<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):
September 30, 1996
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51 - 0271821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14800 CONFERENCE CENTER DRIVE
SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 802-9200
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<PAGE> 2
GENICOM CORPORATION AND SUBSIDIARIES
FORM 8-K INDEX
Item 2. Acquisition Activities
On September 30, 1996, the registrant completed its
acquisition of certain assets of Texas Instruments
worldwide printer and related supplies business for
approximately $27 million. The assets acquired include
primarily accounts receivable and inventory. The purchase
price will be funded from the Registrant's credit
facilities and a promissory note held by Texas Instruments.
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 a press release regarding the
transaction on October 2, 1996. A copy of such press
release is included herein as Exhibits 99.1.
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 December 13, 1996.
(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 December
13, 1996.
(c) Exhibits
2.1 Asset Purchase Agreement dated July 22, 1996.
2.2 Amendment to Asset Purchase Agreement dated as of
September 30, 1996
2.3 Subordinated Promissory Note dated September 30, 1996
2.4 Subordinated Guaranty and Security Agreement dated as
of September 30, 1996
2.5 Pledge Agreement dated as of September 30, 1996
99.1 Press release dated October 2, 1996, published by the
Registrant.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENICOM Corporation
-------------------------------------
Registrant
Date: October 15, 1996
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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GENICOM CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS TO FORM 8-K
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ----------------------------- --------------------------------------------------------- ---------------
<S> <C> <C>
2.1 Asset Purchase Agreement dated July 22, 1996. E-1 - E-44
2.2 Amendment to Assets Purchase Agreement dated as of E-45 - E-50
September 30, 1996.
2.3 Subordinated Promissory Note dated September 30, E-51 - E-65
1996
2.4 Subordinated Guaranty and Security Agreement dated E-66 - E-87
as of September 30, 1996
2.5 Pledge Agreement dated as of September 30, 1996 E-88 - E-105
99.1 Press release dated October 2, 1996, published by E-106 - E-107
the Registrant.
</TABLE>
4
<PAGE> 1
ASSET PURCHASE AGREEMENT
CONCERNING THE PRINTER BUSINESS OF
TEXAS INSTRUMENTS INCORPORATED
BETWEEN
TEXAS INSTRUMENTS INCORPORATED
AND
GENICOM CORPORATION
JULY 22, 1996
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<TABLE>
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ARTICLE I
THE SALE AND PURCHASE OF ASSETS
-------------------------------
1.1 Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------------
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
1.3 Nonassignable Contracts and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------------------
(a) Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------
(b) Seller to Use Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . 4
---------------------------------------------
(c) If Waivers or Consents Cannot Be Obtained . . . . . . . . . . . . . . . . . . . 5
-----------------------------------------
ARTICLE II
PURCHASE PRICE
--------------
2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------
2.2 Net Book Value Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------------
(a) Pre-Closing Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------------
(b) Post-Closing Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------
(c) Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------------------
2.3 Allocation of Purchase Price for Tax Purposes . . . . . . . . . . . . . . . . . . . . . 7
---------------------------------------------
2.4 Transfer Taxes and Similar Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------------------------
ARTICLE III
ASSUMPTION OF LIABILITIES
-------------------------
3.1 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------------------
3.2 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------------------
ARTICLE IV
CLOSING
-------
4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------
4.2 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------
4.3 Delivery of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
5.1 Existence and Authority of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------------------
5.2 Consents and Approvals; Absence of Violations . . . . . . . . . . . . . . . . . . . . . 11
---------------------------------------------
</TABLE>
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<TABLE>
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5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
5.4 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------------------
(a) Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
(b) No Infringement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------
(c) Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
5.5 Capital Equipment and Expensed Assets . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------------
5.6 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------
5.7 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------
5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------
5.9 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------
5.10 Historical Financial Information; Projections . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------------------
5.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------
5.12 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------
5.13 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
---------
5.15 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
6.1 Existence and Authority of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------------------
6.2 Consents and Approvals; Absence of Violations . . . . . . . . . . . . . . . . . . . . . 16
---------------------------------------------
6.3 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------
6.4 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------
6.5 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------
ARTICLE VII
COVENANTS OF SELLER
-------------------
7.1 Conduct of Business and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------------
7.2 Pre-Closing Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
7.3 Update to Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
7.4 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------
7.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
ARTICLE VIII
COVENANTS OF BUYER
------------------
8.1 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
</TABLE>
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<TABLE>
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ARTICLE IX
ADDITIONAL COVENANTS
--------------------
9.1 Names, Trademarks, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------
9.2 Preparation of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------------------
9.3 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
9.4 Solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------------------
9.5 Assignment of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------------
9.6 Satisfaction of Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------------
9.7 Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------
9.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------
9.9 Agreement Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------------------
9.10 Epidemic Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------
9.11 Confidential Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------
ARTICLE X
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
10.1 Truth of Representations and Warranties; Compliance with Covenants . . . . . . . . . . . 25
------------------------------------------------------------------
10.2 No Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------------
10.3 Governmental Consents or Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------------------------
10.4 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------------
10.5 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
11.1 Truth of Representations and Warranties; Compliance with Covenants . . . . . . . . . . . 26
------------------------------------------------------------------
11.2 No Adverse Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------------
11.3 Governmental Consents or Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------------------------
ARTICLE XII
TERMINATION PRIOR TO CLOSING
----------------------------
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------
12.2 Procedure and Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------------------------
</TABLE>
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<TABLE>
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ARTICLE XIII
INDEMNIFICATION
---------------
13.1 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------------
13.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------------
13.3 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------------------
13.4 Notice and Defense Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------------
13.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
---------
13.6 Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------------------
13.7 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------------
ARTICLE XIV
MISCELLANEOUS
-------------
14.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-------------------
14.2 Entire Agreement, Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------------------------
14.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------
14.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
------------
14.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------
14.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------
14.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
-------------
14.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------------
14.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------
14.10 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------
14.11 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-------------
14.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------------
14.13 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------
14.14 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
14.15 Waiver and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------------------
</TABLE>
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Exhibit A - License Agreement
SCHEDULES
Schedule 1.1(a) - Capital Equipment
Schedule 1.1(f) - Material Contracts
Schedule 1.1(g) - Intellectual Property
Schedule 2.2(a) - Pre-Closing Statement
Schedule 5.2 - Seller's Governmental Consents
Schedule 5.10 - Historical Financial Information; Projections
Schedule 5.13 - Seller's Knowledge
Schedule 6.2 - Buyer's Governmental Consents
Schedule 9.1 - Use of Seller's Name
Schedule 9.7(a) - Employees to be Offered Employment by Buyer
Schedule 9.7(b) - Employees of Seller Buyer May Recruit
Schedule 10.4 - Required Consents
v
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made and entered
into on the 22nd day of July, 1996 by and between TEXAS INSTRUMENTS
INCORPORATED, a Delaware corporation with its principal offices in Dallas,
Texas ("Seller"), and GENICOM CORPORATION, a Delaware corporation with its
principal offices in Chantilly, Virginia ("Buyer").
WHEREAS, Seller operates a business engaged in the design,
development, marketing and sale of travel ticket document printers and readers,
monochromatic electrophotographic page printers using laser and LED
technologies and printers using serial impact technologies in each case
operating at peak speeds of less than or equal to 12 pages per minute and
related accessory options, supplies and replaceable parts and components and
sub-assemblies for such printers and options (the "Business");
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Seller desires to sell, transfer, and assign to Buyer, and Buyer
desires to purchase and acquire from Seller, all of the Purchased Assets (as
hereinafter defined); and
WHEREAS, on the terms and subject to the conditions contained in this
Agreement, Seller wishes to assign to Buyer, and Buyer is willing to assume,
the Assumed Liabilities (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, promises and covenants herein contained, and
intending to be legally bound hereby, it is hereby agreed by Seller and Buyer
as follows:
ARTICLE I
THE SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase of Assets. On the terms and subject to
conditions hereof, at the Closing (as hereinafter defined) Seller shall sell,
transfer, and assign to Buyer, and Buyer shall purchase and acquire, all of
Seller's right, title and interest in the following assets of Seller, wherever
located (collectively, the "Purchased Assets"):
(a) Capital Equipment. The capital equipment listed on
Schedule 1.1(a);
(b) Expensed Assets. The laptop computers, software,
non-capitalized printers, cellular telephones, pagers, calculators and books
containing only information not proprietary to Seller (not relating to the
Business) used by the employees of Seller who are offered employment with Buyer
as contemplated by Sections 9.7(a) and 9.7(b)
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and the hand tools, miscellaneous manufacturing supplies, and miscellaneous
assets of Seller located in Sweden used exclusively in the Business (the
"Expensed Assets");
(c) Accounts Receivable. All accounts receivable of the
Business other than accounts receivable on the books of Seller's European
operations as of the Closing Date (as hereinafter defined);
(d) Prepaid Items. All prepaid items, costs and fees listed on
the Pre-Closing Statement (as hereinafter defined);
(e) Inventory. The raw materials, work-in-process, finished
goods, stores, spare parts and supplies of the Business as of the Closing Date
but excluding the Excluded Inventory (as hereinafter defined) (collectively,
the "Inventory");
(f) Contracts. Subject to Section 1.3, all rights and
incidents of interest of Seller or any Subsidiary (as hereinafter defined) of
Seller as of the Closing, in and to all contracts, leases, licenses, purchase
orders (as vendor and purchaser) and other agreements of Seller or any
Subsidiary of Seller relating to the Business as of the date of this Agreement,
including those listed on Schedule 1.1(f), and all contracts, leases, licenses,
purchase orders (as vendor and purchaser) and other agreements relating to the
Business entered into by Seller or any Subsidiary of Seller prior to the
Closing in the ordinary course of its operation of the Business, consistent
with past practice and with Section 7.1, but excluding contracts, leases,
licenses, purchase orders and other agreements fully performed or having
expired prior to the Closing (collectively, the "Contracts"), with Schedule
1.1(f) to be updated as of the Closing to reflect the foregoing changes;
(g) Intellectual Property. All of the trademarks, service
marks and trade names listed on Schedule 1.1(g) and the associated goodwill and
pending applications therefor and the related common law rights and all of the
copyrights, inventions, trade secrets, processes, formulae, software, designs
and know-how used exclusively in the Business, including without limitation,
the source code used in the printers manufactured and sold in the Business (the
"Intellectual Property"); and
(h) Books and Records. All information and records of Seller
related to the Purchased Assets and reasonably required by Seller for the
operation of the Business and which do not pertain to areas of Seller's
business other than the Business, including without limitation, copies of the
workpapers used by Seller to prepare the Pre-Closing Statement (as defined in
Section 2.2(b) herein).
1.2 Excluded Assets. Notwithstanding anything to the contrary
provided for in this Agreement, the Purchased Assets shall in no event include
the following:
2
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(a) All of the Inventory which has been transferred or consumed
by Seller prior to the Closing in the ordinary course of the conduct of the
Business consistent with past practice;
(b) The words and name "Texas Instruments Incorporated" and
"TI", and Seller's related monograms, logos, trademarks, trade names, or any
variations or combinations thereof;
(c) United States and foreign patents, trademarks, service
marks, trade names, copyrights, technology, know-how, processes, trade secret
rights, and claims or interests to or in any of the foregoing, except to the
extent included in the Purchased Assets;
(d) Cash and cash equivalents (other than the deposits and
prepayments specifically described in Section 1.1(d)), including marketable
securities (on hand or in bank accounts);
(e) All contracts of insurance;
(f) All owned real property, options to acquire real property,
real estate leases and leasehold improvements;
(g) Seller's interest in and to all telephone, telex and
telephone facsimile numbers and other directory listings;
(h) Seller's corporate seal, minute books, charter documents,
corporate stock record books and such other books and records as pertain to the
organization, existence or share capitalization of Seller, duplicate copies of
such records included in or relating to the Purchased Assets or to the
operation or operations of the Business as are necessary to enable Seller to
file its tax returns and reports, and any other records or materials relating
to Seller generally and not involving or relating to the Purchased Assets or
the operation or operations of the Business; and
(i) The inventory required to complete the manufacture and/or
assembly of laser units and the finished goods inventory, prepaid assets and
open purchase orders of the Business in each case relating to the microWriter
products, the microLaser 600 products, the microLaser Pro products and the
microLaser Win/4 products as of the Closing Date (collectively, the "Excluded
Inventory").
1.3 Nonassignable Contracts and Permits.
3
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(a) Nonassignability. To the extent that any Contract to be
assigned pursuant to the terms of Section 1.1(f) is not capable of being
assigned without the consent, approval or waiver of a third person or entity
(including without limitation a governmental or regulatory authority), or if
such assignment or attempted assignment would constitute a breach thereof (each
a "Nonassignable Contract"), or to the extent that the assignment of any
Contract is not practicable because it also relates to an area of Seller's or
one of its Subsidiary's business other than the Business (each a "Nonexclusive
Contract"), nothing in this Agreement will constitute an assignment or require
the assignment thereof except to the extent provided in this Section 1.3.
(b) Seller to Use Commercially Reasonable Efforts.
Notwithstanding anything contained in this Agreement to the contrary, neither
Seller nor any Subsidiary of Seller will be obligated to assign to Buyer any of
its rights and obligations in and to any of the Nonassignable Contracts without
first having obtained all consents, approvals and waivers necessary for such
assignment; provided, however, that Seller shall use commercially reasonable
efforts and will cause its Subsidiaries to use commercially reasonable efforts
to obtain all such consents, approvals and waivers prior to the Closing and, if
the Closing occurs, will use commercially reasonable efforts and will cause its
Subsidiaries to use commercially reasonable efforts after the Closing Date (as
hereinafter defined) to obtain all such consents, approvals and waivers. Buyer
will cooperate with Seller and its Subsidiaries in their efforts to obtain all
required consents, approvals and waivers, provided, however, none of Buyer,
Seller or any Subsidiary of Seller will be required to incur any liability or
pay any consideration in connection therewith. As to the Nonexclusive
Contracts, Seller shall use commercially reasonable efforts and will cause its
Subsidiaries to use commercially reasonable efforts to effect an assignment of
rights with respect to the parts of such Nonexclusive Contract that relate
exclusively to the Business (if practicable) or, alternatively, to enter into
new agreements with respect to the parts of each Nonexclusive Contract that
relate exclusively to the Business.
(c) If Waivers or Consents Cannot Be Obtained. To the extent
that all consents, approvals and waivers required pursuant to the
Nonassignable Contracts are not obtained by Seller or its Subsidiaries or to the
extent that any partial assignment of rights or new agreement with respect to
the Nonexclusive Contracts cannot be effected as described in Section 1.3(b),
after the Closing Seller and its Subsidiaries shall use commercially reasonable
efforts to (i) provide to Buyer the financial and business benefits of each
Nonassignable Contract and each Nonexclusive Contract (as it relates to the
Business) and (ii) enforce, at the request of Buyer, for the account of Buyer,
any rights of Seller or any Subsidiary of Seller arising from any such Contract
(including without limitation the right to elect to terminate in accordance with
the terms thereof upon the advice of Buyer, it being understood that such right
to elect termination shall not be applicable to any Nonexclusive Contract unless
and to the extent such termination may be effected solely as to the portion
thereof relating to the Business). Buyer covenants and agrees with Seller that
Buyer shall use commercially
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reasonable efforts to perform any portion of a Nonassignable Contract the
financial and business benefits of which are being provided to Buyer in
accordance with clause (i) of the preceding sentence to the same extent
required of Seller or any Subsidiary of Seller in such contract (i.e., in the
same (or as near as practicable) manner and time, and with the same quality,
required of Seller or any Subsidiary of Seller).
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. In consideration of the conveyance to Buyer of
the Purchased Assets, Buyer shall deliver to Seller the Purchase Price (as
hereinafter defined) and assume the Assumed Liabilities (as hereinafter
defined). At the Closing, Buyer will pay to Seller an aggregate cash amount
equal to Thirty Million Dollars ($30,000,000) (the "Unadjusted Purchase
Price"), subject to adjustment pursuant to Section 2.2 (as adjusted, the
"Purchase Price").
2.2 Net Book Value Adjustment.
(a) Pre-Closing Statement. (i) At least two business days
prior to the Closing Date, Seller shall furnish to Buyer a statement of Seller
(the "Pre-Closing Statement"), prepared as of a date no earlier than June 30,
1996, reflecting Seller's good faith estimate of the Net Book Value of the
Business (as hereinafter defined) immediately prior to the Closing (the "Net
Book Value Estimate") and such supporting schedules as reasonably requested by
Buyer. For purposes of illustration only, attached hereto as Schedule 2.2(a)
is a statement of Seller reflecting the Net Book Value of the Business as of
March 31, 1996. Buyer and Seller agree that the Pre-Closing Statement shall be
in form consistent with Schedule 2.2(a).
(ii) Based on the Pre-Closing Statement, if the
amount equal to the Net Book Value Estimate minus $20 million (the "Net Book
Value Adjustment") is a positive number, then the Unadjusted Purchase Price
shall be increased by such amount. If the Net Book Value Adjustment is a
negative number, the Unadjusted Purchase Price shall be reduced by such amount
(expressed as a positive number).
(b) Post-Closing Statement. (i) As soon as practicable, but in
no event more than 90 days after the Closing Date, Buyer shall furnish Seller a
statement (the "Post-Closing Statement") reflecting the Net Book Value of the
Business immediately prior to the Closing (the "Closing Net Book Value")
prepared in accordance with Seller's Accounting Policies (as hereinafter
defined). In connection with the preparation of the Post-Closing Statement, a
physical inventory of the Business shall be taken as of midnight of the day
before
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the Closing Date. Representatives of Buyer and Seller shall participate
jointly in conducting the physical inventory. No transactions (receipt or
shipment) shall be executed by Seller after such physical inventory.
(ii) Within 30 days after the delivery of the
Post-Closing Statement to Seller, Seller shall either accept the amount of the
Proposed Closing Differential (as hereinafter defined) as reflected on the
Post-Closing Statement as correct or object to the Proposed Closing
Differential, specifying in reasonable detail in writing the nature of its
objection(s). In the event Seller does not object to the Proposed Closing
Differential within said 30-day period, Seller shall be deemed to have accepted
the Proposed Closing Differential as the Closing Differential. In the event
Seller objects to the Proposed Closing Differential, then, during a 15-day
period subsequent to the receipt by Buyer of notice of Seller's objection(s),
Buyer and Seller shall attempt in good faith to resolve the differences
respecting such Proposed Closing Differential. In the event Buyer and Seller
are unable to resolve their differences within said 15-day period, the parties
agree that the matter shall be submitted to Price Waterhouse L.L.P., whose
determination shall be final and binding upon the parties. The costs and
expenses of such firm of certified public accountants shall be borne equally by
Buyer and Seller. During the period from the date of delivery of the
Post-Closing Statement to Seller through the date of resolution of any dispute
regarding the Proposed Closing Differential as contemplated by this Section
2.2(b)(ii), Buyer shall provide Seller and its agents and representatives
reasonable access during normal business hours to the books, records (including
those supplemental schedules prepared by Buyer in connection with preparation
of the Post-Closing Statement), facilities and employees of Buyer for purposes
relevant to the review of such Post-Closing Statement and the resolution of any
related dispute.
(c) Adjustment of Purchase Price. Based on the Post-Closing
Statement, within three (3) days after the final determination of the Closing
Differential, the Purchase Price shall be adjusted as follows: if the amount
of the Closing Differential is a positive amount, then the Purchase Price shall
be adjusted upward by an amount equal to the Closing Differential. In such
case, Buyer shall pay to Seller the increase of the Purchase Price resulting
from such adjusted Purchase Price by wire transfer of immediately available
funds. Conversely, if the amount of the Closing Differential is a negative
amount, then the Purchase Price shall be adjusted downward by an amount equal
to the Closing Differential (expressed as a positive amount), which amount
shall be paid by Seller to Buyer by wire transfer of immediately available
funds.
2.3 Allocation of Purchase Price for Tax Purposes. Buyer and Seller
agree to consult with each other with respect to the allocation of the Purchase
Price and the amount of the Assumed Liabilities to the Purchased Assets;
provided, however, that nothing in this Section 2.3 shall be deemed to obligate
either Buyer or Seller to agree on such allocation.
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2.4 Transfer Taxes and Similar Charges. All recordation, transfer
and documentary taxes and fees and all excise, sales and use taxes
(collectively, "Transfer Taxes") imposed or levied by reason of, in connection
with or attributable to this Agreement and the transactions contemplated
hereby, shall be borne by the party that customarily pays such taxes in similar
transactions. Any Transfer Taxes imposed or levied by reason of, in connection
with or attributable to the transfer of any Purchased Asset from an Affiliate
of Seller to Seller prior to the Closing, shall be borne by Seller.
ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. At the Closing, Buyer will assume and
thereafter pay, perform, or otherwise discharge, as and when the same shall
become due and payable, and hold Seller harmless from the following obligations
and liabilities (the "Assumed Liabilities"):
(a) all liabilities and obligations of Seller in respect of the
Business accrued or reserved for on the Pre-Closing Statement and remaining
unpaid and undischarged on the Closing Date;
(b) all liabilities and obligations of Seller arising in the
ordinary course of the Business between the date of the Pre-Closing Statement
and the Closing Date other than accounts payable on the books of Seller's
European operations, to the extent that the same remain unpaid and undischarged
on the Closing Date and are accrued or reserved for on the Post-Closing
Statement;
(c) all liabilities and obligations arising from product
warranty claims in respect of sales of products by the Business prior to the
Closing; provided, however, Buyer shall not assume, and shall not have any
liability for, product liability claims or product warranty claims arising from
an Epidemic Failure (as hereinafter defined) in each case arising from the
operation of the Business prior to the Closing; and
(d) subject to Section 1.3, all liabilities and obligations of
Seller under the Contracts other than payment and performance of obligations
payable or dischargeable prior to the Closing.
Other than as set forth in this Section 3.1, Buyer shall assume no liabilities
from Seller whether known or unknown, absolute or contingent, accrued or
unaccrued or due or to come due.
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3.2 Retained Liabilities. Other than as set forth in Section 3.1
above, all debts, liabilities and obligations of Seller or arising from the
operation of the Business prior to the Closing (including without limitation,
product liability claims, product warranty claims relating to Epidemic Failure
and environmental claims) shall continue after the Closing to be the debts,
liabilities and obligations of Seller (collectively, the "Retained
Liabilities").
ARTICLE IV
CLOSING
4.1 Closing. The consummation of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Seller, 13500 North
Central Expressway, Dallas, Texas (or at such other place as the parties may
designate), at 9:00 a.m. (Dallas, Texas time) on or before August 31, 1996 or
such later date as the conditions specified in Articles X and XI are fulfilled
(or waived by the party entitled to waive that condition). The date on which
the Closing is effected is referred to in this Agreement as the "Closing Date."
4.2 Deliveries at Closing. At the Closing:
(a) Seller shall deliver to Buyer the items described in
clauses (i) through (ix) below:
(i) a Bill of Sale, in form and substance
reasonably satisfactory to Buyer and Seller (the "Bill of Sale"), executed by
Seller;
(ii) an Assignment and Assumption Agreement, in
form and substance reasonably satisfactory to Buyer and Seller (the "Assignment
Agreement"), executed by Seller;
(iii) a Trademark Assignment, in form and
substance reasonably satisfactory to Buyer and Seller (the "Trademark
Assignment");
(iv) a Sales Agency Agreement, substantially in
the form previously agreed to by the parties (the "Sales Agency Agreement"),
executed by Seller;
(v) a Transition Master Services Agreement,
substantially in the form previously agreed to by the parties (the "Transition
Services Agreement"), executed by Seller;
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(vi) a License Agreement, substantially in the
form of Exhibit A hereto (the "License Agreement"), executed by Seller;
(vii) a Certificate, dated the Closing Date, in
the form described in Section 10.1, executed by Seller;
(viii) evidence that the party signing this
Agreement on behalf of Seller is authorized to do so; and
(ix) all other documents, certificates,
instruments or writings reasonably requested by Buyer in connection herewith.
(b) Buyer shall deliver to Seller the items described in
clauses (i) through (ix) below:
(i) the Purchase Price described in Section 2.1
above by wire transfer of immediately available funds;
(ii) the Assignment Agreement, executed by Buyer;
(iii) the Trademark Assignment, executed by Buyer;
(iv) the Sales Agency Agreement, executed by
Buyer;
(v) the Transition Services Agreement, executed
by Buyer;
(vi) the License Agreement, executed by Buyer;
(vii) a Certificate, dated the Closing Date, in
the form described in Section 11.1, executed by Buyer;
(viii) evidence that the party signing this
Agreement on behalf of Buyer is authorized to do so; and
(ix) all other documents, certificates,
instruments or writings reasonably requested by Seller in connection herewith.
(c) The Bill of Sale, Assignment Agreement, Trademark
Assignment, Sales Agency Agreement, Transition Services Agreement and License
Agreement shall constitute, collectively, the "Collateral Agreements."
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4.3 Delivery of Purchased Assets. Title to the Purchased Assets
shall pass to Buyer as of Closing at the applicable places of business of
Seller. Following the Closing, Seller will deliver to Buyer full possession
and control of the Purchased Assets (it being understood that title to the
Purchased Assets will pass to Buyer, but unless Buyer directs otherwise after
the Closing, any Purchased Assets held by suppliers or contractors shall not be
required to be delivered to Buyer at the Closing). All tangible assets
constituting a part of the Purchased Assets located at Seller's places of
business will, unless Seller and Buyer otherwise agree, be delivered to Buyer's
place of business by means of delivery jointly determined by Seller and Buyer,
and Buyer will bear the cost of such delivery.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date hereof
and as of the Closing Date as follows:
5.1 Existence and Authority of Seller. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Seller has the full corporate power and authority to carry on the
Business as now conducted, to enter into this Agreement and the Collateral
Agreements, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Collateral
Agreements by Seller have been duly and validly authorized by all necessary
corporate proceedings on the part of Seller. This Agreement constitutes and,
when executed and delivered, the Collateral Agreements will constitute, the
legal, valid and binding obligations of Seller or, as applicable, a Subsidiary
of Seller, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
5.2 Consents and Approvals; Absence of Violations.
(a) Except as set forth in Schedule 5.2, no notification,
authorization, consent or approval of, or notice to, or filing or registration
with, any Governmental Authority (as hereinafter defined) is required to be
obtained or given or waiting period required to expire as a condition to
Seller's execution of this Agreement or the Collateral Agreements and the
performance of its obligations hereunder and thereunder other than (i) filings
with the FTC (as hereinafter defined) and the DOJ (as hereinafter defined)
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pursuant to the HSR Act (as hereinafter defined) and (ii) notifications,
authorization, consents, approvals, notices, filings or registrations which the
failure to obtain or make, in the aggregate, would not be reasonably likely to
have a Material Adverse Effect (as hereinafter defined).
(b) Neither Seller's execution and delivery of this Agreement
or of the Collateral Agreements, nor Seller's performance of its obligations
hereunder or thereunder, will (i) violate any provision of, or result in the
acceleration of, or entitle any party to accelerate (whether after the filing
of notice or lapse of time or both), any obligation, or permit any person to
terminate, modify or cancel the rights of Seller or result in the creation or
imposition of any lien, charge, pledge, security interest or other encumbrance
upon any Purchased Assets under any provision of any mortgage, lien, agreement,
license or other obligation to which Seller is a party, or by which Seller is
bound, or to which Seller's assets are subject, (ii) violate any provision of
the certificate of incorporation or by-laws of Seller, or (iii) violate any
Laws or any judgment, order, or decree of any Governmental Authority to which
Seller is subject, except for such defaults, violations, accelerations, and
liens which, in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
5.3 Contracts. All material contracts (as hereinafter defined) of
Seller relating to the Business, and all open purchase orders relating to the
Business (in the case of Schedule 1.1(f) attached to this Agreement as of its
preparation date, such list having been prepared as of July 16, 1996 and in the
case of Schedule 1.1(f) delivered at the Closing, such list having been
prepared as of a date not more than 5 business days prior to the Closing Date)
are set forth on Schedule 1.1(f) hereto. The Contracts are valid, legal and
binding obligations of Seller, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Neither Seller nor (to the knowledge of
Seller) any other party to any Contract is in breach of any Contract except for
breaches which, in the aggregate, are not reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 1.1(f), no consent is
required under any contract, lease, license, purchase order or other agreement
listed on Schedule 1.1(f) in connection with the consummation of the
transactions contemplated by this Agreement except for consents which the
failure to obtain, in the aggregate, is not reasonably likely to have a
Material Adverse Effect. At the Closing, the updated list of Contracts on
Schedule 1.1(f) will include all Material Contracts to which Seller is a party
relating exclusively to the Business. For purposes of this Section 5.3 only,
the term "Seller" shall mean Seller or a Subsidiary of Seller, as applicable.
The open purchase orders of the Business listed on Schedule 1.1(f) are
consistent with (i) the forecasts of the Business as of the date such orders
were placed (except in the case of lifetime buys), (ii) normal lead times, and
(iii) normal transportation times.
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5.4 Intellectual Property Rights.
(a) Ownership. To the knowledge of Seller, Seller owns the
Intellectual Property and has the rights to sell, assign, transfer and deliver
such Intellectual Property as contemplated herein.
(b) No Infringement. To the knowledge of Seller, the
Intellectual Property does not conflict with or infringe, and no one has
asserted to Seller in writing that such rights conflict with or infringe, any
proprietary rights, owned, possessed or used by any third party except for such
instances of infringement that are not reasonably expected to have a Material
Adverse Effect. There are no claims, disputes, actions, proceedings, suits or
appeals pending against Seller with respect to any Intellectual Property or any
Licensed Patent (as hereinafter defined) (other than those, if any, with
respect to which service of process or similar notice may not yet have been
made on Seller), and to the knowledge of Seller, none has been threatened
against Seller except for such claims, disputes, actions, proceedings, suits or
appeals which are not reasonably expected to have a Material Adverse Effect.
Seller makes no representation as to the commercial value of any of the
Intellectual Property or any Licensed Patent.
(c) Disclaimer. Except as specifically provided above, no
warranty or representation by Seller is made that making, having made, selling,
or using the Intellectual Property or any Licensed Patent will be free from
infringement of patents or other intellectual property rights of others nor
shall any representation or warranty be construed as an agreement by Seller to
bring or prosecute actions or suit against third parties for infringement or
conferring any right to bring or prosecute actions or suit against third
parties for infringement.
5.5 Capital Equipment and Expensed Assets. All Capital Equipment
listed on Schedule 1.1(a) and all the Expensed Assets are in reasonably good
condition and repair (subject to normal wear and tear) and are adequate for the
uses to which they are being put or designed to be put. At the Closing, Buyer
will acquire good title to all of the Capital Equipment and Expensed Assets
free and clear of all liens, claims and encumbrances. The Capital Equipment
and Expensed Assets included in the Purchased Assets include all of the
material manufacturing equipment and expensed assets necessary to produce the
products of the Business as such products have been produced by Seller prior to
the Closing.
5.6 Inventory. The Inventory reflected on the Pre-Closing Statement
or acquired since the date thereof was acquired or produced and has been
maintained in the ordinary course of the conduct of the Business. At the
Closing, Buyer will acquire good and marketable title to the Inventory, free
and clear of all liens, claims and encumbrances.
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5.7 Accounts Receivable. The accounts receivable of Seller arising
from the Business as set forth on the Pre-Closing Statement or arising since
the date thereof are valid and genuine and have arisen solely out of bona fide
sales and deliveries of goods, performance of services and other business
transactions in the ordinary course of the operation of the Business. The
allowance for collection losses on the Pre-Closing Statement will have been
determined in accordance with Seller's Accounting Policies. At the Closing,
Buyer will acquire good title to the accounts receivable included in the
Purchased Assets, free and clear of all liens, claims and encumbrances.
5.8 Litigation. There are no legal, administrative, arbitration,
investigatory, or other proceedings, or any other claims asserted in writing,
pending or, to Seller's knowledge, threatened against the Business or directly
affecting any of the Purchased Assets except for proceedings and claims which,
in the aggregate, are not reasonably likely to have a Material Adverse Effect.
There are no product liability lawsuits, claims or other proceedings pending
or, to Seller's knowledge, threatened relating to the Business except for
claims, lawsuits or other proceedings which, in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
5.9 Compliance with Law. To Seller's knowledge, the Purchased
Assets and their use by Seller and the sale of products of the Business by
Seller comply with all applicable Laws except for instances of noncompliance
which in the aggregate, are not reasonably likely to have a Material Adverse
Effect.
5.10 Historical Financial Information; Projections. Schedule 5.10
contains certain information regarding the historical revenues, expenses,
assets and liabilities of the Business (the "Historical Information"). The
Historical Information has been derived from the books and records of Seller
and prepared on a basis consistent with Seller's Accounting Policies. Seller's
Accounting Policies are consistent with GAAP. To Seller's knowledge, such
Historical Information does not contain any material omissions, inaccuracies or
misstatements and are not expected to differ materially from the financial
statements to be prepared pursuant to Section 9.2. There are no material
reserves related to the Business reflected in the consolidated financial
statements of Seller for corresponding periods that are not reflected in the
Historical Financial Information. The financial projections included in
Schedule 5.10 were prepared as of May 9, 1996 based on assumptions considered
as of that date to be reasonable by the management of the Business with respect
to the future operations of the Business and based on the good faith judgment
of the management of the Business. Seller makes no representation or warranty
as to the accuracy of any of such financial projections.
5.11 No Material Adverse Change. Since December 31, 1995, Seller
has not suffered any material change in the results of operations, assets or
financial condition of the
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portion of the Business not related to the design, development, marketing and
sale of laser printer hardware.
5.12 Brokers. No broker, finder, agent or similar intermediary has
acted for or on behalf of Seller in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, or similar fee or other
commission in connection herewith, based on any agreement or understanding with
Seller or any action taken by Seller.
5.13 Knowledge. As used in this Article V, the terms "to Seller's
knowledge" and "to the knowledge of Seller" shall mean the actual knowledge of
the persons listed on Schedule 5.13 after due inquiry.
5.14 Employee Plans. Each employee plan of Seller in which the
employees listed on Schedule 9.7(a) or Schedule 9.7(b) participate and which is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") has heretofore been determined by the Internal
Revenue Service to so qualify. To the knowledge of Seller, nothing has
occurred since the date of the most recent determination that would be
reasonably likely to cause any such employee plan to fail to qualify under
Section 401(a) of the Code.
5.15 Reliance. The representations and warranties of Buyer contained
in this Agreement constitute the sole and exclusive representations and
warranties of Buyer to Seller in connection with this Agreement and the
transactions contemplated hereby, and Seller acknowledges that all other
representations and warranties are specifically disclaimed and may not be
relied upon or serve as a basis for a claim against Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date hereof
and as of the Closing Date as follows:
6.1 Existence and Authority of Buyer. Buyer is a corporation
validly existing and in good standing under the laws of Delaware and has
full corporate power and authority to enter into this Agreement and the
Collateral Agreements and to perform its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and the Collateral
Agreements by Buyer have been duly authorized by all necessary corporate
proceedings on the part of Buyer. The Agreement constitutes, and when executed
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and delivered, the Collateral Agreements will constitute, the legal, valid and
binding obligations of Buyer, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.2 Consents and Approvals; Absence of Violations.
(a) Except as set forth in Schedule 6.2, no notification,
authorization, consent or approval of, or notice to, any Governmental Authority
is required to be obtained or given or waiting period required to expire as a
condition to Buyer's execution of this Agreement or of the Collateral
Agreements and the performance of its obligations hereunder and thereunder
other than filings with the FTC and the DOJ pursuant to the HSR Act.
(b) Neither Buyer's execution and delivery of this Agreement or
of the Collateral Agreements, nor Buyer's performance of its obligations
hereunder and thereunder, will (i) except as set forth in Schedule 6.2, violate
any provision of, or result in the acceleration of, or entitle any party to
accelerate (whether after the filing of notice or lapse of time or both), any
obligation under, or permit any person to terminate, modify or cancel the
rights of Buyer under, any provision of any mortgage, lien, agreement, license
or other obligation to which Buyer is a party, or by which Buyer is bound, or
to which Buyer's assets are subject, (ii) violate any provision of the charter
or by-laws of Buyer, or (iii) violate any provisions of Laws or any judgment,
order, or decree of any court or governmental agency to which Buyer is subject.
6.3 Brokers. No broker, finder, agent or similar intermediary has
acted for or on behalf of Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection herewith based on any agreement or understanding with
Buyer or any action taken by Buyer.
6.4 Financing. Buyer has delivered to Seller a true and complete
copy of an executed commitment letter dated July 22, 1996 from NationsBank
which commitment letter is in form and substance satisfactory to Seller.
6.5 Reliance. The representations and warranties of Seller
contained in this Agreement constitute the sole and exclusive representations
and warranties of Seller to Buyer in connection with this Agreement and the
transactions contemplated hereby, and Buyer acknowledges that all other
representations and warranties are specifically disclaimed and may
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not be relied upon or serve as a basis for a claim against Seller. BUYER
ACKNOWLEDGES THAT SELLER DISCLAIMS ALL WARRANTIES OTHER THAN THOSE EXPRESSLY
CONTAINED IN THIS AGREEMENT AS TO THE PURCHASED ASSETS, OR ANY OF THEM, EITHER
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE VII
COVENANTS OF SELLER
7.1 Conduct of Business and Compliance. Except as otherwise agreed
to by Buyer, which agreement shall not be unreasonably withheld or delayed, or
as otherwise contemplated hereby, Seller covenants and agrees that, between the
date hereof and the Closing, Seller shall:
(a) conduct the Business generally in its customary and usual
manner, including without limitation engaging in marketing efforts at a level
substantially consistent with the financial projections included in Schedule
5.10;
(b) use, operate, repair and maintain all property included in
the Purchased Assets in a commercially reasonable manner consistent with
Seller's past practice;
(c) use commercially reasonable efforts to maintain in full
force and effect all Contracts, permits and other obligations, in all material
respects, which are related to the Business;
(d) use commercially reasonable efforts to retain and preserve
the relationships with and the goodwill of, the present and potential
customers, suppliers and employees of the Business and others having business
relations with the Business;
(e) promptly advise Buyer in writing of the commencement of,
and of any known threat to commence, any suit, claim, action, arbitration,
legal or administrative proceeding, governmental investigation, or tax audit
against the Business or which involve the Purchased Assets;
(f) comply in all material respects with all applicable Laws;
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(g) not enter into any agreement or commitment involving an
aggregate capital expenditure or commitment exceeding $100,000 not in the
ordinary course of Seller's conduct of the Business; and
(h) not enter into any agreement with any Affiliate of Seller
not in the ordinary course of Seller's conduct of the Business.
7.2 Pre-Closing Access. Prior to Closing, Seller shall give the
employees, attorneys and accountants of Buyer and the employees of Atlantic
Design Company, Inc. ("ADC"), at Buyer's reasonable request, reasonable access
during normal business hours to the personnel, properties, books, contracts,
reports and records (including financial information) relating to the Business
in order that Buyer may have the opportunity to make such investigation as it
desires of the affairs of the Business and to furnish Buyer and ADC with
information, and copies of all documents and agreements including but not
limited to financial and operating data and other information concerning the
financial condition, results of operations and business of the Business, that
Buyer may reasonably request, but subject to such reasonable limitations as may
be imposed by Seller. The rights of Buyer and ADC under this Section 7.2 shall
not be exercised in such a manner as to interfere with Seller's operation of
the Business. Seller shall have no duty hereunder to provide access to Buyer
or ADC to any information as to which Seller owes any third party a duty of
confidentiality without such third party's prior written consent; provided,
however, that Seller agrees to use commercially reasonable efforts to obtain
such consents with respect to Material Contracts as soon as practicable after
the date hereof. Prior to the Closing, Seller shall use commercially
reasonable efforts to assist Buyer in verifying the assembly instruction
documentation used in the Business.
7.3 Update to Disclosure. From time to time prior to the Closing,
Seller will supplement or amend the disclosure schedules delivered in
connection herewith with respect to any matter which, if existing or occurring
at or prior to the date of this Agreement, would have been required to be set
forth or described in such disclosure schedules or which is necessary to
correct any information in such disclosure schedules which has been rendered
inaccurate thereby. If the Closing occurs, Buyer waives any right or claim it
may otherwise have or have had on account of any matter so disclosed in such
supplement or amendment.
7.4 Compliance. Seller covenants and agrees that between the date
hereof and the Closing, Seller shall not take any action that would cause the
representations and warranties made by Seller herein not to be true and
correct, in all material respects, as of the Closing without the prior written
consent of Buyer.
7.5 Acquisition Proposals. From and after the date of this
Agreement, Seller shall not, nor shall it authorize or permit any officer,
director or employee of, or any
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investment banker, attorney, accountant or other representative retained by,
Seller to, solicit, initiate or encourage submission of any proposal or offer
(including by way of furnishing information) from any person which constitutes,
or may reasonably be expected to lead to, any Acquisition Proposal. As used in
this Agreement, "Acquisition Proposal" shall mean any proposal for or offer to
acquire in any manner a substantial portion of the Purchased Assets.
ARTICLE VIII
COVENANTS OF BUYER
8.1 Compliance. Buyer covenants and agrees that between the date
hereof and the Closing, Buyer shall not take any action that would cause the
representations and warranties made by Buyer herein not to be true and correct,
in all material respects, as of the Closing without the prior written consent
of Seller.
ARTICLE IX
ADDITIONAL COVENANTS
9.1 Names, Trademarks, Etc. Buyer and its affiliates will revise
trademarks and product literature, change signage and stationery and otherwise
discontinue use of the names "TEXAS INSTRUMENTS INCORPORATED," "TI" and
variations thereof (collectively, the "TI Trade Names") as promptly as
practicable after the Closing; provided, however, that Buyer may consume the
Inventory, stationery and similar supplies on hand or on order as of the
Closing which contain TI Trade Names thereon; provided that to the extent
practicable, such items are overstamped or otherwise appropriately indicate
that the Business is then being conducted by Buyer. Buyer shall be permitted
to utilize the TI Trade Names solely as set forth on Schedule 9.1 in connection
with products of the Business for the life of such products to the extent
Buyer's utilization thereof is accurate. Except as expressly provided in this
Section 9.1, Buyer shall not be permitted to use the TI Trade Names in any
manner.
9.2 Preparation of Financial Statements. Seller shall, as soon as
practicable following the date of this Agreement, provide to Ernst & Young,
LLP, on a confidential basis, such financial information as required to
determine the periods for which historical financial statements of the Business
will be required to be filed by Buyer with the SEC pursuant to the provisions
of Rule 3-05(b) of Regulation S-X promulgated by the SEC. The parties
acknowledge that financial statements have never been prepared and are not
currently available for the Business. Buyer shall, as soon as practicable
following the date of this
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Agreement, advise Seller of the form and content of the audited and unaudited
historical financial statements and other financial data of the Business
required by Buyer to comply with its filing obligations with the SEC under the
rules and regulations of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including Regulation S-X) in connection with the consummation
of the transactions contemplated hereby (the "Financial Statements"). Seller
shall cause the Financial Statements to be prepared and delivered to Buyer as
soon as practicable and in any event within 60 days following such notice so as
to enable Buyer to timely file the Financial Statements with the SEC. The
Financial Statements will conform to the requirements of the Exchange Act as
set forth in the notice of Buyer. Buyer shall pay all fees and expenses of
Ernst & Young, LLP in connection with the preparation and audit of the
Financial Statements.
9.3 Government Approvals. Each of Buyer and Seller will use
commercially reasonable efforts to obtain and to cooperate with the other party
in obtaining, all authorizations, consents, orders and approvals of any
Governmental Authority that may be or become necessary in connection with the
consummation of the transactions contemplated by this Agreement. Promptly
following the execution of this Agreement, Seller and Buyer shall each file (i)
a Premerger Notification and Report Form and all documentary attachments
thereto to be filed with the FTC and the DOJ pursuant to the HSR Act and (ii)
any notices required (if any) under the laws of Belgium. Buyer shall pay all
filing fees required by the HSR Act in connection with the transactions
contemplated by this Agreement. Seller and Buyer shall file any additional
information requested by the FTC, the DOJ or any Belgian governmental agency in
connection with this Agreement or the transactions contemplated hereby as soon
as practicable after receipt of any request for such information. Neither
Seller nor Buyer shall unreasonably take or fail to take any action which
reasonably could be expected to have the effect of delaying, impairing or
impeding the receipt of any authorizations, consents, orders and approvals of
any Governmental Authority (including without limitation approval under the HSR
Act) as contemplated by this Section 9.3. Buyer and Seller agree that any
filing fee required to be paid in connection with any filing with any Belgian
governmental agency shall be paid one-half by Seller and one-half by Buyer.
9.4 Solicitation of Employees. For a period of twenty-five months
following the Closing Date, Buyer and Seller will not solicit for employment or
hire, employ or otherwise retain any employee of the other party or any of the
individuals listed on Schedule 9.7(a), including such listed individuals who
refuse an offer of employment by Buyer; provided, however, that, (i) Buyer
shall have the right to solicit for employment and employ any individual listed
on Schedule 9.7(a) or Schedule 9.7(b), (ii) neither party shall be prohibited
from general employment advertising, and (iii) Buyer's restrictions under this
Section 9.4 shall relate solely to employees of Seller employed in the Business
prior to the Closing who do not accept employment with Buyer.
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9.5 Assignment of Contracts. Seller shall cause its Subsidiaries,
as appropriate, to transfer to Buyer ownership of the Purchased Assets,
including without limitation to assign (subject to Section 1.3) their
respective rights and obligations under the Contracts as necessary to
consummate the transactions contemplated by this Agreement in accordance with
its terms.
9.6 Satisfaction of Conditions. Each of Buyer and Seller will use
commercially reasonable efforts in good faith to satisfy promptly all
conditions required hereby to be satisfied by such party and take such other
actions as may be necessary in order to consummate the transactions
contemplated by this Agreement.
9.7 Employee Matters.
(a) At or prior to the Closing, Buyer will offer employment to
the individuals listed on Schedule 9.7(a) (such employment to become effective
immediately after 12:01 a.m. Dallas, Texas time on the Closing Date (the "New
Employment Start Date") and to be contingent upon the consummation of the
transactions contemplated by this Agreement). Employment will be offered (i)
beginning on the New Employment Start Date at base salary rates not less than
the current base salary rates as of July 1, 1996 for such individuals and (ii)
at a location designated by Buyer not more than 50 miles from such individual's
place of employment prior to the Closing (although the offer need not guarantee
continued employment within such geographic area).
(b) Seller shall terminate the employment of the domestic
employees listed on Schedule 9.7(a) on and as of the Closing Date, such
termination to be deemed effective as of 12:00 midnight Dallas, Texas time
immediately preceding the Closing Date. Buyer will hire, on an "at will" basis
and subject to Buyer's terms, conditions and policies of employment, if any,
each of the individuals listed on Schedule 9.7(a) who are terminated by Seller
on the Closing Date pursuant to the immediately preceding sentence and accept
employment with Buyer. Seller shall permit Buyer to recruit the employees
listed on Schedule 9.7(b).
(c) Buyer will provide to all domestic employees listed on
Schedule 9.7(a) or (b) who accept Buyer's offer of employment extended pursuant
to Section 9.7(a) or (b) above, employee benefits equivalent to such benefits
provided generally to all employees of Buyer, subject to the special terms set
forth in Sections 9.7(d), (e) or (f). Buyer will provide to all international
employees listed on Schedule 9.7(a) who accept Buyer's offer of employment
extended pursuant to Section 9.7(a) above, employee benefits and other terms
and conditions of employment at least identical to those provided to such
employees by Seller as of July 1, 1996, to the extent that Buyer is in a
position to provide an identical benefit and, where Buyer's provision of an
identical benefit is impracticable or impossible in the case of programs
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such as stock option plans and profit sharing programs, Buyer will provide a
program of comparable value (comparability to be determined to the reasonable
satisfaction of Seller and with a view to providing Seller with a successful
defense to any allegation or claim that such employees might make for severance
or termination indemnity); provided, however, that Buyer does not warrant that
any such defense will be successful.
(d) Domestic employees listed on Schedule 9.7(a) or Schedule
9.7(b) who accept Buyer's offer of employment at the Closing will generally be
treated as new hires for purposes of Buyer's employee benefits except as
follows:
(i) Medical and life insurance: Pre-existing
conditions clause will be waived. HMO will be provided for Temple
employees. The cost to employees will be the same as with Seller until
December 31, 1996. Thereafter, the cost to employees shall be the same as
for other employees of Buyer.
(ii) Retiree medical insurance: None.
(iii) 401(k) Plan: Buyer will accept transfer
of employee accounts and loans from Seller's tax-qualified 401(k) plan. That
transfer shall be made in accordance with applicable law. Employees will be
immediately eligible to participate in Buyer's 401(k) plan effective as of the
New Employment Start Date and will be fully vested in employer contributions
when made as if they were fully vested existing employees of Buyer.
(iv) Drug screening: Pre-employment drug
screening shall be waived by Buyer.
(v) Vacation: Employees accepting employment
with Buyer shall be treated as new hires by Buyer and will receive
additional benefits as described in subparagraph (f) below.
(vi) Severance: Employees accepting employment
with Buyer shall be treated as new hires by Buyer and will receive
alternative benefits as described in subparagraph (e) below.
(vii) Tuition plan: Waiting period for
participation will be waived by Buyer.
(viii) Bonus: Employees shall participate in
Buyer's bonus plan for the third and fourth quarter of 1996. Seller shall
pay accrued bonus through
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Closing Date. Buyer shall pay the retention bonuses payable pursuant to
subparagraph (e) below.
(e) Seller will accrue a liability on the Pre-Closing Statement of
$500,000 (the "Severance/Retention Pool"). In the event any domestic employee
of Seller who accepts employment with Buyer is terminated by Buyer (for reasons
other than just cause) during the two year period immediately following the
Closing, such employee will be eligible for a severance payment equal to the
amount that would have been paid to such individual at the time of his/her
employment termination by Seller had such individual been entitled to a
severance payment at that time. Buyer will not provide such employee with any
other post-termination benefits except as required by law. Any transferred
employee who remains employed by Buyer on the second anniversary of the Closing
will be paid a retention bonus equal to 20% of their then current annual base
salary. After the second anniversary of Closing, Buyer will calculate the
total amount of all severance payments and retention bonuses paid by Buyer
under this subparagraph and paid by Seller to direct manufacturing employees of
Seller pursuant to the terms of the Transition Services Agreement. If such
total is less than the Severance/Retention Pool amount, Buyer will pay the
difference to Seller.
(f) Seller will accrue a liability on the Pre-Closing Statement
equal to the aggregate actual vacation days accrued by all employees accepting
employment with Buyer (not to exceed 20 days of vacation for any one employee).
All such employees shall receive cash compensation from Seller upon the
termination of their employment in respect of any vacation days in excess of 20
days. Buyer will recognize the vacation days for which such liability is
accrued. Any of the carryover vacation which has not been taken by December
31, 1997 will be paid to employees in cash by Buyer. Any vacation days carried
over from an employee's employment with Seller shall be used prior to an
employee's use of any vacation days attributable to such employee's employment
with Buyer.
9.8 Confidentiality. Each of Buyer and Seller agrees that, unless
and until the transactions contemplated hereby shall have been consummated,
the Nondisclosure Agreement dated January 29, 1996, as amended to
date, between Buyer and Seller shall remain in full force and effect.
9.9 Agreement Not to Compete.
(a) Subject to the provisions of the Sales Agency Agreement, Seller
agrees that it will not, and it will not permit any of its subsidiaries to,
engage, directly or indirectly, in the Protected Business (as hereinafter
defined) for a period of five years after the Closing Date; provided, however,
that nothing herein shall preclude Seller or any subsidiary thereof from (i)
owning an equity interest of 5% or less in any publicly traded company, (ii)
acquiring after the date hereof an equity interest in any entity which,
together with its subsidiaries, derives 25%
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or less of its consolidated revenues from the Protested Business (a
"Competitive Acquisition"), (iii) manufacturing and/or selling subassemblies or
components for or to others who may compete with the Business, or (iv)
manufacturing and/or selling printers, subassemblies and components based on
Seller's Digital Micromirror Device (as hereinafter defined). In the event of
a Competitive Acquisition, Seller agrees to use its commercially reasonable
efforts to divest, or to cause its subsidiaries to divest, that portion of the
acquired business engaged in the Protected Business (the "Competing Business")
within twenty-four (24) months after the consummation of the Competitive
Acquisition. If, after such efforts, the acquiring party is unable to dispose,
or to cause the disposition, of the Competing Business, then the parties hereto
will cooperate in good faith to develop a plan mutually satisfactory to Buyer
and Seller to eliminate or minimize, to the extent permitted by law, the
potential that the acquiring party and Buyer (or any successor thereto) shall
be engaged in competitive activities. Except as set forth in this Section
9.9(a), Seller does not intend to limit its or its subsidiaries current or
future business activities, whether or not such activities are competitive with
those of Buyer. For purposes of this Section 9.9(a), the term "Protected
Business" means the design, development, marketing and sale of travel ticket
document printers and readers, monochromatic electrophotographic page printers
using laser and LED technologies and printers using serial impact technologies
in each case operating at peak speeds of less than or equal to 18 pages per
minute and related accessory options, supplies and replaceable parts for such
printers and options.
(b) The parties recognize the broad scope of Section 9.9(a), but
agree that Buyer would not have entered into this Agreement in the absence of
the foregoing covenant not to compete. Moreover, the parties agree that the
terms of such covenant are reasonable in light of Buyer's plans for the
Protected Business, which Buyer has discussed with Seller. If, as a result of
a dispute between the parties as to this covenant, a court refuses to enforce
this noncompetition agreement for any reason, the parties shall request such
court to reform this covenant (for purposes of application in the jurisdiction
in which such dispute arises) to the extent necessary to permit its
enforcement.
9.10 Epidemic Failure. In the event that any product of the Business
sold by Seller prior to the Closing is the subject of any Epidemic Failure
(which consequently constitutes a Retained Liability), Buyer agrees that it
shall accept the return of all such products from the purchasers thereof and
shall deal with such purchasers at Seller's sole expense (including the
wholesale cost of replacing the defective products or the internal cost of
Buyer in repairing such defective products, plus the shipping and handling
costs associated with the delivery of the defective products to Buyer from the
customer and the delivery of the replacement or repaired product to the
customer by Buyer). Buyer shall invoice Seller in accordance with its
customary billing practices for the costs contemplated by this Section 9.10 and
Seller shall remit the appropriate payment to Buyer in accordance with Buyer's
customary payment practices.
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9.11 Confidential Treatment. Buyer agrees to seek confidential
treatment under Rule 24b-2 promulgated under the Exchange Act for this
Agreement and any Collateral Agreement Buyer proposes to file with the SEC.
Prior to the proposed filing of any such agreements, Buyer shall (i) give
Seller reasonable prior written notice of such proposed filing, (ii) seek
confidential treatment for those portions of such agreements reasonably
requested by Seller, (iii) use reasonable efforts to secure such confidential
treatment, and (iv) to the extent and for such period as confidential treatment
is secured, hold all such information in strict confidence.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing of the following conditions, but
compliance with any such conditions may be waived by Buyer.
10.1 Truth of Representations and Warranties; Compliance with
Covenants. The representations and warranties of Seller contained in this
Agreement shall be true and correct, in all material respects, at and as of the
Closing, and Seller shall have performed and complied with, in all material
respects, all the covenants and agreements required by this Agreement to be
performed or complied with by Seller at or prior to the Closing and Buyer shall
have received a certificate signed by a duly authorized employee of Seller
certifying to the matters set forth in this Section 10.1.
10.2 No Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of
any court, agency or other Governmental Authority shall have been rendered
against, Buyer or Seller and no Law shall have been enacted which renders
unlawful, restrains or prohibits as of the Closing Date, the consummation of the
transactions contemplated by this Agreement in accordance with its terms or
which could reasonably be expected to limit Buyer's ownership or control of the
Purchased Assets.
10.3 Governmental Consents or Approvals. All applicable waiting
periods under the HSR Act and applicable Belgian antitrust laws (if any) shall
have expired or been terminated.
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10.4 Third Party Consents. Seller shall have obtained and shall
have delivered to Purchaser all third-party consents to the assignment of the
Contracts listed on Schedule 10.4.
10.5 Employees. Buyer shall have received acceptances
of employment offers from all of the employees designated as Code 1 employees
on Schedule 9.7(a), at least 75% of the employees designated as Code 2
employees on Schedule 9.7(a), at least 80% of the employees designated as Code
3 employees on Schedule 9.7(a), at least 60% of the employees designated as
Code 4 employees on Schedule 9.7(a) and at least 50% of the employees
designated as Code 5 employees on Schedule 9.7(b).
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions,
but compliance with such conditions may be waived by Seller:
11.1 Truth of Representations and Warranties; Compliance with
Covenants. The representations and warranties of Buyer contained in this
Agreement shall be true and correct, in all material respects, at and as of the
Closing, with the same effect as though such representations and warranties
were made at and as of the Closing, and Buyer shall have performed and complied
with, in all material respects, all the covenants and agreements required by
this Agreement to be performed or complied with by Buyer at or prior to the
Closing and Seller shall have received a certificate of the President or any
Vice President of Buyer certifying to the matters set forth in this Section
11.1.
11.2 No Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of
any court, agency or other Governmental Authority shall have been rendered
against, Buyer or Seller and no Law shall have been enacted which renders
unlawful, restrains or prohibits, as of the Closing Date, the consummation of
the transactions contemplated by this Agreement in accordance with its terms.
11.3 Governmental Consents or Approvals. All applicable waiting
periods under the HSR Act and applicable Belgian antitrust laws (if any) shall
have expired or been terminated.
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ARTICLE XII
TERMINATION PRIOR TO CLOSING
12.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller:
(i) if a court of competent jurisdiction or
Governmental Authority shall have issued an order, decree or ruling or
taken any other action (which order, decree or ruling the parties hereto
shall use their best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and nonappealable; or
(ii) if the Closing shall not have occurred on or
before September 30, 1996; provided, however, that (A) each of Seller and
Buyer shall have the right, in its sole discretion, to extend the time
period in this Section 12.1(b)(ii) an additional thirty (30) days and (B)
the right to terminate this Agreement shall not be available to any party
whose breach of this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or
(iii) if a material default or breach shall be
made by the other with respect to the due and timely performance of any of
its covenants or agreements contained herein, or in any of its
representations or warranties contained in the Agreement, if such default
or breach has not been cured or waived within thirty (30) days (or, if
such material breach or default shall first be discovered by the party
entitled to assert such breach or default on or after September 1, 1996,
then by September 30, 1996) after written notice to the other specifying,
in reasonable detail, such claimed material default or breach and
demanding its cure or satisfaction.
12.2 Procedure and Effect of Termination. In the event of
termination and abandonment of the transactions contemplated hereby pursuant to
Section 12.1, written notice thereof shall forthwith be given to the other
party to this Agreement and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein:
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(a) upon request therefor, each party will redeliver all documents,
work papers and other material of any other party relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party furnishing the same; and
(b) no party hereto shall have any liability or further obligation
to any other party to this Agreement resulting from such termination except (i)
that the provisions of the Nonsolicitation Agreement dated June 13, 1996,
between Buyer and Seller (the "Nonsolicitation Agreement"), Section 9.8, this
Section 12.2 and the proviso of Section 12.1(b)(ii) shall remain in full force
and effect and (ii) no party waives any claim or right against a breaching
party to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification by Seller. Seller will indemnify and hold
harmless Buyer, its subsidiaries and affiliates, and each of their respective
officers, directors, shareholders, employees and agents from and against:
(a) Any and all Retained Liabilities;
(b) Any and all losses, liabilities, damages, costs and
obligations (or actions or claims in respect thereof) which Buyer may suffer or
incur, insofar as such losses, liabilities, damages, costs, or obligations (or
actions or claims in respect thereof) arise out of or are based upon the breach
of any representation or warranty of Seller set forth herein;
(c) Any and all losses, liabilities, damages, costs and
obligations (or actions or claims in respect thereof) which Buyer may suffer or
incur, insofar as such losses, liabilities, damages, costs, or obligations (or
actions or claims in respect thereof) arise out of or are based upon the breach
of any covenant or agreement of Seller set forth herein;
(d) Any and all brokers' or similar fees or commissions in
connection herewith, based on any understanding with Seller or any action taken
by Seller;
(e) Any and all losses and costs which Buyer may suffer or
incur, insofar as such losses and costs arise out the inability of Buyer to
collect (in the ordinary course and within 180 days of the Closing Date) the
accounts receivable reflected on the Post-Closing Statement and owed by Trans
Capital Sdn. Bhd. and IEC Electronics Corporation;
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(f) Up to $500,000 in costs which Buyer may incur insofar as
such costs arise out of severance payments actually made by Buyer to Michel
DuRang; and
(g) Any and all legal and other expenses reasonably incurred by
Buyer or any of its officers, directors, or controlling persons in connection
with investigating, defending, or prosecuting any of the matters referred to in
paragraph (a), (b), (c), (d), (e), or (f) above (or actions or claims in
respect thereof) whether or not resulting in any loss, liability, damage, cost,
or obligation.
13.2 Indemnification by Buyer. Buyer will indemnify and hold
harmless Seller, its subsidiaries and affiliates, and each of their respective
officers, directors, shareholders, employees and agents from and against:
(a) Any and all Assumed Liabilities;
(b) Any and all losses, liabilities, damages, costs and
obligations (or actions or claims in respect thereof) which Seller may suffer
or incur, insofar as such losses, liabilities, damages, costs or obligations
(or actions or claims in respect thereof) arise out of or are based upon the
breach of any representation or warranty of Buyer set forth herein;
(c) Any and all losses, liabilities, damages, costs and
obligations (or actions or claims in respect thereof) which Seller may suffer
or incur, insofar as such losses, liabilities, damages, costs, or obligations
(or actions or claims in respect thereof) arise out of or are based upon the
breach of any covenant or agreement of Buyer set forth herein;
(d) Any and all brokers' or similar fees or commissions in
connection herewith, based on any understanding with Buyer or any action taken
by Buyer;
(e) Any and all losses, liabilities, damages, costs and
obligations (or actions or claims in respect thereof) which Seller may suffer
or incur, insofar as such losses, liabilities, damages, costs, or obligations
(or actions or claims in respect thereof) arise out of or are based upon
Buyer's conduct of the Business from and after the Closing; and
(f) Any and all legal and other expenses reasonably incurred by
Seller or any of its officers, directors, or controlling persons in connection
with investigating, defending, or prosecuting any of the matters referred to in
paragraph (a), (b), (c), (d), or (e) above (or actions or claims in respect
thereof) whether or not resulting in any loss, liability, damage, cost, or
obligation.
13.3 Limitations on Indemnification.
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(a) Notwithstanding any other provision hereof or any
applicable Law, no Indemnified Party (as hereinafter defined) will be entitled
to make a claim against an Indemnifying Party (as hereinafter defined) under
Section 13.1(b) or Section 13.2(b), as applicable, unless and until the
aggregate amount of indemnifiable losses incurred under Section 13.1(b) or
Section 13.2(b), as applicable, exceeds $200,000 (the "Deductible"), in which
event the Indemnified Party will be entitled to make a claim against the
Indemnifying Party only to the extent the amount of such indemnifiable losses
exceeds such Deductible.
(b) Neither Indemnifying Party shall be liable for
indemnification payments under Section 13.1(b) or Section 13.2(b) to the extent
such aggregate indemnification payments by such Indemnifying Party exceed $10
million.
(c) The representations and warranties of Seller and of Buyer
contained in this Agreement shall survive the Closing until the expiration of
one year from the Closing Date. Any claim for indemnification with respect to
any of such matters which is not asserted by notice given as herein provided
relating thereto within such specified period of survival may not be pursued
and is hereby irrevocably waived after such time.
(d) The right to indemnification in respect of breaches of
representations and warranties hereunder shall be unaffected by any
investigation conducted by or knowledge obtained by Buyer prior to the Closing;
provided, however, if the Closing occurs, no claim for indemnification may be
asserted under Section 13.1(b) with respect to any matter discovered by or
known to Buyer on or before the date hereof or as provided in Section 7.3
unless such matter was disclosed to Seller immediately upon its discovery by
Buyer.
(e) Notwithstanding anything to the contrary herein contained,
except in the case of the termination of this Agreement in violation of Article
XII, neither Buyer nor Seller shall be liable under Section 13.1(b) or Section
13.2(b) for any special, consequential, incidental or indirect damages
(including without limitation loss of profit) whether or not such party has
been advised of the possibility of such loss, however caused and on any theory
of liability arising out of the transactions contemplated by this Agreement or
any document, instrument or agreement contemplated hereby, it being understood
that this exclusion includes liability that may arise out of third-party
claims.
(f) Anything to the contrary contained herein notwithstanding,
Buyer and Seller agree that if a claim may reasonably be asserted under Section
13.1(b) or 13.2(b), as the case may be, or under a subsection which is not
subject to the limitations contained in this Section 13.3, then the party
seeking indemnification may assert such claim under such subsection not subject
to any limitations; provided, however, that the assertion of any such
29
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claim under a subsection not subject to any limitations will not be deemed to
be determinative as to whether such claim is or is not subject to the
limitations contained in this Section 13.3.
13.4 Notice and Defense Procedures.
(a) Whenever any claim shall arise or any proceeding shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to this Article XII, such person (the "Indemnified Party") shall
promptly notify (in no event later than ten business days after receipt of such
notice) the person against whom such indemnity may be sought (the "Indemnifying
Party") thereof in writing, including, when known, the facts constituting the
basis for such claim or proceeding and the amount or an estimate of the amount
of the indemnified liability arising therefrom (such notification being the
"Claims Notice"). In addition, each party hereto hereby agrees to provide to
the other party written notification and copies of communication from third
parties received or made by such parties relating to any matter subject to any
indemnification hereunder. The failure by an Indemnified Party to timely
furnish to the Indemnifying Party any notice or copy required to be furnished
under this Section 13.4(a) shall not relieve the Indemnifying Party from any
responsibility for the matters relating to such notice or copy, unless such
failure adversely prejudices the ability of the Indemnifying Party to defend
such matter.
(b) In connection with any claim giving rise to indemnity
hereunder arising out of any claim or legal proceeding by any person who is not
an Indemnified Party, the Indemnifying Party at its sole cost and expense may,
upon written notice to the Indemnified Party, elect to assume the defense of
any such claim or legal proceeding. If the Indemnifying Party has so elected
to assume the defense of any such claim or legal proceeding, such defense shall
be conducted by counsel chosen by the Indemnifying Party, provided that such
counsel is reasonably satisfactory to the Indemnified Party. The Indemnified
Party shall be entitled to participate in (but not control) the defense of any
such action, with its counsel and at its own expense. If the Indemnifying
Party has elected to assume the defense of any claim or legal proceeding as
provided herein, the Indemnified Party shall not be entitled to indemnification
as to fees and expenses of any counsel retained by the Indemnified Party after
the time at which the Indemnifying Party has so elected. The Indemnified Party
shall not settle or compromise any indemnified liability without the prior
written consent of the Indemnifying Party, which shall not be unreasonably
withheld. In the event that the Indemnifying Party shall so assume such
defense, it shall not compromise or settle any such claim, action, or suit
unless (i) the Indemnified Party gives its prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the compromise or settlement
of such claim, action, or suit provide that the Indemnified Party shall have no
responsibility for the discharge of any settlement amount and impose no other
obligations or duties on the Indemnified Party, and the compromise or
settlement discharges all rights against the Indemnified Party with respect to
such claim, action, or suit. If a firm offer is made to
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settle a pending or threatened claim, action or proceeding for which the
Indemnified Party may be entitled to indemnification hereunder and which
involves only the payment of money damages and the Indemnifying Party desires
to accept and agree to such offer, Indemnifying Party will give written notice
to the Indemnified Party to that effect. If the Indemnified Party fails to
consent to such firm offer within ten calendar days after its receipt of such
notice, the Indemnifying Party may continue to contest or defend such claim
and, in such event, the maximum liability of the Indemnifying Party as to such
claim will not exceed the amount of such settlement offer. The Indemnified
Party will cooperate with the defense of any such claim, action, or suit and
will provide such personnel, technical support, and access to information as
may be reasonably requested by the Indemnifying Party in connection with such
defense.
13.5 Insurance. The amount of any liability for which an Indemnified
Party shall be entitled to indemnification shall take into consideration the
amount of insurance or other third party proceeds, if any, actually received by
the Indemnified Party in respect of such liability, and such amount of
insurance proceeds shall not be included in any calculation of the maximum
aggregate amount of indemnification as set forth in Section 13.3(a). Upon
making any indemnity payment, the Indemnifying Party will, to the extent of
such indemnity payment, be subrogated to all rights of the Indemnified Party
against any third party in respect of the loss to which the indemnity payment
relates. Without limiting the generality or effect of any other provision
hereof, the Indemnified Party and the Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
13.6 Adjustment to Purchase Price. Buyer and Seller agree that any
indemnity payment hereunder shall be treated as an adjustment to the Purchase
Price.
13.7 Exclusive Remedy. Buyer and Seller agree that, to the fullest
extent permitted by law, the sole and exclusive remedy of Buyer and Seller
after the Closing with respect to any claim or cause of action asserted by
Buyer or Seller relating to or arising from breaches of the representations,
warranties or covenants of the other party contained in this Agreement or any
document, list, schedule, exhibit, certificate or other instrument furnished or
to be furnished by or on behalf of such other party or any of its
representatives in connection with the transactions contemplated by this
Agreement shall be limited to the rights of Buyer and Seller under, and shall
be subject to the terms and conditions of, this Article XIII.
ARTICLE XIV
MISCELLANEOUS
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14.1 Certain Definitions. For purposes of this Agreement, the term:
"Affiliate" as used herein shall have the meaning given it in Rule
12b-2 of Regulation 12B under the Exchange Act.
"Closing Differential" as used herein shall mean the Proposed Closing
Differential with such revisions, adjustments and changes thereto, if any, as
shall be effected pursuant to Section 2.2(b)(ii).
"Digital Micromirror Device" as used herein shall mean a
Semiconductive Apparatus wherein addressable and movable radiation reflecting
members comprise a substantial portion of the device, including, by way of
illustration, electrostatically controllable, deformable or deflectable
mirrors.
"DOJ" as used herein shall mean the Antitrust Division of the United
States Department of Justice.
"Epidemic Failure" as used herein shall mean (i) common or similar
defects in more than three percent (3%) of products of the same type,
discovered in any shipment or series of shipments of such products, or in the
installed base of such products; or (ii) a consistent pattern of replacement
rates that does NOT meet Mean Time Between Failure (MTBF) and/or specified life
expectancy of printers, options, supplies, or spare parts.
"FTC" as used herein shall mean the Federal Trade Commission.
"GAAP" as used herein shall mean United States generally accepted
accounting principles.
"Governmental Authority" as used herein shall mean any domestic or
foreign court, government, governmental agency, authority, entity or
instrumentality.
"HSR Act" as used herein shall mean the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended.
"Laws" as used herein shall mean the provisions of any law, rule,
ordinance or regulation.
"Licensed Patents" as used herein shall mean the patents licensed on
a non-exclusive basis to Buyer pursuant to the License Agreement.
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"Material Adverse Effect" as used herein shall mean a material
adverse effect on the results of operation, assets or financial condition of
the Business.
"Material Contracts" means all contracts (other than purchase orders)
which have a remaining term in excess of one year or under which Seller paid or
received more than $25,000 in fiscal 1995 or under which Seller reasonably
expects to pay or receive more than $25,000 in fiscal 1996.
"Net Book Value of the Business" shall mean Purchased Assets minus
Assumed Liabilities determined in accordance with Seller's Accounting Policies.
"Proposed Closing Differential" as used herein shall mean, as
reflected in the Post-Closing Statement, the amount (whether a positive or
negative number) equal to (i) the Closing Net Book Value minus the Net Book
Value Estimate.
"Seller's Accounting Policies" as used herein shall mean Seller's
standard accounting policies and procedures, which policies and procedures are
consistent with GAAP and applied on a basis consistent with past practice.
"Semiconductive Apparatus" as used herein shall mean:
(i) a semiconductive element; or
(ii) a semiconductive element and one or more films of
conductive, semiconductive or insulating material formed on a surface or
surfaces of said element, said film or films comprising one or more conductors,
active or passive electrical circuit elements, or any combination thereof; or
(iii) a unitary assembly consisting of one or more of
(i), one or more of (ii), or any multiple of (i) and (ii), having a fixed
permanent physical relationship established therebetween; or
(iv) a unitary assembly consisting of (i), (ii) or
(iii), and one or more thin film devices having a fixed permanent physical
relationship established therebetween.
Such apparatus includes, if provided therewith as a part thereof,
supporting means, terminal members, conductors or equivalent interconnecting
members, housing means or unitary therewith, and such apparatus further
includes, if provided therewith as part thereof, the electrical circuits
constituted thereby and integrally included therein.
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"Subsidiary" as used herein shall have the meaning given it in Rule
12b-2 of Regulation 12B under the Securities Exchange Act of 1934, as amended.
14.2 Entire Agreement, Schedules and Exhibits.
(a) This Agreement, together with the Collateral Agreements and
other Schedules and Exhibits attached hereto, contains the entire understanding
of the parties relating to the subject matter contained herein, and this
Agreement cannot be changed or terminated orally and supersedes all prior
agreements and understandings relating to the subject matter hereof, other than
that certain nondisclosure agreement dated January 29, 1996, as amended to
date, between Seller and Buyer which shall remain in full force and effect and
the Nonsolicitation Agreement which shall remain in effect until the Closing.
After the Closing, the Nonsolicitation Agreement shall be superseded by Section
9.4 of this Agreement.
(b) The Schedules and Exhibits to this Agreement shall be
construed with and as integral parts of this Agreement to the same extent as if
they were set forth verbatim herein.
14.3 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
14.4 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
14.5 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
14.6 Notice. Any notice, request, instruction, other communications
or other document to be given hereunder by any party hereto to any other party
shall be in writing and delivered personally, telecopied or sent by recognized
overnight delivery service, and shall be deemed given when so delivered
personally, telecopied (with appropriate confirmation of receipt) or received,
as follows:
If to Buyer, to: Genicom Corporation
14800 Conference Center Drive
Suite 400, Westfields
Chantilly, Virginia 20151
Attention: Chief Executive Officer
Telecopier: (703) 802-8618
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with copies to: McGuire, Woods, Battle & Boothe, L.L.P.
901 E. Cary Street
Richmond, Virginia 23219
Attention: Jane Whitt Sellers
Telecopier: (804) 775-1061
and if to Seller, to: Texas Instruments Incorporated
7839 Churchill Way
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Telecopier: (214) 917-3804
with copies to: Texas Instruments Incorporated
P.O. Box 655474, M/S 241
Dallas, Texas 75265
Attention: Richard J. Agnich, Esq. and
Richard L. Thurston, Esq.
Telecopier: (214) 995-3511
or at such other address for a party as shall be specified by like notice.
14.7 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.
14.8 Invalid Provisions. If any provision of this Agreement or any
Collateral Agreement is held to be illegal, invalid, or unenforceable under any
present or future Law, and if the rights or obligations of any party hereto
under this Agreement or any Collateral Agreement will not be materially and
adversely affected thereby, (a) such provision will be fully severable, (b)
this Agreement or such Collateral Agreement will be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Agreement or such Collateral
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance herefrom, and
(d) in lieu of such illegal, invalid, or unenforceable provision, there will be
added automatically as a part of this Agreement or such Collateral Agreement a
legal, valid, and enforceable provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible.
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14.9 Expenses. Each of the parties hereto shall bear its expenses
separately incurred in connection with this Agreement and with the performance
of its obligations hereunder.
14.10 Bulk Sales. Buyer waives compliance by Seller with the
provisions of the so-called bulk sales Law of any jurisdiction; provided,
however, that Seller will indemnify, defend and hold harmless Buyer in respect
of any indemnifiable loss (without regard to Section 13.3 hereof) relating to,
resulting from or arising out of Seller's failure to so comply with such Laws
in connection with the transitions contemplated by this Agreement.
14.11 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person other than the parties hereto
and their successors or assigns, any rights or remedies under or by reason of
this Agreement.
14.12 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto shall use reasonable efforts to
take, or cause to be taken, such action, to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable law to consummate and make
effective the transactions contemplated by this Agreement. For a period of 180
days after the Closing, Seller shall use commercially reasonable efforts to
assist Buyer in the transition of the Business from Seller to Buyer. Seller
shall use commercially reasonable efforts to implement the provisions of this
Agreement relating to the transfer of Intellectual Property to Buyer. To that
end, Seller agrees that immediately following the Closing, or such other date
as the parties may mutually agree, to deliver to Buyer or its permitted assign
the Intellectual Property on such media as the parties shall mutually agree.
Thereafter, should Buyer discover that the delivery of Intellectual Property
was incomplete, or that any item or items of the Intellectual Property
delivered is incomplete or unusable as a result of the media, it shall notify
Seller, which shall promptly replace or furnish the requested Intellectual
Property.
14.13 Publicity. Any general notices, releases, statements or
communications to the general public or the press relating to this Agreement
and the transactions contemplated hereby shall be made only at such times and
in such manner as may be mutually agreed upon by Buyer and Seller; provided,
however, that the parties hereto shall be entitled to issue such press releases
and to make such public statements as are, in the opinion of its legal counsel,
required by applicable law in which case the other party shall be advised and
the parties will use their reasonable efforts to cause a mutually agreeable
release or announcement to be issued. Once information has been made available
to the general public in accordance with this Agreement, this section shall no
longer apply to such information.
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14.14 Assignment. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable to any other person without the prior
written consent of the other party hereto. Any assignment in violation of this
Section 14.14 shall be null and void and of no force and effect.
Notwithstanding the foregoing, (i) Buyer may assign all or part of its rights
and obligations under this Agreement to a Subsidiary of Buyer and (ii) Seller
may assign all or part of its rights and obligations under this Agreement to a
Subsidiary of Seller; provided, however, in no event shall any assignment
relieve the assigning party of any of its obligations under any provision of
this Agreement.
14.15 Waiver and Remedies. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the
benefit thereof. Any such waiver will be in writing and will be executed by
such party. A waiver on one occasion will not be deemed to be a waiver of the
same or any other breach on a future occasion.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
TEXAS INSTRUMENTS INCORPORATED
By: Pallab K. Chattergee
---------------------------------------------
Name: Pallab K. Chattergee
-------------------------------------------
Title: President, Personal Productivity Products
------------------------------------------
BUYER:
GENICOM CORPORATION
By: Paul T. Winn
---------------------------------------------
Name: Paul T. Winn
-------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------
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AMENDMENT TO ASSET PURCHASE AGREEMENT
This Amendment (the "Amendment") to the Asset Purchase Agreement (the
"Asset Purchase Agreement") dated as of July 22, 1996 between Texas Instruments
Incorporated, a Delaware corporation ("Seller"), and Genicom Corporation, a
Delaware corporation ("Buyer"), is made as of September 30, 1996 between Seller
and Buyer pursuant to Section 12.7 of the Asset Purchase Agreement. All
capitalized terms used herein but not defined herein have the meaning given
such terms in the Asset Purchase Agreement.
SECTION 1. Amendment to Asset Purchase Agreement. The parties hereto
hereby agree to amend the Asset Purchase Agreement as follows:
1. The sentence following the heading in Section 1.1(c) of the Asset
Purchase Agreement shall be deleted in its entirety and replaced with
the following: "All accounts receivable of the Business, other than
accounts receivable on the books of Seller's European and Asian
operations, as of the Closing Date (as hereinafter defined)."
2. Section 2.1 of the Asset Purchase Agreement shall be deleted in its
entirety and replaced with the following: "2.1 Purchase Price. In
consideration of the conveyance to Buyer of the Purchased Assets,
Buyer shall deliver to Seller the Purchase Price (as hereinafter
defined) and assume the Assumed Liabilities (as hereinafter defined).
At the Closing, Buyer will (i) pay to Seller an aggregate cash amount
equal to Twenty Million Dollars ($20,000,000) (the "Cash Amount") and
(ii) deliver to Seller the Promissory Note (as hereinafter defined),
the Security Agreement (as hereinafter defined) and the Pledge
Agreement (as hereinafter defined) (the aggregate of the Cash Amount
and the aggregate principal amount of the Promissory Note referred to
as the "Unadjusted Purchase Price"), subject to adjustment pursuant
to Section 2.2 (as adjusted, the "Purchase Price"). As used herein,
the term "Promissory Note" shall mean the subordinated promissory
note substantially in the form of Exhibit B hereto in an aggregate
principal amount of Nine Million Dollars ($9,000,000), the term
"Security Agreement" shall mean the Subordinated Guaranty and
Security Agreement in substantially the form of Exhibit C hereto, and
the term "Pledge Agreement" shall mean the Pledge Agreement in
substantially the form of Exhibit D hereto."
3. Section 2.2(a)(ii) of the Asset Purchase Agreement shall be deleted
in its entirety and replaced with the following:
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"(ii) Based on the Pre-Closing Statement, if the amount
equal to the Net Book Value Estimate minus $20 million (the "Net
Book Value Adjustment") is a positive number, then the Cash
Amount shall be increased by such amount. If the Net Book Value
Adjustment is a negative number, the Cash Amount shall be
reduced by the absolute value of such amount."
4. Section 2.2(b) shall be deleted in its entirety and replaced with the
following:
"(b) Post-Closing Statement. (i) As soon as practicable,
but in no event more than fourteen (14) days after the Closing
Date, Seller shall furnish Buyer a statement reflecting the
Closing Net Book Value (as hereinafter defined) prepared in
accordance with Seller's Accounting Policies and consistent with
the methodology used to prepare the Pre-Closing Statement. As
soon as practicable, but in no event more than 90 days after the
Closing Date, Buyer shall furnish Seller a statement (the
"Post-Closing Statement") reflecting the Net Book Value of the
Business immediately prior to the Closing (the "Closing Net Book
Value") prepared in accordance with Seller's Accounting Policies
(as hereinafter defined). In connection with the preparation of
the Post-Closing Statement as soon as practicable after the
Closing Date, a physical inventory of the Business' Alliance
Airport (Ft. Worth, TX) warehouse shall be taken as of the
Closing Date. Representatives of Buyer and Seller shall
participate jointly in conducting the physical inventory."
5. The last sentence of Section 2.2(c) of the Asset Purchase Agreement
shall be deleted in its entirety and replaced with the following:
"Conversely, if the amount of the Closing Differential is a negative
amount, then the Purchase Price shall be adjusted downward by an
amount equal to the absolute value of the Closing Differential. If
the Closing Differential results in a downward adjustment of less
than $1,000,000 such amount may, at Seller's option, be offset
against any amounts payable to Seller pursuant to the terms of the
Transition Master Services Agreement or the Sales Agency Agreement or
paid by
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Seller to Buyer by wire transfer of immediately available funds. If
the Closing Differential results in a downward adjustment of greater
than $1,000,000, up to $1,000,000 of such amount may, at Seller's
option, be offset against any amounts payable to Seller pursuant to
the Transition Master Services Agreement or the Sales Agency
Agreement or paid by Seller to Buyer by wire transfer of immediately
available funds and the excess over $1,000,000 (if any) shall be paid
by Seller to Buyer by wire transfer of immediately available funds."
6. Section 3.1(b) shall be deleted in its entirety and replaced with the
following: "(b) all liabilities and obligations of Seller arising
in the ordinary course of the Business between the date of the
Pre-Closing Statement and the Closing Date other than accounts
payable on the books of the Business to the extent that the same
remain unpaid and undischarged on the Closing Date and are accrued or
reserved for on the Post-Closing Statement;"
7. The first sentence of Section 9.7(a) of the Asset Purchase Agreement
shall be deleted in its entirety and replaced with the following:
"At or prior to the Closing, Buyer will offer employment to the
individuals listed on Schedule 9.7(a) (such employment to become
effective at 12:01 a.m. Dallas, Texas time on October 1, 1996 (the
"New Employment Start Date") and to be contingent upon the
consummation of the transactions contemplated by this Agreement)."
8. The first sentence of Section 9.7(b) of the Asset Purchase Agreement
shall be deleted in its entirety and replaced with the following:
"Seller shall terminate the employment of the domestic employees
listed on Schedule 9.7(a) on the Closing Date effective as of
midnight Dallas, Texas time on September 30, 1996."
9. The following sentence shall be added to the end of Section 9.7(d)(v)
of the Asset Purchase Agreement: "Notwithstanding anything to the
contrary herein and solely for the purpose of applying Buyer's
vacation policy, such new hires will be deemed to have commenced
employment with Buyer on September 30, 1996."
10. The last sentence of Section 9.7(f) of the Asset Purchase Agreement
shall be deleted in its entirety and replaced with the following:
"Any vacation days attributable to employee's employment with Buyer
shall be used prior to an employee's use of vacation days carried
over from employee's employment with Seller."
11. Section 9.11 of the Asset Purchase Agreement shall be deleted in its
entirety.
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12. Schedule 10.4 to the Asset Purchase Agreement shall be deleted in its
entirety. Section 10.4 of the Asset Purchase Agreement shall be
deleted in its entirety and replaced with the following: "Section
10.4 Reserved."
13. Section 10.5 of the Asset Purchase Agreement shall be deleted in its
entirety and replaced with the following: "10.5 Employees. Buyer
shall have received acceptances of employment offers from all of the
employees designated as Code 1 employees on Schedule 9.7(a), at least
75% of the employees designated as Code 2 employees on Schedule
9.7(a), at least 80% of the employees designated as Code 3 employees
on Schedule 9.7(a) and at least 60% of the employees designated as
Code 4 employees on Schedule 9.7(a)."
14. The following sentence shall be added to the end of Section 14.14 of
the Asset Purchase Agreement: "Notwithstanding the provisions of
Sections 14.11 and 14.14 of this Agreement to the contrary, Seller
agrees that Buyer may make a collateral assignment to the Agent (as
such term is defined in the loan agreement entered into by Buyer as
of January 12, 1996, as amended, of Buyer's rights under (i) Section
13.1(b) of this Agreement for Seller's breach of the warranties set
forth in the second sentence of Section 5.5 of this Agreement, (ii)
the second sentence of Section 5.6 of this Agreement, and (iii) the
third sentence of Section 5.7 of this Agreement."
15. Revised Schedules 1.1(a), 1.1(f), 1.1(g), 9.1, 9.7(a) and 9.7(b) to
the Asset Purchase Agreement, copies of which are attached hereto
shall replace for all purposes those Schedules previously delivered
by Seller to Buyer having the same number.
16. The following section shall be added to the Asset Purchase Agreement:
"9.12 Supply of Parts. For the period commencing on the Closing
Date and ending in the second anniversary thereof, Seller shall use
its commercially reasonably efforts to maintain an adequate supply of
parts manufactured by Seller for products sold by Seller on or prior
to the Closing Date for sale to Buyer at prices not to the exceed the
market price therefor at the time of such sale."
17. The following section shall be added to the Asset Purchase Agreement:
"9.13 Shared Assets. After the Closing Date, Seller shall reimburse
Buyer for the replacement of, or, at Seller's option, purchase
certain shared assets to be agreed upon by Buyer and Seller, which
have a maximum aggregate value of up to $300,000. If Seller elects
to
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reimburse Buyer for the replacement of such assets, Seller may, at
Seller's option, do so by offsetting against any amounts payable to
Seller pursuant to the terms of the Transition Master Services
Agreement or the Sales Agency Agreement."
18. Section 13.1(f) of the Asset Purchase Agreement shall be deleted in
its entirety and replaced with the following: "(f) Reserved."
SECTION 2. Effect of Amendment. Except as specifically provided herein,
the Asset Purchase Agreement is in all respects ratified and confirmed, and all
the terms, conditions and provisions thereof shall be and remain in full force
and effect. For any and all purposes, from and after the date of this
Amendment, any and all references hereafter to the Asset Purchase Agreement
shall refer to the Asset Purchase Agreement as hereby amended.
SECTION 3. Entire Agreement. The Asset Purchase Agreement, as amended
hereby, together with the Collateral Agreements and Schedules, as amended
hereby, and Exhibits thereto, contain the entire understanding of the parties
relating to the subject matter thereof, and the foregoing cannot be changed or
terminated orally and supersede all prior agreements and understanding relating
to the subject matter thereof, other than that certain nondisclosure agreement
dated January 29, 1996, as amended to date, between Seller and Buyer which
shall remain in full force and effect and the Nonsolicitation Agreement which
shall remain in effect until the Closing. After the Closing, the
Nonsolicitation Agreement shall be superseded by Section 9.4 of the Asset
Purchase Agreement.
SECTION 4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.
SECTION 5. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the date first above written.
TEXAS INSTRUMENTS INCORPORATED
By: Pallab K. Chatterjee
-------------------------------------------------
Title: President, Personal Productivity Products
----------------------------------------------
GENICOM CORPORATION
By: James C. Gale
---------------
Title: Senior VP Finance and Chief Financial Officer
----------------------------------------------
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SUBORDINATED PROMISSORY NOTE
$9,000,000
Dallas, Texas September 30, 1996
FOR VALUE RECEIVED, the undersigned, GENICOM CORPORATION, a Delaware
corporation, ("Borrower"), hereby promises to pay to the order to TEXAS
INSTRUMENTS INCORPORATED, a Delaware corporation ("Lender"), at the Payment
Account (hereinafter defined), by wire transfer of immediately available funds,
or to such other place as Lender may specify in writing from time to time, the
principal sum of NINE MILLION AND NO/100 DOLLARS ($9,000,000), together with
interest as hereinafter described, on the terms set forth below.
SECTION 1. DEFINITIONS.
(a) As used in this Subordinated Promissory Note, the following
terms shall have the respective meanings indicated hereinbelow.
"Applicable Law" means the applicable laws of the State of Texas or
laws of the United States, whichever laws allow the greater rate of interest,
as such laws now exist or may be changed or amended or come into effect in the
future.
"Borrower" means Genicom Corporation, a Delaware corporation.
"Borrower's Obligations" means all of the obligations of Borrower to
Lender whenever arising, under this Note or any of the other Loan Documents.
"Business Day" means any day that is not a Saturday, Sunday or day on
which banks are required or permitted to be closed in the State of Texas.
"Credit Agreement" shall mean that certain Credit Agreement dated as
of January 12, 1996 among Genicom Corporation, as Borrower, the Subsidiaries of
the Borrower from time to time party thereto, the several lenders from time to
time party thereto and NationsBank of Texas, N.A., as Agent for the lenders (in
such capacity, "Agent"), as amended by (i) that certain letter agreement dated
as of
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January 29, 1996 from Agent and agreed and accepted to by Borrower, (ii) that
certain Second Amendment to Credit Agreement and Security Agreement dated as of
March 29, 1996, (iii) that certain letter agreement June 14, 1996 from Agent
and agreed and accepted to by Borrower, and (iv) that certain Third Amendment
to Credit Agreement and Security Agreement dated as of September 30, 1996, as
the same may be amended, modified, supplemented, extended, restated,
refinanced, replaced or restated from time to time.
"Credit Party" means any of Borrower or any Guarantors.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws of
any State of the United States or the District of Columbia.
"Event of Default" has the meaning set forth in Section 6 of this
Note.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis.
"Guarantors" means each of the Guarantors party to the Guaranty and
Security Agreement and each additional credit party which may hereafter execute
a Joinder Agreement, together with their permitted successors and assigns.
"Guaranty and Security Agreement" means the Subordinated Guaranty and
Security Agreement of even date herewith by Borrower, Guarantors and Lender.
"Incorporated Affirmative Covenants" has the meaning set forth in
Section 4 of this Note.
"Incorporated Covenants" means the Incorporated Affirmative Covenants
and the Incorporated Negative Covenants.
"Incorporated Negative Covenants" has the meaning set forth in
Section 5 of this Note.
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"Incorporated Representations and Warranties" has the meaning set
forth in Section 3 of this Note.
"Joinder Agreement" means the Joinder Agreement substantially in the
form attached hereto as EXHIBIT A.
"Letter Agreement" means the letter dated the date hereof from Lender
to NationsBank of Texas, N.A. ("NationsBank") and agreed to and accepted by
NationsBank, Borrower and the Guarantors.
"Loan Documents" means this Note, the Joinder Agreement, the Guaranty
and Security Agreement, the Pledge Agreement and all other related agreements
and documents issued or delivered hereunder or thereunder or pursuant hereto or
thereto, including, without limitation, all additional documents or instruments
required to be executed and delivered in connection with the attachment and
perfection of Lender's security interests and liens.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets or liabilities
of Borrower or of Borrower and its Subsidiaries taken as a whole, (ii) the
ability of any Credit Party to perform any material obligation under the Loan
Documents or (iii) the material rights and remedies of Lenders under the Loan
Documents.
"Maturity Date" means the maturity of this Note, which is September
25, 1998, as the same may be hereafter accelerated pursuant to the provisions
of this Note.
"Maximum Lawful Rate" means the maximum rate of interest permitted
under Applicable Law.
"Note" means this Subordinated Promissory Note, as the same may be
amended, modified, substituted, exchanged or replaced from time to time.
"Payment Date" means each of the following dates: December 27, 1996;
March 28, 1997; June 27, 1997; September 26, 1997; December 26, 1997; March 27,
1998; June 26, 1998 and September 25, 1998.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
governmental (whether federal, state, county,
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city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Pledge Agreement" means the Subordinated Pledge Agreement of even
date herewith by Borrower, Guarantors and Lender.
"Purchase Agreement" means the Asset Purchase Agreement Concerning
the Printer Business of Texas Instruments Incorporated between Texas
Instruments Incorporated and Genicom Corporation dated July 22, 1996, as the
same may be amended, modified or supplemented, from time to time.
"Senior Agent" has the meaning set forth in the Letter Agreement.
"Senior Credit Documents" has the meaning set forth in the Letter
Agreement.
"Senior Debt" has the meaning set forth in the Letter Agreement.
"Senior Lenders" has the meaning set forth in the Letter Agreement.
"Subordinated Debt" has the meaning set forth in the Letter
Agreement.
(b) For purposes of the incorporated provisions of the Credit
Agreement (including, without limitation, the Incorporated Representations and
Warranties, the Incorporated Affirmative Covenants and the Incorporated
Negative Covenants), (A) all references in the Incorporated Representations and
Warranties, the Incorporated Affirmative Covenants and the Incorporated
Negative Covenants to a "Lender", the "Required Lenders" or the "Agent" shall
be deemed to refer to Lender, (B) all references in the Incorporated
Representations and Warranties, the Incorporated Affirmative Covenants and the
Incorporated Negative Covenants to "Agreement" and "Credit Agreement" shall
refer to this Note, (C) all references in the Incorporated Representations and
Warranties, the Incorporated Affirmative Covenants and the Incorporated
Negative Covenants to "Credit Documents" shall refer to the Loan Documents, and
(D) all references in the Incorporated Representations and Warranties, the
Incorporated Affirmative Covenants and the Incorporated Negative Covenants to
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"Default" or an "Event of Default" shall refer to a Default or an Event of
Default under this Note.
(c) The terms "Bankruptcy Event", "Change of Control", "Code",
"Environmental Law", "ERISA", "ERISA Affiliate", "Excess Cash Flow",
"Governmental Authority", "Indebtedness", "Liens", "Materials of Environmental
Concern", "Multiemployer Plan", "Multiple Employer Plan", "Permitted Liens",
"PBGC", "Plan", "Property", "Release", "Revolving Committed Amount", "Single
Employer Plan", "Subsidiaries", "Termination Event", Tranche A Term Loan" and
"Tranche B Term Loan" shall have the respective meanings set forth in the
Credit Agreement as it exists on the date hereof; provided that the term
Permitted Liens shall also include the Liens of the Senior Agent under the
Senior Credit Documents.
SECTION 2. PAYMENTS/INTEREST.
2.1 INTEREST PAYMENTS. Borrower shall pay interest on this Note
quarterly on the Payment Date, commencing with December 27, 1996. Interest
will accrue on the unpaid principal balance hereof outstanding at the lesser of
(i) the Maximum Lawful Rate or (ii) a rate per annum equal to eight and one
half percent (8.5%).
2.2 PAYMENT AT MATURITY. All unpaid principal and accrued but unpaid
interest shall be due and payable, in full, on the Maturity Date.
2.3 OVERDUE AMOUNTS. Borrower shall pay interest on the overdue
principal and, to the extent permitted by applicable law, overdue interest, at
a rate per annum equal to the lesser of (i) the Maximum Lawful Rate or (ii)
four percent (4%) in excess of the rate borne by this Note.
2.4 COMPUTATIONS. Interest will be computed on the basis of a 360 day
year of 30 day months.
2.5 VOLUNTARY PREPAYMENTS. This Note may be prepaid in whole or in part
prior to the Maturity Date.
2.6 MANDATORY PREPAYMENTS. Within 120 days after the end of each fiscal
year of Borrower and its Subsidiaries (commencing with the fiscal year ended
January 1, 1997) Borrower shall prepay the principal of this Note in an
aggregate amount equal to 25% of the Excess Cash Flow for such prior fiscal
year.
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SECTION 3. REPRESENTATIONS AND WARRANTIES. Borrower hereby covenants and
agrees with Lender that all of the representations and warranties contained in
Section 6 (other than Section 6.1(b)) of the Credit Agreement (together with
any defined terms set forth in Section 1 of the Credit Agreement utilized in
such representations and warranties unless such terms are otherwise defined
herein and any disclosure schedules related thereto), as in effect on the date
hereof, but excluding those which expressly relate to an earlier date (the
"Incorporated Representations and Warranties") are hereby incorporated by
reference and shall be as binding on Borrower as if set forth fully herein.
SECTION 4. AFFIRMATIVE COVENANTS. Borrower hereby covenants and agrees with
Lender that all of the affirmative covenants contained in Sections 7.1(a),
(b)(i), (c), (f), (i), (j), (k) and (l), 7.2 through 7.8, inclusive, 7.10,
7.12, 7.13 (to the same extent that such section requires that any Property of
Borrower or any Guarantor be pledged to the Senior Lenders and/or the Senior
Agent for the benefit of the Senior Lenders) and 7.15 of the Credit Agreement
(together with any defined terms set forth in Section 1 of the Credit Agreement
utilized in such affirmative covenants unless such terms are otherwise defined
herein and any disclosure schedules related thereto), as in effect on the date
hereof, but excluding those which expressly relate to an earlier date (the
"Incorporated Affirmative Covenants") are hereby incorporated by reference and
shall be as binding on Borrower as if set forth fully herein. The
incorporation of Incorporated Affirmative Covenants shall survive the
termination of the Credit Agreement.
SECTION 5. NEGATIVE COVENANTS. Borrower hereby covenants and agrees with
Lender that all of the negative covenants contained in Sections 8.1 through
8.13 inclusive of the Credit Agreement (together with any defined terms set
forth in Section 1 of the Credit Agreement utilized in such negative covenants
unless such terms are otherwise defined herein and any disclosure schedules
related thereto), as in effect on the date hereof, but excluding those which
expressly relate to an earlier date (the "Incorporated Negative Covenants") are
hereby incorporated by reference and shall be as binding on Borrower as if set
forth fully herein. The incorporation of Incorporated Negative Covenants shall
survive the termination of the Credit Agreement. Lender hereby agrees that in
the event Borrower or any of its Subsidiaries is permitted to make any sale,
lease, transfer or other disposition of Property under Section 8.4 of the
Credit Agreement as it exists on the date hereof and provided that the proceeds
thereof are (i) if required to be applied as a mandatory prepayment under the
Credit Agreement as it exists on the date
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hereof, applied to a mandatory prepayment of the Senior Debt on the terms set
forth in the Credit Agreement as it exists on the date hereof and (ii) if not
required to be applied as a mandatory prepayment under the Credit Agreement as
it exists on the date hereof, applied as required under the Credit Agreement as
it exists on the date hereof or as a prepayment of the Senior Debt, Lender
shall release its Lien on the asset subject to such sale.
SECTION 6. EVENTS OF DEFAULT. An Event of Default shall exist upon the
occurrence of any of the following specified events (each an "Event of
Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of the principal of this Note;
(ii) default, and such default shall continue for five (5) or more
Business Days, in the payment when due of any interest on this Note
or other amounts owing hereunder, under any of the other Loan
Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made by any Credit Party herein, in any of the other Loan
Documents, or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in any material respect
on the date as of which it was deemed to have been made (including, without
limitation, the Incorporated Representations and Warranties); or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any of the
Incorporated Covenants contained in Sections 7.2, 7.12, 7.15 or 8.1
through 8.13, inclusive of the Credit Agreement as it exists on the date
hereof, or
(ii) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in subsections (a),
(b) or (c)(i) of this Section 6) contained in this Note (including,
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without limitation, the Incorporated Covenants) and such default shall
continue unremedied for a period of at least 30 days after the earlier of
a responsible officer of a Credit Party becoming aware of such default or
notice thereof by Lender; or
(d) Other Loan Documents. (i) Any Credit Party shall default in the due
performance or observance of any term, covenant or agreement in any of the
other Loan Documents (subject to applicable grace or cure periods, if any), or
(ii) any Loan Document shall fail to be in full force and effect or to give
Lender the Liens, rights, powers and privileges purported to be created
thereby; or
(e) Guaranties. The guaranty given by any Guarantor under the Guaranty
and Security Agreement or any provision thereof shall cease to be in full force
and effect, or any Guarantor or any Person acting by or on behalf of such
Guarantor shall deny or disaffirm such Guarantor's obligations under such
guaranty, or any Guarantor shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(f) Bankruptcy Event. Any Bankruptcy Event shall occur with respect to
Borrower or any of its Subsidiaries; or
(g) Defaults under Other Agreements. With respect to any Indebtedness
(other than Indebtedness outstanding under this Note and the Senior Debt) in
excess of $5,000,000 in the aggregate for Borrower and each of its Subsidiaries
taken as a whole, (i) Borrower or any of its Subsidiaries shall (A) default in
any payment (beyond the applicable grace period with respect thereto, if any)
with respect to any such Indebtedness, or (B) default in the observance or
performance of any term, covenant or agreement relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition shall occur or condition exist, the
effect of which default or other event or condition is to cause, or permit, the
holder or holders of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (after the giving of any required notice or the passing of
any required period of time or both), any such Indebtedness to become due prior
to its stated maturity; or (ii) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
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(h) Judgments. One or more judgments or decrees shall be entered against
Borrower or any of its Subsidiaries involving a liability of $5,000,000 or more
in the aggregate (to the extent not paid or fully covered by insurance provided
by a carrier who has acknowledged coverage) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could have a Material Adverse Effect: (1) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to any Plan, or any
lien shall arise on the assets of Borrower, any of the Subsidiaries of Borrower
or any ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of Lender, likely to result in the termination of such Plan for
purposes of Title IV of ERISA; (3) a Termination Event shall occur with respect
to a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable
opinion of Lender, likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) Borrower, any of the Subsidiaries of
Borrower or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency or (within the meaning of Section 4245 of ERISA) such
Plan; or (4) any prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility shall
occur which may subject Borrower, any of the Subsidiaries of Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or other instrument
pursuant to which Borrower, any of the Subsidiaries of Borrower or any ERISA
Affiliate has agreed or is required to indemnify any person against any such
liability; or
(j) Ownership. There shall occur a Change of Control; or
(k) Credit Agreement. As a result of the occurrence of any Event of
Default under and as defined in the Credit Agreement the Indebtedness
thereunder shall have been declared due and payable prior to its stated
maturity.
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Upon the occurrence of an Event of Default, and at any time thereafter unless
and until such Event of Default has been waived by Lender or cured to the
satisfaction of Lender, Lender may by written notice to the Credit Parties take
any of the following actions without prejudice to the rights of Lender to
enforce its claims against the Credit Parties, except as otherwise specifically
provided for herein: (i) declare the unpaid principal of and any accrued
interest in respect of this Note and any and all other indebtedness or
obligations of any and every kind owing by Borrower to Lender hereunder to be
due whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower and/or (ii) enforce any and all rights and interests
created and existing under the Loan Documents and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
6.1(f) shall occur, then this Note and all accrued interest in respect hereof
and other indebtedness or obligations owing to Lender hereunder automatically
shall immediately become due and payable without the giving of any notice or
other action by Lender.
SECTION 7. SUBORDINATED PROVISIONS. To the extent and in the manner set
forth in the Letter Agreement, the Subordinated Debt (and guarantees thereof by
the Guarantors) is subordinate and junior in right of payment to the payment in
full in cash of all of the Senior Debt.
SECTION 8. ATTORNEYS' FEES AND EXPENSES. If any suit or action is
instituted or attorneys are employed to collect this Note or any part thereof,
Borrower promises and agrees to pay all reasonable out-of-pocket costs of
collection, including, without limitation, reasonable attorneys' fees and court
costs.
SECTION 9. WAIVERS. Except as otherwise expressly provided herein or in
the Loan Documents, Borrower, and all co-makers, endorsers, guarantors and
sureties, for themselves and their respective successors and assigns, hereby
severally waive diligence, presentment for payment, protest and demand, notice
of intent to accelerate, notice of acceleration, notice of protest, demand, and
notice of dishonor and nonpayment of this Note, and expressly agree that this
Note, or any payment hereunder, may be extended from time to time before, at or
after maturity of the obligations evidenced hereby, without in any way
affecting the liability of Borrower hereunder or of any guarantor or
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endorser or the validity of any lien or security interest given to secure
payment hereof.
SECTION 10. SUCCESSORS AND ASSIGNS. This Note shall be binding upon
Borrower, its successors and assigns, and shall inure to the benefit of the
successors and assigns of the holder. Borrower may not, without the prior
written consent of Lender, which may be withheld in Lender's sole and absolute
discretion, assign this Note.
SECTION 11. MISCELLANEOUS. Paragraph headings appearing in this Note are
for convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this Note. This Note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective legal representatives, heirs, successors and assigns
of the holder. If any provision of this Note shall be determined by any court
of competent jurisdiction to be illegal or unenforceable, then that provision
only shall be of no force and effect and shall be deemed excised herefrom, and
the remainder of the provisions of this Note shall be enforced. This Note and
the Loan Documents embody the entire agreement and understanding between the
holder and Borrower and other parties with respect to the indebtedness to be
evidenced by this Note and supersede all prior conflicting or inconsistent
agreements, consents and understandings relating to such subject matter.
Neither this Note nor any other Loan Document nor any of the terms hereof or
thereof may be amended, changed, waived, discharged or terminated unless such
amendment, change, waiver, discharge or termination is in writing entered into
by the party to be bound. Borrower acknowledges and agrees that there are no
oral agreements between Borrower and the holder which have not been
incorporated in this Note and the other Loan Documents.
SECTION 12. GUARANTEES; SECURITY. The obligations of Borrower under this
Note are guaranteed by the Guarantors under the Guaranty and Security Agreement
and this Note is secured by the Guaranty and Security Agreement, the Pledge
Agreement and all of the other Loan Documents.
SECTION 13. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS FROM TIME TO TIME IN EFFECT AND APPLICABLE FEDERAL LAW.
SECTION 14. ENTIRE AGREEMENT. THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN
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BORROWER AND THE HOLDER, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
SECTION 15. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications shall have been duly given and shall be
effective (i) when delivered, (ii) when transmitted via telecopy (or other
facsimile device) to the number set out below, (iii) the day following the day
on which the same has been delivered prepaid to a reputable national overnight
air courier service, or (iv) the third Business Day following the day on which
the same is sent by certified or registered mail, postage prepaid, in each case
to the respective parties at the address set forth below or at such other
address as such party may specify by written notice to the other parties
hereto:
if to the Borrower or the Guarantors:
Genicom Corporation
14800 Conference Center Drive
Suite 400, Westfields
Chantilly, Virginia 22021-3806
Attn: James C. Gale
Telephone: (703) 802-9259
Telecopy: (703) 802-8618
if to Lender:
Texas Instruments Incorporated
7839 Churchill Way
P.O. Box 650311, MS 3995
Dallas, Texas 75265
Attn: Charles D. Tobin
Telephone: (972) 917-3810
Telecopy: (972) 917-3804
with copies to:
Texas Instruments Incorporated
P.O. Box 655747 MS 241
Dallas, Texas 75265
Attn: Richard J. Agnich, Esq.
Telecopy: (972) 995-3511
SECTION 16. PAYMENT OF EXPENSES, ETC.
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Borrower agrees to: (i) pay all reasonable out-of-pocket costs and
expenses of Lender in connection with the negotiation, preparation, execution
and delivery (not to exceed $15,000) and administration of the Loan Documents
and the documents and instruments referred to therein (including, without
limitation, the reasonable fees and expenses of Weil, Gotshal & Manges LLP,
special counsel to Lender) and any amendment, waiver or consent relating hereto
and thereto including, but not limited to, any such amendments, waivers or
consents resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit Parties under the Loan
Documents and Lender in connection with enforcement of the Loan Documents and
the documents and instruments referred to therein (including, without
limitation, in connection with any such enforcement, the reasonable fees and
disbursements of counsel for Lender); (ii) pay and hold Lender harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to Lender) to pay such taxes; and (iii)
indemnify Lender, its officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result
or, or arising out of, or in any way related to, or by reason of (A) any
investigation, litigation or other proceeding (whether or not Lender is a party
thereto) related to the entering into and/or performance of any Loan Document
or the use of proceeds of any Loans (including other extensions of credit)
hereunder or the consummation of any other transactions contemplated in any
Loan Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding or (B) the presence or Release of any Materials
of Environmental Concern at, under or from any Property owned, operated or
leased by Borrower or any of its Subsidiaries, or the failure by Borrower or
any of its Subsidiaries to comply with any Environmental Law (but excluding, in
the case of either of clause (A) or (B) above, any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of negligence or
willful misconduct on the part of the Person to be indemnified).
SECTION 17. CONFIDENTIALITY. Lender agrees that for a period of three (3)
years from the date of receipt of
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information marked "proprietary" (or comparable legend) provided by Borrower
pursuant to any Loan Document, Lender shall not disclose it to any other
Person, other than to Lender's employees, representatives, attorneys, agents or
affiliates for the purposes of the Loan Documents. Lender shall use the same
degree of care to avoid publication or dissemination of such information as
Lender employs with respect to its own information which it does not desire to
have published or disseminated. Notwithstanding the foregoing, such
information shall not be deemed proprietary and Lender shall have no obligation
with respect to any such information which:
(1) is already known to Lender; or
(2) is or becomes publicly known through no wrongful act of Lender; or
(3) is rightfully received from a third party without restriction and
without breach of this Section 17; or
(4) is independently developed by Lender; or
(5) is furnished to a third party by Borrower or any Guarantor without a
similar restriction on the third party's rights; or
(6) is approved for release by written authorization of Borrower or any
Guarantor; or
(7) is disclosed pursuant to the requirement of a governmental agency or
disclosure of which is otherwise required by law; or
(8) to the extent disclosure is required by law, regulation, subpoena or
judicial order or process; or
(9) to assignees or purchasers of this Note who agree to be bound by the
provisions of this Section 17.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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GENICOM CORPORATION
By:James C. Gale
-------------
Name:James C. Gale
-------------
Title: Senior VP Finance and CFO
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SUBORDINATED GUARANTY AND SECURITY AGREEMENT
THIS SUBORDINATED GUARANTY AND SECURITY AGREEMENT (this "AGREEMENT"),
dated as of September 30, 1996, made by GENICOM CORPORATION, a Delaware
corporation (the "BORROWER"), THE GUARANTORS FROM TIME TO TIME PARTY HERETO
(each a "GUARANTOR", and collectively the "GUARANTORS", and together with the
Borrower, each an "OBLIGOR", and collectively the "OBLIGORS") and TEXAS
INSTRUMENTS INCORPORATED, a Delaware corporation ("LENDER").
RECITALS
WHEREAS, pursuant to the Subordinated Promissory Note dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "NOTE") from the Borrower, Lender has provided to the Borrower a loan in an
original principal amount of $9,000,000; and
WHEREAS, Lender has required, as a condition precedent to making the loan
to the Borrower under the Note, that the Guarantors guarantee the obligations
of the Borrower under the Note and the Obligors secure their respective
obligations to Lender under the Note and the other Loan Documents in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Note. All terms used in
this Agreement that are defined in the Uniform Commercial Code in effect in the
State of Texas (the "UCC") and which are not otherwise defined herein shall
have the meanings set forth therein.
2. THE GUARANTEE.
(a) The Guarantee. Each of the Guarantors hereby jointly and
severally guarantees to Lender as hereinafter provided the prompt payment of
the Borrower's Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, a mandatory cash collateralization or
otherwise) strictly in accordance with the terms thereof. The Guarantors
hereby further agree that if any of the Borrower's Obligations are not paid in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as mandatory cash collateralization or otherwise), the Guarantors
will, jointly and severally, promptly pay the same, without any demand or
notice
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whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Borrower's Obligations, the same will be promptly paid in full
when due (whether at extended maturity, as a mandatory prepayment, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Loan Documents, to the extent the obligations of a Guarantor shall
be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
(b) Obligations Unconditional. The obligations of the Guarantors
under subsection (a) hereof are joint and several, absolute and unconditional,
irrespective of the value, genuineness, validity, regularity or enforceability
of any of the Loan Documents, or any other agreement or instrument referred to
therein, or any substitution, release or exchange of any other guarantee of or
security for any of the Borrower's Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this subsection (b) that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor
shall have no right of subrogation, indemnity, reimbursement or contribution
against the Borrower or any other Guarantor of the Borrower's Obligations for
amounts paid under this guaranty until such time as Lender has been paid in
full and no Person or Governmental Authority shall have any right to request
any return or reimbursement of funds from Lender in connection with monies
received under the Loan Documents. Without limiting the generality of the
foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which liability shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Borrower's Obligations shall be extended, or such performance or
compliance shall be waived;
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(ii) any of the acts mentioned in any of the provisions of any of the
Loan Documents or any other agreement or instrument referred to therein
shall be done or omitted;
(iii) the maturity of any of the Borrower's Obligations shall be
accelerated, or any of the Borrower's Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the Loan
Documents or any other agreement or instrument referred to therein shall
be waived or any other guarantee of any of the Borrower's Obligations or
any security therefor shall be released or exchanged in whole or in part
or otherwise dealt with;
(iv) any Lien granted to, or in favor of, Lender as security for any
of the Borrower's Obligations shall fail to attach or be perfected; or
(v) any of the Borrower's Obligations shall be determined to be void
or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that Lender exhaust any right, power or remedy
or proceed against any Person under any of the Loan Documents or any other
agreement or instrument referred to therein, or against any other Person under
any other guarantee of, or security for, any of the Borrower's Obligations.
(c) Reinstatement. The obligations of the Guarantors under this
Section 2 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of the Borrower's
Obligations is rescinded or must be otherwise restored by any holder of any of
the Borrower's Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and each Guarantor agrees that it
will indemnify Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by
Lender in connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
(d) Certain Additional Waivers. Without limiting the generality of
the provisions of this Section 2, each Guarantor
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hereby agrees that such Guarantor shall have no right of recourse to security
for the Borrower's Obligations.
(e) Remedies. The Guarantors agree that, to the fullest extent
permitted by law, as between the Guarantors, on the one hand, and Lender, on
the other hand, the Borrower's Obligations may be declared to be forthwith due
and payable as provided in the Note (and shall be deemed to have become
automatically due and payable in the circumstances provided in the Note) for
purposes of subsection (a) hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Borrower's
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Borrower's
Obligations being deemed to have become automatically due and payable), the
Borrower's Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of said
subsection (a).
(f) Rights of Contribution. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence hereof and to clause (y) below),
pay to such Excess Funding Guarantor an amount equal to such Guarantor's Pro
Rata Share (as defined below and determined, for this purpose, without
reference to the properties, assets, liabilities and debts of such Excess
Funding Guarantor) of such Excess Payment (as defined below). The payment
obligation of any Guarantor to any Excess Funding Guarantor under this
subsection (f) shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of such Guarantor under the other
provisions of this Section 2, and such Excess Funding Guarantor shall not
exercise any right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations. For purposes hereof, (i)
"EXCESS FUNDING GUARANTOR" shall mean, in respect of any obligations arising
under the other provisions of this Section 2 (hereafter, the "GUARANTEED
OBLIGATIONS"), a Guarantor that has paid an amount in excess of its Pro Rata
Share of the Guaranteed Obligations; (ii) "EXCESS PAYMENT" shall mean, in
respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and
(iii) "PRO RATA SHARE", for the purposes of this subsection (f), shall mean,
for any Guarantor, the ratio (expressed as a percentage) of (x) the amount by
which the aggregate present fair saleable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (y) the
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amount by which the aggregate present fair saleable value of all assets and
other properties of the Borrower and all of the Guarantors exceeds the amount
of all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrower and the Guarantors hereunder) of the Borrower and all of the
Guarantors, all as of the date hereof (if any Guarantor becomes a party hereto
subsequent to the Effective Date, then for the purposes of this subsection (f)
such subsequent Guarantor shall be deemed to have been a Guarantor as of the
Effective Date and the information pertaining to, and only pertaining to, such
Guarantor as of the date such Guarantor became a Guarantor shall be deemed true
as of the Effective Date).
(g) Continuing Guarantee. The guarantee in this Section 2 is a
continuing guarantee, and shall apply to all Borrower's Obligations whenever
arising.
(h) Subordination. Each Guarantor agrees, and Lender by its
acceptance hereof agrees, that the guarantee by the Guarantors of the
Borrower's Obligations shall be subordinated to the payment in full of the
Senior Debt upon the same terms and conditions as set forth in the Letter
Agreement.
3. GRANT OF SECURITY INTEREST IN THE COLLATERAL. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations (as defined in Section 4
hereof), each Obligor hereby grants to Lender, a continuing security interest
in, and a right to set off against, any and all right, title and interest of
such Obligor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "COLLATERAL"):
(a) All equipment, including, without limitation, all vehicles,
machinery, tools, furniture, furnishings, office equipment and trade
fixtures;
(b) All accounts and receivables and all goods represented by or
securing accounts and receivables, including, without limitation, all
rents and tenant payments, if any;
(c) All inventory, including, without limitation, all raw materials,
all work in process and all goods held by the Borrower for sale or lease;
(d) All contract rights, including, without limitation, all rights
under management agreements, tax
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sharing agreements and lease agreements and all rights to payment of
money, tax refunds and insurance proceeds;
(e) All other general intangibles;
(f) All instruments, documents, chattel paper, securities, policies
and certificates of insurance, deposits, cash or other goods;
(g) All books, records, files, computer software and other writings
or evidence of each Obligor's business;
(h) All licenses, patents, patent applications, trademarks,
trademark applications, tradenames, copyrights, assumed names, service
marks and service mark applications (collectively, the "INTELLECTUAL
PROPERTY");
(i) All other personal property of any kind or type whatsoever owned
by an Obligor;
(j) All accessions and additions to, and substitutions and
replacements of, any and all of the foregoing, whether now existing or
hereafter arising; and
(k) All proceeds and products of the foregoing and all insurance
relating to the foregoing collateral and all proceeds thereof (including,
without limitation, insurance proceeds payable on account of business
interruption), whether now existing or hereafter arising.
The Obligors and the Lender hereby agree that, notwithstanding anything to
the contrary contained in this Agreement, the Obligors shall not be deemed to
have assigned, and Lender shall not be deemed to have taken an assignment of,
any "intent to use" federal trademark registration application until such time
as either (i) an amendment alleging use with respect to the related trademark
shall have been accepted for filing by the U.S. Patent & Trademark Office or
(ii) applicable law conclusively allows earlier assignment.
4. SECURITY FOR OBLIGATIONS. The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following, whether now existing or hereafter incurred (the "SECURED
OBLIGATIONS"):
(a) (i) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower under the Note,
this Agreement and the other Loan Documents to which the Borrower is a party;
or
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(ii) In the case of any Obligor which is a Guarantor, the prompt
performance and observance by such Guarantor of all obligations of such
Guarantor under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, its guaranty
obligations arising under Section 2 of this Agreement; and
(b) All other indebtedness, liabilities and obligations of any kind
or nature, now existing or hereafter arising, owing from any Credit Party
to Lender, arising under the Loan Documents, whether primary, secondary,
direct, contingent, or joint and several.
5. REPRESENTATIONS AND WARRANTIES. Each Obligor hereby represents and
warrants to Lender, that so long as any amounts remain payable under the Note
or under any other Loan Document:
(a) Chief Executive Office; Books & Records. Such Obligor's chief
executive office and chief place of business are (and for the prior four
months have been) located at the locations set forth on SCHEDULE 1
attached hereto and such Obligor keeps its books and records at such
locations.
(b) Type and Location of Collateral. The type of Collateral located
in the U.S. owned by such Obligor, each location of Collateral located in
the U.S. owned by such Obligor having an aggregate book value at such
location of $100,000 or more and the owner of each such location for which
a landlord waiver has been requested by Senior Agent is as shown on
SCHEDULE 2 attached hereto.
(c) Ownership. Such Obligor is the legal and beneficial owner of
its Collateral and has the right to pledge, sell, assign or transfer the
same. Such Obligor's legal name is as shown in this Agreement and no
Obligor has in the past four months changed its name, been party to a
merger, consolidation or other change in structure or used any tradename
except as set forth in SCHEDULE 3 hereto.
(d) Security Interest/Priority. This Agreement creates a valid
security interest in favor of Lender, in the Collateral of such Obligor
and, when properly perfected, shall constitute a valid perfected security
interest in such Collateral, free and clear of all Liens except for
Permitted Liens.
(e) Receivables. (i) Each receivable of such Obligor and the papers
and documents relating thereto are genuine and in all respects what they
purport to be, (ii) in the
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case of each receivable of such Obligor which is an account receivable,
each receivable arises out of (A) a bona fide sale of goods sold and
delivered by such Obligor (or is in the process of being delivered) or (B)
services theretofore actually rendered (or, in accordance with the
applicable contract with the account debtor, to be rendered) by such
Obligor to, the account debtor named therein, (iii) no receivable of such
Obligor of $50,000 or more is evidenced by any instrument or chattel paper
unless such instrument or chattel paper has been theretofore endorsed over
and delivered to Lender, and (iv) no surety bond was required or given in
connection with any receivable of such Obligor or the contracts or
purchase orders out of which they arose.
(f) Inventory. No inventory is held by such Obligor pursuant to
consignment, sale or return, sale on approval or similar arrangement.
(g) Intellectual Property. With regard to the Collateral of such
Obligor consisting of Intellectual Property, (i) such Obligor is the
present owner of the entire right, title and interest in and to such
Collateral and has good and indefeasible title thereto with the rights of
use free and clear of the infringement of the rights of others, (ii) the
United States patents listed on SCHEDULE 4 constitute all of the
registrations and applications for the United States patents owned by such
Obligor, (iii) the United States trademarks listed on SCHEDULE 5
constitute all of the registrations and applications for the United States
trademarks owned by such Obligor, (iv) such Obligor has not and will not
make any assignment or agreement in conflict with the security interest in
the Intellectual Property of such Obligor hereunder, and (v) all
applications pertaining to U.S. Intellectual Property of such Obligor
have been duly and properly filed, and all U.S. registrations or letters
pertaining to such Intellectual Property have been duly and properly filed
and issued, and all of such Intellectual Property is valid and
enforceable.
6. COVENANTS. Each Obligor covenants that, so long as any amounts
remain payable under the Note or under any other Loan Document it shall:
(a) OTHER LIENS. Defend the Collateral of such Obligor against the
claims and demands of all other parties claiming an interest therein, keep
such Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of such
Collateral or any interest therein, except in the
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ordinary course of business and except as permitted under the Note.
(b) Preservation of Collateral. Keep the Collateral of such Obligor
in good order, condition and repair and not use such Collateral in
violation of the provisions of this Agreement or any other agreement
relating to such Collateral or any policy insuring the Collateral or any
applicable statute, law, bylaw, rule, regulation or ordinance.
(c) Change in Location. Keep such Obligor's chief executive office
and chief place of business (as well as its books and records) at the
locations set forth on SCHEDULE 1 and keep Collateral of such Obligor
having a book value of $100,000 or more, individually or in the aggregate,
at the locations set forth for such Obligor on SCHEDULE 2.
(d) Inspection. Upon reasonable notice, and during reasonable
hours, at all times allow Lender or its representatives to visit and
inspect the Collateral of such Obligor and the books and records relating
thereto and otherwise cooperate with and promptly respond to the
reasonable requests of Lender or its representatives with respect thereto.
(e) Perfection of Security Interest. Execute and deliver to Lender
such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents, as Lender may reasonably request) and do all such other things
as Lender may reasonably deem necessary or appropriate (i) to assure to
Lender its security interests hereunder, including (A) such financing
statements (including renewal statements) or amendments thereof or
supplements thereto or other instruments as Lender may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, (B) with regard to patents
and patent applications, a Notice of Grant of Security Interest in Patents
for filing with the United States Patent and Trademark Office in the form
of SCHEDULE 6 hereto, and (C) with regard to trademarks and trademark
applications, a Notice of Grant of Security Interest in Trademarks for
filing with the United States Patent and Trademark Office in the form of
SCHEDULE 7 hereto, (ii) to consummate the transactions contemplated hereby
and (iii) to otherwise protect and assure Lender of its rights and
interests hereunder. To that end, each Obligor agrees that Lender may
file one or more financing statements disclosing Lender's security
interest in any or all of the Collateral of such Obligor without, to the
extent
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permitted by law, such Obligor's signature thereon, and further each
Obligor also hereby irrevocably makes, constitutes and appoints Lender,
its nominee or any other person whom Lender may designate, as such
Obligor's attorney in fact with full power and for the limited purpose to
sign in the name of such Obligor any such financing statements, or
amendments and supplements to financing statements, renewal financing
statements, notices or any similar documents which in Lender's reasonable
discretion would be necessary, appropriate or convenient in order to
perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and remaining
irrevocable so long as any amounts remain payable under the Note or under
any other Loan Document. Each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Agreement or any such financing
statement is sufficient for filing as a financing statement by Lender
wherever Lender may in its sole discretion desire to file the same. In
the event for any reason the law of any jurisdiction other than Texas
becomes or is applicable to the Collateral of any Obligor or any part
thereof, or to any of the Secured Obligations, such Obligor agrees to
execute and deliver all such instruments and to do all such other things
as Lender in its sole discretion reasonably deems necessary or appropriate
to preserve, protect and enforce the security interests of Lender under
the law of such other jurisdiction (and, if an Obligor shall fail to do so
promptly upon the request of Lender, then Lender may execute any and all
such requested documents on behalf of such Obligor pursuant to the power
of attorney granted hereinabove). If any Collateral is in the possession
or control of an Obligor's agents and Lender so requests, such Obligor
agrees to notify such agents in writing of Lender's security interest
therein and, upon the Lender's request, instruct them to hold all such
Collateral for Lender's account and subject to Lender's instructions.
Each Obligor agrees to mark its books and records to reflect the security
interest of Lender in the Collateral.
(f) Payment of Taxes and Charges. Pay promptly when due all taxes,
assessments, and governmental charges and levies upon or against the
Collateral of such Obligor in each case before the same become delinquent
and before penalties accrue thereon, unless and to the extent that the
same are being contested in good faith by appropriate proceedings.
(g) Treatment of Receivables. Not grant or extend the time for
payment of any receivable, or compromise or settle any receivable for less
than the full amount thereof, or
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release any person or property, in whole or in part, from payment thereof,
or allow any credit or discount thereon, other than as normal and
customary in the ordinary course of such Obligor's business.
(h) Actions Regarding Intellectual Property. Not take or fail to
take any action, nor permit any action to be taken by others that are
subject to such Obligor's control which would affect the validity and
enforcement of the Intellectual Property of such Obligor, or impair the
value of such Intellectual Property.
(i) New Patents and Trademarks. Promptly after each annual delivery
to Lender pursuant to Section 4 of the Note of a listing of new
registration numbers for patents, trademarks, service marks, tradenames
and copyrights awarded to any Obligor, a duly executed amendment or
modification to the Notice of Security Interest in Patents and/or the
Notice of Security Interest in Trademarks, as applicable, or such other
duly executed documents as Lender may request in a form acceptable to
counsel for Lender and suitable for recording to evidence the security
interest in the patent or trademark which is the subject of such new
application to Lender as provided in Section 3 hereof, and subject to all
the terms hereof.
(j) Insurance. Insure the Collateral of such Obligor as set forth
in the Note. In case of any material loss, damage to or destruction of
the Collateral of any Obligor or any part thereof, such Obligor shall
promptly give written notice thereof to Lender generally describing the
nature and extent of such damage or destruction. In case of any loss,
damage to or destruction of the Collateral of any Obligor or any part
thereof, such Obligor, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for
that purpose, at such Obligor's cost and expense, will promptly repair or
replace the Collateral of such Obligor so lost, damaged or destroyed;
provided, however, that such Obligor need not repair or replace the
Collateral of such Obligor so lost, damaged or destroyed to the extent the
failure to make such repair or replacement (i) is desirable to the proper
conduct of the business of such Obligor in the ordinary course and
otherwise in the best interest of such Obligor and (ii) would not
materially impair the rights and benefits of Lender under this Agreement
or any other Loan Document. In the event an Obligor shall receive any
proceeds of such insurance in a net amount in excess of $1,000,000, such
Obligor will immediately pay over such proceeds to Lender, for payment on
the Secured Obligations; provided, however,
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that Lender agrees to release such insurance proceeds to such Obligor for
replacement or restoration of the portion of the Collateral of such
Obligor lost, damaged or destroyed if, but only if, (A) no Default or
Event of Default shall have occurred and be continuing at the time of
release, (B) written application for such release is received by Lender
from such Obligor within 30 days of receipt of such proceeds and (C)
Lender has received evidence reasonably satisfactory to it that the
Collateral lost, damaged or destroyed has been or will be replaced or
restored to its condition immediately prior to the loss, destruction or
other event giving rise to the payment of such insurance proceeds. All
insurance proceeds shall be subject to the security interest of Lender
hereunder.
7. ADVANCES BY LENDER. On failure of any Obligor to perform any of the
covenants and agreements contained herein, Lender may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums
as Lender may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien, expenditures
made in defending against any adverse claim and all other expenditures which
Lender may make for the protection of the security hereof or may be compelled
to make by operation of law. All such sums and amounts so expended shall be
repayable by the Obligors immediately without notice or demand, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate provided in Section 2.3 of the
Note. No such performance of any covenant or agreement by Lender on behalf of
any Obligor, and no such advance or expenditure therefor, shall relieve the
Obligors of any default under the terms of this Agreement or the other Loan
Documents. Lender may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim.
8. EVENTS OF DEFAULT. The occurrence of an Event of Default under and
as defined in the Note shall be an Event of Default hereunder (an "EVENT OF
DEFAULT").
9. REMEDIES.
(a) General Remedies. Upon the occurrence of an Event of Default
and during continuation thereof, Lender shall have, in addition to the
rights and remedies provided
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herein, in the Loan Documents or by law (including, but not limited to,
the rights and remedies set forth in the Uniform Commercial Code of the
jurisdiction applicable to the affected Collateral) the rights and
remedies of a secured party under the UCC (regardless of whether the UCC
is the law of the jurisdiction where the rights and remedies are asserted
and regardless of whether the UCC applies to the affected Collateral), and
further Lender may, with or without judicial process or the aid and
assistance of others, (i) enter on any premises on which any of the
Collateral may be located and, without resistance or interference by the
Obligors, take possession of the Collateral, (ii) dispose of any
Collateral on any such premises, (iii) require the Obligors to assemble
and make available to Lender at the expense of the Obligors any Collateral
at any place and time designated by Lender which is reasonably convenient
to both parties, (iv) remove any Collateral from any such premises for the
purpose of effecting sale or other disposition thereof, and/or (v) without
demand and without advertisement, notice, hearing or process of law
(except as provided below), all of which each of the Obligors hereby
waives to the fullest extent permitted by law, at any place and time or
times, sell and deliver any or all Collateral held by or for it at public
or private sale, by one or more contracts, in one or more parcels, for
cash, upon credit or otherwise, at such prices and upon such terms as
Lender deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). In addition to all other sums due Lender
with respect to the Secured Obligations, the Obligors shall pay Lender all
reasonable costs and expenses incurred by Lender, including, but not
limited to, reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Secured
Obligations, or in the prosecution or defense of any action or proceeding
by or against Lender or the Obligors concerning any matter arising out of
or connected with this Agreement, any Collateral or the Secured
Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the Bankruptcy Code. To the
extent the rights of notice cannot be legally waived hereunder, each
Obligor agrees that any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to such
Obligor in accordance with the notice provisions of this Agreement at
least 10 days before the time of sale or other event giving rise to the
requirement of such notice. Lender shall not be obligated to make any
sale or other disposition of the Collateral regardless of notice having
been given. To the extent permitted by law, Lender may be a purchaser at
any
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such sale. Subject to the provisions of applicable law, Lender may
postpone or cause the postponement of the sale of all or any portion of
the Collateral by announcement at the time and place of such sale, and
such sale may, without further notice, to the extent permitted by law, be
made at the time and place to which the sale was postponed, or Lender may
further postpone such sale by announcement made at such time and place.
(b) Remedies relating to Receivables. Upon the occurrence of an
Event of Default and during the continuation thereof, whether or not
Lender has exercised any or all of its rights and remedies hereunder, (i)
each Obligor will promptly upon request of Lender instruct all account
debtors to remit all payments in respect of the receivables to a mailing
location selected by Lender and (ii) Lender or its designee may notify any
Obligor's customers and account debtors that the receivables of such
Obligor have been assigned to Lender or of Lender's security interest
therein, and may (either in its own name or in the name of an Obligor or
both) demand, collect (including without limitation by way of a lockbox
arrangement), receive, take receipt for, sell, sue for, compound, settle,
compromise and give acquittance for any and all amounts due or to become
due on receivables, and, in Lender's discretion, file any claim or take
any other action or proceeding to protect and realize upon the security
interest of Lender in the receivables. Each Obligor acknowledges and
agrees that the proceeds of its receivables remitted to or on behalf of
Lender in accordance with the provisions hereof shall be solely for
Lender's own convenience and that such Obligor shall not have any right,
title or interest in such accounts or in any such other amounts except as
expressly provided herein. Lender shall have no liability or
responsibility to any Obligor for acceptance of a check, draft or other
order for payment of money bearing the legend "payment in full" or words
of similar import or any other restrictive legend or endorsement or be
responsible for determining the correctness of any remittance. Each
Obligor hereby agrees to indemnify Lender from and against all
liabilities, damages, losses, actions, claims, judgments, costs, expenses,
charges and reasonable attorneys' fees suffered or incurred by Lender
because of the maintenance of the foregoing arrangements except as
relating to or arising out of the negligence or willful misconduct of
Lender or its officers, employees or agents.
(c) Access. In addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default and during the continuance thereof,
Lender shall have the right
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to enter and remain upon the various premises of the Obligors without cost
or charge to Lender, and use the same, together with materials, supplies,
books and records of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and conducting the
sale of the Collateral, whether by foreclosure, auction or otherwise. In
addition, Lender may remove Collateral, or any part thereof, from such
premises and/or any records with respect thereto, in order to effectively
collect or liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. The failure of Lender to
exercise any right, remedy or option under this Agreement or any other
Loan Document or as provided by law, or any delay by Lender in exercising
the same, shall not operate as a waiver of any such right, remedy or
option. No waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced and
then only to the extent specifically stated, which in the case of Lender
shall only be granted as provided herein. To the extent permitted by law,
neither Lender, nor any party acting as attorney for Lender, shall be
liable hereunder for any acts or omissions or for any error of judgment or
mistake of fact or law other than their negligence or willful misconduct
hereunder. The rights and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right or remedy which Lender
may have.
10. POWER OF ATTORNEY. In addition to other powers of attorney contained
herein, each Obligor hereby designates and appoints Lender, and each of its
designees or agents, as attorney-in-fact of such Obligor, irrevocably and with
power of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of Default,
subject to other provisions hereof:
(i) demand, collect, settle, compromise, adjust, give discharges
and releases, all as Lender may determine;
(ii) commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other right in
respect thereof;
(iii) defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as Lender may deem
appropriate;
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(iv) receive, open and dispose of mail addressed to an Obligor and
endorse checks, notes, drafts, acceptances, money orders, bills of lading,
warehouse receipts or other instruments or documents evidencing payment,
shipment or storage of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such Obligor, or securing, or
relating to such Collateral;
(v) sell, assign, transfer, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, any Collateral or
the goods or services which have given rise thereto, as fully and
completely as though Lender were the absolute owner thereof for all
purposes;
(vi) adjust and settle claims under any insurance policy relating
thereto;
(vii) execute and deliver all assignments, conveyances, statements,
financing statements, renewal financing statements, security agreements,
affidavits, notices and other agreements, instruments and documents that
Lender may determine necessary in order to perfect and maintain the
security interests and liens granted in this Agreement and in order to
fully consummate all of the transactions contemplated therein;
(viii) institute any foreclosure proceedings that Lender may deem
appropriate; and
(ix) do and perform all such other acts and things as Lender may
deem to be necessary, proper or convenient in connection with the
Collateral.
This Power of Attorney is coupled with an interest and is irrevocable until the
Secured Obligations have been fully satisfied.
11. APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by Lender in cash
or its equivalent, will be applied in reduction of the Secured Obligations in
such order and manner as set forth hereinbelow, and each Obligor irrevocably
waives the right to direct the application of such payments and proceeds and
acknowledges and agrees that Lender shall have the continuing and exclusive
right to apply and reapply any and all such payments and proceeds in Lender's
sole discretion, notwithstanding any entry to the contrary upon any of
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its books and records. The Obligors shall remain liable to Lender for any
deficiency. The proceeds of the Collateral shall be applied as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
Lender in connection with enforcing its rights under the Loan Documents
and any protective advances made by Lender with respect to the Collateral
under or pursuant to the terms of the Loan Documents;
SECOND, to the payment of all of the Borrower's Obligations
consisting of accrued fees and interest;
THIRD, to the payment of the outstanding principal amount of the
Borrower's Obligations;
FOURTH, to all other Borrower's Obligations and other obligations
which shall have become due and payable under the Loan Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "THIRD"
above; and
FIFTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
12. COSTS OF COUNSEL. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, Lender employs counsel to prepare or
consider amendments, waivers or consents with respect to this Agreement, or to
take action or make a response in or with respect to any legal or arbitral
proceeding relating to this Agreement or relating to the Collateral, or to
protect the Collateral or exercise any rights or remedies under this Agreement
or with respect to the Collateral, then the Obligors agree to promptly pay upon
demand any and all such reasonable costs and expenses of Lender (including the
allocated costs of in-house counsel), all of which costs and expenses shall
constitute Secured Obligations hereunder.
13. CONTINUING AGREEMENT. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect so long as any
amounts remain payable under the Note or under any other Loan Document. Upon
such termination of this Agreement, Lender shall, upon the request and at the
expense of the Obligors, forthwith release all of its liens and security
interests hereunder. Notwithstanding the foregoing all releases and
indemnities provided hereunder shall survive termination of this Agreement.
14. AMENDMENTS; WAIVERS; MODIFICATIONS. This Agreement and the
provisions hereof may not be amended, waived, modified,
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changed, discharged or terminated except as set forth in Section 11 of the
Note.
15. SUCCESSORS IN INTEREST. This Agreement shall create a continuing
security interest in the Collateral and shall be binding upon each Obligor, its
successors and assigns and shall inure, together with the rights and remedies
of Lender hereunder, to the benefit of Lender and its successors and assigns;
provided, however, that none of the Obligors may assign its rights or delegate
its duties hereunder without the prior written consent of Lender, which consent
may be withheld in Lender's sole and absolute discretion. To the fullest
extent permitted by law, each Obligor hereby releases Lender, and its
successors and assigns, from any liability for any act or omission relating to
this Agreement or the Collateral, except for any liability arising from the
negligence or willful misconduct of Lender or its officers, employees or
agents.
16. NOTICES. All notices required or permitted to be given under this
Agreement shall be in conformance with Section 15 of the Note.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
18. HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
19. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS. Any legal action or proceeding with
respect of this Agreement may be brought in the courts of the State of
Texas in Dallas County, or of the United States in the District Court for
the Northern District of Texas, and, by execution and delivery of this
Agreement, each of the Obligors hereby irrevocably accepts for itself and
in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Obligors further
irrevocably consents to the service of process out of any of the
aforementioned courts in any
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such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 15 of the Note, such service to become
effective 3 days after such mailing. Nothing herein shall affect the
right of Lender to serve process in any other manner permitted by law or
to commence legal proceedings or to otherwise proceed against any Obligor
in any other jurisdiction.
(b) Each of the Obligors hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, LENDER AND EACH OF THE OBLIGORS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
20. SEVERABILITY. If any provision of any of this Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. ENTIRETY. This Agreement and the other Loan Documents represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Loan Documents or the
transactions contemplated herein and therein.
22. SURVIVAL. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Agreement and the
other Loan Documents, the delivery of the Note and the making of the loan under
the Note.
23. OTHER SECURITY. To the extent that any of the Secured Obligations are
now or hereafter secured by Property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or Property of any other Person, then Lender shall have
the right
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to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and Lender has the right, in its sole
discretion, to determine which rights, security, liens, security interests or
remedies Lender shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of
them or any of Lender's rights or the Secured Obligations under this Agreement
or under any other of the Loan Documents.
24. JOINT AND SEVERAL OBLIGATIONS OF OBLIGORS. All payment obligations
of the Obligors hereunder shall be joint and several.
25. INCORPORATION OF TERMS OF NOTE. Each Guarantor hereby agrees that
the representations and warranties set forth in Section 3 of the Note, the
affirmative covenants set forth in Section 4 of the Note and the negative
covenants set forth in Section 5 of the Note shall be incorporated into this
Agreement and hereby makes each such representation and warranty to be made by
it as a Credit Party and hereby agrees to be bound by each affirmative and
negative covenant applicable to a Credit Party or to it as a Subsidiary of the
Borrower.
26. AGENT OF SENIOR LENDERS AS AGENT. Notwithstanding anything to the
contrary contained in this Agreement, Lender agrees that whenever the Obligors
are required to deliver Collateral to Lender and in which Collateral Lender's
security interests are subordinate to the Senior Lenders, delivery to the
Senior Lenders or the agent for the Senior Lenders under the Senior Debt shall
be deemed delivery to Lender and the Senior Lenders or the agent for the Senior
Lenders shall be the bailee to Lender for purposes of holding such Collateral.
The Obligors hereby instruct the Senior Lenders and the agent for the Senior
Lenders, upon payment in full of the Senior Debt, to deliver all Collateral
held by the Senior Lenders or the agent for the Senior Lenders as security for
the Senior Debt to Lender to be held hereunder.
27. SUBORDINATION OF LIENS. The Liens and security interests granted
under this Agreement are subordinate to the Liens and security interests
granted to the Senior Lenders under the Senior Debt on the terms and subject to
the conditions set forth in the Letter Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
BORROWER:
- --------
GENICOM CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
GUARANTORS:
- ----------
GENICOM INTERNATIONAL HOLDINGS CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
GENICOM INTERNATIONAL SALES CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
DELMARVA TECHNOLOGIES CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
RASTEK CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
[Signatures continued]
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<PAGE> 22
ENTERPRISING SERVICE SOLUTIONS CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
PRINTER SYSTEMS CORPORATION
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
THE PRINTER CONNECTION, INC.
By James C. Gale
---------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
PRINTER SYSTEMS INTERNATIONAL, LTD.
By James C. Gale
----------------------------
Name James C. Gale
---------------------------
Title Senior VP Finance and CFO
--------------------------
Accepted and agreed to as of the date first above written.
TEXAS INSTRUMENTS INCORPORATED
By Pallab K. Chatterjee
--------------------
Name Pallab K. Chatterjee
--------------------
Title Pres., Personal Productivity
-----------------------------
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<PAGE> 1
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of September 30,
1996, made by GENICOM CORPORATION, a Delaware corporation (the "BORROWER"), THE
GUARANTORS FROM TIME TO TIME PARTY HERETO (each a "GUARANTOR", and collectively
the "GUARANTORS", and together with the Borrower, each a "PLEDGOR", and
collectively the "PLEDGORS") and TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation ("LENDER").
RECITALS
WHEREAS, pursuant to the Subordinated Promissory Note dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "NOTE") from the Borrower, Lender has provided to the Borrower a loan in an
original principal amount of $9,000,000; and
WHEREAS, Lender has required, as a condition precedent to making the loan
to the Borrower under the Note, that the Pledgors secure their respective
obligations under the Note and the other Loan Documents in accordance with the
terms of this Pledge Agreement.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to such terms in the Note.
2. PLEDGE AND GRANT OF SECURITY INTEREST. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Secured Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to Lender, and grants to Lender, a continuing security
interest in any and all right, title and interest of such Pledgor in and to the
following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the "PLEDGED COLLATERAL"):
(a) Pledged Shares. All of the issued and outstanding shares of
capital stock of the Domestic Subsidiaries of such Pledgor set forth on
SCHEDULE 1 attached hereto (all certificates representing such shares and
all options and
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other rights, contractual or otherwise, with respect thereto, collectively
the "PLEDGED SHARES").
(b) Additional Shares. All of the issued and outstanding shares of
capital stock of any Domestic Subsidiary which is hereafter formed or
acquired by such Pledgor, including without limitation, the certificates
representing such shares.
(c) Other Equity Interests. Any and all other equity interests of
such Pledgor in any direct or indirect Subsidiary of the Borrower.
(d) Proceeds. All proceeds and products of the foregoing, however
and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of stock to Lender as collateral security
for the Secured Obligations. Upon delivery to Lender, such additional shares
of stock shall be deemed to be part of the Pledged Collateral of such Pledgor
and shall be subject to the terms of this Pledge Agreement whether or not
SCHEDULE 1 is amended to refer to such additional shares.
3. SECURITY FOR SECURED OBLIGATIONS. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "SECURED OBLIGATIONS"):
(a) (i) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower under the
Note, this Pledge Agreement and the other Loan Documents to which the
Borrower is a party; or
(ii) In the case of any Pledgor which is a Guarantor, the prompt
performance and observance by such Guarantor of all obligations of such
Guarantor under this Pledge Agreement and the other Loan Documents to
which such Guarantor is a party, including, without limitation, its
guaranty obligations arising under Section 2 of the Guaranty and Security
Agreement; and
(b) All other indebtedness, liabilities and obligations of any kind
or nature, now existing or hereafter
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arising, owing from any Credit Party to Lender, arising under the Loan
Documents, whether primary, secondary, direct, contingent, or joint and
several.
4. DELIVERY OF THE PLEDGED COLLATERAL. Each Pledgor hereby agrees that:
(a) Certificates. Such Pledgor shall deliver to Lender (i)
simultaneously with or prior to the execution and delivery of this Pledge
Agreement, all certificates representing the Pledged Shares of such
Pledgor and (ii) promptly upon the receipt thereof by or on behalf of such
Pledgor, all other certificates and instruments constituting Pledged
Collateral of such Pledgor. Prior to delivery to Lender, all such
certificates and instruments constituting Pledged Collateral of such
Pledgor shall be held in trust by such Pledgor for the benefit of Lender
pursuant hereto. All such certificates shall be delivered in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, in the form provided in
SCHEDULE 2 attached hereto.
(b) Additional Securities. If such Pledgor shall receive by virtue
of its being or having been the owner of any Pledged Collateral, any (i)
stock certificate, including without limitation, any certificate
representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation,
sale of assets, combination of shares, stock splits, spin-off or
split-off, promissory notes or other instrument; (ii) option or right,
whether as an addition to, substitution for, or an exchange for, any
Pledged Collateral or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such stock certificate,
instrument, option, right or distribution in trust for the benefit of
Lender, shall segregate it from such Pledgor's other property and shall
deliver it forthwith to Lender in the exact form received together with
any necessary endorsement and/or appropriate stock power duly executed in
blank in the form provided in SCHEDULE 2, to be held by Lender as Pledged
Collateral and as further collateral security for the Secured Obligations.
(c) Financing Statements. Such Pledgor shall execute and deliver to
Lender such UCC financing statements as may
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be reasonably requested by Lender in order to perfect and protect the
security interest created hereby in the Pledged Collateral of such
Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to Lender, that so long as any amounts remain payable under the Note
or under any other Loan Document:
(a) Authorization of Pledged Shares. The Pledged Shares of such
Pledgor are duly authorized and validly issued, are fully paid and
nonassessable and are not subject to the preemptive rights of any Person.
All other shares of stock constituting Pledged Collateral will be duly
authorized and validly issued, fully paid and nonassessable and not
subject to the preemptive rights of any Person.
(b) Title. Such Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
except for the security interest created by this Pledge Agreement and
other Permitted Liens. There exists no "adverse claim" within the meaning
of Section 8.302 of the Uniform Commercial Code as in effect in the State
of Texas (the "UCC") with respect to the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by Lender of its rights and
remedies hereunder will not violate any law or governmental regulation or
any material contractual restriction binding on or affecting such Pledgor
or any of its Property.
(d) Pledgor's Authority. No authorization, approval or action by,
and no notice or filing with any Governmental Authority or with the issuer
of any Pledged Stock of such Pledgor is required either (i) for the pledge
made by such Pledgor or for the granting of the security interest by such
Pledgor pursuant to this Pledge Agreement; or (ii) for the exercise by
Lender of its rights and remedies hereunder (except as may be required by
laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a
valid security interest in favor of Lender in the Pledged Collateral of
such Pledgor. The taking possession by Lender of the certificates
representing the Pledged Shares of such Pledgor and all other certificates
and instruments constituting Pledged Collateral of such Pledgor
4
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will perfect and establish the first priority of Lender's security
interest, subject to the subordination in favor of the Senior Lenders
pursuant to the subordination provisions contained herein, in the Pledged
Shares of such Pledgor and in all other Pledged Collateral of such Pledgor
represented by such Pledged Shares and instruments securing the Secured
Obligations. Except as set forth in this Section 5(e), no action is
necessary to perfect or otherwise protect such security interest.
6. COVENANTS. Each Pledgor hereby covenants, that so long as any
amounts remain payable under the Note or under any other Loan Document, it
shall:
(a) Books and Records. Mark its books and records (and shall cause
the issuer of the Pledged Shares of such Pledgor to mark its books and
records) to reflect the security interest granted to Lender, pursuant to
this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein, keep
the Pledged Collateral of such Pledgor free from all Liens, except for
those created hereunder and the security interest created hereby and
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Note.
(c) Further Assurances. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that may
be necessary and desirable or which Lender may reasonably request in order
to (i) perfect and protect the security interest created hereby in the
Pledged Collateral of such Pledgor; (ii) enable Lender to exercise and
enforce its rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) otherwise effect the purposes of
this Pledge Agreement, including, without limitation and if requested by
Lender, delivering to Lender irrevocable proxies in respect of the Pledged
Collateral of such Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any restriction
with respect to
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any of the Pledged Collateral of such Pledgor other than pursuant hereto
or as may be permitted under the Note.
(e) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by such Pledgor with the
United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. RIGHTS OF LENDER.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints Lender and
each of its designees or agents as attorney-in-fact of such Pledgor,
irrevocably and with power of substitution, with authority to take any or
all of the following actions upon the occurrence and during the
continuance of an Event of Default (as hereinafter defined):
(i) to demand, collect, settle, compromise, adjust, and
give discharges and releases, all as Lender may reasonably determine;
(ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or release
as Lender may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security interests,
or other encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment under any
of the Pledged Collateral of such Pledgor to make payment of any and
all monies due and to become due thereunder directly to Lender or as
Lender shall direct;
(vi) to receive payment of and take receipt for any and all
monies, claims, and other amounts due and to become due at any time
and from time to time in
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respect of or arising out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other documents
relating to the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection therewith, to give
such discharges or releases as Lender may deem reasonably
appropriate;
(ix) to exchange any of the Pledged Collateral of such
Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof and in connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any depository, transfer agent,
registrar or other designated agency upon such terms as Lender may
determine; and
(x) to do and perform all such other acts and things as
Lender may reasonably deem to be necessary, proper or convenient in
connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Lender shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Lender in this Pledge Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Lender shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or its capacity as attorney-in-fact except acts
or omissions resulting from its negligence or willful misconduct. This power
of attorney is conferred on Lender solely to protect, preserve and realize upon
its security interest in Pledged Collateral.
(b) Performance by Lender of Pledgor's Obligations. If any Pledgor
fails to perform any agreement or obligation contained herein, after the
occurrence and during the continuance of an Event of Default, Lender itself may
perform, or cause performance of, such agreement or obligation, and the
expenses of Lender incurred in
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connection therewith shall be payable by the Pledgors on a joint and several
basis pursuant to Section 11 hereof.
(c) Assignment by the Lender. Lender may from time to time assign
the Pledged Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of Lender under this Pledge
Agreement in relation thereto.
(d) Lender's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Pledged Collateral while being held by
Lender hereunder, Lender shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that each Pledgor shall be
responsible for preservation of all rights in the Pledged Collateral of such
Pledgor, and Lender shall be relieved of all responsibility for Pledged
Collateral upon surrendering it or tendering the surrender of it to such
Pledgor. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that which
Lender accords its own property, it being understood that Lender shall not have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Pledged Collateral, whether or not Lender has or is deemed to have knowledge of
such matters; or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and
be continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining to
the Pledged Collateral of such Pledgor or any part thereof for any
purpose not inconsistent with the terms of this Pledge Agreement or
the Note;
(ii) Upon the occurrence and during the continuance of an
Event of Default, upon written notice from Lender, all rights of a
Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to paragraph (i) of
this Section 7 shall cease and all such rights
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shall thereupon become vested in Lender which shall thereupon have
the sole right to exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and
be continuing and subject to Section 4(b) hereof, each Pledgor may
receive and retain any and all dividends (other than stock dividends
and other dividends constituting Pledged Collateral of such Pledgor
which are addressed hereinabove) or interest paid in respect of the
Pledged Collateral of such Pledgor to the extent they are allowed
under the Note.
(ii) Upon the occurrence and during the continuance of an
Event of Default:
(A) all rights of a Pledgor to receive the dividends
and interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this Section 7(f)
shall cease and all such rights shall thereupon be vested in Lender
which shall thereupon have the sole right to receive and hold as
Pledged Collateral such dividends and interest payments; and
(B) all dividends and interest payments which are
received by such Pledgor contrary to the provisions of paragraph (A)
of this Section 7(f)(ii) shall be received in trust for the benefit
of Lender, shall be segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to Lender as Pledged
Collateral in the exact form received, to be held by Lender as
Pledged Collateral and as further collateral security for the Secured
Obligations.
(g) Release of Pledged Collateral. Lender may release any of the
Pledged Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or security interest of
this Pledge Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first priority lien,
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security interest, pledge and charge on all Pledged Collateral not
expressly released or substituted when any of the Secured Obligations
remain outstanding with respect to the Lender, subject to the
subordination in favor of the Senior Lenders pursuant to the subordination
provisions contained herein.
8. ADVANCES BY LENDER. On failure of any Pledgor to perform any of the
covenants and agreements contained herein, Lender may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums
as Lender may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any taxes, a payment to obtain a release of
a Lien or potential Lien, expenditures made in defending against any adverse
claim and all other expenditures which Lender may make for the protection of
the security hereof or which Lender may be compelled to make by operation of
law. All such sums and amounts so expended shall be repayable by the Pledgors
on a joint and several basis promptly upon notice thereof and demand therefor,
shall constitute additional Secured Obligations and shall bear interest from
the date said amounts are expended at the default rate provided for in Section
2.3 of the Note. No such performance of any covenant or agreement by Lender on
behalf of any Pledgor, and no such advance or expenditure therefor, shall
relieve the Pledgors of any default under the terms of this Pledge Agreement or
the other Loan Documents. Lender may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by a Pledgor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
9. EVENTS OF DEFAULT. The occurrence of an Event of Default under and
as defined in the Note shall be an Event of Default hereunder ("EVENT OF
DEFAULT").
10. REMEDIES UPON DEFAULT. If any Event of Default shall have occurred
and be continuing:
(a) Rights and Remedies. Lender may exercise in respect of the
Pledged Collateral of any Pledgor, in addition to other rights and
remedies provided for herein or otherwise available to it, all rights and
remedies of a
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secured party upon default under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Without limiting the generality of
this Section and without notice (except as provided below), Lender may, in
its sole discretion, sell or otherwise dispose of or realize upon the
Pledged Collateral, or any part thereof, in one or more parcels, at public
or private sale, at any exchange or broker's board or elsewhere, at such
price or prices and on such other terms as Lender may deem commercially
reasonable, for cash, credit or for future delivery or otherwise in
accordance with applicable law. To the extent permitted by law, Lender
may in such event, bid for the purchase of such securities. Each Pledgor
agrees that any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any
private sale is to be made, shall be personally served on or mailed,
postage prepaid, to such Pledgor in accordance with the notice provisions
of Section 15 of the Note at least 10 days before time of such sale.
Lender shall not be obligated to make any sale of Pledged Collateral of
such Pledgor regardless of notice of sale having been given. Lender may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(c) Private Sale. The Pledgors recognize that Lender may deem it
impracticable to effect a public sale of all or any part of the Pledged
Shares or any of the securities constituting Pledged Collateral and that
Lender may, therefore, determine to make one or more private sales of any
such securities to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other
terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sale per se shall not be deemed to
have been made in a commercially unreasonable manner and that Lender shall
have no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933. Each Pledgor
further acknowledges and agrees that any offer to sell such
11
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securities which has been publicly advertised on a bona fide basis in a
newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933)
shall be deemed to involve a "public sale" under the UCC, notwithstanding
that such sale may not constitute a "public offering" under the Securities
Act of 1933, and Lender may, in such event, bid for the purchase of such
securities.
(d) Retention of Pledged Collateral. Lender may, after providing
the notices required by Section 9.505(b) of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction,
retain all or any portion of the Pledged Collateral in satisfaction of the
Secured Obligations. Unless and until Lender shall have provided such
notices, however, Lender shall not be deemed to have retained any Pledged
Collateral in satisfaction of any Secured Obligations for any reason.
(e) Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of any Pledged Collateral, when received by
Lender in cash or its equivalent, will be applied in reduction of the
Secured Obligations in such order and manner as set forth in Section 11 of
the Guaranty and Security Agreement, and each Pledgor irrevocably waives
the right to direct the application of such payments and proceeds and
acknowledges and agrees that Lender shall have the continuing and
exclusive right to apply and reapply any and all such payments and
proceeds notwithstanding any entry to the contrary upon any of its books
and records. The Pledgors shall remain liable to Lender for any
deficiency.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
Lender is legally entitled, the Pledgors shall be jointly and severally
liable for the deficiency, together with interest thereon at the default
rate provided in Section 2.3 of the Note, together with the costs of
collection and the reasonable fees of any attorneys employed by Lender to
collect such deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the
appropriate Pledgors or to whomsoever a court of competent jurisdiction
shall determine to be entitled thereto.
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11. COSTS OF COUNSEL. If at any time hereafter, after the occurrence and
during the continuance of an Event of Default or not, Lender employs counsel to
prepare or consider amendments, waivers or consents with respect to this Pledge
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Pledge Agreement or relating to the
Pledged Collateral, or to protect the Pledged Collateral of any Pledgor or
exercise any rights or remedies under this Pledge Agreement or with respect to
any Pledged Collateral, then the Pledgors agree to promptly pay upon demand any
and all such reasonable costs and expenses of Lender, all of which costs and
expenses shall constitute Secured Obligations hereunder.
12. CONTINUING AGREEMENT. This Pledge Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect so long as
any amounts remain payable under the Note or under any other Loan Document.
Upon such termination of this Pledge Agreement, Lender shall, upon the request
and at the expense of the Obligors, forthwith release all of its liens and
security interests hereunder. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.
13. AMENDMENTS; WAIVERS; MODIFICATIONS. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11 of the Note.
14. SUCCESSORS IN INTEREST. This Pledge Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of Lender hereunder, to the benefit of Lender and its successors
and assigns; provided, however, that none of the Pledgors may assign its rights
or delegate its duties hereunder without the prior written consent of Lender,
which may be withheld in Lender's sole and absolute discretion. To the fullest
extent permitted by law, each Pledgor hereby releases Lender, and its
successors and assigns, from any liability for any act or omission relating to
this Pledge Agreement or the Collateral, except for any liability arising from
the negligence or willful misconduct of Lender, or its officers, employees or
agents.
15. NOTICES. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 15 of the Note.
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16. COUNTERPARTS. This Pledge Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
17. HEADINGS. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
18. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. Any legal action or
proceeding with respect of this Pledge Agreement may be brought in the
courts of the State of Texas in Dallas County, or of the United States in
the District Court for the Northern District of Texas, and, by execution
and delivery of this Pledge Agreement, each of the Pledgors hereby
irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the nonexclusive jurisdiction of such courts. Each
of the Pledgors further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 15
of the Note, such service to become effective 3 days after such mailing.
Nothing herein shall affect the right of Lender to serve process in any
other manner permitted by law or to commence legal proceedings or to
otherwise proceed against any Pledgor in any other jurisdiction.
(b) Each of the Pledgors hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Pledge Agreement brought in the courts referred to in subsection (a)
hereof and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
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(c) TO THE EXTENT PERMITTED BY LAW, LENDER AND EACH OF THE PLEDGORS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS PLEDGE
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19. SEVERABILITY. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
20. ENTIRETY. This Pledge Agreement and the other Loan Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Loan Documents or the
transactions contemplated herein and therein.
21. SURVIVAL. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement and
the other Loan Documents, the delivery of the Note and the making of the loan
under the Note.
22. OTHER SECURITY. To the extent that any of the Secured Obligations
are now or hereafter secured by Property other than the Collateral (including,
without limitation, real property and securities owned by any Pledgor), or by a
guarantee, endorsement or Property of any other Person, then Lender shall have
the right to proceed against such other property, guarantee or endorsement upon
the occurrence of any Event of Default, and Lender has the right, in its sole
discretion, to determine which rights, security, liens, security interests or
remedies Lender shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of
them or any of Lender's rights or the Secured Obligations under this Pledge
Agreement or under any other of the Loan Documents.
23. JOINT AND SEVERAL OBLIGATIONS OF PLEDGORS. All payment obligations
of the Pledgors hereunder shall be joint and several.
24. INCORPORATION OF TERMS OF NOTE. Each Guarantor hereby agrees that
the representations and warranties set forth in Section 3 of the Note, the
affirmative covenants set forth in Section 4 of the Note and the negative
covenants set forth in Section 5 of the Note shall be incorporated into this
Pledge Agreement and hereby makes each such representation and warranty
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to be made by it as a Credit Party and hereby agrees to be bound by each
affirmative and negative covenant applicable to a Credit Party or to it as a
Subsidiary of the Borrower.
25. AGENT OF SENIOR LENDERS AS AGENT. Notwithstanding anything to the
contrary contained in this Pledge Agreement, Lender agrees that whenever the
Obligors are required to deliver Collateral to Lender and in which Collateral
Lender's security interests are subordinate to the Senior Lenders, delivery to
the Senior Lenders or the agent for the Senior Lenders under the Senior Debt
shall be deemed delivery to Lender and the Senior Lenders or the agent for the
Senior Lenders shall be the bailee to Lender for purposes of holding such
Collateral. The Obligors hereby instruct the Senior Lenders and the agent for
the Senior Lenders, upon payment in full of the Senior Debt, to deliver all
Collateral held by the Senior Lenders or the agent for the Senior Lenders as
security for the Senior Debt to Lender to be held hereunder.
26. SUBORDINATION OF LIENS. The Liens and security interests granted
under this Pledge Agreement are subordinate to the Liens and security interests
granted to the Senior Lenders under the Senior Debt on the terms and subject to
the conditions set forth in the Letter Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Each of the Pledgors has caused a counterpart of this Pledge Agreement to
be duly executed and delivered as of the date first above written.
BORROWER:
GENICOM CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
GUARANTORS:
- ----------
GENICOM INTERNATIONAL HOLDINGS CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
GENICOM INTERNATIONAL SALES CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
DELMARVA TECHNOLOGIES CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
RASTEK CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
[Signatures continued]
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ENTERPRISING SERVICE SOLUTIONS CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
PRINTER SYSTEMS CORPORATION
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
THE PRINTER CONNECTION, INC.
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
PRINTER SYSTEMS INTERNATIONAL, LTD.
By James C. Gale
----------------------------
Name James C. Gale
--------------------------
Title Senior VP Finance and CFO
-------------------------
Accepted and agreed to as of the date first above written.
TEXAS INSTRUMENTS INCORPORATED
By Pallab K. Chatterjee
--------------------
Name Pallab K. Chatterjee
--------------------
Title Pres., Personal Productivity
-----------------------------
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FOR FURTHER INFORMATION:
GENICOM Corporation Morgen-Walke Associates
Paul T. Winn Michele Katz/Michael Lendener
President and CEO Press: Lee Foley/Jenn Rutter
703/802-9237 212/850-5600
================================================================================
GENICOM ACQUIRES TEXAS INSTRUMENTS PRINTER BUSINESS
COMBINATION SIGNIFICANTLY STRENGTHENS ITS DOCUMENT SOLUTIONS
BUSINESS IN MID-RANGE CLIENT/SERVER ENVIRONMENT
CHANTILLY, VA, October 2, 1996 -- GENICOM Corporation (Nasdaq:GECM) today
announced the closing of its acquisition of certain assets of Texas Instruments
worldwide printer and related supplies business for a purchase price of
approximately $27 million. The acquisition was financed primarily through
GENICOM's credit facility with NationsBank of Texas, N.A.
The acquisition enhances GENICOM's printer strategy in the mid-range
client/server market as well as custom applications in the transportation,
travel, financial, retail and other selected industries. The addition of Texas
Instruments printer and supplies business compliments GENICOM's current product
offerings and globally expands its customer base. The acquisition positions
GENICOM as a leader in mid-range printing solutions and as a leading supplier
of automated ticket processing systems. The acquired business includes: 1)
mid-range laser products; 2) high-end serial products; 3) automated ticket
processing systems for the transportation industry and 4) supplies for each of
the respective product lines. GENICOM anticipates that the acquired $130
million in revenue will result in an on-going business of approximately $90-100
million of annual revenues. The difference in acquired and on-going revenue is
driven by GENICOM's strategy of focusing on the mid-range market. The company
will not continue offerings in the low-end laser market, i.e. less than 10ppm.
Additionally, GENICOM has an attractive opportunity to provide maintenance and
repair service to Texas Instruments large installed printer base, as well as
future placements, since Texas Instruments currently uses third party
agreements to service its printer customers.
GENICOM does not plan to assume manufacturing operations from Texas
Instruments. The acquired assets are principally assets in support of marketing
demand. In connection with the transaction, it is anticipated that GENICOM will
expand its existing, five year outsourcing agreement with Ogden Atlantic
Design, under which Ogden would be the primary manufacturer of all value-added
GENICOM printer products, including the selected Texas Instruments products
being acquired. Ogden Atlantic Design is also expected to purchase the Texas
Instruments manufacturing assets.
GENICOM has offered employment opportunities to former Texas Instruments
employees with selected critical skills.
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The statements contained in this release which are not historical facts are
forward looking statements that involve risks and uncertainties, including, but
not limited to, the Company's ability to secure new customers and maintain its
current customer base, the risk of customer delays or cancellations in both
on-going and new programs, the effect of economic conditions, the impact of
competition and other risks detailed, from time to time, in the Company's
Securities and Exchange Commission filings.
Texas Instruments, headquartered in Dallas, Texas is one of the world's
foremost high-technology companies with sales or manufacturing operations in
more than 30 countries. T.I.'s products and services include semiconductors;
defense electronics systems; software productivity tools; notebook computers
and consumer electronic products; electrical controls; and metallurgical
materials.
GENICOM Corporation is an international supplier of printer solutions,
multivendor services, and network management services. Document Solutions
designs and markets a wide range of computer printer technologies for general
purpose applications. Enterprising Service Solutions provides logo and
multivendor product field support, depot repair, express parts and professional
services, as well as integrated network solutions, which include integration
of networks, network monitoring product/services and consulting. GENICOM is
headquartered within metropolitan Washington, D.C.
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