<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission file number 0-16071
CALCOMP TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
(Formerly Summagraphics Corporation)
DELAWARE 06-0888312
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2411 W. LA PALMA AVENUE
ANAHEIM, CALIFORNIA 92803
(Address of principal executive offices) (Zip Code)
(714) 821-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at October 30, 1996
--------------------- -------------------------------
$ .01 par value 45,398,650
<PAGE>
CALCOMP TECHNOLOGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (1)
Condensed Consolidated Statements of Operations (2)
Condensed Consolidated Statements of Cash Flows (3)
Condensed Notes to Consolidated Financial Statements (4)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (8)
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (12)
Signatures (13)
</TABLE>
<PAGE>
CALCOMP TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September, 29 December, 31
1996 1995
(Unaudited)
-------------- ------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 14,787 $ 14,574
Accounts receivable, net 49,360 46,380
Accounts receivable from affiliates 10,419 12,232
Inventories (Note 3) 55,323 40,308
Other current assets 3,868 3,504
--------- --------
TOTAL CURRENT ASSETS 133,757 116,998
--------- --------
Property, plant and equipment, net 53,261 51,060
Investments 5,032 4,518
Goodwill 83,491 50,427
Other intangibles 3,142 --
Other assets 8,744 8,561
--------- --------
TOTAL ASSETS $ 287,427 $231,564
========= ========
CURRENT LIABILITIES:
Accounts payable $ 21,034 $ 17,592
Deferred revenue 10,565 10,122
Accrued salaries and related expenditures 9,913 7,594
Income taxes payable 1,061 1,321
Line of credit with Majority Shareholder (Note 4) 19,373 --
Accrued reorganization costs 8,404 --
Other liabilities 34,432 19,472
--------- --------
TOTAL CURRENT LIABILITIES 104,782 56,101
Other long-term liabilities 5,851 5,080
Accumulated postretirement benefit obligation 3,640 3,640
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000
shares authorized -- --
Common stock,$.01 par value, 60,000,000
shares authorized, 45,398,650 and 40,742,957
shares issued on September 29, 1996 and
December 31, 1995 (Note 1) 454 407
Additional paid-in capital 283,312 265,243
Accumulated deficit (Note 6) (118,054) (71,785)
Cumulative translation adjustment 7,907 8,531
Less: Treasury stock, at cost - 49,000 shares (465) --
Note receivable from Majority Shareholder (Note 6) -- (35,653)
--------- --------
Total Stockholders' Equity 173,154 166,743
--------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 287,427 $231,564
========= ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
CALCOMP TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- -------------------------
Sept. 29, Sept. 24, Sept. 29, Sept. 24,
1996 1995 1996 1995
----------- ----------- ----------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
NET SALES $ 65,564 $ 65,289 $ 168,370 $ 206,565
COST OF SALES 49,759 46,782 130,427 147,246
----------- ----------- ----------- -----------
Gross Profit 15,805 18,507 37,943 59,319
OPERATING EXPENSES:
Selling 13,320 11,218 36,748 34,961
Research and development 5,784 4,640 15,882 13,434
General and administrative 6,571 3,339 14,912 15,642
Corporate expenses from
Majority Shareholder 1,094 2,276 3,456 6,540
----------- ----------- ----------- -----------
Total operating expenses 26,769 21,473 70,998 70,577
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (10,964) (2,966) (33,055) (11,258)
----------- ----------- ----------- -----------
Interest (expense) income, net (205) 64 523 52
Other income, net 648 12 662 1,374
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (10,521) (2,890) (31,870) (9,832)
Provision for (benefit of) income taxes 213 (33) 831 1,974
----------- ----------- ----------- -----------
NET LOSS $ (10,734) $ (2,857) $ (32,701) $ (11,806)
=========== =========== =========== ===========
NET LOSS PER COMMON
SHARE (Note 5): $ (0.24) $ (0.07) $ (0.78) $ (0.29)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING: 44,119,613 40,742,957 41,868,509 40,742,957
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
2
<PAGE>
CALCOMP TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
September 29, September 24,
1996 1995
-------------- --------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(32,701) $ (11,806)
Adjustments to reconcile net loss to
net cash provided (used) by operating activities:
Depreciation and amortization 8,732 8,536
Investee income (825) (1,130)
Changes in operating assets and liabilities
(net of effect of acquired company)
Accounts receivable 7,726 11,848
Accounts receivable from affiliates 1,813 (3,283)
Inventory (7,796) (4,760)
Accounts payable (5,516) 1,255
Salaries and wages 2,319 (476)
Accrued liabilities 2,468 9,199
Long-term liabilities (1,385) 442
Other (174) (3,493)
-------------- --------------
Net changes in operating assets and liabilities (545) 10,732
-------------- --------------
Net cash (used) provided by operating activities (25,339) 6,332
-------------- --------------
Cash flows from investing activities:
Cash acquired in connection with purchase (note 1) 2,801 --
Investment in property, plant and equipment (5,377) (9,523)
Proceeds from disposition of property, plant
and equipment 59 983
Dividends received 311 672
-------------- --------------
Net cash used in investing activities (2,206) (7,868)
-------------- --------------
Cash flows from financing activities:
Proceeds from line of credit with Majority
Shareholder 5,873 --
Net cash received from Majority Shareholder 22,085 8,459
-------------- --------------
Net cash provided by financing activities 27,958 8,459
Effect of exchange rate changes on cash (200) 824
-------------- --------------
Increase in cash 213 7,747
-------------- --------------
Cash at beginning of period 14,574 11,249
-------------- --------------
Cash and cash equivalents at end of period $ 14,787 $ 18,996
============== ==============
Supplementary disclosures of cash flow information:
Taxes paid $ 1,091 $ 95
Interest paid $ 41 $ 0
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements
3
<PAGE>
CALCOMP TECHNOLOGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1996
-------------------------
(Unaudited)
1) Merger of Summagraphics Corporation with CalComp, Inc.
------------------------------------------------------
CalComp Technology, Inc. (the "Company") completed a Plan of Reorganization (the
"Agreement") for the exchange of Stock of CalComp Inc. for Stock of
Summagraphics Corporation as of July 23, 1996. Pursuant to this agreement, the
Company issued to Lockheed Martin Corporation ("Majority Shareholder")
40,742,957 shares of Common Stock of the Company, representing 89.7% of the
total outstanding shares of Common Stock of the Company following such issuance,
in exchange for all of the outstanding capital stock of CalComp Inc. As a
result of the exchange, Lockheed Martin Corporation acquired control of the
Company and CalComp Inc. became a wholly-owned subsidiary of the Company. In
connection with the exchange, the Company changed its name from Summagraphics
Corporation to CalComp Technology, Inc. and changed its year end from May 31 to
a fifty-two, fifty-three week fiscal year ending on the last Sunday of December.
The purchase was accounted for as a "reverse acquisition" whereby CalComp Inc.
was deemed to have acquired CalComp Technology, Inc. (formerly Summagraphics
Corporation) for financial reporting purposes. However, CalComp Technology, Inc.
remains the continuing legal entity and registrant for Securities and Exchange
Commission filing purposes. Consistent with reverse acquisition accounting, the
historical financial statements of the Company presented for the three and nine
month periods ended September 24, 1995, are the consolidated financial
statements of CalComp Inc. and differ from the consolidated financial statements
of the Company previously reported. In addition, the historical stockholders'
equity as of December 31, 1995, has been retroactively restated to reflect the
equivalent number of shares issued in connection with the agreement. The
accounts and results of operations of CalComp Technology, Inc. have been
included in the financial statements from the date of acquisition and reflect
preliminary purchase price allocations and adjustments. Certain
reclassifications of prior year amounts have been made to conform to the current
year presentation.
The following sets forth the assets, liabilities and stockholders equity that
were recorded by the Company in connection with the acquisition on July 23, 1996
and reflects the preliminary purchase price allocation:
(In thousands)
<TABLE>
<CAPTION>
Assets Liabilities and Stockholder's Equity
------ ------------------------------------
<S> <C>
Cash $ 2,801 Short-Term Debt $17,912
Accounts Receivable, net 11,041 Accounts Payable 9,060
Inventories 7,577 Other Current Liabilities 18,185
Other Current Assets 1,248 -------
------- Total Current Liabilities $45,157
Total Current Assets $22,667
Plant and Equipment 2,458 Other Long-Term Liabilities 2,156
Goodwill 36,221
Other Current Assets 3,618 Stockholder's Equity 17,651
------- -------
Total Assets $64,964 Total Liabilities and Stockholders Equity $64,964
======= =======
</TABLE>
4
<PAGE>
CALCOMP TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1996
-------------------------
(Unaudited)
The following pro forma summary presents the consolidated results of operations
assuming that the merger of the Company and CalComp Inc. had occurred on January
1, 1995. No adjustments are required to conform the accounting policies of the
Company and CalComp Inc.
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
Sept 29, Sept 24,
1996 1995
------------- ---------------
(In thousands, except per share amounts)
<S> <C> <C>
Revenues $ 198,025 $ 261,566
Net Loss $ (49,179) $ (25,874)
Weighted Average
Shares Outstanding 45,398,650 45,398,650
Loss Per Share $ (1.08) $ (0.57)
</TABLE>
The amounts disclosed above for Net Loss have been adjusted to reflect:
1) Goodwill amortization arising from the exchange, net of the removal of
the historical goodwill recorded on Summagraphics' statement of
operations. Goodwill amortization adjustments totaled $1,039,000 and
$1,425,000 for the nine months ended September 29, 1996 and September
24, 1995, respectively.
2) A $1 million reduction in the carrying amount of certain property and
equipment to record such assets at their fair value. This adjustment,
which assumes a 5 year useful life, resulted in a decrease to
depreciation expense of $117,000 and $150,000 for the nine months
ended September 29, 1996 and September 24, 1995, respectively.
These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of what would have occurred had the transaction
been effected on the date indicated above or of results which may occur in the
future.
5
<PAGE>
CALCOMP TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1996
-------------------------
(Unaudited)
2) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month period ended
September 29, 1996, are not necessarily indicative of the results that may be
expected for the Company's fiscal year or any other interim period.
It is suggested that the financial statements be read in conjunction with the
information contained in the Proxy Statement filed with the Securities and
Exchange Commission on June 24, 1996 under Section 14 of the Securities Act of
1934, as amended, and the Company's Annual Report for the fiscal year ended
May 31, 1996.
3) Inventories
-----------
Inventories as of September 29, 1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
September 29, December 31,
1996 1995
------------- ------------
(in thousands)
<S> <C> <C>
Finished Goods $36,214 $28,720
Work in process 1,138 1,628
Raw materials 17,971 9,960
------- -------
$55,323 $40,308
======= =======
</TABLE>
4) Line of Credit
--------------
Revolving Credit Agreement
- --------------------------
In connection with the Agreement, the Company and Lockheed Martin entered into a
revolving credit agreement pursuant to which Lockheed Martin will provide, from
time to time, financing of up to $28 million for repayment of specified
indebtedness and general corporate purposes, including, without limitation,
financing the working capital needs of the Company and its
6
<PAGE>
CALCOMP TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------
SEPTEMBER 29, 1996
-------------------------
(Unaudited)
Revolving Credit Agreement (continued)
- --------------------------------------
subsidiaries. The revolving credit agreement has a term of two years from the
date of its execution, but is terminable after the first anniversary of the date
of the revolving credit agreement, at the option of either the Company or
Lockheed Martin. The revolving credit agreement bears interest, at CalComp
Technology's option, either at (i) a rate per annum equal to the higher of the
federal funds rate as published in the Federal Reserve System plus 0.5% or the
rate publicly announced from time to time by Morgan Guaranty Trust Company of
New York as its "prime" rate or (ii) LIBOR plus 1.0%. The revolving credit
agreement contains certain negative and affirmative covenants. There is no
required prepayment or scheduled reduction of availability of loans under the
revolving credit agreement.
Cash Management Agreement
- -------------------------
Additionally, in connection with the exchange, the Company and Lockheed Martin
entered into a cash management agreement, whereby Lockheed Martin will provide
cash advances up to $2 million to the Company for cash shortfalls with a
termination date of June 1, 1998 bearing an interest rate per annum equal to the
Federal Funds Rates.
As of September 29, 1996, the Company had an aggregate balance of $19,373,000
on the credit agreements noted above.
5) Net Loss per Share
------------------
Net loss per share has been calculated by dividing net loss by the weighted
average number of common shares outstanding during the period. All common stock
equivalents have been excluded from the calculation of weighted average common
shares outstanding since their inclusion would be anti-dilutive or decrease the
loss per share amount otherwise computed.
6) Supplementary Cash Flow Information
-----------------------------------
In connection with the agreement, the Company reclassified the net receivable
from Lockheed Martin to accumulated deficit to reflect the deemed dividend of
the Company's net receivable to Lockheed Martin. The dividend deemed to Lockheed
Martin, as of the transaction date, totaled $13,568,000. Changes in operating
assets and liabilities presented in the Consolidated Statement of Cash Flows are
net of the effect of the acquired company.
7
<PAGE>
CALCOMP TECHNOLOGY, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- ------------------------------------------------------------
RESULTS OF OPERATIONS:
- ----------------------
On July 23, 1996, Summagraphics Corporation ("Summagraphics") and CalComp Inc.
("CalComp"), a wholly-owned subsidiary of Lockheed Martin Corporation, effected
a plan of reorganization for the exchange of CalComp stock for Summagraphics
stock, after which Summagraphics changed its name to CalComp Technology, Inc.
(the "Company"). The newly reorganized company adopted a fiscal year ending on
the last Sunday of December. For accounting purposes, CalComp was treated as
the acquiring company. Therefore, the financial statements for the prior year
periods are those of CalComp and the financial statements for the current year
reflect CalComp's acquisition of Summagraphics as of July 23, 1996.
REVENUES
- --------
Net revenues for the third quarter ended September 29, 1996 were $65.6 million,
relatively unchanged from the same period in 1995. Product revenues were up 7%
while service revenues were down by 27% versus the same period in 1995. Product
revenues for the quarter were favorably impacted by the addition of the
Summagraphics' Cutter and Digitizer product lines. Service revenues continued
to decline as a result of the transition to lower cost products, which
traditionally do not capture the same level of service contract revenue as
higher cost products; and a lower rate of service contract renewals as older
generation products are retired from service.
Net revenues for the nine months ended September 29, 1996 were $168.4 million, a
decrease of 18%, versus $206.6 million for the same period in 1995. Product and
service revenues decreased 17% and 25% respectively, versus the same period in
1995. The decline in product revenue for the first nine months of 1996 was
primarily the result of continuing competitive pressures on output products,
pricing actions, and difficulties and delays associated with new product
introductions which were only partially offset by the acquisition of the
Summagraphics' Cutter and Digitizer product lines. Service contract revenues
were down for the nine months for the same reasons discussed above for the
quarter.
GROSS PROFIT
- ------------
Gross profit as a percentage of net revenue was 24% for the third quarter and
23% for the first nine months of 1996, compared to 28% for the third quarter and
29% for the first nine months of 1995. The declines were primarily attributable
to: continued competitive pricing pressure; continued shift in the mix of
products sold towards lower cost, lower margin products; higher costs associated
with the introduction of new products; the phase out of mature, end of life
products at reduced selling prices; and the continued deterioration in service
gross margins primarily due to decreased service revenues without corresponding
cost reductions.
The companies that participate in the industry are highly competitive. Reduced
unit selling prices and shortened product life cycles are expected to continue
to place pressure on the Company's margins.
8
<PAGE>
CALCOMP TECHNOLOGY, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- ------------------------------------------------------------
OPERATING EXPENSES
- ------------------
Operating expenses as a percentage of net revenue were 41% for the third quarter
and 42% for the first nine months of 1996, compared to 33% for the third quarter
and 34% for the first nine months of 1995, primarily as a result of lower
revenue in the current periods without a corresponding reduction in costs.
Operating expenses increased 25% for the third quarter and were relatively
unchanged for the nine months versus 1995. The increase for the quarter relates
primarily to the acquisition of Summagraphics.
Selling expenses as a percentage of net revenue were 20% for the third quarter
and 22% for the first nine months of 1996, compared to 17% for the third quarter
and first nine months of 1995. These selling expense increases are attributable
to the Summagraphics expenses as well as marketing and promotional expenses
incurred to meet competitive pressures. In addition, product development
expenses as a percentage of net revenue were 9% for the third quarter and the
first nine months of 1996, compared to 7% for the third quarter and the first
nine months of 1995. The increase in product development expenses results from
ongoing new product development. General and administrative expenses as a
percentage of net revenue were 10% for the third quarter and 9% for the first
nine months of 1996, compared to 5% for the third quarter and 8% for first nine
months of 1995. The quarterly increase in general and administrative expenses
is primarily attributable to the addition of Summagraphics' expenses, costs
associated with new management information systems and the increase in goodwill
amortization resulting from the purchase of Summagraphics and the decision to
shorten CalComp Inc.'s existing goodwill amortization period from 40 years to 25
years. General and administrative expenses for the nine month period versus the
same period in 1995 remained relatively unchanged as the increase in expenses in
the third quarter 1996 were offset by a decrease in expenses during the first
six months of 1996 versus 1995. The year to date decrease for the six months
ended June 30, 1996 versus the same period in 1995, resulted from 1995 facility
closure and workforce reduction costs not incurred in 1996.
A substantial portion of the Summagraphics operating expenses are expected to be
phased out by year end upon completion of the integration of the Summagraphics
into CalComp's operations.
OTHER INCOME/EXPENSE
- --------------------
Net interest expense for the third quarter of 1996 was $0.2 million versus net
interest income of $0.1 million for the same quarter in 1995. This resulted
primarily from interest expense on borrowings in the third quarter of 1996 that
were not required in the prior year. Other income for the third quarter was
$0.6 million versus $0.0 for the same quarter in 1995 as a result of currency
translation gains from the strengthening of the dollar during the current period
which did not occur during the same period in 1995.
9
<PAGE>
CALCOMP TECHNOLOGY, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- ------------------------------------------------------------
OTHER INCOME/EXPENSE (CONTINUED)
- --------------------------------
Interest income for the first nine months of 1996 was $0.5 million versus $0.1
million for the same period in 1995. This resulted primarily from interest
income of $0.7 million recorded in the first quarter of 1996 as a result of a
favorable determination by U.K. taxing authorities that CalComp is entitled to
interest on amounts refunded. Other income for the first nine months of 1996
was $0.6 million versus $1.4 million for the same period in 1995. This resulted
primarily from a reduction in earnings of a Japanese joint venture which is
accounted for on the equity method in other income.
INCOME TAXES
- ------------
Income taxes were $0.2 million for the third quarter versus $0.0 for the same
quarter last year. Income taxes for the first nine months of 1996 were $0.8
million versus $2.0 million for the same period in 1995. These taxes result
primarily from provision of foreign taxes for profitable foreign CalComp
locations.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
When possible, the Company finances its working capital needs and capital
expenditure requirements from internally generated funds. At September 29,
1996, the Company had cash and cash equivalents of $14.7 million, consisting
primarily of foreign cash balances.
During the nine months ended September 29, 1996, the Company used $25.3 million
in operations mainly to fund its $32.7 million net loss, net of depreciation and
amortization of $8.7 million. In addition, the Company expended $5.3 million
for investments in property, plant and equipment. Those uses of cash were
funded by $2.8 million of cash acquired in the acquisition of Summagraphics and
borrowings from the Company's Majority Shareholder consisting of $22.1 million
prior to the Plan of Reorganization and $5.9 million pursuant to a Revolving
Credit Agreement and Cash Management Agreement ("Credit Agreements").
In connection with the Plan of Reorganization, the Company entered into these
Credit Agreements with its Majority Shareholder whereby the Company has access
to $30 million of general purpose financing. In addition, the Company retained a
$4.0 million commercial line of credit which Summagraphics had outstanding with
an international bank, $3.2 million of which remains outstanding at September
29, 1996. The agreements relating to these credit facilities contain typical
covenants with respect to the conduct of the Company's business and require the
maintenance of various financial balances and ratios. As of September 29, 1996,
the Company was in compliance with all such covenants. The Company has utilized
$19.4 million of its credit facilities, a substantial portion of which was used
to finance costs associated with integrating the Summagraphics operations with
those of CalComp including the partial replacement of preexisting Summagraphics'
debt. As a result of the continuing losses and negative cash flows and their
future impact on loan covenants, it is anticipated that the existing Credit
Agreements will be revised and increased. The Company has initiated discussions
with its Majority Shareholder regarding this matter.
10
<PAGE>
CALCOMP TECHNOLOGY, INC.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- ------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- -------------------------------------------
During the first nine months of 1996, the Company spent $2.7 million in the
implementation of new management information systems. It expects to spend an
additional $2.8 million during the remainder of 1996 and 1997 to complete this
implementation. At September 29, 1996, the Company had no other significant
commitments for capital expenditures.
This discussion contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from those indicated by such statements as a result of various
factors, including those discussed in the Company's Form 10-K on file with the
SEC.
11
<PAGE>
CALCOMP TECHNOLOGY, INC.
PART II. OTHER INFORMATION
--------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
10.1 Registration Rights Agreement dated as of July 23, 1996 between the
Company and Lockheed Martin Corporation
10.2 Intercompany Services Agreement dated as of July 23, 1996 between the
Company and Lockheed Martin Corporation
10.3 Cash Management Agreement dated as of July 23, 1996 between the Company
and Lockheed Martin Corporation
10.4 Tax Sharing Agreement dated as of July 23, 1996 between the Company and
Lockheed Martin Corporation
10.5 Revolving Credit Agreement dated as of July 23, 1996 between the Company
and Lockheed Martin Corporation
10.6 Corporate Agreement dated as of July 23, 1996 between the Company and
Lockheed Martin Corporation
10.7 CalComp Technology, Inc. 1996 Stock Option Plan for Key Employees
10.8 CalComp Technology, Inc. Management Incentive Compensation Plan
10.9 CalComp Technology, Inc. Deferred Management Incentive Compensation Plan
10.10 Senior Executive Retirement Plan ("SERP") Agreement between Lockheed
Martin Corporation and Gary R. Long dated November 8, 1995
10.11 Employment Agreement (with Temporary Assignment Memorandum) between
Company and Winfried Rohloff dated June 25, 1996
10.12 Employment Offer and Agreement between Company and John J. Millerick
dated July 12, 1996
10.13 Selex Mini-Engine OEM Agreement for Cuervo plotters between Company and
Selex Systems U.S.A., Inc., dated May 26, 1994
10.14 Selex Color Mini-Engine Supplement for Sake plotters between Company and
Selex Systems U.S.A., Inc. dated January 2, 1995
10.15 OEM Agreement for Asahi and Absolut plotters between Company and Copyer
Co., Ltd. dated September 19, 1996
10.16 OEM Agreement for Model 2700 between Company and Katsuragawa Electric
Co., Ltd. dated June 14, 1996
10.17 OEM Agreement for Model 1220 between Company and Katsuragawa Electric
Co., Ltd. dated April 23, 1996
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on July 29, 1996, and Form 8-K/A on
August 1, 1996.
12
<PAGE>
CALCOMP TECHNOLOGY, INC.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALCOMP TECHNOLOGY, INC
-----------------------
(Registrant)
Date: November 12, 1996
/s/ GARY R. LONG
----------------
Gary R. Long
President and Chief Executive Officer
/s/ JOHN J. MILLERICK
---------------------
John J. Millerick
Senior Vice President, Finance
and Chief Financial Officer
13
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of July 23, 1996
by and between
CALCOMP TECHNOLOGY, INC.,
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 23rd day of July, 1996, by and between CALCOMP
TECHNOLOGY, INC., 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, as
amended, by and among the Stockholder, CalComp Inc., a California corporation
("CalComp"), and Summagraphics Corporation ("Summagraphics") (the
"Reorganization Agreement"), Summagraphics 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, Summagraphics agreed
to issue and deliver to the Stockholder shares of Summagraphics 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
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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.
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"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.
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(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
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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
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registration statement filed with and declared effective by the Commission under
the Securities Act.
3. Demand Registration Rights. (a) Subject to the provisions of
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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 CalComp Technology shall furnish to the
Stockholders and Assignees that have made such request a resolution of the Board
of Directors of CalComp Technology (adopted by the affirmative vote of a
majority of the Board of Directors of CalComp Technology) certified by the
President of CalComp Technology 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
CalComp Technology's reasonable control of any required financial statements, or
any other event or condition of similar significance to CalComp Technology) be
significantly disadvantageous (a "Disadvantageous Condition") to CalComp
Technology 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, CalComp Technology 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
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which CalComp Technology shall 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 CalComp Technology,
the Stockholder and Assignees will deliver to CalComp Technology 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
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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
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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 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
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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
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addition, in the event that the Stockholder or an Assignee 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
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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.
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(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
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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 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
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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 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
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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 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
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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).
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9. Indemnity for Breaches. The Company agrees to indemnify and hold
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harmless the Stockholder 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 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
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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
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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:
CalComp Technology, Inc.
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: Gary R. Long, 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
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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
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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
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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
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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
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which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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16. Rules of Construction. Whenever used herein, the singular number
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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: CALCOMP TECHNOLOGY, INC.
/s/ ROBERT B. SIMS By:/s/ MICHAEL S. BENNETT
- ------------------ ----------------------
Robert B. Sims Michael S. Bennett
Secretary President and Chief Executive
Officer
ATTEST: LOCKHEED MARTIN CORPORATION
/s/ LILLIAN M. TRIPPETT By:/s/ PETER B. TEETS
- ----------------------- ------------------
Lillian M. Trippett Peter B. Teets
Secretary President - Lockheed Martin
Information & Technology
Services Sector
-14-
<PAGE>
SCHEDULE 2(d)
-------------
Piggy-Back, Demand, Other Registration Rights
---------------------------------------------
-15-
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
================================================================================
INTERCOMPANY SERVICES AGREEMENT
Dated as of July 23, 1996
by and between
CALCOMP TECHNOLOGY, INC.,
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 23rd day of July, 1996, by and between CALCOMP
TECHNOLOGY, INC., a Delaware corporation (collectively with its subsidiaries,
"CalComp Technology"), 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 19th day of March, 1996, as amended
(the "Reorganization Agreement"), by and among Summagraphics Corporation
("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 CalComp Technology desires Lockheed Martin to continue
providing to CalComp Technology 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 CalComp Technology 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 CalComp Technology 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
<PAGE>
benefit plans and programs and the corresponding administrative 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, CalComp Technology would be
entitled to participate in the benefit associated with any such reductions.
2. CORPORATE SERVICES.
------------------
(a) Fee. In exchange for the Corporate Services, CalComp Technology
---
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 CalComp
Technology, (ii) CalComp Technology's 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. CalComp Technology
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, CalComp Technology may request that Lockheed Martin provide
additional services to CalComp Technology. 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 CalComp Technology
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 CalComp Technology 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 CalComp Technology and
CalComp
-2-
<PAGE>
Technology may terminate this Agreement by providing not less than 90 days
written notice to Lockheed Martin at any time that Lockheed Martin owns Common
Stock of CalComp Technology representing less than 25% of its issued and
outstanding Common Stock.
3. (a) Insurance. Lockheed Martin shall use its reasonable efforts
---------
to cause CalComp Technology 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 CalComp Technology 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 CalComp Technology other than as set
forth in the preceding sentence. CalComp Technology 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 CalComp Technology. The portion of such premiums and other
charges payable by CalComp Technology 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 CalComp
Technology (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
CalComp Technology of the change prior to its effective date, or (b) otherwise
to provide notice to CalComp Technology upon becoming aware of the change. It
is expressly agreed by CalComp Technology and Lockheed Martin that any self-
insurance, retention or deductible shall be for the account of and be an
obligation of CalComp Technology, and that CalComp Technology's obligations in
respect of such self-insurance, retention or deductible shall survive the
termination of this Agreement.
(b) Termination of Insurance. Either CalComp Technology 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, CalComp Technology 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 CalComp Technology has obtained, or upon termination of such
Insurance will obtain, comparable insurance coverage. In the event
-3-
<PAGE>
all or any portion of the Insurance is terminated, if appropriate, the 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 Technology 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 Technology 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 Technology on or
after the Effective Date, nothing contained herein shall be deemed to permit any
employee of CalComp Technology (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. CalComp Technology shall reimburse
-------------------------
Lockheed Martin for the direct costs associated with the plans in which CalComp
Technology's 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, CalComp Technology's 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 CalComp Technology on a monthly basis and CalComp
Technology 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; CalComp Technology shall promptly
reimburse Lockheed Martin the amount of any increased cost and Lockheed Martin
will promptly refund to CalComp Technology any
-4-
<PAGE>
overcharges. CalComp Technology shall be entitled to review and provide
comments to Lockheed Martin concerning the amount of any such reimbursement or
refund.
(c) Termination. CalComp Technology or Lockheed Martin may terminate
-----------
participation by CalComp Technology'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 CalComp Technology'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 CalComp Technology will
cooperate reasonably in establishing a mutually agreeable termination date.
Notice of less than 180 days may be given by mutual written consent of CalComp
Technology and Lockheed Martin or unilaterally by Lockheed Martin if the
termination applies to all participating employers in the Plan or if CalComp
Technology 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 CalComp Technology
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 CalComp
Technology 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 CalComp Technology 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 Technology
employees.
(d) Changes: Additional Services. CalComp Technology may request
-----------------------------
changes in plan terms or services (including changes allowing CalComp Technology
employees to participate in such plan). Approval of such changes shall be in
the sole and absolute discretion of Lockheed Martin. CalComp Technology may
request additional services that, if agreeable to Lockheed Martin, will be
provided on a direct cost basis to CalComp Technology. 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) CalComp Technology Plans. On or after the Effective Date, no
------------------------
employee of CalComp Technology who is covered by a benefit plan sponsored by any
entity within their "controlled group" of
-5-
<PAGE>
corporations (within the meaning of Code Section 414(b)) 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. CalComp Technology 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. CalComp Technology 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 CalComp Technology
--------------------------
provides benefit plans to its employees, other than those sponsored by Lockheed
Martin, CalComp Technology will have sole responsibility to comply with all
applicable regulatory requirements with respect to such CalComp Technology
plans. Notwithstanding the foregoing, Lockheed Martin and CalComp Technology
agree to cooperate fully with each other in the administration and coordination
of regulatory and administrative requirements that apply jointly to CalComp
Technology 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 CalComp
Technology, 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 CalComp Technology 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
-6-
<PAGE>
that such an action has been taken with respect to such a plan; (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. CalComp Technology 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 CalComp Technology 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 CalComp
Technology 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
CalComp Technology, any subsidiary or any affiliate, director, officer,
employee, agent or permitted assign of CalComp Technology or any of its
subsidiaries, (each, a "CalComp Technology Party") for any liabilities, claims,
damages, losses or expenses, including, but not limited to, any special,
indirect, incidental or consequential damages, of a CalComp Technology 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 CalComp Technology 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
CalComp Technology 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
-7-
<PAGE>
perform its obligation hereunder except to the extent that Damages were caused
directly or indirectly by acts or omissions of any CalComp Technology Party;
provided however, that in the case of a Benefit Plan, CalComp Technology's right
of indemnification also shall extend to claims of CalComp Technology's 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 CalComp Technology 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 CalComp Technology, which will not be unreasonably
withheld.
9. CalComp Technology Indemnification. CalComp Technology 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 CalComp Technology's failure to fulfill
CalComp Technology's 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, CalComp Technology 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. CalComp Technology 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.
-8-
<PAGE>
12. ASSIGNMENT. Except as otherwise provided herein, 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.
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 CalComp Technology:
CalComp Technology, Inc.
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: Gary R. Long, 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
-9-
<PAGE>
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.
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.
CALCOMP TECHNOLOGY, INC.
By:/s/ MICHAEL S. BENNETT
----------------------
Michael S. Bennett
President and Chief
Executive Officer
LOCKHEED MARTIN CORPORATION
By:/s/ PETER B. TEETS
------------------
Peter B. Teets
President - Lockheed Martin
Information & Technology
Services Sector
-11-
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
================================================================================
CASH MANAGEMENT AGREEMENT
Dated as of July 23, 1996
between
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
===============================================================================
<PAGE>
CASH MANAGEMENT AGREEMENT
-------------------------
This CASH MANAGEMENT AGREEMENT is dated as of July 23, 1996, between
CALCOMP TECHNOLOGY, INC., a Delaware corporation ("CalComp Technology"), 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, as amended
(the "Reorganization Agreement"), by and among Summagraphics Corporation
("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, CalComp Technology 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 CalComp
Technology 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,
<PAGE>
receiver, liquidator, custodian or other similar official of it or 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 CalComp Technology 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 CalComp Technology 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 CalComp
Technology, "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 CalComp Technology. In order for Lockheed Martin to
--------------------------------
fulfill its obligations described in Section 2, CalComp Technology agrees that
it will:
(a) establish and maintain the Concentration Account;
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<PAGE>
(b) collect all domestic cash receipts of any nature payable to
CalComp Technology 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 CalComp
Technology 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 CalComp Technology 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
CalComp Technology may make payments or restrict its ability to make
investments.
4. Investments. (a) In the event that CalComp Technology's 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 CalComp
Technology.
(b) Lockheed Martin will pay CalComp Technology interest on the
aggregate principal amount of Investments at a rate per annum equal to the
Federal Funds Rate and will make available to CalComp Technology 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.
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5. Advances. (a) In the event that CalComp Technology's 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 CalComp Technology.
(b) CalComp Technology 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 CalComp
Technology, not later than ten days after the end of each month, of the net
interest amount payable by or to CalComp Technology 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. CalComp Technology 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. CalComp Technology 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 CalComp Technology or any of CalComp Technology's affiliates,
directors, officers, employees, agents or permitted assigns (each a "CalComp
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<PAGE>
Technology Party") for, and each CalComp Technology Party shall not be liable to
any Lockheed Martin Party for, any liabilities, claims, damages, losses or
expenses, 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 CalComp Technology 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 CalComp Technology Party.
Notwithstanding the foregoing, Lockheed Martin shall not be liable for any
special, indirect, incidental or consequential damages relating to third party
claims.
11. CalComp Technology Indemnification. CalComp Technology 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 CalComp Technology's failure to fulfill
CalComp Technology's obligations hereunder; unless such failure is caused by the
acts or omissions of any Lockheed Martin Party. Notwithstanding the foregoing,
CalComp Technology 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 CalComp Technology, 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 CalComp Technology 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
----------------
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<PAGE>
remedies of Lockheed Martin provided by law, Lockheed Martin shall have the
right, without prior notice to CalComp Technology, any such notice being
expressly waived by CalComp Technology to the extent permitted by applicable
law, upon any amount becoming due and payable by CalComp Technology 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 CalComp Technology. Lockheed Martin agrees
promptly to notify CalComp Technology 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 CalComp Technology
-----------
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 CalComp Technology.
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
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<PAGE>
CalComp Technology:
------------------
CalComp Technology, Inc.
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.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
LOCKHEED MARTIN CORPORATION
By:/s/ WALTER E. SKOWRONSKI
------------------------
Walter E. Skowronski
Treasurer
CALCOMP TECHNOLOGY, INC.
By:/s/ MICHAEL D. BENNETT
----------------------
Michael D. Bennett
President and Chief Executive
Officer
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<PAGE>
EXHIBIT 10.4
EXECUTION COPY
================================================================================
TAX SHARING AGREEMENT
Dated as of July 23, 1996
by and between
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
and
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation
===============================================================================
<PAGE>
TAX SHARING AGREEMENT
THIS TAX SHARING AGREEMENT (this "Agreement"), dated as of July 23, 1996,
is made and entered into by and between LOCKHEED MARTIN CORPORATION, a Maryland
corporation ("Lockheed Martin"), and CALCOMP TECHNOLOGY, INC., a Delaware
corporation ("CalComp Technology").
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, as amended (the "Reorganization Agreement"),
by and among Summagraphics Corporation, a Delaware corporation
("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 CalComp Technology
is a member of such affiliated group;
WHEREAS, the affiliated group of which Lockheed Martin is the common
parent and CalComp Technology is a member files a consolidated Federal income
tax return as defined in Code Section 1501; and
WHEREAS, Lockheed Martin and CalComp Technology 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 CalComp Technology 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:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
1. "Code" shall mean the Internal Revenue Code of 1986, as amended.
2. "Combined Consolidated Group" shall mean the Lockheed Martin
Consolidated Group together with the CalComp Technology 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. "CalComp Technology Consolidated Group" shall mean the affiliated
group of corporations of which CalComp Technology 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 CalComp Technology Consolidated Group.
9. "Pro Forma CalComp Technology Return" shall mean a pro forma
consolidated Federal income tax return for the CalComp Technology Consolidated
Group prepared pursuant to ARTICLE III, Section 1 or 5. For 1996, the Pro Forma
CalComp Technology Return shall include CalComp and its subsidiaries commencing
January 1 and CalComp Technology 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.
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<PAGE>
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 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 CalComp Technology 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 CalComp Technology 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
CalComp Technology 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 CalComp Technology regarding the matters set forth in this paragraph as
they apply to the Pro Forma CalComp Technology Return described in ARTICLE III,
Section 1 hereof, and shall consider all changes requested by CalComp
Technology; 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
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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. CalComp Technology hereby
irrevocably appoints Lockheed Martin as its agent and attorney-in-fact to take
such 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 CalComp Technology regarding any
material issue relating to the CalComp Technology 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 CalComp Technology Consolidated Group is carried back, and shall consider
CalComp Technology's views regarding any proposed adjustment relating to any
such issue.
5. CalComp Technology 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 CalComp Technology Consolidated Group issue;
provided, however, that prior to incurring any such expenses, Lockheed Martin
shall, in good faith, consult with CalComp Technology and consider CalComp
Technology's views with regard to the retention of outside professional
assistance.
6. CalComp Technology 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 CalComp
Technology 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 CalComp Technology Return shall be computed as a
flat tax at the highest marginal rate applicable to corporations
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<PAGE>
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 CalComp Technology
Return shall be based on a rate sharing agreement to be agreed upon by the
parties at such time. The Pro Forma CalComp Technology Return shall reflect any
carryovers of net operating losses, net capital losses, excess tax credits or
other tax attributes from prior years' Pro Forma CalComp Technology Returns
which could have been utilized by the CalComp Technology Consolidated Group if
the CalComp Technology 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 CalComp Technology Return shall also reflect any
carryovers of net operating losses, net capital losses, excess tax credits or
other tax attributes from CalComp Technology or CalComp Technology consolidated
returns for any taxable year in which CalComp Technology was not included in the
Combined Consolidated Group which could have been utilized by the CalComp
Technology Consolidated Group if the CalComp Technology Consolidated Group had
not been included in the Combined Consolidated Group. The Pro Forma CalComp
Technology 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 CalComp Technology Consolidated Group if
the CalComp Technology Consolidated Group had not been included in the Combined
Consolidated Group. The Pro Forma CalComp Technology 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 CalComp Technology Consolidated Group and the Lockheed Martin
Consolidated Group were separate affiliated groups, except that the Pro Forma
CalComp Technology Return shall include all gains or losses recognized by the
CalComp Technology Consolidated Group on transactions between members of the
CalComp Technology 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 CalComp Technology Consolidated
Group ceasing to be included in the Combined Consolidated Group.
2. For each taxable year in which a Combined Consolidated Return is
filed, CalComp Technology shall make periodic payments ("Estimated Tax Sharing
Payments") to Lockheed Martin in such
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<PAGE>
amounts as, and no later than the dates on which, payments of estimated tax
would be due from the CalComp Technology 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 CalComp Technology 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 CalComp Technology to Lockheed
Martin not later than such March 15. CalComp Technology shall pay to Lockheed
Martin not 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 CalComp Technology 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 CalComp
Technology Return, Lockheed Martin shall refund such excess to CalComp
Technology 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 CalComp Technology the preliminary tax
calculation no later than 10 days prior to March 15 of the year following the
taxable year, and shall furnish to CalComp Technology the Pro Forma CalComp
Technology Return no later than 30 days before the Combined Consolidated Return
for the taxable year is filed.
3. If a Pro Forma CalComp Technology Return reflects a net operating
loss, net capital loss, excess tax credit or other tax attribute, Lockheed
Martin shall pay to CalComp Technology within 10 days after the Combined
Consolidated Return for the taxable year is filed, the refund which the CalComp
Technology Consolidated Group would have received as a result of the carryback
of such attribute 1) to a Pro Forma CalComp Technology Return for any taxable
year or years in which the CalComp Technology Consolidated Group is included in
the Combined Consolidated Group, or 2) to a CalComp Technology or CalComp
Technology consolidated return for any taxable year or years in which CalComp
Technology was not included in the Combined Consolidated Group. The amount of
the refund shall be determined as if the CalComp Technology Consolidated Group
had never been included in the Combined Consolidated Group and Pro Forma CalComp
Technology Returns had been actual returns. All calculations of deemed refunds
pursuant to this Section 3 shall include interest computed as if CalComp
Technology 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,
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<PAGE>
without regard to extensions. For purposes of determining the refund which the
CalComp Technology 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, CalComp Technology 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 the
Code. For each taxable year for which a Pro Forma CalComp Technology 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 CalComp Technology
Consolidated Group resulting from the transactions engaged in between members of
the CalComp Technology Consolidated Group and CCFSC during such taxable year.
If it is determined that there is a net Federal Income Tax cost to the CalComp
Technology Consolidated Group resulting from such transactions, either CalComp
Technology 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 CalComp Technology,
Lockheed Martin shall refund to CalComp Technology 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 CalComp Technology 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
CalComp Technology 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 CalComp Technology Consolidated Group
ceases to be included in the Combined Consolidated Group, a Pro Forma CalComp
Technology 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
CalComp Technology an amount equal to the refund that would be attributable
thereto (including interest thereon). Pro Forma CalComp Technology
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<PAGE>
Returns under this Section shall be prepared by CalComp Technology, and shall be
subject to review and approval by Lockheed Martin, such approval not to be
unreasonably withheld. After the CalComp Technology 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
CalComp Technology 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 CalComp Technology
Consolidated Group ceases to be a member of both the CalComp Technology
Consolidated Group and the Combined Consolidated Group, such member 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 CalComp Technology Consolidated Group ceases to be a member of
both the CalComp Technology 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
CalComp Technology Consolidated Group and the Combined Consolidated Group,
whether or not the CalComp Technology 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 CalComp Technology Consolidated
Group issue, a corresponding adjustment shall be made to such item and to
CalComp Technology's Consolidated Group Federal Income Tax Liability reflected
on the applicable Pro Forma Return. Within 10 days after any such adjustment is
finally determined, CalComp Technology shall pay to Lockheed Martin any increase
in the CalComp Technology 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 CalComp Technology any reduction in
the CalComp Technology Federal Income Tax Liability as a result of such
adjustment plus interest, as the case may be.
-8-
<PAGE>
ARTICLE IV
INTEREST
--------
Interest required to be paid by or to CalComp Technology 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
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 CalComp
Technology 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 CalComp Technology 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.
-9-
<PAGE>
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 CalComp Technology
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
CalComp Technology or any other member sufficient to disaffiliate CalComp
Technology 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.
(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 CalComp Technology 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 CalComp Technology 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:
-10-
<PAGE>
TO CALCOMP TECHNOLOGY:
CalComp Technology, Inc.
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
-11-
<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:/s/ ARNOLD CHIET
----------------
Arnold Chiet
Vice President and
General Tax Counsel
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation
By:/s/ MICHAEL S. BENNETT
----------------------
Michael S. Bennett
President and Chief Executive
Officer
-12-
<PAGE>
EXHIBIT 10.5
EXECUTION COPY
================================================================================
REVOLVING CREDIT AGREEMENT
Dated as of July 23, 1996
between
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation,
as Borrower
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation,
as Lender
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<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>
<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
</TABLE>
(ii)
<PAGE>
REVOLVING CREDIT AGREEMENT
--------------------------
REVOLVING CREDIT AGREEMENT, dated as of July 23, 1996, between CALCOMP
TECHNOLOGY, INC., 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 $28,000,000, as such amount may be reduced from
time to time pursuant to Section 2.7 hereof.
"Consolidated" refers to the results obtained by the consolidation of
the accounts of the Borrower and its Subsidiaries in accordance with Generally
Accepted Accounting Principles.
"Consolidated Subsidiaries" means the Subsidiaries of Borrower which
are consolidated with Borrower for financial reporting purposes.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all liabilities of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (vi) all Debt of others
Guaranteed by such Person and (vii) all obligations of such Person (contingent
or otherwise) in respect of letters of credit and banker's acceptances.
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time, or both, would
become an Event of Default.
-2-
<PAGE>
"Depreciation and Amortization Expense" means all amounts reported by
the Borrower in its Consolidated financial statements as expense for
depreciation, depletion and amortization, plus amortization of goodwill and
intangibles, during the relevant period.
"Dollars" and the sign "$" 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
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
-3-
<PAGE>
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 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
-4-
<PAGE>
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
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, waste, substance or material within the
meaning of the Environmental Laws.
-5-
<PAGE>
"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
the lesser of the value of such property or assets or the amount
of the obligation so secured.
-6-
<PAGE>
"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.
"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
-7-
<PAGE>
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 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
-8-
<PAGE>
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 July 23, 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).
"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
-9-
<PAGE>
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) 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
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<PAGE>
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 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
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<PAGE>
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.
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
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<PAGE>
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.
(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.
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<PAGE>
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
(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.
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<PAGE>
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:
(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
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<PAGE>
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 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
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<PAGE>
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.
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.
-17-
<PAGE>
(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 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
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<PAGE>
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.
SECTION 5. AFFIRMATIVE COVENANTS.
---------------------
So long as the Lender's commitment to make Loans hereunder shall be in
effect or any amount payable hereunder
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<PAGE>
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;
(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
-20-
<PAGE>
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;
(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
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<PAGE>
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.
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.
-22-
<PAGE>
(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
(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
----
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<PAGE>
(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;
(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;
-24-
<PAGE>
(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.
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
-25-
<PAGE>
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
(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;
-26-
<PAGE>
(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 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:
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<PAGE>
(i) if to the Borrower, to it at:
CalComp Technology, Inc.
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 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.
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<PAGE>
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.
(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
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<PAGE>
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:/s/ WALTER E. SKOWRONSKI
------------------------
Walter E. Skowronski
Treasurer
CALCOMP TECHNOLOGY, INC.
By:/s/ DAVID G. OSOWSKI
--------------------
David G. Osowski
Senior Vice President,
Controller and Treasurer
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<PAGE>
SCHEDULE 4.12
-------------
ERISA Affiliates
----------------
Plans
-----
S-1
<PAGE>
EXHIBIT 10.6
EXECUTION COPY
================================================================================
CORPORATE AGREEMENT
Dated as of July 23, 1996
between
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation
and
LOCKHEED MARTIN CORPORATION,
a Maryland corporation
===============================================================================
<PAGE>
CORPORATE AGREEMENT
-------------------
THIS CORPORATE AGREEMENT ("Agreement") is entered into as of July 23,
1996, by and between LOCKHEED MARTIN CORPORATION, a Maryland corporation
("Lockheed Martin"), and CALCOMP TECHNOLOGY, INC., a Delaware corporation
("CalComp Technology").
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 19th day of March, 1996, as amended
(the "Reorganization Agreement"), by and among Summagraphics Corporation
("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 CalComp Technology 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 CalComp Technology be independent
directors, and (iii) certain representations, warranties, covenants and
agreements applicable to CalComp Technology 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 CalComp Technology owned by the Lockheed Martin Entities that (i) was owned
on the date hereof, plus (ii) shares of Common Stock of CalComp Technology
----
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 CalComp Technology 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 CalComp Technology.
"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 CalComp Technology,
shall also include any other entity affiliated with Lockheed Martin or CalComp
Technology, as the case may be, that Lockheed Martin and CalComp Technology may
hereafter agree in writing shall be treated as a "Subsidiary" for the purposes
of this Agreement.
-2-
<PAGE>
"CalComp Technology" has the meaning ascribed thereto in the preamble
hereto.
"CalComp Technology Entities" means CalComp Technology 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. CalComp Technology 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 CalComp Technology is comprised of persons designated by Lockheed
Martin.
2.2. Independent Directors. CalComp Technology 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 CalComp Technology 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, CalComp Technology 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) CalComp Technology 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 CalComp
Technology 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
CalComp Technology, including, but not limited to, the incurrence by CalComp
Technology 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, CalComp Technology covenants and agrees
that it will not, and it will not permit any CalComp Technology 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 CalComp Technology 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
CalComp Technology 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, CalComp Technology 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
CalComp Technology Entities (each, a "Plan") which was adopted, contributed to
or maintained by CalComp Technology or any CalComp Technology Entities during
the fiscal quarter immediately preceding the date of such list and shall
separately identify each Plan for which CalComp Technology 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, CalComp Technology covenants and
-4-
<PAGE>
agrees that it will not, without the prior written consent of Lockheed 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 CalComp Technology's benefits obligations.
ARTICLE IV
MISCELLANEOUS
4.1. Limitation of Liability. Neither Lockheed Martin nor CalComp
-----------------------
Technology 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
CalComp Technology by any
-5-
<PAGE>
of 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 CalComp Technology, to:
CalComp Technology, Inc.
2411 W. LaPalma Avenue
Anaheim, California 92801
Attention: Gary R. Long, 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 CalComp Technology
------------------
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:/s/ PETER B. TEETS
------------------
Peter B. Teets
Vice President and President
and Chief Operating
Officer, Information &
Technology Services Sector
ATTEST:
______________________________
Secretary
CALCOMP TECHNOLOGY, INC.
[CORPORATE SEAL] By:/s/ MICHAEL S. BENNETT
----------------------
Michael S. Bennett
President and Chief Executive
Officer
ATTEST:
______________________________
Secretary
-8-
<PAGE>
EXHIBIT 10.7
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.
<PAGE>
(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.
<PAGE>
(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 options 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 10.8
CalComp Technology, Inc.
------------------------
MANAGEMENT INCENTIVE COMPENSATION PLAN
--------------------------------------
Approved July 23, 1996
ARTICLE I
---------
PURPOSE OF THE PLAN
-------------------
This plan is established to provide a further incentive to selected employees to
promote the success of CalComp Technology, Inc. by providing an opportunity to
receive additional compensation for above average performance measured against
individual and business unit goals. The Plan is intended to achieve the
following:
1. Improved cost effectiveness.
2. Stimulate employees to work individually and as teams to meet
objectives and goals consistent with enhancing shareholders
values.
3. Facilitate the Company's ability to retain qualified employees
and to attract top executive talent.
ARTICLE II
----------
STANDARD OF CONDUCT AND PERFORMANCE EXPECTATION
-----------------------------------------------
1. It is expected that the business and individual goals and
objectives established for this Plan will be accomplished in
accordance with the Company's policy on ethical conduct in
business with the Government and all other customers. It is a
prerequisite before any award can be considered that a
participant will have acted in accordance with the CalComp
Technology, Inc. Code of Ethics and Business Conduct and
fostered an atmosphere to encourage all employees acting under
the participants' supervision to perform their duties in
accordance with the highest ethical standards. Ethical behavior
is imperative. Thus, in achieving one's goals, their individual
commitment and adherence to the Company's ethical standards will
be considered paramount in determining awards under this Plan.
2. Plan participants whose individual performance is determined to
be less than acceptable are not eligible to receive incentive
awards.
1
<PAGE>
ARTICLE III
-----------
DEFINITIONS
-----------
1. ANNUAL SALARY -- The regular base salary of a Participant during
a fiscal year of the Company, determined by multiplying by 52
the Participant's weekly base salary rate effective during the
first full pay period in December preceding the year of payment,
but excluding any incentive compensation, commissions, over-time
payments, payments under work-week plan, indirect payments,
retroactive payments not affecting the base salary or applicable
to the current year, and any other payments of compensation of
any kind.
2. BOARD OF DIRECTORS -- The Board of Directors of the Company.
3. COMMITTEE -- The Compensation Committee of the Board of
Directors as from time to time appointed or constituted by the
Board of Directors.
4. COMPANY -- CalComp Technology, Inc. and its Subsidiaries.
5. EMPLOYEE -- Any person who is employed by the Company and who is
paid a salary as distinguished from an hourly wage. The term
shall be deemed to include any person who was employed by the
Company during all or any part of the year with respect to which
an appropriation is made to the Plan by the Board of Directors
but shall not include any employee who, during any part of such
year, was represented by a collective bargaining agent.
6. PARTICIPANT -- Any Employee selected to participate in the Plan
in accordance with its terms.
7. PLAN -- This CalComp Technology, Inc. Management Incentive
Compensation Plan (MICP).
ARTICLE IV
----------
ELIGIBILITY FOR PARTICIPATION
-----------------------------
Those Employees who through their efforts are able to contribute significantly
to the success of the Company in any given calendar year will be considered
eligible for selection for participation in the Plan with respect to that year.
Participants are selected each plan year based on recommendations by the Company
President or Company function head. Those eligible shall include all Employees
considered by the Committee to be key Employees of the Company. No member of
the Committee shall be eligible for participation in the plan.
2
<PAGE>
ARTICLE V
---------
INCENTIVE COMPENSATION PAYMENTS
-------------------------------
1. CALCULATION OF PAYMENTS -- Incentive compensation payments to
Participants shall be calculated in accordance with the formula
and procedures set forth in Exhibit A hereto. All such
payments shall be in cash.
2. INDIVIDUAL PERFORMANCE FACTORS - The Individual Performance
Factors of Participants, as provided in Exhibit A shall be
determined by the Company President or Company function head.
The performance factors of the President of CalComp Technology,
Inc. shall be determined by the Committee and the Committee
shall review the Individual Performance Ratings of other
Participants who are elected officers of the Company. The
Committee may at the request of any member of the Committee
review the performance ratings of any other Participant or
groups of Participants. The Committee may make adjustments in
any such performance factors as it considers appropriate.
3. COMPANY FACTORS - The company factors as provided for in Exhibit
A, shall be determined by the Board of Directors and shall
thereafter be reviewed with and be subject to the approval of
the Committee. The Committee may make adjustments in any such
factor as it considers appropriate. The Board of Directors
shall, as soon as feasible in each year, review with the
Committee the company objectives which may relate to the
determination of such company factors.
4. RECOMMENDATION BY THE COMMITTEE.
A. As early as feasible after the end of each year in
respect of which incentive compensation payments are to
be made, the Committee shall establish an incentive fund
which shall be equal to a percentage, to be determined
by the Committee at that time, to the Company's pretax
earnings for the year in which incentive compensation
payments are to be made. For purposes of the Plan,
pretax earnings shall (i) consist of pretax earnings
from operations; (ii) shall not include any earnings
attributable to extraordinary items as determined by
generally accepted accounting principles; and (iii)
shall be computed prior to the deduction of incentive
compensation payments to be paid under the Plan.
3
<PAGE>
B. To the extent that the aggregate of all proposed
payments of incentive compensation to all Participants
as determined by the application of the formula set
forth in Exhibit A (subject to any adjustments made by
the Committee under Paragraph 2 or 3 above) exceeds the
amount of the incentive fund as determined under
Paragraph 4.A. above, all proposed payments of incentive
compensation to Participants shall be reduced on a
prorata basis.
C. If the Company's pretax earnings, as defined in
Paragraph 4A, are less than the aggregate of all
proposed payments of incentive compensation (as
determined by the application of the formula set forth
in Exhibit A subject to 2 or 3 above), the Committee
may, in its discretion, establish an incentive fund
without regard to the pretax earnings guideline of
Paragraph 4A. If the Committee does so, Paragraph 4B
shall not apply and the Committee's recommendation to
the Board of Directors shall both state that the pretax
earnings would be exceeded and set forth the reasons the
Committee believes that the proposed incentive
compensation payments should nevertheless be made.
D. The Committee will recommend to the Board of Directors
the authorization of an appropriation to the Plan by the
Company for distribution to Participants in an amount
equal to the incentive fund as computed pursuant to the
provisions of this Paragraph 4.
5. APPROPRIATIONS TO THE PLAN - The Board of Directors may,
notwithstanding any provision of the Plan, make adjustments in
proposed incentive compensation payment under the Plan, and
subject to any such adjustments, the Board of Directors will
appropriate to the Plan the amount as recommended by the
Committee for distribution to the Participants; provided that,
the Board of Directors may appropriate an amount which is less
than the amount recommended by the Committee in which event all
proposed payments of incentive compensation to Participants
shall be reduced on a prorata basis.
6. METHOD OF PAYMENT - The amount so determined for each
Participant with respect to each calendar year shall be paid to
such Participant in full or on a deferred basis as determined by
the Committee. Such determination as to deferred payments shall
be governed by the Committee's judgement as to the time of
payment best serving the interests of the Company. Deferred
payments shall be made pursuant to such terms and conditions, as
may be determined or provided for the by the Committee, only to
Participants who continue in the employ of the Company or are
retired under a retirement plan approved by the Board of
Directors, or to the estates of, or beneficiaries designated by,
Participants who shall have died while in such employ or after
such retirement. In the event of termination of employment by a
Participant for any reason other than such retirement or death,
then such participant
4
<PAGE>
or his estate or his beneficiary or beneficiaries, shall after
such termination receive a distribution or distributions of any
amounts deferred by the Committee, if any, the amount (not in
excess of the unpaid deferred payments) and time of which shall
be determined or provided for by the Committee. Participants may
also elect to defer payments to the extent provided in the
CalComp Technology, Inc. Deferred Management Incentive Plan.
7. RIGHTS OF PARTICIPANTS - All payments are subject to the
discretion of the Board of Directors. No Participant shall have
any right to require the Board of Directors to make any
appropriation to the Plan for any calendar year, nor shall any
Participant have any vested interest or property right in any
share in any amounts which may be appropriated to the Plan.
Payments made under the Plan and distributed to Participants
shall not be recoverable from the Participant by the Company.
ARTICLE VI
----------
ADMINISTRATION
--------------
The Plan shall be administered under the direction of the Committee. The
Committee shall have the right to construe the Plan, to interpret any provision
thereof, to make rules and regulations relating to the Plan, and to determine
any factual question arising in connection with the Plan's operation after such
investigation or hearing as the Committee may deem appropriate. Any decision
made by the Committee under the provisions of the Article shall be conclusive
and binding on all parties concerned. The Committee may delegate to the
officers or employees of the Company the authority to execute and deliver those
instruments and documents, to do all acts and things, and to take all other
steps deemed necessary, advisable or convenient for the effective administration
of this MICP Plan in accordance with its terms and purpose.
ARTICLE VII
-----------
AMENDMENT OR TERMINATION OF PLAN
--------------------------------
The Board of Directors shall have the right to terminate or amend this Plan at
any time and to discontinue further appropriations thereto.
5
<PAGE>
ARTICLE VIII
------------
EFFECTIVE DATE
--------------
The Plan shall be effective with respect to the operations of the Company for
the year 1996 and the years subsequent thereto. A participant who receives an
award from this Plan is no longer eligible for any incentive compensation
payment from any similar plan which may have been administered by the Lockheed
Corporation, Martin Marietta Corporation, or the Lockheed Martin Corporation.
6
<PAGE>
EXHIBIT A
CALCULATION OF MANAGEMENT INCENTIVE COMPENSATION PAYMENTS
A. AWARD FORMULA
-------------
1. Incentive compensation payments will be calculated by
multiplying the Participant's Annual Salary by the applicable
"target" of the Participant's position (as defined in B), and
that result will then be multiplied by the Individual
Performance Factor (as defined in C). The resulting award will
be increased or decreased proportionately based on the
appropriate Company Factor (as defined in D).
2. Partial awards for Participants who terminate employment during
a Plan Year may be recommended for consideration based on the
following at the discretion of the Company President and
subsequent approval of the Board of Directors.
Termination Method MICP Award
Voluntary May be considered for an award if on active
status January 2 of the following Plan Year with
a minimum of six (6) full months as an active
Plan Participant during the Plan Year.
Lay Off May be pro-rated based on the conditions of the
case with a minimum of six (6) full months as an
active Plan Participant during the Plan Year.
Retirement May be considered for a pro-rated award with a
minimum of six (6) full months as an active
Participant during the Plan Year and the
Participant goes directly into retirement status
upon termination.
3. The aggregate of all Participant's Incentive Awards determined
under items C and D below will be recommended to the Committee
for its consideration.
4. Any calculation of incentive awards under this exhibit shall be
subject to the provisions of the Plan and in the event of any
conflict between the terms or application of this Exhibit A and
the Plan, the Plan shall prevail.
7
<PAGE>
B. TARGET LEVELS
-------------
Target levels are based on the level of importance and
responsibility of the position in the organization as determined
by the Company President or the Board of Directors, as
appropriate.
<TABLE>
<CAPTION>
Position Target
-------- ------
<S> <C>
President 45%
Designated Officers 40%
Other Eligible Positions 30%
20%
</TABLE>
* Requires Board of Directors' approval
C. INDIVIDUAL PERFORMANCE FACTORS
------------------------------
Individual performance factors are normally in increments of 0.10 and
will have the following definitions:
<TABLE>
<CAPTION>
Factor Definition
------ ----------
<S> <C>
1.30 - 1.40 Performance vastly superior to expectations and
peers within the organization.
1.10 - 1.20 Consistently exceeds expected performance.
1.00 Consistently meets all requirements and
expectations.
0.80 - 0.90 Performance meets most, but not all job
requirements and expectations.
0.60 - 0.70 Performance meets some objectives, but overall
performance below expected levels.
0.00 Performance fails to meet job requirements.
</TABLE>
D. COMPANY PERFORMANCE FACTORS
---------------------------
1. Specific objectives will be established by the Board of
Directors and the rating will depend on the assessment of the
quality of performance by the Company in accomplishing the
objectives based on the following schedule:
1.30 On balance, far exceeded high performance expectations.
8
<PAGE>
1.10 - 1.20 Consistently exceeds high performance expectations.
1.00 Achieved all objectives or on balance met high
performance expectations.
0.75 Met most objectives. Overall performance was good, but
not as high as possible or expected.
0.50 Met few objectives, but overall performance not as good
as possible or expected.
0.00 Did not achieve sufficient overall performance level.
2. Intermediate company factors as deemed appropriate by the Board
of Directors for results achieved, may be assigned in increments
of 0.05.
9
<PAGE>
CALCOMP TECHNOLOGY INC. 1996 MANAGEMENT INCENTIVE
COMPENSATION PLAN
.Plan requires Board approval
.Key features of Plan:
-- Participants recommended by Company President
-- Awards based upon annualized December salary and approved in first
quarter of following year
-- Participant's assigned MICP Target Percent based upon position
. President 45%
. Elected Officers 40%
. Other Vice Presidents 30%
. Directors 20%
-- Performance Factors
. Each employee receives an Individual Performance Factor
(IPF) between 0.0 and 1.40
. Board will approve a Company Performance Factor
(CPF) between 0.0 and 1.30
-- Award Formula
. Base Salary times Target times IPF times CPF equals
recommended MICP award
. MICP = $100,000 x 0.40 x 1.10 x 0.90 = $39,600
MICP = Base Salary - $100,000
Target - 0.40
Individual Performance Factor - 1.10
Company Performance Factor - 0.90
. Individual award amounts may be adjusted up or down at the
discretion of the Board
<PAGE>
EXHIBIT 10.9
CalComp Technology, Inc.
------------------------
DEFERRED MANAGEMENT INCENTIVE
-----------------------------
COMPENSATION PLAN
-----------------
(Adopted July 23, 1996)
ARTICLE I
---------
PURPOSES OF THE PLAN
--------------------
The purposes of the CalComp Technology, Inc. Deferred Management
Incentive Compensation Plan (the "Deferral Plan") are to provide certain key
management employees of CalComp Technology, Inc. and its subsidiaries (the
"Company") the opportunity to defer receipt of Incentive Compensation awards
under the CalComp Technology, Inc. Management Incentive Compensation Plan (the
"MICP"). Except as expressly provided hereinafter, the provisions of this
Deferral Plan and the MICP shall be construed and applied independently of each
other.
The Deferral Plan applies solely to MICP awards and expressly does not
apply to any special awards which may be made under any of the Company's other
incentive plans, except and to the extent specifically provided under the terms
of such other incentive plans and the relevant awards.
ARTICLE II
----------
DEFINITIONS
-----------
Unless the context indicates otherwise, the following words and phrases
shall have the meanings hereinafter indicated:
1. ACCOUNT -- The bookkeeping account maintained by the Company for
each Participant which is credited with the Participant's Deferred Compensation
and earnings (or losses), and which is debited to reflect distributions and
forfeitures.
2. ACCOUNT BALANCE -- The total amount credited to a Participant's
Account at any point in time.
3. AWARD YEAR -- The calendar year with respect to which an Eligible
Employee is awarded Incentive Compensation.
4. BENEFICIARY -- The person or persons (including a trust or trusts)
validly designated by a Participant on the form
-1-
<PAGE>
provided by the Company, to receive distributions of the Participant's Account
Balance if any, upon the Participant's death. In the absence of a valid
designation, or if the designated Beneficiary has predeceased the Participant,
the Beneficiary shall be the person or persons entitled by will or the laws of
descent and distribution to receive the amounts otherwise payable to the
Participant under this Deferral Plan; a Participant may amend his or her
Beneficiary designation at any time before the Participant's death.
5. BOARD -- The Board of Directors of CalComp Technology, Inc.
6. COMMITTEE -- The committee described in Section 1 of Article VIII.
7. COMPANY -- CalComp Technology, Inc. and its subsidiaries.
8. DEFERRAL AGREEMENT -- The written agreement executed by an Eligible
Employee on the form provided by the Company under which the Eligible Employee
elects to defer Incentive Compensation for an Award Year.
9. DEFERRED COMPENSATION -- The amount of Incentive Compensation
credited to a Participant's Account under the Deferral Plan for an Award Year.
10. DEFERRAL PLAN -- The CalComp Technology, Inc. Deferred Management
Incentive Compensation Plan, adopted by the Board on July 23, 1996.
11. ELIGIBLE EMPLOYEE -- An employee of the Company who is a
participant in the MICP and who has satisfied such additional requirements for
participation in this Deferral Plan as the Committee may from time to time
establish. In the exercise of its authority under this provision, the Committee
shall limit participation in the Plan to employees whom the Committee believes
to be a select group of management or highly compensated employees within the
meaning of Title I of the Employee Retirement Income Security Act of 1974 as
amended.
-2-
<PAGE>
12. INCENTIVE COMPENSATION -- The MICP amount granted to an employee
for an Award Year.
13. INTEREST -- The rate of return under which earnings will be
credited to a Participant's Account based on the interest rate applicable under
Cost Accounting Standard 415, Deferred Compensation.
14. MICP -- The CalComp Technology, Inc. Management Incentive
Compensation Plan.
15. PARTICIPANT -- An Eligible Employee for whom Incentive Compensation
has been deferred for one or more years under this Deferral Plan; the term
shall include a former employee whose Deferred Compensation has not been fully
distributed.
ARTICLE III
-----------
ELECTION OF DEFERRED AMOUNT
---------------------------
1. Timing of Deferral Elections. An Eligible Employee may elect to
----------------------------
defer Incentive Compensation for an Award Year by executing and delivering to
the Company a Deferral Agreement no later than September 15 of the Award Year or
such other date established by the Committee for an Award Year that is not later
than September 30 of that Award Year. An employee who first qualifies as an
Eligible Employee after September 15 of an Award Year may elect to defer
Incentive Compensation for that Award Year by entering into a Deferral Agreement
up to thirty (30) days after the date on which such employee first becomes a
participant in the MICP. An Eligible Employee's Deferral Agreement shall be
irrevocable when delivered to the Company. Each Deferral Agreement shall apply
only to amounts deferred in that Award Year and a separate Deferral Agreement
must be completed for each Award Year for which an Eligible Employee defers
Incentive Compensation.
-3-
<PAGE>
2. Amount of Deferral Elections. An Eligible Employee's deferral
----------------------------
election may be stated as:
(A) a dollar amount which is at least $5,000 and is an even
multiple of $1,000,
(B) the greater of $5,000 or a designated percentage of the
Eligible Employee's Incentive Compensation (adjusted to the next highest
multiple of $1,000),
(C) the excess of the Eligible Employee's Incentive
Compensation over a dollar amount specified by the Eligible Employee
(which must be an even multiple of $1,000), or
(D) all of the Eligible Employee's Incentive Compensation.
An Eligible Employee's deferral election shall be effective only if the
Participant is awarded at least $10,000 of Incentive Compensation for that Award
Year, and, in the case of a deferral election under paragraph (c) of this
Section 2, only if the resulting excess amount is at least $5,000.
3. Effect of Taxes on Deferred Compensation. The amount that
----------------------------------------
would otherwise be deferred and credited to an Eligible Employee's Account will
be reduced by the amount of any tax that the Company is required to withhold
with respect to the Deferred Compensation.
ARTICLE IV
----------
CREDITING OF ACCOUNTS
---------------------
1. Crediting of Deferred Compensation. Incentive Compensation that
----------------------------------
has been deferred hereunder shall be credited to a Participant's Account as of
the day on which the Incentive Compensation would have been paid to the
Participant if no Deferral Agreement had been made.
2. Crediting of Earnings. Earnings shall be credited to a
---------------------
Participant's Account beginning with the day as of which Deferred Compensation
is credited to the Participant's Account. Any amount distributed from a
Participant's Account shall be
-4-
<PAGE>
credited with earnings through the last day of the month preceding the month in
which a distribution is made. The earnings credited shall be determined as
follows: The Participant's Account shall be credited with interest, compounded
monthly, at a rate equivalent to the then published rate for computing the
present value of future benefits at the time cost is assignable under Cost
Accounting Standard 415, Deferred Compensation, as determined by the Secretary
of the Treasury on a semi-annual basis pursuant to Pub. L. 92-41, 85 Stat. 97.
ARTICLE V
---------
PAYMENT OF BENEFITS
-------------------
1. General. The Company's liability to pay benefits to a
-------
Participant or Beneficiary under this Deferral Plan shall be measured by and
shall in no event exceed the Participant's Account Balance. Except as otherwise
provided in this Deferral Plan, a Participant's Account Balance shall be paid to
him in accordance with the Participant's elections under Sections 2 and 3 of
this Article, and such elections shall be continuing and irrevocable. All
benefit payments shall be made in cash and, except as otherwise provided, shall
be debited against the Participant's Account Balance at the end of the month
preceding the date of distribution.
2. Election for Commencement of Payment. At the time a
------------------------------------
Participant first completes a Deferral Agreement, he or she shall elect from
among the following options governing the date on which the payment of benefits
shall commence:
(A) Payment to begin on or about the January 15th or
July 15th next following the date of the Participant's
termination of employment with the Company for any
reason.
(B) Payment to begin on or about January 15th of the
year next following the year in which the Participant
terminates employment with the Company for any reason.
-5-
<PAGE>
(C) Payment to begin on or about the January 15th or
July 15th next following the date on which the
Participant has both terminated employment with the
Company for any reason and attained the age designated
by the Participant in the Deferral Agreement.
3. Election for Form of Payment. At the time a Participant first
----------------------------
completes a Deferral Agreement, he or she shall elect the form of payment of his
or her Account Balance from among the following options:
(A) A lump sum.
(B) Annual payments for a period of years designated
by the Participant which shall not exceed fifteen (15).
The amount of each annual payment shall be determined by
dividing the Participant's Account Balance at the end of
the month prior to such payment by the number of years
remaining in the designated installment period. The
installment period may be shortened, in the sole
discretion of the Committee, if the Committee at any
time determines that the amount of the annual payments
that would be made to the Participant during the
designated installment period would be too small to
justify the maintenance of the Participant's Account and
the processing of payment.
4. Prospective Change of Payment Elections. At the time of
---------------------------------------
entering into a Deferral Agreement for an Award Year, a Participant may modify
his payment elections under Sections 2 and 3 with respect to the portion of his
or her Account allocable to the amounts to be deferred for that Award Year and
subsequent Award Years. If a Participant has different payment elections in
effect, the Company shall maintain sub-accounts for the Participant to determine
the amounts subject to each payment election; no modification of payment
elections will be accepted if it would require the Company to maintain more than
three (3) sub-accounts within the Participant's Account in order to make
payments in accordance with the Participant's elections.
5. Acceleration upon Early Termination. Notwithstanding a
-----------------------------------
Participant's payment elections under Sections
-6-
<PAGE>
2 and 3, if the Participant terminates employment with the Company other than by
reason of layoff, death or disability and before the Participant is eligible to
commence receiving retirement benefits under a pension plan maintained by the
Company (or before the Participant has attained age 55 if the Participant does
not participate in such a pension plan), the Participant's Account Balance shall
be distributed to him or her in a lump sum on or about the January 15th or July
15th next following the date of the Participant's termination of employment with
the Company.
6. Death Benefits. Upon the death of a Participant before a
--------------
complete distribution of his or her Account Balance, the Account Balance will be
paid to the Participant's Beneficiary in accordance with the payment elections
applicable to the Participant. If a Participant dies while actively employed or
otherwise before the payment of benefits has commenced, payments to the
Beneficiary shall commence on the date payments to the Participant would have
commenced, taking account of the Participant's termination of employment (by
death or before) and, if applicable, by postponing commencement until after the
date the Participant would have attained the commencement age specified by the
Participant. Whether the Participant dies before or after the commencement of
distributions, payments to the Beneficiary shall be made for the period or
remaining period elected by the Participant.
7. Early Distributions in Special Circumstances. Notwithstanding
--------------------------------------------
a Participant's payment elections under Sections 2 and 3 of this Article V, a
Participant or Beneficiary may request an earlier distribution in the following
limited circumstances:
(a) Hardship Distributions. The Committee shall
----------------------
have the power and discretion at any time to approve a payment to a
Participant if the Committee determines that the Participant is
suffering from a serious financial emergency caused by circumstances
beyond the Participant's control which would cause a hardship to the
Participant unless such payment were made. Any such hardship payment
will be in a lump sum and will not exceed the lesser of (i) the amount
necessary to satisfy the financial emergency (taking account of the
income tax liability associates with the distribution), or (ii) the
Participant's Account Balance.
-7-
<PAGE>
(b) Withdrawal with Forfeiture. A Participant may
--------------------------
elect at any time to withdraw ninety percent (90%) of the amount
credited to the Participant's Account. If such a withdrawal is made,
the remaining ten percent (10%) of the Participant's Account shall be
permanently forfeited, and the Participant will be prohibited from
deferring any amount under the Deferral Plan for the Award Year in which
the withdrawal is received (or the first Award Year in which any portion
of the withdrawal is received).
(c) Death or Disability. In the event that a
-------------------
Participant dies or becomes permanently disabled before the
Participant's entire Account Balance has been distributed, the
Committee, in its sole discretion, may modify the timing of
distributions from the Participant's Account, including the
commencement date and number of distributions, if it concludes that such
modification is necessary to relieve the financial burdens of the
Participant or Beneficiary.
8. Acceleration upon Change in Control.
-----------------------------------
(a) Notwithstanding any other provision of the
Deferral Plan, the Account Balance of each Participant shall be
distributed in a single lump sum within fifteen (15) calendar
days following a "Change in Control."
(b) For purposes of this Deferral Plan, a Change
in Control shall include and be deemed to occur upon the
following events:
(1) A tender offer or exchange offer is
consummated for the ownership of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding voting securities entitled to vote
in the election of directors of the Company.
(2) The Company is merged, combined,
consolidated, recapitalized or otherwise reorganized with one or
more other entities that are not Subsidiaries and, as a result
of the
-8-
<PAGE>
merger, combination, consolidation, recapitalization or other
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 Company (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).
(3) 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).
(4) The stockholders of the Company approve
a plan of liquidation and dissolution or the sale or transfer
of substantially all of the Company's business and/or assets as
an entirety to an entity that is not a Subsidiary.
(c) The Committee may cancel or modify this Section
8 at any time prior to a Change in Control. In the event of a
Change in Control, this Section 8 shall remain in force and
effect, and shall not be subject to cancellation or modification
for a period of five years, and any defined term used in Section
8 shall not, for purposes of Section 8, be subject to
cancellation or modification during the five year period.
-9-
<PAGE>
(9) Deductibility of Payments. In the event that the payment of
-------------------------
benefits in accordance with the Participant's elections under Sections 2 and 3
would prevent the Company from claiming an income tax deduction with respect to
any portion of the benefits paid, the Committee shall have the right to modify
the timing of distributions from the Participant's Account as necessary to
maximize the Company's tax deductions. In the exercise of its discretion to
adopt a modified distribution schedule, the Committee shall undertake to have
distributions made at such times and in such amounts as most closely approximate
the Participant's elections, consistent with the objective of maximum
deductibility for the Company. The Committee shall have no authority to reduce a
Participant's Account Balance or to pay aggregate benefits less than the
Participant's Account Balance in the event that all or a portion thereof would
not be deductible not by the Company.
(10) Change of Law. Notwithstanding anything to the contrary herein,
-------------
if the Committee determines in good faith, based on consultation with counsel,
that the federal income tax treatment or legal status of the Plan has or may be
adversely affected by a change in the Internal Revenue Code, Title I of the
Employee Retirement Income Security Act of 1974, or other applicable law or by
an administrative or judicial construction thereof, the Committee may direct
that the Accounts of affected Participants or of all Participants be distributed
as soon as practicable after such determination is made, to the extent deemed
necessary or advisable by the Committee to cure or mitigate the consequences, or
possible consequences of, such change in law or interpretation thereof.
(11) Tax Withholding. To the extent required by law, the Company
---------------
shall withhold from benefit payments hereunder, or with respect to any Incentive
Compensation deferred hereunder, any Federal, state, or local income or payroll
taxes required to be withheld and shall furnish the recipient and the applicable
government agency or agencies with such reports, statements, or information as
may be legally required.
-10-
<PAGE>
ARTICLE VI
----------
EXTENT OF PARTICIPANTS' RIGHTS
------------------------------
1. Unfunded Status of Plan. This Deferral Plan constitutes a mere
-----------------------
contractual promise by the Company to make payments in the future, and each
Participant's rights shall be those of a general, unsecured creditor of the
Company. No Participant shall have any beneficial interest in any specific
assets that the Company may hold or set aside in connection with this Deferral
Plan. Notwithstanding the foregoing, to assist the Company in meeting its
obligations under this Deferral Plan, the Company may set aside assets in a
trust described in Revenue Procedure 92-64, 1964-2 C.B. 44, and the Company may
direct that its obligations under this Deferral Plan be satisfied by payments
out of such trust. The assets of any such trust will remain subject to the
claims of the general creditors of the Company. It is the Company's intention
that the Plan be unfunded for Federal income tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
2. Nonalienability of Benefits. A Participant's rights under this
---------------------------
Deferral Plan shall not be assignable or transferable and any purported
transfer, assignment, pledge or other encumbrance or attachment of any payments
or benefits under this Deferral Plan, or any interest therein shall not be
permitted or recognized, other than the designation of, or passage of payment
rights to, a Beneficiary.
ARTICLE VII
-----------
AMENDMENT OR TERMINATION
------------------------
1. Amendment. The Board may amend, modify, suspend or discontinue
---------
this Deferral Plan at any time subject to any shareholder approval that may be
required under applicable law, provided, however, that no such amendment shall
have the effect of reducing a Participant's Account Balance or postponing the
time when a Participant is entitled to received a distribution of his Account
Balance. Further, no amendment may alter the formula for crediting interest to
Participant's Accounts with respect to amounts for which deferral elections have
previously been made, unless the amended formula is not less favorable to
Participants than that previously in effect, or unless each affected Participant
consents to such change.
-11-
<PAGE>
2. Termination. The Board reserves the right to terminate this
-----------
Plan at any time and to pay all Participants their Account Balances in a lump
sum immediately following such termination or at such time thereafter as the
Board may determine.
ARTICLE VIII
------------
ADMINISTRATION
--------------
1. The Committee. This Deferral Plan shall be administered by a
-------------
Committee of Board Members who are not eligible to participate in the Plan. The
members of the Committee shall be designated by the Board. A majority of the
members of the Committee (but not fewer that 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. The Committee shall have
full authority to interpret the Plan, and interpretations of the Plan by the
Committee shall be final and binding on all parties.
2. Delegation and Reliance. The Committee may delegate to the
-----------------------
officers or employees of the Company the authority to execute and deliver those
instruments and documents, to do all acts and things, and to take all other
steps deemed necessary, advisable or convenient for the effective administration
of this Deferral Plan in accordance with its terms and purpose. In making any
determination or in taking or not taking any action under this Deferral Plan,
the Committee may obtain and rely upon the advice of experts, including
professional advisors to the Company. No member of the Committee or officer of
the Company who is a Participant hereunder may participate in any decision
specifically relating to his or her individual rights or benefits under the
Deferral Plan.
3. Exculpation and Indemnity. Neither the Company nor any member
-------------------------
of the Board or of the Committee, nor any other person participating in any
determination of any question under this Deferral Plan, or in the
interpretation, administration or application thereof, shall have any liability
to any party for any action taken or not taken in good faith under this Deferral
Plan or for the failure of the Deferral Plan or any Participant's rights under
the Deferral Plan to achieve intended tax consequences, or to comply with any
other law, compliance with which is not required on the part of the Company.
-12-
<PAGE>
4. Facility of Payment. If a minor, person declared incompetent,
-------------------
or person incapable of handling the disposition of his or her property is
entitled to receive a benefit, make an application, or make an election
hereunder, the Committee may direct that such benefits be paid to, or such
application or election be made by, the guardian, legal representative, or
person having the care and custody of such minor, incompetent, or incapable
person. Any payment made, application allowed, or election implemented in
accordance with this Section shall completely discharge the Company and the
Committee from all liability with respect thereto.
5. Proof of Claims. The Committee may require proof of the death,
---------------
disability, incompetency, minority, or incapacity of any Participant or
Beneficiary and of the right of a person to receive any benefit or make any
application or election.
6. Claim Procedures. The procedures when a claim under this Plan
----------------
is denied by the Committee are as follows:
(A) The Committee shall:
(i) notify the claimant within a reasonable
time of such denial, setting forth the
specific reasons therefore; and
(ii) afford the claimant a reasonable
opportunity for a review of the decision.
(B) The notice of such denial shall set forth,
in addition to the specific reasons for the denial, the
following:
(i) identification of pertinent provisions
of this Plan;
(ii) such additional information as may be
relevant to the denial of the claim; and
(iii) an explanation of the claims review
procedure and advice that the claimant may
request an opportunity to
-13-
<PAGE>
submit a statement of issues and comments.
(C) Within sixty days following advice of denial of
a claim, upon request made by the claimant, the
Committee shall take appropriate steps to review its
decision in light of any further information or comments
submitted by the claimant. The Committee may hold a
hearing at which the claimant may present the basis of
any claim for review.
(D) The Committee shall render a decision within a
reasonable time (not to exceed 120 days) after the
claimant's request for review and shall advise the
claimant in writing of its decision, specifying the
reasons and identifying the appropriate provisions of
the Plan.
ARTICLE IX
----------
GENERAL AND MISCELLANEOUS PROVISIONS
------------------------------------
1. Neither this Deferral Plan nor a Participant's Deferral
Agreement, either singly of collectively, shall in any way obligate the Company
to continue the employment of a Participant with the Company, nor does either
this Deferral Plan or a Deferral Agreement limit the right of the Company at any
time and for any reason to terminate the Participant's employment. In no event
shall this Plan or a Deferral Agreement, either singly or collectively, by their
terms or implications constitute an employment contract of any nature whatsoever
between the Company and a Participant. In no event shall this Plan or a Plan
Agreement, either singly or collectively, by their terms or implications in any
way obligate the Company to award Incentive Compensation to any Eligible
Employee for any Award Year, whether or not the Eligible Employee is a
Participant in the Deferral Plan for that Award Year, nor in any other way limit
the right of the Company to change an Eligible Employee's compensation or other
benefits.
2. Incentive Compensation deferred under this Deferral Plan shall
not be treated as compensation for purposes of calculating the amount of a
Participant's benefits or
-14-
<PAGE>
contributions under any pension, retirement, or other plan maintained by the
Company, except as provided in such other plan.
3. Any written notice to the Company referred to herein shall be
made by mailing or delivering such notice to the Company at 2411 West LaPalma
Avenue, P.O. Box 3250, Anaheim, CA 92803 to the attention of the Director,
Human Resources. Any written notice to a Participant shall be made by delivery
to the Participant in person, through electronic transmission, or by mailing
such notice to the Participant at his or her place of residence or business
address.
4. In the event it should become impossible for the Company or the
Committee to perform any act required by this Plan, the Company or the Committee
may perform such other act as it in good faith determines will most nearly carry
out the intent and the purpose of this Deferral Plan.
5. By electing to become a Participant hereunder, each Eligible
Employee shall be deemed conclusively to have accepted and consented to all of
the terms of this Deferral Plan and all actions or decisions made by the
Company, the Board, or Committee with regard to the Deferral Plan.
6. The provisions of this Deferral Plan and the Deferral Agreements
hereunder shall be binding upon and inure to the benefit of the Company, its
successors, and its assigns, and to the Participants and their heirs, executors,
administrators, and legal representatives.
7. A copy of this Deferral Plan shall be available for inspection
by Participants or other persons entitled to benefits under the Plan at
reasonable times at the offices of the Company.
8. The validity of this Deferral Plan or any of its provisions
shall be construed, administered, and governed in all respects under and by the
laws of the State of Delaware, except as to matters of Federal law. If any
provisions of this instrument shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.
9. This Deferral Plan and its operation, including but not limited
to, the mechanics of deferral elections, the issuance of securities, if any, or
the payment of cash hereunder
-15-
<PAGE>
is subject to compliance with all applicable federal and state laws, rules and
regulations and such other approvals by any regulatory or governmental authority
as may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith.
10. At no time shall the cumulative amount of Incentive Compensation
deferred under this Deferral Plan by all Eligible Employees for all Award Years
exceed $50,000,000.
ARTICLE X
---------
EFFECTIVE DATE
--------------
This Deferral Plan was adopted by the Board on July 23, 1996 and became
effective upon adoption to awards of Incentive Compensation for the Company's
fiscal year ending December 31, 1996 and subsequent fiscal years.
-16-
<PAGE>
EXHIBIT 10.10
[LETTERHEAD OF LOCKHEED MARTIN]
MEMORANDUM
TO: G. R. Long
FROM: P. B. Teets
DATE: November 8, 1995
SUBJECT: Senior Executive Retirement Plan
- --------------------------------------------------------------------------------
This memorandum is to confirm our mutual agreement regarding the extension of
your employment to January 31, 1997 under the Sanders Supplemental Executive
Retirement Plan (SERP) provisions. This agreement will cancel your notice of
retirement as detailed in your November 1, 1995 letter.
Your employment will continue to January 31, 1997 and you will remain eligible
for the SERP benefits as follows:
. One year of salary continuation plus the average of the three prior
years' incentive compensation. During this salary continuation period,
all benefits and perquisites shall continue.
. Consulting arrangement (at 35% of base annual salary at retirement) for
a one year period following salary continuation.
. One time relocation benefit within one year of retirement.
At the end of the salary continuation period, the following retiree benefits
will continue:
. CalComp Retiree Medical Plan (if currently enrolled);
. CalComp Retiree Life Coverage of $3,000;
. Continuation of CalComp Dental Coverage for up to 18 months if elected
and premiums paid.
All other provisions of the Plan will remain the same. Please sign below if you
are in agreement.
/s/ Peter B. Teets /s/ Gary R. Long
--------------------- ------------------
Peter B. Teets Gary R. Long
President, Information & President
Technology Services Sector CalComp
<PAGE>
[LOGO OF CALCOMP]
A Lockheed Martin Company
2411 West La Palma Avenue
Anaheim, CA 92801
**FACSIMILE TRANSMISSION**
--------------------------
CONFIDENTIAL
TO: GARY MANN DATE: July 1, 1996
NO. OF PAGES: 1
FROM: GARY LONG FAX REPLY: (714) 821-2074
PHONE REPLY: (714) 821-2172
SUBJECT: RETIREMENT TO NOTIFICATION
The Sanders Early Retirement Program (SERP) requires a participant under the
plan to notify management of his intention to retire six months prior to the
planned retirement date. In order to meet that requirement, I am notifying you
of my intention to retire on January 31, 1997.
This is consistent with our discussion and the proxy. I acknowledge the
"handshake" agreement I have with you and Pete Teets concerning continuing
through calendar 1997, and it is my intention to meet this commitment. This
notification is to ensure that I meet the requirements of the SERP.
bjg
copy: Kevin Coleman
<PAGE>
EXHIBIT 10.11
[LETTERHEAD OF CALCOMP]
AGREEMENT
The following agreement is hereby made between
1. CalComp Inc., 2411 West La Palma Avenue, Anaheim, California 92801 USA,
represented by Mr. Gary Long, president of CalComp Inc.
2. CalComp GmbH, Hermann-Klammt-Strasse 1,41460 Neuss, Germany,
represented by its sole shareholder, CalComp Inc., the latter being
represented by Mr. Gary Long, president of CalComp Inc.
and
3. Mr. Winfried Rohloff, Im Wingert 19, 40699 Erkrath, Germany.
1.0 Mr. Rohloff is the managing director ("Geschaeftsfuehrer") of CalComp
GmbH and vice president, Europe, for the CalComp group. He carries out
his activities on the basis of the employment contract of December
1, 1987, together with the supplements of November 22, 1988; June
17, 1993; and August 23, 1994.
2.0 Mr. Rohloff is hereby appointed senior vice president for Worldwide
Marketing, Sales, and Service of CalComp Inc. This does not affect his
activities as managing director ("Geschaeftsfuehrer") and his employment
contract together with the supplements of November 22, 1988; June 17,
1993; and August 23, 1994; apart from the time restriction modifications
set out under point 4.0 of this agreement.
2.1 It is agreed that Mr. Rohloff will continue to perform activities on
behalf and to the benefit of the German GmbH. Mr. Rohloff will
therefore also spend, to a certain extent, working days with CalComp
GmbH in Neuss. Therefore, the appropriate split between CalComp GmbH and
CalComp Inc. of the remuneration payments to Mr. Rohloff has to be
determined. Insofar as the remuneration relates to CalComp GmbH and is
paid by CalComp GmbH, social security charges and wage taxes have to be
withheld.
2.2 CalComp GmbH shall continue to provide all other benefits and fulfill
all other obligations to which Mr. Rohloff is entitled in accordance
with the employment contract.
3.0 Along with the above mentioned appointment, the remuneration of Mr.
Rohloff per Section 3 of the employment contract from December 1, 1987,
will be increased to DM 372,484 for the annual base salary and to 40
percent of the annual base salary for the targeted Management Incentive
Compensation Plan award. For 1996, Mr. Rohloff will receive a bonus
payout of DM 146,014 (MICP and bonus).
Agreement:big Page 1 of 2 June 25, 1996
<PAGE>
4.0 Mr. Rohloff shall perform his activities for the CalComp group between
July 8, 1996, and June 30, 1997, primarily from Anaheim, California USA.
Upon completion of this temporary assignment period, with management
concurrence, Mr. Rohloff may choose to operate as senior vice president
for Worldwide Marketing, Sales, and Service from the CalComp office in
Neuss.
5.0 The guidelines for Mr. Rohloff's temporary assignment will be Lockheed
Martin Corporate Policy Statement 539. Exceptions from that will be
approved by Mr. Long.
6.0 Tax assistance will be provided to Mr. Rohloff through CalComp's agent,
presently Ernst & Young, under the provisions covered by the Lockheed
Martin policy as follows:
- Preassignment Consultation
- Tax Preparation
- Tax Protection
Anaheim: 6-25-96 Neuss: 6-25-96
---------------- -------------------
(date) (date)
/s/ Gary Long /s/ Gary Long
----------------------------- ------------------------------
Gary Long for CalComp Inc. Gary Long for CalComp GmbH
Erkrath: 6-25-96
------------------
(date)
/s/ Winfried Rohloff
-------------------------
Winfried Rohloff
Agreement:bjg Page 2 of 2 June 25, 1996
<PAGE>
[LETTERHEAD OF CALCOMP INC.]
June 25, 1996
Mr. Winfried Rohloff
Im Wingert 19
10699 Erkrath
GERMANY
Dear Mr. Rohloff:
RE: YOUR TEMPORARY ASSIGNMENT TO CALCOMP INC., ANAHEIM, CALIFORNIA USA
This letter confirms our discussion relative to the terms and conditions of your
assignment based on the following guidelines of Lockheed Martin Corporate Policy
Statement No. CPS-539 which states: "Lockheed Martin will compensate
employees for extraordinary and additional expenses incurred in preparation for,
while on, or in returning from a nondomestic assignment. It is the intent of
this CPS to provide guidelines and maximum reimbursement levels for certain
reasonable and necessary expenses in a manner that will minimize the financial
impact of out-of-pocket expenses while an employee is on such as assignment."
This policy has been applied as follows:
SPOUSE: CalComp Inc. will reimburse the costs of travel, lodging, and other
expense of your spouse associated with accompanying you or the cost of
transportation and other expenses associated with visitations by your spouse.
(Six round trips of business class travel not to exceed $5,000 each trip.)
FOREIGN SERVICE PREMIUM (FSP): You will be provided a 10 percent FSP during the
temporary assignment. This premium is intended to compensate you for leaving
familiar working and living conditions. The FSP will be calculated on your base
pay at the time of the assignment and will be adjusted each time the base salary
changes.
TRAVEL AND RELATED EXPENSES: For traveling to and from the temporary
assignment, you will be reimbursed reasonable and actual food, lodging, and
travel expenses from point of origin to the host location and return.
FOOD AND LODGING: For the duration of the temporary assignment, CalComp
will pay your lodging (not to exceed $2,000 a month), a per diem amount $38 a
day to you to cover food and other expenses, and a per diem amount of $25 a day
for your wife when she is visiting to cover food and other expenses.
VEHICLE: CalComp Inc. will provide a leased vehicle for you at the host
location (not to exceed $1,000 a month). You will be reimbursed for expenses
associated with the use of the vehicle.
<PAGE>
Mr. Winfried Rohloff Page 2 of 2 June 25, 1996
HOME COUNTRY HOUSING: You will be reimbursed for reasonable actual fees for
supervision of premises, nominal grounds maintenance, and increased insurance
premiums to the extent incremental to current costs.
RESIDENCE LOCATION FEES: CalComp will provide assistance in locating a
temporary residence with our approved vendor and pay related fees and reasonable
deposits.
PERSONAL EFFECTS: You will be reimbursed for the transportation of up to
1,500 pounds of personal effects to and from your nondomestic location via air
freight or surface transportation, as appropriate.
INOCULATIONS/PASSPORT: You will be reimbursed for all expenses involved in
securing required physical examinations, necessary inoculations, passports,
visas, and other pertinent documents for you and your spouse.
MEDICAL EXPENSE REIMBURSEMENT: You will be reimbursed for medical, hospital, and
dental charges incurred by you and your spouse in excess of the charges you
would normally have incurred for similar treatment in your home country. There
will be no duplicate coverage of benefits provided.
EMERGENCY LEAVE AND MEDICAL REPATRIATION: CalComp Inc. will establish reasonable
practices regarding personal emergency situations and procedures for medical
repatriation. In the event of your death, all reasonable transportation expenses
to the point of origin will be paid by CalComp Inc.
PAYMENT PROCEDURES: During the assignment, 27 percent of your base salary
will be paid to you by CalComp GmbH in German DM. 73 percent of your base
salary, total MICP, bonus, FSP, all expense reimbursements, as well as expenses
and allowances as per (S) 4 point #1 of the employment contract of December
1, 1987, will be paid to you by CalComp Inc. in U.S. dollars. Pay periods end
every-other Friday. We will use the DM currency exchange rate from the Wall
----
Street Journal for the day immediately preceding the submission of payroll for
- --------------
processing.
GENERAL: If you voluntarily terminate employment or are terminated for
cause while on the temporary assignment, all allowances related to the temporary
assignment will cease on the date of termination. Reimbursement will be paid
for reasonable and actual travel and related expenses incurred in returning you
and your spouse to the point of origin, not to exceed cost of being transferred
to Anaheim.
Sincerely,
/s/ Gary R. Long
Gary R. Long
President
CalComp Inc. Accepted: /s/ Winfried Rohloff 6-25-96
____________________ _______
Winfried Rohloff (date)
<PAGE>
EXHIBIT 10.12
[LETTERHEAD OF CALCOMP]
July 11, 1996
Mr. John J. Millerick
22 Putnam Road
Acton, MA 01720
Dear Mr. Millerick:
This letter is to confirm our offer of employment for the position of Senior
Vice President, Chief Financial Officer reporting to me at our Anaheim facility.
Your starting base salary will be $3,847 weekly with a $25,000 sign-on bonus.
Your salary will be reviewed at twelve (12) month intervals. Presently, all
merit reviews are conducted at the end of the third quarter of our fiscal year.
We have a Management Incentive Compensation Plan and Stock Options Plan that are
being recommended to our Board of Directors when we are a public company. The
MICP Plan provides for a bonus opportunity at target of 40% and will be prorated
for the year based on the number of months worked in 1996. However, in order for
a partial payment of the MICP to be implemented, you must start work by August
15, 1996. The Stock Options Plan would offer 50,000 options the first year. The
Stock Options Plan intent is to provide options that would be loaded heavily in
the first year. The remainder of the options that are planned are 75,000 to be
allocated in equal shares over a four year period subject to Board of Directors
approval.
I have been told that an Employment Agreement will be approved by the Board. It
will be two years in duration and provide one year of severance if other than
for just cause. This will be approved by the Board of Directors at a later
Board meeting.
The Company will arrange for the relocation of your family and household
belongings under provisions of the Lockheed Martin Policy CPS-538. Your
relocation costs will be covered up to $100,000, which also includes a home
purchase offer. Temporary lodging, daily meal allowance (per diem) and car will
be extended to you for one year. You will also be provided with two (2) round
trips home each month during this one year period. You will be eligible for the
relocation benefit during the first 18 months of your employment. Additionally,
with respect to Section 10.0 Loss on Sale, in the Relocation Policy, capital
improvements will be considered when calculating loss on sale.
If not either pre-arranged or completed, this offer of employment is contingent
upon your satisfactorily passing a pre-employment physical examination,
including a drug screen urinalysis. If you have any questions, please call
Roberta Diebold at (714) 821-2294.
Employers are required to verify work authorization and identification for all
new hires. We would appreciate your cooperation by bringing with you on the
first day of employment documents to comply with this law.
<PAGE>
John J. Millerick
July 11, 1996
Page 2
It is CalComp policy not to improperly use the intellectual property rights of
others. You are requested not to bring or disclose any proprietary/confidential
information of your former employers(s) to CalComp at any time.
Among the benefits you will enjoy as a full-time CalComp employee, subject to
certain eligibility requirements and waiting periods, is a program of Company
paid group insurance which provides for basic life as well as accidental death
and dismemberment. Employee paid benefits eligible to you are comprehensive
medical, dental and vision coverage for you and your eligible dependents, and a
program of income protection in case of long-term disability. In addition, you
may obtain supplemental life insurance coverage for yourself and your
dependents. Other benefits include paid sick leave, 12 paid holidays per year,
paid vacation, pension plan, thrift plan, credit union and college tuition
support programs. You will be entitled to three (3) weeks of vacation per year.
Extra time will be granted by mutual agreement between you and me.
Unfortunately, the plan document for the Lockheed Savings Plan Plus requires you
to wait 12 months before being eligible to contribute, and this cannot be
waived.
It is a pleasure to make you this offer to join CalComp. We look forward to
your association with the Company and know you will find it both personally and
professionally rewarding.
Please sign below and return this letter to us indicating your acceptance and
start date. An additional copy is included for your records.
Sincerely,
/s/ GARY LONG
- -------------
Gary Long
President
ved
Enclosure
/s/ JOHN J. MILLERICK 8-12-96
--------------------- ------------------
John J. Millerick Start Date
[President's Stamp]
<PAGE>
[LETTERHEAD OF CALCOMP]
July 12, 1996
Mr. John Millerick
22 Putnam Road
Acton, MA 01720
Dear John:
The following is provided as an addendum to my letter to you of July 11 and
specifically addresses your interest in adding a severance clause to our offer
letter.
If, prior to the expiration of the two-year term of this agreement,
employee's employment is terminated by the company other than for cause
or due to death or disability, the company shall provide employee the
following:
a. One year's base salary plus one year's MICP at 100% in a lump sum in
cash within thirty (30) days of the date termination.
b. One year's benefits continuation as currently provided for company
officers.
c. Payment for executive out-placement services with the cost not to
exceed ten percent (10%) of employee's annual base salary. Payment
to be made as billed by the provider.
Please acknowledge acceptance of this addendum by signing below and returning
the signed copy to me.
Regards,
/s/ GARY R. LONG
- ----------------
Gary R. Long
Accepted: /s/ JOHN J. MILLERICK 7-12-96
---------------------- ----------------
/s/ John J. Millerick Date
[Stamp of President]
<PAGE>
[LOGO OF THE COMPANY]
INTEROFFICE COMMUNICATION
TO: JOHN MILLERICK IOC NO.: 96-AMEND
FROM: KEVIN COLEMAN DATE: AUGUST 16, 1996
SUBJECT: AMENDMENT MS/EXT: 17/2622
This is an amendment to your offer of employment dated July 11, 1996. CalComp
will reimburse you for COBRA payments through December 1996. All other
conditions remain the same as stated in the previous letter.
Sincerely,
/s/ KEVIN COLEMAN
- -----------------
Kevin Coleman
Director
Human Resources
<PAGE>
EXHIBIT 10.13
SELEX MINI-ENGINE OEM AGREEMENT
This Agreement made as of the 26th day of May, 1994, by and between
SELEX SYSTEMS U.S.A. Inc., a California corporation (hereinafter "SSUI") having
its principal office at 1875 So. Grant, Suite 770, San Mateo, California 94402
and CALCOMP INC., a California corporation (hereinafter "Buyer"), having its
principal office at 2411 West La Palma, Anaheim, California 92803.
W I T N E S S E T H:
-------------------
WHEREAS, Buyer desires to purchase from SSUI on a non-exclusive basis
units of a certain component for incorporation by Buyer into ink jet plotters to
be marketed by Buyer under its private label; and
WHEREAS, SSUI agrees to cause the manufacture of such component by
Copyer Co., Ltd. ("Copyer"), and to sell the same to Buyer in accordance with
the terms of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions
-----------
A. The term "Equipment" means (i) certain items comprising a
mini-engine which are described in the specifications annexed hereto as Exhibit
A (collectively, the "Component"), including a certain engine controller (the
"Engine Controller") developed by Buyer pursuant to a Development Agreement
dated as of May 26, 1994 between Buyer and Copyer, (ii) the spare parts for the
Component as listed in Exhibit B hereto, and (iii) a certain retaining pin,
retaining shaft, and BJ Ink Cartridge, in each case with such engineering
changes as may be incorporated therein under the provisions of paragraph 4
hereof. The term "Equipment" does not include any other items unless both
parties agree in writing pursuant to a separate negotiation.
B. "Calendar Quarter" as each calendar quarter, or part thereof, to
occur during the relevant period.
2. Purchase and Sale
-----------------
A. SSUI agrees to sell units of the Equipment to Buyer and Buyer
agrees to purchase the same, upon the terms stated in this Agreement. Buyer
agrees to purchase the Equipment only from SSUI. It is Buyer's non-binding
forecast that during the first one (1) year of the term of this Agreement Buyer
will purchase from SSUI approximately 7000 units of the Component.
<PAGE>
B. Buyer represents and warrants that it is purchasing the Equipment
from SSUI solely for incorporation into ink jet plotters to be marketed by Buyer
under its trade names and trademarks, as specified in paragraph 5.B below, and
that is shall use the Equipment for no other purpose. Buyer represents and
warrants that it is an experienced designer of equipment and/or software for its
systems and that it needs no support from SSUI in incorporating the Equipment in
its ink jet plotters. Buyer shall be fully responsible for all costs and
expenses incurred by it in incorporating the Equipment in such ink jet plotters,
including costs of related housing, assembly and packaging.
C. Buyer represents and warrants that it is in the business of
marketing, selling, and/or leasing plotter equipment worldwide, and that Buyer
shall market the ink jet plotters containing the Equipment through its
affiliates and distribution channels worldwide; provided that in the United
States Buyer shall market its ink jet plotters only through its authorized
dealer network and directly to large end user customers.
D. Buyer represents that Buyer shall market and service the
Equipment as part of ink jet plotters at its sole risk and without expense to
SSUI, except for those responsibilities expressly undertaken by SSUI herein or
in the Specifications annexed hereto as Exhibit A. Without limiting the
foregoing, Buyer shall, in connection with the distribution efforts, be
responsible for (i) the exportation of the Equipment from the United States,
including compliance with all U.S. export control laws and regulations and
payment of all applicable customs duty charges, and (ii) obtaining all necessary
governmental approvals and complying with applicable laws and regulations,
except as otherwise provided in Exhibit A.
3. Price, Delivery, Ordering and Payment Terms
-------------------------------------------
A. The prices set forth in Exhibit C hereto shall be applicable to
Buyer's purchase orders for the Component which are placed during the period
through December 31, 1994. SSUI may change the prices for the Component ordered
at any time thereafter during the term of this Agreement on ninety (90) days
notice to Buyer. The spare parts pricing provisions are set forth in
subparagraph 6.A. The prices set forth in Exhibit C-1 shall be applicable to
Buyer's purchase orders for the retaining shaft, retaining pin and BJ Ink
Cartridge, and SSUI shall have the right to change the prices therefor at any
time upon ninety (90) days prior written notice. Once Buyer has placed an Order
(as defined in Paragraph C below), the prices of the Equipment shall remain
fixed except as follows:
(i) The parties hereto acknowledge that the prices for the Equipment
as set forth in Exhibit C hereto have been determined based on an
-2-
<PAGE>
exchange rate of 107.50 Yen/Dollar (the "Base Exchange Rate"). Subject to the
last paragraph of this subparagraph A, if, during any Calendar Quarter, the
Exchange Rate (as hereinafter defined) varies from the Base Exchange Rate by 3%
or more, the prices for the Equipment delivered to Buyer during the next
succeeding Calendar Quarter shall be adjusted by the amount of the Exchange Rate
fluctuation, in accordance with the following formula:
AP = P x (ER + BER)
----------
2ER
AP: the adjusted price
P: the price of Exhibit C
ER: the applicable Exchange Rate
BER: the Base Exchange Rate
As used herein, the "Exchange Rate" shall mean the average of all the
official quotation rates to customers quoted by the Bank of Tokyo, Ltd. (Middle
Rate of Telegraphic Transfer Selling Rate and Telegraphic Transfer Buying Rate)
for the U.S. Dollar in exchange for the Japanese Yen on each business day of the
first two calendar months of the relevant Calendar Quarter.
If, during any Calendar Quarter, the Exchange Rate varies from the Based
Exchange Rate by 6% or more, the parties agree to meet and to negotiate in good
faith an amendment hereto to remedy and hardship to the party affected by such
extreme Exchange Rate fluctuation, which amendment may include a change in the
prices for the Equipment, the formula provided above and/or the Base Exchange
Rate.
(ii) The prices of the Equipment have been determined based on assumed
applicable United States customs duty rates ("Base Duty Rates"). The Base
Duty Rates or each item of Equipment are set forth in Exhibit C hereto. If with
respect to any deliveries hereunder the actual duty varies from the Base Duty
Rate, of if any tariffs or surcharges are imposed on the Equipment, with the
result that the actual duty rate (however designated) assessed on the
importation of the Equipment vary from the Base Duty Rate, then the prices of
the Equipment will be multiplied by 100% plus the percentage fluctuation from
the Base Duty Rate. The parties recognize that on occasion the U.S. computes
duty based on its estimate of fair value rather than the sales price agreed to
by the parties, which may result in the duty actually paid being higher or
lower than the sum which the percentage initially contemplated by the parties
would have yielded. Such increase or decrease shall be treated as a change in
duty rate. Further, in the event that the U.S. Government retroactively claims
additional duty with respect to
-3-
<PAGE>
orders that have already been paid for, then any such increase from the
effective rate originally applied to the order shall be charged to Buyer as
provided above. Any retroactive decreases in duty shall be credited to the
Buyer as provided above.
B. SSUI shall deliver all Equipment to Buyer F.O.B. SSUI's designated
California area warehouse, whereupon all risk of loss shall pass to Buyer.
Prices are inclusive of usual factory tests and inspection, standard commercial
export packing for ocean shipment and freight transportation of a surface
nature, but exclusive of all expedited transportation requested by Buyer to the
point of delivery, all freight transportation or insurance from the point of
delivery and any packing other than SSUI's standard commercial export packing,
all of which shall be for Buyer's account. Each Order, if requested by Buyer,
shall be shipped, at Buyer's expenses, by SSUI from the point of delivery to the
destination specified by Buyer in its Order.
C. Subject to subparagraph E below, Buyer shall order units of
Equipment by formal, irrevocable monthly purchase orders ("Orders") which shall
(a) incorporate the terms of this Agreement, by reference to its date, as the
only operative terms of such Orders, (b) be received by SSUI before the
termination of the Agreement (or thereafter, in the case of spare parts, as
provided in subparagraph 6.A below or in the case of the retaining pin and the
retaining shaft, as provided in subparagraph 6.C below) (c) identify each item
of Equipment by model number, (d) indicate quantity, price (on a pro forma
basis, with the invoice price to be determined in accordance with the provisions
of this Agreement) and shipping instructions, and (e) specify delivery dates
which shall be no sooner than four (4) months from the date of such Order. An
Order shall not be deemed accepted unless and until written confirmation thereof
is sent to Buyer. Within two (2) weeks of SSUI's receipt of an Order, SSUI shall
either accept (as described above) or reject the Order. SSUI shall confirm
Orders which are in conformity with the provisions of this Agreement. It is
understood and agreed that for administrative convenience Buyer may use its form
of purchase order to effect Orders hereunder. If SSUI elects to honor an Order
which varies from the provisions hereof, any terms in such Order which conflict
with, or supplement, the terms of this Agreement shall be deemed null and void,
and this Agreement shall govern.
D. Buyer may place Orders only during the first ten (10) business days
of each calendar month during the terms of the Agreement (or thereafter in the
case of spare parts, as provided in Section 6 below). Orders placed by Buyer
prior to such ten (10) day period shall be irrevocable, but shall, for purposes
of this paragraph 3, be deemed received by SSUI as of the first day of such ten
(10) day period. Each such monthly Order shall specify the number of units to be
delivered during the 4th succeeding month (for example, an Order placed during
the first ten (10) days of
-4-
<PAGE>
January shall be delivered during May). Orders shall be for not less than the
minimum quantities set forth in Exhibits A and B.
1. Schedule 1 hereto lists the units of Equipment for which
Buyer has heretofore placed Orders and the scheduled delivery dates thereof.
The parties intend that all of such Orders shall be subject to the terms and
conditions of this Agreement in all respects.
E. Buyer shall have no right to cancel any Orders of Equipment
which have been specifically modified for the Buyer. Buyer may cancel Orders of
Equipment or decrease the quantity of Equipment covered by an Order upon written
notice to SSUI prior to the then scheduled shipment date of such Equipment, and
payment of the following cancellation charges for each unit of the Equipment
cancelled:
<TABLE>
<CAPTION>
Days Prior to then Scheduled
Delivery Date that Written Percentage of
Notice is Received by SSUI Purchase Price
---------------------------- --------------
<S> <C>
0-14 20%
15-30 15%
31-90 10%
91-150 3%
151+ 0%
</TABLE>
Buyer may also defer scheduled deliveries of Equipment for up to ninety (90)
days from the originally requested delivery date of Orders upon Buyer's payment
of a deferral charge equal to 0.03% of the purchase price of the Equipment for
each day the Order is deferred. SSUI and Buyer recognize that due to the nature
of the Equipment the calculation of damages resulting from cancellation or
deferral of Orders would be difficult. Therefore, the foregoing deferral and
cancellation charges represent fixed and agreed upon liquidation damages in lieu
of other damages and are not intended as a penalty.
F. In each Order, Buyer shall include rolling forecasts estimating
the Equipment to be ordered during the next succeeding three (3) months. Each of
Buyer's estimates for a particular month shall not vary from the preceding
estimate by more than twenty percent (20%) and each Order for a particular month
shall not vary by more than twenty percent (20%) from the final monthly estimate
for such month.
G. SSUI shall use its reasonable efforts to ship Equipment to meet
Buyer's requested delivery dates; provided, that Buyer's orders and the
--------
requested delivery dates thereunder are in conformity with the provisions of
this Agreement;
-5-
<PAGE>
and provided further, that should worldwide demand for the Equipment exceed
-------- -------
Copyer's supply thereof, SSUI shall have the right to allocate limited
quantities of the Equipment in a fair and reasonable manner among all of its
customers, even though this may effectively limit quantities requested by Buyer.
H. In order to preserve SSUI's claims against its insurance carrier,
Buyer shall give notice with respect to any obvious damage which appears to be
attributable to conditions in transit no later than thirty (30) days after
delivery of the shipment to Buyer (as evidenced by a shipper's receipt
therefor), and Buyer shall in addition cooperate in connection with the
inspection and insurance report which is customarily made following such notice
of insurable damage. Buyer shall be liable for obvious damages to Equipment
where the claim has been disallowed by the insurance carrier due to untimely
notice by Buyer as required hereunder.
I. Invoices shall be rendered at the time of delivery of the Equipment,
and are payable net thirty (30) days from the actual or requested delivery date,
whichever is later. There shall be added to the price of each unit the amount
of sales or use tax applicable to the sale by SSUI to Buyer, unless Buyer shall
furnish a resale or other exemption certificate to SSUI. Under no circumstances
shall there be added to such price the amount of any tax measured by SSUI's
gross or net income.
J. Notwithstanding subparagraphs E and G above, Buyer may, at any time
that an emergency situation exists, place an Order for such quantity of spare
parts as is required, and SSUI shall use best efforts to deliver such emergency
Order within two (2) business days of SSUI's receipt thereof; provided, that
--------
SSUI shall not be required to maintain particular inventories of spare parts for
purposes of filling any such emergency Orders and, should available inventories
of spare parts requested by Buyer be limited, SSUI shall have the right to
reasonably allocate available spare parts in light of the requirements of SSUI,
Buyer and SSUI's other customers. Buyer shall pay a surcharge determined by SSUI
to cover its costs and expenses in filling emergency Orders for spare parts.
K. SSUI agrees that if it sells to any customer any product substantially
similar to the Equipment in quantities less than or equal to the quantities
previously purchased by Buyer hereunder at a per unit price less than the per
unit price then applicable to Buyer in accordance with the provisions of this
Section 3, then the per unit prices to Buyer for units of the Equipment
delivered thereafter shall be such lower prices for so long as such lower prices
remain in effect for the other customer.
-6-
<PAGE>
4. Modifications to Equipment
--------------------------
The initial specifications for the Equipment are listed in Exhibit A
hereto (the "Specifications"). SSUI, on its own, or at the instance and request
of Buyer, may cause Copyer to modify the Equipment or mode of manufacture of the
Equipment at any time to meet such amended Specifications which are furnished to
Buyer and which improve or do not adversely affect performance, serviceability
or salability of the ink jet plotters or interchangeability of spare parts
therefor. If SSUI proposes modifications to the Equipment which would
substantially change the size or weight of the same, or adversely affect
performance, serviceability or salability of the ink jet plotters or
interchangeability of spare parts, or materially change the external
configuration thereof, SSUI shall discuss such modifications with Buyer in order
to obtain Buyer's approval, in writing, which shall not be unreasonably
withheld. Approvals shall be deemed given if Buyer does not disapprove the
modifications within thirty (30) days of receipt of SSUI's written request
therefor.
5. Service, Training and Promotional Activities
--------------------------------------------
A. Buyer shall be required, at its own cost and expense, to provide
adequate service, including in-warranty service, to Buyer's customers for the
ink jet plotters containing the Equipment for a reasonable time (including after
termination of the Agreement).
B. Buyer shall promote and market the Equipment in ink jet plotters
to be marketed under Buyer's own trade names and trademarks. Buyer shall not
use SSUI trademarks and shall not describe itself as a "Selex Systems
Distributor". Under no circumstances shall Buyer use the name "Selex" as part
of its corporate or business name, or in any other way in connection with
marketing of ink jet plotters.
6. Spare Parts
-----------
A. SSUI's current list and prices of spare parts is set forth in
Exhibit C-1 hereto. SSUI shall have the right to substitute a new list of spare
parts, and to change the prices therefor, at any time upon ninety (90) days
prior notice to Buyer. Buyer may place Orders pursuant to this Agreement during
the term of the Agreement and for a period of five (5) years from the date of
expiration or termination of the Agreement or the date of discontinuance of the
Component, whichever event occurs first, for any spare parts (i) which during
such five (5) year period are made generally available by SSUI through its
published spare parts lists for the Component, or (ii) which are unique and not
readily available from third party sources. SSUI may change the prices for spare
parts at any time during such five (5) year period upon ninety (90) days prior
notice to Buyer. Notwithstanding
-7-
<PAGE>
the foregoing, SSUI will give Buyer prior written notice of the discontinuance
of the Component and the withdrawal of any spare part from SSUI's published list
of generally available spare parts, and Buyer shall have the opportunity to make
a final purchase of such spare part.
B. Buyer shall purchase a stock of spare parts adequate for Buyer to
maintain a reasonable level of service of the Equipment. In this regard, Buyer
and SSUI shall jointly determine an appropriate initial inventory of spare parts
to be stocked by or on behalf of Buyer utilizing generally as the basis for such
determination the SSUI estimates previously furnished Buyer.
C. During the period that Buyer may place orders for spare parts
hereunder, Buyer may also order the retaining shaft and retaining pin, and SSUI
may change the prices for such items at any time on ninety (90) days prior
notice.
7. Inspection and Warranty
-----------------------
A. The Equipment shall have been inspected and where applicable
tested prior to shipment to determine if the same conforms to the relevant
specifications and Copyer's reference manuals and other technical information it
has published. Buyer shall also have the right to conduct its own inspection
test of the Equipment within thirty (30) days after the date of delivery. If
Buyer determines that the items do not substantially so conform, it shall,
within fifteen (15) days after completion of the inspection, notify SSUI and
request SSUI to institute a consulting inspection. Even if the ensuing
inspection results in a disagreement as to the conformity of the item(s), SSUI
shall use its best efforts to achieve the required conformation at the least
possible expense. If such effort does not yield a result satisfactory to Buyer
and Buyer exercises its right of rejection SSUI has the right to repair or
replace, at SSUI's option, rejected Equipment at no charge (including
transportation charge) within thirty (30) days after SSUI's receipt of Buyer's
fifteen (15) day notice. Should it be subsequently determined that Buyer has
wrongfully rejected such item(s), Buyer shall be liable to SSUI for all expenses
incurred. Upon shipment to Buyer, Equipment must be paid for within the time
frames provided in this Agreement, even if thereafter rejected by Buyer for
nonconformance under the circumstances set forth herein.
In the event that SSUI does not replace rejected Equipment within
the time frame specified above, SSUI shall grant Buyer a credit in an amount
equal to the invoice price of the rejected item against future payments to be
made by Buyer for Equipment hereunder. Such credit shall be reversed and
invoiced when the replacement is effected.
B. THE EQUIPMENT SOLD TO BUYER HEREUNDER IS SOLD "AS IS" AND WITHOUT
ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING
-8-
<PAGE>
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
RELATING TO THE USE OR PERFORMANCE OF THE EQUIPMENT. SSUI WILL NOT BE LIABLE
FOR PERSONAL INJURY OR PROPERTY DAMAGE (UNLESS CAUSED BY SSUI'S NEGLIGENCE),
LOSS OF PROFIT OR OTHER INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT
OF THE USE OR INABILITY TO USE THE EQUIPMENT, OR FOR ANY DAMAGES (REGARDLESS OF
THEIR NATURE) TO THE EXTENT CAUSED BY BUYER'S FAILURE TO FULFILL ITS
RESPONSIBILITIES AS SET FORTH IN THIS AGREEMENT. IN NO EVENT SHALL SSUI'S
LIABILITY HEREUNDER EXCEED THE STATED SELLING PRICE OF THE EQUIPMENT TO BUYER.
C. Buyer acknowledges that (i) SSUI has made no representations
regarding software programming, and the design and implementation thereof, and
shall have no liability for use or performance of any such programming or the
Equipment in connection with the systems of Buyer's customers, even though Buyer
discusses the same from time to time with SSUI employees, and (ii) payment for
the Equipment is an independent obligation of Buyer and is not contingent on or
dependent upon the services and performance of independent vendors of other
components or software.
D. SSUI shall make available to Buyer on such terms as are generally
offered to SSUI's other customers for the Equipment, any modification kits,
retrofits or other assistance being furnished by SSUI to assist such customers
in correcting epidemic failures in the Equipment or in complying with federal
and state laws applicable to the Equipment, it being understood that any such
kits or retrofits shall be furnished without charge if made available generally
by SSUI to comply with mandatory health or safety laws applicable to the
Equipment.
E. IT IS UNDERSTOOD AND AGREED THAT UPON SELLING OR LEASING THE INK
JET PLOTTER THAT CONTAINS THE EQUIPMENT BUYER SHALL DELIVER ITS OWN WARRANTY TO
ITS CUSTOMERS.
8. Relationship of the Parties, Indemnification and Limitation of Liability
------------------------------------------------------------------------
A. Nothing contained in this Agreement shall be construed to make
either party the agent for the other party for any purpose, and neither party
hereto shall have any right whatsoever to incur any liabilities or obligations
on behalf of or binding upon the other party. Each party specifically agrees
that it shall have no power or authority to represent the other party in any
manner; that it will act as an independent contractor in accordance with the
----------- ----------
terms and conditions of this Agreement; and that it will not at any time
represent orally or in writing to any person or corporation or other business
entity that it has any right, power or authority not expressly granted by this
Agreement.
-9-
<PAGE>
B. Buyer agrees to indemnify and hold SSUI and Copyer free and
harmless from any loss, damage or costs, including legal expenses and counsel
fees, that SSUI or Copyer becomes liable for to third parties by reason of acts,
or failure to act of Buyer in marketing and servicing the Equipment, including,
but not limited to (a) warranties made by Buyer's personnel or agents regarding
such ink jet plotters or the Equipment contained therein, or the use or
performance of the same in connection with any other components or software
programming, and (b) improper installation, support or maintenance of the ink
jet plotters containing the Equipment.
9. Patent and Indemnification
--------------------------
Nothing herein contained shall be construed as a representation or
warranty by SSUI or Copyer that the Equipment furnished hereunder is or will be
free from infringement or violation of any patent, copyright, trade secret or
any other proprietary right of any third party. In the event of any claim by a
third party against Buyer asserting a patent, copyright, trade secret or other
proprietary right, infringement involving the Equipment in any country of the
world (except those countries under Russian or Chinese control and such other
countries as may be mutually agreed upon in writing by the parties hereto from
time to time), SSUI will, at its expense, defend and/or settle such claim, and
will indemnify Buyer against any damages, judgments or settlements, including
any reasonable cost, legal fees or other expenses required for such defense,
whether or not such claim is successful, provided, however that Buyer shall
promptly notify SSUI in writing of such claim and shall furnish copies of all
letters and other documents relating to the allegation of infringement, and SSUI
shall be given full and sole authority to defend and settle such claim, action
or allegation of infringement. If SSUI requests, Buyer agrees to assist and/or
cooperate at SSUI's expense with SSUI in such defense and/or settlement.
Anything herein to the contrary notwithstanding, SSUI shall not be obligated to
defend or settle or be liable for costs, fees, expenses or damages if the
infringement claim arises from the Engine Controller or out of compliance with
Buyer's specifications, designs, drawings, instructions or other requirements or
out of any addition to or modification of the Equipment of any combination
thereof with other products after delivery by SSUI or from use of the Equipment
in the practice of a process or system, or from use of the spare parts other
than in connection with the Components, in any of which cases Buyer shall assume
the defense and/or settlement thereof and pay all costs, fees, expenses,
damages, judgments or settlements incurred by SSUI or Copyer. If any
infringement claim is brought against Buyer and/or SSUI, or Copyer, or if in
SSUI's opinion the Equipment is likely to become a subject of a claim of
infringement or violation of any patent, copyright, trade secret or other
proprietary right of any third party, SSUI shall be entitled at its option: (a)
to procure for Buyer the right to continue the sale
-10-
<PAGE>
and/or use of the Equipment at SSUI's expense, by acquiring a license in the
name of SSUI or one of the SSUI's affiliated companies, or of Buyer, (b) to
replace or modify the Equipment so as not to infringe such third party's rights
while conforming, as closely as possible to original specifications, and in the
event that either solution is adopted, SSUI shall be entitled to request a
mutually agreeable price modification, or (c) to discontinue further supply of
the Equipment in spite of any provisions hereof and without any breach hereof,
but prior to SSUI choosing such discontinuance, SSUI agrees to enter into
discussions with Buyer in good faith to determine whether a mutually acceptable
arrangement (including price and other terms and conditions) for continuing the
supply of the Equipment to Buyer can be agreed upon between the parties. In the
event of such discontinuance, SSUI shall refund to Buyer the purchase price of
units of infringing Equipment which are promptly returned to SSUI from Buyer's
inventory in new condition and in unopened boxes. THE FOREGOING STATES THE
ENTIRE LIABILITY OF SSUI, COPYER AND BUYER IN RESPECT OF INFRINGEMENT OF ANY
PATENT, COPYRIGHT, TRADE SECRET OR ANY OTHER PROPRIETARY RIGHT OF ANY THIRD
PARTY AND IS IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, IN REGARD THERETO,
AND IN NO EVENT SHALL SSUI, COPYER OR BUYER BE LIABLE FOR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF
ANTICIPATED PROFITS OR OTHER ECONOMIC LOSS.
10. Disclaimer of License
---------------------
Buyer acknowledges that any and all of the patents, designs,
trademarks, copyrights, and other rights including any unpatented confidential
production method used or embodied in connection with the Equipment will remain
the sole property of SSUI or Copyer, as the case may be. Except as shall be
necessary to carry out the express provisions of this Agreement, nothing herein
shall be construed as granting or conferring to Buyer any rights by license or
otherwise, expressly, impliedly or otherwise, for such patents, designs,
trademarks, copyrights or other rights, including any unpatented production
method.
11. Force Majeure
-------------
Neither SSUI or Buyer shall be in default on any obligation
hereunder if such default results from governmental acts or directives (official
or unofficial); strikes (legal or illegal); acts of God; war (declared or
undeclared); insurrection, riot or civil commotion; fires; flooding or water
damage; explosions; embargoes; or otherwise arises out of causes beyond the
reasonable control of the party affected. Upon the occurrence of a force majeure
event, the affected party shall give written notice thereof to the other party
as soon as is practicable, and the
-11-
<PAGE>
affected party shall take reasonable action to minimize the effect of such force
majeure event.
12. Compliance with Applicable Laws
-------------------------------
A. Nothing herein shall be construed to permit or require either
party to do any act or thing in contravention of any laws or regulations
applicable to the production or distribution of the Equipment (including those
of the United States or of any agency or instrumentality of the United States or
any of the various states). SSUI and Buyer mutually agree to do all things
reasonably necessary in order to enable both or either of them to comply with
all such laws and regulations.
B. Without limiting the foregoing, SSUI's obligations hereunder shall
at all times be subject to the respective export and import control laws and
regulations of the Japanese and United States Governments. Buyer agrees that
with respect to the resale or other disposition of the Equipment, Buyer shall
comply fully with the customs and import control laws and regulations of the
Untied States.
13. Non-Disclosure of Information; Publicity
----------------------------------------
A. Neither party desires to receive any confidential information from
the other party and, accordingly, with respect to any information provided under
this Agreement, neither party shall have any confidential obligation or use
restriction and either party may freely use such information for any purpose
without restriction. To the extent either party determines that there is a need
to disclose information deemed confidential, such information shall be
specifically identified and protected under the terms of a separate non-
disclosure agreement signed by both parties.
B. Except as may be required by Federal, State or Japanese law,
neither Buyer nor SSUI shall release items of publicity of any kind (including,
but not limited to, news releases, articles, brochures, reports, advertising and
prepared speeches) related to the other party's involvement in the Equipment to
be delivered hereunder, unless either party shall have first obtained written
approval from the other party.
14. Term; Termination
-----------------
A. This Agreement shall commence on the date hereof and shall
continue in full force and effect for a period of three (3) years. It shall
automatically renew thereafter on a year-to-year basis unless terminated by
either party upon at least sixty (60) days notice prior to the end of the
initial or any renewal term.
-12-
<PAGE>
B. Without limiting any of the remedies which the non-breaching party may
have, this Agreement and/or any Orders outstanding hereunder may be terminated
by either party for substantial breach of any material provision of this
Agreement by the other party, provided that written notice has been given to the
other party of the alleged breach and the other party has not cured the breach
within thirty (30) days after delivery of such notice, or has not in good faith
made substantial effort and progress in curing the breach during such period
while notifying the other party within the thirty (30) day period of the fact
that the breach will not be cured, the steps taken and the estimated cure date
for the breach. If, even with good faith efforts, the breach continues for a
period of sixty (60) days after notice, the other party may terminate this
Agreement and/or any Orders outstanding hereunder upon five (5) days notice.
C. This Agreement and any Orders outstanding hereunder shall be terminated
automatically and without notice, if either party ceases to function as a going
concern, becomes insolvent, makes an assignment for the benefit of creditors,
files a petition in bankruptcy, has a petition filed against it and such
petition continues for more than sixty (60) days without dismissal, or admits in
writing its inability to pay its debts as they mature or if a receiver is
appointed for a substantial part of its assets.
D. This Agreement and/or any Orders outstanding hereunder may be
terminated by SSUI on notice to Buyer if Buyer no longer engages in the plotter
business substantially as engaged in by Buyer as of the date hereof, if Buyer
sells or otherwise transfers all or substantially all of its plotter business
and assets or if, whether by merger, sale of stock or otherwise, Lockheed
Corporation no longer owns, directly or indirectly, 50% or more of the capital
stock of Buyer. Buyer shall give SSUI advance notice prior to the occurrence of
any of such proposed events and SSUI's right to terminate under this
subparagraph D may be exercised by SSUI no later than sixty (60) days
thereafter.
E. Termination shall not relieve either party of obligations incurred
prior thereto (including Buyer's obligation to pay the purchase price of
Equipment theretofore shipped to Buyer), or for any obligation which by its
terms is to take effect upon termination.
F. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR FOR THE OTHER PARTY'S LOST PROFITS RESULTING IN ANY WAY
FROM THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED FOR IN
RESPECT OF EACH PARTY'S INDEMNIFICATION OF THE OTHER UNDER THIS AGREEMENT.
- 13 -
<PAGE>
15. Assignment
----------
This Agreement constitutes a personal contract and is not assignable by
either party in whole or in part without the other party's written consent.
16. Notices
-------
All notices required or permitted to be sent by the terms of this
Agreement shall be either sent registered or certified mail, return receipt
requested, via facsimile or served personally to the attention of (a) the
President of SSUI; or (b) to each of Vice President, Manufacturing and Corporate
Secretary of Buyer, at their respective addresses on the first page of this
Agreement. All notices shall be deemed effective upon receipt.
17. Governing Law
-------------
A. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA.
B. This agreement constitutes the entire agreement between the
parties, superseding all previous proposals or understandings, oral or written,
relating to the supply of the Equipment to Buyer. No representation or statement
not contained on the original copy of this Agreement shall be binding on SSUI or
Buyer as a warranty or otherwise, nor shall this Agreement be modified or
amended unless in writing and signed by the President of each of SSUI and Buyer.
Any suit between the parties relating to this Agreement, other than for payment
of the purchase price of the Equipment, shall be commenced, if at all, within
one (1) year of the date that it accrues.
-14-
<PAGE>
C. If any one or more of the provisions contained in this Agreement or in
any Schedule or Exhibit hereto shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall not in any way be
affected or impaired.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first above written.
SELEX SYSTEMS U.S.A., INC. CALCOMP INC.
By: /s/ A. Nakazato By: /s/ Gary R. Long
------------------------- -------------------------
Name: A. Nakazato Name: Gary R. Long
Title: President Title: President
-15-
<PAGE>
EXHIBIT A
List of Equipment and Specifications
<TABLE>
<CAPTION>
Copyer Item # CalComp Item # Item Name Min. Order Quantity
- ------------- -------------- --------- -------------------
<S> <C> <C> <C>
- ------------ 22049-0015 Mini Engine 40 sets
595-0591-400 21545-0024 BJ Ink Cartridge 1 pallet (1,440 pcs.)
641-0017-000 22049-3050 Carriage Retaining Shaft 2,000 pcs.
641-0020-000 22049-3068 Retaining Pin 2,000 pcs.
</TABLE>
<PAGE>
EXHIBIT 10.14
SELEX COLOR MINI-ENGINE SUPPLEMENT
SUPPLEMENT (this "Supplement") made effective as of January 2, 1995 to
the Selex Mini-Engine OEM Agreement dated as of May 26, 1994, as amended by
Amendment No. 1 made effective as of January 2, 1995 (the "Agreement") between
SELEX SYSTEMS U.S.A. INC., a California corporation ("SSUI") and CALCOMP INC., a
California corporation ("Buyer").
SSUI and Buyer desire to supplement the Agreement to set forth the
terms and conditions pursuant to which Buyer shall purchase from SSUI units of a
newly developed component for incorporation into Buyer's color ink jet plotters.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. For purposes hereof, the term "Color Equipment" means (i) certain items
comprising a mini-engine which are listed and described in Annex A hereto
(collectively, the "Color Component"), including (A) a certain engine controller
(the "Color Engine Controller") developed by Buyer pursuant to a Development
Agreement dated as of October 31, 1993 between Buyer and Copyer and (B) a
certain head driver (the "Head Driver"), (ii) the spare parts for the Color
Component as listed in Annex B hereto, and (iii) a print head and BJ color ink
tanks, in each case with such engineering changes as may be incorporated therein
under the provisions of paragraph 4 of the Agreement. The term "Color Equipment"
does not include any other items unless both parties agree in writing pursuant
to a separate negotiation.
2. SSUI agrees to sell units of the Color Equipment to Buyer, and Buyer
agrees to purchase the same. It is Buyer's non-binding forecast that during the
one (1) year period ending December 31, 1995, Buyer will purchase from SSUI
approximately 9,000 units of the Color Component. Buyer agrees to purchase the
Color Equipment only from SSUI. Except as otherwise expressly provided in this
Supplement, the terms and provisions of the Agreement shall apply to the
purchase and sale of Color Equipment hereunder, and references in the Agreement
to the "Equipment," the "Component," the "Engine Controller" and "spare parts"
shall be deemed for purposes hereof to include, respectively, the Color
Equipment, the Color Component, the Color Engine Controller and spare parts for
the Color Component.
3. Buyer may place purchase orders hereunder for the Color Equipment
during the Color Equipment Ordering Period. For purposes hereof, the "Color
Equipment Ordering Period" shall mean the period commencing on the date hereof
and ending on the first March 31 to occur after either party hereto gives notice
to the other party that the ordering period hereunder shall terminate; provided,
--------
that such
<PAGE>
notice is given at least sixty (60) days prior to the relevant March 31.
Notwithstanding the foregoing, in no event shall the Color Equipment Ordering
Period extend beyond the date on which the Agreement is terminated.
4. The prices set forth in Annex C hereto shall be applicable to Buyer's
purchase orders for the Color Component which are placed during the one year
period ending December 31, 1995. SSUI may from time to time change the prices
for the Color Component ordered thereafter on ninety (90) days prior notice to
Buyer.
5. SSUI's current list and prices of spare parts for the Color Component,
and prices for the print head and the BJ color ink tanks, are set forth in Annex
D hereto and are applicable to Buyer's purchase orders for such items which are
placed during the one-year period ending December 31, 1995. SSUI shall have the
right to change the prices for any of these items ordered thereafter on ninety
(90) days prior written notice. Spare parts for the Color Component, the Print
Head and the BJ ink tanks may be ordered for five (5) years after expiration of
the Color Equipment Ordering Period.
6. Notwithstanding paragraph 3.B of the Agreement, SSUI shall deliver
certain electronics of the Color Component (consisting of the Head Driver and
the Color Engine Controller) to Buyer F.O.B. SSUI's designated New Hampshire
area warehouse (which may be a Lockheed Commercial Electronics Co. warehouse),
whereupon all risk of loss shall pass to Buyer. Notwithstanding paragraph
3.A(i) of the Agreement, the price of that portion of the Color Component which
is delivered to Buyer in New Hampshire, as well as the prices of the Head Driver
and Color Engine Controller when ordered by the Buyer as spare parts, shall not
be subject to change to reflect exchange rate fluctuations.
7. For purposes of paragraph 9 of the Agreement, the term "Engine
Controller" as used therein shall be deemed to include not only the Color Engine
Controller but shall also include the Head Driver.
IN WITNESS WHEREOF, the parties have signed this Amendment by their duly
authorized representatives this 9th day of October, 1995.
SELEX SYSTEMS U.S.A., INC. CALCOMP INC.
/s/ A. Nakazato /s/ G.R. Long
By:________________________ By:__________________________
Name: A. Nakazato Name: G.R. Long
Title: President Title: President
-2-
<PAGE>
ANNEX A
List of Color Equipment and Specifications
<TABLE>
<CAPTION>
Copyer Item # Cal Comp Item # Item Name Min. Order Quantity
- ------------- --------------- --------- -------------------
<S> <C> <C> <C>
--- 23106-0013/23107-0012 Sake Mini Engine 1 set (40 pcs.)
597-1011-500 22802-0012 Black 14cc Ink Tank 120 pcs.
597-0911-500 22802-0020 Cyan Ink Tank 120 pcs.
597-0921-500 22802-0038 Magnda Ink Tank 120 pcs.
597-0931-500 22802-0046 Yellow Ink Tank 120 pcs.
597-0601-500 22623-0092 Print Head 48 pcs.
</TABLE>
-3-
<PAGE>
ANNEX B
Spare Parts for Color Component
<TABLE>
<CAPTION>
Copyer Item # CalComp Item # Item Name Min. Order Quantity
- ------------- -------------- --------- -------------------
<S> <C> <C> <C>
600-1349-090 22623-0035 Service Station 40 pcs.
600-1359-090 22623-0076 Carriage Unit 40 pcs.
600-1389-090 22623-0050 Drain Sheet 40 pcs.
600-1399-090 22623-0050 Sub Drain Sheet 80 pcs.
600-1369-090 23125-0010 Head Driver 40 pcs.
600-1379-090 22719-0015 Color Engine Controller 40 pcs.
</TABLE>
-4-
<PAGE>
EXHIBIT 10.15
AMENDMENT NO. 1
TO THE
SELEX COLOR MINI-ENGINE SUPPLEMENT
AMENDMENT NO. 1 (this "Amendment") to the Supplement made effective as of
October , 1995 (the "Supplement") to the Selex Mini-Engine OEM Agreement dated
as of May 26, 1994, as amended by Amendment No. 1 made effective as of January
2, 1995 (the "Agreement") between SELEX SYSTEMS USA, INC. a California
Corporation ("SSUI") and CALCOMP INC., a California corporation ("BUYER").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree to amend the Supplement
and Agreement as follows:
1. Each capitalized term in this Amendment not otherwise defined herein
is used herein as defined in the Supplement.
2. Annex A of the Supplement is amended to include the following
additional items of Color Equipment.
<TABLE>
<CAPTION>
CalComp Minimum
Copyer Item # Item # Item Name Order Quantity
- ------------- ------- --------- --------------
<S> <C> <C> <C>
597-1521-500 23947-0016 25cc Black Ink Tank 60 Pieces
597-1531-500 23947-0024 25cc Cyan Ink Tank 60 Pieces
597-1541-500 23947-0032 25cc Magenta Ink Tank 60 Pieces
597-1551-500 23947-0040 25cc Yellow Ink Tank 60 Pieces
</TABLE>
3. Annex D of the Supplement is amended to include the following prices
for the additional items of Color Equipment (and the following revised price for
the Print Head):
<TABLE>
<CAPTION>
CalComp
Copyer Item # Item # Item Name Pricing
- ------------- ------- --------- -------
<S> <C> <C> <C>
597-1521-500 23947-0016 25cc Black Ink Tank $496.80 (60 Pieces)
597-1531-500 23947-0024 25cc Cyan Ink Tank $496.80 (60 Pieces)
597-1541-500 23947-0032 25cc Magenta Ink Tank $496.80 (60 Pieces)
597-1551-500 23947-0040 25cc Yellow Ink Tank $496.80 (60 Pieces)
595-0601-500 22623-0092 Print Head $4,215.84 (48 Pieces)
</TABLE>
<PAGE>
5. In all other respects the Supplement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have signed this Amendment to the
Supplement by their duly authorized representatives this day of October, 1995.
SELEX SYSTEMS USA, INC. CALCOMP INC.
By: /s/ A. Nakazato By: /s/ G. R. Long
----------------------- -------------------------
Name: A. Nakazato Name: G.R. Long
Title: President Title: President
<PAGE>
AMENDMENT NO. 1
AMENDMENT NO. 1 (this "Amendment") made effective as of January 2,
1995 to the Selex Mini-Engine OEM Agreement dated as of May 26, 1994 (the
"Agreement") between SELEX SYSTEMS U.S.A. INC., a California corporation
("SSUI") and CALCOMP INC., a California corporation ("Buyer").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to amend the
Agreement as follows:
1. Each capitalized term in this Amendment not otherwise defined herein
is used herein as defined in the Agreement.
2. Notwithstanding the provisions of paragraph 3 of the Agreement:
(a) The prices set forth in Schedule 1 hereto shall be applicable to
Buyer's purchase orders for the Component which are placed at any time on
or after the date hereof through December 31, 1995, subject to adjustment
based on changes in the Exchange Rate as provided in paragraph 3.A(i) of
the Agreement. SSUI may from time to time change the prices for such
Equipment items ordered thereafter during the term of this Agreement on
ninety (90) days notice to Buyer.
(b) The Base Exchange Rate for purposes of all purchase orders for
Equipment placed by Buyer from and after the date hereof, shall be 100
Yen/Dollar.
3. Paragraph 3.A(ii) of the Agreement is deleted in its entirety.
4. Notwithstanding the provisions of paragraph 6.A of the Agreement, the
prices set forth in Schedule 2 hereto shall be applicable to Buyer's purchase
orders for spare parts, the carriage retaining shaft, retaining pin and BJ ink
cartridge which are placed at any time on or after the date hereof through
December 31, 1995, subject to adjustment based on changes in the Exchange Rate
as provided in paragraph 3.A(i) of the Agreement. SSUI may from time to time
change the prices for such items ordered thereafter during the term of this
Agreement on ninety (90) days prior notice to Buyer.
5. Paragraph 3.B of the Agreement is deleted in its entirety and replaced
with the following:
B. SSUI shall deliver all Equipment to Buyer F.O.B. carrier, Tokyo,
whereupon all risk of loss pass to Buyer. Prices are inclusive of usual
<PAGE>
factory tests and inspection, standard commercial export packing for ocean
shipment, but exclusive of all transportation, insurance or other charges
from the point of delivery, and any packing other than SSUI's standard
commercial export packing, all of which shall be for Buyer's account.
Buyer shall be responsible for the importation of the Equipment into the
United States, including compliance with all U.S. import control laws and
regulations and payment of all applicable customs duty charges.
6. Paragraph 3.C and 3.D of the Agreement are amended to provide that
each Order shall specify delivery during the 3rd month (rather than during the
4th month) from the date the Order is placed (for example, an Order placed
during the first ten (10) days of January shall be delivered during April).
7. Paragraph 3.E of the Agreement is amended to change the schedule of
cancellation charges to read as follows:
<TABLE>
<CAPTION>
Days Prior to then Schedule
Delivery Date that Written Percentage of
Notice is Received by SSUI Purchase Price
-------------------------- --------------
<S> <C>
0-14 20%
15-30 15%
31-90 10%
91-120 3%
121+ 0%
</TABLE>
8. Paragraph 3.H of the Agreement is deleted in its entirety and replaced
with the following:
H. In order to preserve each party's claims against its insurance
carrier, Buyer shall give notice with respect to any obvious
damage which appears to be attributable to conditions in transit
no later than thirty (30) days after delivery of the shipment to
Buyer (fifty (50) days if the delivery point is an ocean vessel),
and each party shall cooperate with the other in connection with
the inspection and insurance report which is customarily made
following such notice of insurable damage. Buyer shall be liable
for obvious damage to Equipment where the claim has been
disallowed by the relevant insurance carrier due to untimely
notice by Buyer as required hereunder.
-2-
<PAGE>
9. The second sentence of Paragraph 7.A of the Agreement is amended to
give Buyer the right to conduct its own inspection test of the Equipment within
thirty (30) days after the date of delivery, if the delivery point is an
aircraft, or within fifty (50) days after the date of delivery, if the delivery
point is an ocean vessel.
10. In all other respects the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have signed this Amendment by their duly
authorized representatives this 9th day of October, 1995.
SELEX SYSTEMS U.S.A., INC. CALCOMP INC.
/s/ A. Nakazato /s/ G.R. Long
By:_________________________ By:_________________________
Name: A. Nakazato Name: G.R. Long
Title: President Title: President
-3-
<PAGE>
EXHIBIT 10.15
OEM AGREEMENT BY AND BETWEEN
CALCOMP TECHNOLOGY, INC.
AND
COPYER CO., LTD
<PAGE>
OEM AGREEMENT
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS ........................................ 1
ARTICLE II - TERM OF AGREEMENT ................................. 1
ARTICLE III - INTENTIONALLY DELETED ............................ 1
ARTICLE IV - PURCHASE, AND SALE ................................ 2
ARTICLE V - PRODUCT PRICES, PAYMENT AND TAXES .................. 2
ARTICLE VI - ORDERING AND SCHEDULING ........................... 2
ARTICLE VII - CANCELLATION OF ORDERS ........................... 3
ARTICLE VIII - PARTS .......................................... 3
ARTICLE IX - PACKING AND SHIPPING .............................. 3
ARTICLE X - INSPECTION, TESTING AND QUALITY REQUIREMENTS ....... 4
ARTICLE XI - DOCUMENTATION, TRAINING AND SUPPORT ............... 5
ARTICLE XII - WARRANTIES ....................................... 5
ARTICLE XIII - CHANGES ......................................... 6
ARTICLE XIV - PRODUCT IMPROVEMENTS ............................. 6
ARTICLE XV - PRODUCT DISCONTINUANCE ............................ 6
ARTICLE XVI - INTENTIONALLY DELETED ............................ 6
ARTICLE XVII - FORCE MAJEURE ................................... 6
ARTICLE XVIII - INFRINGEMENT ................................... 7
ARTICLE XIX - PROPRIETARY INFORMATION .......................... 8
ARTICLE XX - DEFAULT/LIMITATION OF LIABILITY/LICENSE RIGHTS .... 8
ARTICLE XXI - NOTICES .......................................... 8
ARTICLE XXII - PRODUCT LIABILITY/INSURANCE ..................... 9
ARTICLE XXIII - RIGHTS TO SELL AND DISTRIBUTE PRODUCT .......... 9
ARTICLE XXIV - GENERAL ......................................... 9
<PAGE>
EXHIBIT TITLE ARTICLE
A PRODUCT SPECIFICATIONS .................... I,II,III,X,XII
B UNIT PRICE SCHEDULE .................................... V
C SPARE PARTS .................................. I,V,VI,VIII
D PACKAGING SPECIFICATIONS .............................. IX
E QUALITY CONTROL AGREEMENT .............................. X
F QUALITY AUDIT/FINAL ACCEPTANCE TEST .................... X
G DOCUMENTATION ..................................... III,XI
H TRAINING AND SUPPORT .................................. XI
I LICENSE COST .......................................... XI
<PAGE>
OEM AGREEMENT
This Agreement, which includes all Exhibits referred to herein, is entered into
by and between CalComp Technology. Inc. including its subsidiaries and
affiliates, having a place of business at 2411 West La Palma Avenue, Anaheim,
California 92803 (hereinafter "CalComp"), and Copyer Co. Ltd, having a place of
business at 6-3-3 Shimorenjaku, Mitaka-shi, Tokyo 181 Japan (hereinafter
"Copyer").
R E C I T A L S
WHEREAS CalComp has obtained evaluation units of the Products, as hereinafter
defined, from Copyer for evaluation.
WHEREAS Copyer has represented its ability to manufacture and supply CalComp
with production quantities of the products.
WHEREAS CalComp needs a dependable source for the Products and related services
as described herein and is willing to obtain the Products from Copyer, in
accordance with the provisions hereof.
NOW THEREFORE, in consideration of the premises and the covenants set forth
herein and intending to be legally bound, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS
Words shall have their normally accepted meanings as employed in this Agreement.
The terms "herein" and "hereof", unless specifically limited, shall have
reference to the entire Agreement. The word "shall" is mandatory, the word
"may" is permissive, the word "or" is not exclusive, the words "includes" and
"including" are not limiting and the singular includes the plural and vice
versa. The following terms shall have the described meanings:
"Products" means the devices described in Exhibit A (Product Specifications)
including related software and the Parts listed in Exhibit C (Spare Parts).
"Parts" means the service parts and consumables described in Exhibit C (Spare
Parts). The service parts are listed in Exhibit C Section A and the consumables
are listed in Exhibit C Section B.
"Unit" means an individual device described in the Product Specifications.
"Finished Unit" means a unit of CalComp's plotter product produced by
integrating an image controller developed by CalComp and other materials not
supplied by Copyer, excluding tubing systems, with the engine Unit provided by
Copyer.
ARTICLE II - TERM OF AGREEMENT
The term of this Agreement shall commence on the first day of the month
following the date of signing by the last party to sign and shall continue in
full force and effect for a period of three (3) years from such date, unless
extended or earlier canceled as authorized hereunder. Either party has the
right to extend the term for successive one year periods by giving written
notice to the other party at least ninety (90) days prior to the end of the
initial period or any extension thereof.
ARTICLE III - INTENTIONALLY DELETED
1
<PAGE>
ARTICLE IV - PURCHASE, AND SALE
CalComp shall purchase Units of such Product from Copyer during the term of this
Agreement and may purchase Parts and obtain services on the terms and conditions
set forth herein; and Copyer shall sell such Products and furnish the services
in accordance with these terms and conditions.
ARTICLE V - PRODUCT PRICES, PAYMENT AND TAXES
A. The prices for Units purchased under this Agreement shall be as indicated
in Exhibit B (Unit Price Schedule) and the prices for Parts shall be as
indicated in Exhibit C. The pricing detailed in Exhibit B (Unit Price
Schedule) shall remain fixed for a period of each twelve (12) months from
CalComp's first production shipment of mass production units. Three (3)
months prior to the end of such twelve (12) month period the parties
shall meet to agree the pricing to apply to Products shipped from Copyer
for the following twelve (12) month period.
B. Payment shall be made in Japanese Yen thirty (30) days after the date of
the Bill of Lading for Products. Each invoice shall include the Order
number and CalComp's & Copyer's part number of each item shipped or the
service supplied, shipment or supply date, destination address, and
identification of any optional features.
C. With the exception of the items shown in Exhibit C (Spare Parts), the
Products purchased hereunder and Finished Unit will be resold under
CalComp's trade name or trademark. Copyer therefore shall not include in
the prices any amount for taxes upon the sale of Products to CalComp. All
other taxes upon the Products or sale thereof to CalComp which Copyer is
required to pay or collect are included in the prices. Upon request,
CalComp will provide Copyer with an exemption certificate for the resale
of Products as such or as a part of another product or system.
ARTICLE VI - ORDERING AND SCHEDULING
A. The Products, and services when applicable, shall be ordered by purchase
orders and change orders thereto (hereinafter individually or
collectively "Orders") issued by CalComp's procurement department
personnel. Each Order shall specify quantity, configuration, prices,
delivery week dates (detailed on the Order Tracking Sheet described
below) and destination, or service as applicable, and other such matters
necessary for the individual transaction to be adequately described. All
Orders, including those issued by CalComp in anticipation of the signing
of this Agreement, and related instructions which are consistent with the
terms of this Agreement are deemed accepted by Copyer upon receipt
thereof and are covered hereby.
B. Copyer shall acknowledge receipt of each Order within ten (10) days after
receipt and shall deliver ordered Units and Parts in accordance with the
delivery date indicated on the Order Tracking Sheet (herein after "OTS")
provided such dates are consistent with the Order lead times, which are
four (4) months for Units, four (4) months for the consumables listed in
Exhibit C section B and service parts listed in Exhibit C section A,
excluding initial provisioning and emergency Parts for which the lead
time shall be stated in Exhibit C (Parts). Copyer shall make reasonable
effort, however, to comply with CalComp's Orders which request delivery
of Units in less than the lead time the aforementioned lead times.
C. With respect to Units and Part Exhibit C section C, prior to the tenth
(10) day of each month, CalComp shall send Copyer and OTS covering Units
for the next six (6) calendar months. The first four (4) month of the
deliveries shown on the OTS shall represent a firm purchase commitment
not subject to withdrawal except as provided herein. The remaining
period of the OTS shall represent a forecast of CalComp's anticipated
purchases for such period, but is not a purchase commitment. Copyer shall
acknowledge receipt of each OTS within ten (10) days after receipt
thereof and simultaneously inform
2
<PAGE>
CalComp of any problems that Copyer believes it may have in complying
therewith.
D. CalComp shall maintain a reasonable level of Finished Units in stock
such as to support its sales activities. Periodically at its discretion
CalComp may elect to share such stock data with Copyer for the purposed
of manufacturing planning.
E. This Agreement states the terms and conditions applicable to the Orders
and replaces in their entirety both the pre-printed terms and conditions
appearing on CalComp's Order forms and any additional terms or changes
appearing on Copyer's acknowledgment of the Orders.
ARTICLE VII - CANCELLATION OF ORDERS
A. Without relieving CalComp of its obligations under its purchase
commitment detailed under Exhibit B (Unit Price Schedule), CalComp may
cancel any Order for Products issued hereunder, by giving written notice
to Copyer prior to the weekly delivery date stated on the OTS, subject
only to payment of a cancellation fee, which shall be limited to a
percentage of the Product price as follows:
<TABLE>
<CAPTION>
NOTICE OF CANCELLATION
DAYS PRIOR TO CANCELLATION FEE
SCHEDULED SHIP DATE (Maximum)
------------------- --------------
<S> <C>
121 days or more 0%
91-120 days 20%
90 days or less 25%
</TABLE>
C. Each month CalComp shall be allowed to adjust its forecast for Product
as indicated in the OTS by up to 30% from the previously indicated
quantity in the OTS for the prior month.
ARTICLE VIII - PARTS
A. Copyer shall receive emergency Parts Orders for "site down" situations
according to the conditions indicated in Exhibit C (Spare Parts).
Copyer shall timely inform CalComp of shipping information such as a
carrier, routing, air or waybill number, etc.
B. In consideration of CalComp's purchase of Products during the term of
this Agreement, CalComp shall have the right to purchase and Copyer
shall be obligated to sell Parts, as provided in Exhibit C (Spare
Parts), in such quantities as CalComp may need from Copyer, to support
and maintain the Products until five (5) years after the date of the
last delivery of Units hereunder. Thereafter Copyer shall continue to
supply Parts and services at the prices Copyer may quote until Copyer
notifies CalComp that Copyer intends to discontinue supplying any Parts,
whereupon CalComp shall have forty five days to place a final Order for
such Parts to be delivered within six months after CalComp's Order.
ARTICLE IX - PACKING AND SHIPPING
A. All Products shall be packed as set forth in Exhibit D (Packaging
Specifications). A packing list shall accompany each shipment
indicating the Products included therein. CalComp's Order numbers, Unit
serial numbers and CalComp's & Copyer's Part numbers shall be indicated
on the packing list and on all shipping packages.
B. Shipment shall be F.O.B. port of export, Tokyo, Japan as indicated
herein accordance with CalComp's designated freight forwarder. Risk of
loss shall pass to CalComp at the F.O.B. point.
3
<PAGE>
However, if the Copyer fails to follow CalComp's routing instructions,
risk of loss shall remain with the Copyer.
C. Copyer reserves the right to decline to expedite or delay requests by
CalComp of more than one (1) month. CalComp reserves the right to
refuse to take delivery of Products which are delivered to the freight
forwarder by more than one (1) month in advance of the scheduled
delivery date. In such case CalComp may take early delivery and hold
Copyer's invoice for payment until the date it would be due if delivery
had been made according to schedule.
D. If Copyer is more than four (4) weeks late in delivering any Products,
CalComp may require Copyer to ship some or all of such Products by air
freight or other premium mode of transportation and to pay the cost
differential between the normal and premium mode.
E. If Copyer fails to deliver five percent (5%) or more of the Product
scheduled for shipment during the first twelve (12) months of mass
production shipments hereunder then CalComp may cancel some or all
Orders for such delinquent Products without liability but in any event
the canceled quantity shall be counted as though it had been accepted by
CalComp for the purpose of any volume commitments hereunder.
ARTICLE X - INSPECTION, TESTING AND QUALITY REQUIREMENTS
A. Copyer shall establish and maintain a quality control system in
accordance with its own Quality Control Agreement (QCA) Exhibit E
(Quality Control Agreement). Copyer shall, prior to shipment, inspect
and test each Product in accordance with Exhibit E. CalComp shall audit
Copyer's quality assurance on the first lot and review, statistical
process control, inspection and test procedures by observing tests being
conducted by Copyer or by reviewing Copyer's test documentation; and
CalComp may conduct its own source inspection and tests, as stated in
Exhibit F (Source/Receiving Inspection and Test Protocol). Records of
quality assurance inspection work performed on Products prior to
delivery under this Agreement shall be retained by Copyer and be
available to CalComp upon request. Nothing in this Agreement relating
to inspection and test procedures will be construed as diminishing
rights of CalComp under the warranty provisions hereof or as waiving,
altering or modifying CalComp's right of final inspection, acceptance or
rejection at its facility or installation site.
B. Copyer shall strive to achieve Drop Ship status in accordance with the
criteria of Paragraph 1.5 of Exhibit E (QCA) within six (6) consecutive
months of Product shipments after shipment of the first production unit.
If Copyer fails to achieve Drop Ship status within such period, then the
parties shall convene a meeting to discuss the appropriate action. The
same apply during any period in which Drop Ship status is suspended
because of Copyer's failure to continue to comply with the requirements
for such status.
C. If inspection and testing by CalComp within fifteen (15) working days
after receipt at CalComp reveals that any Product is defective with the
requirements of Exhibit A (Product Specifications), CalComp may request
Copyer to repair or replace the defective Product, as Copyer chooses,
within a reasonable time after CalComp's request. Alternatively,
CalComp may, without effecting the warranty provisions, with Copyer's
approval, rework any rejected Product at a mutually agreed expense.
Subject to the foregoing, Copyer shall be notified by CalComp and given
an opportunity to inspect at CalComp's factory subject to CalComp's
prior written consent.
D. CalComp may inspect and test Drop Shipped Products or lot quantities of
products accepted based on incoming inspection and testing after taking
delivery thereof. Such Products or lot quantities, upon CalComp's
inspection and test at its receiving location or installation site,
shall demonstrate a Critical Defect Free (CDF) rate, a Major Defect Free
(MADF) and a Minor Defect Free (MIDF) rates as define by Military
standard 105E. These rates shall be decided by the test method
described in Exhibit F
4
<PAGE>
(Quality Audit/Final Acceptance Test). Non-compliance with either the
CDF or the MADF specified rates shall be cause for Copyer to review its
manufacturing process for possible corrective action.
E. It is hereby understood that in the event of an amendment being
necessary to change the provisions of Exhibit E (Quality Control
Agreement), then such amendments may be executed by the Copyer Quality
Center.
ARTICLE XI - DOCUMENTATION, TRAINING AND SUPPORT
A. Copyer shall provide CalComp with one set of Part lists and Service
Manuals on a free of charge basis.
B. Copyer shall provide training and support as set forth in Exhibit H
(Training and Support) to enable CalComp to install, operate, test,
maintain and repair the Products.
C. Copyer grants CalComp the right and license, subject to the provisions
of Article XIX, Proprietary Information, to use, reproduce, modify,
translate and distribute the Documentation and training materials with
legally effective copyright notice on a chargeable basis so that CalComp
may make its own manuals. Such charges are detailed in Exhibit I
(License Cost).
ARTICLE XII - WARRANTIES
A. Copyer warrants that the Products shall:
1. Conform to Exhibit A (Product Specification).
2. Comply with safety and emission standards of the regulatory
agencies specified in Exhibit A (Product Specification).
3. Be free of defects in material and workmanship.
4. Be of new manufacture, merchantable and fit for use as a
computer peripheral.
5. Be free of any claim, lien or encumbrance not caused by CalComp.
B. In the event of a claim under the warranty provisions Copyer shall
provide replacement Parts, to CalComp free of charge (including freight
cost) for any Product found to be in breach of the provisions listed in
paragraph A (1) through (5) above, within one hundred and ten (110) days
after the Bill of Lading date (herein after "B/L Date"). In the event
that a defect is not of a random nature but rather of an epidemic
nature, as described in paragraph C, then the warranty shall be extended
up to one (1) year after the B/L Date. The same shall apply to defects
in the Products or their manufacturing processes that were not
discernable by an inspection and test in accordance with the Acceptance
Test Procedure of Exhibit F at the time of acceptance. Copyer shall
provide the replacement Parts or an action plan within three (3) weeks
after receipt of CalComp's written report of defects.
In addition, in the event that the replacement Parts do not correct the
defect then CalComp and Copyer shall have the option to decide the
disposition of the defective Products. Such option shall only be
exercised after reasonable good faith discussions between CalComp and
Copyer.
C. In the event that CalComp uncovers what it believes is an epidemic
defect then CalComp shall provide Copyer data, in writing, in order to
convince Copyer that such a defect exists. In the event the parties
reach agreement as to the existence of an epidemic defect then Copyer
shall provide CalComp with Parts, complying with the warranty, on a
free of charge basis (including freight cost), necessary to fix all the
Products as the parties determine. In the event that CalComp needs to
effect repairs to Product
5
<PAGE>
already in the field then Copyer and CalComp shall determine the cost of
such field repairs and reach an agreement as to the apportionment of
such costs.
D. Warranty provisions shall not apply to the Parts listed in Exhibit C
Section B Consumables but shall apply to Section A Service Parts.
E. For countermeasures against epidemic defects of Product and Parts in the
field, CalComp may propose to Copyer that Copyer package replacement
Parts in the form of an FCN kit. In such case the cost apportionment of
such "kitting" (but not the cost of the parts included therein) shall
be discussed and agreed by the parties.
F. CalComp shall submit warranty claims to Copyer in writing, within a
reasonable time after becoming aware of any breach, indicating the
nature and date of the claim and serial number of the defective Unit or
Part.
H. Copyer shall give CalComp prompt notice of any warranty problem that it
becomes aware of and shall promptly correct such problems by making
necessary changes in the Products or their manufacturing process subject
to the provisions of Article XIII (changes).
ARTICLE XIII - CHANGES
Changes to the Products shall be conducted in accordance with the procedure
described in Exhibit E (Quality Control Agreement) Appendix 1.
ARTICLE XIV - PRODUCT IMPROVEMENTS
Copyer shall offer improved and new products which it intends to market that are
comparable in function and capability to the present Products for purchase by
CalComp as additions to or as substitutes therefor under the terms and
conditions of this Agreement. Copyer shall notify and make evaluation units of
improved and new products available to CalComp sufficiently in advance of
Copyer's planned initial shipment so as to afford CalComp reasonable opportunity
to determine whether it would be interested in such products.
ARTICLE XV - PRODUCT DISCONTINUANCE
Copyer shall provide four (4) months written notice to CalComp of its intention
to discontinue the manufacture of Product. The notice shall comprise the
Copyer's part number, Product description and Copyer's replacement part number,
where applicable. Such notices shall be sent to the CalComp contract
administrator.
By the tenth day of the last month of the notice period, CalComp may place
Orders for delivery of Product for the last three (3) months of the subsequent
six (6) months period. Such final Orders shall be deemed as being firm Orders,
within the allowable variance, and cannot be canceled.
ARTICLE XVI - INTENTIONALLY DELETED
ARTICLE XVII - FORCE MAJEURE
Neither Copyer nor CalComp shall be liable for any delay or failure of
performance hereunder due to any contingency beyond its control which renders
performance commercially unreasonable including, but not limited to an act of
God, war, mobilization, riot, strike, embargo, fire, flood, earthquake or power
failure. When only part of Copyer's or CalComp's capacity to perform is excused
under this Article, Copyer or CalComp must
6
<PAGE>
allocate production and deliveries or receipt of deliveries among various
customers or suppliers then under contract for similar goods during the period
when Copyer or CalComp is unable to perform. The allocation must be effected in
a commercially fiar and equitable manner. When either Copyer or CalComp claims
excuse for nonperformance under this Article, it must give notice in writing to
the other party. When an allocation has been made, notice of the estimated
quota made available for CalComp or Copyer, as the case may be, must be given.
If the inability to perform continues for more than sixty (60) days, then
thereafter Copyer shall not be obligated to sell Products that it is unable to
deliver and CalComp shall not be obligated to purchase Products that it is
unable to receive or use due to contingencies that are beyond control, and no
Products are to be tendered by Copyer without the prior written consent of
CalComp. Further, CalComp shall have the right to cancel this Agreement with
respect to Product that Copyer is unable to deliver if Copyer's inability to
deliver does, or it becomes obvious that it will, continue for more than sixty
(60) days.
ARTICLE XVIII - INFRINGEMENT
A. Copyer represents that it is not aware of any trade secret
misappropriation or patent, copyright or mask work infringement or claim
thereof and has no reason to believe that any such misappropriation,
infringement or claim will occur with regard to the Products and
services delivered hereunder by Copyer or the use, sale or lease
thereof by CalComp or its subsidiaries or affiliates or their respective
distributors, dealers or customers.
B. Copyer shall indemnify and hold CalComp and its Subsidiaries and
affiliates and their respective distributors, dealers and customers
harmless from any and all loss, damage or liability (including
reasonable legal and other expenses and costs) that results from any
claim or action for infringement of a domestic or foreign patent,
copyright or mask work right or for misappropriation of any trade
secret or other intellectual property right with respect to the Products
and services furnished by Copyer under this Agreement; and Copyer shall
defend or settle any such claim or action at its own expense provided
that CalComp, upon becoming aware thereof, gives Copyer prompt written
notice of such action or claim made against CalComp or its subsidiaries
or affiliates or their respective distributors, dealers or customers.
CalComp shall have the right, at its own expense, to participate in
Copyer's defense of any such action through CalComp's own counsel. In
the event that Copyer fails, after notice, to adequately defend or
settle any action which it is obligated to defend or settle hereunder,
CalComp shall have the right to prosecute or defend such action and the
right to charge Copyer for the full cost and expense thereof (including
court costs and attorneys' fees) plus all awards and damages in such
action against CalComp.
CalComp shall indemnify and hold Copyer harmless from any and all loss,
damage or liability (including reasonable legal and other expenses and
costs) that results from any claim or action for infringement of a
domestic or foreign patent, copyright or mask work right or for
misappropriation of any trade secret or other intellectual property
right with respect to Copyer's modification of the Products to meet
design requirements of the Products and such infringement or
misappropriation would not have occurred but for Copyer's modification
to CalComp's design. Then CalComp shall defend or settle any such claim
or action at its own expense provided that Copyer, upon becoming aware
thereof, gives CalComp prompt written notice of such action or claim
made against Copyer. Copyer shall have the right, at its own expense, to
participate in CalComp's defense of any such action through Copyer's own
counsel. In the event that CalComp fails, after notice, to adequately
defend or settle any action which it is obligated to defend or settle
hereunder, Copyer shall have the right to prosecute or defend such
action and the right to charge CalComp for the full cost and expense
thereof (including court costs and attorneys' fees) plus all awards and
damages in such action against Copyer.
C. The foregoing states the entire liability of Copyer and CalComp for
infringement and misappropriation except where it is proven to be
willful in which case the other party shall have all available legal and
equitable remedies.
7
<PAGE>
ARTICLE XIX - PROPRIETARY INFORMATION
A. Each party hereto shall treat the other party's proprietary information
in accordance with the Mutual Non-Disclosure Agreement between the
parties dated April 26, 1993.
B. Neither party shall without prior written consent of both parties
disclose the existence of or any terms and conditions of this Agreement
or in any manner advertise or publish any information concerning this
Agreement, except as is necessary for its performance hereunder or as
may be required by law.
ARTICLE XX - DEFAULT/LIMITATION OF LIABILITY/LICENSE RIGHTS
A. If Copyer fails to render timely performance of its obligations with
regard to delivering Products and Documentation and furnishing support,
training and other services, CalComp may, upon giving Copyer written
notice of such failure, stop further shipments of such Products, in
whole or in part, and suspend performance of all or any portion of its
other obligations hereunder with regard to such Products until the
failure is cured. If Copyer does not cure the failure within twenty days
after receipt of the notice, CalComp shall have the right to cancel this
Agreement or any Orders, in whole or in part, with respect to Product
for which Copyer is in default or with respect to all Products,
effective immediately upon transmission of a written notice of
cancellation to Copyer; provided, however, that CalComp may require
Copyer to deliver some or all Products ordered prior to cancellation. In
addition, in the event of cancellation, CalComp shall have the right, in
order to satisfy its requirements for the Products, to purchase
equivalent products from any available source.
B. If CalComp fails to render timely performance of its obligations with
regard to ordering, forecasting, providing shipping routing instructions
and payment, Copyer may, upon giving CalComp written notice of such
failure, stop further shipments of such Products, in whole or in part,
and suspend performance of all or any portion of its other obligations
hereunder with regard to such Products until the failure is cured. If
CalComp does not cure the failure within twenty (20) days after receipt
of the notice, Copyer shall have the right to cancel this Agreement or
any Orders, in whole or in part, with respect to Product for which
CalComp is in default or with respect to all Products, effective
immediately upon transmission of a written notice of cancellation to
CalComp. Cancellation of this Agreement by Copyer shall not relieve
CalComp of its obligation to pay for product ordered.
C. Except as expressly stated herein, neither party shall be liable to the
other or to any third party for any incidental, indirect, special or
consequential damages resulting from a breach of its obligations
hereunder except in the case of material and willful breach.
ARTICLE XXI - NOTICES
All notices hereunder shall be in writing sent by certified mail, return
receipt requested, addressed to the party to be notified as follows:
To CalComp: Director, OEM Contracts
CalComp Technology, Inc
2411 West La Palma Avenue
Anaheim, California 92803
With a copy to: CalComp Corporate Secretary
CalComp Technology, Inc
2411 West La Palma Avenue
Anaheim, California 92803
8
<PAGE>
To Copyer: Copyer Co. Ltd
6-3-3 Shimorenjaku,
Mitaka-shi
Tokyo 181, Japan.
or to such other address or addresses as either party may designate from time to
time.
ARTICLE XXII - PRODUCT LIABILITY/INSURANCE
Copyer shall indemnify and hold CalComp harmless from all cost, expense and
liability arising out of or related to death or injury to persons or property
resulting from any defect in design, manufacture, material or workmanship of the
Products. Copyer shall maintain, at its expense, during the term of this
Agreement, product liability insurance for the Products written by a responsible
insurer with limits of at least $1,000,000.00.
ARTICLE XXIII - RIGHTS TO SELL AND DISTRIBUTE PRODUCT
Copyer grants to CalComp an exclusive world-wide right to sell and distribute
the Finished Unit and a non-exclusive world-wide right to sell and distribute
Parts.
ARTICLE XXIV - GENERAL
A. This Agreement constitutes the entire agreement between the parties. No
waiver, consent, modification or change of terms of this Agreement shall
bind either party unless in writing signed by both parties, and then
such waiver, consent, modification, or change shall be effective only in
the specific instance and for the specific purpose given. Any provision
of an Order or acknowledgment thereof under this Agreement which is in
any way inconsistent herewith shall be deemed deleted. This Agreement is
entered into under the law of Japan.
B. The headings of the Articles in this Agreement are included for
convenience only and are not to be used in construing or interpreting
the Agreement.
C. If any part of this Agreement is declared by the Court of competent
jurisdiction to be invalid, such invalidity shall not affect the
enforceability of other parts not held to be invalid.
D. This Agreement may not be assigned by either party without the prior
written agreement of the other party and any purported attempt to do so
shall be null and void.
E. Upon termination or cancellation of this Agreement, Articles I, IV, V,
VI, VIII, IX, X, XI, XII, XIII, XVI, XVII, XVIII, XIX, XX, XXI, XXII,
XXIII and XXIV shall survive and continue to apply in accordance with
their terms.
9
Last Revised: August 22, 1996
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective authorized
representatives to execute and enter into this Agreement.
CALCOMP TECHNOLOGY, INC. COPYER CO., LTD.
BY: /s/ Gary Long BY: /s/ Takeshi Mitarai
_______________________ _________________________
Signature Signature
Name: Gary Long Name: Takeshi Mitarai
Title: President Time: President
Date: 9-13-96 Date: 9-19-96
______________________ ________________________
10
<PAGE>
EXHIBIT 10.16
OEM AGREEMENT
BY AND BETWEEN
CALCOMP INC.
AND
KATSURAGAWA ELECTRIC CO., LTD.
<PAGE>
TABLE OF CONTENTS
Article 1 - DEFINITIONS.......................................................1
Article 2 - GRANT OF RIGHTS...................................................2
Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING...................3
Article 4 - PRICING AND PAYMENT...............................................4
Article 5 - TECHNICAL TRAINING, MANUALS.......................................5
Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS..................6
Article 7 - WARRANTY..........................................................6
Article 8 - PATENTS...........................................................7
Article 9 - TRADEMARK.........................................................8
Article 10 - SECRECY...........................................................8
Article 11 - TERM OF AGREEMENT.................................................9
Article 12 - TERMINATION FOR SPECIAL REASONS..................................10
Article 13 - FORCE MAJEURE....................................................10
Article 14 - WAIVER...........................................................11
Article 15 - ASSIGNMENT.......................................................11
Article 16 - ENTIRE AGREEMENT.................................................11
Article 17 - GOVERNING LAW....................................................11
Article 18 - ARBITRATION......................................................11
Article 19 - NOTICE...........................................................12
Article 20 - REPRESENTATIONS..................................................12
Article 21 - MATTERS NOT PROVIDED FOR.........................................12
EXHIBITS
--------
Annex I - Model 2700 Product Description
Annex II - Pricing for Machines
Annex III - KIP Model 2700 Parts Price List.
Annex IV - Exchange Rate Procedure
<PAGE>
A G R E E M E N T
-----------------
THIS AGREEMENT is made as of the 9th day of January 1996, by and between CALCOMP
INC., having its principal place of business at 2411 West La Palma Avenue,
Anaheim, California, U.S.A. (hereinafter called "CALCOMP") and KATSURAGAWA
ELECTRIC CO., LTD., having its principal place of business at 21-3, Shimomaruko
4-chome, Ohta-ku, Tokyo, Japan (hereinafter called "KTA")
WITNESSETH
----------
WHEREAS, KTA has been designing and developing a digital printer engine
designated by KTA as its Model 2700 (hereinafter referred to as the "MACHINE",
which term is more fully defined below);
WHEREAS, CALCOMP desires to purchase MACHINES as well as spare parts,
accessories and consumable products for use in and with MACHINES from KTA for
the purpose of distributing the same in the TERRITORY on an OEM basis together
with controllers, drivers and software designated by CALCOMP; and
WHEREAS, the parties wish to enter into an Agreement setting forth the terms and
conditions under which CALCOMP shall purchase and distribute such products from
KTA.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:
Article I - DEFINITIONS
- -----------------------
Words shall have their normally accepted meanings as employed in this Agreement.
The terms "herein" and "hereof", unless specifically limited, shall have
reference to the entire Agreement. The word "shall" is mandatory, the word
"may" is permissive, the word "or" is not exclusive, the words "includes" and
"including" are not limiting and the singular includes the plural. The
following terms shall have the described meanings:
a) MACHINE shall mean the KIP model 2700 Digital Printer Engine designed
-------
and developed by KTA, the specifications of which are set out in Annex I
hereof.
b) SPARE PARTS shall mean those parts used in the repair of the MACHINE
-----------
and which are an integral part thereof.
c) SUPPLY PRODUCTS shall mean SPARE PARTS plus accessories and consumable
---------------
products such as
Date Revised: May 13, 1996 1
<PAGE>
developer, toner and a photosensitive drum to be used in or in
connection with the MACHINE, but not including paper and other copying
media.
d) CONTRACT PRODUCTS shall mean the MACHINE or SUPPLY PRODUCTS.
-----------------
e) OEM PRODUCTS shall mean the MACHINE, and the SUPPLY PRODUCTS, as
------------
integrated into a final product by CALCOMP, inter alia by providing the
MACHINE with a controller driver and related software.
f) TERRITORY shall mean all countries in the World.
---------
g) CONTRACT YEAR shall mean the twelve (12) consecutive calendar month
-------------
period after the first day of the month in which the first production
order for the MACHINES is received or any subsequent twelve (12)
consecutive calendar month period.
Article 2 - GRANT OF RIGHTS
- ---------------------------
2-1
- ---
KTA hereby grants to CALCOMP the non-exclusive right to distribute the OEM
PRODUCTS on an OEM basis within the TERRITORY during the term of this Agreement.
The said right of CALCOMP shall include CALCOMP's right to have the OEM PRODUCTS
distributed by its subsidiaries and distributors within the TERRITORY, provided
that CALCOMP shall be responsible for the compliance by such subsidiaries and
distributors with the terms of this Agreement.
2.2
- ---
CALCOMP hereby agrees to use its best efforts to distribute the OEM PRODUCTS on
an OEM non-exclusive basis within the TERRITORY during the term of this
Agreement.
2.3
- ---
Nothing in this Agreement is to be construed as giving either party the right to
commit the other or to act as the legal representative of the other party.
Date Revised: May 13, 1996 2
<PAGE>
Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING
- -----------------------------------------------------------
3.1
- ----
KTA agrees to supply CALCOMP with the CONTRACT PRODUCTS ordered by CALCOMP for
distribution by CALCOMP within the TERRITORY during the term of this Agreement.
3.2
- ---
During the term hereof and for a period of at least five (5) years after the
termination date of this Agreement, KTA shall supply CALCOMP with SUPPLY
PRODUCTS which CALCOMP may order. If KTA at any time during such five (5) year
period determines that it will no longer supply certain of the SUPPLY PRODUCTS
after expiration of the said period, it will give at least three (3) months
notice prior to the expiration of said five (5) year period to CALCOMP,
identifying the SUPPLY PRODUCT to be discontinued. In such case CALCOMP shall
be entitled to purchase one (1) final lot, in a reasonable quantity, of the
SUPPLY PRODUCT concerned from KTA.
3.3
- ---
CALCOMP agrees that none of the 120/220 volt units of the MACHINE shall be
distributed in Japan as such or such converted into 100 volt units.
3.4
- ---
CALCOMP agrees that it will place firm orders ("Firm Orders") for the CONTRACT
PRODUCTS by means of a purchase order form, letter, or facsimile before the
fifteenth (15th) of each month for the third (3rd) month following, and provide
KTA with a forecast (the "Forecast") before the fifteenth (15th) of each month
for the fourth (4th) and fifth (5th) months following. If any Firm Order is
placed by facsimile, CALCOMP shall promptly send to KTA a confirmation copy by
mail.
Unless CALCOMP specifies otherwise and agrees to pay extra charges for the
packaging concerned, the number of MACHINES specified in a Firm Order for a
month shall be equal to or a multiple of twenty-two (22) (the number of MACHINES
which fit in a 20 foot container) or forty-four (44) (the number of MACHINES
which fit in a 40 foot container). Provided, however, that insofar as the
packaging for the relevant MACHINES need not be changed, the number of MACHINES
for such monthly order need not be equal to or a multiple of twenty two (22) or
forty four (44).
Date Revised: May 13, 1996 3
<PAGE>
Firm orders may not deviate in quantity by more than twenty (20) percent (plus
or minus) from the quantity provided in the related Forecast.
KTA will confirm promptly its acceptance of such Firm Orders by facsimile to
CALCOMP. If such acceptance is sent by facsimile, KTA shall promptly send to
CALCOMP a confirmation copy by mail.
3.5
- ---
The following shall be shipped by KTA, F.O.B. Taipei/Keelung Taiwan or F.O.B.
Japan to CALCOMP within the times stipulated:
a) MACHINES shall be shipped by KTA from its factory to CALCOMP within
three (3) months from the fifteenth (15) of the month before which date
the Firm Order for such MACHINES is placed.
b) SUPPLY PRODUCTS shall be shipped by KTA from its factory to CALCOMP with
the relevant lead time as stated in Annex III, KIP Model 2700 Parts
Price List.
3.6
- ---
On each Firm Order and each delivery made hereunder the terms and conditions
hereof shall be exclusively applicable. General sales or purchase conditions of
the parties hereto shall not be applicable. Special conditions for certain
orders shall be clearly stated in writing and shall previously be accepted in
writing by KTA and CALCOMP in order to be applicable and valid.
Article 4-PRICING AND PAYMENT
- -----------------------------
4.1
- ---
For the first CONTRACT YEAR, the prices for 120/220 volt unit and 100 volt unit
of the MACHINE respectively shall be as set out in Annex II hereto, the 120/220
volt units of which shall be subject to adjustment with respect to fluctuations
in the exchange rate as stated in Annex IV hereto. For the first CONTRACT YEAR,
the prices for SUPPLY PRODUCTS are set out in Annex III hereto.
4.2
- ---
Beginning at least ninety (90) days prior to the end of each CONTRACT YEAR, the
parties will negotiate in good
Date Revised: May 13, 1996 4
<PAGE>
faith to arrive at the price and minimum purchase requirements for the MACHINE,
and the price for the SUPPLY PRODUCTS to be applied in the subsequent CONTRACT
YEAR.
4.3
- ---
Payment for the MACHINES or SUPPLY PRODUCTS shall be made by CALCOMP to KTA in
Japanese Yen via telegraphic transfer (TT) into an account so designated by KTA,
within five (5) days of receipt of a copy of the relevant Bill of Lading or
Airway Bill, for the shipment in question, having been sent via facsimile to
CALCOMP.
Article 5 - TECHNICAL TRAINING, MANUALS
- ---------------------------------------
5.1
- ---
KTA shall provide technical training to the service personnel of CALCOMP as
follows:
a) KTA shall provide, upon written request by CALCOMP, technical training
courses ("Service Training Courses") to train a limited number of key
technicians of CALCOMP at KTA's facility in Japan. KTA shall incur all
costs and expenses for its own personnel and CALCOMP shall bear all
travel costs and other expenses for its own personnel.
b) At CALCOMP's request, KTA may agree to hold its Service Training Course
at CALCOMP's facility, provided CALCOMP shall incur all costs and
expenses of its own personnel, and KTA shall bear all travel costs and
expenses of its own instructor.
c) The obligation of KTA in paragraphs a) and b) above shall be limited to
ten (10) man-days of instruction (e.g. one (1) key technician of CALCOMP
for ten (10) working days or two (2) key technicians of CALCOMP for five
(5) working days) during the first year of this Agreement.
5.2
- ---
CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding
the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP,
free of charge, all information regarding the CONTRACT PRODUCTS which may
reasonably enable CALCOMP to prepare such documentation, including
Date Revised: May 13, 1996 5
<PAGE>
one (1) set in English of the parts manual, service manual, operation manual and
interface-specifications for the CONTRACT PRODUCTS.
Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS
- ------------------------------------------------------------
KTA may make modifications of the CONTRACT PRODUCTS which do not alter the
appearance or operation of the CONTRACT PRODUCTS or do not require any adaption
by CALCOMP of electronic or mechanical items in the OEM PRODUCTS ("Minor
Modifications"). KTA shall inform CALCOMP of such Minor Modifications at least
one month prior to the shipment of the CONTRACT PRODUCTS containing such
modifications. Any modification of the CONTRACT PRODUCTS other than Minor
Modifications may only be made by KTA after having given CALCOMP six (6) months
written notice of such modification. Further, for Engineering Change
Information ("ECI"), KTA agrees to notify CALCOMP prior to making modifications
in the following areas, 1) the appearance of the MACHINE, 2) matters relating to
Agency approval, and 3) matters relating to the software and the controller.
CALCOMP shall respond to all KTA ECI requests within thirty (30) days.
Article 7 - WARRANTY
- --------------------
7.1
- ---
KTA warrants that all CONTRACT PRODUCTS shall be free from defects in material
and workmanship and shall be and operate according to the specifications
appearing in Annex I. The said warranty shall apply during a period of six (6)
months after installation of the OEM PRODUCTS at CALCOMP's customers' premises
or for twelve (12) months after the date of shipment, whichever period is
shorter, and is subject to the condition that CALCOMP has notified KTA in
writing or by facsimile of any warranty claim within the warranty period. If
such notice is sent by facsimile, CALCOMP shall promptly send to KTA a
confirmation copy of the same by mail.
7.2
- ---
KTA's sole obligation under the warranty in Article 7.1 is limited to either
repairing or replacing at KTA's option and expense, those CONTRACT PRODUCTS or
parts thereof which do not conform to the said specifications. CALCOMP may, if
appropriate and after agreement with KTA, repair the defective CONTRACT PRODUCTS
at the installation site, in which case KTA shall credit CALCOMP the costs of
replacement parts used by CALCOMP. CALCOMP shall notify KTA of any defective
component and allow KTA to evaluate the claim against the defective component.
KTA or CALCOMP may request that the defective component be returned to KTA for
failure analysis.
Date Revised: May 13, 1996 6
<PAGE>
7.3
- ---
The above warranty does not extend to that part of the CONTRACT PRODUCTS
modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and
CALCOMP shall indemnify and hold KTA harmless from any and all claims related
thereto.
7.4
- ---
If it is unclear or cannot be determined from the nature of the defect whether
Articles 7.1 and 7.2 or 7.3 should apply, the parties shall meet and determine
in good faith a reasonable apportionment of the relevant repair or replacement
costs.
7.5
- ---
THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, AND ACTION UNDER THIS
WARRANTY SHALL BE THE EXCLUSIVE REMEDY.
Article 8 - PATENTS
- -------------------
8.1
- ---
KTA declares that to the best of its knowledge as of the date hereof the
CONTRACT PRODUCTS can be marketed and used in the TERRITORY without infringing
any intellectual property rights or other rights of any third party.
8.2
- ---
In the event CALCOMP or KTA receives any oral or written notice alleging that
the CONTRACT PRODUCTS or any parts thereof furnished under this Agreement
constitute an infringement of any patent in the TERRITORY, CALCOMP and KTA shall
consult with each other in good faith and assist each other to the extent
reasonably possible in the implementation of the particular plan agreed upon by
CALCOMP and KTA as the best solution to the problem.
Date Revised: May 13, 1996 7
<PAGE>
8.3
- ---
It is expressly agreed that in the event CALCOMP or KTA receives any such oral
or written notice alleging patent infringement as described in the preceding
Article 8.2, KTA shall have ninety (90) days from the date of its receipt of
such notice to attempt at its expense to reach an accommodation with the patent
claimant or holder or to modify or replace the CONTRACT PRODUCTS or any parts
thereof with ones that are free from such allegation of infringement.
8.4
- ---
KTA's obligations under this Article 8 extend only to the CONTRACT PRODUCTS and
do not extend to that part of the MACHINES modified, altered or improved by
CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA
harmless from all costs and expenses of patent infringement claims related
thereto.
8.5
- ---
If either party becomes aware of the possibility that the marketing,
distribution or use of the CONTRACT PRODUCTS in the TERRITORY could affect or
infringe intellectual property rights of third parties, it shall forthwith
inform the other party thereof, specifying the details of the same.
Article 9 - TRADEMARK
- ---------------------
CALCOMP shall market and advertise the OEM PRODUCTS only under the trademark
"SOLUS 4" or any other trademark or trademarks of CALCOMP.
Article 10 - SECRECY
- --------------------
During the term of this Agreement, each party may divulge to the other
information which is proprietary and confidential to it. Both parties hereby
agree that:
a) All information in written or other physical form, delivered to it by
the Other Party and which is designated to be proprietary and
confidential will be safeguarded in the same manner as it safeguards its
own proprietary and confidential information of like character, and will
not be divulged to third parties by it. Information which is initially
orally or visually submitted and identified at the time of initial
disclosure as
Date Revised: May 13, 1996 8
<PAGE>
proprietary shall also be safeguarded only if the Other Party notifies
it in writing, within ten (10) business days of such initial oral or
visual disclosure, with a specific identification of the proprietary
information contained in such initial oral or visual disclosure.
b) Such information designated as proprietary and confidential shall be
used by it only for the purpose of this Agreement unless there is a
specific written agreement permitting wider use.
c) This commitment shall terminate five (5) years from the Termination Date
of this Agreement.
d) This paragraph shall not impose any obligation upon such party with
respect to any portion of the received information which:
1. Is now, or which hereafter, through no act or failure to act on
its part, becomes generally known or available.
2. Is known to such party at the time of receiving such
information.
3. Is furnished to others without restriction on disclosure, or
4. Is hereafter furnished to such party by a third party, as a
matter of right and without restriction on disclosure.
e) Upon written request from the disclosing Party, the receiving Party will
return all of disclosing Party's Proprietary and Confidential
Information disclosed under this Agreement to the disclosing Party.
Article 11 - TERM OF AGREEMENT
- ------------------------------
This Agreement shall be effective as from the date hereof and shall continue for
a period of three (3) CONTRACT YEARS. Thereafter, it shall be automatically
continued for successive periods of 12 consecutive months until and unless
terminated by one of the parties as at the end of the then current period by
giving at least ninety (90) days written notice thereof.
Date Revised: May 13, 1996 9
<PAGE>
Article 12 - TERMINATION FOR SPECIAL REASONS
- --------------------------------------------
12.1
- ----
Without prejudice to any other remedy, any party may summarily terminate this
Agreement by notice in writing to the other party if the other party:
a) Commits a breach of any of the provisions of this Agreement and,
if the subject breach is capable of remedy, does not remedy that
breach within thirty (30) days of the receipt of written notice
from the other party requiring it to do so; or
b) ceases to carry on business, has a receiver appointed for its
assets, enters into liquidation, whether compulsory or
voluntary, or otherwise becomes subject to applicable insolvency
laws; or
c) fails to meet its obligations; or
d) suffers a substantial change in the identity of its major
shareholders, except in the event such change results from an
internal reorganization within the present group of companies to
which the respective party presently belongs.
12.2
- ----
Termination of this Agreement for whatever reason shall not prejudice the
existing rights and obligations of either party to the other hereunder.
12.3
- ----
Any breach of this Agreement by either CALCOMP or KTA shall constitute a breach
for which such party shall be severally liable.
Article 13 - FORCE MAJEURE
- --------------------------
Neither party shall be liable for any default hereunder due to causes beyond its
control which originated without its fault or negligence including, but not
limited to, acts of God, war, strikes, freight and shipping embargoes,
government orders or regulations, provided that, the party which is unable to
perform its obligations hereunder
Date Revised: May 13, 1996 10
<PAGE>
for reasons indicated above, shall upon the occurrence thereof notify the other
of the occurrence and practical effect of any such event in writing. If, despite
the best efforts of the party in default to remedy the situation of force
majeure as indicated here above, the performance of the obligations of a party
hereto has been prevented by occurrence of any event indicated above for a
period of two (2) months or more, the other party is entitled to terminate this
Agreement forthwith by registered letter.
Article 14 - WAIVER
- -------------------
The failure of either party hereto at any time to exercise any of its rights
under this Agreement shall not be deemed a waiver thereof, nor shall such
failure in any way prevent said party from subsequently asserting or exercising
such rights.
Article 15 - ASSIGNMENT
- -----------------------
No rights or obligations of any party hereunder shall be assignable without the
express prior consent of the other party in writing.
Article 16 - ENTIRE AGREEMENT
- -----------------------------
This Agreement supersedes all former agreements between the parties hereto
insofar as the same are related to the distribution of the CONTRACT PRODUCTS. No
change, addition or modification of any of the terms and provisions hereof shall
be binding on either party unless accepted in writing by both parties.
Article 17 - GOVERNING LAW
- --------------------------
This Agreement shall be construed and governed according to Japanese law.
Article 18 - ARBITRATION
- ------------------------
Any dispute which may arise out of or relating to this Agreement and which
cannot be solved by amicable settlement between the parties shall be determined
by arbitration. If such arbitration is instituted by KTA against CALCOMP, the
hearing shall be held in Anaheim, California, U.S.A. under the rules of the
American Arbitration Association. If such arbitration is instituted by CALCOMP
against KTA, the hearing shall be held in Tokyo, Japan under the rules of the
Japan Commerical Arbitration Association.
Date Revised: May 13, 1996 11
<PAGE>
Article 19 - NOTICE
- -------------------
All notices hereunder shall be deemed to be sufficiently given if in the English
language and sent by one party to the other by facsimile or prepaid certified or
registered airmail addressed to its office as hereinabove set forth or to such
new address as such party may have specified to the other party by notice
hereunder. Notices as provided herein shall be deemed given when received, or
if correctly addressed and posted on the seventh day following the date of
dispatch, whichever comes earlier.
Notices to CALCOMP shall be addressed to: William L. Barber, Company Secretary
(Fax: (714) 821-2470). Notices to KTA shall be addressed to: Mr. Masanori
Watanabe, President (Fax: 03-3757-3451).
Article 20 - REPRESENTATIONS
- ----------------------------
Each party hereby warrants and represents to the other that it is legally free
to enter into this Agreement and that it has no obligation to any other person,
partnership, corporation, association or other business or legal entity which
would affect or conflict in any way with any of its obligations or duties
hereunder.
Article 21 - MATTERS NOT PROVIDED FOR
- -------------------------------------
Any matters not provided for herein shall be decided by mutual consultation, and
such decision shall not take effect unless and until confirmed by the Parties in
writing.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
- ------------------
their behalf by duly authorized representatives as of the day and year first
above written.
CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD.
By: /s/ Gary Long By: /s/ Masanori Watanabe
--------------- ---------------------
Name: Gary Long Name: Masanori Watanabe
Title: President Title: President
Date: 6-3-96 Date: 6-14-96
---------------- ----------------------
Date Revised: May 13, 1996 12
<PAGE>
AMENDMENT 1 TO THE AGREEMENT FOR THE MODEL 2700 ENGINE
------------------------------------------------------
This Amendment is made and entered into as of February 1, 1996, by and between
KATSURAGAWA ELECTRIC CO., LTD., (hereinafter referred to as "KTA") and CALCOMP
Inc., (hereinafter referred to as "CALCOMP").
R E C I T A L S
---------------
WHEREAS KTA and CALCOMP have entered into an Agreement effective January 9, 1996
for the distribution of the Model 2700 Digital Print Engine.
WHEREAS the parties hereto wish to amend the Agreement in order to provide for
certain matters not previously addressed and to modify certain other terms;
NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows:
1) Article 4 PRICING AND PAYMENT - Paragraph 4.1 revise wording as follows:
"The prices for 120/220 volt unit and 100 volt unit of the MACHINE
respectively shall be as set out in Annex II hereto, the 120/220 volt
units of which shall be subject to adjustment with respect to
fluctuations in the exchange rate as stated in Annex IV hereto. The
prices for SUPPLY PRODUCTS are set out in Annex III hereto."
2) Article 5 TECHNICAL TRAINING AND MANUALS - Paragraph 5.2 - revise
wording as follows:
"CALCOMP may prepare, at its own cost, its own manuals and catalogues
regarding the OEM PRODUCTS. For that purpose KTA shall, upon request,
furnish to CALCOMP, free of charge, all information regarding the
CONTRACT PRODUCTS which may reasonably enable CALCOMP to prepare such
documentation, including one (1) set in English of the parts manual,
service manual, operation manual and interface-specifications for the
CONTRACT PRODUCTS. KTA grants CALCOMP the right and license, subject to
the provisions of Article 10 Secrecy, to use, reproduce, modify,
translate and distribute the documentation and training materials with
legally effective copyright notice; provided however, that KTA shall
not be liable for any damages incurred by CALCOMP or a third party due
to, and CALCOMP shall indemnify and hold KTA harmless from liability for
any damages incurred by CALCOMP or a third party due to any errors or
omissions in the documentation used by CALCOMP using any information so
provided by KTA."
3) Article 7 WARRANTY - Paragraph 7.1 - revise wording as follows:
"KTA warrants that all CONTRACT PRODUCTS shall be free from defects in
design, material and workmanship and shall be and operate according to
the specifications appearing in Annex I; provided, however, that such
warranty shall not apply to any defects which occur or arise as a result
of changes in aspects, features or details of the CONTRACT PRODUCTS
which are incorporated therein, adopted or implemented as a result of
requests originated by CALCOMP, provided that a CALCOMP officer has
previously agreed in writing that said warranty will not apply as a
result of the incorporation, adoption, or implementation of said
aspects, features or
Date Revised: May 13, 1996 1
<PAGE>
details. The said warranty shall apply during a period of six (6) months
after installation of the OEM PRODUCTS at CALCOMP's customers' premises
or for twelve (12) months after the date of shipment, whichever period
is shorter, and is subject to the condition that CALCOMP has notified
KTA in writing or by facsimile of any warranty claim within the warranty
period. If such notice is sent by facsimile, CALCOMP shall promptly send
to KTA a confirmation copy of the same by mail.
The aforementioned warranty period shall be extended to three (3) years
from the relevant shipping date for any latent defect which causes a
breach of warranty in a series (for example, a range of serial numbers)
of the CONTRACT PRODUCT resulting from a common defect in the CONTRACT
PRODUCTS that was not discernible from an inspection and test of
CONTRACT PRODUCTS. In the event such latent defect is agreed by KTA
and CALCOMP in writing, then CALCOMP may elect to enter into a field
replacement program of the affected part or assembly, prior to its
failure, so as to prevent or minimize any liability or end user
dissatisfaction with the CONTRACT PRODUCT. In such case KTA shall
provide replacement parts at no cost."
4) Article 7 WARRANTY - Paragraph 7.5 - replace this paragraph with the
following:
"THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR OR INTENDED PURPOSE, AND ACTION UNDER THIS WARRANTY
SHALL BE THE EXCLUSIVE REMEDY. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM A
BREACH OF ITS OBLIGATIONS HEREUNDER EXCEPT IN THE CASE OF A MATERIAL OR
WILLFUL BREACH."
5) Article 10 SECRECY - sub-paragraph (a) - revise wording as follows:
"All information in written or other physical form, delivered to it by
the other party and which is designated to be proprietary and
confidential will be safeguarded in the same manner as it safeguards
its own proprietary and confidential information of like character, and
will not be divulged to third parties by it. Information which is
initially orally or visually submitted and identified at the time of
initial disclosure as proprietary shall also be safeguarded only if the
other party notifies it in writing, within ten (10) business days of
such initial oral or visual disclosure, with a specific written
identification of the proprietary information contained in such initial
oral or visual disclosure.
This Agreement shall not impose any obligation upon the receiving party
with respect to any portion of the received information which (i) is
now, or which hereafter, through no act or failure to act on the part of
the receiving party, becomes generally known or available; (ii) is known
to the receiving party at the time of receiving such information; (iii)
is furnished to others by the disclosing party without restriction on
disclosure; (iv) is hereafter furnished to the receiving party by a
third party, as a matter of right and without restriction on disclosure;
or (v) is independently developed by the receiving party without
recourse to the received information, provided that the receiving party
can demonstrate by written documentation that it developed such
information independently.
Each party agrees that upon written request from the other it will
return any identified proprietary and confidential written material
furnished to it which has not been provided in accordance with
Date Revised: May 13, 1996 2
<PAGE>
some business agreement transferring rights to such material, and will
state in writing that no copy of such material has been provided to
others or has been retained (except for one archival copy which each
party may retain in locked legal files)."
6) Article 10 SECRECY - sub-paragraph (c) - revise wording as follows:
"This commitment shall terminate three (3) years from the Termination
Date of this Agreement."
7) Article 15 ASSIGNMENT - Replace the existing language with the
following:
"This Agreement may not be assigned by either party without the prior
written agreement of the other party and any purported attempt to do so
shall be null and void. This Agreement shall, however, be binding upon
and inure to the benefit of any successor in interest of a party hereto
as a result of a merger or consolidation."
8) Add a new Article 22 entitle "MACHINE RESCHEDULE" with wording as
follows:
"CALCOMP may, without incurring liability for any additional or
increased costs resulting therefrom, make changes in the quantities of
the MACHINES scheduled to be delivered, provided written notice of such
change is given to KTA no later than the period of time specified below
as applicable to the percentage change in quantity."
<TABLE>
<CAPTION>
DAYS PRIOR TO SCHEDULED PERCENTAGE CHANGE IN QUANTITY
FOB DELIVERY DATE INCREASE DECREASE
<S> <C> <C>
0 - 60 0% 0%
61 or more 20% 10%"
</TABLE>
9) Add a new Article 23 entitled "MACHINE DISCONTINUATION" with wording as
follows:
"KTA shall provide six (6) months written notice to CALCOMP of its
discontinuance of the manufacture of the MACHINE. The notice shall
comprise KTA's model number, description, CALCOMP part number and KTA's
replacement part number, where applicable. Such notices shall be sent
as provided for herein. During the notice period CALCOMP may place
orders for delivery of the MACHINE, including life time buy purchase
orders, for delivery during the notice period or in the subsequent six
(6) month period provided that the delivery schedule for such six (6)
month period is determined at the time of such orders."
10) Add a new Article 24 entitled "SURVIVAL PROVISIONS" with wording as
follows:
"Notwithstanding the termination or cancellation of this Agreement, the
relevant provisions of Articles 2, 3, 5, 7, 8, 9, 10, 17, 18 and 19 and
any other Articles for which the context so requires shall survive and
shall continue to apply in accordance with their terms."
11) Replace Annex II with Annex II (Revision 1) attached hereto.
Date Revised: May 13, 1996 3
<PAGE>
12) All other terms and conditions of the Agreement as amended shall remain
in full force and effect.
The parties hereto ratify and confirm the Agreement as revised by this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to sign this Amendment on their behalf as of the date first
above written.
CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD.
By: /s/ GARY LONG By: /s/ MASANORI WATANABE
------------- ------------------
Name: Gary Long Name: Masanori Watanabe
Title: President Title: President
Date: 6-3-96 Date: 6-14-96
-------------- --------------------
APPROVED
AS TO FORM
/s/ W. F. PORTER, JR.
-----------------------
LEGAL DEPT.
Date Revised: May 13, 1996
4
<PAGE>
Exhibit 10.17
OEM Agreement
By and Between
CALCOMP INC.
and
KATSURAGAWA ELECTRIC CO., LTD.
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
Article 1 - DEFINITIONS................................................... 1
Article 2 - GRANT OF RIGHTS............................................... 2
Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING............... 3
Article 4 - PRICING AND PAYMENT........................................... 4
Article 5 - TECHNICAL TRAINING, MANUALS................................... 5
Article 6 - PRODUCT SPECIFICATIONS: MODIFICATIONS OF PRODUCTS............. 6
Article 7 - WARRANTY...................................................... 6
Article 8 - PATENTS....................................................... 7
Article 9 - TRADEMARKS.................................................... 8
Article 10 - SECRECY...................................................... 9
Article 11 - TERM OF AGREEMENT............................................ 10
Article 12 - TERMINATION FOR SPECIAL REASONS.............................. 10
Article 13 - FORCE MAJEURE................................................ 11
Article 14 - WAIVER....................................................... 11
Article 15 - ASSIGNMENT................................................... 11
Article 16 - ENTIRE AGREEMENT............................................. 11
Article 17 - GOVERNING LAW................................................ 11
Article 18 - ARBITRATION.................................................. 12
Article 19 - NOTICE....................................................... 12
Article 20 - REPRESENTATIONS.............................................. 12
Article 21 - MATTERS NOT PROVIDED FOR..................................... 12
</TABLE>
EXHIBITS
--------
<TABLE>
<S> <C>
Annex I - Model 1220 Product Description
Annex II - Pricing for Machines
Annex III - KIP Model 1220 Parts Price List.
Annex IV - Exchange Rate Procedure
</TABLE>
<PAGE>
AGREEMENT
---------
THIS AGREEMENT is made as of the 9th day of January 1996, by and between CALCOMP
INC., having its principal place of business at 2411 West La Palma Avenue,
Anaheim, California, U.S.A. (hereinafter called "CALCOMP") and KATSURAGAWA
ELECTRIC CO., LTD., having its principal place of business at 21-3, Shimomaruko
4-chome, Ohta-ku, Tokyo, Japan (hereinafter called "KTA")
WITNESSETH
----------
WHEREAS, KTA has been designing and developing a digital printer engine
designated by KTA as its Model 1220 (hereinafter referred to as the MACHINE",
which term is more fully defined below);
WHEREAS, CALCOMP desires to purchase MACHINES as well as spare parts,
accessories and consumable products for use in and with MACHINES from KTA for
the purpose of distributing the same in the TERRITORY on an OEM basis together
with controllers, drivers and software designed by CALCOMP; and
WHEREAS, the parties wish to enter into an Agreement setting forth the terms and
conditions under which CALCOMP shall purchase and distribute such products from
KTA.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:
Article I - DEFINITIONS
- -----------------------
Words shall have their normally accepted meanings as employed in this Agreement.
The terms "herein" and "hereof", unless specifically limited, shall have
reference to the entire Agreement. The word "shall" is mandatory, the word
"may" is permissive, the word "or" is not exclusive, the words "includes" and
"including" are not limiting and the singular includes the plural. The
following terms shall have the described meanings:
a) MACHINE shall mean the KIP model 1220 Digital Printer Engine designed and
-------
developed by KTA, the specifications of which are set out in Annex I hereof.
b) SPARE PARTS shall mean those parts used in the repair of the MACHINE and
-----------
which are an integral part thereof.
c) SUPPLY PRODUCTS shall mean SPARE PARTS plus accessories and consumable
---------------
products such as
<PAGE>
developer, toner and a photosensitive drum to be used in or in connection
with the MACHINE, but not including paper and other copying media.
d) CONTRACT PRODUCTS, shall mean the MACHINE or SUPPLY PRODUCTS.
-----------------
e) OEM PRODUCTS shall mean the MACHINE, and the SUPPLY PRODUCTS, as integrated
------------
into a final product by CALCOMP, inter alia by providing the MACHINE with a
controller driver and related software.
f) TERRITORY shall mean all countries in the World.
---------
g) CONTRACT YEAR, shall mean the twelve (12) consecutive calendar month period
-------------
after the first day of the month in which the first production order for
the MACHINES is received or any subsequent twelve (12) consecutive calendar
month period.
Article 2 - GRANT OF RIGHTS
- ---------------------------
2.1
- ---
KTA hereby grants to CALCOMP the non-exclusive right to distribute the OEM
PRODUCTS on an OEM basis within the TERRITORY during the term of this Agreement.
The said right of CALCOMP shall include CALCOMP's right to have the OEM
PRODUCTS distributed by its subsidiaries and distributors within the TERRITORY,
provided that CALCOMP shall be responsible for the compliance by such
subsidiaries and distributors with the terms of this Agreement.
2.2
- ---
CALCOMP hereby agrees to use its best efforts to distribute the OEM PRODUCTS on
an OEM non-exclusive basis within the TERRITORY during the term of this
Agreement.
2.3
- ---
Nothing in this Agreement is to be construed as giving either party the right to
commit the other or to act as the legal representative of the other party.
<PAGE>
Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING
- -----------------------------------------------------------
3.1
- ---
KTA agrees to supply CALCOMP with the CONTRACT PRODUCTS ordered by CALCOMP for
distribution by CALCOMP within the TERRITORY during the term of this Agreement.
3.2
- ---
During the term hereof and for a period of at least five (5) years after the
termination date of this Agreement, KTA shall supply CALCOMP with SUPPLY
PRODUCTS which CALCOMP may order. If KTA at any time during such five (5) year
period determines that it will no longer supply certain of the SUPPLY PRODUCTS
after expiration of the said period, it will give at least three (3) months
notice prior to the expiration of said five (5) year period to CALCOMP,
identifying the SUPPLY PRODUCT to be discontinued. In such case CALCOMP shall be
entitled to purchase one (1) final lot, in a reasonable quantity, of the SUPPLY
PRODUCT concerned from KTA.
3.3
- ---
CALCOMP agrees that none of the 120 and 220 volt units of the MACHINE shall be
distributed in Japan as such or converted into 100 volt units.
3.4
- ---
CALCOMP agrees that it will place firm orders ("Firm Orders") for the CONTRACT
PRODUCTS by means of a purchase order form, letter, or facsimile before the
fifteenth (15th) of each month for the third (3rd) month following, and provide
KTA with a forecast (the "Forecast") before the fifteenth (15th) of each month
for the fourth (4th) and fifth (5th) months following. If any Firm Order is
placed by facsimile, CALCOMP shall promptly send to KTA a confirmation copy by
mail.
Unless CALCOMP specifies otherwise and agrees to pay extra charges for the
packaging concerned, the number of MACHINES specified in a Firm Order for a
month shall be equal to or a multiple of twenty-four (24) (the number of
MACHINES which fit in a 20 foot container) or fifty-seven (57) (the number of
MACHINES which fit in a 40 foot container). Provided, however, that insofar as
the packaging for the relevant MACHINES need not be changed, the number of
MACHINES for such monthly order need not be equal to or a multiple of twenty-
four (24) or fifty-seven (57).
<PAGE>
Firm orders may not deviate in quantity by more than twenty (20) per cent (plus
or minus) from the quantity provided in the related Forecast.
KTA will confirm promptly its acceptance of such Firm Orders by facsimile to
CALCOMP. If such acceptance is sent by facsimile, KTA shall promptly send to
CALCOMP a confirmation copy by mail.
3.5
- ---
The following shall be shipped by KTA, F.O.B. Taipei/Keelung Taiwan or F.O.B.
Japan to CALCOMP within the times stipulated:
a) MACHINES shall be shipped by KTA from its factory to CALCOMP within three
(3) months from the fifteenth (15th) of the month before which date the
Firm Order for such MACHINES is placed.
b) SUPPLY PRODUCTS shall be shipped by KTA from its factory to CALCOMP with
the relevant lead time as stated in Annex III, KIP Model 1220 Parts Price
List.
3.6
- ---
On each Firm Order and each delivery made hereunder the terms and conditions
hereof shall be exclusively applicable. General sales or purchase conditions of
the parties hereto shall not be applicable. Special conditions for certain
orders shall be clearly stated in writing and shall previously be accepted in
writing by KTA and CALCOMP in order to be applicable and valid.
Article 4 - PRICING AND PAYMENT
- -------------------------------
4.1
- ---
For the first CONTRACT YEAR, the prices for 120, 220 volt unit and 100 volt unit
of the MACHINE respectively shall be as set out in Annex II hereto, the 120 and
220 volt units of which shall be subject to adjustment with respect to
fluctuations in the exchange rate as stated in Annex IV hereto. For the first
CONTRACT YEAR, the prices for SUPPLY PRODUCTS are set out in Annex III hereto.
4.2
- ---
Beginning at least ninety (90) days prior to the end of each CONTRACT YEAR, the
parties will negotiate in good
<PAGE>
faith to arrive at the price and minimum purchase requirements for the MACHINE,
and the price for the SUPPLY PRODUCTS to be applied in the subsequent CONTRACT
YEAR.
4.3
- ---
Payment for the MACHINES or SUPPLY PRODUCTS shall be made by CALCOMP to KTA in
Japanese Yen via telegraphic transfer (TT) into an account so designated by KTA,
within five (5) days of receipt of a copy of the relevant Bill of Lading or
Airway Bill, for the shipment in question, having been sent via facsimile to
CALCOMP.
Article 5 - TECHNICAL TRAINING, MANUALS
- ---------------------------------------
5.1
- ---
KTA shall provide technical training to the service personnel of CALCOMP as
follows:
a) KTA shall provide, upon written request by CALCOMP, technical training
courses ("Service Training Courses") to train a limited number of key
technicians of CALCOMP at KTA's facility in Japan. KTA shall incur all
costs and expenses for its own personnel and lodging expenses for CALCOMP'S
personnel and CALCOMP shall bear all travel costs and other expenses (other
than lodging expenses) for its own personnel.
b) At CALCOMP's request, KTA may agree to hold its Service Training Course at
CALCOMP's facility, provided CALCOMP shall incur all costs and expenses of
its own personnel and lodging expenses for KTA's instructor, and KTA shall
bear all travel costs and expenses (other than lodging expenses) of its own
instructor.
c) The obligation of KTA in paragraphs a) and b) above shall be limited to ten
(10) man-days of instruction (e.g. one (1) key technician of CALCOMP for
ten (10) working days or two (2) key technicians of CALCOMP for five (5)
working days) during the first year of this Agreement.
<PAGE>
5.2
- ---
CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding
the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP,
free of charge, all information regarding the CONTRACT PRODUCTS which may
reasonably enable CALCOMP to prepare such documentation, including one (1) set
in English of the parts manual, service manual, operation manual and
interface-specifications for the CONTRACT PRODUCTS.
Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS
- ------------------------------------------------------------
KTA may make modifications of the CONTRACT PRODUCTS which do not alter the
appearance or operation of the CONTRACT PRODUCTS or do not require any adaption
by CALCOMP of electronic or mechanical items in the OEM PRODUCTS ("Minor
Modifications"). KTA shall inform CALCOMP of such Minor Modifications at least
one month prior to the shipment of the CONTRACT PRODUCTS containing such
modifications. Any modification of the CONTRACT PRODUCTS other than Minor
Modifications may only be made by KTA after having given CALCOMP six (6) months
written notice of such modification. Further, for Engineering Change Information
("ECI"), KTA agrees to notify CALCOMP prior to making modifications in the
following areas, 1) the appearance of the MACHINE, 2) matters relating to Agency
approval, and 3) matters relating to the software and the controller. CALCOMP
shall respond to all KTA ECI requests within thirty (30)days.
Article 7 - WARRANTY
- --------------------
7.1
- ---
KTA warrants that all CONTRACT PRODUCTS shall be free from defects in material
and workmanship and shall be and operate according to the specifications
appearing in Annex I. The said warranty shall apply during a period of six (6)
months after installation of the OEM PRODUCTS at CALCOMP's customers' premises
or for twelve (12) months after the date of shipment, whichever period is
shorter, and is subject to the condition that CALCOMP has notified KTA in
writing or by facsimile of any warranty claim within the warranty period. If
such notice is sent by facsimile, CALCOMP shall promptly send to KTA a
confirmation copy of the same by mail.
7.2
- ---
KTA's sole obligation under the warranty in Article 7.1 is limited to either
repairing or replacing at KTA's option.
<PAGE>
and expense, those CONTRACT PRODUCTS or parts thereof which do not conform to
the said specifications. CALCOMP may, if appropriate and after agreement with
KTA, repair the defective CONTRACT PRODUCTS at the installation site, in which
case KTA shall credit CALCOMP the costs of replacement parts used by CALCOMP.
CALCOMP shall notify KTA of any defective component and allow KTA to evaluate
the claim against the defective component. KTA or CALCOMP may request that the
defective component be returned to KTA for failure analysis.
7.3
- ---
The above warranty does not extend to that part of the CONTRACT PRODUCTS
modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and
CALCOMP shall indemnify and hold KTA harmless from any and all claims related
thereto.
7.4
- ---
If it is unclear or cannot be determined from the nature of the defect whether
Articles 7.1 and 7.2 or 7.3 should apply, the parties shall meet and determine
in good faith a reasonable apportionment of the relevant repair or replacement
costs.
7.5
- ---
THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, AND ACTION UNDER THIS
WARRANTY SHALL BE THE EXCLUSIVE REMEDY.
Article 8 - PATENTS
- -------------------
8.1
- ---
KTA declares that to the best of its knowledge as of the date hereof the
CONTRACT PRODUCTS can be marketed and used in the TERRITORY without infringing
any intellectual property rights or other rights of any third party.
<PAGE>
8.2
- ---
In the event CALCOMP or KTA receives any oral or written notice alleging that
the CONTRACT PRODUCTS or any parts thereof furnished under this Agreement
constitute an infringement of any patent in the TERRITORY, CALCOMP and KTA shall
consult with each other in good faith and assist each other to the extent
reasonably possible in the implementation of the particular plan agreed upon by
CALCOMP and KTA as the best solution to the problem.
8.3
- ---
It is expressly agreed that in the event CALCOMP or KTA receives any such oral
or written notice alleging patent infringement as described in the preceding
Article 8.2, KTA shall have ninety (90) days from the date of its receipt of
such notice to attempt at its expense to reach an accommodation with the patent
claimant or holder or to modify or replace the CONTRACT PRODUCTS or any parts
thereof with ones that are free from such allegation of infringement.
8.4
- ---
KTA's obligations under this Article 8 extend only to the CONTRACT PRODUCTS and
do not extend to that part of the MACHINES modified, altered or improved by
CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA
harmless from all costs and expenses of patent infringement claims related
thereto.
8.5
- ---
If either party becomes aware of the possibility that the marketing,
distribution or use of the CONTRACT PRODUCTS in the TERRITORY could affect or
infringe intellectual property rights of third parties, it shall forthwith
inform the other party thereof, specifying the details of the same.
Article 9 - TRADEMARK
- ---------------------
CALCOMP shall market and advertise the OEM PRODUCTS only under the trademark
"SOLUS 4" or any other trademark or trademarks of CALCOMP.
<PAGE>
Article 10 - SECRECY
- --------------------
During the term of this Agreement, each party may divulge to the other
information which is proprietary and confidential to it. Both parties hereby
agree that:
a) All information in written or other physical form, delivered to it by the
Other Party and which is designated to be proprietary and confidential will
be safeguarded in the same manner as it safeguards its own proprietary and
confidential information of like character, and will not be divulged to
third parties by it. Information which is initially orally or visually
submitted and identified at the time of initial disclosure as proprietary
shall also be safeguarded only if the Other Party notifies it in writing,
within ten (10) business days of such initial oral or visual disclosure,
with a specific identification of the proprietary information contained in
such initial oral or visual disclosure.
b) Such information designated as proprietary and confidential shall be used
by it only for the purpose of this Agreement unless there is a specific
written agreement permitting wider use.
c) This commitment shall terminate five (5) years from the Termination Date of
this Agreement.
d) This paragraph shall not impose any obligation upon such party with respect
to any portion of the received information which:
1. Is now, or which hereafter, through no act or failure to act on its
part, becomes generally known or available.
2. Is known to such party at the time of receiving such information.
3. Is furnished to others without restriction on disclosure, or
4. Is hereafter furnished to such party by a third party, as a matter of
right and without restriction on disclosure.
e) Upon written request from the disclosing Party, the receiving Party will
return all of disclosing Party's Proprietary and Confidential Information
disclosed under this Agreement to the disclosing Party.
<PAGE>
Article 11 - TERM OF AGREEMENT
- ------------------------------
This Agreement shall be effective as from the date hereof and shall continue for
a period of three (3) CONTRACT YEARS. Thereafter, it shall be automatically
continued for successive periods of 12 consecutive months until and unless
terminated by one of the parties as at the end of the then current period by
giving at least ninety (90) days written notice thereof.
Article 12 - TERMINATION FOR SPECIAL REASONS
- --------------------------------------------
12.1
- ----
Without prejudice to any other remedy, any party may summarily terminate this
Agreement by notice in writing to the other party if the other party:
a) Commits a breach of any of the provisions of this Agreement and, if
the subject breach is capable of remedy, does not remedy that breach
within thirty (30) days of the receipt of written notice from the
other party requiring it to do so; or
b) ceases to carry on business, has a receiver appointed for its assets,
enters into liquidation, whether compulsory or voluntary, or otherwise
becomes subject to applicable insolvency laws; or
c) fails to meet its obligations; or
d) suffers a substantial change in the identity of its major
shareholders, except in the event such change results from an internal
reorganization within the present group of companies to which the
respective party presently belongs.
12.2
- ----
Termination of this Agreement for whatever reason shall not prejudice the
existing rights and obligations of either party to the other hereunder.
<PAGE>
12.3
- ----
Any breach of this Agreement by either CALCOMP or KTA shall constitute a breach
for which such party shall be severally liable.
ARTICLE 13 - FORCE MAJEURE
- --------------------------
Neither party shall be liable for any default hereunder due to causes beyond its
control which originated without its fault or negligence including, but not
limited to, acts of God, war, strikes, freight and shipping embargoes,
government orders or regulations, provided that, the party which is unable to
perform its obligations hereunder for reasons indicated above, shall upon the
occurrence thereof notify the other of the occurrence and practical effect of
any such event in writing. If, despite the best efforts of the party in default
to remedy the situation of force majeure as indicated here above, the
performance of the obligations of a party hereto has been prevented by
occurrence of any event indicated above for a period of two (2) months or more,
the other party is entitled to terminate this Agreement forthwith by registered
letter.
ARTICLE 14 - WAIVER
- -------------------
The failure of either party hereto at any time to exercise any of its rights
under this Agreement shall not be deemed a waiver thereof, nor shall such
failure in any way prevent said party from subsequently asserting or exercising
such rights.
ARTICLE 15 - ASSIGNMENT
- -----------------------
No rights or obligations of any party hereunder shall be assignable without the
express prior consent of the other party in writing.
ARTICLE 16 - ENTIRE AGREEMENT
- -----------------------------
This Agreement supersedes all former agreements between the parties hereto
insofar as the same are related to the distribution of the CONTRACT PRODUCTS.
No change, addition or modification of any of the terms and provisions hereof
shall be binding on either party unless accepted in writing by both parties.
ARTICLE 17 - GOVERNING LAW
- --------------------------
This Agreement shall be construed and governed according to Japanese law.
<PAGE>
ARTICLE 18 - ARBITRATION
- ------------------------
Any dispute which may arise out of or relating to this Agreement and which
cannot be solved by amicable settlement between the parties shall be determined
by arbitration. If such arbitration is instituted by KTA against CALCOMP, the
hearing shall be held in Anaheim, California, U.S.A. under the rules of the
American Arbitration Association. If such arbitration is instituted by CALCOMP
against KTA, the hearing shall be held in Tokyo, Japan under the rules of the
Japan Commercial Arbitration Association.
ARTICLE 19 - NOTICE
- -------------------
All notices hereunder shall be deemed to be sufficiently given if in the English
language and sent by one party to the other by facsimile or prepaid certified or
registered airmail addressed to its office as hereinabove set forth or to such
new address as such party may have specified to the other party by notice
hereunder. Notices as provided herein shall be deemed given when received, or if
correctly addressed and posted on the seventh day following the date of
dispatch, whichever comes earlier.
Notices to CALCOMP shall be addressed to: William L. Barber, Company Secretary
(Fax: (714) 821-2470).
Notices to KTA shall be addressed to: Mr. Masanori Wantanabe, President
(Fax: 03-3757-3451).
ARTICLE 20 - REPRESENTATIONS
- ----------------------------
Each party hereby warrants and represents to the other that it is legally free
to enter into this Agreement and that it has no obligation to any other person,
partnership, corporation, association or other business or legal entity which
would affect or conflict in any way with any of its obligations or duties
hereunder.
ARTICLE 21 - MATTERS NOT PROVIDED FOR
- --------------------------------------
Any matters not provided for herein shall be decided by mutual consultation, and
such decision shall not take effect unless and until confirmed by the Parties in
writing.
<PAGE>
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
- ------------------
their behalf by duly authorized representatives as of the day and year first
above written.
CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD.
By: /s/ GARY LONG By: /s/ MASANORI WATANABE
-------------------------- -----------------------------
Name: Gary Long Name: Masanori Watanabe
Title: President Title: President
Date: 4-17-96 Date: 4-23-96
------------------------- -----------------------------
APPROVED
AS TO FORM
/s/ W.F. PORTER, JR.
---------------------
LEGAL DEPT.
<PAGE>
AMENDMENT 1 TO THE AGREEMENT
----------------------------
This Amendment is made and entered into as of February 1, 1996, by and between
KATSURAGAWA ELECTRIC CO., LTD., (hereinafter referred to as "KTA") and CALCOMP
Inc., (hereinafter referred to as "CALCOMP").
RECITALS
--------
WHEREAS KTA and CALCOMP have entered into an Agreement effective January 9,
1996.
WHEREAS the parties hereto wish to amend the Agreement in order to provide for
certain matters not previously addressed and to modify certain other terms;
NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows:
1) Article 4 PRICING AND PAYMENT - Paragraph 4.1 revise wording as follows:
"The prices for 120 and 220 volt unit and 100 volt unit of the MACHINE
respectively shall be as set out in Annex II hereto, the 120 and 220 volt
units of which shall be subject to adjustment with respect to fluctuations
in the exchange rate as stated in Annex IV hereto. The prices for SUPPLY
PRODUCTS are set out in Annex III hereto."
2) Article 5 TECHNICAL TRAINING AND MANUALS - Paragraph 5.2 - revise wording
as follows:
"CALCOMP may prepare, at its own cost, its own manuals and catalogues
regarding the OEM PRODUCTS. For that purpose KTA shall, upon request,
furnish to CALCOMP, free of charge, all information regarding the CONTRACT
PRODUCTS which may reasonably enable CALCOMP to prepare such
documentation, including one (1) set in English of the parts manual,
service manual, operation manual and interface-specifications for the
CONTRACT PRODUCTS. KTA grants CALCOMP the right and license, subject to
the provisions of Article 10 Secrecy, to use, reproduce, modify, translate
and distribute the documentation and training materials with legally
effective copyright notice; provided however, that KTA shall not be liable
for any damages incurred by CALCOMP or a third party due to, and CALCOMP
shall indemnify and hold KTA harmless from liability for any damages
incurred by CALCOMP or a third party due to any errors or omissions in the
documentation used by CALCOMP using any information so provided by KTA."
3) Article 7 WARRANTY - Paragraph 7.1 - revise wording as follows:
"KTA warrants that all CONTRACT PRODUCTS shall be free from defects in
design, material and workmanship and shall be and operate according to the
specifications appearing in Annex I; provided, however, that such warranty
shall not apply to any defects which occur or arise as a result of changes
in aspects, features or details of the CONTRACT PRODUCTS which are
incorporated therein, adopted or implemented as a result of requests
originated by CALCOMP, provided that a CALCOMP officer has previously
agreed in writing that said warranty will not apply as a result of the
incorporation, adoption, or implementation of said aspects, features or
details. The said warranty shall apply during a period of six (6) months
after installation of the
<PAGE>
OEM PRODUCTS at CALCOMP's customers' premises or for twelve (12) months
after the date of shipment, whichever period is shorter, and is subject to
the condition that CALCOMP has notified KTA in writing or by facsimile of
any warranty claim within the warranty period. If such notice is sent by
facsimile, CALCOMP shall promptly send to KTA a confirmation copy of the
same by mail.
The aforementioned warranty period shall be extended to three (3) years from
the relevant shipping date for any latent defect which causes a breach of
warranty in a series (for example, a range of serial numbers) of the
CONTRACT PRODUCT resulting from a common defect in the CONTRACT PRODUCTS
that was not discernible from an inspection and test of CONTRACT PRODUCTS.
In the event such latent defect is agreed by KTA and CALCOMP in writing,
then CALCOMP may elect to enter into a field replacement program of the
affected part or assembly, prior to its failure, so as to prevent or
minimize any liability or end user dissatisfaction with the CONTRACT
PRODUCT. In such case KTA shall provide replacement parts at no cost."
4) Article 7 WARRANTY - Paragraph 7.5 - replace this paragraph with the
following:
"THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR OR INTENDED PURPOSE, AND ACTION UNDER THIS WARRANTY SHALL BE THE
EXCLUSIVE REMEDY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM A BREACH OF ITS
OBLIGATIONS HEREUNDER EXCEPT IN THE CASE OF A MATERIAL OR WILLFUL BREACH."
5) Article 10 SECRECY - sub-paragraph (a) - revise wording as follows:
"All information in written or other physical form, delivered to it by the
other party and which is designated to be proprietary and confidential will
be safeguarded in the same manner as it safeguards its own proprietary and
confidential information of like character, and will not be divulged to
third parties by it. Information which is initially orally or visually
submitted and identified at the time of initial disclosure as proprietary
shall also be safeguarded only if the other party notifies it in writing,
within ten (10) business days of such initial oral or visual disclosure,
with a specific written identification of the proprietary information
contained in such initial oral or visual disclosure.
This Agreement shall not impose any obligation upon the receiving party with
respect to any portion of the received information which (i) is now, or
which hereafter, through no act or failure to act on the part of the
receiving party, becomes generally known or available; (ii) is known to the
receiving party at the time of receiving such information; (iii) is
furnished to others by the disclosing party without restriction on
disclosure; (iv) is hereafter furnished to the receiving party by a third
party, as a matter of right and without restriction on disclosure; or (v) is
independently developed by the receiving party without recourse to the
received information, provided that the receiving party can demonstrate by
written documentation that it developed such information independently.
Each party agrees that upon written request from the other it will return
any identified proprietary and confidential written material furnished to it
which has not been provided in accordance with some business agreement
transferring rights to such material, and will state in writing that no
<PAGE>
copy of such material has been provided to others or has been retained
(except for one archival copy which each party may retain in locked legal
files)."
6) Article 10 SECRECY - sub-paragraph c - revise wording as follows:
"This commitment shall terminate three (3) years from the Termination Date
of this Agreement."
7) Article 15 ASSIGNMENT - Replace the existing language with the following:
"This Agreement may not be assigned by either party without the prior
written agreement of the other party and any purported attempt to do so
shall be null and void. This Agreement shall, however, be binding upon and
inure to the benefit of any successor in interest of a party hereto as a
result of a merger or consolidation."
8) Add a new Article 22 entitled "MACHINE RESCHEDULE" with wording as follows:
"CALCOMP may, without incurring liability for any additional or increased
costs resulting therefrom, make changes in the quantities of the MACHINES
scheduled to be delivered, provided written notice of such change is given
to KTA no later than the period of time specified below as applicable to
the percentage change in quantity.
DAYS PRIOR TO SCHEDULED PERCENTAGE CHANGE IN QUANTITY
FOB DELIVERY DATE INCREASE DECREASE
0-60 0% 0%
61 or more 20% 10%"
9) Add a new Article 23 entitled "MACHINE DISCONTINUATION" with wording as
follows:
KTA shall provide six (6) months written notice to CALCOMP of its
discontinuance of the manufacture of the MACHINE. The notice shall comprise
KTA's model number, description, CALCOMP part number and KTA's replacement
part number, where applicable. Such notices shall be sent as provided for
herein. During the notice period CALCOMP may place orders for delivery of
the MACHINE, including life time buy purchase orders, for delivery during
the notice period or in the subsequent six (6) month period provided that
the delivery schedule for such six (6) month period is determined at the
time of such orders."
10) Add a new Article 24 entitled "SURVIVAL PROVISIONS" with wording as
follows:
"Notwithstanding the termination or cancellation of this Agreement, the
relevant provisions of Articles 2, 3, 5, 7, 8, 9, 10, 17, 18 and 19 and any
other Articles for which the context so requires shall survive and shall
continue to apply in accordance with their terms."
11) Replace Annex II with Annex II (Revision 1) attached hereto.
12) All other terms and conditions of the Agreement as amended shall remain in
full force and effect.
<PAGE>
The parties hereto ratify and confirm the Agreement as revised by this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to sign this Amendment on their behalf as of the date first
above written.
CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD.
By: /s/ Gary Long By: /s/ Masanori Watanabe
-------------------------- --------------------------
Name: Gary Long Name: Masanori Watanabe
Title: President Title: President
Date: 4-17-96 Date: 4-23-96
------------------------ ------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q,
NINE MONTHS ENDED SEPTEMBER 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 14,787
<SECURITIES> 0
<RECEIVABLES> 65,226
<ALLOWANCES> 5,447
<INVENTORY> 55,323
<CURRENT-ASSETS> 133,757
<PP&E> 134,244
<DEPRECIATION> 80,983
<TOTAL-ASSETS> 287,427
<CURRENT-LIABILITIES> 104,782
<BONDS> 0
0
0
<COMMON> 454
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 287,427
<SALES> 168,370
<TOTAL-REVENUES> 168,370
<CGS> 130,427
<TOTAL-COSTS> 130,427
<OTHER-EXPENSES> 70,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (523)
<INCOME-PRETAX> (31,870)
<INCOME-TAX> 831
<INCOME-CONTINUING> (32,701)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,701)
<EPS-PRIMARY> 0
<EPS-DILUTED> $0.78
</TABLE>
