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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): March 19, 1996
SUMMAGRAPHICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-16071 06-0888312
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
8500 Cameron Road Austin, TX 78754-3999
(Address of Principal Zip Code
Executive Offices)
Registrant's telephone number, including area code: (512) 873-1540
NOT APPLICABLE
(Former name or former address, if changes since last report)
Page 1
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Item 5. OTHER EVENTS
The Registrant entered into a Plan of Reorganization and Agreement For the
Exchange of Stock of CalComp, Inc. For Stock of Summagraphics Corporation (the
"Agreement"), dated as of March 19, 1996, pursuant to which CalComp, Inc., a
wholly owned subsidiary of Lockheed Martin Corporation, would merge with the
Registrant.
A copy of the Agreement and certain other documents are attached as Exhibits
hereto and are incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
Exhibit 2 -- Plan of Reorganization and Agreement for the Exchange of
Stock of CalComp, Inc. for Stock of Summagraphics
Corporation
Exhibit 99 -- Press Release dated March 20, 1996.
Page 2
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SIGNATURE
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 thereto duly authorized.
SUMMAGRAPHICS CORPORATION
Dated: March 26, 1996 By: /s/ ROBERT B. SIMS
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Robert B. Sims
Senior Vice President
Secretary and General Counsel
Page 3
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List of Schedules and Exhibits
Schedule 1.3 Determination of Exchange Shares
Schedule 1.8 Treatment of Stock Options/Severance/Incentive
Compensation
Schedule 3.1(a) Organization and Authority
Schedule 3.1(b)(1) Capital Structure
Schedule 3.1(c) Summagraphics Corporation-Corporate Authority
Schedule 3.1(d) Summagraphics Corporation-Subsidiaries
Schedule 3.1(e) Summagraphics Corporation-Financial Statements
Schedule 3.1(f) Summagraphics Corporation-Absence of Undisclosed
Liabilities
Schedule 3.1(i)(1)(v) Summagraphics Corporation-Property (Encumbrances)
Schedule 3.1(j) Summagraphics Corporation-Litigation
Schedule 3.1(k) Summagraphics Corporation-Contracts and Commitments
Schedule 3.1(m) Summagraphics Corporation-Employee Benefit Plans
Schedule 3.1(m)(vii) Summagraphics Corporation-No Violations of Plan
Schedule 3.1(n)(ii) Summagraphics Corporation-Violations
Schedule 3.1(n)(iii) Summagraphics Corporation-Environmental Proceedings
Schedule 3.1(n)(v) Summagraphics Corporation-Environmental Permits
Schedule 3.1(n)(vi) Summagraphics Corporation-Environmental Spills
Schedule 3.1(n)(vii) Hazardous Waste Handling
Schedule 3.1(o) Summagraphics Corporation-Employees; Directors and
Officers
Schedule 3.1(p) Summagraphics Corporation-Compliance With Laws
Schedule 3.1(s) Summagraphics Corporation-Product and Service Warranty
Schedule 3.1(u) Summagraphics Corporation-Labor Disputes
Schedule 3.1(v) Summagraphics Corporation-Technology
Schedule 3.1(w) Summagraphics Corporation-Opinion of Financial Advisor
Schedule 3.1(aa) Summagraphics Corporation-Banks and Financial
Institutions
Schedule 3.2(d) CalComp Inc.-Subsidiaries
Schedule 3.2(e) CalComp Inc.-Financial Statements
Schedule 3.2(j) CalComp Inc.-Environmental Matters
Schedule 3.2(k) CalComp Inc.-Compliance With Laws
Schedule 3.2(l) CalComp Inc.-Technology
Schedule 4.2 Forbearance
The Registrant will furnish supplementally to the Commission upon its request
copies of the above schedules, which are omitted from this filing.
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Exhibit A Secured Convertible Debenture
Exhibit B Intercompany Services Agreement
Exhibit C Cash Management Agreement
Exhibit D Tax Sharing Agreement
Exhibit E Revolving Credit Agreement
Exhibit F Registration Rights Agreement
Exhibit G Corporate Agreement
Exhibit H Fourth Amended and Restated Articles of Incorporation
Exhibit I Stock Option Plan
The above exhibits are attached to this Agreement.
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EXHIBIT 2
PLAN OF REORGANIZATION
and
AGREEMENT FOR THE EXCHANGE OF STOCK OF
CALCOMP INC. FOR STOCK OF SUMMAGRAPHICS CORPORATION
by and among
LOCKHEED MARTIN CORPORATION,
a Maryland corporation,
CALCOMP INC.,
a California corporation
and
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
dated as of March 19, 1996
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Table of Contents
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ARTICLE I
THE EXCHANGE
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1.1 The Exchange.................................... 1
1.2 Closing......................................... 2
1.3 Determination of Summagraphics Exchange Shares.. 2
1.4 Employee Benefits............................... 3
1.5 Board of Directors.............................. 3
1.6 Officers........................................ 4
1.7 Name Change..................................... 4
1.8 Treatment of Stock Options/Severance/Incentive
Compensation................................... 4
1.9 Certain Definitions............................. 4
ARTICLE II
CERTAIN EVENTS PRECEDING CLOSING
2.1 Proxy Statement................................. 5
2.2 Interim Financing............................... 6
2.3 Transfer of AGT Holdings, Inc. Stock............ 6
2.4 Additional Filings.............................. 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Summagraphics. 6
(a) ORGANIZATION AND AUTHORITY.................. 6
(b) CAPITAL STRUCTURE........................... 7
(c) AUTHORITY................................... 7
(d) SUBSIDIARIES................................ 8
(e) FINANCIAL STATEMENTS........................ 8
(f) ABSENCE OF UNDISCLOSED LIABILITIES.......... 8
(g) NO MATERIAL ADVERSE CHANGES................. 9
(h) TAX MATTERS................................. 9
(i) PROPERTY.................................... 10
(j) LITIGATION.................................. 10
(k) CONTRACTS AND COMMITMENTS................... 10
(l) ACCURACY OF INFORMATION SUPPLIED............ 11
(m) SUMMAGRAPHICS' EMPLOYEE BENEFIT PLANS....... 12
(n) ENVIRONMENTAL MATTERS....................... 14
(o) EMPLOYEES; DIRECTORS AND OFFICERS........... 16
(p) COMPLIANCE WITH LAWS........................ 16
(q) INSURANCE................................... 17
(r) APPLICABLE TAKEOVER LAWS.................... 17
(i)
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(s) PRODUCT AND SERVICE WARRANTY............... 17
(t) SUMMAGRAPHICS COMMON STOCK TO BE ISSUED.... 18
(u) LABOR DISPUTES............................. 18
(v) TECHNOLOGY................................. 18
(w) OPINION OF FINANCIAL ADVISOR............... 19
(x) BOOKS AND RECORDS.......................... 19
(y) FULL DISCLOSURE............................ 19
(z) INVESTMENT REPRESENTATION.................. 20
(aa)BANKS AND FINANCIAL INSTITUTIONS........... 20
(bb)BACKLOG.................................... 20
3.2 Representations and Warranties of CalComp...... 20
(a) ORGANIZATION, STANDING AND POWER........... 20
(b) CAPITAL STRUCTURE.......................... 21
(c) AUTHORITY.................................. 21
(d) SUBSIDIARIES............................... 21
(e) FINANCIAL STATEMENTS....................... 22
(f) ABSENCE OF UNDISCLOSED LIABILITY........... 22
(g) NO MATERIAL ADVERSE CHANGE................. 22
(h) LITIGATION................................. 23
(i) ACCURACY OF INFORMATION SUPPLIED........... 23
(j) ENVIRONMENTAL MATTERS...................... 23
(k) COMPLIANCE WITH LAWS....................... 24
(l) TECHNOLOGY................................. 24
3.3 Representations and Warranties of Lockheed
Martin........................................ 25
(a) ORGANIZATION AND STANDING.................. 25
(b) AUTHORITY.................................. 25
(c) LITIGATION................................. 25
(d) OWNERSHIP OF CALCOMP EXCHANGE SHARES....... 26
(e) INVESTMENT REPRESENTATION.................. 26
(f) TAX MATTERS................................ 26
(g) ACCURACY OF INFORMATION SUPPLIED........... 27
ARTICLE IV
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
4.1 Conduct of the Business of Summagraphics and
its Subsidiaries' Prior to the Closing....... 27
4.2 Forbearance................................... 27
4.3 No Solicitation............................... 29
4.4 Termination Fee............................... 30
4.5 Compliance with Tax-Free Provisions........... 30
4.6 Access and Information; Cooperation........... 30
4.7 Confidentiality............................... 31
4.8 Public Announcements.......................... 32
4.9 Consents...................................... 32
4.10 Meeting of Summagraphics Stockholders......... 32
(ii)
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ARTICLE V
ADDITIONAL COVENANTS OF SUMMAGRAPHICS
5.1 Issuance of Stock.............................. 33
5.2 Intercompany Agreements........................ 33
5.3 Amendment and Restatement of Articles of
Incorporation................................. 33
5.4 Preparation of Proxy Statement................. 34
5.5 Additional Listing Application................. 34
5.6 Filing of Form 10-C............................ 34
5.7 Hart-Scott-Rodino.............................. 34
5.8 Stock Option Plan.............................. 34
ARTICLE VI
COVENANTS OF CALCOMP AND LOCKHEED MARTIN
6.1 Transfer of CalComp Exchange Shares............ 34
6.2 Intercompany Agreements........................ 34
6.3 Preparation of Proxy Statement................. 34
6.4 Hart-Scott-Rodino.............................. 34
6.5 CalComp Financial Statements................... 35
6.6 Pre-Closing Assistance......................... 35
ARTICLE VII
CONDITIONS PRECEDENT TO CALCOMP'S
AND LOCKHEED MARTIN'S OBLIGATIONS HEREUNDER
7.1 Representations, Warranties, Covenants......... 35
7.2 No Adverse Canges.............................. 36
7.3 Due Diligence Audit of Summagraphics and its
Subsidiaries.................................. 36
7.4 Legal Opinion.................................. 36
7.5 No Adverse Proceedings......................... 36
7.6 Intercompany Agreements........................ 36
7.7 Approval by Stockholders of the Agreement, the
Stock Option Plan and Amendment and
Restatement of Summagraphics'
Articles of Incorporation..................... 36
7.8 Additional Listing Application................. 37
7.9 Secretary's Certificate........................ 37
7.10 Compliance With Laws/Government Approvals...... 37
7.11 Backlog........................................ 37
ARTICLE VIII
CONDITIONS PRECEDENT TO SUMMAGRAPHICS' OBLIGATIONS HEREUNDER
8.1 Representations, Warranties, Covenants......... 37
8.2 No Adverse Proceedings or Events............... 38
(iii)
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8.3 No Adverse Changes............................. 38
8.4 Legal Opinion.................................. 38
8.5 Fairness Opinion............................... 38
8.6 Stockholder Approval........................... 38
8.7 Secretary's Certificate........................ 38
8.8 Intercompany Agreements........................ 38
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 Update Disclosure; Breaches.................... 38
9.2 Tax Returns.................................... 39
9.3 Best Efforts and Further Assurances............ 39
9.4 Payoff of Outstanding Indebtedness............. 39
9.5 Directors and Officers Liability Insurance..... 39
9.6 CalComp Taxes.................................. 40
ARTICLE X
TERMINATION, AMENDMENT, SURVIVAL OF
REPRESENTATIONS AND MISCELLANEOUS
10.1 Amendment...................................... 40
10.2 Termination.................................... 40
10.3 Survival of Representations and Covenants...... 42
10.4 Expenses....................................... 42
10.5 Notices........................................ 42
10.6 Entire Agreement in Effect..................... 43
10.7 General........................................ 43
10.8 Governing Law.................................. 43
10.9 Counterparts................................... 43
(iv)
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List of Schedules and Exhibits
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Schedule 1.3 Determination of Exchange Shares
Schedule 1.8 Treatment of Stock
Options/Severance/Incentive Compensation
Schedule 3.1(a) Organization and Authority
Schedule 3.1(b)(1) Capital Structure
Schedule 3.1(c) Summagraphics Corporation - Corporate
Authority
Schedule 3.1(d) Summagraphics Corporation - Subsidiaries
Schedule 3.1(e) Summagraphics Corporation - Financial
Statements
Schedule 3.1(f) Summagraphics Corporation - Absence of
Undisclosed Liabilities
Schedule 3.1(i)(1)(v) Summagraphics Corporation - Property
(Encumbrances)
Schedule 3.1(j) Summagraphics Corporation - Litigation
Schedule 3.1(k) Summagraphics Corporation - Contracts and
Commitments
Schedule 3.1(m) Summagraphics Corporation - Employee
Benefit Plans
Schedule 3.1(m)(vii) Summagraphics Corporation - No Violations
of Plan
Schedule 3.1(n)(ii) Summagraphics Corporation - Violations
Schedule 3.1(n)(iii) Summagraphics Corporation - Environmental
Proceedings
Schedule 3.1(n)(v) Summagraphics Corporation - Environmental
Permits
Schedule 3.1(n)(vi) Summagraphics Corporation - Environmental
Spills
Schedule 3.1(n)(vii) Hazardous Waste Handling
Schedule 3.1(o) Summagraphics Corporation - Employees;
Directors and Officers
Schedule 3.1(p) Summagraphics Corporation - Compliance
With Laws
Schedule 3.1(s) Summagraphics Corporation - Product and
Service Warranty
Schedule 3.1(u) Summagraphics Corporation - Labor Disputes
Schedule 3.1(v) Summagraphics Corporation -Technology
Schedule 3.1(w) Summagraphics Corporation - Opinion of
Financial Advisor
Schedule 3.1(aa) Summagraphics Corporation - Banks and
Financial Institutions
Schedule 3.2(d) CalComp Inc. - Subsidiaries
Schedule 3.2(e) CalComp Inc. - Financial Statements
Schedule 3.2(j) CalComp Inc. - Environmental Matters
Schedule 3.2(k) CalComp Inc. - Compliance With Laws
Schedule 3.2(l) CalComp Inc. - Technology
Schedule 4.2 Forbearance
(v)
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Exhibit A Secured Convertible Debenture
Exhibit B Intercompany Services Agreement
Exhibit C Cash Management Agreement
Exhibit D Tax Sharing Agreement
Exhibit E Revolving Credit Agreement
Exhibit F Registration Rights Agreement
Exhibit G Corporate Agreement
Exhibit H Fourth Amended and Restated Articles of
Incorporation
Exhibit I Stock Option Plan
(vi)
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PLAN OF REORGANIZATION AND AGREEMENT FOR THE EXCHANGE OF STOCK
OF CALCOMP INC. FOR STOCK OF SUMMAGRAPHICS CORPORATION
THIS PLAN OF REORGANIZATION AND AGREEMENT FOR THE EXCHANGE OF STOCK OF
CALCOMP INC. FOR STOCK OF SUMMAGRAPHICS CORPORATION (this "Agreement"), dated
this 19th day of March, 1996, is entered into by and among LOCKHEED MARTIN
CORPORATION, a Maryland corporation ("Lockheed Martin"), CALCOMP INC., a
California corporation ("CalComp") and SUMMAGRAPHICS CORPORATION, a Delaware
corporation ("Summagraphics"). Lockheed Martin, CalComp and Summagraphics
individually are being referred to herein as a "Party" and collectively are
referred to herein as "Parties."
W I T N E S E T H:
- - - - - - - - -
WHEREAS, CalComp has an authorized capital of 1,000 shares of Common
Stock of which 1,000 shares are issued and outstanding as of the date of this
Agreement, all of which are owned by Lockheed Martin;
WHEREAS, Summagraphics has an authorized capital of 20,000,000 shares
of Common Stock, par value $.01 per share, of which 4,623,735 shares are issued
and outstanding as of the date of this Agreement, and 5,000,000 shares of
Preferred Stock, par value $.01 per share, none of which are outstanding as of
the date of this Agreement;
WHEREAS, the boards of directors of each of Lockheed Martin, CalComp
and Summagraphics deem it advisable and in the best interests of the Parties and
their stockholders that Lockheed Martin exchange all of the issued and
outstanding capital stock of CalComp for a number of newly issued shares of
Common Stock of Summagraphics (the "Exchange"), as determined in accordance with
the provisions of Section 1.3 below;
WHEREAS, the Board of Directors of Summagraphics has approved (i) the
transactions contemplated by this Agreement, (ii) the Fourth Amended and
Restated Articles of Incorporation (as defined in Section 5.3) and (iii) the
Stock Option Plan (as defined in Section 5.8) and recommended their submission
to the stockholders of Summagraphics for approval;
WHEREAS, the Parties desire the Exchange to qualify as a
"reorganization" under the provisions of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Parties desire to provide for certain undertakings,
conditions, warranties, representations and covenants in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
Parties agree as follows:
ARTICLE I
THE EXCHANGE
1.1 The Exchange. Upon performance of all covenants and obligations
------------
of the Parties contained in this Agreement and upon the
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terms and conditions contained herein, on the Closing Date (as hereinafter
defined) Lockheed Martin agrees to transfer and deliver, or cause to be
transferred and delivered, to Summagraphics all of the issued and outstanding
CalComp Common Stock (the "CalComp Exchange Shares"), and Summagraphics agrees
to issue and deliver to Lockheed Martin (or a direct or indirect wholly owned
subsidiary of Lockheed Martin) such number of shares of Summagraphics Common
Stock as is determined in accordance with the provisions of Section 1.3 below
(the "Summagraphics Exchange Shares"). As a result of the Exchange,
Summagraphics shall own 100% of the issued and outstanding capital stock of
CalComp and Lockheed Martin (or a direct or indirect wholly owned subsidiary)
shall own in the aggregate 89.7% of all of the issued and outstanding shares of
Summagraphics Common Stock outstanding immediately following the Exchange (on a
Fully Diluted Basis).
1.2 Closing. The consummation of the transactions contemplated by
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this Agreement (the "Closing") will take place at such time on a date not prior
to May 8, 1996 (the "Closing Date") as shall be mutually agreed to by Lockheed
Martin and Summagraphics but in any case shall be as soon as reasonably
practicable on or after the date of Summagraphics' special meeting of
stockholders called to consider the Exchange. In no event shall the Closing
Date be later than May 31, 1996, provided that if Securities and Exchange
Commission clearance of the Proxy Statement (as hereinafter defined) occurs
after April 26, 1996, the time for the Closing will be extended by a number of
days equal to the number of days after April 26, 1996 that such clearance is
received, but in no event beyond June 15, 1996.
1.3 Determination of Summagraphics Exchange Shares. The number of
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Summagraphics Exchange Shares delivered to Lockheed Martin shall equal a number
of shares of Summagraphics Common Stock determined so that immediately after the
Exchange Lockheed Martin owns 89.7% of all of the issued and outstanding capital
stock of Summagraphics determined on a Fully Diluted Basis. For purposes of
this Agreement, "Fully Diluted Basis" shall mean a basis whereby the aggregate
number of shares of Common Stock for such determination includes (i) all
Summagraphics Common Stock then issued and outstanding, (ii) all Summagraphics
Common Stock that would be issued and outstanding upon the exercise, conversion
or exchange of all outstanding warrants, options or other rights to subscribe
for, purchase or otherwise acquire any shares of Summagraphics Common Stock (or
rights to acquire any such warrants, options or other rights), regardless of
whether such warrants, options or other rights are then exercisable, convertible
or exchangeable, (iii) all Summagraphics Common Stock which would be outstanding
upon the exercise, conversion or exchange of all outstanding evidences of
indebtedness, shares of capital stock or other securities (or rights to acquire
any of the foregoing) which are or may be exercisable, convertible or
exchangeable into shares of Common Stock, regardless of whether such evidences
of indebtedness, shares of stock or other securities are then exercisable,
convertible or exchangeable, and (iv) the Summagraphics Exchange Shares issuable
upon such determination but excluding Summagraphics Common Stock issuable upon
conversion of the Secured Convertible Debenture. For purposes of
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subsections (ii) and (iii) above, the number of shares of Summagraphics Common
Stock issuable pursuant to options, warrants and rights of conversion that will
be deemed to be outstanding will be determined using the "Treasury Stock Method"
of accounting as defined in APB Opinion 15 based on an average of the closing
prices, as reported in the Wall Street Journal -- NASDAQ National Market Issues,
for the five days preceding Closing. An example of the calculation provided
above is attached as Schedule 1.3.
1.4 Employee Benefits. Employees of CalComp and its subsidiaries
-----------------
(each subsidiary of CalComp is hereinafter referred to as a "CalComp Subsidiary"
or collectively as the "CalComp Subsidiaries") immediately prior to the Exchange
will be eligible to continue to participate in all of the employee benefit
programs of CalComp in which such employees were eligible to participate on the
same terms and conditions as were previously applicable; provided, however, that
they continue to meet the eligibility requirements of those programs. Employees
of Summagraphics and its subsidiaries (each subsidiary of Summagraphics is
hereinafter referred to as a "Summagraphics Subsidiary" or collectively as the
"Summagraphics Subsidiaries") who are employees of Summagraphics or a
Summagraphics Subsidiary immediately prior to the Exchange and who are not made
eligible to participate in the employee benefit programs of CalComp following
the Exchange will be eligible to continue to participate in all of the employee
benefit plans of Summagraphics in which such employees were eligible to
participate prior to the Exchange on the same terms and conditions as were
previously applicable; provided, however, that they continue to meet the
eligibility requirements of those programs. In the event that the Parties shall
determine to extend eligibility to participate in the employee benefit programs
of CalComp to employees who are employees of Summagraphics immediately prior to
the Exchange, (i) service with Summagraphics and Summagraphics Subsidiaries
shall be considered service with CalComp for purposes of determining eligibility
and vesting under all such CalComp employee benefit programs and (ii) medical
plans of CalComp will offer Summagraphics' employees full coverage for pre-
existing conditions and credit for deductibles and co-insurance payments to date
during the plan year. Notwithstanding the foregoing, nothing contained in this
Section 1.4 shall be deemed to convey any right or benefit upon any employee of
CalComp or CalComp Subsidiaries or Summagraphics or Summagraphics Subsidiaries
nor shall any such employee be entitled to enforce any provision of this Section
1.4. Nothing contained in this Section 1.4 shall be deemed to prohibit
Summagraphics or CalComp or any of their respective Subsidiaries from
terminating any employment relationship or any employee benefit program or
changing the terms or conditions of employment or any employee benefit program
at any time following the Closing.
1.5 Board of Directors of Summagraphics. At the Closing,
-----------------------------------
Summagraphics shall deliver to Lockheed Martin letters effecting the resignation
as of Closing of each of the then current directors of Summagraphics whose
resignation is requested in writing by Lockheed Martin prior to Closing and
Lockheed Martin shall appoint new directors by written consent. Lockheed Martin
shall provide information with respect to the composition of the board of
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directors which it will appoint for use in connection with the Proxy Statement
(as hereinafter defined).
1.6 Officers of Summagraphics. At the Closing, Summagraphics shall
-------------------------
deliver to Lockheed Martin letters effecting the resignation as of Closing of
each of the then current officers of Summagraphics whose resignation is
requested in writing by Lockheed Martin prior to Closing and the new Board of
Directors of Summagraphics to be appointed by written consent of Lockheed Martin
under Section 1.5 above shall appoint new officers by written consent.
Notwithstanding such resignations, it is understood and agreed that the officers
are not waiving any rights they otherwise may have under employment and
severance arrangements existing as of February 1, 1996 or any additional
arrangements approved by Lockheed Martin and CalComp.
1.7 Name Change. Effective upon the Closing, Summagraphics shall
-----------
change its name to CalComp Inc. and CalComp shall change its name to CalComp
Technologies, Inc.
1.8 Treatment of Stock Options/Severance/Incentive Compensation. The
-----------------------------------------------------------
manner in which currently outstanding employee stock options, employee severance
payments and employee incentive compensation will be treated is as reflected on
the letter attached to this Agreement as Schedule 1.8.
1.9 Certain Definitions. As used in this
-------------------
Agreement, the following terms shall have the meanings set forth below:
(a) "material" means material to Summagraphics or CalComp (as the case
may be) and its respective subsidiaries, taken as a whole, and determined in
light of the facts and circumstances of the matter in question; provided, that
any specific monetary amount stated in this Agreement with respect to
materiality shall determine materiality in that instance.
(b) "Material Adverse Effect," with respect to a Party, means an
event, change or occurrence which, individually or in the aggregate, (i) is
reasonably likely to result in a reduction in the consolidated stockholders'
equity of such Party and its subsidiaries, taken as a whole, by the amount equal
to or greater than $2,000,000 for Summagraphics and $15,000,000 for CalComp or
(ii) which has a material adverse impact on the ability of such Party to
consummate the Exchange contemplated by this Agreement, provided that in
determining whether a Material Adverse Effect has occurred under either (i) or
(ii), the effect of foreign currency translations recorded in the Parties equity
in accordance with SFAS 52 for the applicable period shall be disregarded and
the adverse impact of changes in laws or regulations or accounting rules of
general applicability or interpretations thereof shall not be included.
(c) "person" includes an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization.
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(d) "to the knowledge of" or "to the best of the knowledge of"
Summagraphics or CalComp or similar phrases includes the actual knowledge of the
current directors, the current executive officers (including the knowledge of
the chief executive officer and chief financial officer (or person performing
those functions) after reasonable inquiry) and the general counsel of
Summagraphics or CalComp, as the case may be. For purposes of determining
whether a person has actual knowledge of any fact, event, change or occurrence,
such person shall be deemed to have the knowledge relating to such fact, event,
change or occurrence which would have been gained had such person undertaken a
reasonable inquiry in respect thereto.
(e) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns relating to Taxes.
(f) "Taxes" shall mean all Federal, state, local and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding) including, but not limited to, income, excise, property, sales,
use, gains, transfer, franchise, payroll, value-added, withholding, employment,
license fees, customs, duties, and other taxes, assessments and charges imposed
by any governmental authority, including any interest, penalties or other
additions to tax with respect to such amounts.
ARTICLE II
CERTAIN EVENTS PRECEDING CLOSING
In addition to the conditions precedent set forth in ARTICLES VII and
VIII, the following events shall occur:
2.1 Proxy Statement. As promptly as practicable after the execution
---------------
and delivery of this Agreement, and in any event on or prior to March 25, 1996,
the Parties shall prepare, and Summagraphics shall file with the Securities and
Exchange Commission (the "SEC"), preliminary proxy materials (in form and
content reasonably satisfactory to Lockheed Martin and CalComp) relating to the
approval of the Fourth Amended and Restated Articles of Incorporation (as
defined in Section 5.3), the Stock Option Plan (as defined in Section 5.8) and
the transactions contemplated hereby by the stockholders of Summagraphics and,
as promptly as practicable following receipt of SEC comments thereon, if any,
Summagraphics shall file definitive proxy materials (the "Proxy Statement") with
the SEC, which comply in form and substance with applicable SEC requirements,
taking into account such comments and mail the Proxy Statement to its
shareholders. The Proxy Statement shall include a recommendation of the Board
of Directors of Summagraphics in favor of the Fourth Amended and Restated
Articles of Incorporation, the Stock Option Plan and the transactions
contemplated by this Agreement which shall not be changed unless the Board of
Directors of Summagraphics, upon receipt of an unsolicited written proposal or
offer which qualifies as an Acquisition Proposal within the meaning of Section
4.4 hereof or upon delivery of a notice by Summagraphics of termination of this
Agreement in accordance with Section 10.2(b) based upon a
5
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material breach by Lockheed Martin of a representation, warranty, covenant or
agreement contained herein, shall have received an opinion of counsel from
Hughes & Luce, L.P. to the effect that to include such recommendation or not
withdraw such recommendation if it were previously included is reasonably likely
to result in a breach of the Board's fiduciary duty under applicable law.
Lockheed Martin and CalComp shall furnish all information concerning CalComp and
Lockheed Martin as may be reasonably requested by Summagraphics in connection
with the actions contemplated by this Section 2.1.
2.2 Interim Financing. Simultaneously with the execution and
-----------------
delivery of this Agreement, Summagraphics and Lockheed Martin shall execute and
deliver the 9-1/4% Secured Convertible Debenture in the form attached hereto as
Exhibit A (the "Secured Convertible Debenture") pursuant to which Lockheed
Martin will make available borrowings and other forms of credit support in an
aggregate principal amount not to exceed $2,500,000 to Summagraphics for the
period between the execution and delivery of this Agreement and the Closing.
2.3 Transfer of AGT Holdings, Inc. Stock. As soon as practicable
------------------------------------
following May 8, 1996 and prior to Closing, CalComp shall distribute all of the
issued and outstanding capital stock of AGT Holdings, Inc., a California
corporation ("AGT") and wholly owned subsidiary of CalComp, to Lockheed Martin.
The Parties acknowledge and agree that Summagraphics shall obtain no interest in
the shares of AGT (and, consequently, the shares of Access Graphics Inc. owned
by AGT) as a result of the transactions contemplated by this Agreement.
2.4 Additional Filings. As promptly as practicable after the
------------------
execution and delivery of this Agreement, each of the Parties shall prepare and
file, or cause to be filed, any and all filings necessary or appropriate for the
consummation of the transactions contemplated by this Agreement, including
without limitation, any and all foreign filings and any and all filings under
the Hart Scott Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), as
contemplated by Sections 5.7 and 6.4 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Summagraphics. In order to
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induce Lockheed Martin and CalComp to enter into this Agreement and to
effectuate the transactions contemplated hereby, Summagraphics represents and
warrants to Lockheed Martin the following:
(a) ORGANIZATION AND AUTHORITY. Summagraphics is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Each of the Summagraphics Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated. Each of Summagraphics and the Summagraphics
Subsidiaries (as defined in Section 3.1(d)) has all requisite power
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and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Attached hereto as Schedule 3.1(a) for each of
Summagraphics and each Summagraphics Subsidiary are complete and correct copies
of (1) their charters (or other organizational documents) and all amendments
thereto to the date hereof and (2) their bylaws (or other similar governing
documents) as amended to the date hereof.
(b) CAPITAL STRUCTURE.
(1) As of the date of this Agreement, the authorized capital stock of
Summagraphics consists of 20,000,000 shares of Common Stock, $.01 par value per
share, and 5,000,000 shares of Summagraphics Preferred Stock, $.01 par value per
share. As of the date hereof, 4,623,735 shares of Summagraphics Common Stock
are outstanding, all of which are validly issued, fully paid and nonassessable.
Summagraphics has no outstanding Preferred Stock. As of the date hereof,
Summagraphics has outstanding options and warrants to purchase Summagraphics
Common Stock as set forth on Schedule 3.1(b)(1).
(2) Summagraphics has no commitments to issue or sell any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for such shares (other than those stock options and warrants listed
on Schedule 3.1(b)(1)), or giving any person the right to subscribe for or
acquire any such shares and no securities or obligations representing such
rights are outstanding.
(3) Since December 31, 1994, Summagraphics has not adjusted or amended
the exercise price of any stock option previously awarded to any officer of
Summagraphics, whether through amendment, cancellation or replacement grants, or
any other means.
(4) Summagraphics has not issued any stock appreciation right or any
similar right entitling any person to any payment based on the value of
Summagraphics capital stock.
(c) AUTHORITY. The execution of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by the Board
of Directors of Summagraphics. Each of the Fourth Amended and Restated Articles
of Incorporation (as defined in Section 5.3) and the Stock Option Plan (as
defined in Section 5.8) have been approved by the Board of Directors of
Summagraphics with the recommendation that, together with the transactions
contemplated by this Agreement, they be submitted to the shareholders of
Summagraphics for approval. This Agreement is the valid and binding obligation
of Summagraphics and no further corporate authorization on the part of
Summagraphics is necessary to consummate the transactions contemplated hereby or
thereby except the approval by the stockholders of Summagraphics of (i) the
Fourth Amended and Restated Articles of Incorporation pursuant to applicable
law, (ii) the Stock Option Plan and (iii) the consummation of the Exchange
pursuant to the requirements of the National Association of Securities Dealers.
Except as otherwise set forth on Schedule 3.1(c), neither the execution and
delivery of this Agreement, the consummation in accordance with the terms of
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this Agreement of the transactions contemplated hereby nor compliance by
Summagraphics or any Summagraphics Subsidiary with any provision hereof or
thereof will (i) conflict with or result in a breach of any provision of their
charters or bylaws (or other governing documents) or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license, agreement
or other instrument or obligation to which Summagraphics or any Summagraphics
Subsidiary is a party or by which Summagraphics or any Summagraphics Subsidiary
or any of their respective properties or assets may be bound, or (ii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Summagraphics or any Summagraphics Subsidiary or any of their respective
properties or assets. Except as otherwise disclosed on Schedule 3.1(c), no
consent is required in connection with the execution and delivery by
Summagraphics of this Agreement or the consummation of the transactions
contemplated hereby.
(d) SUBSIDIARIES. Except as set forth on Schedule 3.1(d),
Summagraphics owns all the issued and outstanding shares of capital stock of
each of Summagraphics Europe N.V., Summagraphics Belgium, N.V., Summagraphics
Ltd., Summagraphics GmbH and CAD Warehouse, Inc. (collectively, the
"Summagraphics Subsidiaries"). Except as set forth on Schedule 3.1(d), other
than the Summagraphics Subsidiaries, neither Summagraphics nor any Summagraphics
Subsidiary owns any shares of capital stock of any corporation or equity
interests in any other person, nor does Summagraphics or any Summagraphics
Subsidiary have or will have on the Closing Date any other subsidiaries.
(e) FINANCIAL STATEMENTS. Attached hereto as Schedule 3.1(e) are
Summagraphics' Annual Report to Stockholders and Form 10-K for the fiscal year
ended May 31, 1995 and Summagraphics' Quarterly Report on Form 10-Q for the
period ended November 30, 1995 which includes (1) the Unaudited Consolidated
Balance Sheet as of November 30, 1995; (2) the Unaudited Consolidated Statements
of Changes in Stockholders' Equity for the six months ended November 30, 1995
and 1994; (3) the Unaudited Consolidated Statement of Income for the six months
ended November 30, 1995 and 1994 and (4) the Unaudited Consolidated Statements
of Cash Flow for the six months ended November 30, 1995 and 1994 together with
the Notes to those Consolidated Statements (the "Summagraphics Financial
Statements"). Subject to the absence of certain footnote information in the
unaudited statements, the Summagraphics Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated or as more particularly set
forth therein. The Unaudited Consolidated Balance Sheets included as a part of
the Summagraphics Financial Statements present fairly as of their respective
dates the consolidated financial position and assets and liabilities of
Summagraphics. The Unaudited Consolidated Statements of Income present fairly
the consolidated results of operations of Summagraphics for the periods
indicated.
(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected or reserved against in the Summagraphics Financial
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Statements or as disclosed on Schedule 3.1(f), neither Summagraphics nor any
Summagraphics Subsidiary has (i) any liabilities or obligations of any nature or
(ii) any liabilities in the nature of employment contracts with, or agreements
to pay bonuses to any of its directors, officers or employees, other than
liabilities or obligations incurred in the ordinary course of business or
specifically identified in schedules to this Agreement.
(g) NO MATERIAL ADVERSE CHANGES. Since November 30, 1995, there has
been and as of the Closing there will be no material adverse change in the
assets or liabilities or in the business or condition (financial or otherwise)
of Summagraphics or any Summagraphics Subsidiary.
(h) TAX MATTERS.
(1) Summagraphics and each of the Summagraphics Subsidiaries have
filed (or have caused to be filed on their behalf), or will file or cause to be
filed, all Tax Returns required to be filed prior to the Closing, and have paid
all Taxes required to be paid in respect of the periods covered by such Tax
Returns or, where payment of such Taxes is not yet due, have established or will
establish prior to the Closing, an adequate reserve for the payment of all Taxes
which are accruable prior to the Closing. Summagraphics and the Summagraphics
Subsidiaries will not have any material liability for any such Taxes in excess
of the amounts so paid or the reserve so established and Summagraphics and the
Summagraphics Subsidiaries are not delinquent in the payment of any material
assessment of Taxes. No material deficiencies for any assessment of Taxes have
been proposed, asserted or assessed against Summagraphics or the Summagraphics
Subsidiaries which would not be covered by existing reserves and, as of the date
of this Agreement, no requests for waivers of the time to assess any such Taxes
are pending. To the best of its knowledge, Summagraphics and each of the
Summagraphics Subsidiaries, has complied with all IRS requirements regarding the
certification of taxpayer identification numbers of customers and backup
withholding.
(2) There are no liens for any Taxes upon the assets of Summagraphics
or any Summagraphics Subsidiary, other than statutory liens for Taxes not yet
due and payable.
(3) Neither Summagraphics nor any Summagraphics Subsidiary is a party
to, is bound by, or has any obligation under, a tax sharing agreement or
arrangement for the allocation, apportionment, sharing, indemnification, or
payment of Taxes.
(4) Neither Summagraphics nor any Summagraphics Subsidiary is a party
to any agreement, contract or other arrangement that would result, separately or
in the aggregate, in the requirement to pay any "excess parachute payments"
within the meaning of Section 280G of the Code, or any gross-up in connection
with such an agreement, contract or arrangement.
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(i) PROPERTY.
(1) Summagraphics and the Summagraphics Subsidiaries own all operating
real properties reflected as owned by them in the Summagraphics Financial
Statements free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever (collectively, "Encumbrances"), except (i)
liens for current taxes not yet due and payable, (ii) mortgages, deeds of trust
or other Encumbrances reflected in the Summagraphics Financial Statements, (iii)
such imperfections of title, easements and other Encumbrances as do not detract
from or interfere with the present use of such operating real properties subject
thereto or affected thereby, (iv) Encumbrances incurred in the ordinary course
of business after the date of this Agreement with the written consent of
Lockheed Martin, and (v) Encumbrances disclosed on Schedule 3.1(i)(1)(v)
attached hereto.
(2) As of the date of this Agreement, substantially all tangible real
or personal property and assets material to the business operation or financial
condition of Summagraphics and the Summagraphics Subsidiaries on a consolidated
basis which are owned by them or in which any of them has an interest (other
than a security interest) are in good operating condition and repair, ordinary
wear and tear excepted.
(3) All leases material to Summagraphics and the Summagraphics
Subsidiaries on a consolidated basis pursuant to which Summagraphics and the
Summagraphics Subsidiaries lease real property are valid and effective in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws, and there is not, under any such
leases, any existing default by Summagraphics or the Summagraphics Subsidiaries
or any event which with notice or lapse of time or both would constitute such a
material default.
(j) LITIGATION. Other than as set forth in Schedule 3.1(j), neither
Summagraphics nor any of the Summagraphics Subsidiaries is a party to any
pending or, to the best of Summagraphics' knowledge, threatened claim, action,
suit, investigation or proceeding, nor is Summagraphics or any of the
Summagraphics Subsidiaries subject to any order, judgment or decree. Except as
set forth on Schedule 3.1(j), neither Summagraphics nor any of the Summagraphics
Subsidiaries is subject to any agreement, memorandum of understanding or similar
arrangement with any regulatory authority restricting its operations or
requiring that certain actions be taken, and, neither Summagraphics nor any of
the Summagraphics Subsidiaries has received any notification from any
governmental or regulatory authority, or the staff thereof, asserting that it is
not in compliance with any statutes, regulations or ordinances which such
authority enforces.
(k) CONTRACTS AND COMMITMENTS. Except as reflected in the
Summagraphics Financial Statements or as set forth on Schedule 3.1(k), neither
Summagraphics nor the Summagraphics Subsidiaries has as of the date hereof and,
except to the extent consented to in writing by Lockheed Martin, neither
Summagraphics
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nor any of the Summagraphics Subsidiaries will have on the Closing Date:
(1) any bonus, stock option or stock appreciation right or similar
plans, deferred compensation plans, profit-sharing, retirement arrangements or
other fringe benefit plans (other than those terminable at will by Summagraphics
or the Summagraphics Subsidiary) nor any outstanding calls, commitments or
agreements of any character requiring the issuance of shares of its capital
stock;
(2) any debt obligations for borrowed money (including guaranties or
agreements to acquire such debt obligations of others);
(3) any outstanding loans to any person;
(4) any agreement for services or for the purchase or disposition of
any equipment or supplies except those incurred in the ordinary course of
business;
(5) any lease of personal property with annual rent aggregating
$50,000 or more;
(6) any agreement or contract with any third party for the provision
of services to Summagraphics or the Summagraphics Subsidiaries which involves
payment by Summagraphics or the Summagraphics Subsidiaries of more than $10,000
per month and which (i) has more than six months to run from the date of this
Agreement or (ii) may not be canceled by Summagraphics or the Summagraphics
Subsidiaries as appropriate on 180 days notice or less without penalty; or
(7) any outstanding loans to or loan participations with its officers,
directors, significant stockholders (collectively "Insiders"), or to firms,
partnerships or corporations in which any Insiders are partners, executive
officers, directors or significant stockholders or to any Affiliate of an
Insider or any contract, arrangement or understanding with any Insider or any
Affiliate of any Insider requiring Summagraphics or any Summagraphics
Subsidiaries to perform services or make payments in the future.
(l) ACCURACY OF INFORMATION SUPPLIED. As of their respective filing
dates, Summagraphics' Annual Reports on Form 10-K for the fiscal years ended May
31, 1995 and 1994, and any other filings made from and after the date of such
latest Annual Report on Form 10-K with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (such filings being
collectively referred to herein as the "Summagraphics Filings") complied in all
material respects with the regulations of the SEC, and none of the Summagraphics
Filings, as of the respective dates thereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein not misleading. The
information that will be included (other than information provided in writing by
Lockheed Martin specifically for inclusion in the
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Proxy Statement) in the Proxy Statement or any amendment or supplement thereto
pertaining to the transactions contemplated hereby that is filed with the SEC,
at the time the Proxy Statement is filed and distributed to stockholders of
Summagraphics, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein in order to make the
statements not misleading, provided that information as of a later date shall be
deemed to modify information of an earlier date. This representation and
warranty is being made solely for the benefit of Lockheed Martin and CalComp and
is not intended, nor shall it be deemed to, create any rights in any third
party.
(m) SUMMAGRAPHICS' EMPLOYEE BENEFIT PLANS. Attached hereto as
Schedule 3.1(m) is a true, correct and complete list of each employee benefit
plan (each, a "Plan") to which Summagraphics or any Summagraphics Subsidiaries
is a party, together with, as applicable, a true and correct copy of (i) the
most recent annual report (Form 5500, 5500-C or 5500-R, as appropriate) filed
with the IRS including audited financial reports, if any, (ii) each IRS
favorable determination letter or opinion letter for each such Plan (or copies
of any current pending correspondence in respect thereof) (iii) all Plan
documents for each such Plan, (iv) each applicable Summary Plan Description, and
(v) the most recent actuarial report or valuation relating to each tax-qualified
plan, or the equivalent of any of the foregoing under applicable law, if any.
Except as set forth on Schedule 3.1(m):
(1) There are no plans, programs, contracts, understandings or
arrangements of any type (whether oral or written) of Summagraphics or a
"Commonly Controlled Entity" (within the meaning of Sections 414(b), (c), (m),
(n) or (o) of the Code or regulations thereunder) which provide for pension,
profit sharing, savings, executive compensation, incentive compensation, company
cars or car allowances, deferred compensation, severance pay, bonuses, stock
options, stock purchases, welfare, group insurance, medical disability, life,
health, hospitalization, dental, vacation, sick pay, holiday, educational
assistance, or any other form of employee or former employee benefits, whether
established by contract, policy, custom or course of dealing, (including, but
not limited to plans described in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); and neither Summagraphics nor a
Commonly Controlled Entity has previously sponsored or contributed to any such
plan, program, contract, understanding or arrangement other than as listed and
described on Schedule 3.1(m);
(2) Neither Summagraphics nor any Commonly Controlled Entity has ever
maintained a Plan which is subject to Title IV of ERISA;
(3) Neither Summagraphics nor any Commonly Controlled Entity has ever
been a party to any collective bargaining agreement;
(4) Neither Summagraphics nor any Commonly Controlled Entity has ever
maintained a "multi-employer plan" within the meaning of Sections 3(37) and
4001(a)(3) of ERISA, a
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"multiple employer plan" within the meaning of Section 413 of the Code, or a
"multiple employer welfare arrangement" within the meaning of Section 3(40) of
ERISA;
(5) With respect to the Plans which are "welfare plans" within the
meaning of Section 3(1) of ERISA: (i) none of those Plans provide medical or
death benefits (whether or not insured) with respect to current or former
employees beyond their termination of employment other than as required by
applicable law; and (ii) each of those Plans have been operated in material
compliance with the provisions of Section 4980B of the Code and Part 6 of Title
I of ERISA and all other applicable laws concerning continuation or conversion
of coverage; and (iii) none of those Plans have any reserves, assets, surplus or
prepaid premiums;
(6) With respect to each of the Plans: (i) if intended to qualify
under Section 401(a) or 403(a) of the Code, the Plan has been maintained and
administered at all times in full compliance with its terms and applicable laws
and regulations and has been so qualified during the period from its adoption to
date and the trust forming a part thereof is exempt from taxation pursuant to
Section 501(a) of the Code, a favorable determination letter as to qualification
under Section 401 of the Code has been issued and any amendments required for
continued qualification under Section 401 of the Code have been timely adopted
and nothing has occurred subsequent to the date of such determination letter
that could reasonably be expected to adversely affect the qualified status of
such Plan; (ii) no event has occurred and there exists no circumstance under
which Summagraphics could directly, or indirectly through a Commonly Controlled
Entity, incur any liability with respect to any current or former employee (or
any beneficiary of any current or former employee) of Summagraphics or any
Commonly Controlled Entity under ERISA, the Code or otherwise (other than the
normal cost of benefits occurring in the ordinary course under the unfunded
Plans); (iii) there are no actions, suits or claims pending or threatened with
respect to any Plan or against any fiduciary or the assets of any Plan (other
than claims for benefits in the ordinary course) and there are no facts which
could give rise to any such actions, suits or claims, and no Plan is under audit
or investigation by any governmental authority; (iv) no event has occurred with
respect to any Plan or any employee benefit plan sponsored, maintained or
contributed to by Summagraphics or a Commonly Controlled Entity which could be
reasonably expected to subject any Plan, Summagraphics or any Party directly or
indirectly (through indemnification agreement or otherwise) to any liability for
or as a result of a breach of fiduciary duty, a "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Code, or a civil
penalty under Section 502 of ERISA or a tax under Section 4971 of the Code; (v)
no "reportable event" (as defined in Section 4043 of ERISA) has occurred; (vi)
no "accumulated funding deficiency" (as defined in Section 302 of ERISA or
Section 412 of the Code) has occurred; (vii) all contributions required to be
made to, or benefit liabilities arising under, any Plan for all periods prior to
the date hereof and the Closing Date have been, or will as of the Closing Date
be, paid or accrued; (viii) all contributions intended to be deductible have met
the requirements for deductibility under the Code; (ix)
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each Plan is in compliance with the annual reporting requirements under ERISA
and the Code; (x) each Plan has been operated in accordance with its terms and
with all applicable laws, including, but not limited to ERISA, the Code, federal
securities laws and state insurance and health care continuation and conversion
laws.
(7) Except as set forth on Schedule 3.1(m)(vii), consummation of the
transactions contemplated by this Agreement will not (i) entitle any individual
to any bonus, incentive or severance pay or payments, or (ii) accelerate the
time of payment or vesting of any benefit under any Plan, increase the amount of
compensation due to any individual from Summagraphics prior to, or after the
Closing Date, or increase any benefits otherwise payable under any Plan, (iii)
result in the payment of an amount subject to the provisions of Section 280G of
the Code, or (iv) give rise to any liability or obligation of Summagraphics
pursuant to any Plan.
(8) Except as previously consented to in writing by Lockheed Martin,
since November 30, 1995, neither Summagraphics nor a Commonly Controlled Entity
has adopted or communicated to employees of Summagraphics any change to, or
termination of, any Plan or the adoption of a new employee benefit plan or
arrangement affecting the employees of Summagraphics or their dependents.
(9) Except in the normal course of business, neither Summagraphics nor
any Summagraphics Subsidiaries is bound to make, nor has Summagraphics or any
Summagraphics Subsidiary proposed the making of, bonus or incentive or other
similar payments to any employees or consultants at any future date or an
increase to the compensation of any employee or consultant. None of
Summagraphics nor any Summagraphics Subsidiaries will be liable by reason of
this Agreement or any of the transactions contemplated hereby, to make payments
to employees by way of damages or compensation for loss of office or for
redundancy or unfair dismissal or any like payment, other than payments of
severance benefits under Plans disclosed in this Agreement as contemplated by
Section 1.8.
(n) ENVIRONMENTAL MATTERS. (i) For purposes of this Section 3.1(n)
and Section 3.2(j), the following terms shall have the indicated meaning:
"Environmental Law" means any federal, state, local or foreign law
(including case or common law), statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order, judgment, decree,
injunction or agreement with any governmental entity relating to (i) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface soil, subsurface soil, plant and animal life or any
other natural resource), or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term "Environmental Law"
includes without limitation (i) the Comprehensive Environmental Response,
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Compensation and Liability Act ("CERCLA"), as amended, 42 U.S.C. (S) 9601,
et seq; the Resource Conservation and Recovery Act ("RCRA"), as amended, 42
U.S.C. (S) 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. (S) 7401,
et seq; the Federal Water Pollution Control act, as amended, 33 U.S.C. (S)
1251, et seq; the Toxic Substances Control Act, as amended, 15
U.S.C.(S) 9601, et seq; the Emergency Planning and Community Right to Know
Act, 42 U.S.C. (S) 11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
(S) 300f, et seq; the Solid Waste Disposal Act, as amended; and all
comparable state and local laws, and (ii) any common law (including without
limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Substance.
"Hazardous Substance(s)" means any substance that is toxic, ignitable,
reactive, corrosive, radioactive, or caustic or is regulated as a hazardous
substance, contaminant, toxic substance, toxic pollutant, hazardous waste,
or pollutant, including without limitation, petroleum, its derivatives, by-
products and other hydrocarbons, or is otherwise regulated under or the
subject of applicable Environmental Laws.
"Remedial Action" means the investigation, removal, clean-up or
remediation of contamination, environmental degradation or damage arising
from or related to the generation, use, handling, treatment, storage,
transportation, disposal, discharge, release, threatened release or
emission of Hazardous Substances, including without limitation,
investigations, responses and remedial actions under CERCLA, corrective
action under RCRA 42 U.S.C. (S)(S)3004(u) and (v), 3008(h) and 7003, and
clean-up requirements under Environmental Laws.
(ii) Except as set forth on Schedule 3.1(n)(ii), neither
Summagraphics, any of the Summagraphics Subsidiaries, nor any properties owned
or operated by Summagraphics or any of the Summagraphics Subsidiaries or in
which any such entity has a security interest, has been, or is, in violation of
or liable under any Environmental Law.
(iii) Except as set forth on Schedule 3.1(n)(iii), there
are no actions, suits or proceedings, or demands, claims, notices or
investigations (including without limitation notices, demand letters or requests
for information from any environmental agency) instituted, pending or, to the
best knowledge of Summagraphics, threatened, relating to the liability of any
properties owned or operated by Summagraphics or any of the Summagraphics
Subsidiaries or in which such entity has a security interest under any
Environmental Law.
(iv) The facilities occupied or used by Summagraphics or any of the
Summagraphics Subsidiaries and any other real property presently or formerly
owned by, used by or
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leased to or by Summagraphics or any of the Summagraphics Subsidiaries or any
predecessor of Summagraphics or any of the Summagraphics Subsidiaries
(collectively, the "Property"), the existing and prior uses of such Property and
all operations of the businesses of Summagraphics or any of the Summagraphics
Subsidiaries or any predecessor of Summagraphics or any of the Summagraphics
Subsidiaries comply, and have at all times complied, in all material respects
with all Environmental Laws and each of Summagraphics and the Summagraphics
Subsidiaries is not in violation of nor has it violated, in connection with the
ownership, use, maintenance or operation of such Property or the conduct of its
business, any Environmental Law.
(v) Except as set forth on Schedule 3.1(n)(v), each of Summagraphics
and the Summagraphics Subsidiaries has all material permits, registrations,
approvals and licenses required by any governmental agency under any
Environmental Law.
(vi) Except as set forth on Schedule 3.1(n)(vi), there has been no
spill, discharge, leak, emission, injection, disposal, escape, dumping or
release of any kind on, beneath or above such Property or into the environment
surrounding such Property of any Hazardous Substances in violation of
Environmental Laws or requiring Remedial Action.
(vii) Except as set forth on Schedule 3.1(n)(vii), there
has been no past, and there is no current or anticipated storage, disposal,
generation, manufacture, refinement, transportation, production or treatment of
any Hazardous Materials at, upon or from such Property. No asbestos-containing
materials, underground storage tanks or polychlorinated biphenyls (PCBs) are
located on such Property.
(viii) There are no claims, notices of violations, notice
letters, investigations, inquiries or other proceedings now pending or, to the
best knowledge of Summagraphics, threatened, by any governmental entity or any
foreign governmental entity or third party with respect to the business or any
in connection with any actual or alleged failure to comply with any requirement
of any Environmental Law.
(o) EMPLOYEES; DIRECTORS AND OFFICERS. Schedule 3.1(o) sets forth a
true, correct and complete list of all employees of Summagraphics and each
Summagraphics Subsidiary together with current annual or hourly compensation.
In addition, Schedule 3.1(o) identifies each director and officer of
Summagraphics and each of the Summagraphics Subsidiaries.
(p) COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.1(p),
neither Summagraphics nor any Summagraphics Subsidiaries (i) is in violation of
any law, order or permit applicable to its business or (ii) has received any
notification or communication from any agency or federal, state or local
government or any regulatory authority or the staff thereof (a) asserting that
either Summagraphics or any of the Summagraphics Subsidiaries is not in
compliance with any law or order; or (b) threatening to revoke any material
permits, or (c) requiring either Summagraphics
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or any Summagraphics Subsidiaries (1) to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding or (2) to adopt any Board resolution or similar
undertaking which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its management, or the payment of
dividends.
(q) INSURANCE. Summagraphics and the Summagraphics Subsidiaries are
presently insured, and since December 31, 1993 have been insured, for reasonable
amounts with financially sound and reputable insurance companies, against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. All of the insurance policies and
bonds maintained by Summagraphics and the Summagraphics Subsidiaries are in full
force and effect, Summagraphics and the Summagraphics Subsidiaries are not in
material default thereunder, and all material claims thereunder have been filed
in due and timely fashion. Summagraphics and the Summagraphics Subsidiaries
have no knowledge of any material inaccuracy in any application for such
policies or binders, any failure to pay premiums when due or any similar state
of facts that might form the basis for termination of any such insurance.
Summagraphics and the Summagraphics Subsidiaries have no knowledge of any state
of facts or of the occurrence of any event that is reasonably likely to form the
basis for any claim against it not fully covered (except to he extent of any
applicable deductible) by the policies or binders referred to above.
(r) APPLICABLE TAKEOVER LAWS. Summagraphics has taken all necessary
action to exempt (i) the transactions contemplated by this Agreement (including,
without limitation, the issuance of the Secured Convertible Debenture and the
Summagraphics Exchange Shares) and (ii) any transaction between or among
Lockheed Martin and any other Party after the Closing (to the extent that
applicable law permits the exemption of any such transaction therefrom), from
any applicable anti-takeover laws including, without limitation, the provisions
of Section 203 of the Delaware General Corporation Law to the extent applicable.
In addition, Summagraphics has taken all action necessary or appropriate so that
the entering into this Agreement and the consummation of the transactions
contemplated by this Agreement will be exempt from any change of control or
anti-takeover provisions of the Articles of Incorporation, Bylaws, or other
governing instruments of Summagraphics or any Summagraphics Subsidiaries and
will not restrict or impair the ability of Lockheed Martin to vote, or otherwise
to exercise the rights of a stockholder with respect to, shares of Summagraphics
or any Summagraphics Subsidiaries that may be acquired or controlled by Lockheed
Martin.
(s) PRODUCT AND SERVICE WARRANTY. Except as set forth on Schedule
3.1(s), no product manufactured, sold, leased or delivered by Summagraphics or
any Summagraphics Subsidiaries nor any service rendered by Summagraphics or any
Summagraphics Subsidiaries, is subject to any guaranty, warranty, or other
indemnity. Each product manufactured, sold, leased, or delivered by
Summagraphics, and each service rendered by Summagraphics, has conformed with
all applicable contractual commitments and all
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express and implied warranties. Neither Summagraphics nor any Summagraphics
Subsidiary has any liability and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against any of Summagraphics or any Summagraphics Subsidiary that would
be reasonably likely to give rise to any liability or claim for replacement or
repair thereof or other damages in connection therewith. There is no basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against Summagraphics or any Summagraphics
Subsidiaries that could reasonably be expected to give rise to any liability
arising out of any injury to individuals or property as a result of the
ownership, possession or use of any product manufactured, sold, leased or
delivered by Summagraphics or any of its Subsidiaries or any service rendered by
Summagraphics or any of its Subsidiaries.
(t) SUMMAGRAPHICS COMMON STOCK TO BE ISSUED. Each share of
Summagraphics Common Stock to be issued to Lockheed Martin in connection with
the consummation of the transactions contemplated by this Agreement, when
issued, will be validly authorized and issued, fully paid and non-assessable.
Immediately following Closing, Lockheed Martin will own 89.7% of the issued and
outstanding capital stock of Summagraphics on a Fully Diluted Basis. There are
no existing options, subscriptions, warrants, rights, contracts, commitments,
understandings, arrangements, or agreements of any nature to which Summagraphics
or any Summagraphics Subsidiaries are a party or by which any of them are bound,
relating to the issuance, sale, delivery or transfer of the Summagraphics
Exchange Shares other than this Agreement.
(u) LABOR DISPUTES. There is neither pending nor, to the best
knowledge of Summagraphics, threatened, any labor dispute, strike or work
stoppage which adversely affects or which may adversely affect Summagraphics'
business or the business of any Summagraphics Subsidiaries or which may
interfere with the continued operation of Summagraphics' business or the
business of any Summagraphics Subsidiaries after Closing. Except as set forth
on Schedule 3.1(u) attached hereto, neither Summagraphics nor any agents,
representatives or employees of Summagraphics, in connection with its business,
has committed any unfair labor practice as defined in the National Labor
Relations Act of 1947, as amended, and there is not now pending nor, to the
knowledge of Summagraphics, threatened any unfair labor practice charge against
Summagraphics or any Summagraphics Subsidiaries within the jurisdiction of the
National Labor Relations Board or any representative thereof or the jurisdiction
of any similar state, local or foreign authority. Except as set forth on
Schedule 3.1(u), (i) there are no employment agreements, collective bargaining
agreements or other agreements relating to employment between Summagraphics or
any Summagraphics Subsidiaries and any of their respective employees, and (ii)
no employee of Summagraphics has any contractual right to continued employment
with Summagraphics or any Summagraphics Subsidiaries following consummation of
the transactions contemplated by this Agreement.
(v) TECHNOLOGY. Summagraphics owns, or is licensed or otherwise
entitled to use or (with respect to such of the following
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which pertain only to Summagraphics' business as conducted or proposed to be
conducted) can obtain on reasonable terms rights to all patents, trademarks,
tradenames, servicemarks, copyrights, schematics, technology, know-how, computer
software programs or applications in tangible or intangible proprietary
information or material that are used or proposed to be used in the business of
Summagraphics or any Summagraphics Subsidiaries as currently conducted or as
presently proposed to be conducted by Summagraphics or any Summagraphics
Subsidiaries (the "Summagraphics Intellectual Property Rights"). Schedule
3.1(v) lists all patents, patent applications, trademarks, tradenames, and
servicemarks including all registrations for, and pending applications to
register, such trademarks, tradenames and servicemarks, included in the
Summagraphics Intellectual Property Rights, together with a list of all
Summagraphics' currently marketed software products and an indication as to
which, if any, of such software products have been registered for copyright
protection with the United States Patent & Trademark Office. Except as set
forth on Schedule 3.1(v), no claims with respect to the Summagraphics
Intellectual Property Rights have been asserted, or to the knowledge of
Summagraphics, are threatened by any person nor does Summagraphics or any
Summagraphics Subsidiary know of any valid grounds for any bona fide claim (i)
to the effect that the manufacture, sale or use of any product or process as now
used or offered or proposed for use or sale by Summagraphics or any
Summagraphics Subsidiary infringes on any patents of any person, (ii) against
the use by Summagraphics or any Summagraphics Subsidiary of any trademarks,
tradenames, trade secrets, copyrights, technology, know-how, processes or
computer software programs and applications used in the business of
Summagraphics and the Summagraphics Subsidiaries as currently conducted or
presently proposed to be conducted or (iii) challenging the ownership, validity
or effectiveness of any of the Summagraphics Intellectual Property Rights. To
Summagraphics' knowledge, all granted and issued patents and all registered
trademarks listed on Schedule 3.1(v) and all copyrights held by Summagraphics
are valid and existing. To Summagraphics' knowledge, there is no unauthorized
use, infringement or misappropriation of any of the Summagraphics Intellectual
Property Rights by any third party, employee or former employee.
(w) OPINION OF FINANCIAL ADVISOR. Summagraphics has been advised in
writing by its financial advisor, Needham & Company, Inc., that in its opinion,
as of the date hereof, the terms of the transactions described herein are fair,
from a financial point of view, to Summagraphics and its stockholders. A copy
of that opinion is attached hereto as Schedule 3.1(w).
(x) BOOKS AND RECORDS. The books of account, stock records, minute
books and other records of Summagraphics and the Summagraphics Subsidiaries are
complete and correct in all material respects and have been maintained in
accordance with good business practices, and the matters contained therein are
appropriately and accurately reflected in the Summagraphics Financial
Statements.
(y) FULL DISCLOSURE. No statement contained in any certificate or
schedule furnished or to be furnished by Summagraphics to Lockheed Martin or
CalComp in, or pursuant to the
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provisions of, this Agreement contains or shall contain any untrue statement of
a material fact or omits or shall omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
(z) INVESTMENT REPRESENTATION. Summagraphics is aware that the
CalComp Exchange Shares are not registered under the Securities Act of 1933 (the
"Securities Act"). Summagraphics possesses such knowledge and experience in
business matters that it is capable of evaluating the merits and risks of its
investments hereunder. Summagraphics has been provided access to all
information and personnel as Summagraphics deems necessary or advisable in
connection with its investment decision hereunder. Summagraphics is acquiring
the CalComp Exchange Shares for its own account, for investment purposes only
and not with a view to distribution thereof. Summagraphics agrees not to sell,
transfer, offer for sale, pledge, hypothecate or otherwise dispose of the
CalComp Exchange Shares, without registration under the Securities Act, except
pursuant to a valid exemption from registration under the Securities Act.
(aa) BANKS AND FINANCIAL INSTITUTIONS. Schedule 3.1(aa) sets forth a
true, correct and complete list of each bank or financial institution from which
Summagraphics currently has outstanding indebtedness together with the aggregate
amount outstanding as of the date of this Agreement. Attached to schedule
3.1(aa) is a true, correct and complete copy of each agreement listed thereon.
(bb) BACKLOG. At and as of May 31, 1996, Summagraphics shall have
received bona fide purchase orders for sales in the "input" and "cutter"
portions of Summagraphics business ("Backlog") which management of Summagraphics
reasonably believes will result in net sales of not less than $2,750,000 and
which Backlog is reasonably expected to be filled in accordance with the terms
thereof. In the event that the Closing occurs prior to May 31, 1996,
Summagraphics shall have Backlog which, together with prospective orders
expected by May 31, 1996, management reasonably believes will result in Backlog
of not less than $2,750,000 in the aggregate as of May 31, 1996.
3.2 Representations and Warranties of CalComp. In order to induce
-----------------------------------------
Summagraphics to enter into this Agreement and to consummate the transactions
contemplated hereby, CalComp represents and warrants to Summagraphics as
follows:
(a) ORGANIZATION, STANDING AND POWER. CalComp is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each of the CalComp Subsidiaries has all requisite power and authority to own,
lease and operate the properties and to carry on its business as now being
conducted.
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(b) CAPITAL STRUCTURE.
(i) As of the date hereof, the authorized capital stock of CalComp
consists of 1,000 shares of Common Stock of which 1,000 shares are issued and
outstanding. As of the date hereof and as of the Closing Date, all outstanding
shares of capital stock of CalComp have been validly issued and are fully paid
and nonassessable. Lockheed Martin owns 100% of the issued and outstanding
shares of capital stock of CalComp.
(ii) CalComp has no commitments to issue or sell any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for such shares, or giving any person the right to subscribe for or acquire any
such shares and no securities or obligations representing such shares are
outstanding.
(c) AUTHORITY. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by each of the Board of Directors and sole stockholder of CalComp and
this Agreement is the valid and binding obligation of CalComp. Except for the
Joint Venture (as defined in Section 3.2(d) below), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby or thereby, nor compliance by CalComp and the CalComp Subsidiaries with
any of the provisions hereof or thereof will (i) conflict with or result in a
breach of any provision of CalComp's Articles of Incorporation or Bylaws, or
conflict with or result in a default or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or provisions of
any material note, bond, mortgage, indenture, license, agreement or other
instrument, or violate the provisions of any agreement to which CalComp is a
party or by which it or any of its properties or assets may be bound in any
instance in which such right of termination, cancellation, or acceleration if
exercised or such violation would have a Material Adverse Effect, or (ii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to CalComp or any CalComp Subsidiaries or any of its properties or
assets. Except for CalComp's Joint Venture affiliate, no consent or approval by
any governmental authority is required for the execution and delivery by CalComp
of this Agreement and the consummation of the transactions contemplated hereby,
except for the approval of all the applicable regulatory agencies and meeting of
conditions herein set forth.
(d) SUBSIDIARIES. Schedule 3.2(d) sets forth a true, correct and
complete list of each corporation of which CalComp directly or indirectly owns
all of the issued and outstanding shares of capital stock (collectively, the
"CalComp Subsidiaries"). In addition, CalComp owns 1,706 shares (out of a total
of 3,887 shares) of NS CalComp Corporation (Japan) as part of a joint venture
with Nippon Steel Corporation (which owns 1,978 Shares) and Sumitomo Corporation
(which owns 194 Shares) (the "Joint Venture"). Other than the CalComp
Subsidiaries and the Joint Venture, CalComp owns no shares of capital stock of
any other corporation or equity interest in any other person, and has and will
have on the Closing Date no other subsidiaries. The Parties acknowledge that as
of the
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Closing, CalComp will not own and will not have any interest in the following
subsidiaries: AGT Holdings, Inc., Access Graphics, Inc., Advanced Products
Group, Inc. (Georgia), CAD Source, Inc., Access Graphics (U.K.) Ltd., Access
Graphics of Canada Inc., Access Graphics B.V. and Access Graphics S.A. de C.V.
CalComp is currently dissolving CalComp Foreign Sales Corp. (Barbados) and
therefore does not represent that as of the date of signing of this Agreement
nor as of the Closing Date that it does or will own such subsidiary.
(e) FINANCIAL STATEMENTS. Attached hereto as Schedule 3.2(e) are the
Consolidated Balance Sheets of CalComp for each of the fiscal years ended
December 31, 1995 and 1994, the Consolidated Income Statement of CalComp for
each of the years in the three year period ended December 31, 1995, Statement of
Shareholders' Equity for each of the years ended in the three year period ended
December 31, 1995 and the Consolidated Statement of Cash Flow of CalComp for
each of the years in the three year period ended December 31, 1995, each
prepared on a basis which treats the disposition of AGT as if it had occurred
prior to the date of such financial statements. Subject to the absence of
certain footnote information in the financial statements attached as Schedule
3.2(e), those financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated or as more particularly set forth therein. The
Balance Sheets of CalComp for each of the fiscal years ended December 31, 1995
and 1994 present fairly as of their respective dates the consolidated financial
position and assets and liabilities of CalComp. The Consolidated Income
Statement of CalComp for each of the years in the three year period ended
December 31, 1995, present fairly the consolidated results of operations of
CalComp for the periods indicated. The CalComp Financial Statements to be
delivered in accordance with the provisions of Section 6.5 to Summagraphics
will, at the time they are so delivered be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, except that the CalComp Financial Statements will be prepared
on a basis to reflect the disposition of AGT as contemplated by Section 2.4.
(f) ABSENCE OF UNDISCLOSED LIABILITY. Except to the extent reflected
or reserved against in the CalComp Financial Statements, neither CalComp nor any
CalComp Subsidiary as of the date of this Agreement has (i) any liabilities or
obligations of any nature or (ii) any liabilities in the nature of employment
contracts with, or agreements to pay bonuses to any of its directors, officers
or employees, other than liabilities or obligations incurred in ordinary course
of business or specifically identified in schedules to this Agreement.
(g) NO MATERIAL ADVERSE CHANGE. Since December 31, 1995, there has
been and as of the Closing there will be no material adverse change in the
assets or liabilities or in the business or condition (financial or otherwise),
results of operations or prospects of CalComp.
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(h) LITIGATION. There are no actions, proceedings or investigations
pending or, to the best of CalComp's knowledge, threatened against CalComp or
its Subsidiaries which, in the opinion of CalComp's in-house counsel is likely
to have a Material Adverse Effect on the financial conditions or operations of
CalComp and its subsidiaries. Neither CalComp nor any of its Subsidiaries is
subject to any agreement, memorandum of understanding or similar arrangement
with any regulatory authority restricting its operations or requiring that
certain actions be taken, and, neither CalComp nor any of its Subsidiaries has
received any notification from any governmental or regulatory authority, or the
staff thereof, asserting that it is not in compliance with any statutes,
regulations or ordinances which such authority enforces, noncompliance with
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the financial conditions of CalComp and its
Subsidiaries.
(i) ACCURACY OF INFORMATION SUPPLIED. The information that will be
provided in writing by CalComp specifically for inclusion in the Proxy Statement
or any amendment or supplement thereto pertaining to the transactions
contemplated hereby that is filed with the SEC, at the time the Proxy Statement
is filed and distributed to stockholders of Summagraphics will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein in order to make the statements not misleading, provided
that information as of a later date shall be deemed to modify information of an
earlier date. This representation and warranty is being made solely for the
benefit of Summagraphics and Lockheed Martin and is not intended, nor shall it
be deemed to, create any rights in any third party.
(j) ENVIRONMENTAL MATTERS. (i) To the best knowledge of CalComp, and
except as set forth on Schedule 3.2(j), neither CalComp, any of the CalComp
Subsidiaries, nor any properties owned or operated by CalComp or any of the
CalComp Subsidiaries or in which any such entity has a security interest, has
been or is in violation of or liable under any Environmental Law.
(ii) Except as set forth on Schedule 3.2(j), there are no actions,
suits or proceedings, or demands, claims, notices or investigations (including
without limitation notices, demand letters or requests for information from any
environmental agency) instituted, pending or threatened relating to the
liability of any properties owned or operated by CalComp or any of the CalComp
Subsidiaries or in which such entity has a security interest under any
Environmental Law.
(iii) To the best knowledge of CalComp, the facilities
occupied or used by CalComp or any of the CalComp Subsidiaries and any other
real property presently or formerly owned by, used by or leased to or by CalComp
or any of the CalComp Subsidiaries or any predecessor of CalComp or any of the
CalComp Subsidiaries (collectively, the "Property"), the existing and prior uses
of such Property and all operations of the businesses of CalComp or any of the
CalComp Subsidiaries or any predecessor of CalComp or any of the CalComp
Subsidiaries comply and have at all times complied in all material respects with
all Environmental Laws
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and each of CalComp and the CalComp Subsidiaries is not in violation of nor has
it violated, in connection with the ownership, use, maintenance or operation of
such Property or the conduct of its business, any Environmental Law.
(iv) Except as set forth on Schedule 3.2(j), each of CalComp and the
CalComp Subsidiaries has all material permits, registrations, approvals and
licenses required by any governmental agency or Environmental Law.
(v) To the best knowledge of CalComp, and except as set forth on
Schedule 3.2(j), there has been no spill, discharge, leak, emission, injection,
disposal, escape, dumping or release of any kind on, beneath or above such
Property or into the environment surrounding such Property of any Hazardous
Substances in violation of Environmental Laws or requiring Remedial Action.
(vi) There are no claims, notices of violations, notice letters,
investigations, inquiries or other proceedings now pending or threatened by any
governmental entity or any foreign governmental entity or third party with
respect to the business or any in connection with any actual or alleged failure
to comply with any requirement of any Environmental Law.
(k) COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.2(k),
neither CalComp nor any CalComp Subsidiaries (i) is in violation of any law,
order or permit applicable to its business or (ii) has received any notification
or communication from any agency or federal, state or local government or any
regulatory authority or the staff thereof (a) asserting that either CalComp or
any of the CalComp Subsidiaries is not in compliance with any law or order; or
(b) threatening to revoke any material permits, or (c) requiring either CalComp
or any CalComp Subsidiaries (1) to enter into or consent to the issuance of a
cease and desist order, formal agreement, directive, commitment or memorandum of
understanding or (2) to adopt any Board resolution or similar undertaking which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its management, or the payment of dividends.
(l) TECHNOLOGY. CalComp owns, or is licensed or otherwise entitled to
use or (with respect to such of the following which pertain only to CalComp's
business as conducted or proposed to be conducted) can obtain on reasonable
terms rights to all patents, trademarks, tradenames, servicemarks, copyrights,
schematics, technology, know-how, computer software programs or applications in
tangible or intangible proprietary information or material that are used or
proposed to be used in the business of CalComp or any CalComp Subsidiaries as
currently conducted or proposed to be conducted by CalComp or any CalComp
Subsidiaries (the "CalComp Intellectual Property Rights"). Except as set forth
on Schedule 3.2(l), no claims with respect to the CalComp Intellectual Property
Rights have been asserted, or to the knowledge of CalComp, are threatened by any
person nor does CalComp or any CalComp Subsidiary know of any valid grounds for
any bona fide claim (i) to the effect that the manufacture, sale or use of any
product or process as now used or offered or proposed for use
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or sale by CalComp or any CalComp Subsidiary infringes on any patents of any
person, (ii) against the use by CalComp or any CalComp Subsidiary of any
trademarks, tradenames, trade secrets, copyrights, technology, know-how,
processes or computer software programs and applications used in the business of
CalComp and any CalComp Subsidiaries as currently conducted or proposed to be
conducted or (iii) challenging the ownership, validity or effectiveness of any
of the CalComp Intellectual Property Rights. To CalComp's knowledge, all
granted and issued patents, all registered trademarks, and all copyrights that
constitute part of the CalComp Intellectual Property Rights are valid and
existing. To CalComp's knowledge, there is no unauthorized use, infringement or
misappropriation of any of the CalComp Intellectual Property Rights by any third
party, employee or former employee.
3.3 Representations and Warranties of Lockheed Martin. In order to induce
-------------------------------------------------
Summagraphics to enter into this Agreement and to consummate the transactions
contemplated hereby, Lockheed Martin represents and warrants to Summagraphics as
follows:
(a) ORGANIZATION AND STANDING. Lockheed Martin is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and, has all of the requisite corporate power and authority to
consummate the transactions contemplated by this Agreement.
(b) AUTHORITY. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Lockheed Martin and this Agreement is
the valid and binding obligation of Lockheed Martin. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby, nor compliance by Lockheed Martin with any of the provisions hereof will
(i) conflict with or result in a breach of any provision of Lockheed Martin's
Charter or Bylaws, or result in a default or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license, agreement
or other instrument, or result in a violation of any material agreement to which
Lockheed Martin is a party or by which it or any of its properties or assets may
be bound, or (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Lockheed Martin or any of its properties or assets. No
consent or approval by any governmental authority is required for the execution
and delivery by Lockheed Martin of this Agreement or the consummation of the
transactions to be consummated by Lockheed Martin hereunder, except for the
approval of all the applicable regulatory agencies and meeting of conditions
hereinafter set forth.
(c) LITIGATION. There are no actions, proceedings or investigations
pending or, to the best of Lockheed Martin's knowledge, threatened against
Lockheed Martin or any Lockheed Martin Subsidiary which, if adversely
determined, would have a Material Adverse Effect on the ability of Lockheed
Martin to consummate the transactions contemplated by this Agreement. Neither
Lockheed Martin nor any of its Subsidiaries is subject to
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any agreement, memorandum of understanding or similar arrangement with any
regulatory authority restricting its operations or requiring that certain
actions be taken, and, neither Lockheed Martin nor any of its Subsidiaries has
received any notification from any governmental or regulatory authority, or the
staff thereof, asserting that it is not in compliance with any statutes,
regulations or ordinances which such authority enforces, noncompliance with
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the ability of Lockheed Martin to consummate the
transactions contemplated by this Agreement.
(d) OWNERSHIP OF CALCOMP EXCHANGE SHARES. Lockheed Martin owns 100%
of the outstanding capital stock of CalComp of record and beneficially, and, as
of the Closing, free and clear of any Encumbrance. Upon the Closing of the
Exchange and the delivery of the CalComp Exchange Shares to Summagraphics,
Summagraphics will acquire the entire legal and beneficial interest in and to
all of the CalComp Exchange Shares, free and clear of any Encumbrance other than
any Encumbrance which is a result of the terms of any agreement to which
Summagraphics is party, or any order, claim or other charge against
Summagraphics.
(e) INVESTMENT REPRESENTATION. Lockheed Martin is aware that the
Summagraphics Exchange Shares are not registered under the Securities Act.
Lockheed Martin possesses such knowledge and experience in business matters that
it is capable of evaluating the merits and risks of its investments hereunder.
Lockheed Martin agrees not to sell, transfer, offer for sale, pledge,
hypothecate or otherwise dispose of the Summagraphics Exchange Shares, without
registration under the Securities Act, except pursuant to a valid exemption from
registration under the Securities Act.
(f) TAX MATTERS.
(i) CalComp and each of the CalComp Subsidiaries have filed (or had
filed on their behalf), or will file or cause to be filed, all Tax Returns
required to be filed prior to the Closing, and have paid all Taxes required to
be paid in respect of the periods covered by such Tax Returns or, where payment
of such Taxes is not yet due, have established or will establish prior to the
Closing, an adequate reserve for the payment of all Taxes which are accruable
prior to the Closing. CalComp and the CalComp Subsidiaries will not have any
material liability for any such Taxes in excess of the amounts so paid or the
reserve so established and CalComp and the CalComp Subsidiaries are not
delinquent in the payment of any material assessment of Taxes. No material
deficiencies for any assessment of Taxes have been proposed, asserted or
assessed against CalComp or the CalComp Subsidiaries which would not be covered
by existing reserves and, as of the date of this Agreement, no requests for
waivers of the time to assess any such Taxes are pending. CalComp, and to the
best of CalComp's knowledge, each of the CalComp Subsidiaries, has complied with
all IRS requirements regarding the certification of taxpayer identification
numbers of customers and backup withholding.
26
<PAGE>
(ii) There are no liens for any Taxes upon the assets of CalComp or
any CalComp Subsidiary, other than statutory liens for Taxes not yet due and
payable.
(iii) Neither CalComp nor any CalComp Subsidiary is a party to
any agreement, contract or other arrangement that would result, separately or in
the aggregate, in the requirement to pay any "excess parachute payments" within
the meaning of Section 280G of the Code, or any gross-up in connection with such
an agreement, contract or arrangement.
(g) ACCURACY OF INFORMATION SUPPLIED. The information which will be
provided in writing by Lockheed Martin specifically for inclusion in the Proxy
Statement pertaining to the transactions contemplated hereby, at the time such
information is provided will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein in order to
make the statements not misleading, provided that information as of a later date
shall be deemed to modify information of an earlier date. This representation
and warranty is being made solely for the benefit of Summagraphics and is not
intended, nor shall it be deemed to, create any rights in any third party.
ARTICLE IV
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
4.1 Conduct of the Business of Summagraphics and its Subsidiaries' Prior
--------------------------------------------------------------------
to the Closing. During the period from the date of this Agreement to the
- --------------
Closing and except as otherwise expressly provided in the last sentence of
Section 4.4, Summagraphics shall, and Summagraphics shall cause the
Summagraphics Subsidiaries to, conduct their respective operations according to
the ordinary and usual course of business consistent with current practices and
use their reasonable best efforts to maintain and preserve their business
organizations, employees and advantageous business relationships.
Notwithstanding the foregoing, Summagraphics shall not enter into any employee
benefit plan or arrangement with any employee, officer or director without the
prior consent of CalComp and Lockheed Martin.
4.2 Forbearance.
-----------
(a) During the period from the date of this Agreement to the Closing
and except as contemplated by this Agreement (including with respect to Section
4.2(a)(v), (vi) and (viii) below the provisions of the last sentence of Section
4.4) and as set forth on Schedule 4.2, neither Summagraphics nor any
Summagraphics Subsidiaries shall without the prior written consent of CalComp
and Lockheed Martin:
(i) make any changes to their respective Articles of
Incorporation or Bylaws;
(ii) adjust, split, combine or reclassify Summagraphics Common
Stock or make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem,
27
<PAGE>
purchase or otherwise acquire, any shares of their capital stock or any
securities or obligations convertible into or exchangeable for any shares of
their capital stock, or grant (or revise the terms or conditions of any previous
grant of) any stock options or stock appreciation rights or give any person any
right or warrant to acquire any shares of their capital stock;
(iii) enter any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except in the normal
course of business;
(iv) increase in any manner the compensation or fringe benefits of any
of their directors, officers, agents or employees or pay any pension or
retirement allowance not required by any existing Plan or agreement to any such
directors, officers, agents or employees or become a party to, amend or commit
itself to any pension, retirement, profit sharing, welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee or
officer or other person other than payments consistent with past practices and
current incentive compensation plans and other increases consented to by
Lockheed Martin and CalComp in writing, which consent shall not be unreasonably
withheld;
(v) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(vi) merge or consolidate or agree to merge or consolidate with
or into any other person;
(vii) materially change the extent or character of its business
operations;
(viii) dissolve, liquidate (completely or partially), acquire any
capital assets, or grant to any person a right or option to lease, acquire, or
purchase, any material amount of the assets of Summagraphics or any
Summagraphics Subsidiary (including any part thereof or any interest therein),
except in the ordinary course of business and consistent with past practice or
as expressly contemplated by this Agreement;
(ix) issue any shares of its capital stock or any securities
convertible into or exercisable or exchangeable for capital stock;
(x) incur any indebtedness for borrowings (except the Secured
Convertible Debenture, or issue any debt securities or any securities
convertible into debt securities or any options to purchase debt securities or
other rights in respect thereto or assume, indorse, or guarantee, or become a
surety, an accommodation party, or responsible in any other way for, an
obligation or indebtedness of another person;
(xi) discontinue or materially diminish any insurance coverage
applicable to its assets, properties, and business operations;
28
<PAGE>
(xii) commit to a labor or employment contract of any kind
whatsoever, or any compensation obligation to any employee that is executory or
requires payment after the Closing Date, except as consented to in writing by
Lockheed Martin and CalComp, which consent shall not be unreasonably withheld;
(xiii) mortgage, pledge or subject to any other lien any of its
assets;
(xiv) cancel or compromise any legal right or claim of or debts
owed to Summagraphics or any Summagraphics Subsidiaries;
(xv) engage in any speculative currency transactions; or
(xvi) agree to do, or acquiesce in, any of the foregoing acts.
(b) During the period from the date of this Agreement to the Closing,
Summagraphics shall maintain itself as a corporation duly incorporated under the
laws of the State of Delaware and conduct and maintain its operations according
to its usual and ordinary course of business in accordance with past practice.
(c) During the period from the date of this Agreement to the Closing,
Summagraphics shall consult with CalComp and Lockheed Martin with respect to
material business decisions affecting Summagraphics' business.
(d) For purposes of seeking consent to any action to be taken in
accordance with the provisions of this Section 4.2, the parties acknowledge and
agree that any such request shall be in writing delivered to David B. Minnick at
Lockheed Martin Corporation (or such other person as is designated in writing by
Lockheed Martin). Upon receipt of a written request from Summagraphics,
Lockheed Martin shall provide or withhold its consent to such request as soon as
reasonably practicable.
4.3 No Solicitation. Summagraphics acknowledges that Lockheed Martin will
---------------
devote substantial time and incur substantial out-of-pocket expenses in
connection with the preparation and negotiation of this Agreement and the
consummation of the transactions contemplated hereby. Unless and until the
sooner of (i) Lockheed Martin notifies Summagraphics that it no longer wishes to
pursue the Transaction, (ii) this Agreement shall have been terminated pursuant
to its terms or (iii) June 15, 1996, neither Summagraphics nor any of its
subsidiaries nor any of their executive officers, directors, agents (including,
without limitation, Broadview Associates, L.P. or Needham & Company, Inc.) or
affiliates of any of the foregoing, shall, directly or indirectly, encourage,
solicit or initiate discussions or negotiations with any person (other than
Lockheed Martin) concerning any Acquisition Proposal (as hereinafter defined) or
disclose, directly or indirectly, to any person in connection with an
Acquisition Proposal any information not customarily disclosed to the public
concerning Summagraphics or any of the Summagraphics'
29
<PAGE>
Subsidiaries, afford to any other person access to the properties, books or
records of Summagraphics or any of the Summagraphics Subsidiaries in connection
with an Acquisition Proposal or otherwise assist any person preparing to make or
who has made such an Acquisition Proposal, or enter into any agreement with any
third party providing for a business combination transaction, equity investment
or a sale of all or any significant amount of assets, except in a situation in
which a majority of the full Board of Directors of Summagraphics has determined
in good faith, upon advice of counsel, that such Board has a fiduciary duty to
consider and respond to a bona fide Acquisition Proposal by a third party (which
Acquisition Proposal was not directly or indirectly solicited by Summagraphics
or the Summagraphics Subsidiaries or any of their respective officers,
directors, representatives, agents or affiliates in violation of this Agreement)
and provides written notice of its intention to consider such Acquisition
Proposal. Summagraphics will promptly communicate to Lockheed Martin the
identity of the offeror and the terms of any Acquisition Proposal which it may
receive in respect to any of the foregoing transactions.
4.4 Termination Fee. In the event that (i) the Closing does not occur
---------------
because of a breach of this Agreement by Summagraphics and within twelve months
thereafter Summagraphics enters into an agreement with respect to an Acquisition
Proposal or the consummation of the transactions contemplated by any Acquisition
Proposal occurs or (ii) Summagraphics breaches the provisions of Section 4.3,
Summagraphics (or the survivor of any transaction contemplated by the
Acquisition Proposal, which shall include any purchaser of a substantial portion
of the assets of Summagraphics or any Summagraphics Subsidiary) shall
immediately pay to Lockheed Martin by wire transfer of immediately available
funds the sum of $1,250,000 (the "Termination Fee"). For purposes of this
Agreement, "Acquisition Proposal" shall mean any third party proposal concerning
any merger, share exchange, consolidation, sale of any substantial portion of
the assets of Summagraphics and the Summagraphics Subsidiaries, tender offer,
sale of control or similar transaction involving Summagraphics or any
Summagraphics Subsidiaries. The term "Acquisition Proposal" shall not include,
among other things, any third party proposal to acquire Summagraphics' CAD
Warehouse business or Summajet or Summachrome product lines or to secure license
rights to such products; provided, however, Summagraphics shall obtain written
approval from Lockheed Martin prior to entering into any agreement in respect to
any of the foregoing, which approval shall not be unreasonably withheld.
4.5 Compliance with Tax-Free Provisions. Summagraphics shall not take any
-----------------------------------
action prior to or after the Closing which would disqualify the Exchange (and
the other transactions contemplated hereby) as a tax free reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
4.6 Access and Information; Cooperation. Summagraphics and the
-----------------------------------
Summagraphics Subsidiaries will permit reasonable access to Lockheed Martin and
CalComp and their respective representatives, during normal business hours to
verify the accuracy from time to
30
<PAGE>
time of the representations and warranties contained herein. Such investigation
may include an examination of all of Summagraphics' business affairs, contracts,
personnel records, premise files, accounts receivable and accounts payable, tax
returns, agreements, schedule of assets owned, and all other items deemed
necessary by Lockheed Martin to make such examination thereof and to conduct
such other investigation as they deem appropriate to verify the representations
and warranties of Summagraphics contained herein. Summagraphics and CalComp
will each give to the officers, accountants, counsel and authorized
representatives of the other Party access to its properties, books and records
and those of its subsidiaries (including its audit work papers) and will furnish
the other Party with such additional financial and operating data and other
information as to its business and properties and those of its subsidiaries as
the other Party may from time to time reasonably request. In addition, each
shall promptly deliver to the other each internally prepared monthly balance
sheet from November 30, 1995 in the case of Summagraphics and December 31, 1995
in the case of CalComp, if any, through Closing and all other internally
prepared financial information prepared since November 30, 1995 or December 31,
1995, as the case may be. The Parties will cooperate with each other in the
preparation of any documents or other materials which may be required in
connection with the preparation of the Proxy Statement as filed with the SEC or
in connection with any other documents or materials required by any governmental
agency, stock exchange or association of securities dealers. CalComp will
cooperate with and furnish such information to, and cause its directors and
officers and those of its subsidiaries to cooperate with and furnish such
information to, Summagraphics as Summagraphics may reasonably request in
connection with the preparation of the Proxy Statement for the special meeting
of the stockholders of Summagraphics to consider the transactions contemplated
hereby.
4.7 Confidentiality. Each of the Parties shall cause its advisers and
---------------
agents to maintain the confidentiality of all confidential information furnished
to it by the other party concerning its and its Subsidiaries' businesses,
operations, and financial positions, and shall not use such information for any
purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Closing, each Party
shall promptly return all documents and copies thereof, and return or destroy
all work papers containing confidential information received from the other
Party. In the event that any Party violates any of the terms of this paragraph,
they agree that the Party who is not in violation would have an inadequate
remedy at law for such violation and may, therefore, seek an injunction without
the necessity of bond, to prevent or halt any violation hereof and the parties
hereto agree not to raise any defense that the Party who is not in violation of
this paragraph has an adequate remedy at law. The Parties further acknowledge
and agree that in the event of a violation of the terms and conditions of this
paragraph that the party who is not in violation shall have any and all remedies
available at law or equity and shall not be limited to the remedy of injunctive
relief. The confidentiality provisions of this Section 4.7 are in addition to
and shall not be deemed to supersede the agreements contained in
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<PAGE>
(i) the letter, dated October 12, 1995, from Broadview Associates, L.P. to
Lockheed Martin and (ii) the letter agreement, dated December 20, 1995, between
Lockheed Martin Corporation and Summagraphics (the "Confidentiality
Agreements"). In addition, CalComp agrees that, in the event that this
Agreement is terminated for any reason prior to Closing, CalComp shall not for a
period of one year from the date hereof, directly or indirectly, recruit any
non-clerical employee of Summagraphics with whom CalComp has had contact in
connection with CalComp's investigation of Summagraphics from the date hereof to
the Closing; provided however, that the foregoing restriction shall not preclude
CalComp or Lockheed Martin from employing any such employee who seeks employment
with CalComp or Lockheed Martin in response to a general advertisement or other
similar method and not in response to any direct solicitation efforts made by
CalComp or Lockheed Martin. Any provisions of this Section 4.7 shall survive
the Closing or the termination of this Agreement.
4.8 Public Announcements. The Parties will consult with each other before
--------------------
issuing any press release relating to this Agreement or the transactions
contemplated herein and shall not issue any such press release without the prior
written consent of the other Party, except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange.
4.9 Consents.
--------
(a) From the date of this Agreement to the Closing, Summagraphics will
use its reasonable best efforts (which efforts shall not include the payment of
any money to any third party without the prior consent of Lockheed Martin, other
than ordinary filing fees) to obtain the written consents or approvals of all
third parties whose consent or approval is required with regard to the
transactions contemplated to be performed by Summagraphics by the terms of this
Agreement, whether under the terms of any lease, mortgage, indenture or other
agreement to which Summagraphics or any of the Summagraphics Subsidiaries is a
party or by which any of their assets is bound or otherwise.
(b) From the date of this Agreement to the Closing, each of Lockheed
Martin and CalComp will use their respective reasonable best efforts (which
efforts shall not include the payment of any money to any third party, other
than ordinary filing fees) to obtain the written consents or approvals of all
third parties whose consent or approval is required with regard to the
transactions contemplated to be performed by Lockheed Martin or CalComp, as the
case may be, by the terms of this Agreement, whether under the terms of any
lease, mortgage, indenture or other agreement to which Lockheed Martin or
CalComp or any of their respective Subsidiaries is a party or by which any of
their assets is bound or otherwise.
(c) The Parties agree to reasonably cooperate with each other in
connection with obtaining the consents contemplated by Section 4.9.
4.10 Meeting of Summagraphics Stockholders. Summagraphics will duly call
-------------------------------------
and within the time set forth in its Bylaws will
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<PAGE>
convene a special meeting of its stockholders to act upon the transactions
contemplated hereby, the Board of Directors of Summagraphics (subject to Section
2.1) will recommend approval of this Agreement and the Fourth Amended and
Restated Articles of Incorporation to its stockholders, and will use its
reasonable best efforts to obtain a favorable vote thereon. The calling and
holding of such meetings and all transactions, documents and information related
thereto will be in compliance with all applicable laws (including, without
limitation, applicable securities laws). The Proxy Statement for the
stockholders' meeting of Summagraphics will be in form and content reasonably
satisfactory to Lockheed Martin.
ARTICLE V
ADDITIONAL COVENANTS OF SUMMAGRAPHICS
5.1 Issuance of Stock. Summagraphics will issue and deliver or cause to
-----------------
be delivered the Summagraphics Exchange Shares to Lockheed Martin (or its
designee) as called for by Paragraph 1.1 of this Agreement.
5.2 Intercompany Agreements. At the Closing, Summagraphics shall execute
-----------------------
and deliver to Lockheed Martin each of the following documents (collectively,
the "Intercompany Agreements"):
(a) an intercompany services agreement in the form attached hereto as
Exhibit B (the "Services Agreement");
(b) a cash management agreement in the form attached hereto as Exhibit
C (the "Cash Management Agreement");
(c) a tax sharing agreement in the form attached hereto as Exhibit D
(the "Tax Sharing Agreement");
(d) a revolving credit agreement in the form attached hereto as
Exhibit E (the "Revolving Credit Agreement");
(e) a registration rights agreement in the form attached hereto as
Exhibit F (the "Registration Rights Agreement"); and
(f) a corporate agreement in the form attached hereto as Exhibit G
(the "Corporate Agreement").
5.3 Amendment and Restatement of Articles of Incorporation. Prior to
------------------------------------------------------
Closing, Summagraphics shall take all actions necessary or appropriate
(including approval of its stockholders) to cause to be filed with the Secretary
of State of the State of Delaware an amendment and restatement to its Articles
of Incorporation in the form attached as Exhibit H (the "Fourth Amended and
Restated Articles of Incorporation") pursuant to which:
(a) Summagraphics shall change its name to CalComp Inc.;
(b) Summagraphics shall agree to the allocation of business
opportunities by and between it and Lockheed Martin set forth therein; and
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<PAGE>
(c) Summagraphics shall increase the number of authorized shares of
capital stock to 60,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock.
5.4 Preparation of Proxy Statement. In accordance with the provisions of
------------------------------
Section 2.1, Summagraphics shall prepare, file in definitive form and deliver to
each of its stockholders the Proxy Statement.
5.5 Additional Listing Application. At or prior to Closing, Summagraphics
------------------------------
shall take all action necessary or appropriate to cause the Summagraphics
Exchange Shares to be listed for trading on the NASDAQ Interdealer Quotations
System.
5.6 Filing of Form 10-C. Within 10 days of Closing, Summagraphics shall
-------------------
prepare and have filed with the SEC its report on Form 10-C-Report By Issuer of
Securities Quoted on NASDAQ Interdealer Quotations System in respect of the
Summagraphics Exchange Shares.
5.7 Hart-Scott-Rodino. As soon as practicable following the execution of
-----------------
this Agreement and no later than 10 days after the execution of this Agreement,
Summagraphics shall make its filing of a Notification and Report Form pursuant
to, and shall thereafter promptly make any required submissions under the HSR
Act with respect to the transactions contemplated by this Agreement. In
addition, Summagraphics shall cooperate with Lockheed Martin in connection with
Lockheed Martin's filing under the HSR Act in respect of the transactions
contemplated by this Agreement.
5.8 Stock Option Plan. Summagraphics shall use its reasonable best
-----------------
efforts to cause the stock option plan in the form attached hereto as Exhibit I
(the "Stock Option Plan") to be approved by its shareholders.
ARTICLE VI
COVENANTS OF CALCOMP AND LOCKHEED MARTIN
6.1 Transfer of CalComp Exchange Shares. At the Closing, Lockheed Martin
-----------------------------------
will, or will cause its subsidiary to, transfer and deliver the CalComp Exchange
Shares to Summagraphics as called for by Section 1.1 of this Agreement.
6.2 Intercompany Agreements. At the Closing, Lockheed Martin shall
-----------------------
execute and deliver to Summagraphics each of the Intercompany Agreements.
6.3 Preparation of Proxy Statement. Each of Lockheed Martin and CalComp
------------------------------
shall use reasonable efforts to cooperate with Summagraphics in the preparation
of the Proxy Statement.
6.4 Hart-Scott-Rodino. As soon as practicable following the execution of
-----------------
this Agreement and no later than 10 days after the execution of the Agreement,
Lockheed Martin shall make its filing of a Notification and Report Form pursuant
to, and shall thereafter promptly make any required submissions under, the HSR
Act with
34
<PAGE>
respect to the transactions contemplated by this Agreement. In addition,
Lockheed Martin shall cooperate with Summagraphics in connection with the
preparation and filing of a Notification and Report Form in respect of the
transactions contemplated by this Agreement under the HSR Act by Summagraphics.
6.5 CalComp Financial Statements. As soon as practicable following the
----------------------------
execution of this Agreement but in no event after March 25, 1996, CalComp shall
deliver to Summagraphics for inclusion in the Proxy Statement the following
financial statements, audited, with an unqualified opinion by Ernst & Young LLP,
CalComp's independent auditors; the consolidated balance sheet of CalComp for
each of the fiscal years ended December 31, 1995 and 1994, the consolidated
income statement of CalComp for each of the years in the three year period ended
December 31, 1995, the statement of shareholders' equity for each of the years
ended in the three year period ended December 31, 1995 and the consolidated
statement of cash flow of CalComp for each of the years in the three year period
ended December 31, 1995 (collectively, the "CalComp Financial Statements"). The
CalComp Financial Statements shall be prepared on a basis which treats the
disposition of AGT as if it had occurred prior to the CalComp Financial
Statements.
6.6 Pre-Closing Assistance. Lockheed Martin acknowledges that changes may
----------------------
occur in the business of Summagraphics and the Summagraphics Subsidiaries
resulting from employee resignations and the deterioration or termination of
vendor or customer relations which are a direct result of the announcement or of
the transactions contemplated by this Agreement and Lockheed Martin will use
reasonable efforts to work with Summagraphics to remedy such occurrences, it
being understood that if such occurrences (together with all other events,
changes or occurrences) result in a Material Adverse Effect despite Lockheed
Martin's efforts, Lockheed Martin would be entitled pursuant to Section 10.2(b)
to terminate this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO CALCOMP'S
AND LOCKHEED MARTIN'S OBLIGATIONS HEREUNDER
Unless waived in writing by Lockheed Martin, in its sole discretion, all
obligations of CalComp or Lockheed Martin, as the case may be, hereunder to
effect the Exchange shall be subject to the fulfillment prior to or at the
Closing of the following conditions:
7.1 Representations, Warranties, Covenants. The representations and
--------------------------------------
warranties of Summagraphics herein contained shall be true in all material
respects as of the Closing, shall be deemed made again at and as of the Closing
and shall be true in all material respects as if so made again; Summagraphics
shall have performed all of the obligations and complied with all of the
covenants required by this Agreement to be performed or complied with by it in
all material respects on or prior to the Closing Date and Lockheed Martin shall
receive from Summagraphics officers' certificates in such detail as Lockheed
Martin may reasonably
35
<PAGE>
request dated the Closing Date and signed by the chief executive officer,
president or secretary of Summagraphics to the foregoing effect.
7.2 No Adverse Changes. There shall not have been any material adverse
------------------
changes in the financial position, results of operations, assets, liabilities or
business of Summagraphics and the Summagraphics Subsidiaries, taken as a whole,
from November 30, 1995, the date of the Summagraphics Financial Statements
referred to in Paragraph 3.1(e) above, to the Closing Date, which changes,
individually or in the aggregate, have or could reasonably be expected to have a
Material Adverse Effect.
7.3 Due Diligence Audit of Summagraphics and its Subsidiaries. The tax
---------------------------------------------------------
portion of the due diligence audit of Summagraphics and its Subsidiaries
conducted pursuant to Paragraph 4.6 shall have confirmed the accuracy of the
representations and warranties set forth in Section 3.1(h) and 3.1(n) and the
final review of accountant's work papers relating to Summagraphics' Belgium
operation shall be reasonably satisfactory to Lockheed Martin.
7.4 Legal Opinion. Lockheed Martin shall have received a written opinion,
-------------
dated as of the Closing Date, from Hughes & Luce, L.P., counsel to
Summagraphics, in form reasonably satisfactory to Lockheed Martin, which shall
cover matters customary in transactions of this nature.
7.5 No Adverse Proceedings. There shall be no order restraining or
----------------------
prohibiting the transaction contemplated hereby and no action or proceeding
against any of the Parties or their respective Subsidiaries in respect of the
consummation of the transactions contemplated by this Agreement shall have been
instituted or threatened or any investigations or inquiries undertaken that, in
the reasonable judgment of the affected party, could result in substantial
damages or as a result of which the affected party could be deprived of any of
the material benefit of the contemplated transactions.
7.6 Intercompany Agreements. Summagraphics shall have executed and
-----------------------
delivered to Lockheed Martin each of the Intercompany Agreements referred to in
Section 5.2.
7.7 Approval by Stockholders of the Agreement, the Stock Option Plan and
--------------------------------------------------------------------
Amendment and Restatement of Summagraphics' Articles of Incorporation. This
- ---------------------------------------------------------------------
Agreement, the Fourth Amended and Restated Articles of Incorporation and the
Stock Option Plan shall have been submitted to the stockholders of Summagraphics
at a special meeting of stockholders duly called and held and each of the
transactions contemplated by this Agreement, the Fourth Amended and Restated
Articles of Incorporation and the Stock Option Plan shall have been approved, in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware (the "DGCL") and the Certificate of
Incorporation and Bylaws of Summagraphics, by an affirmative vote of the holders
of at least a majority of all the outstanding shares of Summagraphics Common
Stock entitled to vote and, with respect to the Exchange and
36
<PAGE>
the Stock Option Plan by the affirmative vote of the holders of a majority of
the shares present and entitled to vote at the meeting. Summagraphics shall
have duly authorized the filing of, and shall have filed and caused to be
accepted of record by the Secretary of State of the State of Delaware, the
Fourth Amended and Restated Articles of Incorporation.
7.8 Additional Listing Application. Summagraphics shall have caused the
------------------------------
Summagraphics Exchange Shares to be listed on the NASDAQ Interdealer Quotation
System.
7.9 Secretary's Certificate. At the Closing, Summagraphics shall cause to
-----------------------
be delivered to Lockheed Martin, a secretary's certificate in a form reasonably
satisfactory to Lockheed Martin.
7.10 Compliance With Laws/Government Approvals. All applicable
-----------------------------------------
securities, antitrust and other laws shall have been complied with in connection
with the transactions contemplated hereby. All authorizations, consents, orders
or approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any governmental authorities necessary for the consummation
of the transactions contemplated by this Agreement, including, but not limited
to, such requirements under applicable state securities laws, the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the HSR Act, shall
have been filed, occurred or been obtained. All other material consents of
third parties shall have been obtained.
7.11 Backlog. The representations and warranties set forth in Section
-------
3.1(bb) shall be true and correct in all respects as of Closing. At the
Closing, Summagraphics shall have caused to be delivered to Lockheed Martin, a
certificate from Michael S. Bennett and Dave Osowski in such detail as Lockheed
Martin may reasonably request, dated the Closing Date, to such effect together
with copies of purchase orders evidencing such Backlog.
ARTICLE VIII
CONDITIONS PRECEDENT TO SUMMAGRAPHICS' OBLIGATIONS HEREUNDER
Unless waived in writing by Summagraphics, in its sole discretion, all
obligations of Summagraphics hereunder to effect the Exchange shall be subject
to the fulfillment prior to or at the Closing of the following conditions:
8.1 Representations, Warranties, Covenants. The representations and
--------------------------------------
warranties of each of CalComp and Lockheed Martin herein contained shall be true
in all material respects as of the Closing Date, shall be deemed made again at
and as of the Closing Date and shall be true in all material respects as if so
made again. Each of CalComp and Lockheed Martin shall have performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date in all material
respects and Summagraphics shall have received from Lockheed Martin an officer's
certificate in such detail as Summagraphics may reasonably request dated the
Closing Date and signed by its president, any vice
37
<PAGE>
president or other authorized signatory or secretary to the foregoing effect.
8.2 No Adverse Proceedings or Events. There shall be no order restraining
--------------------------------
or prohibiting the transactions contemplated hereby and no action or proceeding
against any of the Parties or their respective Subsidiaries in respect of the
consummation of the transactions contemplated by this Agreement shall have been
instituted or threatened or any investigations or inquiries undertaken that in
the reasonable judgment of Summagraphics, could result in substantial damages or
as a result of which Summagraphics could be deprived of any of the material
benefits of the transactions contemplated by this Agreement.
8.3 No Adverse Changes. There shall not have been any material adverse
------------------
change in the financial position, results of operations, assets, liabilities or
business of CalComp and the CalComp Subsidiaries, taken as a whole, from
December 31, 1995, to the Closing Date, which changes, individually or in the
aggregate, have or constitute a Material Adverse Effect.
8.4 Legal Opinion. Summagraphics shall have received a written opinion,
-------------
dated as of the Closing Date, of in-house counsel to Lockheed Martin, in form
reasonably satisfactory to Summagraphics, which shall cover matters customary in
transactions of this nature.
8.5 Fairness Opinion. The fairness opinion delivered to the Board of
----------------
Directors of Summagraphics by Needham & Company, Inc. in accordance with the
provisions of Section 3.1(w) shall not have been rescinded.
8.6 Stockholder Approval. The transactions contemplated by this Agreement
--------------------
and the Fourth Amended and Restated Articles of Incorporation shall have been
approved and adopted by the affirmative vote of the holders of at least a
majority of the outstanding shares of Summagraphics Common Stock.
8.7 Secretary's Certificate. At the Closing, each of CalComp and Lockheed
-----------------------
Martin shall cause to be delivered to Summagraphics, a secretary's certificate
in a form reasonably satisfactory to Summagraphics.
8.8 Intercompany Agreements. Lockheed Martin shall have executed and
-----------------------
delivered to Summagraphics each of the Intercompany Agreements referred to in
Section 5.2. Sufficient funds shall have been made available to Summagraphics
pursuant to the Revolving Credit Agreement at the Closing to allow Summagraphics
to repay in full its indebtedness to Silicon Valley Bank and Heller Financial.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 Update Disclosure; Breaches. From and after the date hereof until the
---------------------------
Closing, each Party shall promptly notify each other Party by written update of
(a) the occurrence, non-
38
<PAGE>
occurrence, or any event the occurrence, or non-occurrence, of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate, (b) any failure of a Party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it pursuant
to this Agreement, and (c) any other matter which may occur from and after the
date of this Agreement which, if existing on the date hereof, would have been
required to be described herein; provided, however, that the delivery of any
such notice shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to or on the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the Party
receiving such notice under this Agreement.
9.2 Tax Returns. The Exchange shall be reported as a "reorganization"
-----------
within the meaning of Section 368(a)(i)(B) of the Code in all federal and, to
the extent permitted, all state and local tax returns filed after the Closing.
Notwithstanding any other provisions of this Agreement, the obligations set
forth in this Section 9.2 shall survive the Closing.
9.3 Best Efforts and Further Assurances. Each of the Parties to this
-----------------------------------
Agreement shall use its best reasonable efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
the Closing under this Agreement. Each party hereto, at the reasonable request
of another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
affecting completely the consummation of this Agreement and the transactions
contemplated hereby. If, at any time after the Closing, any such further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest Lockheed Martin with full right, title and possession of the Summagraphics
Exchange Shares or Summagraphics with full right, title and possession of the
CalComp Exchange Shares, the officers and directors of each of Lockheed Martin
and Summagraphics shall take all such lawful and necessary action.
9.4 Payoff of Outstanding Indebtedness. At the Closing, Summagraphics
----------------------------------
shall pay, discharge and satisfy all outstanding indebtedness to Silicon Valley
Bank and Heller Financial described on Schedule 3.1(aa) and shall deliver to
Lockheed Martin evidence satisfactory to Lockheed Martin that such banks or
financial institutions have released all Encumbrances which such bank or
financial institutions then hold against the properties or assets of
Summagraphics or any Summagraphics Subsidiaries. The Parties acknowledge and
agree that Summagraphics shall be entitled to borrow funds from Lockheed Martin
under the Revolving Credit Agreement at Closing to pay off such amounts.
9.5 Directors and Officers Liability Insurance. For a period of six years
------------------------------------------
after the Closing, Lockheed Martin shall use reasonable efforts to cause to be
maintained in effect the current policies of directors and officers liability
insurance maintained by Summagraphics (provided that Lockheed Martin may
substitute therefore policies with reputable and financially sound carriers of
at least the same coverage in amounts containing terms and
39
<PAGE>
conditions which are no less advantageous) with respect to claims arising from
or related to facts or events which occurred at or before the Closing; provided,
that Lockheed Martin shall not be obligated to make premium payments for such
insurance to the extent such premiums exceed 150% of the premiums paid as of the
date hereof by Summagraphics for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Lockheed Martin and Summagraphics shall
maintain the most advantageous policies of directors, and officers' insurance
obtainable for an annual premium equal to the Maximum Amount.
9.6 CalComp Taxes.
-------------
(a) Lockheed Martin shall reimburse or pay and assume liability for
and indemnify and hold harmless Summagraphics and CalComp against (i) any
Federal or state income or franchise taxes based on income, including any
interest, penalties or other additions to tax with respect to such amounts,
payable by or on behalf of CalComp or any of the CalComp Subsidiaries for any
period ending on or prior to December 31, 1995 (except in each case to the
extent that such liability is properly reflected as an accrued liability in a
balance sheet for such company as at the close of business on December 31,
1995), and (ii) any deficiencies in any taxes described in (i) above payable by
or on behalf of CalComp or any of the CalComp Subsidiaries with respect to any
period ending on or prior to December 31, 1995.
(b) Lockheed Martin shall be entitled to all refunds of any taxes
described in (a)(i) above, together with any interest thereon, with respect to
CalComp or any of the CalComp Subsidiaries for any period ending on or prior to
December 31, 1995, and Summagraphics shall pay or cause to be paid to Lockheed
Martin any such refunds received.
ARTICLE X
TERMINATION, AMENDMENT, SURVIVAL OF
REPRESENTATIONS AND MISCELLANEOUS
10.1 Amendment. This Agreement may not be amended at any time except in
---------
writing signed by each of the Parties.
10.2 Termination. Notwithstanding any other provision to the contrary of
-----------
this Agreement, and notwithstanding the approval of this Agreement by the
stockholders of Summagraphics, this Agreement and the transactions contemplated
hereby may be terminated and the Exchange abandoned (without any obligation
(other than the payment of the fee contemplated by Section 4.4 in the event that
Summagraphics terminates this Agreement) by Lockheed Martin or Summagraphics to
renegotiate the Agreement) at any time prior to the Effective Date:
(a) By mutual consent of Summagraphics and Lockheed Martin; or
40
<PAGE>
(b) By Summagraphics or Lockheed Martin (provided that the terminating
Party is not then in material breach of any representation, warranty, covenant,
or other agreement contained in this Agreement) in the event of a material
breach by the other Party of any representation, warranty, covenant or other
agreement contained in this Agreement which cannot be or has not been cured
within thirty (30) days after the giving of written notice to the breaching
Party of such breach; provided, however, that, for purposes of this Section
10.2(b), a material breach of a representation or warranty shall be deemed to
exist only if, when aggregated with all other such breaches, the breach has or
constitutes a Material Adverse Effect; or
(c) By either Party hereto if the Federal Trade Commission or the
Department of Justice, as the case may be, denied approval of the Exchange under
the HSR Act and the time period for all appeals or requests for reconsideration
has run;
(d) By either Summagraphics or Lockheed Martin in the event the
Closing has not occurred on or before June 15, 1996 or such later date as may be
established pursuant to Section 1.2, provided the failure to consummate the
Exchange is not caused by or does not result in any breach of the Agreement by
the Party electing to terminate; or
(e) By the Board of Directors of either Summagraphics or Lockheed
Martin (provided that the terminating Party is not then in material breach of
any representation, warranty, covenant or other agreement contained in this
Agreement) in the event that any of the conditions precedent to the obligations
of such Party to consummate the Exchange cannot be satisfied or fulfilled on or
before June 15, 1996 or such later date as may be established pursuant to
Section 1.2;
(f) By Summagraphics, if Lockheed Martin has not on or before the date
the Proxy Statement is first mailed to stockholders of Summagraphics delivered
written notice to Summagraphics that the conditions set forth in Section 7.3 has
been waived or satisfied;
(g) By Summagraphics if the holders of more than fifty percent of the
outstanding shares of Summagraphics Common Stock fail to vote in favor of the
transactions contemplated by this Agreement or the Fourth Amended and Restated
Articles of Incorporation;
(h) By the Board of Directors of Summagraphics if Summagraphics
receives an Acquisition Proposal which the Board of Directors of Summagraphics
determines in good faith in accordance with Paragraph 4.3 that it must consider,
and which Acquisition Proposal a majority of the full Board of Directors of
Summagraphics further determines to approve and to recommend to the stockholders
of Summagraphics for approval; provided however that, in that event,
Summagraphics pays to Lockheed Martin the fee contemplated by Section 4.4.
In the event of the termination of this Agreement and the abandonment of the
transactions contemplated by this Agreement
41
<PAGE>
pursuant to this Paragraph 10.2, other than as otherwise expressly provided
herein, this Agreement shall become void and have no effect, without any
liability on the part of either Party or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing contained in this
Paragraph 10.2 shall relieve either Party from liability for any breach of this
Agreement.
10.3 Survival of Representations and Covenants. Except for those
-----------------------------------------
provisions of this Agreement that by their terms survive the Closing, the
respective warranties, representations, obligations and agreements of the
Parties hereto shall not survive the Closing.
10.4 Expenses. Except as provided in Section 4.4 each party will pay its
--------
own fees and expenses, including the fees and expenses of accountants,
attorneys, investment advisors and other professionals, incurred in connection
with the negotiation of this Agreement and the consummation of the transactions
contemplated hereby, provided that CalComp shall pay (i) the filing fee
associated with the filings of the Parties under the HSR Act and (ii) the filing
fee of the SEC associated with the Proxy Statement. Notwithstanding the
foregoing, in the event that either Party breaches this Agreement and this
Agreement is thereafter terminated, that Party shall pay the reasonable fees and
expenses of third-party consultants, accountants and attorneys that are actually
incurred (including fees and expenses incurred by Summagraphics relating to the
fairness opinion contemplated by Section 3.1(w) and the filing fees to be paid
by CalComp pursuant to the proviso contained in the preceding sentence) by the
-------
non-terminating party in connection with the preparation and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, in the event that Lockheed Martin terminates this
Agreement in breach of the terms hereof or Summagraphics terminates this
Agreement pursuant to Section 10.2(b), Lockheed Martin agrees to pay within five
days of receipt of a reasonably detailed statement from Summagraphics, the
reasonable fees and expenses of third party consultants, accountants and
attorneys which are actually incurred by Summagraphics in connection with the
preparation and delivery of this Agreement and the consummation of the
transactions contemplated hereby. The obligations of the Parties under this
Section will survive any termination of this Agreement pursuant to Section 10.2.
10.5 Notices. All notices, requests, demands and other communications
-------
under or connected with this Agreement shall be in writing and (a) if to
Summagraphics shall be addressed to 8500 Cameron Road, Austin, Texas 78754,
Attention: Robert B. Sims, Esquire, General Counsel, with copies to its
counsel, Hughes & Luce, L.L.P., 1717 Main Street, Suite 2800, Dallas, Texas
75201, Attention: Michael W. Tankersley, Esquire, and (b) if to Lockheed Martin
shall be addressed to 6801 Rockledge Drive, Bethesda, Maryland 20817,
Attention: Stephen M. Piper, Esquire, Assistant General Counsel, with a copy to
Lockheed Martin Information & Technology Services, 6801 Rockledge Drive,
Bethesda, Maryland 20817, Attention: Director of Finance and (c) if to CalComp
shall be addressed to 2411 West LaPalma Avenue, Anaheim, California 92801,
Attention: General Counsel.
42
<PAGE>
10.6 Entire Agreement in Effect. This Agreement, including the Exhibits
--------------------------
and Schedules hereto (together with the Confidentiality Agreements), is intended
by the Parties to and does constitute the entire agreement of the Parties with
respect to the transactions contemplated hereunder. This Agreement including
the Exhibits and Schedules attached hereto supersedes any and all other prior
understandings and agreements between the Parties hereto (other than the
Confidentiality Agreements) and it may not be changed, waived, discharged or
terminated orally but only in writing by a party against which enforcement of
the change, waiver, or discharge or termination is sought.
10.7 General. The paragraph headings contained in this Agreement are for
-------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement and the Exhibits attached
hereto may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, all of which shall become one and the same
instrument. This Agreement and the Exhibits attached hereto shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors; it shall not be assigned.
10.8 Governing Law. This Agreement shall be construed in accordance with
-------------
the laws of the State of Maryland.
10.9 Counterparts. This Agreement and each of the exhibits or schedules
------------
hereto may be executed (by facsimile signature or otherwise) in two or more
counterparts, each of which shall constitute one and the same agreement.
43
<PAGE>
IN WITNESS WHEREOF, Lockheed Martin, CalComp and Summagraphics have caused
this Agreement to be duly executed by their respective chairmen or presidents
and their respective seals to be hereunto affixed and attested by their
respective secretaries thereunto duly authorized as of the date first written
above.
LOCKHEED MARTIN CORPORATION
By:/s/ PETER B. TEETS
------------------
Peter B. Teets
President - Lockheed
Martin Information &
Technology Services Sector
CALCOMP INC.
By:/s/ GARY LONG
-------------
Gary Long
President
SUMMAGRAPHICS CORPORATION
By:/s/ MICHAEL S. BENNETT
----------------------
Michael S. Bennett
President and Chief Executive
Officer
44
<PAGE>
EXHIBIT A
Secured Convertible Debenture
<PAGE>
NEITHER THIS 9-1/4% SECURED CONVERTIBLE DEBENTURE (THIS "DEBENTURE") NOR THE
UNDERLYING SHARES OF STOCK INTO WHICH THIS DEBENTURE MAY BE CONVERTED (THE
"CONVERSION SHARES") HAVE BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW. NEITHER THIS DEBENTURE NOR THE
CONVERSION SHARES NOR ANY PORTION THEREOF OR INTEREST THEREIN MAY BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED AND QUALIFIED
IN ACCORDANCE WITH SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR PURSUANT
TO A VALID EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THE HOLDER'S RIGHTS
UNDER THIS DEBENTURE ARE SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT AMONG
THE HOLDER, THE ISSUER, AND SILICON VALLEY BANK DATED ON OR ABOUT THE DATE OF
THIS DEBENTURE.
9-1/4% SECURED CONVERTIBLE DEBENTURE
Summagraphics Corporation, a Delaware corporation (the "Issuer"), for value
received and without deduction for defense, offset or counterclaim, hereby
promises to pay to Lockheed Martin Corporation, a Maryland corporation (the
"Holder"), its successors and assigns, Two Million Five Hundred Thousand
Dollars ($2,500,000) or such lesser principal amount as is actually advanced by
the Holder from time to time pursuant to the provisions of Section 1 below (the
"Principal Amount") at the times required by Section 3 below, and to pay
interest on said Principal Amount at the rate per annum set forth in Section 2
below at the times required by Section 3 below, until payment of the Principal
Amount has been fully made or duly provided for.
Capitalized terms used but not defined herein shall have the meaning ascribed
to them in the Plan of Reorganization and Agreement for the Exchange of Stock of
CalComp Inc. for Stock of Summagraphics Corporation of even date herewith by and
among the Holder, the Issuer and CalComp Inc. (the "Plan of Reorganization").
1. Funding. From time to time following the date hereof, the Issuer may
request advances (each, an "Advance") of some or all of the Principal Amount by
delivering a written request, substantially in the form attached hereto as
Exhibit C, (i) setting forth the amount requested and (ii) describing in
reasonable detail the specific uses of the proceeds of such Advance or stating
the Pre-Approved Use (as defined below) to which the proceeds of such Advance
will be applied. In no event shall Issuer be entitled to request any Advance in
an amount less than $100,000 nor shall Issuer be entitled to request more than
one Advance in any seven day period. Subject to approval by Holder (except in
the case of Pre-Approved Uses), an Advance of the Principal Amount will be made
by the Holder by wire transfer of funds into the Issuer's account one business
day following the approval of the written request of the Issuer identifying the
specific use(s). Approval or disapproval of a requested Advance will be provided
by Holder within two business days of the date such request is received by
Holder. Schedule 1 attached hereto sets forth a list and description of uses
which have been approved by Holder (the "Pre-
<PAGE>
Approved Uses"), for which Holder will transfer funds one business day following
receipt of a request from Issuer. Advances of the Principal Amount which are
repaid by the Issuer pursuant to the redemption provisions contained in Section
5 of this Debenture will not be available to be readvanced to the Issuer.
2. Interest. Commencing as of the date hereof and continuing until repayment
in full of all sums due hereunder, the unpaid Principal Amount shall bear
interest at a rate of 9-1/4% per annum. All interest payable under the terms of
this Debenture shall be calculated on the basis of a 360 day year and the actual
number of days elapsed.
3. Payments and Maturity. (a) Subject to the provisions of Section 3(b) below,
the unpaid Principal Amount, together with interest accrued and unpaid thereon
at the rate provided above, shall be due and payable in full at the earlier of
(i) the Closing, (ii) the termination of the Plan of Reorganization by the
Issuer (other than a termination by the Issuer based on a material breach by
Holder pursuant to Section 10.2(b) of the Plan of Reorganization), (iii) the
termination of the Plan of Reorganization by the Holder pursuant to the terms of
Section 10.2(b) thereof, or (iv) June 15, 1996 (or such later date as the Holder
agrees to in writing in Holder's sole and absolute discretion).
(b) Not withstanding Section 3(a) above, in the event that either (i) the
Issuer terminates the Plan of Reorganization in accordance with the terms of
Section 10.2(b) thereof or (ii) the Holder terminates the Plan of Reorganization
in breach thereof, the unpaid Principal Amount, together with interest accrued
and unpaid thereon at the rate provided above, shall be due and payable in full
on the first anniversary of the date of the termination of the Plan of
Reorganization.
4. Application and Place of Payments. All payments received on account of this
Debenture shall be applied by the Holder first to the payment of expenses
incurred by the Holder in connection with the collection of amounts payable
under this Debenture (as provided in Section 18), second to the payment of
accrued and unpaid interest then due hereunder and third to the unpaid Principal
Amount. All payments on account of this Debenture shall be paid in lawful money
of the United States of America in immediately available funds during regular
business hours of the Holder at it principal office in Bethesda, Maryland, or at
such other times and places as the Holder may at any time and from time to time
designate in writing to the Issuer.
5. Redemption. The Issuer may redeem this Debenture, in whole but not in part,
at any time, upon ten (10) days' prior written notice to the Holder, without
premium or penalty. Such notice shall specify the date on which this Debenture
will be redeemed and on the second business day preceding such date all rights
that the Holder may have for the conversion hereof shall
-2-
<PAGE>
cease if not exercised in the manner provided below, provided, however, such
conversion rights shall be reinstated and continue if this Debenture is
surrendered for redemption on the date for redemption specified in the notice
and the Issuer fails to pay the redemption price. The redemption price shall be
the Principal Amount plus accrued and unpaid interest through and including the
date of redemption.
6. Security. Simultaneously with the execution and delivery of this Debenture,
the Issuer shall execute and deliver to the Holder the Security Agreement in the
form attached hereto as Exhibit A securing the obligations of the Issuer under
this Debenture by the Collateral (as defined in the Security Agreement).
7. Events of Default. The occurrence of any one or more of the following
events shall constitute an event of default (individually, an "Event of Default"
and collectively, the "Events of Default") under the terms of the Debenture:
(a) The failure of the Issuer to pay to the Holder when due any and all
principal, interest and expenses, if any, payable by the Issuer to the Holder
under the terms of the Debenture; or
(b) The failure of the Issuer reasonably to comply with any covenant or
agreement or the breach by the Issuer of any representation or warranty of the
Issuer contained in this Debenture, the Security Agreement or the Plan of
Reorganization, which failure to comply or breach has not been cured to the
complete satisfaction of the Holder within five (5) business days of such
failure or breach; or
(c) The failure of the Issuer or any of its subsidiaries to pay any Debt when
due, with such failure continuing without cure to the complete satisfaction of
the Holder for more than any applicable grace period with respect thereto, or to
observe or perform any other term or covenant contained in any agreement or
instrument by which the Issuer or any of its subsidiaries is bound evidencing,
securing or relating to Debt, which failure is an event of default as defined
in such agreement or instrument entered into by the Issuer or any of its
subsidiaries as borrower, or which could cause the acceleration of any Debt by a
creditor of the Issuer or any of its subsidiaries; provided that no Event of
Default shall be deemed to have occurred under this subsection 7(c) (i) if the
amount of Debt in default is less than $50,000, unless such breach or default
would otherwise result in a Material Adverse Effect or (ii) if the failure to
pay occurs as result of a failure by the Issuer to comply with certain financial
covenants imposed by Silicon Valley Bank ("SVB") with respect to which SVB
agrees to forebear in the characterization of such non compliance as a default
contingent upon the occurrence of closing under the Plan of Reorganization, as
modified or amended by the parties thereto, or (iii) if the failure to pay
occurs as a result of a default under any Debt which occurs due to any
termination of the Plan of Reorganization by the Holder in breach of the terms
thereof; or
-3-
<PAGE>
(d) The commencement by the Issuer or any of its subsidiaries of a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidation, custodian or other similar official of it or any
substantial part of its property, or consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or the making by the Issuer or any of
its subsidiaries of a general assignment for the benefit of creditors, or
failing generally to pay its debts as they become due, or taking any corporate
action to authorize any of the foregoing; or
(e) The commencement of an involuntary case or other proceeding against the
Issuer or any of its subsidiaries seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Issuer or any of its subsidiaries under
applicable bankruptcy laws as now or hereafter in effect.
For purposes hereof, "Debt" means at any date, without duplication, (i) all
obligations of the Issuer or any of its subsidiaries for borrowed money, (ii)
all obligations of the Issuer or any of its subsidiaries evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of the
Issuer or any of its subsidiaries to pay the deferred purchase price of property
or services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of the Issuer or any of its subsidiaries as
lessee under capital leases, (v) all Debt of others secured by a lien on any
property of the Issuer or any of its subsidiaries, and (vi) all Debt of others
which is guaranteed by the Issuer or any of its subsidiaries or in respect of
which the Issuer or any of its subsidiaries has provided any direct or indirect
assurance against financial loss.
8. Conversion Rights. (a) Upon the occurrence of an Event of Default, and
from time to time thereafter prior to the date on which the Principal Amount
hereof and all accrued interest thereon is paid in full (provided that if notice
of redemption is delivered in accordance with the provisions of Section 5 above,
the right to convert shall terminate on the second business day next preceding
the date fixed for redemption, unless the Issuer shall default in payment due
upon redemption thereof), the Principal Amount and all accrued and unpaid
interest thereon (or any portion thereof which is an integral multiple of
$1,000) (the "Conversion Amount") shall be convertible at the option of the
Holder into fully paid and non-assessable Common Stock of the Issuer at the
Conversion Rate (as defined below), subject in each case to the adjustments in
the
-4-
<PAGE>
Conversion Rate pursuant to Sections 8(b) and 11(j) below. The shares of Common
Stock into which this Debenture is convertible are hereinafter referred to as
"Conversion Shares."
For purposes of this Debenture the term "Conversion Rate" shall mean 500
shares of Common Stock for each $1000 of Conversion Amount, provided that, if
the Plan of Reorganization does not close as a result of a termination by the
Issuer pursuant to Section 10.2(b) of the Plan of Reorganization based upon a
material breach of the Plan of Reorganization by the Holder, the Conversion Rate
will be decreased to 333-1/3 shares of Common Stock for each $1,000 of
Conversion Amount.
(b) Adjustments. The Conversion Rate from time to time in effect shall be
subject to adjustment as follows:
(i) In case the Issuer shall (A) pay a dividend in shares of its Common Stock,
(B) subdivide its outstanding shares of Common Stock, (C) combine its
outstanding shares of Common Stock into a smaller number of shares, or (D) issue
by reclassification of its shares of Common Stock any shares of the Issuer, the
Conversion Rate in effect immediately prior thereto shall be adjusted
retroactively as provided below so that the holder of this Debenture thereafter
surrendered for conversion shall be entitled to receive a number of shares of
the Issuer to which he would have been entitled after the happening of any of
the events described above had such Debenture been converted immediately prior
to the happening of such event. An adjustment made pursuant to this subsection
(i) shall become effective retroactively immediately after the record date in
the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(ii) In case the Issuer shall issue options, warrants or other rights to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the fair market value per share
of Common Stock (as defined in subsection (e) below), the number of shares of
Common Stock into which each $1,000 of Principal Amount of and accrued interest
on this Debenture shall thereafter be convertible shall be determined by
multiplying the number of shares of Common Stock into which the aggregate
Conversion Amount was theretofore convertible by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and the denominator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such fair market value. Subject to subsection (5), such adjustment shall be
made whenever such rights or warrants are issued and shall become effective
retroactively immediately after the record date
-5-
<PAGE>
for the determination of Stockholders entitled to receive such rights or
warrants.
(iii) In case the Issuer shall distribute to all holders of its Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions) or rights to subscribe or warrants, options or other rights to
purchase (excluding those referred to in subsection (ii) above), then in each
such case the number of shares of Common Stock into which each $1,000 of
Principal Amount of and accrued interest on this Debenture shall thereafter be
convertible shall be determined by multiplying the number of shares of Common
Stock into which the aggregate Conversion Amount was theretofore convertible by
a fraction, the numerator of which shall be the fair market value (as defined in
subsection (e) below) per share of Common Stock on the date of such
distribution, and the denominator of which shall be such fair market value per
share of the Common Stock, less the then fair market value (as determined by
independent public accountants selected by the Holder, whose determination shall
be conclusive) of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants applicable to one share
of the Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively immediately after
the record date for the determination of Stockholders entitled to receive such
distribution.
(iv) In the event that at any time, as a result of an adjustment to the
Conversion Rate pursuant to subsection 8(b)(i), the Holder shall become entitled
to receive any shares of the Issuer other than shares of its Common Stock,
thereafter the number of such other shares so receivable upon conversion of this
Debenture shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions contained in this
Section 8 with respect to the Common Stock shall apply on like terms to any such
other shares.
(c) No fractional shares or scrip representing fractional shares shall be
issued upon the conversion of this Debenture. If the conversion of this
Debenture results in a fraction, an amount equal to such fraction multiplied by
the fair market value (determined as provided by Section 8(e)) of the Common
Stock on the day of conversion shall be paid to such holder in cash by the
Issuer.
(d) The Issuer covenants that, upon conversion of this Debenture as herein
provided, there will be credited to the Issuer's capital account, from the
consideration for which the shares of Common Stock issuable upon such conversion
are issued, an amount per share of Common Stock so issued as determined by the
Issuer's Board of Directors, which amount shall not be less than the amount
required by law and by the Certificate of Incorporation of the Issuer, as
amended, as in effect on the date of such
-6-
<PAGE>
conversion. For the purposes of this covenant the Conversion Amount, less the
amount of cash paid in lieu of the issuance of fractional shares on such
conversion, shall be deemed to be the amount of consideration for which the
shares of Common Stock issuable upon such conversion are issued.
(e) No adjustment in the Conversion Shares shall be made by reason of the
issuance of shares of Common Stock or any security convertible into shares of
Common Stock in exchange for cash, property or services; provided, the value of
such cash, property or services is equal to the fair market value of the Common
Stock issued therefor. For purposes hereof, the term "fair market value" or the
Common Stock shall mean, for any day, the last sale price per share for the
Common Stock on the National Association of Securities Dealers National Market
System, or, if the Common Stock shall not be listed on such system, the closing
bid price per share shall not be listed on such system, the closing bid price
per share in the over-the-counter market, in each such case, unless otherwise
provided herein, averaged over a period of 5 consecutive trading days prior to
the date as of which the determination is to be made.
(f) The right to convert this Debenture into Common Stock shall be exercised
by the Holder delivering written notice (the "Conversion Notice") and a copy of
the Debenture (provided that if the Conversion Notice relates to the exercise of
conversion rights in respect of all of the Principal Amount and accrued and
unpaid interest, the Holder shall deliver the original Debenture) to the Issuer
at its office in Austin, Texas. Such conversion shall be deemed to have been
made as of the date such COnversion Notice is sent to the Issuer in accordance
with this Debenture. The Holder shall be treated for all purposes as having
become the record holder of such Common Stock on such date. In case of notice
being given by the Issuer for redemption pursuant to Section 5 above, the right
to convert Principal Amount of and accrued and unpaid interest on the Debenture
shall remain in effect until the close of business on the second business day
preceding the date specified in the notice for redemption and, on that date,
shall cease and terminate, unless previously exercised or the Issuer defaults in
the payment of the redemption price for this Debenture. Upon conversion, the
Issuer shall deliver to the Holder duly issued certificates representing the
shares of fully paid and nonassessable Common Stock which constitute the
Conversion Shares as well a new debenture on the same terms hereof representing
the remaining Principal Amount which shall include all accrued and unpaid
interest up to the date of Conversion.
(g) The Issuer shall pay all expenses, taxes (other than income taxes of
Holder) and other charges payable in connection with the preparation, execution
and delivery of stock certificates and the new debenture pursuant to this
Section 8, except that, in case such stock certificates or new debenture shall
be registered in a name or names other than the name of the Holder of this
Debenture, funds sufficient to pay all stock transfer taxes, if any, which shall
be payable upon the execution and delivery of such stock certificates or
debenture shall be paid by the Holder to the
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<PAGE>
Issuer at the time of delivering the Debenture to the Issuer upon exercise.
9. Transfer of Debenture and Conversion Shares. (a) The Holder of this
Debenture, by acceptance hereof, represents and acknowledges that this
Debenture and the Conversion Shares which may be purchased upon exercise of the
conversion rights contained in Section 8 hereof are not being registered under
the Securities Act of 1933, as amended (the "Securities Act"). The Holder is
acquiring this Debenture for investment for its own account, with no intention
of reselling or otherwise distributing the same without registration under the
Securities Act, except pursuant to a valid exemption under the Securities Act.
Neither this Debenture nor the Conversion Shares issuable hereunder may be
transferred except (i) pursuant to an effective registration statement under the
Securities Act, (ii) to any affiliate of Holder, or a nominee thereof, or (iii)
pursuant to a valid exemption from registration under the Securities Act.
10. Capitalization of the Issuer. The Issuer represents and warrants to the
Holder that the authorized capital stock of the Issuer is 20,000,000 shares of
common stock, $.01 par value, (the "Common Stock") of which 4,623,735 shares are
issued and outstanding on the date hereof. All such shares of the Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable.
11. Additional Agreements of the Issuer. The Issuer agrees with the Holder
and with any holder of Conversion Shares acquired upon conversion of all or a
portion of the Principal Amount and accrued and unpaid interest that:
(a) Character of Conversion Shares. All shares which may be issued upon the
exercise of the rights contained in the Debenture, have been duly authorized by
the Issuer's Board of Directors and upon issuance, will be validly issued, fully
paid an nonassessable and free from all taxes (other than income taxes of
Holder), liens and charges with respect to the issue thereof;
(b) Reservation of Shares. During the period within which the conversion
rights contained in this Debenture may be exercised, the Issuer will have at all
times authorized and reserved (free from preemptive rights) for the purpose of
issue or transfer upon exercise of the conversion rights contained in Section 8
hereof, a sufficient number of shares of its Common Stock to provide for the
exercise of the conversion rights and all other agreements pursuant to which
third parties have rights to acquire shares of Common Stock;
(c) No Violations. The Issuer will take all such action as may be necessary to
ensure that Conversion Shares may be so issued without violation of any
applicable law or regulation, or of any requirements of the National Association
of Securities Dealers National Market System;
-8-
<PAGE>
(d) Maintain Authorized Shares. The Issuer will not take any action that
would result in any adjustment of the number of Conversion Shares issuable upon
exercise of the conversion rights if the total number of Conversion Shares
purchasable after such action upon conversion of the full Conversion Amount,
together with all shares of Common Stock then outstanding and all shares of
Common Stock then issuable upon exercise of all options and other warrants to
purchase Common Stock and upon conversion of all convertible securities then
outstanding, would exceed the total number of shares of Common Stock then
authorized by the Issuer's Certificate of Incorporation, as then amended;
(e) Actions in Avoidance; Non-Dilution. The Issuer will not, by amendment
of its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, issue or sale of securities or otherwise, avoid
or take any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed hereunder by the
Issuer, but will at all times in good faith assist in carrying out all of the
provisions of this Debenture and in taking all of such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Debenture and holders of any Conversion Shares issue pursuant hereto; and
(f) Financial Information. The Issuer will provide the Holder copies of all
annual, quarterly and monthly financial statements, promptly after the same are
available, and in addition, promptly after requested, such other information
concerning the Issuer as the Holder may reasonable require (i) in order to
comply with any law or governmental regulation, order of any court, or order,
inquiry or investigation of any governmental agency or instrumentality, or (ii)
in order to exercise any right or privilege of the Holder or to enforce any
obligation of the Issuer under the Debenture or any agreement or instrument
executed and delivered in connection therewith. All information provided
pursuant to this Section 11(f) (other than any information otherwise generally
available to the public) will be treated as confidential and the Holder will
cause its advisors and agents to maintain the confidentiality of all such
confidential information.
(g) Notice of Adjustment. Whenever the Conversion Shares issuable upon the
exercise of the conversion rights hereunder shall be adjusted as herein
provided, or the rights of the Holder or holders of Conversion Shares shall
change by reason of other events specified herein, the Issuer shall compute the
adjusted number of Conversion Shares in accordance with the provisions hereof
and shall prepare a certificate signed by its chief executive officer or
principal financial officer setting forth the adjusted number of Conversion
Shares issuable upon the exercise of the conversion rights or specifying the
other shares of stock, securities or assets receivable as a result of such
change in rights, and showing in reasonable detail the facts and calculations
upon which such adjustments or other changes are based, and shall obtain an
opinion of the Issuer's independent
-9-
<PAGE>
certified public accountant reasonably satisfactory to the Holder as to the
correctness of such adjustments and calculations and to the effect that such
adjustments and calculations have been made in accordance with the terms hereof.
The Issuer shall cause to be mailed to the Holder copies of such officer's
certificate and accountants' opinion together with a notice stating that the
number of Conversion Shares purchasable upon exercise of the conversion rights
have been adjusted and setting forth the adjusted number of Conversion Shares so
purchasable.
(h) Dividend Restrictions. Without the prior written consent of the Holder,
the Issuer will not declare or pay any dividend or other distribution (whether
cash or property) on its Common Stock.
(i) Notifications to Holder. The Issuer shall give written notice at least
30 days prior to:
(i) offering for subscription pro rata to the holders of its Common Stock
any additional shares of stock of any class or other rights;
(ii) effecting any capital reorganization, or reclassification of the
capital stock of the Issuer, or consolidation, merger or share exchange of the
Issuer with another corporation, or sale, transfer or other disposition of all
or substantially all of its assets; or
(iii) effecting a voluntary dissolution, liquidation or winding up of the
Issuer;
and, in any one or more of such cases, the Issuer shall give the Holder (A) at
least 30 days' (but not more than 120 days') prior written notice of the date on
which the books of the Issuer shall close or a record shall be taken for such
subscription rights or for determining rights to vote in respect of any such
issuance, reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
and (B) in the case of any such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, at least 30 days' (but not more than 120 days') prior
written notice of the date when the same shall take place.
(j) Issuer to Prevent Dilution. If any event or condition occurs as to which
other provisions of this Section 11 are not strictly applicable or if strictly
applicable would not fairly protect the conversion rights under this Debenture
in accordance with the essential intent and principles of such provision, or
which might materially and adversely affect the conversion rights of the Holder
under any provisions of this Debenture, then the Issuer shall make an adjustment
in the application of such provisions, in accordance with such essential intent
and principles, so as to protect such conversion rights as
-10-
<PAGE>
aforesaid, and any adjustment necessary with respect to the Conversion Amount
and the number of Conversion Shares purchasable hereunder so as to preserve the
rights of the Holder of this Debenture hereunder.
12. Consent of Lenders. The Issuer represents and warrants to the Holder that,
prior to the date hereof, the Issuer has received and delivered to the Holder
(in form reasonably satisfactory to the Holder) a written consent and waiver to
Issuer's execution and delivery of this Debenture and the Security Agreement
from Silicon Valley Bank.
13. Registration Rights Agreement. Simultaneously with the execution and
delivery of this Debenture, the Holder and Issuer shall execute and deliver the
registration rights agreement in the form attached hereto as Exhibit B.
14. Exchange and Replacement. This Debenture is exchangeable, upon the
surrender hereof by the Holder at the office of the Issuer described herein, for
one or more new Debentures of like tenor and date representing in the aggregate
the right to payment of any then outstanding indebtedness issued pursuant to the
Debenture and to purchase the number of Conversion Shares which may be purchased
hereunder.
15. Remedies. Upon the occurrence of an Event of Default, at the option of the
Holder, all amounts payable by the Issuer to the Holder under the terms of this
Debenture shall become immediately due and payable by the Issuer to the Holder
without notice to the Issuer or any other person, and the Holder shall have all
of the rights, powers, and remedies available under the terms of the Debenture
or at law or in equity or otherwise. The Issuer and all endorsers, guarantors,
and other parties who may now or in the future be primarily or secondarily
liable for the payment of indebtedness evidenced by this Debenture hereby
severally waive presentment, protest and demand, notice of protest, notice of
demand and of dishonor and non-payment of this Debenture and expressly agree
that this Debenture or any payment hereunder may be extended from time to time
without in any way affecting the liability of the Issuer, guarantors and
endorsers.
16. Confessed Judgment. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE ISSUER
HEREBY AUTHORIZES ANY ATTORNEY DESIGNATED BY THE HOLDER OR ANY CLERK OF ANY
COURT OF RECORD TO APPEAR FOR THE ISSUER IN ANY COURT OF RECORD AND TO CONFESS
JUDGMENT WITHOUT PRIOR HEARING AGAINST THE ISSUER IN FAVOR OF THE HOLDER FOR AND
IN THE AMOUNT OF THE UNPAID PRINCIPAL AMOUNT, ALL INTEREST ACCRUED AND UNPAID
THEREON, ALL OTHER AMOUNTS PAYABLE BY THE ISSUER TO THE HOLDER UNDER THE TERMS
OF THIS DEBENTURE OR ANY OTHER LOAN DOCUMENTS, COSTS OF SUIT, AND ATTORNEYS'
FEES. THE ISSUER HEREBY RELEASES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL
ERRORS AND ALL RIGHTS TO EXEMPTION, APPEAL, STAY OF EXECUTION, INQUISITION, AND
OTHER RIGHTS TO WHICH THE ISSUER MAY OTHERWISE BE ENTITLED UNDER THE LAWS OF THE
UNITED STATES OF AMERICA OR OF ANY STATE OR
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<PAGE>
POSSESSION OF THE UNITED STATES OF AMERICA NOW IN FORCE OR WHICH MAY HEREAFTER
BE ENACTED. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE
ISSUER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF OR BY ANY
IMPERFECT EXERCISE THEREOF AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED
PURSUANT THERETO. SUCH AUTHORITY MAY BE EXERCISED ON ONE OR MORE OCCASIONS OR
FROM TIME TO TIME IN THE SAME OR DIFFERENT JURISDICTIONS AS OFTEN AS THE HOLDER
SHALL DEEM NECESSARY OR DESIRABLE, FOR ALL OF WHICH THIS DEBENTURE SHALL BE A
SUFFICIENT WARRANT.
17. Consent to Jurisdiction. THE ISSUER IRREVOCABLE SUBMITS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE SATE OF MARYLAND OVER
ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS DEBENTURE.
THE ISSUER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION THAT THE ISSUER MAY NOW OR HEREAFTER HAVE TO THE LAYING THE VENUE OF
ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUCH SUIT, ACTION, OR
PROCEEDING BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON THE
ISSUER AND MAY BE ENFORCED IN ANY COURT IN WHICH THE ISSUER IS SUBJECT TO
JURISDICTION BY A SUIT UPON SUCH JUDGMENT PROVIDED THAT SERVICE OF PROCESS IS
EFFECTED UPON THE ISSUER AS PROVIDED IN THIS DEBENTURE OR AS OTHERWISE PERMITTED
BY APPLICABLE LAW.
18. Waiver of Trial by Jury. The parties hereto hereby waive trial by jury in
any action or proceeding to which any or all of them may be parties, arising out
of or in any way pertaining to this Debenture. It is agreed and understood that
this waiver constitutes a waiver of trial by jury of all claims against all
parties to such actions or proceedings, including claims against parties who are
not parties to this Debenture.
This waiver is knowingly, willingly and voluntarily made by each of the
parties hereto, and the parties hereby represent that no representations of fact
or opinion have been made by an individual to induce this waiver of trial by
jury or to in any way modify or nullify its effect. The parties further
represent that they have been represented in the signing of this Debenture and
in the making of this waiver by independent legal counsel, selected of their own
free will, and that they have had the opportunity to discuss this waiver with
counsel.
19. Expenses. The Issuer promises to pay to the Holder on demand by the Holder
all reasonable costs and expenses incurred by the Holder in connection with the
collection and enforcement of this Debenture following the occurrence of an
Event of Default, including, without limitation, all attorneys' fees and
expenses and all court costs.
20. Incorporation by Reference. Each of the representations and warranties
of Borrower set forth in the Plan of Reorganization
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<PAGE>
are hereby incorporated by reference and may be relied on by Lender as if set
forth in full herein.
21. Notices. Any notice, request, or demand to or upon the Issuer or the
Holder shall be deemed to have been properly given or made when delivered by
certified mail, return-receipt requested, or by facsimile, receipt confirmed::
If to Holder: Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Telecopy: 301-897-6651
With a required Lockheed Martin Corporation
copy to: 6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Pete Reynolds
Assistant Treasurer-
Treasury Operations
Telecopy: 301-897-6406
If to Issuer: Summagraphics Corporation
8500 Cameron Road
Austin, Texas 78746
Attention: President
Telecopy: 512-327-9844
22. Partial Invalidity. In the event any provision of this Debenture (or any
part of any provision) is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision (or remaining part of
the affected provision) of the Debenture; but the Debenture shall be construed
as if such invalid, illegal, or unenforceable provision (or part thereof) had
not been contained in this Debenture, but only to the extent it is invalid,
illegal, or unenforceable.
23. Captions. The captions herein set forth are for convenience only and
shall not be deemed to define, limit, or describe the scope or intent of this
Debenture.
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<PAGE>
24. Governing Law. The provisions of this Debenture shall be construed,
interpreted and enforced in accordance with the laws of the State of Maryland
(excluding conflicts of law principles) as the same may be in effect from time
to time.
25. Assignment. This Debenture may not be assigned, in whole or in part, by
either party without the prior written consent of the other party; provided,
however, that Holder may assign this Debenture to any of its subsidiaries.
IN WITNESS WHEREOF, Holder and Issuer have caused this Debenture to be signed
by their duly authorized officers under its corporate seal, duly attested by its
authorized officer, and to be dated as of March 19, 1996.
ATTEST: SUMMAGRAPHICS CORPORATION,
a Delaware Corporation
/s/Robert B Sims By:/s/Michael S. Bennett
____________________________ _________________________(SEAL)
Secretary Michael S. Bennett
President and Chief Executive
Officer
ATTEST: LOCKHEED MARTIN CORPORATION,
a Maryland Corporation
[signature appears here] By:/s/Walter E. Skowronski
____________________________ _________________________(SEAL)
Secretary Walter E. Skowronski
Vice President and Treasurer
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<PAGE>
CONFIDENTIAL -- FOR DISCUSSION PURPOSES ONLY
SCHEDULE 1
Preapproved Uses of Proceeds
Preapproved
Item Uses
Payment of amounts past due to
Venture Manufacturing (Singapore) Up to $1,000,000
Payment of amounts past due to
Mutoh Up to $1,200,000
Payment of amounts past due to
Salisbury (Harvard) manufacturing Up to $100,000
Total Pre-Approved Uses Up to $2,300,000
Additional borrowings to require approval per Exhibit C and the terms of the
Debenture.
<PAGE>
EXHIBIT A
to Secured
Convertible Debenture
================================================================================
SECURITY AGREEMENT
Dated as of March 19, 1996
by
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
(the "Issuer")
in favor of
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
(the "Holder")
================================================================================
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of this 19th day of
March, 1996, by SUMMAGRAPHICS CORPORATION, a Delaware corporation (the
"Issuer"), in favor of LOCKHEED MARTIN CORPORATION, a Maryland corporation (the
"Holder").
RECITALS
A. The Issuer and the Holder have entered into an agreement with Calcomp Inc.,
a wholly owned subsidiary of the Holder ("Calcomp"), of even date herewith,
which is known as the Plan of Reorganization and Agreement for the Exchange of
Stock of Calcomp Inc. for Stock of Summagraphics Corporation (the "Plan of
Reorganization"), pursuant to which the parties have agreed to enter into a
transaction to accomplish the acquisition by Holder of approximately 90% of the
issued and outstanding shares of common stock in the Issuer.
B. In order to provide the Issuer with required working capital until the
closing of the Plan of Reorganization, the Holder has agreed to lend the Issuer
up to Two Million Five Hundred Thousand Dollars ($2,500,000), subject to the
Holder's approval of the specific use(s) of each requested advance of funds, and
the Issuer's obligations to repay outstanding advances together with interest
thereon and costs of collection associated therewith (collectively the "Issuer's
Liabilities") are evidenced by a 9 1/4% Secured Convertible Debenture of even
date herewith (the "Debenture").
C. As referenced by the terms of Section 6 of the Debenture, the Holder has
required that the Issuer's Liabilities be secured by this Agreement.
NOW, THEREFORE, in order to secure (a) the prompt payment and performance of
the Issuer's Liabilities, and (b) the performance by the Issuer of all the
terms, conditions, and provisions of this Agreement (collectively with the
Issuer's Liabilities, the "Issuer's Obligations"; provided, however, that the
Issuer's Obligations shall not include any obligation of the Issuer to the
Holder under the Plan of Reorganization except only to the extent that such
obligation relates specifically to the Debenture or to this Agreement); the
Issuer agrees with the Holder as follows:
1. Definitions. All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to those terms in the Debenture or the Plan
of Reorganization, as the case may be. In addition, the following terms shall
have the following meanings for purposes of this Agreement.
"Accounts", "Documents", "Equipment", "Instruments" and "Inventory" shall, in
addition to any meaning given to such terms in this Agreement, have the
respective meanings as are given to those terms in the Uniform Commercial Code
as presently adopted and in effect in any state in which any portion of the
Collateral may now or hereafter be located, and shall also cover, without
limitation, (a) all property included in these respective terms,
<PAGE>
whether now owned or existing or hereafter acquired or created, and (b) all
proceeds (cash and non-cash) of the foregoing. The term "Equipment" shall not
include any Equipment in which the Issuer has granted a security interest to
Heller Financial, Inc.
"Account Debtor" shall mean any person who is obligated on a Receivable.
"Collateral" shall have the meaning given to such term in Section 2 of this
Agreement.
"General Intangibles" shall mean any and all general intangibles of every
nature, whether presently existing or hereafter acquired or created arising out
of or relating to the operation of the Issuer's business, including without
limitation all books, correspondence, credit files, records, computer programs,
computer tapes, cards and other papers and documents in the possession or
control of the Issuer, claims, judgments, patents, patent licenses, trademarks,
trademark licenses, licensing agreements, rights in intellectual property,
goodwill, as that term is defined in accordance with generally accepted
accounting principles (including all goodwill of the Issuer's business
symbolized by, and associated with, any and all trademarks, trademark licenses,
rights, literary rights, copyrights, service names, service marks, logos and
trade secrets), all amounts received as an award in or settlement of a suit in
damages, and all interests in joint ventures or general or limited partnerships.
"Permitted Liens" shall mean the following:
(a) liens for taxes (i) not delinquent or (ii) being contested in good faith
and by proper proceedings, as to which adequate reserves are maintained on the
books of the Issuer in accordance with generally accepted accounting principles;
(b) carriers', warehousemen's, mechanics', materialmen's or similar liens
imposed by law incurred in the ordinary course of business in respect of
obligations not overdue, or being contested in good faith and by proper
proceedings and as to which adequate reserves with respect thereto are
maintained on the books of the Issuer in accordance with generally accepted
accounting principles;
(c) pledges or deposits in connection with workers' compensation, unemployment
insurance and other types of social security legislation;
(d) security deposits made to secure the performance of leases, licenses and
statutory obligations incurred in the ordinary course of business; and
(e) existing liens in favor of Silicon Valley Bank, Heller Financial, Inc.,
ABN-AMRO Bank (Belgie) N.V. and Banque Bruxelles Lambert and certain equipment
which is leased by the Issuer from The CIT Group Equipment Financing, Inc. and
Amplicon Financial.
2
<PAGE>
"Receivable" shall mean one of the Issuer's now owned or hereafter acquired
Accounts, Chattel Paper, Contract Rights, General Intangibles and Instruments
arising out of or relating to the operation of the Issuer's business and all
cash and non-cash proceeds thereof.
2. Collateral. (a) The Issuer hereby assigns, pledges and grants to the
Holder a continuing security interest in all right, title and interest of the
Issuer in and to the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
hereinafter sometimes referred to collectively as the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents:
(v) Instruments;
(vi) Equipment;
(vii) All monies, investments and property of any kind of the Issuer;
(viii) All books and records (including customer lists, marketing information,
credit files, price lists, operating records, vendor and supplier price lists,
sales literature, computer programs, printouts and other computer materials and
records) of the Issuer pertaining to any of the Collateral, except to the extent
that such property is licensed to the Issuer on an exclusive basis under the
terms of which the Issuer is prohibited from transferring or hypothecating such
property;
(xi) 65% of all issued and outstanding shares of capital stock of
Summagraphics Belgium, N.V., a Belgian corporation, and of Summagraphics Europe,
N.V., also a Belgian corporation, together will all stock certificates, options
or rights of any nature whatsoever which may be issued or granted to the Issuer
(collectively, the "Pledged Stock"); and
(x) All proceeds of, attachments or accessions to, or substitutions for all or
any of the Collateral described in Clauses (i) through (ix) hereof.
3. Title to Collateral. (a) The Issuer represents and warrants that it is
the owner of all of the Collateral and it has good and marketable title to the
Collateral free and clear of all liens, security interests, and other
encumbrances except for Permitted Liens.
3
<PAGE>
(b) Without the prior written consent of the Holder, the Issuer will not (i)
sell, lease, exchange, assign or dispose of, or grant any option with respect
to, any of the Collateral, other than the sale of Inventory in the ordinary
course of business and the replacement of obsolete Equipment, except the sale
of the Issuer's CAD warehouse business or Summajet or Summachrome product lines
or license rights to such products; provided that the proceeds of any such sale
shall be subject to the Holder's security interest to the extent covered by the
definition of Collateral contained in Section 2 of this Agreement; or (ii)
create, incur or suffer to exist any lien, security interest or other
encumbrance in any of the Collateral or in any of the property or assets of
Summagraphics Belgium, N.V. or Summagraphics Europe, N.V., except Permitted
Liens.
4. Further Assurance; Covenants. (a) At its expense, the Issuer will defend
its title to the Collateral against all persons and will, upon request of the
Holder, at its expense, (i) furnish such further assurances of title as may be
required by the Holder, and (ii) deliver and execute or cause to be delivered
and executed, in form and content satisfactory to the Holder, and financing,
continuation, termination, or security interest filing statement, security
agreement, or other document as the Holder may reasonably request in order to
perfect, preserve, maintain, or continue the perfection of the Holder's security
interest in the Collateral and/or its priority, subject only to Permitted Liens.
The Issuer will pay the costs of filing any financing, continuation,
termination, or security interest filing statement as well as any recordation or
transfer tax required by law to be paid in connection with the filing or
recording of any such statement. A carbon, photographic, or other reproduction
of a security agreement or a financing statement is sufficient as a financing
statement. Upon any failure by the Issuer to perform under this Section, the
Holder may make, execute and record any and all such instruments, certificates,
and documents for and in the name of the Issuer, and at the sole expense of the
Issuer, and the Issuer hereby irrevocably appoints the Holder the agent and
attorney-in-fact of the Issuer so to do, this appointment being coupled with an
interest. Upon any failure by the Issuer to pay the expenses of executing,
delivering and recording instruments, certificates or documents which the Holder
deems to be necessary or desirable in order to effectuate, complete, perfect,
continue or preserve the obligations of the Issuer and the Holder's interest in
the Collateral, the Holder may, at its option, advance all such expenses, and
the Issuer shall reimburse the Holder for any such sums advanced with interest
at the Prime Rate of Interest as published in The Wall Street Journal from time
to time plus 2% per annum, and the same shall be part of the Issuer's
Obligations.
(b) The Issuer agrees to hold any evidence of the Pledged Stock, including
(without limitation) share certificates, for and on behalf of the Holder, except
only to the extent that it is required to deliver any such evidence to Silicon
Valley Bank which has received a first priority pledge and assignment of the
Pledged Stock. Subject to the rights of Silicon Valley Bank, the Issuer agrees
to deliver to the Holder, upon the Holder's request
4
<PAGE>
but in any event upon the occurrence of Event of Default, executed stock powers
covering each share of Pledged Stock.
(c) The Issuer will (i) at all times maintain, in accordance with generally
accepted accounting principles, accurate and complete books and records
pertaining to the Collateral, (ii) at all reasonable times and without hindrance
and delay, after reasonable prior notice from the Holder, permit the Holder or
any person designated by the Holder to enter any place of business of the Issuer
or any other premises where any books, records, and other data concerning the
Collateral may be kept and to inspect the Collateral and to examine, audit,
inspect, and make extracts from and photocopies of any such books, records, and
other data, (iii) furnish to the Holder promptly upon request and in the form
and content specified by the Holder such data concerning the Collateral as the
Holder may from time to time reasonably specify, and (iv) mark their respective
books and records in a manner satisfactory to the Holder so that the Holder's
rights in and to the Collateral will be shown.
(d) The Issuer will maintain insurance on the Collateral with financially
sound and reputable insurance companies in such amounts against such risks as
historically have been maintained by the Issuer. The Holder shall have a
security interest in any proceeds of insurance on the Collateral in accordance
with Section 2 of this Agreement.
(e) Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings, the Issuer will pay, as
and when due and payable, all taxes, levies, license fees, assessments, and
other impositions levied on the Collateral or any part thereof or for its use
and operation.
5. Place(s) of Business of Issuer and Location of Collateral. The Issuer
represents and warrants that its correct legal name is as specified on the
signature line of this Agreement, and each prior legal name or trade name
currently used by the Issuer is specified on Exhibit A attached hereto and made
a part hereof. The Issuer warrants that the address of its principal place of
business and the addresses of each other place of its business are as specified
on Exhibit A attached hereto and made a part hereof. The Collateral and all
books and records pertaining to the Collateral have been, are, and will be
located at the office(s) specified and will be retained at such locations at all
times during which any portion of the Issuer's Obligations remain outstanding.
The Issuer will give the Holder advance written notice of the opening of any new
place of business and of any change in the location of the places where the
Collateral or the books and records concerning the Collateral or any part
thereof are kept, so that the Holder will have adequate opportunity to file
additional financing statements, if required, against the Collateral prior to
the date on which it is relocated.
5
<PAGE>
6. Default. The occurrence of any one or more of the following events shall
constitute an event of default (an "Event of Default") under this Agreement;
(a) the occurrence of an Event of Default (as defined therein) under the
Debenture (taking into account any notice, grace or cure period);
(b) failure of the Issuer to perform, observe, or comply with any of the
provisions of this Agreement, which failure shall remain unremedied for thirty
(30) days after written notice thereof to the Issuer by the Holder; and
(c) any execution or attachment shall be levied against the Collateral, or any
part thereof, and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall have been
levied.
7. Rights and Remedies Upon Default. (a) Upon the occurrence of an Event of
Default hereunder, (i) the Holder shall have all the rights and remedies of a
secured party under the Uniform Commercial Code of any state in which any
portion of the Collateral may be located and other applicable laws, (ii) the
Holder is authorized to offset and apply to all or any part of the Issuer's
Obligations, all moneys, credits and other property of any nature whatsoever now
or at any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with the Holder, (iii) the Issuer, upon
demand by the Holder, shall assemble all Collateral which is tangible personal
property and make it available to the Holder at the Issuer's principal place of
business and (iv) the Holder or its agents may enter upon any of the Issuer's
premises to take possession of the Collateral, to remove it, to render it
unusable, or to sell or otherwise dispose of it, all without judicial process or
proceedings.
(b) Any written notice of the sale, disposition, or other intended action by
the Holder with respect to the Collateral which is required by applicable laws
and is sent by certified mail, postage prepaid, to the Issuer at the address of
the Issuer's principal place of business set forth on Exhibit A attached hereto
at least ten (10) days prior to such sale, disposition, or other action, shall
constitute reasonable notice to the Issuer. The Issuer shall pay on demand all
reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees and expenses, incurred by or on behalf of the Holder (a) in
enforcing the Issuer's Obligations, and (b) in connection with the taking,
holding, preparing for sale or other disposition, selling, managing, collecting,
or otherwise disposing of the Collateral. All of such costs and expenses
(collectively, the "Liquidation Costs") together with interest thereon at a per
annum rate of interest which is equal to the Prime Rate of Interest as published
in The Wall Street Journal from time to time plus 2% per annum, from the date of
payment until repaid in full, shall be paid by the Issuer to the Holder on
demand and shall constitute and become a part of the Issuer's Obligations
secured hereby. Any proceeds of
6
<PAGE>
sale or other disposition of the Collateral will be applied by the Holder to the
payment of Liquidation Costs and any balance of such proceeds will be applied by
the Holder to the payment of the remaining Issuer's Liabilities in such order
and manner of application set forth in the Debenture.
(c) The Holder may at any time and from time to time after the occurrence of
an Event of Default which is not cured to the complete satisfaction of the
Holder, and the Issuer hereby irrevocably appoints the Holder as its
attorney-in-fact (which appointment is coupled with an interest), with power of
substitution, in the name of the Holder or in the name of the Issuer or
otherwise, for the use and benefit of the Holder, but at the cost and expense of
the Issuer to, (i) notify the Account Debtors obligated on any of the Collateral
to make payments thereon directly to the Holder to the effect permitted by
applicable law, and to take control of the cash and non-cash proceeds of any
such Collateral; (ii) compromise, extend, or renew any of the Collateral or deal
with the same as the Holder may deem advisable; (iii) release, make exchanges or
substitutions for, or surrender all or any part of the Collateral; (iv) remove
from any place of business of the Issuer all books, records, ledger sheets,
correspondence, invoices, and documents relating to or evidencing any of the
Collateral or, without cost or expense to the Holder, make such use of any such
place(s) of business as may be reasonably necessary to administer, control, and
collect the Collateral; (v) repair, alter, or supply goods, if any, necessary to
fulfill in whole or in part the purchase order of any Account Debtor; (vi)
demand, collect, receipt for, and give renewals, extensions, discharges, and
releases of any of the Collateral; (vii) institute and prosecute legal and
equitable proceedings to enforce collection of, or realize upon, any of the
Collateral; (viii) settle, renew, extend, compromise, compound, exchange, or
adjust claims with respect to any of the Collateral or any legal proceedings
brought with respect thereto; (ix) endorse the name of the Issuer upon any items
of payment relating to the Collateral or upon any proof of claim in bankruptcy
against an Account Debtor; and (x) receive and open all mail addressed to the
Issuer and notify the Post Office authorities to change the address for the
delivery of mail to the Issuer to such address as the Holder may designate.
(d) The Issuer will, following the occurrence of an Event of Default which is
not cured to the complete satisfaction of the Holder (i) make no material change
to the terms of any sale or lease of Inventory or of any Receivable or General
Intangible without the prior written consent of the Holder; (ii) on demand, make
available in form reasonably acceptable to the Holder (1) shipping documents and
delivery receipts evidencing the shipment of goods which gave rise to the sale
or lease of Inventory or Receivable, (2) completion certificates or other proof
of the satisfactory performance of services which gave rise to the sale or lease
of Inventory or Receivables, (3) copies of the invoices arising out of the sale
or lease of Inventory or Receivables, and (4) copies of any written contract or
order from which the sale or lease of Inventory or Receivables arose; and (iii)
when requested, regularly advise the Holder (1) whenever an Account Debtor
returns
7
<PAGE>
or refuses to retain any goods, the sale or lease of which gave rise to a
Receivable, and (2) of any delay in delivery or performance, or claims made, in
regard to any sale or lease of Inventory or Receivables, and will comply with
any instructions which the Holder may give regarding the sale or other
disposition of such returns.
8. Remedies Cumulative. Each right, power and remedy of the Holder as provided
for in this Agreement or in the Debenture or Plan of Reorganization or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the Debenture or Plan of
Reorganization or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by the Holder of any
one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Holder of any or all such other rights,
powers, or remedies.
9. Waiver. No failure or delay by the Holder to insist upon the strict
performance of any term, condition, convenant, or agreement of the Agreement or
of the Debenture or Plan of Reorganization, or to exercise any right, power, or
remedy consequent upon a breach thereof, shall constitute a waiver of any such
term, condition, covenant, or agreement or of any such breach, or preclude the
Holder from exercising any such right, power, or remedy at any later time or
times. By accepting payment after the due date of the Issuer's Obligations, the
Holder shall not be deemed to have waived the right either to require payment
when due of all other Issuer's Obligations or to declare an Event of Default for
failure to effect such payment of any such other Issuer's Obligations. The
Issuer waives presentment, notice of dishonor, and notice of non-payment with
respect to accounts and chattel paper.
10. Illegality. If fulfillment of any provision hereof or any transaction
related hereto, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if any clause or provisions herein contained other than the provisions
hereof pertaining to repayment of the Issuer's Obligations operates or would
prospectively operate to invalidate this Agreement in whole or in part, then
such clause or provision only shall be void, as though not herein contained, and
the remainder of this Agreement shall remain operative and in full force and
effect; and if such provision pertains to repayment of the Issuer's Obligations,
then, at the option of the Holder, all of the Issuer's Obligations shall become
immediately due and payable.
11. Consent to Jurisdiction. THE ISSUER IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF MARYLAND OVER
ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT. THE ISSUER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION THAT THE ISSUER MAY NOW OR HEREAFTER HAVE TO THE LAYING THE
VENUE OF ANY
8
<PAGE>
SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUCH SUIT, ACTION, OR PROCEEDING
BROUGHT IN ANY SUCH COURT SHALL BE CONCLUSIVE AND BINDING UPON THE ISSUER AND
MAY BE ENFORCED IN ANY COURT IN WHICH THE ISSUER IS SUBJECT TO JURISDICTION BY A
SUIT UPON SUCH JUDGMENT PROVIDED THAT SERVICE OF PROCESS IS EFFECTED UPON THE
ISSUER AS PROVIDED IN THIS SECURITY AGREEMENT OR AS OTHERWISE PERMITTED BY
APPLICABLE LAW.
12. Waiver of Trial by Jury. The parties hereto hereby waive trial by jury in
any action or proceeding to which any or all of them may be parties, arising out
of or in any way pertaining to this Agreement. It is agreed and understood that
this waiver constitutes a waiver of trial by jury of all claims against all
parties to such actions or proceedings, including claims against parties who are
not parties to this Agreement.
This waiver is knowingly, willingly and voluntarily made by each of the
parties hereto, and the parties hereby represent that no representative of fact
or opinion have been made by any individual to induce this waiver of trial by
jury or to in any way modify or nullify its effect. The parties further
represent that they have been represented in the signing of this Agreement and
in the making of this waiver by independent legal counsel, selected of their own
free will, and that they have had the opportunity to discuss this waiver with
counsel.
13. Modification; Waiver. None of the terms or provisions of this Agreement
may be changed, waived, modified, discharged or terminated except by instrument
in writing executed by the party or parties against whom enforcement of the
change, waiver, modification, discharge or termination is asserted. None of the
terms or provisions of this Agreement shall be deemed to have been abrogated or
waived by reason of any failure or failures to enforce the same.
14. Applicable Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
without regard to principles of conflicts of laws.
9
<PAGE>
15. Successor and Assigns. This Agreement shall be binding upon the
successors and assigns of the Issuer, and shall inure to the benefit of the
successors and assigns of the Holder.
WITNESS, the signature and seal of the Issuer as of the day and year first
above written.
ATTEST: SUMMAGRAPHICS CORPORATION
____________________________________ By:_________________________(SEAL)
Secretary Michael S. Bennett
President and Chief Executive
Officer
LOCKHEED MARTIN CORPORATION
___________________________________ By:________________________(SEAL)
Secretary Walter E. Skowronski
Vice President and Treasurer
10
<PAGE>
EXHIBIT A
to Security Agreement
(a) Address of Issuer's principal place of business:
8500 Cameron Road, Austin, Texas 78754
(b) Address(es) where Collateral is or is to be located:
See attached.
(c) Address(es) of other place(s) of business of the Issuer:
See attached.
(d) Previous legal and/or trade name(s) of the Issuer:
Not applicable.
A-1
<PAGE>
EXHIBIT A to
Security Agreement
Summagraphics Corporation
North America Inventory Locations
as of February 29, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SUMMAGRAPHICS
Cameron Road Location $6,166,062
Dessau Road Location 746,647 $6,912,709
----------
CONSIGNED TO VENDOR LOCATIONS
Arrow Electronics $ 8,323
Barcon Inc. 5,912
Calidad 320,009
Central Texas Assembly 43,053
Ember 9,311
Grentek Inc. 25,708
HBM/Datagraf, Inc. 1,317
Liberty Machine Inc. 5,415
Marshall 202
MI, Inc. 270
Nukote International 4,919
Pioneer-Standard Electron 899
Precision Laser Cut 4,271
Salisbury Technologies 2,266
Studio RTA 975
TMS 465,029 897,676
---------- ----------
TOTAL $7,810,385
==========
A-2
</TABLE>
<PAGE>
Exhibit A to
Security Agreement
SUMMAGRAPHICS CORPORATION
INVENTORY LOCATION ADDRESSES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUMMAGRAPHICS LOCATION 6500 CAMERON RD. AUSTIN TX 78754
1001A WEST DESSAU RD. AUSTIN TX 78753
VENDOR LOCATION
ARROW ELECTRONICS BRAKER CENTER III BLDG M1,
11500 METRIC BLVD, SUITE 160 AUSTIN TX 78758
AUSTIN SCREEN GRAPHICS 11115 MIDDLE FISKVILLE ROAD AUSTIN TX 78753
BARCON INC. 5460 SOUTH GARNETT, SUITE 3 TULSA OK 74146
BROWN MFG 3500 ANDTREE BLVD. AUSTIN TX 78724
CALIDAD 1920 INDUSTRIAL PARK DRIVE EDINBURG TX 78539
CENTRAL TEXAS ASSEMBLY 26550 RR 12 BLDG #5 DRIPPING SPRINGS TX 78620
CIRCUIT TECHNOLOGY 6952 HIGH TECH DRIVE, SUITE B MIDVALE UT 84047
EMBER INDUSTRIES 500 CARLSEN CIRCLE, SUITE 200 SAN MARCOS TX 78666
GRENTEK INC. 2011 RUTLAND DRIVE AUSTIN TX 78758
HBM/DATAGRAF, INC. 8305 HIGHWAY 71 WEST AUSTIN TX 78735
IDENTIFICATION PRODUCTS P.O. BOX 9276, 104 SILLIMAN AVENUE BRIDGEPORT CT 06605-0276
LIBERTY MACHINE INC. P.O. BOX 547 LIBERTY HILL TX 78642
MARSHALL 8504 CROSS PARK AUSTIN TX 78754
MARYLEE FOUNDATION 1339 LAMAR SQUARE AUSTIN TX 78704
MI, INC. 2007 LAMAR DR. ROUND ROCK TX 78664
MUTCH AMERICA INC. 3007 EAST CHAMBERS ST. PHOENIX AZ 85040
NUKOTE INTERNATIONAL P.O. BOX 3000 FRANKLIN TN 37065
OAKS PRECISCION FABR., INC. 8560 BREEN DRIVE HOUSTON TX
PETTY INDUSTRIAL COATERS 8000 DAFFAN LANE AUSTIN TX 78724
PIONEER-STANDARD ELECTRON 1826-D KRAMER LANE AUSTIN TX 78758
PRECISION LASER CUT 2011 LAMAR DRIVE ROUND ROCK TX 78664
SALISBURY TECHNOLOGIES 600 GLEN AVE. SALISBURY MD 21801
SHIEYI STEEL MOLD CO. 6, LANE 157, HO KONG 1ST ROAD,
HSIN CHUANG CITY TAIPEIHSEN TAIWAN, R.O.C.
STUDIO RTA 2067 E. 55TH STREET VERNON CA 90058
TMS 29621 RIDGE ROUTE DRIVE LAGUNA HILLS CA 92653
V.A.W. ALUMINUM 2525 BROCKTON DRIVE AUSTIN TX 78758
V.A.W. ALUMINUM P.O. BOX 3887, RIVERIA BLVD. ST. AUGUSTINE FLA 32085
</TABLE>
<PAGE>
EXHIBIT A to
Security Agreement
Other Locations
60 Silvermine Road
Seymour, Connecticut 06483
203-881-5400
7755 Center Avenue, Suite 1100
Huntington Beach, California 92647
714-894-6436
Keiberg III-Paviljoen 409
Imperiastraat 16
B-1930 Zaventem
Belgium
32-2-721-5033
100 New Bridge Street
London, England EC4V 63A
44-734-567-115
Rochesterlaan 6
B-8470 Gistel, Belgium
32-59-270011
Munchener Strasse 1
8011 Kirchheim Bei
Munich, Germany
49-89-904-5057
A-4
<PAGE>
EXHIBIT B
to Secured
Convertible Debenture
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of March 19, 1996
by and between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
(the "Company")
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
(the "Debenture Holder")
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into
as of the 19th day of March, 1996, by and between SUMMAGRAPHICS CORPORATION, a
Delaware corporation (the "Company") and LOCKHEED MARTIN CORPORATION, a Maryland
corporation (the "Debenture Holder").
WHEREAS, pursuant to Section 13 of the 9-1/4% Secured Convertible Debenture of
the Company in favor of the Debenture Holder (the "Debenture"), the Company and
the Debenture Holder agreed to execute and deliver this Agreement;
WHEREAS, simultaneously with the execution and delivery of this Agreement, the
Debenture has been executed and delivered by the Company to the Debenture
Holder.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Debenture Holder agree as follows:
1. Certain Definitions. (a) Capitalized terms used but now otherwise defined
herein shall have the meaning given them in the Reorganization Agreement.
(b) As used in this Agreement, the following terms shall have the following
meanings:
"Assignee" shall mean a Person who purchases Conversion Shares from the
Debenture Holder (or another Assignee) other than in a registered distribution,
but only to the extent that the Debenture Holder specifically and in writing
assigns its rights and benefits under this Agreement to such purchaser in
respect of the Conversion Shares purchased from the Debenture Holder and only if
the Person agrees in writing to be bound by the terms and conditions of this
Agreement.
"Commission" shall mean the Securities and Exchange Commission, or any other
Federal agency administering the Securities Act.
"Common Stock" shall mean the Common Stock, par value $.01 per share of
Summagraphics Corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder, as the same shall be in
effect at the time.
"Person" shall mean any individual, corporation, unincorporated association,
business trust, estate, partnership, limited liability company, limited
liability partnership, trust, state, the United States or any other entity.
"Registrable Securities" shall mean the Conversion Shares and all shares of
Common Stock issued in exchange for or in
<PAGE>
replacement thereof or upon the exercise or conversion of any right or security
issued in respect of Conversion Shares, now or hereafter owned, directly or
indirectly, by the Debenture Holder.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, as the same shall be in
effect at the time.
2. Piggy-back Registration Rights.
(a) At any time and from time to time after the date hereof, if the Company
proposes to register any shares of capital stock or other securities of the
Company under the Securities Act (except with respect to registration statements
on Forms S-4 or S-8 or successor forms) on any form that also would be eligible
for use by the Debenture Holder or any Assignees in respect of the Registrable
Securities, the Company will give to the Debenture Holder and the Assignees at
least 30 days prior written notice of the filing or proposed filing of the
registration statement.
(b) Subject to the provisions of Section 2(c), each of the Debenture Holder
and Assignees shall have the right to elect within 20 days after receipt of such
notice to elect to include in such registration statement all or any part of the
Registrable Securities (regardless of whether the Debenture Holder has at such
time converted Principal Amount and accrued or unpaid interest into such
Registrable Securities), which election shall be made by written notice to the
Company within such 20-day period specifying the number of Registrable
Securities that the Debenture Holder desires to so include.
(c) In the case of an underwritten public offering, if the managing
underwriter participating in the sale and distribution of the Company's
securities covered by such registration statement advises the Company in good
faith that the inclusion of some or all of the Registrable Securities which the
Debenture Holder or any Assignee has requested be included in such registration
statement would materially and adversely affect the marketing of the entire
offering of securities, then the Company shall be obligated to include in the
registration statement only such aggregate number of Registrable Securities (the
"Permissible Shares") as the managing underwriter shall in good faith advise the
Company may be included in the offering, without materially and adversely
affecting the marketing of the entire offering of securities. If the aggregate
number of Registrable Securities that the Debenture Holder and the Assignees
shall have requested be included in such registration statement together with
the number of shares requested to be included therein by all other holders
having registration rights entitling them to participate in such registration
(the "Other Holders") exceeds the number of Permissible Shares, then each of the
Debenture Holder and Assignees, at its option, shall be entitled to withdraw
its election to include all or a portion of the Registrable Securities in such
registration statement and the Debenture Holder and Assignees who elect not to
withdraw their
2
<PAGE>
election to include all or a portion of the Registrable Securities in such
registration statement shall have the number of Registrable Securities that they
are entitled to include in the registration statement reduced pro rata based
upon the number of Registrable Securities each such Debenture Holder or Assignee
initially requested be included in the registration statement such together with
all shares requested to be registered by Other Holders that the total number of
Registrable Securities to be included on behalf of the Debenture Holder and
Assignees and Other Holders does not exceed the Permissible Shares. In the event
that (i) the Debenture Holder or any Assignee elects to include Registrable
Securities which have not at the time of such election been acquired by the
Debenture Holder or Assignee upon exercise of conversion rights under the
Debenture in any registration statement filed by the Company, (i) the Debenture
Holder or Assignee elects to exercise conversion rights under the Debenture in
respect of such Registrable Securities and (ii) some or all of such Registrable
Securities are excluded from such registration pursuant to this Section 2(c),
the Debenture Holder or the Assignee, as the case may be, may withdraw such
election to convert Principal Amount and accrued and unpaid interest and upon
such withdrawal, the Debenture Holder or the Assignee shall be treated as if the
right to acquire Conversion Shares had not been exercised to the extent of any
excluded shares.
(d) Except for those registration rights set forth on Schedule 2(d) attached
hereto, the Company represents and warrants to the Debenture Holder and the
Assignees that, except as provided in this Agreement, the Company has not
granted to any stockholder, holder of warrants or options for the purchase of
shares of capital stock or any other Person any "piggy-back," demand or other
registration rights with respect to any shares of capital stock or other
securities of the Company. The Company agrees that it will not until such time
as the Debenture Holder and Assignees no longer own any Registrable Securities,
without the prior written consent of the Debenture Holder, hereafter grant to
any Person "piggy-back," demand or other registration rights with respect to any
shares of capital stock or other securities of the Company.
(e) The Company shall be obligated to afford the Debenture Holder and
Assignees the right to participate in each and every such registration taking
place in accordance with the provisions of this Section 2 until the aggregate
number of Registrable Securities then owned by the Debenture Holder and
Assignees may be sold pursuant to Rule 144 in a single market transaction
without registration under the Securities Act. Notwithstanding anything
contained herein to the contrary, the Company agrees that it will not permit or
agree to be included in any registration statement any shares of capital stock
or other securities of the Company held by any Person (other than (i) a
Debenture Holder, (ii) any Assignee or (iii) any other Holder having a
contractual right to have shares included therein) until all outstanding
Registrable Securities have been included in registration statements and sold,
unless, in the case of each such
3
<PAGE>
registration, the Debenture Holder and Assignees first shall have been offered,
and declined, the opportunity to include all of the Registrable Securities in a
registration statement filed with and declared effective by the Commission under
the Securities Act.
3. Demand Registration Rights. The Company covenants and agrees that, at any
time after the date of this Agreement and from time to time thereafter, upon
receipt of a written request therefor from the Debenture Holder (or Assignees
owning in the aggregate at least 25% of the Common Stock issued to the Debenture
Holder on the date hereof), the Company shall, as promptly as is reasonably
practicable, use its best efforts to file a registration statement to register
under the Securities Act for sale to the public all or a portion of the
Registrable Securities, and thereafter use its best efforts to file such
amendment or amendments as may be necessary to cause the registration statement
to be declared effective; provided, however, that the Company shall have no
obligation under this Section 3 to register Registrable Securities on behalf of
any of the Debenture Holder or Assignees unless the reasonably anticipated
aggregate offering price to the public of such Registrable Securities, as stated
by the Debenture Holder and Assignees requesting registration in their written
request therefor, equals or exceeds $1,000,000, and provided further that the
Company shall not be required to file more than two registration statements
pursuant to this Section 3 on a form other than Form S-3 and in no event shall
be required to file more than three registration statements pursuant to this
Section 3. The rights granted by this Section 3 may be exercised no more often
than once in any six month period. The demand registration rights granted by
this Section 3 will terminate when the aggregate number of Registrable
Securities then owned by the Debenture Holder and Assignees may be sold under
Rule 144 in a single market transaction without registration under the
Securities Act.
4. Company's Registration Obligations. If and whenever the Company is
obligated by the provisions of this Agreement to effect the registration of any
Registrable Securities under the Securities Act, the Company will, as promptly
as is reasonably practicable:
(a) Notify in writing each of the Debenture Holder and Assignees who have not
requested registration of their Registrable Securities of the receipt by the
Company of a request from another Debenture Holder or Assignee to register
Registrable Securities so as to afford the Debenture Holder and Assignees who
have not requested registration an opportunity to include their Registrable
Securities in any such registration statement;
(b) Prepare and file with the Commission a registration statement with respect
to the shares and use its best efforts to cause the registration statement to
become and remain effective for a period of at least 90 days.
(c) Prepare and file with the Commission such amendments and supplements to
the registration statement and the prospectus
4
<PAGE>
used in connection therewith as may be necessary to keep the registration
statement effective until the earlier of the sale of all shares covered thereby
and the expiration of a period of 90 days after the date the registration
statement became effective, and use its best efforts to comply with the
provisions of the Securities Act with respect to the disposition of all rights
to purchase securities covered by the registration statement.
(d) Furnish to the Debenture Holder or its Assignees for whom the same are
registered or are to be registered such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as the Debenture Holder or the
Assignees, as the case may be, may reasonably request in order to facilitate the
disposition of the Registrable Securities.
(e) Use its best efforts to register or qualify the Registrable Securities
covered by the registration statement under the securities or blue sky laws of
such jurisdictions as such Debenture Holders or its Assignees shall reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such holders to consummate the disposition of
the Registrable Securities in such jurisdictions; provided, however, that the
Company shall not be obligated, by reason thereof, to qualify as a foreign
corporation or to consent to general service of process or subject itself to
taxation as doing business in any jurisdiction.
(f) Furnish to Debenture Holders or its Assignees who account for at least 25%
of the Registrable Securities covered by such registration statement, and use
its best efforts to furnish to each other holder of the Registrable Securities
covered thereby, at the time of disposition a signed counterpart, addressed to
such Debenture Holder or Assignee, of an opinion of counsel for the Company
reasonably acceptable to the Debenture Holder or its Assignees, as the case may
be, covering substantially the same matters as are customarily covered in
opinions of issuer's counsel in underwritten public offerings of securities of
issuers in similar industries.
(g) Notify the Debenture Holder or its Assignees, as the case may be, whose
Registrable Securities are covered in such registration statement promptly after
the Company shall receive notice that any registration statement, supplement or
amendment has become effective, any registration statement is required to be
amended or supplemented, or any stop order with respect thereto has been issued.
(h) The inclusion of Registrable Securities in a registration statement
involving an underwritten public offering shall be upon the condition that,
except as otherwise provided in this Agreement, the Debenture Holder or its
Assignees shall have their Registrable Securities sold through the underwriters
on the same terms and conditions as are applicable to the Company.
5
<PAGE>
5. Expenses of Registration. The costs and expenses (other than underwriting
discounts or commissions or similar payments) of all registrations and
qualifications under the Securities Act and applicable state securities or blue
sky laws, and of all other actions, that the Company is required to take or
effect pursuant to this Agreement shall be paid by the Company (including,
without limitation, all registration and filing fees, printing expenses, costs
of special audits incidental to or required by any such registration, and fees
and disbursements of counsel and independent public accountants for the
Company); provided, however, that the Debenture Holder or its Assignees, as the
case may be, shall pay the fees and disbursements of their respective legal
counsel, and transfer taxes, if any, on Registrable Securities sold by the
holders thereof.
6. Debenture Holder's Registration Obligations. In the event a Debenture
Holder or an Assignee desires to include any Registrable Securities in any
registration statement pursuant to this Agreement, the Debenture Holder or the
Assignee shall:
(a) cooperate with the Company in preparing such registration statement, and
execute such ordinary and customary agreements in a form reasonably acceptable
to the Company and the underwriter as may be reasonably necessary in favor of
any underwriter selected by the Company, including those contemplated by Section
8(b); and
(b) promptly supply the Company with all information, documents,
representations and agreements as the Company or any managing underwriter may
reasonably deem necessary in connection with the registration of such
Registrable Securities.
In connection with any registration involving an underwritten public offering in
which a Debenture Holder or any Assignee of a Debenture Holder includes
Registrable Securities in the registration statement, the Debenture Holder or
Assignee, as the case may be, shall agree, if requested by the managing
underwriter, not to effect or cause to be effected any sale or other disposition
of shares or Registrable Securities not included in the registration statement
for a period beginning seven days prior to the effective date and ending 180
days after the effective date of the registration statement without the managing
underwriters' consent.
7. Indemnification.
(a) In the event of any registration of any Registrable Securities pursuant to
this Agreement, the Company will:
(i) indemnify and hold harmless the Debenture Holder and any Assignee whose
Registrable Securities are being so registered or offered, and each Person, if
any, who controls any of the Debenture Holder or any such Assignee within the
meaning of the Securities Act, against any losses, claims, damages, expense
6
<PAGE>
(including, without limitation, reasonable attorneys' fees and disbursements),
or liabilities (or actions in respect thereof) under the Securities Act or
otherwise, which arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such registration
statement, any summary prospectus or final prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any other violation
of law with respect thereto, and
(ii) reimburse the Debenture Holder or such Assignee and each such controlling
Person for any legal or other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any such registration statement, summary prospectus, final
prospectus or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by the Debenture Holder or such
Assignee, as the case may be, expressly for inclusion therein; provided, further
that the Company shall not be liable to any indemnified party who participates
as an underwriter in the offering or sale of Registrable Securities or to any
other indemnified party, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action in respect thereof), or expense arises
out of such indemnified party's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the person
asserting the existence of an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such person if such statement or omission was
corrected in full in such final prospectus.
(b) In the event of any registration of any Registrable Securities, the
Debenture Holder or the Assignee whose shares are included in the registration
statement, as the case may be, shall:
(i) indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed any such registration statement, and each Person,
if any, who controls the Company within the meaning of the Securities Act,
against any losses, claims, damages, expense (including, without limitation,
reasonable attorneys' fees and disbursements) or liabilities (or actions in
respect thereof) to which the Company or any such director, officer or
controlling Person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, expense or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any such registration
7
<PAGE>
statement, summary prospectus, final prospectus, or amendment or supplement
thereof, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement, summary
prospectus, final prospectus, or amendment or supplement thereto, in reliance
upon and in conformity with written information furnished by the Debenture
Holder or such Assignee, as the case may be, and accompanied by an express
written consent that such information may be included therein, and
(ii) reimburse any legal or other expenses reasonably incurred in connection
with investigating or defending any such loss, claim, damage, liability or
action, but only in the circumstances and to the extent aforesaid; provided,
however, that in no event shall the aggregate liability of the Debenture Holder
and its Assignees to all indemnified parties hereunder be greater in amount than
the dollar amount of proceeds received by the Debenture Holder and its Assignees
upon the sale of Registrable Securities giving rise to such indemnification
obligations.
(c) If the indemnification provided for in this Section 7 is unavailable to an
indemnified party under Section 7(a) or Section 7(b) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and the Debenture Holder and their Assignees on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of the Debenture Holder
and its Assignees on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand, or by the Debenture Holder and its
Assignees on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7(e), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and the Debenture Holder (on behalf of themselves and their
Assignees) agree that it would not be just and equitable if contribution
pursuant to this Section 7(c) were determined by pro rata allocation or by any
other method of
8
<PAGE>
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
Section 7(c), the Debenture Holder and its Assignees shall not be required to
contribute any amount in excess of the amount by which the total price of the
Registrable Securities sold by the Debenture Holder and its Assignees and
distributed to the public exceeds the amount of any damages that the Debenture
Holder and its Assignees otherwise have been required to pay by reason of such
untrue or alleged untrue statement or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, the indemnified party will, if a claim
in respect thereof is to be made against an indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have under this Section 7 or otherwise.
(e) In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party.
In the event the indemnifying party gives notice to the indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof subsequent to the date of such notice other than reasonable
costs of investigation; provided, however, that if the indemnified party or
parties reasonably determine that there may be a conflict between the positions
of the indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action or proceeding or that there may be legal
defenses available to such indemnified party or parties different from or in
addition to those available to the indemnifying party or parties, then counsel
for the indemnified party or parties shall be entitled to conduct the defense to
the extent reasonably determined by such counsel to be necessary to protect the
interests of the indemnified party or parties (and the indemnifying party or
parties shall bear the reasonable legal and other expenses incurred in
connection therewith). No indemnifying party will, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as a term thereof the giving by the claimant or plaintiff
to such indemnified party of a release and indemnity from all liability in
respect of such claim or litigation and a denial of fault. No indemnified party
shall consent to entry of any judgment or enter into any settlement of
9
<PAGE>
any such action the defense of which has been assumed by an indemnifying party
without the prior consent of such indemnifying party.
8. Agreements as to Underwriters. If the offering pursuant to any registration
statement provided for under this Agreement is made through underwriters, (a)
the Company agrees to enter into an underwriting agreement in customary form
with the underwriters and to indemnify such underwriters, and each Person who
controls the underwriters within the meaning of the Securities Act, to the same
extent as provided in Section 7(a) with respect to the indemnification of the
Debenture Holder or its Assignees, and (b) the Debenture Holder or its Assignees
agree to provide similar indemnities as part of their obligations in Section
6(a).
9. Indemnity for Breaches. The Company agrees to indemnify and hold harmless
the Debenture Holder and any Assignee hereunder at all times from and after the
date of this Agreement, against and in respect of the following: (i) any losses,
liabilities, costs, expenses or damages to the Debenture Holder or any such
Assignee resulting from any breach of a representation or warranty or
nonfulfillment of any agreement or covenant on the part of the Company under
this Agreement, and (ii) all suits, actions, proceedings, demands, assessments,
judgments, costs, attorneys' fees and expenses incident to any of the foregoing.
Each of the Debenture Holder and Assignees agrees to indemnify and hold harmless
the Company at all times from and after the date of this Agreement, against and
in respect of the following: (i) any losses, liabilities, costs, expenses or
damages to the Company resulting from any breach of a representation or warranty
or nonfulfillment of any agreement or covenant on the part of the Debenture
Holder under this Agreement, and (ii) all suits, actions, proceedings, demands,
assessments, judgments, costs, attorneys' fees and expenses incident to any of
the foregoing.
10. Equitable Relief. The parties agree that legal remedies may be inadequate
to enforce the provisions of this Agreement and that equitable relief, including
specific performance and injunctive relief, may be used to enforce the
provisions of this Agreement.
11. Notices. All notices and other communications give to or made upon any
party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing and shall be sent by telecopy (with
receipt confirmed) by registered or certified mail or delivered by hand,
addressed as follows:
(a) If to the Company:
Summagraphics Corporation
8500 Cameron Road
Austin, Texas 78754
Attention: President
Telecopy: 512-835-6730
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
and
(b) If to the Debenture Holder
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Stephen M. Piper, Esquire
Telecopy: 301-897-6333
with a copy to
Lockheed Martin Information
& Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy: 301-897-8889
and
</TABLE>
(c) If to an Assignee, to such address as such Assignee provides to the
Company and the Debenture Holder in connection with the acquisition of shares of
Common Stock pursuant to which the Assignee becomes so,
or to such other address as any party shall specify in writing to the other
party. All such notices and other communications shall be deemed given at the
time received.
12. Amendments. No change or modification of this Agreement shall be valid
unless the same shall be in writing and signed by the parties hereto. No waiver
of any provision of this Agreement shall be valid unless in writing, making
express reference to this Agreement, and signed by the Person against whom
enforcement of such waiver is sought. The failure of any party at any time to
insist upon strict performance of or compliance with any provision of this
Agreement shall not constitute a waiver of any right of such party hereunder or
as a waiver or relinquishment of the right to insist upon strict performance of
the same provision at any future time.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of ____ without regard to the conflict of
law principles thereof.
14. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and,
in the case of any of the Debenture Holder, its permitted assigns. The Company
and the Debenture Holder expressly agree that the Debenture Holder shall be
entitled to assign from time to time its rights hereunder (in respect of all or
any portion of the Registrable Securities) to any purchaser of any of the
Registrable Securities in accordance with
11
<PAGE>
the terms hereof, provided that no more than four persons unaffiliated with the
Debenture Holder may become Assignees hereunder. In the event that any
provision of this Agreement shall be held to be invalid or unenforceable, the
remaining parts hereof shall nevertheless continue to be valid and enforceable
as though the invalid or unenforceable portion were not a part hereof.
15. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
16. Rules of Construction. Whenever used herein, the singular number shall
include the plural, or plural the singular and the use of the masculine,
feminine or neuter gender shall include all genders. The terms "agree" and
"agreements" contained herein are intended to include and mean "covenant" and
"covenants." Whenever used herein, the word "or" is used in the inclusive
rather than the exclusive sense. The headings in this Agreement are for
convenience only and shall not limit or otherwise affect any of the provisions
hereof.
17. Term. This Agreement shall terminate on the date on which the Debenture
is redeemed or neither the Debenture Holder not any Assignees own or have the
right to acquire upon an Event of Default under the Debenture, directly or
indirectly, Registrable Securities.
IN WITNESS WHEREOF, the Company and the Debenture Holder have executed this
Agreement as of the day and year first above written.
ATTEST: SUMMAGRAPHICS CORPORATION
_________________________________ By:________________________(SEAL)
Robert B. Sims Michael S. Bennett
Secretary President and Chief Executive
Officer
ATTEST: LOCKHEED MARTIN CORPORATION
_________________________________ By:________________________(SEAL)
Lillian M. Trippett Walter E. Skowronski
Secretary Vice President and
Treasurer
12
<PAGE>
EXHIBIT C
to Secured
Convertible Debenture
_________________ ___, 199__
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Ladies and Gentlemen:
Pursuant to the terms of Section 1 of the 9-1/4% Secured Convertible Debenture
(the "Debenture") issued by Summagraphics Corporation to Lockheed Martin
Corporation on March ___, 1996, Summagraphics hereby requests Lockheed Martin to
make an Advance (as defined in the Debenture) in the amount of $_______ (which
amount is not less than $100,000). The proceeds of the Advance will be used
for the following specific purposes:
Upon approval by Lockheed Martin, please wire transfer the Advance to the
following bank account:
Any questions regarding this request should be directed to the undersigned at
(512) 327-_________.
Very truly yours,
SUMMAGRAPHICS CORPORATION
By:_______________________
cc: CalComp, Inc.
2411 West LaPalma Avenue
Anaheim, California 92801
Attention: Treasurer
APPROVED:
CalComp, Inc.
By:__________________________
<PAGE>
EXHIBIT B
Intercompany Services Agreement
<PAGE>
EXHIBIT B
================================================================================
INTERCOMPANY SERVICES AGREEMENT
Dated as of __________ ___, 1996
by and between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
===============================================================================
<PAGE>
INTERCOMPANY SERVICES AGREEMENT
-------------------------------
This INTERCOMPANY SERVICES AGREEMENT (this "Agreement") is made and
entered into as of the ____ day of __________ 1996, by and between SUMMAGRAPHICS
CORPORATION, a Delaware corporation (collectively with its subsidiaries,
"Summagraphics"), and LOCKHEED MARTIN CORPORATION, a Maryland corporation
("Lockheed Martin").
WHEREAS, pursuant to Section 5.2(a) and 6.2 of the Plan of
Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock
of Summagraphics Corporation dated as of the ____ day of __________, 1996 (the
"Reorganization Agreement"), by and among Summagraphics, Lockheed Martin and
CalComp Inc., a California corporation ("CalComp"), Summagraphics and Lockheed
Martin agreed to execute and deliver this Agreement at the closing (the
"Closing") of the transactions contemplated by the Reorganization Agreement;
WHEREAS, pursuant to the Reorganization Agreement, Summagraphics
agreed to issue and deliver to Lockheed Martin shares representing 89.7% of
Summagraphics' outstanding Common Stock, par value $.01 per share (the "Common
Stock"), on a fully diluted basis, in exchange for the transfer and delivery of
all the issued and outstanding capital stock of CalComp to Summagraphics, all
pursuant to and in accordance with the terms of the Reorganization Agreement;
WHEREAS, prior to the consummation of the transactions contemplated by
the Reorganization Agreement, Lockheed Martin had provided certain services to
CalComp, which services Summagraphics desires Lockheed Martin to continue
providing to Summagraphics and CalComp after the Closing; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Closing has occurred.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Summagraphics and Lockheed Martin agree as follows:
1. CORPORATE SERVICES AND EMPLOYEE BENEFITS.
----------------------------------------
(a) Beginning on the date hereof (the "Effective Date"), Lockheed
Martin shall provide to Summagraphics all of the services set forth in Exhibit A
to this Agreement to the extent provided prior to Closing by Lockheed Martin to
CalComp ("Corporate Services"). To the extent provided in this Agreement,
Lockheed Martin will include Summagraphics in its insurance coverage, including
self-insurance, if applicable, ("Insurance"). In addition, Lockheed Martin has
agreed to provide those employees who were employees of CalComp immediately
prior to the Closing with benefit plans and programs and the corresponding
administrative
<PAGE>
services which were provided to employees of CalComp prior to Closing ("Benefit
Plans"). The Corporate Services and Benefit Plans may be provided in accordance
with the terms and conditions of this Agreement by (i) any affiliate or employee
of Lockheed Martin or its affiliates or (ii) any third party, at the sole
discretion of Lockheed Martin.
(b) From time to time, Lockheed Martin reviews its policies with
respect to the provision and cost of services and the methodologies of
allocating such costs among Lockheed Martin's subsidiaries in respect of those
services that Lockheed Martin provides to its subsidiaries in the normal course.
In the event that Lockheed Martin determines that a reduction in the level of
such services (including the Corporate Services) or in the costs allocated to
subsidiaries in respect of such services generally, Summagraphics would be
entitled to participate in the benefit associated with any such reductions.
2. CORPORATE SERVICES.
------------------
(a) Fee. In exchange for the Corporate Services, Summagraphics
shall pay to Lockheed Martin a fee (the "Services Fee") that will be determined
by Lockheed Martin on a basis consistent with past practices, recognizing, to
the extent practicable, (i) Lockheed Martin's percentage ownership of
Summagraphics, (ii) Summagraphics' requirements for certain services for which
CalComp or Summagraphics was previously charged by Lockheed Martin and other
third parties, (iii) costs of obtaining services from third parties that
previously were provided to CalComp by Lockheed Martin. Summagraphics shall pay
the Services Fee (which shall include an allocation of Lockheed Martin's
overhead costs) to Lockheed Martin periodically in arrears on the last business
day of the period to which the Services Fee relates.
(b) Additional Corporate Services. At any time during the term of
this Agreement, Summagraphics may request that Lockheed Martin provide
additional services to Summagraphics. Upon any such request, the parties will
discuss in good faith, without obligation, an appropriate adjustment to the
Services Fee to reflect such additional services, after which Summagraphics
shall notify Lockheed Martin in writing whether it shall accept such additional
services and such adjustment.
(c) Term; Termination of Corporate Services. The term of Lockheed
Martin's agreement to provide Corporate Services shall be for two (2) years from
and after the Effective Date, provided that (i) Lockheed Martin, at its option,
may terminate this Agreement upon not less than 90 days prior written notice (or
such other time as is reasonably agreed by the parties) to Summagraphics at any
time that Lockheed Martin no longer owns Common Stock representing more than 50%
of all of the issued and outstanding Common Stock of Summagraphics and
Summagraphics may terminate this Agreement by providing not less than 90 days
written notice to
2
<PAGE>
Lockheed Martin at any time that Lockheed Martin owns Common Stock of
Summagraphics representing less than 25% of its issued and outstanding Common
Stock.
3. (a) Insurance. Lockheed Martin shall use its reasonable efforts
to cause Summagraphics to be covered under Lockheed Martin's insurance policies
(including, without limitation, property, casualty, workers' compensation and
directors and officers liability policies) which will provide to Summagraphics
the type of Insurance provided to Summagraphics, or, at Lockheed Martin's
option, CalComp immediately prior to Closing, subject to availability. Lockheed
Martin shall not be responsible for obtaining or maintaining any insurance
coverage for Summagraphics other than as set forth in the preceding sentence.
Summagraphics shall, within 30 days of its receipt of a reasonably detailed
invoice from Lockheed Martin, pay the portion of the premiums and other charges
for the Insurance attributable to the coverage provided to Summagraphics. The
portion of such premiums and other charges payable by Summagraphics shall be
allocated in good faith by Lockheed Martin in a manner to reflect the cost to
Lockheed Martin of the insurance premiums and other charges that are properly
attributable to Summagraphics (including an allocation of Lockheed Martin's
overhead costs related to providing such insurance). The Insurance provided
shall be subject to such policies of insurance or self-insurance, and such
guidelines or procedures in respect of insurance or self-insurance, as Lockheed
Martin shall determine in its sole and absolute discretion, provided that in the
event the terms of the Insurance change from those terms in effect immediately
prior to the date hereof, Lockheed Martin agrees (a) to the extent Lockheed
Martin is aware of a material change prior to the effective date of the change,
to provide notice to Summagraphics of the change prior to its effective date, or
(b) otherwise to provide notice to Summagraphics upon becoming aware of the
change. It is expressly agreed by Summagraphics and Lockheed Martin that any
self-insurance, retention or deductible shall be for the account of and be an
obligation of Summagraphics, and that Summagraphics' obligations in respect of
such self-insurance, retention or deductible shall survive the termination of
this Agreement.
(b) Termination of Insurance. Either Summagraphics or Lockheed Martin
may terminate all or any portion of the Insurance at any time on 90 days' prior
written notice to the other party hereto, subject to the terms of the insurance
coverage. Notwithstanding the foregoing, so long as Lockheed Martin
beneficially owns shares of Common Stock possessing 50% or more of the voting
power of all then-outstanding shares of capital stock, Summagraphics may not,
without the prior written consent of Lockheed Martin, terminate all or any
portion of the Insurance without providing evidence satisfactory to Lockheed
Martin that Summagraphics has obtained, or upon termination of such Insurance
will obtain, comparable insurance coverage. In the event all or any portion of
the Insurance is terminated, if appropriate, the
3
<PAGE>
charges therefor shall be adjusted equitably to reflect such termination.
4. EMPLOYEE BENEFIT PLANS.
----------------------
(a) Plans and Services. Prior to the Effective Date, employees of
------------------
CalComp participated in the employee benefit plans sponsored by Lockheed Martin
listed on Exhibit B. On and after the Effective Date, employees who were
employees of CalComp immediately prior to the Closing shall continue to be
eligible to participate in the plans listed in Exhibit B subject to the terms of
the governing plan documents as interpreted by the appropriate plan fiduciaries.
Any person who is hired by CalComp on or after the Effective Date shall be
eligible to participate in the plans listed on Exhibit B subject to the terms of
the governing plan documents as interpreted by the appropriate plan fiduciaries.
On and after the Effective Date, subject to regulatory requirements, the
Lockheed Martin Corporate Benefits Department will continue to provide such
administrative services with respect to those plans listed on Exhibit B in which
employees of CalComp continue to participate in substantially the same manner as
it provided prior to the Effective Date. Except with respect to any employee
who is hired by CalComp on or after the Effective Date, nothing contained herein
shall be deemed to permit any employee of Summagraphics (other than any such
employee who was an employee of CalComp immediately prior to the Closing) to
participate in any employee benefit plan sponsored by Lockheed Martin without
the prior written consent of Lockheed Martin, which consent may be withheld in
Lockheed Martin's sole and absolute discretion.
(b) Direct Cost Reimbursement. Summagraphics shall reimburse
-------------------------
Lockheed Martin for the direct costs associated with the plans in which
CalComp's or Summagraphics' employees participate. For this purpose, direct
costs associated with the plans shall include those items charged to CalComp as
direct costs prior to the Effective Date or any other reasonable method selected
by Lockheed Martin for determining direct costs which included the cost of the
benefits (premiums and contributions) and administration and management fees of
third party providers and internal personnel which is reasonable and fairly
allocates the costs of such plans. As appropriate, Summagraphics' allocable
share of the direct costs will be determined consistent with the methodology
used prior to the Effective Date to determine CalComp's allocable share of
direct costs or any other method selected by Lockheed Martin for determining
direct costs which is reasonable and fairly allocates the costs of such plans.
Lockheed Martin will invoice Summagraphics on a monthly basis and Summagraphics
shall make payment to Lockheed Martin within 30 days of receipt of an invoice.
Experience rated insurance contracts will be actualized as soon as practicable
after the end of each year; Summagraphics shall promptly reimburse Lockheed
Martin the amount of any increased cost and Lockheed Martin will promptly refund
to Summagraphics any overcharges. CalComp shall be entitled to review and
provide
4
<PAGE>
comments to Lockheed Martin concerning the amount of any such reimbursement or
refund.
(c) Termination. Summagraphics or Lockheed Martin may terminate
-----------
participation by Summagraphics' or CalComp's employees in any plan sponsored by
Lockheed Martin by giving 180 days' written notice to the other party, except
that the date of termination may be shortened or extended by either party if the
termination of Summagraphics' or CalComp's employees participation would
adversely affect the tax qualification of the plan or its compliance with
applicable regulatory requirements. The termination date may also be extended
to the earlier of an additional 180 days or the expiration date of any contract
pursuant to which benefits are provided if termination within 180 days would
adversely affect rates or rights of other employees or if more time is necessary
to effect an orderly termination of employees' participation. If the
termination date is extended, Lockheed Martin and Summagraphics will cooperate
reasonably in establishing a mutually agreeable termination date. Notice of
less than 180 days may be given by mutual written consent of Summagraphics and
Lockheed Martin or unilaterally by Lockheed Martin if the termination applies to
all participating employers in the Plan or if Summagraphics and Lockheed Martin
cease to be members of the same "controlled group" of corporations within the
meaning of Code Section 414(b). In the event that Lockheed Martin intends to
unilaterally terminate any plan pursuant to the foregoing sentence, Lockheed
Martin shall provide notice to Summagraphics as soon as reasonably practicable
taking into account the circumstances giving rise to such termination prior to
such termination. Unless Lockheed Martin otherwise agrees, termination shall be
effective with respect to the entire plan. Lockheed Martin will promptly submit
an invoice for, and Summagraphics shall promptly pay to Lockheed Martin, all
costs incurred prior to the date of termination, including costs resulting from
the termination, and Lockheed Martin will promptly repay to Summagraphics any
overpayment. All services offered by the Corporate Benefits Department with
respect to such terminated benefits shall cease. Lockheed Martin thereafter
will not be responsible for providing benefits of a like type to CalComp's
employees.
(d) Changes: Additional Services. Summagraphics may request changes
-----------------------------
in plan terms or services (including changes allowing Summagraphics employees to
participate in such plan). Approval of such changes shall be in the sole and
absolute discretion of Lockheed Martin. Summagraphics may request additional
services that, if agreeable to Lockheed Martin, will be provided on a direct
cost basis to Summagraphics. From time to time, Lockheed Martin may, as plan
sponsor, make changes in the benefit plans or in the administration of any of
the plans.
(e) Summagraphics Plans. On or after the Effective Date, no employee
-------------------
of Summagraphics or CalComp who is covered by a benefit plan sponsored by any
entity within their "controlled group" of corporations (within the meaning of
Code Section 414(b))
5
<PAGE>
other than Lockheed Martin shall be entitled to simultaneous coverage under any
plan sponsored by Lockheed Martin that provides a benefit of similar type,
regardless of whether the other plan provides more or less coverage than the
plan sponsored by Lockheed Martin. Summagraphics shall be solely responsible
for benefits delivery and administration of plans covering its employees that
are not sponsored by Lockheed Martin. A list of plans not sponsored by Lockheed
Martin that covered Summagraphics employees prior to the Effective Date is
attached as Exhibit C. Summagraphics shall use its reasonable efforts to
maintain its employee benefits related insurance policies in effect prior to the
date hereof.
(f) Legislative and Regulatory. In the event Summagraphics provides
--------------------------
benefit plans to its employees, other than those sponsored by Lockheed Martin,
Summagraphics will have sole responsibility to comply with all applicable
regulatory requirements with respect to such Summagraphics plans.
Notwithstanding the foregoing, Lockheed Martin and Summagraphics agree to
cooperate fully with each other in the administration and coordination of
regulatory and administrative requirements that apply jointly to Summagraphics
and Lockheed Martin. Such coordination, upon request, will include (but is not
limited to) the following: Sharing payroll data for determination of highly
compensated employees, providing census information (including accrued benefits)
for purposes of running discrimination tests, providing actuarial reports for
purposes of determining the funded status of any plan, review and coordination
of insurance and other third party contracts, and providing for review all
summary plan descriptions, requests for determination letters, insurance
contracts, Forms 5500, financial statement disclosures, and plan documents.
(g) Third Party Beneficiary. Nothing in this Agreement is intended to
-----------------------
entitle any employee or individual to any benefit or compensation from
Summagraphics, CalComp or Lockheed Martin or to otherwise establish or create
any rights on the part of any third party. Nothing in this Agreement is
intended to restrict or limit Lockheed Martin in the exercise of its rights or
the fulfillment of its duties as plan sponsor of any employee benefit plan.
(h) Certain Notices. In the event that there is an "ERISA Event,"
---------------
Lockheed Martin shall advise Summagraphics as soon as reasonably practicable
after Lockheed Martin determines the ERISA Event has occurred. For purposes of
this Section 4(h), an "ERISA Event" means (a) the termination of a plan listed
on Exhibit B or the filing of a Notice of Intent to Terminate such a plan, in
either case, under Section 4041(c) of the Employee Retirement Income Security
Act of 1974, as amended from time to time ("ERISA"); (b) the institution of
proceedings by the Pension Benefit Guaranty Corporation (or any successor
thereof) to terminate a plan listed on Exhibit B or to appoint a trustee to
administer such a plan or the receipt of notice by Lockheed Martin that such an
action has been taken with respect to such a plan;
6
<PAGE>
(c) any substantial accumulated funding deficiency within the meaning of Section
412 of the Internal Revenue Code of 1986, as amended (the "Code") or Section 302
of ERISA is incurred with respect to any plan sponsored by Lockheed Martin and
listed on Exhibit B and no waiver of that deficiency has been obtained from the
Internal Revenue Service; (d) the Internal Revenue Service determines that a
plan listed on Exhibit B that is intended to be qualified under Section 401 of
the Code fails to meet the applicable requirements of the Code and disqualifies
the plan; or (e) an amendment to a plan sponsored by Lockheed Martin and listed
on Exhibit B that results in a significant underfunding described in Section
401(a)(29) of the Code or Section 307 of ERISA.
5. PRIOR PAYMENTS. Summagraphics agrees from time to time to pay in
--------------
full all amounts owed to Lockheed Martin for the costs incurred in connection
with the provision of the services contemplated to be provided hereunder prior
to the Effective Date. Lockheed Martin agrees from time to time to refund any
overcharges paid by CalComp with respect to services prior to the Effective
Date.
6. COOPERATION. Lockheed Martin and Summagraphics shall (and each
-----------
shall cause their respective Subsidiaries to) cooperate with each other with
respect to all provisions of this Agreement and the Corporate Services,
Insurance and Benefit Plans provided hereunder.
7. LIMITATION OF LIABILITY. Except as may be provided in Section 8
-----------------------
below and with respect to the obligation of Lockheed Martin to reimburse
Summagraphics for overpayments of the fees and charges specified herein,
Lockheed Martin, its subsidiaries, affiliates, directors, officers, employees,
agents and permitted assigns (each, a "Lockheed Martin Party") shall not be
liable to Summagraphics, any subsidiary or any affiliate, director, officer,
employee, agent or permitted assign of Summagraphics or any of its subsidiaries,
(each, a "Summagraphics Party") for any liabilities, claims, damages, losses or
expenses, including, but not limited to, any special, indirect, incidental or
consequential damages, of a Summagraphics Party arising in connection with this
Agreement, the Corporate Services, the Insurance or the Benefit Plans.
8. LOCKHEED MARTIN INDEMNIFICATION. Lockheed Martin shall indemnify,
-------------------------------
defend and hold harmless each of the Summagraphics Parties from and against all
liabilities, claims, damages, losses and expenses (including, but not limited
to, court costs and reasonable attorneys' fees) (collectively referred to as
"Damages") of any kind or nature, of third parties unrelated to any
Summagraphics Party caused by or arising in connection with the gross negligence
or willful misconduct of any employee of Lockheed Martin or its affiliates in
connection with the performance of the Corporate Services or the administration
of the Benefit Plans, or provision of the Insurance, or the failure of Lockheed
Martin to perform its obligation hereunder except to the extent that Damages
were caused directly or indirectly by acts or omissions of any
7
<PAGE>
Summagraphics Party; provided however, that in the case of a Benefit Plan,
Summagraphics' right of indemnification also shall extend to claims of
Summagraphics' employees but shall not extend to any Damages that otherwise
would have been owed in the absence of such gross negligence or willful
misconduct. Notwithstanding the foregoing, Lockheed Martin shall not be liable
for any special, indirect, incidental, or consequential damages relating to such
third party claims. In the event that Summagraphics knows of a claim that may
be the subject of indemnification under this paragraph, it shall promptly notify
Lockheed Martin of such claim and Lockheed Martin, in its sole and absolute
discretion, may defend, settle, or otherwise litigate such claim, provided that
no settlement be made without the consent of Summagraphics, which will not be
unreasonably withheld.
9. SUMMAGRAPHICS INDEMNIFICATION. Summagraphics shall indemnify,
-----------------------------
defend and hold harmless each of the Lockheed Martin Parties, from and against
all Damages of any kind or nature, of any Lockheed Martin party, caused by or
arising in connection with Summagraphics' failure to fulfill Summagraphics'
obligations hereunder, except to the extent that such failure is caused,
directly or indirectly, by acts or omissions of any Lockheed Martin Party.
Notwithstanding the foregoing, Summagraphics shall not be liable for any
special, indirect, incidental or consequential damages relating to third party
claims.
10. INFORMATION. Subject to applicable law, each party hereto
-----------
covenants and agrees to provide the other party with all information regarding
itself and transactions under this Agreement as are required by such other party
to comply with all applicable federal, state, county and local laws, ordinances,
regulations and codes, including, but not limited to, securities laws and
regulations.
11. CONFIDENTIAL INFORMATION. Summagraphics and Lockheed Martin
------------------------
hereby covenant and agree to hold in trust and maintain confidential, except as
otherwise required by law, all Confidential Information relating to the other
party or any of its subsidiaries. Confidential Information shall mean all
information disclosed by either party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, technical, economic and business data,
know-how, flow sheets, drawings, business plans, computer information data
bases, and the like. Without prejudice to the rights and remedies of any party
to this Agreement, a party disclosing any Confidential Information to the other
party in accordance with the provisions of this Agreement shall be entitled to
equitable relief by way of an injunction if the other party hereto breaches or
threatens to breach any provision of this Section 11.
12. ASSIGNMENT. Except as otherwise provided herein, neither party
----------
may assign or transfer any of its rights or duties under this
8
<PAGE>
Agreement to any person or entity without the prior written consent of the other
party.
13. NOTICES. Any notice, instruction, direction or demand under the
-------
terms of this Agreement required to be in writing will be duly given upon
delivery, if delivered by hand, facsimile transmission or intercompany mail, or
five (5) days after posting if sent by certified mail, return receipt requested
to the following addresses:
If to Lockheed Martin:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817-1877
Attention: Stephen M. Piper, Esquire
Assistant General Counsel
Telecopy No.: (301) 897-6333
with a copy to:
Lockheed Martin Information
& Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy No.: (301) 897-6889
and
If to Summagraphics:
Summagraphics Corporation
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: President
Telecopy No.: (714) 821-2074
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 13.
14. GOVERNING LAW. This Agreement shall be construed in accordance
-------------
with and governed by the laws of the State of Maryland.
15. SUSPENSION. The obligations of any party to perform any acts
----------
hereunder may be suspended if such performance is prevented by fires, strikes,
embargoes, riot, invasion, governmental interference, inability to secure goods
or materials, or other circumstances outside the control of the parties.
16. SEVERABILITY. If any provision of this Agreement shall be
------------
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if
not containing the particular
9
<PAGE>
invalid or unenforceable provision, and the rights and obligations of each party
shall be construed and enforced accordingly.
17. RIGHTS UPON ORDERLY TERMINATION; SURVIVAL. Upon termination or
-----------------------------------------
expiration of this Agreement or any of the Services, Insurance or Benefit Plans
described herein, each party shall, upon request, forthwith return to the other
party all reports, paper, materials and other information required to be
provided to the other party by this Agreement. In addition, each party shall
assist the other in the orderly termination of this Agreement or any of the
Services, Insurance or Benefit Plans described herein. Notwithstanding any
termination of this Agreement, the obligations of the parties hereto to make
payments hereunder and the provisions of Sections 7, 8, 9 and 11 shall survive.
18. AMENDMENT. This Agreement may only be
---------
amended by a written agreement executed by all of the parties hereto.
19. COUNTERPARTS. This Agreement may be executed in separate
------------
counterparts (by facsimile or otherwise), each of which shall be deemed an
original and all of which, when taken together, shall constitute one agreement.
10
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives.
SUMMAGRAPHICS CORPORATION
By:___________________________
Michael S. Bennett
President and Chief
Executive Officer
LOCKHEED MARTIN CORPORATION
By:___________________________
Peter B. Teets
President - Lockheed Martin
Information & Technology
Services Sector
11
<PAGE>
EXHIBIT A
---------
Corporate Services
------------------
Tax planning and advice and preparation of income tax returns.
Corporate control and internal audit services.
Insurance planning and advice.
Health, safety and environmental management services and advice.
Human resources and employee relations services.
Legal services (other than outside counsel services).
Employee benefit plans administration and services.
Treasury and cash management services.
12
<PAGE>
EXHIBIT B
---------
Certain Lockheed Martin
Employee Benefit Plans
-----------------------
13
<PAGE>
EXHIBIT C
---------
Summagraphics Heritage Plans
----------------------------
14
<PAGE>
EXHIBIT C
Cash Management Agreement
<PAGE>
EXHIBIT C
================================================================================
CASH MANAGEMENT AGREEMENT
Dated as of __________ ___, 1996
between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
==============================================================================
<PAGE>
CASH MANAGEMENT AGREEMENT
This CASH MANAGEMENT AGREEMENT is dated as of __________ ___, 1996,
between SUMMAGRAPHICS CORPORATION, a Delaware corporation ("Summagraphics"), and
LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Lockheed Martin").
WHEREAS, pursuant to Sections 5.2(b) and 6.2 of the Plan of
Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock
of Summagraphics Corporation dated as of the 19th day of March, 1996 (the
"Reorganization Agreement"), by and among Summagraphics, CalComp Inc., a
California corporation ("CalComp"), and Lockheed Martin, Summagraphics and
Lockheed Martin agreed to execute and deliver this Agreement at the closing (the
"Closing") of the transactions contemplated by the Reorganization Agreement;
WHEREAS, pursuant to the Reorganization Agreement, Summagraphics
agreed to issue and deliver to Lockheed Martin shares representing 89.7% of
Summagraphics' outstanding Common Stock, par value $.01 per share (the "Common
Stock") on a Fully Diluted Basis, in exchange for the transfer and delivery of
all the issued and outstanding capital stock of CalComp to Summagraphics, all
pursuant to and in accordance with the terms of the Reorganization Agreement;
and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Closing has occurred and the parties have executed and delivered
a Revolving Credit Agreement of even date herewith.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Summagraphics and Lockheed Martin agree as follows:
1. Definitions. (a) Certain capitalized terms used but not defined
herein shall have the meaning given those terms in the Revolving Credit
Agreement.
(b) The following terms, as used herein, shall have the following
respective meanings:
"Advance" means any amount advanced by Lockheed Martin to
Summagraphics pursuant to Section 5(a) hereof.
"Bankruptcy Event" means, with respect to either party hereto, such
party or any Subsidiary thereof (i) shall commence a voluntary case or other
proceeding or an involuntary case or other proceeding shall be commenced against
it seeking liquidation, reorganization or other relief with respect to it or its
debt under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or
<PAGE>
any substantial part of its property, or, in the case of an involuntary case or
other proceeding commenced against it, it shall consent to any such relief or to
the appointment of or taking possession by any such official, or it shall make a
general assignment for the benefit of creditors, or it shall fail generally to
pay its debts as they become due, or it shall take any corporate action to
authorize any of the foregoing, or an order for relief shall be entered against
it under the federal bankruptcy laws as now or hereafter in effect; provided,
however, that, any such involuntary case or proceeding shall not be a Bankruptcy
Event unless it shall remain undismissed and unstayed for a period of 60 days.
"Concentration Account" means the account established and maintained
by Summagraphics in accordance with Section 3(a) hereof at such bank that
Lockheed Martin in its sole discretion may from time to time designate.
"Federal Funds Rate" means, for any day, the interest rate per annum
equal for such day to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published in the Federal Reserve System statistical
release H-15.
"Investment" means any amount held by Lockheed Martin for the benefit
of Summagraphics pursuant to Section 4(a) hereof.
"Revolving Credit Agreement" means the Revolving Credit Agreement of
even date herewith between the parties hereto as the same may be amended from
time to time.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof, and, as to
Summagraphics, "Subsidiary" shall also mean CalComp.
2. Agreement of Lockheed Martin. In consideration for the
compensation described in Section 8 below, Lockheed Martin agrees that it will,
in accordance with Sections 4 and 5 below, cause cash to be transferred to or
from the Concentration Account in amounts sufficient to cause the Concentration
Account balance to be zero at the end of each banking day.
3. Agreements of Summagraphics. In order for Lockheed Martin to
fulfill its obligations described in Section 2, Summagraphics agrees that it
will:
(a) establish and maintain the Concentration Account;
2
<PAGE>
(b) collect all domestic cash receipts of any nature payable to
Summagraphics or its Subsidiaries through lockbox services or other
collection services provided by banks approved by Lockheed Martin and cause
all such cash receipts and all other amounts collected by Summagraphics to
be transferred each banking day to the Concentration Account by means of a
banking settlement system approved by Lockheed Martin;
(c) notify Lockheed Martin of the estimated amount of the sum of
electronic payments as of the date of transfer not later than 1:00 p.m.
Eastern Standard Time on the date of such transfers;
(d) provide Lockheed Martin with projections of cash flow and
any additional related reports reasonably requested by Lockheed Martin;
(e) promptly notify Lockheed Martin of the occurrence of any
default or of any event that with notice or passage of time would
constitute a default by Summagraphics under any financial or credit
agreement or arrangement; and
(f) disburse funds from the Concentration Account to banks and
accounts approved by Lockheed Martin.
Nothing in this Agreement is intended to limit the purposes for which
Summagraphics may make payments or restrict its ability to make investments.
4. Investments. (a) In the event that Summagraphics' net cash
balance in the Concentration Account on any banking day is greater than zero,
Lockheed Martin will cause the cash balance to be transferred from the
Concentration Account to an account of Lockheed Martin. That amount will,
first, be deemed a repayment of principal of Base Rate Loans outstanding under
the Revolving Credit Agreement, second, to the extent not applied to repay Base
Rate Loans, be deemed a repayment of principal of LIBOR Rate Loans outstanding
under the Revolving Credit Agreement, and, third, to the extent not applied to
repay Base Rate Loans and LIBOR Rate Loans, be deemed a repayment of outstanding
Advances and, fourth, to the extent not applied to repay loans or Advances, be
deemed an Investment held by Lockheed Martin for the benefit of Summagraphics.
(b) Lockheed Martin will pay Summagraphics interest on the aggregate
principal amount of Investments at a rate per annum equal to the Federal Funds
Rate and will make available to Summagraphics the aggregate principal amount of
such Investments plus interest accrued not later than the next business day.
The aggregate amount of Investments plus interest accrued thereon at any time
shall be available to off-set any negative cash balances in the Concentration
Account on any day.
3
<PAGE>
5. Advances. (a) In the event that Summagraphics' net cash balance
in the Concentration Account on any banking day is negative, Lockheed Martin
will, subject to Section 5(c) hereof, advance by a deposit of funds into the
Concentration Account the amount necessary to cause the balance in the
Concentration Account to be zero. The amount so advanced will, first, be deemed
a repayment of any Investments plus any interest accrued thereon outstanding on
the date thereof and, second, to the extent not applied to repay Investments, be
deemed an Advance by Lockheed Martin to Summagraphics.
(b) Summagraphics will pay Lockheed Martin interest on Advances at a
per annum rate equal to the Federal Funds Rate.
(c) The maximum principal amount of Advances to be made by Lockheed
Martin hereunder shall be $2,000,000 outstanding at any time.
6. Interest. All interest to be paid with respect to Investments or
Advances will be calculated on the basis of a 365/366 day year and the actual
number of days elapsed. Interest will be calculated on each banking day and
will be payable monthly in arrears. Lockheed Martin will notify Summagraphics,
not later than ten days after the end of each month, of the net interest amount
payable by or to Summagraphics hereunder with respect to Investments and
Advances, which amount will be payable by the applicable party within five
banking days of the date of such notice.
7. Additional Accounts. Summagraphics may establish petty cash
accounts and local depository accounts at local banks to ensure that funds are
available to cover minor operating expenses. Such accounts, however, shall be
subject to a limit on the maximum balances therein reasonably approved by
Lockheed Martin and shall be replenished only to the extent vouchers and
receipts are available. Summagraphics may further establish bank accounts in
international locations as are required to collect and disburse funds of foreign
operations. Such foreign bank accounts shall be established and banks approved
by Lockheed Martin.
8. Compensation. Lockheed Martin shall be compensated for providing
services hereunder in accordance with the Intercompany Services Agreement, dated
the date hereof (the "Services Agreement"), between the parties hereto. No
additional compensation shall be due hereunder to Lockheed Martin.
9. Limitation of Liability. Except as may be provided in Sections 10
and 11 below, Lockheed Martin, its affiliates, directors, officers, employees,
agents or permitted assigns (each a "Lockheed Martin Party") shall not be liable
to Summagraphics or any of Summagraphics' affiliates, directors, officers,
employees, agents or permitted assigns (each a "Summagraphics Party") for, and
each Summagraphics Party shall not be liable to any Lockheed Martin Party for,
any liabilities, claims, damages, losses or expenses,
4
<PAGE>
including, but not limited to, any special, indirect, incidental or
consequential damages arising in connection with this Agreement.
10. Lockheed Martin Indemnification. Lockheed Martin shall
indemnify, defend and save harmless the Summagraphics Parties from and against
all liabilities, claims, damages, losses and expenses, including, but not
limited to, court costs and reasonable attorneys' fees, of any kind or nature,
caused by or arising in connection with the gross negligence or willful
misconduct of Lockheed Martin hereunder, unless such gross negligence or willful
misconduct is caused by the acts or omissions of any Summagraphics Party.
Notwithstanding the foregoing, Lockheed Martin shall not be liable for any
special, indirect, incidental or consequential damages relating to third party
claims.
11. Summagraphics Indemnification. Summagraphics shall indemnify,
defend and save harmless the Lockheed Martin Parties from and against all
liabilities, claims, damages, losses and expenses, including, but not limited
to, court costs and reasonable attorneys' fees, of any kind or nature, caused by
or arising in connection with Summagraphics' failure to fulfill Summagraphics'
obligations hereunder; unless such failure is caused by the acts or omissions of
any Lockheed Martin Party. Notwithstanding the foregoing, Summagraphics shall
not be liable for any special, indirect, incidental or consequential damages
relating to such claims.
12. Term of Agreement; Change of Control. This Agreement is
effective from the date hereof and shall continue in full force and effect until
June 1, 1998, unless sooner terminated by either party. Either party may
terminate this Agreement (a) at any time after the first anniversary of the
date this Agreement is effective by giving not less than 90 days' prior written
notice to the other party of its election to terminate (which notice may be
given up to 90 days prior to the first anniversary), or (b) at any time by
giving written notice to the other party of its election to terminate if (i)
such other party has failed to make any payments hereunder within five days of
when due or (ii) a Bankruptcy Event has occurred with respect to such other
party. In the event of a change of control of Summagraphics, whether by merger,
acquisition or sale of stock, disposition of assets or otherwise, this Agreement
shall automatically terminate.
13. Representations and Warranties. Each of the representations and
warranties contained in the Revolving Credit Agreement of even date herewith by
and between Summagraphics and Lockheed Martin are hereby incorporated by
reference as if set forth herein in full and may be relied upon by the parties
hereto as if set forth herein.
14. Right of Set-Off. In addition to any rights and remedies of
Lockheed Martin provided by law, Lockheed Martin shall have the right, without
prior notice to Summagraphics, any such notice being expressly waived by
Summagraphics to the extent
5
<PAGE>
permitted by applicable law, upon any amount becoming due and payable by
Summagraphics hereunder and remaining unpaid, to set-off and appropriate and
apply against any and all Investments, and any other credits, Indebtedness (as
defined in the Revolving Credit Agreement) or claims at any time held by or
owing by Lockheed Martin to or for the credit or the account of Summagraphics.
Lockheed Martin agrees promptly to notify Summagraphics after any such set-off
and application made by Lockheed Martin, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
15. Information. Each of Lockheed Martin and Summagraphics hereby
covenants and agrees to provide the other with all information regarding itself
and other assistance necessary for the other to comply with all applicable,
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
16. Assignment. Neither party may assign or transfer any of its
rights or duties under this Agreement to any person or entity without the prior
written consent of the other party; provided, however, that Lockheed Martin may
make any such assignment or transfer to an affiliate of Lockheed Martin without
the prior written consent of Summagraphics.
17. Notices. Any notice, instruction, direction or demand under the
terms of this Agreement required to be in writing will be duly given upon
delivery, if delivered by hand, intercompany mail or by facsimile (with receipt
confirmed), or five days after posting if sent by certified mail, return receipt
requested to the following addresses:
Lockheed Martin:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Telephone: (301) 897-6027
Telecopy: (301) 897-6651
With a copy to:
Lockheed Martin Information & Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Director, Finance
Telephone: (301) 897-6540
Telecopy: (301) 897-6889
6
<PAGE>
Summagraphics:
Summagraphics Corporation
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: Treasurer
Telephone:
Telecopy:
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 17.
18. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Maryland.
19. Suspension. The obligations of any party to perform any acts
hereunder may be suspended if such performance is prevented by fires, strikes,
embargoes, riot, invasion, governmental interference, inability to secure goods
or materials, or other circumstances outside the control of the parties.
20. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if
not containing the particular invalid or unenforceable provision, and the rights
and obligations of each party shall be construed and enforced accordingly.
21. Rights Upon Orderly Termination. Upon termination or expiration
of this Agreement or any portion of the services described herein, each party
shall, upon request, forthwith return to the other party all reports, paper,
material and other information required to be provided to the other party by
this Agreement. In addition, each party will assist the other in the orderly
termination of this Agreement or any portion of the services described herein.
22. Amendment. This Agreement may only be amended by a written
agreement executed by all of the parties hereto.
23. Entire Agreement. This Agreement, including any exhibits,
together with the Revolving Credit Agreement and the Services Agreement,
constitutes the entire agreement between the parties, and supersedes all prior
agreements, representations, negotiations, statements or proposals related to
the subject matter thereof.
24. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
LOCKHEED MARTIN CORPORATION
By:___________________________
Walter E. Skowronski
Treasurer
SUMMAGRAPHICS CORPORATION
By:___________________________
Michael D. Bennett
President and
Chief Executive Officer
8
<PAGE>
EXHIBIT D
Tax Sharing Agreement
<PAGE>
EXHIBIT D
================================================================================
TAX SHARING AGREEMENT
Dated as of __________ __, 1996
by and between
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
and
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
================================================================================
<PAGE>
TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT (this "Agreement"), dated as of _________,
1996, is made and entered into by and between LOCKHEED MARTIN CORPORATION, a
Maryland corporation ("Lockheed Martin"), and SUMMAGRAPHICS CORPORATION, a
Delaware corporation ("Summagraphics").
RECITALS
--------
WHEREAS, pursuant to the Plan of Reorganization and Agreement for the
Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation, dated
as of the 19th day of March, 1996 (the "Reorganization Agreement"), by and among
Summagraphics, CalComp Inc., a California Corporation ("CalComp"), and Lockheed
Martin, Summagraphics agreed to issue and deliver to Lockheed Martin 89.7% of
the outstanding shares of Summagraphics' Common Stock, par value $.01 per share,
determined on a fully diluted basis, in exchange for the transfer and delivery
of all the issued and outstanding capital stock of CalComp to Summagraphics;
WHEREAS, as a result of the Closing of the transactions contemplated
by the Reorganization Agreement, Lockheed Martin is the common parent
corporation of an affiliated group of corporations within the meaning of Section
1504(a) of the Internal Revenue Code of 1986, as amended and Summagraphics is a
member of such affiliated group;
WHEREAS, the affiliated group of which Lockheed Martin is the common
parent and Summagraphics is a member files a consolidated Federal income tax
return as defined in Code Section 1501; and
WHEREAS, Lockheed Martin and Summagraphics desire to provide for the
allocation of liabilities, procedures to be followed, and other matters with
respect to certain taxes for tax periods in which Summagraphics and its
subsidiaries are included in a consolidated Federal income tax return filed for
the Combined Consolidated Group, and with respect to certain carrybacks and
carryforwards of amounts relating to other periods.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1. "Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
2. "Combined Consolidated Group" shall mean the Lockheed Martin
Consolidated Group together with the Summagraphics Consolidated Group, and any
other corporations which may become members of either.
3. "Combined Consolidated Return" shall mean a consolidated Federal
income tax return filed for the Combined Consolidated Group.
4. "Summagraphics Consolidated Group" shall mean the affiliated group
of corporations of which Summagraphics would be the common parent for
consolidated Federal income tax return filing purposes if it were not a
subsidiary of Lockheed Martin, and any other corporations which are or may
become members of that affiliated group.
5. "Estimated Tax Sharing Payments" shall have the meaning given that
term in Section 2 of ARTICLE III.
6. "Federal Income Taxes" and "Federal Income Tax Liability" shall
mean the taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code, or any
successor provisions to such sections and any other income based U.S. Federal
taxes which are hereinafter imposed upon corporations.
7. "IRS" shall mean the Internal Revenue Service.
8. "Lockheed Martin Consolidated Group" shall mean the affiliated
group of corporations of which Lockheed Martin is the common parent, and any
other corporations which may become members of the affiliated group, but
excluding members of the Summagraphics Consolidated Group.
9. "Pro Forma Summagraphics Return" shall mean a pro forma
consolidated Federal income tax return for the Summagraphics Consolidated Group
prepared pursuant to ARTICLE III, Section 1 or 5. For 1996, the Pro Forma
Summagraphics Return shall include CalComp and its subsidiaries commencing
January 1 and Summagraphics and its subsidiaries commencing on the Closing Date
(as defined in the Reorganization Agreement).
10. "Regulations" shall mean the U.S. Treasury regulations in effect
from time to time.
ARTICLE II
PROCEDURAL MATTERS
------------------
1. Lockheed Martin shall have the sole and exclusive responsibility
for the preparation and filing of the consolidated U.S. Federal income tax
return of the Combined Consolidated Group, including any amended returns and any
other returns, documents, or statements required to be filed with the IRS with
respect to the
2
<PAGE>
determination of the Federal Income Tax Liability of the Combined Consolidated
Group. Lockheed Martin shall have the same responsibility with respect to state
combined or consolidated returns filed by the Combined Consolidated Group. All
returns shall be filed by Lockheed Martin on a timely basis, taking into account
extensions of the due dates for the filings of such returns.
2. The Summagraphics Consolidated Group shall continue to join in
filing consolidated Federal income tax returns and consolidated or combined
state income tax returns with the Lockheed Martin Consolidated Group for all
such taxable years for which the Summagraphics Consolidated Group is eligible to
do so under the Code, the Regulations and applicable state statutes, unless
Lockheed Martin shall request and be granted permission to discontinue filing on
a consolidated or combined basis by the appropriate Federal or state authority.
3. Lockheed Martin shall make all Federal and state income and
franchise tax payments, including estimated payments, with respect to combined
and consolidated tax returns of the Combined Consolidated Group, and Lockheed
Martin shall have the right to exercise all powers of a common parent with
respect to filing the consolidated Federal income tax returns and consolidated
or combined state income tax returns as are conferred on it by the Regulations
and applicable state statutes.
4. Lockheed Martin shall be the sole and exclusive agent of the
Summagraphics Consolidated Group and any member of such group in any and all
matters relating to the U.S. Federal Income Tax Liability of the Combined
Consolidated Group for all consolidated return years. The same shall apply with
respect to any state income tax liability where consolidated or combined returns
are filed by the Combined Consolidated Group. Lockheed Martin shall consult
with Summagraphics regarding the matters set forth in this paragraph as they
apply to the Pro Forma Summagraphics Return described in ARTICLE III, Section 1
hereof, and shall consider all changes requested by Summagraphics; provided,
however, that in its sole discretion, Lockheed Martin shall have the right with
respect to any Federal or state consolidated or combined returns which it files
(a) to determine (i) the manner in which such returns shall be prepared and
filed, including, without limitation, the manner in which any item of income,
gain, loss, deduction or credit shall be reported, (ii) whether any extensions
may be requested and (iii) the elections that will be made by any member of the
Combined Consolidated Group, (b) to contest, compromise or settle any adjustment
or deficiency proposed, asserted or assessed as a result of any audit of such
returns by the IRS or applicable state authority, (c) to file, prosecute,
compromise or settle any claim for refund and (d) to determine whether any
refunds, to which the Combined Consolidated Group may be entitled, shall be paid
by way of refund or credited against the tax liability of the Combined
Consolidated Group. Summagraphics hereby irrevocably appoints Lockheed Martin
as its agent and attorney-in-fact to take such
3
<PAGE>
action (including the execution of documents) as Lockheed Martin may deem
appropriate in accordance with the terms of this Section 4 to effect the
foregoing.
Lockheed Martin shall consult with Summagraphics regarding any
material issue relating to the Summagraphics Consolidated Group which arises
pursuant to an audit by the IRS or applicable state authorities of a Combined
Consolidated Return or combined or consolidated state return of the Combined
Consolidated Group or a return of Lockheed Martin to which an attribute of the
Summagraphics Consolidated Group is carried back, and shall consider
Summagraphics' views regarding any proposed adjustment relating to any such
issue.
5. Summagraphics shall reimburse Lockheed Martin for any outside
legal and accounting expenses incurred by Lockheed Martin in the course of the
conduct of any audit or contest regarding the tax liability of the Combined
Consolidated Group, and for any other expenses incurred by Lockheed Martin in
the course of any litigation relating thereto, to the extent such costs are
reasonably attributable to a Summagraphics Consolidated Group issue; provided,
however, that prior to incurring any such expenses, Lockheed Martin shall, in
good faith, consult with Summagraphics and consider Summagraphics' views with
regard to the retention of outside professional assistance.
6. Summagraphics shall furnish to Lockheed Martin in a timely manner
such information and documents as Lockheed Martin may reasonably request for
purposes of preparing the returns referred to in Section 1 of this ARTICLE II.
ARTICLE III
CALCULATION AND PAYMENT OF TAX SHARING PAYMENTS
-----------------------------------------------
1. For each taxable year for which Lockheed Martin files a Combined
Consolidated Return, Lockheed Martin shall prepare a Pro Forma Summagraphics
Return taking into account elections, methods of accounting, and positions with
respect to specific items that are consistent with those made or used by
Lockheed Martin for purposes of the Combined Consolidated Return. The tax
liability for the Pro Forma Summagraphics Return shall be computed as a flat tax
at the highest marginal rate applicable to corporations with respect to each
category of reported taxable income (at the date of this Agreement, the highest
marginal rate under Section 11 of the Code is 35%); provided, however, that if
the taxable income of the Combined Consolidated Group has not reached the level
(the "Flat Rate Level") at which the effect of the lower marginal rates set
---------------
forth in Section 11 of the Code (or any successor provision) is eliminated (as
of the date hereof, the Flat Rate Level is $18,333,333.33), then the tax
liability for the Pro Forma Summagraphics Return shall be based on a rate
sharing agreement to be agreed upon by the parties at such time. The Pro Forma
4
<PAGE>
Summagraphics Return shall reflect any carryovers of net operating losses, net
capital losses, excess tax credits or other tax attributes from prior years' Pro
Forma Summagraphics Returns which could have been utilized by the Summagraphics
Consolidated Group if the Summagraphics Consolidated Group had never been
included in the Combined Consolidated Group. Subject to the limitations imposed
by Section 382 of the Code, the Pro Forma Summagraphics Return shall also
reflect any carryovers of net operating losses, net capital losses, excess tax
credits or other tax attributes from Summagraphics or Summagraphics consolidated
returns for any taxable year in which Summagraphics was not included in the
Combined Consolidated Group which could have been utilized by the Summagraphics
Consolidated Group if the Summagraphics Consolidated Group had not been included
in the Combined Consolidated Group. The Pro Forma Summagraphics Return shall
also reflect any carryovers of net operating losses, net capital losses, excess
tax credits or other tax attributes from CalComp and its United States
subsidiaries (excluding AGT Holdings, Inc. and all of its subsidiaries) for tax
periods ending on or prior to December 31, 1995, that were used on a
consolidated basis by the affiliated group of corporations of which Lockheed
Corporation was the common parent or by the Lockheed Martin Group, but which
could have been utilized by the Summagraphics Consolidated Group if the
Summagraphics Consolidated Group had not been included in the Combined
Consolidated Group. The Pro Forma Summagraphics Return shall not, however,
reflect carryovers of any attributes from the Lockheed Martin Consolidated
Group, other than carryovers of pre-January 1, 1996, attributes of CalComp and
its subsidiaries. Sections 1.1502-13 and 1502-13T of the Regulations shall be
applied as if the Summagraphics Consolidated Group and the Lockheed Martin
Consolidated Group were separate affiliated groups, except that the Pro Forma
Summagraphics Return shall include all gains or losses recognized by the
Summagraphics Consolidated Group on transactions between members of the
Summagraphics Consolidated Group which are restored pursuant to such
aforementioned Sections of the Regulations and actually reflected on the
Combined Consolidated Return as a result of the Summagraphics Consolidated Group
ceasing to be included in the Combined Consolidated Group.
2. For each taxable year in which a Combined Consolidated Return is
filed, Summagraphics shall make periodic payments ("Estimated Tax Sharing
Payments") to Lockheed Martin in such amounts as, and no later than the dates on
which, payments of estimated tax would be due from the Summagraphics
Consolidated Group under Section 6655 of the Code if it were not included in the
Combined Consolidated Group. The Estimated Tax Sharing Payments shall be
determined by Lockheed Martin. Prior to March 15 of the following year,
Lockheed Martin shall prepare a preliminary tax calculation for the
Summagraphics Consolidated Group for such taxable year. The amount, if any, by
which the Federal Income Tax Liability determined pursuant to such preliminary
tax calculation exceeds the Estimated Tax Sharing Payments for the taxable year
shall be paid by Summagraphics to Lockheed Martin not later than such March 15.
Summagraphics shall pay to Lockheed Martin not
5
<PAGE>
later than 10 days after the date on which a Combined Consolidated Return for
the taxable year is filed, an amount equal to (i) the Federal Income Tax
Liability shown on the Pro Forma Summagraphics Return prepared for the taxable
year, reduced by (ii) the Federal Income Tax Liability determined pursuant to
the preliminary tax calculation, plus (iii) interest on such net amount. If the
Estimated Tax Sharing Payments paid to Lockheed Martin plus the excess, if any,
of the Federal Income Tax Liability determined pursuant to the preliminary tax
calculation over the Estimated Tax Sharing Payments exceeds the amount of the
Federal Income Tax Liability shown on the Pro Forma Summagraphics Return,
Lockheed Martin shall refund such excess to Summagraphics within 10 days after
the date on which a Combined Consolidated Return for the taxable year is filed,
plus interest.
Lockheed Martin shall furnish to Summagraphics the preliminary tax calculation
no later than 10 days prior to March 15 of the year following the taxable year,
and shall furnish to Summagraphics the Pro Forma Summagraphics Return no later
than 30 days before the Combined Consolidated Return for the taxable year is
filed.
3. If a Pro Forma Summagraphics Return reflects a net operating loss,
net capital loss, excess tax credit or other tax attribute, Lockheed Martin
shall pay to Summagraphics within 10 days after the Combined Consolidated Return
for the taxable year is filed, the refund which the Summagraphics Consolidated
Group would have received as a result of the carryback of such attribute 1) to a
Pro Forma Summagraphics Return for any taxable year or years in which the
Summagraphics Consolidated Group is included in the Combined Consolidated Group,
or 2) to a Summagraphics or Summagraphics consolidated return for any taxable
year or years in which Summagraphics was not included in the Combined
Consolidated Group. The amount of the refund shall be determined as if the
Summagraphics Consolidated Group had never been included in the Combined
Consolidated Group and Pro Forma Summagraphics Returns had been actual returns.
All calculations of deemed refunds pursuant to this Section 3 shall include
interest computed as if Summagraphics had filed a claim for refund or an
application for a tentative carryback adjustment pursuant to Section 6411(a) of
the Code on the date on which the Combined Consolidated Return is due, without
regard to extensions. For purposes of determining the refund which the
Summagraphics Consolidated Group would have received in accordance with the
preceding sentence, such attributes shall not be deemed to be available as a
carryback to any Lockheed Martin Consolidated Group return for any period.
4. For each taxable year in which a Combined Consolidated Return is
filed, Summagraphics shall take or cause to be taken all actions necessary to
ensure that CalComp Foreign Sales Corporation or, at Lockheed Martin's election,
a newly incorporated company (herein both referred to as "CCFSC") qualifies as a
"foreign sales corporation", and that commissions are paid to CCFSC in amounts
which will cause CCFSC to realize profits on each transaction equal to the
largest amount permitted for CCFSC under the provisions of
6
<PAGE>
the Code. For each taxable year for which a Pro Forma Summagraphics Return is
prepared, a determination shall be made (at the time at which the preliminary
tax calculation is made for such taxable year pursuant to ARTICLE III, Section
2) as to the net Federal Income Tax cost or saving to the Summagraphics
Consolidated Group resulting from the transactions engaged in between members of
the Summagraphics Consolidated Group and CCFSC during such taxable year. If it
is determined that there is a net Federal Income Tax cost to the Summagraphics
Consolidated Group resulting from such transactions, either Summagraphics shall
reduce the amount it is required to pay to Lockheed Martin by March 15 pursuant
to ARTICLE III, Section 2 by the amount of such net Federal Income Tax cost or,
if no amount is required to be paid by Summagraphics, Lockheed Martin shall
refund to Summagraphics by March 15 the amount of such net Federal Income Tax
cost. If it is determined that there is a net Federal Income Tax cost to the
Summagraphics Consolidated Group from transactions engaged in with CCFSC during
a taxable year, the amounts of any carryovers of a net operating loss, net
capital loss, excess tax credits or other tax attributes from such taxable year
which are reflected on the Pro Forma Summagraphics Group Return for a subsequent
year shall be reduced by the equivalent net Federal Income Tax cost. Such
reduction shall be accomplished in two steps, as follows: first, if there is a
carryover of a net operating loss or net capital loss, the reduction shall be an
amount equal to the net Federal Income Tax cost divided by the highest marginal
tax rate applicable to such category of taxable income for the tax year in which
such Federal Income Tax cost is incurred; second, any carryovers of other tax
attributes shall be reduced by an amount equal to the remaining unrecovered net
Federal Income Tax cost.
5. If, in any year after the Summagraphics Consolidated Group ceases
to be included in the Combined Consolidated Group, a Pro Forma Summagraphics
Return for such period reflects a net operating loss, a net capital loss, excess
tax credit or any other tax attribute, and such attribute could be carried back
to a Combined Consolidated Return, Lockheed Martin shall pay to Summagraphics an
amount equal to the refund that would be attributable thereto (including
interest thereon). Pro Forma Summagraphics Returns under this Section shall be
prepared by Summagraphics, and shall be subject to review and approval by
Lockheed Martin, such approval not to be unreasonably withheld. After the
Summagraphics Consolidated Group ceases to be included in the Combined
Consolidated Group, it shall not be entitled to any payment by Lockheed Martin
with respect to any net operating losses, net capital losses, excess tax credits
or other tax attributes not used by the Summagraphics Consolidated Group prior
to its ceasing to be included in the Combined Consolidated Group, whether or not
the Combined Consolidated Group receives a refund or other benefit relating to
such tax attributes.
6. If, in any year after a member of the Summagraphics Consolidated
Group ceases to be a member of both the Summagraphics Consolidated Group and the
Combined Consolidated Group, such member
7
<PAGE>
has a net operating loss, a net capital loss, excess tax credit or any other tax
attribute, and such attribute could be carried back to a Combined Consolidated
Return, Lockheed Martin shall pay to such member an amount equal to the refund
that would be attributable to such member (including interest thereon). After a
member of the Summagraphics Consolidated Group ceases to be a member of both the
Summagraphics Consolidated Group and the Combined Consolidated Group, it shall
not be entitled to any payment by Lockheed Martin with respect to any net
operating losses, net capital losses, excess tax credits or other tax attributes
not used by the member prior to its ceasing to be a member of the Summagraphics
Consolidated Group and the Combined Consolidated Group, whether or not the
Summagraphics Consolidated Group or the Combined Consolidated Group receives a
refund or other benefit relating to such tax attributes.
7. To the extent that any audit, litigation, claim or refund with
respect to a Combined Consolidated Return results in an increase or decrease in
taxable income relating to the treatment of a Summagraphics Consolidated Group
issue, a corresponding adjustment shall be made to such item and to
Summagraphics' Consolidated Group Federal Income Tax Liability reflected on the
applicable Pro Forma Return. Within 10 days after any such adjustment is
finally determined, Summagraphics shall pay to Lockheed Martin any increase in
the Summagraphics Consolidated Group Federal Income Tax Liability as a result of
such adjustment plus interest and any penalties consistent with such adjustment
and consistent with the penalties and interest actually assessed by the IRS, or
Lockheed Martin shall refund to Summagraphics any reduction in the Summagraphics
Federal Income Tax Liability as a result of such adjustment plus interest, as
the case may be.
ARTICLE IV
INTEREST
--------
Interest required to be paid by or to Summagraphics pursuant to this
Agreement shall, except as otherwise specified in Section 2 of ARTICLE V, be
computed at the rate and in the manner provided in the Code for interest on
underpayments and overpayments, respectively, of Federal income tax for the
relevant period.
ARTICLE V
STATE & LOCAL INCOME AND FRANCHISE TAXES
----------------------------------------
1. The principles expressed with respect to the Combined Consolidated
Group Federal income tax matters throughout this Agreement (including the
Miscellaneous Provisions of ARTICLE VI) shall apply with equal force and effect
to state and local income and franchise tax matters to the extent such taxes are
determined on a combined or consolidated basis, including the preparation and
8
<PAGE>
filing of state and local income tax and franchise tax returns required to be
filed by the Combined Consolidated Group.
2. Any interest charge required to be paid by or to Summagraphics
pursuant to this Agreement with respect to any state or local income tax or
franchise tax return shall be computed at the rate and in the manner as provided
under the applicable state or local statute for interest on underpayments and
overpayments of such tax for the relevant period.
ARTICLE VI
MISCELLANEOUS PROVISIONS
------------------------
1. Lockheed Martin and Summagraphics agree that any information
furnished one another pursuant to this Agreement is confidential and, except as,
and to the extent, required during the course of an audit or litigation or
otherwise required by law, shall not be disclosed to another person or entity.
2. This Agreement shall be binding upon and inure to the benefit of
any successor to any of the parties, by merger, acquisition of assets or
otherwise, to the same extent as if the successor had been an original party to
this Agreement. For purposes of this Section 2, the term "successor" shall be
deemed to include the acquiror of a substantial part of the assets of either of
the parties hereto.
3. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland without giving effect to conflicts of law
principles thereof.
4. This Agreement may be amended from time to time by agreement in
writing executed by all the parties hereto or all of the parties then bound
thereby. This Agreement constitutes the entire agreement with respect to the
subject matter hereof and supersedes all prior written and oral understandings
with respect thereto.
5. (a) With respect to each member of the Summagraphics Consolidated
Group, if such member is no longer eligible to file consolidated returns with
Lockheed Martin for any reason (including, without limitation, the sale,
exchange, or other disposition of all or any portion of the stock of
Summagraphics or any other member sufficient to disaffiliate Summagraphics or
such member from the Combined Consolidated Group, or the termination of the
Combined Consolidated Group), the parties hereto agree that as between Lockheed
Martin and the departing member, except as otherwise provided herein, this
Agreement shall be terminated at the time specified in the following paragraph
b. After the date of the disaffiliation, the parties agree to continue sharing
on a timely basis information necessary to the preparation of applicable
Federal, state and local tax returns.
9
<PAGE>
(b) This Agreement shall become operative as of the Closing Date (as
defined in the Reorganization Agreement) and with respect to any member of the
Summagraphics Consolidated Group, shall terminate and be of no further force or
effect only upon the expiration of all applicable statutes of limitations
relating to federal and state income taxes (including refunds thereof) for all
periods in which such member was a member of the Combined Consolidated Group,
provided that any amounts payable hereunder by one party to the other as of the
date of any such termination shall continue to be a valid and binding obligation
of such party and shall be paid as provided herein.
6. Lockheed Martin hereby agrees to indemnify and hold each member of
the Summagraphics Consolidated Group harmless with respect to:
(a) any Federal Income Tax Liability attributable to any taxable
period of such member for which such member has paid Lockheed Martin its
separate Federal Income Tax Liability, if any, in accordance with this
Agreement; and
(b) any Federal Income Tax Liability of the Combined Consolidated
Group for any taxable period of Lockheed Martin where such liability arises
solely by reason of the member being severally liable for any taxes of the
Lockheed Martin Consolidated Group pursuant to Treas. Reg. 1.1502-6.
7. Any notice, request or other communication required or permitted
in this Agreement shall be in writing and shall be sufficiently given if
personally delivered or if sent by registered or certified mail, postage
prepaid, addressed as follows:
TO SUMMAGRAPHICS:
2411 West LaPalma Avenue
Anaheim, California 92801
Attention: General Counsel
TO LOCKHEED MARTIN:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Vice President
and General Tax Counsel
With a copy to:
Lockheed Martin Information &
Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Director of Finance
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives.
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
By:___________________________
Arnold Chiet
Vice President and
General Tax Counsel
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
By:___________________________
Michael S. Bennett
President and Chief Executive
Officer
11
<PAGE>
EXHIBIT E
Revolving Credit Agreement
<PAGE>
EXHIBIT E
================================================================================
REVOLVING CREDIT AGREEMENT
Dated as of _______ __, 1996
between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation,
as Borrower
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation,
as Lender
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
SECTION 1. INTERPRETATIONS AND DEFINITIONS.
1.1 Definitions................................... 1
SECTION 2. THE LOANS.
2.1 Commitment to Lend............................ 10
2.2 Method of Borrowing........................... 10
2.3 Repayment and Prepayment of the Loans......... 11
2.4 Evidence of the Loans......................... 12
2.5 Interest Rates................................ 13
2.6 Commitment Fee................................ 13
2.7 Reduction and Cancellation of the Commitment.. 13
2.8 General Provisions as to Payments............. 14
2.9 Computation of Interest and Fees.............. 14
2.10 No Deduction.................................. 14
2.11 Use of Proceeds............................... 14
SECTION 3. CONDITIONS OF LENDING.
3.1 All Loans..................................... 14
3.2 Initial Loan.................................. 15
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 Corporate Existence and Power................. 15
4.2 Corporate Authorization....................... 15
4.3 Binding Effect................................ 15
4.4 No Contravention.............................. 15
4.5 Financial Statements.......................... 16
4.6 Litigation.................................... 17
4.7 Licenses and Authorizations................... 17
4.8 No Default.................................... 17
4.9 No Event of Default........................... 17
4.10 Adverse Change................................ 17
4.11 Liens......................................... 17
4.12 ERISA......................................... 18
4.13 Taxes......................................... 18
4.14 Environmental Matters......................... 18
4.15 Labor Matters................................. 19
4.16 Completeness.................................. 19
SECTION 5. AFFIRMATIVE COVENANTS.
5.1 Financial Statements.......................... 20
5.2 Notices, Litigation, etc...................... 21
5.3 Maintenance of Existence, etc................. 21
5.4 Obligations and Taxes......................... 22
5.5 Books and Records............................. 22
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
5.6 Insurance..................................... 22
5.7 ERISA......................................... 23
5.8 Environmental Compliance...................... 23
SECTION 6. NEGATIVE COVENANTS.
6.1 Maximum Leverage Ratio........................ 23
6.2 Minimum Fixed Charge Coverage Ratio........... 23
6.3 Minimum Quick Ratio........................... 24
6.4 Prohibition of Liens.......................... 24
6.5 Prohibition of Sale-Leaseback Transactions.... 25
6.6 Mergers, Consolidations, etc.................. 25
6.7 ERISA......................................... 25
SECTION 7. EVENTS OF DEFAULT.
SECTION 8. MISCELLANEOUS.
8.1 Notices....................................... 27
8.2 Amendments and Waivers; Cumulative Remedies... 28
8.3 Successors and Assigns........................ 28
8.4 Expenses and Withholding...................... 29
8.5 Counterparts.................................. 29
8.6 Headings; Table of Contents................... 29
8.7 Governing Law; Arbitration.................... 29
8.8 Right of Set-Off.............................. 30
SCHEDULES
Schedule 4.12...................................... S-1
(ii)
</TABLE>
<PAGE>
REVOLVING CREDIT AGREEMENT
--------------------------
REVOLVING CREDIT AGREEMENT, dated as of __________ ___, 1996, between
SUMMAGRAPHICS CORPORATION, a Delaware corporation (the "Borrower"), and LOCKHEED
MARTIN CORPORATION, a Maryland corporation (the "Lender").
SECTION 1. INTERPRETATIONS AND DEFINITIONS.
-------------------------------
1.1 Definitions. The following terms, as used herein, shall have
the following respective meanings:
"Agreement" means this Revolving Credit Agreement, as amended,
restated, extended or otherwise modified from time to time in accordance with
the terms hereof.
"Attributable Debt" means, for a lease, the carrying value of
the capitalized rental obligation determined under Generally Accepted Accounting
Principles, whether or not such obligation is required to be shown on the
balance sheet as a liability. In the case of any lease which, in accordance with
Generally Accepted Accounting Principles, is classified as a capital lease, the
amount of Attributable Debt created through such capital lease shall equal the
amount required to be shown under Generally Accepted Accounting Principles as a
liability of such lessee for such capital lease. In the case of any other lease,
the amount of Attributable Debt created through such lease shall be calculated
in a manner consistent with the determination of the net present value of the
Operating Lease Rental Obligations made as part of the determination of the
Interest Portion of Operating Lease Rental Expense.
"Base Rate" means a fluctuating per annum rate of interest as
shall be in effect from time to time, which rate shall at all times be equal to
the higher of:
(a) the per annum rate of interest publicly announced from time
to time by Morgan Guaranty Trust Company of New York in New
York as its "prime" rate. Any change in the Base Rate due
to a corresponding change in Morgan Guaranty Trust Company
of New York's "prime" rate shall take effect on the day
specified in the public announcement of such change; or
(b) 0.50% per annum above the Federal Funds Rate. Any change in
the Base Rate due to a change in the Federal Funds Rate
shall be effective as of the effective date of such change
in the Federal Funds Rate.
<PAGE>
"Base Rate Loan" means a Loan as to which the Borrower, in the
applicable notice of borrowing given pursuant to Section 2.2(a), shall have
requested the Base Rate as the applicable rate of interest.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or directed to
close.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended.
"Capital Lease Obligations" means, as applied to any Person, all
monetary obligations of such Person, under any leasing or similar arrangement
which, in accordance with Generally Accepted Accounting Principles, is
classified as a capital lease, as all such obligations are reported by such
Person in its financial statements prepared in accordance with Generally
Accepted Accounting Principles.
"Cash Management Agreement" means the Cash Management Agreement among
the Borrower and the Lender of even date herewith.
"Code" means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Commitment" means $28,000,000, as such amount may be reduced
from time to time pursuant to Section 2.7 hereof.
"Consolidated" refers to the results obtained by the consolidation of
the accounts of the Borrower and its Subsidiaries in accordance with Generally
Accepted Accounting Principles.
"Consolidated Subsidiaries" means the Subsidiaries of Borrower which
are consolidated with Borrower for financial reporting purposes.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all liabilities of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (vi) all Debt of others
Guaranteed by such Person and (vii) all obligations of such Person (contingent
or otherwise) in respect of letters of credit and banker's acceptances.
2
<PAGE>
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time, or both, would
become an Event of Default.
"Depreciation and Amortization Expense" means all amounts reported by
the Borrower in its Consolidated financial statements as expense for
depreciation, depletion and amortization, plus amortization of goodwill and
intangibles, during the relevant period.
"Dollars" and the sign "$" mean lawful money of United States.
"Earnings from Continuing Operations" means earnings from continuing
operations of the Borrower and its Consolidated Subsidiaries before adjustments
for extraordinary items, the cumulative effect of accounting changes and all
taxes on or measured by income, all as reported by the Borrower in its
Consolidated financial statements in accordance with Generally Accepted
Accounting Principles.
"Environmental Laws" means federal, state or local statutes, laws,
ordinances, codes, rules, regulations, consents, decrees and administrative
orders relating to protection of the environment, such as CERCLA, the Resource
Conservation and Recovery Act and analogous state laws and regulations.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"ERISA Affiliate" means any Person which would be a member of a
"controlled group," within the meanings of Sections 414(b), (c), (m) and (o) of
the Code, of which the Borrower would also be a member; provided, however, that
"ERISA Affiliate" will not include any Person of which the Borrower does not
have any direct or indirect ownership.
"ERISA Event" means, with respect to any Plan: (a) the occurrence of
any reportable event described in Section 4043(b) or (c) of ERISA or the
regulations thereunder (other than any such event as to which the PBGC has
waived the thirty-day notice requirements), (b) a withdrawal from a Plan
described in Sections 4063, 4203 or 4205 of ERISA by the Borrower or any ERISA
Affiliate, (c) a cessation of operations described in Section 4062(e) of ERISA
by the Borrower of any ERISA Affiliate, (d) the termination of a Plan or the
filing of a notice of intent to terminate such Plan, in either case, under
Section 4041 of ERISA, or the receipt of notice by the Borrower of the
occurrence of an event described in Section 4041A of ERISA which constitutes a
termination of a Plan, unless such termination occurs in connection with an
acquisition of a Person other than an ERISA Affiliate of the Borrower, and the
Borrower is taking reasonable steps to eliminate any material adverse effect
arising therefrom within a reasonable period of time, (e) proceedings under
3
<PAGE>
Section 515 of ERISA to collect delinquent contributions to a Plan result in a
judgment against the Borrower or any ERISA Affiliate, (f) the institution of
proceedings by the PBGC to terminate a Plan or to appoint a trustee to
administer a Plan or the receipt of notice by the Borrower that such action has
been taken with respect to a Plan or that such Plan is in reorganization or
insolvent under Sections 4241 or 4245 of ERISA, (g) any substantial accumulated
funding deficiency within the meaning of Section 412 of the Code or Section 302
of ERISA is incurred by the Borrower or any ERISA Affiliate, and for which no
waiver of that deficiency has been obtained from the Internal Revenue Service,
(h) the Internal Revenue Service determines that a Plan that is intended to be
qualified under Section 401 of the Code fails to meet the applicable
requirements of the Code and disqualifies the Plan, (i) any Plan (other than a
multiemployer plan within the meaning of Section 3(37) of ERISA) fails to be
maintained in substantial compliance with its documents or with the requirements
of any applicable statutes, regulations, rules, and orders, including, without
limitation, ERISA and the Code, (j) a failure by the Borrower or any ERISA
Affiliate to pay contributions or premiums required with respect to a Plan
within the time permitted by law, including extensions, unless such payment is
waived by an appropriate regulatory authority or is being contested in good
faith by appropriate proceedings, or (k) an amendment to a Plan resulting in a
significant underfunding as described in Code Section 401(a)(29) or ERISA
Section 307.
"Events of Default" shall have the meaning given to that term in
Section 7 hereof.
"Federal Funds Rate" means, for any day, the interest rate per annum
equal for such day to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published in the Federal Reserve System statistical
release H-15.
"Fixed Charge Coverage Ratio" will have the meaning given that
term in Section 6.2.
"Fixed Charges" means, for any period, the sum of
(a) Interest Expense during such period, plus
----
(b) Preferred Dividends during such period, plus
----
(c) Interest Portion of Operating Lease Rental Obligations for
such period.
"Funded Debt" means, without duplication, the sum of (i) all
obligations for borrowed money which would be reported on the Consolidated
balance sheet of the Borrower as a liability (expressly including, without
limitation, all purchase money obligations and Consolidated Capital Lease
Obligations of the Borrower and its Subsidiaries), (ii) all obligations for
borrowed
4
<PAGE>
money created, incurred, assumed or guaranteed by, or otherwise existing as a
liability of, any association, partnership, joint venture or other business
entity not in corporate form (expressly including, without limitation, all
purchase money obligations and Capital Lease Obligations of such association,
partnership, joint venture or such other entity) with respect to which the
Borrower or any of its Subsidiaries is liable as a primary obligor, and (iii)
all Debt of others Guaranteed by the Borrower or its Subsidiaries of, and all
reimbursement obligations of the Borrower or its Subsidiaries (whether or not
matured) with respect to surety bonds, letters of credit, bankers' acceptances
or other similar instruments.
"Generally Accepted Accounting Principles" means generally accepted
accounting principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and promulgations of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in such other
statements by such other entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any corporation or entity whose stock or capital ownership is owned or
controlled by any of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person or in any manner providing for the payment of any Debt of any other
Person or otherwise protecting the holder of such Debt against loss (whether by
agreement to keep-well, to purchase assets, goods, securities or services, or to
take-or-pay or otherwise), provided that the term Guarantee shall not include
--------
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means:
(a) any "hazardous substance," as defined by CERCLA;
(b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any waste oil or petroleum product; or
5
<PAGE>
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, waste, substance or material within the
meaning of the Environmental Laws.
"Indebtedness" of any Person means, without duplication,
(a) the principal of and premium (if any) in respect of (i)
Indebtedness of such Person for money borrowed and (ii)
Indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is
responsible or liable;
(b) all Capital Lease Obligations of such Person;
(c) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such
Person under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of
business);
(d) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with
respect to letters of credit securing obligations entered
into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such
Person of a demand for reimbursement following payment on
the letter of credit);
(e) all obligations of the type referred to in clauses (a)
through (d) of other Persons and all dividends of other
Persons for the payment of which, in either case, Borrower
is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any
agreement which has the economic effect of a guaranty; and
(f) all obligations of the type referred to in clauses (a)
through (e) of other Persons secured by any Lien on any
property or asset of the Borrower (whether or not such
obligation is assumed by such Person), the amount of such
obligation being deemed to be
6
<PAGE>
the lesser of the value of such property or assets or the
amount of the obligation so secured.
"Interest Expense" means the amount reported by the Borrower in its
Consolidated financial statements as interest expense during the relevant
period, increased (to the extent not duplicative) by the amount of any
amortization of discount and of capitalized financing costs on indebtedness of
the Borrower and its Subsidiaries, and reduced (to the extent not duplicative)
by the amount of any amortization of premium and of capitalized interest on
indebtedness of the Borrower and its Subsidiaries.
"Interest Portion of Operating Lease Rental Expense" means, for any
period, the portion of rents representative of an interest factor during such
period calculated in a manner consistent with the portion of rents
representative of an interest factor as reported by the Borrower in its Annual
Report on Form 10-K (including attachments thereto) (the "Form 10-K Report") or
Quarterly Report on Form 10-Q (including attachments thereto) (the "Form 10-Q
Report") filed with the Securities and Exchange Commission for such period;
provided, however, that if at any time the Borrower is no longer required to
- -------- -------
report, and does not in fact report, the portion of rents representative of an
interest factor in such Form 10-K Report and Form 10-Q Report, "Interest Portion
of Operating Lease Rental Expense" shall mean the portion of rents
representative of an interest factor of the Borrower and its Subsidiaries
calculated in a manner consistent with the portion of rents representative of an
interest factor as reported in the most recent Form 10-K Report or Form 10-Q
Report where the portion of rents representative of an interest factor was
reported.
"Leverage Ratio" will have the meaning given that term in
Section 6.1.
"LIBOR" means, with respect to any applicable period of duration for a
LIBOR Loan, the London inter-bank offered rate for deposits in United States
dollars for an approximately equivalent period, determined as of approximately
11:00 a.m. (London time) as set forth on the display designated as the "LIBOR"
page on the Rider Monitor Money Rates Service, or such other well recognized
source or service as the parties hereto may agree in writing, on the Business
Day immediately preceding the day on which such period commences. If such rate
is not so quoted and the parties do not agree in writing to an alternative
source or service, "LIBOR" shall be reasonably determined by the Lender on such
day by reference to the rate quoted for the offering by leading banks
(reasonably selected by the Lender) in the London inter-bank market of dollars
for deposit.
"LIBOR Loan" means a Loan as to which the Borrower, in the applicable
notice of borrowing given pursuant to Section 2.2(a), shall have requested a
rate based on LIBOR for the applicable period as the applicable rate of
interest.
7
<PAGE>
"Lien" means with respect to any property or asset (or any income or
profits therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise) (a) any mortgage, lien, pledge, attachment, levy or other security
interest of any kind thereupon or in respect thereof, but not including the
interest of a third party in receivables sold by such Person to such third party
on a non-recourse basis or (b) any other arrangement, express or implied, under
which the same is subordinated, transferred, sequestered or otherwise identified
so as to subject the same to, or make the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured liabilities of such Person. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset that it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Loan" means a loan, whether a Base Rate Loan or a LIBOR Loan, made by
the Lender to Borrower pursuant to Section 2, or all such Loans, as the context
may require.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, (b) the ability
of the Borrower to perform its obligations under this Agreement, (c) the
validity or enforceability of this Agreement, (d) the rights and remedies of the
Lender under this Agreement, or (e) the timely payment of the principal of or
interest on the Loans or other amounts payable in connection therewith.
"Obligation" means as applied to any Person, any law, decree,
regulation or similar enactment, any instrument, agreement or other obligation
or any judgment, injunction or other order or award of any judicial,
administrative or governmental authority or arbitrator by which such Person or
any of its Properties is bound.
"Operating Lease Rental Obligations" means all monetary obligations of
the Borrower and its Subsidiaries for scheduled rental payments under any
leasing or similar arrangement which, in accordance with Generally Accepted
Accounting Principles, is not classified as a capital lease.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a business trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) and any multiemployer plan (as defined in
8
<PAGE>
Section 3(37) of ERISA) (i) which is contributed to, participated in or
sponsored or maintained by the Borrower, or any ERISA Affiliate or (ii) to which
the Borrower or any ERISA Affiliate is obligated to make, or at any time during
the five calendar years preceding the date of this Agreement has made, or was
obligated to make, contributions; provided, however, that "Plan" shall not
include any such plan sponsored by Lockheed Martin Corporation or any Subsidiary
thereof unless it is sponsored by the Borrower or an ERISA Affiliate.
"Preferred Dividends" means, with respect to any period, the aggregate
amount of all dividends accrued by the Borrower on its preferred shares, if any,
during such period.
"Property" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"Proxy Statement" means Proxy Statement of Borrower used in connection
with the Special Meeting of Stockholders of Borrower held on ____________ __,
1996.
"Quick Ratio" will have the meaning given that term in
Section 6.3.
"Real Properties" means collectively, any and all parcels of real
property owned or operated by the Borrower or any Subsidiary of the Borrower.
"Release" means a "release" as such term is defined in CERCLA.
"Sale-Leaseback Transaction" means an arrangement whereby the Borrower
or any Subsidiary of the Borrower now owns or hereafter acquires Property,
transfers it to a Person and leases it back from that Person.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof, and, as to the
Borrower, "Subsidiary" shall also mean CalComp Inc.
"Tangible Net Worth" means, at any date, the Consolidated
stockholder's equity of the Borrower and its Subsidiaries at such time
determined in accordance with Generally Accepted Accounting Principles, less all
----
assets that are reflected on the Consolidated balance sheet of the Borrower at
such time that would be treated as intangibles under Generally Accepted
Accounting Principles (including, but not limited to, good will, capitalized
software development costs and excess purchase costs).
9
<PAGE>
"Tax" means all taxes, levies, imposts, stamp taxes, sales tax, goods
and services tax, duties, charges to tax, fees, deductions, withholdings and any
restrictions or conditions resulting in a charge to tax, in each case imposed by
or payable to a government or governmental agency, and all penalty, interest and
other payments on or in respect thereof.
"Term of this Agreement" means the period from the date hereof to
and including the Termination Date.
"Termination Date" means the second anniversary of the date hereof or
such earlier date as Borrower has obtained an agreement to lend from a third
party on terms which are not substantially less favorable to Borrower than the
terms of the Loans hereunder.
SECTION 2. THE LOANS.
---------
2.1 Commitment to Lend.
------------------
(a) During the Term of this Agreement the Lender agrees, on the terms
and conditions contained in this Agreement, to make Loans to the Borrower at any
time prior to the Termination Date in an aggregate amount not exceeding at any
one time outstanding the Commitment in effect at the time the Loans are made.
The Borrower shall repay Loans in accordance with Section 2.3 and may reborrow
under this Section 2.1(a) at any time.
(b) Any other provision of this Agreement to the contrary
notwithstanding, the Lender shall not be obligated to make a Loan to the
Borrower at any time that the Borrower is, or after giving effect to the making
of the Loan the Borrower would be, in violation of (i) any of the terms,
conditions, covenants or provisions of this Agreement including, without
limitation, the terms and conditions contained in Section 3 hereof or (ii) any
of the terms, conditions, covenants or provisions of the Cash Management
Agreement.
(c) The commitment of the Lender to make Loans to the Borrower set
forth in Section 2.1 (a) may be cancelled by the Lender at any time after the
first anniversary of the date of this Agreement. The Lender shall give the
Borrower not less than 120 days' prior written notice of cancellation of the
Commitment (which notice can be given up to 120 days prior to the first
anniversary).
2.2 Method of Borrowing.
-------------------
(a) With respect to each Loan made pursuant to Section 2.1 hereof,
except as provided in paragraph (c) below, the Borrower shall give the Lender a
notice of borrowing notifying the Lender of its request to borrow hereunder
which notice will specify (i) the date of the Loan, which date shall be a
Business Day, (ii) whether the Loan will be a Base Rate Loan or a LIBOR Loan,
(iii)
10
<PAGE>
the principal amount of the Loan, which in the case of a LIBOR Loan shall be
$500,000 or a greater multiple thereof, and (iv) in the case of a LIBOR Loan,
the duration thereof which shall be one, two or three months, subject to the
provisions of paragraph (d) below. The notice of borrowing shall be written,
provided that it may be given orally (to be confirmed in writing if the Lender
so requests) if the principal amount of the Loan is less than $500,000.
(b) If the Borrower gives the notice required by Section 2.2(a) with
respect to any Loan before 1:00 p.m. (Eastern Time), the Lender will disburse
the proceeds of the Loan to the Borrower in immediately available funds on the
Business Day following the date of such notice. The Lender will disburse all
Loans to the Borrower by deposit in the Concentration Account (as that term is
defined in the Cash Management Agreement) or, if the Cash Management Agreement
shall no longer be in effect, by deposit in such account as shall be designated
by the Borrower in the applicable notice of borrowing.
(c) On any Business Day that there would be outstanding (if not for
the limitation as to the principal amount of advances set forth in Section 5(c)
of the Cash Management Agreement) advances from the Lender to the Borrower under
the Cash Management Agreement in an aggregate amount (the "Covered Amount") that
is greater than $2.0 million, the Borrower shall be deemed to have given the
Lender a notice of borrowing requesting a Loan hereunder. The principal amount
of the Loan so requested shall be the amount by which the Covered Amount exceeds
$2.0 million. The Lender will make the proceeds thereof available to the
Borrower on the day the Borrower is deemed to give such notice. Each Loan made
pursuant to this paragraph (c) shall be a Base Rate Loan.
(d) If in any notice of borrowing given pursuant to paragraph (a)
above the Borrower designates a period of duration for a LIBOR Loan which would
otherwise end on a day which is not a Business Day, that period shall end on the
next preceding Business Day. Any such period of duration which begins prior to
the Termination Date and would otherwise end after the Termination Date shall
end on the Termination Date.
2.3 Repayment and Prepayment of the Loans.
-------------------------------------
(a) The Borrower agrees that it shall repay each LIBOR Loan at the end
of the period of duration applicable thereto and it shall repay all Loans no
later than the Termination Date.
(b) The Lender may, in its sole discretion, set off any amounts due
and owing to it by the Borrower hereunder (and not otherwise paid by the
Borrower) against amounts owed by the Lender to the Borrower as provided in
Section 8.8.
(c) The Borrower may repay or prepay the outstanding principal amount
of Loans in whole or in part on any Business Day upon irrevocable notice to the
Lender given not later
11
<PAGE>
than 1:00 p.m. (Eastern Time) on the Business Day prior to the proposed payment
date, provided, however, that the Borrower may make repayments pursuant to
Section 4(a) of the Cash Management Agreement without giving such notice.
Notice hereunder shall specify the date of the repayment or prepayment, the
principal amount to be repaid or prepaid (which amount, in the case of a LIBOR
Loan, shall be a multiple of $500,000) and whether such payment relates to Base
Rate Loans or LIBOR Loans and, if the latter, identifying the LIBOR Loan or
Loans to which such payment applies. Each such repayment or prepayment shall be
made on the dates specified and shall be accompanied by payment of all accrued
interest thereon and, subject to compliance with the foregoing procedures, may
be made at any time without cost or penalty of any kind; provided, however,
that, if the Borrower prepays any LIBOR Loan in whole or in part, the accrued
interest on the principal amount to be prepaid will be recalculated from the
date the applicable LIBOR Loan was borrowed as if that amount had been borrowed
as a Base Rate Loan.
(d) Subject to the conditions of Section 2.2(a) and this Section
2.3(d), a LIBOR Loan may, on the last day of the applicable period of duration
thereof, be converted into a Base Rate Loan or a new LIBOR Loan and a Base Rate
Loan may, on any Business Day, be converted into a LIBOR Loan. The applicable
notice of borrowing given pursuant to Section 2.2(a) shall designate any part of
the Loan requested thereby that is to be made by conversion of an existing Loan
rather than by advancing a new Loan. To the extent that a Loan is made by
conversion of an existing Loan, the conditions of lending set forth in Section
3.1 hereof will not apply. Notwithstanding the provisions of this Section
2.3(d), during a Default the Lender may notify the Borrower that Base Rate Loans
may not be converted into LIBOR Loans and that LIBOR Loans may not be converted
into new LIBOR Loans.
2.4 Evidence of the Loans.
---------------------
(a) The Loans made to the Borrower shall be evidenced by this
Agreement and by a loan account in the Borrower's name to be maintained by the
Lender. All Loans shall be payable by the Borrower to the order of the Lender
not later than the Termination Date.
(b) The Lender's loan account shall reflect appropriate notations
evidencing the date, the amount and the maturity of each Loan and the date and
amount of each payment of principal made by the Borrower with respect thereto.
The loan account shall be conclusive evidence, absent manifest error, of the
amount of the Loans, the interest accrued and payable thereon and all interest
and principal payments made thereon. Any failure to record or any error therein
shall in no way limit or otherwise affect the obligations of the Borrower
hereunder to pay any amount owing with respect to the Loans.
12
<PAGE>
2.5 Interest Rates and Payments. (a) Base Rate Loans shall bear
---------------------------
interest on the outstanding principal amount thereof at a rate per annum equal
to the Base Rate as in effect from time to time. Interest on Base Rate Loans
shall be payable monthly in arrears and on the Termination Date. The Lender
will notify the Borrower in writing, not later than ten days after the end of
each month, of the amount of interest payable hereunder with respect to Base
Rate Loans which notice will set forth in reasonable detail the calculation of
such amount. The Borrower agrees that it shall pay each monthly installment of
interest within five Business Days of the date on which it receives such notice.
(b) LIBOR Loans shall bear interest on the outstanding principal
amount thereof, for the applicable duration thereof as selected by the Borrower
in the notice of borrowing given pursuant to Section 2.2(a), at a rate per annum
equal to LIBOR for such period as in effect one Business Day before the
beginning of the period plus 1% (one percent). Interest on LIBOR Loans shall be
payable, and the Borrower agrees that it shall pay such interest without any
requirement of notice from the Lender, with respect to the period of duration of
each LIBOR Loan on the last day thereof.
(c) Overdue principal of and, to the extent permitted by law,
overdue interest on the Loans shall bear interest, payable on demand of the
Lender, for each day until paid at a rate per annum equal to the Base Rate plus
2% (two percent).
2.6 Commitment Fee. During the Term of this Agreement, the Borrower
--------------
shall pay to the Lender a commitment fee computed at a rate per annum equal to
0.35% on the unused amount of the Commitment. Such commitment fee shall accrue
daily from the date hereof to and including the Termination Date and shall be
payable quarterly in arrears and on the Termination Date. The Lender will
notify the Borrower, not later than ten days after the end of each March, June,
September and December, of the amount of the commitment fee payable hereunder.
The Borrower agrees that it shall pay the commitment fee within five Business
Days of the date on which it receives such notice.
2.7 Reduction and Cancellation of the Commitment. (a) The Borrower
--------------------------------------------
shall have the right, after the first anniversary of the date of this Agreement,
upon at least 120 days' prior written notice (which notice can be given up to
120 days prior to the first anniversary) to the Lender, to terminate or reduce
the unused portion of the Commitment. Any such reduction of the Aggregate
Commitment shall be in the minimum amount of $500,000 or a greater multiple
thereof (except that any such reduction may be in the full amount of the unused
portion of the Commitment). The accrued commitment fee with respect to the
terminated or reduced portion of the Aggregate Commitment shall be payable on
the effective date of such reduction or termination.
13
<PAGE>
(b) The Commitment shall terminate on the Termination Date, and any
Loans then outstanding (together with accrued interest thereon) shall be repaid
in full on such date.
2.8 General Provisions as to Payments. Subject to the provisions of
---------------------------------
Section 2.3(b), the Borrower shall make each payment of principal of, and
interest on, the Loans and the Borrower shall make each payment of commitment
fees hereunder on the date when due in funds immediately available in the
account that the Lender shall designate. Whenever any payment of principal of,
or interest on, the Loans or of commitment fees shall be due on a day which is
not a Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest shall be payable for such extended
time at a rate per annum equal to the Base Rate.
2.9 Computation of Interest and Fees. Interest on Base Rate Loans
--------------------------------
and the commitment fee shall be computed for each day on the basis of a year of
365 or 366 days, as the case may be. Interest on each LIBOR Loan shall be
computed for the applicable period of duration on the basis of a year of 360
days and the actual number of days elapsed.
2.10 No Deduction. All amounts payable by the Borrower under this
------------
Agreement are payable without deduction or set-off unless specifically agreed to
by the Lender in writing.
2.11 Use of Proceeds. The proceeds of Loans will be employed by the
---------------
Borrower for general corporate purposes including, without limitation, as
working capital for the Borrower and its Subsidiaries, and to acquire the assets
or capital stock of other Persons, as may be authorized by the Board of
Directors.
SECTION 3. CONDITIONS OF LENDING.
---------------------
The obligation of the Lender to make each Loan hereunder is subject to
the performance by the Borrower of all its obligations under this Agreement and
to the satisfaction of the following further conditions:
3.1 All Loans. In the case of each Loan hereunder, including the
---------
initial Loan:
(a) receipt by the Lender of a notice of borrowing from the Borrower
required by Section 2.2(a) hereof, except in the case of a deemed notice of
borrowing in accordance with Section 2.2(c);
(b) the fact that immediately after the making of the Loan no Default
or Event of Default shall have occurred and be continuing; and
14
<PAGE>
(c) the fact that the representations and warranties contained in
this Agreement are true and correct on and as of the date of the Loan with the
same force and effect as if made on and as of such date.
Each notice of borrowing and each borrowing by the Borrower hereunder shall be
deemed to be a representation and warranty by the Borrower on the date of such
Loan as to the facts specified in (b) and (c) above. If the Lender reasonably
believes, acting in good faith, that the conditions set forth in (b) and (c)
above cannot or would not be satisfied, the Lender will have no obligation to
make the applicable Loan.
3.2 Initial Loan. In the case of the initial Loan receipt by the
------------
Lender of a certificate of a duly authorized officer of the Borrower as to the
incumbency, and setting forth a specimen signature, of each person who has
signed this Agreement on behalf of the Borrower and who will, until replaced by
other persons duly authorized for that purpose, act as the representatives of
such Borrower for the purpose of signing documents in connection with this
Agreement and the transactions contemplated hereby.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower hereby represents and warrants to the Lender that:
4.1 Corporate Existence and Power. The Borrower is a corporation
-----------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has full power and authority to carry on its
business as now being conducted and to own its properties and is duly licensed
or qualified and in good standing as a foreign corporation in each other
jurisdiction in which failure to qualify would have a Material Adverse Effect.
The Borrower is in compliance with its charter and bylaws and all other
organizational or governing documents.
4.2 Corporate Authorization. The execution, delivery and performance
-----------------------
by the Borrower of this Agreement are within the Borrower's corporate power and
have been duly authorized by all necessary corporate action.
4.3 Binding Effect. This Agreement constitutes the valid and binding
--------------
obligation of the Borrower enforceable against the Borrower in accordance with
its terms.
4.4 No Contravention. The Borrower's execution and delivery of, and
----------------
performance of its obligations under, this Agreement do not, and consummation of
the transactions contemplated hereby will not, result in:
15
<PAGE>
(a) a violation of or a conflict with any provision of the charter,
bylaws or any other organizational or governing document of the Borrower;
(b) a breach or default under any provision of any contract,
agreement, lease, commitment, license, franchise or permit to which the Borrower
is a party or by which any property of the Borrower is bound;
(c) a violation of any statute, rule, regulation, ordinance, order,
judgment, writ, injunction, decree or award of any judicial, administrative,
governmental or other authority or of any arbitrator; or
(d) an imposition on the business of the Borrower or on any of
its properties of any Lien.
4.5 Financial Statements. (a) (i) The Consolidated balance sheet of
--------------------
CalComp Inc. and its Consolidated Subsidiaries as at December 31, 1995 and the
related Consolidated statement of earnings and business equity and Consolidated
statement of cash flows of CalComp Inc. and its Consolidated Subsidiaries for
the fiscal year then ended, certified by Ernst & Young, LLP, certified public
accountants, and (ii) the Consolidated balance sheet of Summagraphics
Corporation and its Consolidated Subsidiaries as at May 31, 1995 and the related
Consolidated statement of earnings and business equity and Consolidated
statement of cash flow of Summagraphics Corporation and its Consolidated
Subsidiaries for the fiscal year then ended, certified by KPMG Peat Marwick,
LLP, certified public accountants, and (iii) the unaudited consolidated balance
sheet, statement of changes in stockholders equity, statement of income and
statement of cash flow for the six months ended November 30, 1995 and 1994, and
(iv) any interim financial statements filed by Summagraphics Corporation with
the Securities and Exchange Commission after November 30, 1995, all which are
set forth in the Proxy Statement, fairly present in conformity with Generally
Accepted Accounting Principles, the Consolidated financial position of CalComp
Inc. and its Consolidated Subsidiaries or Summagraphics Corporation and its
Consolidated Subsidiaries, as the case may be, at such dates and the
Consolidated results of operations and cash flow of CalComp Inc. or
Summagraphics Corporation, as the case may be, for the periods then ended.
(b) The unaudited pro forma combined condensed financial statements of the
Borrower and its Consolidated Subsidiaries contained in the Proxy Statement were
prepared in accordance with the Securities and Exchange Commission's rules and
guidelines with respect to pro forma financial statements, were properly
compiled on the pro forma basis described therein from historical consolidated
financial statements of each of CalComp Inc. and Summagraphics Corporation, and
the assumptions used in their preparation are reasonable and the adjustments
described in the
16
<PAGE>
notes thereto are appropriate to give effect to the transactions or
circumstances described therein.
4.6 Litigation. Except as disclosed in the Proxy Statement, there is
----------
no action, suit, litigation or proceeding at law or in equity or by or before
any Governmental Authority now pending against or, to the knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries or any of
their respective Properties an adverse decision in which could reasonably be
expected to have a Material Adverse Effect.
4.7 Licenses and Authorizations. The Borrower and the Borrower's
---------------------------
Subsidiaries have obtained all licenses, permits and certificates and all other
approvals, orders, authorizations and consents and have made all declarations,
filings and registrations which are necessary for the ownership by the Borrower
and the Borrower's Subsidiaries of their respective Properties and for the
conduct by the Borrower and the Borrower's Subsidiaries of their respective
businesses, except for those, which, if not obtained or made, could not
reasonably be expected to have a Material Adverse Effect. No approval of or
filing with any Governmental Authority is or will be necessary for the valid
execution, delivery or performance by the Borrower of this Agreement or for the
performance by the Borrower of any of the terms or conditions hereof or thereof,
except for such approvals as have been obtained.
4.8 No Default. None of the Borrower or the Borrower's Subsidiaries
----------
(i) is in breach or violation of any of the terms, covenants, conditions or
provisions of any of its Obligations such as reasonably could be expected to
have a Material Adverse Effect; or (ii) has done or omitted to do anything
which, with the giving of notice or lapse of time, or both, would constitute a
material default under any of its Obligations or reasonably could be expected to
have a Material Adverse Effect.
4.9 No Event of Default. No Event of Default or other material event
-------------------
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default has occurred and is continuing.
4.10 Adverse Change. There have been no material adverse changes in
--------------
the financial condition, results of operations or business of the Borrower and
its Subsidiaries taken as a whole since December 31, 1995.
4.11 Liens. The Borrower and the Borrower's Subsidiaries have good
-----
and marketable title to each of their respective Properties, free and clear of
all material Liens, except for Liens, if any, now existing in the nature of
those that are, or would be, permitted under Section 6.4 of this Agreement. The
obligations of the Borrower under this Agreement rank at least pari passu to all
---- -----
other debt of the Borrower, except for any senior Indebtedness to which Lender
has consented in writing prior to the incurrence thereof.
17
<PAGE>
4.12 ERISA.
-----
(a) Schedule 4.12 attached to this Agreement (as the schedule shall be
modified from time to time pursuant to Section 5.7 hereof) sets forth a true and
complete list of all ERISA Affiliates and of all Plans.
(b) No ERISA Event or Events have occurred or reasonably could be
expected to occur which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.13 Taxes. Subject to the provisions of the Tax Sharing Agreement by
-----
and between Borrower and Lender of even date herewith (the "Tax Sharing
Agreement"), all federal, state and other income tax returns of the Borrower and
each of the Borrower's Subsidiaries required by law to be filed have been duly
filed, and all federal, state and other taxes, assessments and other
governmental charges or levies upon the Borrower and each of the Borrower's
Subsidiaries and any of their respective Properties, income, profits and assets,
which are due and payable, have been paid, except as permitted by Section 5.3.
4.14 Environmental Matters.
---------------------
(a) Except as set forth in subsection (b) below:
(i) the Real Properties and all operations and facilities at the
Real Properties are not contaminated by, and, to the best knowledge of the
Borrower, have not previously been contaminated by, any Hazardous Materials
in concentrations which constitute or constituted a violation of, or could
reasonably be expected to give rise to liability under, any Environmental
Law;
(ii) the Real Properties and all operations and facilities at the
Real Properties are in material compliance with all Environmental Laws, and
there is no contamination at, under or about the Real Properties in
concentrations that constitute a violation of any Environmental Law which
reasonably could be expected to materially interfere with the continued
operation of any of the Real Properties or any operations or facilities at
the Real Properties;
(iii) neither the Borrower nor any of its Subsidiaries have
received any notice of violation, alleged violation, noncompliance,
liability or potential liability, or responsibility regarding compliance
with or liability under Environmental Laws, nor, to the best knowledge of
the Borrower, is any such notice being threatened;
(iv) no Hazardous Materials have been generated, treated, stored
or disposed of, at, on or under any of the Real Properties during the
period of ownership or
18
<PAGE>
operation thereof by the Borrower, or, to the best knowledge of the
Borrower, any property formerly owned or leased by the Borrower or any of
the Borrower's Subsidiaries, in violation of, or in a manner that would
reasonably be expected to give rise to liability under, any Environmental
Law, nor have any Hazardous Materials been transported or disposed of from
any of the Real Properties or, to the best knowledge of the Borrower, any
property formerly owned or leased by the Borrower or any of its
Subsidiaries, to any other location in violation of, or in a manner that
would reasonably be expected to give rise to liability under, any
Environmental Law;
(v) there are no judicial proceedings or governmental or
administrative actions pending or, to the best knowledge of the Borrower,
threatened under any Environmental Law to which the Borrower or any of its
Subsidiaries is or will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under
any Environmental Law against the Borrower or any of its Subsidiaries; and
(vi) there has been no Release or threat of Release of Hazardous
Materials at or from any of the Real Properties or any facilities at the
Real Properties, or arising from or related to operations in connection
with the Real Properties, in violation of, or in amounts or in a manner
that could reasonably be expected to give rise to liability under, any
Environmental Law.
(b) To the best knowledge of the Borrower, Schedule 4.14 sets forth
the liabilities and potential liabilities of the Borrower and its Subsidiaries
under Environmental Laws, the existence of which could have a material adverse
effect on the financial condition or business of the Borrower and its
Subsidiaries taken as a whole or the ability of the Borrower to perform its
obligations under this Agreement.
4.15 Labor Matters. There are no strikes or other labor disputes,
-------------
grievances, charges or complaints with respect to any employee or group of
employees pending or, to the best knowledge of the Borrower, threatened against
the Borrower or any of the Borrower's Subsidiaries which reasonably could be
expected to have a Material Adverse Effect.
4.16 Completeness. None of the statements of the Borrower contained
------------
in this Agreement or in any certificate or written statement furnished by the
Borrower to the Lender pursuant hereto when made (as limited or qualified in
such documents) contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements contained therein not
misleading. There is no fact known to the Borrower which the Borrower has not
disclosed to the Lender which reasonably could be expected to have a Material
Adverse Effect.
19
<PAGE>
SECTION 5. AFFIRMATIVE COVENANTS.
---------------------
So long as the Lender's commitment to make Loans hereunder shall be in
effect or any amount payable hereunder remains unpaid, unless compliance shall
have been waived in writing by the Lender, the Borrower agrees that:
5.1 Financial Statements. The Borrower will:
--------------------
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, deliver to the Lender a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of
such year, and a consolidated statements of earnings, shareholders' equity and
cash flows of the Borrower and its Consolidated Subsidiaries for such year,
setting forth in each case in comparative form corresponding Consolidated
figures from the preceding fiscal year, all as filed with the Securities and
Exchange Commission and audited by an accounting firm of nationally recognized
standing, together with the report of the accountants thereon, which report
shall include the unqualified opinion of such accountants, prepared in
accordance with Generally Accepted Accounting Principles consistently applied;
(b) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Borrower, deliver
to the Lender a Consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such quarter and the related Consolidated
statements of earnings, shareholders' equity and cash flows of the Borrower and
its Consolidated Subsidiaries for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter setting forth in each
case in comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year; as filed with the
Securities and Exchange Commission, prepared in accordance with Generally
Accepted Accounting Principles;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, deliver to the Lender, a
certificate of the Borrower signed by an authorized officer of the Borrower, (i)
stating that, as of the date of such financial statements, the representations
and warranties set forth in Article IV of this Agreement are true, correct and
complete in all material respects as though made on and as of the date, and (ii)
stating whether, to the best of his or her knowledge after due inquiry, there
exists on the date of such certificate any Default or Event of Default and, if
any Default or Event of Default exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto, and (iii) setting forth in reasonable detail a calculation of the Fixed
Charge Coverage Ratio and the Leverage Ratio as of the applicable day;
20
<PAGE>
(d) deliver to the Lender copies of all financial statements, reports
and notices, if any, sent or distributed generally by the Borrower to its
stockholders generally, promptly upon such distribution and of all proxy
materials, registration statements, regular periodic reports (including interim
reports filed on Form 8-K) which the Borrower has filed with the Securities and
Exchange Commission, as soon as the same are available;
(e) promptly upon the chief financial officer, treasurer, or chief
accounting officer of the Borrower, or any other officer of similar
responsibility, becoming aware of the occurrence of any Default or Event of
Default, a certificate of the Borrower, signed by chief financial officer or the
chief accounting officer of the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto; and
(f) promptly upon the reasonable request of the Lender, deliver to the
Lender, any other information reasonably requested by the Lender.
5.2 Notices, Litigation, etc. The Borrower will promptly give
------------------------
written notice to the Lender of the following:
(a) Any litigation or other proceeding before any judicial,
administrative or arbitral body to which the Borrower or any of its Subsidiaries
is a party or any dispute which may exist between the Borrower or any of its
Subsidiaries and any Governmental Authority, in each case which reasonably could
be expected to have a Material Adverse Effect;
(b) Any work stoppage which reasonably could be expected to have
a Material Adverse Effect; and
(c) The occurrence of any ERISA Event or Events (other than those of
which the Borrower is given notice by the Lender in accordance with Section 4(h)
of the Intercompany Services Agreement, of even date herewith between the Lender
and the Borrower) which, individually or in the aggregate, reasonably could be
expected to have a Material Adverse Effect, together with a statement as to the
reasons therefore and the action, if any, which the Borrower proposes to take
with respect thereto.
5.3 Maintenance of Existence, etc. The Borrower will, and will cause
-----------------------------
its Subsidiaries to:
(a) do or cause to be done all things necessary to preserve and keep
in full force and effect its or their existence and all rights, privileges and
franchises currently existing other than those rights, privileges and franchises
that the failure to have or maintain could not reasonably be expected to have a
Material Adverse Effect;
21
<PAGE>
(b) comply with all material requirements of all applicable laws,
decrees, regulations and similar enactments and with all applicable judgments,
injunctions and other orders and awards of judicial, administrative,
governmental and other authorities and arbitrators the violation of which,
individually or in the aggregate, reasonably could be expected to have a
Material Adverse Effect or unless they are being contested in good faith and, if
appropriate, by legal proceedings;
(c) maintain and preserve all of its or their Properties in good
working order and condition and maintain, preserve and replace all plant and
equipment necessary in the proper conduct of its or their business; and
(d) with respect to the business of the Borrower and its Subsidiaries,
taken as a whole, remain in, and continue to operate substantially in, the
business being conducted by the Borrower and its Subsidiaries on the date of
this Agreement.
5.4 Obligations and Taxes. The Borrower shall, and shall cause its
---------------------
Subsidiaries to, (i) subject to the provisions of the Tax Sharing Agreement of
even date herewith between the Lender and the Borrower, pay or discharge or
cause to be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits before the same
shall become in default, and (ii) pay all of their material liabilities and
obligations when due and prior to the date on which penalties attach thereto,
except, in each case with respect to clauses (i) and (ii), such as are being
contested in good faith or which, if taken in the aggregate, reasonably could
not be expected to have a Material Adverse Effect.
5.5 Books and Records. The Borrower shall, and shall cause its
-----------------
Subsidiaries to, (i) keep adequate records and books of account in which
complete entries will be made in accordance with Generally Accepted Accounting
Principles so that Consolidated financial statements can be prepared in
accordance with Generally Accepted Accounting Principles and (ii) permit
employees or agents of the Lender, at its risk and expense, during working
hours, with reasonable advance notice, to inspect their respective properties,
and to examine the books, accounts and records relating to their financial
condition.
5.6 Insurance. The Borrower shall, and shall cause its Subsidiaries
---------
to, (i) maintain and keep in full force and effect general business insurance in
such amounts and against such risks as is customary for businesses similarly
situated, with responsible insurance companies or, to the customary extent,
self-insurance, including reasonable protection against loss of use and
occupancy, and, (ii) furnish the Lender upon request with full information as to
the insurance carried.
22
<PAGE>
5.7 ERISA.
-----
(a) The Borrower shall promptly notify the Lender in writing of (i)
any changes in the information reported on Schedule 4.12 by delivering to the
Lender an amended schedule making specific reference to Section 4.12 and (ii)
the occurrence of any ERISA Event not previously reported to the Lender.
(b) The Borrower shall, and shall cause its ERISA Affiliates to, make
payment of contributions to the Plans required of them to meet the minimum
funding standards set forth in ERISA and the Code within the time permitted by
law, including any extensions, unless such payment is waived by an appropriate
regulatory authority or is being contested in good faith by appropriate
proceedings.
5.8 Environmental Compliance. The Borrower shall, and shall cause
------------------------
its Subsidiaries to:
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in compliance therewith,
(b) handle all Hazardous Materials in compliance with all
applicable Environmental Laws, and
(c) promptly address or respond and defend against any actions and
proceedings relating to compliance with Environmental Laws.
SECTION 6. NEGATIVE COVENANTS.
------------------
Until the later of the cancellation in full of its Commitment and the
payment in full of all sums due from the Borrower pursuant to this Agreement,
the Borrower covenants and agrees as follows:
6.1 Maximum Leverage Ratio. The Borrower shall not permit the ratio
----------------------
(the "Leverage Ratio") (stated as a percentage) of
(a) Funded Debt to
(b) the sum of Tangible Net Worth plus its Funded Debt to exceed
----
at any time 32%.
6.2 Minimum Fixed Charge Coverage Ratio. On and after the Closing
-----------------------------------
Date, the Borrower shall not permit, for any period, the ratio (the "Fixed
Charge Coverage Ratio") of
(a) the sum of
23
<PAGE>
(i) Earnings from Continuing Operations for such period, plus
----
(ii) Interest Expense for such period, plus
----
(iii) Depreciation and Amortization Expense for such period,
plus
----
(iv) Interest Portion of Operating Lease Rental Expense for such
period, to
(b) Fixed Charges for such period,
to be less than (w) 3.5 to 1 for the first full fiscal quarter following the
date hereof, (x) 3.5 to 1 for the first two full fiscal quarters after the date
hereof, (y) 3.5 to 1 for the first three full fiscal quarters following the date
hereof, and (z) commencing with the fourth full fiscal quarter following the
date hereof and on each March 31, June 30, September 30 and December 31
thereafter, 4.0 to 1 for the preceding four quarters, all of the foregoing
measured at the end of each fiscal quarter and determined on a Consolidated
basis.
6.3 Minimum Quick Ratio. The ratio (the "Quick Ratio") of
-------------------
(a) the sum of
(i) cash, plus
----
(ii) cash equivalent investments, plus
----
(iii) trade accounts receivable, to
(b) total current liabilities (excluding any Borrowings under the
Agreement which may be so classified) shall be at least .75 to 1.
6.4 Prohibition of Liens. The Borrower shall not, nor shall Borrower
--------------------
permit any of its Subsidiaries to create, assume or suffer to exist any Lien
securing Debt on any Property now owned or hereafter acquired by it, except for:
(a) any Lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary and not created in contemplation of such
event;
(b) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
- --------
days after the acquisition thereof;
24
<PAGE>
(c) any Lien on any asset of any corporation existing at the time
such corporation is merged into or consolidated with the Borrower or a
Subsidiary and not created in contemplation of such event;
(d) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(e) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section 6.4, provided that such Debt is not increased and is not
--------
secured by any additional assets; and
(f) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court proceedings
so long as the execution or other enforcement thereof is effectively stayed and
the claims secured thereby are being contested in good faith by appropriate
proceedings.
6.5 Prohibition of Sale-Leaseback Transactions. The Borrower shall
------------------------------------------
not, nor shall the Borrower permit any of its Subsidiaries to, after the date of
this Agreement, enter into a Sale-Leaseback Transaction unless:
(a) the lease has a term of three years or less, with no provision
giving the lessee the absolute or conditional option to extend the term of the
lease or to renew the lease; or
(b) the Borrower or its Subsidiary under Section 6.4(b) could
create a Lien on the applicable Property to secure Debt at least equal in amount
to the Attributable Debt for the lease.
6.6 Mergers, Consolidations, etc. The Borrower shall not enter into
----------------------------
any consolidation, merger or other combination with any other Person or sell,
lease or otherwise transfer (other than sales of product in the normal course of
Borrower's business) all or any substantial part of its assets to any other
Person.
6.7 ERISA. Without the prior written consent of the Lender, which
-----
consent will not be unreasonably withheld, the Borrower shall not (a) contribute
to, maintain or adopt any Plan not listed on Schedule 4.12 on the date of this
Agreement (the "Original Schedule"), or (b) become subject to any obligation to
contribute to any Plan not listed on the Original Schedule, or (c) materially
increase its obligations under any Plan.
25
<PAGE>
SECTION 7. EVENTS OF DEFAULT.
-----------------
If any one or more of the following events ("Events of Default") shall
have occurred and be continuing:
(a) the Borrower shall fail to pay any interest on the Loans or any
commitment fee, in each case, within 30 days of the date when due or the
Borrower shall fail to pay any principal of the Loans when due; or
(b) any representation and warranty made by the Borrower herein or in
any document or instrument delivered pursuant hereto shall prove to be incorrect
or misleading in any material respect on the date when made or deemed to be
made; or
(c) the Borrower shall fail to perform or observe any of the covenants
contained in Sections 5.2, 6.1, 6.2, 6.3, 6.4 and 6.5 of this Agreement; or
(d) the Borrower shall fail to pay or otherwise default on any term,
covenant or agreement contained herein (other than those specified in clauses
(a), (b) or (c) above) for 30 days after written notice thereof has been given
to such Borrower by the Lender; or
(e) the Borrower or any of its Subsidiaries shall (i) fail to pay any
indebtedness (other than under this Agreement) with an aggregate principal
amount when due or to pay interest thereon and, with respect to interest, such
failure shall continue for more than any applicable grace period, or (ii) fail
to observe or perform any other term, covenant or agreement contained in any
agreement, instrument, agreements, or instruments (other than this Agreement) by
which it is bound evidencing, securing or relating to indebtedness in an
aggregate principal amount if the effect thereof is to permit (or, with the
giving of notice or lapse of time or both, would permit) the holder or holders
thereof or of any obligations issued thereunder or a trustee or trustees acting
on behalf of such holder or holders to cause acceleration of the maturity
thereof or of any such obligations; or
(f) the Borrower or any of its Subsidiaries shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
26
<PAGE>
(g) an involuntary case or other proceeding shall be commenced against
the Borrower or any of its Subsidiaries seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any of its Subsidiaries under
the federal bankruptcy laws as now or hereafter in effect;
(h) one or more judgments against the Borrower or any of its
Subsidiaries, or attachments against the Property of either, the operation or
result of which reasonably could be expected to have a Material Adverse Effect,
remain unpaid, unstayed on appeal, not being appealed in good faith,
undischarged, unbonded or undismissed for a period of 60 days; or
(i) any ERISA Event or Events shall occur and the aggregate amount of
the liability of the Borrower and its ERISA Affiliates resulting therefrom
reasonably could be expected to have a Material Adverse Effect; or
(j) The Borrower or any of its material Subsidiaries shall voluntarily
suspend for more than 30 days the transaction of all or substantially all of its
business (a shutdown due to strikes, labor disputes, government action, or
action arising from acts of God are not to be deemed voluntary and intra-company
mergers and consolidations shall not be deemed a voluntary suspension of all or
substantially all of the business of any material Subsidiary provided the
Borrower (directly or through its other Subsidiaries) continues to carry on such
business); or
(k) an Event of Default of the Borrower shall have occurred under the
Cash Management Facility;
then, and in every such event, (1) in the case of any of the Events of Default
specified in paragraphs (f) or (g) above, the Commitment shall thereupon
automatically be terminated and the principal of and accrued interest on the
Loans shall automatically become due and payable without presentment, demand,
protest or other notice or formality of any kind, all of which are hereby
expressly waived and (2) in the case of any other Event of Default specified
above, the Lender may, by notice in writing to the Borrower, terminate the
Commitment and declare the Loans and all other sums payable under this Agreement
to be, and the same shall thereupon forthwith become, due and payable.
SECTION 8. MISCELLANEOUS.
-------------
8.1 Notices. Unless otherwise specified herein, all notices,
-------
requests, demands or other communications to or from the
27
<PAGE>
parties hereto shall be made by personal delivery, mail or telecopy and shall be
effective upon receipt by such party. Any such notice, request, demand or
communication shall be delivered or addressed as follows:
(i) if to the Borrower, to it at:
Summagraphics Corporation
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: Treasurer
Telephone: 512-835-____
Telecopy: 512-835-6730
(ii) if to the Lender, to it at:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Treasurer
Telephone: 301-897-6027
Telecopy: 301-897-6651
with a copy to:
Lockheed Martin Information & Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telephone: (301) 897-6927
or at such other address or telex number or telecopy number as any party hereto
may designate by written notice to the other party hereto.
8.2 Amendments and Waivers; Cumulative Remedies.
-------------------------------------------
(a) None of the terms of this Agreement may be waived, altered or
amended except by an instrument in writing duly executed by the Borrower and the
Lender; and
(b) No failure or delay on the part of the Lender in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
provided and contemplated by this Agreement are cumulative and not exclusive of
any rights or remedies provided by law.
8.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, provided that the Borrower may not assign its rights and
obligations hereunder
28
<PAGE>
without the prior written consent of the Lender. The Lender shall notify the
Borrower in writing promptly upon any assignment by the Lender of its rights and
obligations hereunder, including any such assignment to any Subsidiary of
Lender.
8.4 Expenses and Withholding.
------------------------
(a) The Borrower shall pay all out-of-pocket expenses of the Lender
in connection with the preparation and administration of this Agreement and, if
there is an Event of Default, all out-of-pocket expenses incurred by the Lender
(including reasonable fees and disbursements of counsel and reasonable time
charges of lawyers who may be employees of the Lender) in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom.
(b) All payments to be made by or on behalf of the Borrower under or
in connection with this Agreement are to be made without deduction or
withholding for or on account of any Tax. If any Tax is deducted or withheld
from any payment, the Borrower shall promptly remit to the Lender the equivalent
of the amount so deducted or withheld together with relevant receipts, if
available, addressed to the Lender. If the Borrower is prevented by operation
of law or otherwise from paying, causing to be paid or remitting such Tax, the
interest payable under this Agreement shall be increased to such rates as are
necessary to yield and remit to the Lender the principal sum advanced together
with interest at the rates specified in this Agreement after provision for
payment of such Tax. The Borrower shall from time to time at the request of the
Lender execute and deliver any and all further instruments necessary or
advisable to give full force and effect to such increase in the rates of
interest as are necessary to yield to the Lender interest at the specified
rates. The Borrower shall also indemnify the Lender in respect of any claim or
loss which it may suffer as a result of the delay or failure of the Borrower to
make any such payment including penalties relating thereto or interest thereon.
8.5 Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
8.6 Headings; Table of Contents. The section and subsection headings
---------------------------
used herein and the Table of Contents have been inserted for convenience of
reference only and do not constitute matters to be considered in interpreting
this Agreement.
8.7 Governing Law; Arbitration.
--------------------------
(a) This Agreement shall be construed in accordance with and governed
by the laws of the State of Maryland, without reference to the conflict of law
provisions of such laws.
29
<PAGE>
(b) The Borrower (i) hereby irrevocably submits to the jurisdiction of
the courts of the State of Maryland over any suit, action or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby and
(ii) hereby agrees with the Lender that the courts of the State of Maryland will
have exclusive jurisdiction over any such suits, actions or proceedings. Final
judgment in any such suit, action or proceeding in any such court shall be
conclusive and binding upon the Borrower and may be enforced in any court in
which the Borrower is subject to jurisdiction by suit upon such judgment
provided that service of process is effected as permitted by applicable law.
8.8 Right of Set-Off. In addition to any rights and
----------------
remedies of the Lender provided by law, Lender shall have the right, without
prior notice to the Borrower, any such notice being expressly waived by the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by the Borrower hereunder and remaining unpaid (whether at the
stated maturity, by acceleration or otherwise), to set-off and appropriate and
apply against any and all Investments (as defined in the Cash Management
Agreement), and any other credits, Indebtedness or claims at any time held by or
owing by the Lender to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
LOCKHEED MARTIN CORPORATION
By:___________________________
Walter E. Skowronski
Treasurer
SUMMAGRAPHICS CORPORATION
By:___________________________
Name:
Treasurer
30
<PAGE>
SCHEDULE 4.12
-------------
ERISA Affiliates
----------------
Plans
-----
S-1
<PAGE>
EXHIBIT F
Registration Rights Agreement
<PAGE>
EXHIBIT F
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of __________ __, 1996
by and between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
(the "Company")
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
(the "Stockholder")
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of the ____ day of ____________, 1996, by and between
SUMMAGRAPHICS CORPORATION, a Delaware corporation (the "Company") and LOCKHEED
MARTIN CORPORATION, a Maryland corporation (the "Stockholder").
WHEREAS, pursuant to Sections 5.2(e) and 6.2 of the Plan of
Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock
of Summagraphics Corporation dated as of the 19th day of March, 1996, by and
among the Stockholder, CalComp Inc., a California corporation ("CalComp"), and
the Company (the "Reorganization Agreement"), the Company and the Stockholder
agreed to execute and deliver this Agreement at the closing (the "Closing") of
the transactions contemplated by the Reorganization Agreement;
WHEREAS, pursuant to the Reorganization Agreement, the Company agreed
to issue and deliver to the Stockholder shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock"), representing 89.7% of its issued
and outstanding shares of capital stock, on a fully diluted basis, in exchange
for the transfer and delivery of all of the issued and outstanding capital stock
of CalComp to the Company, all pursuant to and in accordance with the terms of
the Reorganization Agreement; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Closing has occurred.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Stockholder agree as follows:
1. Certain Definitions. (a) Capitalized terms used but not otherwise
-------------------
defined herein shall have the meaning given them in the Reorganization
Agreement.
(b) As used in this Agreement, the following terms shall have the
following meanings:
"Assignee" shall mean a Person who purchases shares of Common
Stock from the Stockholder (or another Assignee) other than in a registered
distribution, but only to the extent that the Stockholder specifically and in
writing assigns its rights and benefits under this Agreement to such purchaser
in respect of the shares of Common Stock purchased from the Stockholder and only
if the Person agrees in writing to be bound by the terms and conditions of this
Agreement.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission, or any
other Federal agency administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, as the same
shall be in effect at the time.
"Person" shall mean any individual, corporation, unincorporated
association, business trust, estate, partnership, limited liability company,
limited liability partnership, trust, state, the United States or any other
entity.
"Registrable Securities" shall mean all shares of Common Stock or all
shares of Common Stock issued in exchange for or in replacement thereof or upon
the exercise or conversion of any right or security, now or hereafter owned,
directly or indirectly, by the Stockholder.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, as the same shall be
in effect at the time.
2. Piggy-back Registration Rights.
------------------------------
(a) In the case of any proposed registration of shares of capital
stock or other securities of the Company under the Securities Act (except with
respect to registration statements on Forms S-4 or S-8 or successor forms) on
any form that also would be eligible for use by the Stockholder or any Assignees
in respect of the Registrable Securities, the Company will give to the
Stockholder and the Assignees at least 30 days prior written notice of the
filing or proposed filing of the registration statement.
(b) Subject to the provisions of Section 2(c), each of the
Stockholder and Assignees shall have the right to elect within 20 days after
receipt of such notice to elect to include in such registration statement all or
any part of the Registrable Securities, which election shall be made by written
notice to the Company within such 20-day period specifying the number of
Registrable Securities that the Stockholder desires to so include.
(c) In the case of an underwritten public offering, if the managing
underwriter participating in the sale and distribution of the Company's
securities covered by such registration statement advises the Company in good
faith that marketing factors require the exclusion of some or all of the
Registrable Securities which the Stockholder or any Assignee has requested be
included in such registration statement, then the Company shall be obligated to
include in the registration statement only such aggregate number of Registrable
Securities (the "Permissible Shares") as the managing underwriter shall in good
faith advise the Company may be included in the offering. If the aggregate
number of Registrable Securities that the Stockholder and the Assignees shall
have requested be
2
<PAGE>
included in such registration statement together with the number of shares
requested to be included therein by other holders of Common Stock having
registration rights as of the date of this Agreement (the "Other Holders")
exceeds the number of Permissible Shares, then each of the Stockholder and
Assignees, at its option, shall be entitled to withdraw its election to include
all or a portion of the Registrable Securities in such registration statement
and the Stockholder and Assignees who elect not to withdraw their election to
include all or a portion of the Registrable Securities in such registration
statement shall have the number of Registrable Securities that they are entitled
to include in the registration statement reduced pro rata based upon the number
of Registrable Securities each such Stockholder or Assignee initially requested
be included in the registration statement together with all shares of Common
Stock requested to be registered by Other Holders such that the total number of
Registrable Securities to be included on behalf of the Stockholder, Assignees
and Other Holders does not exceed the Permissible Shares.
(d) Except for those registration rights set forth on Schedule 2(d)
attached hereto, the Company represents and warrants to the Stockholder and the
Assignees that, except as provided in this Agreement, the Company has not
granted to any stockholder, holder of warrants or options for the purchase of
shares of capital stock or any other Person any "piggy-back," demand or other
registration rights with respect to any shares of capital stock or other
securities of the Company. The Company agrees that it will not until such time
as the Stockholder and Assignees no longer own Registrable Securities with an
aggregate market value of at least $25,000,000 determined on the basis of the
average of the high and low trading prices of the Company's Common Stock on the
five trading days immediately preceding such determination, without the prior
written consent of the Stockholder, hereafter grant to any Person "piggy-back,"
demand or other registration rights with respect to any shares of capital stock
or other securities of the Company.
(e) The Company shall be obligated to afford the Stockholder and
Assignees the right to participate in each and every such registration taking
place in accordance with the provisions of this Section 2 until the aggregate
number of Registerable Securities then owned by the Stockholder and Assignees
may be sold pursuant to Rule 144 in a single market transaction without
registration under the Securities Act. Notwithstanding anything contained
herein to the contrary, the Company agrees that it will not permit or agree to
be included in any registration statement any shares of capital stock or other
securities of the Company held by any Person (other than a Stockholder, any
Assignee or any Other Holder having contractual rights to include shares therein
as of the date hereof) until all outstanding Registrable Securities have been
included in registration statements and sold, unless, in the case of each such
registration, the Stockholder and Assignees first shall have been offered, and
declined, the opportunity to include all of the Registrable Securities in a
3
<PAGE>
registration statement filed with and declared effective by the Commission under
the Securities Act.
3. Demand Registration Rights. (a) Subject to the provisions of
--------------------------
Section 3(b) below, the Company covenants and agrees that, at any time after the
date of this Agreement and from time to time thereafter, upon receipt of a
written request therefor from the Stockholder (or Assignees owning in the
aggregate at least 25% of the Common Stock issued to the Stockholder on the date
hereof), the Company shall, as promptly as is reasonably practicable, use its
best efforts to file a registration statement to register under the Securities
Act for sale to the public all or a portion of the Registrable Securities, and
thereafter use its best efforts to file such amendment or amendments as may be
necessary to cause the registration statement to be declared effective;
provided, however, that the Company shall have no obligation under this Section
3 to register Registrable Securities on behalf of any of the Stockholder or
Assignees unless the reasonably anticipated aggregate offering price to the
public of such Registrable Securities, as stated by the Stockholder and
Assignees requesting registration in their written request therefor, equals or
exceeds $15,000,000, and provided further that the Company shall not be required
to file more than three registration statements pursuant to this Section 3 on a
form other than Form S-3 and in no event shall be required to file more than
four registration statements pursuant to this Section 3. The rights granted
under this Section 3 may be exercised by the Stockholder no more often than once
in any six month period. The demand registration rights granted by this Section
3 will terminate when the aggregate number of Registerable Securities then owned
by the Stockholder and Assignees may be sold under Rule 144 in a single market
transaction without registration under the Securities Act.
(b) With respect to any registration statement filed, or to be filed,
pursuant to this Section 3, if Summagraphics shall furnish to the Stockholders
and Assignees that have made such request a resolution of the Board of Directors
of Summagraphics (adopted by the affirmative vote of a majority of the Board of
Directors of Summagraphics) certified by the President of Summagraphics stating
that in the Board of Directors' good faith judgment it would (because of the
existence of, or in anticipation of, any acquisition or financing activity, or
the unavailability for reasons beyond Summagraphics' reasonable control of any
required financial statements, or any other event or condition of similar
significance to Summagraphics) be significantly disadvantageous (a
"Disadvantageous Condition") to Summagraphics for such a registration statement
to be maintained effective, or to be filed and become effective, and setting
forth the general reasons for such judgment, Summagraphics may cause such
registration statement to be withdrawn and the effectiveness of such
registration statement terminated, or, in the event no registration statement
has yet been filed, shall be entitled not to file any such registration
statement, until such Disadvantageous Condition no longer exists (notice of
which Summagraphics shall
4
<PAGE>
promptly deliver to the Stockholder and Assignees). Upon receipt of any such
notice of a Disadvantageous Condition, the Stockholder and Assignees shall
forthwith discontinue use of the prospectus contained in registration statement
and, if so directed by Summagraphics, the Stockholder and Assignees will deliver
to Summagraphics all copies, other than permanent file copies then in such
Stockholder or Assignees' possession, of the prospectus then covering such
Registerable Securities current at the time of receipt of such notice; provided,
that the filing of any such registration statement may not be delayed for a
period in excess of six months due to the occurrence of any particular
Disadvantageous Condition.
4. Company's Registration Obligations. If and whenever the Company
----------------------------------
is obligated by the provisions of this Agreement to effect the registration of
any Registrable Securities under the Securities Act, the Company will, as
promptly as is reasonably practicable:
(a) Notify in writing each of the Stockholder and Assignees who
have not requested registration of their Registrable Securities of the receipt
by the Company of a request from another Stockholder or Assignee to register
Registrable Securities so as to afford the Stockholder and Assignees who have
not requested registration an opportunity to include their Registrable
Securities in any such registration statement;
(b) Prepare and file with the Commission a registration statement
with respect to the shares and use its best efforts to cause the registration
statement to become and remain effective for a period of at least 90 days.
(c) Prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to keep the registration statement effective until
the earlier of the sale of all shares covered thereby and the expiration of a
period of 90 days after the date the registration statement became effective,
and use its best efforts to comply with the provisions of the Securities Act
with respect to the disposition of all rights to purchase securities covered by
the registration statement.
(d) Furnish to the Stockholder or its Assignees for whom the same
are registered or are to be registered such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as the Stockholder or the Assignees,
as the case may be, may reasonably request in order to facilitate the
disposition of the Registrable Securities.
(e) Use its best efforts to register or qualify the Registrable
Securities covered by the registration statement under the securities or blue
sky laws of such jurisdictions as such Stockholders or its Assignees shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or
5
<PAGE>
advisable to enable such holders to consummate the disposition of the
Registrable Securities in such jurisdictions; provided; however, that the
Company shall not be obligated, by reason thereof, to qualify as a foreign
corporation or to consent to general service of process or subject itself to
taxation as doing business in any such jurisdiction.
(f) Furnish to Stockholders or its Assignees who account for at least
25% of the Registrable Securities covered by such registration statement, and
use its best efforts to furnish to each other holder of the Registrable
Securities covered thereby, at the time of disposition a signed counterpart,
addressed to such Stockholder or Assignee, of an opinion of counsel for the
Company reasonably acceptable to the Stockholder or its Assignees, as the case
may be, covering substantially the same matters as are customarily covered in
opinions of issuer's counsel in underwritten public offerings of securities of
issuers in similar industries.
(g) Notify the Stockholder or its Assignees, as the case may be, whose
Registrable Securities are covered in such registration statement promptly after
the Company shall receive notice that any registration statement, supplement or
amendment has become effective, any registration statement is required to be
amended or supplemented, or any stop order with respect thereto has been issued.
(h) The inclusion of Registrable Securities in a registration
statement involving an underwritten public offering shall be upon the condition
that, except as otherwise provided in this Agreement, the Stockholder or its
Assignees shall have their Registrable Securities sold through the underwriters
on the same terms and conditions as are applicable to the Company.
5. Expenses of Registration. The costs and expenses (other than
------------------------
underwriting discounts or commissions or similar payments) of all registrations
and qualifications under the Securities Act and applicable state securities or
blue sky laws, and of all other actions, that the Company is required to take or
effect pursuant to this Agreement shall be paid by the Company (including,
without limitation, all registration and filing fees, printing expenses, costs
of special audits incidental to or required by any such registration, and fees
and disbursements of counsel and independent public accountants for the
Company); provided, however, that the Stockholder or its Assignees, as the case
may be, shall pay the fees and disbursements of their respective legal counsel,
and transfer taxes, if any, on Registrable Securities sold by the holders
thereof. Notwithstanding the foregoing if the Stockholder or any Assignees
elect to participate in a "piggy-back registration" pursuant to Section 2 of
this Agreement, the Stockholder shall pay their proportionate share of the
Security and Exchange Commission's registration fees associated with the shares
attributable to the Stockholder or the respective Assignee in connection with
the filing of the Registration Statement. In addition, in the event that the
Stockholder or an Assignee
6
<PAGE>
exercises the registration rights granted pursuant to Section 3 of this
Agreement, and the Company and other securityholders do not participate in the
registration or offering, each of the Stockholder and the Assignees shall pay
their proportionate share based upon the aggregate number of shares which the
Stockholder and the Assignees elect to register of the costs and expenses of
registration and qualification under the Securities Act and applicable state
securities or blue sky laws (including, without limitation, all registration and
filing fees, printing expenses, costs of special audits incidental to or
required by such registration) other than any fees and disbursements of counsel
and independent public accountants for the Company.
6. Stockholder's Registration Obligations. In the event a
--------------------------------------
Stockholder or an Assignee desires to include any Registrable Securities in any
registration statement pursuant to this Agreement, the Stockholder or the
Assignee shall:
(a) cooperate with the Company in preparing such registration
statement, and execute such ordinary and customary agreements in a form
reasonably acceptable to the Company and the underwriter as may be reasonably
necessary in favor of any underwriter selected by the Company, including those
contemplated by Section 8(b); and
(b) promptly supply the Company with all information, documents,
representations and agreements as the Company or any managing underwriter may
reasonably deem necessary in connection with the registration of such
Registrable Securities.
In connection with any registration involving an underwritten public offering by
the Company, the Stockholder or Assignee, as the case may be, shall agree, if
requested by the managing underwriter, not to effect or cause to be effected any
sale or other disposition of shares or Registrable Securities not included in
the registration statement for a period beginning seven days prior to the
effective date and ending 180 days after the effective date of the registration
statement without the managing underwriters' consent.
7. Indemnification.
---------------
(a) In the event of any registration of any Registrable Securities
pursuant to this Agreement, the Company will:
(i) indemnify and hold harmless the Stockholder and any
Assignee whose Registrable Securities are being so registered or offered, and
each Person, if any, who controls any of the Stockholder or any such Assignee
within the meaning of the Securities Act, against any losses, claims, damages,
expense (including, without limitation, reasonable attorneys' fees and
disbursements), or liabilities (or actions in respect thereof) under the
Securities Act or otherwise, which arise out of or are based upon any untrue
statement or alleged untrue statement of any
7
<PAGE>
material fact contained in any such registration statement, any summary
prospectus or final prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any other violation of law with respect thereto, and
(ii) reimburse the Stockholder or such Assignee and each such
controlling Person for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any such registration statement, summary prospectus, final
prospectus or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by the Stockholder or such
Assignee, as the case may be, expressly for inclusion therein; provided, further
that the Company shall not be liable to any indemnified party who participates
as an underwriter in the offering or sale of Registrable Securities or to any
other indemnified party, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action in respect thereof), or expense arises
out of such indemnified party's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the person
asserting the existence of an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such person if such statement or omission was
corrected in full in such final prospectus.
(b) In the event of any registration of any Registrable Securities,
the Stockholder or the Assignee whose shares are included in the registration
statement, as the case may be, shall:
(i) indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed any such registration statement, and each
Person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages, expense (including, without
limitation, reasonable attorneys' fees and disbursements) or liabilities (or
actions in respect thereof) to which the Company or any such director, officer
or controlling Person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, expense or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any such registration statement,
summary prospectus, final prospectus, or amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein
8
<PAGE>
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such registration statement, summary prospectus, final prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished by the Stockholder or such Assignee, as the case may be,
and accompanied by an express written consent that such information may be
included therein, and
(ii) reimburse any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action, but only in the circumstances and to the extent aforesaid;
(c) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Stockholder and their Assignees on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the Stockholder and its Assignees on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or by the
Stockholder and its Assignees on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 7(e), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
The Company and the Stockholder (on behalf of themselves and their
Assignees) agree that it would not be just and equitable if contribution
pursuant to this Section 7(c) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, the indemnified party will, if a
claim in respect thereof is to be made
9
<PAGE>
against an indemnifying party under this Section 7, notify the indemnifying
party of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
under this Section 7 or otherwise.
(e) In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party. In the event the indemnifying party gives notice to the
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof subsequent to the date
of such notice other than reasonable costs of investigation; provided, however,
that if the indemnified party or parties reasonably determine that there may be
a conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action or
proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct the defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties (and the indemnifying party or parties shall bear the reasonable
legal and other expenses incurred in connection therewith). No indemnifying
party will, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as a term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release and indemnity from all liability in respect of such claim or litigation
and a denial of fault. No indemnified party shall consent to entry of any
judgment or enter into any settlement of any such action the defense of which
has been assumed by an indemnifying party without the prior consent of such
indemnifying party.
8. Agreements as to Underwriters. If the offering pursuant to any
-----------------------------
registration statement provided for under this Agreement is made through
underwriters, (a) the Company agrees to enter into an underwriting agreement in
customary form with the underwriters and to indemnify such underwriters, and
each Person who controls the underwriters within the meaning of the Securities
Act, to the same extent as provided in Section 7(a) with respect to the
indemnification of the Stockholder or its Assignees, and (b) the Stockholder or
its Assignees agree to provide similar indemnities as part of their obligations
in Section 6(a).
9. Indemnity for Breaches. The Company agrees to indemnify and hold
----------------------
harmless the Stockholder and any Assignee hereunder at all
10
<PAGE>
times from and after the date of this Agreement, against and in respect of the
following: (i) any losses, liabilities, costs, expenses or damages to the
Stockholder or any such Assignee resulting from any breach of a representation
or warranty or nonfulfillment of any agreement or covenant on the part of the
Company under this Agreement, and (ii) all suits, actions, proceedings, demands,
assessments, judgments, costs, attorneys' fees and expenses incident to any of
the foregoing. Each of the Stockholder and Assignees agrees to indemnify and
hold harmless the Company at all times from and after the date of this
Agreement, against and in respect of the following: (i) any losses,
liabilities, costs, expenses or damages to the Company resulting from any breach
of a representation or warranty or nonfulfillment of any agreement or covenant
on the part of the Stockholder under this Agreement, and (ii) all suits,
actions, proceedings, demands, assessments, judgments, costs, attorneys' fees
and expenses incident to any of the foregoing.
10. Equitable Relief. The parties agree that legal remedies may be
----------------
inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.
11. Notices. All notices and other communications give to or made upon
-------
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing and shall be sent by telecopy (with
receipt confirmed) by registered or certified mail or delivered by hand,
addressed as follows:
(a) If to the Company:
Summagraphics Corporation
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: President
Telecopy: 714-821-2074
and
(b) If to the Stockholder
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Stephen M. Piper, Esquire
Telecopy: 301-897-6333
11
<PAGE>
with a copy to
Lockheed Martin Information
& Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy: 301-897-8889
and
(c) If to an Assignee, to such address as such Assignee provides to
the Company and the Stockholder in connection with the
acquisition of shares of Common Stock pursuant to which the
Assignee becomes so,
or to such other address as any party shall specify in writing to the other
party. All such notices and other communications shall be deemed given at the
time received.
12. Amendments. No change or modification of this Agreement shall be
----------
valid unless the same shall be in writing and signed by the parties hereto. No
waiver of any provision of this Agreement shall be valid unless in writing,
making express reference to this Agreement, and signed by the Person against
whom enforcement of such waiver is sought. The failure of any party at any time
to insist upon strict performance of or compliance with any provision of this
Agreement shall not constitute a waiver of any right of such party hereunder or
as a waiver or relinquishment of the right to insist upon strict performance of
the same provision at any future time.
13. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to the conflict
of law principles thereof.
14. Benefit and Binding Effect. This Agreement shall be binding upon and
--------------------------
shall inure to the benefit of the parties hereto and their respective successors
and, in the case of any of the Stockholder, its permitted assigns. The Company
and the Stockholder expressly agree that the Stockholder shall be entitled to
assign from time to time its rights hereunder (in respect of all or any portion
of the Registrable Securities) to any purchaser of any of the Registrable
Securities in accordance with the terms hereof and applicable law, provided that
no more than four unaffiliated persons may become Assignees hereunder. In the
event that any provision of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable portion were not a
part hereof.
15. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
12
<PAGE>
16. Rules of Construction. Whenever used herein, the singular number
---------------------
shall include the plural, or plural the singular and the use of the masculine,
feminine or neuter gender shall include all genders. The terms "agree" and
"agreements" contained herein are intended to include and mean "covenant" and
"covenants." Whenever used herein, the word "or" is used in the inclusive
rather than the exclusive sense. The headings in this Agreement are for
convenience only and shall not limit or otherwise affect any of the provisions
hereof.
17. Term. The provisions of Sections 5, 7 and 9 of this Agreement shall
----
survive any termination of this Agreement.
13
<PAGE>
IN WITNESS WHEREOF, the Company and the Stockholder have executed this
Agreement as of the day and year first above written.
ATTEST: SUMMAGRAPHICS CORPORATION
______________________________ By:___________________________(SEAL)
Robert B. Sims Michael S. Bennett
Secretary President and Chief Executive
Officer
ATTEST: LOCKHEED MARTIN CORPORATION
______________________________ By:___________________________(SEAL)
Lillian M. Trippett Peter B. Teets
Secretary President - Lockheed Martin
Information & Technology
Services Sector
14
<PAGE>
EXHIBIT G
Corporate Agreement
<PAGE>
EXHIBIT G
================================================================================
CORPORATE AGREEMENT
Dated as of __________ ___, 1996
between
SUMMAGRAPHICS CORPORATION,
a Delaware corporation
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
===============================================================================
<PAGE>
CORPORATE AGREEMENT
THIS CORPORATE AGREEMENT ("Agreement") is entered into as of _________
___, 1996, by and between LOCKHEED MARTIN CORPORATION, a Maryland corporation
("Lockheed Martin"), and SUMMAGRAPHICS CORPORATION, a Delaware corporation
("Summagraphics").
WHEREAS, pursuant to Section 5.2(f) and 6.2 of the Plan of
Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock
of Summagraphics Corporation dated as of the ____ day of __________, 1996 (the
"Reorganization Agreement"), by and among Summagraphics, Lockheed Martin and
CalComp Inc., a California corporation, Summagraphics and Lockheed Martin agreed
to execute and deliver this Agreement at the closing (the "Closing") of the
transactions contemplated by the Reorganization Agreement;
WHEREAS, pursuant to the Reorganization Agreement, Summagraphics
agreed to issue and deliver to Lockheed Martin shares representing 89.7% of
Summagraphics' outstanding Common Stock, par value $.01 per share, on a fully
diluted basis, in exchange for the transfer and delivery of all the issued and
outstanding capital stock of CalComp to Summagraphics, all pursuant to and in
accordance with the terms of the Reorganization Agreement;
WHEREAS, the parties desire to enter into this Agreement to set forth
their agreement regarding (i) the agreement of Summagraphics to cause to be
nominated for election to its board of directors individuals designated by
Lockheed Martin (ii) the agreement of the parties that at least two of the
members of the board of directors of Summagraphics be independent directors, and
(iii) certain representations, warranties, covenants and agreements applicable
to Summagraphics so long as it is a Subsidiary of Lockheed Martin; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Closing has occurred.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Summagraphics and Lockheed Martin agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following terms
will have the following meanings, applicable both to the singular and the plural
forms of the terms described:
<PAGE>
"Agreement" has the meaning ascribed thereto in the preamble hereto,
as such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Applicable Stock" means at any time the total shares of Common Stock
of Summagraphics owned by the Lockheed Martin Entities that (i) was owned on the
date hereof, plus (ii) shares of Common Stock of Summagraphics acquired by the
Lockheed Martin Entities following the Closing, if any, plus (iii) shares of
Common Stock that were issued to Lockheed Martin Entities in respect of shares
described in either clause (i) or clause (ii) in a stock split, stock dividend
or similar transaction.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"Lockheed Martin" has the meaning ascribed thereto in the preamble
hereto.
"Lockheed Martin Entities" means Lockheed Martin and its Subsidiaries
(other than Subsidiaries that constitute Summagraphics Entities) and "Lockheed
Martin Entity" shall mean any of the Lockheed Martin Entities.
"Ownership Percentage" means, at any time, the fraction, expressed as
a percentage and rounded to the next highest thousandth of a percent, whose
numerator is the number of shares of Applicable Stock and whose denominator is
the number of outstanding shares of Common Stock of Summagraphics.
"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government (and
any department or agency thereof) or other entity.
"Plan" has the meaning ascribed thereto in Section 3.2(b).
"Reorganization Agreement" has the meaning ascribed thereto in the
preamble hereto.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the voting capital stock or other voting ownership
interests is owned or controlled directly or indirectly by such Person or by one
or more of the Subsidiaries of such Person or by a combination thereof.
Subsidiary, when used with respect to Lockheed Martin or Summagraphics, shall
also include any other entity affiliated with Lockheed Martin or Summagraphics,
as the case may be, that Lockheed Martin and Summagraphics may hereafter agree
in writing shall be treated as a "Subsidiary" for the purposes of this
Agreement.
2
<PAGE>
"Summagraphics" has the meaning ascribed thereto in the preamble
hereto.
"Summagraphics Entities" means Summagraphics and its Subsidiaries
(including, without limitation, CalComp and its Subsidiaries).
1.2. Internal References. Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement and references to the
parties shall mean the parties to this Agreement.
ARTICLE II
BOARD OF DIRECTORS
2.1. Lockheed Martin Directors. Summagraphics covenants and agrees,
for so long as the Ownership Percentage is equal to or greater than 50.000
percent, to propose, at each election of directors, a slate of directors, or in
the cases of vacancies, individual directors, for election so that at all times
during the term of this Agreement, at least 66 percent of the board of directors
of Summagraphics is comprised of persons designated by Lockheed Martin.
2.2. Independent Directors. Summagraphics and Lockheed Martin shall
each use its good faith efforts to cause at least two individual directors to be
independent directors with respect to both Summagraphics and Lockheed Martin
within the meaning of the rules of the New York Stock Exchange regarding who may
serve on the audit committee of a company listed on such exchange (as such rules
are in effect as of the date of this Agreement).
ARTICLE III
CERTAIN COVENANTS AND AGREEMENTS
3.1. No Violations. (a) For so long as the Ownership Percentage is
equal to or greater than 50.000 percent, Summagraphics covenants and agrees that
it will not take any action or enter into any commitment or agreement which may
reasonably be anticipated to result, with or without notice and with or without
lapse of time, or otherwise, in a contravention or event of default by any
Lockheed Martin Entity of (i) any provision of applicable law or regulation,
including but not limited to provisions pertaining to ERISA, (ii) any provision
of Lockheed Martin's certificate of incorporation or bylaws, (iii) any credit
agreement or other material instrument binding upon any Lockheed Martin Entity,
or (iv) any judgment, order or decree of any governmental body, agency or court
having jurisdiction over any Lockheed Martin Entity.
3
<PAGE>
(b) Summagraphics and Lockheed Martin each agrees to provide to the
other any information and documentation requested by the other for the purpose
of evaluating and ensuring compliance with Section 3.1(a) hereof. Lockheed
Martin agrees to use its reasonable efforts to exclude Summagraphics in the
future from the express coverage of the restrictive provisions referenced in
Section 3.1(a).
(c) Notwithstanding the foregoing Sections 3.1(a) and 3.1(b) nothing
in this Agreement is intended to limit or restrict in any way the ability of
Lockheed Martin to control or limit any action or proposed action of
Summagraphics, including, but not limited to, the incurrence by Summagraphics of
indebtedness, based upon Lockheed Martin's internal policies or other factors.
3.2. ERISA Covenants. (a) For so long as the Ownership Percentage is
equal to or greater than 50.000 percent, Summagraphics covenants and agrees that
it will not, and it will not permit any Summagraphics Entities to, without the
prior written consent of Lockheed Martin, take any action or enter into any
commitment or agreement which may reasonably be anticipated to result in, with
or without notice and with or without lapse of time, or otherwise, (i) any
material increase in liabilities required to be included in the consolidated
financial statements of Summagraphics and its Subsidiaries under the provisions
of the Statement of Financial Accounting Standards No. 87 promulgated by the
Financial Accounting Standards Board, or (ii) any material increase in
liabilities required to be included in the consolidated financial statements of
Summagraphics and its Subsidiaries under the provisions of the Statement of
Financial Accounting Standards No. 106 promulgated by the Financial Accounting
Standards Board.
(b) For so long as the Ownership Percentage is equal to or greater
than 50.000 percent, Summagraphics covenants and agrees that it will provide to
Lockheed Martin, within 15 days after each fiscal quarter, a list and
description of each employee benefit plan within the meaning of ERISA Section
3(3), excluding plans sponsored by Lockheed Martin Entities that are not
Summagraphics Entities (each, a "Plan") which was adopted, contributed to or
maintained by Summagraphics or any Summagraphics Entities during the fiscal
quarter immediately preceding the date of such list and shall separately
identify each Plan for which Summagraphics has (i) sought a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, (ii)
failed to make any contribution or payment or made any amendment which has
resulted or could result in the imposition of a material lien or the posting of
a material bond or other material security under ERISA or the Internal Revenue
Code or (iii) incurred any material liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
(c) For so long as the Ownership Percentage is equal to or greater
than 50.000 percent, Summagraphics covenants and agrees that it will not,
without the prior written consent of Lockheed
4
<PAGE>
Martin, materially increase its obligations under any Plan contributed to,
maintained or adopted prior to or following the date hereof or adopt any new
Plan which would materially increase Summagraphics' benefits obligations.
ARTICLE IV
MISCELLANEOUS
4.1. Limitation of Liability. Neither Lockheed Martin nor
Summagraphics shall be liable to the other for any special, indirect, incidental
or consequential damages of the other arising in connection with this Agreement.
4.2. Arbitration. (a) Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Rules of the American Arbitration
Association ("AAA") by a panel of three neutral arbitrators (the "Panel") in
Chicago, Illinois, or any other location agreed to by the parties, and judgment
upon the award of the arbitrators may be entered in any court having
jurisdiction.
(b) One of the arbitrators shall be a member of the bar of any state,
actively engaged in the practice of law, or a retired member of the state or
federal judiciary. The other two arbitrators shall have such qualifications, as
the parties may agree, as necessitated by the nature of the dispute. If unable
to agree on the qualifications of the remaining arbitrators, the makeup of the
panel shall be determined by the AAA.
(c) The Panel shall have the authority to order pre-hearing exchanges
of information, including and without limitation, production of requested
documents, exchange of summaries of testimony or prospective witnesses, and
depositions as may be necessary.
(d) Each party shall be responsible for its own costs incurred in any
arbitration and the Panel shall not have the authority to award such costs in
its decision. The Panel shall have the authority to assess the administrative
fees and expenses of the AAA and the compensation and expenses of the
arbitrators.
(e) The Panel shall have the authority to order specific performance,
but shall have no authority to award punitive damages. The Panel's award shall
be based on and accompanied by written findings of fact.
4.3. Amendments. This Agreement may not be amended or terminated
orally, but only by a writing duly executed by or on behalf of the parties
hereto. Any such amendment shall be validly and sufficiently authorized for
purposes of this Agreement if it is signed on behalf of Lockheed Martin and
Summagraphics by any of
5
<PAGE>
their respective presidents or vice presidents, who is not also an officer of
the other party.
4.4. Term. This Agreement shall remain in effect until such time as
the Percentage Ownership is less than 50.000 percent.
4.5. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction or duly authorized arbitration
tribunal to be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement or such provision of the application of such provision to such
party or circumstances, other than those to which it is so determined to be
invalid, illegal or unenforceable, shall remain in full force and effect to the
fullest extent permitted by law and shall not be affected thereby, unless such a
construction would be unreasonable.
4.6. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail, postage prepaid, return receipt requested, or (c) by facsimile or other
generally accepted means of electronic transmission (provided that a copy of any
notice delivered pursuant to this clause (c) shall also be sent pursuant to
clause (b), addressed as follows:
(a) If to Summagraphics, to:
Summagraphics Corporation
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: President
Telecopy No.: (714) 821-2074
(b) If to Lockheed Martin, to:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Stephen M. Piper, Esquire
Assistant General Counsel
Telecopy No.: (301) 897-6333
with a copy to:
Lockheed Martin Information
& Technology Services
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy No.: (301) 897-6889
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
6
<PAGE>
4.7. Further Assurances. Lockheed Martin and Summagraphics shall
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments and take such other action as may be necessary or
advisable to carry out their obligations under this Agreement and under any
exhibit, document or other instrument delivered pursuant hereto.
4.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same agreement.
4.9.Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Delaware.
4.10.Entire Agreement. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
4.11.Successors. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns. Nothing contained in this Agreement, express or implied, is intended
to confer upon any other person or entity any benefits, rights or remedies.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
under seal and with the intent that this Agreement shall constitute a sealed
instrument, the day and year first above written.
LOCKHEED MARTIN CORPORATION
[CORPORATE SEAL] By:___________________________
President and Chief
Operating Officer,
Information & Technology
Services Sector
ATTEST:
______________________________
Secretary
SUMMAGRAPHICS CORPORATION
[CORPORATE SEAL] By:___________________________
Michael S. Bennett
President and Chief Executive
Officer
ATTEST:
______________________________
Secretary
8
<PAGE>
EXHIBIT H
Fourth Amended and Restated
Articles of Incorporation
<PAGE>
EXHIBIT H
================================================================================
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUMMAGRAPHICS CORPORATION
Dated as of [May] __, 1996
================================================================================
<PAGE>
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SUMMAGRAPHICS CORPORATION
Summagraphics Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware, filed its Certificate of
Incorporation with the Secretary of State of the State of Delaware on June 29,
1972 under the name "Scriptographics Corporation". Desiring to amend its
Certificate of Incorporation, as heretofore amended, and to restate the same, as
amended, Summagraphics Corporation does hereby certify:
FIRST: That the Board of Directors of Summagraphics Corporation, at a
meeting duly called at which a quorum was present and acting throughout, duly
adopted a resolution proposing and declaring advisable the amendment and
restatement of the Certificate of Incorporation of Summagraphics Corporation as
hereinafter set forth.
SECOND: That, thereafter, the stockholders of Summagraphics
Corporation, in a manner and by the vote prescribed by Section 242 of the
General Corporation Law of the State of Delaware, voted in favor of the
amendment and restatement.
THIRD: That this Fourth Amended and Restated Certificate of
Incorporation of Summagraphics Corporation has been duly adopted in accordance
with Sections 242 and 245 of the General Corporation Law of the State of
Delaware.
FOURTH: That the Third Restated Certificate of Incorporation of
Summagraphics Corporation is hereby amended and restated in its entirety as
follows:
ARTICLE 1. The name of the corporation is CalComp Inc. (hereinafter
the "Corporation").
ARTICLE 2. The address of the Corporation's registered office in the
State of Delaware is Corporate Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle, Delaware 19801. The name of its
registered agent at such address is the Corporation Trust Company.
ARTICLE 3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of
Delaware.
<PAGE>
ARTICLE 4. The total number of shares of stock which the Corporation
shall have authority to issue is Sixty-Five Million (65,000,000), of which
Sixty Million (60,000,000) shares of the par value of one cent ($.01) per
share, amounting in the aggregate to Six Hundred Thousand Dollars
($600,000), shall be Common Stock, and Five Million (5,000,000) shares of
the par value of one cent ($.01) per share, amounting in the aggregate to
Ten Thousand Dollars ($10,000), shall be Preferred Stock. A description of
the respective classes of stock and a statement of the designations,
preferences, voting powers (or no voting powers), relative participating,
optional or other special rights and privileges and the qualifications,
limitations and restrictions of the Preferred Stock and Common Stock are as
follows:
(a) Preferred Stock
The Preferred Stock may be issued in one or more series at such
time or times and for such consideration or considerations as the
Board of Directors may determine. Each series shall be so
designated as to distinguish the shares thereof from the shares
of all other series and classes. The Board of Directors is
expressly authorized, subject to the limitations prescribed by
law and the provisions of this Fourth Amended and Restated
Certificate of Incorporation, to provide for the issuance of all
or any shares of the Preferred Stock in one or more series, each
with such designations, preferences, voting powers (or no voting
powers), relative, participating, optional or other special
rights and privileges and such qualifications, limitations or
restrictions thereof as shall be stated in the resolution or
resolutions adopted by the Board of Directors to create such
series, and a certificate setting forth said resolution or
resolutions shall be filed in accordance with the General
Corporation Law of the State of Delaware. The authority of the
Board of Directors with respect to each such series shall
include, without limitation of the foregoing, the right to
provide that the shares of each such series may be: (i) subject
to redemption, at the option of either the holder or the
Corporation or upon the happening of a specified event, at such
time or times and at such price or prices; (ii) entitled to
receive dividends (which may be cumulative or non-cumulative) at
such rates, on such conditions, and at such times, and payable in
preference to, or in such relation
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to, the dividends payable on any other class or classes or any
other series; (iii) entitled to such rights upon the dissolution
of, or upon any distribution of the assets of, the Corporation;
(iv) convertible into, or exchangeable for, at the option of
either the holder or the Corporation or the happening of a
specified event, shares of any other class or classes of stock,
or of any other series of the same or any other class or classes
of stock of the Corporation at such price or prices or at such
rates of exchange and with such adjustments, if any; (v) entitled
to the benefit of such limitations, if any, on the issuance of
additional shares of such series or shares of any other series of
Preferred Stock; or (vi) entitled to such other preferences,
powers, qualifications, rights and privileges, all as the Board
of Directors may deem advisable and as are not inconsistent with
law or the provisions of this Fourth Amended and Restated
Certificate of Incorporation.
(b) Common Stock
Except as otherwise required by law, this Fourth Amended and
Restated Certificate of Incorporation, or as otherwise provided
for in any resolutions of the Board of Directors providing for
the issuance of shares of Preferred Stock in one or more series,
the holders of the Common Stock, voting together as a single
class with the holders of the Preferred Stock, if any, shall
possess all of the voting power. Each holder of Common Stock
shall be entitled to one vote for each share held. The
Corporation shall not have cumulative voting.
ARTICLE 5. The Corporation is to have perpetual existence.
ARTICLE 6. The Board of Directors of the Corporation shall be
comprised of seven members or such other number of members as is determined
by the Board of Directors of the Corporation in accordance with the Bylaws.
ARTICLE 7. In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware:
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(a) The Board of Directors of the Corporation is expressly authorized
to adopt, amend or repeal the Bylaws of the Corporation.
(b) Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
(c) The books of the Corporation may be kept at such place within or
without the State of Delaware as the Bylaws of the Corporation
may provide or as may be designated from time to time by the
Board of Directors of the Corporation.
ARTICLE 8. (a) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, any person who was or is made or is threatened to be made a party
or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of
the fact that such person, or a person for whom such person is the legal
representative, is or was a director or officer of the Corporation or is or
was serving at the request of the Corporation as a director or officer of
another corporation or of a partnership, joint venture, trust, enterprise
or nonprofit entity, including service with respect to employee benefit
plans (an "indemnitee"), against all liability and loss suffered and
expenses (including attorneys' fees) reasonably incurred by such
indemnitee. The Corporation shall be required to indemnify an indemnitee
in connection with a proceeding (or part thereof) initiated by such
indemnitee only if the initiation of such proceeding (or part thereof) by
the indemnitee was authorized by the Board of Directors of the Corporation.
(b) Notwithstanding the foregoing subparagraph (a), a director or
officer of the Corporation shall only be indemnified with respect
to a criminal action or proceeding, if at all, if the director or
officer had no reasonable cause to believe the conduct giving
rise to such action or proceeding was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create the presumption that such person did
not act in good faith and in a manner such person believed to be
in or not opposed to the best interests of the Corporation and,
with respect to a criminal action or proceeding, shall not
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create the presumption that such person had reasonable cause to
believe that the conduct giving rise to such action or proceeding
was unlawful.
(c) Any and all indemnifications (except those ordered by a court)
shall be made by the Corporation only as authorized in the
specific case upon a determination that the indemnification of
the director or officer is proper under the circumstances. The
determination of the propriety of indemnification in a specific
case shall be made upon the affirmative vote of a majority of the
directors who are not parties to the action, suit or proceeding,
even if such directors comprise less than a quorum. In the event
there are no such directors, or if such directors so direct, the
determination shall be made by independent legal counsel in a
written opinion or by the stockholders.
(d) The Corporation may, in the discretion of the majority of the
Board of Directors who are not parties to the action, suit or
proceeding, to pay expenses and legal fees incurred by a director
or officer in defending any civil, criminal, administrative or
investigative action in advance of its final disposition upon an
undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that the
director or officer is not entitled to be indemnified by the
Corporation.
(e) The Corporation is hereby authorized to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or was serving at
the request of the Corporation as a director, officer, employee
or agent of another corporation or other enterprise against any
liability asserted against the director, officer, employee or
agent and incurred by such person in any such capacity, or
arising out of the director, officer, employee or agent's status
as such, whether or not the Corporation would have the power to
indemnify such person against liability under the law of the
applicable jurisdiction.
ARTICLE 9. (a) Upon the consummation of the Plan of Reorganization
and Agreement for the Exchange of Stock of CalComp Inc. for Stock of
Summagraphics Corporation,
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pursuant to which Lockheed Martin Corporation ("Lockheed Martin") will
exchange 100% of the issued and outstanding Common Stock of CalComp Inc.
for 89.7% of the then-issued and outstanding Common Stock of the
Corporation, Lockheed Martin will own shares of the outstanding Common
Stock of the Corporation, which represents a controlling interest in the
Corporation. As used herein, "Lockheed Martin" includes Lockheed Martin and
each corporation, partnership, joint venture, limited liability company,
association and other entity in which the Corporation beneficially owns
(directly or indirectly) fifty percent (50%) or more of the outstanding
common stock of such corporation or, if not a corporation, equity interests
entitled to vote generally in the election of the governing body of such
entity. In anticipation that the Corporation and Lockheed Martin may
engage in the same or similar activities or lines of business and have an
interest in the same areas of corporate opportunities, and in recognition
of (i) the benefits to be derived by the Corporation through its continued
contractual, corporate and business relations with Lockheed Martin
(including service of officers, directors and employees of Lockheed Martin
as directors of the Corporation) and (ii) the difficulties attendant to any
director, who desires and endeavors fully to satisfy such director's
fiduciary duties, in determining the full scope of such duties in any
particular situation, the provisions of this Article 9 are set forth to
regulate, define and guide, to the extent permitted by law, the conduct of
certain affairs of the Corporation as they may involve Lockheed Martin and
its officers, directors and employees, and the powers, rights, duties and
liabilities of the Corporation and its officers, directors, employees and
stockholders in connection therewith; provided, however, except as
expressly set forth herein, nothing contained in this Article 9 shall
limit, restrict or relieve the powers, rights, duties and liabilities of
the Corporation and its officers, directors, employees and stockholders.
(b) To the fullest extent permitted by the General Corporation Law of
the State of Delaware, except as Lockheed Martin may otherwise agree in
writing, Lockheed Martin shall have the right to (i) engage in the same or
similar business activities or lines of business as the Corporation and
(ii) do business with any client or customer of the Corporation, and
Lockheed Martin shall have no duty to refrain from engaging in such
business activities or to refrain from doing business with such clients and
customers. To the fullest extent permitted by the General Corporation Law
of the State of Delaware, neither Lockheed Martin nor any officer, director
or employee thereof (except as provided in subparagraph (c) of this Article
9) shall be liable to the Corporation or
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its stockholders for breach of any duty which is owed or may be owed to the
Corporation by reason of any such activities of Lockheed Martin or of such
person's participation therein. To the fullest extent permitted by the
General Corporation Law of the State of Delaware, in the event that
Lockheed Martin acquires knowledge of a potential transaction or matter
that may be a corporate opportunity for both Lockheed Martin and the
Corporation, other than from the Corporation, Lockheed Martin shall have no
duty to communicate or present such corporate opportunity to the
Corporation and shall not be liable to the Corporation or its stockholders
for breach of any duty as a stockholder of the Corporation by reason of the
fact that Lockheed Martin pursues or acquires such corporate opportunity
for itself, directs such corporate opportunity to another person or entity,
or does not present such corporate opportunity to the Corporation.
(c) In the event that a director, officer or employee of the
Corporation who is also a director, officer or employee of Lockheed Martin
acquires knowledge of a potential transaction or matter that may be a
corporate opportunity for both the Corporation and Lockheed Martin, such
director or officer of the Corporation shall act in good faith in a manner
consistent with the following policy:
(i) a corporate opportunity offered to any person who is a
director, officer or employee of the Corporation and who is
also a director but not an officer or employee of Lockheed
Martin shall belong to the Corporation, unless such
opportunity is expressly offered to such person primarily in
his or her capacity as a director of Lockheed Martin, in
which case such opportunity shall belong to Lockheed Martin;
(ii) a corporate opportunity offered to any person who is a
director but not an officer or employee of the Corporation
and who is also a director, officer or employee of Lockheed
Martin shall belong to Lockheed Martin, unless such
opportunity is expressly offered to such person primarily in
his or her capacity as a director of the Corporation or he
or she became aware of it in the course of the performance
of his or her duties on behalf of the Corporation, in which
case such opportunity shall belong to the Corporation; and
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(iii) a corporate opportunity offered to any other person who is
either (A) an officer or employee of both the Corporation
and Lockheed Martin or (B) a director of both the
Corporation and Lockheed Martin (but an officer or employee
of neither the Corporation nor Lockheed Martin) shall belong
to Lockheed Martin or to the Corporation, as the case may
be, if such opportunity is expressly offered to such person
primarily in his or her capacity, or he or she became aware
of it in the course of the performance of his or her duties
on behalf of the Corporation, as an officer, employee or
director of Lockheed Martin or of the Corporation, as the
case may be; otherwise, such opportunity shall belong to
either Lockheed Martin or the Corporation as a majority of
the directors of the Corporation who are not officers or
employees of either Lockheed Martin or the Corporation or
directors of Lockheed Martin shall determine in their good
faith judgment, taking into account all the facts and
circumstances with respect to such opportunity.
(d) For the purposes of this Article 9, "corporate opportunities"
shall not include any business opportunities that the Corporation is not
financially able to undertake, or that are, from their nature, not in the
ordinary business of the Corporation or are of no practical advantage to it
or that are ones in which the Corporation has no interest or reasonable
expectancy. In addition, "corporate opportunities" shall not include any
transactions in which the Corporation or its subsidiaries are permitted to
participate pursuant to any services agreement or any other agreement
(which may be adopted, amended or repealed from time to time by the vote of
a majority of the disinterested directors) between Lockheed Martin and the
Corporation (each such agreement is referred to herein as a "Services
Agreement"), it being acknowledged that the rights of the Corporation under
any such Services Agreement shall be deemed for all purposes to be
contractual rights and shall not be corporate opportunities of the
Corporation for any purpose; provided, however, that the absence of any
such Services Agreement, or the absence of any provisions in a Services
Agreement relating to any particular transactions or types of transactions,
shall not support any inferences or implications or have any effect
whatsoever on transactions not explicitly covered by a Services Agreement.
(e) Any person or entity that currently owns, hereafter purchases or
hereafter otherwise acquires any interest in any
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<PAGE>
shares of capital stock of the Corporation shall be deemed to have notice
of and to have consented to the provisions of this Article 9.
(f) For purposes of this Article 9, the "Corporation" shall mean the
Corporation and each corporation, partnership, joint venture, limited
liability company, association and other entity in which the Corporation
beneficially owns (directly or indirectly) fifty percent (50%) or more of
the outstanding common stock of such corporation or, if not a corporation,
equity interests entitled to vote generally in the election of the
governing body of such entity.
ARTICLE 10. (a) In anticipation that (i) the Corporation and Lockheed
Martin or its customers (or other persons acquiring products manufactured
or distributed by Lockheed Martin) may enter into contracts or otherwise
transact business with each other and that the Corporation may derive
benefits therefrom and (ii) the Corporation may from time to time enter
into contractual, corporate or business relations with one or more of its
directors, or one or more corporations, partnerships, associations or other
organizations in which one or more of its directors have a financial
interest or are affiliated with (collectively "Related Entities"), the
provisions of this Article 10 are set forth to regulate and guide certain
contractual relations and other business relations of the Corporation as
they may involve Lockheed Martin or its customers (or other persons
acquiring products manufactured or distributed by Lockheed Martin), Related
Entities and their respective officers and directors, and the powers,
rights, duties and liabilities of the Corporation and its officers,
directors and stockholders in connection therewith. The provisions of this
Article 10 are in addition to, and not in limitation of, the provisions of
the General Corporation Law of the State of Delaware and the other
provisions of this Fourth Amended and Restated Certificate of
Incorporation. Any contract or business relation that does not comply with
procedures set forth in this Article 10 shall not by reason thereof be
deemed void or voidable or result in any breach of any duty or the
derivation of any improper personal benefit but shall be governed by the
provisions of this Fourth Amended and Restated Certificate of
Incorporation, the Bylaws of the Corporation, the General Corporation Law
of the State of Delaware and other applicable law.
(b) No contract, agreement, arrangement or transaction between the
Corporation and Lockheed Martin or any customer thereof (or other person
acquiring products manufactured or distributed by Lockheed Martin) or any
Related Entity or between the Corporation and one or more of the directors
or officers of the Corporation,
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Lockheed Martin or any Related Entity shall be void or voidable solely for
the reason that Lockheed Martin or such customer (or other person), any
Related Entity or any one or more of the officers or directors of the
Corporation, Lockheed Martin or any Related Entity are parties thereto, or
solely because any such directors or officers are present at or participate
in the meeting of the Board of Directors or committee thereof which
authorizes the contract, agreement, arrangement or transaction or solely
because his, her or their votes are counted for such purposes, if:
(i) the material facts as to the contract, agreement,
arrangement or transaction and as to the relationship of
the parties to such contract, agreement, arrangement or
transaction are disclosed or are known to the Board of
Directors or the committee thereof that authorizes the
contract, agreement, arrangement or transaction, and the
Board of Directors or such committee in good faith
authorizes, approves or ratifies the contract, agreement,
arrangement or transaction by the affirmative vote of a
majority of the disinterested directors on the Board of
Directors or such committee, even though the disinterested
directors be less than a quorum; or
(ii) the material facts as to the contract, agreement,
arrangement or transaction and as to the relationship of
the parties to such contract, agreement, arrangement or
transaction are disclosed or are known to the holders of
the voting shares of the Corporation, and the contract,
agreement, arrangement or transaction is specifically
approved or ratified in good faith by vote of the holders
of a majority of the then outstanding voting shares of the
Corporation not owned by Lockheed Martin, such Related
Entity or such interested party, as the case may be; or
(iii) such contract, agreement, arrangement or transaction is
effected pursuant to, or consistent with, terms and
conditions specified in any arrangements, standards or
guidelines that are in good faith authorized, approved or
ratified, after disclosure or knowledge of the material
facts related thereto, by the affirmative
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vote of a majority of the disinterested directors on the
Board of Directors or a committee thereof, even though the
disinterested directors be less than a quorum, or by vote of
the holders of a majority of the then outstanding voting
shares of the Corporation not owned by Lockheed Martin, such
Related Entity or such interested party, as the case may be
(such authorization, approval or ratification of such
arrangements, standards or guidelines constituting or being
deemed to constitute authorization, approval or ratification
of such contract, agreement, arrangement or transaction); or
(iv) such contract, agreement, arrangement or transaction is fair
to the Corporation as of the time it is authorized, approved
or ratified by the Board of Directors, a committee thereof
or the stockholders.
In addition, each such contract, agreement, arrangement or transaction
authorized, approved or effected, and each of such arrangements, standards
or guidelines so authorized or approved, as described in (i), (ii) or (iii)
above, shall be conclusively deemed to be fair to the Corporation and its
stockholders; provided, however, that if such authorization or approval is
not obtained, or such contract, agreement, arrangement or transaction is
not so effected, no presumption shall arise that such contract, agreement,
arrangement or transaction, or such arrangements, standards or guidelines,
are not fair to the Corporation and its stockholders.
(c) Directors of the Corporation who are also directors or officers of
Lockheed Martin or any Related Entity may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee thereof that authorizes, approves or ratifies any such contract,
agreement, arrangement or transaction or any such arrangements, guidelines
or standards. Voting shares owned by Lockheed Martin, any Related
Entities, or such interested party may be counted in determining the
presence of a quorum at a meeting of stockholders that authorizes, approves
or ratifies any such contract, agreement, arrangement or transaction or any
such arrangements, guidelines or standards.
(d) To the fullest extent permitted by law, Lockheed Martin shall not
be liable to the Corporation or its stockholders for breach of any duty by
reason of the fact that Lockheed Martin in good faith takes any action or
exercises any rights or gives or withholds any consent in connection with
any agreement or contract between Lockheed Martin and the
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Corporation. No vote cast or other action taken by any person who is an
officer, director or other representative of Lockheed Martin, which vote is
cast or action is taken by such person in his or her capacity as a director
of the Corporation, shall constitute an action of or the exercise of a
right by or a consent of Lockheed Martin for the purpose of any such
agreement or contract.
(e) Any person or entity that currently owns, hereafter purchases or
hereafter otherwise acquires any interest in any shares of capital stock of
the Corporation shall be deemed to have notice of and to have consented to
the provisions of this Article 10.
(f) For purposes of this Article 10, any contract, agreement,
arrangement or transaction with any corporation, partnership, joint
venture, limited liability company, association or other entity in which
the Corporation beneficially owns (directly or indirectly) fifty percent
(50%) or more of the outstanding voting power, or with any officer or
director thereof, shall be deemed to be a contract, agreement, arrangement
or transaction with the Corporation.
ARTICLE 11. The Corporation shall not be governed by the provisions
of Section 203 of the General Corporation Law of the State of Delaware or
by any similar law restricting business combinations with an Interested
Stockholder, as defined in such Section 203.
ARTICLE 12. The Corporation reserves the right to amend or repeal any
provision contained in this Fourth Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and
all rights conferred upon a stockholder herein are granted subject to this
reservation.
IN WITNESS WHEREOF, Summagraphics Corporation has caused this certificate
to be signed by Michael S. Bennett, its duly authorized President and Chief
Executive Officer, and attested by Robert B. Sims, its duly authorized
Secretary, this ____ day of May, 1996.
ATTEST: SUMMAGRAPHICS CORPORATION
______________________________ By:___________________________
Robert B. Sims Michael S. Bennett
Secretary President and Chief Executive Officer
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EXHIBIT I
Stock Option Plan
<PAGE>
CALCOMP INC.
1996 STOCK OPTION PLAN
FOR KEY EMPLOYEES
(WITH STOCK APPRECIATION RIGHTS)
Adopted: ______, 1996
<PAGE>
CALCOMP INC.
1996 STOCK OPTION PLAN FOR KEY EMPLOYEES
1. Purpose
The purpose of the Plan is to attract and retain the services of key
employees in positions which contribute materially to the successful operation
of the business of the Corporation and to grant such employees an opportunity to
acquire a proprietary interest in the business enterprise.
It is intended that this purpose will be effected through the granting of
stock options (including qualified incentive stock options issued pursuant to
Section 13) and stock appreciation rights, as provided herein.
2. Definitions
(a) "Board of Directors" means the Board of Directors of CalComp Inc.
(b) "Committee" means the Stock Option Committee.
(c) "Corporation" means CalComp Inc. (formerly Summagraphics Corporation)
and its subsidiaries.
(d) "Early retirement" means retirement before Normal retirement but on
or after attaining age 55 and completion of 10 years of service.
(e) "Employee" means officers and other key employees of the Corporation,
but excludes directors who are not also officers or employees of the
Corporation.
(f) "Grant" means the award of a stock option or a stock appreciation
right.
(g) "Grantee" means an employee to whom an option or right is granted.
(h) "Grant value of the right" means the fair market value of a share of
stock on the date a right is granted as that value may be adjusted
pursuant to Section 8 of the Plan.
(i) "Normal retirement" means retirement on or after the later of age 65
or the completion of 5 years of service.
(j) "Option" means an option to purchase shares of CalComp Common Stock.
(k) "Right" means a stock appreciation right.
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(l) "Subsidiary" means a corporation of which CalComp Inc. owns, directly
or indirectly, stock having at least 50% of the power to vote, under
normal circumstances, in the election of directors.
(m) "Vest" means the option or right becomes exercisable.
(n) "Year of service" means the completion of 1,000 hours of service with
the Corporation or any affiliate of the Corporation, including
service with Summagraphics Corporation completed prior to the time
that the Corporation and Summagraphics became affiliated.
3. Effective Date
The Plan shall become effective upon the approval by the
stockholders.
4. Eligible Employees
Options and rights may be granted only to salaried employees of the
Corporation. However, not more than 10% of the total number of shares available
under the Plan shall be subject to option to any one employee, and no more than
10% of the rights available under the Plan may be granted to any one employee.
No individual who owns stock possessing 5% or more of the combined voting power
of all classes of stock of the Corporation shall be eligible for a grant of
options or rights under the Plan.
5. Terms of Stock Options and Stock Appreciation Rights
The terms of each option or right granted under the Plan shall be
determined by the Committee, consistent with the provisions of the Plan,
including the following:
(a) Each grant of options or rights may be exercised in whole or in
part subject to the provisions of the Plan, provided that no option or right
shall be exercisable prior to one year or after ten years from the date of
grant. Except as provided in Section 8, each grant shall be divided into three
approximately equal installments of 100-share and 100-right increments. The
first installment shall vest one year after the date of grant and each
succeeding installment shall vest one year from the date the prior installment
vested. To the extent that the installments are not equal in number, the larger
installment or installments shall vest in the last or second and last years.
After an installment is vested, the options or rights included in that
installment may, except as provided in Section 9, be exercised at any time prior
to the expiration of ten years from date of grant.
(b) Each grantee must remain in the employ of the Corporation for at
least one year from the date the option or right is granted before any part of
the grant can be exercised.
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(c) An option or right shall not be assignable or transferable by the
grantee otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the participant's lifetime only by the participant
or, in the event of disability, by the legal guardian or representative.
6. Stock Options
(a) Shares of Stock Subject to the Plan
The shares that may be issued under the Plan shall not exceed
2,000,000 shares of the Common Stock, $.01 par value, of the Corporation, except
as provided in Section 8 below. They may consist in whole or in part of
unissued or treasury shares. Such treasury shares may be acquired to satisfy the
requirements of the Plan. If for any reason shares as to which an option has
been granted cease to be subject to purchase, then such shares shall again be
available for option under the Plan.
(b) Grant of Options
(i) The purchase price of the stock subject to option shall not be
less than 100% of the fair market value of the stock on the date the option is
granted, except as otherwise provided in Section 8(a) below.
(ii) Except as provided in Section 11, the purchase price of the stock
subject to option shall be paid in cash or, with the approval of the Board of
Directors or the Committee, may be paid in full or part by the tender of CalComp
Inc. Common Stock owned by the optionee. Common Stock delivered in payment of
the purchase price shall be valued at the fair market value and any portion of
the purchase price not satisfied by the tender of Common Stock shall be paid in
full in cash upon such exercise. No fractional shares shall be issued. As soon
as possible following receipt of payment to the Corporation, the optionee (or
other person entitled to exercise the option) shall receive a certificate or
certificates for such shares, subject to the provisions of Section 6(c).
(iii) No person shall have the rights of a stockholder with
respect to shares subject to an option until the date the option is exercised.
(c) Limitations on Transfer of Shares
The Corporation shall not be required, upon the exercise of any
option, to issue or deliver any shares of stock prior to (a) the authorization
of such shares for listing on any stock exchange on which CalComp Inc.'s Common
Stock may then be listed and (b) such registration or other qualification of
such shares under applicable securities laws as the Corporation shall determine
to be necessary or advisable. If shares issuable on the exercise of options
have not been registered under the Securities Act of 1933 ("the Act") or there
is not available a current Prospectus meeting the requirements of the Act with
respect thereto, grantees may be required to represent at the time of each
exercise of
<PAGE>
options that the shares purchased are being acquired for investment and not with
a view to distribution; and the Corporation may place a legend on the stock
certificate to indicate that the stock may not be sold or otherwise disposed of
except in accordance with the Act, as amended, and the rules and regulations
promulgated thereunder.
7. Stock Appreciation Rights
(a) Grant of Rights
The total number of rights that may be granted under the Plan may not
exceed 2,000,000, except as provided in paragraph 8 below.
(b) Exercise of Rights
Subject to the limitations set forth herein, upon exercise, a grantee
holder shall be entitled to receive payment in cash for rights granted under
this Plan equal to the excess, if any, of the fair market value of a share of
CalComp Common Stock on the exercise date over the grant value of the right. The
cash payment will be in consideration of services performed for the Corporation
or for its benefit by the grantee.
8. Adjustment Upon Changes in Stock
(a) If there shall be any change affecting the stock subject to the
Plan or to any option or right granted thereunder through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or combination, or
otherwise, the Board of Directors shall make appropriate proportional
adjustments in the aggregate number of shares subject to the Plan, the number or
exercise price of rights granted under Plan, the number of shares and the price
per share subject to outstanding options, and may assume old options or
substitute new options for old options, regardless of whether the price of any
such option or right resulting from the proportional adjustment is less than the
then fair market value of the subject shares.
(b) In the event of a Change of Control, the vesting date of all
outstanding options and rights shall be accelerated so as to cause all
outstanding options and rights to become exercisable. For purposes of this Plan,
a Change of Control shall include and be deemed to occur upon the following
events:
(i) A tender offer or exchange offer is consummated for the ownership of
securities of the Corporation representing 25% or more of the combined voting
power of the Corporation's then outstanding voting securities entitled to vote
in the election of directors of the Corporation.
(ii) The Corporation is merged, combined, consolidated, recapitalized or
otherwise reorganized with one or more other entities that are not
Subsidiaries and, as a result of the merger, combination, consolidation,
recapitalization or other
<PAGE>
reorganization, less than 75% of the outstanding voting securities of the
surviving or resulting corporation shall immediately after the event be owned
in the aggregate by the stockholders of the Corporation (directly or
indirectly), determined on the basis of record ownership as of the date of
determination of holders entitled to vote on the action (or in the absence of
a vote, the day immediately prior to the event).
(iii) Any person (as this term is used in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act, but excluding any person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder), becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 25% or more of the combined voting
power of the Corporation's then outstanding securities entitled to vote in the
election of directors of the Corporation.
(iv) At any time within any period of two years after a tender offer,
merger, combination, consolidation, recapitalization, or other reorganization
or a contested election, or any combination of these events, the "Incumbent
Directors" shall cease to constitute at least a majority of the authorized
number of members of the Board. For purposes hereof, "Incumbent Directors"
shall mean the persons who were members of the Board immediately before the
first of these events and the persons who were elected or nominated as their
successors or pursuant to increases in the size of the Board by a vote of at
least three-fourths of the Board members who were then Board members (or
successors or additional members so elected or nominated).
(v) The stockholders of the Corporation approve a plan of liquidation and
dissolution or the sale or transfer of substantially all of the Corporation's
business and/or assets as an entirety to an entity that is not a Subsidiary.
Notwithstanding the foregoing, the transaction contemplated in the
Plan of Reorganization and Agreement for the Exchange of Stock of CalComp, Inc.
for Stock of Summagraphics Corporation, dated _____, 1996, and Lockheed Martin
Corporation's or its subsidiaries' resulting ownership of shares of the
Corporation, shall not constitute, or be, an event which can give rise to a
Change in Control.
9. Death, Disability, Termination of Employment, or Retirement
(a) Death and Disability
If a grantee dies or becomes disabled while employed by the
Corporation or dies within three months after termination of employment, all of
the grantee's outstanding options shall become vested. In case of death,
options and rights may be exercised by the persons referred to in Section 5(c)
only within three years from the date of death or, if shorter, the remaining
exercise period. In case of disability, options and rights may be exercised
during the remaining exercise period. For purposes of this section a grantee
shall be considered disabled if he or she is eligible to receive disability
benefits under the Lockheed Sanders Retirement Plan, or its successor, or if the
grantee is not enrolled in such plan, any other Corporation sponsored plan which
provides
<PAGE>
disability benefits. If the grantee is not enrolled in a Corporation sponsored
plan which provides disability benefits, the grantee will be considered disabled
if he or she is unable to perform the duties of any position for which he or she
is qualified by reason of education, training and experience, as determined by
the Committee in its sole discretion.
(b) Layoff or Retirement
If a grantee separates from service by reason of a layoff (i.e.,
termination for lack of work and the expectation that the position will not be
filled for the next 12 months) or early or normal retirement, all of the
grantee's options and rights that have been outstanding for 18 months or more
will vest as though the grantee had remained in the employ of the Corporation.
Options or rights that were outstanding for less than 18 months on the grantee's
layoff or retirement date and are not then exercisable shall be forfeited.
Vested options and rights may be exercised during the remaining exercise period.
(c) Termination or Resignation
In all other cases of a grantee's resignation or termination of
employment by the Corporation, with or without cause, all unvested options and
rights are forfeited. Vested options and rights must be exercised within 6
months of the grantee's separation from service.
Nothing contained in the Plan or in any option or right granted hereunder
shall confer upon any employee any right of continued employment by the
Corporation nor limit in any way the right of the Corporation to terminate the
employee's employment at any time.
10. Leave of Absence
For purposes of the Plan, an employee on an approved leave of absence will
be considered as still in the employ of the Corporation unless otherwise
provided in an agreement between the employee and the Corporation.
11. Purchase or Exercise Price; Withholding
The exercise or purchase price (if any) of the stock issuable pursuant to any
option grant and any withholding obligation under applicable tax laws shall be
paid in cash or, subject to the Committee's express authorization and the
restrictions, conditions and procedures as the Committee may impose, any one or
combination of (i) cash, (ii) the delivery of shares of stock, (iii) a reduction
in the amount of stock or other amounts otherwise issuable or payable pursuant
to a grant, or (iv) the delivery of a promissory note, or other obligation for
the future payment in money, the terms and conditions of which shall be
determined by the Committee. In the case of a payment by the means
<PAGE>
described in clause (ii) or (iii) above, the stock to be so delivered or offset
shall be determined by reference to the fair market value of the stock on the
date as of which the payment or offset is made.
12. Administration
(a) Stock Option Committee
(i) This Plan and all grants under this Plan shall be administered by
the Stock Option Committee which shall be the Compensation Committee of the
Board or such other committee of the Board as may be designated by the Board and
constituted so as to permit this Plan to comply with the disinterested
administration of Directors requirements of Rule 16b-3 under the Exchange Act
and the "outside director" requirement of Code Section 162(m). The members of
the Committee shall be designated by the Board of Directors. A majority of the
members of the Committee (but not fewer than two) shall constitute a quorum. The
vote of a majority of a quorum or the unanimous written consent of the Committee
shall constitute action by the Committee.
(ii) The Committee shall determine the employees who will participate
in the Plan, the number of shares and rights subject to each grant, and shall
have the authority to adopt rules and regulations for administering the Plan.
<PAGE>
(iii) As and to the extent authorized by the Board of Directors or
the By-Laws, the Committee may exercise the powers and authority related to the
Plan which are vested in the Board of Directors. The Committee may delegate to
the officers or employees of the Corporation the authority to execute and
deliver documents and to take such other steps deemed necessary or convenient
for the efficient administration of the Plan.
(b) Finality of Determinations
The Board of Directors and the Committee shall have the power to
interpret the Plan. All interpretations, determinations, and actions by the
Board of Directors or by the Committee, to the extent authorized by the Plan,
the Board of Directors or the By-Laws shall be final, conclusive, and binding
upon all parties.
13. Qualified Incentive Stock Options
If the Committee determines that tax laws warrant granting options that
qualify as incentive stock options under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"), some or all of the options authorized
hereunder may be granted as qualified incentive stock options. The Plan may be
amended by the Board of Directors to comply with Code Section 422 without
further shareholder approval.
14. Amendment and Termination
The Board of Directors shall have the power, in its discretion, to amend,
suspend, or terminate the Plan or options and rights granted under the Plan
(including the power to accelerate vesting) at any time; provided, however, that
amendments to options and rights granted to persons subject to the requirements
of Section 16 of the Exchange Act must be made by the Committee and may not
permit the grantee to exercise the option or right within 181 days of the grant.
It shall not, however, without further action by the stockholders, have the
power to (a) change the class of employees eligible to receive grants under the
Plan, (b) provide for options or rights exercisable more than ten years after
the date granted, or (c) extend the expiration date of the Plan; nor shall it
have the power (except as otherwise provided in the Plan) to (d) increase the
number of shares subject to the Plan or (e) reduce the exercise price of an
option or right below the fair market value of the stock at the time of the
grant. No amendment, suspension, or termination of the Plan or options or
rights granted under the Plan shall, except with the consent of the grantee,
adversely affect an option or right previously granted.
<PAGE>
15. Duration
The Plan shall remain in effect until all options and rights granted under
the Plan have been exercised or terminated under the terms of the Plan, provided
that options and rights under the Plan must be granted within ten years from the
effective date of the Plan.
<PAGE>
EXHIBIT 99
NEWS RELEASE
SUMMAGRAPHICS CORPORATION AND LOCKHEED MARTIN'S
CALCOMP SUBSIDIARY SIGN DEFINITIVE AGREEMENT TO COMBINE
AUSTIN, Texas and BETHESDA, Maryland, March 20, 1996 -- Summagraphics
Corporation (NASDAQ:SUGR) and Lockheed Martin Corporation (NYSE:LMT) announced
today the signing of a definitive agreement to combine Lockheed Martin's
CalComp subsidiary and Summagraphics Corporation.
Under the agreement, Summagraphics will issue approximately 40.7 million new
shares of common stock to Lockheed Martin in a tax-free exchange for all of the
issued and outstanding shares of Lockheed Martin's CalComp subsidiary. As a
result of this exchange, Lockheed Martin will own approximately 90 percent of
the combined entity. About 4.7 million shares, or 10 percent, of the combined
company will continue to be held by existing Summagraphics public shareholders.
With annual sales of about $350 million, the new company will continue to be
listed on the NASDAQ.
"By combining CalComp and Summagraphics through this agreement, existing
Summagraphics' shareholders will own a continuing interest in a larger, stronger
company that will be able to compete more effectively in its markets," said
Michael Bennett, Summagraphics' president and chief executive officer.
"The synergies from the combination of these businesses are expected to
result in substantial benefits to the companies, their customers and
shareholders," said Peter B. Teets, president and chief operating officer,
Information & Technology Services Sector, Lockheed Martin Corporation.
<PAGE>
-2-
According to Gary Long, CalComp's president and chief executive officer, the
combined company will be well positioned in the growing computer peripherals
market through the integration of product lines, distribution channels, and
research and development.
The agreement is subject to a number of conditions, including approval by
Summagraphics' shareholders and requisite regulatory approvals. A proxy
statement relating to this transaction will be sent to Summagraphics'
shareholders in late April or early May. It is anticipated that the transaction
will be close in the second quarter of 1996.
Summagraphics, based in Austin, Texas, is a leading supplier of high
performance digitizing tablets and cutters, and manufacturers plotter and
large-format color printers used principally in computer graphics,
computer-aided design and other advanced graphics applications. The company has
about 275 employees worldwide.
CalComp, based in Anaheim, California, designs and manufacturers computer
peripherals, such as plotters and printers, and is a leading supplier of
digitizers and scanners for complex business, CAD and graphic arts applications.
It has about 1,000 employees worldwide.
###
CONTACTS:
Summagraphics Corporation
Robert Sims (512) 873-1540
David Osowski (512) 873-1525
Lockheed Martin Corporation
Media: Ron Meder (301) 897-6345
Investors/Analysts: Jim Ryan (301) 897-6584
