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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 8, 1997
Commission File No.: 0-14685
GENICOM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51 - 0271821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14800 CONFERENCE CENTER DRIVE
SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 802-9200
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GENICOM CORPORATION AND SUBSIDIARIES
FORM 8-K INDEX
Item 2. Acquisition Activities
On August 10, 1997, the registrant purchased Digital Equipment
Corporation's Printing Systems Business and became Digital's
exclusive supplier of Digital-branded printer products. The
multi-year agreement also established a cooperative alliance where
the registrant will provide a broad line of products, business
planning, technical support and distribution services to Digital's
marketing channels in each of their global geographies. The
registrant and Digital have also agreed to pursue joint marketing
programs for each other's capabilities, products and services.
Copies of the Asset Purchase Agreement, the Trademark License
Agreement and the Cooperative Marketing, Support and Development
Agreement are filed herewith as Exhibits 2.1, 2.2 and 2.3,
respectively.
The registrant published a press release regarding the transaction
on August 11, 1997. A copy of such press release is included herein
as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired:
The registrant has concluded that it is currently impracticable to
file the required financial statements for this acquisition within
this Form 8-K filing. The required omitted information will be
filed in an amendment to this Form 8-K filing on or before October
22, 1997.
(b) Pro forma financial information:
The registrant has concluded that it is currently impracticable to
file the required pro forma financial information for this
acquisition within this Form 8-K filing. The required omitted
information will be filed in an amendment to this Form 8-K filing on
or before October 22, 1997.
(c) Exhibits
2.1 Asset Purchase Agreement dated August 10, 1997
2.2 Trademark License Agreement dated August 10, 1997
2.3 Cooperative Marketing, Support and Development Agreement dated
August 10, 1997
99.1 Press release dated August 11, 1997, published by the
Registrant
Signatures
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENICOM Corporation
-------------------
Registrant
Date: August 25, 1997
/s/Karen M. Morinelli
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Signature
Karen M. Morinelli
Vice President
(Ms. Morinelli is a
Corporate Vice
President and has
been duly authorized
to sign on behalf of
the Registrant)
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of
August 10, 1997
between
DIGITAL EQUIPMENT CORPORATION
as Seller
and
GENICOM CORPORATION
as Purchaser
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THIS ASSET PURCHASE AGREEMENT dated as of August 10, 1997 (this
"Agreement") between DIGITAL EQUIPMENT CORPORATION, a Massachusetts corporation
("Seller"), and GENICOM CORPORATION, a Delaware corporation ("Purchaser").
W I T N E S E T H:
WHEREAS, subject to the terms and conditions of this Agreement, Purchaser
desires to acquire from Seller, and Seller desires to transfer to Purchaser,
the Transferred Assets (as hereinafter defined), subject to certain
liabilities, which are used in Seller's Printing Systems Business.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, agreements and covenants hereinafter set forth,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto (individually, a "Party" and
collectively, the "Parties") agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.
(a) As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Affiliate" as used with reference to any Person means any Person
controlling, controlled by, or under common control with such Person.
"Control" for purposes of this definition means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities or by
contract, or otherwise.
"Ancillary Agreement" means any of the Software Assignment and License
Agreement, the Assignment and Assumption Agreement, the Bill of Sale, the
Cooperative Marketing, Support and Development Agreement, the Interim Services
Agreement, Basic Order Agreement, Warranty Service Agreement, International
Implementation Agreement, the Occupancy Agreement, the Patent Assignment and
License Agreement, and the Trademark License Agreement (collectively, the
"Ancillary Agreements").
"Antitrust Division" means the Antitrust Division of the Department of
Justice of the United States.
"Basic Order Agreement" means the Basic Order Agreement entered into by
Seller and Purchaser as of the date hereof.
"Business" means the design, procurement and selling of computer printers
and integrated printing systems, printer accessories and related consumable
products, as operated by Seller on the Closing Date, provided, however, that
the Business shall not be deemed to include, among other
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things, (i) Seller's Digital Linear Tape Business, for which Seller's
Printing Systems Business previously provided certain marketing and sales
services, and (ii) Seller's Passbook Printing Business principally located in
Sweden which designs, manufactures, procures, distributes and sells passbook
printers and related accessories and consumable products.
"Business Day" means any day of the year on which banks are not required
or authorized to be closed in Boston, Massachusetts.
"Claim" means any pending claim, demand, assessment, legal, administrative
or arbitral proceeding, cause of action, notice or demand involving any Person.
"Closing Date" means the date specified in Section 3.01 on which the
Closing shall become effective.
"Closing Time" means the time on the Closing Date immediately prior to the
consummation of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Cooperative Marketing, Support and Development Agreement" means the
Cooperative Marketing, Support and Development Agreement entered into by Seller
and Purchaser as of the date hereof.
"Damages" means any loss, damage, liability, judgment, deficiency, fine,
penalty, encumbrance, Lien, cost or expense (including, without limitation,
reasonable attorneys' fees and expenses) incurred or which will be incurred by
any Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FTC" means the Federal Trade Commission of the United States.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations of the FTC promulgated thereunder as
in effect at any time during the term of this Agreement.
"Indemnified Person" means a member of the Purchaser Group or the Seller
Group, as the case may be, that is entitled to receive any payment in respect
of Claims or Damages from an Indemnifying Party in accordance with Article
VIII.
"Indemnifying Party" means, with respect to any Indemnified Person that is
a member of the Purchaser Group, Seller, and means with respect to any
Indemnified Person that is a member of the Seller Group, Purchaser.
"Interim Services Agreement" means the Interim Services Agreement entered
into by Seller and Purchaser as of the date hereof.
"International Implementation Agreement" means the International
Implementation Agreement entered into by Seller and Purchaser as of the date
hereof.
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"Knowledge" or "knowledge" when used in this Agreement with respect to the
knowledge of Seller, means the actual personal knowledge of James E. Flanagan
and Jeff Bergart and shall require no affirmative duty on the part of such
Person to make an inquiry or investigation in order to make the representations
and warranties contained herein which are based on such knowledge.
"Law" means any applicable law (whether statutory, at common law, or
otherwise), regulation, order, ordinance, judgment or decree of any
governmental authority (foreign, federal, state, local or otherwise).
"Lien", with respect to any asset or property, means any lien,
encumbrance, charge, security interest, mortgage or pledge in such asset or
property or any restriction or limitation on the transfer or use of such asset
or property which has a Material Adverse Effect.
"Material Adverse Effect" means an effect on (i) the operations of the
Business or (ii) the value of the Transferred Assets, which, in the case of
both clauses (i) and (ii), would after the Closing Time be materially adverse
to the Transferred Assets and the Business, taken as a whole.
"Material Contract" means each of the Assigned Contracts which (i) (a)
involves, or pursuant to which, payments are to be made to or by Seller of
$100,000 or more over its term and (b) has a term of more than 12 months, which
term is not subject to cancellation or termination by Seller or any other party
to such Contract on 60 days' or less notice without penalty or (ii) the
non-assignment of which to Purchaser or the termination of which could
reasonably be expected to result in a Material Adverse Effect.
"Occupancy Agreement" means the Occupancy Agreement entered into by Seller
and Purchaser as of the date hereof.
"Patent Assignment and License Agreement" means the Patent Assignment and
License Agreement entered into by Seller and Purchaser as of the date hereof.
"Person" or "person" means an individual, partnership, firm, association,
joint venture, trust, estate, corporation or any other legal or business entity
and any governmental entity or authority (including without limitation, the
United States, a state or any political subdivision thereof).
"Plan" means any employee plan or program whether insured or otherwise
(including any employee welfare plans within the meaning of Section 3(1) of
ERISA, any pension plans within the meaning of Section 3(2) of ERISA, and any
incentive, bonus, compensation, severance, termination or fringe benefit plan
or program).
"Representative" with respect to any Person, means such Person's
directors, officers employees and other agents, accountants, auditors, counsel,
financial advisors, bankers, investment bankers and consultants.
"Software Assignment and License Agreement" means the Software Assignment
and License Agreement entered into by Seller and Purchaser as of the date
hereof.
"Tax Return" means return (including any information return), report,
declaration of estimated tax, claim for refund, statement, schedule, notice,
form, or other document or information (including any schedule or attachment
thereto and including any amendment thereof)
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filed with or submitted to, or required to be filed with or submitted to, any
federal, state, local, or foreign agency or governmental authority, in
connection with the determination, assessment, collection, or payment of any
Tax or in connection with the administration, implementation, or enforcement of
or compliance with any requirement by Law relating to any Tax.
"Taxes" means all income, gross receipts, sales, bulk transfer, use,
employment, franchise, profits, property or other taxes, fees, stamp taxes and
duties, assessments or charges of any kind whatsoever whether foreign or
domestic (and whether payable directly or by withholding), including, without
limitation, real estate transfer taxes, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority with respect thereto.
"Trademark Assignment Agreement" means the Trademark Assignment Agreement
entered into by Seller and Purchaser as of the date hereof.
"Trademark License Agreement" means the Trademark License Agreement
entered into by Seller and Purchaser as of the date hereof.
"Transfer Instruments" means the Bill of Sale and the Instruments of
Assignment.
"Warranty Service Agreement" means the Warranty Service Agreement entered
into by Seller and Purchaser as of the date hereof.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Assigned Contracts 2.01(ii)
Assignment and Assumption Agreement 2.03
Assumed Liabilities 2.03
Bill of Sale 2.01
Closing 3.01
Disclosing Party 6.11
Excluded Assets 2.02
Financial Information 4.11
Information 6.11
Initial Period 6.13
Instruments of Assignment 2.01
Intellectual Property Agreements 4.12(a)
Nonassigned Contracts 2.03(c)
Nonexclusive Contracts 2.03(d)
Purchase Orders 2.03(ii)
Purchase Price 2.04(a)
Purchased Equipment 2.01(i)
Purchaser Group 8.02
Recipient 6.11
Retained Liabilities 2.03(b)
Retained Names and Marks 6.03
Required Financial Information 6.14
Seller Group 8.03
Seller Inventory 6.13
Settlement Amount 8.05(b)
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Third Party Sales 6.13
Threshold Amount 8.04(b)
Transfer Taxes 6.05
Transferred Assets 2.01
Transferred Intellectual Property 4.12(a)
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Transferred Assets. Subject to the terms and conditions of
this Agreement, Seller shall sell, transfer, assign, license and convey to
Purchaser, and Purchaser shall purchase and accept from Seller on the Closing
Date or at such other time after the Closing Date as may be expressly provided
herein, the following assets used in the Business and all of Seller's rights,
title and interest in and with respect thereto other than items which
constitute Excluded Assets (which items, excluding any Excluded Assets, are
referred to herein as the "Transferred Assets"):
(i) The personal property located in the United States, including
machinery, development (hardware and software) tools, test and other
equipment, tooling (including tooling in possession of Seller's vendors),
computer hardware, furniture and office equipment owned by Seller and
used in the Business to the extent set forth in Schedule 2.01(i)
(hereinafter the "Purchased Equipment"), and any and all warranties
covering the Purchased Equipment to the extent assignable;
(ii) All rights of Seller in, to and under all of the contracts
listed on Schedule 2.01(ii) hereto and the unfilled purchase orders from
Seller's customers to the extent assignable (collectively the "Assigned
Contracts");
(iii) Certain rights of Seller in, to and under certain Software to
the extent provided in the Software Assignment and License Agreement;
(iv) Certain rights of Seller in, to and under certain patents and
patent applications to the extent provided in the Patent Assignment and
License Agreement;
(v) Certain rights of Seller in, to and under certain Trademarks to
the extent provided in the Trademark License Agreement;
(vi) Originals or copies of all books, accounting records, business
plans, written processes and designs, engineering and schematic drawings
and diagrams and change orders, reports, files and documents (including
computer tapes or disks) of Seller which are located at 200 Forrest
Street in Marlborough, Massachusetts or 111 Powdermill Road in Maynard,
Massachusetts on the Closing Date and are used solely in the Business,
provided in each case that any information contained in such materials
which does not relate directly to the Business may be deleted by Seller;
(vii) Seller's inventory of finished goods and supplies located in
Singapore as of the Closing Date as set forth in Schedule 2.01(vii)
hereto (the "Purchased Inventory"); and
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(viii) All Claims of Seller, whether arising before or after the
date hereof, to the extent such Claims are necessary to assure to
Purchaser after the Closing Time the full title, ownership, possession
and benefit of the Transferred Assets to the extent such claims are
assignable;
To the extent that any of the Transferred Assets are owned by any
Subsidiary of Seller, Seller shall cause such subsidiary to sell,
transfer, convey, assign, license and deliver to Purchaser such Assets. Such
sale, transfer, conveyance, assignment, license and delivery shall be effected
by delivery by Seller to Purchaser of (i) a duly executed bill of sale with
respect to all of the Transferred Assets (other than such of the Transferred
Assets for which other instruments are provided in clauses (ii) and (iii) of
this paragraph) in the form attached hereto as Exhibit 2.01(a) (the "Bill of
Sale"), (ii) the Software Assignment and License Agreement, the Patent
Assignment and License Agreement, the Trademark License Agreement and the
Trademark Assignment Agreement; and (iii) instruments of assignment and, as
required, consent with respect to the Assigned Contracts from the other parties
to such Contracts (collectively, the "Instruments of Assignment") and such
other instruments of conveyance and transfer to be tendered at the Closing as
shall be necessary in the reasonable opinion of Purchaser's counsel to vest in
Purchaser good, valid and marketable title to the Transferred Assets, free and
clear of all Liens. Except as otherwise expressly provided herein and in the
Ancillary Agreements, from and after the Closing, Seller shall cease to have
any right, title or interest in or to the Transferred Assets and shall not make
use of any Transferred Assets. Legal and equitable title and risk of loss with
respect to the Transferred Assets shall pass to Purchaser at the Closing.
Purchaser shall take title to the Transferred Assets as and wherever located at
the Closing. The locations of the Transferred Assets are set forth in Schedule
2.01(i).
SECTION 2.02. Excluded Assets. Purchaser expressly understands and
agrees that the Transferred Assets shall exclude all assets and properties of
Seller not specifically included within the Transferred Assets (including,
without limitation, all of Seller's receivables and inventory of samples,
finished goods, components and supplies used in the Business except as provided
in Section 2.01(vii) herein) as well as any assets which are within the
definition of Transferred Assets but are sold or otherwise disposed of in the
ordinary course of the operation of the Business during the period from the
date hereof until the Closing Date (the "Excluded Assets").
SECTION 2.03. Assumption of Liabilities; Assigned Contracts. (a) Upon
the terms and subject to the conditions of this Agreement, Purchaser agrees,
effective at the time of Closing, to assume and timely discharge and/or perform
the following specific debts, obligation, contracts and liabilities of Seller
arising out of the conduct of the Business (the "Assumed Liabilities"):
(i) subject to this Section 2.03(a), all liabilities and obligations
of Seller arising from and after the Closing Time under the Assigned
Contracts;
(ii) all of Seller's obligations under purchase orders to acquire
goods and services in connection with the operation of the Business
listed on Schedule 2.03(a) hereto and any other purchase orders to
acquire goods and services in connection with the operation of the
Business entered into by Seller in the ordinary course of business until
the Closing Date (the "Purchase Orders"); and
(iii) all debts, liabilities and obligations of Purchaser arising
from the operation of the Business and the Transferred Assets at and
after the Closing Time (including without limitation, product liability
claims, product warranty claims or customer returns relating to products
shipped at and after the Closing Time, employee claims arising out
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of the employment relationship with Purchaser, Tax claims and
environmental claims) shall be at and after the Closing Time the debts,
liabilities and obligations of Purchaser, but excluding product warranty
claims relating to the Purchased Inventory or the Seller Inventory.
In connection with the foregoing, Purchaser and Seller have entered into an
Assignment and Assumption Agreement as of the date hereof (the "Assignment and
Assumption Agreement"). Purchaser shall assume the duties of Seller to perform
the Assigned Contracts to the extent that by the terms of such Assigned
Contracts such performance by Seller is required, or may occur without default
after the Closing Time; provided that, Purchaser shall have no liability or
obligation to perform under any Assigned Contracts unless and until Seller's
rights thereunder have been effectively assigned to Purchaser. Other than as
expressly set forth in this Agreement or in any of the Ancillary Agreements,
Purchaser shall assume no liabilities from Seller whether known or unknown,
absolute or contingent, accrued or unaccrued or due or to come due.
(b) Retained Liabilities. Other than as set forth in this Agreement or in
any of the Ancillary Agreements, (i) all debts, liabilities and obligations of
Seller arising from the operation of the Business prior to the Closing Time
(including without limitation, product liability claims, product warranty
claims or customer returns relating to products shipped before the Closing
Time, employee claims arising out of the employment relationship with Seller,
Tax claims and environmental claims) shall continue after the Closing Time to
be the debts, liabilities and obligations of Seller, and (ii) all liabilities,
including, without limitation, warranty liability and liability for customer
returns, relating to Seller Inventory and warranty liability for Purchased
Inventory shall be the liabilities of the Seller (collectively, the "Retained
Liabilities"); provided, however, that the Retained Liabilities shall not
include liabilities relating to Seller Inventory to the extent Purchaser
purchases Seller Inventory from Seller after the Initial Period. With respect
to returns of printer products after the Closing Date for which Seller is
obligated hereunder, Purchaser agrees to assist Seller to minimize Seller's
cost of disposing of such products, including, without limitation, using its
commercially reasonable efforts to sell such products in exchange for a
commercially reasonable portion of the selling price.
(c) Nonassignability. Schedule 2.03(c) attached hereto sets forth a list
of the Assigned Contracts which have not been effectively assigned to Purchaser
as of the Closing Date (each a "Nonassigned Contract" and collectively, the
"Nonassigned Contracts"). Notwithstanding anything contained in this Agreement
to the contrary, Seller will not be obligated to assign to Purchaser any of its
rights and obligations in and to any of the Nonassigned Contracts without first
having obtained all consents, approvals and waivers necessary for such
assignment; provided, however, that, with respect to such Nonassigned
Contracts, Seller shall use commercially reasonable efforts during a reasonable
period of time after the Closing Date, to obtain all such consents, approvals
and waivers, such period of time not to exceed ninety (90) days. Purchaser
will cooperate with Seller in its efforts to obtain all required consents,
approvals and waivers, provided, however, that neither Purchaser nor Seller
will be required to incur any liability or pay any consideration in connection
therewith. With respect to each vendor agreement included in the Nonassigned
Contracts, Seller agrees (subject to its obligations to use its commercially
reasonable efforts as provided above in this paragraph (c)) that it will (i)
for such period of time as such Nonassigned Contract remains in effect, use its
commercially reasonable efforts to make arrangements for Purchaser to purchase
items covered by such Contract from Seller and/or (ii) for a reasonable period
of time, assist Purchaser with procuring substantially equivalent arrangements
with another vendor, as determined by Seller. If Seller complies with its
obligations hereunder to use its commercially reasonable efforts, it shall have
no further obligations to Purchaser, financially or otherwise, with respect
thereto.
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(d) Nonexclusive Agreements. The parties hereto acknowledge that the
Assigned Contracts do not include any vendor agreements between Seller and
another party pursuant to which such other party supplies products and/or
services to the Seller other than exclusively to the Business (the
"Nonexclusive Agreements"). With respect to the Nonexclusive Agreements listed
on Schedule 2.03(d), Seller shall have no obligations to assign any of its
rights thereunder, provided, however, that Seller will (i) for such period of
time as such Nonexclusive Agreement remains in effect, use its commercially
reasonable efforts to make arrangements for Purchaser to purchase items for the
Business covered by such Agreement from Seller and/or (ii) for a reasonable
period of time, assist Purchaser with procuring substantially equivalent
arrangements with another vendor, as determined by Seller. If Seller complies
with its obligations hereunder, it shall have no further obligations to
Purchaser, financially or otherwise, with respect to the Nonexclusive
Agreements.
SECTION 2.04. Purchase Price; Allocation.
(a) In addition to the Assumed Liabilities and the other rights and
obligations of the parties hereto, in consideration of the sale, transfer,
conveyance, assignment, license and delivery of the Transferred Assets,
Purchaser shall pay to Seller a purchase price of $3,135,000 (the "Purchase
Price"), which is equal to the sum of (i) of the agreed upon value of the
Purchased Equipment and the Purchased Inventory as such agreed upon value for
each item of Purchased Equipment and Purchased Inventory is set forth on
Schedule 2.01(i) and Schedule 2.01(vii), respectively hereto, plus (ii)
$2,000,000. The Purchase Price shall be paid by Purchaser to Seller in cash at
the Closing. On September 30, 1997, there will be an adjustment made with
respect to (i) the Purchased Inventory, to the extent that Purchaser and Seller
reasonably determine the value of the useable and saleable portion of such
inventory to be more or less than $800,000 (based on the same pricing
methodology as employed in Section 6.13 for the Seller Inventory) and (ii) the
Purchased Equipment, such that to the extent an item of Purchased Equipment was
not transferred to Purchaser, such adjustment shall be made equal to the agreed
upon value therefor, and to the extent Purchaser and Seller agree that other
personal property used in the Business should be sold to Purchaser, such
adjustment shall be made using the agreed upon pricing methodology used to
determine the prices set forth in Schedule 2.01(i). The Parties acknowledge
that between the Closing and September 30, 1997, there may be a change in the
Purchased Equipment, such change to be mutually agreed to in writing by the
Parties.
(b) The consideration for the Transferred Assets will be allocated
consistent with the allocation set forth on Schedule 2.04 hereto which has been
determined by mutual agreement of Purchaser and Seller. It is agreed that such
an allocation is fair to both Parties and that it will be used as the basis for
reporting this transaction for all Tax purposes (subject to purchase price
adjustments, if any). Each party hereto agrees to prepare its federal and
state income tax returns for all current and future tax reporting periods and
file Form 8594 (and corresponding state forms) with respect to the transfer of
the Transferred Assets to Purchaser in a manner consistent with such allocation
and each party shall deliver to the other party a copy of its Form 8594
relating to this transaction no later than ten (10) days prior to filing
thereof.
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ARTICLE III
THE CLOSING
SECTION 3.01. The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the sale, purchase, assignment, license and
transfer pursuant hereto shall take place at a closing (the "Closing") to be
held simultaneous with the execution hereof at the offices of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,
Massachusetts, to be effective as of 12:01 a.m. on August 10, 1997.
SECTION 3.02. Seller's Deliveries at the Closing. At the Closing, Seller
shall deliver to Purchaser the Transfer Instruments and the Ancillary
Agreements, and the opinions, certificates, consents of third parties and other
documents contemplated by this Agreement to be delivered by Seller, each of
which shall be in form and substance reasonably satisfactory to Purchaser.
SECTION 3.03. Purchaser's Deliveries at the Closing. At the Closing,
Purchaser shall deliver to Seller the Purchase Price by wire transfer of
federal funds in accordance with wire transfer instructions heretofore provided
by Seller to Purchaser, the Transfer Instruments and Ancillary Agreements to
which Purchaser is a party and the opinions, certificates and other documents
contemplated by this Agreement to be delivered by Purchaser, each of which
shall be in form and substance reasonably satisfactory to Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to and covenants with Purchaser as
of the date hereof as follows:
SECTION 4.01. Organization and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the
Laws of the Commonwealth of Massachusetts, and has all necessary corporate
power and authority to enter into and perform its obligations under this
Agreement, the Transfer Instruments and the other agreements contemplated
hereby (including the Ancillary Agreements) and to transfer the Transferred
Assets as contemplated hereby.
SECTION 4.02. Corporate Action. All corporate action necessary to be
taken by Seller to authorize the execution, delivery and performance of this
Agreement and any instruments and agreements contemplated herein (including the
Ancillary Agreements) has been, or prior to the Closing Time will have been,
duly and validly taken. Subject to the terms and conditions hereof, each of
this Agreement and the other agreements contemplated hereby (including the
Ancillary Agreements) to which Seller will be a party constitutes or, in the
case of such other agreements will, when executed and delivered at the Closing,
constitute the valid and binding obligation of Seller, enforceable in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, other Laws affecting creditors' rights generally and
general equitable principles. The execution, delivery and performance of this
Agreement, the Transfer Instruments and the other agreements contemplated
hereby (including the Ancillary Agreements) by Seller do not and will not
violate or result in any default under any provision of Seller's Articles of
Organization or by-laws, or except as would not have a Material Adverse Effect
or impair the value or use of any of the Transferred Assets affected thereby,
result in any default under or any Lien
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upon any of the Transferred Assets, any Material Contract, or any Law or under
any obligation constituting part of the Transferred Assets or to which any of
the Transferred Assets may be subject.
SECTION 4.03. Title to Transferred Assets; Right to Convey. Except as
set forth in Schedule 4.03, Seller has good, valid and marketable title to all
of the Transferred Assets, free and clear of all Liens, and Seller will convey
such title to the Transferred Assets to Purchaser at the Closing.
SECTION 4.04. Litigation. Except as set forth in Schedule 4.04, there
are no actions, suits, or proceedings pending or, to Seller's knowledge,
threatened, against the Business, or the Transferred Assets at Law or in equity
before any foreign, federal, state, municipal or other governmental department
or agency which would, if adversely determined, have a Material Adverse Effect.
No Claim has been asserted in writing against Seller or, to the best knowledge
of Seller, is any Claim threatened which seeks to delay or prevent the
consummation of the transactions contemplated hereby which would, if
successful, have a material adverse effect on the ability of Seller to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements and to perform its obligations hereunder and thereunder.
SECTION 4.05. Taxes, Tax Returns and Audits. Tax Returns required to be
filed by or on behalf of Seller relating to the Transferred Assets or the
operation of the Business have been duly and timely filed, or extensions have
been obtained, and all Taxes, assessments, and levies shown thereon to be due
and payable, including, without limitation, estimated tax payments and
withholding or periodic tax deposits, have been paid. Except as would not
result in a Lien on the Transferred Assets, to the knowledge of Seller, there
is no audit or other Tax-related proceeding or investigation relating to the
Transferred Assets.
SECTION 4.06. Consents and Approvals. The execution and delivery of this
Agreement and the other agreements and documents contemplated herein (including
the Transfer Instruments and the Ancillary Agreements) by Seller do not, and
the performance of this Agreement and such other agreements and documents by
Seller will not, require any consent, approval, authorization or other action
by or filing with or notification to, any governmental or regulatory authority,
or any other Person, except (i) a filing with and approval from the FTC and/or
the Antitrust Division pursuant to the HSR Act, (ii) for such consents,
approvals, authorizations or other actions, which, if not obtained, will not
have a Material Adverse Effect, and (iii) the consents set forth on Schedule
4.06.
SECTION 4.07. Other Contracts; Default. Except as set forth on Schedule
4.07, Seller is not a party to or bound by any Material Contracts with respect
to the Business. To Seller's knowledge, neither Seller nor any other party
thereto is in material default under any Material Contract.
SECTION 4.08. Compliance with Applicable Law. Except as set forth in
Schedule 4.08, Seller has not received any written notice of, nor does Seller
have any knowledge of any material current non-compliance with applicable laws
in respect of the Transferred Assets.
SECTION 4.09. Brokers. Except for Lehman Brothers, for whose fee, if
any, Seller shall be responsible, no broker, finder, investment banker or other
similar Person is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller.
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SECTION 4.10. [Intentionally omitted.]
SECTION 4.11. Financial Information. Attached hereto as Schedule 4.11(a)
is the following financial information of the Company previously provided to
Purchaser with respect to the Business for the Company's fiscal years ending
July 1, 1995, June 29, 1996 and June 28, 1997 (the "Financial Information"):
unit volumes, revenue received, standardized cost per unit, direct expenses of
the Business, property plant and equipment, and inventory. The Financial
Information has been prepared in the manner described in Schedule 4.11(b)
hereto.
SECTION 4.12. Intellectual Property.
(a) Seller owns or has the valid right to use the intellectual property
being assigned or licensed to Purchaser (the "Transferred Intellectual
Property") under the Software Assignment and License Agreement, the Patent
Assignment and License Agreement, the Trademark Assignment Agreement and the
Trademark License Agreement (collectively "the Intellectual Property
Agreements") and Seller has the rights to assign or license, as the case may
be, such Transferred Intellectual Property pursuant to the terms and conditions
of the Intellectual Property Agreements.
(b) The Seller has no knowledge (i) of any claims or demands of any other
person pertaining to the Transferred Intellectual Property, or of any
proceedings having been commenced or threatened which challenge Seller's rights
in respect thereof, (ii) that any of the rights constituting the Transferred
Intellectual Property is subject to any outstanding order, decree, ruling,
charge, injunction, judgment or stipulation, (iii) of the infringement of any
Transferred Intellectual Property by any other person, except to the extent
such infringement would not have a Material Adverse Effect, and (iv) that the
use by Seller of any of the Transferred Intellectual Property infringes the
intellectual property rights of any third party to the extent such infringement
would have a Material Adverse Effect.
Section 4.13. Conduct of Business. Except as would not have a Material
Adverse Effect, since June 28, 1997, Seller has conducted the Business in a
manner which is not inconsistent with the consummation of the transactions
contemplated by this Agreement and in the ordinary course except to the extent
the ordinary course may have been affected by the extended period during which
the Business has been a candidate for disposition by the Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 5.01. Organization and Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the
Laws of Delaware and has all necessary corporate power and authority to enter
into and perform its obligations under this Agreement, the Transfer Instruments
and the other agreements contemplated hereby (including the Ancillary
Agreements) and to acquire the Transferred Assets as contemplated hereby.
SECTION 5.02. Corporate Action. All corporate action necessary to be
taken by Purchaser to authorize the execution, delivery and performance of this
Agreement and any instruments and agreements contemplated herein (including the
Ancillary Agreements) has been, or prior to the Closing Time will have been,
duly and validly taken. Subject to the terms and conditions hereof, each of
this Agreement and the other agreements contemplated hereby (including
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the Ancillary Agreements) to which Purchaser will be a party constitutes
or, in the case of such other agreements will, when executed and delivered at
the Closing constitute, the valid and binding obligation of Purchaser,
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, other Laws affecting creditors' rights
generally and general equitable principles. The execution, delivery and
performance of this Agreement, the Transfer Instruments and the other
agreements contemplated hereby (including the Ancillary Agreements) by
Purchaser does not and will not violate or result in any default under any
provision of Purchaser's charter or by-laws or any default under or, except as
would not materially impair Purchaser's ability to perform its obligations
pursuant to this Agreement and the Ancillary Agreements, result in the
termination of, or accelerate the performance required by or cause the
acceleration of the maturity of any liability or obligation pursuant to, any
material commitment, agreement, indenture, license, or other obligation to
which Purchaser is a party or any Law applicable to it.
SECTION 5.03. Absence of Litigation. No Claim has been asserted in
writing against Purchaser or, to the best knowledge of Purchaser, is any Claim
threatened which seeks to delay or prevent the consummation of the transactions
contemplated hereby which would, if successful, have a material adverse effect
on the ability of Purchaser to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements and to perform its obligations hereunder
and thereunder.
SECTION 5.04. Consents and Approvals. The execution and delivery of this
Agreement and the other agreements and documents contemplated herein (including
the Transfer Instruments and the Ancillary Agreements) by Purchaser does not,
and the performance of this Agreement and such other agreements and documents
by Purchaser will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any governmental or regulatory
authority or any other Person, except for a filing with and approval from the
FTC and/or the Antitrust Division pursuant to the HSR Act.
SECTION 5.05. Purchaser's Acknowledgments. Purchaser acknowledges and
agrees that it (i) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the Transferred Assets
and the Business (ii) has been furnished with or given adequate access to such
Representatives of Seller, and books, records and other information about the
Transferred Assets and the Business as it has requested and the financial
information contained therein has not been prepared in accordance with
generally accepted accounting principles, and (iii) will not assert any Claim
against Seller or its Representatives or hold any of them liable, for any
inaccuracies, misstatements or omissions with respect to information (except
for representations and warranties made by Seller in this Agreement) furnished
by Seller or its Representatives.
SECTION 5.06. Projections. In connection with Purchaser's investigation
of the Business and the Transferred Assets, Purchaser has received from Seller
and its Representatives certain estimates, projections and other forecasts for
the Business. Purchaser acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections, forecasts, plans and budgets,
that Purchaser is familiar with such uncertainties, that Purchaser is taking
full responsibility for making its own evaluation of the adequacy and accuracy
of all estimates, projections, forecasts, plans and budgets so furnished to it,
and that Purchaser will not assert any claim against Seller or any of its
Representatives or hold any of them liable, in connection with such estimates,
projections and forecasts.
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SECTION 5.07. Brokers. No broker, finder, investment banker or similar
Person is entitled to any brokerage, finder's or other fee or commission in
connection with the transaction contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser.
ARTICLE VI
ADDITIONAL COVENANTS, AGREEMENTS AND UNDERTAKINGS
SECTION 6.01. Office Space. Until October 31, 1997, Seller will provide
to Purchaser certain office space located in Marlborough, Massachusetts,
pursuant to the terms and conditions of the Occupancy Agreement entered into by
Purchaser and Seller as of the date hereof. Notwithstanding the foregoing,
Purchaser shall use its best efforts to vacate the office space by September
30, 1997. Upon the termination of Purchaser's right to use the office space
(whether at Purchaser's election upon due notice to Seller or at the expiration
of the term thereunder), Purchaser shall remove all of the Transferred Assets
and any other of its property that are located thereat at its expense.
Notwithstanding the foregoing, title to the Transferred Assets after the
Closing Date shall be in the hands of Purchaser. If any of the Transferred
Assets have not been removed from the office space by such time and in addition
to all legal rights available to Seller, Seller shall have the right to charge
Purchaser a commercially reasonable fee for storing the remaining Transferred
Assets. Purchaser acknowledges and agrees that certain of the Transferred
Assets are at locations other than Seller's facilities and that Purchaser shall
be solely responsible for making arrangements to maintain such Transferred
Assets thereat or to make any other arrangements.
SECTION 6.02. Regulatory and Other Authorizations. Each Party will make
any and all filings and submissions to, and use its commercially reasonable
efforts to obtain all authorizations, consents, orders and approvals of all
federal, state, and foreign governmental and regulatory Persons that may be or
become necessary for the performance of its obligations pursuant to this
Agreement and will cooperate fully with the other Party in promptly seeking to
obtain all such authorizations, consents, orders and approvals. The Parties
will not intentionally take, or omit to take, any action that will have the
effect of delaying, impairing or impeding the receipt of any required approval.
SECTION 6.03. Use of Name. Anything herein to the contrary
notwithstanding, no interest in or right to use the name "Digital Equipment
Corporation" or any derivation thereof or any logo, trademark or trade name in
which Seller has any interest whether with respect to the Business or otherwise
other than pursuant to the Trademark License Agreement or Trademark Assignment
Agreement (collectively, the "Retained Names and Marks") is being transferred,
assigned or licensed to Purchaser pursuant to the transactions contemplated
hereby. Purchaser agrees not to use any materials bearing Retained Names and
Marks or sell, transfer or ship any inventory or products bearing Retained
Names and Marks, unless pursuant to the Trademark License Agreement or
Trademark Assignment Agreement or requested to do so by Seller. Purchaser
agrees that Seller shall have no responsibility for Claims by third parties
arising out of, or relating to, the use by Purchaser of any Retained Name or
Mark after the Closing Date unless requested to do so by Seller as contemplated
by the preceding sentence, and Purchaser agrees to defend, indemnify and hold
harmless Seller, pursuant to the terms and conditions of Article VIII herein,
from any and all Claims that may arise out of the unauthorized use thereof by
Purchaser. Purchaser shall take no action to hold itself out or to otherwise
create the impression that it is an agent or otherwise affiliated with Seller
except as expressly permitted herein or under any of the Ancillary Agreements.
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SECTION 6.04. Bulk Transfer and Other Laws. Purchaser hereby waives
compliance by Seller with the provisions of any so-called bulk transfer Laws of
any jurisdiction in connection with the sale of the Transferred Assets to
Purchaser, provided, however, that Seller will indemnify, defend and hold
harmless Purchaser, pursuant to the terms and conditions of Article VIII
herein, in respect of any indemnifiable loss relating to, resulting from or
arising out of Seller's failure to so comply with such Laws in connection with
the transactions contemplated by this Agreement.
SECTION 6.05. Sales and Transfer Taxes. Seller agrees to pay any sales,
use or transfer or similar taxes imposed or assessed as a result of the sale of
any Transferred Assets that are physically located in the United States on the
Closing Date. Purchaser agrees to pay any sales, use, Value Added Tax or
transfer or similar tax imposed or assessed as a result of the sales of
Transferred Assets that are physically located outside the United States on the
Closing Date. Seller shall prepare and file, or cause to be prepared and
filed, any required Transfer Tax returns and other documents in connection with
Transfer Taxes incurred as a result of the sale of the Transferred Assets
contemplated by this Agreement. Seller and Purchaser agree to cooperate in any
endeavor to effect a reduction in any such Transfer Taxes.
SECTION 6.06. Insurance. After the Closing Time, all insurance coverage
for the Business, and Transferred Assets shall be the responsibility of
Purchaser.
SECTION 6.07. Further Action. Each of the Parties shall execute such
documents and take such further actions as may be reasonably required or
desirable to carry out the provisions of this Agreement and the transactions
contemplated hereby. Upon the terms and subject to the conditions hereof, each
of the Parties shall use its commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and shall cooperate
in good faith with respect thereto. Among other things, each of the parties
will cooperate in forwarding to the other party any misdirected payments and
receipts from customers and vendors. The Parties agree that to the extent it
is reasonably determined during the four month period after the date hereof
that the Parties failed to enter into agreements or other arrangements in
connection with the transactions contemplated hereunder to the extent such
agreements or arrangements existed with respect to the operation of the
Business prior to the Closing and that are useful in the operation of the
Business by Purchaser, each Party's Manager (as such term is defined in the
Cooperative Marketing Support and Development Agreement) or his or her designee
shall negotiate in good faith to enter such arrangements or agreements on
commercially reasonable terms and conditions.
SECTION 6.08. Tax Returns; Information; Cooperation.
(a) The Parties will provide each other with such cooperation and
information as either of them reasonably may request of the other in connection
with filing any Tax Return, amended return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or preparation for litigation
or investigation of Claims or in connection with any audit relating to Taxes
involving the Business. Such cooperation and information shall include
providing copies of all relevant documents and records, or portions thereof,
relating to the Business. Each Party will retain all returns, schedules and
work papers and all material records or other documents relating to Tax matters
of the Business for the taxable year of Seller ending after the Closing Date
and for all previous years, until the expiration of the statute of limitations
of the taxable years to which such returns and other documents relate (and, to
the extent notified by the other Party in writing, any extensions thereof),
provided, however, each Party shall provide written notice to the other Party
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after the expiration of such period if such Party desires to dispose of or
destroy such documents and records and shall provide such other party with the
right to copy or take possession of such documents and records. Any
information obtained under this Section 6.08(a) shall be kept confidential,
except as may be otherwise necessary in connection with the filing of returns
or claims for refund or in conducting an audit or other proceeding.
(b) If in order to properly prepare documents required to be filed with
governmental authorities or its financial statements, it is necessary that
either Party be furnished with additional information relating to the
Transferred Assets and such information is in the possession of the other
Party, such other Party agrees to use its reasonable efforts to furnish such
information in a timely manner to the Party reasonably requiring such
information, at the cost and expense of the Party requiring such information.
SECTION 6.09. Access to Books and Records.
(a) Seller agrees that from and after the Closing Date, it will permit
Purchaser and its Representatives, during normal business hours and with
reasonable notice, (i) to have access to and to examine and take copies of all
books and records of Seller (excluding personnel records unless specifically
requested in writing by the employee and to the extent otherwise permitted by
law) which are not delivered to Purchaser pursuant hereto and which directly
relate to the Transferred Assets and/or the Business and to events occurring
prior to the Closing Time or to transactions or events occurring subsequent to
the Closing Time which arise out of transactions or events occurring prior to
the Closing Time and (ii) make available to Purchaser the employees of Seller
that previously worked in the Business on such terms and conditions and for
such periods of time as Seller shall reasonably determine, provided, however,
that Purchaser shall pay to Seller a commercially reasonable hourly rate for
the actual time spent by such employees to the extent not otherwise provided in
the Interim Services Agreement, provided, further, that for time spent by such
employees solely in connection with effectuating the transactions hereunder
(excluding services under the Interim Services Agreement) such time shall be at
no cost to Purchaser if the aggregate amount of such time is not material. All
books and records of Seller relating to the Transferred Assets and the Business
not delivered to Purchaser pursuant hereto will be preserved by Seller for a
period of not less than seven years following the Closing Date, or such longer
period as may be required by Law, provided, however, Seller shall provide
written notice to Purchaser after the expiration of such seven year period if
Seller desires to dispose of or destroy such books and records and shall
provide Purchaser with the right to copy or take possession of such books and
records.
(b) Purchaser agrees that from and after the Closing Date, it will permit
Seller and its Representatives, during normal business hours and with
reasonable notice, (i) to have access to its properties, books, records,
employees and auditors and to examine and take copies of all books and records
of Seller which are delivered to Purchaser pursuant to this Agreement, (ii)
furnish to the representatives of Seller such additional financial and other
information regarding the Business and the Transferred Assets as Seller may
from time to time reasonably request and (iii) make available to Seller the
employees of Purchaser that Seller reasonably requires on such terms and
conditions and for such periods of time as Purchaser shall reasonably
determine, including, without limitation, employees whose assistance, testimony
or presence is necessary to assist Seller in evaluating or defending any Claims
or in discharging such responsibilities or obligations, including the presence
of such persons as witnesses in hearings or trials for such purposes, provided,
however, that Seller shall pay to Purchaser a commercially reasonable hourly
rate for the actual time spent by such employees providing such assistance,
presence or testimony . All books and records included in the Transferred
Assets will be preserved by Purchaser for a period of not less than seven years
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following the Closing Date, or such longer period as may be required by
Law, provided, however, Purchaser shall provide written notice to Seller after
the expiration of such seven year period if Purchaser desires to dispose of or
destroy such books and records and shall provide Seller with the right to copy
or take possession of such books and records.
SECTION 6.10. Mail Received After Closing.
(a) In the event that Purchaser receives after the Closing Time any mail
or other communications addressed to Seller, Purchaser may open such mail or
other communications and deal with the contents thereof in its discretion to
the extent that such mail or other communications and the contents thereof
relate to any of the Transferred Assets or the operation of the Business by
Purchaser; provided, however, that Purchaser shall provide Seller with copies
of any such communications which do not relate exclusively to the Transferred
Assets or the operation of the Business by Purchaser. Purchaser agrees to
promptly deliver or cause to be delivered to Seller all other mail and the
contents thereof which do not relate to the Transferred Assets or the operation
of the Business by Purchaser.
(b) In the event that Seller receives after the Closing Date mail or other
communications addressed to Seller which relate to any of the Transferred
Assets or the operation of the Business by Purchaser, Seller shall, after
examining such communications, promptly deliver or cause to be delivered all
such mail and the contents thereof to Purchaser. Seller agrees to cooperate
with Purchaser and to make arrangements reasonably necessary in order to deal
properly with checks addressed to Seller but which belong to Purchaser pursuant
to this Agreement, and to properly and promptly direct the proceeds thereof to
Purchaser. Purchaser shall promptly inform all of the parties to the Assigned
Contracts and the customers of and the suppliers to the Business, of the new
address of the Business being carried on by Purchaser.
(c) The Parties will cooperate with each other with respect to the matters
covered by this Section 6.10 to enable each such Party to obtain such
information as it requires to conduct its business.
SECTION 6.11. Confidentiality. Each of the Parties shall exercise, and
shall cause their respective Representatives and their respective Affiliates to
exercise, the same degree of care to prevent disclosure of Information (as
hereinafter defined) received by or disclosed to such Party pursuant to this
Agreement as it takes to preserve and safeguard its own confidential
information, data, technology or know-how but, in any event, no less than a
reasonable degree of care. As used herein, "Information" means all documents
and information concerning the other Party and the Affiliates thereof furnished
to a Party, its Affiliates or Representatives (in any case, a "Recipient") by
such other Party or its Representatives (in any case, the "Disclosing Party")
in connection with the transactions contemplated by this Agreement. Each
Recipient shall not use any of such Information except as permitted by this
Agreement or release or disclose such Information to any other Person, except
its auditors, attorneys, financial advisors, bankers and other consultants and
advisors in connection with this Agreement.
Information shall be safeguarded by the Recipient for not less than three
years from the date hereof and any documentary Information (including all
copies thereof) not relating to the Business or the Transferred Assets shall be
returned to the Disclosing Party promptly at its request and other Information
shall be maintained in confidence subject to the terms of this Section 6.11.
The restrictions of this Section 6.11 shall not apply to any Information
received by a Recipient (a) which such Recipient already possessed at the time
of receipt as shown by written
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records; (b) which was at the time of receipt or subsequently becomes,
publicly available through no fault of such Recipient or any of its Affiliates
or Representatives; (c) which such Recipient rightfully received from a third
party which the Recipient neither knows nor has reason to know is prohibited
from disclosing such information by a contractual, legal or fiduciary
obligation; (d) is furnished to the Recipient by to a third party without a
similar restriction on the third party's rights; or (e) is as required to be
disclosed pursuant to Law; provided that, if practicable, the Recipient shall
notify the Disclosing Party prior to disclosing any Information pursuant to
this clause (e) and shall cooperate with the Disclosing Party in making
reasonable efforts to resist such disclosure, if the Disclosing Party so
requests. Information shall not be deemed to be within the foregoing
exceptions merely because such Information is embraced by more general
information in the public domain or in a Recipient's possession. In addition,
any combination of features shall not be deemed to be within the foregoing
exceptions merely because individual features are in the public domain or in a
Recipient's possession, but only if the combination itself and its principle of
operation are in public domain or in Recipient's possession.
Each Recipient shall limit access to Information to those of its
Representatives who have a need to know in order to effectuate this Agreement
and have expressly agreed in writing or otherwise to maintain the
confidentiality principles of this Section 6.11.
In the event of a breach of any of the obligations stated above in this
Section 6.11, the Disclosing Party may proceed against the breaching Recipient
in Law or in equity for such damages or other relief as a court may deem
appropriate. Nothing herein contained shall be construed as prohibiting the
Disclosing Party from pursuing, in addition, any other remedy for such breach
or threatened breach. The confidentiality restrictions set forth in this
Section 6.11 supersede the Nondisclosure Agreement between the parties hereto
dated July 15, 1996 and the Confidentiality Agreement between the parties
hereto dated June 30, 1997.
SECTION 6.12. Notices of Certain Events. A Party shall promptly notify
the other Party of:
(i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement to the extent that the
failure to obtain such consent would have a Material Adverse Effect;
(ii) any notice or other communications from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating
to or involving or otherwise affecting the Transferred Assets or the
Business that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.04 or that relate
to the consummation of the transactions contemplated by this Agreement.
SECTION 6.13. Seller's Inventory. The Parties hereto acknowledge and
agree that, except pursuant to Section 2.01(vii) herein, the Transferred Assets
being sold to Purchaser hereunder shall not include, among other things,
Seller's inventory of samples, components, supplies and finished goods with
respect to the Business ( the "Seller's Inventory"). The Parties agree that
until September 30, 1997 (the "Initial Period"), the Seller's Inventory will be
treated as follows:
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(i) The Seller Inventory shall be held by Seller at its facilities
and title thereto and risk of loss thereof shall remain with Seller until
sold in the manner provided herein. Seller and Purchaser shall have
access to the list of remaining Seller Inventory.
(ii) Purchaser shall use its best efforts to sell the Seller
Inventory to its customers in the ordinary course of Purchaser's business
solely through Seller's current distribution channels ("Third Party
Sales") and, in the case of components included in the Seller Inventory,
to its vendors for use in the manufacture of Purchaser's products. Such
best efforts shall include, without limitation, including the Seller's
Inventory in Purchaser's standard product lists and materials, providing
commercially reasonable incentives to its sales person, distributors and
resellers to sell the Seller Inventory, selling the Seller Inventory
prior to selling comparable inventory procured from other sources and,
with respect to the use of the components in the manufacture of
Purchaser's products, selling such items to its vendors in lieu of
selling them comparable items from other sources or encouraging such
vendors to purchase such inventory prior to their sourcing such
comparable items from their own vendors.
(iii) Purchaser shall sell the Seller Inventory on substantially the
same terms and conditions as Seller is currently selling such inventory,
including, without limitation, with respect to price and warranty, and
shall obtain the consent of Seller, in writing, in advance of any
material changes therefrom. Purchaser shall be responsible for all
returns and warranty and other claims in connection with its sale of
Seller Inventory.
(iv) When Purchaser receives an order from a customer or vendor
which can be filled from the Seller Inventory, Purchaser shall place a
corresponding order on its customary purchase order form with Seller to
purchase Seller Inventory to resell to such customer or vendor. Seller
shall notify Purchaser when product is shipped to the customer or vendor
and Purchaser shall invoice the customer or vendor for the transactions.
The purchase price of such Seller Inventory shall be Purchaser's actual
standard price to its customer less 17%, provided, that Purchaser shall
use its commercially reasonable efforts to maximize the price therefor.
Payment for such purchases of Seller Inventory shall be made by Purchaser
forty-five (45) days after its receipt of an invoice. Seller shall be
responsible for any licenses fees relating to its Adobe license and for
any other license fees relative to the Seller Inventory.
(v) Purchaser acknowledges that it shall not have exclusive rights
to sell the Seller Inventory. However, Seller agrees that it shall not
reject any orders from Purchaser during the Initial Period, except to the
extent such Inventory is not then available or for other good cause.
Seller shall have no obligation to manufacture or procure additional
products to the extent Purchaser desires to purchase Seller Inventory not
then remaining. In the event that Seller identifies another purchaser
for any material amount of any type of Seller Inventory, Seller will
notify Purchaser in advance of a sale to such alternative purchaser.
Upon the expiration of the Initial Period, Seller will consult with
Purchaser with respect to the optimal disposition of the remaining Seller
Inventory, provided, however, the Seller shall have the sole discretion with
respect to the disposition thereof.
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SECTION 6.14. Preparation of Financial Statements. The Parties
acknowledge that financial statements for the Business, for at least the three
prior fiscal years, have not been prepared in accordance with generally
accepted accounting principles and any such financial statements are not
currently available for the Business. Purchaser and its independent accountant
shall, as soon as practicable following the date of this Agreement, advise
Seller by written notice of the form and content of the audited and unaudited
historical financial statements and other financial data of the Business
required by Purchaser to comply with its filing obligations with the Securities
and Exchange Commission (the "SEC") under the rules and regulations of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including
Regulation S-X) in connection with the consummation of the transactions
contemplated hereby (the "Required Financial Information"). Seller shall cause
the Required Financial Information to be prepared and delivered to Purchaser as
soon as practicable and in any event within 60 days following such notice. The
Required Financial Information will conform to the requirements of the Exchange
Act as set forth in the notice of Purchaser. Purchaser shall pay all fees and
expenses of Seller's independent accountant in connection with the preparation
and audit of the Required Financial Information. Seller does not make and will
not be deemed to make any representations or warranties concerning the Required
Financial Information.
SECTION 6.15. Enforcement of Restrictive Agreements. For a period of
one (1) year after the Closing Date, to the extent that any third party is
bound by a confidentiality, noncompetition, nonsolicitation or other similar
restrictive agreement with Seller solely related to the Business, if Purchaser
has reason to believe that any such third party has breached its obligations
under such agreement in such a manner as to have a Material Adverse Effect upon
the Business, Purchaser shall notify Seller, and Seller shall in good faith
determine whether such third party breach exists, and if so, Seller shall, in
its sole discretion, either (i) use its commercially reasonable efforts to
enforce its rights thereunder with respect to such breach, provided, however,
that Purchaser shall reimburse Seller for its costs and expenses in connection
therewith (including, without limitation, reasonable attorneys fees and
expenses) or (ii) to the extent permitted, allow Purchaser to enforce such
agreement against a breach thereof, at Purchaser's sole cost and expense.
Notwithstanding the foregoing, Seller shall have no obligation under the
preceding sentence to the extent prohibited by law or to the extent taking any
such action would result in its being in violation under such restrictive
agreement.
SECTION 6.16. Noncompetition. Seller agrees that for the period during
which the Cooperative Marketing, Support and Development Agreement is in effect
(the "Non-Compete Period") neither it nor any of its Affiliates will engage in
the manufacture of Printers, except to the extent permitted under the
Cooperative Marketing, Support and Development Agreement. "Printer" shall mean
devices or collections thereof that receive as input electronic signals
representative of image data to be printed in hard copy and that provide as
output hard copy printed images corresponding to such electronic signals but
shall not include passbook printers. The Parties agree that the Non-Compete
Period is reasonable and fair, but if for any reason a court determines such
period is not reasonable, such period shall be modified to the extent necessary
to render the provisions of this Section 6.16 enforceable. The restrictions in
this Section 6.16 shall not, however, prevent Seller from acquiring another
company or entity which at the time of such acquisition is engaged in the
manufacture or sale of printers.
SECTION 6.17 Know-How, Trade Secrets and Proprietary Processes. Seller
agrees that any know-how, trade secrets or proprietary processes relating to
the Business shall be owned by, and may be used by Genicom, to the extent
reflected in the books and records
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transferred pursuant to this Agreement or known by the employees of Seller who
become employees of Purchaser.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment of each of the following conditions:
(a) Litigation. No order, stay, judgment or decree shall have been issued
by any court restraining or prohibiting the consummation of the transactions
contemplated hereby.
(b) Legal Opinion. Seller shall have received from McGuire, Woods, Battle
& Boothe, L.L.P., counsel to Purchaser, a legal opinion addressed to Seller,
dated the Closing Date, to substantially the following effect: Purchaser is a
corporation duly organized and validly existing in good standing under the Laws
of Delaware; has all required corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and the
Ancillary Agreements; such execution, delivery and performance has been duly
authorized by all necessary corporate action on the part of Purchaser; the
execution, delivery and performance of its obligations under this Agreement and
the Ancillary Agreements do not (i) violate or cause a default under any
provision of Purchaser's charter or by-laws and (ii) to the best knowledge of
such counsel, violate any other agreement or instrument to which Purchaser is a
party or to which Purchaser or any of its property is subject; each of this
Agreement and the Ancillary Agreements to which Purchaser is a party has been
duly executed and delivered by Purchaser, each of the Ancillary Agreements to
which Purchaser is a party constitutes a valid and binding obligation of
Purchaser; and each of such Ancillary Agreements is enforceable in accordance
with its terms, subject to such customary exceptions as may be reasonably
acceptable to counsel for Seller.
(c) Certificates. Seller shall have received a true and complete copy,
certified by an appropriate officer of Purchaser, of the resolutions duly and
validly adopted by Purchaser's Board of Directors evidencing its authorization
of the execution and delivery of this Agreement and the Ancillary Agreements
and the consummation of the transactions contemplated hereby and all such other
documents reasonably requested by Seller relating to the good standing and
existence of Purchaser and the authority of Purchaser to enter into and perform
this Agreement, all in form and substance reasonably satisfactory to Seller.
(d) Ancillary Agreements. The Ancillary Agreements to which Purchaser is
a party shall have been executed and delivered by Purchaser and shall be
legally binding on Purchaser.
(e) HSR Act. The waiting period required by the HSR Act, and any
extensions thereof obtained by request or other action of the FTC and/or the
Antitrust Division, shall have expired or been terminated by the FTC and the
Antitrust Division.
(f) Compliance with Covenants. Purchaser shall have performed and complied
with, in all material respects, all of the covenants and agreements required by
this Agreement to be performed or complied with by Purchaser at or prior to the
Closing and Seller shall have received a certificate of a duly authorized
representative of Purchaser certifying to the matters set forth in this Section
7.01(f).
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SECTION 7.02. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment of each of the following conditions:
(a) Litigation. No order, stay, judgment or decree shall have been issued
by any court restraining or prohibiting the consummation of the transactions
contemplated hereby.
(b) Legal Opinion. Purchaser shall have received from (1) Molly Brennan,
assistant general counsel to Seller, a legal opinion addressed to Purchaser,
dated the Closing Date, to substantially the following effect: Seller is a
corporation duly organized and validly existing in good standing under the Laws
of the Commonwealth of Massachusetts; has all required corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and the Ancillary Agreements; such execution, delivery and
performance has been duly authorized by all necessary corporate action on the
part of Seller; the execution, delivery and performance of its obligations
under this Agreement and the Ancillary Agreements do not (i) violate or cause a
default under any provision of Seller's articles of organization or by-laws,
and (ii) to the best knowledge of such counsel, violate any other agreement or
instrument to which Seller is a party or to which Seller or any of its property
is subject which would materially adversely effect the transfer of the
Transferred Assets in accordance with this Agreement; and (2) from Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Seller, to the effect
that each of this Agreement and the Ancillary Agreements to which Seller is a
party has been duly executed and delivered by Seller and constitutes a valid
and binding obligation of Seller enforceable in accordance with its terms,
subject in both opinions, to such customary exceptions as may be reasonably
acceptable to counsel for Purchaser.
(c) Certificates. Purchaser shall have received a true and complete copy,
certified by the Assistant Secretary of Seller, of the resolutions duly and
validly adopted by the Board of Directors of Seller evidencing its
authorization of the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and all
such other documents reasonably requested by Purchaser relating to the
existence of Seller and the authority of Seller to enter into and perform this
Agreement, all in form and substance reasonably satisfactory to Purchaser.
(d) Documents. The Transfer Instruments to be delivered by Seller to
Purchaser at the Closing shall be in form and substance reasonably satisfactory
to Purchaser.
(e) Casualties. Prior to the Closing, fire, flood or other cause shall
not have destroyed a material part of the Transferred Assets taken as a whole,
or damaged such Transferred Assets to a material extent.
(f) Ancillary Agreements. The Ancillary Agreements to which Seller is a
party shall have been executed and delivered by Seller and shall be legally
binding on Seller.
(g) HSR Act. The waiting period required by the HSR Act, and any
extensions thereof obtained by request or other action of the FTC and/or the
Antitrust Division, shall have expired or been terminated by the FTC and the
Antitrust Division.
(h) Compliance with Covenants. Seller shall have performed and complied
with, in all material respects, all of the covenants and agreements required by
this Agreement to be performed
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or complied with by Seller at or prior to the Closing and Seller shall have
received a certificate of a duly authorized Representative of Purchaser
certifying to the matters set forth in this Section 7.02(h).
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Survival of Representations. Subject to the limitations
and other provisions of this Article VIII, the representations and warranties
of the Parties contained in this Agreement shall survive the Closing for a
period of one (1) year.
SECTION 8.02. Seller's Agreement to Indemnify. Subject to the terms and
conditions of this Article VIII, Seller agrees to indemnify, defend and hold
harmless Purchaser and any stockholder, partner, officer, director or employee
of Purchaser (collectively, the "Purchaser Group"), at any time after the
Closing Time, from and against all Damages, (including such as are incurred as
the result of Claims), incurred by the Purchaser Group or any member thereof
resulting from or relating to (i) a breach of any representation or warranty of
Seller contained in this Agreement, (ii) the non-performance of any covenant or
obligation to be performed on the part of Seller under this Agreement, (iii)
any of the Retained Liabilities, or (iv) any claim by a third party that
Seller's use of the rights Seller retains under the terms of the Patent
Assignment and License Agreement, Software Assignment and License Agreement or
Trademark License Agreement violate the rights of such third party.
SECTION 8.03. Purchaser's Agreement to Indemnify. Subject to the terms
and conditions of this Article VIII, Purchaser agrees to indemnify, defend and
hold harmless Seller and any stockholder, partner, officer, director or
employee of Seller (collectively, the "Seller Group"), at any time after the
Closing Time, from and against all Damages (including such as are incurred as
the result of Claims) incurred by the Seller Group or any member thereof
resulting from or relating to (i) a breach of any representation or warranty of
Purchaser contained in this Agreement, (ii) the non-performance of any covenant
or obligation to be performed on the part of Purchaser under this Agreement or
(iii) any of the Assumed Liabilities.
SECTION 8.04. Indemnification Payments and Survival. (a) No action may
be brought by any Indemnified Person with respect to any indemnifiable claim
under Section 8.02(i) or 8.03(i) after the expiration of the representations and
warranties contained herein unless prior to such expiration, written notice,
given in good faith of the specific breach thereof is given by the Indemnified
Party to the Indemnifying Party.
(b) No claim may be made against an Indemnifying Party pursuant to its
indemnification obligations set forth in Section 8.02(i) or 8.03(i) with
respect to any individual item of Damage unless and until the aggregate of all
such Damages actually incurred by the Indemnified Person exceeds $50,000 (the
"Threshold Amount") and the Indemnified Person's right to indemnification
hereunder shall only be with respect to such amounts in excess of the Threshold
Amount. In the case of any claim for indemnification made by the Indemnified
Person to the Indemnifying Party in which the Indemnified Person asserts for
the first time that the Threshold Amount has been or will be exceeded after or
upon satisfaction of the claim for which the Indemnified Person seeks
indemnification, the Indemnified Person shall set forth in reasonable detail
the Damages, including the basis therefor, which have exceeded or which,
together with the
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claim being made, will exceed the Threshold Amount. Neither party's
obligation to indemnify the other and hold it harmless under Section 8.02(i) or
8.03(i) shall in any event exceed in the aggregate an amount equal to twenty
five percent (25%) of the Purchase Price. If either party is obligated to
indemnify the other hereunder, in lieu of the payment of cash, it may offset
such indemnification payments against amounts owed by the Indemnified Person to
the Indemnifying Party under any of the Ancillary Agreements or hereunder. The
Indemnifying Party shall not be obligated for any indirect, special or
consequential damages incurred by the Indemnified Person.
(c) For purposes of determining the amount of Damages incurred by an
Indemnified Person, such Damages shall be net of any insurance payment actually
received by the Indemnified Person in compensation for the same Damages for
which indemnification is sought and shall be reduced by the amount of any tax
benefits to be realized by the Indemnified Person with respect to the matter
which was the basis for the Damages for which indemnification is sought.
(d) The parties hereto acknowledge and agree that the indemnities set
forth in this Agreement shall be the sole and exclusive remedy at law or equity
with respect to any and all claims relating to the subject matter of this
Agreement.
(e) Except as set forth in this Agreement and in the Ancillary Agreements,
the parties hereto are not making any representation, warranty, covenant or
agreement with respect to the subject matter of this Agreement. Anything
herein to the contrary notwithstanding, no breach of any representation,
warranty, covenant or agreement contained herein shall give rise to any right
on the part of any party hereto after the consummation of the transactions
contemplated hereby to rescind this Agreement or any of the transactions
contemplated hereby.
(f) Purchaser and Seller agree that if a claim may reasonably be asserted
under Section 8.02(i) or 8.03(i), as the case may be, or under a subsection
which is not subject to the limitations contained in Section 8.04(b), then the
party seeking indemnification may assert such claim under either or both of the
applicable sections.
SECTION 8.05. Conditions of Indemnification.
(a) Except as otherwise specifically provided in this Agreement, any claim
for indemnification by any Indemnified Person with respect to a Claim made by
any Person other than a Party shall be subject to the provisions of this
Section 8.05:
(i) The Indemnified Person will give the Indemnifying Party prompt
notice of any such Claim and, subject to Section 8.05(b) herein, shall
cooperate in all reasonable respects with the Indemnifying Party and its
counsel in defending such Claim and, subject to Section 8.05(b), the
Indemnifying Party shall have the right to undertake the defense thereof
by representatives chosen by it;
(ii) If the Indemnifying Party, within a reasonable time after
notice of any such Claim, fails to defend the Indemnified Person against
whom such Claim has been asserted, the Indemnified Person shall (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and for the
account and risk of the Indemnifying Party; and
(iii) Anything in this Section 8.05 to the contrary notwithstanding,
if there is a reasonable probability that a Claim may materially and
adversely affect the Indemnified Person other than as a result of money
damages or other money payments, the Indemnified
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<PAGE> 25
Person shall, after reasonable prior notice to the Indemnifying Party,
have the right, at its own cost and expense, to jointly defend,
compromise or settle such Claim.
(b) If any member of the Purchaser Group or the Seller Group is entitled
to receive indemnification from an Indemnifying Party with respect to any
Claim and the named parties to any such Claim include both such Indemnified
Person and such Indemnifying Party, and such Indemnified Person shall have been
advised by counsel that counsel employed by such Indemnifying Party would, under
applicable professional standards, have a conflict in representing both the
Indemnifying Party and such Indemnified Person, if such Indemnified Person
notifies the Indemnifying Party in writing that it elects to employ separate
counsel reasonably satisfactory to the Indemnifying Party at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such Claim on behalf of such Indemnified Person, it being
understood, however, that the Indemnifying Party shall not in connection with
any one such Claim or separate but substantially similar or related Claims in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all such Indemnified Persons. With the prior
written consent of the Indemnifying Party (it being agreed that such consent
shall not be unreasonably withheld), any Indemnified Person may agree to any
settlement of any Claim involving a payment or expenditure for which such
Indemnified Person intends to claim indemnification hereunder. Nothing herein
shall be deemed to authorize any Indemnified Person to agree without the prior
written consent of the Indemnifying Party to any such settlement. The
Indemnifying Party may not, without the prior written consent of the Indemnified
Person, settle or compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
under this Agreement (whether or not any Indemnified Person is an actual or
potential party to such Claim) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Person from all liability
arising out of such Claim. If an Indemnified Person determines not to accept a
monetary settlement of any such litigation or prospective litigation following
the Indemnified Person's receipt of written notice from the Indemnifying Party
requesting the Indemnified Person's acceptance of such a settlement for an
amount (the "Settlement Amount") agreed to in writing by the Indemnified Person
and the parties (other than the Indemnified Person) to such litigation or
prospective litigation and a judgment in excess of the Settlement Amount is
thereafter rendered against the Indemnified Person, no claim for indemnification
under Section 8.02 or 8.03, as the case may be, may thereafter be made with
respect to such litigation or prospective litigation against the Indemnifying
Party in excess of the Settlement Amount consented to by the Indemnifying Party.
(c) Purchaser and Seller agree that any indemnity payment hereunder shall
be treated as an adjustment to the Purchase Price.
ARTICLE IX
EMPLOYEE ARRANGEMENTS AND BENEFITS
SECTION 9.01. Employment Offers to United States Employees.
Seller and Purchaser acknowledge that by letter agreement dated July 22,
1997, Seller agreed that Purchaser may make offers of employment, contingent
upon the Closing, to the employees of the Business located in the United States
for any position and under any terms and conditions determined in Purchaser's
sole discretion. Seller agrees that Purchaser may continue to make offers of
employment to such persons after the Closing.
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SECTION 9.02. No Right or Benefit. No provision of this Article IX shall
create any right or benefit in any person not a party to this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by Purchaser and Seller.
SECTION 10.02. Waiver. At any time prior to the Closing, either Purchaser
or Seller may (a) extend the time for the performance of any of the obligations
or other acts of the other Party, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the Party to be bound
thereby.
SECTION 10.03. Expenses. Except as otherwise provided herein, all costs
and expenses, including, without limitation, fees and disbursements of
Representatives, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
costs and expenses, whether or not the Closing shall have occurred.
SECTION 10.04. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
(a) if to Seller:
Digital Equipment Corporation
111 Powdermill Road
Maynard, Massachusetts 01754
Attention: Harold D. Copperman
Telephone No.: (508) 467-7560
Facsimile No.: (508) 493-7310
with a copy to:
Digital Equipment Corporation
111 Powdermill Road
Maynard, Massachusetts 01754-1499
Attention: Cindy Lewis, Esq.
Telephone No.: (508) 493-5242
Facsimile No.: (508) 493-7310
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with an additional copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Richard A. Goldman, Esq.
Telephone No.: (617) 542-6000
Facsimile No.: (617) 542-2241
(b) if to Purchaser:
Genicom Corporation
14800 Conference Center Drive
Chantilly, Virginia 20151
Attention: Paul Winn, President
and Chief Executive Officer
Telephone No.: (703) 802-9200
Facsimile No.: (703) 802-8618
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Jane Whitt Sellers, Esq.
Telephone No.: (804) 775-1000
Facsimile No.: (804) 775-1061
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
SECTION 10.05. Press Release; Public Announcements. Purchaser and Seller
shall not make any public announcements in respect of this Agreement or the
transactions contemplated herein without prior consultation and agreement as to
the form and content thereof, which agreement shall not be unreasonably
withheld or delayed, except to the extent required by Law.
SECTION 10.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so
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long as the transactions contemplated hereby are not affected in any
manner materially adverse to Purchaser or Seller. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
Purchaser and Seller shall negotiate in good faith to modify this Agreement so
as to effect the original intent of Purchaser and Seller as closely as possible
in an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 10.08. Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the Parties and
supersede all prior and contemporaneous agreements and undertakings, both
written and oral, between Purchaser and Seller with respect to the subject
matter hereof and supersede all prior oral written agreements and
understandings relating to the subject matter hereof.
SECTION 10.09. Assignment; Successors. The rights and obligations under
this Agreement may not be assigned by either Party hereto without the prior
written consent of the other Party; provided, however, either Party may assign
its rights and obligations under this Agreement, in whole or in part, to any of
its wholly-owned subsidiaries without the other Party's consent, provided,
further, that no such assignment shall relieve such assigning Party from its
obligations or liabilities hereunder. All statements, representations,
warranties, covenants and agreements in this Agreement shall be binding on the
Parties hereto and shall inure to the benefit of the respective successors and
permitted assigns of each Party hereto.
SECTION 10.10. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any Person other than
the Parties hereto, their successors or permitted assigns and, with respect to
Article VIII, the Indemnified Persons, any rights or remedies under or by
reason of this Agreement and no person or entity shall be regarded as a
third-party beneficiary of this Agreement.
SECTION 10.11. Specific Performance. The Parties each acknowledge and
agree that in addition to any other remedies available at law (except as
specifically restricted as provided herein) or hereunder each of the Parties
hereto shall be entitled to specific enforcement of the terms of this Agreement
against the other Party.
SECTION 10.12. Governing Law. This Agreement and the rights and
obligations of the Parties hereunder shall be construed in accordance with and
governed by the law of the Commonwealth of Massachusetts, without giving effect
to the conflict of law principles thereof. Any legal action or proceeding with
respect to this Agreement shall be brought either in the courts of The
Commonwealth of Massachusetts, the Commonwealth of Virginia or of the United
States of America for the District of Massachusetts or the District of
Virginia. By execution and delivery of this Agreement, each of the Parties
hereto accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts with respect to this
Agreement and the rights and obligations of the Parties hereunder. The Parties
hereby irrevocably waive any objection or defense that they may now or
hereafter have to the assertion of personal jurisdiction by any such court in
any such action or to the laying of the venue of any such action in any such
court, and hereby waive, to the extent not prohibited by law, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such proceeding,
any claim that it or he is not subject to the jurisdiction of the above-named
courts for such proceedings. Each of the Parties hereto irrevocably consents
to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to the Party at its address set forth in Section 10.04 hereof
and irrevocably waive any objection or defense that it may now or hereafter
have to the sufficiency of any such service of process in any such action.
Nothing
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in this Section 10.12 shall affect the rights of the parties to commence any
such action in any other forum or to serve process in any such action in any
other manner permitted by law.
SECTION 10.13. Interpretation. The Parties hereto acknowledge and agree
that: (i) each Party and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (ii) the
rule of construction to the effect that any ambiguities are resolved against
the drafting Party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to all Parties hereto and not in favor of or against any
Party, regardless of which Party was generally responsible for the preparation
of this Agreement.
SECTION 10.14. Counterparts. This Agreement shall become effective upon
execution by both Parties. This Agreement may be executed in one or more
counterparts, and by the Parties in separate counterparts, each of which when
executed shall be deemed to be an original but all of which when taken together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
under seal as of the date first written above by their respective officers
thereunto duly authorized.
DIGITAL EQUIPMENT CORPORATION
By:/s/Harold D. Copperman
Name: Harold D. Copperman
Title: Senior Vice President and General Manager
Digital Products Division
GENICOM CORPORATION
By:/s/Paul T. Winn
Name: Paul T. Winn
Title: President and Chief Executive Officer
29
<PAGE> 1
EXHIBIT 2.2
TRADEMARK LICENSE AGREEMENT
This Agreement is entered into as of August 10, 1997, by and between
DIGITAL EQUIPMENT CORPORATION, a Massachusetts corporation having its principal
offices at 111 Powdermill Road, Maynard, MA 01754 ("Digital") and GENICOM
CORPORATION, a company incorporated under the laws of the State of Delaware
and having a place of business at 14800 Conference Center Drive, Suite 400,
Westfields, Chantilly, VA 22021-3806(hereinafter, together with all subsidiary
and affiliate companies which it now or hereafter owns or controls, "Genicom").
This Agreement is effective as of the date Genicom provides a fully paid
certificate of insurance as proof of compliance with Article 6(c) below.
WHEREAS, since 1957 Digital has been conducting business under the trade
name and trademark "DIGITAL", including a design incorporating the word
"DIGITAL" as shown on attached Figure 1 (hereinafter "the DIGITAL Logo"); the
name "DIGITAL" and the DIGITAL Logo are well known throughout the world as
identifying Digital as the source of high-quality products and services,
including a full line of computer hardware and software products; and Digital
is the owner of numerous registrations for the trademark "DIGITAL" and the
DIGITAL Logo in the United States and throughout the rest of the world;
WHEREAS, Digital has long been advertising and selling printer products
under certain trademarks consisting of the prefix "DEC" combined with another
word as listed in the attached Schedule 1 (collectively "the DEC Trademarks");
the DEC Trademarks are well known throughout the world as identifying Digital
as the source of high-quality printer products; and Digital is the owner of
numerous registrations for the DEC Trademarks and numerous other DEC-formative
trademarks in the United States and throughout the rest of the world;
WHEREAS, Digital is also the owner of certain trademarks listed on the
attached Schedule 1, such trademarks being the subjects of trademark
registrations or applications for trademark registration that have been filed
with trademark authorities in certain countries;
WHEREAS, Digital is the owner of certain trademarks listed on the attached
Schedule 1, the rights of which have been acquired through common law; and
WHEREAS, Genicom desires to obtain a license to use the DIGITAL Logo, the
DEC Trademarks and other trademarks listed on the attached Schedule 1 in
connection with the sale of those products listed on attached Schedules 2
through 6, and in connection with other printing products approved by Digital;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants,
promises and undertakings set forth below, and as required by Article VII,
sections 7.01(d) and 7.02(f) of a certain Asset Purchase Agreement dated August
10, 1997 (hereinafter the "Asset
<PAGE> 2
Purchase Agreement") to which Digital and Genicom are parties, Digital and
Genicom hereby agree as follows:
Article 1 - DEFINITIONS
"PRINTERS" means those printer products listed in attached Schedule 2.
"SUPPLIES" means those printer supply products listed in attached Schedule 3.
"OPTIONS" means those printer option products listed in attached Schedule 4.
"SOFTWARE" means those printer software products listed in attached Schedule 5.
"LICENSED PRODUCTS" means Printers, Supplies, Options, and Software, and
printer guides, information sheets, and manuals related to Printers.
"FUTURE PRODUCTS" means printer products developed by Genicom under the
Cooperative, Marketing, Support and Development Agreement and designated to be
Digital Branded Products.
"NET RECEIPTS" means the gross receipts received by Genicom from Sales,
less (i) credits for refunds and returns, (ii) sales tax billed by Genicom to
its customers and required to be paid to the appropriate taxing authorities by
Genicom, and (iii) amounts paid by Genicom and billed through to Genicom's
customers for insurance, shipping and other similar charges.
Article 2 - LICENSE GRANT
a. Digital hereby grants to Genicom, and Genicom accepts, a
royalty-bearing, worldwide, nonexclusive, nontransferable license,
without the right to grant sub-licenses, to use the DIGITAL Logo and
the DEC Trademarks (hereinafter collectively "the Licensed
Trademarks") on currently-existing models or versions of the
Licensed Products and Future Products, solely in accordance with the
terms and conditions described in articles 3 through 8 below.
b. Digital further grants to Genicom, and Genicom accepts, a
royalty-free, worldwide, nonexclusive, nontransferable license,
without the right to grant sub-licenses, to use the DEC Trademarks,
in non-stylized form, in connection with the advertising, promotion,
and sale of the Licensed Products and Future Products.
<PAGE> 3
Article 3 - CONDITIONS OF USE
a. The Licensed Trademarks shall be used in accordance with
Digital's policies and practices regarding trademark usage as
established from time to time by Digital and as provided in writing
to Genicom by Digital.
b. The DIGITAL Logo shall not be used by Genicom on advertising
material, stationary or other business identification materials,
promotional pieces, novelty items (e.g. hats, shirts, key chains,
etc.), or other collateral items, nor shall the DIGITAL Logo be
included in any ephemeral images generated by whatever means,
including but not limited to images displayed, transmitted, or
broadcast on the Internet or other computer networks. Genicom shall
however be permitted to use the Digital Logo on advertising and
marketing material, in any media, that promote nothing but the
Licensed Products or Future Products. Any such advertising and
marketing material will be submitted by Genicom to Digital for prior
written approval, which approval shall not be unreasonably withheld.
c. Genicom acknowledges the great value of the goodwill
associated with the Licensed Trademarks and further acknowledges
that Digital is the sole and exclusive owner of the Licensed
Trademarks and the goodwill associated therewith. Genicom agrees
that any and all use of the Licensed Trademarks shall inure to the
benefit of Digital. Genicom agrees that it will not, either during
or after the term of this Agreement, contest, attack or dispute, or
assist another party in contesting, attacking or disputing,
Digital's title or rights in the Licensed Trademarks or in any other
similar mark.
d. Genicom agrees not to adopt or use any name or mark
confusingly similar to the Licensed Trademarks without the written
consent of Digital. This Agreement does not grant any rights to use
the Licensed Trademarks on products or services other than Licensed
Products, other than as expressly provided herein.
e. The DIGITAL Logo shall only be used as currently used by
Digital on Licensed Products and printed materials packaged
therewith. For Future Products the DIGITAL Logo shall be used in
accordance with provisions of Article 3a above. Genicom may only
reproduce the DIGITAL Logo from existing plates and molds. In the
event that new plates or molds become necessary during the term of
this Agreement to replace broken or worn existing plates or molds,
such new plates or molds may be used to create the DIGITAL Logo only
upon prior inspection and approval by Digital.
Article 4 - QUALITY CONTROL
a. Genicom shall use its best efforts to ensure that all
products sold while using the Licensed Trademarks shall be of a high
standard and of such style, appearance and quality as to protect and
enhance the Licensed Trademarks and the goodwill associated
therewith. Quality standards in connection with the use of the
Licensed
<PAGE> 4
Trademarks for (i) Licensed Products shall be at least equal to those
maintained by Digital at the time of the execution of this Agreement
and (ii) Future Products shall be as mutually established by Digital
and Genicom as provided in the Cooperative Marketing, Support and
Development Agreement dated as of the Closing between Digital and
Genicom.
Article 5 - RIGHT TO INSPECT
a. In order to enable Digital to maintain control over the
nature and quality of the products on which Genicom uses the Licensed
Trademarks, and for the protection of the public and the preservation
of Digital's rights, Genicom shall submit such products to Digital for
examination and approval upon Digital's request. Digital shall also
have the right to examine and approve the manner in which Genicom uses
the Licensed Trademarks to ensure proper usage of the Licensed
Trademarks by Genicom. Should Digital determine that (i) the quality
of the Licensed Products fails to meet Digital's quality standards
provided in Article 4(a) or (ii) the manner of Genicom's use of the
Licensed Trademarks fails to meet Digital's policies and practices
regarding trademark uses as provided in Article 3, Digital may provide
Genicom written notice specifying the failure about which it objects,
and Genicom shall forthwith cure the objection. Genicom acknowledges
that it shall also comply with all relevant provisions of the
Cooperative Marketing, Support and Development Agreement between
Genicom and Digital dated as of the Closing (the "Cooperative
Marketing, Support and Development Agreement"), including without
limitation Digital's internal development qualification and approval
processes as set forth in section 3(i) of the Cooperative Marketing,
Support and Development.
Article 6 - ENFORCEMENT AND DEFENSE OF LICENSED TRADEMARKS; INDEMNIFICATION;
PRODUCT LIABIITY INSURANCE
a. Digital will defend at its expense any claim, proceeding or
lawsuit brought against Genicom alleging that the authorized use by
Genicom of the Licensed Trademarks infringes the trademark or
service mark rights of a third party. Digital will pay all costs
and damages finally awarded or any settlement amounts, provided that
Genicom gives Digital prompt written notice of such suit, and
reasonable assistance. Any such assistance provided by Genicom shall
be at no cost to Genicom. Digital shall have sole authority to
defend and/or settle the suit if Digital so requests. This is
Digital's exclusive liability for such claims or lawsuits.
b. Genicom shall indemnify and hold Digital harmless from and
against any claims, lawsuits, judgments, losses, damages, costs and
attorney's fees at all levels of proceedings arising from an
unauthorized or negligent use by Genicom of the Licensed
<PAGE> 5
Trademarks or the trademarks of a third party, or otherwise
arising from or related to products sold in connection with the
Licensed Trademarks.
c. To assure Digital of adequate protection Genicom shall obtain
and maintain in force throughout the term of this Agreement, at its
own expense, product liability insurance from an insurance company
acceptable to Digital, providing adequate protection (at least in
the amount of $10 million per occurrence with no deductible) for
Digital against any claims, lawsuits, judgments, losses, damages,
costs and attorney's fees at all levels of proceedings arising from
or related to any alleged defects in the products sold in connection
with the Licensed Trademarks.
d. Genicom shall inform Digital, within a reasonable time, of
any unauthorized use of the Licensed Trademarks which comes to the
attention of Genicom. Digital shall have the right, but not the
obligation, to take action against any unauthorized user. In the
event that Digital takes action against such unauthorized user,
Digital shall be entitled to all of the proceeds recovered in such
action or settlement.
Article 7 - TERM AND TERMINATION
a. Digital may terminate this Agreement with respect to all
Licensed Products and Future Products if Genicom neglects or fails
to perform or observe any of its obligations under Article 3 of this
Agreement and such condition is not remedied within thirty (30) days
after written notice of such neglect or failure is provided to
Genicom.
b. Should Digital determine that the quality of a Licensed
Product fails to meet Digital's quality standards provided in
Article 4(a) and such condition is not remedied within thirty (30)
days after written notice of such neglect or failure, or if such
default by its nature cannot be cured within thirty (30) days, then
if Genicom shall not immediately upon notice from Digital commence
curing such default and diligently pursue such remedy and cure such
default within sixty (60) days, Genicom's license under the Licensed
Trademarks shall terminate for said Licensed Product, and Genicom
shall immediately cease all use of the Licensed Trademarks with said
Licensed Product. Should Digital at its sole discretion determine
that Genicom's failure to meet Digital's quality standards provided
in Article 4(a) is Pervasive, Digital may terminate this Agreement
with respect to all Licensed Products and Future Products and
Genicom's license under the Licensed Trademarks shall terminate, and
Genicom shall immediately cease all use of the Licensed Trademarks.
For purposes of this Article 7(b), Pervasive shall mean that more
than 25% of the Licensed Products and Future Products shall fail to
meet Digital's quality standards provided in Article 4(a) and
Genicom has not cured such failure as provided in the prior
sentence.
c. This Agreement shall terminate immediately, without action
by if (i) Digital terminates the Cooperative Marketing, Support and
Development Agreement, or (ii)Genicom enters bankruptcy proceedings,
becomes insolvent, makes an assignment for the benefit of its
creditors, discontinues its business or is placed in receivership.
<PAGE> 6
d. Upon termination of this Agreement, Genicom's license under
the Licensed Trademarks shall terminate, and Genicom shall
immediately cease all use of the Licensed Trademarks, except as
provided in the Cooperative Marketing, Support and Development
Agreement.
e. Upon termination of this Agreement under Article 7(a)
above, Genicom (i) shall retain in its possesion all remaining
inventory of Licensed Products and associated authorized promotional
materials bearing the Licensed Trademmarks, (ii) shall remove the
Licensed Trademarks from such inventory, and (iii) shall sell such
inventory under a different trademark or brand name. In furtherance
of the provision in the preceding sentence, Genicom shall allow
Digital the right to inspect such inventory prior to selling any
modified products and Genicom shall certify to Digital that it has
complied with the provisions of this paragraph.
Article 8 - REPRESENATIONS AND WARRANTIES; ALLOCATION OF LIABILITY
a. DIGITAL MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT
TO THE LICENSED TRADEMARKS HEREUNDER OTHER THAN THOSE
REPRESENTATIONS OR WARRANTIES CONTAINED IN THE ASSET PURCHASE
AGREEMENT. DIGITAL HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY EXPRESS OR IMPLIED
WARRANTLY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
DIGITAL'S ENTIRE LIABLITY AND GENICOM'S EXCLUSIVE REMEDY FOR ANY
INTELLECTUAL PROPERTY CLAIMS RELATING TO THE LICENSED TRADEMARKS ARE
AS EXPRESSLY SET FORTH IN ARTICLE 6 ABOVE.
Article 9 - ROYALTIES
a. Genicom shall pay to Digital a running royalty on sales, leases and other
commercial transfers of Printers and Options and future printers and
options which bear the Licensed Trademarks (collectively, "Sales"), such
royalties to be computed as indicated in Schedule Royalties of this
Agreement.
b. Running royalties shall be paid on a quarterly basis, within thirty (30)
days following the end of each calendar quarter during the term of this
Agreement and within thirty (30) days following the termination of this
Agreement. Each payment shall be accompanied by a report in a form which
is reasonably acceptable to Digital which sets forth the computation of
Net Receipts, Variable Margin and the running royalty on a product by
product basis.
c. Genicom shall keep true and accurate accounting records relating to all
Sales and shall maintain such records for at least two (2) years after the
termination of this Agreement. Genicom shall maintain all accounting
records, documents and other instruments relating to all Sales in such
detail as shall enable Digital to ascertain royalties due under this
Agreement and
<PAGE> 7
compliance with the payment provisions thereof. Digital shall have the
right to inspect, and have inspected by its representative, the relevant
records of Genicom to verify the accuracy of the royalties paid or payable
to Digital. Digital shall give at least 2 days written notice to Genicom
before any inspection. All inspections must be made during the ordinary
business hours. If any inspection discloses a deficiency in the amount of
royalties paid by Genicom, then Genicom shall, within 10 days after the
date of determination of such discrepancy, pay Digital the amount of the
deficiency plus interest from the date the deficiency occurred at the rate
of 1.5% per thirty (30) day period or the maximum lawful rate, whichever is
less. If, as a result of Digital's inspection, it is determined that the
royalties paid for the period in question are less than ninety-five (95%)
of the correct amount, Genicom shall be liable for Digital's costs of
inspection.
d. Running royalties paid by Genicom to Digital on Sales are exclusive of
any sales, use, withholding or other taxes or other assessments in the
nature of taxes, however designated, on the Licensed Trademarks or its
license or use. Genicom shall be responsible for the payment of all such
taxes, with the sole exception of taxes based upon Digital's income.
Article 10 - GENERAL PROVISIONS
a. This Agreement and the rights granted may not be assigned or
otherwise transferred by Genicom.
b. This Agreement, the Cooperative Marketing, Support and
Development Agreement and the Asset Purchase Agreement constitutes
the entire agreement between the parties with respect to the subject
matter hereof, and supersedes all contemporaneous agreements both
written and oral between Digital and Genicom, and except as
otherwise expressly provided herein is not intended to confer upon
any other person any rights or remedies hereunder.
c. This Agreement is made and shall be construed and interpreted
under and in accordance with the law of the Commonwealth of
Massachusetts.
d. The parties are independent contractors with respect to the
subject matter of this Agreement and neither party is an employee,
partner, agent or joint venturer of the other by reason thereof.
Neither party shall have the right or authority to bind the other to
any agreement with a third party.
e. If any term, condition, or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other terms, conditions,
and provisions of this Agreement shall nevertheless remain in full
force and effect. With respect to any provision of this Agreement
determined to be invalid, illegal or incapable of enforcement,
Digital and Genicom shall negotiate in good faith to modify this
Agreement to effect their original intent as closely as possible in
a valid, legal, and enforceable manner.
<PAGE> 8
f. All notices, communications or payments required or permitted
to be given hereunder shall be made in accordance with Article XI,
section 11.04 of the Asset Purchase Agreement.
g. No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions hereof, and no waiver
shall be effective unless made in writing and signed by an
authorized representative of the waiving party.
h. Nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon, or to give to, any person,
firm, corporation, or other entity other than Digital, Genicom, and
their respective successors and permitted assigns, any right or
remedy under or by reason of this Agreement or any term, covenant, or
condition hereof; and all the terms, covenants, conditions, promises,
and agreements contained in this Agreement shall be for the sole and
exclusive benefit of Digital, Genicom, and their respective
successors and permitted assigns.
i. Digital and Genicom each hereby acknowledges and agrees that
neither the representations and warranties nor the rights and
remedies of any party under the Asset Purchase Agreement shall be
deemed to be enlarged, modified, or altered in any way by this
Agreement.
<PAGE> 9
DIGITAL EQUIPMENT CORP. GENICOM CORPORATION
By:/s/Harold D. Copperman By:/s/ Paul T. Winn
Name:Harold D. Copperman Name:Paul T. Winn
Title:Senior Vice President Title:President and Chief Executive Officer
and General Manager, Digital
Products Division
<PAGE> 10
SCHEDULE 1
DEC Trademarks
A. Registered Trademarks
DEClaser
DECmultiJET
DECprint
RAPIDPRINT
B. Common-law or Unregistered Trademarks
DECcolorwriter
DECwriter
LA30N
LA30W
LA400
LA600
LA700
LG04+
LG08+
LG12+
LGL4+
LGL8+
LN14
LN17
LPS17
LPS32
LN24
B20
LNCO1
LNCO1+
<PAGE> 11
SCHEDULE - ROYALTY
Genicom shall pay to Digital a running royalty on sales, leases and other
commercial transfers of Printers and Options and future printers and options
which bear the Licensed Trademarks (collectively, "Sales"), equal to (i) five
percent (5%) of Net Receipts received through the first anniversary of the
first Sale anywhere in the world and (ii) the Applicable Percentage of Net
Receipts received following the first anniversary and through the termination
of Genicom's obligation to pay royalties. "APPLICABLE PERCENTAGE" for the
purpose of computing royalties under the foregoing means: (i) 5% if the
Variable Margin is at least 28%; (ii) 4.3% if the Variable Margin is at least
26% but less than 28%; (iii) 3.6% if the Variable Margin is at least 24% but
less than 26%; (iv) 2.8% if the Variable Margin is at least 22% but less than
24%; (v) 2.0% if the Variable Margin is at least 20% but less than 22%; and
(vi) 1.5% if the Variable Margin is less than 20%."VARIABLE MARGIN" for the
purpose of computing royalties under the foregoing means: (i) Net Receipts
minus (-) an amount equal to 110% of Genicom's direct third party cost,
including license fees, of acquiring the Printers and Options and future
printers and options which were sold, leased or otherwise commercially
transferred or the direct cost of manufacturing such Printers and Options and
future printers and options incurred by Genicom, divided by (ii) Net Receipts.
<PAGE> 12
Figure 1
The Digital Logo
<PAGE> 1
EXHIBIT 2.3
COOPERATIVE MARKETING, SUPPORT
AND DEVELOPMENT AGREEMENT
COOPERATIVE MARKETING, SUPPORT AND DEVELOPMENT AGREEMENT dated as of
this 10th day of August, 1997 (this "Agreement") between Digital Equipment
Corporation, a Massachusetts corporation ("Digital"), and Genicom Corporation,
a Delaware corporation ("Genicom").
WHEREAS, on the date hereof, Digital and Genicom entered into an Asset
Purchase Agreement (the "Asset Purchase Agreement") with respect to the
acquisition by Genicom from Digital of certain assets, subject to certain
liabilities, used worldwide in Digital's Printing Systems Business;
WHEREAS, Digital and Genicom desire for Genicom exclusively, subject
to the terms and conditions set forth herein, to perform many of the same
functions as had been performed by Digital's Printing Systems Business in
supporting the installed base of Digital branded printers and in the planning,
design, acquisition, pre-sale, delivery and post-sales support cycles of
Digital's customers' future purchases of printing systems solutions; and;
WHEREAS, the parties hereto desire to work cooperatively with each
other pursuant to the terms hereof with respect to the products and services
each sells and provides.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth and in the Asset Purchase
Agreement, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto (individually,
a "Party" and collectively, the "Parties") agree as follows:
1. General. It is the intention of the Parties to have a
cooperative alliance pursuant to the terms hereof whereby, primarily, Genicom
provides printer product planning, product pricing, channel distribution, and
inventory management to Digital's marketing channels in each geographic region
and provides technical and customer support to Digital's installed base of
legacy products and Digital branded printers purchased from Genicom ("Digital
Branded Printers"). The Parties will work cooperatively as each other's
supplier of complementary products and services for full service customer
solutions such that Genicom will promote Digital computer systems with Genicom
branded printers and Digital will offer Digital Branded Printers with Digital
systems. Secondarily, the Parties will from time to time provide joint
marketing programs and sales leads for each other's capabilities, products and
services. The Parties agree that the provisions herein and the cooperative
alliance hereunder shall be with respect to Digital Branded Printers and sales
of printers by Genicom to its customers, provided, however, that the Parties
may in the future expand the scope by amending this Agreement in the manner
provided in Section 18(a) herein. The Parties acknowledge that it is Digital's
policy generally to lead with Digital branded products in Digital's sales
relationships, provided, however, that Digital and its customers may elect to
purchase non-Digital branded products and Digital shall not be restricted in
any manner from offering other products.
<PAGE> 2
2. Relationship Manager. Each Party shall designate a relationship
manager (a "Manager") for purposes of this Agreement who shall act as a
coordinator on a worldwide basis for activities under this Agreement and have
authority to make day-to-day operational decisions on behalf of such Party,
provided, however, that this Agreement may only be amended as provided in
Section 18(a) herein. Each Manager shall not be obligated to devote his or her
full business time and efforts to the performance of his or her obligations
hereunder. The Manager for Digital shall initially be William Fischer and the
Manager for Genicom shall initially be Art Gallo, provided, however, that
either Party may change its Manager, from time to time, by providing written
notice thereof to the other Party, and, provided, further, that the Manager
from Digital shall be selected by Digital from its products division.
1. Operations, Exclusivity and Product Pricing.
(a) Any Party's obligation to purchase products or services from
the other Party shall be subject to basic order agreements or other agreements
that the Parties may enter into, including, without limitation, the Basic Order
Agreement entered into by the Parties as of the date hereof (the "Basic Order
Agreement). Each Party's Manager shall identify and authorize specific
individuals to address operational issues relating to orders and such
agreements including, without limitation, warranties, returns, forecasting, and
delivery.
(b) The Parties acknowledge that the success of their cooperative
relationship hereunder is dependent, among other things, on their products
being competitively priced. For printers, related products, spare parts and
consumables purchased from Genicom for Digital's internal consumption and
Digital's service business' consumption for making internal and external
repairs, Genicom's prices therefor will be equal to the lowest price for each
type of Digital branded product and part that Genicom charges from time to time
to its resellers, distributors and other preferred customers for comparable
products in like circumstances, provided, however, that to the extent that the
dollar volume of products purchased by Digital exceeds the volumes for such
resellers, distributors and other preferred customers from time to time, the
Parties shall negotiate more favorable prices than such lowest prices to the
extent economically practicable. Genicom shall provide Digital with reasonable
advance notice prior to increasing any of its prices for all printers,
products, spare parts and consumables sold to Digital and/or through its
distribution channels.
(c) Digital acknowledges that during the term of this Agreement it
desires to exclusively source from Genicom Digital Branded Printers pursuant to
the terms and conditions hereof and a Basic Order Agreement of even date
herewith between the parties hereto. In furtherance thereof, Genicom agrees
that if it does not have at any time a particular product of comparable
features, functions, quality, realiability and/or price available to timely
meet the needs of Digital or any of its customers, it shall, if requested by
Digital, use its best efforts to source such product to meet such needs and
shall perform its other obligations hereunder in connection therewith,
including, without limitation, testing and qualifying the product to ensure its
quality, its compatibility with Digital's internal product development
qualifications and approval processes (as described in Section 4(i) herein).
If Genicom shall not timely source such product of comparable features,
functions, quality, reliability, availability and/or price, Digital shall, in
addition to its other remedies hereunder, have the
<PAGE> 3
right to source the product on its own, which may contain Digital's tradename
and brandname and Genicom shall cooperate in all respects in connection
therewith and shall reimburse Digital for any reasonable incremental expenses
incurred by Digital in furtherance thereof, provided, however, that this shall
not be construed to impose on Genicom an obligation to support such product.
Notwithstanding anything herein to the contrary, Digital is under no obligation
to source from Genicom any non-Digital branded printers, which it may acquire
on behalf of its customers or for its internal use from time to time.
4. Product Development Assistance. The Parties acknowledge and
agree that Genicom shall engage full-time in the development of new products to
meet the needs of Digital and its customers. Each of the Parties will provide
reasonable assistance to the other Party to jointly plan and develop new
printing systems to be procured by Genicom for Digital's customers which are
compatible with Digital's computer systems. Such assistance shall be limited
to the following unless otherwise agreed to in writing between the Parties:
i. For products being developed by Genicom which are intended to
be Digital branded products, Genicom shall comply with
Digital's internal product development qualification and
approval processes, which shall include, among other things,
providing Digital with information and access from time to
time with respect to each phase of Genicom's development of
printer products, providing Digital, at Genicom's expense,
with prototypes or samples of its printer products and/or
reasonable access thereto to facilitate testing of Genicom's
existing and future products for compatibility and quality and
providing Digital with hardware and software specifications
and engineering development plans. The printer solutions
shall address, among other things, the unique needs of
Digital's installed base including support for the ANSI/PPL3
datastream and support for the LAT network protocol.
ii. The Managers shall designate appropriate representatives of
each Party to meet from time to time at such reasonable
intervals not less than quarterly and at such reasonable times
and locations as mutually agreeable to the Parties to (x)
discuss Digital's and its customers' future requirements for
printers and related products (including, without limitation,
schedules and product pricing), (y) discuss Genicom's products
strategy in order to assist it in supporting Digital's and its
customers needs for printers and related products and (z)
evaluate and, if appropriate, determine ways to enhance,
Genicom's performance of its obligations under this Section 4.
iii. Genicom shall devote appropriate personnel (in terms of a
sufficient number of personnel with sufficient training and
experience in the printer industry generally and with respect
to Digital specifically) and financial and other resources to
satisfy its product development obligations hereunder.
iv. In furtherance of the Parties desire for Genicom to develop
Digital compatible printer products, Genicom shall have the
right to have access to and/or purchase from Digital its
computer systems products for development and testing on the
<PAGE> 4
same terms and conditions that Digital generally offers from
time to time to its ISV (Independent Software Vendor)
partners. In addition, Genicom will maintain, at its
expense, its own commercially reasonable facilities for
research and development and for customer and technical
support of Digital Branded Printers. Genicom shall also have
access to Digital's laboratories and testing facilities, on
the same terms and conditions that Digital generally offers
from time to time to its ISV partners, to ensure system level
compatibility for new products, and for remedying recurring
field problems with Digital Branded Printers sold to
customers, provided, however, that Digital shall not charge
Genicom for its reasonable access to such facilities to remedy
such recurring field problems. Digital agrees to give Genicom
access to field test pre- release versions and final release
versions of Digital's operating systems software, at no charge
to Genicom; provided, however, that such access is limited to
use necessary to develop printer products for Digital and
subject to the confidentiality restrictions set forth herein.
Digital agrees to allow Genicom to purchase legacy\obsolete
hardware systems at cost and otherwise on standard terms and
conditions.
v. With respect to Digital's strategic alliance partners, to the
extent that such alliance involves the development of printers
by Digital (including Microsoft, Oracle and Xerox), Digital
will continue to interface with such partners, provided,
however, that upon Genicom's request, Digital will, at such
times and on such other terms and conditions determined from
time to time by Genicom and Digital, introduce Genicom to
Digital alliance partners.
vi. In furtherance of paragraph i. of this Section 4, Genicom
agrees to work to develop printer products that are well
integrated across all three of Digital's current operating
systems environments and any other operating systems used in
Digital systems. Under OpenVMS, Genicom will use the DCPS
software product as the vehicle for achieving such
integration. Under Digital UNIX, Genicom will work
cooperatively with the Digital UNIX group for printer support
for the lpd.lpr and Printxchange environments to achieve
integration. Under the NT operating system, Genicom will be
responsible for developing an integration plan that is
acceptable to Digital. Digital shall continue to provide
commercially reasonable service to integrate drivers and other
printer software for the Digital UNIX group.
vii. In furtherance of paragraph i. of this Section 4, Genicom
shall be responsible for completely testing its new printer
products and obtaining any necessary third party approvals
prior to Digital providing its final approval for use with the
Digital brand. Such final approval shall be provided pursuant
to the terms and conditions of the Trademark License Agreement
of even date herewith between Digital and Genicom (the
"Trademark License Agreement"). Genicom shall provide Digital
from time to time with Genicom's testing methodology and test
results.
<PAGE> 5
5. Cooperative Marketing. The Parties hereto agree that their
respective cooperative sales and marketing obligations under this Agreement
shall be as set forth in this Section 5 unless otherwise agreed to in writing
by the Parties.
i. Genicom will provide full-time sales and marketing support to
Digital's sales force (including the sales forces of all
Digital channels, including without limitation, VARs, systems
integrators, distributors and large end users), which will
include, among other things, product training, pre-sales and
post-sales support, technical support and providing relevant
marketing materials and documentation. When requested by
Digital or agreed to by Digital following a Genicom request,
Genicom sales and marketing personnel will support Digital's
sales force in system solution sales which include printing
product requirements. Genicom will supplement their current
sales and marketing organization with appropriate personnel
(in terms of a sufficient number of personnel with sufficient
training and experience in the printer industry generally and
with respect to Digital specifically) dedicated to sales,
support, marketing and management of the Digital Branded
Products.
ii. The Parties shall mutually agree upon three Digital employees
with substantial sales experience in the Printing Systems
Business to serve as Printer Market Development Executives
(the "PMD Executives") whose compensation shall be funded by
Digital in accordance with the limitations set forth herein.
Each PMD Executive shall be assigned an exclusive territory
(such territories to be the United States, Europe and
Asia-Pacific) in which the PMD Executive shall facilitate the
joint marketing and sales efforts of the Parties, including
without limitation, facilitating marketing programs, joint
trade show presentations and customer calls, defining the
market, and organizing joint planning efforts. The Parties
shall jointly assign sales targets for each of the PMD
Executives such that the PMD Executives are compensated on a
highly variable basis based on printer sales, with such sales
targets and compensation to be mutually determined by the
Parties. In addition, Genicom shall assign three senior sales
executives (the "GC Executives") to work closely with the PMD
Executives in their sales and marketing efforts. The Parties
may, from time to time, replace its PMD Executives or GC
Executives as the case may be, provided, however, that before
any such replacement is made by a Party, the other Party shall
have the opportunity to consult with the Party and/or
interview potential replacements. The Parties agree that, for
a period of two years from the date hereof, neither Party
shall directly or indirectly induce, solicit, request or
encourage, whether on behalf of a Party or others, any PMD
Executive or GC Executive, as the case may be, to terminate
his or her relationship with the other Party and/or to be
employed by or consult to another Party.
iii. The Parties acknowledge that in furtherance of this Agreement,
commercially reasonable commissions and incentive programs for
Digital's systems sales representatives will be funded by
Digital in accordance with the limitations set forth herein.
The Parties will develop a commission program for sales
<PAGE> 6
representatives that provides incentives for printer sales
in all channels of distribution. The Parties will, from time
to time, propose and jointly authorize and develop, special
sales incentives and promotion programs for Digital sales and
marketing representatives.
iv. The total amount of the compensation, bonuses, and benefits
for the PMD Executives and the commissions paid to Digital's
sales representatives described in paragraphs ii. and iii. of
this Section 5 shall be funded by Digital in an amount not to
exceed fifty percent (50%) but not to be lower than thirty
percent (30%) of the revenue royalty paid by Genicom to
Digital under the Trademark License Agreement
v. From time to time as reasonably requested by a Party, (x)
Genicom will supply to Digital a contact listing of its key
management personnel located at its headquarters and in the
field and (y) Digital will supply to Genicom a contact
listing of its key management personnel responsible for sales
and marketing, for the sole purpose of effecting the
objectives of this Agreement. Access to each Party's
personnel shall be coordinated through such Party's Manager;
provided, however, that communications between the personnel
referred in (x) and (y) concerning day to day sales and
marketing efforts shall not always require coordination by a
Manager unless either Party reasonably determines that such
coordination is necessary.
vi. The Parties acknowledge that Digital's cooperative sales and
marketing efforts hereunder on behalf of Genicom shall be
primarily in support of Digital's systems sales. Digital's
sales and marketing personnel will determine the appropriate
circumstances pursuant to which they will provide appropriate
Genicom personnel with sales leads and/or access to customers
and information for printer sales presentations, on terms and
conditions to be mutually determined by the parties from time
to time.
vii. Digital and Genicom will mutually determine the vehicles they
will use to jointly promote each other's products and the
scope of such promotional activity. With respect to Digital's
promotional activities, the vehicles used will be reasonably
consistent with Digital's other promotional vehicles then
being used and may include, without limitation, Digital VAR
Program, Digital Call Center, Account Programs, Industry
Marketing Programs, Digital sponsored events, Digital's
systems and options catalogs, Advantage menu, Inform, Sales
Update, Web pages and links, DUPS Sales Training Programs and
MES Upgrade Program. These promotional vehicles might also
include co-logo promotional brochures, joint trade and
industry show appearances and presentations at national and
customer conferences, as well as other promotions, on such
terms and conditions as may be agreed to by the Parties. In
furtherance thereof, each Party will make available to the
other Party, at the providing Party's expense, sales and
marketing information in form suitable for use in such sales
and marketing programs, provided, however, that to the extent
<PAGE> 7
Digital shall prepare such information primarily for use
hereunder, Digital shall not incur any expenses unless it
agrees in writing in advance to do so. All aspects of such
joint marketing program shall be approved in advance by both
Parties, including, without limitation, the content of the
promotional materials, the sales and marketing programs used
and the frequency of the promotional efforts thereof. Digital
shall also carry Genicom's Digital Branded Printers and
related products on its price lists and shall also include
Digital Branded Printers in its system configuration tables.
viii. Digital will make available to Genicom, subject to the
confidentiality restrictions set forth in Section 16 herein,
certain printer sales and marketing history for the three
fiscal years ending in June 1997 and Multi-Customer Service
(MCS) printer contact data and system account printer profiles
to the extent the data is readily available to Digital.
Genicom will use this data solely to build a marketing model
that will increase the print solution content of systems
solutions sales for Digital.
ix. Genicom agrees that it will perform functions and activities
similar to Digital's obligations under this Section 5 with
respect to Digital's cooperative sales and marketing efforts
to support and promote sales of Digital's systems products in
connection with Genicom's sales of products, including,
without limitation, joint promotional activities, offering
Digital- funded incentives to Genicom's sales force, providing
support to Digital's sales force in system solution sales,
meeting regularly to review sales activities and strategies,
and providing access, as Genicom determines to be appropriate,
to Genicom's customers and strategic partners. The Parties
may mutually agree from time to time upon certain programs to
facilitate and encourage efforts to find sales leads.
x. The Parties will jointly develop annual operating plan
objectives for Digital Branded Printers, sales targets for PMD
Executives, printer commission plans for Digital sales
representatives, and specific demand generation programs by
quarter. Genicom will, from time to time as reasonably
determined by Digital, participate in sales meetings and
provide speakers/training materials/program content for such
meetings. Representatives from Digital and Genicom will also
meet on a regularly scheduled basis to share and review sales
structure, initiatives, product and brand strategies, channel
strategy and marketing programs, future plans and current
effectiveness.
xi. The Parties agree that, except to the extent agreed to in
advance in writing by Digital or as specifically provided
herein, Digital shall not incur expenses under this Section 5
in connection with its obligations hereunder unless it would
otherwise incur such expense in connection with the operation
of its business generally.
xii. Digital shall provide Genicom, at no cost, office space for
Genicom's sales representatives selling Digital Branded
Printers in those cities in Europe and
<PAGE> 8
Asia/Pacific in which Genicom does not have a physical
presence and in which Digital does and has office space
available on terms and conditions similar to those set forth
in the Occupancy Agreement of even date herewith, provided
however, that Digital shall not be obligated to provided such
office space to more than five (5) sales representatives. To
the extent Digital provides to its personnel office space for
visitors, Digital shall make such visitor's office space
available to Genicom on the same terms and conditions as it
provides to its personnel. The access to office space shall
terminate upon the termination of this Agreement pursuant to
Section 14 hereof or upon the earlier closure of such
facilities or if Digital vacates such facilities or no longer
has available space therein. Genicom shall pay Digital for
all expenses incurred by Digital in connection therewith other
than for the space, including, without limitation, a
reasonable allocation for secretarial support,
telecommunications charges and the like.
6. DCPS Software. Genicom agrees to provide commercially
reasonable support for DCPS in the installed base or incorporated in any
Genicom product sold under this Agreement or the Basic Order Agreement during
the term of this Agreement unless the Parties mutually agree that such support
is no longer necessary. The Parties agree to work cooperatively to address the
economics of continuing support and to make economics a factor, along with,
among other things, customer satisfaction, in deciding the appropriate level of
DCPS support that should continue.
7. Product Migration Plan. Genicom agrees to initially source
Digital's existing products and components from (x) Digital's suppliers of such
products and components prior to the date hereof, including, without
limitation, pursuant to the Assigned Contracts and Purchase Orders (as such
terms are defined in the Asset Purchase Agreement) and (y) pursuant to Section
6.13 of the Asset Purchase Agreement, from Digital's inventory of such
products, components and consumables. Within sixty (60) days from the date
hereof, the Parties will mutually agree upon a product migration plan with
respect to Genicom's future sourcing of products, components and consumables.
Subject to Section 3(c) herein, this plan will provide, among other things, (i)
that Genicom shall have the right to source products, components and
consumables from third party sources other than the sources currently used by
Digital if the Genicom sourced products, components and consumables are
compatible with the Digital sourced products, components and consumables and
have comparable features, functions, price, availability and quality, all as
reasonably and objectively determined by Digital, (ii) Genicom's rights to
source products from third parties shall be subject to its obligations under
the Asset Purchase Agreement with respect to Assigned Contracts and Purchase
Orders (as such terms are defined in the Asset Purchase Agreement), and (iii)
Genicom's right to source products from third parties shall take into account,
among other things, Digital's customers' needs and satisfaction, and the
ability of the third party supplier to timely supply a sufficient quantity of
the products over a long period of time.
8. Customer Support. To ensure ongoing support of Digital's
installed base of legacy products and Digital Branded Products, Genicom agrees
to provide, at its expense, customer and technical support, the quality and
level of which will be at least comparable to
<PAGE> 9
the quality and level of support currently provided by Digital's Printing
Systems Business and by MCS, with respect to (i) Digital's installed base of
legacy products (printers, software, supplies and options), (ii) legacy
products sold by Digital, Genicom or Digital's representatives from Digital's
existing inventory thereof and (iii) future Digital Branded Printers.
i. Without limiting the generality of the foregoing, Genicom will
ensure that it has sufficient expertise and resources in both
its technical support and life-cycle engineering groups in
order to manage Digital customer issues. In connection
therewith, Genicom will designate a specific group of its
employees (having a sufficient number of personnel with
sufficient training and experience in the printer industry
generally and with respect to Digital specifically) dedicated
to providing technical support and managing problem reports
from Digital's customer base.
i. While it is anticipated that Digital's current legacy base of
printers will, on its own time and pace, convert to new
generations of printing systems, the parties explicitly agree
that Genicom will not use escalated problems to recommend to
customers to prematurely convert their Digital Branded
Products to products manufactured by or for Genicom. The
Parties agree that with regard to support the objective is
current customer satisfaction with its existing products, not
new sales.
i. All selling efforts by Genicom in connection with replacement
of legacy printer products will be first coordinated with the
appropriate Digital account representative.
iv. Digital may, from time to time, at its expense, conduct
customer surveys to determine if Genicom is fulfilling its
obligations hereunder with respect to Digital's customers.
9. Laser Printer Products. The Parties acknowledge the critical
need for new laser printer offerings in Digital's product line. Genicom will
use its best efforts to have available for shipment during the fourth quarter
of 1997, a family of Digital compatible, competitively priced and featured
laser printers with full Digital operating system support. These printers
will initially include a color laser printer, 20 ppm and 40ppm laser printers
(monochrome) and an LN17 printer (cost reduced version of Digital's current
LN17). The objective is to have this laser printer product family be plug
compatible with Digital's currently installed base of laser printers. In
satisfying its obligations hereunder, Genicom will work with Digital pursuant
to the cooperative development provisions set forth in Section 4 herein. In
addition to the laser printers, Genicom will use its best efforts to develop
and have available for shipment during the fourth quarter of 1997, printer
network management software for installing, setting up and managing the laser
printers on a network. The software should be open to support industry
standard mechanisms for managing printers (e.g., SNMP Printer MIBs).
10. Distribution Channels. Genicom acknowledges the importance of
Digital's right
<PAGE> 10
to control the distribution channels for Digital Branded Products. The parties
agree that Digital Branded Products shall only be marketed and sold through
Digital's current and future distributors, VARs, systems integrators,
government contracts and its own sales force. Genicom shall obtain Digital's
consent in writing, which may be given or withheld in Digital's sole
discretion, if Genicom desires to market and sell Digital Branded Products
through other channels.
11. Expenses. Unless otherwise specified herein or otherwise
agreed to in writing by the parties hereto, each party shall pay for its own
costs and expenses incurred in connection with performing its obligations
hereunder. Except pursuant to Section 15 herein for termination by Digital
pursuant to Section 14(a) herein, Digital shall have no responsibility to
Genicom for any expenses, losses or action incurred or undertaken by Genicom as
a result of work performed or materials or equipment purchased by Genicom in
anticipation of purchases of products by Digital unless specifically agreed to
by Digital in writing.
12. Indemnification.
(a) Genicom shall indemnify, defend, and hold harmless
Digital and its affiliates and their respective officers, directors, agents,
employees, customers and strategic partners from and against any and all
liabilities, losses, damages, demands, claims, suits, taxes and expenses,
including reasonable legal fees and other expenses of litigation, arising out
of or related to the performance by Genicom of its obligations hereunder and
all products developed, sold or serviced by Genicom hereunder or under the
Basic Order Agreement, except to the extent such liabilities or losses are
directly attributable to the gross negligence or willful misconduct of Digital.
Nothing herein shall be deemed to affect Digital's right to indemnification
under the Asset Purchase Agreement or the Ancillary Agreements (as defined in
the Asset Purchase Agreement).
(b) Digital shall indemnify, defend, and hold harmless
Genicom and its affiliates and their respective officers, directors, agents and
employees from and against any and all liabilities, losses, damages, demands,
claims, suits, taxes and expenses, including reasonable legal fees and other
expenses of litigation, arising out of or related to the performance by Digital
of its obligations hereunder, except to the extent such liabilities or losses
are directly attributable to the gross negligence or willful misconduct of
Genicom. Nothing herein shall be deemed to affect Genicom's right to
indemnification under the Asset Purchase Agreement or the Ancillary Agreements
(as defined in the Asset Purchase Agreement).
(c) In the event a Party provides the other Party with
information and/or certifications as to compliance with applicable laws
pursuant to Section 17(j) of this Agreement, the Party providing such
information and/or certification shall indemnify and hold the other Party
harmless from and against any claims, costs, or damages resulting from or
arising out of the other Party's reliance on such information and/or
certifications.
13. Force Majeure. Neither Party shall be liable for or deemed in
breach hereof because of any delay in the performance of its obligations to the
extent caused by
<PAGE> 11
circumstances beyond its control and that could not have been prevented by the
exercise of due diligence, including but not limited to fires, natural
disasters, riots, wars, embargos, strikes, adverse weather conditions, or acts
of God. The affected Party will promptly notify the other Party in writing,
but in any event within ten (10) business days, after the beginning of any such
cause which would affect its performance and shall promptly take actions to
mitigate any problems caused thereby.
14. Term and Termination.
(a) This Agreement shall remain in effect, unless
terminated in the manner provided in Paragraph (b) below, until such time as
either Party gives the other Party at least six (6) months prior written notice
of termination, provided that such notice of termination pursuant to this
Section 14(a) [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] and further provided that any such notice of termination given more
than [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
from the date hereof shall be given at least twelve (12) months prior to the
effective date of such termination.
(b) If any of the following events occur with respect to
a Party (hereinafter referred to as the "Defaulting Party"), the other Party
shall have the right, in its sole discretion, to immediately terminate this
Agreement in whole or in part:
i. A material breach of this Agreement by the Defaulting
Party which is not cured within thirty (30) days
after notice thereof is provided to the Defaulting
Party by the other Party; 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 the Defaulting Party shall not
immediately upon notice from the other Party commence
curing such default and diligently and continuously
pursue such remedy and cure such default within sixty
(60) days;
ii. Digital has the right to and elects to terminate any
of the agreements contemplated under the Asset
Purchase Agreement, including, without limitation, a
complete termination of the Trademark License
Agreement, or a material breach, beyond any
applicable cure period, by the Defaulting Party of
any of its obligations to the other Party, including,
without limitation, under the Asset Purchase
Agreement and/or any of the Ancillary Agreements (as
such term is defined in the Asset Purchase
Agreement);
iii. The Defaulting Party merges with a third-party (not a
parent or subsidiary company) whereby the Defaulting
Party is not the surviving corporation;
iv. The Defaulting Party shall make an assignment for the
benefit of creditors or shall admit in writing its
inability to pay its debts as they
<PAGE> 12
become;
v. The Defaulting Party shall file a voluntary petition
in bankruptcy, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer
seeking any reorganization arrangement, composition,
readjustment, liquidation, dissolution, or similar
relief under the United States bankruptcy code or
other applicable federal, state or similar statute,
law or regulation, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver
or liquidator of the Defaulting Party of all or any
substantial part of its properties;
vi. Within thirty (30) days after the
commencement of any proceedings against the
Defaulting Party seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the United States
bankruptcy code or other applicable federal, state or
similar statute, law or regulation, such proceeding
shall not have been dismissed or if, within thirty
(30) days after the appointment, without the consent
or acquiescence of the Defaulting Party of all or any
substantial part of its properties, such appointment
shall not have been vacated; or
vii. Genicom fails to provide Digital with quality
printers and related products delivered on a timely
basis and such failure continues for such period of
time whereby it has or is likely to have in the
aggregate a material adverse effect on (x) Digital's
business as it relates to printer products, or (ii)
Digital's ability to sell computer systems with
printers manufactured or sourced by Genicom.
viii. Any event, action or omission, whether intentional or
otherwise (which is not cured with thirty (30) days
after notice thereof is provided to the Defaulting
Party by the other Party), which is reasonably
determined to have or will have a material adverse
effect on the business activities, financial or
otherwise, reputation or goodwill of the Defaulting
Party.
(c) If either Party elects to terminate this Agreement in
the manner provided in Paragraph (b) above, it shall do so by giving the
Defaulting Party written notice thereof. Upon termination by either Party as
permitted in this Section 14 all obligations between the Parties as set forth
in this Agreement shall terminate immediately, and each Party, will among other
things (x) except as mutually agreed to by the Parties pursuant to Section
15(c), not hold themselves out to the public as having any cooperative
relationship with the other pursuant to any marketing materials or otherwise,
(y) return all Confidential Information (as defined herein) of the other Party
relating to the work and/or services to be performed under this Agreement,
whether so obtained before or after the execution hereof, to the Party
furnishing the same; and all Confidential Information received by either Party
with respect to the business of the other Party shall be treated in accordance
with Section 16 hereof and (z) pursuant to the Trademark License Agreement,
cease selling Digital Branded Products.
<PAGE> 13
(d) Neither Party shall be obligated for any indirect,
special or consequential damages or lost profits incurred by the other Party
under this Agreement.
15. Exit Conditions.
(a) In the event Digital terminates this Agreement
pursuant to Section 14(a) and fails to give Genicom at least six (6) months
prior written notice of such termination, Digital shall be responsible for all
on-hand and on-order inventory relating to specific large end user contracts,
government contracts, or any other unique forecasted requirements, provided,
however, that Genicom shall use commercially reasonable efforts to mitigate the
amount of such on-hand and on-order inventory, which efforts shall include,
without limitation, (i) selling the inventory to its customers prior to
procuring comparable inventory and providing its sales force with commercially
reasonable incentives therefor and (ii) reworking unique inventory to the
extent commercially practicable, to permit its sale in the ordinary course of
business.
(b) In the event of termination of this Agreement
pursuant to Section 14(a), at Digital's request, the Parties will negotiate an
agreement for providing customer and technical support to Digital's installed
legacy base of printers and other Digital Branded Printers that appropriately
covers Genicom's costs and profit margin.
(c) In the event that Digital provides at least six
months notice to terminate this Agreement pursuant to Section 14(a), Genicom,
at its option (with such option to be elected by notice in writing to Digital
within ten (10) days after Digital provides notice of termination under Section
14(a)) may elect, in lieu of continuing all aspects of this Agreement in full
force and effect until the expiration of the six month period, to terminate the
royalty payments contemplated thereunder, whereupon the Parties obligations
under Sections 1, 2, 3(a), 3(c) 4, 5 and 9 herein shall terminate and be of no
further force and effect.
(d) Upon the termination of this Agreement for any
reason, Genicom shall, upon Digital's request, continue to provide certain
services to Digital on commercially reasonable terms and for a commercially
reasonable period of time to assist Digital in transitioning to another
supplier or suppliers of printer products, including, without limitation,
continuing to procure printer products, components and consumable for Digital's
benefit and providing Digital with access to specifications, drawings and other
technical data for the Digital Branded Products.
(e) In the event of termination of this Agreement
pursuant to Section 14(a), Genicom may continue to indicate, in a manner to be
agreed upon by the Parties, on Genicom's consumables associated with the
Digital branded products marketed by Genicom during the term of this Agreement,
that such consumables have such history and/or compatibility with Digital
branded products. In addition, the Parties shall discuss further whether they
can reach agreement on making such indications with respect to other products
marketed during the term of this Agreement.
(e) In the event of a termination of this Agreement
pursuant to Section 14(a) it
<PAGE> 14
is understood that Genicom may continue after the effective date of such
termination to sell Digital branded products as part of an orderly liquidation
process which shall be completed within 90 days after the effective date of
such termination.
16. Confidential Information.
(a) Each of the Parties shall maintain as confidential
and shall not disclose to any person outside its employ, nor use for purposes
other than performance of this Agreement, any proprietary information, trade
secrets, confidential data or know-how of the other party relating to this
Agreement and the performance of the Parties obligations hereunder which is
made or becomes known to either Digital or Genicom (the "Recipient") as a
result of this Agreement ("Confidential Information"). "Confidential
Information" shall include, but shall not be limited to proprietary, technical
developmental, engineering, operating, performance, know-how, trade secrets,
business and process information related to products, purchasing, pricing and
financial information and all records, models, prototypes or other media
containing or disclosing such information and techniques, manufacturing
capacity and yields, labor and value added rates, prices, product plans,
personnel names, material sources and costs, approved vendors, quality data,
build to order systems processes, customer names, test processes, shipment
volumes necessarily communicated between the Parties as part of performance
hereunder. Immediately upon termination of this Agreement for any reason, the
Recipient shall promptly return to the other party hereto all tangible forms of
Confidential Information and all copies thereof. Title to all Confidential
Information shall be and remain with the party providing such Confidential
Information. Confidential Information shall not include information (i)
already known by the Recipient other than pursuant to its due diligence efforts
in connection with its entering into the Asset Purchase Agreement and the
agreements contemplated thereunder, (ii) in the public domain, except as a
result of the Recipient's breach of its obligations hereunder, (iii)
independently developed by the Recipient without reliance on the Confidential
Information or (iv) otherwise obtained by the Recipient from a third party
without similar restrictions and without breach of any obligation owed to the
disclosing party. The Parties shall mutually develop and implement a plan that
addresses confidentiality, data security, account management, communication
access and physical security in connection with the Parties' obligations
hereunder.
(b) Without Digital's prior written consent or except as
required by law, Genicom shall not in any manner disclose, advertise, or
publish the existence of this Agreement or any terms of transactions under this
Agreement, provided, however, that during the term of this Agreement, Genicom
may identify itself in its publications and marketing materials as being an
alliance partner of Digital using language mutually agreed to in writing by the
Parties and Genicom may file this Agreement as an exhibit to any filings with
the Securities and Exchange Commission that it is required to file as
reasonably determined by its counsel, provided that Genicom, at its expense,
requests and uses its best efforts to obtain confidential treatment for any
information contained herein reasonably requested in writing by Digital.
Except as specifically agreed to in writing by Digital, Genicom shall not use
Digital's name, trademark, logo or any derivations thereof for any other
purpose.
(c) The Confidentiality restrictions under paragraphs (a)
and (b) of this Section 16 shall survive the expiration or termination of this
Agreement.
<PAGE> 15
17. No Implied License. The Parties understand that, except as
may be otherwise expressly stated in any agreement entered into between them,
neither the terms and conditions of this Agreement, nor the acts of either
Party arising out of this Agreement may be considered in any way as a grant of
any license whatsoever under any of either Party's present or future patents,
copyrights, trademarks, trade secrets, Confidential Information or other
proprietary rights, nor is any such license granted by implication, estoppel,
or otherwise.
18. Miscellaneous
(a) Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by the Parties hereto.
(b) Waiver. Either Digital or Genicom may (a) extend the
time for the performance of any of the obligations or other acts of the other
Party, (b) waive compliance with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the Party to be bound thereby.
(c) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
(x) if to Digital:
Digital Equipment Corporation
111 Powdermill Road
Maynard, Massachusetts 01754
Attention: Harold D. Coppermen
Telephone No.: (508) 467-7560
Facsimile No.: (508) 493-7310
with a copy to:
Digital Equipment Corporation
111 Powdermill Road
Maynard, Massachusetts 01754-1499
Attention: Cindy Lewis; Esq.
Telephone No.: (508) 493-5242
Facsimile No.: (508) 493-7310
with an additional copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
<PAGE> 16
One Financial Center
Boston, Massachusetts 02111
Attention: Richard A. Goldman, Esq.
Telephone No.: (617) 542-6000
Facsimile No.: (617) 542-2241
(y) if to Genicom:
Genicom Corporation
14800 Conference Center Drive
Chantilly, Virginia 20151
Attention: Paul Winn, President
and Chief Executive Officer
Telephone No.: (703) 802-9200
Facsimile No.: (703) 802-8618
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219
Attention: Jane Whitt Sellers, Esq.
Telephone No.: (804) 775-1000
Facsimile No.: (804) 775-1061
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (ii) if
made by telex, telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise, (iii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (iv) if sent by registered or
certified mail, on the 5th business day following the day such mailing is made.
(d) Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the transactions
contemplated hereby are not affected in any manner materially adverse to either
of the Parties. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
<PAGE> 17
(f) Entire Agreement. This Agreement and the agreements
referenced herein constitute the entire agreement between the Parties and
supersedes all prior and contemporaneous agreements and undertakings, both
written and oral, between the Parties with respect to the subject matter hereof
and supersedes all prior oral written agreements and understanding relating to
the subject matter hereof.
(g) Assignment; Successors. The rights and obligations
under this Agreement may not be assigned by either Party hereto without the
prior written consent of the other Party; provided, however, that either Party
may assign its rights and obligations under this Agreement, in whole or in
part, to such Party's wholly-owned subsidiaries without the other Party's
consent, provided, further, that no such assignment shall relieve such Party
from its obligations or liabilities hereunder. All statements,
representations, warranties, covenants and agreements in this Agreement shall
be binding on the Parties hereto and shall inure to the benefit of the
respective successors and permitted assigns of each Party hereto. Nothing in
this Agreement shall be construed to create any rights or obligations except
among the Parties hereto, and no person or entity shall be regarded as a
third-party beneficiary of this Agreement.
(h) Independent Contractor Status. The Parties
acknowledge and agree that nothing herein and the performance of each Party's
obligations hereunder shall not create or imply a partnership or joint venture
between the Parties and shall not make either of the Parties a partner,
venturer or agent of the other for any purpose.
(i) Governing Law. This Agreement and the rights and
obligations of the Parties hereunder shall be construed in accordance with and
governed by the law of the Commonwealth of Massachusetts, without giving effect
to the conflict of law principles thereof. Any legal action or proceeding with
respect to this Agreement shall be brought either in the courts of The
Commonwealth of Massachusetts, the Commonwealth of Virginia or the United
States of America for the District of Massachusetts or the Eastern District of
Virginia. By execution and delivery of this Agreement, each of the Parties
hereto accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts with respect to this
Agreement and the rights and obligation of the Parties hereunder. The Parties
hereby irrevocably waive any objection or defense that they may now or
hereafter have to the assertion of personal jurisdiction by any such court in
any such action or to the laying of the venue of any such action in any such
court, and hereby waive, to the extent not prohibited by law, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such proceeding,
any claim that it or he is not subject to the jurisdiction of the above-named
courts for such proceedings. Each of the Parties hereto irrevocably consents
to the service of process of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to the Party at its or his address set forth in Section 18(c)
hereof and irrevocably waive any objection or defense that it may now or
hereafter have to the sufficiency of any such service of process in any such
action. Nothing in this Section 18(i) shall affect the rights of the parties
to commence any such action in any other forum or to serve process in any such
action in any other manner permitted by law.
(j) Compliance With Laws. Each Party shall, in the
performance of its obligations hereunder, fully comply with all applicable
federal, state, local, foreign and other
<PAGE> 18
laws and regulations. Upon reasonable request, each Party shall provide the
other Party with information and certifications required to demonstrate
compliance with applicable laws and regulations for the work and/or services
performed under this Agreement. Such Party shall indemnify and hold the other
Party harmless from and against any claims, costs, or damages resulting from
or arising out of the other Party's reliance on such information and/or
certifications.
(k) Interpretation. The Parties hereto acknowledge and
agree that: (i) each Party and its counsel reviewed and negotiated the terms
and provisions of this Agreement and have contributed to its revision; (ii) the
rule of construction to the effect that any ambiguities are resolved against
the drafting Party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to all Parties hereto and not in favor of or against any
Party, regardless of which Party was generally responsible for the preparation
of this Agreement.
(l) Counterparts. This Agreement shall become effective
upon execution by both Parties. This Agreement may be executed in one or more
counterparts, and by the Parties in separate counterparts, each of which when
executed shall be deemed to be an original but all of which when taken together
shall constitute one and the same agreement.
<PAGE> 19
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed under seal as of the date first written above by their respective
officers thereunto duly authorized.
DIGITAL EQUIPMENT CORPORATION
By:/s/Harold D. Copperman
Harold D. Copperman, Senior Vice President and
General Manager, Digital Products Division
GENICOM CORPORATION
By:/s/Paul T. Winn
Paul T. Winn, President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 99.1
FOR FURTHER INFORMATION:
Paul T. Winn
President and CEO
703-802-9200
FOR IMMEDIATE RELEASE
================================================================================
GENICOM PURCHASES DIGITAL'S PRINTING SYSTEMS BUSINESS
AND BECOMES EXCLUSIVE SUPPLIER OF DIGITAL-BRANDED
PRINTER SOLUTIONS AND TECHNICAL SUPPORT WORLDWIDE
CHANTILLY, VA August 11,1997-- GENICOM Corporation (Nasdaq: GECM) today
announced it has purchased Digital Equipment Corporation's (NYSE: DEC) Printing
Systems Business and will become Digital's exclusive supplier of
Digital-branded printer products. This multi-year agreement is structured
around GENICOM assuming responsibility for Digital's printer business through
an in-sourcing program that aligns GENICOM's operations as close to the inside
of Digital as practical.
The parties have established a cooperative alliance where GENICOM provides a
broad line of products, business planning, technical support and distribution
services to Digital's marketing channels in each of their global geographies.
The parties also agreed to pursue joint marketing programs for each other's
capabilities, products and services.
As a result of this transaction, GENICOM will hire selected employees, acquire
certain assets, receive assignment and license rights for certain intellectual
properties, and have access to Digital's customer base. Additionally, Digital
granted GENICOM a license to use the Digital Logo, DEC trademark and other
trademarks for programs within the cooperative alliance agreement. This
transaction will be implemented in two phases. The U.S. transition is
effective immediately. The international transaction, which involves the sales
and marketing organization, will take place on a country-by-country basis over
the next several months.
1
<PAGE> 2
GENICOM anticipates revenue from this purchase to be approximately $100 million
annually. Aligned to this opportunity, GENICOM has established a dedicated
sales and marketing organization, in each of Digital's global geographical
centers, to focus on Digital's channels and customers. GENICOM has also opened
a new product marketing and engineering center in the Boston area, which will
tailor GENICOM's broad product line of printer products to include Digital
value-add for their multiple operating environments.
Paul T. Winn, President and CEO of GENICOM stated, "This transaction supports
both Digital's and GENICOM's long-term strategies to focus on core businesses.
Digital will strengthen its focus on core Alpha and x86 platforms,
workstations, personal computers for business, semiconductors, storage,
networking products, software and services, and the Internet and intranet;
GENICOM, through its Document Solutions company (DSC), will continue to
strengthen its position as a leader in midrange, client/server printing
solutions worldwide, providing a broad range of serial matrix, line matrix and
nonimpact printers, along with a complementary line of supplies, parts and
services. Our strategy, to provide midrange printer solutions in multiple
technologies, has always been focused on selected vertical and horizontal
markets. We view the Digital environment as a broad horizontal application
within this strategy."
"We are pleased with Digital's selection of GENICOM as their partner, and the
opportunity to provide printer solutions to their impressive customer base.
GENICOM's expansion, through Digital's channels in the Americas, Europe,
Africa, Middle East and Asia-Pacific, continues to increase our presence in the
global market. We look forward to our new partnerships with Digital's printer
distributors and customers and expect to make this transaction as transparent
as possible."
GENICOM Corporation is an international supplier of network integration,
multivendor services and printer solutions. The Enterprising Service Solutions
company (ESSC) provides integrated network solutions that include network
integration, professional services and help desk support, in addition to, logo
and multivendor on-site and off-site product repair and express parts. The
Document Solutions company (DSC) designs and markets a wide range of computer
printer technologies for general purpose applications. GENICOM is
headquartered within metropolitan Washington, D. C.
2
<PAGE> 3
The discussion above contains certain forward-looking statements as such term
is defined in the Private Securities Litigation Reform Act of 1995. Company
statements that are not historical facts, including statements about
management's expectations, are forward-looking statements and involve risks and
uncertainties. Factors that could cause the Company's actual results to differ
materially from management's expectations include, but are not limited to, the
following: the Company's ability to secure new customers and maintain its
current customer base, risks associated with a new venture, the risk of
customer delays or cancellations, the impact of competition and other risks
detailed from time to time, in the Company's filings with the Securities and
Exchange Commission.
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