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Exhibit 10.3
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE COMMISSION
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT between Genicom Corporation, on the one
hand, and Atlantic Design Company, Inc. and Xxxxx Services Corporation, on the
other hand, dated July 4, 1998 (the "Agreement").
The parties agree to settle fully and completely the matters that are
the subject of the arbitration proceeding presently pending between the parties
relating to the Services Agreement dated as of December 18, 1995, as amended
(the "Services Agreement"), and the pricing for the Model #3870 Eagle printer
and print ribbon and spares related to the Eagle printer (the "Eagle Printer")
that Genicom desires to add to the Products that may be purchased by Genicom
under the Services Agreement, on the following terms:
1. Genicom shall pay ADC $2.1 million, to be paid as follows: $1.0
million by July 9, 1998; $700,000 by July 31, 1998; and $400,000 by August 31,
1998. In the event Genicom fails to pay any of such amounts when due, and fails
to cure within three business days of receipt of notice thereof, then ADC may,
in addition to its right to enforce Genicom's payment obligations contained in
this paragraph, at its
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option, terminate the Services Agreement and, in such event, Genicom, upon ADC's
written request, shall comply with and pay the sums referred to in the
Reacquisition Conditions.
2. [The material at this point has been omitted pursuant to a request
for confidential treatment and filed separately with the Commission]
3. [The material at this point has been omitted pursuant to a request
for confidential treatment and filed separately with the Commission]
3. With respect to Genicom initiated ECNs and ECOs implemented by ADC
after the date of this Agreement, any incremental cost increases resulting
directly therefrom will be passed on to Genicom in the form of price increases
on a dollar-for-dollar basis; 75% of any decremental cost decreases resulting
directly therefrom will be passed on to Genicom in the form of price decreases,
with 25% of any such decremental cost decreases inuring to the benefit of ADC;
provided, however, with respect to ECNs, ECOs and ECO-Vs initiated by ADC after
the date of this Agreement, 75% of the decremental cost decreases resulting
directly therefrom will inure to the benefit of ADC, with 25% of any decremental
cost decreases resulting directly therefrom to be passed on to Genicom in the
form of price decreases. The implementation date for such ECNs, ECOs and ECO-Vs
shall be agreed concurrently with the setting of pricing. There will be no price
adjustments for ECNs, ECOs or ECO-Vs implemented prior to the date of this
Agreement.
4. Genicom guarantees that for the twelve months beginning July 1,
1998 (the "Guarantee Period"), Genicom will place purchase orders that obligate
ADC
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to expend, to meet Genicom's production requirements, no fewer than the lower of
(1) 696,000 man-hours or (2) 80% of the actual annualized man-hours expended by
ADC on Genicom production during the first six months of 1998 (i.e., 80% of the
actual hours for the first six months times two) (the "Guaranteed Hours"). If
ADC does not expend the Guaranteed Hours during the Guarantee Period, Genicom
shall pay ADC within 30 days of receipt of an invoice an amount equal to the
product of Six Dollars per man-hour and the difference between the Guaranteed
Man Hours and actual numbers of man-hours expended by ADC during the Guarantee
Period. The Guaranteed Hours will be adjusted for any decline in man-hours over
the Guarantee Period caused as a result of any request by ADC to not supply
particular products under the Services Agreement.
5. [The material at this point has been omitted pursuant to a request
for confidential treatment and filed separately with the Commission]
6. Genicom agrees to cooperate in all reasonable ways in any efforts
by ADC or Xxxxx to sell ADC or assets of ADC, including entering into
appropriate proprietary and confidentiality provisions in accordance with any
reasonable requests of ADC. The foregoing agreement shall not modify any rights
of Genicom under Sections 21.04 and 22 of the Services Agreement.
7. [The material at this point has been omitted pursuant to a request
for confidential treatment and filed separately with the Commission]
8. The parties hereby stipulate to dismiss with prejudice all claims
and counterclaims asserted in the pending arbitration, and will take appropriate
steps,
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including the filing of a Stipulation of Dismissal, to so notify the Arbitrator.
9. Within 60 days of the execution of this Agreement, ADC shall
invoice Genicom (to the extent it has not already done so) for all product that
has been shipped pursuant to Genicom purchase orders prior to the date of the
execution of this Agreement. Genicom shall pay all such invoices within 30 days.
ADC agrees that it will not invoice Genicom or otherwise seek payment for any
products shipped prior to the date of execution of this Agreement if invoices
for such products are not rendered within 60 days of execution of this
Agreement. Genicom will notify ADC within seven days from receipt of any
invoices that it believes are not made pursuant to Genicom purchase orders, and
the parties will work together to reconcile any such invoices within 30 days.
The provisions of this paragraph are without prejudice to any of Genicom's
rights to contest the accuracy of the invoices.
10. Genicom and ADC shall jointly explore strategic and pricing issues,
including the competitiveness of the pricing of products provided to Genicom and
the profitability of ADC's Genicom business.
11. Genicom hereby opts, and ADC hereby approves, that Genicom has
exercised its option pursuant to Section 8.03 of the Services Agreement to
provide repair services, and be reimbursed for its costs of repair within the
meaning of that Section 8.03 of the Services Agreement.
12. Any disputes arising out of or relating to this Settlement
Agreement, including the enforcement thereof, shall be subject to the
arbitration provisions of Section 20 of the Services Agreement except that, if
he is available, the
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parties agree to Xxxxx Xxxxx, Esq. as the arbitrator. Any arbitration relating
to Genicom's payment obligations, and only such obligations, set forth in
paragraph 1 of this Agreement shall be held no later than 15 days after the
initiation of such arbitration and without any discovery being taken.
13. The provisions of this Agreement shall be considered amendments to
the Services Agreement. In all other respects, the Services Agreement remains in
effect. Capitalized terms used herein which are not defined herein shall have
the meaning assigned to such terms in the Services Agreement. In the event of an
inconsistency between the provisions of the Services Agreement and this
Agreement, this Agreement shall control.
14. This Agreement may be executed by facsimile signature, in several
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
ATLANTIC DESIGN COMPANY, INC.
By:\s\ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
GENICOM CORPORATION
By: \s\ X.X. XxXxxxx
Name: Xxxxxx X. XxXxxxx
Title: Chief Operating Officer
Document Solutions
GUARANTOR:
XXXXX SERVICES CORPORATION
By: \s\ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Vice President
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