative advertising which runs after the Closing Date with respect to REX
Products sold by
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Franklin prior to the Closing Date; (IV) relating to claims made by Franklin's
customers under Franklin's price protection policies with respect to REX
Products sold by Franklin prior to the Closing Date which claims arise as a
result of Xircom's post-Closing Date pricing policies; and (V) except as
elsewhere noted in this Agreement as regards or will be associated with any
obligation or duties imposed on Franklin in relation to the class action titled
Winigrad v. Franklin Electronic Publishers, Inc., arising under warranty claims,
return rights or comparable customer rights for REX Products shipped or sold by
Franklin prior to the Closing Time, including, but not limited to, any
obligations to Starfish Software or Sykes Enterprises that arise or accrue after
the Closing Time under any agreements listed in Schedule 1.2(a) that are held by
Franklin for the benefit of Xircom hereunder. Such assumption and agreement
shall be effected by such instruments as shall be reasonably requested by
Franklin. Xircom shall not assume or have any liability with respect to any
liability or obligation of Franklin related to the Excluded Assets or any other
liability or obligation related to the REX Business, including, without
limitation:
(i) liabilities of Franklin in connection with or relating to
this Agreement, including counsel and accountant's fees, and broker's
commissions;
(ii) liabilities in connection with or relating to all
actions, suits, claims, proceedings, demands, assessments and judgments,
costs, losses, liabilities, damages, deficiencies and expenses (whether or
not arising out of third party claims), including, without limitation,
interest, penalties, reasonable attorneys' and accountants' fees and all
amounts paid or payable in investigation, defense or settlement of any of
the foregoing, to the extent the same relate to or arise from the
operation of the REX Business prior to the Closing Date, other than
liabilities arising under warranty claims, return rights and
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comparable customer rights for REX Products shipped or sold by Franklin
prior to the Closing Time; and
(iii) liabilities for trade account payables and other accrued
liabilities relating to the business and operations of Franklin for
periods prior to the Closing Date.
(c) Allocation of Purchase Price. The Purchase Price shall be
allocated as specified in Schedule 1.3(c). Neither Franklin nor Xircom shall
file any tax return or take any position, tax or otherwise, or make any filing
inconsistent with the allocations set forth in Schedule 1.3(c).
(d) Sales and Transfer Taxes and Fees. Xircom and Franklin shall
each file such tax returns or other documentation with each "Governmental Body"
for which they, as a seller or buyer (as the case may be) of assets are
primarily liable, and shall provide a copy thereof to the other party, with
respect to any sales taxes and/or use taxes, recording fees, personal property
title application fees, patent and trademark assignment registration fees, and
all other taxes and fees on transfer of the REX Assets arising by virtue of the
sale of the REX Assets by Franklin to Xircom. Notwithstanding anything else
herein to the contrary, each of Xircom and Franklin shall coordinate with the
other party so that each shall pay when due from assets other than the REX
Assets one-half of all such taxes and fees regardless of whether the liability
for such taxes or fees is imposed by law upon Franklin or upon Xircom.
"Governmental Body" means any Federal, state, local or foreign governmental
authority or regulatory body, any subdivision, agency, commission or authority
thereof (including, without limitation, environmental protection, planning and
zoning), or any quasi-governmental or private body exercising any regulatory
authority thereunder and any person directly or indirectly owned by
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and subject to the control of any of the foregoing, or any court, arbitrator or
other judicial or quasi-judicial tribunal.
Second: Existing Franklin Finished Goods.
2.1. Certain of the REX Assets are currently labeled and identified
as Franklin products. Franklin and Xircom agree that Xircom is authorized to
sell these Franklin-labeled products for Xircom's own account. Franklin hereby
designates and authorizes Xircom to act as a distributor of such
Franklin-labeled products, solely until such time as all such Franklin-labeled
products have been sold by Xircom. Xircom is authorized to retain and to use any
existing Franklin-labeled packaging, manuals, labels, product markings and
related items purchased under this Agreement associated with such
Franklin-labeled products, solely in connection with sales by Xircom of such
Franklin-labeled products.
2.2. Xircom agrees that it will annotate, overlay, supplement or
otherwise modify all applicable manuals, product literature and other end-user
items to ensure that the end-user is referred directly to Xircom for any and all
product support, warranty claims, repair, return and other post-sale REX Product
related activity.
Third: Representations and Warranties of Franklin. Franklin
represents and warrants to Xircom that:
3.1. Organization and Good Standing. Franklin is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Franklin has the power and authority to conduct
all of the business and activities conducted by it and to own or lease all of
the assets owned or leased by it.
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3.2. Authority. The Board of Directors of Franklin has authorized
the execution and delivery by Franklin of this Agreement and all other documents
contemplated hereby and the performance and consummation of the transactions
contemplated hereby and thereby. Franklin has the corporate power and authority
to execute and deliver this Agreement and all other documents contemplated
hereby, to consummate the transactions hereby and thereby contemplated and to
take all other actions required to be taken by it pursuant to the provisions
hereof and thereof. This Agreement and all other documents required hereby have
been duly and validly executed and delivered by Franklin to Xircom, are valid
and binding upon Franklin and enforceable against Franklin in accordance with
their respective terms.
3.3. No Default; Non-Contravention. Except as set forth on Schedule
3.3, neither the execution and delivery of this Agreement and all other
documents contemplated hereby nor the consummation of the transactions
contemplated hereby and thereby (a) will constitute any violation or breach of
the Certificate of Incorporation or By-Laws of Franklin or (b) will result in
the breach or termination of or give rise to a right of termination of, or
accelerate the performance required by, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
(i) any provision of any contract, agreement, instrument, judicial or
administrative order or decree to which Franklin is a party and by which the REX
Assets or the REX Business may be affected or (ii) any order, writ, injunction,
decree, statute, rule or regulation applicable to the REX Assets, the REX
Business or Franklin, in each case, that would limit Franklin's ability to
consummate the transactions contemplated by this Agreement, or (c) will result
in the creation of any "Lien" on any of the REX Assets that would limit
Franklin's ability to consummate the transactions contemplated by
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this Agreement. "Lien" means any mortgage, charge, pledge, lien, security
interest, claim, encumbrance or restriction, of any kind or nature.
3.4. Consents and Approvals. Except as set forth on Schedule 3.4, no
consent, authorization, order or approval of, or filing or registration with,
any Governmental Body or third party is required for the execution and delivery
by Franklin of this Agreement and all other documents contemplated hereby and
the consummation by Franklin of the transactions contemplated hereby and
thereby, including the assignment of Franklin's right, title and interest in and
to the REX Assets (without termination or alteration).
3.5. Compliance with Law. (a) Except as set forth on Schedule
3.5(a), Franklin has complied in all material respects with all statutes, laws,
treaties, rules, codes, ordinances, regulations, permits, certificates and
orders of any Governmental Body and all judgments, decrees, injunctions, writs,
orders and like actions of any Governmental Body, applicable to Franklin, the
REX Business or the REX Assets, including, without limitation, any federal,
state or local laws, rules or regulations regulating fair and equal employment
practices, the safety of the workplace, antitrust, wages, hours, collective
bargaining and the payment of withholding or taxes of all types.
(b) Franklin has obtained and maintained all permits, licenses,
consents and approvals necessary for Franklin to conduct the REX Business
required by any Governmental Body. All such permits, licenses, consents and
approvals are set forth on Schedule 3.5(b).
3.6. Title; Liens. Franklin has good title to all of the REX Assets,
free and clear of all Liens.
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3.7. Litigation. Except as set forth on Schedule 3.7, there is no
action, suit, claim, proceeding or investigation pending or, to the knowledge of
Franklin, threatened against or affecting any of the REX Assets or the REX
Business. The matters set forth on Schedule 3.7, if decided adversely to
Franklin, will not result in a material adverse change in the REX Assets or the
REX Business..
3.8. Intellectual Property. (a) Franklin has exclusive ownership of,
or a license to use, all Intellectual Property relating to or used by Franklin
in relation to the REX Assets or the REX Business (collectively, the "REX
Intellectual Property"). The REX Intellectual Property is listed on Schedule
3.8. Franklin's rights in all of the REX Intellectual Property owned by Franklin
are freely transferable. There are no claims or demands of any other person
pertaining to any of the REX Intellectual Property owned by Franklin and no
proceedings have been instituted, or are pending or, to the knowledge of
Franklin, threatened, which challenge the rights of Franklin in respect thereof.
Except as set forth on Schedule 3.8, Franklin has the right to use, free and
clear of claims or rights of other persons, all customer lists, designs,
manufacturing or other processes, computer software, systems, data compilations,
research results and other information required for or incident to the REX
Assets or the REX Business.
(b) All of the patents, patent applications, trademark
registrations, trademark applications and registered copyrights included in the
REX Intellectual Property have been duly registered in, filed in or issued by
the United States Patent and Trademark Office, the United States Register of
Copyrights, or the corresponding offices of other jurisdictions as identified on
Schedule 3.8, and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations of the United
States or each such other jurisdiction.
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(c) All licenses or other agreements under which Franklin is granted
rights in the REX Intellectual Property are listed in Schedule 1.2(a). Except as
set forth on Schedule 3.8, to the knowledge of Franklin, all said licenses or
other agreements are in full force and effect and there is no material default
by any party thereto. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Xircom.
(d) All licenses or other agreements under which Franklin has
granted rights to others in REX Intellectual Property are listed in Schedule
3.8. To the knowledge of Franklin, all said licenses or other agreements are in
full force and effect and there is no material default by any party thereto, and
all Franklin's rights thereunder are freely assignable. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
provided to Xircom.
(e) Franklin has taken all steps required in accordance with sound
business practice to establish and preserve its ownership of, and as applicable,
the confidentiality of, all REX Intellectual Property rights. Franklin has
required all employees having access to valuable non-public information of
Franklin to execute agreements in the form attached to Schedule 3.8. Franklin
has no knowledge of any infringement by others of any of its REX Intellectual
Property rights.
(f) Except as set forth on Schedule 3.8, to the knowledge of
Franklin, the REX Assets and the REX Business do not infringe on any
Intellectual Property rights of any other person or party. No proceeding
charging Franklin with infringement by the REX Assets or the REX Business of any
adversely held Intellectual Property has been filed or, to the knowledge of
Franklin, is threatened to be filed. To Franklin's knowledge, there exists no
unexpired patent
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or patent application which includes claims that would be infringed by or
otherwise adversely affect the REX Assets or the REX Business. To the knowledge
of Franklin, Franklin is not making unauthorized use of any confidential
information or trade secrets of any person in connection with the REX Assets or
the REX Business.
3.9. Completeness of REX Assets. The REX Assets are adequate and
suitable for the conduct of the REX Business and include all tangible and
intangible property necessary for Xircom to continue the conduct of the REX
Business as now conducted by Franklin. The Inventory consists of items of first
quality useable in the ordinary course of business. The work in process and
finished goods included within such inventory are suitable for the REX Business
and are of at least the standard quality for such items.
3.10. Contracts. Except as otherwise set forth on Schedule 1.2(a),
Franklin is not in default under any contract, agreement or commitment set forth
on Schedule 1.2(a) which are assigned to Xircom (or held for the benefit of
Xircom), nor has any event occurred which, with notice or lapse of time, or
both, could result in a default under any such contract, agreement or
commitment. To the knowledge of Franklin, Schedule 1.2(a) also describes all
actions, omissions and defaults, if any, by the other party to any such
contract, agreement or commitment which, with notice or lapse of time, or both,
could result in a default thereunder. Except as noted on Schedule 1.2(a), each
such contract, agreement or commitment is in full force and effect, is freely
transferable and/or assignable to Xircom, and constitutes a valid and binding
obligation of, and is legally enforceable in accordance with its terms against,
the parties thereto.
3.11. Customers and Sales. Schedule 3.11 is a list of the largest 20
customers of REX Products, together with summaries of the sales made to each
such customer during the most
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recent fiscal year. Except as indicated in Schedule 3.11, Franklin does not have
any information indicating that any of these customers intend to cease or
materially alter the amount of REX Products they are presently purchasing from
Franklin.
3.12. Full Disclosure. All documents delivered by Franklin in
connection with this Agreement and the transactions contemplated hereby are true
and complete and authentic. The representations, warranties and statements
contained in this Agreement and the certificates, Exhibits and Schedules
delivered to Xircom pursuant to this Agreement by Franklin, when taken together,
do not omit or fail to state a material fact required to be stated therein or
necessary in order to make such representations, warranties and statements not
misleading or incomplete in light of the circumstances under which they were
made.
Fourth: Covenants.
4.1. Non-Competition.
(a) As a material inducement to Xircom to enter into this Agreement and
consummate the transactions contemplated hereby, Franklin agrees, on behalf of
itself and all its existing and future subsidiaries, that, for three years after
the Closing, it will not, without the prior written consent of Xircom, directly
or indirectly, engage or participate in, be employed by or assist in any manner
or in any capacity, or have any interest in or make any loan to any person,
firm, corporation or business which engages anywhere in the world in the
business of designing, manufacturing or selling synchronizable electronic
personal computer companion information management organizers which utilize the
PCMCIA format; provided, however, that the provisions of this Section 4.1(a)
shall terminate if Xircom and all of Xircom's subsidiaries (and its and their
successors or assigns, if any) shall no longer engage in such business.
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(b) As a material inducement to Xircom to enter into this Agreement and
consummate the transactions contemplated hereby, Franklin agrees, on behalf of
itself and all its existing and future subsidiaries, that, for eighteen months
after the Closing, it will not, without the prior written consent of Xircom,
directly or indirectly, engage or participate in, be employed by or assist in
any manner or in any capacity, or have any interest in or make any loan to any
person, firm, corporation or business which engages anywhere in the world in the
business of designing, manufacturing or selling synchronizable electronic
personal computer information management organizers, synchronizable electronic
personal digital assistants, and related synchronizable electronic handheld or
portable multi-function personal information management products which, in each
case, have dimensions less than 100 millimeters long and less than 70
millimeters wide and less than 10.75 millimeters thick as per the orientations
noted on Exhibit 4.1(b) attached hereto; provided, however, that the provisions
of this Section 4.1(b) shall terminate if Xircom and all of Xircom's
subsidiaries (and its and their successors or assigns, if any) shall no longer
engage in such business and further provided that the provision shall not apply
to any card module which contains memory and is intended for use and insertion
into any electronic product, such as a BOOKMAN(R) card, which is a current
product of Franklin.
4.2. No Solicitation of Employees. Neither Franklin nor any of its
existing or future subsidiaries will at any time, for three years after the
Closing, directly or indirectly, employ any person who, at the Closing, was an
employee of Xircom, or solicit, encourage, assist, initiate discussion or engage
in negotiation with any such person regarding employment, without
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the prior written consent of Xircom. Neither Xircom nor any of its existing or
future subsidiaries will at any time, for three years after the Closing,
directly or indirectly, employ any person who, at the Closing, was an employee
of Franklin, or solicit, encourage, assist, initiate discussion or engage in
negotiation with any such person regarding employment, without the prior written
consent of Franklin.
Fifth: Representations and Warranties of Xircom. Xircom represents
and warrants to Franklin that:
5.1. Organization and Good Standing. Xircom is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California.
5.2. Authority. The execution and delivery by Xircom of this
Agreement and all other documents contemplated hereby and the performance and
consummation of the transactions contemplated hereby and thereby has been
authorized by Xircom. Xircom has the corporate power and authority to execute
and deliver this Agreement and all other documents contemplated hereby, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by it pursuant to the provisions hereof and
thereof. This Agreement and all other documents required hereby have been duly
and validly executed and delivered by Xircom to Franklin, are valid and binding
upon Xircom and enforceable against Xircom in accordance with their respective
terms.
5.3. No Default; Non-Contravention. Neither the execution and
delivery of this Agreement and all other documents contemplated hereby nor the
consummation of the transactions contemplated hereby and thereby contemplated
will constitute any violation or
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breach of the organizational documents of Xircom or any provision of any
contract, agreement, instrument, judicial or administrative order or decree to
which Xircom is a party.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
5.4. Consents and Approvals. No consent, authorization, order or
approval of, or filing or registration with, any Governmental Body or third
party is required for the execution and delivery by Xircom of this Agreement and
all other documents contemplated hereby and the consummation by Xircom of the
transactions contemplated hereby and thereby.
Sixth: Conditions to Xircom's Obligations. All obligations of Xircom
under this Agreement are subject to the fulfillment of each of the following
conditions, any or all of which may be waived in whole or in part by Xircom, in
its sole discretion:
6.1. Certificates. Xircom shall have received (1) a certificate of
the Secretary of Franklin, dated the Closing Date, setting forth the resolutions
of the Board of Directors of Franklin approving this Agreement and all other
documents required hereby and authorizing the transactions hereby contemplated,
and (2) such other evidence with respect to the fulfillment of said conditions
as Xircom may reasonably request upon reasonable prior notice.
6.2. License Agreement. Franklin shall have executed and delivered
the License Agreement in the form of Exhibit A (the "License Agreement")
relating to a license [+].
6.3. Services Agreement. Franklin shall have executed and delivered
the Services Agreement in the form of Exhibit B (the "Services Agreement").
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6.4. Assignments of Agreements. Except as set forth on Schedule 6.4,
Franklin shall have obtained such consents to assignments from third parties as
may be necessary to provide for the transfer of all contracts, agreements and
commitments applicable to the REX Business from Franklin to Xircom.
Seventh: Conditions to Franklin's Obligations. All obligations of
Franklin under this Agreement are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
Franklin, in its sole discretion:
7.1. Certificates. Franklin shall have received (1) a certificate of
the Secretary of Xircom, dated the Closing Date, setting forth the resolutions
of the Board of Directors of Xircom approving this Agreement and all other
documents required hereby and authorizing the transactions hereby contemplated,
and (2) such other evidence with respect to the fulfillment of said conditions
as Franklin may reasonably request upon reasonable prior notice.
7.2. License Agreement. Xircom shall have executed and delivered the
License Agreement.
7.3. Services Agreement. Xircom shall have executed and delivered
the Services Agreement.
Eighth: Indemnification.
8.1. Indemnification by Franklin. Franklin agrees to indemnify and
hold harmless Xircom and its officers and directors, and each of their
respective affiliates (each, an "Other Xircom Indemnified Party"), from and
against, and to reimburse Xircom and each Other Xircom Indemnified Party with
respect to, any and all loss, damage, liability, cost and expense,
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including attorneys' fees (collectively, "Damages"), incurred by Xircom or such
Other Xircom Indemnified Party by reason of or arising out of or in connection
with (1) a breach of any representation or warranty contained in Article THIRD
of this Agreement, (2) the failure of Franklin to perform any covenant or
agreement required by this Agreement to be performed by it, (3) any actions,
suits, claims, proceedings or investigations involving Franklin or its
affiliates (including the class action titled Winigrad v. Franklin Electronic
Publishers, Inc. and more fully described on Schedule 3.7), the REX Business or
the REX Assets asserted against Xircom or any Other Xircom Indemnified Party and
arising out of any matter occurring or accruing prior to the Closing Time, other
than liabilities arising under warranty claims, return rights and comparable
customer rights for REX Products shipped or sold by Franklin prior to the
Closing Time, or (4) any liabilities or debts of Franklin other than the Assumed
Liabilities.
8.2. Indemnification by Xircom. Xircom agrees to indemnify and hold
harmless Franklin and its officers and directors, and each of their respective
affiliates (each, an "Other Franklin Indemnified Party"), from and against, and
to reimburse Franklin and each Other Franklin Indemnified Party with respect to,
any and all Damages incurred by Franklin or such Other Franklin Indemnified
Party by reason of or arising out of or in connection with (1) a breach of any
representation or warranty contained in Article FIFTH of this Agreement, (2) the
failure of Xircom to perform any covenant or agreement required by this
Agreement to be performed by it, (3) any actions, suits, claims, proceedings or
investigations involving the REX Business or the REX Assets asserted against
Franklin or any Other Franklin Indemnified Party and arising out of any matter
occurring or accruing after the Closing Time, (4) any liabilities arising under
warranty claims, return rights and comparable customer rights for REX Products
no matter when shipped or sold, (5) any and all Assumed Liabilities or (6) any
credits taken by
18
<PAGE>
Franklin's customers with respect to price protection or cooperative advertising
which credits constitute Assumed Liabilities.
8.3. Indemnification Procedures. A party entitled to recover an
indemnification payment pursuant to this Article EIGHTH (the "Indemnified
Party") (a) shall give the party required to make such payment (the
"Indemnifying Party") prompt notice of any claim, demand, suit, proceeding or
action (a "Claim") by any person against the Indemnified Party, (b) shall
consult with the Indemnifying Party as to the procedure to be followed in
defending, settling, or compromising the Claim, (c) shall not consent to any
settlement or compromise of the Claim without the written consent of the
Indemnifying Party (which consent, unless the Indemnifying Party has elected to
assume the exclusive defense of such Claim, shall not be unreasonably withheld
or delayed), and (d) shall permit the Indemnifying Party, if it so elects, to
assume the exclusive defense of such Claim, all at the cost and expense of the
Indemnifying Party. If the Indemnified Party shall (i) fail to notify or to
consult with the Indemnifying Party with respect to any Claim in accordance with
subparagraph (a) or (b) above or (ii) consent to the settlement or compromise of
any Claim without having received the written consent of the Indemnifying Party
(unless, if the Indemnifying Party has not elected to assume the exclusive
defense of such Claim, the consent of the Indemnifying Party is unreasonably
withheld or delayed), the Indemnifying Party shall be relieved of its
indemnification obligation with respect to such Claim (provided that failure to
notify the Indemnifying Party of a Claim shall only so relieve the Indemnifying
Party to the extent the failure to notify actually prejudiced the Indemnifying
Party). If the Indemnifying Party shall elect to assume the exclusive defense of
any Claim, it shall notify the Indemnified Party in writing of such election,
and the Indemnifying Party shall not be liable hereunder for any fees or
expenses of the Indemnified Party's counsel
19
<PAGE>
relating to such Claim after the date of delivery to the Indemnified Party of
such notice of election. In the event of such election, the Indemnified Party
shall cooperate with the Indemnifying Party and provide it with access to all
books and records of the Indemnified Party relevant to the Claim. The
Indemnifying Party will not compromise or settle any Claim without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed) if the relief provided is other than monetary damages for
which the Indemnifying Party is liable hereunder and such relief would adversely
affect the Indemnified Party.
8.4. Basket; Payment. Notwithstanding anything to the contrary set
forth in this Article EIGHTH, Xircom shall not be entitled to indemnification
pursuant to Section 8.1 until the aggregate amount of Damages pursuant to
Section 8.1 exceeds $100,000 (the "Floor"). Once Xircom's Damages pursuant to
Section 8.1 exceed the Floor, Xircom shall be entitled to be indemnified for the
full amount of such Damages in excess of the Floor; provided, however, that
Franklin shall not be required to indemnify Xircom for Damages pursuant to
Section 8.1 in excess of the Purchase Price.
Ninth: Expenses of the Transaction; Brokers. Except for the services
performed for Franklin by Broadview International LLC whose fees shall be paid
by Xircom out of the total Purchase Price at the Closing Time, each of Franklin
and Xircom represents and warrants that it has not employed or utilized the
services of any broker in connection with this Agreement or the transactions
contemplated hereby. Except as otherwise expressly set forth herein, each of
Franklin and Xircom agrees to pay its own expenses (including brokers',
attorneys' and auditors' fees) in connection with this Agreement and the
transactions hereby contemplated.
20
<PAGE>
Tenth: Further Assurances. Franklin agrees that it will, at any time
and from time to time after the Closing Date, upon the request of Xircom, and
without further consideration, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, conveyances and assurances reasonably requested by
Xircom as may be required for the better assigning, transferring, granting,
conveying, assuring, and confirming to Xircom, or to its successors and assigns,
or for the aiding, assisting, collecting and reducing to possession any or all
of the REX Assets to be assigned to Xircom as provided herein, and any or all
obligations of Franklin hereunder. Xircom agrees that it will, at any time and
from time to time after the Closing Date, upon the request of Franklin, and
without further consideration, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
assumptions and assurances reasonably requested by Franklin as may be required
for the better assumption by Xircom of the Assumed Liabilities, and any or all
obligations of Xircom hereunder.
Eleventh: Miscellaneous.
11.1. Survival of Representations. All statements, certifications,
indemnifications, representations and warranties made herein by Franklin and
Xircom, and its respective obligations to be performed pursuant to the terms
hereof, shall survive the Closing for a period of one year.
11.2. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally against written receipt therefor or by private
courier, (ii) when actually delivered by
21
<PAGE>
registered or certified United States mail, return receipt requested, or (iii)
when received by telecopy (provided that it is confirmed by a means specified in
clause (i) or (ii)), addressed as follows:
If to Franklin, to:
Franklin Electronic Publishers, Incorporated
One Franklin Plaza
Burlington, NJ 08016-4907
Attention: Gregory J. Winsky
Facsimile: (609) 387-2666
Telephone: (609) 386-2500
with a copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Attention: Edward H. Cohen, Esq.
Facsimile: (212) 940-8776
Telephone: (212) 940-8580
If to Xircom, to:
Xircom, Inc.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
Attention: General Counsel
Facsimile: (805) 375-8164
Telephone: (805) 376-6910
with a copy to:
Nordman, Cormany, Hair & Compton
1000 Town Center Drive
Sixth Floor
Oxnard, CA 93030
Attention: Christopher K. Kitasaki, Esq.
Facsimile: (805) 988-8387
Telephone: (805) 988-8358
or to such other address as such party may indicate by a notice delivered to the
other parties.
22
<PAGE>
11.3. No Modification Except in Writing. This Agreement may not be
changed, modified or amended except by a writing signed by the party to be
charged and then only to the extent therein set forth.
11.4. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, and all other documents to be delivered in connection herewith
and therewith, sets forth the entire agreement and understanding between
Franklin and Xircom as to the subject matter hereof and thereof, respectively,
and merges and supersedes all prior discussions, agreements and understandings
of every kind and nature among them, and neither Franklin nor Xircom shall be
bound by any condition, definition, warranty or representation other than as
expressly provided for in this Agreement.
11.5. Severability. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, the remainder of this Agreement and the application of such provision
to other persons or circumstances shall not be affected unless the provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
11.6. Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement and the rights and obligations of the parties hereto may
not be assigned without the prior written consent of the other party hereto.
11.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and to be
23
<PAGE>
performed wholly within said State, without giving effect to the conflict of
laws principles thereof.
11.8. Captions. The captions appearing in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope and intent of this Agreement or any of the
provisions hereof.
11.9. Publicity. Except as otherwise required by law, press releases
concerning the transactions contemplated by this Agreement shall be made only
with the prior agreement of Franklin and Xircom.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
XIRCOM, INC. FRANKLIN ELECTRONIC
PUBLISHERS, INCORPORATED
By: R. Holliday By: Gregory J. Winsky
---------------------------------- -----------------------------
Name: Randell H. Holliday Name: Gregory J. Winsky
Title: Secretary and General Counsel Title: Executive Vice President
24
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
FOR THE INFORMATION REPRESENTED BY A
DAGGER [+] HEREIN. THE OMITTED INFORMATION
HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Schedule 1.2(a)
I. REX ASSETS
All of Franklin's rights arising under the following REX related
Agreements:
(a) Starfish Agreement as of April 4, 1997
(b) Starfish Agreement as of February 19, 1998
(c) Citizen Agreement as of April 1, 1997
(d) Amendment #2 as of November 11, 1997
(e) Amendment #3 as of April 1, 1998
(f) Amendment #4 as of March 24, 1998
(g) Amendment #5 as of July 13, 1998
(h) Sykes Enterprises Agreement dated October 1, 1997
[+]
1
<PAGE>
All of Franklin's rights under the following REX Related Trademark Registrations
and Filings:
- --------------------------------------------------------------------------------
MARK COUNTRY STATUS
- --------------------------------------------------------------------------------
REX U.S.A. Registration No. 2,205,231 issued November
24, 1998.
- --------------------------------------------------------------------------------
REX logo U.S.A. Registration No. 2,205,326 issued November
24, 1998.
- --------------------------------------------------------------------------------
Five Symbol Set U.S.A. ITU case in which use declaration was
filed. Response to rejection filed.
- --------------------------------------------------------------------------------
REXessory U.S.A. Pending. Response to formalities rejection
filed. Allowance is expected.
- --------------------------------------------------------------------------------
REX (stylized) Canada Allowed. Storage Tek Canada, Inc. may
oppose.
- --------------------------------------------------------------------------------
REX Canada Allowed. Storage Tek Canada, Inc. may
oppose.
- --------------------------------------------------------------------------------
REX (stylized) E.C. Allowed without opposition. Registration
fee has been paid. Registration should
issue.
- --------------------------------------------------------------------------------
REX E.C. Opposition has been lodged and information
concerning this opposition is being
received once the EC Trademark Office
determines the admissibility of the
opposition. It is opposition No. B141103.
- --------------------------------------------------------------------------------
RxREX U.S.A. ITU case. We will file a Request for an
Extension of Time to Allege Use.
- --------------------------------------------------------------------------------
REX PRO U.S.A. Case allowed. Statement of Use prepared and
out for signature to be filed by August 23,
1999.
- --------------------------------------------------------------------------------
REX READY U.S.A. Response to certain objections on
formalities has been filed. We expect
application to be allowed.
- --------------------------------------------------------------------------------
Six Symbol Set U.S.A. Trademark application filed on April 14,
1999. Awaiting Office Action.
- --------------------------------------------------------------------------------
Six Icon Set U.S.A. Trademark application filed on April 14,
1999. Awaiting Office Action.
- --------------------------------------------------------------------------------
<PAGE>
All of Franklin's rights under the following United States patents and patent
applications:
- --------------------------------------------------------------------------------
SERIAL NUMBER TITLE STATUS
- --------------------------------------------------------------------------------
[+] [+] [+]
- --------------------------------------------------------------------------------
[+] [+] [+]
- --------------------------------------------------------------------------------
All of Franklin's rights in the following REX programs:
(1) Unregistered copyright rights in "cradle speed up code" (subject to
Assignment of Technology dated June 30, 1997) (2) Application for
copyright registration in BCO Bank Switch Support Code
[+]
Domain Names
1. rexenter.com
2. rexpro.com
3. rexessories.com
4. rexsports.com
5. rexvoice.com
6. rexsport.com
7. rexpc.com
Other REX Assets:
(i) prepaid expenses, advances, rights under royalty payments, or other
comparable rights under agreements between Franklin and third parties associated
with the REX [+] related Agreements noted above in this Schedule 1.2 (a);
(ii) work in process, finished goods in inventory, packaging and manuals
(to the extent necessary to allow for completion of work in process to convert
same into finished goods), and related physical assets used in whole or
primarily in connection with the REX Business for sale to and use by ultimate
end users;
(iii) all technical data and documentation, including all hardware design
information, drawings, manufacturing and test data, and related information as
used or as needed by Franklin in the REX Business;
(iv) all software (including applicable source code), including all
relevant drivers, applications programs, utilities, diagnostic tools, and
related programs incorporated and used by Franklin in the REX Business as listed
on this Schedule;
(v) all designs, styles, product concepts, prototypes, inventions (whether
reduced to practice or not), know-how, processes, procedures, research records,
test information, market
3
<PAGE>
surveys, marketing know-how, manufacturing information, research, studies, and
related information used in whole or primarily in connection with the REX
Business.
(vi) 800 number for REX support: 1-800-386-0580
(vii) tooling for REX products.
[Worldwide Inventory List to Come]
II. EXCLUDED ASSETS
a. [+]
b. [+]
c. Accounts receivable, cash, or cash equivalents (other than prepaid
expenses and advances as noted above in this Schedule 2.2(a) under Other REX
Assets).
<PAGE>
Schedule 1.3(c) - Purchase Price Allocation
[TO COME]
<PAGE>
Schedule 3.3 - Non-Contravention
NONE
<PAGE>
Schedule 3.4 - Consents and Approvals
NONE
Franklin requires the consent of a lender to consummate the transactions
contemplated hereby.
<PAGE>
Schedule 3.5(a) - Government Rules
NONE
<PAGE>
Schedule 3.5(b) - Permits
FCC Tests: EMI Test June 3, 1997
Immunity Test June 24, 1997
<PAGE>
Schedule 3.7 - Litigation
Winigrad v. Franklin Electronic Publishers, Inc., Superior Court of New Jersey,
Law Division, Camden County, Docket No. L157498
<PAGE>
Schedule 3.8 - Intellectual Property
(a) The Intellectual Property included on Schedule 1.2(a).
(c) The following defaults exist under the Starfish Agreement of February
19, 1998:
(i) Starfish has not produced the Pro SDK as required under P. 1(a)
of such Agreement;
(ii) Starfish has not completed the development of the REX Sport
Program in accordance with the product specifications and milestones referred to
in P. 1(a) of such Agreement; and
(iii) Starfish has not localized the REX Pro Programs as required
under P. 7 of such Agreement.
(d) Assignment of Technology dated June 30, 1997.
[(e) The BCO Bank Switch Code is found in the Motorola Startac Clipon
Organizer.]
<PAGE>
Schedule 3.11 - REX Products' Customer List
[+]
<PAGE>
Schedule 4.1(b)
[GRAPHIC OMITTED]
<PAGE>
Schedule 5.4 - Consents and Approvals
<PAGE>
Schedule 6.4 - Assignments of Agreements
[Attached]
[+]
Exhibit 10.1.2
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
THE INFORMATION REPRESENTED BY A DAGGER [+] HEREIN.
THE OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
LICENSE AGREEMENT
This Agreement, effective September 27th, 1999 by and between FRANKLIN
ELECTRONIC PUBLISHERS, INC., having its primary offices located at One Franklin
Plaza, Burlington, New Jersey 08016-4907 ("Licensor") and XIRCOM, INC., having
its primary offices located at 2300 Corporate Center Drive, Thousand Oaks,
California 91320 ("Licensee").
BACKGROUND
1. Licensor is engaged in, among other things, the business of designing,
developing, producing, and marketing electronic organizers and related
information products under the REX and REX PRO brand names (the
"Business") [+];
2. Licensee desires to purchase, and Licensor desires to sell all of
Licensor's right, title and interest in and to the assets, business and
properties used in whole or primarily in connection with the Business on
the terms and subject to the conditions set forth in that certain Asset
Purchase Agreement between the parties of even date herewith ("Asset
Purchase Agreement"); and
3. The parties acknowledge that, because certain assets of Licensor [+] (that
are specified in Exhibit A hereto and referred to collectively herein as
the "Franklin Technology" which is comprised of the "Franklin Software"
[+] as further specified in Exhibit A) are intended to
1
<PAGE>
continue to be used by Licensor in its ongoing business after the date of
closing under the Asset Purchase Agreement, Licensor shall
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
THE INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
retain all of its rights in the Franklin Technology and Licensee shall be
licensed hereunder to use the Franklin Technology in connection with [+]
("Products").
TERMS OF AGREEMENT
The parties agree as follows:
1. Grant of Rights. In consideration of the consummation of the transactions
contemplated by the Asset Purchase Agreement and the receipt by Licensor
of the portion of the purchase price as allocated under and paid by
Licensee to Licensor pursuant to the Asset Purchase Agreement, Licensor
grants to Licensee:
(a) a perpetual, worldwide, non-transferable, non-exclusive, royalty
free, paid-up license to make, have made, use, sell, distribute and
copy Franklin Technology in and for the development and production
of Products; and
(b) a perpetual, worldwide, non-transferable, non-exclusive, royalty
free, paid up license to make derivative works of the Franklin
Software solely for Licensee's use in and for the development and
production of Products in accordance with the terms and conditions
of this License Agreement; provided, however, that other than for
traditional end-user licenses associated with products sold by
Licensee which may include or incorporate certain Franklin
Technology, Licensee shall not sublicense or assign all or any part
of
2
<PAGE>
the Franklin Technology to any third party or release to any third party
all or any part of the source code for the Franklin Software or any
derivative thereof made by Licensee in accordance with this License
Agreement and further provided, that Licensee shall not be entitled to use
the Spell Checker or Scan (as such terms are defined in Exhibit A hereto)
in any product that is not a PCMCIA format Product. Nothing herein shall
prohibit Licensee from having components for Products containing the
Franklin Technology made by third parties ("Recipients") solely for
assembly or incorporation by Licensee or its representatives into
Products. Licensee shall secure such appropriate confidentiality
agreements as are necessary from Recipients prior to Licensee's providing
Franklin Technology to any such Recipients; provided, however, that
Licensee shall provide to Franklin, the identity of each third party.
2. Deliverables. Licensor agrees to deliver to Licensee the confidential
technical information and computer programs, including source code for the
Franklin Software, as specified in Exhibit A ("Deliverables") within five
(5) business days of the effective date of this License Agreement.
Licensee agrees not to use the Deliverables for any purpose other than for
use in the development and production of Products as provided for in
recital 3 and paragraph 1 herein.
3. Confidential Information. Licensee acknowledges the value of the Franklin
Technology to Licensor in Licensor's ongoing business and therefore agrees
(a) except as provided in this License Agreement, not to divulge to any
third party any confidential information, including, but not limited to,
the Deliverables, specifically the source code for the Franklin Software,
disclosed to Licensee by Licensor hereunder and (b) to maintain such
information in
3
<PAGE>
confidence until such time that such particular information has become
widely known to the public without breach of this License Agreement or is
described in an issued patent. Without limitation, Licensee hereby
consents to the entry of injunctive relief against Licensee in the case of
any breach of this paragraph 3, provided however that Licensor will not
seek such injunctive relief without having first notified Licensee in
writing of the alleged grounds for Licensor's seeking such action, and
providing Licensee with such reasonable opportunity to cure as Licensor
determines in its sole discretion to be appropriate.
4. Warranty. Licensor warrants that the Franklin Technology will meet the
specifications set forth in Exhibit A and will be fit for the purpose
intended hereunder, to wit, for use in Products except as noted below in
this Section 4. Licensor expressly disclaims any warranties of any nature
or form, and Licensee expressly acknowledges that it accepts all Franklin
Technology "as is-where is," for any use by Licensee, in any product or
application, beyond use for and in the completion of the current iteration
of Products in PCMCIA format as per designs, assets and technology sold to
Licensee by Licensor under and pursuant to the Asset Purchase Agreement.
Licensor's obligation with regard to this warranty shall be limited to
repair or replacement of the Franklin Technology, at Licensor's option, as
commercially reasonable. Licensor shall not be responsible for any damages
or loss in connection with this warranty except as expressly provided
herein. EXCEPT AS PROVIDED HEREIN, LICENSOR MAKES NO WARRANTY OF ANY KIND
WITH REGARD TO THE FRANKLIN TECHNOLOGY AND EXPRESSLY DISCLAIMS ANY OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, OR ANY IMPLIED WARRANTY OF FITNESS OF PURPOSE FOR ANY
PRODUCTS BEYOND THE CURRENT ITERATION OF PRODUCTS IN PCMCIA
4
<PAGE>
FORMAT AS PER DESIGNS, ASSETS AND TECHNOLOGY SOLD TO LICENSEE BY LICENSOR
UNDER AND PURSUANT TO THE ASSET PURCHASE AGREEMENT, WHETHER ARISING IN
LAW, CUSTOM, CONDUCT OR OTHERWISE. IN NO EVENT SHALL LICENSOR BE LIABLE
FOR ANY LOSS OF PROFITS, LOSS OF USE, CONSEQUENTIAL, SPECIAL OR INCIDENTAL
DAMAGES ARISING UNDER THIS LICENSE AGREEMENT, EVEN IF THE LICENSOR HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL ANY
DAMAGES ATTRIBUTABLE TO LICENSOR EXCEED THE AMOUNT OF PAYMENTS ALLOCATED
IN CONNECTION WITH THIS LICENSE AGREEMENT UNDER THE ASSET PURCHASE
AGREEMENT.
5. Indemnification. Subject to the limitations and express disclaimers of
warranties in Section 4 above regarding use of Franklin Technology by
Licensee in the use of Franklin Technology in products or applications
beyond the completion of the current iteration of Products in PCMCIA
format as per designs, assets and technology sold to Licensee by Licensor
under and pursuant to the Asset Purchase Agreement, Licensor shall defend,
indemnify, and hold harmless Licensee from and against any claim that the
Franklin Technology infringes upon or violates the intellectual property
or proprietary rights of any third party; provided, that Licensee (i)
notifies Licensor in writing of any claim received by Licensee within five
business days of receipt of same, (ii) provides Licensor with sole control
of the defense of such claim and all related settlement negotiations, and
(iii) reasonably assists Licensor as requested in preparation and defense
of such claim. In no event shall Licensor's aggregate liability under this
paragraph exceed the aggregate amount of payments allocated in connection
with this License Agreement under the Asset
5
<PAGE>
Purchase Agreement.
6. Termination. Licensor shall have the right to terminate this License
Agreement in the event that Licensee has failed to cure any breach of any
material provision of this License Agreement within thirty (30) days
following receipt by Licensee of written notice from Licensor. If the
breach is of such a nature that reasonably requires more than thirty (30)
days to complete cure, Licensee shall be deemed to have cured such breach
if Licensee commences to cure such breach within the thirty (30) day
notice period and thereafter diligently completes such cure. Upon
termination of this License Agreement, Licensee shall immediately cease
using the Franklin Technology, shall destroy any inventory or work in
process of Products containing the Franklin Technology, and shall return
all Deliverables and any copies thereof to Licensor immediately.
7. Proprietary Rights Notices. Licensee shall provide such commercially
reasonable notice as Licensor shall direct of any and all applicable
proprietary rights of Licensor on all Products produced hereunder and all
marketing materials produced in connection therewith, including, but not
limited to, the notice: "(c) Franklin Electronic Publishers, Inc. 1995.
All rights reserved. Patent Pending."
8. End User License. Licensee agrees that each copy of the Franklin Software
or a derivative thereof marketed by Licensee hereunder will be accompanied
by a copy of Licensee's standard end user software license; provided,
however, that the terms of such license will be drafted so as to apply to
and include the Franklin Software and shall be at least as protective of
the Franklin Software as the terms and conditions Licensee uses for
6
<PAGE>
its own software products.
9. Government Legend and Export Controls. The Franklin Software is commercial
in nature and developed solely at private expense. The Franklin Software
is delivered as commercial computer software as defined in DFARS
252.227-7014 (June 1995) or as a commercial item as defined in FAR2.101(a)
and as such is provided with only such rights as are standard in a
commercial license for such software. Technical data is provided with
limited rights only as provided in DFARS 2520227-7015 (Nov. 1995) or FAR
52.227-14 (June 1987), whichever is applicable. Licensee will: (a)
identify and license the Franklin Software or any derivative thereof
developed by Licensee hereunder in all proposals and agreements with the
United States Government or any contractor therefor; and (b) legend or
mark such software provided pursuant to any agreement with the United
States Government or any contractor therefor in a form sufficient to
obtain for Licensor the protection intended by this paragraph (U.S.
Government Restricted Rights Legend). Licensor shall not export, directly
or indirectly, any technical data or Franklin Software provided to
Licensee under this License Agreement or the direct product of any such
technical data or Franklin Software to any country for which the United
States Government or any agency thereof, at the time of export, requires
an export license or other government approval, without first obtaining
such license or approval.
10. General. This License Agreement may not be assigned by either party
without the prior written consent of the other, which consent shall not be
unreasonably withheld. This License Agreement is the complete
understanding between the parties regarding the subject matter hereof and
supersedes all prior agreements between the parties with
7
<PAGE>
respect to the subject matter hereof, provided, however, that, this
License Agreement does not supersede the Asset Purchase Agreement. In the
event of any inconsistency between this License Agreement and the Asset
Purchase Agreement, the terms and conditions of this License Agreement
will prevail on all matters applicable to interpretation, administration,
and enforcement of this License Agreement. This License Agreement may not
be amended or modified except by a writing signed by the party against
whom enforcement is sought. This License Agreement shall be governed by
the applicable laws of the State of New Jersey and the United States of
America.
11. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered (i)
when delivered personally against written receipt therefor or by private
courier, (ii) when actually delivered by registered or certified United
States mail, return receipt requested, or (iii) when received by telecopy
(provided that it is confirmed by a means specified in clause (i) or (ii),
addressed as follows:
If to Licensor, to:
Franklin Electronic Publishers, Incorporated
One Franklin Plaza
Burlington, NJ 08016-4907
Attention: Gregory J. Winsky
Facsimile: (609) 387-2666
Telephone: (609) 386-2500
With a copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Attention: Edward H. Cohen, Esq.
Facsimile: (212) 940-8776
Telephone: (212) 940-8580
8
<PAGE>
If to Licensee, to:
Xircom, Inc.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
Attention: General Counsel
Facsimile: (805) 375-8164
Telephone: (805) 376-6910
With a copy to:
Nordman, Cormany, Hair & Compton
1000 Town Center Drive
Sixth Floor
Oxnard, CA 93030
Attention: Christopher K. Kitasaki, Esq.
Facsimile: (805) 988-9387
Telephone: (805) 988-8358
or to such other address as such party may indicate by a notice delivered to the
other parties.
9
<PAGE>
Intending to be legally bound hereby, the parties hereto have executed this
License Agreement on the dates set forth below.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By: Gregory J. Winsky
--------------------------------------
Executive Vice President
Date: 9/27/99
--------------------------------------
XIRCOM, INC.
By: R. Holliday
-------------------------------------
Title: Secretary and General Counsel
-------------------------------------
Authorized Representative
Date: Sept. 27, 1999
-------------------------------------
10
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT A
FRANKLIN TECHNOLOGY
A. Franklin Software
1. Franklin Software to be licensed to Xircom (attachment dated 9/9/99
author paulb)
2. Proximity Product Description:
a. Spell Checker ("Speller") (attachment)
b. Proximity Scan (TM) ("Scan") (attachment)
B. [+]
11
Exhibit 10.1.3
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
THE INFORMATION REPRESENTED BY A DAGGER [+]
HEREIN. THE OMITTED INFORMATION HAS BEEN
SEPARATELY FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION.
SERVICES AGREEMENT
SERVICES AGREEMENT, dated September 27th, 1999, between FRANKLIN
ELECTRONIC PUBLISHERS, INCORPORATED, a Pennsylvania corporation ("Franklin"),
and XIRCOM, INC. a California corporation ("Xircom").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated
the date hereof, between Xircom and Franklin (the "Purchase Agreement"),
Franklin has sold certain assets to Xircom; and
WHEREAS, as a condition to the closing of the transactions
contemplated by the Purchase Agreement, Xircom and Franklin are required to
enter into this Services Agreement.
NOW, THEREFORE, Franklin and Xircom hereby agree as follows:
FIRST: Services. Commencing on the date hereof and ending on March
31, 2000 (the "Term"), Franklin shall provide to Xircom the services set forth
on Schedule 1 hereto (the "Services") as and when requested by Xircom upon not
less than one week prior written notice. By separate written notice to Franklin,
Xircom will appoint an official designated representative, who will have sole
authority on behalf of Xircom to request and coordinate Services under this
Agreement. Services shall be performed primarily at Franklin's Burlington, New
Jersey facility. In the event Xircom desires to have Services performed at its
facility in Thousand Oaks, California, Franklin will make personnel available on
a reasonable basis, but not for periods longer than two weeks at a time, upon
reasonable prior request from Xircom. Xircom will be responsible for all
reasonable costs and expenses of travel, meals, transportation, lodging, etc.
associated with performance of Services under this Agreement at Xircom's
facility in Thousand Oaks, California.
SECOND: Fees. Xircom shall pay Franklin fees in accordance with the
rates set forth on Schedule 2 hereto. Franklin will invoice Xircom for Services
rendered from time to time, and such fees will be due and payable within 30 days
of Xircom's receipt of invoice.
<PAGE>
THIRD: Independent Contractor. All Services performed by Franklin
shall be performed by Franklin as an independent contractor. Notwithstanding
anything herein to the contrary, no partnership or joint venture has been, or is
intended to be, created in or by this Services Agreement, as a result of the
provision of the Services or otherwise.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
FOURTH: Software Developer's Kit; Completed Products. Within 30 days
of completion thereof, Xircom shall, at Xircom's sole expense, provide to
Franklin [+].
FIFTH: Intellectual Property. All intellectual property resulting
from the Services shall be owned by Xircom. Subject to the limitations and
conditions provided below in this Article FIFTH, Xircom hereby grants back to
Franklin a limited, perpetual, worldwide, non-exclusive, royalty-free license to
make, use, sell and copy any such intellectual property solely in connection
with and for use in products manufactured or sold by Franklin or its successors
and assigns. Other than traditional end user licenses granted to purchasers of
Franklin products, Franklin shall have no right to grant sublicenses to any
intellectual property licensed to Franklin hereunder by Xircom. Any sale,
license or distribution by Franklin of any such intellectual property shall be
accompanied by appropriate usage restrictions which prohibit decompiling,
reverse engineering, or other comparable attempts to secure access to
intellectual property not otherwise provided by right to the end user. Any
independent sale, license or distribution by Franklin of any such intellectual
property shall require that the recipient use such intellectual property solely
with and in products manufactured and sold by Franklin. Nothing contained in
this Article FIFTH shall in any way negate, supersede, limit, or be interpreted
as overriding any restrictions on competition imposed on Franklin under the
Purchase Agreement.
SIXTH: Miscellaneous.
6.1. Assignment. This Services Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Services Agreement and the rights, licenses and
obligations of the parties hereto may not be assigned without the prior written
consent of the other party hereto.
6.2. No Modification Except in Writing. This Services Agreement may
not be changed, modified or amended except by a writing signed by the party to
be charged and then only to the extent therein set forth.
6.3. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally against written receipt therefor or by private
courier, (ii) when actually delivered by registered or certified United States
mail, return receipt requested, or (iii) when received by telecopy (provided
that it is confirmed by a means specified in clause (i) or (ii)), addressed as
follows:
If to Franklin, to:
2
<PAGE>
Franklin Electronic Publishers, Incorporated
One Franklin Plaza
Burlington, NJ 08016-4907
Attention: Gregory J. Winsky
Facsimile: (609) 387-2666
Telephone: (609) 386-2500
with a copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Attention: Edward H. Cohen, Esq.
Facsimile: (212) 940-8776
Telephone: (212) 940-8580
If to Xircom, to:
Xircom, Inc.
2300 Corporate Center Drive
Thousand Oaks, CA 91320
Attention: General Counsel
Facsimile: (805) 375-8164
Telephone: (805) 376-6910
with a copy to:
Nordman, Cormany, Hair & Compton
1000 Town Center Drive
Sixth Floor
Oxnard, CA 93030
Attention: Christopher K. Kitasaki, Esq.
Facsimile: (805) 988-8387
Telephone: (805) 988-8358
or to such other address as such party may indicate by a notice
delivered to the other parties.
6.4. Governing Law. This Services Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within said State, without giving
effect to the conflict of laws principles thereof.
6.5. Severability. If any provision of this Services Agreement or
the application of any provision hereof to any person or circumstances is held
invalid, the remainder of this Services Agreement and the application of such
provision to other persons or circumstances shall
3
<PAGE>
not be affected unless the provision held invalid shall substantially impair the
benefits of the remaining portions of this Services Agreement.
6.6. Entire Agreement. This Services Agreement, including the
Schedules hereto, sets forth the entire agreement and understanding between
Franklin and Xircom as to the subject matter hereof, and, except as provided in
Article FIFTH as regards the noncompetition provisions of the Purchase
Agreement, merges and supersedes all prior discussions, agreements and
understandings of every kind and nature among them regarding the providing of
Services by Franklin to Xircom. Neither Franklin nor Xircom shall be bound by
any condition, definition, warranty or representation other than as expressly
provided for in this Services Agreement.
6.7. Captions. The captions appearing in this Services Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope and intent of this Services Agreement or any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Services
Agreement as of the day and year first above written.
XIRCOM, INC. FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED
By: R. Holliday By: Gregory J. Winsky
----------------------------------- --------------------------------
Name: Randell H. Holliday Name: Gregory J. Winsky
Title: Secretary and General Counsel Title: Executive Vice President
4
<PAGE>
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
INFORMATION REPRESENTED BY A DAGGER [+] HEREIN. THE
OMITTED INFORMATION HAS BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
SCHEDULE 1
Services Agreement
1. Software Services: To assist Xircom's employees to assimilate the
architecture of the software described in Schedule 1.2(a) of the Purchase
Agreement or the Franklin Software as described in Exhibit A of the
License Agreement attached as an exhibit to the Purchase Agreement and to
assist Xircom's employees to [+].
Maximum* man hours per week: 40/week for first 3 months of the Term,
20/week thereafter
2. [+].
Maximum* man hours per week: 40/week for first 3 months of the Term,
20/week thereafter
3. Mechanical Design Services: To assist Xircom's employees to[+].
Maximum* man hours per week: 20/week for first 3 months of the Term,
10/week thereafter
* exclusive of travel or transit time associated with Services performed
at Xircom's facility in Thousand Oaks, California
<PAGE>
SCHEDULE 2
Fees
1. Software Services: $200.00/hour
2. [+]: $200.00/hour
3. Mechanical Design Services: $200.00/hour
LETTERHEAD OF FRANKLIN ELECTRONIC PUBLISHERS
NEWS
FOR IMMEDIATE RELEASE
Contact: Gregory J. Winsky
Executive Vice President
609-386-2500
FRANKLIN SELLS ITS REX(R) BUSINESS TO XIRCOM
BURLINGTON, N.J. -- September 27, 1999 - Franklin Electronic Publishers, Inc.
(NYSE:FEP) today announced an agreement by which Xircom ("Nasdaq:XIRC") has
acquired certain assets in connection with the Franklin REX(R) line of connected
organizers for the sum of $13,250,000. Franklin expects to report a gain from
the transaction approximating $8,000,000. Xircom will continue to market the
current line of REX products that download contact, scheduling, and other
information from desktop and laptop PC's.
The companies also plan to provide Franklin reference works and other content
for downloading to Xircom's REX products from the companies' websites,
www.franklin.com and www.xircom.com.
Xircom designs and develops innovative solutions that connect mobile users
worldwide to corporate networks, the Internet, Intranets and other online
resources. Xircom sells and supports its products in over 100 countries through
distributors, resellers, electronic channels and global OEM partnerships.
Barry J. Lipsky, Franklin's President and Chief Executive Officer said: "Xircom
has the unique ability to reinvigorate the REX business because of its expertise
in mobile access solutions and financial resources as well as its corporate
distribution channels. The divestiture of the REX device business coupled with
our concentration on providing content for the REX platform complements
Franklin's strategy of providing downloadable content for any and all hand-held
devices. We are eager to begin work with Xircom to provide Franklin's signature
reference works for Xircom's REX line of products."
Dirk Gates, Chairman, President and Chief Executive Officer of Xircom said:
"Going forward we will continue to expand the REX capabilities through industry
partnerships with the goal of enhancing individual and corporate productivity by
enabling mobility. As one of our industry partners for REX products, Franklin
plans to allow users to download its reference content from the Internet to
Xircom REX products. We at Xircom look forward to Franklin's support of the
Xircom REX platform through Internet publishing."
- more -
<PAGE>
Franklin Electronic Publishers, Inc. is the worldwide market leader in handhold
electronic books, including the popular BOOKMAN(TM) series. The Company is also
the exclusive producer and distributor of ROLODEX(R) Electronics brand personal
information management products. Franklin has sold more than 21,000,000
electronic books and currently publishes more than 200 titles, including
dictionaries and bilingual dictionaries; encyclopedias; Bibles; entertainment
titles; education and tutorial publications; and medical reference works.
Franklin products, available in twelve languages, are sold in 45,000 retail
outlets worldwide and through catalogs. More information about Franklin can be
found at http://www.franklin.com. The Company has sales and distribution
subsidiaries in the United Kingdom, France, Germany, the Benelux countries,
Canada, Australia, and Mexico, and production management offices in Tokyo and
Hong Kong.
ROLODEX(R) is a registered trademark of Berol Corporation, a subsidiary of
Newell Rubbermaid, Inc.
- --------------------------------------------------------------------------------
Except for the historical information contained herein, the matters discussed
throughout this release, including, but not limited to, those that are stated as
Franklin's belief or expectation or preceded by the word "should" are forward
looking statements that involve risks to and uncertainties in Franklin's
business, including, among other things, the timely availability and acceptance
of new electronic reference products, organizers, and computer companion
products, changes in technology, the impact of competitive electronic products,
the management of inventories, Franklin's dependence on third party component
suppliers and manufacturers, including those that provide Franklin-specific
parts, and other risks and uncertainties that may be detailed from time to time
in Franklin's reports filed with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
September 27, 1999
