<PAGE>1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (Date of earliest event reported):
March 1, 1995
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51 -
0271821
(State or other (I.R.S.
jurisdiction of Employer
incorporation or Identificat
organization) ion No.)
14800 Conference Center
Drive
Suite 400, Westfields 22021 -
Chantilly, Virginia 3806
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (703) 802-
9200
1
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<TABLE>
GENICOM Corporation and Subsidiaries
Form 8-K Index
<S> <C> <C>
Item 2. Acquisition Activities
On March 1, 1995, the registrant completed
its acquisition of substantially all of the
assets and certain liabilities of Harris
Adacom Network Services, Inc. ("HANS"),
including all of the stock of its Canadian
subsidiary, Harris Adacom Inc. from Harris
Adacom Corporation, B.V. ("HACBV") for $7.3
million. The assets acquired relate to
HANS's service depot facility, field service
operations, systems integration business and
network diagnostic and monitoring operations.
The purchase price will be funded from the
Registrant's cash flows from operations and
credit facilities. The transaction will be
accounted for as a purchase for financial
reporting purposes. A copy of the Purchase
Agreement is filed herewith as Exhibit 2.1.
The registrant published press releases
regarding the transaction on February 23,
1995 and March 2, 1995. A copy of such press
releases are included herein as Exhibits 99.1
and 99.2.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired:
The registrant has concluded that it is
currently impracticable to file the required
financial statements for this acquisition
within this Form 8-K filing. The required
omitted information will be filed in an
amendment to this Form 8-K filing on or
before May 15, 1995.
(b) Pro forma financial information:
The registrant has concluded that it is
currently impracticable to file the required
pro forma financial information for this
acquisition within this Form 8-K filing. The
required omitted information will be filed in
an amendment to this Form 8-K filing on or
before May 15, 1995.
(c) Exhibits
2.1 Purchase Agreement dated February 23,
1995.
99.1 Press release dated February 23, 1995,
published by the Registrant.
99.2 Press release dated March 2, 1995,
published by the Registrant.
Signatures 3
</TABLE>
2
<PAGE>3
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.
GENICOM Corporation
------------------------
Registrant
Date: March 16, 1995
James C. Gale
----------------
Signature
James C. Gale
Senior Vice
President Finance
and Chief Financial
Officer
(Mr. Gale is the
Chief Financial
Officer and has been
duly authorized to
sign on behalf of
the Registrant)
3
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<TABLE>
GENICOM Corporation and Subsidiaries
INDEX TO EXHIBITS TO FORM 8-K
March 1, 1995
<CAPTION>
Exhibit
Number Description Page
<S> <C> <C>
2.1 Purchase Agreement dated E-1 - E-62
February 23, 1995.
99.1 Press release dated February E-63-E-64
23, 1995, published by the
Registrant.
99.2 Press release dated March 2, E-65
1995, published by the
Registrant.
</TABLE>
4
ASSET PURCHASE AGREEMENT
by and among
HARRIS ADACOM NETWORK SERVICES, INC.
HARRIS ADACOM CORPORATION, B.V.
and
GENICOM CORPORATION
Dated 23 February 1995
TABLE OF CONTENTS
RECITALS 1
Section 1. Definitions 1
Section 2. Transfer of Assets 4
(a) Cash, Accounts
Receivable and Notes Receivable 4
(b) Real Estate Leases 4
(c) Customer Contracts 5
(d) License and Royalty Agreements 5
(e) Agency Agreements 5
(f) Contracts 5
(g) Furnishings, Furniture and Fixtures 5
(h) Equipment 5
(i) Inventory, Service Parts and Supplies 5
(j) Intangibles 5
(k) Business and Technical Data 6
(l) Harris Adacom Inc 6
(m) Residual Property 6
Section 3. Assets Not Transferred 6
Section 4. Assumed Liabilities, Administration of
Existing UCC-1 Liens and Permitted
Encumbrances 7
Section 5. Amount of Purchase Price 8
Section 6. Accounts and Notes Receivable 9
Section 7. Adjustment to Purchase Price 9
Section 8. Payment of Purchase Price 10
(a) Cash Paid At Closing 10
(b) Assumption of Assumed Liabilities 11
(c) Seller's Note 11
(d) Limited Right
to Not Make Payment Directly to Seller 11
(e) Non-Resident Clearance Certificate 12
Section 9. Escrow Provisions 12
Section 10. Allocation of Purchase Price 13
Section 11. Representations, Warranties and
Agreements Regarding Seller's Employees 13
Section 12. Contracts Requiring Consent of Other
Party to Contract and Other Matters
Related to Contracts 14
Section 13. Instruments of Conveyance and
Transfer to Buyer 15
Section 14. Continuing Covenants of Seller and
HACBV 16
Section 15. Closing 17
Section 16. Documents Delivered at Closing 17
Section 17. Conduct of Business Pending Closing 21
Section 18. Conditions Precedent to Obligation of
Buyer 23
Section 19. Conditions Precedent to Obligations
of Seller 24
Section 20. Representations and Warranties of
Seller 24
(a) Organization 24
(b) Authority Relative to this Agreement 25
(c) Title to Assets 26
(d) October and December Balance Sheets 26
(e) Absence of Undisclosed Liabilities 26
(f) Absence of Certain Changes or Events 27
(g) Properties, Contracts and Personnel Data 28
(h) Defaults 29
(i) Compliance with Laws 29
(j) Pending Matters 30
(k) Employee Benefit Plans 31
(l) Labor Matters 32
(m) Right to Vote Stock 32
(n) Harris Adacom Inc. (Canada) 33
(p) No Breach or Violation 34
(q) Governmental Authority 34
(r) Third Party Consents 34
(s) Completeness of Assets 34
(t) Condition of Tangible Assets 35
(u) Condition of Intangible Assets 35
(v) No Other Agreements 35
(w) Inventories 35
(x) Accounts 36
(y) Powers of Attorney 36
(z) Contracts and Commitments 37
(aa) Transactions With Affiliates 38
(cc) Intellectual Property 40
(dd) Insurance 41
(ee) Seller's Financial Statements 41
(ff) Environmental Matters 41
(gg) Seller's 1995 Plan 42
(hh) Arms's Length Transaction 43
(ii) Warranties 43
(jj) Full Disclosure 43
Section 21. Representations and Warranties of
HACBV 43
(a) Organization 43
(b) Authority Relative to this Agreement 44
(c) Right to Vote Stock 44
(d) No Other Agreements 44
(e) Arm's Length Transaction 45
Section 22. Representations and Warranties by
Buyer 45
(a) Organization 45
(b) Authority Relative to this Agreement 45
(c) No Breach or Violation 45
(d) Full Disclosure 45
(e) Pending Matters 45
Section 23. Survival of Representations and
Warranties 46
Section 24. Risk of Loss 46
Section 25. Seller's Taxes 47
Section 26. Indemnification by Seller and HACBV 47
Section 27. Indemnification by Buyer 48
Section 28. Third Party Claims 49
Section 29. Expenses of Transaction 50
Section 30. Brokers 50
Section 31. Access to Books and Records 50
Section 32. Investigation by Buyer 51
Section 33. Publicity 51
Section 34. Exhibits 51
Section 35. Notices 51
Section 36. Attorney's Fees 51
Section 37. Deposits 52
Section 38. Multiple Originals 52
Section 39. Parties in Interest 52
Section 40. Merger Clause 52
Section 41. Applicable Law and Venue 52
Section 42. Construction 52
Annexes
1 Form of Assumption Agreement.
2 Form of Seller's Note.
3 Form of Escrow Agreement.
4 Form of Bill of Sale and Assignment.
5 [intentionally left blank]
6 Form of Assignment of Intellectual Property Rights.
7 Form of Opinion of Buyer's Counsel.
8 Form of Opinion of Seller's Counsel.
9 Form of Certificate of Officers of Seller, HACBV
and HAI.
10 Form of Release by Directors and Officers of HAI.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered
into on this 23rd day of February, 1995 by and among (i) HARRIS
ADACOM NETWORK SERVICES, INC., a Delaware corporation, with
principal offices located at 1100 Venture Court, Carrollton,
Texas 75006 (referred to herein as the "Seller"), (ii) HARRIS
ADACOM CORPORATION, B.V., a corporation formed under the laws of
the Netherlands with principal offices located in care of Rutger
J. Schimmelpenninck, Boekel de Neree, Advocates, Postbus 2508,
1000 CM Amsterdam, The Netherlands and the sole shareholder and
having the sole right to vote the stock of the Seller (referred
to herein as "HACBV") and (iii) GENICOM CORPORATION, a Delaware
corporation, with principal offices located at 14800 Conference
Center Drive, Suite 400, Chantilly, Virginia 22021 (referred to
herein as the "Buyer").
RECITALS:
A. The Seller is engaged in the business of providing
computer network services, maintenance and related sales to
business and governmental entities.
B. The Seller desires to sell to the Buyer, and the Buyer
desires to purchase from the Seller, substantially all of the
assets comprising the Seller's business, but only as set forth in
more detail in this Agreement; and
C. The Seller has heretofore delivered to Buyer on the
date hereof a letter dated as of the date hereof, setting forth
certain disclosures and other matters required by this Agreement
and specifying the section or sections hereof making reference to
such disclosures and other matters (the "Seller's Letter").
D. HACBV owns beneficially, and of record, all of the
issued and outstanding shares of the Seller's stock, and has
consented to the sale of the Seller's assets to the Buyer.
NOW, THEREFORE, Know All Men By These Presents, that for and
in consideration of the premises and the respective agreements
hereinafter set forth, the Seller, HACBV and Buyer hereby agree,
covenant, warrant and represent as follows:
Section 1. Definitions. For purposes of this Agreement the
following terms shall have the indicated meaning:
"Agreement" shall mean this Asset Purchase Agreement.
"Assumed Liabilities" shall mean (i) the liabilities
accruing from and after Closing under each and every
Assigned Contract (excluding claims asserted after Closing
with respect to breaches of or defaults under any Assigned
Contracts before Closing, or otherwise relating to actions
or omissions before Closing with respect to any Assigned
Contracts, except to the extent that any such claim is
represented by a line item on, and quantified on, the
Exhibit referred to in clause (ii) below), and (ii) the
liabilities of the Seller, as of the Closing Date, as
represented by the line items therefor on Exhibit 1 (a) to
the Seller's Letter. For the avoidance of doubt, and
without limitation, the Excluded Liabilities shall not be
assumed by the Buyer, and are not included in the term
"Assumed Liabilities."
"Assigned Contracts" shall mean all of the contracts,
agreements, leases and other agreements described in Section
2 (b), (c), (d), (e) and (f), excluding Employment
Agreements.
"Bad Receivables" shall have the meaning set forth in
Section 6.
"Business" shall mean all of the business operations of the
Seller and HAI.
"Buyer's Loan" shall mean the $1,000,000 loan made by the
Buyer to the Seller on or about December 27, 1994 as
evidenced by that one certain Secured Promissory Note,
Security Agreement and Financing Statement dated on or about
December 27, 1994.
"Closing" shall mean the closing of the Transaction.
"Closing Date" shall mean the actual date on which the
Closing occurs.
"Closing Date Balance Sheet" shall mean the Consolidated
Balance Sheet of Harris Adacom Network Services, Inc. and
Harris Adacom Inc. as of the Closing Date included in the
Closing Date Financial Statements, excluding (i) the
Excluded Liabilities and (ii) the Excluded Assets.
"Closing Date Financial Statements" shall mean the
Consolidated Financial Statements of Seller and HAI for the
period commencing January 1, 1994 and ending on the Closing
Date, audited by and accompanied by the unqualified audit
opinion of Deloitte & Touche, which shall be prepared on the
same basis and applying GAAP consistently as in the
preparation of the December Balance Sheet .
"December Balance Sheet" shall mean the Consolidated Balance
Sheet of Seller and HAI as of December 31, 1994 attached as
Exhibit 20(d) to the Seller's Letter.
"Disputed Adjustment" shall have the meaning set forth in
Section 7(d).
"Employment Agreements" shall mean any and all contracts or
agreements of employment, written or oral, between Seller
and any person and such definition shall include Local Union
No. 134 International Brotherhood of Electrical Workers, AFL-
CIO effective 8.27.92 through 8.16.95. and any other
collective bargaining agreement to which Seller is a party.
"Escrow Agent" shall mean the escrow agent under the Escrow
Agreement.
"Escrow Agreement" shall have the meaning set forth in
Section 9.
"Excluded Assets" shall have the meaning set forth in
Section 3.
"Excluded Liabilities" shall mean any and all liabilities
with respect to (a) federal and state income and capital
gains taxes; (b) state sales and use taxes incurred prior
to, or relating to sales occurring or services provided
prior to, January 1, 1995, provided that the due date for
the payment is prior to the Closing Date; (c) Seller's stock
options; (d) liabilities relating to the matters listed on
Exhibit 20(j) to the Seller's Letter and (e) costs incurred
by Seller and HAI in connection with the Transaction.
"HAI" or "Harris Adacom Inc." shall mean Harris Adacom Inc.,
a corporation formed under the laws of the province of
Ontario, Canada, which is a wholly owned subsidiary of the
Seller.
"HAI Assets" shall mean all of the assets used by HAI in the
conduct of its business, or otherwise included as HAI's
assets in the preparation of the October Balance Sheet, the
December Balance Sheet, and the Closing Date Balance Sheet.
"HAI Contracts" shall have the meaning set forth in Section
20(g)(2).
"HAI Shares" shall have the meaning set forth in Section
20(n).
"Intellectual Property" shall have the meaning set forth in
Section 20(cc).
"January Balance Sheet" shall mean the Consolidated Balance
Sheet of Seller and HAI as of January 31, 1995.
"Liquidated Third Party Claim" shall mean a claim by a third
party which shall be asserted against Genicom after Closing,
alleging ownership of or an interest in any of the Assets,
or lack of authority (including inadequacy of consideration)
of any of the Seller, HACBV or the Curators to effect the
Transaction.
"October Balance Sheet" shall mean the Consolidated Balance
Sheet of Seller and HAI as of October 31, 1994 attached as
Exhibit 20(d) to the Seller's Letter.
"PBGC" shall mean the Pension Benefits Guaranty Corporation.
"Permitted Encumbrances" shall have the meaning set forth in
Section 4(f).
"Special Liabilities" shall mean any and all liabilities
accruing on or prior to Closing with respect to Seller's (a)
federal, state, and local payroll taxes and other employee
payroll deductions, (b) payments due to employees with
respect to base wages or salary, commissions, benefits
(other than accrued vacation for employees who are employed
by Genicom effective 12:01 a.m. on March 1, 1995) and
severance accrued on the January Balance Sheet, (c) the
accrued vacation amounts as reflected on the books of the
Seller for those employees of the Seller who are not
employed by Genicom effective 12:01 a.m. on March 1, 1995
and (d) employee expense reimbursements.
"Transaction" shall mean the sale and purchase transaction
contemplated by this Agreement.
"Total Equity" shall mean the consolidated total equity of
the Seller and HAI as stated on the Closing Date Balance
Sheet.
Section 2. Transfer of Assets. Subject to the terms and
conditions of this Agreement, Seller agrees to sell, transfer,
assign and convey unto Buyer and Buyer agrees to accept the sale,
transfer, assignment and conveyance from Seller of all the
assets, properties, Assigned Contracts, agreements, rights,
privileges and interests of the Seller, excluding only the
Excluded Assets expressly listed and quantified on Exhibit 3 to
the Seller's Letter and Employment Agreements (such assets sold
to Buyer are collectively referred to herein as the "Assets").
The Assets are set forth in more detail and description as
follows:
(a) Cash, Accounts Receivable and Other Receivables At the
Closing the Seller will assign, transfer and sell to Buyer,
without recourse but subject to the reduction provision for
non-collection set forth below, all of Seller's cash,
accounts receivable and other receivables existing at the
time of Closing; provided that the Seller shall be entitled
to retain the cash necessary to pay the Special Liabilities
as described in Section 17(m). For point of reference the
December 31, 1994 balances of such items are described in
Exhibit 2(a) to the Seller's Letter. Buyer acknowledges
that Seller is not, in any way, guaranteeing or assuring the
collection of accounts receivable or other receivables
conveyed to Buyer pursuant to this Agreement and that Buyer
bears all risk of collection of same, except to the extent
that the non-collection of such receivables will result in a
reduction in the Purchase Price to the extent and in the
manner described in Section 6 hereof.
(b) Real Estate Leases. At the Closing the Seller will
assign, transfer and sell to Buyer all of its real estate
leases as described on Exhibit 2(b) to the Seller's Letter,
and any entered into after December 31, 1994.
(c) Customer Contracts. At the Closing the Seller will
assign, transfer and sell to Buyer all of its customer
contracts as described on Exhibit 2(c) to the Seller's
Letter, and any entered into after December 31, 1994.
(d) License and Royalty Agreements. At the Closing the
Seller will assign, transfer and sell to Buyer all of its
license and royalty agreements as described on Exhibit 2(d)
to the Seller's Letter, and any entered into after December
31, 1994.
(e) Agency Agreements. At the Closing the Seller will
assign, transfer and sell to Buyer all of its agency,
distributorship, representation, engagement and commission
agreements as described on Exhibit 2(e) to the Seller's
Letter, and any entered into after December 31, 1994.
(f) Contracts. At the Closing the Seller will assign,
transfer and sell to Buyer all other contracts, agreements
and understandings of any nature whatsoever (excluding
Employment Agreements), including leases with respect to
real property and personal property, whether written or
oral, and all renewals thereof, to which the Seller is a
party, or by which any of its assets or properties are
bound, that are a part of or pertain or relate to the
Business as described on Exhibit 2(f) of the Seller's
Letter, and any entered into after December 31, 1994.
(g) Furnishings, Furniture and Fixtures Etc. At the
Closing the Seller will assign, transfer and sell to Buyer
all leasehold improvements, furnishings, furniture,
fixtures, equipment, machinery, vehicles and tools owned or
leased by Seller and used or usable in connection with the
Business as set forth more fully on Exhibit 2(g) to the
Seller's Letter, and any acquired after December 31, 1994.
(h) Rental Equipment. At the Closing the Seller will
assign, transfer and sell to Buyer all rental equipment,
whether owned or leased by Seller and used or usable in
connection with the Business as set forth more fully on
Exhibit 2(h) to the Seller's Letter, and any acquired after
December 31, 1994.
(i) Inventory, Service Parts and Supplies. At the Closing
the Seller will assign, transfer and sell to Buyer all
inventory, service parts and supplies owned by Seller and
used or usable in connection with the Business as set forth
more fully on Exhibit 2(i) to the Seller's Letter, and any
acquired after December 31, 1994.
(j) Intangibles. At the Closing the Seller will assign,
transfer and sell to Buyer all trademarks, tradenames,
service marks, copyrights and all applications therefor,
software, software development rights, network systems,
trade secrets, know-how, as well as all common law property
rights and other intangible personal property owned by
Seller or used or usable by it in connection with the
Business and Intellectual Property, as set forth more fully
on Exhibit 2(j) to the Seller's Letter, and any acquired
after December 31, 1994.
(k) Business and Technical Data. At the Closing the Seller
will assign, transfer and sell to Buyer schematics,
blueprints, engineering data, other technical information
pertaining to the ownership, operation, management and
administration of the Business, customer lists, sales
records, books of accounts, and all files, records, and
logs, all of which pertain or relate to the ownership,
operation, management and administration of the Business.
(l) Harris Adacom Inc. At the Closing the Seller will
assign, transfer and sell to Buyer all of the issued and
outstanding shares of stock of Harris Adacom Inc. and all of
Seller's rights, titles and interests as a shareholder,
creditor or otherwise in and to its Canadian subsidiary,
Harris Adacom Inc. The currently issued and outstanding
shares of stock of Harris Adacom Inc., all classes, are 100
common shares, and 1,881,190 preference shares, all of which
are owned beneficially and of record by the Seller.
(m) Other Property. At the Closing the Seller will assign,
transfer and sell to Buyer all miscellaneous assets (other
than deferred tax assets which are included on Exhibit 2(m)
solely for the purposes of reconciling to the December
Balance Sheet) as set forth more fully on Exhibit 2(m) to
the Seller's Letter, and any acquired after December 31,
1994.
(n) Residual Property. Except any property specifically
listed on Exhibit 3 to the Seller's Letter, at the Closing
the Seller will assign, transfer and sell to Buyer any and
all other property and rights whether real, personal or
mixed and whether tangible or intangible, owned by Seller,
even though such property and rights may not be specifically
described elsewhere in this Agreement or on any of the
Exhibits attached hereto, or in the Seller's Letter or on
any of the Exhibits attached thereto.
Section 3. Assets Not Transferred. The Seller and the
Buyer agree that those assets and properties belonging to the
Seller which are set forth in more detail and description on
Exhibit 3 to the Seller's Letter (the "Excluded Assets") are not
to be transferred to the Buyer and the Buyer is not purchasing
same, the Seller's obligations with respect thereto will not be
assumed by the Buyer, and the Excluded Assets will not be
included on the Closing Date Balance Sheet. The parties hereto
agree that in order for any asset or property owned, claimed or
controlled by Seller, whether real, personal or mixed and whether
tangible or intangible, to be an Excluded Asset, such asset or
property must be described on Exhibit 3 to the Seller's Letter
with sufficient detail to reasonably identify same, otherwise it
is agreed that such asset or property will be conveyed to Buyer
at Closing.
Section 4. Assumed Liabilities, Administration of Existing
UCC-1 Liens and Permitted Encumbrances.
(a) The Buyer will, at the Closing, assume the Assumed
Liabilities. Buyer covenants and agrees to pay, if, as and when
due and payable, all Assumed Liabilities. Except with respect to
the Assumed Liabilities, the parties hereto agree that all other
obligations, debts, claims and other liabilities (referred to
herein simply as "liabilities") of the Seller, including, without
limitation, the Excluded Liabilities, shall remain the
liabilities of the Seller, and Buyer is not assuming any of such
other liabilities.
(b) The lien represented by Financing Statement 93-129609,
filed July 2, 1993 (a copy of which is attached as Exhibit 4(b)
to the Seller's Letter) of which Bank of America Arizona ("BOA")
is the Secured Party (as assignee of Manufacturers' Leasing
Services, Inc.) (the "MLSI Lien") will not be required to be
removed based upon the representation and warranty, hereby made,
from the Seller to the Buyer that the property encumbered by said
lien (i) is not reflected in the total equity on the October
Balance Sheet or the December Balance Sheet and (ii) will not be
reflected in the total equity on the January Balance Sheet or the
Total Equity on the Closing Date Balance Sheet.
(c) The lien represented by Financing Statement 94-010725,
filed January 18, 1994 (a copy of which is attached as Exhibit
4(c) to the Seller's Letter) of which Norwest Financial Leasing,
Inc. ("Norwest") is the Secured Party (the "Norwest Lien") will
not be required to be removed based upon the representation and
warranty, hereby made, from the Seller to the Buyer that the
property encumbered by said lien (i) is not reflected in the
total equity on the October Balance Sheet or the December Balance
Sheet and (ii) will not be reflected in the total equity on the
January Balance Sheet or the Total Equity on the Closing Date
Balance Sheet.
(d) The Buyer agrees that it will, as part of the Closing,
purchase from Fidelity Funding, Inc. ("Fidelity") all of the
remaining accounts receivable theretofore sold by Seller to
Fidelity and will otherwise satisfy all of the Seller's
obligations to Fidelity so as to obtain at the Closing releases
of the liens represented by Financing Statements 94-024207 and 94-
024209, copies of which are attached as Exhibit 4(d) to the
Seller's Letter (the "Fidelity Liens"). The Seller hereby
represents and warrants to the Buyer that (x) the dollar amount
necessary to reacquire the accounts receivable from Fidelity
(other than accrued interest) and to obtain a release of the
Fidelity Liens (i) is not reflected in the total equity on the
October Balance Sheet or the December Balance Sheet, (ii) will
not be reflected in the total equity on the January Balance Sheet
or in the Total Equity on the Closing Date Balance Sheet and
(iii) is not reflected in any of the Assets being assigned to
Buyer or in the Assumed Liabilities and (y) the accounts
receivable sold to Fidelity (i) are not reflected in the total
equity on the October Balance Sheet or the December Balance
Sheet, (ii) will not be reflected in the total equity on the
January Balance Sheet or the Total Equity on the Closing Date
Balance Sheet and (iii) will not be reflected in any of the
Assets being assigned to Buyer. The Seller will use its best
efforts, in cooperation with the Buyer, to obtain the release of
the Fidelity Liens.
(e) The Seller and the Buyer will jointly approach Tech
Data Corporation ("Tech Data") and request the release of the
lien represented by Financing Statement 94-198837 filed October
10, 1994 (the "Tech Data Lien") a copy of which is attached as
Exhibit 4(e)(1) to the Seller's Letter . The Seller hereby
represents and warrants that (i) the total indebtedness secured
by such lien as of February 20, 1995 was $337,350 and (ii) such
lien affects only the assets listed on Exhibit 4(e)(2) to the
Seller's Letter (the "Tech Data Assets") and certain spare parts
, the aggregate book value of which does not exceed $400,000.
(f) As used in this Agreement the term "Permitted
Encumbrance" shall mean any and all of the following: (i) the
statutory lien for current taxes not yet due and payable, (ii)
the lien associated with the Buyer's Loan, (iii) the MLSI Lien
and the Norwest Lien, as described in Paragraphs (b) and (c) of
this Section, (iv) liens placed on the Assets at Closing by the
Buyer and (v) liens on HAI's assets as described in Exhibit 17(h)
to the Seller's Letter.
Section 5. Amount of Purchase Price. In consideration for
(a) the sale of the Assets by the Seller to the Buyer and (b) the
other agreements, warranties and representations of the Seller
and HACBV made herein, the Buyer has made the agreements,
warranties and representations contained herein, will assume the
Assumed Liabilities and shall pay to the Seller a Purchase Price
(herein so called) in the amount of SEVEN MILLION THREE HUNDRED
THOUSAND AND NO/100 DOLLARS ($7,300,000) which is described as
follows. The Purchase Price shall be comprised as follows: (i)
FOUR MILLION AND NO/100 DOLLARS ($4,000,000) cash to be paid at
Closing as described in Section 8(a); and (ii) additionally, a
cash payment of TWO MILLION AND NO/100 DOLLARS ($2,000,000) to be
paid on the 90th day following Closing and another cash payment
of ONE MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,300,000) to be paid on the 180th day following Closing as
evidenced by the Seller's Note as described in Section 8(c). No
warranties or representations of any kind have been made by the
Seller with respect to the future earning capacity of Seller
which would in any way diminish or reduce the Purchase Price;
and, Buyer is not purchasing the Assets nor conditioning the
payment of the Purchase Price on any such representations. The
payment by the Buyer of the Purchase Price, or any portion
thereof, is in no way contingent or conditioned upon any
particular level or amount of future earnings of Seller.
Section 6. Accounts and Other Receivables. The Seller and
the Buyer agree that the Buyer shall be entitled to a credit
against the Purchase Price for the non-collectibility of the
trade accounts receivable conveyed to Buyer pursuant to this
Agreement or purchased by Buyer from Fidelity in accordance with
Section 4(d), above, and for the non-collectibility of the trade
accounts receivable of HAI, but only in accordance with the
following terms. All of such trade accounts receivable that are
not collected within 180 days after Closing shall be referred to
herein as the "Bad Receivables". The "Receivables Floor Amount"
shall be an amount equal to the sum of (a) the dollar amount of
the reserve for non-collectibility of trade accounts receivable
utilized in the preparation of the Closing Date Balance Sheet and
(b) the amount, if any, by which the Total Equity is more than
<$1,818,000>. If the amount of the Bad Receivables shall exceed
the Receivables Floor Amount, then the Buyer shall be entitled to
a reduction in the Purchase Price in an amount equal to such
excess; provided that as a condition to being entitled to such
credit the Buyer shall assign back to Seller, without recourse,
all Bad Receivables; and provided further such credit may be
applied by the Buyer, in its sole discretion, against payments
otherwise due under the Seller's Note.
Section 7. Adjustment to Purchase Price. (a) The Purchase
Price shall be subject to downward adjustment as described in
this Section. Within forty-five (45) days following Closing, the
Seller will deliver to the Buyer a first draft of the Closing
Date Financial Statements and the Closing Date Balance Sheet,
certified by the Dallas, Texas offices of Deloitte & Touche
("D&T"). Buyer and its auditors, Coopers & Lybrand ("C&L") will
have thirty (30) days following receipt of such draft to comment
thereon. Buyer and Seller, with the assistance of C&L and D&T,
will seek to agree to the Closing Date Financial Statements and
the Closing Date Balance Sheet within fifteen (15) days following
receipt of such comments.
(b) If either party shall dispute the Closing Date
Financial Statements or Closing Date Balance Sheet as prepared by
D&T, then the parties agree to negotiate with each other to seek
to settle any such dispute in a timely and reasonable manner.
However, if the parties are unable to settle any such dispute
then the parties agree to promptly submit the dispute to binding
arbitration to be conducted before one arbitrator in Dallas,
Texas selected in accordance with the procedures of the American
Arbitration Association ("AAA") and in such proceeding the AAA
rules for commercial arbitration shall apply. In such
arbitration proceeding each party shall bear its own respective
costs for legal counsel, experts, travel, lodging, delivery,
copies, telephone and all other charges and expenses incurred by
such party; provided that the fee of the arbitrator shall be
borne equally by the Seller and Buyer. The parties will jointly
instruct the arbitrator to come to a binding resolution within
thirty (30) days following submission of the dispute to the
arbitrator.
(c) The parties have negotiated the terms of this Agreement
with reference to the October Balance Sheet. The "Total Equity"
under the "Assets & Liabilities Acquired" column on the October
Balance Sheet is <$1,818,000>. Consequently, if the Closing Date
Balance Sheet, as finally agreed by the Seller and Buyer or as
determined pursuant to arbitration, shall reflect a Total Equity
less than <$1,818,000>, then in such event the Buyer shall be
entitled to a credit against the Purchase Price in the amount by
which the Total Equity on the Closing Date Balance Sheet is less
than <$1,818,000>, and will be entitled to apply such credit
against the last maturing principal due under the Seller's Note.
By way of illustration, if the Total Equity is <$1,900,000>, then
the Buyer shall be entitled to a $82,000 credit against the
Purchase Price. If the Closing Date Balance Sheet, as finally
agreed by the Seller and Buyer or as determined pursuant to
arbitration, shall reflect a Total Equity more than <$1,818,000>,
e.g. <$1,750,000>, then there shall be no adjustment to the
Purchase Price, but the Receivables Floor Amount will include the
$68,000 in the foregoing example as provided in Section 6. To
the extent that such adjustment is made to the Purchase Price,
Seller shall be deemed to have cured any breach which resulted in
the adjustment, provided that, Buyer shall have the right, in its
sole discretion, to elect either to accept such adjustment of the
Purchase Price, or to pursue its other remedies for such breach.
(d) If the Buyer proposes a downward adjustment in the
Purchase Price pursuant to this Section which is not agreed to by
the Seller, and such dispute is not resolved by agreement or
arbitration before the due date for payment of the last
installment of principal due under the Seller's Note, then Buyer
agrees that it will pay the dollar amount of the Disputed
Adjustment (herein so defined), up to the amount of such
installment of principal then due on the date due under the
Seller's Note to the Escrow Agent as described in further detail
in Section 9 hereof, and Seller agrees that said payment to the
Escrow Agent of the dollar amount of the Disputed Adjustment
shall constitute payment of the Purchase Price under the Seller's
Note, but only to the extent of the dollar amount of the Disputed
Adjustment so paid to the Escrow Agent. The Escrow Agent shall
hold and deliver the dollar amount of the Disputed Adjustment
pursuant to the Escrow Agreement.
Section 8. Payment of Purchase Price. The Purchase Price,
adjusted as provided in Section 7, shall be paid to or for the
benefit of the Seller as follows:
(a) Cash Paid At Closing. The cash sum of FOUR MILLION
DOLLARS ($4,000,000) shall be paid by the Buyer to Seller at
Closing by wire transfer in accordance with the written
instructions contained in the paragraph of the Seller's
Letter referencing Section 8(a); provided that the total
amount due by Seller to the IRS with respect to the second,
third and fourth quarters of 1993 will be paid by Seller to
the IRS at Closing.
(b) Assumption of Assumed Liabilities. The Buyer will
deliver to the Seller at Closing a written Assumption
Agreement in the form of Annex 1 whereby the Buyer will
assume the Assumed Liabilities.
(c) Seller's Note. The sum of THREE MILLION THREE HUNDRED
THOUSAND DOLLARS ($3,300,000) of the Purchase Price shall be
evidenced by a non-negotiable promissory note which shall
not be assignable for 180 days from its date (the "Seller's
Note") in the original principal amount of $3,300,000
together with interest prior to maturity at a fixed annual
rate of zero percent (0%) per annum. The Seller's Note
shall be in the form of Annex 2 and shall provide for the
payment of $2,000,000 on the 90th day following Closing and
shall provide for the payment of $1,300,000 on the 180th day
following Closing. The Seller's Note shall contain a
default interest rate equal to the lower of 13% or the
highest applicable non-usurious legal rate permitted under
Texas law for payments made after the due dates thereof.
The Seller's Note shall represent the senior unsecured
indebtedness of the Buyer and shall contain such covenants
and conditions as are necessary to establish and maintain
such senior unsecured status.
(d) Limited Right to Not Make Payment Directly to Seller.
The Buyer shall have the limited right to not make payment
directly to the Seller of the applicable portion of the
Purchase Price, but only in the amount and in the manner
described in the following sections: (i) Section 8(e)
(relating to Canadian taxes); (ii) Section 6 (relating to
adjustment for Bad Receivables); (iii) Section 7(d)
(relating to payment to the Escrow Agent of a Disputed
Adjustment); (iv) Section 26(d) (relating to payment to the
Escrow Agent of the amount of an indemnification claim as
described therein); (v) Section 28(b) (relating to payment
to the Escrow Agent of a Liquidated Third Party Claim); and
(vi) Section 28(c) (relating to payment to the holder of a
Liquidated Third Party Claim). Except as described in the
preceding sentence, the Buyer shall not have any right
hereunder to not make payment directly to the Seller of any
portion of the Purchase Price under any circumstances and
failure by the Buyer to do so shall be a material default of
this Agreement by the Buyer. An adjustment of the Purchase
Price pursuant to and in compliance with Section 6, or the
delivery or payment of a portion of the Purchase Price
pursuant to and in compliance with Sections 7(d), 8(e),
26(d), 28(b) or 28(c), shall not be deemed the withholding
of payment of the applicable portion of the Purchase Price
by Buyer and shall be deemed timely payment of such amount
such that no default rate of interest shall apply thereto.
(e) Non-Resident Clearance Certificate.
(1) Seller will use its best efforts to deliver
to Buyer, at or before the Closing Date, a certificate
issued by the Canadian Minister of National Revenue
under subsection 116(2) of the Income Tax Act (Canada)
in respect of the sale of the preference shares, common
shares and indebtedness of HAI constituting part of the
Assets. Such certificate shall contain a "certificate
limit" at least equal to the portion of the Purchase
Price allocable to such Assets (the "Limit Amount").
If such certificate is delivered to Buyer at Closing,
then the Buyer shall not withhold any amount of the
Purchase Price under this Section 8(e).
(2) If Seller is unable to deliver to Buyer, at
or before the Closing Date, the certificate under
section 116 of the Income Tax Act (Canada) referred to
in (i) above, the Buyer shall withhold from the amount
of the Purchase Price payable at the Closing Date the
amount (the "Withheld Amount") for which Buyer may be
liable (as determined solely by Buyer's Canadian
counsel) under section 116 of the Income Tax Act
(Canada) by reason of Seller's failure to so deliver
such a certificate. If Seller delivers to Buyer a
certificate under subsection 116(4) of the Income Tax
Act (Canada) with a "certificate limit" at least equal
to the Limit Amount or before the last business day
that is not more than 30 days after the end of the
month in which the Closing Date occurs, the Buyer shall
pay to Seller forthwith upon the delivery of such
certificate by Seller to Buyer an amount equal to the
Withheld Amount. If Seller fails to deliver to Buyer a
certificate under subsection 116(2) of the Income Tax
Act (Canada) at or before the Closing Date or under
subsection 116(4) of the Income Tax Act (Canada) before
the last business day that is not more than 30 days
after the end of the month in which the Closing Date
occurs (the "Remittance Date"), Buyer shall, on the
Remittance Date, pay to the Receiver General for Canada
an amount equal to the Withheld Amount and the amount
so paid by Buyer shall be considered for all purposes
to be a payment made by Buyer to Seller on account of
the Purchase Price.
Section 9. Escrow Provisions. In the circumstances
described in any of Section 7(d), Section 26(d) or Section 28(b),
the Buyer shall be permitted to deliver the applicable amount
described in such Section to the Escrow Agent pursuant to the
Escrow Agreement (herein so defined) in the form attached hereto
as Annex 3. The Escrow Agent shall hold and release such sums in
accordance with the terms of the Escrow Agreement.
Section 10. Allocation of Purchase Price. For federal
income tax purposes, the Purchase Price will be allocated among
the Assets including, in the case of the HAI Shares, allocated
among the separate classes of securities or other interests in
HAI to be acquired by Buyer in such a manner as the Seller and
the Buyer shall agree prior to Closing. At or prior to the
Closing the Seller and the Buyer will sign a memorandum
reflecting such allocation. The Seller and the Buyer agree that
for purposes of Section 1060 of the Internal Revenue Code of 1986
and for other tax purposes, the Seller and the Buyer will report
the allocation of the Purchase Price in accordance with the
allocation agreed to by the parties.
Section 11. Representations, Warranties and
Agreements Regarding Seller's Employees.
(a) Seller represents and warrants to Buyer that all of
Seller's employees as of February 20, 1995 (each, a "Subject
Employee"), and the rate of base salary or wages and total
compensation of each, are identified on Exhibit 11(a) to the
Seller's Letter, and that each of the Subject Employees is
actively engaged in the Business and was so engaged as of
February 20, 1995.
(b) Buyer has extended an offer of full time employment to
each Subject Employee; and the Seller has permitted the Buyer to
extend such offer. Buyer has included in its offer the
following:
(1) Compensation at an amount no less than such Subject
Employee's current base salary level, plus Buyer's Incentive
Compensation Program if such Subject Employee's position is
eligible under that Program.
(2) Except in the case of a termination for cause, if Buyer
at any time thereafter terminates (lays off) the Subject
Employee, then Buyer will pay severance to the Subject
Employee under Buyer's then existing severance policy, but
for the purposes of applying Buyer's severance policy each
Subject Employee will be credited with service from the date
of hire of each Subject Employee as set forth on Exhibit
11(b)(2).
(3) Attached to the Seller's Letter as Exhibit 11(b)(3) is
a list of twelve (12) Subject Employees of the Seller who
have special severance benefit arrangements with Seller as
described therein (each a "Special Employee"). Buyer agrees
that the employment offer to each such Special Employee will
provide that, except in the case of a termination for cause,
if Buyer thereafter at any time terminates (lays off) the
Special Employee, then Buyer will pay severance in a lump
sum to the Special Employee in the amount described on
Exhibit 11(b)(3); provided that if the severance benefit as
determined under (2), next above, is greater, then Buyer
will pay the severance benefit as determined under (2), next
above.
(4) In the case of the employment offer to Lee P. Chu,
Buyer will include an option for Mr. Chu to voluntarily
terminate his services with Buyer during the period
commencing on the corresponding day of the month (as the
Closing Date) ten (10) months after the Closing Date and
ending sixty (60) days thereafter and receive from Buyer a
severance of ten (10) months of Mr. Chu's salary.
(5) The Subject Employee shall be permitted during calendar
year 1995 to use all earned but unused vacation time that
the Subject Employee has with Seller at the time of Closing
which is accrued on the Closing Date Balance Sheet.
Furthermore, the Buyer will credit the Subject Employee for
one full year's service effective January 1, 1996 (assuming
the Subject Employee is employed by Genicom on that date)
for purposes of Genicom's vacation policy.
Seller agrees that the other terms and conditions of an offer of
employment to any Subject Employee by Buyer shall be within the
sole discretion of Buyer.
Section 12. Contracts Requiring Consent of Other Party to
Contract and Other Matters Related to Contracts.
(a) Buyer has delivered to Seller a list of all contracts
as to which the Buyer requires the consent of the other party
thereto to the assignment thereof to the Buyer as a condition to
the Closing (the "Consents List"). The Seller and the Buyer
hereby agree that all Assigned Contracts not listed on the
Consents List are being assigned to the Buyer without regard to
obtaining the consent of the other party (or parties) to each
particular Assigned Contract, to the extent such consent is
required. With respect to each and every Assigned Contract not
listed on the Consents List, or that is listed on the Consents
List, but for which Buyer waives the other party's consent as a
condition to Closing, the Buyer agrees (i) that it has accepted
the assignment of such contract without obtaining consents of the
other party thereto to the assignment thereof to the Buyer and
(ii) to the extent that the failure to obtain any such consent
results in a breach of any warranty, representation, covenant or
agreement made by the Seller to the Buyer in this Agreement or in
any document or instrument delivered pursuant to the Closing,
then such breach is hereby waived by the Buyer. Notwithstanding
the foregoing, in the case of contracts, if any, which cannot be
transferred effectively without the consent of third parties,
which consent is not obtained, Seller and HACBV, and each of
them, will use their best efforts to assure Buyer of the benefits
thereof; provided that the Seller and HACBV will not be required
to incur any monetary expenses in so doing (other than with
respect to obtaining consents of the other party or parties to
the assignment to Buyer of the contracts on the Consents List.)
(b) All of the Assigned Contracts to which the Seller was
not an original named party have been assigned to Seller by its
predecessor in interest, Harris Adacom Corporation, formerly
named Adacom Corporation ("HAC"). Buyer has been informed that
Seller accepted the assignment of the Assigned Contracts to which
the Seller was not an original named party from HAC (the "HAC
Contracts") without obtaining the consent of the other parties to
the HAC Contracts. Likewise, certain of the Assigned Contracts
(the "Harris Contracts") were acquired by HAC from Harris
Corporation and/or one or more of its affiliated corporations
without obtaining the consent of the other parties to the
contracts. Since 1992, the Seller has assumed all of the rights
and obligations of HAC, Harris Corporation and such affiliates
with respect to the HAC Contracts and the Harris Contracts, has
performed such contracts in its own name, has invoiced the other
parties to such contracts in its own name and has received
payment in its own name. To the extent the Buyer requires the
Seller to obtain the consent of the other party to any such
Assigned Contract to the assignment thereof to the Buyer, then
such Assigned Contracts are listed on the Consents List. With
respect to each and every Assigned Contract not listed on the
Consents List, or that is listed on the Consents List, but for
which Buyer waives the other party's consent as a condition to
Closing, the Buyer agrees (i) that it has accepted the assignment
of such contract with the understanding that the Seller was not
an original named party to such contract (or to the prior
contract) and that the other party to the contract has not
consented to any prior assignment and (ii) to the extent that the
facts (a) the Seller was not an original named party to such
contract and/or (b) the other party to the contract has not
consented to any prior assignment result in a breach of any
warranty, representation, covenant or agreement made by the
Seller or to the Buyer in this Agreement or in any document or
instrument delivered pursuant to the Closing, then such breach is
hereby waived by the Buyer.
Section 13. Instruments of Conveyance and Transfer to
Buyer. Seller will deliver to Buyer at Closing (i) a Bill of
Sale and Assignment in the form attached hereto as Annex 4, an
Assignment of Intellectual Property Rights in the form attached
hereto as Annex 6, and such other assignments of interests and
rights as Buyer shall request in order to fully vest in Buyer
good and marketable title to the Assets, subject only to the
Assumed Liabilities and (ii) all of Seller's contracts (other
than Employment Agreements), agreements, commitments, books
(except Seller's corporate minute and stock books), Harris Adacom
Inc. corporate minute and stock books, records, and other
material and data relating to the ownership, operation,
management and administration of the Business and/or the Assets;
and simultaneously with such delivery, Seller and HACBV will take
all such steps as may be necessary, desirable or appropriate to
put Buyer in actual ownership, possession and operating control
of the Business and the Assets.
Section 14. Continuing Covenants of Seller and HACBV. (a)
From time to time after Closing, at the request of Buyer, and
without further consideration, Seller and HACBV and each of them,
or their respective successors in interest, will execute and
deliver such instruments of conveyance and transfer and take such
other action as Buyer may reasonably require to more effectively
convey, transfer to and vest in Buyer, and to put Buyer in
ownership, possession and control of, the Business and the
Assets.
(b) After the second anniversary of Closing (the "Second
Anniversary") all of the agreements made or referred to in this
Section 14(b) shall automatically expire. The agreements made
herein shall apply only during the two year period following
Closing. Seller and HACBV agree to retain the sale proceeds (the
"Funds"), to the extent that they are not used to pay bona fide
liabilities, taxes (including the tax liability described in item
C of Section 20(bb)), expenses and other obligations due by
Seller, to third parties not affiliated with Seller, in a bank
or other financial institution in the United States (which will
initially be BankOne, Dallas, Texas) in the name of the Seller
until the Second Anniversary or a later date as to such amount as
shall be decided by Seller in its sole discretion in relation to
the proper resolution of the potential unpaid tax liability
referred to in Section 20(bb). Seller and HACBV agree that none
of such remaining sale proceeds shall be distributed to HACBV,
nor shall HACBV accept any of same, prior to the Second
Anniversary; provided that Seller may distribute to HACBV prior
to the Second Anniversary such sale proceeds as are necessary to
pay any expenses and costs incurred in connection with the
insolvency proceedings of HACBV up to an amount not to exceed
$550,000. The Seller will cause Robert Q. Stanton to be a
necessary signatory to the withdrawal or disposition of the
Funds. The Seller will notify the Buyer, and will deliver to the
Buyer at Closing the agreement of Robert Q. Stanton (the "Funds
Letter") to notify the Buyer, of the occurrence of a Notice Event
(herein so called) which shall be any of the following which
shall occur prior to the Second Anniversary: (1) the request by
any person for the Seller to distribute any Funds to HACBV in
excess of the $550,000 amount referred to above, in which case
notification shall be made upon receipt of such request; (2) the
proposed payment by the Seller of any Funds which exceed, in the
aggregate, the Notice Amount, as defined below, in which case
notification shall be made at least three (3) days prior to the
actual payment; and (3) the notice of removal or resignation of
Robert Q. Stanton as a necessary signatory to the withdrawal of
any Funds in which case notification shall be made upon the
occurrence of such event. The Notice Amount, at any particular
time, shall be the sum of (i) $1,000,000 plus (ii) all income
earned by the Seller after Closing on the investment of the sale
proceeds. If Robert Q. Stanton shall resign or be removed as a
necessary signatory, then the Seller shall give notice to Buyer
of the identity of a successor necessary signatory who shall
agree to notify the Buyer of the occurrence of any Notice Event.
Seller and HACBV have no agreement with Buyer regarding the use
of the income earned on the sale proceeds. Seller and HACBV
agree to maintain the corporate existence of the Seller until the
Second Anniversary in order to accomplish the foregoing.
(c) Seller and HACBV are in the process of liquidating all
of their assets, and have entered into the Transaction as part of
that process. Neither of them intends to continue in any line of
business in the United States or Canada after Closing. Seller
and HACBV agree that from and after the Closing Date, neither of
them will engage in, or be involved (directly or indirectly) in
any business which engages in, the business of providing computer
network services, maintenance or sales to business or
governmental entities in any state of the United States or in any
province of Canada in which either Seller or HAI has been engaged
in business prior to Closing. From and after Closing, Seller
will change its name to a name which does not include the words
"Harris" or "Adacom" or "HANS" and which does not suggest any
involvement in any such business.
Section 15. Closing. The Closing shall take place at the
offices of Buyer in Chantilly, Virginia at 10:00 a.m. on March
1, 1995 provided that (i) all conditions precedent to the
obligations of Buyer to close as set forth in Section 18 hereof
have either been substantially satisfied or waived by Buyer and
(ii) all conditions precedent to the obligations of Seller to
close as set forth in Section 19 hereof have either been
substantially satisfied or waived by Seller. If Closing shall
take place on March 1, 1995, then Closing shall be effective as
of 12:01 a.m. on March 1, 1995 at the place of Closing. If the
Closing does not take place on or before March 31, 1995 or a
later date as permitted by Section 24 (the "Drop Dead Date"),
then this Agreement shall automatically terminate. Termination
of this Agreement upon failure of this transaction to close shall
not operate to diminish any claims by either Seller against Buyer
or Buyer against Seller or HACBV that may otherwise have arisen
under this Agreement.
Section 16. Documents Delivered at Closing. At the Closing
of the Transaction the following described items will be
delivered as indicated:
(a) From Buyer to Seller:
(1) Four Million Dollars ($4,000,000) cash to
Seller in the form of one or more wire transfers;
(2) Seller's Note in the original principal
amount of Three Million Three Hundred Thousand Dollars
($3,300,000);
(3) Certified resolutions required by Section
22(b);
(4) Opinion of Buyer's counsel in the form
attached as Annex 7;
(5) The Certificate required by Section 22(g);
and
(6) Any other items required by this Agreement.
(b) From Seller to Buyer:
(1) Bill of Sale and Assignment of
Interests;
(2) Assignment of the Lease for 1100 Venture
Court, Carrollton, Texas with Consent of the lessor to
the assignment of the lease of that facility to Buyer;
(3) Assignment of Intellectual Property Rights;
(4) Certified resolutions required by Sections
20(b) and 21(b);
(5) Executed stock power transferring 100 common
shares in the capital of Harris Adacom Inc. to Genicom
Corporation;
(6) Executed stock power transferring 261,112
preference shares in the capital of Harris Adacom Inc.
to Genicom Corporation;
(7) Executed stock power transferring 789,444
preference shares in the capital of Harris Adacom Inc.
to Genicom Corporation;
(8) Executed stock power transferring 670,336
preference shares in the capital of Harris Adacom Inc.
to Genicom Corporation;
(9) Executed stock power transferring 160,298
preference shares in the capital of Harris Adacom Inc.
to Genicom Corporation;
(10) Original certificate for 100 common shares in
the capital of Harris Adacom Inc. issued in the name of
Genicom Corporation (together with the cancelled
original certificate for the 100 common shares in the
capital of Harris Adacom Inc. issued in the name of
Harris Adacom Network Services, Inc. being transferred
to Genicom Corporation);
(11) Original certificate for 261,112 preference
shares in the capital of Harris Adacom Inc. issued in
the name of Genicom Corporation (together with the
cancelled original certificate for the 261,112
preference shares in the capital of Harris Adacom Inc.
issued in the name of Harris Adacom Network Services,
Inc. being transferred to Genicom Corporation);
(12) Original certificate for 789,444 preference
shares in the capital of Harris Adacom Inc. issued in
the name of Genicom Corporation (together with the
cancelled original certificate for the 789,444
preference shares in the capital of Harris Adacom Inc.
issued in the name of Harris Adacom Network Services,
Inc. being transferred to Genicom Corporation);
(13) Original certificate for 670,336 preference
shares in the capital of Harris Adacom Inc. issued in
the name of Genicom Corporation (together with the
cancelled original certificate for the 670,336
preference shares in the capital of Harris Adacom Inc.
issued in the name of Harris Adacom Network Services,
Inc. being transferred to Genicom Corporation);
(14) Original certificate for 160,298 preference
shares in the capital of Harris Adacom Inc. issued in
the name of Genicom Corporation (together with the
cancelled original certificate for the 160,298
preference shares in the capital of Harris Adacom Inc.
issued in the name of Harris Adacom Network Services,
Inc. being transferred to Genicom Corporation);
(15) Copy, certified by HAI's corporate secretary,
of a resolution passed by the board of directors of
HAI or of an instrument in writing signed by all the
directors of HAI in office immediately prior to the
resignations referred to in the following paragraph
(16) which resolution or instrument expresses consent,
as required by HAI's articles, to the transfer of
shares in the capital of HAI referred to in the
preceding paragraphs (5), (6), (7), (8) and (9);
(16) Resignation of all current directors and
officers of Harris Adacom Inc. and release in favor of
HAI and Buyer from each such director and officer, and
from Seller and HACBV, in respect of any and all claims
against HAI, in the form attached as Annex 10;
(17) Documentation rectifying deficiencies in the
minute books of HAI, as identified in the memorandum
previously provided to Seller's Canadian counsel by
Buyer's Canadian counsel, including documentation of
the 1994 recapitalization of HAI, such documentation to
be in form and substance satisfactory to Buyer's
Canadian counsel;
(18) Results of lien searches (effective to within
30 days of Closing) conducted by a reputable private
research firm which results demonstrate that no
financing statements, judgment liens and tax liens are
of record with respect to the Seller or HAI except for
the Permitted Encumbrances or those which will be
released at Closing;
(19) Releases of liens as indicated under item (b)(18);
(20) Certificates of Good Standing for Seller
and HAI;
(21) Certified copy of the articles of
incorporation and by-laws of HAI (including all
amendments thereto in each case);
(22) Opinion of Seller's U.S. and Canadian counsel
in the forms attached as Annex 8(1) and Annex 8(2);
(23) Schedules, as of the close of business on the
day before Closing or such other date as near to the
Closing Date as shall be reasonably practicable, of
Seller's and HAI's receivables, payables, and
inventory;
(24) Certificate of the Seller and (to the extent
of the personal knowledge of each of them after due
inquiry) Lee Chu, its President, Jim Byrne, its
Authorized Director, and (as to the representations of
Seller relating to Seller and not HAI) Cindy Frie, its
Chief Financial Officer, dated as of the Closing Date,
confirming that the representations and warranties of
Seller made herein are true and correct as of the date
hereof and as of Closing Date, and that Seller has
performed all of the agreements contained herein to be
performed by it prior to Closing;
(25) Certificate of HACBV and (to the extent of
the personal knowledge of each of them) the Curators of
HACBV dated as of the Closing Date, confirming that the
representations and warranties of HACBV made herein are
true and correct as of the date hereof and as of the
Closing Date and that HACBV has performed all of the
agreements contained herein to be performed by it
prior to Closing;
(26) Certificate of Bruce Glashan, Lee Chu and
William John Wilkinson confirming (to the extent of the
personal knowledge of each of them after due inquiry)
that the representations and warranties contained
herein relating to HAI are true and correct as of the
date hereof and as of the Closing Date;
(27) The IRS transcript (or other such item
supplied by the IRS) showing the amount of the Seller's
federal income tax liability, including any applicable
penalties and interest, for 2q, 3q and 4q, 1993;
(28) Confirmatory assignment of assets and rights
by HAC to Seller in form and substance acceptable to
Buyer;
(29) Signature cards and banking resolutions for
all bank accounts of Seller (other than the account
described in Section 8(a) of the Seller's Letter) and
HAI, changing the names of such accounts and the
authorized signatures thereon in accordance with
Buyer's directions;
(30) Certified copy of the HACBV Order referred to
in Section 21(c);
(31) Evidence that all necessary internal
corporate action has been taken by Seller to change its
name to a name which does not include the words "HANS",
"Harris" or "Adacom";
(32) The January Balance Sheet;
(33) The Funds Letter; and
(34) Any other items required by this Agreement.
Section 17. Conduct of Business Pending Closing. Pending
the Closing and except as otherwise consented to or approved by
Buyer in writing, the Seller and HACBV agree that:
(a) The Business shall be conducted by Seller and HAI only
in its ordinary course and neither Seller nor HACBV will,
and Seller shall cause HAI not to, and HAI will not, enter
into any commitment, contract or transaction affecting the
Business, the Assets or the HAI Assets which is unusual or
outside the normal course of sound operation of the
Business.
(b) No payments or transfers of the Assets shall be made by
the Seller, or of the HAI Assets by HAI except for those in
the ordinary course of business and except for those of
which the Buyer agrees to in writing. The Seller shall
cause HAI not to make any payments or transfers of its
assets or property except in the ordinary course of business
and except for those of which the Buyer agrees to in
writing. For the avoidance of doubt, any sale, transfer or
factoring by Seller or HAI of any receivables, leases,
equipment rental streams, and any borrowing of money by
Seller or HAI (other than the sales of receivables to
Fidelity pursuant to the Fidelity Agreement) will require
the prior agreement of Buyer in writing.
(c) Seller will use its best efforts to, and will cause HAI
to, and HAI will, preserve the Business and to keep its
organization intact, and to keep available to Buyer the
services of Seller's and HAI's present employees and to
preserve for Buyer the goodwill of Seller's and HAI's
customers, suppliers and others having business relations
with Seller or HAI.
(d) Seller shall continue, and shall cause HAI to continue,
and HAI shall continue, to maintain in full force and effect
all policies of insurance or renewals thereof now in effect,
shall take out, at the expense of Buyer, such additional
insurance as may be reasonably requested by Buyer and shall
give all notices and present all claims under all policies
of insurance in a due and timely fashion.
(e) Seller will use its best efforts to, and will cause HAI
to, and HAI will use its best efforts to, keep and maintain
the tangible assets comprising their respective assets in
normal operating repair and efficiency so that said assets
will be delivered to the Buyer at Closing in the condition
required by this Agreement provided, however, Seller shall
have no obligation to repair or replace, but Seller shall
assign all insurance proceeds with respect thereto to the
Buyer.
(f) Seller will cause HAI to pay and discharge, and HAI
will pay and discharge, the liabilities of HAI in the
ordinary course in accordance and consistent with the
previous practice of HAI, except those contested in good
faith by HAI.
(g) Seller shall not, and it will cause HAI not to, and HAI
will not, increase the compensation of any of Seller's or
HAI's employees nor will the Seller or HAI hire any
additional employees without the prior written consent of
the Buyer.
(h) Except with the prior written consent of the Buyer,
Seller shall not, and it will cause HAI not to, and HAI will
not, grant or permit any liens or encumbrances to attach to
any of the Assets or the HAI Assets other than liens
previously granted in the ordinary course of business and
which are listed on the lien searches attached as Exhibit
17(h) to the Seller's Letter. If any such liens and
encumbrances attach without the written consent of the
Buyer, the Seller shall, at its sole cost and expense, cause
such liens and encumbrances to be removed prior to Closing.
(i) Each of them will use its respective best efforts to
ensure that each of the representations and warranties made
by each of them herein remain true and accurate, and will
promptly give notice to Buyer of the occurrence of any event
which might render any such representation or warranty
untrue or inaccurate.
(j) Each of them will use its best efforts to ensure that
all of the conditions to Closing are satisfied, and to
consummate the Transaction.
(k) Permit Buyer and its employees and representatives
access to all of the assets, properties, books, records and
employees of Seller and HAI and permit Buyer to conduct its
due diligence review and make such investigation of the
business and properties of Seller and HAI, and their
respective financial and legal condition, as Buyer deems
necessary or advisable.
(l) No effort will be made, or discussion or negotiation
entered, relating to sale of any of the Assets, the HAI
Assets or of the stock of the Seller, other than to the
Buyer.
(m) Before Closing, or as a part of Closing, the Seller
will make payment of all Special Liabilities that can be
determined by the time of Closing, to the extent that Seller
has cash available to pay such Special Liabilities. For
these purposes the Seller will utilize Bank One Texas, N.A.
Account No. 0100148774 (operating account) and Bank One
Texas, N.A. Account No. 0100148782 (payroll account) (both
these accounts are referred to as the "Special Liability
Accounts"). The Seller will deposit into the Special
Liability Accounts the applicable amount of its available
cash in order to cover payment of all remaining unpaid
Special Liabilities up to the amount of its available cash.
Buyer agrees that if the Seller shall not have sufficient
available cash to fully fund the Special Liability Accounts
to pay all remaining Special Liabilities, the Buyer will
either (i) deposit into the Special Liability Accounts at
Closing the applicable amounts necessary to fund any such
deficiency or (ii) pay the excess Special Liabilities within
30 days after Closing.
(n) Prior to Closing the Seller will cause HAI to execute
and deliver a release to Seller, Harris Adacom Corporation
and Harris Adacom Corporation, B.V. pursuant to which HAI
will release such entities from all known and unknown claims
that HAI has or may have against such entities other than
claims of title to the HAI Assets.
Section 18. Conditions Precedent to Obligation of Buyer.
All obligations of the Buyer under this Agreement are subject to
the fulfillment, prior to or at the Closing Date, of each of the
following conditions (unless waived in writing by the Buyer):
(a) Buyer shall not have discovered, from its due diligence
investigation or otherwise, any material error or
misstatement or omission in the representations and
warranties of the Seller or HACBV made in this Agreement or
in the Seller's Letter.
(b) Each of Seller's and HACBV's representations and
warranties contained in this Agreement shall be true and
correct in all material respects as of the date hereof and
shall be deemed to have been made again at and as of the
Closing Date and shall then be true and correct in all
material respects to the same and full extent as though this
Agreement were signed and delivered again at Closing.
Seller and HACBV shall have performed and complied in all
material respects with all agreements and conditions
required by this Agreement to be performed and complied with
prior to or at the Closing, and there shall have been no
material adverse changes in the condition of the Assets, the
HAI Assets or the Business from the condition thereof as of
the date of this Agreement. Buyer shall have been furnished
with a certificate of appropriate officers of Seller, HACBV
and HAI dated the Closing Date, in form attached as Annex 9,
certifying to the fulfillment of the foregoing conditions.
(c) Seller shall have delivered to Buyer (i) the consent of
the other party to each Assigned Contract and HAI Contracts
listed on the Consents List to the assignment thereof to the
Buyer and the change of control of HAI, respectively, and
(ii) the consents of such governmental and regulatory bodies
(other than those appearing on the Consents Lists) as shall
be necessary to consummate the Transaction.
(d) Buyer shall have received the acceptance of employment
from at least fifty percent (50%) in number of the Subject
Employees in each category listing set forth on Exhibit
11(a) to the Seller's Letter; it being understood that
verbal acceptance consent is sufficient for the purposes of
this Agreement.
(e) No order of any court or governmental agency shall be
in effect which restrains or prohibits the consummation of
the transactions contemplated by this Agreement and there
shall not have been threatened, nor shall there be pending,
any action or proceeding by or before any such court or
governmental agency seeking to prohibit or delay or
challenging the validity of the transactions contemplated by
this Agreement or petitioning for the bankruptcy or
receivership of Seller or HAI.
(f) Buyer shall have received the consent of its lender to
the Transaction.
Section 19. Conditions Precedent to Obligations of Seller.
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the
following conditions, (unless waived in writing by Seller):
(a) Seller shall not have discovered any material adverse
error, misstatement or omission in the warranties and
representations of the Buyer made in this Agreement.
(b) Buyer's warranties and representations contained in
this Agreement shall be deemed to have been made again at
and as of the Closing Date and shall then be true in all
material respects to the same and full extent as though this
Agreement were signed and delivered again at Closing. Buyer
shall have performed and complied in all material respects
with all agreements and conditions required by this
Agreement to be performed and complied with prior to or at
the Closing. Seller shall have been furnished with a
certificate of appropriate officers of Buyer, dated the
Closing Date, certified in the normal and standard form to
the fulfillment of the foregoing conditions.
Section 20. Representations and Warranties of Seller.
Except as otherwise disclosed to Buyer in Seller's Letter or as
otherwise expressly set forth in this Agreement, Seller hereby
represents and warrants to the Buyer as follows:
(a) Organization. The Seller is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to conduct
business in every foreign jurisdiction in which such
qualification is necessary and has all requisite corporate
power and authority to own, operate and lease its properties
and assets and to carry on its business as now being
conducted and to perform the obligations required to be
performed by it hereunder. Harris Adacom Inc. is a
corporation duly organized, validly existing and in good
standing under the laws of the province of Ontario, Canada
and is qualified to conduct business in every other province
or foreign jurisdiction in which such qualification is
necessary and has all requisite corporate power and
authority to own, operate and lease its properties and
assets and to carry on its business as now being conducted.
HAI does business exclusively in Canada and owns no assets
or properties in the United States. Each of the Seller and
HAI has the power and holds all rights, privileges,
franchises, licenses, permits, authorizations and approvals
(governmental and otherwise; "Licenses") necessary to own
and operate its respective properties and to carry on and
conduct its business as presently carried on and conducted.
A complete list of the Licenses is attached as Exhibit 20(a)
to the Seller's Letter. No notice of a violation of any
said License has been received by Seller or HAI or, to the
knowledge of Seller, recorded or published, and no
proceeding is pending or, to the knowledge of Seller,
threatened, to revoke or limit any of them. Seller has no
reason to believe that the Licenses in effect on the date
hereof will not be renewed. The rights under the Licenses
described in items 1, 3, 4 and 5 as shown on Exhibit 20(a)
to the Seller's Letter are not used in the Business. No
petition has been filed or, to the knowledge of Seller, is
contemplated, seeking the bankruptcy or receivership of
Seller or HAI and neither Seller nor HAI is in the course
of, and no proceedings have been taken by or against Seller
or HAI in respect of, a winding up, dissolution or
liquidation. True and complete copies of the Certificate
and Bylaws of Seller, and the Articles and By-Laws of HAI
have been delivered to Buyer, and true and complete copies
of their respective minute books and stock records have been
made available to Buyer for its inspection. James J. Byrne
is the sole director of Seller.
(b) Authority Relative to this Agreement. Seller has full
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by the Seller, and the consummation by it of the
transactions contemplated hereby, have been duly and
effectively authorized by the Seller's sole shareholder and
by the Seller's board of directors, as required by all
applicable law and by all necessary corporate proceedings of
Seller. No other corporate proceedings on the part of
Seller are necessary with respect thereto. No corporate
proceedings on the part of HAI are necessary with respect to
the execution, delivery and performance of this Agreement by
Seller (including, without limitation, the sale and transfer
of the HAI shares) other than a resolution of the board of
directors of HAI, which has been duly and effectively
adopted. The Seller will deliver to Buyer at Closing a true
and correct copy, certified by its corporate secretary of
(1) a resolution duly adopted by its sole shareholder and
(2) a resolution of Seller's board of directors, in each
case duly adopted, authorizing the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby. All such approvals are
adequate under all applicable law and the governing
instruments and documents with respect to the Seller. This
Agreement has been duly and validly executed and delivered
by Seller and constitutes the valid and binding obligation
of Seller, enforceable in accordance with its terms. The
execution and delivery by Seller of this Agreement does not,
and the consummation of the transactions contemplated hereby
(including the sale and transfer of the HAI Shares) will
not, (i) violate or result in a breach of any provision of
the Certificate of Incorporation or Bylaws of the Seller, or
the Articles or By-laws of HAI, (ii) violate, result in a
default, or give rise to any right of termination,
cancellation or acceleration (whether immediately or after
the giving of notice or the passage of time, or both), under
the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, agreement, lease, permit,
approval, consent, authorization or other instrument or
obligation to which Seller or HAI is a party or by which
Seller or HAI or any of the Assets or the HAI Assets may be
bound, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller, any of the
Assets, the HAI Assets or the Business.
(c) Title to Assets. All assets to be conveyed to the
Buyer at Closing and all of the assets used by HAI in the
conduct of its business, are owned beneficially and of
record by the Seller or HAI, as the case may be, with good
and marketable title thereto, free and clear of all liens,
mortgages, charges, pledges, security interests or other
encumbrances whatsoever, including without limitation any
rights of avoidance, under any fraudulent or voluntary
conveyance or other similar law, of any transferor or
trustee or similar fiduciary acting for the transferor, to
any of the Assets or any of the HAI Assets (collectively,
the "Encumbrances") of any persons except for the Permitted
Encumbrances. Seller and HAI are the sole owners,
beneficially and of record, of the Assets and the HAI
Assets, respectively, and except as provided in the Seller's
Letter, have good and marketable title to the Assets and the
HAI Assets, free and clear of any Encumbrances except for
the Permitted Encumbrances. All properties and rights held
under lease or license by Seller are held under valid,
enforceable and assignable leases and licenses.
(d) October and December Balance Sheets. The October
Balance Sheet and the December Balance Sheet have been
prepared by the accounting staff of Seller in accordance
with generally accepted accounting principles consistently
applied, have been certified (in the case of the December
Balance Sheet) by Seller's Chief Financial Officer, and
accurately reflect the subject matter contained therein and
do not omit any material item which, if omitted, would cause
said Balance Sheets to be materially misleading. The
October Balance Sheet and the December Balance Sheet are
attached as Exhibit 20(d) to the Seller's Letter.
(e) Absence of Undisclosed Liabilities. The Seller has
disclosed in writing to the Buyer in the Seller's Letter all
liabilities or potential liabilities which have or could
have a material adverse impact on, or otherwise create or
could create a lien, claim or demand against the Assets, the
HAI Assets or the Business.
(f) Absence of Certain Changes or Events. Except as
detailed in Exhibit 20(f) to the Seller's Letter, at any
time after October 1, 1994 and prior to or at the date
hereof, neither Seller nor HAI has:
(1) suffered any materially adverse change in
assets, liabilities or business condition except for
the cash flow shortages experienced by the Seller and
the resulting inability of the Seller to pay all of its
operating expenses as same fall due and payable;
(2) other than for the Buyer's Loan, incurred,
issued, assumed, extended, renewed or guaranteed any
indebtedness for money borrowed or any other
indebtedness, liability or obligation of any kind
(whether absolute or contingent) by Seller or HAI;
(3) sold or otherwise disposed of any of its
assets, or any interest therein, otherwise than in the
ordinary course of business;
(4) except for the inchoate tax lien in favor of
the IRS in connection with the liability of the Seller
to the IRS for unpaid federal income taxes for the
second, third and fourth quarters of 1993, which will
be paid at Closing, mortgaged, pledged or subjected to
lien or encumbrance any of its assets, and Seller has
received no notice from the IRS of any intention to
record any such lien;
(5) suffered any loss, damage or destruction in
excess of $25,000 in one instance or $100,000 in the
aggregate, to any of the Assets or the HAI Assets,
whether or not covered by insurance; provided, however,
Seller has no obligation to repair or replace any lost,
damaged or destroyed item and the Seller will assign
all of its rights to any insurance proceeds to the
Buyer at the Closing;
(6) discharged or satisfied any lien or
encumbrance prior to the time it was obligated to do
so, or paid or agreed to pay any obligation or
liability prior to the time it was payable under its
terms, except in order to qualify for trade discounts
or in instances involving less than $5,000 or in the
ordinary course of business;
(7) changed the accounting methods, practices or
principles previously followed by it or changed the
depreciation or amortization policies and rates
previously used by it;
(8) acquired any assets or properties other than
in the ordinary course of business, or entered into any
material transaction, contract, agreement or commitment
which acquisition or transaction, individually or
collectively with all other such transactions, is
likely to have a material effect on the condition,
financial or otherwise of the Business, or which
involves a payment or payments by the Seller or HAI of
more than $100,000;
(9) increased the level of compensation or
benefits of any of the employees of Seller or HAI, or
otherwise amended any employment agreement;
(10) made any declaration, setting aside or
payment of any dividend or other distribution with
respect to any shares in the capital of Seller or HAI
or any direct or indirect redemption, purchase or other
acquisition of any such shares;
(11) in the case of HAI made any issuance or
sale, or entered into any contract for the issuance or
sale, of any shares in the capital of or securities
convertible into or exercisable for shares in the
capital of HAI; or
(12) agreed to do or perform any of the
activities described in items (2) through (11) above.
(g) Properties, Contracts and Personnel Data. Seller has
delivered to Buyer as Exhibits to the Seller's Letter
accurate lists and summary descriptions of the following:
(1) substantially all fixed assets and equipment
of the Seller and HAI with their respective dates of
purchase, locations and valuations at which they are
carried in the books of Seller and HAI, all of which
have been included in the Assets to be assigned, sold
and transferred to Buyer at Closing, or are included in
the HAI Assets and will be included in the HAI Assets
at Closing;
(2) all leases and written contracts and
agreements (i) to which HAI is a party or by which any
of the Business, (to the extent conducted by HAI) or
the HAI Assets are bound (the "HAI Contracts"), and
(ii) to which the Seller is a party or by which the
Business or the Assets are bound;
(3) all Intellectual Property which Seller or HAI
owns or has the right to use in the conduct of the
Business;
(4) the names and current salary and wage rates
of all of the employees of the Seller and HAI;
(5) active customer accounts for the Seller and
HAI, including for each account, the customer's name,
address and current account receivable; to the extent
that such accounts are on Seller's or HAI's standard
order form, a copy of each of which is attached as
Exhibit 20(g)(5) to the Seller's Letter, none of
Seller, HAI, their respective employees or any person
acting (or purporting to act) on behalf of either of
them has modified, or offered to the customer to
modify, the terms and conditions printed thereon;
(6) all bank accounts, lock boxes and safe
deposit boxes of Seller and HAI, including name of
institution, account number, authorized signatories and
names of all other persons with access thereto.
(h) Contracts. Except as provided in Seller's Letter, each
contract, lease, license, agreement or other instrument to
which either Seller or HAI is a party or by the terms by
which it is bound is in full force and effect and neither
the Seller nor HAI nor any other party thereto has breached
or is in default or arrears under any of them and no event
has occurred which, with the giving of notice or the passage
of time, or both, will cause a default under, or permit the
termination, modification or acceleration of any of them by
any party thereto. Complete copies of each such contract,
lease, license, agreement or other instrument have been made
available to Buyer.
(i) Compliance with Laws. Except as specified in Exhibit
20(i) to the Seller's Letter, Seller and HAI have operated
their respective assets and businesses in compliance with
all, and as of the date of this Agreement, each of the
Seller and HAI is in compliance with each and every, law,
ordinance, rule, regulation, policy, guideline, judgment,
decree, or order of any federal, state, provincial, local,
county, municipal or foreign court or governmental agency or
public body (together, "Laws" and each a "Law") having
jurisdiction over the Seller, HAI, their respective
properties, businesses, licenses, permits or operations, non-
compliance with which could have a material adverse impact
on the Transaction or have a material adverse effect on the
ownership, financial condition, use or operation of the
Business or the Assets by the Buyer or use or operation of
the Business or the HAI Assets by HAI. Neither the Seller
nor HAI has received any notice from any such entity of a
violation or threatened claim of violation of, or alleging
non-compliance with, any such Law. Without prejudice to the
generality of the foregoing, no notice has been received by
HAI of any complaint filed by any of the employees of HAI
claiming that HAI has violated the Employment Standards Act
(Ontario), the Human Rights Code (Ontario), the Employment
Equity Act, 1993 (Ontario) (or any applicable employee or
human rights or similar legislation in any of the other
jurisdictions in which the Business is conducted by HAI or
HAI operates) or of any complaints or proceedings of any
kind involving HAI or, to Seller's and HAI's knowledge,
after due inquiry, any of the employees of HAI before any
labor relations board, except as disclosed in Exhibit 20(i)
to the Seller's Letter. There are no outstanding orders or
charges against HAI under the Occupational Health and Safety
Act (Ontario) (or any applicable health and safety
legislation in the other jurisdictions in which the Business
is conducted). All levies, assessments and penalties made
against HAI pursuant to the Worker's Compensation Act
(Ontario) (and any applicable workers' compensation
legislation in the other jurisdictions in which the Business
is conducted by HAI) have been paid by HAI and HAI has not
been reassessed under any such legislation during the past
three years. All accruals for unpaid vacation pay, premiums
for unemployment insurance, health premiums, Canada Pension
Plan premiums, accrued wages, salaries and commissions and
employee benefit plan payments have been reflected in the
books and records of HAI.
(j) Pending Matters. Except as provided in Exhibit 20(j)
to Seller's Letter, no action, suit, claim, investigation,
litigation or proceeding (legal, administrative or
arbitrative) at law, in equity, whether civil or criminal,
before any court, administrative authority or arbitrator
(each, a "Proceeding") is now pending, or to the knowledge
of the Seller is threatened, against the Seller, HAI or any
of the Assets or the HAI Assets or which seek to prevent,
restrict or delay the consummation of the Transaction
contemplated hereby, or the fulfillment or any of the
conditions to Closing specified in this Agreement. There is
no claim, or Proceeding pending, or to the knowledge of
Seller's officers, threatened, which affects or challenges
the title or interest of the Seller to any of the Assets or
of HAI to any of its assets or which would prevent or have a
material adverse effect on the ownership, use or operation
of the Business or Assets by Buyer, or the Business or HAI
Assets by HAI after Closing. Furthermore, other than as
provided in Exhibit 20(j) to the Seller's Letter, there are
no existing judgments, orders or decrees of any such court,
arbitrator, governmental department, commission, agency or
other instrumentality against or naming Seller or HAI, or
which have, or can reasonably be expected to have, the
material adverse effect described in the preceding sentence.
Except as provided in Exhibit 20(j) to Seller's Letter,
there are no actions, suits or proceedings (whether or not
purportedly on behalf of HAI) pending or, to the knowledge
of Seller or HAI, after due enquiry, threatened against or
affecting, HAI at law or in equity, or by or before any
federal, provincial, municipal or other governmental
department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or by or before an
arbitrator or arbitration board. Neither Seller nor HAI is
aware of any ground on which any such action, suit or
proceeding might be commenced with any reasonable likelihood
of success.
(k) Employee Benefit Plans.
(1) Except as listed in Exhibit 20(k) to the
Seller's Letter, as of the date of this Agreement
neither the Seller nor HAI has contributed to, is
contributing to, or is, and as of the date of Closing
neither the Seller nor HAI will be, obligated under any
pension, profit sharing, retirement, savings, health,
severance, insurance, stock purchase, disability,
incentive, option, vacation or any other type of
employee benefit plan (collectively, the "Plans").
Included on Exhibit 20(k) to the Seller's Letter is a
list of all Plans. Neither Seller nor HAI is a party
to any multi-employer plan. The Buyer will not assume
any of Seller's Plans or any obligations of the
employer thereunder. A true and complete copy of all
documents relating to the Plans has been delivered to
Buyer.
(2) As to each such Plan, each of Seller and HAI
has complied, in all respects, with all applicable laws
and regulations, including specifically, in the case of
Seller, the applicable provisions of ERISA and the
qualification provisions of the Internal Revenue Code
(the "Code"). No prohibited transaction, as defined in
Section 4975 of the Code, has occurred with respect to
any of the Plans, and none of the Plans has incurred
any accumulated funding deficiency, as defined in
Section 412 of the Code, whether or not waived. There
has not been, with respect to any of the Plans, any
reportable event, as defined in Section 4043(b) of
ERISA, that is or would be required to be reported to
the PBGC by law or regulation. The fair market value
of the assets of each of the Plans equals or exceeds
the present value of all benefits accrued under such
Plan, whether or not vested, based on the actuarial
assumptions that would be used by the PBGC if the Plan
were terminated as of the date of this Agreement.
Seller has delivered to Buyer a true and complete copy
of the actuarial valuations, if any, prepared for HAI's
Plans during the past three years. Neither Seller nor
HAI has terminated any Plan or incurred any liability
to the PBGC under Section 4001 et seq. of ERISA, and to
the knowledge of Seller and HAI, no condition exists
that could reasonably be expected to cause Seller or
HAI, to incur any such liability. All premiums, if
any, payable to the PBGC have been paid when due.
(3) All contributions to, and payments from, each
Plan of HAI that may have been required to be made in
accordance with the terms of any such Plan, or with the
recommendation of the actuary for such Plan, and, where
applicable, the laws of the jurisdictions that govern
such Plan, have been made in a timely manner.
(4) There are no pending investigations by any
governmental or regulatory agency or authority
involving or relating to any Plan of HAI, no threatened
or pending claims (except for claims for benefits
payable in the normal operation of the Plans of HAI),
suits or proceedings against any Plan of HAI or
asserting any rights or claims to benefits under any
Plan of HAI that could give rise to a liability nor, to
the knowledge of Seller or HAI, are there any facts
that could give rise to any liability in the event of
such investigation, claim, suit or proceeding.
(5) No notice has been received by HAI of any
complaints or other proceedings of any kind involving
HAI or, to Seller's or HAI's knowledge, any of the
employees of HAI before any pension board or committee
relating to any Plan or to HAI.
(l) Labor Matters. Except as provided in Exhibit 20(l) to
the Seller's Letter, neither the Seller nor HAI is a party
to any collective bargaining agreements. Neither Seller nor
HAI has made any commitments to or conducted negotiations
with any labor union or employee association with respect to
any future collective bargaining agreements and neither
Seller nor HAI is aware of any current attempts to organize
or establish any labor union or employee association with
respect to any employees of Seller or HAI, nor is there any
certification of any such union with regard to a bargaining
unit. There are no controversies pending, or, threatened
between Seller or HAI and any of their respective employees
which affect, or can reasonably be expected to affect, the
earnings, assets, financial condition or operations of the
Business or relate to any specific effort to prevent,
restrict or delay consummation of the Transaction.
(m) Right to Vote Stock. HACBV has the sole and exclusive
right to vote, and has voted, all the stock of the Seller in
favor of the Transaction.
(n) Harris Adacom Inc. (Canada) The authorized capital of
HAI consists of an unlimited number of common shares and
preference shares. The Seller is the sole shareholder of
HAI, and owns beneficially and of record all of the issued
and outstanding shares of stock of HAI, which are comprised
of 100 common shares and 1,881,190 preference shares
(together, the "HAI Shares"), all of which are validly
issued and outstanding, fully paid and nonassessable and not
subject to any preemptive rights. Except for HAI, the
Seller does not own any stock in any other corporation or
entity and there are no other subsidiary corporations or
entities of the Seller. HAI does not own any stock in any
corporation or entity and there are no subsidiary
corporations or entities of HAI and HAI does not have any
agreements of any nature to acquire, directly or indirectly,
any shares, other securities or other proprietary interests
in any corporation, firm or other entity and HAI does not
have any agreements to acquire or lease any other business
operations. HAI has no commitment to issue or sell any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person
the right or obligation to acquire, from it, any shares of
its capital stock, and no such securities or obligations are
issued or outstanding and no person has any right or
privilege (whether by law, pre-emptive or contractual) for
the purchase, subscription, allotment or issuance of any
unissued shares or other securities of HAI. Exhibit 20(n) to
Seller's Letter sets forth the names and titles of all the
officers and directors of HAI.
(o) Real Property Matters.
(1) Other than the leased real property listed in
Exhibits 2(b) and 20(g)(2) to the Seller's Letter (the
"Leased Property") neither Seller nor HAI has, during
the seven years prior to the date hereof, been the
beneficial or registered owner or (in the case of HAI)
has leased, any real property.
(2) Seller and HAI have the exclusive right to
possess, use and occupy the Leased Property and it is
in good condition and in a good state of maintenance
and repair, adequate and suitable for the purposes for
which it is currently being used by Seller or HAI, as
the case may be, and Seller or HAI has adequate rights
of ingress and egress for the operation of the Business
in the ordinary course. Neither Seller nor HAI has
received any written notification of any work being
ordered, directed or requested with respect to
maintenance or repair of any of the Leased Property.
(3) There is nothing owing in respect of any
Leased Property by Seller or HAI with respect to rent
or other accounts to any lessor, or to any municipal
corporation or to any other corporation or commission
owning or operating a public utility for water, gas,
electrical power or energy, steam or hot water, or for
the use thereof, other than current accounts in respect
of which the payment due date has not yet past, or
which are accrued on the December Balance Sheet.
(4) No part of any Leased Property has been
taken or expropriated by any federal, state,
provincial, municipal or other competent authority nor
has any notice or proceeding in respect thereof been
given to Seller or HAI.
(5) Seller or HAI, as the case may be, is in
fact exclusively occupying and using the Leased
Property other than those three Leased Properties which
have been subleased to third parties as identified on
Exhibit 2(b) to the Seller's Letter.
(p) No Breach or Violation. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby does not and will not
conflict with, or result in any breach or violation of, any
applicable provision of law or administrative regulation or
any mortgage, lien, lease, agreement, instrument, order,
judgment or decree or any other material obligation of any
kind to which Seller or HAI is a party or by which any of
their respective properties are bound. Except as described
in Section 12 with respect to Assigned Contracts, no consent
of any person is required for the performance of Seller's
obligations hereunder or otherwise for the closing of the
Transaction.
(q) Governmental Authority. No consent or approval of, or
filing, registration or notice (including, without
limitation, "bulk sales" or similar filings or notices)
with, any governmental body, entity, unit or agency (other
than as a customer) is required for the performance of
Seller's obligations hereunder (including, without
limitation, for the transfer of the HAI Shares), or
otherwise for the lawful consummation of the Transaction.
(r) Third Party Consents. Except as provided in Section 12
relating to Assigned Contracts and in Seller's Letter, there
is no requirement applicable to Seller or HAI to make any
filing with, or obtain any consent or approval from any
business entity or individual, as a condition to the
consummation of the transactions contemplated by this
Agreement.
(s) Completeness of Assets. The Assets and the HAI Assets
constitute all of the properties and assets necessary to the
operation of the Business as it is currently being conducted
and as an ongoing business. Section 2 (except for
immaterial or insignificant properties and assets) and the
Exhibits referred to therein, and (with respect to the HAI
Assets) Exhibit 20(g)(1), (2), (3), (5) and (6) to the
Seller's Letter, constitute a true, accurate, and complete
list of substantially all items of real and personal
property, whether tangible or intangible, owned or leased by
Seller or HAI including, without limitation, all contracts,
written and oral, other than the Excluded Assets. There are
no material assets used or required by the Seller or HAI in
the proper and normal conduct of the Business which are not
owned or leased by Seller or HAI, except as referred to in
the Seller's Letter.
(t) Condition of Tangible Assets. Exhibit 20(t) to the
Seller's Letter sets forth a list of locations of tangible
assets of the Seller and HAI (other than inventories) and
the valuations of such assets at which they are carried on
the books of the Seller and HAI. All tangible assets (with
a replacement cost in excess of $5,000) being delivered to
the Buyer pursuant hereto, and all HAI Assets (with a
replacement cost in excess of $5,000) are in good operating
condition for the intended use and operation of such
tangible assets, ordinary wear and tear excepted.
(u) Condition of Intangible Assets. All intangible assets
being delivered to the Buyer pursuant hereto (except for
immaterial or insignificant intangible assets) will be
delivered to Buyer, and all intangible assets owned by HAI
or used by it in its business are owned by it in such a
manner and condition that Buyer and HAI, respectively, will
have full enjoyment of the rights and privileges attendant
thereto from and after Closing without illegally infringing
upon the rights of any other party, except to the extent
that the lack of a third party consent to assignment of any
Assigned Contracts may adversely affect Buyer's rights
thereto.
(v) No Other Agreements. Neither Seller nor HAI is a party
to any outstanding agreements with any person other than
Buyer, and no person other than Buyer has any option, right
or privilege (whether by law, pre-emptive or contractual)
for transfer or sale, directly or indirectly, of any
interest in all or any part of the Assets (including the HAI
Shares), the HAI Assets, or the Business except for
transfers or sales in the ordinary course of business.
(w) Inventories. Exhibit 20(w) to the Seller's Letter sets
forth a list of equipment and spare parts inventories of the
Seller and HAI and the valuations at which such inventories
are carried on the books of Seller and HAI (by location, in
the case of equipment inventories). The inventories (a)
shown on the October Balance Sheet, (b) acquired by the
Seller and HAI subsequent to the date thereof and (c) shown
in the Inventory Schedule attached as Exhibit 20(w) to the
Seller's Letter: (i) with respect to equipment inventories,
are carried on Seller's and HAI's respective books at cost,
and consist of items of quality and quantity usable or
sellable in the normal course of the Seller's and HAI's
respective businesses and are sufficient but not excessive
in kind or amount for the conduct of the Business as it is
presently being conducted; and (ii) with respect to spare
parts inventories, are written down from cost on a straight
line basis over three years. The value of all items of
equipment inventory which are obsolete, damaged or of a low
standard or quality has been written down on the books of
Seller and HAI, to realizable market value such that any
material deviation from realizable market value has been
recognized in accordance with generally accepted accounting
principles applied on a consistent basis.
(x) Accounts. All of the accounts receivable of Seller and
HAI (a) shown on the October Balance Sheet, (b) shown on
Exhibit 2(a) to the Seller's Letter and (c) originated by
the Seller and HAI subsequent to December 31, 1994 are valid
and subsisting, have or will have arisen in the ordinary
course of the business, and will be collectible in amounts
not less than the aggregate amount thereof (net of reserves
for non-collectibility established in accordance with past
practices) carried on the respective books of the Seller and
HAI. Each such receivable is not and, as of the Closing,
will not be the subject of a pledge or assignment and will
be free of any and all liens, encumbrances and charges
whatsoever and has not been and will not be placed for
collection with any attorney or collection agency or similar
individual or firm, except for receivables sold pursuant to
the Fidelity Agreement. Substantially all of the goods
and/or services with respect to such accounts receivable
have been delivered and/or provided to the customer (other
than as reflected in deferred revenue) and the accounts
receivable have been earned and none of the goods delivered
with respect to such accounts receivable is reflected in
inventory on the financial statements of the Seller or HAI.
Neither the Seller nor HAI has received any notice of
insolvency from any of the obligors on the accounts
receivable and the Seller and its officers know of no reason
why the accounts receivable will not be collected in full
within ordinary collection cycles after Closing except to
the extent of the amount of the reserve for bad debt set
forth in the October Balance Sheet, which reserve has been
historically determined to be adequate. Neither the Seller
nor HAI has any receivables from or pending or unasserted
claims against any of its present or former shareholders,
directors, officers, employees or affiliates, except as
reflected on the October Balance Sheet, the December Balance
Sheet and as detailed in the Seller's Letter.
(y) Powers of Attorney. There are no outstanding general
or special powers of attorney granted by the Seller or HAI
in favor of any person, firm or corporation for any purpose
except to the extent set forth in the terms of any of the
Assigned Contracts.
(z) Contracts and Commitments. Except as specified in the
Seller's Letter and the Exhibits thereto, neither the Seller
nor HAI is a party to nor bound by, nor are any of their
respective assets or properties subject to, any of the
following types of contracts or commitments (whether oral or
written, fixed or contingent) that will survive Closing and
be binding upon the Buyer or HAI:
(1) a contract or commitment for the employment
of any person which cannot be terminated by the Seller
or HAI, as the case may be, at any time without penalty
upon not more than thirty days prior notice;
(2) a contract or commitment with any present or
former director, officer, employee, shareholder or
affiliate (or former affiliate) of Seller or HAI or
with any associate or affiliate of any such director,
officer, employee, shareholder or affiliate (or former
affiliate);
(3) a contract or commitment pursuant to which
the Seller or HAI (i) has borrowed money or guaranteed
a liability of any other party, unless such borrowing
has been fully repaid or such guaranty terminated, (ii)
is entitled or required to borrow money or guaranty a
liability of any other party, (iii) has indemnified,
agreed to hold harmless, or insured any other party
from any claim, loss or damage or (iv) has encumbered
or may be required to encumber any of its properties or
assets to secure the performance of any contract or
commitment of the types referred to in clauses (i),
(ii) or (iii), just described;
(4) a partnership, joint venture or teaming
agreement, or a contract or commitment to enter into a
partnership, joint venture or teaming agreement;
(5) a contract or commitment by the Seller or HAI
for the purchase of goods or services in excess of the
normal requirements of their respective businesses, or
at a price which materially exceeds that normally
payable for such goods and services;
(6) to the best knowledge of Seller and its
officers, and except as may occur in the ordinary
course of sound business practices, a material contract
or commitment of any kind which is or which can
reasonably be expected to be unprofitable or unduly
burdensome to the Seller or HAI, recognizing that sound
business practices include the initiation and
maintenance of customer relationships through
competitive pricing;
(7) a contract or commitment in excess of $5,000
entered into other than in the ordinary course of
business of the Seller or HAI;
(8) a contract with any person containing any
provision or covenant prohibiting or limiting the
ability of the business of Seller or HAI to compete
with any person or prohibiting or limiting the ability
of any person to compete with the Seller or HAI;
(9) a contract relating to and resulting in (A)
the disposition or acquisition of any real property,
product lines, businesses, or assets (other than in the
ordinary course of business) or (B) any merger or other
business combination.
(aa) Transactions With Affiliates. Except as set forth in
Exhibit 20(aa) to the Seller's Letter, no shareholder,
director, officer, employee or affiliate of the Seller or
HAI (collectively, "Related Parties"), owns, directly or
indirectly, any interest in, or is a director, officer or
principal employee of or a consultant to any corporation,
partnership or other business organization which (i) is a
competitor, supplier or major customer of the Seller or HAI
or (ii) is in any material way associated with or involved
in the business conducted by the Seller or HAI, or (iii)
owns, directly or indirectly, in whole or in part, any
material property, asset or right, tangible or intangible
(including, without limitation, the Intellectual Property)
which the Seller or HAI is presently operating or using or
the use of which is material to the Business or (iv) is a
party which has any cause of action or other claim
whatsoever against, or which owes any amount to, Seller or
HAI in connection with the Business, except for any
liabilities reflected in the October Balance Sheet and
claims in the ordinary and normal course of business, such
as for accrued vacation pay and accrued benefits under
employee benefit plans of HAI. To the extent that any of
the Assets were acquired by Seller, or any of the HAI Assets
were acquired by HAI, from an affiliate, such acquisition
was for full value and on arm's length terms.
(bb) Taxes.
(1) Except for (A) Seller's second, third and
fourth quarter 1993 federal income taxes, which are
properly reflected and accrued on the December Balance
Sheet; (B) other Taxes properly reflected and accrued
on the December Balance Sheet and which will be
properly reflected and accrued on the Closing Date
Balance Sheet, and (C) a potential unpaid tax liability
for first quarter 1993 income taxes of Harris Adacom
Corporation with which the Seller may be required to
file a consolidated income tax return (at this time
Seller does not know for certain whether it will be
required to file such a consolidated return and if it
is required to do so what the tax liability will be,
but Seller has delivered to Buyer true and complete
copies of its working papers with respect to such
potential liability), the Seller and HAI have paid all
Taxes which have become due and payable in the full
amount of the liability thereof and have filed in the
manner and within the time prescribed by the relevant
law in all applicable jurisdictions all tax returns,
tax reports and other information required to be filed
with respect to those Taxes and there are presently no
federal, state, provincial or local Taxes of any kind
which are due and payable by either of them which have
not already been paid. All tax returns, tax reports
and other information so filed by Seller and HAI are
true and correct as filed.
(2) HAI has made adequate provision in its
financial statements for all Taxes payable in respect
of periods up to and including the date hereof in
respect of which a tax return has not yet been filed.
(3) Canadian federal and provincial assessments
for Taxes under income tax legislation have been issued
to HAI covering all periods up to and including the
1993 taxation year, and any amounts owing in respect of
such assessments have been paid. All amounts owing
under assessments issued for all other applicable Taxes
payable by HAI have been paid.
(4) There are no actions, suits, reassessments or
other proceedings or audits initiated or in progress
or, to the best of Seller's or HAI's knowledge, any
such matters pending or threatened or any
investigations or claims initiated, in progress,
pending or threatened against HAI or Seller with
respect to Taxes and, in particular, there are no
currently outstanding reassessments or enquiries which
have been issued or raised by any governmental
authority relating to any Taxes.
(5) HAI has withheld, collected and remitted
within the prescribed time all amounts required to be
withheld, collected or remitted by it in respect of any
Taxes, including, but not limited to, any such Taxes in
respect of payments made to employees or persons not
resident in Canada.
(6) The same businesses, if any (taking into
account all relevant factors including the types of
products sold, property leased and services rendered)
in the course of which any non-capital losses were
realized and in the course of which any capital cost of
depreciable properties, expenditures giving rise to
investment tax credits and eligible capital
expenditures (each within the meaning of the Income Tax
Act (Canada) were incurred by HAI have been carried on
by HAI continuously since the time the losses were
realized or costs or expenditures incurred and such
business will continue to be carried on up to the
Closing Date.
(7) There are no circumstances existing which
could result in the application to HAI of either
section 78 or section 80 of the Income Tax Act (Canada)
or any equivalent provision of provincial legislation.
(8) For purposes of this Section, "Taxes" means
all governmental taxes, levies, duties, assessments,
reassessments and social and other charges of any
nature whatsoever, whether direct or indirect,
including but not limited to, income tax, profits tax,
gross receipts tax, corporation tax, sales and use tax,
wage tax, payroll tax, capital tax, stamp duty, real
and personal property tax, land transfer tax, customs
or excise duty, excise tax, turnover or value added tax
on goods sold or services rendered, withholding taxes,
and any interest, fines, additions to tax and penalties
thereon, and "Tax" means any one of them.
(cc) Intellectual Property. Exhibit 20(cc) to the
Seller's Letter sets forth a complete list of all trade
names, trademarks, service marks, patents, patent rights,
inventions, trade secrets, proprietary processes and
formulae, copyrights, software and other property rights
generally considered to be intellectual property or
industrial property, as well as all applications for
registration or certificates for any of the foregoing (the
"Intellectual Property") Seller or HAI owns or has the right
to use in the conduct of the Business. Seller's and HAI's
rights to use the Intellectual Property are not subject to
any restrictions and Seller and HAI are authorized to sell
or assign all of the Intellectual Property. Seller and HAI
are not infringing upon any rights of any third party in the
Intellectual Property and no third party is infringing upon
the rights of Seller or HAI in the Intellectual Property.
There is no claim or Proceeding, pending or threatened
against Seller or HAI, or naming either of them, asserting
that its use of any Intellectual Property infringes upon the
rights of any third party or otherwise contesting the rights
of Seller or HAI in the Intellectual Property.
(dd) Insurance. Each of Seller and HAI has all of its
property and assets insured against loss or damage by all
insurable hazards or risks on a replacement cost basis and
such insurance coverage will be continued in full force and
effect to and including the Closing. Exhibit 20(dd) to the
Seller's Letter sets out all insurance policies (specifying
the insurer, the amount of the coverage, the type of
insurance, the policy number and any pending claims
thereunder) maintained by Seller or HAI, as the case may be,
on its property and assets or personnel as of the date
hereof and true and complete copies of the most recent
inspection reports, if any, received from insurance
underwriters or others as to the condition of the property
and assets of Seller and HAI. Seller and HAI are not in
default with respect to any of the provisions contained in
any such insurance policy and have not failed to give any
notice or present any claim under any such insurance policy
in a due and timely fashion. Seller has provided to Buyer a
true copy of each insurance policy referred to in Exhibit
20(dd).
(ee) Seller's Financial Statements. Seller has previously
furnished Buyer with true and complete copies of (i) the
audited and consolidated financial statements of Seller and
HAI for the fiscal years of 1992 and 1993, including the
notes thereto (the "Seller's Audited Financial Statements"),
together with the reports on such statements of Deloitte &
Touche and (ii) the October Balance Sheet and the December
Balance Sheet. Such financial statements present fairly the
consolidated financial position of Seller and HAI as of such
dates, and the consolidated results of their operations and
consolidated changes in their financial position for such
periods and have been prepared in accordance with generally
accepted accounting principles in the United States applied
on a consistent basis. The books and records of Seller and
HAI fairly and correctly set out and disclose in accordance
with generally accepted accounting principles the financial
position of Seller and HAI as at the date hereof, and all
financial transactions of Seller and HAI have been
accurately recorded in such respective books and records.
(ff) Environmental Matters. Except as set forth in Seller's
Letter in Exhibit 20(ff), Seller and HAI have obtained and
currently maintain in good standing all environmental,
public health and safety, and worker health and safety
permits, licenses, approvals, consents and other
authorizations, if any and as necessary, from governmental
or regulatory authorities, including any permit by rule,
required under any applicable environmental or other law to
carry on the business and activities of the Seller and HAI
("Environmental Permits") as presently being conducted,
including, without limitation, those relating to (i)
emissions, discharges or threatened discharges of
pollutants, contaminants, hazardous or toxic substances,
wastes, or petroleum into the air, surface water, ground
water or the ocean, or on or into the land ("Hazardous
Emissions") and (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, hazardous or toxic
substances, wastes, or petroleum ("Handling Hazardous
Substances"). Seller and HAI are in substantial compliance
with all of the terms and conditions set forth in such
Environmental Permits, if any, and are also in substantial
compliance with all of the terms and conditions contained in
or required of them by any law, regulation, policy,
guideline, order, judgment or decree of any federal, state,
provincial, local or foreign court or governmental or
regulatory authority applicable to or having jurisdiction
over Seller, HAI, the Business, the Assets or the HAI
Assets. Neither Seller nor HAI has received notice of, is
otherwise aware of, any facts, events or conditions which
exist which (x) interfere with, prevent, or, with the
passage of time, could interfere with or prevent continued
substantial compliance with any of the Environmental
Permits, if any, or any of the aforementioned laws,
regulations, policies, guidelines, orders, judgements or
decrees, (y) may give rise to any liability (whether based
in contract, tort, implied or express warranty, criminal or
civil statute or otherwise) under any law, regulation,
policy or guideline relating to the Hazardous Emissions or
Handling Hazardous Substances or (z) obligate either of them
or, with the passage of time, could cause either of them to
be obligated to clean up, remedy or otherwise restore to a
former condition, by itself or jointly with others, any
contaminated surface water, ground water, soil or any
natural resources associated therewith (whether in
connection with or in relation to its current Business and
currently owned or leased properties, or any business
previously conducted by it, or any property previously owned
or leased by it, or otherwise). Neither Seller nor HAI has
ever received any notice of, or been prosecuted for an
offence alleging, non-compliance with any of the
aforementioned laws, regulations, policies or guidelines and
neither Seller nor HAI has settled any allegation of non-
compliance short of prosecution. Seller has delivered to
Buyer true and complete copies of all environmental audits,
evaluations, assessments, studies or tests relating to
Seller or HAI or their owned or leased properties, of which
Seller or HAI is aware.
(gg) Seller's 1995 Plan. The Seller's 1995 Plan, dated
1/06/95, a copy of which is attached as Exhibit 20(gg) to
the Seller's Letter, represents the bona fide business plan
of the Seller, and is based on projections and assumptions
of Seller's management which are reasonable in light of
Seller's historical business performance and present
business prospects.
(hh) Arms's Length Transaction. Seller and HACBV have
entered into the Transaction on the terms and conditions
contained herein after offering the Assets, the HAI Assets
and Business for sale in a competitive bidding process, and
after arms' length negotiation with the Buyer.
(ii) Warranties. Exhibit 2O(ii) to the Seller's Letter
contains a true and accurate description of the standard
product warranties given by HAI to their customers. Such
Exhibit sets forth a list of all outstanding warranties
given by HAI to its customers which are on materially more
favorable terms to its customers than such standard
warranties.
(jj) Full Disclosure. Seller has disclosed all events,
conditions and facts that may have a material adverse effect
on the Business, the Assets or the HAI Assets which the
Seller, HAI, or any officer or director of Seller or HAI
knows or should know. None of the officers, directors or
shareholders of the Seller or HAI has withheld information
of such events, conditions or facts which he or she knows,
or should know, that may have a material adverse effect on
the Business, the Assets or the HAI Assets. None of the
representations and warranties made by Seller herein or
contained in Seller's Letter or in any certificate or other
instrument furnished to Buyer pursuant hereto contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained herein or therein not misleading, in light of the
circumstances under which they were made.
Section 21. Representations and Warranties of HACBV.
Except as otherwise disclosed to Buyer in Seller's Letter prior
to the execution of this Agreement, or as otherwise expressly set
forth in this Agreement, HACBV hereby represents and warrants to
the Buyer as follows:
(a) Organization. HACBV is a corporation duly organized,
validly existing and, except as noted below, is in good
standing under the laws of the Netherlands and is qualified
to conduct business in every foreign jurisdiction in which
such qualification is necessary and has all requisite
corporate power and authority to own, operate and lease its
properties and assets and to carry on its business as now
being conducted and to perform the obligations required to
be performed by it hereunder. Notwithstanding the
foregoing, HACBV is currently in bankruptcy proceedings in
the Netherlands and its Curators (herein so called) duly
appointed by the Dutch court with jurisdiction over HACBV
are Rutger J. Schimmelpenninck and Wouter J.P. Jongepier.
The Curators have been recognized by the United States
Bankruptcy Court for the District of Delaware with respect
to HACBV with full right to vote the shares of the Seller in
favor of this Transaction,
(b) Authority Relative to this Agreement. HACBV has the
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by HACBV and the Seller, and the consummation by
the Seller of the Transaction, and HACBV's approval and
consent of the consummation by Seller of the Transaction,
has been duly and effectively authorized by HACBV and by the
Curators, as required by all applicable law, and by all
necessary corporate proceedings of Seller. No other
corporate proceedings on the part of Seller or HACBV are
necessary with respect thereto. HACBV will deliver to Buyer
at Closing a true and correct copy of a resolution of the
Curators, duly adopted, authorizing the execution, delivery
and performance of this Agreement and the consummation of
the transactions contemplated hereby, by HACBV. All such
approvals are adequate under all applicable law and the
governing instruments and documents with respect to the
Seller and HACBV. This Agreement has been duly and validly
executed and delivered by HACBV and constitutes the valid
and binding obligation of HACBV, enforceable in accordance
with its terms. The execution and delivery by HACBV of this
Agreement does not, and the consummation of the transactions
contemplated hereby and thereby will not, violate or result
in a breach of any provision of the Articles of
Incorporation or By Laws or other governing instruments and
charter documents of HACBV, (ii) result in a default, or
give rise to any right of termination, cancellation or
acceleration (whether immediately or after the giving of
notice or the passage of time, or both), under the terms,
conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or
obligation to which HACBV is a party or by which HACBV may
be bound, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to HACBV.
(c) Right to Vote Stock. HACBV has the sole and exclusive
right to vote, and has voted, all the stock of the Seller in
favor of the Transaction. Such authority to vote the stock
of Seller in connection with any sale involving the Seller
for which stockholder approval is required has been
exercised pursuant to Order of the United States Bankruptcy
Court for the District of Delaware dated December 22, 1994
in Case No. 94-709 (the "HACBV Order"), by the Curators who
have signed this Agreement. The HACBV Order is final an d
has not been appealed, rescinded or amended and is in full
force and effect.
(d) No Other Agreements. HACBV is not a party to any
outstanding agreements with any person other than Buyer for
transfer or sale, directly or indirectly, of any interest in
all or any part of the Assets, the HAI Assets or the
Business.
(e) Arm's Length Transaction. Seller and HACBV have
entered into the Transaction on the terms and conditions
contained herein after offering the Assets and Business for
sale in a competitive bidding process, and after arms'
length negotiation with the Buyer.
Section 22. Representations and Warranties by Buyer.
Buyer hereby represents and warrants to the Seller and HACBV as
follows:
(a) Organization. Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of the
State of Delaware, has all requisite power and authority to
carry on its business and is duly qualified as a foreign
corporation to transact business within the State of Texas.
(b) Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement by the Buyer has
been duly and effectively authorized by the Buyer's board of
directors as required by all applicable law. The Buyer will
deliver to Seller at Closing a true and correct copy,
certified by its corporate secretary of resolutions duly
adopted by its board of directors, authorizing the
execution, delivery and performance of this Agreement. All
such director approvals shall be adequate under all
applicable law and the governing instruments and documents
with respect to the Buyer.
(c) No Breach or Violation. The execution, delivery and
performance of this Agreement and the consummation of the
Transaction does not and will not conflict with, or result
in any material breach or violation of, any applicable
provision of law or administrative regulation or any
material mortgage, lien, lease, agreement, instrument,
order, judgment or decree, or any other material obligation
or restriction of any kind to which the Buyer is a party or
by which its properties are bound.
(d) Full Disclosure. None of the representations and
warranties made by Buyer herein or contained in any
certificate or other instrument furnished or to be furnished
to Seller pursuant hereto contains any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements contained herein or therein, in
the light of circumstances under which these were made, not
misleading.
(e) Pending Matters. No material and substantial
investigation, litigation, proceeding at law, in equity or
before any administrative authority is now pending against
the Buyer, or to the knowledge of the Buyer, is threatened
against the Buyer.
(f) Reports. Each of the following reports (i) the Genicom
Corporation 1993 Annual Report, (ii) Form 10-K for Genicom
Corporation for the fiscal year ended January 2, 1994, (iii)
Form 10-Q for Genicom Corporation for the quarterly period
ended April 3, 1994, (iv) Form 10-Q for Genicom Corporation
for the quarterly period ended July 3, 1994, (v) Form 10-Q
for Genicom Corporation for the quarterly period ended
October 2, 1994 and (vi) Genicom Press Release - "Genicom
Corporation Reports Fourth Quarter Results" released January
31, 1995, accurately reflects the subject matter contained
therein and does not omit any material item which, if
omitted, would cause said report to be materially
misleading.
(g) Funding. On or prior to Closing the Buyer will have
made adequate provisions to obtain the cash necessary to
timely and fully fund its obligations under the Seller's
Note. The Buyer will deliver to Seller at Closing a written
certificate to that effect describing in reasonable detail
the nature of such adequate provisions.
Section 23. Survival of Representations and Warranties.
All of the representations and warranties of Seller, HACBV and
Buyer contained herein shall survive the consummation of the
Transaction for a period of twenty-four (24) months and shall
then expire, except that all representations and warranties
relating to environmental and tax matters shall survive the
period of their respective periods of limitations. The party
making each such representation and warranty shall not be liable
for a breach thereof except for a breach with respect to which a
written claim shall have been delivered to such party within the
applicable survival period.
Section 24. Risk of Loss. Risk of loss, damage or
destruction to the Assets shall be upon the Seller until Closing
and thereafter upon the Buyer. In the event there shall be any
material damage, destruction or loss on or prior to the Closing
Date to the Assets or the HAI Assets, then the Closing shall be
postponed for five working days in order for the Buyer to assess
the extent of the damages, loss or destruction. If such loss,
damage or destruction either materially interferes or disrupts
the ownership, operation and management of the Business or
relates to a significant and/or material portion of the Assets or
the HAI Assets, then the Buyer may elect either (i) to consummate
the Transaction on the Closing Date and accept the Assets and the
HAI Assets in their then condition, in which event, Seller shall
assign to Buyer all of Seller's rights under any insurance or pay
over to Buyer all proceeds of insurance covering any property
damage, destruction or loss or (ii) terminate this Agreement.
Any loss, damage or destruction of vehicles, equipment or
inventory in an amount of $200,000 or less fully covered by
insurance the proceeds of which are assigned to Buyer shall not
be deemed to be a "material" loss, damage or destruction.
Section 25. Seller's Taxes. All federal, state,
provincial and local income taxes based upon the sales
transaction contemplated hereby shall be a liability to be paid
by the Seller and none of the Assets shall be reduced by the
amount of any such taxes.
Section 26. Indemnification by Seller and HACBV.
(a) Without in any way limiting the warranties,
representations or agreements contained herein, or the rights or
remedies available to the Buyer for the breach thereof, and
subject to the provisions of sub-paragraphs (b), (c) and (d)
below, Seller hereby agrees, with respect to the matters set
forth in clauses (i) through (v), below, and HACBV agrees, with
respect to the matters set forth in clauses (vi) and (vii),
below, to indemnify and hold the Buyer, and its successors and
assigns, free and harmless from and against, and to fully
reimburse and compensate the Buyer for, as the case may be, any
and all loss, liability, damage or expense (including reasonable
attorneys' fees) arising from (i) the breach of any
representations, warranties, agreements and covenants made herein
(or under the provisions of any documents or instruments referred
to herein, attached hereto or delivered to the Buyer at Closing)
by Seller or HAI to Buyer, (ii) the operation of the Business
prior to Closing (except to the extent that any such liability is
an Assumed Liability), (iii) claims by employees of the Seller
for severance or otherwise, whether arising before or after the
Closing, (iv) any matter disclosed on Exhibit 20(j) to the
Seller's Letter, (v) any liability of Seller which is not an
Assumed Liability, (vi) the breach of any representations,
warranties, agreements and covenants made herein (or under the
provisions of any documents or instruments referred to herein,
attached hereto or delivered to the Buyer at Closing) by HACBV to
Buyer and (vii) any competing claim by any subsidiary or
affiliate of HACBV to any right, title or interest in or to any
of the Assets or the HAI Assets. This Section will apply to
claims of indemnification made against Seller and/or HACBV by
Buyer based upon claims made against Buyer or HAI by third
parties. This Section will also apply to claims made by Buyer
directly against Seller and/or HACBV not involving any third
party claim against Buyer or HAI.
(b) Notwithstanding the provisions of Paragraph (a) of this
Section, the Seller and/or HACBV shall not be liable for, and the
Purchase Price shall not be adjusted for, any claims for
indemnification by the Buyer to the extent such claims shall not
exceed $150,000 in the aggregate. The limit of Seller's
liability for claims that may be made against Seller on account
of any breaches of warranties, representations, covenants and
agreements relating to HAI shall not exceed the dollar amount of
the Purchase Price allocated to the HAI Shares as provided in
Section 10.
(c) If the Buyer shall make a claim for indemnification
hereunder at any time while any portion of the Purchase Price
shall remain unpaid, the Buyer shall not under any circumstances
have the right to not make timely payment directly to the Seller
of any unpaid portion of the Purchase Price (determined without
regard to such claim) on account of such claim except for the
reasons set forth in Section 8(d). If the Buyer shall, on the
basis of a claim for indemnification, fail to make timely payment
of any portion of the Purchase Price (determined without regard
to such claim) directly to the Seller except for the reasons set
forth in Section 8(d), then the Buyer agrees that neither the
Seller nor HACBV shall be liable for, nor shall the Purchase
Price be adjusted for, such claim for indemnification.
(d) Notwithstanding the last sentence of paragraph (c) of
this Section, if the claim for indemnification made by the Buyer
shall be based upon an identifiable and certain and non-
speculative economic loss actually sustained by the Buyer, and
not otherwise recovered by the Buyer pursuant to Section 7(c)
hereof, then the Buyer, as a condition precedent to the validity
of its claim for indemnification, shall deliver the dollar amount
of such claim (or the portion of the Purchase Price then
remaining unpaid, if less) to the Escrow Agent at the same time
as the payment shall have otherwise been due to the Seller and
the provisions of Section 9 shall apply. On the other hand if
the claim for indemnification made by the Buyer shall not be
based upon an identifiable and certain and non-speculative
economic loss actually sustained by the Buyer, then the Buyer
shall still nonetheless make timely payment to the Seller of the
remaining portions of the Purchase Price when due, but without
loss of its claim for indemnification.
Section 27. Indemnification by Buyer. Without in any way
limiting the warranties, representations or agreements contained
herein, or the rights or remedies available to the Seller for the
breach thereof, Buyer hereby agrees to indemnify and hold the
Seller and HACBV, and their respective successors and assigns,
free and harmless from and against, and to fully reimburse and
compensate the Seller and HACBV, and their respective successors
and assigns, for any and all loss, liability, damage or expense
(including reasonable attorneys' fees) arising from (i) the
breach of any representations, warranties, agreements and
covenants made herein (or under the provisions of any documents
or instruments referred to herein, attached hereto or delivered
to the Seller and/or HACBV at Closing) by Buyer to Seller and/or
HACBV and (ii) the operations of the Business after Closing.
This Section will apply to claims of indemnification made against
Buyer by Seller and/or HACBV based upon claims made against
Seller and/or HACBV by third parties. This Section will also
apply to claims made by Seller and/or HACBV directly against
Buyer not involving any third party claim against Seller and/or
HACBV. Buyer shall not be liable for any claims for
indemnification by Seller and HACBV to the extent such claims
shall not exceed $150,000 in the aggregate; provided that the
forgoing clause shall not apply to the Buyer's obligation to pay
the full Purchase Price and to perform, and timely perform, all
of the Assumed Liabilities.
Section 28. Third Party Claims. (a) In the event of
third party claims giving rise to a claim for indemnification
under this Agreement, then the party seeking indemnification
("Indemnified Party") shall notify the other party ("Indemnifying
Party") in writing as soon as practicable but in no event later
than fifteen (15) days after receipt of such claims. The
Indemnified Party's failure to give 15 days' notice shall not
preclude it from seeking indemnification hereunder unless such
failure has materially prejudiced the Indemnifying Party's
ability to defend such a claim. The Indemnifying Party shall
promptly defend such claim by counsel acceptable to the
Indemnified Party and the Indemnified Party shall cooperate with
the Indemnifying Party in the defense of such claim including the
settlement of the matter (with the Indemnifying Party being
responsible for all costs and expenses of such cooperation and
settlement). If the Indemnifying Party within thirty (30) days
after notice of a claim fails to assume the defense of the
Indemnified Party, the Indemnified Party shall be entitled to
undertake the defense, compromise or settlement of such claim at
the expense of and for the account and risk of the Indemnifying
Party. Upon the assumption of the defense of such claim, the
Indemnifying Party may settle or compromise such claim with the
consent of the Indemnified Party, such consent not to be
unreasonably withheld. Anything in this Section to the contrary
notwithstanding: (i) if there is a reasonable probability that a
claim may materially and adversely affect the Indemnified Party,
the Indemnified Party shall have the right, at its own cost and
expense, to defend, compromise or settle such claim against it,
and to withhold consent to any compromise or settlement proposed
by the Indemnifying Party; (ii) if the facts giving rise to
indemnification hereunder shall involve a possible claim by the
Indemnified Party against a third party, the Indemnified Party
shall have the right, at its own cost and expense, to undertake
the prosecution, compromise and settlement of such claim and to
withhold consent to any compromise or settlement proposed by the
Indemnifying Party; and (iii) the Indemnifying Party will not,
without the Indemnified Party's written consent, settle or
compromise any claim or consent to any entry of judgment which
does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect to such claim.
(b) If a Liquidated Third Party Claim shall occur, then the
parties shall proceed in accordance with the provisions of
Section 28(a). If the Seller shall defend such claim in
accordance with Section 28(a) and if prior to the resolution of
such Liquidated Third Party Claim a payment shall become due
under the Seller's Note, then the Buyer shall pay the dollar
amount of such Liquidated Third Party Claim (up to the unpaid
amount of the Seller's Note) to the Escrow Agent to be held by
such Escrow Agent as described in further detail in Section 9
hereof; and Seller agrees that said delivery to the Escrow Agent
of the dollar amount of such Liquidated Third Party Claim (up to
the unpaid amount of the Seller's Note) shall constitute payment
of the Purchase Price under the Seller's Note, but only to the
extent of the dollar amount so paid to the Escrow Agent. The
Escrow Agent shall hold and deliver the dollar amount of such
Liquidated Third Party Claim pursuant to the Escrow Agreement.
(c) If a Liquidated Third Party Claim shall occur, but the
Seller shall fail to defend such claim in accordance with Section
28(a), then the Buyer shall be permitted to undertake the
defense, compromise or settlement of such Liquidated Third Party
Claim at the expense of and for the account and risk of the
Seller. Seller agrees that the expenses and costs incurred by
the Buyer in undertaking the defense, compromise or settlement of
such Liquidated Third Party Claim shall constitute payment of the
Purchase Price under the Seller's Note, but only to the extent of
the dollar amount of the expenses and costs so incurred by the
Buyer and the amount, if any, actually paid by Buyer to such
third party.
Section 29. Expenses of Transaction. The parties shall
be obligated for their own respective costs and expenses related
to this Agreement and the transactions hereunder, and no party
shall be obligated for such costs and expenses of any other
party. For the avoidance of doubt, the costs and expenses of
Seller and HAI shall not be Assumed Liabilities, and shall not be
included on the Closing Date Balance Sheet.
Section 30. Brokers. Seller warrants to Buyer that it
knows of no broker claiming by, through or under Seller and
Seller will indemnify Buyer against all claims and demands made
by any such broker claiming by, through or under Seller. Buyer
warrants to Seller that it knows of no broker claiming by,
through or under Buyer and Buyer will indemnify Seller against
all claims and demands made by any such broker claiming by,
through or under Buyer. For purposes of this Agreement the term
"broker" shall mean any person or entity other than the Seller
entitled to collect any fee or commission as a result of the
closing of the purchase and sale described herein.
Section 31. Access to Books and Records. Buyer agrees
that for a period of five (5) years after Closing, the Buyer
shall permit the Seller reasonable access during regular business
hours to the books and records of the Buyer, but only as same
shall pertain to the operations of the Business occurring prior
to Closing. If the Buyer shall desire to destroy any of such
records, the Buyer shall notify the Seller at least 30 days in
advance and give Seller the opportunity to retrieve such records
as same relate to any open matters.
Section 32. Investigation by Buyer. Buyer has commenced
its due diligence investigation into the assets, liabilities,
operations, books, records, contracts and all other aspects of
Seller and HAI and the Business, and will conduct such further
investigation prior to Closing as Buyer may deem necessary,
advisable or appropriate. Buyer represents and warrants to
Seller that, to the actual knowledge of Raymond D. Stapleton or
James C. Gale, neither of them is currently aware, as of the date
of this Agreement, of any material breach of the warranties and
representations of Seller and HACBV made in this Agreement.
Section 33. Publicity. Seller and Buyer shall consult
with each other in good faith with regard to all press releases
and other publicity issued at or prior to the Closing concerning
this Agreement or the transactions contemplated hereby and,
except as may be required by applicable laws or the applicable
rules and regulations of any governmental agency, neither Buyer
nor Seller shall issue any such press release or other publicity
concerning these matters without the prior written consent of the
other party.
Section 34. Annexes. All Annexes attached hereto are an
integral part of this Agreement and are hereby incorporated in
this Agreement as though set out in full verbatim herein. Any
reference to this Agreement shall be deemed a reference to the
entire Agreement including all Annexes attached hereto. In
entering into this Agreement, the Buyer has relied upon the
Seller's Letter and the Exhibits thereto.
Section 35. Notices. All notices, requests, demands and
other communications hereunder shall be in writing and shall be
deemed to have been duly given (i) on the day of actual delivery
in person or (ii) on the third day following deposit of same in
the United States Mails (certified and return receipt requested)
but in either such event addressed, as follows: (a) If to Seller
or HACBV, then in care of Robert Q. Stanton, Esq., Payne &
Vendig, P.C., 3700 Renaissance Tower, 1201 Elm Street, Dallas, TX
75270; and if to Buyer, then to: Genicom Corporation, 14800
Conference Center Drive, Suite 400, Chantilly, Virginia 22021,
Attention: Paul T. Winn, President, with a copy to Robert S.
Smith, Esq., McGuire, Woods, Battle & Boothe, L.L.P, 1627 Eye
Street, N.W., Suite 1000, Washington, D.C. 20006. Any of the
above addresses may be changed by written notice delivered to the
other parties in the same manner as described in this Section.
Section 36. Attorney's Fees. If any party to this
transaction shall ever be required to bring a law suit or
institute other legal action short of bringing a law suit against
any other party hereto based upon this Agreement or the
transactions contemplated hereby, then the prevailing party shall
be entitled to recover reasonable attorney's fees incurred with
respect to such legal action or law suit from the non-prevailing
party.
Section 37. Deposits. All deposits under contracts,
agreements and leases assigned to Buyer pursuant hereto shall
pass with such contracts, agreements and leases, and Seller shall
not be entitled to any further consideration as a result thereof.
Section 38. Multiple Originals. This Agreement shall be
executed in multiple originals each of which shall be deemed an
original of this Agreement.
Section 39. Parties in Interest. This Agreement shall
inure to the benefit of and be binding upon the parties named
herein and their respective successors and assigns; nothing in
this Agreement is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement.
Section 40. Merger Clause. This Agreement represents the
entire agreement of the parties hereto and supersedes all prior
agreements, understandings, letters of intent and negotiations
concerning the subject matter hereof.
Section 41. Applicable Law and Venue. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE PERFORMABLE
IN DALLAS COUNTY, TEXAS.
Section 42. Construction. Section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of the terms and
provisions of this Agreement. As used in this Agreement, the
singular shall include the plural and vice versa, and the
masculine, feminine and neuter gender shall each be deemed to
include the others.
IN WITNESS WHEREOF, the undersigned parties have duly
executed this Agreement as of the date first above written.
SELLER:
HARRIS
ADACOM NETWORK SERVICES, INC.
By: ____________________________
James J. Byrne
Its: Authorized Director
and
By: ____________________________
Lee P. Chu
Its: President
HARRIS
ADACOM CORPORATION, B.V.
By: ____________________________
Rutger J. Schimmelpenninck
Its: Curator
and
By: ____________________________
Wouter J.P. Jongepier
Its: Curator
BUYER:
GENICOM CORPORATION
By: ____________________________
Raymond D. Stapleton
Its: Senior Vice President
For Further Information:
Paul T. Winn James C. Gale
President and Chief Senior Vice President
Executive Officer Finance and Chief
703/802-9237 Financial Officer
703/802-9259
FOR IMMEDIATE RELEASE
GENICOM TO ACQUIRE HARRIS ADACOM NETWORK SERVICES, INC.
Enhances Enterprise Service Solutions Business and Broadens
Product Offerings
Chantilly, VA - - February 23, 1995 - - GENICOM Corporation
(Nasdaq-NNM:GECM) today announced the signing of a
definitive agreement with Harris Adacom Network Services,
Inc. ("HANS") and Harris Adacom Corporation, B.V. ("HACBV")
to acquire substantially all of the assets and certain
liabilities of HANS and all of the stock of its Canadian
subsidiary, Harris Adacom, Inc. HANS is headquartered near
Dallas, with the Canadian operation based in Toronto.
The transaction, which is expected to close in late
February, is subject to approval by the Board of Directors
of GENICOM and HANS, certain third party consents and
customary filings. The purchase will be funded from
GENICOM's credit facilities. Under the agreement, GENICOM
would acquire HANS's service depot facility, field service
operations, hardware integration business and network
diagnostic and monitoring operations.
The acquisition of HANS is expected to add approximately $
36.0 million in annual revenues to GENICOM, whose revenues
totaled $ 233.8 million in 1994. This additional business
together with the elimination of duplicative cost
structures, is expected to favorably impact GENICOM's 1995
earnings.
Paul T. Winn, President and CEO of GENICOM, said, "In
addition to building our revenues and strengthening our
earnings, HANS offers several strategic advantages for our
business. Their field service and depot operations, with
fiscal year 1994 revenues of more than $ 20.0 million,
should enhance our Enterprising Service Solutions
businesses in both the United States and Canada. HANS's
solid reputation in the IBM market will be an excellent
addition to our current capabilities."
Mr. Winn continued, "We are also excited about HANS's
systems integration business, with fiscal year 1994
revenues approximating $ 13.0 million. This strengthens
GENICOM's expertise and customer base which we believe is
necessary to establish ourselves as a participant in the
fast growing systems integration market. It further
enhances our capabilities of being a mid-range solution
provider to our customers.
"Of further interest is their network diagnostic and
monitoring service offerings associated with network
baselining, monitoring and remote maintenance. These
offerings present a new business opportunity for GENICOM.
These services, which are currently being test marketed,
have the potential for long term growth," concluded Mr.
Winn.
Lee Chu, President of HANS said, "We look forward to
combining our resources with those of GENICOM, enabling us
to provide the broadest line of high quality services to
customers in the information processing industry."
GENICOM Corporation, through its worldwide operations,
designs, manufactures, markets and services a wide range of
computer printer technologies for general purpose
applications as well as a line of hermetically sealed
relays. Through its Enterprising Service Solutions
business, GENICOM provides multivendor depot and field
support, express parts and professional services. GENICOM
has its headquarters near Washington, D.C.
# # # # # # # # #
For Further Information:
James C. Gale
Senior Vice President
Finance and Chief Financial
Officer
703/802-9259
FOR IMMEDIATE RELEASE
GENICOM AND HARRIS ADACOM NETWORK SERVICES, INC.
FINALIZE THEIR AGREEMENT
Chantilly, VA - - March 2, 1995 - - GENICOM Corporation
(Nasdaq-NNM:GECM) today announced that it has completed the
acquisition of substantially all of the assets and certain
liabilities of Harris Adacom Network Services, Inc.
("HANS"), including all of the stock of HANS's Canadian
subsidiary, Harris Adacom Inc. Under the agreement,
GENICOM acquired HANS's service depot facility, field
service operations, hardware integration business and
network diagnostic and monitoring operations in the United
States and Canada.
The acquisition of HANS is expected to add approximately $
36.0 million in annual revenues to GENICOM, whose revenues
totaled $ 233.8 million in 1994. This additional business
together with the elimination of duplicative cost
structures, is expected to favorably impact GENICOM's 1995
earnings.
GENICOM Corporation, through its worldwide operations,
designs, manufactures, markets and services a wide range of
computer printer technologies for general purpose
applications as well as a line of hermetically sealed
relays. Through its Enterprising Service Solutions
business, GENICOM provides multivendor depot and field
support, express parts and professional services. GENICOM
has its headquarters near Washington, D.C.
# # # # # # # # #
