GENICOM CORP, 10-K, 1996-03-28

GENICOM CORP
10-K, 1996-03-28
COMPUTER PERIPHERAL EQUIPMENT, NEC

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<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________ to __________

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 22021-3806
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (703) 802-9200

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes /X/ No
------- -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained, to the best of the registrant's knowledge,
in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K.
---

As of February 2, 1996, there were 10,852,999 shares of Common Stock of the
Registrant outstanding. The aggregate market value of the shares of Common
Stock held by non-affiliates (without admitting that any person whose shares are
not included in determining such value is an affiliate) was approximately
$49,770,130 based upon the closing price of the shares in the NASDAQ
over-the-counter market on February 2, 1996.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive proxy statement with respect to the
Annual Meeting of Stockholders to be held on May 1, 1996: Part III
<PAGE> 2
GENICOM CORPORATION AND SUBSIDIARIES
FORM 10-K INDEX

PART I

Item 1. Business 3
Item 2. Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 14

Executive Officers of the Registrant. 14

PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters 15
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 17
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 43

PART III

Item 10. Directors and Executive Officers of the Registrant 44
Item 11. Executive Compensation 44
Item 12. Security Ownership of Certain Beneficial Owners and Management 44
Item 13. Certain Relationships and Related Transactions 44

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 45
Signatures 48
Index to Financial Statements and Schedules F-1
Index to Exhibits E-1
</TABLE>

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<PAGE> 3
ITEM 1. BUSINESS

GENERAL

GENICOM Corporation ("GENICOM" or the "Company"), through its worldwide
operations, provides maintenance and repair services for computer systems
produced by multiple vendors, network planning, integration and optimization
services and develops and distributes printers and related products. Through
its acquisition of substantially all of the assets and certain liabilities of
Harris Adacom Network Services, Inc., the Company is developing into a fully
integrated provider of multivendor business services. GENICOM's service
businesses include (i) multivendor support (i.e. hardware installation and
repair and maintenance contracts) and (ii) network management services (i.e.
software and network consulting services, system specification and evaluation,
hardware and software design and integration, documentation and contract
labor). GENICOM continues to design and provide distribution of impact and
page printers for (i) use in cost sensitive environments; (ii) the printing of
multi-part forms and bar-codes; and (iii) providing printing connectivity in
proprietary systems. The Company also provides spare parts and supplies, such
as, print heads, printed wire boards, ribbons and printer cartridges for both
the Company's as well other manufacturers' printers.

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

The Company's businesses are reported in two business segments: Enterprising
Service Solutions and Document Solutions. Financial information by business
segment and geographic location appears on pages 40 and 41 of this Annual
Report on Form 10-K. This information includes sales and service revenues,
operating income and identifiable assets for the year ended December 31, 1995.

Operation of the Company's subsidiaries in Australia, Canada, and Europe is
subject to various risks associated with political and economic developments in
such countries, such as tariffs imposed to discourage imports, varying product
standards and specifications, and value added and excise taxes. In addition,
GENICOM is exposed to currency fluctuation risks as a result of its
international sales and sourcing of products from foreign vendors. Accordingly,
sales or cost of components may decrease or increase as the value of the United
States dollar appreciates or depreciates relative to the currency of the source
country. The Company usually hedges these currency risks through the purchase
of forward exchange contracts and expects to continue this practice in the
future.

In December 1994, the Mexican peso suffered a devaluation of approximately 30%.
The impact on the Company's financial position, results of operations and
liquidity was immaterial.

ENTERPRISING SERVICE SOLUTIONS

GENERAL

GENICOM performs a wide range of service solutions related activities through
its Enterprising Service Solutions company. These operations, which are
classified into the Company's Multivendor Services and Integrated Network
Services operations, include the provision of services for customers of both
other vendors' products and GENICOM products - Multivendor Services - and for
customers in need of network consultation - Integrated Network Services.
Multivendor Services accounted for 80.8 percent of Enterprising Service
Solutions revenue while Integrated Network Services provided the remaining 19.2
percent in 1995.

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MULTIVENDOR SERVICES

Through its Multivendor Services operations, the Company performs a variety of
service related activities for customers utilizing not only GENICOM products
but also products manufactured by other vendors. Products serviced by
Multivendor Services include servers and midrange systems, personal computers,
workstations, networking products, controllers, routers, hubs, terminals,
printers, peripherals, and storage devices. Services are typically provided on
a subcontracted basis for major hardware vendors such as IBM and Canon, or
directly under contract with system users, such as NASDAQ or USX. Service
contracts, which comprise the major portion of Multivendor Services revenue,
typically extend for several years, with payment due monthly, quarterly or
annually, in advance. Service is generally available Monday through Friday,
during normal working hours, with response times ranging from 4 to 8 working
hours in metro areas and less than 16 working hours outside metro areas.
Standard depot repair time is five working days. The Company's service
activities include the following:

<TABLE>
<S> <C>
Preventive maintenance Regularly scheduled visits to customer sites and to provide routine
maintenance.

Depot repair Unit repair or refurbishment in GENICOM's quality controlled repair
facility by qualified depot technicians.

Onsite support Repair of down equipment accomplished at customer site by qualified
field engineers.

Technical support Phone service for customers and field engineers providing technical
and operating information for products and software.

Installation Installation of hardware and software products at customer's site.

Training Hands on training for customers, field engineers, and partners at our
training facility or at customer's site.

Documentation Training and service manuals and videos for a broad portfolio of
hardware products.

Systems integration Customer tailored solutions providing hardware, software and
services to meet unique customer information technology needs.
</TABLE>

Multivendor Services seeks to become a leading provider of information-related
services in those markets in which it competes. Thus, it strives to maintain a
strong focus on existing customers, while simultaneously developing growth
opportunities that become available. To that end, the Company significantly
expanded its presence in the multivendor services market by acquiring
substantially all of the assets and certain liabilities of Harris Adacom
Network Services, Inc. ("HANS"), including all of the stock of HANS' Canadian
subsidiary, Harris Adacom Inc., on March 1, 1995. Through this acquisition,
the Company added HANS' computer and peripherals field and depot repair service
operations to the Multivendor Services operation, significantly expanding the
Company's core competencies and improving its efficiency in these markets.

Multivendor Services operations now provide a "one stop" maintenance service
approach that includes hardware maintenance and repair, quality assurance,
configuration management, and asset management. Given the wide variety of
computer equipment brands used by individual customers, Multivendor Services
focuses on third party maintenance of hardware and peripheral equipment,

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employing some of the most knowledgeable technicians in the industry who are
able to service a wide breadth of equipment.

As of March 1996, the Company services over 14,000 customers and 281,000
devices through its domestic Multivendor Services operations. Such operations
are classified into depot and field repair services.

Depot Repair

Depot repair services are employed when, due either to complexity of repair or
cost related issues, the repair of a customer's defective hardware cannot be
completed in the field. The Company has established two facilities to conduct
domestic depot repair operations, one in Waynesboro, Virginia, where printers,
keyboards, personal computers, controllers and other network-related hardware
are serviced, and another in Bedford, Massachusetts, where workstations,
systems and monitors are serviced. The Waynesboro facility performs less
complex high volume services on both GENICOM and multivendor products, whereas
the Bedford facility primarily services multivendor products which employ
complex technologies. In 1994 and 1995, the Bedford facilities and in 1995,
the Waynesboro facilities were certified for compliance with the provisions of
ISO 9002 International Quality System Standard, in recognition of the Depot
Repair operations consistent quality of service.

Field Repair

Field repair services are traditionally employed to repair equipment which
utilizes less complex technologies where it is more efficient to repair the
product in the field rather than to ship it to one of the Company's depot
repair facilities. The Company segregates domestic field repair operations by
geographic location, and within each service center by field engineer skill
type. The Company deploys over 340 field engineers and 164 service vans from
140 service centers in all 50 states, including all major metro areas.

Field repair and maintenance operations are, like depot repair work, typically
performed under contract with hardware vendors such as Computervision or Canon
or provided directly to the hardware user. Field clients and company engineers
are categorized through an internal grading system which allows the Company to
more efficiently assign Company repair engineers based on their levels of
expertise and cost, after GENICOM customer service representatives assess the
technical skill level required to adequately serve the customer. Through such
orderly scheduling of its field technicians, the Company attempts to minimize
its cost structure.

GENICOM provides its Canadian and European customers parts and services through
the Company's international subsidiaries. GENICOM services its Latin American,
Middle Eastern, African and Pacific Rim customers through authorized
distributors of GENICOM products.

Sales, Marketing and Competition

Multivendor Services has increased its sales and marketing efforts. Through
alliances with key OEM customers and the HANS acquisition, Multivendor Services
has been able to expand its offerings to meet a broader range of customer
needs.

Multivendor Services competes with, among others, independent providers of
repair services, in-house repair centers of OEMs and third party maintenance
organizations (TPMs). Multivendor Services believes that it offers
cost-effective maintenance and repair solutions to OEMs and TPMs and,
therefore, considers these entities potential customers.

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<PAGE> 6
The Company believes that Multivendor Services competes primarily on the basis
of price and the scope and quality of its services. Due in part to the capital
costs necessary to maintain adequate inventory and equipment to service large
OEMs and TPMs, Multivendor Services believes the capital constraints of small
maintenance and repair companies preclude them from competing with Multivendor
Services for large programs. Multivendor Services also believes that the scope
of its maintenance and repair operations and capabilities provides it with
competitive advantages over many of its competitors.

INTEGRATED NETWORK SERVICES

Centralized network systems management and control solutions have evolved to
meet the needs of network managers responsible for the expanding corporate
distributed computing environments. Many companies now outsource their network
service activities to companies such as GENICOM which can provide total network
planning, integration and optimization services across a variety of software
and hardware platforms. Through the acquisition of HANS, the Company acquired
knowledgeable marketing personnel, a proven sales force, highly regarded
technicians and an established customer base, which have allowed the Company to
establish the Integrated Network Services operation and to expand its services
into the high growth market of network integration and management.

Integrated Network Services provides turnkey network solutions for clients
through system software and hardware planning, system installation, integration
and training, as well as post-implementation facilities management and
technical services. Integrated Network Services personnel essentially tailor
logical or physical network infrastructures to meet customers' information
gathering, processing and reporting system needs by recommending, selecting,
benchmarking and sometimes installing the requisite hardware, software and
computer services. Integrated Network Services often performs client need
assessments, then designs, selects and installs systems structured to meet
client needs, and then trains client personnel with respect to the use of such
systems. Typically, the Company contracts its Integrated Network Services
computer technicians and systems engineers to clients on a per diem basis.

Integrated Network Services also provides diagnostic and monitoring services
for the evaluation of existing computer networks. Such services are primarily
provided on a contract labor basis or annual fees to support customers'
existing information technology systems, including concept formulation, system
specification, system engineering design/development and project management.
Such services are important for managing the growth of and optimizing usage
from existing networks. Typically, Integrated Network Services establishes and
reports on an existing system's capabilities, including usage, software and
hardware inventory and network functionality, and then provides remote network
monitoring services to continue to evaluate the network's capacity and usage,
allowing clients to regularly track the value provided by the network.

The establishment of Integrated Network Services provides the Enterprising
Service Solutions company the opportunity to leverage its existing technical
capabilities and established customer base with additional value-added business
services. The Company generally can offer systems to customers to meet
configuration and capacity needs identified through the rendering of diagnostic
and monitoring services. Further, on-going network monitoring activities
frequently identify network component breakdowns which may be referred to
Multivendor Services for repair. Thus, the establishment of Integrated Network
Services and in particular the integration of HANS' systems integration and
network diagnostic and monitoring operations has provided the Company new
opportunities to provide its customers a total application solution through the
Enterprising Service Solutions company.

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<PAGE> 7
DOCUMENT SOLUTIONS

PRINTERS AND RELATED PRODUCTS

The Company offers a wide range of serial (one character at a time), line (one
or more lines at a time) and page (one page at a time) printers, with
performance features and prices suitable for a varied range of printing
applications. Besides offering a wide range of technologies and print speeds,
GENICOM's printers offer multiple combinations of features that make them
suitable for diverse applications. Such features include multiple copy and
extensive paper handling capabilities, multiple type styles (fonts) and bar
codes. GENICOM's printers are used with desktop workstations and with various
networks and stand alone configurations in conjunction with micro, mini,
super-mini and mainframe computers.

Document Solutions also sells spare parts and supplies, for both GENICOM
products and those manufactured by other vendors. Supplies include items that
have a relatively short life such as printer ribbons and cartridges, while
spare parts include items that have generally a longer life such as print heads
and printed wire boards.

The following table reports the composition of Document Solutions revenue:

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Impact Printers 44.9 % 46.2 % 53.9 %
Nonimpact Printers 11.1 9.3 9.7
Spares 11.3 11.7 9.7
Supplies 32.7 32.6 26.7
TOTAL DOCUMENT SOLUTIONS -------- -------- --------
100.0 % 100.0 % 100.0 %
======== ======== ========
</TABLE>

The following table sets forth a summary of certain performance features of
GENICOM's principal printer products. Manufacturer's List Price Range is as of
January 1996. Sales price may vary depending on features installed,
customization, discounts and other factors.

<TABLE>
<CAPTION>
Manufacturer's
Suggested
Printer Technology Draft List Price
Product Family Type Print Speed Features Options Range
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IMPACT-SERIES
2000 Series 9 wire serial 60 to 150 cps teleprinters for desktop paper handling $2,906 - $3,008
matrix applications options, current
interface and
pedestal
2400 Series 9 wire serial 270 to 320 cps designed for attachment to $1,492-$1,658
matrix IBM 3270 controllers (coax
and IBM AS/400 twinax) with
versatile paper handling
3000 Series 9 or 18 wire 240 to 400 cps wide range of models for additional fonts, $2,079 - $3,130
parallel or different environments, graphic buffer
staggered color and bar codes expansion, paper
serial matrix handling options

3400 Series (1) 9 or 24 wire 400 to 480 cps mid-range network printer, paper handling $1,329-$1,645
serial matrix advanced paper handling to options, colorkit and
include dual tranctors and pedestal
auto sheet feeder, postnet
and bar codes, with automatic
switching serial (parallel
interface)

3800 Series 18 wire 600 cps high-speed, network printer, additional fonts, $2,125 - $2,499
parallel advanced paper handling and oversize characters
serial matrix single/dual path, postnet and and DEC LA210,
bar codes pedestal and paper
handling options
</TABLE>

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<PAGE> 8
<TABLE>
<S> <C> <C> <C> <C> <C>
3900 Series 18 wire 600 cps designed for attachment to additional fonts, $2,999 - $4,520
parallel IBM 3270 controllers (coax) pedestal and paper
serial matrix and IBM Systems 3X or AS/400 handling options
(twinax), high-speed,
advanced paper handling and
bar codes

IMPACT-LINE
4000 Series shuttle matrix 400 to 1400 lpm heavy-duty cycle, maintenance additional fonts and $6,195 - $10,158
line printer free features, advanced paper paper motion detector
handling, graphics and bar QMS bar codes
codes

band line 800 to 1200 lpm fully-formed letter quality special character $8,685 - $11,990
printers print, rugged band printer bands
features and postnet

4500 Series shuttle matrix 1200 to 1400 lpm designed for attachment to additional fonts $7,790 - $11,158
line printer IBM 3270 controllers (coax), QMS bar codes
IBM Systems 3X or AS/400
(twinax) and bar codes
4800 Series shuttle matrix 400 to 800 lpm reliable, low cost of QMS & IPG graphics $5,995 - $8,013
line printer ownership, printer designed IBM twinax and coax
for connectivity to Ethernet,
TCP/IP, Token Ring, AT&T SSI
and LANS

4900 Series shuttle matrix 400 to 800 lpm designed for attachment to additional fonts $7,047 - $9,265
line printer IBM 3270 controllers (coax), QMS/IGP bar codes
IBM Systems 3X or AS/400
(twinax) and bar codes
NONIMPACT
7000 Series page printers 10 to 17 ppm and desktop, network and interconnection with $995 - $3,979
(laser) and color thermal multiuser environments, high Geniscript,
thermal transfer printer resolution, multiple resident (Postscript language
transfer at 2.5 min per fonts, PCL5 & PCL5E compatible
printer page compatibles, supports various interpreter),
paper sizes including large multipurpose feeder,
format printing up to 11" x versatile
17" input/output paper
handling devices and
duplexing

7900 Series (1) page printers 10 to 16 ppm Multiuser, IBM client server MarkNet internal $1,399 - $5,665
(laser) environments, full IBM 4028 network adapter
IPDS emulation, PCL5E & connects up to 18
Postscript Level 2 compatible different operating
up to 1200 dpi, bar codes, systems, versatile
labels, graphics, electronic input/output paper
forms handling devices and
duplexing, various
memory options

7930/40 Series page printers 30 to 40 ppm multi-user materials, IBM Internal network $18,316-$32,333
(1) (LED array) client server environments, connectivity options
full IBM 4028 IPDS emulation, & printer cabinet
PCL5E and Postscript Level 2
comparability , hard drive
for software upgradability
and storage of forms and
fonts
9000 Series page printers 8 to 17 ppm desktop, network and interconnection with $4,195 - $4,395
(laser) multiuser environments, high Geniscript,
resolution, multiple resident (Postscript language
fonts, PCL5 compatibles, compatible
supports various paper sizes interpreter),
including large format multipurpose feeder,
printing up to 11" x 17" versatile
input/output paper
handling devices and
duplexing
</TABLE>

The following are trademarks or registered trademarks of their respective
companies: DEC of Digital Equipment Corporation; Geniscript of GENICOM
Corporation; IBM and IBM Proprinter of International Business Machines
Corporation; PCL5 & PCL5E of Hewlett-Packard Company, Postscript of Adobe
Systems, Inc.

Definitions: cps-characters per second, lpm-lines per minute, ppm-pages per
minute

(1) Volume shipments for these products began in 1995.

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RELAY PRODUCTS

The Company offers a line of relays that are used principally in signal
switching applications requiring high functional reliability and product
quality and are sold primarily for aerospace and defense applications,
automatic test equipment applications and, to a lesser extent, communication,
industrial control and transportation control applications. GENICOM believes
that its certified and proprietary designs should enable it to continue to
participate in future major space and weapons programs. Relay revenues have
declined since 1990 due to decreased spending by defense contractors. There
are relatively few competitors in the relay market that GENICOM serves. Relay
revenues, as a percentage of total revenues, were 4.0%, 6.4% and 6.8% in 1995,
1994 and 1993, respectively.

Manufacturing

Document Solutions products are manufactured and assembled primarily at
facilities in Reynosa, Mexico and McAllen, Texas and to a lesser extent at the
Company's facility in Waynesboro, Virginia. Certain GENICOM designed products
are produced by a third party manufacturer located in the Republic of India.
The Reynosa facility assembles certain impact printer product lines and
produces printed circuit boards, high-speed matrix printheads, ribbon
cartridges and a variety of conventional electromechanical assemblies. The
Waynesboro facility is used primarily for depot repair and relay manufacturing.

In December of 1995, the Company entered into a five year agreement (renewable
annually after 5 years) with Atlantic Design Company, a subsidiary of Ogden
Services Corporation, ("ADC") pursuant to which ADC acquired the Company's
manufacturing operations in McAllen, Texas and Reynosa, Mexico. Under the
agreement, ADC is committed to manufacturing substantially all of the Company's
impact printer products, printed circuit boards, related supplies and spare
parts, while the Company retains design, intellectual and distribution rights
with respect thereto. Pursuant to the agreement, the Company will be a
preferred provider of impact and page printers and multivendor information
technologies service to Ogden Services Corporation. The agreement also requires
the Company to purchase from ADC, $54.0 million of product by April 1997 or to
pay to ADC lost profits for the Company's failure to do so.

Sales and Marketing

The major portion of printer and relay sales are made pursuant to purchase
agreements, blanket purchase orders and similar arrangements whereby products
are deliverable only after the customer issues a purchase order, release or
schedule covering specific numbers of units and specifying firm delivery dates.
Such arrangements usually contain price protection provisions which provide
that if the Company decreases its prices, customers will receive the benefit of
such price decreases for products then held in inventory. The Company's
agreements with larger OEMs for printer sales generally require the customer to
provide GENICOM with continuously updated forecasts of its requirements and to
issue firm orders for deliveries for up to a twelve month period.

GENICOM markets its products and services through several domestic and
international channels. GENICOM's distribution channels consist of (1) national
and regional distributors who sell to value added resellers ("VARs"), dealers
and end users, and (2) a direct sales force which sells to OEMs, end users and
value added resellers and dealers.

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<PAGE> 10
Most printers are available in several standard models, enabling Document
Solutions to serve a wide range of customer requirements. A combination of
accessories satisfies various printing applications. In addition, standard
models are customized for OEMs and end users using GENICOM's engineering design
capabilities. No customer accounted for more than 10% of GENICOM's total sales
in 1995.

GENICOM maintains international sales and marketing subsidiaries in Australia,
Canada, France, Germany, Italy and the United Kingdom. These subsidiaries
offer GENICOM products and services to distributors, small OEMs, system houses,
VARs and retail dealers in over 66 countries in primarily local currencies.
See "Business Segment and Geographic Information."

Competition

Document Solutions' printer products compete in markets characterized by rapid
technological change and strong competition. The Company competes primarily in
the medium and high-performance segments of the printer market where users
require reliable printers principally for word processing, shared network
printing, graphics, bar codes and other business applications. The Company
competes against many well-established companies, some with financial,
technical and operating resources greater than GENICOM. Such competitors
include large computer system manufacturers that produce printers for their own
product lines and, in certain cases, for sale to other suppliers or end users.
In addition, there are a number of independent printer manufacturers producing
printers that compete with those offered by GENICOM.

Competitive factors within the printer market include price, performance,
reliability, cost of ownership, versatility, ease of maintenance, applications
solutions support, after-sales service and support and marketing channels. As
the computer industry continues to move toward product standardization and
relies less on proprietary designs, GENICOM will be challenged to continue to
differentiate its products based on these competitive factors. The Company
believes that its ability to maintain a competitive market position depends on
the following: development of applications solutions to customer needs,
continued growth of nonimpact printer technologies, sustained migration to
shared printing environments, effective channels to market, continued
enhancement of the Company's product line and improvements in the Company's
productivity. To enhance its competitive position in the nonimpact market, the
Company purchased Printer Systems Corporation ("PSC") on February 16, 1995.
PSC provides Document Solutions with proprietary software and hardware
technology for distributed communications, data stream management and imaging
with emphasis on complex raster image command languages for page printers and
IBM network transmission protocols. Raster imaging is a widely employed
technology used in translation and creation of images for nonimpact printing
and other applications. Utilizing PSC expertise, the Company has introduced a
new series of desktop laser printer products for small workgroups or
departmental printing. The Company has broadened its page printer product line
and increased its penetration in the IBM compatible market and built on its
value added application solution strategy with the PSC acquisition.

The Company believes that the market for impact printers has largely shifted to
shared-resource, application-specific environments such as bar coding and
multipart forms. As this happens, the Company is narrowing its focus to these
niche markets, de-emphasizing or discontinuing low-end offerings and channeling
resources to markets where growth potential is greatest. As the market for
this technology has declined, the Company is also focusing on the replacement
market. By addressing connectivity issues and applications such as industrial
graphics and labels, the Company has designed products which appeal to the
existing user base as well as new customers. Impact printers continue to meet
customer application needs not yet satisfied by nonimpact technologies, in such
areas as multipart forms, high-volume reliability and low cost ownership.

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<PAGE> 11
GENERAL

ENVIRONMENTAL MATTERS

As a result of manufacturing processes, the Company generated and managed
hazardous wastes at its facilities. The Company does not believe that
compliance with Federal, State and local regulations will have a material
effect on its capital expenditures, financial condition or results of
operations. See "Legal Proceedings."

BACKLOG

The Company's order backlog at December 31, 1995 was approximately $47.5
million, compared with approximately $48.9 million at January 1, 1995.
GENICOM's reportable backlog includes all orders associated with relays,
service, systems integration, network monitoring and those orders for printers,
spare parts and supplies for which a delivery date within approximately six
months has been specified by the customer. The Company expects to ship
substantially all printer, spares and supplies orders in reported backlog
within fiscal year 1996. The Company normally experiences lower sales each
year in its third quarter due to European holidays.

GENICOM's working capital practices are consistent with the working capital
practices of the printer industry. GENICOM's customer payment terms generally
require invoices to be paid within thirty days of the date of issue.

ENGINEERING, RESEARCH AND PRODUCT DEVELOPMENT

GENICOM incurs engineering, research and product development costs for the
following purposes: development of new products; applications solutions
development; modification, enhancement and achievement of cost reductions for
existing product lines; customization of products for OEMs; market research;
and development of process inspection criteria to ensure new products are built
to specification. GENICOM's expenditures for engineering, research and product
development were $8.4 million, $7.7 million and $9.8 million in 1995, 1994 and
1993, respectively. $0.5 million of the 1993 amount related to restructuring
costs. In 1995, 1994 and 1993 the Company expended 5.0%, 4.6% and 5.6% of
products revenue, respectively, in engineering research and product
development.

GENICOM maintains in-house capabilities and facilities available to support its
engineering and design activities. The Company also engages a number of highly
specialized independent firms to supplement its own engineering capabilities
and to design certain software and components for its products.

PROPRIETARY RIGHTS

GENICOM relies on patent, copyright and trade secret laws to protect its
proprietary and technology rights. GENICOM obtained certain patents, licenses
and cross-licenses when it acquired the Data Communication Products Business
Department from General Electric Company (collectively "G.E.") in 1983, when it
acquired the Printer related assets of Ekco Group, Inc. (formerly Centronics
Data Computer Corporation, "Centronics") in 1987, and when it acquired Harris
Adacom Network Services, Inc. and Printer Systems Corporation in 1995.
GENICOM continues to patent certain developments, holds certain patents pending
and retains numerous patents expiring at various times between 1995 and 2011.
In addition, the Company has a cross-licensing agreement with IBM that expires
17 years after the date of issue of certain patents pending prior to January 1,
1991.

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<PAGE> 12
"GENICOM" and certain other marks used in connection with the sale of the
Company's products are registered trademarks of GENICOM in the United States
and, in some cases, certain foreign countries. Under United States law, a
registered trademark remains valid for 10 years if affirmed at the end of the
sixth year. There is no limit to the number of times the registration may be
renewed for additional 10-year periods. Thereafter, each registration may be
renewed for additional 10 year periods; otherwise the registration will expire
automatically.

GENICOM's Laser Printing Solutions strategic business unit specializes in
raster imaging technology and has numerous related patents and trademarks which
should assist in GENICOM's continued penetration into the nonimpact market in
1996.

In connection with the acquisition of the printer-related assets of Centronics,
GENICOM acquired a license to use the name "Centronics" as a trademark,
tradename and service name.

HP Laserjet is a registered trademark of Hewlett-Packard Company.

SUPPLIERS

GENICOM currently purchases raw materials, components and printers from various
domestic and foreign suppliers. GENICOM utilizes supply agreements and other
arrangements whereby volume discounts can be obtained.

GENICOM purchases certain products - printers, options, supplies and component
parts, including print engines, from sole suppliers who have developed
proprietary processes that the Company incorporates into its products. In the
event that those suppliers were unable or unwilling to supply these products,
the Company believes it could establish alternate sources for these products or
similar products. The time required to establish an alternate source could
disrupt the manufacture or distribution of these products, thus causing delays
that could adversely affect revenues. Currently, the Company considers its
relationships with these vendors to be good and does not anticipate any
disruption in the supply of these products.

In 1995, GENICOM procured 16% of its total purchases from TEC Corporation
("TEC") which supplies the Company with certain nonimpact printer products. No
other supplier accounted for a significant portion of GENICOM's total 1995
purchases. In 1994, Toshiba Corporation accounted for 13% of GENICOM's total
purchases related to printers. In December 1995, the Company entered into an
agreement for the term of five years with Atlantic Design Company ("ADC") in
which ADC would take over the Company's manufacturing operations and employees
in McAllen, Texas and Reynosa, Mexico. ADC is committed to manufacturing all
of the Company's impact printer products, printed circuit boards, related
supplies and spare parts (See "Management's Discussion and Analysis").

EMPLOYEES

As of December 31, 1995, the Company and its subsidiaries employed 1,638
employees. The Company believes its relations with its employees are
satisfactory.

The Company's production and maintenance employees at its Waynesboro facility
are represented by the United Electrical, Radio and Machine Workers of America
Local 124, under a collective bargaining agreement which expires in July 1996.

12
<PAGE> 13
ITEM 2. PROPERTIES

The following table sets forth certain information with respect to the
Company's owned or leased property as of December 31, 1995:

<TABLE>
<CAPTION>
SQUARE OWNED OR YEAR LEASE
LOCATION PRINCIPAL USES FEET LEASED EXPIRES
------------------- ------------------------------- -------- ------- ----------
<S> <C> <C> <C> <C>
Chantilly, Virginia Corporate Headquarters 23,000 Leased 1998
Waynesboro, Virginia Service, Manufacturing, Office 377,000 Owned --
Reynosa, Mexico (1) Manufacturing 120,000 Owned --
McAllen, Texas (1) Distribution 37,500 Leased 1997
Bedford, Mass. Service 75,000 Leased 1996
New Carrollton, Texas Service 105,000 Leased 2002
</TABLE>

(1) These facilities are currently being subleased by Atlantic Design Company
as part of the manufacturing agreement mentioned above.

GENICOM's leased property is occupied under standard industrial leases. Each
lease generally contains an optional renewal provision.

The Company's Waynesboro property is subject to a lien in favor of the
Company's lenders under its loan agreement.

ITEM 3. LEGAL PROCEEDINGS

The Company and the former owner of its Waynesboro, Virginia facility, General
Electric Company ("G.E."), have generated and managed hazardous wastes at the
facility for many years as a result of their use of certain materials in
manufacturing processes. The Company and the United States Environmental
Protection Agency ("EPA") have agreed to a corrective action consent order (the
"Order"), which became effective on September 14, 1990. The Order requires the
Company to undertake an investigation of solid waste management units at its
Waynesboro, Virginia facility and to conduct a study of any necessary
corrective measures that may be required. Although the Order is currently
being implemented, it is not possible for the Company to reliably estimate the
total cost of the investigation and the study required by the Order. If, as a
result of the investigation and study, corrective measures are required, the
Company expects that it will then enter into discussions with the EPA
concerning a further order for that purpose.

The Company has been notified by the EPA that it is one of 700 potentially
responsible parties ("PRPs") under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, for necessary corrective action at a
hazardous waste disposal site in Greer, South Carolina. In prior years, the
Company arranged for the transportation of wastes to the site for treatment or
disposal. During 1995, the PRPs entered into an administrative consent order
with EPA under which they will undertake a remedial investigation and
feasibility study.

With respect to the above mentioned actions, the Company believes its share of
the costs of the investigation and any corrective action that may be required
are not likely to have a material effect upon the financial condition, results
of operations or liquidity of the Company.

The Company has been named as a defendant in an Original Petition and Petition
for Injunctive Relief filed in August 1995 which alleges that the Company and
certain other defendants are strictly liable for damages allegedly suffered by
the plaintiffs as a result of contamination of groundwater at the
Linn-Faysville Aquifer, in Texas, due to the disposal of dangerous products and
materials at a landfill which is alleged to be the source of the contamination.

13
<PAGE> 14
The Company is currently unable to make any estimates as to whether this action
will have a material effect upon the financial condition, results of operations
or liquidity of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information with respect to the
Company's executive officers as of December 31, 1995:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ------------ ---- -----------------------------------------------
<S> <C> <C>
Paul T. Winn 51 Director, President and Chief Executive Officer
James C. Gale 53 Senior Vice President Finance and Chief Financial Officer
Raymond D. Stapleton 56 Senior Vice President, International Subsidiaries
James A. Jones 38 Vice President, Corporate Controller and Treasurer
C. Bruce Meyer 46 Vice President Human Resources and Corporate Communications
B. Garrett Buttner 47 Vice President and General Manager, Annuities
Harold L. McIlroy 57 Vice President, Quality, Customer Service and Partnerships
Arthur D. Gallo 53 Corporate Vice President and General Manager, Document
Solutions Company
Michael J. Shelor 47 Corporate Vice President and General Manager,
Enterprising Service Solutions Company
</TABLE>

Mr. Winn joined the Company in April 1990 as President and Chief Executive
Officer and became a director in May 1990. Previously, Mr. Winn was employed
by IBM Corporation, where he served for 22 years in various capacities, most
recently as Vice President of Graphics Systems in the Advanced Work Station
Division. Prior to that position, Mr. Winn served as Vice President of
Worldwide System Printers, responsible for technology, software, product
development and manufacturing.

Mr. Gale joined the Company as Senior Vice President Finance and Chief
Financial Officer in August 1991. Previously, Mr. Gale was employed by General
Foods Corporation, where he served for 25 years in various capacities, most
recently as Vice President of Finance for General Foods Corporation and in that
role acted as Chief Financial Officer of General Foods, USA.

Mr. Stapleton became Senior Vice President International Subsidiaries in August
1994 after serving the Company and its predecessor, G.E., in various capacities
for 30 years, most recently as Senior Vice President and General Manager
Enterprising Service Solutions Division.

Mr. Jones served the Company as Corporate Controller since November 1988, and
Treasurer since March 1990 until his resignation in January 1996.

Mr. Meyer was appointed Vice President of Human Resources in September 1991
after serving the Company, and its predecessor, G.E., in various human
resources capacities since 1973.

Mr. Buttner was appointed Vice President and General Manager, Annuities in
November 1995 after having served as Vice President and General Manager
Supplies Business Unit since April 1993. Prior to his appointment as a
corporate officer, Mr. Buttner had served in sales, marketing and

14
<PAGE> 15
business management positions with GENICOM since 1988. Previously, Mr. Buttner
was employed by G.E. for 15 years.

Mr. McIlroy was appointed Vice President in July 1995 after joining the Company
October 1991 and serving in various operations management capacities.
Previously Mr. McIlroy was employed by IBM for 30 years.

Mr. Arthur D. Gallo was appointed Corporate Vice President and General Manager,
Document Solutions Company in November 1995 after having been the President of
Printer Systems Corporations since 1985.

Mr. Shelor was appointed Corporate Vice President and General Manager,
Enterprising Service Solutions Company in November 1995 after serving the
Company and its predecessor, G.E., in various operating positions since 1969.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

Stock Trading:

GENICOM's common stock is quoted and traded on the Nasdaq National Market
System (Symbol: GECM). As of February 2, 1996, there were approximately 610
shareholders of record. The following table sets forth, for the periods
indicated, the high and low closing prices per share of GENICOM common stock as
reported by Nasdaq:

<TABLE>
<CAPTION>
1995 1994
--------------------------- ------------------------------
HIGH LOW High Low
<S> <C> <C> <C> <C>
First Quarter $ 2 7/8 $ 2 $ 1 5/8 $ 1 1/16
Second Quarter 4 3/4 2 1/8 2 3/8 1
Third Quarter 5 7/8 4 1/8 3 1/4 1 3/4
Fourth Quarter 5 3/8 4 2 7/8 1 7/8
</TABLE>

Additionally, GENICOM has not paid a cash dividend on its common stock. The
Company intends to retain earnings from operations for use in its business, and
therefore does not anticipate paying any cash dividends in the foreseeable
future.

15
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA

The information is set forth below:

<TABLE>
<CAPTION>
GENICOM CORPORATION AND SUBSIDIARIES
FIVE YEAR FINANCIAL HISTORY (UNAUDITED)

Fiscal year, (1) 1995 1994 1993 1992 1991
(In thousands, except per ---------- ---------- ---------- ---------- ----------
share and other data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:

Revenues $ 294,052 $ 233,797 $ 221,865 $ 222,692 $ 217,021
Operating costs and expenses (2) 278,874 224,629 219,220 214,176 224,363
---------- ---------- ---------- ---------- ----------
Operating income (loss) 15,178 9,168 2,645 8,516 (7,342)
Interest expense, net 7,741 7,458 7,559 7,742 9,122
Other income (3) 1,908 1,741
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes
and extraordinary gain 7,437 3,618 (3,173) 774 (16,464)
Income tax expense (benefit) 1,285 1,048 56 450 275
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary gain 6,152 2,570 (3,229) 324 (16,739)
Extraordinary gain (4) 1,273 3,691
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 6,152 $ 2,570 $ (3,229) $ 1,597 $ (13,048)
========== ========== ========== ========== ==========
Earnings (loss) per share (fully
diluted):
Income (loss) before
extraordinary gain $ 0.51 $ 0.23 $ (0.30) $ 0.03 $ (1.58)
Extraordinary gain 0.12 0.35
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 0.51 $ 0.23 $ (0.30) $ 0.15 $ (1.23)
========== ========== ========== ========== ==========
Weighted average shares (fully
diluted) 12,056 11,416 10,621 10,833 10,592
========== ========== ========== ========== ==========
BALANCE SHEET DATA:

Working capital $ 34,530 $ 40,780 $ 33,642 $ 54,915 $ 47,193
Total assets 161,539 127,267 141,159 146,806 137,299
Total debt obligations 51,544 47,563 69,020 69,311 64,027
Stockholders' equity 34,533 28,083 24,575 28,524 27,804

OTHER DATA:

Employees (5) 1,638 2,382 2,147 2,488 2,512
Price range per common share:
Low $ 2 $ 1 $ 1 1/8 $ 7/8 $ 7/8
High 5 7/8 3 1/4 3 1/2 2 2 3/4

</TABLE>

(1) The Company's fiscal year ends on the Sunday nearest December 31.
Accordingly, the Company is reporting for 52-week periods for all years
presented, except for fiscal year 1992 which is a 53-week period.

(2) Includes restructuring costs of $1.0 million and $15.0 million in 1993 and
1991, respectively. In addition, includes $1.2 16 million for acquisition
related charges in 1995.

(3) The company recognized a gain of $0.9 million and $1.7 million from the
sale of its investment in a Belgian printer development and manufacturing
company in 1994 and 1993, respectively. The Company also recognized a gain of
$1.0 million on the early extinguishment of $9.2 million principal amount of
its Senior Securities Subordinated Notes in 1994.

(4) The Company recognized extraordinary gains of $1.3 million and $3.7
million, net of taxes of $0.1 million and $0.5 million, on the early
extinguishment of $4.0 million and $13.3 million principal amount of it Senior
Subordinated Notes in 1992 and 1991, respectively.

(5) Substantial staff reductions occurred in 1995 as a result of the service
agreement with ADC.

16
<PAGE> 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

GENERAL

GENICOM Corporation ("GENICOM" or the "Company") is comprised of two distinct
operating companies. The Enterprising Service Solutions company provides logo
and multivendor product field support, depot repair, express parts,
professional services and network information technology and services. The
Document Solutions company designs and markets page and impact printers for a
variety of business applications as well as related supplies and spare parts.
The production and sales of relay products, which comprises less than 10% of
consolidated revenue, operating income and assets, are included with the
Document Solutions company.

NET REVENUE

In 1995, the Company reported revenue of $294.0 million, an increase of 25.8%
from fiscal 1994. This growth in revenue was primarily attributable to the
Company's Enterprising Service Solutions company which had total revenues of
$125.6 million in 1995 and reflects internal growth achievements as well as the
effects of the first quarter 1995 business acquisition of Harris Adacom Network
Services, Inc. The Document Solutions company also demonstrated growth with
total revenue, excluding relays, of $156.7 million. Relay revenues were $11.7
million, a decrease of $3.4 million from 1994. Total consolidated revenue was
$233.8 million and $221.9 million for the fiscal years ending January 1, 1995
and January 2, 1994, respectively.

For the fiscal year ending January 1, 1995, revenue was 5.4% higher than for
the fiscal year ending January 2, 1994. The increase in revenue for 1994 was
primarily attributable to service and supplies revenue which increased $29.1
million and offset a decline in printer revenues of $18.7 million. Relay
revenues decreased $0.1 million in 1994 as compared to 1993.

ORDER BACKLOG

Order backlog was $47.5 million at December 31, 1995, a decrease of $1.4
million or 2.8% from January 1, 1995. Order backlog increased $14.8 million or
43.2% in 1994 as compared with 1993. The decrease in order backlog in 1995 is
primarily attributable to printers and services but was partially offset by a
significant increase in the relay backlog. The Company's backlog as of any
particular date should not be the sole measurement used in determining sales
for any future period.

GROSS PROFIT

Gross profit, as a percentage of revenue, experienced a slight increase in 1995
as compared to 1994 due to an improvement in sales of higher margin printer
products. In 1994, gross margin increased slightly as compared to 1993 as a
result of a larger portion of consolidated revenues being associated with
higher margin products such as spares and supplies.

OPERATING EXPENSES

Operating expenses in 1995 increased in actual dollars but decreased as a
percentage of revenue over 1994. The increased expenses were primarily
attributable to business growth as well as a result of the Company's
acquisition of Harris Adacom Network Services, Inc. This comparison was
affected by a non recurring charge in the second quarter of 1995 of $1.2
million for costs representing a proposed acquisition which was terminated and
non-capitalized costs associated with the two acquisitions completed in 1995.
In January 1994, the Company initiated a cost reduction

17
<PAGE> 18
program which included personnel, salary and benefit reductions for the
Company's worldwide operations.

Operating expenses in 1994 as compared with 1993 decreased overall and as a
percentage of revenue, due to the favorable impact of the Company's January
1994 cost reduction program that included personnel, salary and benefit
reductions for the Company's worldwide operations, partially offset by
increased costs associated with the growth in the service area.

OPERATING INCOME

The Company's operating income increased $6.0 million in 1995 as compared to
1994 as a result of the increased revenues mentioned above and the reduction of
operating expenses as a percent of revenue. The relay operating loss was $1.4
million in 1995, an increase of $0.4 million from 1994. Operating income
increased $6.5 million in 1994 compared to 1993 as a result of cost controls
implemented in 1994 and an increase in service and supplies revenue which
yielded a higher gross profit.

INTEREST EXPENSE

Interest expense increased 3.8% or $0.3 million in 1995 as compared to 1994 as
a result of the increase in the Company's borrowings under its senior credit
facility. These increased borrowings resulted from the Company's 1995 business
acquisitions and increased working capital requirements to support the higher
business activity.

The decrease in interest expense of $0.7 million or 8.7% from 1993 to 1994
reflects the impact of the Company's repurchase of its 12.5% Senior
Subordinated Notes ("Notes") in the second and fourth quarter of 1994 and a
decrease in borrowings as a result of reduced working capital investment.
Interest expense in 1993 was also favorably affected by a first quarter
interest payment receipt from the Internal Revenue Service of $0.6 million
related to the settlement of prior year tax matters.

OTHER INCOME

The Company had no material other income in 1995 as compared to 1994. This
absence of income compares to 1994 when the Company recognized a pre-tax gain
of $0.9 million on the sale of its remaining investment in Xeikon N.V.,
("Xeikon"), a Belgian printer development and manufacturing company and an
additional pre-tax gain of $1.0 million from the repurchase of Notes.

INCOME TAX

The Company's effective income tax rate for fiscal year 1995 was 17.3% compared
with 29.0% and (1.8)% for fiscal years 1994 and 1993, respectively. The rate
in 1995 was affected by reversal of a portion of the valuation allowance
associated with the Company's deferred tax assets including certain net
operating loss carryforwards. Such assets were previously fully reserved due
to uncertainties regarding their ultimate recoverability.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital decreased to $34.5 million in 1995 as compared to
$40.8 million in 1994. The 1995 decrease was primarily the result of an
increase in long-term debt being classified as current. In 1994, the Company
had repurchased a sufficient amount of the Notes to meet the sinking fund
payment due in 1995, reducing the portion of debt classified as current. The

18
<PAGE> 19
Company's current ratio was 1.5 to 1 at the end of fiscal year 1995 compared to
1.9 to 1 at the end of fiscal year 1994. Cash and cash equivalents increased
$3.6 million since January 1, 1995.

Net cash generated by operations was $16.6 million during 1995. The major
source of cash was earnings, depreciation and amortization which were partially
offset by an increase in accounts receivable associated with the Company's
significant revenue increase.

During 1995, the Company used $23.8 million of cash for investments. These
investments related to the acquisition of Harris Adacom Network Services Inc.
and Printer Systems Corporation (see "Other Matters") and capital expenditures
required to support increased levels of operation as a result of business
growth in services. The Company does not have any material commitments of
funds for capital expenditures other than to support the current level of
operations.

In 1995, the Company retired $9.0 million of its previously purchased Notes in
fulfillment of its annual sinking fund requirement. As of December 31, 1995,
the Company had $3.4 million of the Notes in treasury which were applied to the
retirement of all the remaining outstanding Notes in February 1996 (see "Other
Matters").

In December 1995, the Company received $14.5 million as a result of its
agreement with Atlantic Design Company, a subsidiary of Ogden Services
Corporation, ("ADC") (see "Other Matters"). Of the proceeds, $3.0 million was
payment for machinery and equipment which was sold to ADC and $11.5 million was
related to the transfer of inventory to ADC. The Company continues to
recognize in its financial statements the inventory of $12.3 million associated
with the ADC agreement and a corresponding account payable of $10.5 million as
of December 31, 1995. It is expected that the Company will have no material
liability with regards to this inventory by the end of the second quarter of
1996.

ENVIRONMENTAL MATTERS

19
<PAGE> 20
The Company has been named as a defendant in an Original Petition and Petition
for Injunctive Relief filed in August 1995 which alleges that the Company and
certain other defendants are strictly liable for damages allegedly suffered by
the plaintiffs as a result of contamination of groundwater at the
Linn-Faysville Aquifer, in Texas, due to the disposal of dangerous products and
materials at a landfill which is alleged to be the source of the contamination.

The Company is currently unable to make any estimates as to whether this action
will have a material effect upon the financial condition, results of operations
or liquidity of the Company.

OTHER MATTERS

On January 12, 1996, the Company reached an agreement with NationsBank of
Texas, N.A., as agent for a group of banks, ("NationsBank") on $75 million of
credit facilities. Under the agreement, NationsBank is providing a $35 million
revolving credit facility and two term loans totaling $40 million. In a
separate transaction, the Company entered into an interest rate swap
arrangement with NationsBank which fixes the interest rate for five years on a
substantial portion of the debt. The fixed rate at the time the agreement was
executed averaged 8.25%. As of February 13, 1996, the Company had $22.2
million available for borrowing under the revolving credit facility. Principal
payments on the term loans are $3.5 million in 1996, $4 million in 1997 and
1998, $5 million in 1999 and $6 million in 2000.

The Company has used this new credit agreement to retire all the debt
associated with its former credit agreement with CIT and to retire all of the
Company's outstanding Notes.

In December 1995, the Company entered into an agreement for the term of five
years with Atlantic Design Company, a subsidiary of Ogden Services
Corporation, ("ADC") in which ADC would take over the Company's manufacturing
operations and employees in McAllen, Texas and Reynosa, Mexico. The agreement
is automatically renewed unless notice is given. ADC is committed to
manufacturing all of the Company's impact printer products, printed circuit
boards, related supplies and spare parts. The Company will retain design,
intellectual and distribution rights. As part of this agreement, the Company
will be a preferred provider of impact and page printers and multivendor
information technologies service to Ogden Services Corporation.

The Company, as part of the agreement, has agreed to purchase from ADC $54
million of product by April 1997. In the event that the minimum purchase
commitment is not met, the Company would be required to pay ADC the lost
profits on the amount not achieved. At December 31, 1995, the Company had
recorded $12.3 million of inventory and a related payable of $10.5 million
associated with a commitment to repurchase certain inventories which were
transferred to ADC during December 1995. It is expected that this inventory
will have been used by the end of the second quarter of 1996 and any remaining
amount will not be material.

GENICOM provides an array of services and products addressing different niches
of the information processing industry, competing against a wide range of
companies from large multi-nationals to small domestic entrepreneurs. The
Company has the risk of obsolescence due to the rapid change of technology in
the markets in which it competes.

In 1994 and 1995, SFAS No. 114 "Accounting by Creditors for Impairment of a
Loan", SFAS No. 118 "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure - Amendment of SFAS No. 114", and SFAS No. 119
"Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments" became effective. The implementation of these accounting standards
did not have a material impact on the financial condition, results of
operations or liquidity of the Company.

20
<PAGE> 21
In 1996, SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of" will become effective. Management
believes this standard will not have a material impact on the financial
condition, results of operations or liquidity of the Company. SFAS No. 123
"Accounting for Stock-Based Compensation" will not be adopted by the Company
for accounting purposes, however, the Company will be required to disclose the
effects of this pronouncement on a pro forma basis in 1996.

21
<PAGE> 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
DECEMBER 31, January 1, January 2,
Year Ended, 1995 1995 1994
(In thousands, except per share data) ============ ------------ ------------
<S> <C> <C> <C>
REVENUES, NET:
Products $ 168,394 $ 166,518 $ 176,432
Services 125,658 67,279 45,433
------------ ------------ ------------
294,052 233,797 221,865
------------ ------------ ------------
OPERATING COSTS AND EXPENSES:
Cost of revenues:
Products 116,842 120,455 129,274
Services 100,771 53,439 36,537
Selling, general and administration 52,780 43,015 43,584
Engineering, research and product development 8,481 7,720 9,825
------------ ------------ ------------
278,874 224,629 219,220
------------ ------------ ------------

OPERATING INCOME 15,178 9,168 2,645
Interest expense, net 7,741 7,458 7,559
Other income 1,908 1,741
------------ ------------ ------------

INCOME (LOSS) BEFORE INCOME TAXES 7,437 3,618 (3,173)
Income tax expense 1,285 1,048 56
------------ ------------ ------------

NET INCOME (LOSS) $ 6,152 $ 2,570 $ (3,229)
============ ============ ============

EARNINGS (LOSS) PER COMMON SHARE AND COMMON
SHARE EQUIVALENT (PRIMARY AND FULLY DILUTED): $ 0.51 $ 0.23 $ (0.30)
============ ============ ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING:

Primary 12,038 11,345 10,621

Fully diluted 12,056 11,416 10,621
============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

22
<PAGE> 23
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, January 1,
1995 1995
(In thousands, except share data) ------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,271 $ 673
Accounts receivable, less allowance for
doubtful accounts of $1,616 and $1,479 53,572 37,846
Other receivables 3,767 2,711
Inventories 43,079 43,368
Prepaid expenses and other assets 1,432 2,329
---------- ----------
TOTAL CURRENT ASSETS 106,121 86,927
Property, plant and equipment 30,896 26,215
Goodwill 21,632 9,293
Other assets, principally intangibles 2,890 4,832
---------- ----------
$ 161,539 $ 127,267
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 7,070 $ 371
Accounts payable and accrued expenses 52,910 37,540
Deferred income 11,611 8,236
---------- ----------
TOTAL CURRENT LIABILITIES 71,591 46,147
Long-term debt, less current portion 44,474 47,192
Other non-current liabilities 10,941 5,845
---------- ----------
TOTAL LIABILITIES 127,006 99,184

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 18,000,000 and 15,000,000
shares authorized, 10,839,399 and 10,638,299 shares issued 108 106
Additional paid-in capital 26,023 25,760
Retained earnings 10,503 4,351
Foreign currency translation adjustment (1,331) (1,435)
Pension liability adjustment (770) (699)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 34,533 28,083
---------- ----------
$ 161,539 $ 127,267
========== ==========

</TABLE>

The accompanying notes are an integral part of these financial statements.

23
<PAGE> 24
GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year ended, DECEMBER 31, January 1, January 2,
(In thousands) 1995 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 6,152 $ 2,570 $ (3,229)
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation 13,981 9,374 6,703
Amortization 4,125 3,149 2,400
Effect of gain on early extinguishment of notes (1,009)
Effect of investment gain (901) (1,741)
Acquisition related costs 654
Effect of restructuring accrual (3,380)
Effect of environmental recovery from G.E. (862)
Deferred tax benefit (1,830)
Changes in assets and liabilities:
Accounts receivable (9,406) 1,031 2,099
Inventories 3,348 10,882 1,710
Accounts payable and accrued expenses (1,730) 2,521 1,733
Other 1,338 938 (190)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,632 28,555 5,243
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:

Payments for businesses, net of cash acquired (10,309)
Additions to property, plant and equipment (16,325) (11,067) (5,724)
Proceeds from sale of investment 3,436
Proceeds from sale of equipment 3,031
Other investing activities (239) (581) (1,456)
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (23,842) (8,212) (7,180)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from long-term debt 31,594 21,537 26,818
Payments on long-term debt (31,939) (33,985) (26,697)
Proceeds from Atlantic Design agreement 11,502
Purchases of senior subordinated notes (8,123)
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 11,157 (20,571) 121
-------- -------- --------

Effect of exchange rate changes on cash and cash equivalents (349) (896) 612
-------- -------- --------

Net increase (decrease) in cash and cash equivalents 3,598 (1,124) (1,204)

Cash and cash equivalents at beginning of year 673 1,797 3,001
-------- -------- --------

Cash and cash equivalents at end of year $ 4,271 $ 673 $ 1,797
======== ======== ========

SUPPLEMENTAL DATA:

Cash paid (received) during the year for:
Income taxes $ 1,483 $ 28 $ (501)
Interest 8,040 7,491 7,953
</TABLE>

The accompanying notes are an integral part of these financial statements.

24
<PAGE> 25

GENICOM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
For the years ended December 31, 1995, January 1, 1995 and January 2, 1994
(In thousands) Foreign
Common Stock Additional Currency Pension
-------------------- Paid-in Retained Translation Liability
Shares Amount Capital Earnings Adjustment Adjustment
------ ------ ------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF JANUARY 3, 1993 10,605 $ 106 $ 25,730 $ 5,010 $ (1,795) $ (527)

Exercise of stock options 17 14
Net loss (3,229)
Cumulative translation adjustment (162)
Pension liability adjustment (572)
------ -------- --------- -------- --------- --------
BALANCE AS OF JANUARY 2, 1994 10,622 106 25,744 1,781 (1,957) (1,099)

Exercise of stock options 16 16
Net income 2,570
Cumulative translation adjustment 522
Pension liability adjustment 400
------ -------- --------- -------- --------- --------
BALANCE AS OF JANUARY 1, 1995 10,638 106 25,760 4,351 (1,435) (699)

Exercise of stock options 201 2 263
Net income 6,152
Cumulative translation adjustment 104
Pension liability adjustment (71)
------ -------- --------- -------- --------- -------
BALANCE AS OF DECEMBER 31, 1995 10,839 $ 108 $ 26,023 $ 10,503 $ (1,331) $ (770)
====== ======== ========= ======== ========= =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

25
<PAGE> 26
GENICOM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of GENICOM
Corporation (the "Company") and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The 1995 financial
statements include the results of two acquisitions, Printer Systems Corporation
("PSC") and Harris Adacom Network Services, Inc. ("HANS") from their respective
acquisition dates. PSC was acquired on February 16, 1995 and HANS was acquired
on March 1, 1995.

Fiscal Year

The Company's fiscal year ends on the Sunday nearest December 31. Accordingly,
the Company is reporting for the 52-week periods ended December 31, 1995,
January 1, 1995 and January 2, 1994.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents.

Inventories

Inventories are stated at the lower of cost, determined on the first-in
first-out method, or market.

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method for financial reporting purposes based on
estimated lives at acquisition date (generally 10 to 25 years for buildings and
18 months to 10 years for machinery and equipment) and accelerated methods for
income tax purposes.

Significant improvements and the cost of tooling are capitalized, while repairs
and maintenance costs are charged to operations.

Goodwill and Intangibles

Goodwill includes the excess of acquisition costs over the fair market value of
net assets of acquired businesses and is being amortized on a straight-line
basis over 5 to 20 years. Intangible assets, including patents, copyrights,
trademarks, licenses and organization and financing costs, are amortized on a
straight-line basis over periods ranging from 3 to 15 years. The Company
assesses at each balance sheet date whether there has been a permanent
impairment in the value of the respective assets. This is accomplished by
determining whether projected undiscounted future cash flows from operations
over the remaining life exceed the net book value of the assets as of such
balance sheet date. The aggregate amount of accumulated amortization for
goodwill and intangibles was $14.5 million and $12.9 million at December 31,
1995 and January 1, 1995, respectively.

26
<PAGE> 27

Research and Development Costs and Capitalized Software

Costs incurred in basic research and development are expensed as incurred.
Certain costs relating to software and product development are capitalized and
amortized over the estimated economic life of the product.

The Company capitalized software costs of $0.1 million and $0.6 million in 1995
and 1994, respectively. The related amortization expenses were $1.2 million and
$1.0 million in 1995 and 1994, respectively. As of December 31, 1995 and
January 1, 1995, capitalized software, net of amortization, was $0.4 million
and $1.5 million, respectively.

Income Taxes

The Company accounts for income taxes under the liability method in accordance
with SFAS No. 109 "Accounting for Income Taxes". Certain expenses are
recognized in different periods for financial reporting and Federal income tax
purposes. Research and development credits are recognized as a reduction of
income tax expense in the year they are recognized for Federal tax purposes.
The Company does not provide deferred taxes on the undistributed earnings of
its foreign subsidiaries as such earnings are intended to be permanently
reinvested in those operations.

Foreign Operations

The consolidated balance sheets include foreign assets and liabilities of $54.4
million and $16.0 million as of December 31, 1995, respectively, and $55.5
million and $14.7 million as of January 1, 1995, respectively. The net effects
of foreign currency transactions reflected in income were immaterial in fiscal
years 1995, 1994 and 1993.

Assets and liabilities of most of the Company's foreign operations are
translated into U.S. dollars using exchange rates in effect at the balance
sheet date and results of operations items are translated using the average
exchange rates prevailing throughout the period. The resulting translation
adjustments are recorded as a separate component of stockholders' equity. The
Company's Mexican subsidiary, of which the operating assets were transferred to
Atlantic Design Company in December 1995 (see "Note 8"), remeasures its
financial statements in U.S. dollars, as this is the currency of the primary
economic environment in which the entity operates. Prior to 1993, the Mexican
subsidiary was considered to operate in a highly inflationary economy.
Accordingly, its translation adjustments, which are not material, are included
in results of operations.

Off-Balance Sheet Risk and Concentrations of Credit Risk

The Company periodically hedges against foreign currency fluctuations through
the use of forward exchange contracts. Gains and losses on contracts to hedge
foreign currency commitments are deferred and accounted for as part of the
commitment transaction except for losses expected to be incurred in future
periods which are recorded when identified.

The forward exchange contracts which the Company uses as hedges are subject to
off-balance sheet market risk. The Company believes that its risk due to
non-performance by the other parties to these contracts is remote. The Company
had $4.4 million and $0.6 million of forward exchange contracts outstanding as
of December 31, 1995 and January 1, 1995, respectively.

Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of receivables. The Company extends credit to
various customers that are primarily in the computer and computer peripherals
industries. These specific industries may be similarly affected by economic
factors, however, the Company performs ongoing credit evaluations of its
customers and establishes an allowance for doubtful accounts for specific
customers that it determines to have significant credit risk.

27
<PAGE> 28
Generally, the Company does not require collateral from its customers and has,
historically, not experienced significant credit related losses.

Revenue Recognition and Warranty Costs

Revenues from the sales of products, which include printers and relays, are
recorded when products are shipped to customers. Revenues from services, which
include service and rentals, are recognized monthly as earned. Advance
billings for customer maintenance contracts are deferred and amortized over the
contract life on a straight-line basis. Estimated warranty costs for equipment
sales are provided for in the year of sale.

Net Income (Loss) Per Share

Net income (loss) per common share and common share equivalent is computed by
dividing net income (loss) by the weighted average number of common shares and
dilutive common share equivalents outstanding during each year. Common share
equivalents include the weighted average number of shares issuable upon the
exercise of outstanding stock options, assuming the applicable proceeds from
such exercise are used to acquire treasury shares.

Recent Accounting Pronouncements

In 1996, SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of" will become effective. Management
believes this standard will not have a material impact on the financial
condition, results of operations, or liquidity of the Company. SFAS No. 123
"Accounting for Stock-Based Compensation" will not be adopted by the Company
for accounting purposes, however, the Company will be required to disclose the
effects of this pronouncement on a pro forma basis beginning in 1996.

Nature of Operations

GENICOM Corporation is an international supplier of network systems, service
and printers. The Company's Enterprising Service Solutions company provides
logo and multivendor product field support and depot repair, express parts,
integrated network systems, technology consulting, diagnostic and monitoring
services and other professional services. The Company's Document Solutions
company designs and markets a wide range of computer printer technologies for
general purpose applications.

The Company markets it products and services through several domestic and
international channels including national and regional distributors, value
added resellers and direct sales forces. GENICOM has positioned its products
as mid-range solutions to corporate customers. Operating on a worldwide
basis, the Company has operations in the United States, Canada, Europe and
Australia.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the dates of the financial statements
and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

28
<PAGE> 29

NOTE 2:SUPPLEMENTAL BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
Inventories consist of:

DEC. 31, JAN. 1,
(in thousands) 1995 1995
--------- ---------
<S> <C> <C>
Raw materials $ 2,594 $ 14,354
Work in process 4,899 6,639
Finished goods 23,327 22,375
Atlantic Design inventory (see Note 8) 12,259
--------- ---------
$ 43,079 $ 43,368
========= =========
<CAPTION>
Property, plant and equipment consists of:

DEC. 31, Jan. 1,
1995 1995
(in thousands) --------- ---------
<S> <C> <C>
Land $ 714 $ 714
Buildings 11,038 10,406
Machinery and equipment 77,372 77,274
Construction in progress 461 361
--------- ---------
89,585 88,755
Less: accumulated depreciation 58,689 62,540
--------- ---------
$ 30,896 $ 26,215
========= =========
<CAPTION>
Accounts payable and accrued expenses consist of:

DEC. 31, Jan. 1,
1995 1995
(in thousands) --------- ---------
<S> <C> <C>
Trade accounts payable $ 21,388 $ 18,918
Atlantic Design account payable (see Note 8) 10,500
Accrued liabilities: Accrued compensation and benefits 9,088 8,900
Interest 1,867 1,883
Other 10,067 7,839
--------- ---------
$ 52,910 $ 37,540
========= =========
</TABLE>

29
<PAGE> 30
NOTE 3: DEBT OBLIGATIONS

<TABLE>
<CAPTION>
Long-term debt consists of:
(in thousands) DEC. 31, Jan. 1,
1995 1995
--------- ----------
<S> <C> <C>
Revolving credit notes and term loans $ 12,022 $ 10,897
Senior subordinated notes 36,364 36,532
Other subordinated notes 3,158 134
--------- ----------
51,544 47,563
Less: current portion 7,070 371
--------- ----------
$ 44,474 $ 47,192
========= ==========
</TABLE>

The Company had an agreement (the "Loan Agreement") with a lender to provide
credit facilities to a maximum borrowing of $35.0 million. The Loan Agreement
was amended on June 9, 1994, to extend its term to December 30, 1996. The
Company had pledged as collateral generally all assets of the Company. The
Loan Agreement provided for financing based on formulas applied to certain
adjusted asset balances, such balances being determined at the lender's sole
discretion, an annual fee of 4.0% of the amount by which average daily
borrowings were below $10.0 million, and interest at a posted prime rate plus
3.0% (11.5% as of December 31, 1995). Prior to June 9, 1994, the interest rate
was the posted prime rate plus 2.25% (8.25% as of January 2, 1994). Also, the
Loan Agreement had provisions for automatic renewal for successive one (1) year
terms should certain notice provisions not be exercised by either party.
Moreover, upon the termination of the Loan Agreement by either the lender,
pursuant to an event of default, or the Company, a termination fee was payable
by the Company.

The Company maintained a term loan agreement (the "Term Loan") with the same
lender which amortized monthly and bore the same interest rate. The Term Loan
would have matured on the earlier of the maturity date of the Loan Agreement or
September 1, 1997.

On January 12, 1996, the Company reached an agreement with NationsBank of
Texas, N.A., as agent for a group of banks, ("NationsBank") on $75 million of
credit facilities. Under the agreement, NationsBank is providing a $35 million
revolving credit facility and two term loans totaling $40 million. The
revolver matures in five years; while the term loans are for five and seven
years, respectively. The rate of interest on the credit facilities is tied to
LIBOR or NationsBank's prime rate and is also dependent upon the Company's
performance. Principal payments on the term loans are $3.5 million in 1996, $4
million in 1997 and 1998, $5 million in 1999 and $6 million in 2000.

In a separate transaction, the Company entered into an interest rate swap
arrangement with NationsBank which fixes the interest rate for five years on a
substantial portion of the debt. The fixed rate at the time the agreement was
executed averaged 8.25%.

The proceeds from NationsBank were used to retire the outstanding borrowings
under the Company's prior Loan Agreement. The principal amount of this payment
was $10.5 million. The Company recognized a loss on extinguishment of debt
associated with this repayment of $0.3 million after tax in January 1996.

The Company's international subsidiaries maintain various credit facilities for
their local operations. Borrowings under such credit facilities bear interest
at prevailing or negotiated rates.

The Company issued senior subordinated notes (the "Notes") on February 13,
1987, with an aggregate principal amount of $76.0 million. The Notes, which
bore interest at 12.5% payable semiannually, were redeemable at the option of
the Company, in whole or in part, at any time on or after February 15, 1992.
Sinking fund payments to retire $9.0 million annually began in 1992, with the
Notes maturing on February 15, 1997. The Notes were subordinated to all senior
indebtedness.

30
<PAGE> 31
On February 14 and 15, 1996, the Company used proceeds from the credit
arrangement with NationsBank to retire the remaining outstanding Notes.
Approximately $27 million of the Notes were redeemed at 100% of their face
value and approximately $9.4 million of the Notes were redeemed at 101.2% of
their face value. The Company recognized a $0.1 million after tax loss on
extinguishment of debt associated with the retirement of the Notes in February
1996.

The Company retired $9 million of the Notes in 1995 as part of the sinking fund
requirement. In 1994 and 1992, the Company used cash flow from operations and
borrowings under the Loan Agreement to purchase $9.2 million and $4.0 million,
respectively, principal amount of its Notes prior to their scheduled maturity.
Such purchases were at market prices below face value and, as a result, the
Company recognized gains of $0.7 million and $1.3 million, net of income taxes
and the write-off of related unamortized discount and debt issuance costs.
Notes purchased by the Company had been applied to the Notes' sinking fund
requirements.

The prior Loan Agreement and the Notes contained certain restrictive covenants
which included, among other things, required minimum net worth of $22.8
million, restrictions on additional borrowing and the sale or disposition of
certain assets and limitations on the payment of dividends. Under the new
credit facilities with NationsBank, the Company will be subject to certain
other covenants which will require the Company, among other things, to maintain
a consolidated tangible net worth of $10.5 million plus 50 % of cumulative net
income and 100% of cumulative equity transactions, a funded debt coverage ratio
of at least 3.5 to 1 for 1996, a fixed charges coverage ratio of at least 2 to
1 for 1996 and a debt to capitalization ratio of .7 to 1 for 1996.

As part of the purchase agreement with Printer Systems Corporation ("PSC" - see
"Note 12"), the Company has recorded the present value of a note payable with
payments of $400,000 each due in 1996, 1997 and 1998. In addition to these
payments, the Company has possible contingent payments based on performance due
in 1996, 1997 and 1998. The maximum amount due under the contingent
arrangement is $2.8 million.

NOTE 4:EMPLOYEE BENEFIT PLANS

The Company provides postretirement medical and life insurance benefits to
hourly and salaried employees hired before March 22, 1993, who retire after
attaining age 60 with at least 5 years of service. Under certain conditions,
benefits may be extended to the retirees' spouse and dependents. Salaried
employees hired after March 22, 1993 are eligible for postretirement medical
and life insurance benefits only upon attainment of Social Security retirement
age and completion of 10 years of service, and no spouse or dependent coverage
is provided.

The postretirement medical coverage is contributory, while the life insurance
coverage is noncontributory.

On January 4, 1993, the Company adopted the provisions of SFAS No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions", which
requires the accrual of the cost of providing postretirement benefits during an
employee's active service.

31
<PAGE> 32
The components of net periodic postretirement benefit costs were:

<TABLE>
<CAPTION>
DEC. 31, Jan. 1,
(in thousands) 1995 1995
--------- --------
<S> <C> <C>
Service cost - benefits attributed to service during the period $ 337 $ 396
Interest cost on accumulated postretirement benefit obligation 1,339 1,334
Amortization of unrecognized transition obligation over 20 years 840 878
------- -------
Net periodic postretirement benefit cost $ 2,516 $ 2,608
======= =======
</TABLE>

The following table sets forth the combined funded status for the Company's
postretirement benefit obligation as of the indicated actuarial valuation dates:

<TABLE>
<CAPTION>
DEC. 31, Jan. 1,
(in thousands) 1995 1995
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $ 7,280 $ 9,296
Active plan participants 8,173 8,045
--------- ---------
15,453 17,341
Unrecognized transition obligation 14,926 15,805
Unrecognized net gain (5,087) (2,309)
--------- ---------
Accrued postretirement benefit cost $ 5,614 $ 3,845
========= =========
</TABLE>

For measurement purposes, 9.5% and 11.0% annual rates of increase in the per
capita cost of covered health care benefits were assumed for 1996 and 1995,
respectively; both rates were assumed to decrease gradually to 5.5% for 2001
and remain at that level thereafter. If the health care cost trend rate was to
increase 1.0%, the accumulated postretirement benefit obligation as of December
31, 1995 and January 1, 1995, would have increased by 5.3% and 7.0%,
respectively. The effect of this change on the aggregate service and interest
costs for 1995 and 1994 would be increases of 5.8% and 7.1%, respectively. The
weighted-average discount rates used in determining the accumulated
postretirement benefit obligation was 7.25% and 8.0% in 1995 and 1994,
respectively.

Substantially all domestic non-collective bargaining employees are eligible to
participate in the Company's retirement savings plan (the "Savings Plan"),
which qualifies under section 401(k) of the Internal Revenue Code. The Company
makes certain matching contributions which are allocated to the participants
and vest based on the employee's years of service. The Company's expense under
the Savings Plan was $0.8 million, $0.5 million and $1.2 million in fiscal
years 1995, 1994 and 1993, respectively.

The Company's domestic collective bargaining employees are covered by a
contributory defined benefit pension plan (the "Pension Plan"). The Pension
Plan benefits are based on years of credited service and the participant's
compensation. Eligible employees must elect to participate and contribute 3.0%
of compensation between $12,000 and $25,650 per calendar year. The Company
makes contributions to the Pension Plan sufficient to meet federal funding
requirements.

32
<PAGE> 33
Components of periodic pension costs were:

<TABLE>
<CAPTION>
DEC. 31, Jan. 1, Jan. 2,
1995 1995 1994
(in thousands) ------------- ---------- ----------
<S> <C> <C> <C>
Service cost $ 340 $ 445 $ 442
Interest cost on projected benefit obligation 806 731 660
Actual return on plan assets (2,277) 131 (753)
Net amortization and deferral 1,681 (673) 243
------------- ---------- ---------

Net periodic pension expense $ 550 $ 634 $ 592
============= ========== =========
</TABLE>

The following table sets forth the Pension Plan's funded status as of the
indicated actuarial valuation dates:

<TABLE>
<CAPTION>
DEC. 31, Jan. 1,
(in thousands) 1995 1995
----------------- -----------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits $ 10,834 $ 8,621
Non-vested benefits 664 555
----------------- -----------------
Total accumulated benefit obligation 11,498 9,176
Effect of projected future compensation levels 555 734
----------------- -----------------
Projected benefit obligation 12,053 9,910
Fair value of plan assets 10,912 8,097
----------------- -----------------

Fair value of plan assets less than projected benefit obligation (1,141) (1,813)
Unrecognized net liability existing at January 1, 1987 272 318
Unrecognized net loss from actuarial experience 1,477 1,753
Adjustment to recognize minimum liability (1,194) (1,337)
----------------- -----------------

Accrued pension cost $ (586) $ (1,079)
================= =================
</TABLE>

The Company's assumptions used in determining the pension cost and pension
liability shown above were as follows:

<TABLE>
<CAPTION>
DEC. 31, Jan. 1, Jan. 2,
1995 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Discount rate 7.25 8.00 7.25
Rate of compensation progression 4.00 5.00 5.00
Rate of return on plan assets 9.00 9.00 9.00
</TABLE>

Pension Plan assets consist primarily of treasury notes, government and
corporate bonds, corporate equities and cash equivalent funds.

The Company makes contributions to various employee benefit plans for certain
of its foreign subsidiaries and the expense for these plans was not material in
fiscal years 1995, 1994 and 1993.

On January 3, 1994, the Company adopted the provisions of SFAS No. 112
"Employers' Accounting for Postemployment Benefits" which requires employers to
accrue costs of providing

33
<PAGE> 34
postemployment benefits other than pensions. The implementation of SFAS No.
112 did not have a material effect on the Company's financial condition,
results of operations or liquidity.

NOTE 5: STOCK OPTIONS

Under the Company's stock option plan, 2,112,268 shares of unissued common
stock are reserved for issuance pursuant to options outstanding and to be
granted. Stock option activity for the respective fiscal periods is as follows:

<TABLE>
<CAPTION>
Option
Number of Amount
Shares Per Share Total
------------- --------------- ------------
<S> <C> <C> <C>
OUTSTANDING,
JANUARY 3, 1993 1,135,067 $ 0.15-7.50 $ 1,529,140
Granted 406,500 1.00-1.50 412,500
Exercised (17,000) 0.15-1.75 (17,975)
Cancelled (42,000) 0.15-1.50 (51,500)
------------- --------------- ------------

OUTSTANDING,
JANUARY 2, 1994 1,482,567 1.00-7.50 1,872,165
Granted 460,000 1.00-2.38 471,688
Exercised (16,600) 1.00 (16,600)
Cancelled (166,833) 1.00-7.50 (196,823)
------------- --------------- ------------

OUTSTANDING,
JANUARY 1, 1995 1,759,134 1.00-7.50 2,130,430
Granted 410,000 1.75-4.50 804,375
Exercised (201,100) 1.00-2.13 (264,824)
Cancelled (195,467) 1.00-7.50 (253,328)
============= =============== ============

OUTSTANDING,
DECEMBER 31, 1995 1,772,567 $ 1.00-7.50 $ 2,416,653
============= =============== =============
OPTIONS EXERCISABLE,
DECEMBER 31, 1995 819,967 $ 1.00-7.50 $ 1,041,753
============= =============== =============
OPTIONS
AVAILABLE
FOR FUTURE GRANTS 339,701
=============
</TABLE>

Options granted under the stock option plan are granted at prices not less than
85.0% of the fair market value of the common stock and become exercisable in
installments at dates ranging from one to ten years from the date of grant, as
determined by the Board of Directors or the Compensation Committee thereof.

In 1992 and 1993, the stockholders approved nonstatutory stock option grants of
100,000 and 10,000 shares of common stock, respectively, to certain members of
the Company's Board of Directors. The stock options become exercisable at a
rate of 33.3% per year beginning one year from grant date. However, the stock
options become fully exercisable upon the merger of the Company into another
entity or the acquisition of the Company by another entity or the sale or
transfer of substantially all assets of the Company to another entity. As of
December 31, 1995, none of these stock options had been exercised.

34
<PAGE> 35
NOTE 6: INCOME TAXES

The components of income (loss) before income taxes were as follows:

<TABLE>
<CAPTION>
(in thousands) DEC. 31, Jan. 1, Jan. 2,
1995 1995 1994
------- -------- --------
<S> <C> <C> <C>
Domestic $ 7,860 $ 4,524 $ 1,767
Foreign (423) (906) (4,940)
------- -------- --------
$ 7,437 $ 3,618 $ (3,173)
======= ======== ========
</TABLE>

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
(in thousands) DEC. 31, Jan. 1, Jan. 2,
1995 1995 1994
------- ------ ------
<S> <C> <C> <C>
Current:
Federal $ 2,299 $ 164 $ (27)
State 557 568 23
Foreign 259 148 60
------- ------ ------
3,115 880 56
------- ------ ------

Deferred:
Federal (1,830) 168
Foreign
------- -------- -----
(1,830) 168
------- -------- -----

$ 1,285 $ 1,048 $ 56
</TABLE> ======= ======== =====

35
<PAGE> 36
A reconciliation of the U.S. statutory Federal tax rate of 34.0% to the
Company's effective tax rate is as follows:

<TABLE>
<CAPTION>
(in thousands) DEC. 31, Jan. 1, Jan. 2,
1995 1995 1994
----------- ----------- ---------
<S> <C> <C> <C>
Tax expense (benefit) at statutory rate $ 2,529 $ 1,230 $ (1,079)
Increase (decrease) related to:
State income taxes, net of
Federal tax benefit 557 568 23
Foreign income tax 259 148 60
Foreign operating losses
generating no current tax benefit 144 279 1,642
Domestic operating profit not taxed
due to carryfoward losses (383) (1,331) (563)
Reduction in valuation allowance (1,830)
Other, net 9 154 (27)
----------- ----------- ---------
$ 1,285 $ 1,048 $ 56
----------- ----------- ---------
17.3% 29.0% (1.8)%
=========== =========== =========
</TABLE>

Deferred tax assets and liabilities are recorded based on temporary differences
between earnings as reported in the financial statements and earnings for income
tax purposes. The major components of the Company's deferred tax assets and
liabilities are as follows:

<TABLE>
<CAPTION>
(in thousands) DEC. 31, Jan. 1,
6/17/05 6/17/05
----------- ------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Net operating loss carryforwards $ 9,214 $ 12,838
Inventory valuation 2,275 3,475
Vacation accrual 1,231 1,049
Bad debt reserve 701 554
Employee benefits 1,884 1,580
Other 4,758 93
Valuation allowance (12,521) (16,747)
----------- ------------
Total deferred tax asset $ 7,542 $ 2,842
=========== ============
DEFERRED TAX LIABILITIES:
Depreciation 263 1,481
Other intangible assets 5,364
Foreign currency translation gain 456
Other 85 905
----------- ------------
Total deferred tax liability $ 5,712 $ 2,842
=========== ============
</TABLE>

<PAGE> 37
During 1995, the Company recorded a deferred tax benefit of approximately $1.8
million, relating to the reversal of a portion of the Company's valuation
allowance for its domestic deferred tax assets. Such assets were previously
fully reserved due to uncertainties regarding their ultimate recoverability.
The benefit was recorded in 1995 based upon management's estimate of amounts
which are expected to be recoverable through future earnings or reversals of
temporary differences.

During 1996, management will continue to assess the recoverability of its
deferred tax assets. Should domestic earnings continue at levels achieved in
1995, it is possible that the remaining domestic valuation allowance of
approximately $3.0 million will be reversed.

The cumulative amount of undistributed earnings of foreign subsidiaries which
the Company intends to permanently invest and upon which no deferred U.S.
income taxes have been provided is $8.3 million. The Company cannot practically
determine the amount of deferred income tax liability that would result had
such earnings actually been remitted. The amount of foreign withholding taxes,
at current rates, that would have been due on the earnings had they actually
been remitted was $0.4 million.

NOTE 7: OTHER INCOME, ACQUISITION AND RESTRUCTURING COSTS

During 1995, the Company charged against pre-tax income $1.2 million related to
a proposed acquisition which was terminated and non-capitalized costs
associated with the Company's 1995 business acquisitions.

During fiscal 1994, the Company reported gains of $1.0 million from the early
extinguishment of $9.2 million of its Notes.

During fiscal 1994 and 1993, the Company sold 35.0% and 65.0%, respectively, of
its investment in Xeikon N.V., a Belgian printer development and manufacturing
company. These transactions added approximately $0.9 million and $1.7 million
of pre-tax income to fiscal 1994 and 1993, respectively.

During fiscal 1993, the Company incurred costs totaling $1.0 million associated
with the reorganization and restructuring of the Company's sales and marketing,
development and administrative operations including the formation of an
application solutions function. Such costs are reflected in the Company's
operating expenses.

NOTE 8: COMMITMENTS AND CONTINGENT LIABILITIES

Leasing arrangements:

As lessee:

The Company leases certain manufacturing and warehousing properties. Rent
expense amounted to $7.2 million, $6.7 million and $6.3 million in 1995, 1994
and 1993, respectively.

Minimum future lease commitments for operating leases as of December 31, 1995,
are as follows: 1996 - $4.9 million, 1997 - $3.3 million, 1998 - $2.3 million,
1999 - $1.4 million, 2000 - $1.3 million, and $3.9 million thereafter.

37
<PAGE> 38
As lessor:

The Company has rental agreements for the leasing of printers. Operating lease
terms vary, generally from one to sixty months. Rental revenue was $2.3
million, $0.7 million and $1.1 million for 1995, 1994 and 1993, respectively.

On December 31, 1995 and January 1, 1995, the cost of equipment leased was $3.0
million and $1.1 million, respectively, which is included in property, plant
and equipment, net of accumulated depreciation of $1.2 million and $0.9
million, respectively.

Environmental matters:

The Company and the former owner of its Waynesboro, Virginia facility, General
Electric Company ("G.E."), have generated and managed hazardous wastes at the
facility for many years as a result of their use of certain materials in
manufacturing processes. The Company and the United States Environmental
Protection Agency ("EPA") have agreed to a corrective action consent order
(the"Order"), which became effective on September 14, 1990. The Order requires
the Company to undertake an investigation of solid waste management units at
its Waynesboro, Virginia facility and to conduct a study of any necessary
corrective measures that may be required. Although the Order is currently
being implemented, it is not possible for the Company to reliably estimate the
total cost of the investigation and the study required by the Order. If, as a
result of the investigation and study, corrective measures are required, the
Company expects that it will then enter into discussions with the EPA
concerning a further order for that purpose.

On December 9, 1993, the Company entered into a Cooperation Agreement
("Agreement") with G.E. covering certain environmental matters at the Company's
Waynesboro, Virginia site. One of the matters covered is the cost of
responding to the Order. The Agreement provides that G.E. will bear 70.0% of
the allocable costs relating to the Order. In 1993, the Company recorded a
$1.2 million recovery from G.E. of previously incurred allocable costs relating
to the Order. The Company's financial statements as of December 31, 1995
reflect a receivable from G.E. of $0.8 million.

As a result of the continuing financial obligation which G.E. has with respect
to releases at the facility and the protracted nature of the investigation, the
Company believes that the costs of the investigation and study and any
corrective action that may be required are not likely to have a material effect
upon the financial condition, results of operations or liquidity of the
Company.

The Company has been notified by the EPA that it is one of 700 potentially
responsible parties (PRPs) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, for necessary corrective action at a
hazardous waste disposal site in Greer, South Carolina. In prior years, the
Company arranged for the transportation of wastes to the site for treatment or
disposal. During 1995, the PRPs entered into an administrative consent order
with EPA under which they will undertake a remedial investigation and
feasibility study. Based on information currently available, the Company
believes its share of the costs of the investigation and any necessary
corrective action is not likely to have a material effect upon the financial
condition, results of operations or liquidity of the Company.

The Company has been named as a defendant in an Original Petition and Petition
for Injunctive Relief filed in August 1995 which alleges that the Company and
certain other defendants are strictly liable for damages allegedly suffered by
the plaintiffs as a result of contamination of groundwater at the
Linn-Faysvilles Aquifer, in Texas, due to the disposal of dangerous products
and materials at a landfill which is alleged to be the source of the
contamination. The Company is currently unable to make any estimates as to
whether this action will have a material effect upon the financial condition,
results of operations or liquidity of the Company.

38
<PAGE> 39
Atlantic Design:

The Company as part of the agreement has agreed to purchase from ADC $54.0
million of product by April 1997. In the event the minimum purchase commitment
is not met, the Company would be required to pay ADC the lost profits on the
amount not achieved. At December 31, 1995, the Company had $12.3 million of
inventory and a related payable of $10.5 million associated with a commitment
to repurchase certain inventories which were transferred to ADC during December
1995. It is expected that this inventory will have been used by the end of the
second quarter of 1996 and any remaining amount will not be material.

Other matters:

In the ordinary course of business, the Company is party to various
environmental, administrative and legal proceedings. In the opinion of
management, the Company's liability, if any, in all pending litigation or other
legal proceedings, other than those discussed above, will not have a material
effect upon the financial condition, results of operations or liquidity of the
Company.

NOTE 9: RELATED PARTY TRANSACTIONS

G.E. is one of the principal stockholders of the Company. Sales by the Company
to G.E. and its affiliates amounted to $2.4 million, $4.6 million and $4.6
million in 1995, 1994 and 1993, respectively. Amounts receivable from G.E.
were $0.1 million and $1.8 million as of December 31, 1995 and January 1, 1995,
respectively.

39
<PAGE> 40
NOTE 10: SEGMENT AND GEOGRAPHIC INFORMATION

Industry Segments

The Company operates in the serial, line and page printer business where it
designs and markets printers as well as in the related supplies and spare parts
(Document Solutions company). The Company's operation in services provides
customers with a full range of network information technology and services with
field services, depot repair, parts, logistics and network products
(Enterprising Service Solutions company). The production and sales of relay
products comprise less than 10% of revenue, operating income and identifiable
assets and are included in the Document Solutions segment. Revenue between
industry segments are not material. The Company is reporting segment
information by industry group for only 1995 as prior to 1995 and the
acquisition of Harris Adacom Network Services, Inc., the Company operated only
in one segment, the computer peripheral sales and service business.

<TABLE>
<CAPTION>
(in thousands) 1995
----------
<S> <C>
REVENUES
Document Solutions* $ 168,394
Enterprising Service Solutions 125,658
----------
$ 294,052
==========
OPERATING INCOME
Document Solutions+ $ 8,349
Enterprising Service Solutions 6,829
----------
$ 15,178
==========
ASSETS
Document Solutions $ 85,130
Enterprising Service Solutions 49,264
Corporate and other 27,145
----------
$ 161,539
==========
DEPRECIATION AND AMORTIZATION
Document Solutions $ 4,471
Enterprising Services Solutions 9,487
Corporate and other 4,148
----------
$ 18,106
==========
CAPITAL EXPENDITURES
Document Solutions $ 2,970
Enterprising Service Solutions 11,680
Corporate and other 1,675
----------
$ 16,325
==========
</TABLE>

*Includes relay revenues of $11,726 thousand.
+Includes relay operating loss of $1,367 thousand.

Geographic Segments

Transfers (sales) between geographic areas are accounted for at prices
approximating market. Information regarding the Company's operations in the
Pacific Rim, which are not material relative to total operations, has been
combined with its European operations. Additionally, information regarding the
Company's former Mexican subsidiary has been combined with its U.S. operations
because of the vertical integration and its close proximity to the United
States.

40
<PAGE> 41

Financial information by geographic area:

(in thousands)

<TABLE>
<CAPTION>
United States
FISCAL YEAR 1995 and Canada Europe Eliminations Consolidated
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 231,709 $ 62,343 $ 294,052

Transfers between
geographic areas 39,870 $ (39,870)
------------- ------------ -------------- -------------

Total sales $ 271,579 $ 62,343 $ (39,870) $ 294,052
------------- ------------ -------------- -------------

Operating income $ 15,021 $ 157 $ 15,178
------------- ------------ -------------- -------------

Identifiable assets $ 125,511 $ 37,733 $ 163,244
============= ============ ============== =============

<CAPTION>
United States
FISCAL YEAR 1994 and Canada Europe Eliminations Consolidated
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 174,455 $ 59,342 $ 233,797

Transfers between
geographic areas 41,821 $ (41,821)
------------- ------------ -------------- -------------

Total sales $ 216,276 $ 59,342 $ (41,821) $ 233,797
------------- ------------ -------------- -------------

Operating income (loss) $ 9,262 $ (94) $ 9,168
------------- ------------ -------------- -------------

Identifiable assets $ 97,517 $ 29,750 $ 127,267
============= ============ ============== =============

<CAPTION>
United States
FISCAL YEAR 1993 and Canada Europe Eliminations Consolidated
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ 159,504 $ 62,361 $ 221,865

Transfers between
geographic areas 43,519 $ (43,519)
------------- ------------ -------------- -------------

Total sales $ 203,023 $ 62,361 $ (43,519) $ 221,865
------------- ------------ -------------- -------------

Operating income (loss) $ 6,134 $ (3,489) $ 2,645
------------- ------------ -------------- -------------

Identifiable assets $ 104,461 $ 36,698 $ 141,159
============= ============ ============== =============
</TABLE>

Total sales to customers outside the United States amounted to $84.7 million,
$72.3 million and $73.5 million for 1995, 1994 and 1993, respectively; these
amounts include export sales from the United States of $1.1 million, $1.5
million and $1.5 million in 1995, 1994 and 1993, respectively.

41
<PAGE> 42

NOTE 11: SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

(in thousands, except per share data)

<TABLE>
<CAPTION>
QUARTER
-------------------------------------------------------------------------------
1995 FIRST SECOND THIRD FOURTH
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 68,134 $ 71,842 $ 78,506 $ 75,570
Operating income 3,517 3,724 4,070 3,867
Net income 1,301 1,559 1,703 1,589
Earnings per share:
Primary 0.11 0.13 0.14 0.13
Fully diluted 0.11 0.13 0.14 0.13

<CAPTION>
QUARTER
-------------------------------------------------------------------------------
1994 FIRST SECOND THIRD FOURTH
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 55,336 $ 59,325 $ 57,350 $ 61,786
Operating income 1,322 3,196 2,408 2,242
Net income 94 1,502 486 488
Earnings per share:
Primary 0.01 0.13 0.04 0.04
Fully diluted 0.01 0.13 0.04 0.04
</TABLE>

NOTE 12: BUSINESS ACQUISITIONS

PRINTER SYSTEMS CORPORATION

On February 16, 1995, the Company acquired Printer Systems Corporation ("PSC"),
a privately held company whose primary business is the design, manufacture,
distribution and support of printer networking products for commercial
customers. PSC had 1994 revenues of approximately $10.0 million. Pursuant to
the purchase agreement, the Company acquired all of PSC's outstanding common and
preferred shares for consideration aggregating to potentially $4.8 million. Of
the consideration $0.8 million was payable at closing and $1.2 million is
payable over the three subsequent years to closing. The remaining balance of up
to $2.8 million in consideration is contingent upon attainment of performance
objectives during the three years subsequent to closing, and will be funded from
the Company's cash flows from operations and credit facilities. The acquisition
has been accounted for as a purchase. The goodwill associated with the purchase
is being amortized over seven years.

HARRIS ADACOM NETWORK SERVICES, INC.

On March 1, 1995, the Company acquired substantially all of the assets and
certain liabilities of Harris Adacom Network Services, Inc. ("HANS"), including
all of the stock of its Canadian subsidiary, Harris Adacom Inc. for cash and
notes totaling $7.3 million. The assets acquired relate to HANS' service depot
facility, field service operations, systems integration business, and network
baselining and monitoring operations. HANS had 1994 revenues of approximately
$36.1 million. The purchase price was funded from the Company's cash flows from
operations and credit facilities

42
<PAGE> 43
and the acquisition has been accounted for as a purchase. The goodwill
associated with the purchase is being amortized over ten years.

PRO FORMA FINANCIAL INFORMATION

Presented below are the unaudited pro forma statements of operations as if the
acquired operations had been integrated into the Company effective January 3,
1994. Accounting adjustments have been made in the pro forma financial
information to include estimated costs of the combinations and to reflect the
integration and consolidation of facilities and personnel. Included in such
integration costs are lease termination fees and relocation costs associated
with redundant facilities and employee severance expenses. This pro forma
information has been prepared for comparative purposes only and does not
purport to be indicative of the results that actually would have been obtained
if the acquired operations had been conducted by the Company during the periods
presented, and is not intended to be a projection of future results.
Presentation is in thousands except for earnings per share amounts.

<TABLE>
<CAPTION>
Period Ended Period Ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
Revenue $ 302,416 $ 279,984
Pre-Tax Income 7,527 2,636
---------- ----------
Net Income 6,019 1,370
---------- ----------
Earnings per share $ 0.50 $ 0.12
---------- ----------
Weighted average share outstanding 12,056 11,416
---------- ----------
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

43
<PAGE> 44
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is set forth under the caption "Election
of Directors" in the registrant's Proxy Statement for its 1996 annual meeting
of stockholders, to be mailed to each stockholder on or about March 31, 1996,
which information is incorporated herein by reference and under the heading
"Executive Officers of the Registrant" appearing on page 14 of this report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is set forth on pages 4 through 15 of the
registrant's Proxy Statement for its 1996 annual meeting of stockholders, to be
mailed to each stockholder on or about March 31, 1996, which information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is set forth under the caption "Principal
Stockholders of the Company" in the registrant's Proxy Statement for its 1996
annual meeting of stockholders, to be mailed to each stockholder on or about
March 31, 1996, which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is set forth under the caption "Certain
Transactions" in the registrant's Proxy Statement for its 1996 annual meeting
of stockholders, to be mailed to each stockholder on or about March 31, 1996,
which information is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Financial Statements and Schedules

The financial statement schedules filed as part of this report are
listed in the Index to Financial Statements and Schedules on page F-1
immediately following the signatures to this report.

44
<PAGE> 45
Exhibits Included in Response to Item 601 of Regulation S-K

NUMBER DESCRIPTION
------ -----------

3.1 Restated Certificate of Incorporation effective as of June 15,
1992, incorporated by reference to Exhibit 4.1 to Form S-8
Registration Statement (No. 33-49472) filed with the Commission on
July 10, 1992.

3.2 By-laws, dated June 1, 1983, as amended January 23, 1989 -
incorporated by reference to Exhibit 3.2 to Form 10-K filed with
the Commission on March 29, 1989.

4.1 Indenture, between GENICOM Corporation and Bankers Trust Company
(the "Trustee"), dated February 13, 1987 - filed herewith. First
Supplemental Indenture dated as of March 22, 1991 - incorporated
by reference to Exhibit 4.1 to Form S-1 Registration Statement
(No. 33-23007) filed with the Commission on May 14, 1991.

10.1 Loan and Security Agreement, dated September 25, 1990 between
GENICOM Corporation and The CIT Group/Credit Finance, Inc. (as
successor by assignment to Fidelcor Business Credit Corporation) -
incorporated by reference to Exhibit 4.1 to Form 10-Q filed with
the Commission on November 13, 1990. First Amendment dated May 1,
1991 and Second Amendment dated March 3, 1992 - incorporated by
reference to Exhibit 10.1 to Form 10-K filed with the Commission
on March 24, 1992. Extension of and Amendment to Financing
Agreements dated September 23, 1992 in reference to the Loan and
Security Agreement, dated September 25, 1990 between GENICOM
Corporation and The CIT Group/Credit Finance, Inc. - incorporated
by reference to Exhibit 10.1 to Form 8-K filed with the Commission
on October 6, 1992. Extension of and Amendment to Financing
Agreements dated June 9, 1994 in reference to the Loan and
Security Agreement, dated September 25, 1990 between GENICOM
Corporation and The CIT Group/Credit Finance, Inc. - incorporated
by reference to Exhibit 10.1 to Form 8-K/A filed with the
Commission on July 15, 1994.

10.2 Registration Rights Agreement, dated October 21, 1983, among the
Company and the several Purchasers named therein - incorporated by
reference to Exhibit 10.2 to the Form S-1 Registration Statement
(No. 33-5458) filed with the Commission on June 25, 1986 (the
"June 25, 1986 Registration Statement").

10.3 Registration Rights Agreement, dated December 20, 1984, among the
Company and the several Purchasers named therein - incorporated by
reference to Exhibit 10.3 to the June 25, 1986 Registration
Statement.

10.4 Registration Rights Agreement, dated December 20, 1984, among the
Company and the several Purchasers named therein - incorporated by
reference to Exhibit 10.4 to the June 25, 1986 Registration
Statement.

10.5 Registration Rights Agreement, dated January 3, 1985, among the
Company and the several Purchasers named therein - incorporated by
reference to Exhibit 10.5 to the June 25, 1986 Registration
Statement.

10.6 Registration rights provisions contained in a Stock Purchase
Warrant dated October 21, 1983 granted by the Company in favor of
General Electric Company, which Stock Purchase Warrant became void
after October 21, 1988 - incorporated by reference to Exhibit 10.6
to the June 25, 1986 Registration Statement.

45
<PAGE> 46
NUMBER DESCRIPTION
------ -----------

10.7# Stock Option Plan, as amended and restated, effective as of
February 7, 1991 - incorporated by reference to Exhibit 10 to the
Registrant's Quarterly Report on Form 10Q (File No. 0-14685) for
the quarter ended March 31, 1991 filed with the Commission on May
15, 1991. First Amendment to the Registrant's Stock Option Plan,
dated February 3, 1992 - incorporated by reference to Exhibit 4.2
to Form S-8 Registration Statement (No. 33-49472) filed with the
Commission on July 10, 1992. Second Amendment to the Registrant's
Stock Option Plan, dated January 17, 1994 - incorporated by
reference to Exhibit 4 to Form S-8 Registration Statement (No.
33-53843) filed with the Commission on May 27, 1994.

10.8# Deferred Compensation and Savings Plan, as amended and restated,
effective as of January 2, 1989 - incorporated by reference to
Exhibit 10.8 to Form 10-K filed with the Commission on March 29,
1991. First Amendment to the Deferred Compensation and Savings
Plan, dated as of November 1, 1993 - incorporated by reference to
Exhibit 10.1 to Form 8-K filed with the Commission on March 30,
1995. Second Amendment to the Deferred Compensation and Savings
Plan, dated as of January 20, 1994 - incorporated by reference to
Exhibit 10.2 to Form 8-K filed with the Commission on March 30,
1995.

10.9# Defined Benefit Pension Plan for Hourly Employees, as amended and
restated, effective as of January 1, 1989 - incorporated by
reference to Exhibit 10.9 to Form 10-K filed with the Commission
on March 29, 1991.

10.10# Incentive Compensation Plan, as amended - incorporated by
reference to Exhibit 10.13 to the June 25, 1986 Registration
Statement.

10.11 Lease agreement with respect to the Company's customer service
facilities in Waynesboro dated August 1, 1988 - incorporated by
reference to Exhibit 10.10 to Form 10-K filed with the Commission
on March 29, 1989. Lease agreement with respect to the Company's
manufacturing facilities in Waynesboro - incorporated by
reference to Exhibit 10.11 to Form 10-K filed with the Commission
on March 24, 1992.

10.12 Lease of McAllen, Texas facility, dated January 20, 1992 -
incorporated by reference to Exhibit 10.12 to Form 10-K filed
with the Commission on March 24, 1992.

10.13# Terms of employment of Paul T. Winn dated March 26, 1990 -
incorporated by reference to Exhibit 10.15 to Form S-1
Registration Statement (No. 33-23007) filed with the Commission
on May 17, 1990.

10.14 Yen Agreement Between GENICOM Corporation and TOSHIBA Corporation
Relating to Laser Printer G751, Laser Printer G750 and Related
Options, Supplies and Service Parts, dated March 31, 1992 -
incorporated by reference to Exhibit 10.17 to Form 10-K filed
with the Commission on March 31, 1993.

10.15 Agreement with the General Electric Company regarding
environmental matters at the Registrants Waynesboro, Virginia
facility, dated December 9, 1993 - incorporated by reference to
Exhibit 10.1 to Form 8-K filed with the Commission on February
23, 1994.

46
<PAGE> 47

NUMBER DESCRIPTION
------ -----------
10.16 Lease of Bedford and Framingham, Massachusetts facilities, dated
March 11, 1994 - incorporated by reference to Exhibit 10.1 and
10.2, respectively to Form 8-K filed with the Commission on May
31, 1994.

10.17 Consulting agreement between GENICOM Corporation and W. Allen
Surber, dated October 11, 1994 - incorporated by reference to
Exhibit 10.17 to Form 10-K filed with the Commission on March 31,
1995.

10.18# Consulting agreement between GENICOM Corporation and Edward E.
Lucente, dated December 6, 1994 - incorporated by reference to
Exhibit 10.18 to Form 10-K filed with the Commission on March 31,
1995.

10.19 Agreement to purchase Harris Adacom Network Services, Inc., dated
February 23, 1995 - incorporated by reference to Exhibit 2.1 to
Form 8-K filed with the Commission on March 16, 1995.

10.20 Financing agreement with NationsBank, dated January 12, 1996 -
incorporated by reference to Exhibit 10.1 to Form 8-K filed with
the Commission on March 12, 1996.

10.21 Manufacturing agreement between GENICOM Corporation and Atlantic
Design Company - incorporated by reference to Exhibit 10.21 to
Form 10-K filed with the Commission on March 28, 1996 - filed
herewith.

11 Statement regarding the Company's computation of earnings per
share - filed herewith.

22 Subsidiaries of the Registrant - filed herewith.

24 Consent of Independent Accountants - filed herewith.

27 Financial Data Schedule - Filed only with EDGAR version.

(b) Reports on Form 8-K

The Company did not file a Form 8-K during the quarter ended
December 31, 1995.

Yen Confidential treatment granted with respect to certain provisions
pursuant to 17 C.F.R. 200.80 (b) (4).

# Management contracts or compensatory plans.

47
<PAGE> 48
SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) 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
BY: Paul T. Winn
------------------------------

Paul T. Winn
President and Chief Executive
Officer

Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
-------------------- ------------------------------------- ---------------
<S> <C> <C>
Don E. Ackerman Chairman of the Board and Director March 28, 1995
-------------------
Don E. Ackerman

Paul T. Winn President and Chief Executive Officer March 28, 1995
------------------ and Director (Principal Executive Officer)
Paul T. Winn

James C. Gale Senior Vice President Finance and Chief March 28, 1995
------------------ Financial Officer (Principal Financial Officer)
James C. Gale

Edward E. Lucente Director March 28, 1995
------------------
Edward E. Lucente
</TABLE>

48
<PAGE> 49

GENICOM CORPORATION AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

PAGE
----
Independents Accountants' Report F-2

Financial Statement Schedules:

Schedule II Valuation and Qualifying Accounts and Reserves F-3

1. All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedules.

F - 1

<PAGE> 50
INDEPENDENT ACCOUNTANTS' REPORT

The Board of Directors and Stockholders of GENICOM Corporation:

We have audited the accompanying consolidated balance sheets of GENICOM
Corporation and Subsidiaries (the "Company") as of December 31, 1995 and
January 1, 1995, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1995. We have also audited the financial statement
schedules listed in the index on page F-1 of this Form 10-K. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of GENICOM
Corporation and Subsidiaries as of December 31, 1995 and January 1, 1995, and
the consolidated results of their operations and their cash flows for each of
the three fiscal years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.

As discussed in Note 4 to the financial statements, effective January 4, 1993,
the Company changed its method of accounting for postretirement benefits other
than pensions.

Coopers & Lybrand L.L.P.

Washington, D.C.
January 31, 1996,
except for certain information in Note 3,
for which the date is February 15, 1996

F - 2
<PAGE> 51
GENICOM CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(In thousands)

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
DESCRIPTION BEGINNING COSTS FROM END OF
OF PERIOD AND EXPENSES RESERVES PERIOD
------------------------------ ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS

Year ended:

JANUARY 2, 1994 $ 1,248 $ 812(1) $ 580 $ 1,480

JANUARY 1, 1995 $ 1,480 $ 365(1) $ 366 $ 1,479

DECEMBER 31, 1995 $ 1,479 $ 1,284(1) $ 1,147 $ 1,616

ALLOWANCE FOR INVENTORY
OBSOLESCENCE

Year ended:

JANUARY 2, 1994 $ 6,853 $ 2,367(2) $ 2,483 $ 6,737

JANUARY 1, 1995 $ 6,737 $ 2,723(2) $ 3,302 $ 6,158

DECEMBER 31, 1995 $ 6,158 $ 2,292(2) $ 305 $ 8,145
</TABLE>

1. "Additions" to the allowance for doubtful accounts include a foreign
currency translation adjustment of $46, $56, and $(48) in 1995, 1994 and
1993, respectively. Net bad debt expense for 1995, 1994 and 1993 was $1,238,
$309 and $859, respectively.

2. Foreign currency translation adjustments were immaterial in 1995, 1994 and
1993.

F - 3
<PAGE> 52

GENICOM CORPORATION AND SUBSIDIARIES

INDEX TO EXHIBITS TO FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
10.21 Manufacturing agreement between GENICOM and Atlantic Design Company E-2 - E-35

11 Statement regarding computation of per share earnings E-36

22 Subsidiaries of the Registrant E-37

23 Consent of Independent Accountants E-38

27 Financial Data Schedule Filed only
with EDGAR
version
</TABLE>

E-1

<PAGE> 1

SERVICES AGREEMENT
------------------
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
1. GRANT OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------

2. SCOPE OF SERVICES; MINIMUM GUARANTEE; INITIAL INVENTORY; RIGHT OF FIRST REFUSAL . . . . . . . 2
-------------------------------------------------------------------------------

3. TERM; TERMINATION OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------------

4. REACQUISITION CONDITIONS; DEDICATED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------------------------------

5. PURCHASE ORDERS; CHANGE ORDERS; PAYMENT AND DELIVERY TERMS . . . . . . . . . . . . . . . . . . 10
----------------------------------------------------------

6. PRICE; SAVINGS SPLIT; ADDITIONAL COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------

7. RESCHEDULING; CANCELLATION OF PURCHASE ORDERS; REMAINDERS . . . . . . . . . . . . . . . . . . 17
---------------------------------------------------------

8. QUALITY UNDERTAKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------

9. PROPRIETARY AND CONFIDENTIAL INFORMATION; NON-COMPETITION . . . . . . . . . . . . . . . . . . 20
---------------------------------------------------------

10. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------

11. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------------------------------------

12. DEFAULT BY GENICOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------

13. DEFAULT BY ADC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------------

14. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------

15. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------

16. COMPLETENESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------

17. SECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------

18. AMENDMENTS AND SUPPLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------------------

19. APPLICABLE LAW; NO CONSEQUENTIAL DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------------------------------

20. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------

</TABLE>
E-2
<PAGE> 2

<TABLE>
<S> <C> <C>
21. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------

22. OGDEN GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------
</TABLE>
E-3
<PAGE> 3
1

SERVICES AGREEMENT

THIS AGREEMENT is made and entered into as of the 18th day of December
1995, by and between GENICOM CORPORATION, a Delaware corporation, with its
principal place of business at 14800 Conference Center Drive, Suite 400,
Westfields, Virginia 22021-3806 ("GENICOM"), ATLANTIC DESIGN COMPANY, INC., a
New York corporation, with its principal place of business at 5601 Wilkinson
Boulevard, Charlotte, North Carolina 28208-3557 ("ADC") and OGDEN SERVICES
CORPORATION, a Delaware corporation, with its principal place of business at 2
Pennsylvania Plaza, New York, New York 10121 ("OGDEN") as guarantor.

W I T N E S S E T H

WHEREAS, GENICOM and ADC are parties to (i) a stock purchase
agreement, dated December 15, 1995 (the "Purchase Agreement"), and related
agreements, whereby GENICOM has sold and ADC has purchased (A) certain
inventory and equipment owned by GENICOM and located at the plant (the "Plant")
historically operated in Reynosa, Mexico by GENICOM's subsidiary, Genicom de
Mexico, S.A. de C.V. ("GENMEX"), (B) all of the outstanding capital stock of
GENICOM's subsidiary, DATACOM de Mexico, S.A. de C.V. ("DATACOM"), and (C)
GENICOM's warehouse operations and assets in McAllen, Texas (the "McAllen
Facility"); and (ii) an agreement with respect to preferential consideration to
be given to GENICOM's products and services by ADC's ultimate parent, Ogden
Corporation, and its Affiliates, as defined below (the "Preferential
Consideration"); and

WHEREAS, as an essential part of the Purchase Agreement, the parties
have agreed, inter alia, that ADC shall manufacture and assemble Products and
perform Other Services, as those terms are defined herein, for GENICOM; and

WHEREAS, the parties have entered into a letter agreement, dated
November 27, 1995, as amended (the "Interim Letter Agreement"), and an interim
services agreement, dated December 17, 1995 (the "Interim Services Agreement"),
whereunder they have completed certain preliminary transactions.

NOW, WHEREFORE, in consideration of the sum of One Dollar and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

E-4
<PAGE> 4
2

1. GRANT OF LICENSE

1.01 (a) GENICOM hereby grants to ADC and its Affiliates a
nonexclusive license (the "License") at no cost for the term of this Agreement
to use all GENICOM owned and licensed patents, patent rights, processes,
designs, formulas, inventions, trade secrets, specialized technological
information and techniques not generally known in the industry, and all
enhancements, modifications or updates thereto, whether developed by GENICOM or
ADC (the "Intellectual Property"), for the sole purpose of performing its
obligations under this Agreement. No rights to the Intellectual Property shall
transfer to ADC or its Affiliates hereunder, and GENICOM shall retain all
right, title and ownership in and to the Intellectual Property and any
enhancements, modifications or updates thereto, including, without limitation,
any enhancements, modifications or updates developed by ADC or its Affiliates
in the course of performing under this Agreement.

(b) If ADC or its Affiliates uses the License in a manner not
authorized herein, GENICOM shall give written notice thereof to ADC, and
GENICOM will be entitled to specific performance and injunctive relief in
addition to any other remedies to which GENICOM may be entitled.

2. SCOPE OF SERVICES; MINIMUM GUARANTEE; INITIAL INVENTORY; RIGHT OF
FIRST REFUSAL

2.01 (a) During the term of this Agreement, ADC or its Affiliates
shall provide the following services to GENICOM (the "Services"):

(i) Manufacture, assemble and test Products, and refurbish and
remanufacture Products, pursuant to GENICOM's written specifications, including
without limitation, design and manufacturing specifications (the
"Specifications"). As used herein, "Products" is defined as the products
listed on Schedule 2.01(a)(i), delivered herewith;

(ii) Engineering, design and drafting services as mutually
agreed upon (the "Engineering Services");

(iii) Warehousing services, including without limitation,
integration of sourced Products; pick, pack and ship operations; storage of
finished goods and consigned inventory and additional related services as
mutually agreed upon (collectively, "Warehouse

E-5
<PAGE> 5
3

Services"). ("Engineering Services" and "Warehouse Services" shall be
collectively referred to herein as "Other Services.")

(b) The Services shall initially be performed at the Plant and the
McAllen Facility. Alternative or additional locations for the performance of
Services hereunder may be added as mutually agreed upon and reflected in a
Purchase Order, as defined below, or an amendment to this Agreement.

(c) During the term of this Agreement, the parties may add to, change,
or delete specific Products and Other Services by mutual agreement. It is
anticipated that GENICOM may delete the production of relay coils from the
Services to be provided hereunder.

(d) It is agreed that the parties shall meet from time to time to
discuss new and existing Products and the manufacturing processes associated
therewith, as set forth and provided for on Exhibit 2.01(d) (the "Technical
Operations Document").

2.02 (a) During the Minimum Guarantee Period , as defined below,
GENICOM guarantees that (i) it shall purchase Products from ADC at a total
price to GENICOM of no less than Fifty Four Million ($54,000,000) Dollars and
(ii) ADC shall expend no fewer than 980,000 man-hours to meet GENICOM such
production requirements (the "Minimum Guarantee").

(b) GENICOM shall use its best efforts to satisfy the Minimum
Guarantee during the first Contract Year. If, at the end of the first Contract
Year and succeeding four (4) months (the "Minimum Guarantee Period"), GENICOM
has failed to purchase Products valued at least as much as $54,000,000 (the
"Minimum Guarantee Product Requirements") for any reason, GENICOM shall pay to
ADC within thirty (30) days of receipt of an invoice, such payment to be in
lieu of any cancellation charges pursuant to Section 7.01(c) that may be
assessable in connection with the Minimum Guarantee Product Requirements, an
amount equal to ADC's lost profit margin. For the purposes of this subsection
(b) only, ADC's profit margin shall be deemed to be six (6%) percent of the
difference between $54,000,000 and the amount GENICOM paid to ADC during the
Guaranteed Minimum Period in fulfillment of Minimum Guarantee Product
Requirements;

(c) If ADC does not expend 980,000 or more man-hours during the
Minimum Guarantee Period, GENICOM shall pay ADC within thirty (30) days of
receipt of an invoice an amount equal to the product

E-6
<PAGE> 6
4

of Six ($6.00) Dollars per man-hour (the fixed cost portion of ADC's
fully-burdened labor rate) and the difference between 980,000 man-hours and
actual number of man-hours expended by ADC during the Minimum Guarantee Period.

2.03 (a) It is acknowledged by the parties that GENICOM owned
or had on order equipment, tools, and fixtures (the "Equipment"), an inventory
of parts and materials necessary for the assembly of the Products to be
produced hereunder (the "Initial Inventory"), work in process (the "Initial WIP
"). (The Equipment, Initial Inventory and Initial WIP are hereinafter
collectively referred as the "Acquired Assets".) It is further acknowledged by
the parties that ADC has issued a purchase order for the Equipment the Initial
Inventory and Initial WIP pursuant to the Interim Agreements and has made
partial payment therefor in accordance with a schedule attached to the Interim
Services Agreement. The balance thereunder shall be paid pursuant to the
Interim Services and/or Purchase Agreement, in accordance with their terms.

(b) ADC is required to inspect the Initial Inventory within
forty-five (45) days of its receipt and promptly notify GENICOM of any Obsolete
Material, as defined below. As used herein, "Obsolete Material" is defined as
Initial Inventory and Initial WIP which is (i) defective, or (ii) not active in
the list of parts and material required to manufacture and assemble Products
(the "Bill of Material") from GENICOM. GENICOM shall purchase such Obsolete
Material in ADC's possession at the end of such forty-five (45) day period at
ADC's original cost.

(c) At ADC's request, GENICOM shall purchase any remaining Initial
Inventory and Initial WIP in ADC's possession at the end of the Minimum
Guarantee Period, at such remaining Initial Inventory, or Initial WIP's
original cost to ADC plus interest on such amounts at the Prime Rate, as
defined below, applied on a monthly basis for the period from the date of
payment by ADC to the date of purchase by GENICOM. ADC shall provide GENICOM
with the opportunity to verify the amount of any Initial Inventory, Initial WIP
or Obsolete Material to be purchased by GENICOM. Thereafter, ADC shall
repurchase from GENICOM such remaining Initial Inventory and Initial WIP as
needed to fulfill its manufacturing requirements. The repurchase price for
such remaining Initial Inventory and Initial WIP shall be the price that ADC
would pay at such time of repurchase to third party suppliers in arms-length
transactions for the same or similar items, inclusive of shipping and handling
charges and taxes.

E-7
<PAGE> 7
5

(d) ADC shall use its best efforts to expend the Initial Inventory
and Initial WIP prior to purchasing any additional materials, parts and other
supplies for the production of Products. To the extent that any of the Initial
Inventory and Initial WIP is fungible, it will be treated on a "first in-first
out" basis.

(e) The parties acknowledge and confirm that ADC has observed
GENICOM's annual physical count of the Initial Inventory and Initial WIP
conducted in October 1995 and has been provided with the opportunity to review
(including confirming sampling) GENICOM's practices for tracking decreases and
increases in Initial Inventory and Initial WIP since the physical count was
made.

(f) GENICOM shall introduce ADC to its suppliers of components
necessary for manufacturing the Products hereunder and, at the request of ADC,
shall use its best efforts ( to cause the terms and conditions of its supplier
agreements to inure to the benefit of ADC in furtherance of ADC's obligations
hereunder, subject to any limitations imposed thereon by such supplier
agreements. It is the intent of the parties hereto to cooperate in those
instances where GENICOM's supplier agreements preclude assumption by ADC so
that GENICOM and ADC shall be in substantially the same position as if said
supplier agreements are so assumed. Details of any supplier rebates or
discounts given to GENICOM in respect of the materials used to produce the
Products hereunder shall be disclosed in writing to ADC and delivered herewith
as Schedule 2.03(f).

2.04 So long as there is no default by ADC hereunder, and no event
which, with the giving of notice or the passage of time would become a default
by ADC hereunder, has occurred and is continuing, GENICOM shall give ADC a
right of first refusal to perform (a) all manufacturing of New Products, as
defined below, and Product related new services ("New Services") to be
outsourced by GENICOM to a company that is not an Affiliate of GENICOM; and (b)
work performed by an existing vendor that GENICOM intends to have another or a
different vendor perform ("Existing Vendor Services"). GENICOM shall serve
written notice of the right of first refusal on ADC (the "Right of First
Refusal Notice") which shall set forth a description of the New Products, New
Services or Existing Vendor Services required by GENICOM, Forecasts in
connection therewith, and an offer to negotiate prices therefor. ADC shall
have thirty (30) days to exercise the rights granted therein from the day on
which the Right of First Refusal Notice is delivered by advising GENICOM in
writing of ADC's intention to commence such

E-8
<PAGE> 8
6

negotiations. The parties shall thereupon commence good faith negotiations for
the New Products, New Services or Existing Vendor Services. If ADC does not
exercise the right of first refusal as granted above or if the parties cannot
reach a mutually acceptable agreement for the New Products, New Services or
Existing Vendor Services within forty-five (45) days from the date of ADC's
exercise notice, then GENICOM shall have the right to negotiate for the
provision of the New Products, New Services or Existing Vendor Services with a
third party. In the event that GENICOM receives a bona fide third-party offer
for such New Products, New Services or Existing Vendor Services (the "Third
Party Offer") and ADC's best and final price offer therefor was within three
(3%) percent of the Third Party Offer, GENICOM shall award the work to ADC at
such best and final price. As used herein, "New Products" is defined as
products whose form, fit or function have been substantially changed from
existing models

3. TERM; TERMINATION OPTION

3.01 The term of this Agreement shall be five (5) years commencing
on the date hereof, and shall be automatically extended for additional one (1)
year periods (each an "Option Period") unless either party shall provide the
other with written notice of its desire not to extend said term by no later
than one hundred eighty (180) days prior to the end of the initial five (5)
year period and each Option Period. As used herein, the term "Contract Year"
shall be defined as each successive twelve (12) month period commencing on the
date hereof.

3.02 (a) Subject to Section 2.04, GENICOM may early terminate
this Agreement (the "Termination Option") in the event that: (i) GENICOM, in
good faith, intends to order New Products, New Services or Existing Vendor
Services from ADC that would increase ADC's overall volume of manufacturing and
other activities under this Agreement by twenty (20%) or more sustainable
volume above the volume of such activities during the ninety (90) day period
immediately preceding the proposed increase (a "Volume Increase"), as measured
by the number of Product units in the case of New Products or Existing Vendor
Services for Products, man-hours in the case of New Services and Existing
Vendor Services for Other Services, and space requirements in the case of new
Warehouse Services, and (ii) as provided in Section 2.04, ADC and Genicom do
not negotiate mutually acceptable terms regarding such Volume Increase or ADC
does not accept an Offer to Match, as defined below, therefor. Such proposed
Volume Increase shall be evidenced

E-9

<PAGE> 9
7

by a Right of First Refusal Notice. GENICOM shall be precluded from
exercising the Termination Option if (i) a Right of First Refusal Notice
reflecting the proposed Volume Increase is not given to ADC six (6) months or
more prior to such Volume Increase, or (ii) such proposed Volume Increase would
increase ADC's capital requirements by twenty (20%) percent above ADC's
then-current annual fixed capital plan. It shall not be a default under this
Agreement if ADC does not accept a Volume Increase. If the Third Party Offer
is priced less than ninety-seven (97%) percent of ADC's best and final price,
GENICOM shall provide ADC with written notice thereof, including the name of
the third party and the terms and conditions of the Third Party Offer, and an
offer to substantially match the Third Party Offer or secure an alternate
provider upon comparable terms (the "Offer to Match"). ADC shall have thirty
(30) days to either accept the Offer to Match in writing or such offer shall be
deemed to be withdrawn, and GENICOM may either accept the Third Party Offer
and/or exercise the Termination Option. (The "Acceptance Period" is defined as
the period commencing on the date of ADC's receipt of the Right of First
Refusal Notice to the date on which ADC's right to accept the Offer to Match
expires.

(b) In the event GENICOM has the right to exercise the Termination
Option, as a condition precedent to the termination of this Agreement, GENICOM
shall, within thirty (30) days of the date that ADC refuses to accept the Offer
to Match, or if none, or the end of the Acceptance Period (whichever is
sooner), deliver written notice to ADC of its intent to (i) waive its right to
exercise the Termination Option (the "Waiver") or (ii) terminate this Agreement
(the "Termination Notice"), specifying an effective date for the termination
which shall be no less than thirty (30) days and no more than sixty (60) days
following delivery of said Termination Notice (the "Termination Date"). In the
event GENICOM delivers a Termination Notice to ADC, GENICOM shall comply with
the terms of the Reacquisition Conditions, as set forth and defined in Section
4.01.

(c) If GENICOM does not terminate this Agreement pursuant to
Sections 3.02(a) and 3.02(b), or fails to deliver a Waiver in a timely manner,
GENICOM's right to exercise the Termination Option shall be waived with respect
to such proposed Volume Increase only, and ADC shall not be obligated to
perform the Services required thereunder.

4. REACQUISITION CONDITIONS; DEDICATED ASSETS

E-10
<PAGE> 10
8

4.01 (a) GENICOM shall be required to comply with the
Reacquisition Conditions in the event that GENICOM (i) exercises the
Termination Option, or (ii) is in default of this Agreement and ADC elects to
terminate this Agreement due to such default. In such events, GENICOM's
compliance with the Reacquisition Conditions shall be a condition precedent to
GENICOM's allowing any other person, firm or corporation to perform the
Services or operate the Plant or McAllen Facility, or to GENICOM performing the
Services or operating the Plant or McAllen Facility on its own behalf.

(b) GENICOM may comply with either or both of the Reacquisition
Conditions, at GENICOM's option,(i) in the event that ADC is in default of this
Agreement and GENICOM elects to terminate this Agreement as a result of such
default, or (ii) this Agreement expires or this Agreement terminates due to a
Force Majeure Event, as defined below.

(i) GENICOM shall purchase the Dedicated Assets, as defined
below, at the higher of fair market value (as determined by mutual agreement of
GENICOM and ADC) or ADC's then-current net book value for such assets, provided
that materials and parts on order shall be treated pursuant to the manner in
which non- useable on-order Remainders, as defined below, are treated under
Section 7.03; and

(ii) GENICOM shall hire the Dedicated Employees, as defined
below, at their then-current rates of pay and benefits, or pay ADC the amount
of employee benefits required to be paid by ADC to Dedicated Employees
terminated by ADC due to the termination of this Agreement, at GENICOM's
option.

(d) In connection with GENICOM's fullfillment of either or both of
the Recquisition Conditions, as applicable, the parties shall take the
following actions, as applicable::

(i) ADC or its designee shall transfer, convey and assign
to GENICOM, in a manner as the parties shall mutually agree, (A) title to the
Dedicated Assets, free and clear of all claims, pledges, security interests,
liens, mortgages or encumbrances (collectively, "Liens"), and (B) such
agreements, including the Collective Barganing Agreement, and an amount equal
to the accruals for employee benefit plans regarding the Dedicated Employees as
are

E-11
<PAGE> 11
9

in the possession or control of ADC or its Affiliates;

(ii) ADC shall terminate or assign to GENICOM or its
designee (depending on the structure agreed upon by the parties) all other
agreements necessary for GENICOM or its designee to reacquire the Plant and
McAllen Facility, including without limitation, the Lease Agreement, the Plant
Sublease Agreement and the McAllen Sublease Agreement; provided that the
parties mutually agree upon a date for the termination of ADC's access to the
Plant and the McAllen Facility which would enable ADC to make an orderly
transition of its operations into alternate facilities and allow GENICOM to
effectively operate the Plant operations and the McAllen Facility as soon as
practicable.

(iii) The parties shall execute and deliver all such bills of
sale, assignment and assumption agreements or other documents reasonably
necessary to effect the transactions set forth in subsections 4.01(d)(i) and
4.01(d)(ii) above.

(e) As used herein, "Dedicated Assets" means the following items,
provided that they are (i) owned or controlled by ADC or its Affiliates; and
(ii) on-order, utilized or produced in connection with the Services provided
hereunder: (A) equipment, tools, fixtures and inventories of materials, parts,
and work in process, purchased, ordered, manufactured or assembled in
quantities and types reasonably related to GENICOM-issued Purchase Orders,
Change Orders, and Forecasts, and (B) capital improvements made by ADC at the
Plant or the McAllen Facility. As used herein, "Dedicated Employees" shall
mean the employees at the Plant and McAllen Facility engaged primarily (50% or
more of their time) in providing the Services hereunder.

4.02 It is hereby acknowledged by the parties that as of the date
hereof, the Acquired Assets acquired by ADC pursuant to the Interim Services
Agreement and the Purchase Agreement are Dedicated Assets. If ADC desires to
utilize Dedicated Assets for a party other than GENICOM or move the Dedicated
Assets from the Plant or the McAllen Facility, ADC shall obtain the prior
written consent of GENICOM, which shall not be unreasonably withheld.

4.03 (a) To the extent that any third party (including
governmental) consents or approvals are required for the above- described
termination transactions, the parties shall use best efforts to obtain the same
as soon as possible so that the Plant operations and the McAllen Facility can
be effectively operated by

E-12
<PAGE> 12
10

GENICOM or its designees on or about the Termination Date, subject to the last
clause of Section 4.01(d)(ii).

(b) ADC shall indemnify and hold harmless GENICOM against all
Liens upon any Dedicated Assets acquired by GENICOM pursuant to Section 4.01,
and claims arising from the conduct of ADC and its Affiliates hereunder, except
as otherwise specifically provided herein.

5. PURCHASE ORDERS; CHANGE ORDERS; PAYMENT AND DELIVERY TERMS

5.01 (a) The Services shall be rendered by ADC in accordance
with separate purchase orders ("Purchase Orders") and Change Orders, as defined
below, issued by GENICOM to ADC from time to time. All Purchase Orders, Change
Orders, confirmations and related documents shall be delivered by electronic
data interchange ("Electronic Data Interchange") in accordance with the
procedures set forth on Exhibit 5.01(a) hereto. Each Purchase Order shall
contain the following information:

(i) Description and quantity of Products to be shipped
or description of Other Service required;

(ii) The Product or Other Service unit price;

(iii) The required delivery schedule and place of delivery.
The cost of expedited delivery or delivery to a destination other than the FOB
Point, as defined below, will be negotiated on a case-by-case basis; and

(iv) Specifications or reference thereto if such
Specifications have been previously supplied by GENICOM to ADC.

(b) Initial Purchase Orders for a particular Product model or
design specification shall identify the quantity required to be manufactured
and delivered by ADC in the first ninety (90) days following the date of the
Purchase Order (the "Manufacturing Period"). GENICOM shall issue a Purchase
Order for its Product requirements for the initial Manufacturing Period within
five (5) days of the date hereof which shall provide for a written weekly
delivery schedule and Forecast, as defined and set forth below. Unfulfilled
Purchase Orders issued under the Interim Agreements shall be deemed Purchase
Orders under this Agreement. Commencing on the first business day of each
succeeding month after the date hereof or more frequently if necessary, subject
to Section 7 below,

E-13
<PAGE> 13
11

GENICOM shall amend and extend such Purchase Order and the 12-Month Forecast
(as defined below) portion of such Forecast by thirty (30) days. Industry
Trend Data, the GENICOM Strategic Plan, and the GENICOM Annual Operating Plan,
as those terms are defined below, shall be updated by GENICOM annually. The
parties acknowledge that it is their intent to maintain a minimum of ninety
(90) days manufacturing coverage during the term of this Agreement. GENICOM
may increase or decrease the quantities or, on an exception basis, the delivery
dates for particular Products ordered pursuant to a Purchase Order after the
issuance thereof subject to Section 7 hereof or ADC's reasonable approval.

(c) GENICOM shall provide ADC with the following type of forecast
information, as provided in Section 5.01(b) (the "Forecast"):

(i) "12-Month Forecast": Twelve (12) month plan by each
GENICOM business unit with a detailed monthly projection of the Services
required to be provided hereunder during such period, including without
limitation, the quantities and types of Products required.

(ii) "Industry Trend Data": Multi-year projection of
overall printer markets with a breakdown by printer class, including GENICOM's
chosen market cells. Such data as is currently available from industry
consultants and is in GENICOM's possession will be provided to ADC on the date
hereof and thereafter shall be updated and provided to ADC as set forth in
Section 5.01(b).

(iii) "GENICOM Strategic Plan": Two (2) year revenue only
projection by each GENICOM business unit with Product, industry, and channel
detail to generate strategic objectives, including without limitation, Product
specific projections, new Product introduction plans, and end of life plans for
existing Products. GENICOM's current Strategic Plan will be provided to ADC
on the date hereof and thereafter shall be updated and provided to ADC as set
forth in Section 5.01(b).

(iv) "GENICOM Annual Operating Plan": One (1) year
operations plan by each GENICOM business unit with a detailed monthly
projection of expenses and revenues by Product, to be used for resource
planning, capacity sizing, and expense budgeting for the period covered by such
plan. GENICOM's 1996 Operating Plan will be provided on the date hereof and
thereafter shall be updated and provided to ADC as set forth in Section
5.01(b).

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12

5.02 All Purchase Orders and Change Orders shall be subject to this
Agreement and acceptance by ADC, such acceptance not to be withheld if the
Purchase Order or Change Order is consistent with Forecasts provided pursuant
to Sections 5.01(b) and 5.01(c), and not to be unreasonably withheld in all
other cases. ADC shall use its best efforts to be ready to serve GENICOM's
requirements as set forth hereunder and in Purchase Orders and Change Orders.
ADC shall notify GENICOM by Electronic Data Interchange within three (3) days
of ADC's acceptance or rejection of any Purchase Order, or such Purchase Order
shall be deemed accepted.

5.03 (a) All changes, modifications and amendments to a Purchase
Order shall be set forth in a Change Order. Either party hereto may request a
Change Order before the delivery of Product or performance of Other Service
hereunder. A Change Order shall reference the Purchase Order it is amending
and identify the change with specificity. The effective date of any
Specification or engineering change will be mutualy agreed upon in writing. The
parties may orally agree to change a Purchase Order provided that a written
Change Order reflecting such changes is exchanged via Electronic Data
Interchange within twenty-four (24) hours thereafter. As used herein, a
"Change Order" is defined as a written amendment to a Purchase Order, including
without limitation, the price terms, agreed to in writing by the parties
hereto. The term "Change Order" includes purchase and engineering Change
Orders.

(b) In the event that ADC receives a proposed Change Order, ADC
shall, in its sole discretion, make a good faith determination of the cost of
such Change Order within five (5) business days, and shall notify GENICOM of
the price thereof, if any, which price offer shall remain open for thirty (30)
days. ADC shall not commence work on any Change Order unless it is at no
additional cost to GENICOM or has obtained GENICOM's prior written acceptance
of the price thereof.

5.04 In the event of a conflict between a Purchase Order, a Change
Order, this Agreement, the Interim Services Agreement and/or the Interim
Letter Agreement, unless the intent of the parties to supersede this Agreement
the Interim Services Agreement and/or the Interim Letter Agreement, is clearly
reflected in a Change Order, the order of precedence shall be as follows: (1)
this Agreement, (2) the Interim Services Agreement, (3) the Interim Letter
Agreement, (4) a Change Order, and (5) a Purchase

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13

Order.

5.05 Delivery shall be FOB such location as the parties may
mutually agree upon (the "FOB Point"). The initial FOB Point shall be the
McAllen Facility. The time of delivery shall be within five (5) days (plus or
minus) of the required delivery schedule, as set forth in the applicable
Purchase Order. Title to the Products shall pass from ADC to GENICOM upon
delivery to GENICOM at the FOB Point.

5.06 On a weekly basis, ADC will invoice GENICOM through the
Electronic Data Interchange for Products delivered to the FOB Point and Other
Services performed during the preceding week, net of any credits due to
GENICOM; provided, however, that GENICOM shall not be charged for those days of
Warehouse Services for Products delivered to the FOB Point more than five (5)
days prior to the date specified on the relevant Purchase Order. Payment shall
be due net thirty (30) days. GENICOM shall pay an interest charge on
outstanding balances ten (10) or more days past due at the Prime Rate.

5.07 Specific parts or materials whose procurement time exceeds
(90) days on a non-expedited basis ("Long Lead-Time Items") shall be identified
by ADC to GENICOM promptly after ADC becomes aware of such procurement time.
ADC shall purchase Long Lead-Time Items in accordance with the Forecasts. Long
Lead-Time Items not used due to cancelled Purchase Orders shall be treated as
Remainders.

6. PRICE; SAVINGS SPLIT; ADDITIONAL COSTS

6.01 The initial prices for Products to be provided hereunder are
set forth on Schedule 2.01(a)(i) and the price for Warehouse Services is One
Hundred Two Thousand Eight Hundred Forty Three ($102,843) dollars per month.
Said prices shall be fixed for the first Contract Year, except as otherwise
provided for herein.

6.02 (a) The parties shall meet no later than thirty (30) days prior
to the end of each Contract Year to establish prices (up or down) for the
following Contract Year. Such price changes shall be based upon actual
changes to ADC's labor, material and overhead costs at the Plant anticipated
during the following Contract Year, including without limitation, price changes
that may result due to additional or reutilized Dedicated Assets. The
percentage change of all prices changes in the aggregate shall not

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14

exceed the percentage change in the Core Inflation Rate, as defined below, from
the start to the end of the then-concluding Contract Year, excepting increases
due to mutually agreed-upon capital investments by ADC. As used herein, the
"Core Inflation Rate" is defined as the Consumer Price Index for the United
States, urban wage earners and clerical workers, exclusive of food and energy
prices, as announced from time to time by the Department of Labor s Bureau of
Labor Statistics.

(b) Notwithstanding anything contained herein to the contrary,
prices may be varied by ADC (i) at any time due to (A) cost reductions
implemented by either party relating to the subject matter of this Agreement,
as provided for in Section 6.03 below; (B) Catastrophic Changes or Beneficial
Changes, as those terms are defined below; or (C) End of Life Products, as
defined below; and (ii) quarterly due to Economies of Scale, as defined and
provided for below.

(c) As used herein, a "Catastrophic Change" is defined as an
increase in ADC's material cost rates due to printer industry- wide single part
cost increases beyond the control of either party in excess of three (3%)
percent which cause an increase in the total cost of a Product of more than
three (3%) percent. As used herein, a "Beneficial Change" is defined as a
printer industry-wide decrease in ADC's material cost rates due to single part
cost decreases in excess of three (3%) percent which cause a decrease in the
total cost of a Product of more than three (3%) percent. Catastrophic Changes
and Beneficial Changes shall be passed on to GENICOM on a dollar-for-dollar
basis in the form of price increases or decreases, as the case may be.

(d) As used herein, a Product is by definition an "End of Life
Product" if (i) GENICOM declares it to be such, or (ii) the manufacturing
volume thereof is no longer economically viable for either party hereto, as
mutually agreed upon on a case by case basis. Unused parts and materials
associated with End of Life Products shall be treated as Remainders under
Section 7.03(c).

(e) In the event that (i) GENICOM's Purchase Order requirements
for Products exceeds the Minimum Guarantee during the Minimum Guarantee Period,
or (ii) ADC exceeds the Labor Target, as defined below, ADC may decrease the
prices of Products on a prospective basis to reflect any economies of scale
enjoyed by ADC due to such increased volume of activity (the "Economies of
Scale"). ADC may subsequently increase said prices prospectively

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15

if the Economies of Scale are not sustained, up to the agreed upon prices for
such Contract Year. The parties shall discuss any such price adjustments at
their Quarterly Meetings, as defined below. As used herein, the "Labor Target"
is defined as a threshold number of man-hours of manufacturing and assembly
activity by ADC at the Plant in a given Contract Year, as mutually agreed upon
by the parties hereto. The Labor Target shall be reset annually when the
parties meet to discuss annual price changes. The Labor Target for the first
Contract Year is One Million Two Hundred Thousand (1,200,000) man-hours.

(f) ADC will notify GENICOM at least sixty (60) days prior to any
mid-Contract Year price adjustments as provided for above. If GENICOM and ADC
disagree on the amount of a price adjustment proposed to be made under this
Section 6.02, and such disagreement cannot be resolved by discussion between
the chief executive officer of GENICOM and the chief operating officer of ADC,
the disagreement shall be submitted to arbitration pursuant to Section 20
hereof and the current prices shall remain in effect pending the outcome of the
arbitration proceeding. Any price change determined appropriate by the
arbitrator shall be retroactively applied to the date established by the
parties (or, if necessary, the arbitrator) as appropriate.

6.03 (a) The parties shall make good faith efforts to reduce the cost
to GENICOM of the Products and Other Services provided hereunder. In the
event that the total of all prices for Products based upon the fixed demand as
projected in Schedule 6.03(a) is less than the Baseline, as defined below, the
difference shall be divided equally between the parties as a savings split (the
"Savings Split"). The "Baseline" is defined as an amount equal to the total of
all 1996 Fourth Quarter prices for Products based upon a fixed annual demand,
as projected in Schedule 6.03(a). The Savings Split shall not be paid unless
and until ADC has recovered the capital investment it made, if any, in
connection therewith.

(b) The Savings Split shall be paid to the parties for the
remaining term of this Agreement as follows: ADC shall reduce the price of
Products and Other Services by fifty (50%) percent of the realized savings.
In lieu thereof, ADC may issue GENICOM a credit in said amount on a monthly
basis applicable to future invoices.

(c) The parties shall meet within three (3) months after the date
hereof and thereafter on a quarterly basis to establish cost reduction programs
for purposes of the Savings Split, their dates

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16

of implementation, including price adjustments, as mutually agreed, and the
means to measure the impact of such cost reduction programs (the "Quarterly
Meetings"). At the Quarterly Meetings, the parties shall also review progress
in reducing costs, agree on additional cost reduction programs, confirm the
amount of price reductions subject to the Savings Split and make any price
adjustments pursuant to Section 6.02(e). If Product redesign results in the
obsolescence of equipment, tools, materials and parts, and a cost savings
benefit subject to the Savings Split, the parties shall share the cost i.e.,
the difference between the net book value and recovery value, of such obsolete
items.

6.04 GENICOM will be responsible for certain additional charges,
defined as those charges constituting costs and expenses not contained in
Schedule 2.01(a)(i) or the Purchase Orders where the cause is not due to ADC or
the performance of its obligations under this Agreement and which fall into one
or more of the following categories:

(a) Overtime; Downtime/Workflow Interruption. ADC shall obtain a
Change Order from GENICOM in advance of incurring any overtime or downtime
expense due to a Change Order. There shall be no charge for ADC expenses
incurred due to permitted reschedulings made in accordance with Sections
7.01(a) and 7.01(b). As used herein, "downtime expense" means the labor cost
incurred by ADC for the period when ADC's normal manufacturing process of a
Product to be produced hereunder is halted, delayed or interrupted.

(b) Specifications Changes. GENICOM shall be liable for ADC's
expenses incurred in connection with any Specification or engineering change
initiated by GENICOM, except as provided in Section 7.01(b). ADC shall obtain
an engineering Change Order from GENICOM in advance of incurring any expense
which ADC believes should be paid by GENICOM, provided that, if such changes
will result in cost reductions or in such other circumstances as ADC and
GENICOM may determine are appropriate, the sharing of such expenses may be
agreed to.

(c) Obsoleted Material. Subject to Section 6.03(c), materials
(on-hand or subject to non-returnable or non-cancelable orders) which are
reasonably related to issued Purchase Orders or Change Orders and which are
rendered obsolete as a result of any GENICOM requested specification or
engineering change, including without limitation, material purchased by ADC due
to a Purchase Order from GENICOM, shall be treated as Remainders. The
effective

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17

date of any specification or engineering change will be mutually agreed upon in
writing.

(d) Rework Labor Costs. GENICOM shall pay for any additional
labor costs required to implement a Change Order calling for rework labor.
Prior to beginning any such work, ADC will provide GENICOM with estimated
additional labor and material costs and obtain a Change Order therefor.

7. RESCHEDULING; CANCELLATION OF PURCHASE ORDERS; REMAINDERS

7.01 (a) GENICOM may reschedule (increase or decrease)without
penalty the delivery of Products and Product groupings ordered pursuant to a
Purchase Order in accordance with the following table:

<TABLE>
<CAPTION>
Days Before Scheduled Shipment Percent Rescheduled
------------------------------ -------------------
<S> <C>
0-30 0%
31-60 15%
61-90 30%
</TABLE>

(b) GENICOM may reschedule the delivery of Products without
penalty due to engineering changes described in Schedule 7.01(b) (the
"Reconfiguration Matrix").

(c) In the event that GENICOM causes a change in the delivery
schedule except as provided in Sections 7.01(a) and 7.01(b) above, GENICOM
shall pay ADC, for work in process, completed but unshipped work, or the
material or assemblies being rescheduled in accordance with Section 7.03.. The
schedule of a single line item in a Purchase Order may not be changed more than
twice during any forty-five (45) day period. Purchase Orders that cannot be
rescheduled under this Agreement will be fulfilled in accordance with the
schedule set forth in the original applicable Purchase Order or last accepted
Change Order pertaining thereto.

7.02 GENICOM may cancel all or any part of any Purchase Order
subject to a cancellation charge which the parties hereto undertake to
negotiate in good faith on a case-by-case basis, except as provided for in
Section 7.04 below, based upon ADC's costs due to such cancellation, including
without limitation, any cost related to Remainders, as provided for in Section
7.03 below, actual labor expended, and reasonable out-of-pocket expenditures.
In addition, a material burden of three (3%) percent shall be added to such

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18

costs.

7.03 Remaining parts and materials purchased or ordered by ADC to
fulfill Purchase Orders issued by GENICOM and work in process manufactured or
assembled hereunder, exclusive of remaining Initial Inventory and Initial
WIP,remaining after their scheduled use ("Remainders") shall be treated as set
forth in this Section. In the event that any Remainders are useable in the
manufacture and assembly of Products for which GENICOM has issued Purchase
Orders, GENICOM shall pay ADC interest on ADC's cost of said Remainders during
the period commencing on the approximate date of their original intended use
and ending on the date of actual use. The applicable rate of interest shall be
the prime rate as published in the Wall Street Journal (the "Prime Rate") on
the date of such actual use, applied on a monthly basis. If Remainders are not
useable as described above, ADC shall use its best efforts to minimize the cost
to GENICOM of such items by attempting to return them to suppliers or, in the
case of on-order Remainders, attempt to cancel open purchase orders therefor,
without a penalty. In the event that all or part of the Remainders are
non-useable, non-returnable, non-cancellable, or returnable or cancellable
with penalties or other expenses, GENICOM shall (at GENICOM's option, as
applicable) either (i) buy them from ADC at ADC's original cost plus seven (7%)
percent, (ii) pay ADC for its return or cancellation costs, or (iii) in the
case of on-order Remainders, assume ADC's obligations therefor.

7.04 In addition to the payments that may be required under
Section 7.01, 7.02 and 7.03, if (i) GENICOM's Purchase Order requirements
reduce ADC's manufacturing activities at the Plant in any thirty (30) day
period by thirty (30%) percent or more, and (ii) GENICOM fails to provide ADC
with thirty (30) days prior written notice of its intent to so reduce its
Purchase Order requirements, then GENICOM shall pay ADC an amount equal to
either (at GENICOM's option): (A) the employee benefits that would have been
paid to DATACOM employees as of the closing date of the Purchase Agreement if
such employees had been terminated on such date, provided that such employees
are terminated by ADC during said thirty (30) day period, or (B) such
employees' salaries and benefits for said thirty (30) day period.

8. QUALITY UNDERTAKING

8.01 (a) ADC agrees that the Products produced hereunder shall
conform to all Specifications provided to ADC by GENICOM.

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GENICOM retains the right to inspect items to be purchased hereunder at time of
completion and prior to shipment from the Plant to assure conformance with such
Specifications. Additionally, GENICOM shall have the right, subject to ADC's
reasonable approval as to dates and times, to visit, and have GENICOM's
customers visit, and inspect ADC's facilities where Products are being
manufactured and assembled and to observe ADC's manufacturing, assembly and
other processes.

(b) ADC shall develop a written quality assurance program (the
"Quality Assurance Program"), a copy of which shall be supplied to GENICOM, for
Product manufacturing, assembly and delivery. ADC shall meet or exceed
GENICOM's current performance level against the quality and delivery
performance standards set forth in Exhibit 8.01(b) (the "Quality Standards")
and show continuous improvement to bring such processes towards the objectives
set forth in the Quality Standards, subject to the Specifications. The Quality
Assurance Program shall be updated and supplied to GENICOM annually. ADC shall
maintain the ISO registration of the Plant operations at ISO 9000, except with
respect to printed circuit board subassemblies, and shall meet all applicable
U.L., F.C.C. and C.S.A. standards for manufacturing processes. The status of
ISO, U.L., F.C.C., VDE and C.S.A. standards as of the date hereof is set forth
is Schedule 8.01. It is the desire of the parties that ADC show continual
improvement in the quality standards of its Product manufacturing and assembly
processes.

8.02 ADC agrees that the Products produced hereunder shall be free
of defects in material and workmanship under normal use and operation for a
period of one (1) year from date of delivery at the FOB Point, except that the
undertakings set forth in this Section 8.02 and Sections 8.03 and 8.04 shall
not apply to defects due to Specifications or defective material provided by or
acquired from GENICOM.

8.03 ADC shall repair (at the Plant or other ADC facility) or
replace defective or non-conforming Product, provide GENICOM with a refund
therefor or reimburse GENICOM for the costs of repair (parts and labor only)
effected by GENICOM. Repaired or replacement units shall be covered by the
quality undertaking set forth in Sections 8.01 and 8.02. The form of
compensation (repair, replacement, refund or reimbursement) shall be at
GENICOM's option, subject to ADC's reasonable approval, and made within thirty
(30) days of GENICOM's request. Notwithstanding the foregoing, ADC

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20

shall only be obligated to reimburse GENICOM for GENICOM's repair costs to the
extent that such costs are equal to or less than ADC's cost of repair, refund
or replacement.

8.04 Should there be field failures of any Product produced hereunder
in excess of three (3%) percent of the total number of such Products delivered
to the FOB Point during any three-month period, ADC will, in addition to the
remedies provided in Section 8.03 hereof, pay shipping, air freight, or
expediting fees incurred by GENICOM in connection with such failed Product.
Such reimbursable expenses may include all reasonable and necessary costs of
providing field repairs, including transportation and related expenses,
provided however, that prior to incurring expenses for field repairs, GENICOM
shall provide ADC with written notice thereof and an opportunity to conduct
such field repairs on its own account or to send representatives with GENICOM's
field engineers or repair technicians to investigate the claimed Product
defects. In the event that such field failures are due to Specifications or
defective material provided by or acquired from GENICOM, GENICOM shall pay ADC
for all reasonable and necessary costs incurred by ADC in connection with said
investigation, including transportation and related expenses.

8.05 THE AGREEMENTS SET FORTH IN THIS SECTION 8 SPECIFICALLY
EXCLUDE ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ADC DOES NOT UNDERTAKE THAT THE PRODUCTS WILL MEET U.L., F.C.C., CSA OR VDE
PRODUCT STANDARDS. THESE UNDERTAKINGS ARE IN LIEU OF ALL OTHER WARRANTIES,
WRITTEN OR ORAL, EXPRESSED OR IMPLIED, IN RELATION TO THE PRODUCTS PRODUCED
HEREUNDER. IT IS HEREBY EXPRESSLY AGREED THAT ANY IMPLIED OR STATUTORY
WARRANTIES UNDER THE SALE OF GOODS ACT, 1893 (AS AMENDED) IN RELATION TO THE
PRODUCTS PRODUCED HEREUNDER ARE EXCLUDED TO THE FULLEST EXTENT PERMITTED BY
LAW.

8.06 IN NO EVENT SHALL ADC BE LIABLE TO ANY THIRD PARTY FOR ANY
CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES DUE TO DEFECTIVE OR
NON-CONFORMING PRODUCTS.

9. PROPRIETARY AND CONFIDENTIAL INFORMATION; NON-COMPETITION

9.01 GENICOM and ADC agree to keep in confidence and not disclose to
others all knowledge, information and data furnished to it by the other and
claimed by either to be proprietary or confidential. GENICOM and ADC agree that
neither shall use or reproduce for use in any way any proprietary or
confidential

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21

information of the other except in furtherance of the relationship set forth in
this Agreement. Such information includes without limitation, all GENICOM
Forecasts, cost data, Product Specifications, Bills of Material and
manufacturing processes. GENICOM and ADC agree to protect such proprietary or
confidential information with the same standard of care and procedures which
each uses to protect its own proprietary or confidential information and shall
ensure that their respective parent companies, subsidiaries, directors,
officers, employees and agents shall comply with this Section. This Section
shall not be applicable and shall impose no obligation on a party with respect
to any portion of proprietary or confidential information which:

(a) was at the time received or which thereafter becomes, through
no act or failure on the part of such party, generally known or available to
the public;

(b) is known to such party at the time of receiving such
information as evidenced by documentation then rightfully in the possession of
such party; provided that the proprietary or confidential information provided
by GENICOM to persons in its employ who are subsequently employed by ADC shall
continue to be considered confidential and proprietary to GENICOM and subject
to ADC's obligations of confidentiality contained herein;

(c) is rightfully furnished to such party by a third party without
restriction by that third party on disclosure and not subject to any
obligations of confidentiality owed by the parties hereto or to a third party;
or

(d) is released from restrictions imposed hereunder by written
release given by the owner of the information.

9.02 During the term of this Agreement, neither ADC, GENICOM nor
any of their Affiliates shall, directly or indirectly, on their own behalf or
on behalf of any other entity (i) solicit any of the customers of the other
party for the purpose of competing with such other party; (ii) except as
provided for in the Purchase Agreement, hire or attempt to hire any employees
of GENICOM; and (iii) ADC and its Affiliates shall not utilize the Plant or the
McAllen Facility to compete with GENICOM or on behalf of a competitor of
GENICOM in the business of designing and selling high-speed printers.

10. INSURANCE

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22

ADC shall be responsible for insuring at fair market value (i) the
Dedicated Assets; and (ii) the Product stored by ADC hereunder. ADC shall
provide business interruption insurance with respect to its operations
hereunder in favor of GENICOM. Coverage shall be provided to the policy limits
set forth in Schedule 10. In line fire suppression, if functional as the date
hereof, shall be maintained by ADC at the McAllen Facility to minimize
insurance premiums. Each party hereto shall cause its respective insurers to
waive such insurer's right of subrogation with respect to the other party.

11. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

11.01 GENICOM hereby represents and warrants to ADC the following:

(a) GENICOM has all necessary or appropriate right, title and
ownership interest in the Intellectual Property embodied in the Products to be
manufactured by ADC for GENICOM hereunder, and has the authority to grant the
License to ADC;

(b) Based on GENICOM's experience and assuming normal business
conditions, GENICOM is not aware of any condition that would cause a material
or sole supplier of components used in the manufacture or assembly of the
Products to cease supplying such components to GENICOM or DATACOM or to refuse
to supply such components to ADC;

(c) GENICOM is not in material dispute with any of its suppliers
of raw materials relating to the quality of such materials, late deliveries, or
sums owed by GENICOM to any such supplier or otherwise;

(d) Not more than (10%) percent of the aggregate amount of all the
purchases made by GENICOM in the past year have been obtained from the same
supplier; and

(e) GENICOM's subsidiaries, GENMEX and DATACOM, do not have any
supplier arrangements that would have a material affect on the Plant operations
or Product manufacturing and assembly if such arrangements were substantially
altered or terminated.

(f) GENICOM is not in default of the financial covenants in any
loan agreement between it and any lender. In the event that GENICOM is in
default of any such loan covenants, GENICOM shall

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23

give prompt oral notice thereof to ADC's chief operating officer, which notice
shall be subject to Section 9 and disclosed within ADC and OGDEN on a strict
need to know basis. If GENICOM receives notice that any such loan shall be or
has been accelerated (whichever notice is received sooner), GENICOM shall
promptly notify ADC thereof and ADC may (at ADC's option) terminate this
Agreement without regard to any applicable cure period. Such termination shall
be deemed to be due to GENICOM's default hereunder.

11.02 Each party represents to the other party that it is duly
incorporated in accordance with the laws and regulations of the jurisdiction of
its incorporation, and that it has duly executed and delivered this Agreement,
and that this Agreement constitutes the legal, valid and binding obligation of
such party, enforceable against it in accordance with its terms. The
signatories hereto represent that they have full power and all necessary
authority to execute and deliver this Agreement.

11.03 (a) ADC and GENICOM shall each indemnify and hold
harmless the other party from and against all claims, actions, proceedings,
liabilities, losses, costs and expenses (including reasonable attorneys' fees
with respect thereto) arising out of or attributable to the breach of any
representation or warranty made herein by such breaching party.

(b) A party making a claim for indemnification pursuant to this
Section 11.03 (the "Indemnitee") shall notify the other party (the
"Indemnitor") in writing of the nature of any such claim promptly upon receipt
of knowledge of the facts upon which such claim is based, setting forth
specifically the representation or warranty with respect to which the claim is
made, if applicable, the facts giving rise to the alleged basis for the claim,
and the amount of liability asserted, to the extent known. The Indemnitor
shall have the right to conduct the defense of any such claim or action against
the Indemnitee, provided that it so elects by notice to the Indemnitee promptly
upon receipt of notice thereof from the Indemnitee. In defending, compromising
or settling any such claim or action, the Indemnitor shall exercise due regard
for the Indemnitee's continuing business interests and, where compromising or
settling any such claim, shall provide for a complete release of claims in
favor of the Indemnittee. The Indemnitee shall fully cooperate with the
Indemnitor in defense of all such claims or actions which the Indemnitor elects
to defend, and the Indemnitee shall have the right, at its own cost and
expense, to employ

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counsel to assist in such defense, which counsel may consult or confer with and
advise counsel or other representatives of the Indemnitor with respect thereto.
The Indemnitee's cooperation shall include making available the time and
assistance of the officers and other employees of the Indemnitee and providing
access to and the right to make copies of and excerpts from all pertinent
documents, books and records.

12. DEFAULT BY GENICOM

In the event that (a) GENICOM shall fail to pay within thirty (30)
days after the date when due any amounts due to ADC hereunder and fails to cure
within three (3) business days of receipt of notice thereof, or (b) GENICOM
shall commit a material breach of any other term, condition or covenant
contained herein or in the Purchase Agreement, the Lease Agreement, the Plant
Sublease or the McAllen Sublease Agreement, and shall fail to cure same within
said thirty (30) days after receipt of written notice from ADC so to do,
provided that if such default by its nature cannot be cured within said thirty
(30) days and does not involve the payment of money, then if GENICOM shall not
immediately upon notice from ADC commence curing such default and diligently
and continuously pursue such remedy and cure such default within ninety (90)
days; or (c) GENICOM shall make an assignment for the benefit of creditors, or
if a proceeding in bankruptcy, receivership or insolvency shall be instituted
by or against GENICOM and GENICOM does not move to vacate such proceeding
within sixty (60) days thereof, or if a trustee or receiver shall be appointed
for GENICOM, then ADC may, at its option, terminate this Agreement and, in such
event, GENICOM, upon ADC's written request, shall comply with and pay the sums
referred to in the Reacquisition Conditions. The termination of this Agreement
by ADC because of the happening of said events of default and the payment to
ADC of such sums shall be without prejudice to any claims which ADC may have
against GENICOM growing out of GENICOM's default under this Agreement. No
failure of ADC to exercise any right, power or privilege shall operate as a
waiver thereof, or as a waiver of any other right, power or privilege.

13. DEFAULT BY ADC

In the event that (a) ADC (i) shall fail to pay within thirty (30)
days after the date when due any amounts due to GENICOM hereunder and fails to
cure within three (3) business days of receipt of notice thereof, or (ii) shall
commit a material breach of any term, condition or covenant contained herein or
in the

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Purchase Agreement, the Lease Agreement, the Plant Sublease Agreement or the
McAllen Sublease Agreement, and shall fail to cure same within thirty (30) days
after receipt of written notice from GENICOM so to do, or (iii) commits
consistent and substantial quality failures as measured by the Quality
Assurance Program or delivery failures; provided that if such default by its
nature cannot be cured within said thirty (30) days and does not involve the
payment of money, then if ADC or OGDEN shall not immediately upon notice from
GENICOM commence curing such default and diligently and continuously pursue
such remedy and cure such default within ninety (90) days; or (b) ADC shall
make an assignment for the benefit of creditors, or if a proceeding in
bankruptcy, receivership, or insolvency shall be instituted by or against ADC
and ADC does not move to vacate such proceeding within sixty (60) days thereof,
or if a trustee or receiver shall be appointed for ADC, then GENICOM may, at
its option, terminate this Agreement. In the event that GENICOM terminates
this Agreement, GENICOM may, at its option, reacquire either or both of the
Dedicated Assets or the Dedicated Employees, as provided in Article 4 by
complying with and paying the sums referred to in the Reacquisition Conditions
as a condition precedent to such reacquisition. The termination of this
Agreement by GENICOM because of the happening of any of such events of default
shall be without prejudice to any claims which GENICOM has against ADC growing
out of ADC's default under this Agreement. No failure of GENICOM to exercise
any right, power or privilege hereunder shall operate as a waiver thereof, or
as a waiver of any other right, power or privilege.

14. FORCE MAJEURE

14.01 In the event that either party hereto is prevented from
performing or is unable to perform any of its obligations under this Agreement,
except for the payment of money, due to any act of God, fire, casualty, flood,
war, strike, lockout, epidemic, destruction of production facilities, riot,
insurrection, or any other cause (a "Force Majeure Event") beyond the
reasonable control of the party invoking this section (the "Non-Performing
Party"), the Non-Performing Party shall give prompt written notice thereof to
the other party, and the Non- Performing Party's failure to perform shall be
excused and the time for performance shall be extended for the period of delay
or inability to perform due to such occurrence.

14.02 The Non-Performing Party shall notify the other party in

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<PAGE> 28
26

writing within fifteen (15) days of the Force Majeure Event of the anticipated
date that it will be able to resume substantial performance of its obligations
hereunder. In the event that the Non-Performing Party is unable to resume
substantial performance within a period of ninety (90) days after such notice,
the other party may terminate this Agreement without regard to any applicable
cure period and GENICOM may, at its option, reacquire either or both of the
Dedicated Assets or the Dedicated Employees, as provided in Article 4 by
complying with and paying the sums referred to in the Reacquisition Conditions.

15. NOTICES

15.01 (a) Any notice to be given to any of the parties hereto
shall be delivered or sent by telex, facsimile transmission or prepaid
registered post to their respective addresses as given herein or such other
address as shall have been subsequently notified in writing by them to the
person serving such notice:

If to GENICOM: Genicom Corporation
14800 Conference Center Drive
Suite 400, Westfields
Chantilly, Virginia 22021-3806
Attention: President
Fax: (703) 802-8618

with a copy to: McGuire, Woods, Battle &
Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Att.: Jane Whitt Sellers, Esq.
Fax: (804) 775-1061

If to ADC or OGDEN: Atlantic Design Company, Inc.
5601 Wilkinson Boulevard
Charlotte, North Carolina 28208
Attention: President
Fax: (704) 394-1722

with a copy to: Ogden Services Corporation
Two Pennsylvania Plaza
New York, New York 10121
Attention: General Counsel
Fax: (212) 868-5714

E-29
<PAGE> 29
27

(b) Any such notice shall be deemed to have been served (if
delivered personally) at the time of delivery or (if sent by telex or
facsimile) at the time of despatch or (if posted as aforesaid) on the fourth
working day after the envelope containing the same shall have been put into the
post, provided that if, in the case of a notice sent by telex, facsimile or
post, there shall be a cessation or effective suspension (whether total or not
and whether or not official) of the relevant service before the deemed time or
date of receipt of notice, then such notice shall be deemed to have been served
as if it had been sent when the relevant service was effectively resumed.

(c) Proof that (i) the envelope containing the notice was properly
addressed and posted as a prepaid first class recorded delivery letter, or (ii)
a true copy of the notice bears a facsimile machine stamp of the date of
transmission and the telephone address of the recipient, shall be sufficient
evidence of service.

16. COMPLETENESS

This Agreement, the Purchase Agreement, the Lease Agreement, the Plant
Sublease Agreement and McAllen Sublease Agreement, the Preferential
Consideration and the exhibits annexed hereto and thereto set forth the entire
understanding of GENICOM and ADC relating to the subject matter referred to
herein and no representations or warranties are made by GENICOM or ADC, except
as set forth herein and therein. Such agreements supersede all proposals, oral
or written, and all negotiations, conversations or discussions heretofore had
between the parties hereto as to the subject matter hereof.

17. SECTIONS

All references to sections refer to sections of this Agreement, unless
otherwise stated.

18. AMENDMENTS AND SUPPLEMENTS

The parties may amend, modify, supplement or waive any provisions of
this Agreement in such manner as may be agreed upon in a written instrument
executed by the parties. No such amendment, modification, supplement or waiver
shall be effective unless it is in writing and signed by the parties hereto.

E-30
<PAGE> 30
28

19. APPLICABLE LAW; NO CONSEQUENTIAL DAMAGES

(a) This Agreement is governed by and is to be interpreted
pursuant to the laws of the State of New York.

(b) Except as otherwise expressly stated herein, in no event shall
any of the parties hereto be liable to any other party to this Agreement, for
any consequential, indirect or incidental damages due to a default or breach
under this Agreement.

20. ARBITRATION

Any controversy, dispute or claim arising out of the interpretation,
performance or breach of this Agreement (including disputes as to the
jurisdiction of the arbitrator), except for issues pertaining to Intellectual
Property and Section 9 shall be resolved at the request of either party hereto
("Initiation") directed to the American Arbitration Association ("AAA") by a
binding arbitration conducted in New York, New York by a single Arbitrator
reasonably familiar with computer and peripherals manufacturing and contract
law in accordance with the Commercial Arbitration Rules ("CAR") of the AAA,
except as modified by the terms of this Section. The Arbitrator shall apply
New York substantive law to the matter(s) which are the subject of the
arbitration. The Arbitrator shall have the power to grant such legal and
equitable remedies and award such damages as may be granted or awarded by a
trial level judge of the State of New York. The Arbitrator shall prepare and
provide to the parties a written decision ("Decision") on all matters which are
the subject of the arbitration, including factual findings and the reasons
which form the basis of the Decision of the Arbitrator. The Arbitrator shall
not have the power to commit errors of law and the award may be vacated or
corrected in any New York court of competent jurisdiction for any such error.
The Decision shall have the effect and be enforceable as if it were a final
judgement. Costs of the arbitration shall be borne as directed by the
Arbitrator. The parties hereby agree that the CAR are modified as follows:

(a) If the parties have not agreed to an Arbitrator within thirty
(30) days after the Initiation of arbitration, then the AAA shall appoint a
single neutral Arbitrator as soon thereafter as practicable.

(b) The parties shall be permitted discovery under the supervision
and rules set by the Arbitrator, including the right to

E-31
<PAGE> 31
29

take depositions pursuant to New York rules of civil procedure; provided
however, that discovery shall be completed within sixty (60) days of selection
or appointment of the Arbitrator. The Arbitrator shall have power to impose
such sanctions as the Arbitrator deems appropriate for failure of a party or
counsel for a party to comply with discovery rules established by the
Arbitrator.

(c) A hearing before the Arbitrator shall be held no later than
one hundred twenty (120) days after Initiation of arbitration, unless a hearing
is waived by the parties.

(d) No later than ten (10) days from the date of closing of the
arbitration hearing, or, if an oral hearing has been waived, from the date of
transmitting final statements and proofs to the Arbitrator, the Arbitrator
shall render a written Decision.

21. GENERAL

21.01 This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which together constitute one
and the same instrument.

21.02 In each instance where the consent or approval of GENICOM or
ADC is required, unless otherwise provided, such consent or approval shall not
be unreasonably withheld or delayed.

21.03 If any clause, term or provision of this Agreement shall be
judged invalid by any court or administrative agency, such invalidity shall not
affect the validity or operation of any other clause, term or provision; and
such invalid clause, item or provision shall be deemed to have been deleted
from this Agreement.

21.04 (a) Neither ADC nor GENICOM may (i) transfer or assign
this Agreement, except to an Affiliate, or (ii) undergo a Voluntary Change of
Control, as defined below, without the other party's approval, which approval
shall not be unreasonably withheld. No party may transfer or assign this
Agreement to a competitor of the other party. As used herein, "Voluntary
Change of Control" shall mean the transfer of a majority of the outstanding
shares of capital stock or equivalent interests ordinarily having voting rights
in a negotiated transaction to an entity that is not an Affiliate. The term
"Affiliate" means any corporation or other entity controlling, controlled by or
under common control of the subject company ("control" shall mean the

E-32
<PAGE> 32
30

ownership of a majority of the outstanding shares of capital stock or
equivalent interests ordinarily having voting rights). A party seeking to
transfer or assign this Agreement shall provide the other party hereto with no
less than thirty (30) days written notice thereof. The party receiving such
notice shall have ten (10) days from the date of receipt of the notice to
either approve or object in writing to such transfer or assignment. Failure to
respond or object in writing during said ten (10) day period shall be deemed an
approval of the proposed transfer or assignment.

(b) In the event that this Agreement is transferred or assigned
(i) with approval, then the other party shall take all necessary actions to
effect the assignment of the Lease, the Sublease, the Preferential
Consideration, and related agreements to such assignee; (ii) without approval,
then the party making such assignment or transfer shall be in default
hereunder.

21.05 Each party warrants that the information to be furnished by it
to the other hereunder will, to the best of its knowledge and belief, be
correct in all material respects. Each party shall notify the other promptly
in the event that it comes to such party's attention that information provided
by the supplying party contains an error or omission.

21.06 The relationship created by this Agreement is a
purchaser-independent contractor relationship. Nothing herein shall create a
partnership, joint venture, agency, trust, or other relationship between
GENICOM and ADC.

21.07 All payments required hereunder shall be made in the currency
of the United States unless expressly stated otherwise.

21.08 The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.

21.09 Any waiver by any party hereto of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Except as otherwise expressly
provided herein, any waiver must be in writing.

E-33
<PAGE> 33
31

21.10 Except as otherwise expressly stated herein, all payment terms
shall be thirty (30) days net.

21.11 Wherever calculations herein are based upon values supplied by
one party hereto, the other party shall have the right to examine such
supporting material as it may reasonably deem necessary in order to verify such
values.

21.12 This Agreement is intended for the benefit of the parties
hereto and their permitted transferees or assigns, and no other person shall be
entitled to rely upon this Agreement or be entitled to any benefits under this
Agreement.

22. OGDEN GUARANTEE

By its signature hereon, OGDEN hereby guarantees the performance of
ADC hereunder (the "OGDEN Guarantee"), provided however, that the OGDEN
Guarantee shall terminate immediately in the event there is a transfer or
assignment of either party's rights and obligations hereunder pursuant to
Section 21.04, except where such transfer or assignment by ADC is to an
Affiliate of ADC or not approved or deemed approved by GENICOM.

[The remainder of this page has been left blank intentionally.]

E-34
<PAGE> 34
32

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date above written.

GENICOM CORPORATION ATLANTIC DESIGN COMPANY, INC.

- -------------------------- --------------------------
By: James C. Gale By:
Its: Senior Vice President Its: Vice President

Guarantor:
OGDEN SERVICES CORPORATION

---------------------------
By: Isaac Palmer
Its: Vice President

E-35

<PAGE> 1
Exhibit 11

GENICOM Corporation and Subsidiaries
STATEMENT REGARDING THE COMPANY'S COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------
DECEMBER 31, JANUARY 1,
1995 1995
------------ ---------
<S> <C> <C>
SHARES USED IN THIS COMPUTATION:

Weighted average common shares outstanding 10,760 10,630

Shares applicable to stock options, net of shares
assumed to be purchased from proceeds at
average market 1,278 715
----------- ---------
TOTAL SHARES FOR EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENTS (PRIMARY) 12,038 11,345

Shares applicable to stock options in addition to
those used in primary computation due to the use
of period-end market price when higher than
average 18 71
----------- ---------
TOTAL FULLY DILUTED SHARES 12,056 11,416
=========== =========
</TABLE>

E-36

<PAGE> 1
Exhibit 22

SUBSIDIARIES OF REGISTRANT

<TABLE>
<CAPTION>
JURISDICTION
SUBSIDIARY OF INCORPORATION
- ---------------------------------------------- ----------------
<S> <C>
GENICOM International Holdings Corporation Delaware

GENICOM International Sales Corporation Delaware

Enterprising Service Solutions Corporation Delaware

Delmarva Technologies Corporation Delaware

Rastek Corporation Delaware

Rastek Japan Ltd. Japan

GENICOM Relay Products Corporation Delaware

Printer Systems Corporation Virginia

Printer Connection, Inc. Virginia

Printer Systems International, Inc. Virginia

GENICOM Canada, Inc. Canada

GENICOM Foreign Sales Corporation U.S. Virgin Islands

GENICOM Euro Holdings B.V. The Netherlands

GENICOM de Mexico, S.A. de C.V. Mexico

GENICOM International Limited England

GENICOM (No. 1) Limited England

GENICOM Ltd. England

GENICOM S.A.R.L. France

GENICOM S.A. France

GENICOM GmbH Germany

GENICOM S.p.A. Italy

GENICOM (Australia) PTY LTD. Australia

GENICOM Pty Limited Australia
</TABLE>

E-37

<PAGE> 1
Exhibit 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement of
GENICOM Corporation and Subsidiaries on Form S-8 (FILE Nos. 33-29388, 33-41148,
33-49472, 33-53843 and 333-01845) of our report dated January 31, 1996, except
for certain information in Note 3, for which the date is February 15, 1996, on
our audits of the consolidated financial statements and financial statement
schedules of GENICOM Corporation and Subsidiaries as of December 31, 1995 and
January 1, 1995 and for the three fiscal years in the period ended December 31,
1995, which report is included on page F-2 in this Annual Report on Form 10-K.

Coopers & Lybrand L.L.P.

Washington, D.C.
March 28, 1996

E-38

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,271
<SECURITIES> 0
<RECEIVABLES> 53,572
<ALLOWANCES> (1,616)
<INVENTORY> 43,079
<CURRENT-ASSETS> 106,121
<PP&E> 89,585
<DEPRECIATION> (58,689)
<TOTAL-ASSETS> 161,539
<CURRENT-LIABILITIES> 71,591
<BONDS> 44,474
0
0
<COMMON> 108
<OTHER-SE> 34,425
<TOTAL-LIABILITY-AND-EQUITY> 161,539
<SALES> 168,394
<TOTAL-REVENUES> 294,052
<CGS> 116,842
<TOTAL-COSTS> 217,613
<OTHER-EXPENSES> 61,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,741
<INCOME-PRETAX> 7,437
<INCOME-TAX> 1,285
<INCOME-CONTINUING> 6,152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,152
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51

</TABLE>