SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1996
NETWORK EXPRESS, INC.
(Exact name of registrant as specified in its charter)
Michigan 0-25350 38-2917505
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
4251 Plymouth Road
Ann Arbor, Michigan 48105-4251
(Address of principal executive offices)
(313) 761-5005
Registrant's telephone number)
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Item 2. Acquisition or Disposition of Assets
On July 1, 1996, Network Express, Inc. (the "Company") entered into
a Transfer Agreement with International Business Machines Corporation
("IBM"), pursuant to which the Company has acquired certain assets
pertaining to IBM's Waverunner product line, including the "Waverunner" name
(with all rights in and to any trademarks and applications therefor),
inventory and specified rights to use technology. The Waverunner product
line consists of three products: (i) the IBM 7845 network terminator (NT1),
which provides an interface between a telephone line and ISDN; (ii) the
Waverunner credit card, which plugs into notebook personal computers and
which provides an interface between a telephone line and ISDN and also acts
as a modem; and (iii) the Waverunner ISA Board, which plugs into desktop
personal computers and which provides an interface between a telephone line
and ISDN.
Under the terms of the Transfer Agreement, the purchase price is
$7.0 million, $1.5 million of which was paid in cash on July 2, 1996 and,
assuming the closing of the Merger (as defined below), the remainder of the
purchase price of $5.5 million is payable in cash on August 2, 1996. In the
event that the Merger does not close, the remainder of the purchase price is
due in two installments (which are unsecured), with the first installment of
$1.5 million (plus interest on $5.5 million at an annual rate of 8-1/2%) due
on December 27, 1996 and with the second installment of $4.0 million (plus
interest thereon at an annual rate of 8-1/2%) due on June 30, 1997. The
source of funds used by the Company for the initial $1.5 million payment was
internal cash and the Company anticipates using internal cash for the future
payments required under the Transfer Agreement.
As previously reported in the Company's Current Report on Form 8-K
dated May 24, 1996, the Company entered into an Agreement and Plan of Merger
on May 21, 1996 with Cabletron Systems, Inc. ("Parent") and its wholly-owned
subsidiary, Cabletron Systems of Michigan, Inc. ("Merger Sub"), pursuant to
which the Company, Parent and Merger Sub will consummate a merger (the
"Merger") in which the Merger Sub shall be merged with and into the Company.
The Merger is subject to, among other things, the approval of the Company's
shareholders at the Special Meeting scheduled for August 1, 1996.
The information set forth in the Transfer Agreement attached hereto
as Exhibit 2.1 and the press release attached hereto as Exhibit 99.1 is
hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
2.1 Transfer Agreement dated July 1, 1996 between International Business
Machine Corporation and Network Express, Inc. The Transfer
Agreement includes customary attachments for agreements of this
nature which have been omitted. The Registrant will furnish a copy
of the omitted attachments to the Commission supplementally upon
request.
99.1 Press release issued by Network Express, Inc. on July 3, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NETWORK EXPRESS, INC.
Dated: July 12, 1996 By: /s/ John R. Ternes
----------------------------------
Name: John R. Ternes
Title: Vice President - Finance
and Administration, Chief
Financial Officer, Treasurer
and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
2.1 Transfer Agreement dated July 1, 1996 between International Business
Machine Corporation and Network Express, Inc.
99.1 Press release issued by Network Express, Inc. on July 3, 1996.
TRANSFER AGREEMENT
This Transfer Agreement (Agreement) shall be deemed to be effective on the
30th day of June, 1996, by and between International Business Machines
Corporation (IBM, a New York corporation having a place of business in
Raleigh, North Carolina, and Network Express, Inc. (Network Express) a
Michigan corporation.
Whereas, IBM has developed certain ISDN adapter products and technologies
for making such products and has acquired certain intellectual property
rights covering such products and such technologies, including patent
rights, copyrights, trademark rights and trade secret rights; and
Whereas, IBM markets such products and presently has an inventory of such
products available for such marketing;
Whereas, Network Express would like to purchase IBM's existing product
inventory and to acquire rights under IBMs intellectual property sufficient
to allow Network Express to become fully responsible for the manufacture and
marketing of products or successors to such products;
Whereas, it is the intent of the parties that the sale of the inventory and
the grant of rights and immunities under IBM intellectual property be
accomplished expeditiously to minimize any impact on product marketing or
support of use of such products by end users;
Now, Therefore, for good and valuable consideration, the receipt of which is
hereby acknowledged, IBM and Network Express agree as follows,
Part 1 - Definitions
"Distributors" shall mean third parties with whom IBM has contracted to sell
and/or distribute Products to End Users.
"End Users" shall mean persons and business entities who purchase the
Products for their own use and not for resale to others.
"Effective Date" shall mean June 30,1996.
"Licensed Technology" shall mean the following materials for the Products
made available by IBM to Network Express under this Agreement: a) unique
source code, b) hardware bill of materials, c) functional specifications, d)
component specifications, and e) other related documentation. Licensed
Technology shall also include object code for the IBM Mwave subsystem and
certain install and diagnostic diskettes.
"OEM Customers" shall mean third parties that IBM has contacted with or made
marketing efforts towards for sale of Products to End Users under the terms
of an OEM sales agreement.
"Product Inventory" shall mean the following minimum quantities of units of
Products to be purchased by Network Express under the terms of this
agreement:
Product Quantity of Units
7845
Completed/Packaged
IBM Logo 146
OEM 36
Completed/Unpackaged 2683
To Be Assembled 3135
WaveRunner Credit Card
Completed/Packaged
IBM Logo 414
OEM 3500
Completed/Unpackaged 5386
WaveRunner ISA Board
Completed/Packaged
IBM Logo 235
OEM 46
Completed/Unpackaged 1902
To Be Assembled 1617
"Products" shall mean the 7845 Box, the WaveRunner Credit Card and the
WaveRunner ISA Board.
"7845 Box" shall mean the IBM 7845 ISDN Network Terminator Extended, as more
fully described in Attachment A, Product Description and Specifications.
"Subsidiary" shall mean an entity where more than fifty percent (50%) of its
voting stock is owned, or if no voting stock exists, decision-making power
is controlled directly or indirectly by another entity.
"Successor Product" shall mean a product developed by or for Network Express
which is derived from and is functionally similar to a Product but which
improves upon such Product such as by improving performance, adding function
or reducing manufacturing or support costs.
"Technology Transfer Phase" shall mean that period of time commencing on the
Effective Date and concluding six (6) months thereafter.
"Transition Period" shall mean that period of time commencing on the
Effective Date and concluding thirty (30) days thereafter.
"WaveRunner Credit Card" shall mean the IBM WaveRunner PCMCIA ISDN or Analog
Modem, as more fully described in Attachment A, Product Description and
Specifications.
"WaveRunner ISA Board" shall mean the IBM WaveRunner Digital Modem - ISA,
Rev B Version, as more fully described in Attachment A, Product Description
and Specifications.
Part 2 - Overview of Agreement
2.1 This is an agreement where, pursuant to the terms and conditions of
this Agreement and in consideration of payment and other promises by Network
Express to IBM, IBM sells to Network Express the Products and grants certain
other licenses and immunities as described briefly below, and in more detail
elsewhere in this Agreement:
a) IBM sells the Product Inventory to Network Express; and
b) IBM assigns its rights in the "WaveRunner" trademark to
Network Express; and
c) IBM grants to Network Express certain licenses and
immunities related to the Licensed Technology sufficient to support
Network Express' manufacture, marketing and/or marketing of Products
and Successor Products; and
d) IBM provides Network Express certain technical support and
transition services associated with the Products.
2.2 This Agreement includes an overview of a possible relationship
between the parties under which:
a) IBM and Network Express would contract to manufacture the
WaveRunner Credit Card and/or WaveRunner ISA Board, or successors
thereof, and
b) IBM intends, in accordance with the process described in
Part 17, Product Reseller Agreement, to purchase Products and
Successor Products from Network Express for internal use and/or
remarketing to End Users or others.
Part 3 - Conveyance of Product Inventory Assets
3.1 Upon the Effective Date of this Agreement, for good and valuable
consideration as described in Part 9, Payment, of this Agreement, IBM hereby
sells to Network Express all right, title and interest to the Product
Inventory.
3.2 Title of each item of Product Inventory sold by IBM to Network
Express under this Agreement shall pass on the Effective Date at the current
location of such Item. Network Express a) shall ship the Product Inventory
listed as "Completed/Packaged" from the IBM location within sixty (60) days
of the Effective Date, b) shall pay any and all costs of transporting the
Product Inventory from its present location, and c) shall accept all risk of
damages and/or loss once title passes.
3.3 IBM may retain other units of Products not included in the Product
Inventory for the purposes of: a) sale of Products to End Users or OEM
Customers during the Transition Period, or b) End User/OEM Customer Product
Warranty requirements, or c) IBM internal Use.
3.4 If requested by Network Express in writing, and based upon a
schedule to be agreed to by the parties in writing (but in no event more
than four (4) months from the Effective Date), IBM will complete assembly on
the Product Inventory listed as "To Be Assembled" under the definition, of
Product Inventory" in Part 1, Definitions.
3.5 If requested by Network Express in writing, and based upon a price
and schedule to be agreed to by the parties in writing (but in no event more
than four (4) months from the Effective Date), IBM will package the
unpackaged Product Inventory with packaging materials specified by Network
Express.
Part 4 - Assignment of "WaveRunner" Trademark
4.1 IBM has, in its marketing of Products, adopted, used and is using
the term "WaveRunner" as a trademark for such Products and has, under
national trademark laws, acquired certain assignable trademark rights in
WaveRunner for use on Products.
4.2 Subject to other provisions of this Agreement, including Part 9,
Price and Payment, IBM hereby assigns to Network Express any and all of
IBM's right, title and interest provided under the laws of the United
States, of the individual states thereof, and of jurisdictions foreign
thereto, in and to the WaveRunner trademark together with the goodwill of
the business symbolized by the mark. Upon written request by Network
Express, IBM will execute any and all powers of attorney, applications,
assignments, declarations, affidavits, and any other business papers in
connection therewith necessary to perfect such right title and interest,
including an assignment document for possible filing by Network Express in
each country in which IBM has made formal application for national
registration or regional rights in and to the WaveRunner trademark. IBM
shall disclose to Network Express all such pending formal applications.
4.3 Except as noted below, IBM shall hereafter discontinue use of the
WaveRunner mark. IBM reserves the right to use the WaveRunner mark during
the Transition Period, and in referring to any Product marketed or ordered
during the Transition Period. Further, nothing in this Agreement shall be
deemed to preclude IBM from using the WaveRunner mark or variations thereof
in any situation where such use would not, if carried out by a party other
than IBM, be considered to be an infringement of Network Express' rights
under the applicable trademark law.
Part 5 - Grant of Immunities Under IBM Patents
5.1 IBM grants to Network Express an immunity from suit for infringement
of any claim of any IBM patent which is necessarily infringed by
importation, use, sale or other transfer of Products in the form in which
such Products exist at the time of transfer to Network Express under this
Agreement. For any IBM patent falling within the scope of the foregoing
grant of immunity, IBM extends the grant of immunity to Successor Products.
5.2 IBM grants, to Network Express an immunity from suit for
infringement of any claim of any IBM patent which is necessarily infringed
by Network Express' use of Licensed Technology in the making or having made
of Products in the form in which such Products exist at the time of transfer
to Network Express under this Agreement for any IBM patent falling within
the scope of the foregoing grant of immunity, IBM extends the grant of
immunity to the making or having made of Successor Products.
5.3 The immunities granted above shall extend to (a) Network Express'
distributors and dealers, provided the extended immunity shall immunize only
the acts of transferring, offering for sale or selling Products or Successor
Products; and (b) Network Express' End Users, provided the extended immunity
shall immunize only the act of using Products of Successor Products.
5.4 Network Express acknowledges that the grants of immunity do not
extend to any IBM patent which is infringed by the importation, manufacture,
use, offer for sale, sale or other transfer of a Successor Product unless
such patent is also infringed by the importation, manufacture, use, offer
for sale, sale or other transfer of the Product on which the Successor
Product is based. Network Express further acknowledges that the foregoing
grants of immunity shall not apply where the claim of infringement is based
on the importation, manufacture, use, sale or other transfer of products
other than Products or Successor Products either alone or in combination
with Products or Successor Products.
5.5 Nothing in this Agreement shall be construed as implying any grant
of any license or immunity by IBM under any patent owned or controlled by a
third party.
5.6 IBM will not provide a grant of immunity nor a license under IBM
patents comparable in scope to the immunities granted in Section 5.1 and 5.2
above to a third parry where the third party has revealed that it intends to
use the immunity or grant of license to support its importation, use, making
or have made, offering for sale, sale or other transfer of Products or
Successor Products.
Part 6 - Rights in Licensed Technology
6.1 IBM grants to Network Express a worldwide, nonexclusive,
transferable royalty-free (subject to payment of the consideration recited
in Part 9, Price and Payment) license to use Licensed Technology for the
purposes of designing, developing, manufacturing, marketing and maintaining
Products and Successor Products.
6.2 Network Express shall be free to use Licensed Technology in any way
it deems appropriate to accomplish the foregoing purposes (including making
printed or machine-readable copies) subject to limitations set forth below
or elsewhere in, this Agreement:
a) Any copy of a Licensed Technology item (whether whole or
partial) shall include any IBM notices of proprietary rights
appearing in the original copy of that item;
b) No Licensed Technology item shall, without IBM's prior
written consent, be made available to anyone other than employees or
contractors who have a need to know in connection with rights
granted under this Agreement, and who have agreed to observe any
restrictions set forth in this Agreement.
6.3 Network Express acknowledges that the license to use Licensed
Technology does not extend to use of such technology in connection with
products other than Products or Successor Products.
6.4 IBM will not grant a license or an immunity to any third party for
the use of all or substantially all of the materials included in the
Licensed Technology where the license would have the same or substantially
similar scope to the license set forth in Section 6.1.
6.5 Network Express acknowledges that it has been made aware that IBM
intends to publish a reference design that may contain card layout and
design information substantially similar to that included in the Licensed
Technology, and to offer to make available to card manufacturers or other
third parties code that can be executed in a card made in accordance with
the reference design. Network Express agrees that such acts by IBM will not
be considered a breach of any provision of this Agreement.
Part 7 - Product Sales and Marketing Transition
7.1 Except as otherwise set forth in this Part 7, upon the Effective
Date, Network Express shall assume all responsibilities for worldwide sales
and marketing activities related to the Products, including the
determination of the extent of Product marketing efforts (if any), the
methods of marketing that are employed, and the terms, conditions and
pricing for the products that are offered to and/or negotiated with End
Users, OEM Customers and/or other third parties.
7.2 *[Confidential Treatment has been requested for this Section].
7.3 Upon the Effective Date, Network Express shall affix to the IBM-logo
Product Inventory identified as "Completed/Packaged" in the definition of
"Product Inventory" in Part 1, Definitions, a) a sticker stating that
Network Express, not IBM, is the seller of the Products, that the Network
Express Sales Agreement applies to the sale of the Products, and that the
End User must look to Network Express for performance of any obligation
related to the Products, and b) a Network Express Sales Agreement.
7.4 IBM authorizes Network Express to sell the IBM-logo
Completed/Packaged Product Inventory as described in Section 7.3 above to
End Users with its existing packaging, instructions and promotional
literature up to and including December 31, 1996.
7.5 To the extent that remaining Completed/Packaged IBM-logo Product
Inventory exists at the end of the Transition Period, Network Express shall
repackage such Product Inventory so, as, to remove all references to IBM
that might be visible to the End User.
7.6 IBM shall be responsible for warranty claims made under the terms of
the appropriate IBM agreement for all End User sales prior to the Effective
Date. Network Express shall be responsible for warranty claims made under
the terms of the appropriate Network Express agreement for all End User
sales made on or after the Effective Date.
7.7 IBM shall be responsible for all warranty claims made by OEM
Customers under the terms of the appropriate agreement between IBM and OEM
Customers. Network shall be responsible for all warranty claims made by OEM
Customers under the terms of the appropriate agreement between Network
Express and OEM Customers.
7.8 For all Product Inventory identified as "Completed/Unpackaged" and
"To Be Assembled" in the definition of Product Inventory in Part 1, Network
Express or a third party under contract with Network Express shall not use
IBM-logo packaging materials to package such Product Inventory.
7.9 *[Confidential Treatment has been requested for this Section].
7.10 Within thirty (30) days of the Effective Date, IBM will use
commercially reasonable efforts to: a) notify OEM Customers of the Product
transitions and b) to the extent permissible under terms of existing
agreements, provide OEM Customers with notice of termination of existing
contracts and/or amendments that directly relate to the Products.
Part 8 - Technology Transfer
8.1 In consideration for the purchase price specified in Part 9, Price
and Payment, IBM will provide Network Express with up to fifteen (15)
man-months of technical transition support during the Technology Transfer
Phase. The support will, be provided by IBM personnel knowledgeable in the
Product set and its underlying technology. The support will be provided for
the purpose of instructing Network Express personnel about the use, support,
potential enhancement directions and technology of the Products.
8.2 During the Technology Transfer Phase, and in order to implement the
technical transition, Network Express personnel may travel, at the expense
of Network Express, to the IBM Networking Hardware Division, located in
Raleigh, North Carolina, for briefings and training on the Product. During
such time, IBM will, at no extra cost to Network Express, provide Network
Express personnel with office space, furniture and telephones for three
people. During the Technology Transfer Phase, IBM personnel may travel, at
the expense of IBM, to the Network Express facility in Ann Arbor, Michigan.
During such time, Network Express will, at no cost to IBM, provide IBM
personnel with office space, furniture and telephones for three people.
8.3 IBM will provide Network Express with all of the Licensed Technology
sufficient to allow a team of people: a) with the necessary skills in
Digital Signal Processor (DSP) technology, and b) who have attended the
training sessions described in Section 8.1, to manufacture and maintain the
Products.
Part 9 - Price and Payment
9.1 In consideration for the sale of Product Inventory, assignment of
"WaveRunner" trademark, grants of licenses and immunities under other
intellectual property rights, and provision of transition services, all as
described in this Agreement, Network Express shall pay IBM the sum of seven
million dollars ($7,000,000) (Purchase Price).
9.2 Network Express shall pay IBM the first installment of the Purchase
Price, in the amount of one million five hundred thousand dollars
($1,500,000), on the Effective Date.
9.3 In the event that Network Express and Cabletron Systems, Inc.
complete their merger agreement (as described in Section 18-7), then Network
Express shall pay IBM a second and final installment of the Purchase Price
of five million five hundred thousand dollars ($5,500,000), on August 2,
1996.
9.4 In the event that Network Express and Cabletron do not complete
their merger agreement then Network Express shall pay IBM the remaining
installments according to the following schedule:
a) Network Express shall. pay IBM a second installment of the
Purchase Price in the amount of one million five hundred thousand
dollars ($1,500,000), plus interest of eight and one-half percent
(8.1/2%) per annum on five million five hundred thousand dollars
($5,500,000) calculated from the Effective Date, on December 27,
1996.
b) Network Express shall pay IBM a third and final installment
of the Purchase Price in the amount of four million dollars
($4,000,000), plus interest of eight and one-half percent (8 1/2%)
per annum on four million dollars ($4,000,000) calculated from
December 27, 1996, on June 30, 1997.
9.5 Network Express shall wire all payments due under Part 9 of this
Agreement to the IBM account at the Chemical Bank. Network Express shall
wire payment to the following address:
Chemical Bank
55 Water Street
New York, New York 10041
IBM Concentration Account
Account #323-213499
ABA Routing #021000128
Chemical Bank Contact: Ms. Michelle Reed
212-638-5832
Network Express shall include the following information in the wire detail:
Network Express, Inc.
WaveRunner Trademark Assignment and Inventory Sale
IBM Contact: John Buckwalter 919-254-9292
9.6 IBM reserves a purchase money security interest in the Product
Inventory and the proceeds from the Product Inventory until it receives full
payment of the amount due from Network Express under this Part 9 of this
Agreement. Upon request by IBM, Network Express agrees to sign an
appropriate document to permit IBM to perfect its security interest.
Part 10 - Warranties
10.1 IBM represents and warrants that, as of the date of this Agreement
and to the best of its knowledge, a) IBM owns or otherwise has all of the
rights necessary to make the transfer, grants, conveyances and assignments
set forth herein, (b) Products are free of patent rights of third parties,
and in particular, IBM has not taken a patent license under any third-party
patents for the express purpose of making, having made, using, offering to
sell or selling the Products, and c) the WaveRunner trademark is free of
trademark rights of third parties. IBM further represents and warrants that
the Products and documentation are free of copyright and trade secret rights
of third parties.
10.2 IBM represents and warrants that it has no knowledge of litigation
against IBM Which adversely affects the Products.
10.3 Except as specified in Section 18.7 herein, the warranties provided
in this Part 10 are solely for the benefit of Network Express, Network
Express shall not assign or transfer any of these Warranties.
10.4 IBM and Network Express represent and warrant to each other that
they are under no obligation or restriction, nor will they assume any such
obligation or restriction, that does or would in any way interfere or
conflict with the performance to be rendered under this Agreement. Each
party warrants that it has all the necessary authority and approvals, if
any, that are required to carry out its obligations under this Agreement.
10.5 IBM warrants that the Products have been manufactured in accordance
with IBM manufacturing guidelines and ISO 9002 standards.
10.6 THE FOREGOING WARRANTIES AND REPRESENTATIONS ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
IBM DOES NOT WARRANT THAT THE PRODUCT OR PRODUCT INVENTORY WILL MEET THE
REQUIREMENTS OF NETWORK EXPRESS, THE DISTRIBUTORS OF NETWORK EXPRESS OR END
USERS, OR THAT THEIR OPERATION WILL BE UNINTERRUPTED OR ERROR FREE. EXCEPT
AS EXPRESSLY PROVIDED IN THIS AGREEMENT, IBM PROVIDES THE PRODUCT AND
PRODUCT INVENTORY "AS IS" WITHOUT WARRANTY OR INDEMNIFICATION.
IBM MAKES NO PROMISE, GUARANTEE OR WARRANTY OF ANY KIND AS TO THE POTENTIAL
FINANCIAL GAIN OR OTHER BENEFITS THAT NETWORK EXPRESS MAY REALIZE RELATED TO
THIS AGREEMENT.
Part 11 - Indemnification
11.1 IBM will, at its expense, indemnify Network Express against any
claim against Network Express based on:
a) any breach of warranty or representation specified in Part
10, Warranties, above; and/or
b) Products sold by IBM prior to the Effective Date.
Under the indemnification described in this Section 11.1, IBM will pay all
costs, damages, expenses and reasonable attorneys' fees finally awarded by a
court provided that Network Express:
a) promptly notifies IBM in writing of the claim; and
b) allows IBM to control the defense, and cooperates with IBM
in the defense.
11.2 Network Express will, at its expense, Indemnify IBM against any
claim against IBM based on:
a) any claim for infringement of third party rights or any other
claim resulting from any enhancement or modification made by or for
Network Express to the Products, and/or
b) any claim attributable to the Products and/or Successor Products
that are sold after the Effective Date.
Under the indemnification described in this Section 11.2, Network Express
will pay all costs, damages, expenses and reasonable attorneys' fees finally
awarded by a court provided that IBM:
a) promptly notifies Network Express in writing of the claim;
and
b) allows Network Express to control the defense, and
cooperates with Network Express in the defense.
Part 12 - Limitation of Remedies
The parties' entire liability and exclusive remedy are set forth in
this section. Either party's liability for damages to the other for any
cause whatsoever arising under this Agreement (other than a claim by IBM for
payment of the purchase price under Part 9, Price and Payment, of this
Agreement, or a claim by either party under Part 11, Indemnification), shall
be limited to three million five hundred thousand dollars ($3,500,000). In
no event will either party be liable for any damages caused by lost profits,
lost savings, incidental, special, indirect or other consequential damages.
Neither party will be liable for any claim by the other based on any third
party claim, except as provided in Part II, Indemnification.
Part 13 - Announcements
13.1 Upon the Effective Date or some time thereafter, the parties may
decide to make public statements regarding the activities described in this
Agreement or other related joint activity. Both parties recognize the value
and importance of clear and accurate public communications regarding the
transactions contemplated under this Agreement. The Project Managers of
each party as specified in Section 18.5 shall be responsible for the
coordination of such public statements.
13.2 Except as required by law or other governmental regulation, neither
IBM nor Network Express shall make any public announcements regarding the
activities described in this Agreement, other than as may be expressly
agreed upon in advance by the parties in writing.
Part 14 - IBM Manufacturing Services
14.1 Attachment B, Manufacturing Agreement (Manufacturing Agreement)
outlines the terms for an agreement whereby IBM would manufacture additional
units of existing or enhanced versions of the of the WaveRunner Credit Card
or the WaveRunner ISA Board. The parties agree to execute the Manufacturing
Agreement. The Manufacturing Agreement shall become effective upon the
listing of pricing information by IBM in a subsequent Attachment to such
Agreement and the issuance of a Purchase Order by Network Express.
14.2 Network Express shall also be free, according to the licenses and
immunities granted by IBM herein, to have the Products or Successor Products
manufactured by a third party. In such event, Network Express may order IBM
Mwave Chips for the WaveRunner Credit Card and WaveRunner ISA Board under
IBM's standard agreement for sale of Mwave products. In addition, Network
Express may order SRAM chips, all as described below.
a) The Mwave chip for the WaveRunner Credit Card is currently
offered commercially. IBM agrees to sell the Mwave chips for the
WaveRunner Credit Card to Network Express *[Confidential treatment
has been requested for the remainder of this sub-section].
b) The Mwave chip for the WaveRunner ISA Card is not currently
offered commercially, but IBM maintains a limited inventory of the
chips. While IBM maintains such inventory, IBM agrees to sell the
Mwave Chip for the WaveRunner ISA Card to Network Express
*[Confidential treatment has been requested for the remainder of
this sub-section].
c) IBM currently contracts with a third party to obtain SRAM
chips. IBM will use good faith efforts to work with Network Express
and the third party on an arrangement whereby Network Express is
able to procure the SRAM chips at a favorable price.
Part 15 - Confidential Information
15.1 IBM and Network Express shall make all disclosures of confidential
information under the terms of the Confidential Disclosure Agreement #
327-96 (CDA).
15.2 IBM and Network Express hereby amend the CDA to apply to any
information related to the transactions contemplated in this Agreement that
is identified by a party hereto as confidential subject to the terms of the
CDA.
15.3 Network Express and IBM acknowledge that the period of
confidentiality set forth in the CDA may be inadequate for certain of the
Licensed Technology, such as IBM source code, to be disclosed under this
Agreement. In such case, Network Express and IBM agree to amend the CDA to
provide for additional procedures for safeguarding such Licensed Technology,
and/or establish a longer period of confidentiality for such Licensed
Technology.
15.3 IBM and Network Express each consider all drafts and executed copies
of this Agreement as confidential information, to be held by each party
under the terms of the CDA.
15.4 Nothing in this agreement shall be construed as prohibiting or
restricting either party from independently developing, acquiring or
marketing materials, products or services or any part thereof.
Part 16 - Term and Termination
16.1 This Agreement shall begin upon the Effective Date and shall remain
in full force and effect for a term of one (1) year, unless terminated
earlier in accordance with the provisions hereof; provided however, that
Part 5, Grant of Immunities under IBM Patents, Part 6, Rights in Licensed
Technology, Section 8.3 in Part 8, Technology Transfer, Part 9. Price and
Payment; Part 10, Warranties; Part 11, Indemnification; Part 12, Limitation
of Remedies; Part 14, IBM Manufacturing Services; Part 15, Confidential
Information; and Part 18, General Provisions, shall survive any termination
of this Agreement until such obligations expire according to their terms,
and shall bind the parties and their legal representatives, survivors,
successors and assigns.
16.2 At any time, IBM and Network Express may mutually agree upon a
complete or partial termination of this Agreement
16.3 At any time during the term of this Agreement, if either party shall
believe that the other party has materially breached any representation,
warranty, covenant or obligation contained herein, such party shall promptly
so inform the other party in writing, specifying the nature of such breach,
and such other party shall have a reasonable opportunity to correct the
breach. However, the failure of a party to provide such notice of breach
shall not release the parry in default of its obligations hereunder. In the
event that such breach is not corrected within a reasonable period of time,
in no event less than thirty (30) days, the party not in default may, in the
exercise of its sole discretion, terminate this Agreement.
16.4 Notwithstanding any other provision of this Part 16, this Agreement
may be immediately terminated at the sale election of the party not in
breach, if the other party's failure to perform arises out of any of the
following circumstances
(a) If a receiver is appointed for either party or its property;
(b) If either party becomes insolvent or unable to pay its debts
as they mature, or ceases to pay its debts as they mature in the
ordinary count of business, or makes an assignment for the benefit
of its creditors;
(c) If any proceedings are commenced by or for either party
under any bankruptcy, insolvency or debtor's relief law;
(d) If any proceedings are commenced against either party under
any bankruptcy, insolvency or debtor's relief law and such
proceedings shall not be vacated or be set aside within sixty (60)
days after the date of commencement thereof;
(e) If either party is liquidated or dissolved.
Part 17 - Product Reseller Agreement
17.1 Attachment C, Product Reseller Agreement (Reseller Agreement),
provides the terms and conditions under which IBM may purchase Products and
Successor Products for remarketing to End Users. The parties agree to
execute the Reseller Agreement. The Reseller Agreement shall become
effective upon the listing of pricing information in a subsequent attachment
to such agreement and the issuance of a Purchase Order by IBM.
Part 18 - General Provisions
18.1 Unless otherwise expressly provided in this Agreement, each of the
parties hereto shall bear all of the fees and expenses relating to its
compliance with the various provisions of this Agreement and its covenants
to be performed hereunder.
18.2 Except for the payment obligations by Network Express as outlined in
Part 9, Price and Payment, if a party's performance of any material
obligations under this Agreement is prevented, restricted or interfered with
by reason of fire or other casualty or accident; inability to procure raw
materials, power, or supplies; war or other civil disturbance; any law,
order or proclamation, regulation, ordinance, demand or requirement of any
governmental agency or intergovernmental body, or any other act or condition
whatsoever beyond the reasonable control of the parties hereto, the Party so
affected, upon giving notice to the other party, shall be excused from such
performance to the extent of such prevention, restriction or interference;
provided however, that the party so affected shall use its reasonable
efforts under the circumstances to avoid or remove such causes of
nonperformance and shall continue its performance immediately upon the
removal of such causes, provided however, the if after ninety (90) days a
party remains unable to perform its obligations under this Agreement for the
reasons described in this Section 18.2, the other party shall have the
right, in the exercise of its own discretion, to either a) terminate this
Agreement under Part 16, Term and Termination, upon thirty (30) days written
notice, or b) suspend its performance until the other party can perform.
18.3 Each party shall cooperate with the other party as is reasonably
necessary to comply with all applicable United States, state and local laws,
regulations and ordinances, including but not limited to, the regulations of
(the United States Department of Commerce relating to the export from the
United States of technical data. Both parties agree that they shall comply
with all applicable US regulations relating to the export of either party's
technical data from the United States.
18.4 Each party shall name a Project Manager to coordinate the
relationships described in this Agreement. If a party changes its
representative, it shall notify the other party of the change in writing.
The current representatives of each party and their addresses are:
For IBM: Shirral Davis
IBM Corporation
700 Park Offices Drive
RTP, NC 27709
Phone: 919-254-2526
Fax: 919-254-2455
For Network Express:
All notices, requests, consents and other communications under this
Agreement shall be in writing. All such communications shall be mailed to
each party's representative at the addresses above.
18.5 This Agreement, including its Attachments, embodies the entire
agreement and understanding between the parties, and supersedes all prior
agreements, written or oral, related to the subject matter hereof. No
amendment or modification hereof will be valid or binding upon the parties,
unless made in writing and signed by authorized representatives of each
party except as otherwise expressly provided for herein. No forbearance on
the part of IBM or Network Express in enforcing their rights under any terms
of this Agreement, nor any removal, examination, or rearrangement of any
payment or obligation by either party hereunder, shall constitute a waiver
of any other term of this Agreement or a forfeiture of any other right.
18.6 This Agreement shall be governed in all reports by the laws of the
State of New York as they apply to contracts executed and fully performed in
New York. IBM and Network Express each waive the right to a jury trial in
any dispute.
18.7 Network Express has notified IBM that Network Express has entered
into a merger agreement, dated May 21, 1996, with Cabletron Systems, Inc.
(Cabletron). In the event that this merger is completed, IBM agrees that
Network Express may assign all of its rights and obligations under this
Agreement to Cabletron. In the event that performance under this Agreement
requires the disclosure of "IBM Confidential" information described or
referenced in Part 15, Confidential Information, by Network Express to
Cabletron, IBM agrees to such disclosure, provided that Network Express
makes such disclosure under the third party disclosure provisions of the
IBM/Network Express CDA described in Section 15.1.
In witness of the foregoing, IBM and Network Express have caused this
Transfer Agreement to be executed by their authorized representatives as of
the day and year last written below.
Accepted and agreed to:
International Business Network Express, Inc.
Machines Corporation
By: /S/ LUTZ F. HAHME By: /S/ RICHARD EIDSWICK
Name: Lutz Hahme Name: Richard Eidswick
Title: General Manager, Title: President
Networking Hardware
Division
Date: 1 July 1996 Date: 1 July 1996
Exhibit 99.1
For more Information Contact:
Wendy Skidmore
Network Express, Inc.
(313) 761-5005
[email protected]
NETWORK EXPRESS ANNOUNCES AGREEMENT TO PURCHASE IBM'S WAVERUNNER
ISDN PRODUCT LINE
ANN ARBOR, Mich. - July 3, 1996 -- Network Express, Inc. (NASDAQ:NETK) today
announced that, effective July 1, 1996, Network Express acquired certain
assets from IBM pertaining to the IBM ISDN adapter products known as the
WaveRunner for a purchase price of $7 million.
Under the terms of its agreement with IBM, Network Express has acquired the
WaveRunner name, the existing IBM WaveRunner inventory and the right (under
the Wave Runner name) to build and market the ISDN adapter products
currently marketed under the WaveRunner name. the WaveRunner product line
was designed to provide the user with the ability to use the products as
modems while on the road and as ISDN adapters while at the home or office.
"The purchase of the IBM WaveRunner rounds out the Network Express line of
ISDN access products for the central site and branch or remote office," said
Richard P. Eidswick, president and CEO of Network Express. "It's our
anticipation that our agreement with IBM will also open up the IBM channels
to Network Express for WaveRunner products, and strengthen our partnership
with IBM, its resellers, and customers. Network Express has been working
closely with IBM since the WaveRunner was introduced to ensure
interoperability with our existing product line."
"IBM's WaveRunner has long been a leader in the ISDN area. With the
transition of WaveRunner to Network Express we have the opportunity to see
these products continue and grow as part of a company that we have enjoyed a
long-standing WaveRunner relationship with," said Michael Mayer, Director,
Campus Networking Products, IBM Networking Hardware Division.
About Network Express, Inc.
Network Express supplies high-speed switched access communications products
for companies seeking to reduce communications costs through dial-up
services such as ISDN. The Company's products provide high-speed,
cost-effective and secure features for applications including pre-press
publishing, Internet access, telecommuting, and remote LAN access. The
Company has more than 3,000 installations in the US, Japan and Europe. On
May 21, 1996, Network Express entered into a merger agreemnt with Cabletron
Systems, Inc. (NYSE:CS) of New Hampshire pursuant to which Network Express
will become a wholly-owned subsidiary of Cabletron subject to, among other
things, the requisite approval of the merger by Network Express'
shareholders at the special meeting scheduled for August 1, 1996. NEI's
corporate headquarters are located at 4251 Plymouth Rd., Ann Arbor, MI,
48105. Network Express can be contacted at 313-761-5005, via fax at
313-995-1114 and the home page for NEI can be accessed at
http://www.nei.com.
All trademarks are the property of their respective owners.
