<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________
Form 8-K
CURRENT REPORT
Pursuant to Section 12 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 6, 1999
PLANAR SYSTEMS, INC.
(exact name of registrant as specified in its charter)
Oregon 0-23018 93-0835396
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1400 N.W. Compton Drive, Beaverton, Oregon 97008
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (503)690-1100
_______________________________________________________________________________
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On July 6, 1999, dpiX, Inc., a Delaware corporation ("dpiX") was merged
(the "Merger") with and into New dpiX LLC, a Delaware limited liability
corporation ("New dpiX") pursuant to the terms and conditions of the Agreement
and Plan of Merger dated as of May 13, 1999 (the "Merger Agreement"), by and
among dpiX, New dpiX and Xerox Corporation, a New York corporation ("Xerox"). In
the Merger, all of the outstanding Preferred Shares of dpiX, all of which were
owned by Xerox, were converted into a 19.9% membership interest in New dpiX, and
all of the outstanding Common Shares of dpiX were converted into a total of $100
in cash at a rate of $.05 per Common Share. The terms and conditions of the
Merger Agreement, including the purchase price, were negotiated on an arms-
length basis by Xerox and dpiX Holding Company LLC, a Delaware limited liability
corporation ("dpiX Holding").
New dpiX was formed solely for the purpose of effecting the Merger. Prior
to the Merger, all of the outstanding membership interests in New dpiX were
owned by dpiX Holding. The owners of membership interests in dpiX Holding are
Planar Systems, Inc. (the "Company"), Varian Medical Systems, Inc. and PHSITH,
LLC, a joint venture of the United States affiliates of Phillips Medical
Systems, Siemens A.G. and Thompson-CSF. The Company owns a 20 percent membership
interest in dpiX Holding for which it paid $5 million. The Company's investment
was funded out of working capital.
Prior to the Merger, dpiX manufactured and sold amorphous silicon thin-film
transistor ("TFT") arrays for use in x-ray digital detectors and liquid crystal
displays, and the Company was a significant customer of dpiX. In connection
with the Merger, the Company entered into an agreement with New dpiX that
ensures the supply of TFT arrays required to satisfy the Company's existing and
currently anticipated customer commitments for products that contain such
arrays. The principal assets acquired in the Merger were the accounts receivable
and inventory of dpiX and the property, plant and equipment used by dpiX in its
manufacturing operations. New dpiX will continue to employ such assets in the
manufacture and sale of TFT arrays.
The Company's investment in dpiX Holding will be accounted for on the
equity method. Based on the operating losses expected to be incurred by New dpiX
during its first year of operations and the method of allocating profits and
losses adopted by dpiX Holding, the Company expects to write-off the majority of
its investment in dpiX Holding during the quarter ending September 24, 1999.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of Business Acquired.
It is impracticable to provide the financial statements required under this
Item as of the date this Current Report on Form 8-K must be filed. The required
financial statements will be filed as an amendment to this Form 8-K as soon as
practicable, but not later than 60 days after the date this Current Report on
Form 8-K must be filed.
<PAGE>
(b) Pro Forma Financial Information
It is impracticable to provide the pro forma financial information
required under this Item as of the date this Current Report on Form 8-K must be
filed. The required pro forma financial information will be filed as an
amendment to this Form 8-K as soon as practicable, but not later than 60 days
after the date this Current Report on Form 8-K must be filed.
(c) Exhibits
Number Description
------ -----------
2.1 Agreement and Plan of Merger dated as of May 13, 1999 by and
among dpiX, Inc., Xerox Corporation and New dpiX LLC.
<PAGE>
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 thereunto duly authorized on July 20, 1999.
PLANAR SYSTEMS, INC.
(Registrant)
/s/ Jack Raiton
---------------------------
Jack Raiton
Vice President and
Chief Financial Officer
<PAGE>
Exhibit 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DPIX INCORPORATED,
XEROX CORPORATION
AND
NEW DPIX LLC
Dated as of May 13, 1999
================================================================================
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TABLE OF CONTENTS
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SECTION 1
DEFINITIONS AND INTERPRETATIONS....................................................................... 1
1.1 Defined Terms..................................................................................... 1
1.2 Principles of Construction........................................................................ 7
SECTION 2
THE MERGER AND RELATED MATTERS........................................................................ 8
2.1 The Merger........................................................................................ 8
2.2 Conversion of Shares.............................................................................. 8
2.3 Dissenting Shares................................................................................. 9
2.4 Surrender of Certificates......................................................................... 9
2.5 No Further Rights of Transfers.................................................................... 11
2.6 Employee Stockholders and Stock Plan.............................................................. 11
2.7 Certificate of Formation of the Surviving Company................................................. 12
2.8 Limited Liability Company Agreement of the Surviving Company...................................... 12
2.9 Managers and Officers of the Surviving Company.................................................... 13
2.10 Contribution of Capital.......................................................................... 13
2.11 Execution and Delivery of Related Documents...................................................... 13
2.12 Closing.......................................................................................... 13
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF XEROX ............................................................................................. 13
3.1 Capitalization.................................................................................... 13
3.2 Books and Records................................................................................. 14
3.3 Encumbrances...................................................................................... 14
3.4 Binding Effect.................................................................................... 14
3.5 Subsidiaries...................................................................................... 14
3.6 Material Contracts................................................................................ 14
3.7 Restrictive Documents............................................................................. 15
3.8 Litigation........................................................................................ 15
3.9 Year 2000 Problem................................................................................. 15
3.10 Export Licenses and Security Clearances.......................................................... 16
3.11 Broker's or Finder's Fees........................................................................ 16
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3.12 Financial Statements............................................................................. 16
3.13 Taxes............................................................................................ 16
3.14 Intellectual Properties.......................................................................... 17
SECTION 4
REPRESENTATIONS AND WARRANTIES OF NEW DPIX............................................................ 18
4.1 Binding Effect.................................................................................... 18
4.2 Restrictive Documents............................................................................. 18
4.3 Broker's or Finder's Fees......................................................................... 18
SECTION 5
TRANSACTIONS PRIOR TO THE EFFECTIVE TIME.............................................................. 18
5.1 Conduct of the Business of dpiX Prior to Effective Time........................................... 18
5.2 Review of dpiX; Confidentiality................................................................... 19
5.3 Exclusive Dealing................................................................................. 20
5.4 Reasonable Efforts................................................................................ 21
5.5 Inventory and Fixed Asset Write-Down.............................................................. 21
SECTION 6
CONDITIONS PRECEDENT TO MERGER........................................................................ 21
6.1 Conditions Precedent to Obligations of Xerox, dpiX and New dpiX................................... 21
6.2 Conditions Precedent to Obligations of New dpiX................................................... 22
6.3 Conditions Precedent to Obligations of dpiX and Xerox............................................. 24
SECTION 7
COVENANTS............................................................................................. 25
7.1 Takeover Statutes................................................................................. 25
7.2 Government Matters................................................................................ 25
7.3 Xerox and dpiX Contracts.......................................................................... 25
7.4 Employee Retention and Severance.................................................................. 26
7.5 Warehouse Space................................................................................... 26
SECTION 8
TERMINATION........................................................................................... 26
8.1 Events of Termination............................................................................. 26
8.2 Effect of Termination............................................................................. 27
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SECTION 9
SURVIVAL OF REPRESENTATIONS........................................................................... 27
9.1 Survival of Representations....................................................................... 27
SECTION 10
INDEMNITY............................................................................................. 28
10.1 Xerox Indemnities ............................................................................... 28
10.2 New dpiX Indemnity............................................................................... 28
SECTION 11
MISCELLANEOUS......................................................................................... 29
11.1 Knowledge........................................................................................ 29
11.2 Expenses......................................................................................... 29
11.3 Governing Law.................................................................................... 29
11.4 Jurisdiction; Agents for Service of Process...................................................... 29
11.5 Confidentiality and Publicity.................................................................... 29
11.6 Notices.......................................................................................... 30
11.7 Parties in Interest.............................................................................. 31
11.8 Entire Agreement................................................................................. 31
11.9 Amendments....................................................................................... 31
11.10 Extension; Waiver............................................................................... 31
11.11 Severability.................................................................................... 31
11.12 Third Party Beneficiaries....................................................................... 32
11.13 Payments........................................................................................ 32
11.14 Counterparts.................................................................................... 32
EXHIBITS
Exhibit A Equipment Lease Assignment Agreement
Exhibit B Sublease
Exhibit C Agreement of Merger
Exhibit D License Agreement
Exhibit E Fair Pricing Agreement
Exhibit F Limited Liability Company Agreement for New dpiX LLC
Exhibit G Retention Plan
Exhibit H 1999 (Signing) Balance Sheet
Exhibit I Amended and Restated Technology Agreement
Exhibit J Operating Agreement
Exhibit K Services Agreement
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Exhibit L Certificate of Formation of New dpiX LLC
Exhibit M dpiX Inc. By-Laws
Exhibit N Form of Opinion of Counsel for Xerox
Exhibit O Form of Opinion of Counsel for New dpiX LLC
Exhibit P Employee Retention and Severance
</TABLE>
(4)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 13, 1999 (this "Agreement"),
---------
by and among dpiX, Inc., a Delaware corporation ("dpiX"), Xerox Corporation, a
----
New York corporation ("Xerox"), and New dpiX LLC, a Delaware limited liability
-----
company ("New dpiX"), and, collectively with Xerox and dpiX, the "Parties" and
-------- -------
each a "Party").
-----
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of dpiX and the Board of Managers of
New dpiX have each determined that it is in the best interests of their
respective companies and the shareholders and members of their respective
companies that dpiX and New dpiX combine into a single company through the
statutory merger of dpiX with and into New dpiX (the "Merger") and, in
------
furtherance thereof, have approved the Merger;
WHEREAS, pursuant to the Merger, among other things, the outstanding
preferred shares of dpiX, $0.001 par value, each of which is held by Xerox
(collectively, the "Preferred Shares") shall be converted into a 19.9%
----------------
membership interest in New dpiX and the outstanding common shares of dpiX,
$0.001 par value (each a "Common Share") shall be converted into cash at a rate
------------
of $0.05 per Common Share;
WHEREAS, the Parties intend to cause the Merger for all federal, state
and local income tax purposes to be treated as a liquidation of dpiX into Xerox
and a contribution of assets by Xerox to, and an assumption of liabilities by,
New dpiX;
WHEREAS, the Parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger; and
WHEREAS, in order to effectuate and facilitate the Merger, each Party
has independently determined that its in its best interest to enter into this
Agreement and to consummate the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
SECTION 1
DEFINITIONS AND INTERPRETATIONS
<PAGE>
1.1 Defined Terms. In this Agreement, the following terms shall have
-------------
the following meanings. The meaning of each defined term shall be equally
applicable to both the singular and plural forms of the terms defined.
"Agreement" shall have the meaning provided in the introductory
---------
paragraph hereto.
"Affiliate" shall mean with respect to any specified Entity any Person
---------
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Entity. For the purposes of this definition, "control"
-------
when used with respect to any specified Entity means the power to direct the
management and policies of such Entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
- ------------ ----------
"ATEL Assignment" shall mean the agreement transferring to New dpiX
---------------
the benefits and obligations of Xerox associated with the ATEL Equipment in the
form attached hereto as Exhibit A.
---------
"ATEL Equipment" shall mean all equipment used by dpiX as of April 1,
--------------
1999 that is leased by Xerox from ATEL Financial Corporation.
"Authorized Representative" with respect to Xerox, shall mean Brian
-------------------------
Stern and, with respect to New dpiX shall mean the New dpiX manager who was not
appointed by Xerox.
"Building 34 Sublease" shall mean the sublease by Xerox to New dpiX of
--------------------
the facilities located at 3406 Hillview Avenue, Palo Alto, California in the
form attached hereto as Exhibit B.
---------
"Business Day" shall mean any day, excluding Saturday, Sunday or any
------------
day which shall be a legal holiday in the State of California.
"Business Plan: shall mean the business plan attached as Exhibit B to
-------------
the New dpiX LLC Agreement.
"Certificate of Merger" shall mean the Merger Agreement in the form
---------------------
attached hereto as Exhibit C.
---------
"Closing" shall have the meaning provided in Section 2.11.
-------
"Closing Balance Sheet" shall mean the dpiX balance sheet as of the
---------------------
date three Business Days prior to the Closing Date and a profit and loss
statement for the period of March 1, 1999 to the date three Business Days prior
to the Closing Date.
"Closing Date" shall have the meaning provided in Section 2.11.
------------
-2-
<PAGE>
"Common Certificate" shall mean a stock certificate evidencing
------------------
ownership of the Common Shares.
"Common Share" shall have the meaning provided in the second recital
------------
hereto.
"Consortium Technology Agreement" shall mean the Technology Agreements
-------------------------------
between Xerox and each of Varian Medical Systems, Inc., Planar Systems, Inc.,
and Trixell S.A. in the form attached hereto as Exhibit D.
---------
"Delaware Code" shall mean the Delaware General Corporation Law.
-------------
"Dissenting Stockholders" shall have the meaning provided in Section
-----------------------
2.3.
"dpiX" shall have the meaning provided in the introductory paragraph
----
hereto.
"dpiX Holding" shall mean dpiX Holding Company LLC, a Delaware limited
------------
liability company.
"dpiX Stock Rights" shall have the meaning provided in Section 2.6(a).
-----------------
"Effective Time" shall have the meaning provided in Section 2.1(b).
--------------
"Entity" shall mean any Person that is not a natural Person.
------
"Environmental Claims" shall mean any and all administrative,
--------------------
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued under any such
Environmental Law, (for purposes of this definition, "Claims") including,
without limitation (i) any and all Claims by any governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims, by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Law" shall mean any federal, state or local statute,
-----------------
law, rule, regulation, ordinance, code, written or binding guideline, policy or
rule of common law in effect and in each case as amended as of the date hereof
and the Closing Date, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or Hazardous
Materials, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S)
9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
-- ----
(S) 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
-- ----
(S) 1251 et seq.; the Toxic Substances Control Act,
-- ----
-3-
<PAGE>
15 U.S.C. (S) 2601 et seq.; the Clean Air Act 42 U.S.C. (S) 7401 et seq.; the
-- ---- -- ----
Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq.; the Oil Pollution Act of
-- ----
1990, 33 U.S.C. (S)2701 et seq.; the Occupational Safety and Health Act, 29
-- ----
U.S.C. (S) 651 et seq.; the Emergency Planning and the Community Right-to-Know
-- ----
Act of 1986, 42 U.S.C. (S)11001 et seq.; the Hazardous Material Transportation
-- ----
Act, 49 U.S.C. (S) 1801 et seq.; and their state and local counterparts and
-- ----
equivalents.
"Excepted Shares" shall mean (i) any Common Shares which are held by
---------------
dpiX or which are held, directly or indirectly, by Xerox or any direct or
indirect Subsidiary of Xerox and (ii) Common Shares held by Dissenting
Stockholders.
"Fair Pricing Agreement" shall mean the Fair Pricing Agreement among
----------------------
New dpiX, Trixell S.A., Planar Systems, Inc., Varian Medical Systems, Inc.,
Xerox and others in the form attached hereto as Exhibit E.
---------
"Governmental Entities" shall mean all legislative, executive,
---------------------
judicial, Federal, state and local governmental or regulatory agencies and
authorities in the United States or any other jurisdiction.
"Hazardous Materials" shall mean (i) any petroleum or petroleum
-------------------
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, dielectric fluid containing
polychlorinated biphenyls and radon gas; (ii) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," "pollutants," "toxic
pollutants," or words of similar import, under any applicable Environmental Law;
and (iii) any other chemical, material or substance (in any form, including
without limitation, solid or liquid forms or in the form of radiation, gas or
vapor), exposure to which is prohibited, limited or regulated by any
Governmental Entity.
"Indemnified Person" shall have the meaning provided in Section 10.1.
------------------
"Intellectual Property" shall have the meaning provided in the
---------------------
Technology Agreement.
"IP Filings" shall mean all of the documents, filings and
----------
applications necessary or desirable to perfect the interests in Intellectual
Property transferred, assigned or licensed by Xerox to dpiX or New dpiX under
the Technology Agreement.
"LLC Act" shall mean the Delaware Limited Liability Company Act.
-------
-4-
<PAGE>
"Material Adverse Effect" shall mean, with respect to any Person, a
-----------------------
material adverse effect on (i) the validity or enforceability of this Agreement
and the Related Documents to which such Person is a party, (ii) the ability of
such Person to perform its obligations under this Agreement and the Related
Documents to which such Person is a party, (iii) the business, assets, condition
or results of operations of such Person and its Subsidiaries, taken as a whole
(taking into account, with regard to dpiX, the manner of conducting its business
as required and permitted under Section 5.1).
"Merger" shall have the meaning provided in the first recital hereto.
------
"Merger Consideration" shall mean for Preferred Shares, in the
--------------------
aggregate, a 19.9% membership interest in New dpiX in accordance with the terms
of the New dpiX LLC Agreement and Section 2.2(a) hereof and for Common Shares,
other than Excepted Shares, the cash amount set forth in Section 2.2(b).
"New dpiX" shall have the meaning provided in the introductory
--------
paragraph hereto.
"New dpiX LLC Agreement" shall mean the limited liability company
----------------------
agreement for New dpiX in the form attached hereto as Exhibit F.
---------
"1996 SOP" shall have the meaning provided in Section 2.6(b).
--------
"Operations Agreement" shall mean the Agreement between Xerox and dpiX
--------------------
concerning the building and facilities shared by Xerox and by dpiX in the form
attached hereto as Exhibit J.
---------
"Person" shall mean and include any individual, partnership, joint
------
venture, association, joint stock company, corporation, trust, limited liability
company, unincorporated organization, a group and a government or other
department, agency or political subdivision thereof.
"Preferred Certificate" shall mean a stock certificate evidencing
---------------------
ownership of Preferred Shares.
"Preferred Shares" shall have the meaning provided in the second
----------------
recital.
"Related Documents" shall mean the Certificate of Merger, the New dpiX
-----------------
LLC Agreement, the Xerox joinder thereto in the form of Exhibit C of the New
dpiX LLC Agreement, the ATEL Assignment, the Building 34 Sublease, the
Consortium Technology Agreement, the Fair Pricing Agreement, the IP Filings, the
Technology Agreement, the Operations Agreement and the Xerox Services Agreement.
-5-
<PAGE>
"Retention Plan" shall mean the employee retention plan attached
--------------
hereto as Exhibit G.
---------
"Returns" shall have the meaning provided in Section 3.14(a).
-------
"Schedule Certificate" shall mean the certificate from Brian Stern of
--------------------
Xerox delivered on the date hereof, attaching the Schedules delivered by Xerox
under this Agreement and certifying that all Schedules to be delivered by Xerox
under this Agreement have been so delivered.
"Signing Balance Sheet" shall mean the balance sheet of dpiX as of
---------------------
April 30, 1999 with a profit and loss statement for the period of March 1, 1999
to April 30, 1999 attached hereto as Exhibit H;
---------
"Signing Balance Sheet Date" shall mean April 30, 1999.
--------------------------
"Stock Certificate" shall mean a Common Certificate or a Preferred
-----------------
Certificate.
"Stock Option Agreements" shall mean the Stock Option Agreements (Non-
-----------------------
Statutory Stock Option) between dpiX and current or former employees of dpiX
made in accordance with the dpiX, Inc. 1996 Stock Option Plan.
"Subsidiary" shall mean, with respect to any Person, (i) any
----------
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any Entity (other than a
corporation) in which such Person and/or one more Subsidiaries of such Person
has more than a 50% equity interest at the time or otherwise controls the
management and affairs of such Entity (including the power to veto any material
act or decision).
"Surviving Company" shall have the meaning provided in Section 2.1(a).
-----------------
"Takeover Proposal" shall mean any proposal, other than a proposal by
-----------------
New dpiX or any of its Affiliates, for a merger, share exchange or other
business combination involving dpiX or any proposal or offer to acquire in any
manner a substantial equity interest in dpiX or a substantial portion of the
assets of dpiX.
"Takeover Statute" shall mean any "fair price," "moratorium," "control
----------------
share acquisition," or other similar anti-takeover statute or regulation enacted
under state or federal laws in the United States.
-6-
<PAGE>
"Taxes" shall mean all taxes, assessments, charges, duties, fees,
-----
levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other similar governmental
charges (whether payable directly or by withholding and whether or not requiring
the filing of a Return), all estimated taxes, deficiency assessments, additions
to tax, penalties and interest and shall include any liability for such amounts
as a result either of being a member of a combined, consolidated, unitary or
affiliated group or of being a party to a contractual obligation to indemnify
any person or other Entity.
"Technology Agreement" shall mean the agreement between Xerox and dpiX
--------------------
concerning Intellectual Property in the form attached hereto as Exhibit I.
---------
"US GAAP" shall mean United States generally accepted accounting
-------
principles applied on a consistent basis.
"Xerox" shall have the meaning provided in the introductory paragraph
-----
hereto.
"Xerox Services Agreement" shall mean the agreement between Xerox and
------------------------
New dpiX whereby Xerox will provide New dpiX employee benefit and payroll
services in the format attached hereto as Exhibit K.
---------
"Year 2000 Issues" shall have the meaning provided in Section 3.9.
----------------
1.2 Principles of Construction.
--------------------------
(a) All references to Sections, subsections, Schedules and Exhibits
are to Sections, subsections, Schedules and Exhibits in or to this Agreement
unless otherwise specified. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
term "including" is not limiting and means "including without limitation."
(b) All accounting terms not specifically defined herein shall be
construed in accordance with US GAAP.
(c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding"; and the word "through" means "to and
including."
(d) The Table of Contents hereto and the Section headings herein are
for convenience only and shall not affect the construction hereof.
-7-
<PAGE>
(e) This Agreement is the result of negotiations among and has been
reviewed by each Party's counsel. Accordingly, this Agreement shall not be
construed against any Party merely because of such Party's involvement in its
preparation.
(f) The Schedules referred to herein are incorporated herein by
reference.
SECTION 2
THE MERGER AND RELATED MATTERS
2.1 The Merger.
----------
(a) At the Effective Time, and subject to and upon the terms and
conditions of this Agreement, the Certificate of Merger and the applicable
provisions of the Delaware Code, dpiX shall be merged with and into New dpiX and
the separate corporate existence of dpiX shall cease, and New dpiX shall
continue as the surviving limited liability company under the laws of the State
of Delaware (the "Surviving Company"). The Surviving Company shall succeed to
-----------------
all rights and liabilities of dpiX except as otherwise expressly set forth in
this Agreement or the Related Documents.
(b) The Merger shall become effective when (i) each of the conditions
set forth in Section 6 has been satisfied or waived by the appropriate Party or
Parties and (ii) the Certificate of Merger, executed in accordance with the
applicable provisions of the Delaware Code, is filed with and approved by the
Secretary of State of Delaware (the time of such filing, the "Effective Time").
--------------
(c) From and after the Effective Time, the Merger shall have the
effects provided for in Section 264 of the Delaware Code and Section 18-209 of
the LLC Act.
(d) The Parties agree that the transaction contemplated herein shall,
(i) for all federal, state and local income tax purposes, be treated as a
liquidation of dpiX by its shareholders at the Effective Time and a contribution
of assets by Xerox to, and an assumption of liabilities by, New dpiX at the
Effective Time and (ii) for all state and local sales, use and transfer tax
purposes, be treated as a statutory merger under the Delaware Code.
2.2 Conversion of Shares. At the Effective Time, by virtue of the
--------------------
Merger and without any action on the part of dpiX, New dpiX, Xerox or any of
their respective Stockholders or members:
(a) The Preferred Shares then issued and outstanding ("Preferred
---------
Shares"), shall, in the aggregate, be converted into a 19.9% membership interest
- ------
in New dpiX in accordance with the terms of the New dpiX LLC Agreement. All
such Preferred Shares, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and
-8-
<PAGE>
each holder of a Preferred Certificate representing any such Preferred Shares
shall cease to have any rights with respect thereto, other than its right to
receive a pro rata share of such 19.9% membership interest in New dpiX.
(b) Each Common Share then issued and outstanding, other than
Excepted Shares, shall be converted into the right to receive the amount of cash
set forth in the second recital of this Agreement. All such Common Shares, when
so converted, shall no longer be outstanding and shall automatically be canceled
and retired and each holder of a Common Certificate representing any such Common
Shares shall cease to have any rights with respect thereto, other than its right
to receive such cash consideration.
(c) Excepted Shares shall be canceled and retired without any
conversion thereof and shall not receive any cash payment. All such Excepted
Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a Common Certificate
representing any such Excepted Shares shall, except as otherwise provided in
Section 2.3, cease to have any rights with respect thereto.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to
-----------------
the contrary, but only to the extent required by Delaware law, Common Shares
issued and outstanding immediately prior to the Effective Time and held by
holders of Common Shares that were not voted in favor of the Merger and whose
holders comply with the provisions of Section 262 of the Delaware Code
concerning the appraisal right of holders of Common Shares to dissent from the
Merger and require appraisal of their Common Shares ("Dissenting Stockholders"),
-----------------------
shall not be converted into or represent the right to receive the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the law of the
State of Delaware. From and after the Effective Time, Dissenting Stockholders
shall not have and shall not be entitled to exercise any of the voting rights or
other rights of a member of the Surviving Company. If any Dissenting
Stockholder shall fail to assert or perfect, or shall waive, rescind, withdraw
or otherwise lose, such holder's right to dissent and obtain payment under
Section 262 of the Delaware Code, then such Common Shares shall automatically be
converted into and represent only the right to receive (upon surrender of a
Common Certificate previously representing such Common Shares) cash in
accordance with Section 2.2(b). dpiX shall give New dpiX (i) prompt notice of
any written demands for appraisal, withdrawals of demands for appraisal and any
other related instruments received by dpiX and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. dpiX
will not voluntarily make any payment with respect to any demands for appraisal
and will not, except with the prior written consent of New dpiX, settle or offer
to settle any demand for appraisal.
2.4 Surrender of Certificates.
-------------------------
-9-
<PAGE>
(a) Exchange of Company Common Certificates. At or prior to the
---------------------------------------
Effective Time, or as soon as practicable thereafter, each holder of Common
Shares, other than Excepted Shares, will be entitled to receive, upon surrender
of one or more Common Certificates to New dpiX, the Merger Consideration
specified in Section 2.2(b).
(b) Exchange of Preferred Certificates. At or prior to the Effective
----------------------------------
Time, or as soon as practicable thereafter, the holder of the Preferred Shares
will be entitled to receive, upon surrender of all of the Preferred Certificates
to New dpiX, the New dpiX membership interest specified in Section 2.2(a).
(c) Exchange Procedures for Common Certificates. Promptly after the
-------------------------------------------
Effective Time, New dpiX shall mail to each record holder of a Common
Certificate: (i) a letter of transmittal in customary form (which shall specify
that delivery shall be effected, and risk of loss and title to the Common
Certificates shall pass, only upon receipt of the Common Certificates by New
dpiX and shall otherwise be in such form and have such other provisions as Xerox
and New dpiX shall reasonably specify) and (ii) instructions for use in
effecting the surrender of the Common Certificates in exchange for the Merger
Consideration specified in Section 2.2(b). Upon surrender to New dpiX of a
Common Certificate, together with such letter of transmittal properly completed
and duly executed, together with any other required documents, the holder of
such Common Certificate shall be entitled to receive in exchange therefor the
Merger Consideration payable in respect of the Common Shares formerly
represented by such Common Certificate and such Common Certificate shall
forthwith be canceled. Until so surrendered, each Common Certificate shall be
deemed, for all corporate purposes, to evidence only the right to receive upon
such surrender the Merger Consideration deliverable in respect thereof to which
such Person is entitled pursuant to Section 2.2(b).
(d) Exchange Procedure for Preferred Certificates. On the Closing
---------------------------------------------
Date, Xerox shall deliver or cause to be delivered to New dpiX all of the
Preferred Certificates. No distributions with respect to New dpiX will be paid
nor other membership rights in New dpiX be afforded to the holder of any
unsurrendered Preferred Certificate until the holder of record of such Preferred
Certificate surrenders such Preferred Certificate. Until so surrendered, each
Preferred Certificate shall be deemed, for all corporate purposes, to evidence
only the right to receive upon such surrender the Merger Consideration
deliverable in respect thereof to which such Person is entitled pursuant to
Section 2.2(a).
(e) Registration Name on Certificates. If the Merger Consideration
---------------------------------
(or any portion thereof) is to be delivered to a Person other than the Person in
whose name the Stock Certificate surrendered in exchange therefor is registered,
it shall be a condition to the payment of the Merger Consideration that the
Stock Certificate so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the Person requesting such transfer pay
any transfer or other
-10-
<PAGE>
taxes payable by reason of the foregoing or establish to the satisfaction of New
dpiX that such taxes have been paid or are not required to be paid.
(f) Unavailable Certificates. In the event any Stock Certificate
------------------------
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such certificate to be lost, stolen or
destroyed, the Surviving Company will issue in exchange for such lost, stolen or
destroyed certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Section 2, provided that the Surviving
Company may require the Person to whom the Merger Consideration is paid, as a
condition precedent to the payment thereof, to give the Surviving Company a bond
in such sum as is customary or otherwise indemnify the Surviving Company in a
manner satisfactory to it against any claim that may be made against the
Surviving Company with respect to the Stock Certificate claimed to have been
lost, stolen or destroyed.
(g) Merger Not Consummated. In the event the Merger is not
----------------------
consummated for any reason, New dpiX shall return promptly to each Person who
deposited a Stock Certificate and any other agreements or instruments tendered
to New dpiX by such Person, such Stock Certificate and other agreements or
instruments.
(h) Escheat Laws. Notwithstanding any provisions of this Section 2
------------
to the contrary, neither dpiX nor the Surviving Company shall be liable to any
holder of the Stock Certificates formerly representing Common Shares or
Preferred Shares for any property properly delivered or amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
2.5 No Further Rights of Transfers. At and after the Effective Time,
------------------------------
each holder of a Stock Certificate shall cease to have any rights as a
stockholder of dpiX, except for, in the case of a holder of a Stock Certificate
(other than Excepted Shares), the right to surrender his or her Stock
Certificate in exchange for the Merger Consideration therefor or, in the case of
a Dissenting Stockholder, to perfect his or her right to receive payment for his
or her shares pursuant to Delaware law if such holder has validly perfected and
not withdrawn his or her right to receive payment for his or her shares. Stock
Certificates presented to the Surviving Company after the Effective Time shall
be canceled and exchanged as provided in this Section 2. At the close of
business on the day of the Effective Time the stock ledger of dpiX with respect
to the Common Shares and Preferred Shares shall be closed.
2.6 Employee Stockholders and Stock Plan.
------------------------------------
(a) Xerox shall cause the Board of Directors of dpiX to give all dpiX
stockholders adequate notice of the proposed Merger and appraisal rights in
accordance with section 262 of the Delaware Code.
-11-
<PAGE>
(b) Prior to the Effective Time, Xerox shall cause the Board of
Directors of dpiX to adopt appropriate resolutions and take all other actions
necessary to provide that (i) the Merger shall be determined to be a "Liquidity
Event" pursuant to Section 8.1(c) of the dpiX 1996 Stock Option Plan ("1996
----
SOP") and Section 7(c) of the related stock option agreements ("Option
- --- ------
Agreements") (ii) the Exercise Price (as defined in the Option Agreements) shall
- ----------
be reduced to $0.01 under all Option Agreements and (iii) the stock rights
granted under all of the Option Agreements shall have vested at or prior to the
Effective Time pursuant to the last sentence of Section 8.1(c) of the 1996 SOP.
(c) Xerox shall cause the Board of Directors of dpiX to take all
actions necessary to assure that all Persons holding outstanding unexercised
options heretofore granted under the 1996 SOP shall have been given (i) notice
of the Merger and of the fact that the Merger will constitute a "Liquidity
Event" (as defined in Section 8.1(c) of the 1996 SOP) in accordance with Section
8.1(c) of the 1996 SOP at least 30 days prior to the Closing Date, (ii) 30 days
written notice that the options granted under the Stock Option Agreements will
be terminated in accordance with Section 7(d) of the Option Agreements, (iii)
all other notices required under the 1996 SOP and Option Agreements and (iv)
notice that the 1996 SOP and Option Agreements will be terminated as of the
Effective Time.
(d) Xerox, dpiX and New dpiX shall consult with each other concerning
the treatment of dpiX Stock Rights and dpiX shall comply with lawful actions
requested by New dpiX as necessary to terminate as of the Effective Time the
right of each holder of a dpiX Stock Right or any participant in any Stock Plans
to acquire capital stock of dpiX or the Surviving Company. Xerox shall cause
dpiX to take all actions so that, as of the Effective Time, neither dpiX nor the
Surviving Company will be bound by any shares, options, warrants, rights or
agreements which would entitle (i) Malcolm Thompson, Jean-Pierre Georges or
Thomas Mager to any Merger Consideration or to own (by virtue of a right granted
by dpiX) any capital stock of dpiX or of the Surviving Company or receive any
payment in respect thereof or (ii) any Person to own (by virtue of a right
granted by dpiX other than in accordance with the 1996 SOP) any capital stock of
dpiX or of the Surviving Company or to receive any payment in respect thereof.
2.7 Certificate of Formation of the Surviving Company. The
-------------------------------------------------
certificate of formation of New dpiX, as in effect immediately prior to the
Effective Time and attached hereto as Exhibit L, shall be the certificate of
---------
formation of the Surviving Company and thereafter shall continue to be its
certificate of formation (the "Certificate of Formation") until amended as
------------------------
provided therein and in the New dpiX LLC Agreement and under the LLC Act.
2.8 Limited Liability Company Agreement of the Surviving Company.
------------------------------------------------------------
The New dpiX LLC Agreement, as in effect immediately prior to the Effective
Time, shall be the limited liability company agreement of the Surviving Company
and thereafter shall continue to be its limited liability company agreement
until amended as provided therein and under the Certificate of Formation and the
LLC Act.
-12-
<PAGE>
2.9 Managers and Officers of the Surviving Company. At the Effective
----------------------------------------------
Time, the manager of New dpiX immediately prior to the Effective Time and a
manager to be appointed by Xerox shall comprise the board of managers of the
Surviving Company, each of such managers to hold office, subject to the
applicable provisions of the Certificate of Formation and the New dpiX LLC
Agreement, until their respective successors shall be duly elected or appointed
and qualified. At the Effective Time, the officers of dpiX immediately prior to
the Effective Time shall, subject to the applicable provisions of the
Certificate of Formation and the New dpiX LLC Agreement, be the officers of the
Surviving Company until their respective successors shall be duly elected or
appointed and qualified.
2.10 Contribution of Capital. Immediately prior to the Effective
-----------------------
Time, Xerox will make a contribution to the capital of dpiX in the amount of the
then outstanding intercompany debt owed by dpiX to Xerox.
2.11 Execution and Delivery of Related Documents. At the Effective
-------------------------------------------
Time, each Party, upon satisfaction of all conditions precedent for the benefit
of such Party, shall execute each of the Related Documents to which it is to be
a party and deliver to each other party thereto each such Related Document.
2.12 Closing. The closing of the transactions contemplated hereby
-------
(the "Closing") shall take place at the offices of White & Case LLP, 1155 Avenue
-------
of the Americas, New York, New York, within seven (7) days after the last of the
conditions set forth in Section 6 hereof is fulfilled or waived (subject to
applicable law) or at such other time and place and on such other date as the
Parties shall mutually agree (the "Closing Date").
------------
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF XEROX
Xerox represents, warrants and agrees as of the date hereof that the
following statements set forth in this Section 3 and in the Schedules attached
hereto (which Schedules are hereby incorporated herein by reference) are true,
accurate and complete and are not misleading:
3.1 Capitalization. The authorized capital stock of dpiX is (i)
--------------
65,000,000 Common Shares, $0.001 par value, of which 2,000 shares are issued and
outstanding as of the date of this Agreement and (ii) 45,000,000 Preferred
Shares, $0.001 par value, of which 16,000,000 Series A and 21,249,630 Series B
shares are issued and outstanding as of the date of this Agreement. Xerox is
the holder of all Preferred Shares and 1,000 of the Common Shares. Set forth in
Schedule 3.1 is a complete list of all other holders of record of Common Shares
as of the date hereof with the number of Common Shares held by each. All
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth on Schedule 3.1, there are no, and
------------
as of the Effective Time there will be no, outstanding options,
-13-
<PAGE>
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase, issuance
or sale of any Common Shares, Preferred Shares, any other securities of dpiX, or
any other equity interest in dpiX or its business. No stock plan, stock
purchase, stock option or other agreement or understanding between dpiX and any
holder of any equity securities or rights to purchase equity securities, other
than the 1996 SOP, provides for acceleration or other changes in the vesting
provisions or other terms of such agreement or understanding upon any merger,
sale of stock or assets, change in control or other similar transaction by dpiX.
Except as set forth in dpiX's certificate of incorporation, dpiX has no
obligation (contingent or other) to pay any dividend or to make any other
distribution in respect of any of its equity securities.
3.2 Books and Records. The copy of the by-laws of dpiX attached
-----------------
hereto as Exhibit M is true and complete, and such bylaws are in full force and
---------
effect.
3.3 Encumbrances. Except as set forth on Schedule 3.6, there is no
------------
encumbrance, lien or charge on the property and assets of dpiX, except for (i)
liens reflected in the Signing Balance Sheet, (ii) liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or limitations
on the use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property by
dpiX in the operation of its business, and (iii) liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent.
3.4 Binding Effect. This Agreement has been, and each of the Related
--------------
Documents to which Xerox and/or dpiX is a party when delivered by Xerox will be,
duly executed and delivered by Xerox and dpiX and when so executed and delivered
will constitute the valid and binding agreement of Xerox and dpiX enforceable
against Xerox and dpiX, respectively, in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or similar laws and
equitable principles relating to or affecting the rights of creditors generally
from time to time in effect.
3.5 Subsidiaries. dpiX does not have and has never had any
------------
Subsidiary or Subsidiaries and does not presently own or control, directly or
indirectly, any equity interest in any Entity. dpiX is not a participant in any
joint venture, partnership or similar arrangement.
3.6 Material Contracts. Except as set forth on Schedule 3.6 or as
------------------ ------------
may be included in any contract or agreement with New dpiX, Trixell S.A., Planar
Systems or Varian Medical Systems, Inc., (such contracts or agreements with New
dpiX, Trixell S.A., Planar Systems, Inc. or Varian Medical Systems, Inc., the
"Consortium Contracts") dpiX has not knowingly contracted for (a) any material
- ---------------------
liabilities, commitments or undertakings, (b) any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind, (c) any
agreement, contract or commitment relating to the employment or retention of
employment of any Person by dpiX or any bonus, deferred compensation, pension,
profit sharing, stock option,
-14-
<PAGE>
employee stock purchase, retirement or other employee benefit plan, (d) any
agreement, indenture or other instrument which contains restrictions with
respect to payment of dividends or any other distribution in respect of its
capital stock, (e) any warrant or other agreement to sell shares of its capital
stock, (f) any agreement, contract or commitment relating to capital
expenditures in excess of $50,000 per individual item or $150,000 in the
aggregate, (g) any loan or advance to, or investment in, any Person or any
agreement, contract or commitment relating to the making of any such loan,
advance or investment, (h) any guarantee or other contingent liability in
respect of any indebtedness or obligation of any Person other than dpiX (other
than the endorsement of negotiable instruments for collection in the ordinary
course of business), (i) any management service, consulting or any other similar
type contract, (j) any agreement, contract or commitment limiting the ability of
dpiX to engage in any line of business or to compete with any Person or (k) any
agreement, contract or commitment entered into in the ordinary course of
business which involves $50,000 or more and is not cancelable without penalty
within 30 days of the Closing Date. Each contract or agreement set forth on
Schedule 3.6 (or required to be set forth on Schedule 3.6) other than the
- ------------ ------------
Consortium Contracts is in full force and effect. dpiX is not in breach of or
default under any contract or agreement set forth on Schedule 3.6 (or required
------------
to be set forth on Schedule 3.6) other than the Consortium Contracts in any
------------
material respect, it has not received any written notice of breach or basis for
breach or intention to terminate from any other party to such contracts or
agreements other than the Consortium Contracts, and, to the best knowledge,
information and belief of Xerox and dpiX, the other parties thereto are not in
breach of or default under the same. Except as set forth in Schedule 3.6, there
------------
are no contractual arrangements between Xerox and its Affiliates, on the one
hand, and dpiX, on the other hand.
3.7 Restrictive Documents. Except as set forth in Schedule 3.7, dpiX
--------------------- ------------
is not (a) subject to any law, order, judgment or decree, or any other
governmental restriction of any kind or character or (b) a party to a contract,
which would be violated or breached as a result of the execution and delivery of
this Agreement and the Related Documents to which dpiX is a party, the
consummation of the Merger or dpiX's performance of its obligations hereunder or
under the Related Documents.
3.8 Litigation. There is no action, suit, proceeding at law or in
----------
equity, arbitration or administrative or other proceeding by or before any
Governmental Entity pending against or impacting dpiX, or any of its properties
or rights, and neither Xerox nor dpiX have received any written notice that any
of the foregoing have been threatened against dpiX. dpiX is not subject to any
judgment, order or decree entered in any lawsuit or proceeding which may have a
Material Adverse Effect on dpiX. dpiX has no present intent to initiate legal
proceedings against any Person.
3.9 Year 2000 Problem. dpiX has made all reasonable efforts to
-----------------
determine that (a) all software, including source and object code, hardware and
other products in production,
-15-
<PAGE>
design or development by dpiX and (b) all computer and telecommunications
software and hardware, including source and object code, necessary to carry on
dpiX's business substantially as currently conducted, that contains or calls on
a calendar function that is indexed to a computer processing unit clock,
provides specific dates or calculates spans of dates, is able, or can, without
material expense, be made to be able, to record, store, transmit, receive,
process and provide true and accurate dates and calculations for dates and spans
of dates including and following January 1, 2000 (including leap year
calculations) and will not, by themselves, create any logical or mathematical
inconsistency or malfunction or cease to function when processing date/time data
under such circumstances ("Year 2000 Issues"). Neither Xerox nor dpiX have any
----------------
knowledge of any problems concerning the Year 2000 Issues that would have a
Material Adverse Effect on dpiX or New dpiX.
3.10 Export Licenses and Security Clearances. dpiX is not required to
---------------------------------------
have any export licenses or security clearances with or granted by any
Governmental Entity in order to enable dpiX to carry on its business as
presently conducted.
3.11 Broker's or Finder's Fees. Except as set forth on Schedule 3.11,
------------------------- -------------
no agent, broker, person or firm acting on behalf of Xerox or dpiX is, or will
be, entitled to any commission or broker's or finder's fees from any of the
parties hereto or from any Person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of the
transactions contemplated by this Agreement. Xerox agrees to pay any commission
or broker's or finder's fees listed (or required to be listed) on Schedule 3.11.
-------------
3.12 Financial Statements. Except as set forth on Schedule 3.12, the
--------------------
Signing Balance Sheet and the financial statements for the one-year period
ending December 31, 1998 and the three-month period ending March 31, 1999
attached hereto as Exhibit 3.12 are, and the Closing Balance Sheet when
delivered in accordance herewith will be prepared in accordance with US GAAP and
fairly present in all material respects the financial condition of dpiX at the
date and for the periods presented. There have been no material or extraordinary
changes in dpiX's business, operations, assets, financial condition or results
of operations since the Signing Balance Sheet Date.
3.13 Taxes.
-----
(a) Tax Returns. Xerox and dpiX have filed or caused to be filed
-----------
with the appropriate taxing authorities all returns, statements, forms and
reports for Taxes (the "Returns") that are required to be filed by, or with
-------
respect to, dpiX on or prior to the Closing Date (taking into account all valid
extensions of time to file such returns). The Returns have accurately reflected
in all material respects and will accurately reflect in all material respects
all liability for Taxes of dpiX for the periods covered thereby.
-16-
<PAGE>
(b) Payment of Taxes. All material Taxes and Tax liabilities of dpiX
----------------
for all taxable years or periods that end on or before the Closing Date and,
with respect to any taxable year or period beginning before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date have been paid or adequately accrued and disclosed and fully
provided for on the books and records of Xerox and dpiX in accordance with US
GAAP.
3.14 Intellectual Properties. Neither Xerox nor dpiX has received
-----------------------
any written notice of any claim adverse to the interests of dpiX in the
Intellectual Property (i) owned or licensed by dpiX or (ii) licensed by Xerox to
dpiX and used or necessary for use in the business of dpiX as presently
conducted, including any claim that any such Intellectual Property is in whole
or in part invalid, unenforceable, ineffective or breaches or infringes the
rights of others. To the best knowledge, information and belief of Xerox and
dpiX, no Person has infringed or otherwise violated dpiX's right in any
Intellectual Property licensed by Xerox to dpiX. No litigation is pending
wherein dpiX is accused of infringing or otherwise violating the Intellectual
Property right of another Person, or of breaching a contract conveying a right
to it under Intellectual Property. To the best knowledge, information and
belief of Xerox and dpiX, no such claim has been asserted or threatened in
writing against dpiX. Except as set forth in Schedule 3.14, neither Xerox nor
dpiX have granted any third party a license for the use of any Xerox or dpiX
Intellectual Properties in the "dpiX Field" (as defined in the Technology
Agreement).
-17-
<PAGE>
SECTION 4
REPRESENTATIONS AND WARRANTIES OF NEW DPIX
New dpiX represents, warrants and agrees as of the date hereof that
the following statements set forth in this Section 4 are true, accurate and
complete and are not misleading:
4.1 Binding Effect. This Agreement has been, and each of the Related
--------------
Documents to which New dpiX is a party when delivered by New dpiX at Closing
will be, duly executed and delivered by New dpiX and when so executed and
delivered will constitute the valid and binding agreement of New dpiX
enforceable against New dpiX in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws and
equitable principles relating to or affecting the rights of creditors generally
from time to time in effect.
4.2 Restrictive Documents. New dpiX is not (a) subject to, or a
---------------------
party to, any law, order, judgment or decree, or any other governmental
restriction of any kind or character or (b) a party to any contract, which would
be violated or breached as a result of the execution and delivery of this
Agreement and the Related Documents to which New dpiX is a party, the
consummation of the Merger or New dpiX's performance of its obligations under
the Related Documents.
4.3 Broker's or Finder's Fees. No agent, broker, person or firm
-------------------------
acting on behalf of New dpiX is, or will be, entitled to any commission or
broker's or finder's fees from any of the Parties hereto, or from any Person
controlling, controlled by or under common control with any of the Parties
hereto, in connection with any of the transactions contemplated by this
Agreement.
SECTION 5
TRANSACTIONS PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of the Business of dpiX Prior to Effective Time. During
-------------------------------------------------------
the period from the date of this Agreement to the Effective Time, Xerox shall
cause dpiX to, and dpiX shall: (x) conduct dpiX's respective operations only
according to the ordinary and usual course of business as established on the
date hereof (i.e., an orderly wind down provided that neither Xerox nor dpiX
take any action that would materially impair their ability to consummate the
transactions contemplated herein); use reasonable efforts to preserve intact its
business organizations; keep available the services of its officers and
employees; and maintain existing relationships with licensors, suppliers,
distributors, customers, landlords, employees, agents and others having material
business relationships with dpiX; (y) discuss with New dpiX operational matters
of a significant nature (including, without limitation, the cancellation or
waiver of any claim or right in excess of $10,000) and (z) report bi-weekly to
New dpiX concerning the business, operations and finances of dpiX.
Notwithstanding the immediately preceding sentence,
-18-
<PAGE>
prior to the Effective Time, except as may be first approved in writing by New
dpiX or as is otherwise permitted or required by this Agreement, Xerox shall
cause dpiX to, and dpiX shall: (a) refrain from amending or modifying dpiX's
articles of incorporation, certificates of incorporation and by-laws from their
respective forms on the date of this Agreement, (b) refrain from (i) paying
bonuses (other than retention bonuses pursuant to preexisting arrangements
previously disclosed in writing to, and approved by, New dpiX), (ii) increasing
any salaries, or (iii) paying or increasing any other compensation, in each
case, to any officer or employee or entering into any employment, severance, or
similar agreement with any officer or employee, (c) refrain from adopting or
increasing any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any of dpiX's
directors, officers or employees, (d) except to the extent permitted by any
other clauses of this Section 5.1, refrain from entering into any contract or
commitment except contracts and commitments in the ordinary and usual course of
business as established on the date hereof, (e) refrain from increasing dpiX's
indebtedness for borrowed money, except interest free borrowings from Xerox, (f)
refrain from canceling or waiving any claim or right of substantial value which
individually or in the aggregate is significant, (g) refrain from declaring or
paying any dividends in respect of dpiX's capital stock, or redeeming,
purchasing or otherwise acquiring any of dpiX's securities, (h) refrain from
making any material change in accounting methods or practices, except as
required by law or US GAAP, (i) refrain from issuing or selling any shares of
capital stock or any other securities, as the case may be, or issuing any
securities convertible into, or options, warrants or rights to purchase or
subscribe to, or entering into any arrangement or contract with respect to the
issue and sale of, any shares of dpiX's capital stock or any other securities,
or making any other changes in its capital structures, except such issuances or
sales of securities which dpiX is already obligated to make as of the date of
this Agreement and which are disclosed in writing to New dpiX, (j) refrain from
establishing or acquiring any Entity, (k) refrain from selling, leasing or
otherwise disposing of any asset or property other than in the ordinary and
usual course of business as established on the date hereof, (l) refrain from
making any capital expenditure or commitment therefor, except in the ordinary
and usual course of business established on the date hereof, (m) except as
provided in Schedule 8 to the Fair Pricing Agreement, refrain from releasing a
third party from its obligations under any notes or accounts receivable, and (n)
refrain from agreeing in writing to do any of the foregoing; provided however,
-------- -------
that no reference herein to the "ordinary and usual course of business as
established on the date hereof" shall include a shut-down of any of dpiX's
operations that are included in the Business Plan.
5.2 Review of dpiX; Confidentiality.
-------------------------------
(a) New dpiX may, prior to the Closing Date and during regular
business hours, directly or through its representatives, review the properties,
books and records of dpiX and its financial and legal condition to the extent
New dpiX deems necessary or advisable to familiarize itself with such
properties and other matters; such review shall not, however, affect the
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representations and warranties made by Xerox in this Agreement or the remedies
of New dpiX for breaches of those representations and warranties. Xerox shall
cause dpiX to and dpiX shall permit New dpiX and its representatives to have,
immediately after the date of execution of this Agreement, full access to the
premises during regular business hours, to the officers, employees and to all
the books and records of dpiX and to cause the officers of dpiX to furnish New
dpiX with such financial and operating data and other information with respect
to the business and properties of dpiX as New dpiX shall from time to time
reasonably request.
(b) In the event of termination of this Agreement, New dpiX shall
keep confidential any material information obtained from dpiX concerning dpiX's
properties, operations and business (unless readily ascertainable from public
or published information or trade sources) until the same ceases to be material
(or becomes so ascertainable) and, at the request of dpiX, shall return to dpiX
or destroy (at the discretion of New dpiX) all copies of any schedules,
statements, documents, source codes, object codes, programs and flowcharts or
other written information obtained in connection therewith, including, but not
limited to, any materials prepared by New dpiX or its representatives (except
for work product encompassed by the attorney-client or attorney work product
privileges) containing any such confidential information, except to the extent
that such materials contain information confidential to New dpiX, in which case
such materials shall not be returned, but destroyed. dpiX shall deliver or cause
to be delivered to New dpiX such additional instruments, documents, certificates
and opinions as New dpiX may reasonably request for the purpose of (i) verifying
the information set forth in this Agreement and on any Schedule or Exhibit
attached hereto and (ii) consummating or evidencing the transactions
contemplated by this Agreement.
(c) In the event of termination of this Agreement, Xerox and dpiX
shall keep confidential any material information obtained from New dpiX, its
members and their Affiliates concerning their properties, operations and
business (unless readily ascertainable from public or published information or
trade sources) until the same ceases to be material (or becomes so
ascertainable) and, at the request of New dpiX, shall return to New dpiX or
destroy all copies of any schedules, statements, documents or other written
information obtained in connection therewith, including any materials prepared
by Xerox or dpiX or their representatives (except for work product encompassed
by the attorney-client or the attorney work product privileges) containing any
such confidential information, except to the extent that such materials contain
information confidential to Xerox or dpiX, in which case such materials shall
not be returned, but destroyed.
5.3 Exclusive Dealing. Xerox and dpiX shall not, and shall not
-----------------
permit any of their Subsidiaries to, and Xerox, dpiX and their Subsidiaries
shall not authorize or permit any officer, director or employee of, or any
financial advisor, attorney, accountant or other advisor or representative
retained by, Xerox, dpiX or any of their Subsidiaries to, solicit, initiate,
encourage (including by way of furnishing information), endorse or enter into
any agreement with respect
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to, or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal.
5.4 Reasonable Efforts. Each of Xerox, dpiX and New dpiX shall, and
------------------
Xerox shall cause dpiX to, cooperate and use their respective reasonable efforts
to take, or cause to be taken, all appropriate action, and to make, or cause to
be made, all filings necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, their respective reasonable
efforts to obtain, (i) prior to the Effective Time, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Government
Entities and parties to contracts with Xerox or dpiX, as are necessary for
consummation of the transactions contemplated by this Agreement and to fulfill
the conditions to the Merger and (ii) after the Effective Time, all licenses,
permits, consents, approvals, authorizations from Government Entities and orders
as necessary for New dpiX to continue the business and operations of dpiX to the
extent not received prior to the Effective time; provided, however, that in
-------- -------
order to obtain any such consent, approval or authorization no (a) loan
agreement or contract for borrowed money shall be repaid except as currently
required by its terms, in whole or in part, (b) contract shall be amended to
increase the amount payable thereunder or otherwise to be more burdensome to
dpiX, New dpiX or Xerox or (c) Party shall, and no Party shall be required to,
commit to any divestiture transaction, agree to sell or hold separate or agree
to license to such Party's competitors, before or after the Effective Time, any
of dpiX's businesses, product lines, properties or assets, or agree to any
changes or restrictions in the operation of such businesses, product lines,
properties or assets.
5.5 Inventory and Fixed Asset Write-Down. Notwithstanding anything
------------------------------------
to the contrary in Section 5.1, the Parties hereto agree that dpiX and Xerox
representatives shall, prior to the Effective Time, review dpiX's inventory on
hand, capitalized lease and leasehold improvements appearing on the Signing
Balance Sheet and shall, in accordance with GAAP and after consultation with
(but not agreement from) the Manager (or such Manager's designated
representative) of New dpiX, write down (and if appropriate destroy or sell for
salvage), prior to the Effective Time, portions of such capital lease and
leasehold improvements and such inventory which is defective, damaged, obsolete,
worthless or surplus, taking into account the Business Plan of the New dpiX.
SECTION 6
CONDITIONS PRECEDENT TO MERGER
6.1 Conditions Precedent to Obligations of Xerox, dpiX and New dpiX.
---------------------------------------------------------------
The respective obligations of New dpiX, on the one hand, and Xerox and dpiX, on
the other hand, to effect the Merger are subject to the satisfaction or waiver
(subject to applicable law) at or prior to the Closing Date of each of the
following conditions:
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(a) Statutes; Governmental Approvals. No statute, rule, regulation,
--------------------------------
executive order, decree or order of any kind shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which prohibits
the consummation of the Merger;
(b) No Litigation. No litigation shall have been threatened or
-------------
instituted against Xerox, dpiX or New dpiX for a temporary or preliminary or
permanent injunction or other order issued by a court or other government body
or by any public authority to restrain or prohibit or restraining or prohibiting
the consummation of the Merger;
(c) Related Documents. Each of the Related Documents shall be in
-----------------
full and effect;
(d) Landlord and Lessor Consents. Xerox shall have obtained the
----------------------------
written consents of the landlords and lessors necessary for Xerox to execute,
deliver and perform under the Building 34 Sublease and ATEL Assignment; and
(e) New dpiX Capitalization. Each of dpiX Holding and Xerox shall
-----------------------
have made the capital contributions described in Section 3.2 of the New dpiX LLC
Agreement.
6.2 Conditions Precedent to Obligations of New dpiX. The obligation
-----------------------------------------------
of New dpiX to effect the Merger is also subject to the satisfaction or waiver,
at or prior to the Closing Date, of each of the following conditions:
(a) Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Xerox and dpiX contained herein and in the Related Documents to
which Xerox and/or dpiX is a party shall be true and accurate in all material
respects, in each case at and as of the date of this Agreement or such Related
Document and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date, in which case such
representation shall be true and accurate in all material respects as of such
earlier date), and Xerox shall have delivered to New dpiX a certificate from an
Authorized Representative of Xerox, dated the Closing Date to such effect;
(b) Performance of Agreements. All of the agreements of Xerox and
-------------------------
dpiX to be performed prior to the Closing pursuant to the terms of this
Agreement and the Related Documents to which Xerox and/or dpiX is a party shall
have been duly performed in all material respects as of the Closing Date, and
Xerox shall have delivered to New dpiX a certificate from an Authorized
Representative of Xerox, dated the Closing Date, to such effect;
(c) Governmental Consents. All governmental and other consents and
---------------------
approvals, necessary to permit the consummation of the transactions contemplated
hereby and by the Related Documents and to permit New dpiX to commence
operations at dpiX's present facilities shall have been received (including,
without limitation, approvals required under
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European Union Council Regulation (EC) No. 4064/89 as amended by Council
Regulation (EC) No. 1310/97), and all pre-consummation waiting or review periods
under applicable law, required, proper or advisable (including, without
limitation, the U.S. Omnibus Trade and Competitiveness Act of 1988 and Defense
Production Act of 1950), for consummation of such transactions, shall have
expired (or terminated);
(d) Opinion of Counsel. On the Closing Date, New dpiX shall have
------------------
received a favorable opinion in the agreed form attached hereto as Exhibit N,
---------
dated the Closing Date, of in-house, counsel to Xerox;
(e) Good Standing and Other Certificates. As of the Closing Date,
------------------------------------
(i) Xerox shall have delivered to New dpiX (A) copies of dpiX's certificate of
incorporation including all amendments thereto, certified by the Delaware
Secretary of State as of a date close to the Closing Date, (B) certificates from
the Delaware Secretary of State to the effect that dpiX is in good standing in
such jurisdiction and listing all charter documents of dpiX on file, (C) a
certificate from the California Secretary of State as of a date close to the
Closing Date to the effect that dpiX is in good standing in such State, (D) a
certificate as to the tax status of dpiX as of a date close to the Closing Date
from the appropriate official in its jurisdiction of incorporation and each
state in which dpiX is qualified to do business, (E) a certificate from the New
York Secretary of State as of a date close to the Closing Date to the effect
that Xerox is in good standing in such State, (F) a certificate from the
Secretary or an Assistant Secretary of Xerox certifying a copy of Xerox's
certificate of incorporation, by-laws and standing resolution granting the Xerox
officer executing this Agreement the power and authority to do so, and (G)
incumbency certificates from the Secretaries or Assistant Secretaries of Xerox
and dpiX and (ii) Xerox shall be in good standing in the State of New York and
dpiX in good standing in the States of California and Delaware;
(f) Closing Balance Sheet. New dpiX shall have received at least
---------------------
three Business Days prior to the Closing Date the Closing Balance Sheet
certified as true and correct by an Authorized Representative of Xerox and New
dpiX shall have been given reasonable access to the books and records of dpiX to
confirm the information contained therein prior to the Effective Time.
(g) No Material Adverse Change. As of the Closing Date, there shall
--------------------------
not have occurred any change or development that has or could reasonably be
expected to have a Material Adverse Effect on dpiX provided, however, any
writedown in accordance with Section 5.5 shall not constitute a Material Adverse
Effect;
(h) Proceedings. As of the Closing Date, the resolutions duly
-----------
adopted by dpiX's Board of Directors and dpiX's stockholders, approving the
Merger and authorizing the transactions contemplated hereby, as previously
delivered to New dpiX shall remain in full force
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and effect, without amendment, and Xerox shall have delivered to New dpiX a
certificate from an Authorized Representative of Xerox, dated the Closing Date
to such effect;
(i) Termination of Agreements. All contractual arrangements between
-------------------------
dpiX and Xerox or any Affiliate thereof other than the Related Documents shall
have been terminated and, except as provided on Schedule 6.2(i), without any
---------------
liability to New dpiX; and
(j) Notice to Option Holders. dpiX shall have (i) declared the
------------------------
Merger a "Liquidity Event" in accordance with the terms of Section 7(c) the
Option Agreements, (ii) provided each Person that is a party to an Option
Agreement the notices required thereunder and hereunder with respect to the
Merger as a Liquidity Event and (iii) delivered a Common Certificate to each
Person that exercises his or her option rights under the Stock Option Agreements
prior to the Effective Time.
6.3 Conditions Precedent to Obligations of dpiX and Xerox. The
-----------------------------------------------------
obligations of dpiX and Xerox to effect the Merger are also subject to the
satisfaction or waiver, at or prior to the Closing Date, of each of the
following conditions:
(a) Opinion of Counsel. Xerox shall have received (i) a favorable
------------------
opinion in the agreed form attached hereto as Exhibit O, dated the Closing Date,
---------
of White & Case LLP, counsel to New dpiX;
(b) Good Standing Certificate. As of the Closing Date, (i) New dpiX
-------------------------
shall have delivered to Xerox (A) copies of New dpiX's certificate of formation
including all amendments thereto, certified by the Delaware Secretary of State
as of a date close to the Closing Date as of a date close to the Closing Date,
(B) a certificate from the Delaware Secretary of State as of a date close to the
Closing Date to the effect that New dpiX, is in good standing in such State, and
listing all charter documents of New dpiX on file, (C) a certificate from the
California Secretary of State as of a date close to the Closing Date to the
effect that New dpiX is in good standing in that state and (D) a certificate as
to the tax status of New dpiX as of a date close to the Closing Date from the
appropriate official in the jurisdiction of its incorporation and California and
(ii) New dpiX shall be in good standing in the State of Delaware;
(c) Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of New dpiX contained herein and in the Related Documents to which
New dpiX is a party shall be true and accurate in all material respects, in each
case at and as of the date of this Agreement or such Related Document and as of
the Closing Date (except to the extent a representation or warranty speaks
specifically as of an earlier date, in which case such representation shall be
true and accurate in all material respects as of such earlier date), and New
dpiX shall have delivered to Xerox a certificate from an Authorized
Representative of New dpiX, dated the Closing Date, to such effect;
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<PAGE>
(d) Performance of Agreements. All of the agreements of New dpiX to
-------------------------
be performed prior to the Closing pursuant to the terms of this Agreement and
the Related Documents to which New dpiX is a party shall have been duly
performed in all material respects, and New dpiX shall have delivered to Xerox a
certificate, dated the Closing Date, to such effect;
(e) Proceedings. As of the Closing Date, the resolutions duly
-----------
adopted by New dpiX's Management Committee, approving the Merger and authorizing
the transactions contemplated hereby, as previously delivered to Xerox shall
remain in full force and effect, without amendment; and New dpiX shall have
delivered to Xerox a certificate from an Authorized Representative of New dpiX,
dated the Closing Date, to such effect; and
(f) No Material Adverse Change. As of the Closing Date there shall
--------------------------
not have occurred any change or development that has or could reasonably be
expected to have a Material Adverse Effect on New dpiX.
(g) Wastewater Treatment Permit. Xerox shall have obtained from the
---------------------------
State of California the permits, consents or variances necessary for Xerox Palo
Alto Research Center to share with the Surviving Company the wastewater
treatment facility located at 3406 Hillview Avenue, Palo Alto, California.
SECTION 7
COVENANTS
7.1 Takeover Statutes. If any Takeover Statute is or may become
-----------------
applicable to the Merger, each of New dpiX, dpiX and Xerox shall take such
actions as are reasonably necessary so that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any Takeover Statute on the Merger and such other
transactions.
7.2 Government Matters. Xerox and dpiX will furnish New dpiX with
------------------
such information as New dpiX may reasonably request in connection with any
application or notification New dpiX may make to applicable Governmental
Entities in connection with the transactions contemplated hereby or any existing
contracts between dpiX and any Governmental Entities. Xerox and dpiX will
cooperate with New dpiX, to the extent New dpiX may reasonably request, to
enable it to make such applications or notifications as promptly as practicable,
including without limitation, providing access to any and all employees of Xerox
and dpiX. Xerox and dpiX shall perform such other actions to obtain prompt
favorable action from any such agency or body as may be reasonably requested by
New dpiX.
7.3 Xerox and dpiX Contracts. As of the Effective Time, (a) all
------------------------
contracts and agreements between Xerox and dpiX other than the Related Documents
shall, automatically and
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without any further act by any party or other person, terminate and, except as
provided on Schedule 6.2(i), all claims, obligations and liabilities between
Xerox and dpiX shall be deemed satisfied and (b) Xerox shall have caused all
contracts and agreements between any Affiliate of Xerox and dpiX to be
terminated and, except as provided on Schedule 6.2(i), all claims, obligations
--------------
and liabilities between such Affiliate and dpiX shall be deemed satisfied.
7.4 Employee Retention and Severance. Xerox shall cause dpiX to
--------------------------------
terminate prior to the Effective Time all of dpiX employees identified on
Exhibit P whose services will not be required under the Business Plan. Xerox
shall be liable for the lesser of $400,000 or 50% of the employee severance
costs incurred by dpiX or New dpiX in terminating the employment of dpiX and New
dpiX employees in accordance with this Section 7.4. Xerox shall also reimburse
New dpiX up to $950,000 of the employee retention costs incurred by dpiX and New
dpiX in implementing the Retention Plan.
7.5 Warehouse Space. Commencing on the Effective Date, Xerox shall
---------------
store New dpiX parts and products at the warehouse subleased to Xerox and
located at 1320 Willow Road, Menlo Park, California (the "Warehouse"); provided,
---------
however, the space made available for this purpose shall not exceed dpiX's
current space usage of approximately 10,000 square feet. The parts and finished
products being stored at the Warehouse shall be similar to what is being stored
there by dpiX on the date hereof and, in no event, shall New dpiX store any
Hazardous Materials at the Warehouse. New dpiX agrees that in the event either
the lessor or sublessor of the Warehouse shall object to the storage of New dpiX
parts and products then the storage arrangement described herein shall be
terminated upon ten (10) days notice from Xerox to New dpiX, with no liability
to Xerox as a result of said termination. On the first day of each month New
dpiX shall pay Xerox Five Thousand ($5000.00) Dollars for the use of the
Warehouse storage space. New dpiX acknowledges that it is aware that Xerox's
sublease for the Warehouse terminates on December 31, 1999. New dpiX hereby
agrees that all new dpiX parts and products shall be removed by New dpiX from
the Warehouse prior to December 31, 1999, whether or not Xerox may (but shall
not be obligated to) remove said parts and products to another location at New
dpiX's sole cost and expense, payable and reimbursable to Xerox immediately upon
demand, and (ii) New dpiX shall be liable to Xerox for any and all losses,
damages, costs and expenses, including without limitation, holdover rent, that
may be incurred by Xerox as a result of New dpiX's failure to remove its parts
and products prior to December 31, 1999. New dpiX will be fully responsible for
its parts and products stored at the Warehouse. New dpiX hereby releases Xerox,
the landlord, the building manager and any mortgagee from any and all liability
for loss or damage to the parts and products New dpiX will store at the
Warehouse.
SECTION 8
TERMINATION
8.1 Events of Termination. This Agreement may be terminated at any
---------------------
time prior to the Effective Time (a) by mutual written agreement of the Parties,
(b) on or after July 1,
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1999 (or such later date as the Parties may have agreed to in writing) by New
dpiX, by written notice to Xerox and dpiX, if the conditions set forth in
Section 6.1 and Section 6.2 hereof shall not have been complied with or
performed in any material respect and New dpiX shall at such time not be in
material breach of any of its representations, warranties, covenants or
agreements contained herein, (c) on or after July 1, 1999 (or such later date as
the Parties may have agreed to in writing) by Xerox or dpiX, by written notice
to New dpiX, if the conditions set forth in Section 6.1 and Section 6.3 hereof
shall not have been complied with or performed in any material respect and
neither Xerox nor dpiX shall at such time not be in material breach of any of
their representations, warranties, covenants or agreements contained herein, (d)
by any of the Parties by written notice to the other Parties if the relevant
European Union competition law Governmental Entity (or authorities of any member
state including the German Cartel office) proceed to a secondary phase of
inquiry into notification filed therewith in respect of the Merger, (e) by any
Party, by written notice to the other Parties, if prior to the Effective Time, a
court of competent jurisdiction or other Governmental Entity shall have issued a
final, non-appealable order, decree or ruling, or taken any other action, having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger or (f) on or after July 30, 1999 by any Party, for any reason, by written
notice to the other Parties.
8.2 Effect of Termination. In the event that this Agreement shall be
---------------------
terminated pursuant to Section 8.1, all further obligations of the Parties
hereto under this Agreement (other than pursuant to Sections 5.2(b) and (c),
11.2 and 11.5 which shall continue in full force and effect) shall terminate
without further liability or obligation of any Party to any other Party
hereunder; provided, however, that no Party shall be released from liability
-------- -------
hereunder if this Agreement is terminated and the transaction abandoned by
reason of (a) the willful failure of such Party to have performed its
obligations hereunder and (b) any knowing misrepresentation made by such Party
regarding any matter set forth herein.
SECTION 9
SURVIVAL OF REPRESENTATIONS
9.1 Survival of Representations. All representations, warranties,
---------------------------
covenants and agreements of the Parties in this Agreement shall survive the
Effective Time; provided, however, (a) the representations of Xerox in Sections
-------- -------
3.4 through 3.12 shall survive until the third anniversary of the Closing Date,
(b) the representations in Section 3.13 shall survive until the applicable
statute of limitations as extended for any claim against dpiX or New dpiX
thereunder expires and (c) the representations of Xerox in Section 3.14 shall
survive until the fifth anniversary of the Closing Date.
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SECTION 10
INDEMNITY
10.1 Xerox Indemnities. Xerox shall indemnify, protect, defend and
-----------------
hold harmless New dpiX, and any of its Affiliates and each of their respective
officers, directors, members, stockholders, employees, servants, and agents
(each an "Indemnified Person") against any and all liabilities, obligations,
------------------
losses, damages, penalties, claims, costs, expenses (including reasonable
attorneys' fees and expenses), actions or suits of whatsoever kind and nature
(whether arising on the basis of negligence, strict or absolute liability or
liability in tort) ("Losses") which may be imposed on, incurred by, suffered by,
------
or asserted against, directly or indirectly, an Indemnified Person (whether or
not named) or through the application of New dpiX's assets as a result of, in
connection with or arising out of (i) any investigation, cleanup, removal,
remediation or response action required under any Environmental Law in
connection with the actual or alleged presence or release of Hazardous Materials
on any property currently or previously owned or operated by dpiX or its
predecessors ("Company Property") on or prior to the Closing Date; and (ii) any
----------------
Environmental Claim or violation of any Environmental Law relating to (x) any
Company Property or (y) the operations of Xerox or dpiX, their Affiliates,
agents, contractors or subcontractors, in the case (x) or (y) to the extent
arising from conditions, events or circumstances occurring or existing on or
prior to the Closing Date, whether or not known prior to the Effective Time;
(iii) liabilities of dpiX for income Taxes that are attributable to all periods
prior to the Effective Time; (iv) liabilities of dpiX for any funding
obligations under any qualified benefit plans of dpiX, Xerox or any Affiliate of
Xerox that relate to liabilities that accrued on or before the Effective Time;
(v) the termination of employment of any dpiX or Xerox employee terminated prior
to the Effective Time (whether or not such termination was requested by New
dpiX) except as otherwise provided in Section 7.4; (vi) any breach of Xerox's
obligations under the second sentence of Section 2.6(d) and (vii) any breach of
Xerox's representations or warranties set forth in Section 3 provided that the
indemnity in this clause (vii) shall be subject to an aggregate cap of
$5,000,000 except in the case of fraud. Additionally, Xerox agrees to indemnify
and hold harmless each Indemnified Person and any successor to New dpiX's
interest in the chain-of-title to the Company Property, their directors,
officers, employees and agents from and against all Losses suffered or paid,
directly or indirectly, through application of New dpiX's assets or otherwise,
as a result of, in connection with or arising out of the actual or alleged
presence of Hazardous Materials on any Company Property as of the Closing Date
or any Environmental Claim based on the conduct of dpiX or any of its Affiliates
on or prior to the Closing Date
10.2 New dpiX Indemnity. New dpiX shall indemnify Xerox against any
------------------
claims of third parties claiming compensation commissions or expenses for
services as a broker or finder based on the obligations of New dpiX.
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SECTION 11
MISCELLANEOUS
11.1 Knowledge. Except as otherwise set forth herein, where any
---------
representation or warranty contained in this Agreement that is expressly
qualified by reference to the best knowledge, information and belief of Xerox or
dpiX, Xerox and dpiX confirm that dpiX's chief executive officer, president,
principal accounting officer and counsel have made due and diligent inquiry as
to the matters that are the subject of such representations and warranties.
11.2 Expenses. The Parties hereto shall pay all of their own expenses
--------
relating to the transactions contemplated by this Agreement and the documents
described herein, including, without limitation, the fees and expenses of their
respective counsel, auditors and financial advisers. The legal, accounting and
other expenses of Xerox and dpiX in connection with the Merger shall not be or
become liabilities of New dpiX or in any way be assumed by New dpiX.
11.3 Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
-------------
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW
THEREOF WHICH WOULD REQUIRE A DIFFERENT CHOICE OF LAW.
11.4 Jurisdiction; Agents for Service of Process. The parties hereto
-------------------------------------------
agree that any disputes arising out of or in connection with this Agreement
shall be finally settled by arbitration under the Rules of the London Court of
International Arbitration ("LCIA") by one or more arbitrators appointed in
accordance with such Rules. The site of arbitration shall be New York, New
York, and the language of the arbitration proceedings shall be English. Each
party hereto irrevocably consents to the jurisdiction of the LCIA solely for
such purpose and the purpose of the following sentence. The decision of the
arbitrators shall be final and shall be enforceable in the Federal courts
situated in Southern District of New York or the State courts situated in New
York, New York or any other court of competent jurisdiction.
11.5 Confidentiality and Publicity. The Parties agree that no
-----------------------------
disclosure of the terms of this Agreement shall be made, except disclosures on a
need-to-know basis only to directors, officers, counsel, accountants and
financial advisors who are directly involved in the transactions described
herein, each of whom shall agree to be bound by the provisions of this Section
11.5; provided, however, that nothing in this Section 11.5 shall prevent any of
-------- -------
Xerox, dpiX, New dpiX, any member of New dpiX, any member of dpiX Holding or any
Affiliate or parent thereof, from making any such disclosure required by law or
in connection with any judicial proceeding or to employees of dpiX to the extent
necessary for Xerox and dpiX to comply with Section 5.1(x) or to stockholders or
holders of Stock Rights to the extent necessary for Xerox and dpiX to comply
with Section 2.6. Xerox, dpiX and New dpiX further agree that
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the Parties hereto shall have the right, prior to disclosure or external
presentation of any kind, to review and approve the timing, content and the
manner (including, without limitation, any press release) in which the Merger or
the identity of any member of New dpiX or dpiX Holding or any parent or
Affiliate thereof is disclosed or presented to any Person.
11.6 Notices. Any notice or other communication required or permitted
-------
under this Agreement shall be sufficiently given if delivered in person or sent
by facsimile or by registered or certified mail, postage prepaid, addressed as
follows:
if to Xerox or dpiX, to:
Xerox Corporation
800 Long Ridge Road
Stamford, Connecticut 06904
Telephone: 203-968-3257
Facsimile: 203-968-4301
Attention: Brian Stern
with a copy to:
Xerox Corporation
800 Long Ridge Road
Stamford, Connecticut 06904
Telephone: 203-968-3417
Facsimile: 203-968-3446
Attention: Senior Vice President and General Counsel
if to New dpiX, to:
New dpiX LLC
c/o Thomson Tubes Electroniques S.A.
ZI Centr' Alp
38430 Moirans
France
Telephone: 33 4 76 57 40 01
Facsimile: 33 4 76 57 40 22
Attention: Gerard Daguise
with a copy to:
White & Case LLP
633 West Fifth Street, Suite 1900
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<PAGE>
Los Angeles, California 90071
Telephone: 213-620-7700
Facsimile: 213-687-0758
Attention: Neil W. Rust
or such other address or number as shall be furnished in writing by any such
Party, and such notice or communication shall, if properly addressed, be deemed
to have been given as of the date so delivered, sent by facsimile or three
business days after deposit into the U.S. mail postage prepaid.
11.7 Parties in Interest. This Agreement may not be transferred,
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assigned, pledged or hypothecated by any Party hereto. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
11.8 Entire Agreement. This Agreement, the Related Documents and the
----------------
other documents referred to herein and therein which form a part hereof,
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter including, without limitation, all of the provisions of the
Letter of Intent addressed to Xerox and dated April 19, 1999 regarding the
Merger. The Parties acknowledge and agree that there are no, and there shall
not be any, oral agreements between or among any of the Parties and that for any
agreement to be binding such agreement must be in a writing executed by each
Party.
11.9 Amendments. This Agreement may be amended by the Parties only
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by an agreement in writing signed by the Parties.
11.10 Extension; Waiver. At any time prior to the Effective Time,
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the Parties may, to the extent legally allowed, (i) extend the time for
performance of any of the obligations or other acts of the other parties hereto
contained here, (ii) waive any inaccuracies in the representations and
warranties of the other Parties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions of the other Parties contained herein. Any agreement on the part of
a Party to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such Party.
11.11 Severability. In case any provision in this Agreement shall
------------
be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining pro visions hereof will not in any way be
affected or impaired thereby.
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<PAGE>
11.12 Third Party Beneficiaries. Except as expressly provided
-------------------------
herein, each Party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than the
Parties hereto and the stockholders of dpiX.
11.13 Payments. Any amounts due from one Party to another under
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this Agreement shall be paid within a reasonable time after such amounts come
due and demand is made therefor.
11.14 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one instrument.
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<PAGE>
IN WITNESS WHEREOF, each of Xerox, dpiX and New dpiX has caused its
company name to be hereunto subscribed by its officer thereunto duly authorized,
all as of the day and year first above written.
XEROX CORPORATION
By /s/ Brian E. Stern
----------------------------
Name: Brian E. Stern
Title: Senior Vice President
DPIX, INC.
By /s/ Timothy da Silva
----------------------------
Name: Timothy da Silva
Title: President
NEW DPIX LLC
By /s/ Gerard Daguise
----------------------------
Name: Gerard Daguise
Title: Manager
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