<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 27, 1999
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-16071
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CALCOMP TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0888312
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
1 Centerpointe Drive, Suite 400, La Palma, California 90623
(Address of principal executive offices)
(714) 690-8330
(Registrant's telephone number, including area code)
2411 West La Palma Avenue, Anaheim, California 92801
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
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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 twelve (12) months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety (90) days. Yes [X] No [_]
The number of shares of Common Stock outstanding as of July 30, 1999: 47,120,650
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<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<C> <S> <C>
Item 1. Financial Statements
Consolidated Statements of Net Liabilities in Liquidation as of June 27, 1999
(Unaudited) and December 27, 1998 ............................................... 3
Unaudited Consolidated Statement of Changes in Net Liabilities in Liquidation
for the six months ended June 27, 1999 .......................................... 4
Notes to Unaudited Consolidated Financial Statements ............................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations ...................................................................... 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................................ 14
Item 2. Changes in Securities and Use of Proceeds ........................................ 14
Item 6. Exhibits and Reports on Form 8-K ................................................. 14
Signatures ................................................................................... 15
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
CONSOLIDATED STATEMENTS OF NET LIABILITIES IN LIQUIDATION
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
June 27, December 27,
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ASSETS 1999 1998
------ ---- ----
(Unaudited)
<S> <C> <C>
Cash ............................................................... $ 8,825 $ 3,280
Accounts receivable ................................................ 579 7,775
Inventories ........................................................ 200 5,966
Prepaid expenses and other assets .................................. -- 1,033
Net assets held for sale ........................................... -- 1,430
Property, plant and equipment ...................................... 1,600 2,455
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Total assets ..................................................... 11,204 21,939
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LIABILITIES
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Accounts payable ................................................... 3,032 12,308
Commitment cancellation costs ...................................... 5,529 15,433
Accrued salaries and related expenditures .......................... 7,907 20,697
Administrative expenses during liquidation period .................. 13,157 21,647
Secured demand loan with Lockheed Martin ........................... 22,581 --
Other liabilities .................................................. 23,998 16,854
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Total liabilities ................................................ 76,204 86,939
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Net liabilities in liquidation ..................................... $ (65,000) $ (65,000)
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Contingencies (Note 2)
Number of common shares outstanding ................................ 47,120,650 47,120,650
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Net liabilities in liquidation per share ........................... $ (1.38) $ (1.38)
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</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
For the Six Months Ended June 27, 1999
(In thousands)
<TABLE>
<S> <C>
Net liabilities in liquidation, December 27, 1998 ......................................... $(65,000)
Net changes in estimated fair values and settlement amounts for assets and liabilities .... --
--------
Net liabilities in liquidation, June 27, 1999 ........................................... . $(65,000)
========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background and Summary of Significant Developments
The Company was a supplier of both input and output computer graphics
peripheral products consisting of (i) printers (including plotters), (ii)
cutters, (iii) digitizers and (iv) large format scanners. In general, the
Company's products were designed for use in computer aided design and
manufacturing ("CAD/CAM"), printing and publishing and graphic arts markets,
both domestically and internationally. The Company also maintained service,
product support and technical assistance programs for its customers and sold
software, supplies and after-warranty service.
In recent years, the Company had begun transitioning its traditional pen,
electrostatic and most thermal technology products to inkjet plotters and
printers. Generally, inkjet technology products provide increased user
productivity compared to traditional pen plotters and solid area fill capability
for applications requiring graphic imaging. By the end of 1997, the Company had
substantially completed its strategy to discontinue its non-inkjet printer and
plotter products.
In the fourth quarter of 1997, the Company completed the development of a
new line of wide-format digital printers which was marketed under the
"CrystalJet(TM)" name and targeted at the graphic arts industry. Although volume
shipments to customers of CrystalJet products commenced in the second quarter of
1998 and increased during the remainder of the fiscal year, the projected
profitability of the CrystalJet products was dependent on achieving greater
production volumes and wider market acceptance than could reasonably be
anticipated to occur in the near term and would have required substantial
infusions of new capital which the Company was unable to obtain. The Company
believes that production delays, technical difficulties in the manufacturing
processes and a failure to gain timely market acceptance resulted in continuing
operating losses and negative cash flow, which materially and adversely affected
the Company's business plan for the CrystalJet technology and, in significant
part, resulted in the Company's liquidity crisis discussed further below.
In a letter dated December 23, 1998, Lockheed Martin Corporation ("Lockheed
Martin") notified the Company that it would not increase the Company's credit
availability, needed to fund the Company's operations, beyond the $43 million
then available under the Company's Revolving Credit Agreement and related Cash
Management Agreement (collectively, the "Credit Agreements") with Lockheed
Martin. At such date, the Company anticipated that, to fund operating
requirements, it would require the $4.9 million remaining under the Credit
Agreements in January 1999. On December 28, 1998, the Company indicated its
intent to accept Lockheed Martin's proposal to fund a non-bankruptcy orderly
shut-down of the Company's operations in accordance with a plan to be proposed
by the Company. On January 14, 1999, the Company's directors approved and
submitted the Company's plan ("Plan for Orderly Shutdown") to Lockheed Martin
for its review. As a result of this liquidity crisis and after considering its
lack of strategic alternatives, in particular, given the Company's inability to
obtain funding from sources other than Lockheed Martin, on January 15, 1999, the
Company announced that it would commence an orderly shutdown of its operations.
Under the Plan for Orderly Shutdown, the Company completed a Secured Demand Loan
Facility ("Secured Demand Loan") with Lockheed Martin, pursuant to which
Lockheed Martin agreed to provide, subject to the terms and conditions set forth
in such facility, funding to the Company in addition
5
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
to the $43 million available under the Credit Agreements. The purpose of the
Secured Demand Loan was to provide funds to assist the Company in the non-
bankruptcy shutdown of its operations pursuant to the Plan for Orderly Shutdown.
In addition, Lockheed Martin agreed to forebear from exercising its rights and
remedies to collect amounts outstanding under the Credit Agreements until the
Secured Demand Loan was terminated.
The Secured Demand Loan provided for Lockheed Martin to make loans to the
Company from time to time up to an aggregate maximum available amount (the
"Maximum Available Amount"), specified by Lockheed Martin, which could have
been increased by Lockheed Martin, in its sole and absolute discretion, upon
requests for borrowing that were in conformity with the cash requirements set
forth in the Plan for Orderly Shutdown. The Maximum Available Amount was subject
to a ceiling ("Maximum Available Amount Ceiling") of $51 million, an amount
based on the Company's initial estimate of loan proceeds needed to fully fund
the Plan for Orderly Shutdown. The Maximum Available Amount, initially, was set
at $11 million and subsequently increased to $28.9 million. Lockheed Martin had
the right to accept or reject, in whole or in part, any request for borrowing
based on its determination, in its sole discretion, as to whether the Company
was complying with, or making reasonable progress with respect to, the Plan for
Orderly Shutdown. Loans under the Secured Demand Loan were to be repaid not
later than August 6, 1999. Under the accompanying Security Agreement, the
Company granted to Lockheed Martin a security interest in all of the assets of
the Company and its principal domestic subsidiaries to secure the obligations
owing to Lockheed Martin under the Secured Demand Loan. The Secured Demand Loan
also provided for certain other obligations of the Company, including covenants
of the Company with respect to periodic notices, reports and forecasts relating
to the Plan for Orderly Shutdown.
The Secured Demand Loan also required the Company to retain an independent
third-party liquidation specialist acceptable to Lockheed Martin to review,
validate and, to the extent deemed necessary by Lockheed Martin in its sole and
absolute discretion, implement the Plan for Orderly Shutdown. In March 1999,
Brincko Associates, Inc. was retained by the Company as the liquidation
specialist approved by Lockheed Martin, and Mr. John P. Brincko was appointed
the Chief Executive Officer of the Company. After his appointment, the Company
conducted an updated and more detailed analysis of the amount of funds needed to
fund the Plan for Orderly Shutdown, and revised its estimate of funding needed
to approximately $65 million.
Since the announcement of the Plan for Orderly Shutdown, the Company ceased
all manufacturing, sales and marketing activities and scaled back staffing to a
level designed to allow the Company to sell or liquidate its assets in a manner
that takes into account the interests of the Company's stockholders, creditors,
employees, customers and suppliers. The Company has now consummated sales of
substantially all of its non-Crystaljet assets and has begun the sale of its
Crystaljet assets. Additionally, pursuant to the Plan for Orderly Shutdown, the
Company issued notices to its domestic employees under the Worker Adjustment and
Retraining Notification Act (W.A.R.N.) and, as of July 23, 1999, has terminated
501 employees, or 97% of the Company's domestic workforce. Non-U.S. employees
have also been terminated or notified of their scheduled termination under
applicable foreign laws. A small administrative team will continue the wind up
of the Company's operations and finalize the liquidation and dissolution of the
Company. The Company's ability to make payments on any agreed settlement amounts
will depend on receiving sufficient cash from the sale of its remaining assets
and securing additional funding for the Plan for Orderly Shutdown.
6
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On April 29, 1999, the Company's Board of Directors (a) authorized the
merger with and into CalComp Technology, Inc. of all the Company's subsidiaries
organized under the laws of any state of the United States and (b) approved and
adopted the Plan of Complete Liquidation and Dissolution (the "Plan of
Liquidation and Dissolution"). Lockheed Martin, as holder of a majority of the
outstanding shares of common stock and holder of all of the outstanding shares
of preferred stock, executed a written consent on May 12, 1999 approving the
Plan of Liquidation and Dissolution. The merger of the Company's domestic
subsidiaries into the Company was consummated on August 2, 1999. In addition, on
August 6, 1999, pursuant to the Plan of Liquidation and Dissolution, the Company
filed a Certificate of Dissolution with the Delaware Secretary of State.
Subsequent to the filing of the Certificate of Dissolution, the Company's stock
transfer books were closed. As a result, the Company's common and preferred
stock are no longer treated as outstanding. Based on the anticipated value of
the Company's remaining assets and the amounts owed to creditors of the Company,
the Company does not believe it will have any funds or assets remaining to make
distributions to either preferred or common stockholders. Therefore, it is
highly unlikely that any distributions will be made to stockholders.
On August 6, 1999, the Secured Demand Loan terminated in accordance with
its terms. As of that date, approximately $28.9 million was payable and no
additional amounts could be borrowed under the Secured Demand Loan. However,
effective the same date, the Company and Lockheed Martin entered into a
Subordinated Loan Agreement (the "Loan Agreement") under which Lockheed Martin
agreed to make loans to the Company to fund administrative expenses incurred in
connection with the Plan for Orderly Shutdown in an aggregate principal amount
of up to $5.0 million at any time prior to the Loan Agreement's termination. In
connection with the Loan Agreement, Lockheed Martin agreed, pursuant to a
letter agreement dated August 6, 1999, to forebear from pursuing its rights and
remedies to collect amounts outstanding under the Credit Agreements and the
Secured Demand Loan until the earlier of August 6, 2002 and the date on which
Lockheed Martin notifies the Company of termination which notice may be
delivered by Lockheed Martin in its sole and absolute discretion.
The Company's latest estimate of funding needed to complete the Plan for
Orderly Shutdown and the Plan of Liquidation and Dissolution indicates estimated
net liabilities in liquidation to be $31.1 million in excess of the amount
currently outstanding under the Secured Demand Loan and the maximum amount
available under the Loan Agreement. There can be no assurance that the Company
will be able to settle with its creditors at amounts estimated in the Plan for
Orderly Shutdown, that estimated cash inflows from sales of remaining assets
will occur or that actual net cash funding requirements will not exceed current
estimates for other reasons. Accordingly, there is substantial uncertainty as to
whether the Company will be able to complete the Plan for Orderly Shutdown as
currently contemplated. If the Company is unable to obtain sufficient funds to
complete the Plan for Orderly Shutdown from asset sales proceeds and the Loan
Agreement or it is unable to reach acceptable settlements with all of its
creditors, the Company may be forced to seek protection from creditors under
Federal Bankruptcy law or may become subject to an involuntary bankruptcy
proceeding. In the event of a bankruptcy or insolvency proceeding, claims of
secured creditors, such as Lockheed Martin, may not be able to be repaid in full
and unsecured creditors may receive little, if anything, for their claims. In
any circumstance, it is highly unlikely the holders of the Company's preferred
and common stock will receive any distributions of funds or assets, and neither
the Plan for Orderly Shutdown nor the Plan of Liquidation and Dissolution
contemplates any such distributions.
On January 27, 1999, the Company's Common Stock was delisted from the
Nasdaq National Market System due to the Company's failure to maintain certain
listing requirements, and continued to trade on the over-the-counter bulletin
board market maintained by Nasdaq until August 6, 1999, the date of the filing
of the Certificate of Dissolution with the Delaware Secretary of State.
7
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Liquidation Basis of Accounting
As a result of the Board of Directors approving the Plan for Orderly
Shutdown, the accompanying consolidated financial statements have been presented
based on the liquidation basis of accounting to provide more relevant
information.
The liquidation basis of accounting requires that assets and liabilities be
stated at estimated fair value. Accordingly, the statements of net liabilities
in liquidation reflects assets and liabilities based on their estimated fair
values and estimated settlement amounts. Changes in the estimated liquidation
value of assets and liabilities are recognized in the period in which such
refinements are known.
The Company established the carrying values for its assets and liabilities
as reflected in the consolidated statement of net liabilities in liquidation as
of December 27, 1998, using estimates of the fair values of assets and
settlement amounts of liabilities developed in March 1999 giving consideration
to all information available at that time. The Company believes there is
insufficient additional information presently available to determine whether a
change to its estimate of the deficiency in the fair value of its assets as
compared to the estimated settlement amounts for its liabilities is necessary.
Accordingly, no refinement to this estimate was made in preparing the
consolidated statement of net liabilities in liquidation as of June 27, 1999.
Organization and Basis of Presentation
The consolidated financial statements included herein have been prepared by
the Company, without audit, and include all adjustments which, in the opinion of
management, are necessary for a fair presentation of the consolidated net
liabilities in liquidation as of June 27, 1999. Certain information and footnote
disclosures normally included in financial statements prepared on the
liquidation basis of accounting have been condensed or omitted in accordance
with principles for interim period financial reporting on Form 10-Q, although
the Company believes the disclosures in these financial statements are adequate
to make the information presented not misleading. These condensed financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes thereto included in the Company's Annual Report
filed with the Securities Exchange Commission on Form 10-K for the year ended
December 27, 1998.
The Company is an 86.7% owned subsidiary of Lockheed Martin. The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles under the liquidation basis of accounting
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Significant
estimates have been made relative to the valuation of all assets and liabilities
of the Company, including, among others, estimates for warranties and settlement
of litigation and long-term lease commitments. Such estimates have been
developed pursuant to the provisions of the Plan for Orderly Shutdown. Actual
results may differ from amounts estimated.
8
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. CONTINGENCIES
Legal
Xaar. On July 8, 1998, Xaar Technology Limited ("Xaar") filed suit (the "U.S.
----
Action") in the U.S. District Court for the Northern District of California
against the Company and two of its wholly-owned subsidiaires, CalComp Inc. and
Topaz Technologies Inc. ("Topaz" and collectively the "Defendants"), alleging
that the Defendants' manufacture and sale of CrystalJet piezoelectric inkjet
printheads infringed Xaar's U.S. Pat. Nos. 4,879,568 and 5,003,679 which cover
certain pulsed droplet deposition apparatus and certain processes for
manufacturing pulsed droplet deposition apparatus. Xaar sought preliminary and
permanent injunctive relief against the alleged infringement of the Xaar
patents, increased damages for willful infringement of those patents, interest
and award of its attorneys' fees and costs. On April 20, 1999, the complaint was
amended to add Lockheed Martin as a party.
In a separate action, on July 6, 1998, Xaar filed suit (the "English Action")
in the English High Court of Justice ("High Court") alleging that the Defendants
and CalComp Ltd., a U.K. subsidiary of CalComp Inc., infringed or caused,
enabled, or assisted others to infringe, European patent (UK) number EP 0 277
703 ("703 Patent"), which covers certain pulsed droplet deposition apparatus and
certain processes for manufacturing pulsed droplet deposition apparatus, as a
result of sales of the Company's CrystalJet printers in the U.K. Xaar sought an
injunction and damages or profits resulting from the alleged infringement and,
among other things, interest and an award of its costs. In the English Action,
the Company counterclaimed for an order revoking the `703 Patent. On September
7, 1998, the Company, CalComp Inc. and CalComp Ltd. (collectively, the "CalComp
Parties"), filed an action (the "English Petition") in the High Court to revoke
Xaar's European Patent (UK) number EP 0 278 590 which also covers certain pulsed
droplet deposition apparatus and certain processes for manufacturing pulsed
droplet deposition apparatus and which involves technology similar to that in
the `703 Patent.
Pursuant to a Settlement Agreement dated June 29, 1999, by and among the
CalComp Parties, Topaz, Lockheed Martin and Xaar, the CalComp Parties
collectively paid an undisclosed amount to Xaar, and the U.S. Action, the
English Action and the English Petition were dismissed with prejudice. The
Settlement Agreement also expressly provides that it covers only liability for
past claims, which were based on events that took place prior to June 29, 1999.
Texas Lease. In March 1999, QRS 10-12 (TX), Inc. and QRS 11-5 (TX), Inc., the
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landlords under the lease for the Company's former Austin, Texas facility
(collectively, "Landlord"), filed suit against the Company in the U.S. District
Court for the Southern District Court of New York (the "New York Action")
claiming damages equal to the present value of rent due for the remaining term
of the lease based on an accelerated damages clause. The Company had ceased
paying rent in January 1999. The Company moved to dismiss for lack of personal
jurisdiction or alternatively to transfer venue of the case to Texas, but the
motion was denied.
9
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In a separate action, on April 30, 1999, the Landlord filed suit against the
Company in the Court of Chancery of the State of Delaware (the "Delaware
Action") claiming damages under the terms of the lease; claiming compensatory
and punitive damages from the Company for an alleged breach of fiduciary duty to
creditors; and requesting that the court void alleged fraudulent transfers of
assets since October 1, 1998, require the Company to provide a complete
accounting, and provide such additional relief as the court may determine. In
addition, under the Delaware Action, the Landlord sought an expedited hearing on
its claims, and injunctive relief to enjoin the Company and its subsidiaries
from paying any debt to any creditor and to require the Company to place in
escrow to be held by the court all proceeds obtained from sales of its assets.
On May 12, 1999, the Landlord's motion for an expedited hearing was denied.
On August 5, 1999, the Company, the Landlord and W.P. Carey & Company, Inc., a
New York corporation and the parent corporation of the Landlord entered into a
Settlement Agreement. Under the terms of the Settlement Agreement, the Company
paid $2.5 million to the Landlord, and the New York Action and the Delaware
Action were dismissed with prejudice.
Kodak Litigation. On May 13, 1999, Eastman Kodak Company ("Kodak") filed suit
----------------
against the Company and Lockheed Martin (collectively, the "Defendants") in the
Orange County Superior Court of the State of California claiming (i)
compensatory damages as a result of the Defendants' alleged breaches of a joint
development agreement between the Company and Kodak (the "Joint Development
Agreement") and the covenant of good faith and fair dealing, and the Defendants'
alleged negligent misrepresentation; (ii) compensatory and exemplary damages as
a result of the Defendants' alleged fraud in inducing Kodak to believe that
Lockheed Martin would support the Company and that the Company would remain a
viable entity throughout the term of the Joint Development Agreement; and (iii)
compensatory and exemplary damages as a result of Lockheed Martin's alleged
intentional interference with the contract between the Company and Kodak. In
each cause of action, Kodak is seeking compensatory damages in excess of $22
million. In addition, Kodak requests that (a) it be awarded a constructive trust
over the $22 million in funds it contributed to the project and any property
acquired therefrom; (b) the Defendants be required to provide an accounting of
all funds provided to and expended by the Defendants with respect to the
project; and (c) the court adjudge and declare the respective rights and duties
of the parties under the Joint Development Agreement. The Company intends to
defend itself vigorously. The Company has filed its answer to Kodak's complaint,
and it has filed a cross-complaint against Kodak relating to failure to make $5
million in milestone payments to the Company pursuant to the Joint Development
Agreement. The Company's cross-complaint contains causes of action for breach of
contract, breach of the implied covenant of good faith and fair dealing and
breach of fiduciary duty. The parties have recently commenced discovery.
The Company is also party to other legal actions arising from its Plan for
Orderly Shutdown. The Company believes that any such claims in material amounts
are without merit.
The Company does not believe that the disposition of any of these matters will
have a material adverse effect on its net liabilities in liquidation, nor will
the results of any lawsuits affect the Company's determination to proceed with
the Plan for Orderly Shutdown or the Plan of Liquidation and Dissolution.
10
<PAGE>
CALCOMP TECHNOLOGY, INC.
(In Process of Liquidation)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Environmental Matters
In connection with the June 1997 sale of the Company's headquarters facility
in Anaheim, California, the Company agreed to remain obligated to address
certain environmental conditions which existed at the site prior to the closing
of the sale. In addition, Lockheed Martin has guaranteed the performance of the
Company under this environmental agreement.
In 1988, the Company submitted a plan to the California Regional Water Quality
Control Board ("the Water Board") relating to its facility in Anaheim,
California. This plan contemplated site assessment and monitoring of soil and
ground water contamination. In 1997, the Company, at the request of the Water
Board, submitted work plans to conduct off-site water investigations and on-site
soil remediation. In 1998, CalComp conducted an extensive aquifer
characterization and off-site plume delineation investigation. Afterwards, the
Board approved CalComp's work plans for Off-Site Plume Delineation and Source
Area Remediation. The Company has included in other liabilities, expenditures
which it considers to be adequate to cover the cost of investigations and tests
required by the Water Board, any additional remediation that may be requested
and potential costs of continued monitoring of soil and groundwater
contamination, if required.
The Company believes that it has adequately projected any future expenditures
in connection with environmental matters and does not believe that the
disposition of any of these matters will have a material adverse effect on its
net liabilities in liquidation, nor will any such expenditures affect the
Company's determination to proceed with the Plan for Orderly Shutdown or the
Plan of Liquidation and Dissolution.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Report on Form 10-Q contains statements which, to the extent that they
are not recitations of historical facts, constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
forward looking statements involve risks and uncertainties. The forward looking
statements in this Report on Form 10-Q have been made subject to the safe harbor
protections provided by Sections 27A and 21E.
Liquidity and Capital Resources
On January 14, 1999, the Board of Directors approved a Plan for Orderly
Shutdown which has been substantially completed. On April 29, 1999, the
Company's Board of Directors approved the Plan of Liquidation and Dissolution.
For further information see "Note 1. Summary of Significant Accounting
Policies--Background and Summary of Significant Developments" of the Notes to
Unaudited Consolidated Financial Statements in Part I which is incorporated
herein by reference.
During the six months ended June 27, 1999, the Company's sources of cash
consisted primarily of proceeds from the sale of its assets of $23.1 million,
proceeds from the Secured Demand Loan with Lockheed Martin of $22.6 million and
collections from trade accounts receivable of $18.3 million.
The Company's uses of cash during the six months ended June 27, 1999,
consisted primarily of salaries and related benefits of $27.0 million,
administrative expenses during the liquidation period of $23.5 million, and
commitment cancellation costs related to open purchase orders as of January 14,
1999, of $8.9 million.
Pursuant to the Plan for Orderly Shutdown, the Company has to date consummated
sales of substantially all of its non-Crystaljet assets including, but not
limited to, those sales described as follows: On February 1, 1999, the Company,
through certain domestic and foreign subsidiaries, sold substantially all of the
assets relating to its input device business to GTCO Corporation ("GTCO") for an
aggregate of $6,500,000 in cash and the assumption by GTCO of certain
liabilities relating to the input device business. On February 19, 1999, the
Company sold its cutter business to WestComp Incorporated ("WestComp") for
$600,000 in cash and the assumption by WestComp of certain liabilities relating
to the cutter business. The asset sale to WestComp principally included the
shares of CalComp Display Products N.V., a Belgian company and an indirect
subsidiary of the Company, and the cutter related products held as inventory by
the other subsidiaries of the Company. In connection with the sale, CalComp
Technology Europe N.V. sold the principal facility of the cutter business,
located in Gistel, Belgium, to an affiliate of WestComp at a purchase price of
$924,000 on March 31, 1999. On March 24, 1999, the Company sold its non-
CrystalJet consumables business (excluding the territories of Europe and Africa)
to Budde International, Inc. for a purchase price of $833,000 in cash. On April
30, 1999, the Company sold the European and African supplies business to CalComp
European Supplies Limited, a subsidiary of RES Holdings Limited, for a purchase
price of $1,089,000 in cash. On April 1, 1999, the Company sold the assets and
liabilities relating to its worldwide parts distribution business and its North
American service business to CalGraph Technology Services, Inc., a wholly-owned
subsidiary of Tekgraf Inc., for a purchase price of $400,000 in cash. On May 31,
1999, the Company sold all of its shares of Common Stock in NS CalComp
Corporation to Oce N.V. for the net adjusted purchase price of $6,180,000 in
cash.
No assurances can be given that the proceeds from the remaining asset sales
and the funding from Lockheed Martin under the Loan Agreement will allow the
Company to successfully complete the Plan for Orderly Shutdown and the Plan of
Liquidation and Dissolution, in which case the Company may be forced to seek
protection from its creditors under Federal Bankruptcy law or may become the
subject of an involuntary bankruptcy proceeding.
12
<PAGE>
The Company believes that even if the Plan for Orderly Shutdown and the Plan
of Liquidation and Dissolution are successfully completed, it is highly unlikely
that there will be any funds or assets available for distribution to its
preferred or common stockholders, and neither the Plan for Orderly Shutdown nor
the Plan of Liquidation and Dissolution contemplates any such distributions.
Assets and Liabilities following the Adoption of the Plan for Orderly Shutdown
As a result of the Board of Directors approving the Plan for Orderly Shutdown,
the Company adopted the liquidation basis of accounting which requires assets
and liabilities to be stated at estimated fair value. Accordingly, the
consolidated statements of net liabilities in liquidation reflect assets and
liabilities based on their estimated fair values and estimated settlement
amounts. Changes in the estimated liquidation value of assets and liabilities
are recognized in the period in which such refinements are known.
The Company established the carrying values for its assets and liabilities as
reflected in the consolidated statement of net liabilities in liquidation as of
December 27, 1998, using estimates of the fair values of assets and settlement
amounts of liabilities developed in March 1999 giving consideration to all
information available at that time. The Company believes there is insufficient
additional information presently available to determine whether a change to its
estimate of the deficiency in the fair value of its assets as compared to the
estimated settlement amounts for its liabilities is necessary. Accordingly, no
refinement to this estimate was made in preparing the consolidated statement of
net liabilities in liquidation as of June 27, 1999.
Year 2000 Compliance
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. Others do not correctly
process "leap year" dates. As a result, such systems and applications could
fail or create erroneous results unless corrected to process data related to the
year 2000 and beyond. The problems are expected to increase in frequency and
severity as the year 2000 approaches, and are commonly referred to as the "Year
2000 Problem." The Company intends to complete an orderly shutdown of its
operations before the end of calendar year 1999; therefore, no additional
funding will be expended on the assessment process. Year 2000 issues are not
expected to impact the shutdown of Company operations.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of legal proceedings, see "Note 2. Contingencies - Legal" of
the Notes to Unaudited Consolidated Financial Statements in Part I, which is
incorporated herein by reference.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 6, 1999, pursuant to the Plan of Liquidation and Dissolution adopted
by the Company's Board of Directors and approved by the Company's majority
stockholder, the Company filed a Certificate of Dissolution with the Secretary
of State of the State of Delaware. Subequent to the filing of the Certificate
of Dissolution, the Company's stock transfer books were closed. As a result,
the Company's common and preferred stock are no longer treated as outstanding.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits--The Following Exhibits Are Included Herein:
<TABLE>
<S> <C>
10.36 Plan of Complete Liquidation and Dissolution of CalComp Technology, Inc.
10.37 Share and Purchase Agreement by and among Oce N.V., CalComp Pacific, Inc. and Nippon Steel Corporation
10.38 Subordinated Loan Agreement dated August 6, 1999 between the Company and Lockheed Martin Corporation
10.39 Letter agreement dated August 6, 1999 between the Company and Lockheed Martin Corporation regarding
the Secured Demand Loan Facility dated January 14, 1999 and amended July 15, 1999 and the Security
Agreement dated January 14, 1999
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
Reports on Form 8-K filed by the Company during the Company's fiscal
quarter ended June 27, 1999 were as follows:
Form 8-K/A dated February 1, 1999, filed on April 19, 1999, reporting under
Item 7 information related to the Company's sale of the operating assets of
its input device business to GTCO Corporation ("GTCO"), a Maryland corporation
and the assumption by GTCO of certain of the liabilities relating to the input
device business.
Form 8-K dated May 31, 1999, filed on May 31, 1999, reporting under Item 2
the sale of the Company's shares in NS CalComp Corporation, a Japanese
corporation to Oce N.V., a Dutch corporation.
14
<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: August 11, 1999
/s/ JOHN P. BRINCKO
John P. Brincko
Chief Executive Officer
(Principal Financial Officer)
15
<PAGE>
EXHIBIT 10.36
PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION OF
CALCOMP TECHNOLOGY, INC.
This Plan of Complete Liquidation and Dissolution (the "PLAN") is intended
to accomplish the complete liquidation and dissolution of CalComp Technology,
Inc., a Delaware corporation (the "COMPANY"), in accordance with Section 275
and other applicable provisions of the General Corporation Law of Delaware
("DGCL") and Sections 331 and 336 (or Sections 332 and 337, as appropriate) of
the Internal Revenue Code of 1986, as amended (the "CODE").
1. Approval and Adoption of Plan
This Plan shall be effective when all of the following steps have been
completed:
(a) Resolutions of the Company's Board of Directors. The Company's Board
of Directors shall have adopted a resolution or resolutions with respect to
the following:
(i) Complete Liquidation and Dissolution: The Board of Directors
shall determine that it is deemed advisable for the Company to be
liquidated completely and dissolved.
(ii) Adoption of the Plan of Liquidation and Dissolution: The Board
of Directors shall approve this Plan as the appropriate means for
carrying out the complete liquidation and dissolution of the Company.
(iii) Sale of Assets: The Board of Directors shall determine that, as
part of the Plan of Liquidation and Dissolution, it is deemed expedient
and in the best interests of the Company to sell all or substantially
all of the Company's assets in order to facilitate liquidation and
distribution to the Company's creditors and stockholders, as
appropriate.
(b) Adoption of This Plan by the Company's Preferred and Common
Stockholders. The holders of a majority of the outstanding shares of the
Company's Series A Cumulative Redeemable Preferred Stock, par value $0.01
per share (the "PREFERRED STOCK") and the holders of a majority of the
outstanding shares of common stock of the Company, par value $0.01 per
share (the "COMMON STOCK"), entitled to vote shall have adopted this Plan,
including the dissolution of the Company and those provisions authorizing
the Board of Directors to sell all or substantially all of the Company's
assets, by written consent or at a special meeting of the stockholders of
the Company called for such purpose by the Board of Directors.
2. Dissolution and Liquidation Period
Once the Plan of Liquidation and Dissolution is effective, the steps set
forth below shall be completed at such times as the Board of Directors, in its
absolute discretion, deems necessary, appropriate or advisable. Without
limiting the generality of the foregoing, the Board of Directors may instruct
the officers of the Company to delay the taking of any of the following steps
until the Company has performed such actions as the Board or such officers
determine to be necessary, appropriate or advisable for the Company to
maximize the value of the Company's assets upon liquidation; provided that
such steps may not be delayed longer than is permitted by applicable law.
(a) The filing of a Certificate of Dissolution of the Company (the
"CERTIFICATE OF DISSOLUTION") pursuant to Section 275 of the DGCL
specifying the date (no later than ninety (90) days after the filing) upon
which the Certificate of Dissolution will become effective (the "EFFECTIVE
DATE"), and the completion of all actions that may be necessary,
appropriate or desirable to dissolve and terminate the corporate existence
of the Company;
(b) The cessation of all of the Company's business activities and the
withdrawal of the Company from any jurisdiction in which it is qualified to
do business, except and insofar as necessary for the sale of its assets and
for the proper winding up of the Company pursuant to Section 278 of the
DGCL;
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<PAGE>
(c) The negotiation and consummation of sales of all of the assets and
properties of the Company, including the assumption by the purchaser or
purchasers of any or all liabilities of the Company, insofar as the Board
of Directors of the Company deems such sales to be necessary, appropriate
or advisable;
(d) The distribution of the remaining funds of the Company and the
distribution of remaining unsold assets of the Company, if any, to its
stockholders pursuant to Sections 4, 7 and 8 below.
If the Board determines to follow the procedures described in Section 280 of
the DGCL, then the additional steps set forth below shall, to the extent
necessary or appropriate, be taken:
(a) The giving of notice of the dissolution to all persons having a claim
against the Company and the rejection of any such claims in accordance with
Section 280 of the DGCL;
(b) The offering of security to any claimant on a contract whose claim is
contingent, conditional or unmatured in an amount the Company determines is
sufficient to provide compensation to the claimant if the claim matures,
and the petitioning of the Delaware Court of Chancery to determine the
amount and form of security sufficient to provide compensation to any such
claimant who has rejected such offer in accordance with Section 280 of the
DGCL;
(c) The petitioning of the Delaware Court of Chancery to determine the
amount and form of security which would be reasonably likely to be
sufficient to provide compensation for (i) claims that are the subject of
pending litigation against the Company, and (ii) claims that have not been
made known to the Company or that have not arisen, but are likely to arise
or become known within five (5) years after the date of dissolution (or
longer in the discretion of the Delaware Court of Chancery), each in
accordance with Section 280 of the DGCL;
(d) The payment, or the making of adequate provision for payment, of all
claims made against the Company and not rejected in accordance with Section
280 of the DGCL;
(e) The posting of all security offered and not rejected and all security
ordered by the Court of Chancery in accordance with Section 280 of the
DGCL; and
(f) the payment, or the making of adequate provision for payment, of all
other claims that are mature, known and uncontested or that have been
finally determined to be owing by the Company.
Notwithstanding the foregoing, the Company shall not be required to follow
the procedures described in Section 280 of the DGCL, and the adoption of the
Plan of Liquidation and Dissolution by the Company's preferred and common
stockholders shall constitute full and complete authority for the Board of
Directors and the officers of the Company, without further stockholder action,
to proceed with the dissolution and liquidation of the Company in accordance
with any applicable provision of the DGCL, including, without limitation,
Section 281(b) thereof, including the adoption of a plan of distribution as
contemplated by such section.
1. Authority of Officers and Directors
After the Effective Date, the Board of Directors and the officers of the
Company shall continue in their positions for the purpose of winding up the
affairs of the Company as contemplated by Delaware law. The Board of Directors
may appoint officers, hire employees and retain independent contractors in
connection with the winding up process, and is authorized to pay to the
Company's officers, directors and employees, or any of them, compensation or
additional compensation above their regular compensation, in money or other
property, in recognition of the extraordinary efforts they, or any of them,
will be required to undertake, or actually undertake, in connection with the
successful implementation of this Plan. Adoption of this Plan by holders of a
majority of the outstanding shares of Preferred Stock and Common Stock shall
constitute the approval of the Company's stockholders of the Board of
Directors' authorization of the payment of any such compensation.
The adoption of the Plan of Liquidation and Dissolution by the Company's
preferred and common stockholders shall constitute full and complete authority
for the Board of Directors and the officers of the Company, without further
stockholder action, to do and perform any and all acts and to make, execute
and deliver any and all agreements, conveyances, assignments, transfers,
certificates and other documents of any kind and
A-2
<PAGE>
character which the Board or such officers deem necessary, appropriate or
advisable: (i) to sell, dispose, convey, transfer and deliver the assets of
the Company, whether before or after the Effective Date, (ii) to satisfy or
provide for the satisfaction of the Company's obligations in accordance with
Sections 280 and 281 of the DGCL, (iii) to distribute all of the remaining
funds of the Company and any unsold assets of the Company to the Company's
preferred stockholders (up to the $60.0 million, plus accrued and unpaid
dividends, liquidation preference of the Preferred Stock), plus accrued and
unpaid dividends due thereon, with the remaining amounts, if any,
distributable to the common stockholders, and (iv) to dissolve the Company in
accordance with the laws of the State of Delaware and cause its withdrawal
from all jurisdictions in which it is authorized to do business.
2. Conversion of Assets Into Cash or Other Distributable Form
Subject to approval by the Board of Directors, the officers, employees and
agents of the Company, shall, as promptly as feasible and whether before or
after the Effective Date, proceed to collect all sums due or owing to the
Company, to sell and convert into cash any and all corporate assets and, out
of the assets of the Company, to pay, satisfy and discharge or make adequate
provision for the payment, satisfaction and discharge of all debts and
liabilities of the Company pursuant to Section 2 above, including all expenses
of the sale of assets and of the liquidation and dissolution provided for by
the Plan of Liquidation and Dissolution.
3. Professional Fees and Expenses
It is specifically contemplated that the Board of Directors may authorize
the payment of a retainer fee to a law firm or law firms selected by the Board
for legal fees and expenses of the Company, including, among other things, to
cover any costs payable pursuant to the indemnification of the Company's
officers or members of the Board provided by the Company pursuant to its
Certificate of Incorporation and Bylaws or the DGCL or otherwise.
In addition, in connection with and for the purpose of implementing and
assuring completion of this Plan, the Company may, in the absolute discretion
of the Board of Directors, pay any brokerage, agency and other fees and
expenses of persons rendering services to the Company in connection with the
collection, sale, exchange or other disposition of the Company's property and
assets and the implementation of this Plan.
4. Indemnification
The Company shall continue to indemnify its officers, directors, employees
and agents in accordance with its Certificate of Incorporation and Bylaws and
any contractual arrangements, for actions taken in connection with this Plan
and the winding up of the affairs of the Company. The Board of Directors, in
its absolute discretion, is authorized to obtain and maintain insurance as may
be necessary, appropriate or advisable to cover the Company's obligations
hereunder.
5. Liquidating Trust
The Board of Directors may establish a Liquidating Trust (the "LIQUIDATING
TRUST") and distribute assets of the Company to the Liquidating Trust. The
Liquidating Trust may be established by agreement with one or more Trustees
selected by the Board. If the Liquidating Trust is established by agreement
with one or more Trustees, the trust agreement establishing and governing the
Liquidating Trust shall be in form and substance determined by the Board of
Directors. In the alternative, the Board may petition the Delaware Court of
Chancery for the appointment of one or more Trustees to conduct the
liquidation of the Company subject to the supervision of the Court. Whether
appointed by an agreement or by the Court, the Trustees shall in general be
authorized to take charge of the Company's property, and to collect the debts
and property due and belonging to the Company, with power to prosecute and
defend, in the name of the Company, or otherwise, all such suits as may be
necessary or proper for the foregoing purposes, and to appoint an agent under
it and to do all other acts which might be done by the Company that may be
necessary, appropriate or advisable for the final settlement of the unfinished
business of the Company.
A-3
<PAGE>
6. Liquidating Distributions
Liquidating distributions, in cash or in kind, shall be made from time to
time after the adoption of the Plan of Liquidation and Dissolution to the
holders of record, at the close of business on the date of the filing of a
Certificate of Dissolution of the Company as provided in Section 2 above, of
outstanding shares of stock of the Company, according to the priorities of the
various classes of the Company's stock and pro rata in accordance with the
respective number of shares then held of record; provided that in the opinion
of the Board of Directors adequate provision has been made for the payment,
satisfaction and discharge of all known, unascertained or contingent debts,
obligations and liabilities of the Company (including costs and expenses
incurred and anticipated to be incurred in connection with the sale of assets
and complete liquidation of the Company). All determinations as to the time
for and the amount and kind of distributions to stockholders shall be made in
the exercise of the absolute discretion of the Board of Directors and in
accordance with Section 281 of the DGCL.
Any assets distributable to any creditor or stockholder of the Company who
is unknown or cannot be found, or who is under a disability and for whom there
is no legal representative, shall escheat to the state or be treated as
abandoned property pursuant to applicable state law.
7. Amendment, Modification or Abandonment of Plan
If for any reason the Company's Board of Directors determines that such
action would be in the best interests of the Company, it may amend, modify or
abandon the Plan of Liquidation and Dissolution and all action contemplated
thereunder, notwithstanding stockholder approval, to the extent permitted by
the DGCL; provided, however, that the Company will not amend or modify the
Plan of Liquidation and Dissolution under circumstances that would require
additional stockholder approval under the DGCL and the federal securities laws
without complying with the DGCL and the federal securities laws. Upon the
abandonment of the Plan of Liquidation and Dissolution, the Plan of
Liquidation and Dissolution shall be void.
8. Cancellation of Stock and Stock Certificates
Following the dissolution of the Company, the Company's stock transfer books
shall be closed and the Company's capital stock and stock certificates
evidencing the Company's Preferred Stock and Common Stock will be treated as
no longer being outstanding.
9. Liquidation under Section 331 and 336 (or Sections 332 and 337, as
appropriate)
It is intended that this Plan shall be a plan of complete liquidation within
the terms of Sections 331 and 336 (or Sections 332 and 337, as appropriate) of
the Code. The Plan of Liquidation and Dissolution shall be deemed to authorize
such action as, in the opinion of counsel for the Company, may be necessary to
conform with the provisions of said Sections 331 and 336 (or Sections 332 and
337, as appropriate).
10. Filing of Tax Forms
The appropriate officer of the Company is authorized and directed, within
thirty (30) days after the effective date of the Plan of Liquidation and
Dissolution, to execute and file a United States Treasury Form 966 pursuant to
Section 6043 of the Code and such additional forms and reports with the
Internal Revenue Service as may be appropriate in connection with this Plan
and the carrying out thereof.
A-4
<PAGE>
EXHIBIT 10.37
SHARE SALE AND PURCHASE AGREEMENT
by and among
OCE N.V.,
CALCOMP PACIFIC, INC.
and
NIPPON STEEL CORPORATION
May 31, 1999
<PAGE>
SHARE SALE AND PURCHASE AGREEMENT
THIS SHARE SALE AND PURCHASE AGREEMENT (the "Agreement") is entered into as
of May 31, 1999, by OCE N.V., a Dutch corporation with its principal office at
St. Urbanusweg 43, P.O. Box 101, 5900 MA Venlo, the Netherlands ("OCE"), CALCOMP
PACIFIC, INC., a Nevada corporation with its principal office at 2411 West La
Palma Avenue, Anaheim, California 92801, the U.S.A. ("CC"), and NIPPON STEEL
CORPORATION, a Japanese corporation with its principal office at 6-3, Otemachi
2-chome, Chiyoda-ku, Tokyo 100-8071, Japan ("NSC") (each of OCE, CC and NSC
shall be referred to herein at the "Party" and collectively as the "Parties").
RECITALS
A. CC presently owns 1,706 shares of common stock of NS CalComp
Corporation, a Japanese corporation with its principal office at 25-1, Nishi-
Shinbashi 3-chome, Minato-ku Tokyo 105-0003, Japan ("NSCC").
B. NSC presently owns 1,978 shares of common stock of NSCC.
C. OCE is willing to purchase and each of CC and NSC is willing to sell a
certain number of shares of NSCC's common stock on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the mutual covenants, promises and
representations contained herein, the Parties hereby agree as follows:
1. Purchase and Sale.
------------------
Subject to the terms and conditions set forth herein, OCE shall
respectively purchase from CC and NSC, and CC and NSC shall respectively sell to
OCE, the following number of shares of NSCC's common stock for a purchase price
corresponding thereto on the Closing Date (as defined below):
<TABLE>
<CAPTION>
Number of Shares Purchase Price
---------------- --------------
<S> <C> <C>
CC 1,706 Yen 796,690,570.-("CC Price")
NSC 1,590 Yen 742,519,347.-("NSC Price")
- ------------------------------------------------------------------------------------------------------------------
Total 3,296 Yen 1,539,209,917.-
</TABLE>
The shares to be sold by CC to OCE shall be referred to as "CC shares" and the
shares to be sold by NSC to OCE shall be referred to as "NSC shares".
1
<PAGE>
2. Closing Date; Delivery.
-----------------------
2.1 Closing. The closing of the purchase and sale of the CC Shares
and the NSC Shares (the "Closing") shall be held at 16:00 p.m. on May 31, 1999
at the office of NSCC following the satisfaction or waiver of all conditions set
forth in Section 5 or such other time, date and location as OCE, CC and NSC
agree (the "Closing Date").
2.2 Delivery and Payment. At the Closing;
(a) each of CC and NSC will deliver to OCE the share certificate of
the CC Shares and NSC Shares respectively, and
(b) the CC Price and the NSC Price will be paid by OCE to CC and
NSC respectively by wire transfer of immediately available funds to CC's account
and NSC's account respectively, pursuant to the instructions by each of CC and
NSC, given to OCE no less than five (5) Business Days prior to the Closing Date.
As used in this Agreement, a "Business Day" means any day, other than a Saturday
or Sunday, on which banking institutions are not required or authorized to close
in Amsterdam, the Netherlands, in Los Angeles, U.S.A. or in Tokyo, Japan.
2.3 Post-Closing Price Adjustment. After the Closing, the CC Price
and the NSC Price shall be adjusted respectively, reflecting incremental or de-
incremental change, if any, in the shareholder's equity (net assets) of NSCC
that is caused by the business operations of NSCC and/or any of the capitalized
R&D/MIS costs and/or any pension fund underfunded, which shall be determined by
the actuarial report to be provided by Mitsui Mutual Life Insurance, Co., all
during the period from January 1, 1999 through the Closing Date ("Change"), in
accordance with the calculation mechanism set forth below:
The amount of the Change shall be the difference between the shareholder's
equity (net assets) on the balance sheet as of December 31, 1998 as corrected in
accordance with the calculation formula shown in Exhibit A attached hereto
("Starting Shareholder's Equity") and shareholder's equity (net assets) on the
balance sheet as of the Closing Date as also corrected in accordance with the
calculation formula shown in Exhibit A attached hereto ("Ending Shareholder's
Equity"). The Parties shall, at OCE's costs and expenses, have Chuo Audit
Corporation (Coopers & Lybrand) or its successor render an audit
report/actuarial report to the Parties with regard to the amount of the Change
("Audit Report") within four (4) weeks after the Closing Date. The amount of
the Change indicated in the Audit Report shall be in the amount to be adjusted
("Adjustment Amount"), 44% of which ("NSC Adjustment Amount") shall be allocated
to the NSC Price.
(a) In case that the amount of the Ending Shareholder's Equity is
greater than the Starting Shareholder's Equity, OCE shall pay the CC Adjustment
Amount to CC, and the NSC Adjustment Amount to NSC, respectively within five (5)
Business Days after the date on which OCE receives the Audit Report by wire
transfer of immediately available funds to CC's account and NSC's account
respectively, pursuant to the instructions by each of CC and NSC given to OCE.
2
<PAGE>
(b) In case that the amount of the Ending Shareholder's Equity is
smaller than the Starting Shareholder's Equity, CC and NSC shall pay the CC
Adjustment Amount and the NSC Adjustment Amount respectively to OCE within five
(5) Business Days after the dates on which CC and NSC receives the Audit Report
respectively by wire transfer of immediately available funds to OCE's account
pursuant to the instructions by OCE given to CC and NSC respectively.
(c) In case that (i) the Adjustment Amount is zero (0), or (ii) the
Adjustment Amount is negligibly small and the Parties unanimously so agree, the
post-closing price adjustment set forth in this Section 2.3 shall not be made.
3. Representations and Warranties of CC and NSC.
---------------------------------------------
3.1 CC hereby represents and warrants to OCE as of the date
hereof with respect to the matters mentioned in this Section 3.1:
(a) Organization and Standing. CC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
(b) Corporate Power. CC has all requisite legal and corporate
power and authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement.
(c) Authorization. CC has taken all action required by
applicable law, its articles of incorporation or by-laws, if any, or otherwise
to authorize the execution and delivery of this Agreement. This Agreement, when
executed and delivered by the Parties, shall constitute valid and binding
obligations of CC, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies.
(d) No Violation or Default. The execution, delivery and
performance of and compliance with this Agreement, and the consummation of the
transactions contemplated hereby have not resulted and will not result in any
material violation of, or conflict with, or constitute a material default under,
the articles of incorporation or by-laws, if any, of CC or any of its agreements
or obligations or any applicable order, statute, rule, regulation, order or
decree, nor will they result in the creation of, any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of CC.
(e) Governmental Consent. Except for the filing required to be
made with the Ministry of Finance of Japan after the Closing in accordance with
the Foreign Exchange and Foreign Trade Law of Japan ("MOF Filing"), no consent,
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of CC is required in connection with the
valid execution and delivery of this Agreement, or the transactions contemplated
hereby.
3
<PAGE>
(f) Encumbrances. CC is and shall be on the Closing Date the
sole record and beneficial owner and holder of CC Shares as set forth in Section
1 above, free and clear of any claim, charge, mortgage, pledge, security, lien,
option, equity, power of sale or hypothecation.
(g) Brokers and Finders. Except for The Nomura Securities Co.,
Ltd. and its affiliates, whose fees, if any, shall be paid by CC and NSC, no
agent, broker, investment banker, intermediary, finder, person or firm acting on
behalf of CC or which has be retained by or is authorized to act on behalf of CC
is or would be entitled to any broker's or finder's fee or any other commission
or similar fee, directly or indirectly, from CC in connection with the execution
of this Agreement or upon consummation of the transactions contemplated herein.
(h) CC shares to be sold by CC to OCE hereunder represent 44%
of the entire capital of NSCC. Any and all CC Shares have been validly issued
and fully paid up and are freely transferable subject to the requirements set
forth in the Articles of Incorporation of NSCC.
(i) CC has obtained from the transferee of the business of
CalComp Inc. the letter attached hereto as Exhibit B which sets forth the
transferee's intention to supply spare parts to NSCC on terms and conditions
substantially compatible to those contained in the current supply agreement
between NSCC and CC.
3.2 NSC hereby represents and warrants to OCE as of the date
hereof with respect to the matters mentioned in this Section 3.2:
(a) Organization and Standing. NSC is a corporation duly
organized, validly existing and in good standing under the laws of Japan.
(b) Corporate Power. NSC has all requisite legal and corporate
power and authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement.
(c) Authorization. NSC has taken all action required by
applicable law, its articles of incorporation or by-laws, if any, or otherwise
to authorize the execution and delivery of this Agreement. This Agreement, when
executed and delivered by the Parties, shall constitute valid and binding
obligations of NSC, enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies.
(d) No Violation or Default. The execution, delivery and
performance of and compliance with this Agreement, and the consummation of the
transactions contemplated hereby have not resulted and will not result in any
material violation of, or conflict with, or constitute a material default under,
the articles of incorporation or by-laws, if any, of NSC or any of its
agreements or obligations or any applicable order, statute, rule, regulation,
order or decree, nor will they result in the creation of, any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of NSC.
4
<PAGE>
(e) Governmental Consent. Except for the filing required to be
made with the Ministry of Finance of Japan after the Closing in accordance with
the Foreign Exchange and Foreign Trade Law of Japan ("MOF Filing"), no consent,
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of NSC is required in connection with the
valid execution and delivery of this Agreement, or the transactions contemplated
hereby.
(f) Encumbrances. NSC is and shall be on the Closing Date the
sole record and beneficial owner and holder of NSC Shares as set forth in
Section 1 above, free and clear of any claim, charge, mortgage, pledge,
security, lien, option, equity, power of sale or hypothecation.
(g) Brokers and Finders. Except for The Nomura Securities Co.,
Ltd. and its affiliates, whose fees, if any, shall be paid by CC and NSC, no
agent, broker, investment banker, intermediary, finder, person or firm acting on
behalf of NSC or which has be retained by or is authorized to act on behalf of
NSC is or would be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly, from NSC in connection with
the execution of this Agreement or upon consummation of the transactions
contemplated herein.
(h) NSC shares to be sold by CC to OCE hereunder represent 41%
of the entire capital of NSCC. Any and all NSC Shares have been validly issued
and fully paid up and are freely transferable subject to the requirements set
forth in the Articles of Incorporation of NSCC.
3.3 Each of CC and NSC hereby jointly and severally represents
and warrants to OCE as of the date hereof as follows:
(a) Organization and Standing. NSCC is a corporation duly
organized, validly existing and in good standing under the laws of Japan. NSCC
has the requisite legal and corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted.
(b) Accuracy of Statements. All information contained in this
Agreement and all other written information relating to NSC which has been
delivered by any officer, director or agent of NSCC to any officer, director or
agent of OCE in the course of the due diligence investigation into NSCC
conducted by OCE on April 13 through 16, 1999 were, when given and (subject to
passage of time) are now, true and accurate in all material respects and either
CC or NSC is not aware of any fact or matter or circumstance not disclosed in
writing to OCE which would render any such information which was disclosed
untrue, inaccurate or misleading in any material respect.
(c) CC and NSC delivered and disclosed or had NSCC deliver or
disclose all documents and information relating to NSCC which had been required
by OCE to deliver or disclose for OCE to conduct its due diligence
investigations for the transactions contemplated by this Agreement. To the best
knowledge of CC and NSC, CC and NSC have not withheld or concealed information
from OCE which would have a material adverse effect on the financial condition,
results of operations, assets or liabilities of NSCC.
5
<PAGE>
(d) The financial statements prepared in English for the two
years ended at December 31, 1998 present fairly the financial position of NSCC
as of the dates indicated therein and the results of the operations of NSCC for
the periods indicated therein, such financial statements have been prepared in
accordance with accounting principles generally accepted in Japan applied on a
consistent basis and there have been no adverse changes in the conditions,
prospects, results of operations or general affairs of NSCC since December 31,
1998. Furthermore, the said financial statements:
- contain, in accordance with accounting principles generally
accepted in Japan, full allowance for all liabilities and
capital commitments of NSCC, whether actual, contingent,
quantified, disputed or otherwise and there are no liabilities
and/or capital commitments other than those explicitly mentioned
therein;
- contain, in accordance with accounting principles generally
accepted in Japan, full allowance for bad and doubtful debts,
depreciation, amortization, obsolescence of assets and any
foreseeable losses; and
- are not adversely affected by an extraordinary or non-recurring
item, unless otherwise expressly stated therein.
(e) No obligations have been undertaken to or promises have been
made to non-shareholding third parties by NSCC to issue shares of NSCC.
(f) NSCC is in material respects in compliance with all
statutes, laws, regulations, agreements, including collective agreements, if
any, and other commitments with respect to employment practices and terms and
conditions of employment and remuneration and has not been nor is engaged in any
unfair labor practice and NSCC is not liable for any damages to any employee,
officer or director or former employee, officer or director of NSCC resulting
from the violation of any applicable employment law or agreement, nor to the
best knowledge of NSC and CC will it become liable for the same prior to or on
the closing because of the resignation of any of its employees, officers and/or
directors. There are no outstanding, pending or, to the extent known to NSC and
CC, threatened:
- unfair labor practice complaints or other complaint or
grievances against NSCC; or
- inspection or prosecution orders against NSCC under any labor
employment, social security or occupational health and safety
legislation and there is no basis for any such action;
NSCC has withheld and paid for all social security charges and contributions
required to be withheld or paid to the relevant contributions required to be
withheld or paid to the relevant authority or social security institution. No
dispute has arisen within the last three years between NSCC and material number
or category of its employees and to the best knowledge of NSC and CC there are
no present circumstances likely to give rise to such dispute. There are no
outstanding or pending claims, disputes or other controversies between NSCC and
any of its employees, officers and directors.
(g) Particulars of all pension schemes applicable to employees
and/or directors of NSCC have been disclosed to OCE. NSCC has paid all relevant
charges and made all relevant contributions under pension schemes of Kosei-
Nenkin, and Kosei-Nenkin-Kikin.
6
<PAGE>
(h) There is no decree, order, judgement or other award outstanding
against NSCC by any court, governmental agency, arbitration tribunal or similar
agency and more in particular, that NSCC is not a party to any agreement or
arrangement, which infringes or should have registered under any anti-trust
legislation.
(i) To the best knowledge of NSC and CC, there are no outstanding,
pending or, to the extent known to NSC and CC, threatened suit against NSCC for
its infringement of any intellectual property rights held by any third party. To
the best knowledge of NSC and CC, there is no material infringement by any third
party of any intellectual property right owned or used by NSCC.
(j) NSCC has obtained all licenses, permissions and consents
required for the carrying on of its present business and NSCC is not, nor has it
conducted its business affairs at any time, in violation of any applicable law,
regulation, administrative order, or permit, and there is no violation of any
statute, regulation, order, or judgement of any court or governmental agency
each of which could have a material adverse effect on NSCC.
(k) NSCC has maintained insurance for property and fire the
contents of which have been disclosed to OCE.
(l) All income and other tax returns and reports required to be
filed by NSCC have been properly completed and filed with the appropriate
authorities and all taxes (including interest and penalties) due to any taxing
authorities from NSCC have been fully paid or are provided for in the books of
NSCC. No issues have been raised (and are pending) by the Japanese or any other
taxing authorities in connection with any of the tax returns and reports
referred to in the foregoing and there is no outstanding proceeding, audit,
investigation or dispute relating to the taxation of NSCC other than the audit
of NSCC's income and other tax returns and reports for the financial year ending
December 31, 1998 being conducted by the Japanese taxing authority.
(m) NSCC has not disposed any material assets that are necessary
for NSCC to conduct its current business since December 31, 1998 and none of
such assets will no longer be at its disposal as a sole result of the purchase
and sale of the CC Shares and NSC Shares hereunder.
(n) There has been no change to NSCC's warranty policies relating
to its sales of products and services which have been disclosed to OCE. NSCC has
not granted any express and specific guarantees concerning the functionality
and/or performance in connection with any change in the date format of any
software products made and/or sold by it.
(o) NSCC has carried out it business prudently and in the normal
and ordinary course of business since June 1, 1994.
4. Representations and Warranties of OCE. OCE represents and
--------------------------------------
warrants to CC and NSC as of the date hereof as follows:
(a) Organization and Standing. OCE is a corporation duly organized,
validly existing and in good standing under the laws of the Netherlands.
7
<PAGE>
(b) Corporate Power. OCE has all requisite legal and corporate
power and authority to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement.
(c) Authorization. OCE has taken all action required by applicable
law, its memorandum of association, articles of association or by-laws, if any,
or otherwise to authorize the execution and delivery of this Agreement. This
Agreement, when executed and delivered by the Parties, shall constitute valid
and binding obligations of OCE, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
(d) No Violation or Default. The execution, delivery and
performance of and compliance with this Agreement, and the consummation of the
transactions contemplated hereby have not resulted and will not result in any
material violation of, or conflict with, or constitute a material default under
the memorandum of association, articles of association or by-laws, if any, of
OCE or any of its agreements or obligations or any applicable order, statute,
rule, regulation, order or decree, nor will they result in the creation of, any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of OCE.
(e) Governmental Consent. Except for the MOF Filing, no consent,
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of OCE is required in connection with the
valid execution and delivery of this Agreement, or the transactions contemplated
hereby.
(f) Access to Data. OCE has been provided with, or given reasonable
access to, all corporate books and records of NSCC and all material contracts
and documents related to the transaction contemplated by this Agreement. OCE has
had an opportunity to discuss NSCC's business, management and financial affairs
with NSCC's management. OCE has also had an opportunity to ask questions of
officers of NSCC, which questions were answered to its satisfaction.
5. Conditions to Closing.
----------------------
5.1 The completion of OCE's obligations at the Closing are subject to
the fulfillment, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by OCE:
(a) Representations and Warranties. The representations and
warranties made by CC and NSC in Section 3 shall be true and correct as of the
Closing Date in all material respects.
(b) Execution of Shareholders' Agreement. OCE, NSC and Sumitomo
Corporation which owns 194 shares of common stock of NSCC shall have entered
into the Shareholders' Agreement substantially in the form attached hereto as
Exhibit C ("Shareholders' Agreement").
8
<PAGE>
(c) Performance of Obligations. CC and NSC shall have performed all
of their obligations on the Closing.
5.2 The completion of NSC's obligation at the Closing is subject to the
fulfillment, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by NSC:
(a) Representations and Warranties. The representations and
warranties made by OCE in Section 4 shall be true and correct as of the Closing
Date in all material respects.
(b) Execution of Shareholders' Agreement. OCE, NSC and Sumitomo
Corporation shall have entered into the Shareholders' Agreement.
(c) Performance of Obligations. OCE and CC shall have performed all
of their obligations on the Closing.
5.3 The completion of CC's obligation at the Closing is subject to the
fulfillment, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by CC:
(a) Representations and Warranties. The representations and
warranties made by OCE in Section 4 shall be true and correct as of the Closing
Date in all material respects.
(b) Performance of Obligations. OCE and NSC shall have performed
all of their obligations on the Closing.
6. Miscellaneous.
--------------
6.1 Indemnification. (a) CC agrees to and shall indemnify and hold
OCE harmless from and against, and shall pay to OCE any and all loss, liability,
damage or deficiency resulting from any breach of the respective warranties set
forth in Section 3.1 applicable only to CC ("CC-OCE Loss"), but only to the
extent not exceeding the CC Price, if OCE has given written notice to CC setting
out specific details of the CC-OCE Loss as soon as reasonably practicable after
OCE has become aware of the facts, matters or circumstances from which the CC-
OCE Loss arises; provided however, that CC shall be liable for neither the CC-
OCE Loss after the second anniversary of the Closing Date, nor the CC-OCE Loss
arising from the facts,matters or circumstances which were disclosed to OCE in
the course of negotiations leading to execution of this Agreement.
(b) NSCC agrees to and shall indemnify and hold OCE harmless from
and against, and shall pay to OCE any and all loss, liability, damage or
deficiency resulting from any breach of the respective warranties set forth
Section 3.2 applicable only to NSC ("NSC-OCE Loss"), but only to the extent not
exceeding the NSC Price, if OCE has given written notice to NSC setting out
specific details of the NSC-OCE Loss as soon as reasonably practicable after OCE
has become aware of the facts, matters or circumstances from which the NSC-OCE
Loss arises; provided however, that NSC shall be liable for neither the NSC-OCE
Loss after the second anniversary of the Closing Date, nor the NSC-OCE Loss
arising from the facts, matters
9
<PAGE>
or circumstances which were disclosed to OCE in the course of negotiations
leading to execution of this Agreement.
(c) NSCC and CC jointly and severally agree to and shall indemnify
and hold OCE harmless from and against, and shall pay to OCE any and all loss,
liability, damage or deficiency resulting from any breach of warranties set
forth in Section 3.3 ("Additional OCE Loss), but only to the extent not
exceeding the sum of the CC Price and the NSC Price, if OCE has give written
notice to NSC and CC setting out specific details of the Additional OCE Loss as
soon as reasonably practicable after OCE has become aware of the facts, matters
or circumstances from which the Additional OCE Loss arises; provided, however
that NSC or CC shall be liable for neither the Additional OCE Loss after the
second anniversary of the Closing Date, nor for the Additional OCE Loss arising
from the facts, matters or circumstances which were disclosed to OCE in the
course of negotiations leading to execution of this Agreement.
(d) OCE agrees to and shall indemnify and hold NSC and CC harmless
from and against, and shall pay to NSC and CC any and all loss, liability,
damage, or deficiency incurred by NSC or CC, as the case may be, resulting from
a breach of warranties set forth in Section 4 ("Sellers Loss"), but only to the
extent not exceeding the sum of the CC Price and NSC Price, if CC or NSC has
given written notice to OCE setting out specific details of the Sellers Loss as
soon as reasonably practicable after CC or NSC has become aware of the facts,
matters or circumstances from which the Sellers Loss arises; provided however,
that OCE shall be liable for neither the Sellers Loss after the second
anniversary of the Closing Date, nor for the Sellers Loss arising from the
facts, matters or circumstances which were disclosed to CC and NSC in the course
of the negotiations leading the execution of this Agreement.
6.2 Governing Law and Dispute Settlement. (a) This Agreement and
all actions arising out of or in connection with this Agreement shall be
governed by and construed in accordance with the laws of Japan, without regard
to the conflicts of law provisions of Japan or of any other jurisdiction.
(b) All disputes not capable of amicable resolution among the
representatives of the Parties in such discussion or negotiation shall be
resolved, first, among the Parties, by referring such dispute to successively
higher levels of management of each of the Parties. In the event that management
is not capable of concluding a mutually acceptable settlement within sixty (60)
days after the date one Party notifies the other(s) of the dispute, all disputes
shall be resolved by arbitration held according to the ICC Rules and shall take
place in Tokyo, Japan. Each of the Parties hereby waives any objections which it
may now or hereafter have to the place of the arbitration. The Parties shall
share the procedural costs of the arbitration equally, unless the arbitrators
decide otherwise. Each Party shall pay its own attorney's fees and costs
incurred by it relating to the arbitration, unless the arbitrators decide
otherwise. The award of the arbitration shall; be final and binding upon the
Parties.
6.3 Survival. The representations, warranties, covenants and
agreements made herein shall survive until two (2) years after the Closing Date.
10
<PAGE>
6.4 Successor and Assigns. The rights and obligations of the
Parties shall be binding upon and inure to the benefit of the successors,
assigns, heirs, administrators and permitted transferees of the Parties.
6.5 Prior Agreements. NSC shall not terminate any of the following
agreements between NSC and NSCC during the term thereof which is effective as of
the date hereof unless (a) NSCC is in breach of any representation or warranty,
or fails to perform any covenant or agreement, contained in the agreement in
question, (b) NSCC becomes insolvent or bankrupt or its substantial assets are
attached or (c) otherwise agreed to by OCE and NSC:
Supply/Distribution Agreements
Agreement on the Business Service Consignment Agreement dated as of
January 1, 1995,
Agreement on the Basic Conditions of Development Consignment dated of
January 1, 1995,
Software Free License Agreement dated January 1, 1995,
Equipment & Building Lease Agreement dated January 1, 1995, License and
Equipment
Lease Agreement dated November 1, 1992, and Memorandum on the Status of
Dispatched Personnel dated as of February 1, 1990
Upon the expiration of the said agreement, NSC shall discuss in good faith with
NSCC a possible renewal of such agreement.
6.6 NSCC's Director. NSC shall not require the removal or
replacement of the director of NSCC nominated by NSC during his term of office
which is effective as of the date hereof unless (a) such director wishes to
resign from the office of NSCC's director or (b) otherwise agreed to by OCE and
NSC. Upon the expiration of the said term of office, NSC shall discuss in good
faith with NSCC a possible re-nomination of such director.
6.7 NSCC's Officer. NSC shall not cease to dispatch to NSCC the NSC
personnel who is working as an officer of NSCC and is also nominated as a
director of NSCC by OCE during his term of office as NSCC's director which is
effective as of the date hereof unless (a) such NSC personnel wishes to resign
from his employment with NSC or to work for NSC without a solicitation of any
kind from NSC or (b) otherwise agreed to by OCE and NSC.
6.8 R&D Engineers. NSC shall not cease to dispatch to NSCC any of
the persons who is working as a research and development engineer for NSCC as of
the date hereof unless (a) such person wishes to resign from his employment with
NSC or to work for NSC without a solicitation of any kind from NSC or (b)
otherwise agreed to by OCE and NSC.
6.9 Non-Solicitation. NSC and CC shall undertake not to, directly
or indirectly, solicit, employ or hire, as employee, consultant, or agent, any
of NSCC employees working at NSCC when solicited or hired other than those
dispatched from NSC for a period of three (3) years from the Closing.
6.10 Entire Agreement, Amendments and Waivers. This Agreement
constitutes the full and entire understanding and agreement among the Parties
with regard to the subject matters hereof, and supersedes all other prior
agreements, whether written or oral, with
11
<PAGE>
regard hereto. Any provision of this Agreement may be amended, waived or
modified only upon the written consent of the Parties.
6.11 Notices. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be sent by facsimile or
mailed by registered or certified mail, postage prepaid, or otherwise delivered
by hand or messenger, addressed:
(i) if to OCE, at the address appearing at the beginning of this
Agreement, Attention: Legal Dept., Facsimile: (31) 77-359-5421, or at such other
address as OCE shall have furnished to CC and NSC in writing pursuant to this
Section 6.11,
(ii) if to CC, at the address appearing at the beginning of this
Agreement, Attention: Mr. John P. Brincko, Facsimile: (1) 714-821-2235, or at
such other address as CC shall have furnished to OCE and NSC in writing pursuant
to this Section 6.11,
(iii) if to NSC, at 31-1 Shinkawa 2-chome, Chuo-ku, Tokyo 104-8283,
Japan, Attention: Legal Dept., Electronics & Information Systems Division,
Facsimile: (81) 3-5540-0063, or at such other address as NSC shall have
furnished to OCE and CC in writing pursuant to this Section 6.11.
Each such notice or other communication shall for all purposes be treated
as effective or having been given when given if delivered personally, or if sent
via facsimile upon acknowledgement of receipt at the facsimile number listed
above for such Party.
6.12 Severability. If any provision of this Agreement shall be
judicially determined to be invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, provided that no such severability shall be
effective if it materially reduces the economic benefit of this Agreement to any
Party.
6.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
6.14 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.15 Delays or Omissions. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any Party upon
any breach or default of any other Party under this Agreement, shall impair any
such right, power or remedy of such non-defaulting Party nor shall it be
construed to be a waiver of any such breach or default, or any acquiescence
therein, or of or in any similar breach or default thereafter occurring nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default previously or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
breach or default under this Agreement, or any waiver on the part of any Party
of any provisions or conditions of this Agreement shall be made pursuant to
Section 6.10 in writing, and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under this Agreement or by law
or otherwise afforded to any Party, shall be cumulative and not alternative.
6.16 Expenses. Each Party shall be responsible for all fees and
expenses incurred by it in connection with the transactions contemplated hereby.
12
<PAGE>
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
date first written above.
On behalf of
OCE N.V.
By: /s/
-------------------------------------------
Name: Gerrit Kraaijeveld
Title: Executive Director Strategic Business Unit
Wide Format Printing Systems
OCE - TECHNOLOGIES, B.V.
CALCOMP PACIFIC, INC.
By: /s/
-------------------------------------------
Name: John P. Brincko
Title: Chief Executive Officer
NIPPON STEEL CORPORATION
By: /s/
-------------------------------------------
Name: Shigeru Suzuki
Title: Division Director
Electronics and Information Systems Division
13
<PAGE>
Exhibit 10.38
SUBORDINATED LOAN AGREEMENT
---------------------------
SUBORDINATED LOAN AGREEMENT, dated as of August 6, 1999, among CALCOMP
TECHNOLOGY, INC., a Delaware corporation (the "Borrower") and LOCKHEED MARTIN
CORPORATION, a Maryland corporation (the "Lender").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on the date hereof, the Borrower has filed a Certificate of
Dissolution with the Secretary of State of the State of Delaware pursuant to
which the Borrower will effect its complete liquidation and dissolution;
WHEREAS, the Borrower has requested the Lender to make available to
the Borrower financing in an amount up to $5,000,000 to be used by the Borrower
to fund the Administrative Expenses to be incurred by the Borrower in connection
with the winding-up of its affairs and its dissolution; and
WHEREAS, the Lender has agreed to provide financing for such purposes
in an amount up to the Maximum Available Amount (as defined herein) in effect
from time to time on the terms, and subject to the conditions, set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender agree as follows:
SECTION 1. DEFINITIONS The following terms, as used herein, shall
-----------
have the following respective meanings:
"Administrative Expenses" shall mean general administrative
expenses, employee salaries and benefits and bona fide fees and expenses of
professional advisors to the Borrower (including agreed upon "success fees" of
the Liquidation Specialist and reasonable fees and expenses of the Borrower's
attorneys and accountants) actually incurred by the Borrower in connection with
the transactions contemplated by the Certificate and the Plan.
"Agreement" means this Subordinated Loan Agreement, as amended,
restated, extended or otherwise modified from time to time in accordance with
the terms hereof.
"Authorized Officer" means the Chief Executive Officer of the
Borrower.
"Bankruptcy Event" means the Borrower or any of its Subsidiaries
shall have commenced a voluntary case or other proceeding or an involuntary case
or other proceeding shall
<PAGE>
have been commenced against such Person seeking liquidation, reorganization or
other relief with respect to itself or its debts under any federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment by a court of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its Property, or such
Person shall make a general assignment for the benefit of its creditors. The
term "Bankruptcy Event" shall not include a voluntary dissolution proceeding
under applicable law as contemplated by the Certificate in which no trustee or
receiver is appointed.
"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.
"Certificate" means the Certificate of Dissolution of the Borrower
filed with the Secretary of State of the State of Delaware on the date hereof.
"Dollars" and the sign "$" means lawful money of the United States.
"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.
"Lien" means with respect to any property or asset (or any income or
profits therefrom) of any Person (in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise) (a) any mortgage, lien, pledge, attachment, levy or other security
interest of any kind thereupon or in respect thereof, but not including the
interest of a third party in receivables sold by such Person to such third party
on a non-recourse basis or (b) any other arrangement, express or implied, under
which the same is subordinated, transferred, sequestered or otherwise identified
so as to subject the same to, or make the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured liabilities of such Person. For the purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any asset that it has acquired
or holds subject to the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement relating to
such asset.
"Liquidation Specialist" means Brincko Associates, Inc., an
independent third-party liquidation specialist, retained by the Borrower to
review, validate and implement the Plan.
"Loan" means a loan made by the Lender to the Borrower pursuant to
Section 2, or all such Loans, as the context may require.
"Maximum Available Amount" means $5,000,000.
<PAGE>
"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 the detailed Plan of Dissolution and Liquidation of the
Borrower, as amended from time to time with the written consent of the Lender.
"Prime 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
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 Prime 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.
"Property" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"Revolving Credit Agreement" means the Amended and Restated Revolving
Credit Agreement dated December 20, 1996 between the Borrower and CalComp Inc.
and the Lender, as amended through the date hereof.
"Secured Loan Facility" shall mean the Secured Demand Loan Facility by
and among the Borrower, CalComp Inc., Topaz Technologies, Inc. and the Lender
dated January 14, 1999, as amended, together with the Security Agreement of even
date therewith.
"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.
"Tax" means all taxes, levies, imposts, stamp taxes, sales tax, goods
and services tax, duties, charges to tax, fees, deductions, withholdings and any
restrictions or conditions resulting in a charge to tax, in each case imposed by
or payable to a government or governmental agency, and all penalty, interest and
other payments on or in respect thereof.
"Term of this Agreement" means the period from the date hereof to and
including the Termination Date.
"Termination Date" means the earlier of (i) the third anniversary of
the date hereof and (ii) the date on which the Lender notifies the Borrower of
termination which notice may be delivered by the Lender in its sole and absolute
discretion. The termination of this Agreement for any reason shall in no way
affect the Lender's rights and remedies and ability to collect any amounts
<PAGE>
outstanding hereunder.
SECTION 2. THE LOANS
---------
Section 2.1. Loans. During the Term of this Agreement and subject to
-----
Section 2.2 below, 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 principal amount not exceeding at any one time
outstanding the Maximum Available Amount in effect at the time the Loans are
made; provided, however, that no Loan shall be requested by the Borrower except
to the extent that the funds which are projected by the Borrower to be available
to the Borrower during such period (other than pursuant to this Agreement) are
less than the projected cash requirements during such period. The Borrower
shall repay Loans in accordance with Section 2.3.
Section 2.2. Method of Borrowing.
-------------------
(a) Requests for borrowing pursuant to Section 2.2(b) below may
be made by the Borrower no more frequently than monthly and may only be made
with respect to the funding of Administrative Expenses for the period identified
in the statement of projections of costs and cash flows delivered pursuant to
Section 4.1(a) (which period shall in no event exceed one month) in respect of
the request for borrowing made pursuant to Section 2.2(b).
(b) With respect to each Loan made pursuant to Section 2.1
hereof, the Borrower shall have complied with Section 4.1(a) with respect to
such request and shall give the Lender a written 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) the principal amount
of the Loan and (iii) a detailed description of the purposes for which the
proceeds of the Loan are to be used. The notice of borrowing shall be written
and shall be accompanied by a certificate of an Authorized Officer certifying
that (i) the proceeds of the Loan are to be used solely for the Administrative
Expenses described in the notice, (ii) such Administrative Expenses are in
accordance with and in furtherance of the Plan, (iii) no Bankruptcy Event has
occurred, and (iv) to the best of such Authorized Officer's knowledge, no breach
of this Agreement (or any representation or warranty made in any notice or
document delivered pursuant hereto or thereto) has occurred.
(c) The Lender shall have the right to accept or reject, in whole
or in part, any request for borrowing based on the Lender's sole and absolute
discretion. Nothing in this Agreement or any other document and no course of
dealing shall be deemed to imply any limitation on the discretionary and demand
nature of the Loans or to require that the Lender give any notice of or reason
for declining from time to time to make any Loan.
<PAGE>
(d) If a Borrower gives the notice required by Section 2.2(b) with
respect to any Loan before 1:00 p.m. (Eastern Time), the Lender will accept or
reject that request, in whole or in part, and to the extent accepted, disburse
the proceeds of the Loan to the Borrower in immediately available funds as soon
as practicable thereafter. The Lender will disburse all Loans to the Borrower
by deposit in an account to be maintained by the Borrower.
Section 2.3. Repayment and Prepayment of the Loans
-------------------------------------
(a) The Borrower promises and agrees to repay to the Lender all Loans,
together with interest accrued through the date of repayment, at the earlier to
occur of (i) the Business Day following delivery of written demand by the Lender
or (ii) the Termination Date. Without prejudice to any of the rights of the
Lender arising under this Agreement, the Lender shall have the right at any time
and from time to time to demand repayment, in whole or in part, of any Loans,
together with any accrued but unpaid interest thereon.
(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 and its Subsidiaries (other than
the Borrower and its Subsidiaries) to the Borrower.
(c) The Borrower may repay or prepay the outstanding principal amount
of Loans in whole or in part on any Business Day. Each such repayment or
prepayment shall be accompanied by payment of all accrued interest thereon and
may be made at any time without cost or penalty of any kind.
Section 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 a Borrower's name to be maintained by the
Lender. All Loans shall be payable by the Borrower to the order of the Lender
on demand and in no event 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.
Section 2.5. Interest Rates and Payments. (a) Loans shall bear interest
---------------------------
on the outstanding principal amount thereof at a rate per annum equal to the
Prime Rate as in effect from time to time. Interest on Loans shall accrue
monthly and be payable on the earlier to occur of (i) the Business Day following
demand by the Lender or (ii) the Termination Date. The Lender will notify the
Borrower
<PAGE>
in writing, upon request of a Borrower, of the amount of interest payable
hereunder with respect to Loans which notice will set forth in reasonable detail
the calculation of such amount.
(b) 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 Prime Rate plus
2% (two percent).
Section 2.6. General Provisions as to Payments. The Borrower shall
---------------------------------
make each payment of principal of, and interest on, the Loans hereunder in
Dollars on the date when due in funds immediately available in the account that
the Lender shall designate from time to time. Whenever any payment of principal
of, or interest on, the Loans shall be due on a day that 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 Prime Rate.
Section 2.7. Computation of Interest. Interest on Loans shall be
-----------------------
computed for each day on the basis of a year of 365 or 366 days, as the case may
be.
Section 2.8. No Deduction. All amounts payable by the Borrower under
------------
this Agreement are payable without deduction or set-off.
Section 2.9. Use of Proceeds. The proceeds of Loans will be employed
---------------
by the Borrower only for purposes of paying Administrative Expenses incurred in
connection with the Plan, will be used only to pay for the specified purpose and
for no more than the specified amount set forth in the budget referred to in
Section 4.2(a) below and may only be used for the purposes described in the
request for borrowing for such Loan to the extent accepted by the Lender.
Section 2.10. Subordination. Loans outstanding under this Agreement
-------------
shall constitute unsecured obligations of the Borrower and shall be expressly
subordinate and junior in right of payment to all secured indebtedness of the
Borrower and all unsecured and unsubordinated indebtedness of the Borrower
whether now or hereafter existing. Nothing contained herein shall limit the
Lender's rights under the Secured Loan Facility.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower hereby represents and warrants to the Lender that as of
the date hereof:
Section 3.1. 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 on the Borrower's ability to perform this Agreement except to the extent
affected by the filing of the
<PAGE>
Certificate. The Borrower is in compliance with its charter and bylaws and all
other organizational or governing documents.
Section 3.2. 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.
The execution, delivery and performance by the Borrower of this Agreement and
the transactions contemplated hereby and thereby have been approved by at least
a majority of the disinterested directors of the Borrower.
Section 3.3. Binding Effect. This Agreement constitutes the valid
--------------
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms.
Section 3.4. 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 permit to which the Borrower
is a party or by which any property of a 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 a Borrower or on any of its
properties of any Lien (other than as contemplated by the Security Agreement).
Section 3.5. Litigation. Except as set forth in Schedule 3.5, there
----------
is no action, suit, litigation or proceeding at law or in equity or by or before
any Governmental Authority now pending against or, to the knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries or any of
their respective Properties other than as described in the Borrower"s periodic
reports filed pursuant to the Securities Exchange Act of 1934.
Section 3.6. Licenses and Authorizations. The Borrower and its
---------------------------
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 its Subsidiaries of their respective Properties and for the conduct by the
Borrower and its Subsidiaries of their respective businesses, except (i) for
those, which, if not obtained or made, could not reasonably be expected to have
a material adverse effect on the Borrower's ability to perform this Agreement
and (ii) to the extent affected by the filing of the
<PAGE>
Certificate. 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.
SECTION 4. AFFIRMATIVE COVENANTS
---------------------
So long as this Agreement shall be in effect or any amount payable
hereunder remains unpaid, unless the Lender shall have waived compliance in
writing, the Borrower agrees that:
Section 4.1. Notices, Reports and Forecasts. The Borrower will
------------------------------
promptly furnish to the Lender:
(a) (i) With respect to the initial request for borrowing
pursuant to Section 2.2(b), the Borrower shall have delivered to the Lender,
such detailed information as the Lender shall request in its sole and absolute
discretion and (ii) with respect to any subsequent request for borrowing, at
least 2 Business Days prior to delivery of any request for borrowing pursuant to
Section 2.2(b), a detailed written report of all disbursements and receipts of
the Borrower and its Subsidiaries for the borrowing period preceding the
borrowing period during which such request is made, an accounting of the use of
proceeds of Loans during such period (i.e., a variance report with detailed
explanations) and a statement of projections of costs and cash flow for the
period for which the proceeds of any Loan will be used, as well as any
additional related reports reasonably requested by the Lender; and
(b) Not later than the tenth day of each calendar month (or if
not a Business Day, the next Business Day), a written report of all
disbursements and receipts of the Borrower and its Subsidiaries during the
preceding calendar month and an accounting of the use of proceeds of Loans
during such month certified by the Liquidation Specialist and a written report
of the progress through the end of the preceding calendar month in disposing of
and liquidating the assets of the Borrower and its Subsidiaries and otherwise
effecting the Plan, which report shall contain such information as the Lender
may reasonably request including, but not limited to (i) the status of
disposition of assets and receipt of proceeds therefor (including with respect
to any foreign entities or assets controlled by the Borrower and its
Subsidiaries), (ii) the costs incurred in connection therewith, (iii) an
explanation of any significant variances from the costs and cash flow
projections previously furnished to the Lender, and (iv) a reasonable detailed
update of the Plan, including the legal status of the transactions contemplated
thereby;
(c) Notice of any pending or threatened Bankruptcy Event and of
any pending or threatened 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; and
(d) At the time the Borrower (or an Authorized Officer) furnishes
the
<PAGE>
information, reports, lists and computations required by this Agreement, the
Borrower shall be deemed to have represented and warranted to the Lender that
each component of such information, reports, lists and computations materially
complies with the terms and conditions of this Agreement and is true, correct
and complete.
Section 4.2. Plan of Complete Liquidation and Dissolution, etc. The
-------------------------------------------------
Borrower will, and will cause its Subsidiaries to:
(a) do or cause to be done all things necessary to effect the
complete liquidation and dissolution of the Borrower in as expeditious a manner
as practicable; and
(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 in connection with the
consummation of the transactions contemplated by the Plan.
SECTION 5. MISCELLANEOUS.
-------------
Section 5.1. 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:
(i) if to the Borrower, to it at:
CalComp Technology, Inc.
1 Centerpointe Drive
Suite 400
LaPalma, California 90623
Attention: John P. Brincko
Telecopy: (714) 690-8346
(ii) if to the Lender, to it at:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Vice President and Treasurer
Telecopy: (301) 897-6651
<PAGE>
with a copy to:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Marian S. Block
Vice President and Associate
General Counsel
Telecopy: (301) 897-6587
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.
Section 5.2. 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. No failure or delay on the
part of the Lender in exercising any right, power or privilege under the
Revolving Credit Agreement, the Cash Management Agreement or the Secured Loan
Facility shall operate as a waiver or preclude any exercise of any right, power
or privilege hereunder. Nothing contained herein shall be deemed to negate or
novate the Revolving Credit Agreement, the Cash Management Agreement or the
Secured Loan Facility or any other agreements between the parties hereto or
otherwise release, modify or terminate the Lender's rights thereunder. The
rights and remedies provided and contemplated by this Agreement are cumulative
and not exclusive of any rights or remedies provided by law and shall not be
effected by the termination of this Agreement for any reason.
Section 5.3. 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 any
of their rights and obligations hereunder without the prior written consent of
the Lender
<PAGE>
Section 5.4. 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 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 any collection and other enforcement
proceedings resulting herefrom.
(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, jointly and severally, 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.
Section 5.5. 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.
Section 5.6. 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.
Section 5.7. Governing Law; Confessed Judgment.
---------------------------------
(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 proceedings. Final
judgment in any such suit, action or proceeding in any such court
<PAGE>
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.
(c) IN THE EVENT THAT THE BORROWER FAILS TO PAY ANY AMOUNT DUE
HEREUNDER (WHETHER UPON DEMAND OF THE LENDER OR UPON THE TERMINATION DATE) THE
BORROWER HEREBY AUTHORIZES ANY ATTORNEY DESIGNATED BY THE LENDER OR ANY CLERK OF
ANY COURT OF RECORD TO APPEAR FOR THE BORROWER IN ANY COURT OF RECORD AND
CONFESS JUDGMENT AGAINST THE BORROWER IN FAVOR OF THE LENDER, WITHOUT PRIOR
HEARING, FOR AND IN THE AMOUNT OF ANY UNPAID LOANS PLUS INTEREST ACCRUED AND
UNPAID THEREON, TOGETHER WITH REASONABLE ATTORNEY'S FEES (NOT TO EXCEED 15% OF
THE UNPAID PRINCIPAL AMOUNT OF LOANS HEREUNDER). THE BORROWER HEREBY RELEASES
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL ERRORS AND ALL RIGHTS TO
EXEMPTION, APPEAL, STAY OF EXECUTION, INQUISITION, AND OTHER RIGHTS TO WHICH THE
BORROWER MAY OTHERWISE BE ENTITLED UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR OF ANY STATE OR POSSESSION THEREOF NOW OR HEREAFTER IN EFFECT.
Section 5.8 Waiver of Jury Trial.
--------------------
THE BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE
PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS AGREEMENT. THIS WAIVER
CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO
THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the Borrower
and the Lender, and the Borrower and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect. The
Borrower and the Lender further represent that they have been represented in the
signing of this Agreement and in the making of this waiver by independent legal
counsel, selected of their own free will, and that they have had the opportunity
to discuss this waiver with counsel.
Section 5.9. Waiver of Lender Liability. The Borrower hereby knowingly
--------------------------
and voluntarily, forever releases, acquits and discharges the Lender or any
past, present or future agent, attorney, legal representative, predecessor in
interest, affiliate, successor, assign, employee, director or officer of the
Lender (collectively, the "Lender Group") from and of any and all existing or
future claims that the Lender or any of Lender Group is in any way responsible
for the past, current or
<PAGE>
future condition or deterioration of the business operations and/or financial
condition of the Borrower, and from and of any and all claims that the Lender or
any of the Lender Group breached any agreement to loan money or make other
financial accommodations available to the Borrower or to fund any operations of
the Borrower at any time. The Borrower further hereby knowingly and voluntarily
forever releases, acquits and discharges the Lender and the Lender Group, from
and of any and all other claims, damages, losses, actions, counterclaims, suits,
judgments, obligations, liabilities, defenses, affirmative defenses, setoffs,
and demands of any kind or nature whatsoever, in law or in equity, whether
presently known or unknown, which the Borrower may have had, now have, or which
they can, shall or may have for, upon, or by reason of any matter, course or
thing whatsoever relating to, arising out of, based upon, or in any manner
connected with, any transaction, event, circumstance, action, failure to act, or
occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted, begun, or otherwise related or connected to or
with, whether past, existing or hereafter occurring, any or all of the Loans,
this Agreement and/or any direct or indirect action or omission of the Lender
and/or any of the Lender Group, including, without limitation, the failure or
the refusal of the Lender to make any one or more Loans requested by the
Borrower. The Borrower further agrees that from and after the date hereof, it
will not assert to any person or entity that any deterioration of the business
operations or financial condition of the Borrower was caused by any breach or
wrongful act of the Lender or any of the Lender Group.
Section 5.10 No Third Party Beneficiaries. This Agreement is for the sole
----------------------------
benefit of the parties hereto and nothing herein express or implied shall give
or be construed to give any person, other than the parties hereto, any legal or
equitable rights hereunder.
<PAGE>
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:_____________________(SEAL)
Janet L. McGregor
Vice President and Treasurer
CALCOMP TECHNOLOGY, INC.
By:_____________________(SEAL)
John P. Brincko
Chief Executive Officer
<PAGE>
Exhibit 10.39
[LOCKHEED MARTIN CORPORATION LETTERHEAD]
August 6, 1999
CalComp Technology, Inc.
CalComp Inc.
Topaz Technologies, Inc.
1 Centerpointe Drive
Suite 400
LaPalma, California 90623
ATTN: John P. Brincko
Re: Secured Demand Loan Facility, dated as of January 14, 1999, as amended
----------------------------------------------------------------------
July 15, 1999 (the "Secured Facility") and Security Agreement, dated as of
--------------------------------------------------------------------------
January 14, 1999 (the "Security Agreement")
-------------------------------------------
Dear John:
Reference is made to the Secured Facility and the Security Agreement which
are collectively referred to herein as the "Existing Agreements." Capitalized
terms used but not defined herein shall have the meanings given to those terms
in the Existing Agreements.
On December 23, 1998, Lockheed Martin Corporation (the "Lender") notified
CalComp Technology, Inc. ("Technology") and CalComp Inc. ("CalComp") that the
Lender would not provide additional credit capacity beyond that available under
the Amended and Restated Revolving Credit Agreement dated as of December 20,
1996 as amended on March 20, 1998 and July 15, 1998 and the Cash Management
Agreement dated July 23, 1996 as amended (collectively, the "Prior Agreements").
As of January 14, 1999, the $43,000,000 of credit available under the Prior
Agreements had been fully drawn. Those amounts, together with accrued and
unpaid interest and fees, became due and payable in full on January 31, 1999.
On January 14, 1999, the Lender agreed, subject to certain terms and
conditions, to forbear from collecting amounts outstanding under the Prior
Agreements and Technology, CalComp, Topaz Technologies, Inc. ("Topaz") and the
Lender entered into the Secured Facility pursuant to which the Lender has made
available to the Borrowers additional borrowings with a principal amount
outstanding equal to $28,916,356.95 as of the date hereof to facilitate the non-
<PAGE>
CalComp Technology, Inc.
August 6, 1999
Page 2
bankruptcy liquidation of Technology, CalComp and Topaz. The Secured Facility
terminates in accordance with its terms as of the date hereof. In addition, on
the date hereof, Technology has filed a Certificate of Dissolution with the
Secretary of State of the State of Delaware pursuant to which Technology intends
to effect its complete liquidation and dissolution under Delaware law.
Technology has requested that the Lender make available to it additional
borrowings under a Subordinated Loan Facility to be entered into by and between
Technology and the Lender immediately following the execution of this letter.
Effective upon execution and delivery of this letter and the Subordinated
Loan Facility by all parties, this letter agreement amends and modifies certain
terms of the Existing Agreements and provides certain additional agreements of
the parties all as set forth below.
1. The Lender hereby agrees to forbear from pursuing its rights and remedies
to collect amounts outstanding under the Existing Agreements and the Prior
Agreements until the Termination Date (as defined in the Subordinated Loan
Facility). All principal currently outstanding and, to the extent
permitted by law, interest on the Loans under the Existing Agreement shall
accrue interest at the rate provided for in Section 2.5(b) of the Secured
Facility until repaid in full. All principal currently outstanding and, to
the extent permitted by law, interest on the Loans under the Prior
Agreements shall continue to accrue interest at the rate provided for in
Section 2.5(b) of the Secured Facility, as contemplated by the Side-Letter
Agreement dated January 14, 1999 by and between the Lender, Technology and
CalComp (the "Letter Agreement"). Subject to the foregoing, the parties
agree that the Secured Facility is hereby amended to the extent necessary
to provide that no additional Loans will be made under the Secured Facility
and to provide that no amounts repaid by the Borrowers under the Secured
Facility may be reborrowed under the Secured Facility. Neither this letter
agreement nor the Subordinated Loan Facility shall affect or limit (a) the
Lender's right to collect amounts outstanding under the Existing Agreements
and the Prior Agreements on or after the Termination Date (as defined in
the Subordinated Loan Facility) or (b) the security interest arising under
the Security Agreement securing the Borrowers' obligation to Lender under
the Secured Facility.
2. This agreement shall in no way affect any rights or remedies the Lender may
have to collect any amounts that may become due and payable under the
Subordinated Loan Facility.
3. Except as specifically modified hereby or by the Letter Agreement dated
January 14, 1999, the Existing Agreements and the Prior Agreements shall
remain in full force and effect and no additional changes, modifications,
or amendments shall be inferred that are not expressly set forth herein or
therein.
<PAGE>
CalComp Technology, Inc.
August 6, 1999
Page 3
4. This letter agreement may be signed (by facsimile or otherwise) in one or
more counterparts with the same effect as if the signatures were upon the
same instrument.
5. This letter agreement shall be construed in accordance with and governed by
the laws of the State of Maryland, without reference to the conflict of
laws provisions thereof.
If the foregoing accurately reflects our agreement, please have the
duplicate copy of this letter agreement executed by a duly authorized officer
where indicated and return it to the undersigned.
LOCKHEED MARTIN CORPORATION
By:________________________
Janet L. McGregor
Vice President and Treasurer
Acknowledged and agreed this
6th day of August, 1999:
CALCOMP TECHNOLOGY, INC.
By:_________________________
Name:
Title:
CALCOMP INC.
By:_________________________
Name:
Title:
TOPAZ TECHNOLOGIES, INC.
By:_________________________
Name:
Title:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-26-1999 DEC-27-1998
<PERIOD-START> DEC-28-1998 DEC-29-1997
<PERIOD-END> JUN-27-1999 JUN-28-1998
<CASH> 8,825 4,913
<SECURITIES> 0 0
<RECEIVABLES> 579 23,968
<ALLOWANCES> 0 3,140
<INVENTORY> 200 36,087
<CURRENT-ASSETS> 9,604 66,682
<PP&E> 1,600 69,080
<DEPRECIATION> 0 38,676
<TOTAL-ASSETS> 11,204 180,710
<CURRENT-LIABILITIES> 76,204 133,168
<BONDS> 0 0
0 0
0 0
<COMMON> 0 471
<OTHER-SE> 0 48,195
<TOTAL-LIABILITY-AND-EQUITY> 76,204 189,710
<SALES> 0 79,366
<TOTAL-REVENUES> 0 79,366
<CGS> 0 69,806
<TOTAL-COSTS> 0 69,806
<OTHER-EXPENSES> 0 39,541
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 2,306
<INCOME-PRETAX> 0 (32,287)
<INCOME-TAX> 0 65
<INCOME-CONTINUING> 0 (32,352)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 0 (32,352)
<EPS-BASIC> 0 (.69)
<EPS-DILUTED> 0 0
</TABLE>
