-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C6RFywgbmO3ImVoX3wSEbEmShdLXxoLAGPZmYG/yokhxyqlnpf0mbc4scJ3zoJoF k8tzqTlaREyoxs4hHDLE2g== 0001017062-96-000480.txt : 19961113 0001017062-96-000480.hdr.sgml : 19961113 ACCESSION NUMBER: 0001017062-96-000480 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALCOMP TECHNOLOGY INC CENTRAL INDEX KEY: 0000818470 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 060888312 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16071 FILM NUMBER: 96659795 BUSINESS ADDRESS: STREET 1: 8500 CAMERON ROAD CITY: AUSTIN STATE: TX ZIP: 78754-3999 BUSINESS PHONE: 5128731540 MAIL ADDRESS: STREET 1: 60 SILVERMINE ROAD CITY: SEYMOUR STATE: CT ZIP: 06483 FORMER COMPANY: FORMER CONFORMED NAME: SUMMAGRAPHICS CORP DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR PERIOD ENDING 09/29/96 Form 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from to Commission file number 0-16071 CALCOMP TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) (Formerly Summagraphics Corporation) DELAWARE 06-0888312 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2411 W. LA PALMA AVENUE ANAHEIM, CALIFORNIA 92803 (Address of principal executive offices) (Zip Code) (714) 821-2000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class of Common Stock Outstanding at October 30, 1996 --------------------- ------------------------------- $ .01 par value 45,398,650 CALCOMP TECHNOLOGY, INC. AND SUBSIDIARIES TABLE OF CONTENTS ------------------------------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (1) Condensed Consolidated Statements of Operations (2) Condensed Consolidated Statements of Cash Flows (3) Condensed Notes to Consolidated Financial Statements (4) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (8) PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (12) Signatures (13)
CALCOMP TECHNOLOGY, INC. Condensed Consolidated Balance Sheets
September, 29 December, 31 1996 1995 (Unaudited) -------------- ------------ (In thousands) CURRENT ASSETS: Cash $ 14,787 $ 14,574 Accounts receivable, net 49,360 46,380 Accounts receivable from affiliates 10,419 12,232 Inventories (Note 3) 55,323 40,308 Other current assets 3,868 3,504 --------- -------- TOTAL CURRENT ASSETS 133,757 116,998 --------- -------- Property, plant and equipment, net 53,261 51,060 Investments 5,032 4,518 Goodwill 83,491 50,427 Other intangibles 3,142 -- Other assets 8,744 8,561 --------- -------- TOTAL ASSETS $ 287,427 $231,564 ========= ======== CURRENT LIABILITIES: Accounts payable $ 21,034 $ 17,592 Deferred revenue 10,565 10,122 Accrued salaries and related expenditures 9,913 7,594 Income taxes payable 1,061 1,321 Line of credit with Majority Shareholder (Note 4) 19,373 -- Accrued reorganization costs 8,404 -- Other liabilities 34,432 19,472 --------- -------- TOTAL CURRENT LIABILITIES 104,782 56,101 Other long-term liabilities 5,851 5,080 Accumulated postretirement benefit obligation 3,640 3,640 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value, 5,000,000 shares authorized -- -- Common stock,$.01 par value, 60,000,000 shares authorized, 45,398,650 and 40,742,957 shares issued on September 29, 1996 and December 31, 1995 (Note 1) 454 407 Additional paid-in capital 283,312 265,243 Accumulated deficit (Note 6) (118,054) (71,785) Cumulative translation adjustment 7,907 8,531 Less: Treasury stock, at cost - 49,000 shares (465) -- Note receivable from Majority Shareholder (Note 6) -- (35,653) --------- -------- Total Stockholders' Equity 173,154 166,743 --------- -------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 287,427 $231,564 ========= ========
See accompanying notes to unaudited condensed consolidated financial statements. 1 CALCOMP TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Unaudited)
Three Months Ended Nine Months Ended -------------------------- ------------------------- Sept. 29, Sept. 24, Sept. 29, Sept. 24, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- (In thousands, except per share amounts) NET SALES $ 65,564 $ 65,289 $ 168,370 $ 206,565 COST OF SALES 49,759 46,782 130,427 147,246 ----------- ----------- ----------- ----------- Gross Profit 15,805 18,507 37,943 59,319 OPERATING EXPENSES: Selling 13,320 11,218 36,748 34,961 Research and development 5,784 4,640 15,882 13,434 General and administrative 6,571 3,339 14,912 15,642 Corporate expenses from Majority Shareholder 1,094 2,276 3,456 6,540 ----------- ----------- ----------- ----------- Total operating expenses 26,769 21,473 70,998 70,577 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (10,964) (2,966) (33,055) (11,258) ----------- ----------- ----------- ----------- Interest (expense) income, net (205) 64 523 52 Other income, net 648 12 662 1,374 ----------- ----------- ----------- ----------- LOSS BEFORE INCOME TAXES (10,521) (2,890) (31,870) (9,832) Provision for (benefit of) income taxes 213 (33) 831 1,974 ----------- ----------- ----------- ----------- NET LOSS $ (10,734) $ (2,857) $ (32,701) $ (11,806) =========== =========== =========== =========== NET LOSS PER COMMON SHARE (Note 5): $ (0.24) $ (0.07) $ (0.78) $ (0.29) =========== =========== =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING: 44,119,613 40,742,957 41,868,509 40,742,957 =========== =========== =========== ===========
See accompanying notes to unaudited condensed consolidated financial statements 2 CALCOMP TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Nine Months Ended ------------------------------- September 29, September 24, 1996 1995 -------------- -------------- (In thousands) Cash flows from operating activities: Net loss $(32,701) $ (11,806) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 8,732 8,536 Investee income (825) (1,130) Changes in operating assets and liabilities (net of effect of acquired company) Accounts receivable 7,726 11,848 Accounts receivable from affiliates 1,813 (3,283) Inventory (7,796) (4,760) Accounts payable (5,516) 1,255 Salaries and wages 2,319 (476) Accrued liabilities 2,468 9,199 Long-term liabilities (1,385) 442 Other (174) (3,493) -------------- -------------- Net changes in operating assets and liabilities (545) 10,732 -------------- -------------- Net cash (used) provided by operating activities (25,339) 6,332 -------------- -------------- Cash flows from investing activities: Cash acquired in connection with purchase (note 1) 2,801 -- Investment in property, plant and equipment (5,377) (9,523) Proceeds from disposition of property, plant and equipment 59 983 Dividends received 311 672 -------------- -------------- Net cash used in investing activities (2,206) (7,868) -------------- -------------- Cash flows from financing activities: Proceeds from line of credit with Majority Shareholder 5,873 -- Net cash received from Majority Shareholder 22,085 8,459 -------------- -------------- Net cash provided by financing activities 27,958 8,459 Effect of exchange rate changes on cash (200) 824 -------------- -------------- Increase in cash 213 7,747 -------------- -------------- Cash at beginning of period 14,574 11,249 -------------- -------------- Cash and cash equivalents at end of period $ 14,787 $ 18,996 ============== ============== Supplementary disclosures of cash flow information: Taxes paid $ 1,091 $ 95 Interest paid $ 41 $ 0
See accompanying notes to unaudited condensed consolidated financial statements 3 CALCOMP TECHNOLOGY, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------- SEPTEMBER 29, 1996 ------------------------- (Unaudited) 1) Merger of Summagraphics Corporation with CalComp, Inc. ------------------------------------------------------ CalComp Technology, Inc. (the "Company") completed a Plan of Reorganization (the "Agreement") for the exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation as of July 23, 1996. Pursuant to this agreement, the Company issued to Lockheed Martin Corporation ("Majority Shareholder") 40,742,957 shares of Common Stock of the Company, representing 89.7% of the total outstanding shares of Common Stock of the Company following such issuance, in exchange for all of the outstanding capital stock of CalComp Inc. As a result of the exchange, Lockheed Martin Corporation acquired control of the Company and CalComp Inc. became a wholly-owned subsidiary of the Company. In connection with the exchange, the Company changed its name from Summagraphics Corporation to CalComp Technology, Inc. and changed its year end from May 31 to a fifty-two, fifty-three week fiscal year ending on the last Sunday of December. The purchase was accounted for as a "reverse acquisition" whereby CalComp Inc. was deemed to have acquired CalComp Technology, Inc. (formerly Summagraphics Corporation) for financial reporting purposes. However, CalComp Technology, Inc. remains the continuing legal entity and registrant for Securities and Exchange Commission filing purposes. Consistent with reverse acquisition accounting, the historical financial statements of the Company presented for the three and nine month periods ended September 24, 1995, are the consolidated financial statements of CalComp Inc. and differ from the consolidated financial statements of the Company previously reported. In addition, the historical stockholders' equity as of December 31, 1995, has been retroactively restated to reflect the equivalent number of shares issued in connection with the agreement. The accounts and results of operations of CalComp Technology, Inc. have been included in the financial statements from the date of acquisition and reflect preliminary purchase price allocations and adjustments. Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The following sets forth the assets, liabilities and stockholders equity that were recorded by the Company in connection with the acquisition on July 23, 1996 and reflects the preliminary purchase price allocation: (In thousands)
Assets Liabilities and Stockholder's Equity ------ ------------------------------------ Cash $ 2,801 Short-Term Debt $17,912 Accounts Receivable, net 11,041 Accounts Payable 9,060 Inventories 7,577 Other Current Liabilities 18,185 Other Current Assets 1,248 ------- ------- Total Current Liabilities $45,157 Total Current Assets $22,667 Plant and Equipment 2,458 Other Long-Term Liabilities 2,156 Goodwill 36,221 Other Current Assets 3,618 Stockholder's Equity 17,651 ------- ------- Total Assets $64,964 Total Liabilities and Stockholders Equity $64,964 ======= =======
4 CALCOMP TECHNOLOGY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------- SEPTEMBER 29, 1996 ------------------------- (Unaudited) The following pro forma summary presents the consolidated results of operations assuming that the merger of the Company and CalComp Inc. had occurred on January 1, 1995. No adjustments are required to conform the accounting policies of the Company and CalComp Inc.
Nine Months Ended --------------------------------------- Sept 29, Sept 24, 1996 1995 ------------- --------------- (In thousands, except per share amounts) Revenues $ 198,025 $ 261,566 Net Loss $ (49,179) $ (25,874) Weighted Average Shares Outstanding 45,398,650 45,398,650 Loss Per Share $ (1.08) $ (0.57)
The amounts disclosed above for Net Loss have been adjusted to reflect: 1) Goodwill amortization arising from the exchange, net of the removal of the historical goodwill recorded on Summagraphics' statement of operations. Goodwill amortization adjustments totaled $1,039,000 and $1,425,000 for the nine months ended September 29, 1996 and September 24, 1995, respectively. 2) A $1 million reduction in the carrying amount of certain property and equipment to record such assets at their fair value. This adjustment, which assumes a 5 year useful life, resulted in a decrease to depreciation expense of $117,000 and $150,000 for the nine months ended September 29, 1996 and September 24, 1995, respectively. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the transaction been effected on the date indicated above or of results which may occur in the future. 5 CALCOMP TECHNOLOGY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------- SEPTEMBER 29, 1996 ------------------------- (Unaudited) 2) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month period ended September 29, 1996, are not necessarily indicative of the results that may be expected for the Company's fiscal year or any other interim period. It is suggested that the financial statements be read in conjunction with the information contained in the Proxy Statement filed with the Securities and Exchange Commission on June 24, 1996 under Section 14 of the Securities Act of 1934, as amended, and the Company's Annual Report for the fiscal year ended May 31, 1996. 3) Inventories ----------- Inventories as of September 29, 1996 and December 31, 1995 are as follows:
September 29, December 31, 1996 1995 ------------- ------------ (in thousands) Finished Goods $36,214 $28,720 Work in process 1,138 1,628 Raw materials 17,971 9,960 ------- ------- $55,323 $40,308 ======= =======
4) Line of Credit -------------- Revolving Credit Agreement - -------------------------- In connection with the Agreement, the Company and Lockheed Martin entered into a revolving credit agreement pursuant to which Lockheed Martin will provide, from time to time, financing of up to $28 million for repayment of specified indebtedness and general corporate purposes, including, without limitation, financing the working capital needs of the Company and its 6 CALCOMP TECHNOLOGY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ----------------------------------------------- SEPTEMBER 29, 1996 ------------------------- (Unaudited) Revolving Credit Agreement (continued) - -------------------------------------- subsidiaries. The revolving credit agreement has a term of two years from the date of its execution, but is terminable after the first anniversary of the date of the revolving credit agreement, at the option of either the Company or Lockheed Martin. The revolving credit agreement bears interest, at CalComp Technology's option, either at (i) a rate per annum equal to the higher of the federal funds rate as published in the Federal Reserve System plus 0.5% or the rate publicly announced from time to time by Morgan Guaranty Trust Company of New York as its "prime" rate or (ii) LIBOR plus 1.0%. The revolving credit agreement contains certain negative and affirmative covenants. There is no required prepayment or scheduled reduction of availability of loans under the revolving credit agreement. Cash Management Agreement - ------------------------- Additionally, in connection with the exchange, the Company and Lockheed Martin entered into a cash management agreement, whereby Lockheed Martin will provide cash advances up to $2 million to the Company for cash shortfalls with a termination date of June 1, 1998 bearing an interest rate per annum equal to the Federal Funds Rates. As of September 29, 1996, the Company had an aggregate balance of $19,373,000 on the credit agreements noted above. 5) Net Loss per Share ------------------ Net loss per share has been calculated by dividing net loss by the weighted average number of common shares outstanding during the period. All common stock equivalents have been excluded from the calculation of weighted average common shares outstanding since their inclusion would be anti-dilutive or decrease the loss per share amount otherwise computed. 6) Supplementary Cash Flow Information ----------------------------------- In connection with the agreement, the Company reclassified the net receivable from Lockheed Martin to accumulated deficit to reflect the deemed dividend of the Company's net receivable to Lockheed Martin. The dividend deemed to Lockheed Martin, as of the transaction date, totaled $13,568,000. Changes in operating assets and liabilities presented in the Consolidated Statement of Cash Flows are net of the effect of the acquired company. 7 CALCOMP TECHNOLOGY, INC. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------ RESULTS OF OPERATIONS: - ---------------------- On July 23, 1996, Summagraphics Corporation ("Summagraphics") and CalComp Inc. ("CalComp"), a wholly-owned subsidiary of Lockheed Martin Corporation, effected a plan of reorganization for the exchange of CalComp stock for Summagraphics stock, after which Summagraphics changed its name to CalComp Technology, Inc. (the "Company"). The newly reorganized company adopted a fiscal year ending on the last Sunday of December. For accounting purposes, CalComp was treated as the acquiring company. Therefore, the financial statements for the prior year periods are those of CalComp and the financial statements for the current year reflect CalComp's acquisition of Summagraphics as of July 23, 1996. REVENUES - -------- Net revenues for the third quarter ended September 29, 1996 were $65.6 million, relatively unchanged from the same period in 1995. Product revenues were up 7% while service revenues were down by 27% versus the same period in 1995. Product revenues for the quarter were favorably impacted by the addition of the Summagraphics' Cutter and Digitizer product lines. Service revenues continued to decline as a result of the transition to lower cost products, which traditionally do not capture the same level of service contract revenue as higher cost products; and a lower rate of service contract renewals as older generation products are retired from service. Net revenues for the nine months ended September 29, 1996 were $168.4 million, a decrease of 18%, versus $206.6 million for the same period in 1995. Product and service revenues decreased 17% and 25% respectively, versus the same period in 1995. The decline in product revenue for the first nine months of 1996 was primarily the result of continuing competitive pressures on output products, pricing actions, and difficulties and delays associated with new product introductions which were only partially offset by the acquisition of the Summagraphics' Cutter and Digitizer product lines. Service contract revenues were down for the nine months for the same reasons discussed above for the quarter. GROSS PROFIT - ------------ Gross profit as a percentage of net revenue was 24% for the third quarter and 23% for the first nine months of 1996, compared to 28% for the third quarter and 29% for the first nine months of 1995. The declines were primarily attributable to: continued competitive pricing pressure; continued shift in the mix of products sold towards lower cost, lower margin products; higher costs associated with the introduction of new products; the phase out of mature, end of life products at reduced selling prices; and the continued deterioration in service gross margins primarily due to decreased service revenues without corresponding cost reductions. The companies that participate in the industry are highly competitive. Reduced unit selling prices and shortened product life cycles are expected to continue to place pressure on the Company's margins. 8 CALCOMP TECHNOLOGY, INC. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------ OPERATING EXPENSES - ------------------ Operating expenses as a percentage of net revenue were 41% for the third quarter and 42% for the first nine months of 1996, compared to 33% for the third quarter and 34% for the first nine months of 1995, primarily as a result of lower revenue in the current periods without a corresponding reduction in costs. Operating expenses increased 25% for the third quarter and were relatively unchanged for the nine months versus 1995. The increase for the quarter relates primarily to the acquisition of Summagraphics. Selling expenses as a percentage of net revenue were 20% for the third quarter and 22% for the first nine months of 1996, compared to 17% for the third quarter and first nine months of 1995. These selling expense increases are attributable to the Summagraphics expenses as well as marketing and promotional expenses incurred to meet competitive pressures. In addition, product development expenses as a percentage of net revenue were 9% for the third quarter and the first nine months of 1996, compared to 7% for the third quarter and the first nine months of 1995. The increase in product development expenses results from ongoing new product development. General and administrative expenses as a percentage of net revenue were 10% for the third quarter and 9% for the first nine months of 1996, compared to 5% for the third quarter and 8% for first nine months of 1995. The quarterly increase in general and administrative expenses is primarily attributable to the addition of Summagraphics' expenses, costs associated with new management information systems and the increase in goodwill amortization resulting from the purchase of Summagraphics and the decision to shorten CalComp Inc.'s existing goodwill amortization period from 40 years to 25 years. General and administrative expenses for the nine month period versus the same period in 1995 remained relatively unchanged as the increase in expenses in the third quarter 1996 were offset by a decrease in expenses during the first six months of 1996 versus 1995. The year to date decrease for the six months ended June 30, 1996 versus the same period in 1995, resulted from 1995 facility closure and workforce reduction costs not incurred in 1996. A substantial portion of the Summagraphics operating expenses are expected to be phased out by year end upon completion of the integration of the Summagraphics into CalComp's operations. OTHER INCOME/EXPENSE - -------------------- Net interest expense for the third quarter of 1996 was $0.2 million versus net interest income of $0.1 million for the same quarter in 1995. This resulted primarily from interest expense on borrowings in the third quarter of 1996 that were not required in the prior year. Other income for the third quarter was $0.6 million versus $0.0 for the same quarter in 1995 as a result of currency translation gains from the strengthening of the dollar during the current period which did not occur during the same period in 1995. 9 CALCOMP TECHNOLOGY, INC. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------ OTHER INCOME/EXPENSE (CONTINUED) - -------------------------------- Interest income for the first nine months of 1996 was $0.5 million versus $0.1 million for the same period in 1995. This resulted primarily from interest income of $0.7 million recorded in the first quarter of 1996 as a result of a favorable determination by U.K. taxing authorities that CalComp is entitled to interest on amounts refunded. Other income for the first nine months of 1996 was $0.6 million versus $1.4 million for the same period in 1995. This resulted primarily from a reduction in earnings of a Japanese joint venture which is accounted for on the equity method in other income. INCOME TAXES - ------------ Income taxes were $0.2 million for the third quarter versus $0.0 for the same quarter last year. Income taxes for the first nine months of 1996 were $0.8 million versus $2.0 million for the same period in 1995. These taxes result primarily from provision of foreign taxes for profitable foreign CalComp locations. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- When possible, the Company finances its working capital needs and capital expenditure requirements from internally generated funds. At September 29, 1996, the Company had cash and cash equivalents of $14.7 million, consisting primarily of foreign cash balances. During the nine months ended September 29, 1996, the Company used $25.3 million in operations mainly to fund its $32.7 million net loss, net of depreciation and amortization of $8.7 million. In addition, the Company expended $5.3 million for investments in property, plant and equipment. Those uses of cash were funded by $2.8 million of cash acquired in the acquisition of Summagraphics and borrowings from the Company's Majority Shareholder consisting of $22.1 million prior to the Plan of Reorganization and $5.9 million pursuant to a Revolving Credit Agreement and Cash Management Agreement ("Credit Agreements"). In connection with the Plan of Reorganization, the Company entered into these Credit Agreements with its Majority Shareholder whereby the Company has access to $30 million of general purpose financing. In addition, the Company retained a $4.0 million commercial line of credit which Summagraphics had outstanding with an international bank, $3.2 million of which remains outstanding at September 29, 1996. The agreements relating to these credit facilities contain typical covenants with respect to the conduct of the Company's business and require the maintenance of various financial balances and ratios. As of September 29, 1996, the Company was in compliance with all such covenants. The Company has utilized $19.4 million of its credit facilities, a substantial portion of which was used to finance costs associated with integrating the Summagraphics operations with those of CalComp including the partial replacement of preexisting Summagraphics' debt. As a result of the continuing losses and negative cash flows and their future impact on loan covenants, it is anticipated that the existing Credit Agreements will be revised and increased. The Company has initiated discussions with its Majority Shareholder regarding this matter. 10 CALCOMP TECHNOLOGY, INC. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ------------------------------------------------------------ LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) - ------------------------------------------- During the first nine months of 1996, the Company spent $2.7 million in the implementation of new management information systems. It expects to spend an additional $2.8 million during the remainder of 1996 and 1997 to complete this implementation. At September 29, 1996, the Company had no other significant commitments for capital expenditures. This discussion contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such statements as a result of various factors, including those discussed in the Company's Form 10-K on file with the SEC. 11 CALCOMP TECHNOLOGY, INC. PART II. OTHER INFORMATION -------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- 10.1 Registration Rights Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.2 Intercompany Services Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.3 Cash Management Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.4 Tax Sharing Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.5 Revolving Credit Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.6 Corporate Agreement dated as of July 23, 1996 between the Company and Lockheed Martin Corporation 10.7 CalComp Technology, Inc. 1996 Stock Option Plan for Key Employees 10.8 CalComp Technology, Inc. Management Incentive Compensation Plan 10.9 CalComp Technology, Inc. Deferred Management Incentive Compensation Plan 10.10 Senior Executive Retirement Plan ("SERP") Agreement between Lockheed Martin Corporation and Gary R. Long dated November 8, 1995 10.11 Employment Agreement (with Temporary Assignment Memorandum) between Company and Winfried Rohloff dated June 25, 1996 10.12 Employment Offer and Agreement between Company and John J. Millerick dated July 12, 1996 10.13 Selex Mini-Engine OEM Agreement for Cuervo plotters between Company and Selex Systems U.S.A., Inc., dated May 26, 1994 10.14 Selex Color Mini-Engine Supplement for Sake plotters between Company and Selex Systems U.S.A., Inc. dated January 2, 1995 10.15 OEM Agreement for Asahi and Absolut plotters between Company and Copyer Co., Ltd. dated September 19, 1996 10.16 OEM Agreement for Model 2700 between Company and Katsuragawa Electric Co., Ltd. dated June 14, 1996 10.17 OEM Agreement for Model 1220 between Company and Katsuragawa Electric Co., Ltd. dated April 23, 1996 27 Financial Data Schedule (b) Reports on Form 8-K: The Company filed a report on Form 8-K on July 29, 1996, and Form 8-K/A on August 1, 1996. 12 CALCOMP TECHNOLOGY, INC. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALCOMP TECHNOLOGY, INC ----------------------- (Registrant) Date: November 12, 1996 /s/ GARY R. LONG ---------------- Gary R. Long President and Chief Executive Officer /s/ JOHN J. MILLERICK --------------------- John J. Millerick Senior Vice President, Finance and Chief Financial Officer 13 EX-10.1 2 REGISTRATION RIGHTS AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.1 EXECUTION COPY ================================================================================ REGISTRATION RIGHTS AGREEMENT Dated as of July 23, 1996 by and between CALCOMP TECHNOLOGY, INC., a Delaware corporation (the "Company") and LOCKHEED MARTIN CORPORATION, a Maryland corporation (the "Stockholder") ================================================================================ REGISTRATION RIGHTS AGREEMENT ----------------------------- This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of the 23rd day of July, 1996, by and between CALCOMP TECHNOLOGY, INC., a Delaware corporation (the "Company") and LOCKHEED MARTIN CORPORATION, a Maryland corporation (the "Stockholder"). WHEREAS, pursuant to Sections 5.2(e) and 6.2 of the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation dated as of the 19th day of March, 1996, as amended, by and among the Stockholder, CalComp Inc., a California corporation ("CalComp"), and Summagraphics Corporation ("Summagraphics") (the "Reorganization Agreement"), Summagraphics and the Stockholder agreed to execute and deliver this Agreement at the closing (the "Closing") of the transactions contemplated by the Reorganization Agreement; WHEREAS, pursuant to the Reorganization Agreement, Summagraphics agreed to issue and deliver to the Stockholder shares of Summagraphics Common Stock, par value $.01 per share (the "Common Stock"), representing 89.7% of its issued and outstanding shares of capital stock, on a fully diluted basis, in exchange for the transfer and delivery of all of the issued and outstanding capital stock of CalComp to the Company, all pursuant to and in accordance with the terms of the Reorganization Agreement; and WHEREAS, simultaneously with the execution and delivery of this Agreement, the Closing has occurred. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Stockholder agree as follows: 1. Certain Definitions. (a) Capitalized terms used but not otherwise ------------------- defined herein shall have the meaning given them in the Reorganization Agreement. (b) As used in this Agreement, the following terms shall have the following meanings: "Assignee" shall mean a Person who purchases shares of Common Stock from the Stockholder (or another Assignee) other than in a registered distribution, but only to the extent that the Stockholder specifically and in writing assigns its rights and benefits under this Agreement to such purchaser in respect of the shares of Common Stock purchased from the Stockholder and only if the Person agrees in writing to be bound by the terms and conditions of this Agreement. "Commission" shall mean the Securities and Exchange Commission, or any other Federal agency administering the Securities Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, as the same shall be in effect at the time. "Person" shall mean any individual, corporation, unincorporated association, business trust, estate, partnership, limited liability company, limited liability partnership, trust, state, the United States or any other entity. "Registrable Securities" shall mean all shares of Common Stock or all shares of Common Stock issued in exchange for or in replacement thereof or upon the exercise or conversion of any right or security, now or hereafter owned, directly or indirectly, by the Stockholder. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, as the same shall be in effect at the time. 2. Piggy-back Registration Rights. ------------------------------ (a) In the case of any proposed registration of shares of capital stock or other securities of the Company under the Securities Act (except with respect to registration statements on Forms S-4 or S-8 or successor forms) on any form that also would be eligible for use by the Stockholder or any Assignees in respect of the Registrable Securities, the Company will give to the Stockholder and the Assignees at least 30 days prior written notice of the filing or proposed filing of the registration statement. (b) Subject to the provisions of Section 2(c), each of the Stockholder and Assignees shall have the right to elect within 20 days after receipt of such notice to elect to include in such registration statement all or any part of the Registrable Securities, which election shall be made by written notice to the Company within such 20-day period specifying the number of Registrable Securities that the Stockholder desires to so include. (c) In the case of an underwritten public offering, if the managing underwriter participating in the sale and distribution of the Company's securities covered by such registration statement advises the Company in good faith that marketing factors require the exclusion of some or all of the Registrable Securities which the Stockholder or any Assignee has requested be included in such registration statement, then the Company shall be obligated to include in the registration statement only such aggregate number of Registrable Securities (the "Permissible Shares") as the managing underwriter shall in good faith advise the Company may be included in the offering. If the aggregate number of Registrable Securities that the Stockholder and the Assignees shall have requested be -2- included in such registration statement together with the number of shares requested to be included therein by other holders of Common Stock having registration rights as of the date of this Agreement (the "Other Holders") exceeds the number of Permissible Shares, then each of the Stockholder and Assignees, at its option, shall be entitled to withdraw its election to include all or a portion of the Registrable Securities in such registration statement and the Stockholder and Assignees who elect not to withdraw their election to include all or a portion of the Registrable Securities in such registration statement shall have the number of Registrable Securities that they are entitled to include in the registration statement reduced pro rata based upon the number of Registrable Securities each such Stockholder or Assignee initially requested be included in the registration statement together with all shares of Common Stock requested to be registered by Other Holders such that the total number of Registrable Securities to be included on behalf of the Stockholder, Assignees and Other Holders does not exceed the Permissible Shares. (d) Except for those registration rights set forth on Schedule 2(d) attached hereto, the Company represents and warrants to the Stockholder and the Assignees that, except as provided in this Agreement, the Company has not granted to any stockholder, holder of warrants or options for the purchase of shares of capital stock or any other Person any "piggy-back," demand or other registration rights with respect to any shares of capital stock or other securities of the Company. The Company agrees that it will not until such time as the Stockholder and Assignees no longer own Registrable Securities with an aggregate market value of at least $25,000,000 determined on the basis of the average of the high and low trading prices of the Company's Common Stock on the five trading days immediately preceding such determination, without the prior written consent of the Stockholder, hereafter grant to any Person "piggy-back," demand or other registration rights with respect to any shares of capital stock or other securities of the Company. (e) The Company shall be obligated to afford the Stockholder and Assignees the right to participate in each and every such registration taking place in accordance with the provisions of this Section 2 until the aggregate number of Registerable Securities then owned by the Stockholder and Assignees may be sold pursuant to Rule 144 in a single market transaction without registration under the Securities Act. Notwithstanding anything contained herein to the contrary, the Company agrees that it will not permit or agree to be included in any registration statement any shares of capital stock or other securities of the Company held by any Person (other than a Stockholder, any Assignee or any Other Holder having contractual rights to include shares therein as of the date hereof) until all outstanding Registrable Securities have been included in registration statements and sold, unless, in the case of each such registration, the Stockholder and Assignees first shall have been offered, and declined, the opportunity to include all of the Registrable Securities in a -3- registration statement filed with and declared effective by the Commission under the Securities Act. 3. Demand Registration Rights. (a) Subject to the provisions of -------------------------- Section 3(b) below, the Company covenants and agrees that, at any time after the date of this Agreement and from time to time thereafter, upon receipt of a written request therefor from the Stockholder (or Assignees owning in the aggregate at least 25% of the Common Stock issued to the Stockholder on the date hereof), the Company shall, as promptly as is reasonably practicable, use its best efforts to file a registration statement to register under the Securities Act for sale to the public all or a portion of the Registrable Securities, and thereafter use its best efforts to file such amendment or amendments as may be necessary to cause the registration statement to be declared effective; provided, however, that the Company shall have no obligation under this Section 3 to register Registrable Securities on behalf of any of the Stockholder or Assignees unless the reasonably anticipated aggregate offering price to the public of such Registrable Securities, as stated by the Stockholder and Assignees requesting registration in their written request therefor, equals or exceeds $15,000,000, and provided further that the Company shall not be required to file more than three registration statements pursuant to this Section 3 on a form other than Form S-3 and in no event shall be required to file more than four registration statements pursuant to this Section 3. The rights granted under this Section 3 may be exercised by the Stockholder no more often than once in any six month period. The demand registration rights granted by this Section 3 will terminate when the aggregate number of Registerable Securities then owned by the Stockholder and Assignees may be sold under Rule 144 in a single market transaction without registration under the Securities Act. (b) With respect to any registration statement filed, or to be filed, pursuant to this Section 3, if CalComp Technology shall furnish to the Stockholders and Assignees that have made such request a resolution of the Board of Directors of CalComp Technology (adopted by the affirmative vote of a majority of the Board of Directors of CalComp Technology) certified by the President of CalComp Technology stating that in the Board of Directors' good faith judgment it would (because of the existence of, or in anticipation of, any acquisition or financing activity, or the unavailability for reasons beyond CalComp Technology's reasonable control of any required financial statements, or any other event or condition of similar significance to CalComp Technology) be significantly disadvantageous (a "Disadvantageous Condition") to CalComp Technology for such a registration statement to be maintained effective, or to be filed and become effective, and setting forth the general reasons for such judgment, CalComp Technology may cause such registration statement to be withdrawn and the effectiveness of such registration statement terminated, or, in the event no registration statement has yet been filed, shall be entitled not to file any such registration statement, until such Disadvantageous Condition no longer exists (notice of -4- which CalComp Technology shall promptly deliver to the Stockholder and Assignees). Upon receipt of any such notice of a Disadvantageous Condition, the Stockholder and Assignees shall forthwith discontinue use of the prospectus contained in registration statement and, if so directed by CalComp Technology, the Stockholder and Assignees will deliver to CalComp Technology all copies, other than permanent file copies then in such Stockholder or Assignees' possession, of the prospectus then covering such Registerable Securities current at the time of receipt of such notice; provided, that the filing of any such registration statement may not be delayed for a period in excess of six months due to the occurrence of any particular Disadvantageous Condition. 4. Company's Registration Obligations. If and whenever the Company ---------------------------------- is obligated by the provisions of this Agreement to effect the registration of any Registrable Securities under the Securities Act, the Company will, as promptly as is reasonably practicable: (a) Notify in writing each of the Stockholder and Assignees who have not requested registration of their Registrable Securities of the receipt by the Company of a request from another Stockholder or Assignee to register Registrable Securities so as to afford the Stockholder and Assignees who have not requested registration an opportunity to include their Registrable Securities in any such registration statement; (b) Prepare and file with the Commission a registration statement with respect to the shares and use its best efforts to cause the registration statement to become and remain effective for a period of at least 90 days. (c) Prepare and file with the Commission such amendments and supplements to the registration statement and the prospectus used in connection therewith as may be necessary to keep the registration statement effective until the earlier of the sale of all shares covered thereby and the expiration of a period of 90 days after the date the registration statement became effective, and use its best efforts to comply with the provisions of the Securities Act with respect to the disposition of all rights to purchase securities covered by the registration statement. (d) Furnish to the Stockholder or its Assignees for whom the same are registered or are to be registered such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as the Stockholder or the Assignees, as the case may be, may reasonably request in order to facilitate the disposition of the Registrable Securities. (e) Use its best efforts to register or qualify the Registrable Securities covered by the registration statement under the securities or blue sky laws of such jurisdictions as such Stockholders or its Assignees shall reasonably request, and do any -5- and all other acts and things which may be reasonably necessary or advisable to enable such holders to consummate the disposition of the Registrable Securities in such jurisdictions; provided; however, that the Company shall not be obligated, by reason thereof, to qualify as a foreign corporation or to consent to general service of process or subject itself to taxation as doing business in any such jurisdiction. (f) Furnish to Stockholders or its Assignees who account for at least 25% of the Registrable Securities covered by such registration statement, and use its best efforts to furnish to each other holder of the Registrable Securities covered thereby, at the time of disposition a signed counterpart, addressed to such Stockholder or Assignee, of an opinion of counsel for the Company reasonably acceptable to the Stockholder or its Assignees, as the case may be, covering substantially the same matters as are customarily covered in opinions of issuer's counsel in underwritten public offerings of securities of issuers in similar industries. (g) Notify the Stockholder or its Assignees, as the case may be, whose Registrable Securities are covered in such registration statement promptly after the Company shall receive notice that any registration statement, supplement or amendment has become effective, any registration statement is required to be amended or supplemented, or any stop order with respect thereto has been issued . (h) The inclusion of Registrable Securities in a registration statement involving an underwritten public offering shall be upon the condition that, except as otherwise provided in this Agreement, the Stockholder or its Assignees shall have their Registrable Securities sold through the underwriters on the same terms and conditions as are applicable to the Company. 5. Expenses of Registration. The costs and expenses (other than ------------------------ underwriting discounts or commissions or similar payments) of all registrations and qualifications under the Securities Act and applicable state securities or blue sky laws, and of all other actions, that the Company is required to take or effect pursuant to this Agreement shall be paid by the Company (including, without limitation, all registration and filing fees, printing expenses, costs of special audits incidental to or required by any such registration, and fees and disbursements of counsel and independent public accountants for the Company); provided, however, that the Stockholder or its Assignees, as the case may be, shall pay the fees and disbursements of their respective legal counsel, and transfer taxes, if any, on Registrable Securities sold by the holders thereof. Notwithstanding the foregoing if the Stockholder or any Assignees elect to participate in a "piggy-back registration" pursuant to Section 2 of this Agreement, the Stockholder shall pay their proportionate share of the Security and Exchange Commission's registration fees associated with the shares attributable to the Stockholder or the respective Assignee in connection with the filing of the Registration Statement. In -6- addition, in the event that the Stockholder or an Assignee exercises the registration rights granted pursuant to Section 3 of this Agreement, and the Company and other securityholders do not participate in the registration or offering, each of the Stockholder and the Assignees shall pay their proportionate share based upon the aggregate number of shares which the Stockholder and the Assignees elect to register of the costs and expenses of registration and qualification under the Securities Act and applicable state securities or blue sky laws (including, without limitation, all registration and filing fees, printing expenses, costs of special audits incidental to or required by such registration) other than any fees and disbursements of counsel and independent public accountants for the Company. 6. Stockholder's Registration Obligations. In the event a Stockholder -------------------------------------- or an Assignee desires to include any Registrable Securities in any registration statement pursuant to this Agreement, the Stockholder or the Assignee shall: (a) cooperate with the Company in preparing such registration statement, and execute such ordinary and customary agreements in a form reasonably acceptable to the Company and the underwriter as may be reasonably necessary in favor of any underwriter selected by the Company, including those contemplated by Section 8(b); and (b) promptly supply the Company with all information, documents, representations and agreements as the Company or any managing underwriter may reasonably deem necessary in connection with the registration of such Registrable Securities. In connection with any registration involving an underwritten public offering by the Company, the Stockholder or Assignee, as the case may be, shall agree, if requested by the managing underwriter, not to effect or cause to be effected any sale or other disposition of shares or Registrable Securities not included in the registration statement for a period beginning seven days prior to the effective date and ending 180 days after the effective date of the registration statement without the managing underwriters' consent. 7. Indemnification. --------------- (a) In the event of any registration of any Registrable Securities pursuant to this Agreement, the Company will: (i) indemnify and hold harmless the Stockholder and any Assignee whose Registrable Securities are being so registered or offered, and each Person, if any, who controls any of the Stockholder or any such Assignee within the meaning of the Securities Act, against any losses, claims, damages, expense (including, without limitation, reasonable attorneys' fees and disbursements), or liabilities (or actions in respect thereof) under the Securities Act or otherwise, which arise out of or are -7- based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement, any summary prospectus or final prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any other violation of law with respect thereto, and (ii) reimburse the Stockholder or such Assignee and each such controlling Person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such registration statement, summary prospectus, final prospectus or amendment or supplement thereto, in reliance upon and in conformity with written information furnished by the Stockholder or such Assignee, as the case may be, expressly for inclusion therein; provided, further that the Company shall not be liable to any indemnified party who participates as an underwriter in the offering or sale of Registrable Securities or to any other indemnified party, if any, who controls such underwriter within the meaning of the Securities Act, in any such case to the extent that any such loss, claim, damage, liability (or action in respect thereof), or expense arises out of such indemnified party's failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the person asserting the existence of an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such person if such statement or omission was corrected in full in such final prospectus. (b) In the event of any registration of any Registrable Securities, the Stockholder or the Assignee whose shares are included in the registration statement, as the case may be, shall: (i) indemnify and hold harmless the Company, each of its directors, each of its officers who have signed any such registration statement, and each Person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, expense (including, without limitation, reasonable attorneys' fees and disbursements) or liabilities (or actions in respect thereof) to which the Company or any such director, officer or controlling Person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, expense or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in any such registration statement, summary prospectus, final prospectus, or amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required -8- to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, summary prospectus, final prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished by the Stockholder or such Assignee, as the case may be, and accompanied by an express written consent that such information may be included therein, and (ii) reimburse any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, claim, damage, liability or action, but only in the circumstances and to the extent aforesaid; (c) If the indemnification provided for in this Section 7 is unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Stockholder and their Assignees on the other in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Stockholder and its Assignees on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand, or by the Stockholder and its Assignees on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7(e), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and the Stockholder (on behalf of themselves and their Assignees) agree that it would not be just and equitable if contribution pursuant to this Section 7(c) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (d) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, the -9- indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7, notify the indemnifying party of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have under this Section 7 or otherwise. (e) In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party. In the event the indemnifying party gives notice to the indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof subsequent to the date of such notice other than reasonable costs of investigation; provided, however, that if the indemnified party or parties reasonably determine that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action or proceeding or that there may be legal defenses available to such indemnified party or parties different from or in addition to those available to the indemnifying party or parties, then counsel for the indemnified party or parties shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party or parties (and the indemnifying party or parties shall bear the reasonable legal and other expenses incurred in connection therewith). No indemnifying party will, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as a term thereof the giving by the claimant or plaintiff to such indemnified party of a release and indemnity from all liability in respect of such claim or litigation and a denial of fault. No indemnified party shall consent to entry of any judgment or enter into any settlement of any such action the defense of which has been assumed by an indemnifying party without the prior consent of such indemnifying party. 8. Agreements as to Underwriters. If the offering pursuant to any ----------------------------- registration statement provided for under this Agreement is made through underwriters, (a) the Company agrees to enter into an underwriting agreement in customary form with the underwriters and to indemnify such underwriters, and each Person who controls the underwriters within the meaning of the Securities Act, to the same extent as provided in Section 7(a) with respect to the indemnification of the Stockholder or its Assignees, and (b) the Stockholder or its Assignees agree to provide similar indemnities as part of their obligations in Section 6(a). -10- 9. Indemnity for Breaches. The Company agrees to indemnify and hold ---------------------- harmless the Stockholder and any Assignee hereunder at all times from and after the date of this Agreement, against and in respect of the following: (i) any losses, liabilities, costs, expenses or damages to the Stockholder or any such Assignee resulting from any breach of a representation or warranty or nonfulfillment of any agreement or covenant on the part of the Company under this Agreement, and (ii) all suits, actions, proceedings, demands, assessments, judgments, costs, attorneys' fees and expenses incident to any of the foregoing. Each of the Stockholder and Assignees agrees to indemnify and hold harmless the Company at all times from and after the date of this Agreement, against and in respect of the following: (i) any losses, liabilities, costs, expenses or damages to the Company resulting from any breach of a representation or warranty or nonfulfillment of any agreement or covenant on the part of the Stockholder under this Agreement, and (ii) all suits, actions, proceedings, demands, assessments, judgments, costs, attorneys' fees and expenses incident to any of the foregoing. 10. Equitable Relief. The parties agree that legal remedies may be ---------------- inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement. 11. Notices. All notices and other communications give to or made upon ------- any party hereto in connection with this Agreement shall, except as otherwise expressly herein provided, be in writing and shall be sent by telecopy (with receipt confirmed) by registered or certified mail or delivered by hand, addressed as follows: (a) If to the Company: CalComp Technology, Inc. 2411 W. LaPalma Avenue Anaheim, California 92801 Attention: Gary R. Long, President Telecopy: 714-821-2074 and (b) If to the Stockholder Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Stephen M. Piper, Esquire Telecopy: 301-897-6333 -11- with a copy to Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: General Counsel Telecopy: 301-897-8889 and (c) If to an Assignee, to such address as such Assignee provides to the Company and the Stockholder in connection with the acquisition of shares of Common Stock pursuant to which the Assignee becomes so, or to such other address as any party shall specify in writing to the other party. All such notices and other communications shall be deemed given at the time received. 12. Amendments. No change or modification of this Agreement shall be ---------- valid unless the same shall be in writing and signed by the parties hereto. No waiver of any provision of this Agreement shall be valid unless in writing, making express reference to this Agreement, and signed by the Person against whom enforcement of such waiver is sought. The failure of any party at any time to insist upon strict performance of or compliance with any provision of this Agreement shall not constitute a waiver of any right of such party hereunder or as a waiver or relinquishment of the right to insist upon strict performance of the same provision at any future time. 13. Governing Law. This Agreement shall be governed by and construed in ------------- accordance with the laws of the State of Delaware without regard to the conflict of law principles thereof. 14. Benefit and Binding Effect. This Agreement shall be binding upon and -------------------------- shall inure to the benefit of the parties hereto and their respective successors and, in the case of any of the Stockholder, its permitted assigns. The Company and the Stockholder expressly agree that the Stockholder shall be entitled to assign from time to time its rights hereunder (in respect of all or any portion of the Registrable Securities) to any purchaser of any of the Registrable Securities in accordance with the terms hereof and applicable law, provided that no more than four unaffiliated persons may become Assignees hereunder. In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the remaining parts hereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable portion were not a part hereof. 15. Counterparts. This Agreement may be executed in counterparts, each of ------------ which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. -12- 16. Rules of Construction. Whenever used herein, the singular number --------------------- shall include the plural, or plural the singular and the use of the masculine, feminine or neuter gender shall include all genders. The terms "agree" and "agreements" contained herein are intended to include and mean "covenant" and "covenants." Whenever used herein, the word "or" is used in the inclusive rather than the exclusive sense. The headings in this Agreement are for convenience only and shall not limit or otherwise affect any of the provisions hereof. 17. Term. The provisions of Sections 5, 7 and 9 of this Agreement shall ---- survive any termination of this Agreement. -13- IN WITNESS WHEREOF, the Company and the Stockholder have executed this Agreement as of the day and year first above written. ATTEST: CALCOMP TECHNOLOGY, INC. /s/ ROBERT B. SIMS By:/s/ MICHAEL S. BENNETT - ------------------ ---------------------- Robert B. Sims Michael S. Bennett Secretary President and Chief Executive Officer ATTEST: LOCKHEED MARTIN CORPORATION /s/ LILLIAN M. TRIPPETT By:/s/ PETER B. TEETS - ----------------------- ------------------ Lillian M. Trippett Peter B. Teets Secretary President - Lockheed Martin Information & Technology Services Sector -14- SCHEDULE 2(d) ------------- Piggy-Back, Demand, Other Registration Rights --------------------------------------------- -15- EX-10.2 3 INTERCOMPANY SERVICES AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.2 EXECUTION COPY ================================================================================ INTERCOMPANY SERVICES AGREEMENT Dated as of July 23, 1996 by and between CALCOMP TECHNOLOGY, INC., a Delaware corporation and LOCKHEED MARTIN CORPORATION, a Maryland corporation =============================================================================== INTERCOMPANY SERVICES AGREEMENT ------------------------------- This INTERCOMPANY SERVICES AGREEMENT (this "Agreement") is made and entered into as of the 23rd day of July, 1996, by and between CALCOMP TECHNOLOGY, INC., a Delaware corporation (collectively with its subsidiaries, "CalComp Technology"), and LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Lockheed Martin"). WHEREAS, pursuant to Section 5.2(a) and 6.2 of the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation dated as of the 19th day of March, 1996, as amended (the "Reorganization Agreement"), by and among Summagraphics Corporation ("Summagraphics"), Lockheed Martin and CalComp Inc., a California corporation ("CalComp"), Summagraphics and Lockheed Martin agreed to execute and deliver this Agreement at the closing (the "Closing") of the transactions contemplated by the Reorganization Agreement; WHEREAS, pursuant to the Reorganization Agreement, Summagraphics agreed to issue and deliver to Lockheed Martin shares representing 89.7% of Summagraphics' outstanding Common Stock, par value $.01 per share (the "Common Stock"), on a fully diluted basis, in exchange for the transfer and delivery of all the issued and outstanding capital stock of CalComp to Summagraphics, all pursuant to and in accordance with the terms of the Reorganization Agreement; WHEREAS, prior to the consummation of the transactions contemplated by the Reorganization Agreement, Lockheed Martin had provided certain services to CalComp, which services CalComp Technology desires Lockheed Martin to continue providing to CalComp Technology after the Closing; and WHEREAS, simultaneously with the execution and delivery of this Agreement, the Closing has occurred. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Summagraphics and Lockheed Martin agree as follows: 1. CORPORATE SERVICES AND EMPLOYEE BENEFITS. ---------------------------------------- (a) Beginning on the date hereof (the "Effective Date"), Lockheed Martin shall provide to CalComp Technology all of the services set forth in Exhibit A to this Agreement to the extent provided prior to Closing by Lockheed Martin to CalComp ("Corporate Services"). To the extent provided in this Agreement, Lockheed Martin will include CalComp Technology in its insurance coverage, including self-insurance, if applicable, ("Insurance"). In addition, Lockheed Martin has agreed to provide those employees who were employees of CalComp immediately prior to the Closing with benefit plans and programs and the corresponding administrative services which were provided to employees of CalComp prior to Closing ("Benefit Plans"). The Corporate Services and Benefit Plans may be provided in accordance with the terms and conditions of this Agreement by (i) any affiliate or employee of Lockheed Martin or its affiliates or (ii) any third party, at the sole discretion of Lockheed Martin. (b) From time to time, Lockheed Martin reviews its policies with respect to the provision and cost of services and the methodologies of allocating such costs among Lockheed Martin's subsidiaries in respect of those services that Lockheed Martin provides to its subsidiaries in the normal course. In the event that Lockheed Martin determines that a reduction in the level of such services (including the Corporate Services) or in the costs allocated to subsidiaries in respect of such services generally, CalComp Technology would be entitled to participate in the benefit associated with any such reductions. 2. CORPORATE SERVICES. ------------------ (a) Fee. In exchange for the Corporate Services, CalComp Technology --- shall pay to Lockheed Martin a fee (the "Services Fee") that will be determined by Lockheed Martin on a basis consistent with past practices, recognizing, to the extent practicable, (i) Lockheed Martin's percentage ownership of CalComp Technology, (ii) CalComp Technology's requirements for certain services for which CalComp or Summagraphics was previously charged by Lockheed Martin and other third parties, (iii) costs of obtaining services from third parties that previously were provided to CalComp by Lockheed Martin. CalComp Technology shall pay the Services Fee (which shall include an allocation of Lockheed Martin's overhead costs) to Lockheed Martin periodically in arrears on the last business day of the period to which the Services Fee relates. (b) Additional Corporate Services. At any time during the term of ----------------------------- this Agreement, CalComp Technology may request that Lockheed Martin provide additional services to CalComp Technology. Upon any such request, the parties will discuss in good faith, without obligation, an appropriate adjustment to the Services Fee to reflect such additional services, after which CalComp Technology shall notify Lockheed Martin in writing whether it shall accept such additional services and such adjustment. (c) Term; Termination of Corporate Services. The term of Lockheed --------------------------------------- Martin's agreement to provide Corporate Services shall be for two (2) years from and after the Effective Date, provided that (i) Lockheed Martin, at its option, may terminate this Agreement upon not less than 90 days prior written notice (or such other time as is reasonably agreed by the parties) to CalComp Technology at any time that Lockheed Martin no longer owns Common Stock representing more than 50% of all of the issued and outstanding Common Stock of CalComp Technology and CalComp -2- Technology may terminate this Agreement by providing not less than 90 days written notice to Lockheed Martin at any time that Lockheed Martin owns Common Stock of CalComp Technology representing less than 25% of its issued and outstanding Common Stock. 3. (a) Insurance. Lockheed Martin shall use its reasonable efforts --------- to cause CalComp Technology to be covered under Lockheed Martin's insurance policies (including, without limitation, property, casualty, workers' compensation and directors and officers liability policies) which will provide to CalComp Technology the type of Insurance provided to Summagraphics, or, at Lockheed Martin's option, CalComp immediately prior to Closing, subject to availability. Lockheed Martin shall not be responsible for obtaining or maintaining any insurance coverage for CalComp Technology other than as set forth in the preceding sentence. CalComp Technology shall, within 30 days of its receipt of a reasonably detailed invoice from Lockheed Martin, pay the portion of the premiums and other charges for the Insurance attributable to the coverage provided to CalComp Technology. The portion of such premiums and other charges payable by CalComp Technology shall be allocated in good faith by Lockheed Martin in a manner to reflect the cost to Lockheed Martin of the insurance premiums and other charges that are properly attributable to CalComp Technology (including an allocation of Lockheed Martin's overhead costs related to providing such insurance). The Insurance provided shall be subject to such policies of insurance or self-insurance, and such guidelines or procedures in respect of insurance or self-insurance, as Lockheed Martin shall determine in its sole and absolute discretion, provided that in the event the terms of the Insurance change from those terms in effect immediately prior to the date hereof, Lockheed Martin agrees (a) to the extent Lockheed Martin is aware of a material change prior to the effective date of the change, to provide notice to CalComp Technology of the change prior to its effective date, or (b) otherwise to provide notice to CalComp Technology upon becoming aware of the change. It is expressly agreed by CalComp Technology and Lockheed Martin that any self- insurance, retention or deductible shall be for the account of and be an obligation of CalComp Technology, and that CalComp Technology's obligations in respect of such self-insurance, retention or deductible shall survive the termination of this Agreement. (b) Termination of Insurance. Either CalComp Technology or Lockheed ------------------------ Martin may terminate all or any portion of the Insurance at any time on 90 days' prior written notice to the other party hereto, subject to the terms of the insurance coverage. Notwithstanding the foregoing, so long as Lockheed Martin beneficially owns shares of Common Stock possessing 50% or more of the voting power of all then-outstanding shares of capital stock, CalComp Technology may not, without the prior written consent of Lockheed Martin, terminate all or any portion of the Insurance without providing evidence satisfactory to Lockheed Martin that CalComp Technology has obtained, or upon termination of such Insurance will obtain, comparable insurance coverage. In the event -3- all or any portion of the Insurance is terminated, if appropriate, the charges therefor shall be adjusted equitably to reflect such termination. 4. EMPLOYEE BENEFIT PLANS. ---------------------- (a) Plans and Services. Prior to the Effective Date, employees of ------------------ CalComp participated in the employee benefit plans sponsored by Lockheed Martin listed on Exhibit B. On and after the Effective Date, employees who were employees of CalComp immediately prior to the Closing shall continue to be eligible to participate in the plans listed in Exhibit B subject to the terms of the governing plan documents as interpreted by the appropriate plan fiduciaries. Any person who is hired by CalComp Technology on or after the Effective Date shall be eligible to participate in the plans listed on Exhibit B subject to the terms of the governing plan documents as interpreted by the appropriate plan fiduciaries. On and after the Effective Date, subject to regulatory requirements, the Lockheed Martin Corporate Benefits Department will continue to provide such administrative services with respect to those plans listed on Exhibit B in which employees of CalComp Technology continue to participate in substantially the same manner as it provided prior to the Effective Date. Except with respect to any employee who is hired by CalComp Technology on or after the Effective Date, nothing contained herein shall be deemed to permit any employee of CalComp Technology (other than any such employee who was an employee of CalComp immediately prior to the Closing) to participate in any employee benefit plan sponsored by Lockheed Martin without the prior written consent of Lockheed Martin, which consent may be withheld in Lockheed Martin's sole and absolute discretion. (b) Direct Cost Reimbursement. CalComp Technology shall reimburse ------------------------- Lockheed Martin for the direct costs associated with the plans in which CalComp Technology's employees participate. For this purpose, direct costs associated with the plans shall include those items charged to CalComp as direct costs prior to the Effective Date or any other reasonable method selected by Lockheed Martin for determining direct costs which included the cost of the benefits (premiums and contributions) and administration and management fees of third party providers and internal personnel which is reasonable and fairly allocates the costs of such plans. As appropriate, CalComp Technology's allocable share of the direct costs will be determined consistent with the methodology used prior to the Effective Date to determine CalComp's allocable share of direct costs or any other method selected by Lockheed Martin for determining direct costs which is reasonable and fairly allocates the costs of such plans. Lockheed Martin will invoice CalComp Technology on a monthly basis and CalComp Technology shall make payment to Lockheed Martin within 30 days of receipt of an invoice. Experience rated insurance contracts will be actualized as soon as practicable after the end of each year; CalComp Technology shall promptly reimburse Lockheed Martin the amount of any increased cost and Lockheed Martin will promptly refund to CalComp Technology any -4- overcharges. CalComp Technology shall be entitled to review and provide comments to Lockheed Martin concerning the amount of any such reimbursement or refund. (c) Termination. CalComp Technology or Lockheed Martin may terminate ----------- participation by CalComp Technology's employees in any plan sponsored by Lockheed Martin by giving 180 days' written notice to the other party, except that the date of termination may be shortened or extended by either party if the termination of CalComp Technology's employees participation would adversely affect the tax qualification of the plan or its compliance with applicable regulatory requirements. The termination date may also be extended to the earlier of an additional 180 days or the expiration date of any contract pursuant to which benefits are provided if termination within 180 days would adversely affect rates or rights of other employees or if more time is necessary to effect an orderly termination of employees' participation. If the termination date is extended, Lockheed Martin and CalComp Technology will cooperate reasonably in establishing a mutually agreeable termination date. Notice of less than 180 days may be given by mutual written consent of CalComp Technology and Lockheed Martin or unilaterally by Lockheed Martin if the termination applies to all participating employers in the Plan or if CalComp Technology and Lockheed Martin cease to be members of the same "controlled group" of corporations within the meaning of Code Section 414(b). In the event that Lockheed Martin intends to unilaterally terminate any plan pursuant to the foregoing sentence, Lockheed Martin shall provide notice to CalComp Technology as soon as reasonably practicable taking into account the circumstances giving rise to such termination prior to such termination. Unless Lockheed Martin otherwise agrees, termination shall be effective with respect to the entire plan. Lockheed Martin will promptly submit an invoice for, and CalComp Technology shall promptly pay to Lockheed Martin, all costs incurred prior to the date of termination, including costs resulting from the termination, and Lockheed Martin will promptly repay to CalComp Technology any overpayment. All services offered by the Corporate Benefits Department with respect to such terminated benefits shall cease. Lockheed Martin thereafter will not be responsible for providing benefits of a like type to CalComp Technology employees. (d) Changes: Additional Services. CalComp Technology may request ----------------------------- changes in plan terms or services (including changes allowing CalComp Technology employees to participate in such plan). Approval of such changes shall be in the sole and absolute discretion of Lockheed Martin. CalComp Technology may request additional services that, if agreeable to Lockheed Martin, will be provided on a direct cost basis to CalComp Technology. From time to time, Lockheed Martin may, as plan sponsor, make changes in the benefit plans or in the administration of any of the plans. (e) CalComp Technology Plans. On or after the Effective Date, no ------------------------ employee of CalComp Technology who is covered by a benefit plan sponsored by any entity within their "controlled group" of -5- corporations (within the meaning of Code Section 414(b)) other than Lockheed Martin shall be entitled to simultaneous coverage under any plan sponsored by Lockheed Martin that provides a benefit of similar type, regardless of whether the other plan provides more or less coverage than the plan sponsored by Lockheed Martin. CalComp Technology shall be solely responsible for benefits delivery and administration of plans covering its employees that are not sponsored by Lockheed Martin. A list of plans not sponsored by Lockheed Martin that covered Summagraphics employees prior to the Effective Date is attached as Exhibit C. CalComp Technology shall use its reasonable efforts to maintain its employee benefits related insurance policies in effect prior to the date hereof. (f) Legislative and Regulatory. In the event CalComp Technology -------------------------- provides benefit plans to its employees, other than those sponsored by Lockheed Martin, CalComp Technology will have sole responsibility to comply with all applicable regulatory requirements with respect to such CalComp Technology plans. Notwithstanding the foregoing, Lockheed Martin and CalComp Technology agree to cooperate fully with each other in the administration and coordination of regulatory and administrative requirements that apply jointly to CalComp Technology and Lockheed Martin. Such coordination, upon request, will include (but is not limited to) the following: Sharing payroll data for determination of highly compensated employees, providing census information (including accrued benefits) for purposes of running discrimination tests, providing actuarial reports for purposes of determining the funded status of any plan, review and coordination of insurance and other third party contracts, and providing for review all summary plan descriptions, requests for determination letters, insurance contracts, Forms 5500, financial statement disclosures, and plan documents. (g) Third Party Beneficiary. Nothing in this Agreement is intended to ----------------------- entitle any employee or individual to any benefit or compensation from CalComp Technology, CalComp or Lockheed Martin or to otherwise establish or create any rights on the part of any third party. Nothing in this Agreement is intended to restrict or limit Lockheed Martin in the exercise of its rights or the fulfillment of its duties as plan sponsor of any employee benefit plan. (h) Certain Notices. In the event that there is an "ERISA Event," --------------- Lockheed Martin shall advise CalComp Technology as soon as reasonably practicable after Lockheed Martin determines the ERISA Event has occurred. For purposes of this Section 4(h), an "ERISA Event" means (a) the termination of a plan listed on Exhibit B or the filing of a Notice of Intent to Terminate such a plan, in either case, under Section 4041(c) of the Employee Retirement Income Security Act of 1974, as amended from time to time ("ERISA"); (b) the institution of proceedings by the Pension Benefit Guaranty Corporation (or any successor thereof) to terminate a plan listed on Exhibit B or to appoint a trustee to administer such a plan or the receipt of notice by Lockheed Martin -6- that such an action has been taken with respect to such a plan; (c) any substantial accumulated funding deficiency within the meaning of Section 412 of the Internal Revenue Code of 1986, as amended (the "Code") or Section 302 of ERISA is incurred with respect to any plan sponsored by Lockheed Martin and listed on Exhibit B and no waiver of that deficiency has been obtained from the Internal Revenue Service; (d) the Internal Revenue Service determines that a plan listed on Exhibit B that is intended to be qualified under Section 401 of the Code fails to meet the applicable requirements of the Code and disqualifies the plan; or (e) an amendment to a plan sponsored by Lockheed Martin and listed on Exhibit B that results in a significant underfunding described in Section 401(a)(29) of the Code or Section 307 of ERISA. 5. PRIOR PAYMENTS. CalComp Technology agrees from time to time to -------------- pay in full all amounts owed to Lockheed Martin for the costs incurred in connection with the provision of the services contemplated to be provided hereunder prior to the Effective Date. Lockheed Martin agrees from time to time to refund any overcharges paid by CalComp with respect to services prior to the Effective Date. 6. COOPERATION. Lockheed Martin and CalComp Technology shall (and ----------- each shall cause their respective Subsidiaries to) cooperate with each other with respect to all provisions of this Agreement and the Corporate Services, Insurance and Benefit Plans provided hereunder. 7. LIMITATION OF LIABILITY. Except as may be provided in Section 8 ----------------------- below and with respect to the obligation of Lockheed Martin to reimburse CalComp Technology for overpayments of the fees and charges specified herein, Lockheed Martin, its subsidiaries, affiliates, directors, officers, employees, agents and permitted assigns (each, a "Lockheed Martin Party") shall not be liable to CalComp Technology, any subsidiary or any affiliate, director, officer, employee, agent or permitted assign of CalComp Technology or any of its subsidiaries, (each, a "CalComp Technology Party") for any liabilities, claims, damages, losses or expenses, including, but not limited to, any special, indirect, incidental or consequential damages, of a CalComp Technology Party arising in connection with this Agreement, the Corporate Services, the Insurance or the Benefit Plans. 8. LOCKHEED MARTIN INDEMNIFICATION. Lockheed Martin shall indemnify, ------------------------------- defend and hold harmless each of the CalComp Technology Parties from and against all liabilities, claims, damages, losses and expenses (including, but not limited to, court costs and reasonable attorneys' fees) (collectively referred to as "Damages") of any kind or nature, of third parties unrelated to any CalComp Technology Party caused by or arising in connection with the gross negligence or willful misconduct of any employee of Lockheed Martin or its affiliates in connection with the performance of the Corporate Services or the administration of the Benefit Plans, or provision of the Insurance, or the failure of Lockheed Martin to -7- perform its obligation hereunder except to the extent that Damages were caused directly or indirectly by acts or omissions of any CalComp Technology Party; provided however, that in the case of a Benefit Plan, CalComp Technology's right of indemnification also shall extend to claims of CalComp Technology's employees but shall not extend to any Damages that otherwise would have been owed in the absence of such gross negligence or willful misconduct. Notwithstanding the foregoing, Lockheed Martin shall not be liable for any special, indirect, incidental, or consequential damages relating to such third party claims. In the event that CalComp Technology knows of a claim that may be the subject of indemnification under this paragraph, it shall promptly notify Lockheed Martin of such claim and Lockheed Martin, in its sole and absolute discretion, may defend, settle, or otherwise litigate such claim, provided that no settlement be made without the consent of CalComp Technology, which will not be unreasonably withheld. 9. CalComp Technology Indemnification. CalComp Technology shall ---------------------------------- indemnify, defend and hold harmless each of the Lockheed Martin Parties, from and against all Damages of any kind or nature, of any Lockheed Martin party, caused by or arising in connection with CalComp Technology's failure to fulfill CalComp Technology's obligations hereunder, except to the extent that such failure is caused, directly or indirectly, by acts or omissions of any Lockheed Martin Party. Notwithstanding the foregoing, CalComp Technology shall not be liable for any special, indirect, incidental or consequential damages relating to third party claims. 10. INFORMATION. Subject to applicable law, each party hereto ----------- covenants and agrees to provide the other party with all information regarding itself and transactions under this Agreement as are required by such other party to comply with all applicable federal, state, county and local laws, ordinances, regulations and codes, including, but not limited to, securities laws and regulations. 11. CONFIDENTIAL INFORMATION. CalComp Technology and Lockheed Martin ------------------------ hereby covenant and agree to hold in trust and maintain confidential, except as otherwise required by law, all Confidential Information relating to the other party or any of its subsidiaries. Confidential Information shall mean all information disclosed by either party to the other in connection with this Agreement whether orally, visually, in writing or in any other tangible form, and includes, but is not limited to, technical, economic and business data, know-how, flow sheets, drawings, business plans, computer information data bases, and the like. Without prejudice to the rights and remedies of any party to this Agreement, a party disclosing any Confidential Information to the other party in accordance with the provisions of this Agreement shall be entitled to equitable relief by way of an injunction if the other party hereto breaches or threatens to breach any provision of this Section 11. -8- 12. ASSIGNMENT. Except as otherwise provided herein, neither party ---------- may assign or transfer any of its rights or duties under this Agreement to any person or entity without the prior written consent of the other party. 13. NOTICES. Any notice, instruction, direction or demand under the ------- terms of this Agreement required to be in writing will be duly given upon delivery, if delivered by hand, facsimile transmission or intercompany mail, or five (5) days after posting if sent by certified mail, return receipt requested to the following addresses: If to Lockheed Martin: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817-1877 Attention: Stephen M. Piper, Esquire Assistant General Counsel Telecopy No.: (301) 897-6333 with a copy to: Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: General Counsel Telecopy No.: (301) 897-6889 and If to CalComp Technology: CalComp Technology, Inc. 2411 W. LaPalma Avenue Anaheim, California 92801 Attention: Gary R. Long, President Telecopy No.: (714) 821-2074 or to such other address as either party may have furnished to the other in writing in accordance with this Section 13. 14. GOVERNING LAW. This Agreement shall be construed in accordance ------------- with and governed by the laws of the State of Maryland. 15. SUSPENSION. The obligations of any party to perform any acts ---------- hereunder may be suspended if such performance is prevented by fires, strikes, embargoes, riot, invasion, governmental interference, inability to secure goods or materials, or other circumstances outside the control of the parties. 16. SEVERABILITY. If any provision of this Agreement shall be ------------ invalid or unenforceable, such invalidity or unenforceability -9- shall not render the entire Agreement invalid. Rather, the Agreement shall be construed as if not containing the particular invalid or unenforceable provision, and the rights and obligations of each party shall be construed and enforced accordingly. 17. RIGHTS UPON ORDERLY TERMINATION; SURVIVAL. Upon termination or ----------------------------------------- expiration of this Agreement or any of the Services, Insurance or Benefit Plans described herein, each party shall, upon request, forthwith return to the other party all reports, paper, materials and other information required to be provided to the other party by this Agreement. In addition, each party shall assist the other in the orderly termination of this Agreement or any of the Services, Insurance or Benefit Plans described herein. Notwithstanding any termination of this Agreement, the obligations of the parties hereto to make payments hereunder and the provisions of Sections 7, 8, 9 and 11 shall survive. 18. AMENDMENT. This Agreement may only be amended by a written --------- agreement executed by all of the parties hereto. 19. COUNTERPARTS. This Agreement may be executed in separate ------------ counterparts (by facsimile or otherwise), each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement. -10- IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives. CALCOMP TECHNOLOGY, INC. By:/s/ MICHAEL S. BENNETT ---------------------- Michael S. Bennett President and Chief Executive Officer LOCKHEED MARTIN CORPORATION By:/s/ PETER B. TEETS ------------------ Peter B. Teets President - Lockheed Martin Information & Technology Services Sector -11- EX-10.3 4 CASH MANAGEMENT AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.3 EXECUTION COPY ================================================================================ CASH MANAGEMENT AGREEMENT Dated as of July 23, 1996 between CALCOMP TECHNOLOGY, INC., a Delaware corporation and LOCKHEED MARTIN CORPORATION, a Maryland corporation =============================================================================== CASH MANAGEMENT AGREEMENT ------------------------- This CASH MANAGEMENT AGREEMENT is dated as of July 23, 1996, between CALCOMP TECHNOLOGY, INC., a Delaware corporation ("CalComp Technology"), and LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Lockheed Martin"). WHEREAS, pursuant to Sections 5.2(b) and 6.2 of the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation dated as of the 19th day of March, 1996, as amended (the "Reorganization Agreement"), by and among Summagraphics Corporation ("Summagraphics"), CalComp Inc., a California corporation ("CalComp"), and Lockheed Martin, Summagraphics and Lockheed Martin agreed to execute and deliver this Agreement at the closing (the "Closing") of the transactions contemplated by the Reorganization Agreement; WHEREAS, pursuant to the Reorganization Agreement, Summagraphics agreed to issue and deliver to Lockheed Martin shares representing 89.7% of Summagraphics' outstanding Common Stock, par value $.01 per share (the "Common Stock") on a Fully Diluted Basis, in exchange for the transfer and delivery of all the issued and outstanding capital stock of CalComp to Summagraphics, all pursuant to and in accordance with the terms of the Reorganization Agreement; and WHEREAS, simultaneously with the execution and delivery of this Agreement, the Closing has occurred and the parties have executed and delivered a Revolving Credit Agreement of even date herewith. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, CalComp Technology and Lockheed Martin agree as follows: 1. Definitions. (a) Certain capitalized terms used but not defined ----------- herein shall have the meaning given those terms in the Revolving Credit Agreement. (b) The following terms, as used herein, shall have the following respective meanings: "Advance" means any amount advanced by Lockheed Martin to CalComp Technology pursuant to Section 5(a) hereof. "Bankruptcy Event" means, with respect to either party hereto, such party or any Subsidiary thereof (i) shall commence a voluntary case or other proceeding or an involuntary case or other proceeding shall be commenced against it seeking liquidation, reorganization or other relief with respect to it or its debt under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or, in the case of an involuntary case or other proceeding commenced against it, it shall consent to any such relief or to the appointment of or taking possession by any such official, or it shall make a general assignment for the benefit of creditors, or it shall fail generally to pay its debts as they become due, or it shall take any corporate action to authorize any of the foregoing, or an order for relief shall be entered against it under the federal bankruptcy laws as now or hereafter in effect; provided, however, that, any such involuntary case or proceeding shall not be a Bankruptcy Event unless it shall remain undismissed and unstayed for a period of 60 days. "Concentration Account" means the account established and maintained by CalComp Technology in accordance with Section 3(a) hereof at such bank that Lockheed Martin in its sole discretion may from time to time designate. "Federal Funds Rate" means, for any day, the interest rate per annum equal for such day to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published in the Federal Reserve System statistical release H-15. "Investment" means any amount held by Lockheed Martin for the benefit of CalComp Technology pursuant to Section 4(a) hereof. "Revolving Credit Agreement" means the Revolving Credit Agreement of even date herewith between the parties hereto as the same may be amended from time to time. "Subsidiary" means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled directly or indirectly by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof, and, as to CalComp Technology, "Subsidiary" shall also mean CalComp. 2. Agreement of Lockheed Martin. In consideration for the ---------------------------- compensation described in Section 8 below, Lockheed Martin agrees that it will, in accordance with Sections 4 and 5 below, cause cash to be transferred to or from the Concentration Account in amounts sufficient to cause the Concentration Account balance to be zero at the end of each banking day. 3. Agreements of CalComp Technology. In order for Lockheed Martin to -------------------------------- fulfill its obligations described in Section 2, CalComp Technology agrees that it will: (a) establish and maintain the Concentration Account; -2- (b) collect all domestic cash receipts of any nature payable to CalComp Technology or its Subsidiaries through lockbox services or other collection services provided by banks approved by Lockheed Martin and cause all such cash receipts and all other amounts collected by CalComp Technology to be transferred each banking day to the Concentration Account by means of a banking settlement system approved by Lockheed Martin; (c) notify Lockheed Martin of the estimated amount of the sum of electronic payments as of the date of transfer not later than 1:00 p.m. Eastern Standard Time on the date of such transfers; (d) provide Lockheed Martin with projections of cash flow and any additional related reports reasonably requested by Lockheed Martin; (e) promptly notify Lockheed Martin of the occurrence of any default or of any event that with notice or passage of time would constitute a default by CalComp Technology under any financial or credit agreement or arrangement; and (f) disburse funds from the Concentration Account to banks and accounts approved by Lockheed Martin. Nothing in this Agreement is intended to limit the purposes for which CalComp Technology may make payments or restrict its ability to make investments. 4. Investments. (a) In the event that CalComp Technology's net ----------- cash balance in the Concentration Account on any banking day is greater than zero, Lockheed Martin will cause the cash balance to be transferred from the Concentration Account to an account of Lockheed Martin. That amount will, first, be deemed a repayment of principal of Base Rate Loans outstanding under the Revolving Credit Agreement, second, to the extent not applied to repay Base Rate Loans, be deemed a repayment of principal of LIBOR Rate Loans outstanding under the Revolving Credit Agreement, and, third, to the extent not applied to repay Base Rate Loans and LIBOR Rate Loans, be deemed a repayment of outstanding Advances and, fourth, to the extent not applied to repay loans or Advances, be deemed an Investment held by Lockheed Martin for the benefit of CalComp Technology. (b) Lockheed Martin will pay CalComp Technology interest on the aggregate principal amount of Investments at a rate per annum equal to the Federal Funds Rate and will make available to CalComp Technology the aggregate principal amount of such Investments plus interest accrued not later than the next business day. The aggregate amount of Investments plus interest accrued thereon at any time shall be available to off-set any negative cash balances in the Concentration Account on any day. -3- 5. Advances. (a) In the event that CalComp Technology's net cash -------- balance in the Concentration Account on any banking day is negative, Lockheed Martin will, subject to Section 5(c) hereof, advance by a deposit of funds into the Concentration Account the amount necessary to cause the balance in the Concentration Account to be zero. The amount so advanced will, first, be deemed a repayment of any Investments plus any interest accrued thereon outstanding on the date thereof and, second, to the extent not applied to repay Investments, be deemed an Advance by Lockheed Martin to CalComp Technology. (b) CalComp Technology will pay Lockheed Martin interest on Advances at a per annum rate equal to the Federal Funds Rate. (c) The maximum principal amount of Advances to be made by Lockheed Martin hereunder shall be $2,000,000 outstanding at any time. 6. Interest. All interest to be paid with respect to Investments -------- or Advances will be calculated on the basis of a 365/366 day year and the actual number of days elapsed. Interest will be calculated on each banking day and will be payable monthly in arrears. Lockheed Martin will notify CalComp Technology, not later than ten days after the end of each month, of the net interest amount payable by or to CalComp Technology hereunder with respect to Investments and Advances, which amount will be payable by the applicable party within five banking days of the date of such notice. 7. Additional Accounts. CalComp Technology may establish petty ------------------- cash accounts and local depository accounts at local banks to ensure that funds are available to cover minor operating expenses. Such accounts, however, shall be subject to a limit on the maximum balances therein reasonably approved by Lockheed Martin and shall be replenished only to the extent vouchers and receipts are available. CalComp Technology may further establish bank accounts in international locations as are required to collect and disburse funds of foreign operations. Such foreign bank accounts shall be established and banks approved by Lockheed Martin. 8. Compensation. Lockheed Martin shall be compensated for ------------ providing services hereunder in accordance with the Intercompany Services Agreement, dated the date hereof (the "Services Agreement"), between the parties hereto. No additional compensation shall be due hereunder to Lockheed Martin. 9. Limitation of Liability. Except as may be provided in Sections ----------------------- 10 and 11 below, Lockheed Martin, its affiliates, directors, officers, employees, agents or permitted assigns (each a "Lockheed Martin Party") shall not be liable to CalComp Technology or any of CalComp Technology's affiliates, directors, officers, employees, agents or permitted assigns (each a "CalComp -4- Technology Party") for, and each CalComp Technology Party shall not be liable to any Lockheed Martin Party for, any liabilities, claims, damages, losses or expenses, including, but not limited to, any special, indirect, incidental or consequential damages arising in connection with this Agreement. 10. Lockheed Martin Indemnification. Lockheed Martin shall ------------------------------- indemnify, defend and save harmless the CalComp Technology Parties from and against all liabilities, claims, damages, losses and expenses, including, but not limited to, court costs and reasonable attorneys' fees, of any kind or nature, caused by or arising in connection with the gross negligence or willful misconduct of Lockheed Martin hereunder, unless such gross negligence or willful misconduct is caused by the acts or omissions of any CalComp Technology Party. Notwithstanding the foregoing, Lockheed Martin shall not be liable for any special, indirect, incidental or consequential damages relating to third party claims. 11. CalComp Technology Indemnification. CalComp Technology shall ---------------------------------- indemnify, defend and save harmless the Lockheed Martin Parties from and against all liabilities, claims, damages, losses and expenses, including, but not limited to, court costs and reasonable attorneys' fees, of any kind or nature, caused by or arising in connection with CalComp Technology's failure to fulfill CalComp Technology's obligations hereunder; unless such failure is caused by the acts or omissions of any Lockheed Martin Party. Notwithstanding the foregoing, CalComp Technology shall not be liable for any special, indirect, incidental or consequential damages relating to such claims. 12. Term of Agreement; Change of Control. This Agreement is ------------------------------------ effective from the date hereof and shall continue in full force and effect until June 1, 1998, unless sooner terminated by either party. Either party may terminate this Agreement (a) at any time after the first anniversary of the date this Agreement is effective by giving not less than 90 days' prior written notice to the other party of its election to terminate (which notice may be given up to 90 days prior to the first anniversary), or (b) at any time by giving written notice to the other party of its election to terminate if (i) such other party has failed to make any payments hereunder within five days of when due or (ii) a Bankruptcy Event has occurred with respect to such other party. In the event of a change of control of CalComp Technology, whether by merger, acquisition or sale of stock, disposition of assets or otherwise, this Agreement shall automatically terminate. 13. Representations and Warranties. Each of the representations ------------------------------ and warranties contained in the Revolving Credit Agreement of even date herewith by and between CalComp Technology and Lockheed Martin are hereby incorporated by reference as if set forth herein in full and may be relied upon by the parties hereto as if set forth herein. 14. Right of Set-Off. In addition to any rights and ---------------- -5- remedies of Lockheed Martin provided by law, Lockheed Martin shall have the right, without prior notice to CalComp Technology, any such notice being expressly waived by CalComp Technology to the extent permitted by applicable law, upon any amount becoming due and payable by CalComp Technology hereunder and remaining unpaid, to set-off and appropriate and apply against any and all Investments, and any other credits, Indebtedness (as defined in the Revolving Credit Agreement) or claims at any time held by or owing by Lockheed Martin to or for the credit or the account of CalComp Technology. Lockheed Martin agrees promptly to notify CalComp Technology after any such set-off and application made by Lockheed Martin, provided that the failure to give such notice shall not affect the validity of such set-off and application. 15. Information. Each of Lockheed Martin and CalComp Technology ----------- hereby covenants and agrees to provide the other with all information regarding itself and other assistance necessary for the other to comply with all applicable, federal, state, county and local laws, ordinances, regulations and codes, including, but not limited to, securities laws and regulations. 16. Assignment. Neither party may assign or transfer any of its ---------- rights or duties under this Agreement to any person or entity without the prior written consent of the other party; provided, however, that Lockheed Martin may make any such assignment or transfer to an affiliate of Lockheed Martin without the prior written consent of CalComp Technology. 17. Notices. Any notice, instruction, direction or demand under ------- the terms of this Agreement required to be in writing will be duly given upon delivery, if delivered by hand, intercompany mail or by facsimile (with receipt confirmed), or five days after posting if sent by certified mail, return receipt requested to the following addresses: Lockheed Martin: --------------- Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Treasurer Telephone: (301) 897-6027 Telecopy: (301) 897-6651 With a copy to: -------------- Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Director, Finance Telephone: (301) 897-6540 Telecopy: (301) 897-6889 -6- CalComp Technology: ------------------ CalComp Technology, Inc. 2411 W. LaPalma Avenue Anaheim, California 92801 Attention: Treasurer Telephone: Telecopy: or to such other address as either party may have furnished to the other in writing in accordance with this Section 17. 18. Governing Law. This Agreement shall be construed in accordance ------------- with and governed by the laws of the State of Maryland. 19. Suspension. The obligations of any party to perform any acts ---------- hereunder may be suspended if such performance is prevented by fires, strikes, embargoes, riot, invasion, governmental interference, inability to secure goods or materials, or other circumstances outside the control of the parties. 20. Severability. If any provision of this Agreement shall be ------------ invalid or unenforceable, such invalidity or unenforceability shall not render the entire Agreement invalid. Rather, the Agreement shall be construed as if not containing the particular invalid or unenforceable provision, and the rights and obligations of each party shall be construed and enforced accordingly. 21. Rights Upon Orderly Termination. Upon termination or ------------------------------- expiration of this Agreement or any portion of the services described herein, each party shall, upon request, forthwith return to the other party all reports, paper, material and other information required to be provided to the other party by this Agreement. In addition, each party will assist the other in the orderly termination of this Agreement or any portion of the services described herein. 22. Amendment. This Agreement may only be amended by a written --------- agreement executed by all of the parties hereto. 23. Entire Agreement. This Agreement, including any exhibits, ---------------- together with the Revolving Credit Agreement and the Services Agreement, constitutes the entire agreement between the parties, and supersedes all prior agreements, representations, negotiations, statements or proposals related to the subject matter thereof. 24. Counterparts. This Agreement may be executed in separate ------------ counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall constitute one agreement. -7- IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives. LOCKHEED MARTIN CORPORATION By:/s/ WALTER E. SKOWRONSKI ------------------------ Walter E. Skowronski Treasurer CALCOMP TECHNOLOGY, INC. By:/s/ MICHAEL D. BENNETT ---------------------- Michael D. Bennett President and Chief Executive Officer -8- EX-10.4 5 TAX SHARING AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.4 EXECUTION COPY ================================================================================ TAX SHARING AGREEMENT Dated as of July 23, 1996 by and between LOCKHEED MARTIN CORPORATION, a Maryland corporation and CALCOMP TECHNOLOGY, INC., a Delaware corporation =============================================================================== TAX SHARING AGREEMENT THIS TAX SHARING AGREEMENT (this "Agreement"), dated as of July 23, 1996, is made and entered into by and between LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Lockheed Martin"), and CALCOMP TECHNOLOGY, INC., a Delaware corporation ("CalComp Technology"). RECITALS -------- WHEREAS, pursuant to the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation, dated as of the 19th day of March, 1996, as amended (the "Reorganization Agreement"), by and among Summagraphics Corporation, a Delaware corporation ("Summagraphics"), CalComp Inc., a California Corporation ("CalComp"), and Lockheed Martin, Summagraphics agreed to issue and deliver to Lockheed Martin 89.7% of the outstanding shares of Summagraphics' Common Stock, par value $.01 per share, determined on a fully diluted basis, in exchange for the transfer and delivery of all the issued and outstanding capital stock of CalComp to Summagraphics; WHEREAS, as a result of the Closing of the transactions contemplated by the Reorganization Agreement, Lockheed Martin is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended and CalComp Technology is a member of such affiliated group; WHEREAS, the affiliated group of which Lockheed Martin is the common parent and CalComp Technology is a member files a consolidated Federal income tax return as defined in Code Section 1501; and WHEREAS, Lockheed Martin and CalComp Technology desire to provide for the allocation of liabilities, procedures to be followed, and other matters with respect to certain taxes for tax periods in which CalComp Technology and its subsidiaries are included in a consolidated Federal income tax return filed for the Combined Consolidated Group, and with respect to certain carrybacks and carryforwards of amounts relating to other periods. NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS ----------- 1. "Code" shall mean the Internal Revenue Code of 1986, as amended. 2. "Combined Consolidated Group" shall mean the Lockheed Martin Consolidated Group together with the CalComp Technology Consolidated Group, and any other corporations which may become members of either. 3. "Combined Consolidated Return" shall mean a consolidated Federal income tax return filed for the Combined Consolidated Group. 4. "CalComp Technology Consolidated Group" shall mean the affiliated group of corporations of which CalComp Technology would be the common parent for consolidated Federal income tax return filing purposes if it were not a subsidiary of Lockheed Martin, and any other corporations which are or may become members of that affiliated group. 5. "Estimated Tax Sharing Payments" shall have the meaning given that term in Section 2 of ARTICLE III. 6. "Federal Income Taxes" and "Federal Income Tax Liability" shall mean the taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code, or any successor provisions to such sections and any other income based U.S. Federal taxes which are hereinafter imposed upon corporations. 7. "IRS" shall mean the Internal Revenue Service. 8. "Lockheed Martin Consolidated Group" shall mean the affiliated group of corporations of which Lockheed Martin is the common parent, and any other corporations which may become members of the affiliated group, but excluding members of the CalComp Technology Consolidated Group. 9. "Pro Forma CalComp Technology Return" shall mean a pro forma consolidated Federal income tax return for the CalComp Technology Consolidated Group prepared pursuant to ARTICLE III, Section 1 or 5. For 1996, the Pro Forma CalComp Technology Return shall include CalComp and its subsidiaries commencing January 1 and CalComp Technology and its subsidiaries commencing on the Closing Date (as defined in the Reorganization Agreement). 10. "Regulations" shall mean the U.S. Treasury regulations in effect from time to time. -2- ARTICLE II PROCEDURAL MATTERS ------------------ 1. Lockheed Martin shall have the sole and exclusive responsibility for the preparation and filing of the consolidated U.S. Federal income tax return of the Combined Consolidated Group, including any amended returns and any other returns, documents, or statements required to be filed with the IRS with respect to the determination of the Federal Income Tax Liability of the Combined Consolidated Group. Lockheed Martin shall have the same responsibility with respect to state combined or consolidated returns filed by the Combined Consolidated Group. All returns shall be filed by Lockheed Martin on a timely basis, taking into account extensions of the due dates for the filings of such returns. 2. The CalComp Technology Consolidated Group shall continue to join in filing consolidated Federal income tax returns and consolidated or combined state income tax returns with the Lockheed Martin Consolidated Group for all such taxable years for which the CalComp Technology Consolidated Group is eligible to do so under the Code, the Regulations and applicable state statutes, unless Lockheed Martin shall request and be granted permission to discontinue filing on a consolidated or combined basis by the appropriate Federal or state authority. 3. Lockheed Martin shall make all Federal and state income and franchise tax payments, including estimated payments, with respect to combined and consolidated tax returns of the Combined Consolidated Group, and Lockheed Martin shall have the right to exercise all powers of a common parent with respect to filing the consolidated Federal income tax returns and consolidated or combined state income tax returns as are conferred on it by the Regulations and applicable state statutes. 4. Lockheed Martin shall be the sole and exclusive agent of the CalComp Technology Consolidated Group and any member of such group in any and all matters relating to the U.S. Federal Income Tax Liability of the Combined Consolidated Group for all consolidated return years. The same shall apply with respect to any state income tax liability where consolidated or combined returns are filed by the Combined Consolidated Group. Lockheed Martin shall consult with CalComp Technology regarding the matters set forth in this paragraph as they apply to the Pro Forma CalComp Technology Return described in ARTICLE III, Section 1 hereof, and shall consider all changes requested by CalComp Technology; provided, however, that in its sole discretion, Lockheed Martin shall have the right with respect to any Federal or state consolidated or combined returns which it files (a) to determine (i) the manner in which such returns shall be prepared and filed, including, without limitation, the manner in which any item of income, gain, loss, deduction or credit shall be reported, (ii) whether any extensions may be requested and (iii) the elections -3- that will be made by any member of the Combined Consolidated Group, (b) to contest, compromise or settle any adjustment or deficiency proposed, asserted or assessed as a result of any audit of such returns by the IRS or applicable state authority, (c) to file, prosecute, compromise or settle any claim for refund and (d) to determine whether any refunds, to which the Combined Consolidated Group may be entitled, shall be paid by way of refund or credited against the tax liability of the Combined Consolidated Group. CalComp Technology hereby irrevocably appoints Lockheed Martin as its agent and attorney-in-fact to take such action (including the execution of documents) as Lockheed Martin may deem appropriate in accordance with the terms of this Section 4 to effect the foregoing. Lockheed Martin shall consult with CalComp Technology regarding any material issue relating to the CalComp Technology Consolidated Group which arises pursuant to an audit by the IRS or applicable state authorities of a Combined Consolidated Return or combined or consolidated state return of the Combined Consolidated Group or a return of Lockheed Martin to which an attribute of the CalComp Technology Consolidated Group is carried back, and shall consider CalComp Technology's views regarding any proposed adjustment relating to any such issue. 5. CalComp Technology shall reimburse Lockheed Martin for any outside legal and accounting expenses incurred by Lockheed Martin in the course of the conduct of any audit or contest regarding the tax liability of the Combined Consolidated Group, and for any other expenses incurred by Lockheed Martin in the course of any litigation relating thereto, to the extent such costs are reasonably attributable to a CalComp Technology Consolidated Group issue; provided, however, that prior to incurring any such expenses, Lockheed Martin shall, in good faith, consult with CalComp Technology and consider CalComp Technology's views with regard to the retention of outside professional assistance. 6. CalComp Technology shall furnish to Lockheed Martin in a timely manner such information and documents as Lockheed Martin may reasonably request for purposes of preparing the returns referred to in Section 1 of this ARTICLE II. ARTICLE III CALCULATION AND PAYMENT OF TAX SHARING PAYMENTS ----------------------------------------------- 1. For each taxable year for which Lockheed Martin files a Combined Consolidated Return, Lockheed Martin shall prepare a Pro Forma CalComp Technology Return taking into account elections, methods of accounting, and positions with respect to specific items that are consistent with those made or used by Lockheed Martin for purposes of the Combined Consolidated Return. The tax liability for the Pro Forma CalComp Technology Return shall be computed as a flat tax at the highest marginal rate applicable to corporations -4- with respect to each category of reported taxable income (at the date of this Agreement, the highest marginal rate under Section 11 of the Code is 35%); provided, however, that if the taxable income of the Combined Consolidated Group has not reached the level (the "Flat Rate Level") at which the effect of the --------------- lower marginal rates set forth in Section 11 of the Code (or any successor provision) is eliminated (as of the date hereof, the Flat Rate Level is $18,333,333.33), then the tax liability for the Pro Forma CalComp Technology Return shall be based on a rate sharing agreement to be agreed upon by the parties at such time. The Pro Forma CalComp Technology Return shall reflect any carryovers of net operating losses, net capital losses, excess tax credits or other tax attributes from prior years' Pro Forma CalComp Technology Returns which could have been utilized by the CalComp Technology Consolidated Group if the CalComp Technology Consolidated Group had never been included in the Combined Consolidated Group. Subject to the limitations imposed by Section 382 of the Code, the Pro Forma CalComp Technology Return shall also reflect any carryovers of net operating losses, net capital losses, excess tax credits or other tax attributes from CalComp Technology or CalComp Technology consolidated returns for any taxable year in which CalComp Technology was not included in the Combined Consolidated Group which could have been utilized by the CalComp Technology Consolidated Group if the CalComp Technology Consolidated Group had not been included in the Combined Consolidated Group. The Pro Forma CalComp Technology Return shall also reflect any carryovers of net operating losses, net capital losses, excess tax credits or other tax attributes from CalComp and its United States subsidiaries (excluding AGT Holdings, Inc. and all of its subsidiaries) for tax periods ending on or prior to December 31, 1995, that were used on a consolidated basis by the affiliated group of corporations of which Lockheed Corporation was the common parent or by the Lockheed Martin Group, but which could have been utilized by the CalComp Technology Consolidated Group if the CalComp Technology Consolidated Group had not been included in the Combined Consolidated Group. The Pro Forma CalComp Technology Return shall not, however, reflect carryovers of any attributes from the Lockheed Martin Consolidated Group, other than carryovers of pre-January 1, 1996, attributes of CalComp and its subsidiaries. Sections 1.1502-13 and 1502-13T of the Regulations shall be applied as if the CalComp Technology Consolidated Group and the Lockheed Martin Consolidated Group were separate affiliated groups, except that the Pro Forma CalComp Technology Return shall include all gains or losses recognized by the CalComp Technology Consolidated Group on transactions between members of the CalComp Technology Consolidated Group which are restored pursuant to such aforementioned Sections of the Regulations and actually reflected on the Combined Consolidated Return as a result of the CalComp Technology Consolidated Group ceasing to be included in the Combined Consolidated Group. 2. For each taxable year in which a Combined Consolidated Return is filed, CalComp Technology shall make periodic payments ("Estimated Tax Sharing Payments") to Lockheed Martin in such -5- amounts as, and no later than the dates on which, payments of estimated tax would be due from the CalComp Technology Consolidated Group under Section 6655 of the Code if it were not included in the Combined Consolidated Group. The Estimated Tax Sharing Payments shall be determined by Lockheed Martin. Prior to March 15 of the following year, Lockheed Martin shall prepare a preliminary tax calculation for the CalComp Technology Consolidated Group for such taxable year. The amount, if any, by which the Federal Income Tax Liability determined pursuant to such preliminary tax calculation exceeds the Estimated Tax Sharing Payments for the taxable year shall be paid by CalComp Technology to Lockheed Martin not later than such March 15. CalComp Technology shall pay to Lockheed Martin not later than 10 days after the date on which a Combined Consolidated Return for the taxable year is filed, an amount equal to (i) the Federal Income Tax Liability shown on the Pro Forma CalComp Technology Return prepared for the taxable year, reduced by (ii) the Federal Income Tax Liability determined pursuant to the preliminary tax calculation, plus (iii) interest on such net amount. If the Estimated Tax Sharing Payments paid to Lockheed Martin plus the excess, if any, of the Federal Income Tax Liability determined pursuant to the preliminary tax calculation over the Estimated Tax Sharing Payments exceeds the amount of the Federal Income Tax Liability shown on the Pro Forma CalComp Technology Return, Lockheed Martin shall refund such excess to CalComp Technology within 10 days after the date on which a Combined Consolidated Return for the taxable year is filed, plus interest. Lockheed Martin shall furnish to CalComp Technology the preliminary tax calculation no later than 10 days prior to March 15 of the year following the taxable year, and shall furnish to CalComp Technology the Pro Forma CalComp Technology Return no later than 30 days before the Combined Consolidated Return for the taxable year is filed. 3. If a Pro Forma CalComp Technology Return reflects a net operating loss, net capital loss, excess tax credit or other tax attribute, Lockheed Martin shall pay to CalComp Technology within 10 days after the Combined Consolidated Return for the taxable year is filed, the refund which the CalComp Technology Consolidated Group would have received as a result of the carryback of such attribute 1) to a Pro Forma CalComp Technology Return for any taxable year or years in which the CalComp Technology Consolidated Group is included in the Combined Consolidated Group, or 2) to a CalComp Technology or CalComp Technology consolidated return for any taxable year or years in which CalComp Technology was not included in the Combined Consolidated Group. The amount of the refund shall be determined as if the CalComp Technology Consolidated Group had never been included in the Combined Consolidated Group and Pro Forma CalComp Technology Returns had been actual returns. All calculations of deemed refunds pursuant to this Section 3 shall include interest computed as if CalComp Technology had filed a claim for refund or an application for a tentative carryback adjustment pursuant to Section 6411(a) of the Code on the date on which the Combined Consolidated Return is due, -6- without regard to extensions. For purposes of determining the refund which the CalComp Technology Consolidated Group would have received in accordance with the preceding sentence, such attributes shall not be deemed to be available as a carryback to any Lockheed Martin Consolidated Group return for any period. 4. For each taxable year in which a Combined Consolidated Return is filed, CalComp Technology shall take or cause to be taken all actions necessary to ensure that CalComp Foreign Sales Corporation or, at Lockheed Martin's election, a newly incorporated company (herein both referred to as "CCFSC") qualifies as a "foreign sales corporation", and that commissions are paid to CCFSC in amounts which will cause CCFSC to realize profits on each transaction equal to the largest amount permitted for CCFSC under the provisions of the Code. For each taxable year for which a Pro Forma CalComp Technology Return is prepared, a determination shall be made (at the time at which the preliminary tax calculation is made for such taxable year pursuant to ARTICLE III, Section 2) as to the net Federal Income Tax cost or saving to the CalComp Technology Consolidated Group resulting from the transactions engaged in between members of the CalComp Technology Consolidated Group and CCFSC during such taxable year. If it is determined that there is a net Federal Income Tax cost to the CalComp Technology Consolidated Group resulting from such transactions, either CalComp Technology shall reduce the amount it is required to pay to Lockheed Martin by March 15 pursuant to ARTICLE III, Section 2 by the amount of such net Federal Income Tax cost or, if no amount is required to be paid by CalComp Technology, Lockheed Martin shall refund to CalComp Technology by March 15 the amount of such net Federal Income Tax cost. If it is determined that there is a net Federal Income Tax cost to the CalComp Technology Consolidated Group from transactions engaged in with CCFSC during a taxable year, the amounts of any carryovers of a net operating loss, net capital loss, excess tax credits or other tax attributes from such taxable year which are reflected on the Pro Forma CalComp Technology Group Return for a subsequent year shall be reduced by the equivalent net Federal Income Tax cost. Such reduction shall be accomplished in two steps, as follows: first, if there is a carryover of a net operating loss or net capital loss, the reduction shall be an amount equal to the net Federal Income Tax cost divided by the highest marginal tax rate applicable to such category of taxable income for the tax year in which such Federal Income Tax cost is incurred; second, any carryovers of other tax attributes shall be reduced by an amount equal to the remaining unrecovered net Federal Income Tax cost. 5. If, in any year after the CalComp Technology Consolidated Group ceases to be included in the Combined Consolidated Group, a Pro Forma CalComp Technology Return for such period reflects a net operating loss, a net capital loss, excess tax credit or any other tax attribute, and such attribute could be carried back to a Combined Consolidated Return, Lockheed Martin shall pay to CalComp Technology an amount equal to the refund that would be attributable thereto (including interest thereon). Pro Forma CalComp Technology -7- Returns under this Section shall be prepared by CalComp Technology, and shall be subject to review and approval by Lockheed Martin, such approval not to be unreasonably withheld. After the CalComp Technology Consolidated Group ceases to be included in the Combined Consolidated Group, it shall not be entitled to any payment by Lockheed Martin with respect to any net operating losses, net capital losses, excess tax credits or other tax attributes not used by the CalComp Technology Consolidated Group prior to its ceasing to be included in the Combined Consolidated Group, whether or not the Combined Consolidated Group receives a refund or other benefit relating to such tax attributes. 6. If, in any year after a member of the CalComp Technology Consolidated Group ceases to be a member of both the CalComp Technology Consolidated Group and the Combined Consolidated Group, such member has a net operating loss, a net capital loss, excess tax credit or any other tax attribute, and such attribute could be carried back to a Combined Consolidated Return, Lockheed Martin shall pay to such member an amount equal to the refund that would be attributable to such member (including interest thereon). After a member of the CalComp Technology Consolidated Group ceases to be a member of both the CalComp Technology Consolidated Group and the Combined Consolidated Group, it shall not be entitled to any payment by Lockheed Martin with respect to any net operating losses, net capital losses, excess tax credits or other tax attributes not used by the member prior to its ceasing to be a member of the CalComp Technology Consolidated Group and the Combined Consolidated Group, whether or not the CalComp Technology Consolidated Group or the Combined Consolidated Group receives a refund or other benefit relating to such tax attributes. 7. To the extent that any audit, litigation, claim or refund with respect to a Combined Consolidated Return results in an increase or decrease in taxable income relating to the treatment of a CalComp Technology Consolidated Group issue, a corresponding adjustment shall be made to such item and to CalComp Technology's Consolidated Group Federal Income Tax Liability reflected on the applicable Pro Forma Return. Within 10 days after any such adjustment is finally determined, CalComp Technology shall pay to Lockheed Martin any increase in the CalComp Technology Consolidated Group Federal Income Tax Liability as a result of such adjustment plus interest and any penalties consistent with such adjustment and consistent with the penalties and interest actually assessed by the IRS, or Lockheed Martin shall refund to CalComp Technology any reduction in the CalComp Technology Federal Income Tax Liability as a result of such adjustment plus interest, as the case may be. -8- ARTICLE IV INTEREST -------- Interest required to be paid by or to CalComp Technology pursuant to this Agreement shall, except as otherwise specified in Section 2 of ARTICLE V, be computed at the rate and in the manner provided in the Code for interest on underpayments and overpayments, respectively, of Federal income tax for the relevant period. ARTICLE V STATE & LOCAL INCOME AND FRANCHISE TAXES ---------------------------------------- 1. The principles expressed with respect to the Combined Consolidated Group Federal income tax matters throughout this Agreement (including the Miscellaneous Provisions of ARTICLE VI) shall apply with equal force and effect to state and local income and franchise tax matters to the extent such taxes are determined on a combined or consolidated basis, including the preparation and filing of state and local income tax and franchise tax returns required to be filed by the Combined Consolidated Group. 2. Any interest charge required to be paid by or to CalComp Technology pursuant to this Agreement with respect to any state or local income tax or franchise tax return shall be computed at the rate and in the manner as provided under the applicable state or local statute for interest on underpayments and overpayments of such tax for the relevant period. ARTICLE VI MISCELLANEOUS PROVISIONS ------------------------ 1. Lockheed Martin and CalComp Technology agree that any information furnished one another pursuant to this Agreement is confidential and, except as, and to the extent, required during the course of an audit or litigation or otherwise required by law, shall not be disclosed to another person or entity. 2. This Agreement shall be binding upon and inure to the benefit of any successor to any of the parties, by merger, acquisition of assets or otherwise, to the same extent as if the successor had been an original party to this Agreement. For purposes of this Section 2, the term "successor" shall be deemed to include the acquiror of a substantial part of the assets of either of the parties hereto. 3. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland without giving effect to conflicts of law principles thereof. -9- 4. This Agreement may be amended from time to time by agreement in writing executed by all the parties hereto or all of the parties then bound thereby. This Agreement constitutes the entire agreement with respect to the subject matter hereof and supersedes all prior written and oral understandings with respect thereto. 5. (a) With respect to each member of the CalComp Technology Consolidated Group, if such member is no longer eligible to file consolidated returns with Lockheed Martin for any reason (including, without limitation, the sale, exchange, or other disposition of all or any portion of the stock of CalComp Technology or any other member sufficient to disaffiliate CalComp Technology or such member from the Combined Consolidated Group, or the termination of the Combined Consolidated Group), the parties hereto agree that as between Lockheed Martin and the departing member, except as otherwise provided herein, this Agreement shall be terminated at the time specified in the following paragraph b. After the date of the disaffiliation, the parties agree to continue sharing on a timely basis information necessary to the preparation of applicable Federal, state and local tax returns. (b) This Agreement shall become operative as of the Closing Date (as defined in the Reorganization Agreement) and with respect to any member of the CalComp Technology Consolidated Group, shall terminate and be of no further force or effect only upon the expiration of all applicable statutes of limitations relating to federal and state income taxes (including refunds thereof) for all periods in which such member was a member of the Combined Consolidated Group, provided that any amounts payable hereunder by one party to the other as of the date of any such termination shall continue to be a valid and binding obligation of such party and shall be paid as provided herein. 6. Lockheed Martin hereby agrees to indemnify and hold each member of the CalComp Technology Consolidated Group harmless with respect to: (a) any Federal Income Tax Liability attributable to any taxable period of such member for which such member has paid Lockheed Martin its separate Federal Income Tax Liability, if any, in accordance with this Agreement; and (b) any Federal Income Tax Liability of the Combined Consolidated Group for any taxable period of Lockheed Martin where such liability arises solely by reason of the member being severally liable for any taxes of the Lockheed Martin Consolidated Group pursuant to Treas. Reg. 1.1502-6. 7. Any notice, request or other communication required or permitted in this Agreement shall be in writing and shall be sufficiently given if personally delivered or if sent by registered or certified mail, postage prepaid, addressed as follows: -10- TO CALCOMP TECHNOLOGY: CalComp Technology, Inc. 2411 West LaPalma Avenue Anaheim, California 92801 Attention: General Counsel TO LOCKHEED MARTIN: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Vice President and General Tax Counsel With a copy to: Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Director of Finance -11- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives. LOCKHEED MARTIN CORPORATION, a Maryland corporation By:/s/ ARNOLD CHIET ---------------- Arnold Chiet Vice President and General Tax Counsel CALCOMP TECHNOLOGY, INC., a Delaware corporation By:/s/ MICHAEL S. BENNETT ---------------------- Michael S. Bennett President and Chief Executive Officer -12- EX-10.5 6 REVOLVING CREDIT AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.5 EXECUTION COPY ================================================================================ REVOLVING CREDIT AGREEMENT Dated as of July 23, 1996 between CALCOMP TECHNOLOGY, INC., a Delaware corporation, as Borrower and LOCKHEED MARTIN CORPORATION, a Maryland corporation, as Lender ================================================================================ TABLE OF CONTENTS
Page ---- SECTION 1. INTERPRETATIONS AND DEFINITIONS. ------------------------------- 1.1 Definitions............................................................. 1 SECTION 2. THE LOANS./ --------- 2.1 Commitment to Lend....................................................... 10 2.2 Method of Borrowing...................................................... 10 2.3 Repayment and Prepayment of the Loans.................................... 11 2.4 Evidence of the Loans.................................................... 12 2.5 Interest Rates........................................................... 13 2.6 Commitment Fee........................................................... 13 2.7 Reduction and Cancellation of the Commitment............................. 13 2.8 General Provisions as to Payments........................................ 14 2.9 Computation of Interest and Fees......................................... 14 2.10 No Deduction............................................................ 14 2.11 Use of Proceeds......................................................... 14 SECTION 3. CONDITIONS OF LENDING. --------------------- 3.1 All Loans................................................................ 14 3.2 Initial Loan............................................................. 15 SECTION 4. REPRESENTATIONS AND WARRANTIES. ------------------------------ 4.1 Corporate Existence and Power............................................ 15 4.2 Corporate Authorization.................................................. 15 4.3 Binding Effect........................................................... 15 4.4 No Contravention......................................................... 15 4.5 Financial Statements..................................................... 16 4.6 Litigation............................................................... 17 4.7 Licenses and Authorizations.............................................. 17 4.8 No Default............................................................... 17 4.9 No Event of Default...................................................... 17 4.10 Adverse Change........................................................... 17 4.11 Liens.................................................................... 17 4.12 ERISA.................................................................... 18 4.13 Taxes.................................................................... 18 4.14 Environmental Matters.................................................... 18 4.15 Labor Matters............................................................ 19 4.16 Completeness............................................................. 19 SECTION 5. AFFIRMATIVE COVENANTS. --------------------- 5.1 Financial Statements..................................................... 20 5.2 Notices, Litigation, etc................................................. 21 5.3 Maintenance of Existence, etc............................................ 21 5.4 Obligations and Taxes.................................................... 22 5.5 Books and Records........................................................ 22
(i) 5.6 Insurance................................................................ 22 5.7 ERISA.................................................................... 23 5.8 Environmental Compliance................................................. 23 SECTION 6. NEGATIVE COVENANTS. ------------------ 6.1 Maximum Leverage Ratio................................................... 23 6.2 Minimum Fixed Charge Coverage Ratio...................................... 23 6.3 Minimum Quick Ratio...................................................... 24 6.4 Prohibition of Liens..................................................... 24 6.5 Prohibition of Sale-Leaseback Transactions............................... 25 6.6 Mergers, Consolidations, etc............................................. 25 6.7 ERISA.................................................................... 25 SECTION 7. EVENTS OF DEFAULT. ----------------- SECTION 8. MISCELLANEOUS. ------------- 8.1 Notices.................................................................. 27 8.2 Amendments and Waivers; Cumulative Remedies.............................. 28 8.3 Successors and Assigns................................................... 28 8.4 Expenses and Withholding................................................. 29 8.5 Counterparts............................................................. 29 8.6 Headings; Table of Contents.............................................. 29 8.7 Governing Law; Arbitration............................................... 29 8.8 Right of Set-Off......................................................... 30 SCHEDULES Schedule 4.12.................................................................. S-1
(ii) REVOLVING CREDIT AGREEMENT -------------------------- REVOLVING CREDIT AGREEMENT, dated as of July 23, 1996, between CALCOMP TECHNOLOGY, INC., a Delaware corporation (the "Borrower"), and LOCKHEED MARTIN CORPORATION, a Maryland corporation (the "Lender"). SECTION 1. INTERPRETATIONS AND DEFINITIONS. ------------------------------- 1.1 Definitions. The following terms, as used herein, shall ----------- have the following respective meanings: "Agreement" means this Revolving Credit Agreement, as amended, restated, extended or otherwise modified from time to time in accordance with the terms hereof. "Attributable Debt" means, for a lease, the carrying value of the capitalized rental obligation determined under Generally Accepted Accounting Principles, whether or not such obligation is required to be shown on the balance sheet as a liability. In the case of any lease which, in accordance with Generally Accepted Accounting Principles, is classified as a capital lease, the amount of Attributable Debt created through such capital lease shall equal the amount required to be shown under Generally Accepted Accounting Principles as a liability of such lessee for such capital lease. In the case of any other lease, the amount of Attributable Debt created through such lease shall be calculated in a manner consistent with the determination of the net present value of the Operating Lease Rental Obligations made as part of the determination of the Interest Portion of Operating Lease Rental Expense. "Base Rate" means a fluctuating per annum rate of interest as shall be in effect from time to time, which rate shall at all times be equal to the higher of: (a) the per annum rate of interest publicly announced from time to time by Morgan Guaranty Trust Company of New York in New York as its "prime" rate. Any change in the Base Rate due to a corresponding change in Morgan Guaranty Trust Company of New York's "prime" rate shall take effect on the day specified in the public announcement of such change; or (b) 0.50% per annum above the Federal Funds Rate. Any change in the Base Rate due to a change in the Federal Funds Rate shall be effective as of the effective date of such change in the Federal Funds Rate. "Base Rate Loan" means a Loan as to which the Borrower, in the applicable notice of borrowing given pursuant to Section 2.2(a), shall have requested the Base Rate as the applicable rate of interest. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or directed to close. "CERCLA" means the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended. "Capital Lease Obligations" means, as applied to any Person, all monetary obligations of such Person, under any leasing or similar arrangement which, in accordance with Generally Accepted Accounting Principles, is classified as a capital lease, as all such obligations are reported by such Person in its financial statements prepared in accordance with Generally Accepted Accounting Principles. "Cash Management Agreement" means the Cash Management Agreement among the Borrower and the Lender of even date herewith. "Code" means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. "Commitment" means $28,000,000, as such amount may be reduced from time to time pursuant to Section 2.7 hereof. "Consolidated" refers to the results obtained by the consolidation of the accounts of the Borrower and its Subsidiaries in accordance with Generally Accepted Accounting Principles. "Consolidated Subsidiaries" means the Subsidiaries of Borrower which are consolidated with Borrower for financial reporting purposes. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under capital leases, (v) all liabilities of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person, (vi) all Debt of others Guaranteed by such Person and (vii) all obligations of such Person (contingent or otherwise) in respect of letters of credit and banker's acceptances. "Default" means any event or condition which constitutes an Event of Default or which with the giving of notice or lapse of time, or both, would become an Event of Default. -2- "Depreciation and Amortization Expense" means all amounts reported by the Borrower in its Consolidated financial statements as expense for depreciation, depletion and amortization, plus amortization of goodwill and intangibles, during the relevant period. "Dollars" and the sign "$" mean lawful money of United States. "Earnings from Continuing Operations" means earnings from continuing operations of the Borrower and its Consolidated Subsidiaries before adjustments for extraordinary items, the cumulative effect of accounting changes and all taxes on or measured by income, all as reported by the Borrower in its Consolidated financial statements in accordance with Generally Accepted Accounting Principles. "Environmental Laws" means federal, state or local statutes, laws, ordinances, codes, rules, regulations, consents, decrees and administrative orders relating to protection of the environment, such as CERCLA, the Resource Conservation and Recovery Act and analogous state laws and regulations. "ERISA" means the Employee Retirement Income Security Act of 1974, as in effect from time to time. "ERISA Affiliate" means any Person which would be a member of a "controlled group," within the meanings of Sections 414(b), (c), (m) and (o) of the Code, of which the Borrower would also be a member; provided, however, that "ERISA Affiliate" will not include any Person of which the Borrower does not have any direct or indirect ownership. "ERISA Event" means, with respect to any Plan: (a) the occurrence of any reportable event described in Section 4043(b) or (c) of ERISA or the regulations thereunder (other than any such event as to which the PBGC has waived the thirty-day notice requirements), (b) a withdrawal from a Plan described in Sections 4063, 4203 or 4205 of ERISA by the Borrower or any ERISA Affiliate, (c) a cessation of operations described in Section 4062(e) of ERISA by the Borrower of any ERISA Affiliate, (d) the termination of a Plan or the filing of a notice of intent to terminate such Plan, in either case, under Section 4041 of ERISA, or the receipt of notice by the Borrower of the occurrence of an event described in Section 4041A of ERISA which constitutes a termination of a Plan, unless such termination occurs in connection with an acquisition of a Person other than an ERISA Affiliate of the Borrower, and the Borrower is taking reasonable steps to eliminate any material adverse effect arising therefrom within a reasonable period of time, (e) proceedings under Section 515 of ERISA to collect delinquent contributions to a Plan result in a judgment against the Borrower or any ERISA Affiliate, (f) the institution of proceedings by the PBGC to terminate a Plan or to appoint a trustee to administer a Plan or the receipt of -3- notice by the Borrower that such action has been taken with respect to a Plan or that such Plan is in reorganization or insolvent under Sections 4241 or 4245 of ERISA, (g) any substantial accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA is incurred by the Borrower or any ERISA Affiliate, and for which no waiver of that deficiency has been obtained from the Internal Revenue Service, (h) the Internal Revenue Service determines that a Plan that is intended to be qualified under Section 401 of the Code fails to meet the applicable requirements of the Code and disqualifies the Plan, (i) any Plan (other than a multiemployer plan within the meaning of Section 3(37) of ERISA) fails to be maintained in substantial compliance with its documents or with the requirements of any applicable statutes, regulations, rules, and orders, including, without limitation, ERISA and the Code, (j) a failure by the Borrower or any ERISA Affiliate to pay contributions or premiums required with respect to a Plan within the time permitted by law, including extensions, unless such payment is waived by an appropriate regulatory authority or is being contested in good faith by appropriate proceedings, or (k) an amendment to a Plan resulting in a significant underfunding as described in Code Section 401(a)(29) or ERISA Section 307. "Events of Default" shall have the meaning given to that term in Section 7 hereof. "Federal Funds Rate" means, for any day, the interest rate per annum equal for such day to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published in the Federal Reserve System statistical release H-15. "Fixed Charge Coverage Ratio" will have the meaning given that term in Section 6.2. "Fixed Charges" means, for any period, the sum of (a) Interest Expense during such period, plus ---- (b) Preferred Dividends during such period, plus ---- (c) Interest Portion of Operating Lease Rental Obligations for such period. "Funded Debt" means, without duplication, the sum of (i) all obligations for borrowed money which would be reported on the Consolidated balance sheet of the Borrower as a liability (expressly including, without limitation, all purchase money obligations and Consolidated Capital Lease Obligations of the Borrower and its Subsidiaries), (ii) all obligations for borrowed money created, incurred, assumed or guaranteed by, or otherwise existing as a liability of, any association, partnership, joint venture or other business entity not in corporate form (expressly including, without limitation, all purchase money obligations and -4- Capital Lease Obligations of such association, partnership, joint venture or such other entity) with respect to which the Borrower or any of its Subsidiaries is liable as a primary obligor, and (iii) all Debt of others Guaranteed by the Borrower or its Subsidiaries of, and all reimbursement obligations of the Borrower or its Subsidiaries (whether or not matured) with respect to surety bonds, letters of credit, bankers' acceptances or other similar instruments. "Generally Accepted Accounting Principles" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and promulgations of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the U.S. accounting profession, which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or entity whose stock or capital ownership is owned or controlled by any of the foregoing. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person or in any manner providing for the payment of any Debt of any other Person or otherwise protecting the holder of such Debt against loss (whether by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise), provided that the term Guarantee shall not include -------- endorsements for collection or deposit in the ordinary course of business. "Hazardous Materials" means: (a) any "hazardous substance," as defined by CERCLA; (b) any "hazardous waste," as defined by the Resource Conservation and Recovery Act, as amended; (c) any waste oil or petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, waste, substance or material within the meaning of the Environmental Laws. -5- "Indebtedness" of any Person means, without duplication, (a) the principal of and premium (if any) in respect of (i) Indebtedness of such Person for money borrowed and (ii) Indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all Capital Lease Obligations of such Person; (c) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (e) all obligations of the type referred to in clauses (a) through (d) of other Persons and all dividends of other Persons for the payment of which, in either case, Borrower is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any agreement which has the economic effect of a guaranty; and (f) all obligations of the type referred to in clauses (a) through (e) of other Persons secured by any Lien on any property or asset of the Borrower (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. -6- "Interest Expense" means the amount reported by the Borrower in its Consolidated financial statements as interest expense during the relevant period, increased (to the extent not duplicative) by the amount of any amortization of discount and of capitalized financing costs on indebtedness of the Borrower and its Subsidiaries, and reduced (to the extent not duplicative) by the amount of any amortization of premium and of capitalized interest on indebtedness of the Borrower and its Subsidiaries. "Interest Portion of Operating Lease Rental Expense" means, for any period, the portion of rents representative of an interest factor during such period calculated in a manner consistent with the portion of rents representative of an interest factor as reported by the Borrower in its Annual Report on Form 10-K (including attachments thereto) (the "Form 10-K Report") or Quarterly Report on Form 10-Q (including attachments thereto) (the "Form 10-Q Report") filed with the Securities and Exchange Commission for such period; provided, however, that if at any time the Borrower is no longer required to - -------- ------- report, and does not in fact report, the portion of rents representative of an interest factor in such Form 10-K Report and Form 10-Q Report, "Interest Portion of Operating Lease Rental Expense" shall mean the portion of rents representative of an interest factor of the Borrower and its Subsidiaries calculated in a manner consistent with the portion of rents representative of an interest factor as reported in the most recent Form 10-K Report or Form 10-Q Report where the portion of rents representative of an interest factor was reported. "Leverage Ratio" will have the meaning given that term in Section 6.1. "LIBOR" means, with respect to any applicable period of duration for a LIBOR Loan, the London inter-bank offered rate for deposits in United States dollars for an approximately equivalent period, determined as of approximately 11:00 a.m. (London time) as set forth on the display designated as the "LIBOR" page on the Rider Monitor Money Rates Service, or such other well recognized source or service as the parties hereto may agree in writing, on the Business Day immediately preceding the day on which such period commences. If such rate is not so quoted and the parties do not agree in writing to an alternative source or service, "LIBOR" shall be reasonably determined by the Lender on such day by reference to the rate quoted for the offering by leading banks (reasonably selected by the Lender) in the London inter-bank market of dollars for deposit. "LIBOR Loan" means a Loan as to which the Borrower, in the applicable notice of borrowing given pursuant to Section 2.2(a), shall have requested a rate based on LIBOR for the applicable period as the applicable rate of interest. "Lien" means with respect to any property or asset (or any income or profits therefrom) of any Person (in each case whether the same is consensual or nonconsensual or arises by -7- contract, operation of law, legal process or otherwise) (a) any mortgage, lien, pledge, attachment, levy or other security interest of any kind thereupon or in respect thereof, but not including the interest of a third party in receivables sold by such Person to such third party on a non-recourse basis or (b) any other arrangement, express or implied, under which the same is subordinated, transferred, sequestered or otherwise identified so as to subject the same to, or make the same available for, the payment or performance of any liability in priority to the payment of the ordinary, unsecured liabilities of such Person. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a loan, whether a Base Rate Loan or a LIBOR Loan, made by the Lender to Borrower pursuant to Section 2, or all such Loans, as the context may require. "Material Adverse Effect" shall mean a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under this Agreement, (c) the validity or enforceability of this Agreement, (d) the rights and remedies of the Lender under this Agreement, or (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith. "Obligation" means as applied to any Person, any law, decree, regulation or similar enactment, any instrument, agreement or other obligation or any judgment, injunction or other order or award of any judicial, administrative or governmental authority or arbitrator by which such Person or any of its Properties is bound. "Operating Lease Rental Obligations" means all monetary obligations of the Borrower and its Subsidiaries for scheduled rental payments under any leasing or similar arrangement which, in accordance with Generally Accepted Accounting Principles, is not classified as a capital lease. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a business trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA) and any multiemployer plan (as defined in Section 3(37) of ERISA) (i) which is contributed to, participated in or sponsored or maintained by the Borrower, or any ERISA Affiliate or (ii) to which the Borrower or any ERISA Affiliate is -8- obligated to make, or at any time during the five calendar years preceding the date of this Agreement has made, or was obligated to make, contributions; provided, however, that "Plan" shall not include any such plan sponsored by Lockheed Martin Corporation or any Subsidiary thereof unless it is sponsored by the Borrower or an ERISA Affiliate. "Preferred Dividends" means, with respect to any period, the aggregate amount of all dividends accrued by the Borrower on its preferred shares, if any, during such period. "Property" means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Proxy Statement" means Proxy Statement of Borrower used in connection with the Special Meeting of Stockholders of Borrower held on July 23, 1996. "Quick Ratio" will have the meaning given that term in Section 6.3. "Real Properties" means collectively, any and all parcels of real property owned or operated by the Borrower or any Subsidiary of the Borrower. "Release" means a "release" as such term is defined in CERCLA. "Sale-Leaseback Transaction" means an arrangement whereby the Borrower or any Subsidiary of the Borrower now owns or hereafter acquires Property, transfers it to a Person and leases it back from that Person. "Subsidiary" means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled directly or indirectly by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof, and, as to the Borrower, "Subsidiary" shall also mean CalComp Inc. "Tangible Net Worth" means, at any date, the Consolidated stockholder's equity of the Borrower and its Subsidiaries at such time determined in accordance with Generally Accepted Accounting Principles, less all ---- assets that are reflected on the Consolidated balance sheet of the Borrower at such time that would be treated as intangibles under Generally Accepted Accounting Principles (including, but not limited to, good will, capitalized software development costs and excess purchase costs). "Tax" means all taxes, levies, imposts, stamp taxes, sales tax, goods and services tax, duties, charges to tax, fees, deductions, withholdings and any restrictions or conditions -9- resulting in a charge to tax, in each case imposed by or payable to a government or governmental agency, and all penalty, interest and other payments on or in respect thereof. "Term of this Agreement" means the period from the date hereof to and including the Termination Date. "Termination Date" means the second anniversary of the date hereof or such earlier date as Borrower has obtained an agreement to lend from a third party on terms which are not substantially less favorable to Borrower than the terms of the Loans hereunder. SECTION 2. THE LOANS. --------- 2.1 Commitment to Lend. ------------------ (a) During the Term of this Agreement the Lender agrees, on the terms and conditions contained in this Agreement, to make Loans to the Borrower at any time prior to the Termination Date in an aggregate amount not exceeding at any one time outstanding the Commitment in effect at the time the Loans are made. The Borrower shall repay Loans in accordance with Section 2.3 and may reborrow under this Section 2.1(a) at any time. (b) Any other provision of this Agreement to the contrary notwithstanding, the Lender shall not be obligated to make a Loan to the Borrower at any time that the Borrower is, or after giving effect to the making of the Loan the Borrower would be, in violation of (i) any of the terms, conditions, covenants or provisions of this Agreement including, without limitation, the terms and conditions contained in Section 3 hereof or (ii) any of the terms, conditions, covenants or provisions of the Cash Management Agreement. (c) The commitment of the Lender to make Loans to the Borrower set forth in Section 2.1 (a) may be cancelled by the Lender at any time after the first anniversary of the date of this Agreement. The Lender shall give the Borrower not less than 120 days' prior written notice of cancellation of the Commitment (which notice can be given up to 120 days prior to the first anniversary). 2.2 Method of Borrowing. ------------------- (a) With respect to each Loan made pursuant to Section 2.1 hereof, except as provided in paragraph (c) below, the Borrower shall give the Lender a notice of borrowing notifying the Lender of its request to borrow hereunder which notice will specify (i) the date of the Loan, which date shall be a Business Day, (ii) whether the Loan will be a Base Rate Loan or a LIBOR Loan, (iii) the principal amount of the Loan, which in the case of a LIBOR Loan shall be $500,000 or a greater multiple thereof, and (iv) in the case of a LIBOR Loan, the duration thereof which shall be one, two -10- or three months, subject to the provisions of paragraph (d) below. The notice of borrowing shall be written, provided that it may be given orally (to be confirmed in writing if the Lender so requests) if the principal amount of the Loan is less than $500,000. (b) If the Borrower gives the notice required by Section 2.2(a) with respect to any Loan before 1:00 p.m. (Eastern Time), the Lender will disburse the proceeds of the Loan to the Borrower in immediately available funds on the Business Day following the date of such notice. The Lender will disburse all Loans to the Borrower by deposit in the Concentration Account (as that term is defined in the Cash Management Agreement) or, if the Cash Management Agreement shall no longer be in effect, by deposit in such account as shall be designated by the Borrower in the applicable notice of borrowing. (c) On any Business Day that there would be outstanding (if not for the limitation as to the principal amount of advances set forth in Section 5(c) of the Cash Management Agreement) advances from the Lender to the Borrower under the Cash Management Agreement in an aggregate amount (the "Covered Amount") that is greater than $2.0 million, the Borrower shall be deemed to have given the Lender a notice of borrowing requesting a Loan hereunder. The principal amount of the Loan so requested shall be the amount by which the Covered Amount exceeds $2.0 million. The Lender will make the proceeds thereof available to the Borrower on the day the Borrower is deemed to give such notice. Each Loan made pursuant to this paragraph (c) shall be a Base Rate Loan. (d) If in any notice of borrowing given pursuant to paragraph (a) above the Borrower designates a period of duration for a LIBOR Loan which would otherwise end on a day which is not a Business Day, that period shall end on the next preceding Business Day. Any such period of duration which begins prior to the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date. 2.3 Repayment and Prepayment of the Loans. ------------------------------------- (a) The Borrower agrees that it shall repay each LIBOR Loan at the end of the period of duration applicable thereto and it shall repay all Loans no later than the Termination Date. (b) The Lender may, in its sole discretion, set off any amounts due and owing to it by the Borrower hereunder (and not otherwise paid by the Borrower) against amounts owed by the Lender to the Borrower as provided in Section 8.8. (c) The Borrower may repay or prepay the outstanding principal amount of Loans in whole or in part on any Business Day upon irrevocable notice to the Lender given not later than 1:00 p.m. (Eastern Time) on the Business Day prior to the proposed payment date, provided, however, that the Borrower may make repayments pursuant to Section 4(a) of the Cash Management -11- Agreement without giving such notice. Notice hereunder shall specify the date of the repayment or prepayment, the principal amount to be repaid or prepaid (which amount, in the case of a LIBOR Loan, shall be a multiple of $500,000) and whether such payment relates to Base Rate Loans or LIBOR Loans and, if the latter, identifying the LIBOR Loan or Loans to which such payment applies. Each such repayment or prepayment shall be made on the dates specified and shall be accompanied by payment of all accrued interest thereon and, subject to compliance with the foregoing procedures, may be made at any time without cost or penalty of any kind; provided, however, that, if the Borrower prepays any LIBOR Loan in whole or in part, the accrued interest on the principal amount to be prepaid will be recalculated from the date the applicable LIBOR Loan was borrowed as if that amount had been borrowed as a Base Rate Loan. (d) Subject to the conditions of Section 2.2(a) and this Section 2.3(d), a LIBOR Loan may, on the last day of the applicable period of duration thereof, be converted into a Base Rate Loan or a new LIBOR Loan and a Base Rate Loan may, on any Business Day, be converted into a LIBOR Loan. The applicable notice of borrowing given pursuant to Section 2.2(a) shall designate any part of the Loan requested thereby that is to be made by conversion of an existing Loan rather than by advancing a new Loan. To the extent that a Loan is made by conversion of an existing Loan, the conditions of lending set forth in Section 3.1 hereof will not apply. Notwithstanding the provisions of this Section 2.3(d), during a Default the Lender may notify the Borrower that Base Rate Loans may not be converted into LIBOR Loans and that LIBOR Loans may not be converted into new LIBOR Loans. 2.4 Evidence of the Loans. --------------------- (a) The Loans made to the Borrower shall be evidenced by this Agreement and by a loan account in the Borrower's name to be maintained by the Lender. All Loans shall be payable by the Borrower to the order of the Lender not later than the Termination Date. (b) The Lender's loan account shall reflect appropriate notations evidencing the date, the amount and the maturity of each Loan and the date and amount of each payment of principal made by the Borrower with respect thereto. The loan account shall be conclusive evidence, absent manifest error, of the amount of the Loans, the interest accrued and payable thereon and all interest and principal payments made thereon. Any failure to record or any error therein shall in no way limit or otherwise affect the obligations of the Borrower hereunder to pay any amount owing with respect to the Loans. 2.5 Interest Rates and Payments. (a) Base Rate Loans shall bear --------------------------- interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate as in effect from time to time. Interest on Base Rate Loans shall be payable monthly in -12- arrears and on the Termination Date. The Lender will notify the Borrower in writing, not later than ten days after the end of each month, of the amount of interest payable hereunder with respect to Base Rate Loans which notice will set forth in reasonable detail the calculation of such amount. The Borrower agrees that it shall pay each monthly installment of interest within five Business Days of the date on which it receives such notice. (b) LIBOR Loans shall bear interest on the outstanding principal amount thereof, for the applicable duration thereof as selected by the Borrower in the notice of borrowing given pursuant to Section 2.2(a), at a rate per annum equal to LIBOR for such period as in effect one Business Day before the beginning of the period plus 1% (one percent). Interest on LIBOR Loans shall be payable, and the Borrower agrees that it shall pay such interest without any requirement of notice from the Lender, with respect to the period of duration of each LIBOR Loan on the last day thereof. (c) Overdue principal of and, to the extent permitted by law, overdue interest on the Loans shall bear interest, payable on demand of the Lender, for each day until paid at a rate per annum equal to the Base Rate plus 2% (two percent). 2.6 Commitment Fee. During the Term of this Agreement, the Borrower -------------- shall pay to the Lender a commitment fee computed at a rate per annum equal to 0.35% on the unused amount of the Commitment. Such commitment fee shall accrue daily from the date hereof to and including the Termination Date and shall be payable quarterly in arrears and on the Termination Date. The Lender will notify the Borrower, not later than ten days after the end of each March, June, September and December, of the amount of the commitment fee payable hereunder. The Borrower agrees that it shall pay the commitment fee within five Business Days of the date on which it receives such notice. 2.7 Reduction and Cancellation of the Commitment. (a) The Borrower -------------------------------------------- shall have the right, after the first anniversary of the date of this Agreement, upon at least 120 days' prior written notice (which notice can be given up to 120 days prior to the first anniversary) to the Lender, to terminate or reduce the unused portion of the Commitment. Any such reduction of the Aggregate Commitment shall be in the minimum amount of $500,000 or a greater multiple thereof (except that any such reduction may be in the full amount of the unused portion of the Commitment). The accrued commitment fee with respect to the terminated or reduced portion of the Aggregate Commitment shall be payable on the effective date of such reduction or termination. (b) The Commitment shall terminate on the Termination Date, and any Loans then outstanding (together with accrued interest thereon) shall be repaid in full on such date. -13- 2.8 General Provisions as to Payments. Subject to the provisions of --------------------------------- Section 2.3(b), the Borrower shall make each payment of principal of, and interest on, the Loans and the Borrower shall make each payment of commitment fees hereunder on the date when due in funds immediately available in the account that the Lender shall designate. Whenever any payment of principal of, or interest on, the Loans or of commitment fees shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest shall be payable for such extended time at a rate per annum equal to the Base Rate. 2.9 Computation of Interest and Fees. Interest on Base Rate Loans -------------------------------- and the commitment fee shall be computed for each day on the basis of a year of 365 or 366 days, as the case may be. Interest on each LIBOR Loan shall be computed for the applicable period of duration on the basis of a year of 360 days and the actual number of days elapsed. 2.10 No Deduction. All amounts payable by the Borrower under this ------------ Agreement are payable without deduction or set-off unless specifically agreed to by the Lender in writing. 2.11 Use of Proceeds. The proceeds of Loans will be employed by the --------------- Borrower for general corporate purposes including, without limitation, as working capital for the Borrower and its Subsidiaries, and to acquire the assets or capital stock of other Persons, as may be authorized by the Board of Directors. SECTION 3. CONDITIONS OF LENDING. --------------------- The obligation of the Lender to make each Loan hereunder is subject to the performance by the Borrower of all its obligations under this Agreement and to the satisfaction of the following further conditions: 3.1 All Loans. In the case of each Loan hereunder, including the --------- initial Loan: (a) receipt by the Lender of a notice of borrowing from the Borrower required by Section 2.2(a) hereof, except in the case of a deemed notice of borrowing in accordance with Section 2.2(c); (b) the fact that immediately after the making of the Loan no Default or Event of Default shall have occurred and be continuing; and (c) the fact that the representations and warranties contained in this Agreement are true and correct on and as of the date of the Loan with the same force and effect as if made on and as of such date. -14- Each notice of borrowing and each borrowing by the Borrower hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Loan as to the facts specified in (b) and (c) above. If the Lender reasonably believes, acting in good faith, that the conditions set forth in (b) and (c) above cannot or would not be satisfied, the Lender will have no obligation to make the applicable Loan. 3.2 Initial Loan. In the case of the initial Loan receipt by the ------------ Lender of a certificate of a duly authorized officer of the Borrower as to the incumbency, and setting forth a specimen signature, of each person who has signed this Agreement on behalf of the Borrower and who will, until replaced by other persons duly authorized for that purpose, act as the representatives of such Borrower for the purpose of signing documents in connection with this Agreement and the transactions contemplated hereby. SECTION 4. REPRESENTATIONS AND WARRANTIES. ------------------------------ The Borrower hereby represents and warrants to the Lender that: 4.1 Corporate Existence and Power. The Borrower is a corporation ----------------------------- duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has full power and authority to carry on its business as now being conducted and to own its properties and is duly licensed or qualified and in good standing as a foreign corporation in each other jurisdiction in which failure to qualify would have a Material Adverse Effect. The Borrower is in compliance with its charter and bylaws and all other organizational or governing documents. 4.2 Corporate Authorization. The execution, delivery and performance ----------------------- by the Borrower of this Agreement are within the Borrower's corporate power and have been duly authorized by all necessary corporate action. 4.3 Binding Effect. This Agreement constitutes the valid and binding -------------- obligation of the Borrower enforceable against the Borrower in accordance with its terms. 4.4 No Contravention. The Borrower's execution and delivery of, and ---------------- performance of its obligations under, this Agreement do not, and consummation of the transactions contemplated hereby will not, result in: (a) a violation of or a conflict with any provision of the charter, bylaws or any other organizational or governing document of the Borrower; (b) a breach or default under any provision of any contract, agreement, lease, commitment, license, franchise or -15- permit to which the Borrower is a party or by which any property of the Borrower is bound; (c) a violation of any statute, rule, regulation, ordinance, order, judgment, writ, injunction, decree or award of any judicial, administrative, governmental or other authority or of any arbitrator; or (d) an imposition on the business of the Borrower or on any of its properties of any Lien. 4.5 Financial Statements. (a) (i) The Consolidated balance sheet of -------------------- CalComp Inc. and its Consolidated Subsidiaries as at December 31, 1995 and the related Consolidated statement of earnings and business equity and Consolidated statement of cash flows of CalComp Inc. and its Consolidated Subsidiaries for the fiscal year then ended, certified by Ernst & Young, LLP, certified public accountants, and (ii) the Consolidated balance sheet of Summagraphics Corporation and its Consolidated Subsidiaries as at May 31, 1995 and the related Consolidated statement of earnings and business equity and Consolidated statement of cash flow of Summagraphics Corporation and its Consolidated Subsidiaries for the fiscal year then ended, certified by KPMG Peat Marwick, LLP, certified public accountants, and (iii) the unaudited consolidated balance sheet, statement of changes in stockholders equity, statement of income and statement of cash flow for the six months ended November 30, 1995 and 1994, and (iv) any interim financial statements filed by Summagraphics Corporation with the Securities and Exchange Commission after November 30, 1995, all which are set forth in the Proxy Statement, fairly present in conformity with Generally Accepted Accounting Principles, the Consolidated financial position of CalComp Inc. and its Consolidated Subsidiaries or Summagraphics Corporation and its Consolidated Subsidiaries, as the case may be, at such dates and the Consolidated results of operations and cash flow of CalComp Inc. or Summagraphics Corporation, as the case may be, for the periods then ended. (b) The unaudited pro forma combined condensed financial statements of the Borrower and its Consolidated Subsidiaries contained in the Proxy Statement were prepared in accordance with the Securities and Exchange Commission's rules and guidelines with respect to pro forma financial statements, were properly compiled on the pro forma basis described therein from historical consolidated financial statements of each of CalComp Inc. and Summagraphics Corporation, and the assumptions used in their preparation are reasonable and the adjustments described in the notes thereto are appropriate to give effect to the transactions or circumstances described therein. 4.6 Litigation. Except as disclosed in the Proxy Statement, there is ---------- no action, suit, litigation or proceeding at law or in equity or by or before any Governmental Authority now pending against or, to the knowledge of the Borrower, threatened -16- against the Borrower or any of its Subsidiaries or any of their respective Properties an adverse decision in which could reasonably be expected to have a Material Adverse Effect. 4.7 Licenses and Authorizations. The Borrower and the Borrower's --------------------------- Subsidiaries have obtained all licenses, permits and certificates and all other approvals, orders, authorizations and consents and have made all declarations, filings and registrations which are necessary for the ownership by the Borrower and the Borrower's Subsidiaries of their respective Properties and for the conduct by the Borrower and the Borrower's Subsidiaries of their respective businesses, except for those, which, if not obtained or made, could not reasonably be expected to have a Material Adverse Effect. No approval of or filing with any Governmental Authority is or will be necessary for the valid execution, delivery or performance by the Borrower of this Agreement or for the performance by the Borrower of any of the terms or conditions hereof or thereof, except for such approvals as have been obtained. 4.8 No Default. None of the Borrower or the Borrower's Subsidiaries ---------- (i) is in breach or violation of any of the terms, covenants, conditions or provisions of any of its Obligations such as reasonably could be expected to have a Material Adverse Effect; or (ii) has done or omitted to do anything which, with the giving of notice or lapse of time, or both, would constitute a material default under any of its Obligations or reasonably could be expected to have a Material Adverse Effect. 4.9 No Event of Default. No Event of Default or other material event ------------------- which, with the giving of notice or lapse of time, or both, would constitute an Event of Default has occurred and is continuing. 4.10 Adverse Change. There have been no material adverse changes in -------------- the financial condition, results of operations or business of the Borrower and its Subsidiaries taken as a whole since December 31, 1995. 4.11 Liens. The Borrower and the Borrower's Subsidiaries have good ----- and marketable title to each of their respective Properties, free and clear of all material Liens, except for Liens, if any, now existing in the nature of those that are, or would be, permitted under Section 6.4 of this Agreement. The obligations of the Borrower under this Agreement rank at least pari passu to all ---- ----- other debt of the Borrower, except for any senior Indebtedness to which Lender has consented in writing prior to the incurrence thereof. 4.12 ERISA. ----- (a) Schedule 4.12 attached to this Agreement (as the schedule shall be modified from time to time pursuant to Section 5.7 hereof) sets forth a true and complete list of all ERISA Affiliates and of all Plans. -17- (b) No ERISA Event or Events have occurred or reasonably could be expected to occur which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4.13 Taxes. Subject to the provisions of the Tax Sharing Agreement by ----- and between Borrower and Lender of even date herewith (the "Tax Sharing Agreement"), all federal, state and other income tax returns of the Borrower and each of the Borrower's Subsidiaries required by law to be filed have been duly filed, and all federal, state and other taxes, assessments and other governmental charges or levies upon the Borrower and each of the Borrower's Subsidiaries and any of their respective Properties, income, profits and assets, which are due and payable, have been paid, except as permitted by Section 5.3. 4.14 Environmental Matters. --------------------- (a) Except as set forth in subsection (b) below: (i) the Real Properties and all operations and facilities at the Real Properties are not contaminated by, and, to the best knowledge of the Borrower, have not previously been contaminated by, any Hazardous Materials in concentrations which constitute or constituted a violation of, or could reasonably be expected to give rise to liability under, any Environmental Law; (ii) the Real Properties and all operations and facilities at the Real Properties are in material compliance with all Environmental Laws, and there is no contamination at, under or about the Real Properties in concentrations that constitute a violation of any Environmental Law which reasonably could be expected to materially interfere with the continued operation of any of the Real Properties or any operations or facilities at the Real Properties; (iii) neither the Borrower nor any of its Subsidiaries have received any notice of violation, alleged violation, noncompliance, liability or potential liability, or responsibility regarding compliance with or liability under Environmental Laws, nor, to the best knowledge of the Borrower, is any such notice being threatened; (iv) no Hazardous Materials have been generated, treated, stored or disposed of, at, on or under any of the Real Properties during the period of ownership or operation thereof by the Borrower, or, to the best knowledge of the Borrower, any property formerly owned or leased by the Borrower or any of the Borrower's Subsidiaries, in violation of, or in a manner that would reasonably be expected to give rise to liability under, any Environmental Law, nor have any Hazardous Materials been transported or disposed of from any of the Real Properties or, to the best knowledge of the -18- Borrower, any property formerly owned or leased by the Borrower or any of its Subsidiaries, to any other location in violation of, or in a manner that would reasonably be expected to give rise to liability under, any Environmental Law; (v) there are no judicial proceedings or governmental or administrative actions pending or, to the best knowledge of the Borrower, threatened under any Environmental Law to which the Borrower or any of its Subsidiaries is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law against the Borrower or any of its Subsidiaries; and (vi) there has been no Release or threat of Release of Hazardous Materials at or from any of the Real Properties or any facilities at the Real Properties, or arising from or related to operations in connection with the Real Properties, in violation of, or in amounts or in a manner that could reasonably be expected to give rise to liability under, any Environmental Law . (b) To the best knowledge of the Borrower, Schedule 4.14 sets forth the liabilities and potential liabilities of the Borrower and its Subsidiaries under Environmental Laws, the existence of which could have a material adverse effect on the financial condition or business of the Borrower and its Subsidiaries taken as a whole or the ability of the Borrower to perform its obligations under this Agreement. 4.15 Labor Matters. There are no strikes or other labor disputes, ------------- grievances, charges or complaints with respect to any employee or group of employees pending or, to the best knowledge of the Borrower, threatened against the Borrower or any of the Borrower's Subsidiaries which reasonably could be expected to have a Material Adverse Effect. 4.16 Completeness. None of the statements of the Borrower contained ------------ in this Agreement or in any certificate or written statement furnished by the Borrower to the Lender pursuant hereto when made (as limited or qualified in such documents) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements contained therein not misleading. There is no fact known to the Borrower which the Borrower has not disclosed to the Lender which reasonably could be expected to have a Material Adverse Effect. SECTION 5. AFFIRMATIVE COVENANTS. --------------------- So long as the Lender's commitment to make Loans hereunder shall be in effect or any amount payable hereunder -19- remains unpaid, unless compliance shall have been waived in writing by the Lender, the Borrower agrees that: 5.1 Financial Statements. The Borrower will: -------------------- (a) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, deliver to the Lender a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such year, and a consolidated statements of earnings, shareholders' equity and cash flows of the Borrower and its Consolidated Subsidiaries for such year, setting forth in each case in comparative form corresponding Consolidated figures from the preceding fiscal year, all as filed with the Securities and Exchange Commission and audited by an accounting firm of nationally recognized standing, together with the report of the accountants thereon, which report shall include the unqualified opinion of such accountants, prepared in accordance with Generally Accepted Accounting Principles consistently applied; (b) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, deliver to the Lender a Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such quarter and the related Consolidated statements of earnings, shareholders' equity and cash flows of the Borrower and its Consolidated Subsidiaries for such quarter and for the portion of the Borrower's fiscal year ended at the end of such quarter setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's previous fiscal year; as filed with the Securities and Exchange Commission, prepared in accordance with Generally Accepted Accounting Principles; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, deliver to the Lender, a certificate of the Borrower signed by an authorized officer of the Borrower, (i) stating that, as of the date of such financial statements, the representations and warranties set forth in Article IV of this Agreement are true, correct and complete in all material respects as though made on and as of the date, and (ii) stating whether, to the best of his or her knowledge after due inquiry, there exists on the date of such certificate any Default or Event of Default and, if any Default or Event of Default exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto, and (iii) setting forth in reasonable detail a calculation of the Fixed Charge Coverage Ratio and the Leverage Ratio as of the applicable day; (d) deliver to the Lender copies of all financial statements, reports and notices, if any, sent or distributed generally by the Borrower to its stockholders generally, promptly upon such distribution and of all proxy materials, registration statements, regular periodic reports (including interim reports -20- filed on Form 8-K) which the Borrower has filed with the Securities and Exchange Commission, as soon as the same are available; (e) promptly upon the chief financial officer, treasurer, or chief accounting officer of the Borrower, or any other officer of similar responsibility, becoming aware of the occurrence of any Default or Event of Default, a certificate of the Borrower, signed by chief financial officer or the chief accounting officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; and (f) promptly upon the reasonable request of the Lender, deliver to the Lender, any other information reasonably requested by the Lender. 5.2 Notices, Litigation, etc. The Borrower will promptly give ------------------------ written notice to the Lender of the following: (a) Any litigation or other proceeding before any judicial, administrative or arbitral body to which the Borrower or any of its Subsidiaries is a party or any dispute which may exist between the Borrower or any of its Subsidiaries and any Governmental Authority, in each case which reasonably could be expected to have a Material Adverse Effect; (b) Any work stoppage which reasonably could be expected to have a Material Adverse Effect; and (c) The occurrence of any ERISA Event or Events (other than those of which the Borrower is given notice by the Lender in accordance with Section 4(h) of the Intercompany Services Agreement, of even date herewith between the Lender and the Borrower) which, individually or in the aggregate, reasonably could be expected to have a Material Adverse Effect, together with a statement as to the reasons therefore and the action, if any, which the Borrower proposes to take with respect thereto. 5.3 Maintenance of Existence, etc. The Borrower will, and will cause ----------------------------- its Subsidiaries to: (a) do or cause to be done all things necessary to preserve and keep in full force and effect its or their existence and all rights, privileges and franchises currently existing other than those rights, privileges and franchises that the failure to have or maintain could not reasonably be expected to have a Material Adverse Effect; (b) comply with all material requirements of all applicable laws, decrees, regulations and similar enactments and with all applicable judgments, injunctions and other orders and awards of judicial, administrative, governmental and other authorities and arbitrators the violation of which, individually or in the aggregate, reasonably could be expected to have a Material -21- Adverse Effect or unless they are being contested in good faith and, if appropriate, by legal proceedings; (c) maintain and preserve all of its or their Properties in good working order and condition and maintain, preserve and replace all plant and equipment necessary in the proper conduct of its or their business; and (d) with respect to the business of the Borrower and its Subsidiaries, taken as a whole, remain in, and continue to operate substantially in, the business being conducted by the Borrower and its Subsidiaries on the date of this Agreement. 5.4 Obligations and Taxes. The Borrower shall, and shall cause its --------------------- Subsidiaries to, (i) subject to the provisions of the Tax Sharing Agreement of even date herewith between the Lender and the Borrower, pay or discharge or cause to be paid and discharged promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits before the same shall become in default, and (ii) pay all of their material liabilities and obligations when due and prior to the date on which penalties attach thereto, except, in each case with respect to clauses (i) and (ii), such as are being contested in good faith or which, if taken in the aggregate, reasonably could not be expected to have a Material Adverse Effect. 5.5 Books and Records. The Borrower shall, and shall cause its ----------------- Subsidiaries to, (i) keep adequate records and books of account in which complete entries will be made in accordance with Generally Accepted Accounting Principles so that Consolidated financial statements can be prepared in accordance with Generally Accepted Accounting Principles and (ii) permit employees or agents of the Lender, at its risk and expense, during working hours, with reasonable advance notice, to inspect their respective properties, and to examine the books, accounts and records relating to their financial condition. 5.6 Insurance. The Borrower shall, and shall cause its Subsidiaries --------- to, (i) maintain and keep in full force and effect general business insurance in such amounts and against such risks as is customary for businesses similarly situated, with responsible insurance companies or, to the customary extent, self-insurance, including reasonable protection against loss of use and occupancy, and, (ii) furnish the Lender upon request with full information as to the insurance carried. 5.7 ERISA. ----- (a) The Borrower shall promptly notify the Lender in writing of (i) any changes in the information reported on Schedule 4.12 by delivering to the Lender an amended schedule making specific reference to Section 4.12 and (ii) the occurrence of any ERISA Event not previously reported to the Lender. -22- (b) The Borrower shall, and shall cause its ERISA Affiliates to, make payment of contributions to the Plans required of them to meet the minimum funding standards set forth in ERISA and the Code within the time permitted by law, including any extensions, unless such payment is waived by an appropriate regulatory authority or is being contested in good faith by appropriate proceedings. 5.8 Environmental Compliance. The Borrower shall, and shall cause ------------------------ its Subsidiaries to: (a) use and operate all of its facilities and properties in material compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, (b) handle all Hazardous Materials in compliance with all applicable Environmental Laws, and (c) promptly address or respond and defend against any actions and proceedings relating to compliance with Environmental Laws. SECTION 6. NEGATIVE COVENANTS. ------------------ Until the later of the cancellation in full of its Commitment and the payment in full of all sums due from the Borrower pursuant to this Agreement, the Borrower covenants and agrees as follows: 6.1 Maximum Leverage Ratio. The Borrower shall not permit the ratio ---------------------- (the "Leverage Ratio") (stated as a percentage) of (a) Funded Debt to (b) the sum of Tangible Net Worth plus its Funded Debt to exceed ---- at any time 32%. 6.2 Minimum Fixed Charge Coverage Ratio. On and after the Closing ----------------------------------- Date, the Borrower shall not permit, for any period, the ratio (the "Fixed Charge Coverage Ratio") of (a) the sum of (i) Earnings from Continuing Operations for such period, plus ---- (ii) Interest Expense for such period, plus ---- (iii) Depreciation and Amortization Expense for such period, plus ---- -23- (iv) Interest Portion of Operating Lease Rental Expense for such period, to (b) Fixed Charges for such period, to be less than (w) 3.5 to 1 for the first full fiscal quarter following the date hereof, (x) 3.5 to 1 for the first two full fiscal quarters after the date hereof, (y) 3.5 to 1 for the first three full fiscal quarters following the date hereof, and (z) commencing with the fourth full fiscal quarter following the date hereof and on each March 31, June 30, September 30 and December 31 thereafter, 4.0 to 1 for the preceding four quarters, all of the foregoing measured at the end of each fiscal quarter and determined on a Consolidated basis. 6.3 Minimum Quick Ratio. The ratio (the "Quick Ratio") of ------------------- (a) the sum of (i) cash, plus ---- (ii) cash equivalent investments, plus ---- (iii) trade accounts receivable, to (b) total current liabilities (excluding any Borrowings under the Agreement which may be so classified) shall be at least .75 to 1. 6.4 Prohibition of Liens. The Borrower shall not, nor shall Borrower -------------------- permit any of its Subsidiaries to create, assume or suffer to exist any Lien securing Debt on any Property now owned or hereafter acquired by it, except for: (a) any Lien existing on any asset of any corporation at the time such corporation becomes a Subsidiary and not created in contemplation of such event; (b) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 - -------- days after the acquisition thereof; (c) any Lien on any asset of any corporation existing at the time such corporation is merged into or consolidated with the Borrower or a Subsidiary and not created in contemplation of such event; (d) any Lien existing on any asset prior to the acquisition thereof by the Borrower or a Subsidiary and not created in contemplation of such acquisition; -24- (e) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section 6.4, provided that such Debt is not increased and is not -------- secured by any additional assets; and (f) any Lien arising pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings so long as the execution or other enforcement thereof is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings. 6.5 Prohibition of Sale-Leaseback Transactions. The Borrower shall ------------------------------------------ not, nor shall the Borrower permit any of its Subsidiaries to, after the date of this Agreement, enter into a Sale-Leaseback Transaction unless: (a) the lease has a term of three years or less, with no provision giving the lessee the absolute or conditional option to extend the term of the lease or to renew the lease; or (b) the Borrower or its Subsidiary under Section 6.4(b) could create a Lien on the applicable Property to secure Debt at least equal in amount to the Attributable Debt for the lease. 6.6 Mergers, Consolidations, etc. The Borrower shall not enter into ---------------------------- any consolidation, merger or other combination with any other Person or sell, lease or otherwise transfer (other than sales of product in the normal course of Borrower's business) all or any substantial part of its assets to any other Person. 6.7 ERISA. Without the prior written consent of the Lender, which ----- consent will not be unreasonably withheld, the Borrower shall not (a) contribute to, maintain or adopt any Plan not listed on Schedule 4.12 on the date of this Agreement (the "Original Schedule"), or (b) become subject to any obligation to contribute to any Plan not listed on the Original Schedule, or (c) materially increase its obligations under any Plan. SECTION 7. EVENTS OF DEFAULT. ----------------- If any one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) the Borrower shall fail to pay any interest on the Loans or any commitment fee, in each case, within 30 days of the date when due or the Borrower shall fail to pay any principal of the Loans when due; or (b) any representation and warranty made by the Borrower herein or in any document or instrument delivered pursuant hereto -25- shall prove to be incorrect or misleading in any material respect on the date when made or deemed to be made; or (c) the Borrower shall fail to perform or observe any of the covenants contained in Sections 5.2, 6.1, 6.2, 6.3, 6.4 and 6.5 of this Agreement; or (d) the Borrower shall fail to pay or otherwise default on any term, covenant or agreement contained herein (other than those specified in clauses (a), (b) or (c) above) for 30 days after written notice thereof has been given to such Borrower by the Lender; or (e) the Borrower or any of its Subsidiaries shall (i) fail to pay any indebtedness (other than under this Agreement) with an aggregate principal amount when due or to pay interest thereon and, with respect to interest, such failure shall continue for more than any applicable grace period, or (ii) fail to observe or perform any other term, covenant or agreement contained in any agreement, instrument, agreements, or instruments (other than this Agreement) by which it is bound evidencing, securing or relating to indebtedness in an aggregate principal amount if the effect thereof is to permit (or, with the giving of notice or lapse of time or both, would permit) the holder or holders thereof or of any obligations issued thereunder or a trustee or trustees acting on behalf of such holder or holders to cause acceleration of the maturity thereof or of any such obligations; or (f) the Borrower or any of its Subsidiaries shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or (g) an involuntary case or other proceeding shall be commenced against the Borrower or any of its Subsidiaries seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any of its Subsidiaries under the federal bankruptcy laws as now or hereafter in effect; -26- (h) one or more judgments against the Borrower or any of its Subsidiaries, or attachments against the Property of either, the operation or result of which reasonably could be expected to have a Material Adverse Effect, remain unpaid, unstayed on appeal, not being appealed in good faith, undischarged, unbonded or undismissed for a period of 60 days; or (i) any ERISA Event or Events shall occur and the aggregate amount of the liability of the Borrower and its ERISA Affiliates resulting therefrom reasonably could be expected to have a Material Adverse Effect; or (j) The Borrower or any of its material Subsidiaries shall voluntarily suspend for more than 30 days the transaction of all or substantially all of its business (a shutdown due to strikes, labor disputes, government action, or action arising from acts of God are not to be deemed voluntary and intra-company mergers and consolidations shall not be deemed a voluntary suspension of all or substantially all of the business of any material Subsidiary provided the Borrower (directly or through its other Subsidiaries) continues to carry on such business); or (k) an Event of Default of the Borrower shall have occurred under the Cash Management Facility; then, and in every such event, (1) in the case of any of the Events of Default specified in paragraphs (f) or (g) above, the Commitment shall thereupon automatically be terminated and the principal of and accrued interest on the Loans shall automatically become due and payable without presentment, demand, protest or other notice or formality of any kind, all of which are hereby expressly waived and (2) in the case of any other Event of Default specified above, the Lender may, by notice in writing to the Borrower, terminate the Commitment and declare the Loans and all other sums payable under this Agreement to be, and the same shall thereupon forthwith become, due and payable. SECTION 8. MISCELLANEOUS. ------------- 8.1 Notices. Unless otherwise specified herein, all notices, ------- requests, demands or other communications to or from the parties hereto shall be made by personal delivery, mail or telecopy and shall be effective upon receipt by such party. Any such notice, request, demand or communication shall be delivered or addressed as follows: -27- (i) if to the Borrower, to it at: CalComp Technology, Inc. 2411 W. LaPalma Avenue Anaheim, California 92801 Attention: Treasurer Telephone: 512-835-____ Telecopy: 512-835-6730 (ii) if to the Lender, to it at: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Treasurer Telephone: 301-897-6027 Telecopy: 301-897-6651 with a copy to: Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: General Counsel Telephone: (301) 897-6927 or at such other address or telex number or telecopy number as any party hereto may designate by written notice to the other party hereto. 8.2 Amendments and Waivers; Cumulative Remedies. ------------------------------------------- (a) None of the terms of this Agreement may be waived, altered or amended except by an instrument in writing duly executed by the Borrower and the Lender; and (b) No failure or delay on the part of the Lender in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided and contemplated by this Agreement are cumulative and not exclusive of any rights or remedies provided by law. 8.3 Successors and Assigns. This Agreement shall be binding upon and ---------------------- shall inure to the benefit of the Borrower and the Lender and their respective successors and assigns, provided that the Borrower may not assign its rights and obligations hereunder without the prior written consent of the Lender. The Lender shall notify the Borrower in writing promptly upon any assignment by the Lender of its rights and obligations hereunder, including any such assignment to any Subsidiary of Lender. -28- 8.4 Expenses and Withholding. ------------------------ (a) The Borrower shall pay all out-of-pocket expenses of the Lender in connection with the preparation and administration of this Agreement and, if there is an Event of Default, all out-of-pocket expenses incurred by the Lender (including reasonable fees and disbursements of counsel and reasonable time charges of lawyers who may be employees of the Lender) in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom. (b) All payments to be made by or on behalf of the Borrower under or in connection with this Agreement are to be made without deduction or withholding for or on account of any Tax. If any Tax is deducted or withheld from any payment, the Borrower shall promptly remit to the Lender the equivalent of the amount so deducted or withheld together with relevant receipts, if available, addressed to the Lender. If the Borrower is prevented by operation of law or otherwise from paying, causing to be paid or remitting such Tax, the interest payable under this Agreement shall be increased to such rates as are necessary to yield and remit to the Lender the principal sum advanced together with interest at the rates specified in this Agreement after provision for payment of such Tax. The Borrower shall from time to time at the request of the Lender execute and deliver any and all further instruments necessary or advisable to give full force and effect to such increase in the rates of interest as are necessary to yield to the Lender interest at the specified rates. The Borrower shall also indemnify the Lender in respect of any claim or loss which it may suffer as a result of the delay or failure of the Borrower to make any such payment including penalties relating thereto or interest thereon. 8.5 Counterparts. This Agreement may be signed in any number of ------------ counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. 8.6 Headings; Table of Contents. The section and subsection headings --------------------------- used herein and the Table of Contents have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Agreement. 8.7 Governing Law; Arbitration. -------------------------- (a) This Agreement shall be construed in accordance with and governed by the laws of the State of Maryland, without reference to the conflict of law provisions of such laws. (b) The Borrower (i) hereby irrevocably submits to the jurisdiction of the courts of the State of Maryland over any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and (ii) hereby agrees with the Lender that the courts of the State of Maryland will have exclusive jurisdiction over any such suits, actions or -29- proceedings. Final judgment in any such suit, action or proceeding in any such court shall be conclusive and binding upon the Borrower and may be enforced in any court in which the Borrower is subject to jurisdiction by suit upon such judgment provided that service of process is effected as permitted by applicable law. 8.8 Right of Set-Off. In addition to any rights and remedies of ---------------- the Lender provided by law, Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder and remaining unpaid (whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against any and all Investments (as defined in the Cash Management Agreement), and any other credits, Indebtedness or claims at any time held by or owing by the Lender to or for the credit or the account of the Borrower. The Lender agrees promptly to notify the Borrower after any such set-off and application made by the Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. LOCKHEED MARTIN CORPORATION By:/s/ WALTER E. SKOWRONSKI ------------------------ Walter E. Skowronski Treasurer CALCOMP TECHNOLOGY, INC. By:/s/ DAVID G. OSOWSKI -------------------- David G. Osowski Senior Vice President, Controller and Treasurer -30- SCHEDULE 4.12 ------------- ERISA Affiliates ---------------- Plans ----- S-1 EX-10.6 7 CORPORATE AGREEMENT DATED JULY 23, 1996 EXHIBIT 10.6 EXECUTION COPY ================================================================================ CORPORATE AGREEMENT Dated as of July 23, 1996 between CALCOMP TECHNOLOGY, INC., a Delaware corporation and LOCKHEED MARTIN CORPORATION, a Maryland corporation =============================================================================== CORPORATE AGREEMENT ------------------- THIS CORPORATE AGREEMENT ("Agreement") is entered into as of July 23, 1996, by and between LOCKHEED MARTIN CORPORATION, a Maryland corporation ("Lockheed Martin"), and CALCOMP TECHNOLOGY, INC., a Delaware corporation ("CalComp Technology"). WHEREAS, pursuant to Section 5.2(f) and 6.2 of the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp Inc. for Stock of Summagraphics Corporation dated as of the 19th day of March, 1996, as amended (the "Reorganization Agreement"), by and among Summagraphics Corporation ("Summagraphics"), Lockheed Martin and CalComp Inc., a California corporation, Summagraphics and Lockheed Martin agreed to execute and deliver this Agreement at the closing (the "Closing") of the transactions contemplated by the Reorganization Agreement; WHEREAS, pursuant to the Reorganization Agreement, Summagraphics agreed to issue and deliver to Lockheed Martin shares representing 89.7% of Summagraphics' outstanding Common Stock, par value $.01 per share, on a fully diluted basis, in exchange for the transfer and delivery of all the issued and outstanding capital stock of CalComp to Summagraphics, all pursuant to and in accordance with the terms of the Reorganization Agreement; WHEREAS, the parties desire to enter into this Agreement to set forth their agreement regarding (i) the agreement of CalComp Technology to cause to be nominated for election to its board of directors individuals designated by Lockheed Martin (ii) the agreement of the parties that at least two of the members of the board of directors of CalComp Technology be independent directors, and (iii) certain representations, warranties, covenants and agreements applicable to CalComp Technology so long as it is a Subsidiary of Lockheed Martin; and WHEREAS, simultaneously with the execution and delivery of this Agreement, the Closing has occurred. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Summagraphics and Lockheed Martin agree as follows: ARTICLE I DEFINITIONS 1.1. Definitions. As used in this Agreement, the following terms ----------- will have the following meanings, applicable both to the singular and the plural forms of the terms described: "Agreement" has the meaning ascribed thereto in the preamble hereto, as such agreement may be amended and supplemented from time to time in accordance with its terms. "Applicable Stock" means at any time the total shares of Common Stock of CalComp Technology owned by the Lockheed Martin Entities that (i) was owned on the date hereof, plus (ii) shares of Common Stock of CalComp Technology ---- acquired by the Lockheed Martin Entities following the Closing, if any, plus ---- (iii) shares of Common Stock that were issued to Lockheed Martin Entities in respect of shares described in either clause (i) or clause (ii) in a stock split, stock dividend or similar transaction. "ERISA" means the Employee Retirement Income Security Act of 1974, as in effect from time to time. "Lockheed Martin" has the meaning ascribed thereto in the preamble hereto. "Lockheed Martin Entities" means Lockheed Martin and its Subsidiaries (other than Subsidiaries that constitute CalComp Technology Entities) and "Lockheed Martin Entity" shall mean any of the Lockheed Martin Entities. "Ownership Percentage" means, at any time, the fraction, expressed as a percentage and rounded to the next highest thousandth of a percent, whose numerator is the number of shares of Applicable Stock and whose denominator is the number of outstanding shares of Common Stock of CalComp Technology. "Person" means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, government (and any department or agency thereof) or other entity. "Plan" has the meaning ascribed thereto in Section 3.2(b). "Reorganization Agreement" has the meaning ascribed thereto in the preamble hereto. "Subsidiary" means, as to any Person, any corporation, association, partnership, joint venture, limited liability company or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled directly or indirectly by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof. Subsidiary, when used with respect to Lockheed Martin or CalComp Technology, shall also include any other entity affiliated with Lockheed Martin or CalComp Technology, as the case may be, that Lockheed Martin and CalComp Technology may hereafter agree in writing shall be treated as a "Subsidiary" for the purposes of this Agreement. -2- "CalComp Technology" has the meaning ascribed thereto in the preamble hereto. "CalComp Technology Entities" means CalComp Technology and its Subsidiaries (including, without limitation, CalComp and its Subsidiaries). 1.2. Internal References. Unless the context indicates otherwise, ------------------- references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement and references to the parties shall mean the parties to this Agreement. ARTICLE II BOARD OF DIRECTORS 2.1. Lockheed Martin Directors. CalComp Technology covenants and ------------------------- agrees, for so long as the Ownership Percentage is equal to or greater than 50.000 percent, to propose, at each election of directors, a slate of directors, or in the cases of vacancies, individual directors, for election so that at all times during the term of this Agreement, at least 66 percent of the board of directors of CalComp Technology is comprised of persons designated by Lockheed Martin. 2.2. Independent Directors. CalComp Technology and Lockheed Martin --------------------- shall each use its good faith efforts to cause at least two individual directors to be independent directors with respect to both CalComp Technology and Lockheed Martin within the meaning of the rules of the New York Stock Exchange regarding who may serve on the audit committee of a company listed on such exchange (as such rules are in effect as of the date of this Agreement). ARTICLE III CERTAIN COVENANTS AND AGREEMENTS 3.1. No Violations. (a) For so long as the Ownership Percentage is ------------- equal to or greater than 50.000 percent, CalComp Technology covenants and agrees that it will not take any action or enter into any commitment or agreement which may reasonably be anticipated to result, with or without notice and with or without lapse of time, or otherwise, in a contravention or event of default by any Lockheed Martin Entity of (i) any provision of applicable law or regulation, including but not limited to provisions pertaining to ERISA, (ii) any provision of Lockheed Martin's certificate of incorporation or bylaws, (iii) any credit agreement or other material instrument binding upon any Lockheed Martin Entity, or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over any Lockheed Martin Entity. -3- (b) CalComp Technology and Lockheed Martin each agrees to provide to the other any information and documentation requested by the other for the purpose of evaluating and ensuring compliance with Section 3.1(a) hereof. Lockheed Martin agrees to use its reasonable efforts to exclude CalComp Technology in the future from the express coverage of the restrictive provisions referenced in Section 3.1(a). (c) Notwithstanding the foregoing Sections 3.1(a) and 3.1(b) nothing in this Agreement is intended to limit or restrict in any way the ability of Lockheed Martin to control or limit any action or proposed action of CalComp Technology, including, but not limited to, the incurrence by CalComp Technology of indebtedness, based upon Lockheed Martin's internal policies or other factors. 3.2. ERISA Covenants. (a) For so long as the Ownership Percentage is --------------- equal to or greater than 50.000 percent, CalComp Technology covenants and agrees that it will not, and it will not permit any CalComp Technology Entities to, without the prior written consent of Lockheed Martin, take any action or enter into any commitment or agreement which may reasonably be anticipated to result in, with or without notice and with or without lapse of time, or otherwise, (i) any material increase in liabilities required to be included in the consolidated financial statements of CalComp Technology and its Subsidiaries under the provisions of the Statement of Financial Accounting Standards No. 87 promulgated by the Financial Accounting Standards Board, or (ii) any material increase in liabilities required to be included in the consolidated financial statements of CalComp Technology and its Subsidiaries under the provisions of the Statement of Financial Accounting Standards No. 106 promulgated by the Financial Accounting Standards Board. (b) For so long as the Ownership Percentage is equal to or greater than 50.000 percent, CalComp Technology covenants and agrees that it will provide to Lockheed Martin, within 15 days after each fiscal quarter, a list and description of each employee benefit plan within the meaning of ERISA Section 3(3), excluding plans sponsored by Lockheed Martin Entities that are not CalComp Technology Entities (each, a "Plan") which was adopted, contributed to or maintained by CalComp Technology or any CalComp Technology Entities during the fiscal quarter immediately preceding the date of such list and shall separately identify each Plan for which CalComp Technology has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, (ii) failed to make any contribution or payment or made any amendment which has resulted or could result in the imposition of a material lien or the posting of a material bond or other material security under ERISA or the Internal Revenue Code or (iii) incurred any material liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. (c) For so long as the Ownership Percentage is equal to or greater than 50.000 percent, CalComp Technology covenants and -4- agrees that it will not, without the prior written consent of Lockheed Martin, materially increase its obligations under any Plan contributed to, maintained or adopted prior to or following the date hereof or adopt any new Plan which would materially increase CalComp Technology's benefits obligations. ARTICLE IV MISCELLANEOUS 4.1. Limitation of Liability. Neither Lockheed Martin nor CalComp ----------------------- Technology shall be liable to the other for any special, indirect, incidental or consequential damages of the other arising in connection with this Agreement. 4.2. Arbitration. (a) Any controversy or claim arising out of or ----------- relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the Commercial Rules of the American Arbitration Association ("AAA") by a panel of three neutral arbitrators (the "Panel") in Chicago, Illinois, or any other location agreed to by the parties, and judgment upon the award of the arbitrators may be entered in any court having jurisdiction. (b) One of the arbitrators shall be a member of the bar of any state, actively engaged in the practice of law, or a retired member of the state or federal judiciary. The other two arbitrators shall have such qualifications, as the parties may agree, as necessitated by the nature of the dispute. If unable to agree on the qualifications of the remaining arbitrators, the makeup of the panel shall be determined by the AAA. (c) The Panel shall have the authority to order pre-hearing exchanges of information, including and without limitation, production of requested documents, exchange of summaries of testimony or prospective witnesses, and depositions as may be necessary. (d) Each party shall be responsible for its own costs incurred in any arbitration and the Panel shall not have the authority to award such costs in its decision. The Panel shall have the authority to assess the administrative fees and expenses of the AAA and the compensation and expenses of the arbitrators. (e) The Panel shall have the authority to order specific performance, but shall have no authority to award punitive damages. The Panel's award shall be based on and accompanied by written findings of fact. 4.3. Amendments. This Agreement may not be amended or terminated ---------- orally, but only by a writing duly executed by or on behalf of the parties hereto. Any such amendment shall be validly and sufficiently authorized for purposes of this Agreement if it is signed on behalf of Lockheed Martin and CalComp Technology by any -5- of their respective presidents or vice presidents, who is not also an officer of the other party. 4.4. Term. This Agreement shall remain in effect until such time as ---- the Percentage Ownership is less than 50.000 percent. 4.5. Severability. If any provision of this Agreement or the ------------ application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction or duly authorized arbitration tribunal to be invalid, illegal or unenforceable to any extent, the remainder of this Agreement or such provision of the application of such provision to such party or circumstances, other than those to which it is so determined to be invalid, illegal or unenforceable, shall remain in full force and effect to the fullest extent permitted by law and shall not be affected thereby, unless such a construction would be unreasonable. 4.6. Notices. All notices and other communications required or ------- permitted hereunder shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in person, (b) by registered or certified mail, postage prepaid, return receipt requested, or (c) by facsimile or other generally accepted means of electronic transmission (provided that a copy of any notice delivered pursuant to this clause (c) shall also be sent pursuant to clause (b), addressed as follows: (a) If to CalComp Technology, to: CalComp Technology, Inc. 2411 W. LaPalma Avenue Anaheim, California 92801 Attention: Gary R. Long, President Telecopy No.: (714) 821-2074 (b) If to Lockheed Martin, to: Lockheed Martin Corporation 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: Stephen M. Piper, Esquire Assistant General Counsel Telecopy No.: (301) 897-6333 with a copy to: Lockheed Martin Information & Technology Services 6801 Rockledge Drive Bethesda, Maryland 20817 Attention: General Counsel Telecopy No.: (301) 897-6889 or to such other addresses or telecopy numbers as may be specified by like notice to the other parties. -6- 4.7. Further Assurances. Lockheed Martin and CalComp Technology ------------------ shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments and take such other action as may be necessary or advisable to carry out their obligations under this Agreement and under any exhibit, document or other instrument delivered pursuant hereto. 4.8. Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement. 4.9. Governing Law. This Agreement and the transactions contemplated ------------- hereby shall be construed in accordance with, and governed by, the laws of the State of Delaware. 4.10. Entire Agreement. This Agreement constitutes the entire ---------------- understanding of the parties hereto with respect to the subject matter hereof. 4.11. Successors. This Agreement shall be binding upon, and shall ---------- inure to the benefit of, the parties hereto and their respective successors and assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights or remedies. -7- IN WITNESS WHEREOF, the parties hereto have executed this Agreement, under seal and with the intent that this Agreement shall constitute a sealed instrument, the day and year first above written. LOCKHEED MARTIN CORPORATION [CORPORATE SEAL] By:/s/ PETER B. TEETS ------------------ Peter B. Teets Vice President and President and Chief Operating Officer, Information & Technology Services Sector ATTEST: ______________________________ Secretary CALCOMP TECHNOLOGY, INC. [CORPORATE SEAL] By:/s/ MICHAEL S. BENNETT ---------------------- Michael S. Bennett President and Chief Executive Officer ATTEST: ______________________________ Secretary -8- EX-10.7 8 1996 STOCK OPTION PLAN FOR KEY EMPLOYEES EXHIBIT 10.7 CALCOMP INC. 1996 STOCK OPTION PLAN FOR KEY EMPLOYEES 1. Purpose The purpose of the Plan is to attract and retain the services of key employees in positions which contribute materially to the successful operation of the business of the Corporation and to grant such employees an opportunity to acquire a proprietary interest in the business enterprise. It is intended that this purpose will be effected through the granting of stock options (including qualified incentive stock options issued pursuant to Section 13) and stock appreciation rights, as provided herein. 2. Definitions (a) "Board of Directors" means the Board of Directors of CalComp Inc. (b) "Committee" means the Stock Option Committee. (c) "Corporation" means CalComp Inc. (formerly Summagraphics Corporation) and its subsidiaries. (d) "Early retirement" means retirement before Normal retirement but on or after attaining age 55 and completion of 10 years of service. (e) "Employee" means officers and other key employees of the Corporation, but excludes directors who are not also officers or employees of the Corporation. (f) "Grant" means the award of a stock option or a stock appreciation right. (g) "Grantee" means an employee to whom an option or right is granted. (h) "Grant value of the right" means the fair market value of a share of stock on the date a right is granted as that value may be adjusted pursuant to Section 8 of the Plan. (i) "Normal retirement" means retirement on or after the later of age 65 or the completion of 5 years of service. (j) "Option" means an option to purchase shares of CalComp Common Stock. (k) "Right" means a stock appreciation right. (l) "Subsidiary" means a corporation of which CalComp Inc. owns, directly or indirectly, stock having at least 50% of the power to vote, under normal circumstances, in the election of directors. (m) "Vest" means the option or right becomes exercisable. (n) "Year of service" means the completion of 1,000 hours of service with the Corporation or any affiliate of the Corporation, including service with Summagraphics Corporation completed prior to the time that the Corporation and Summagraphics became affiliated. 3. Effective Date The Plan shall become effective upon the approval by the stockholders. 4. Eligible Employees Options and rights may be granted only to salaried employees of the Corporation. However, not more than 10% of the total number of shares available under the Plan shall be subject to option to any one employee, and no more than 10% of the rights available under the Plan may be granted to any one employee. No individual who owns stock possessing 5% or more of the combined voting power of all classes of stock of the Corporation shall be eligible for a grant of options or rights under the Plan. 5. Terms of Stock Options and Stock Appreciation Rights The terms of each option or right granted under the Plan shall be determined by the Committee, consistent with the provisions of the Plan, including the following: (a) Each grant of options or rights may be exercised in whole or in part subject to the provisions of the Plan, provided that no option or right shall be exercisable prior to one year or after ten years from the date of grant. Except as provided in Section 8, each grant shall be divided into three approximately equal installments of 100-share and 100-right increments. The first installment shall vest one year after the date of grant and each succeeding installment shall vest one year from the date the prior installment vested. To the extent that the installments are not equal in number, the larger installment or installments shall vest in the last or second and last years. After an installment is vested, the options or rights included in that installment may, except as provided in Section 9, be exercised at any time prior to the expiration of ten years from date of grant. (b) Each grantee must remain in the employ of the Corporation for at least one year from the date the option or right is granted before any part of the grant can be exercised. (c) An option or right shall not be assignable or transferable by the grantee otherwise than by will or by the laws of descent and distribution and shall be exercisable during the participant's lifetime only by the participant or, in the event of disability, by the legal guardian or representative. 6. Stock Options (a) Shares of Stock Subject to the Plan The shares that may be issued under the Plan shall not exceed 2,000,000 shares of the Common Stock, $.01 par value, of the Corporation, except as provided in Section 8 below. They may consist in whole or in part of unissued or treasury shares. Such treasury shares may be acquired to satisfy the requirements of the Plan. If for any reason shares as to which an option has been granted cease to be subject to purchase, then such shares shall again be available for option under the Plan. (b) Grant of Options (i) The purchase price of the stock subject to option shall not be less than 100% of the fair market value of the stock on the date the option is granted, except as otherwise provided in Section 8(a) below. (ii) Except as provided in Section 11, the purchase price of the stock subject to option shall be paid in cash or, with the approval of the Board of Directors or the Committee, may be paid in full or part by the tender of CalComp Inc. Common Stock owned by the optionee. Common Stock delivered in payment of the purchase price shall be valued at the fair market value and any portion of the purchase price not satisfied by the tender of Common Stock shall be paid in full in cash upon such exercise. No fractional shares shall be issued. As soon as possible following receipt of payment to the Corporation, the optionee (or other person entitled to exercise the option) shall receive a certificate or certificates for such shares subject to the provisions of Section 6(c). (iii) No person shall have the rights of a stockholder with respect to shares subject to an option until the date the option is exercised. (c) Limitations on Transfer of Shares The Corporation shall not be required upon the exercise of any option, to issue or deliver any shares of stock prior to (a) the authorization of such shares for listing on any stock exchange on which CalComp Inc.'s Common Stock may then be listed and (b) such registration or other qualification of such shares under applicable securities laws as the Corporation shall determine to be necessary or advisable. If shares issuable on the exercise of options have not been registered under the Securities Act of 1933 ("the Act") or there is not available a current Prospectus meeting the requirements of the Act with respect thereto, grantees may be required to represent at the time of each exercise of options that the shares purchased are being acquired for investment and not with a view to distribution; and the Corporation may place a legend on the stock certificate to indicate that the stock may not be sold or otherwise disposed of except in accordance with the Act, as amended and the rules and regulations promulgated thereunder. 7. Stock Appreciation Rights (a) Grant of Rights The total number of rights that may be granted under the Plan may not exceed 2,000,000, except as provided in paragraph 8 below. (b) Exercise of Rights Subject to the limitations set forth herein, upon exercise, a grantee holder shall be entitled to receive payment in cash for rights granted under this Plan equal to the excess, if any, of the fair market value of a share of CalComp Common Stock on the exercise date over the grant value of the right. The cash payment will be in consideration of services performed for the Corporation or for its benefit by the grantee. 8. Adjustment Upon Changes in Stock (a) If there shall be any change affecting the stock subject to the Plan or to any option or right granted thereunder through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or combination, or otherwise, the Board of Directors shall make appropriate proportional adjustments in the aggregate number of shares subject to the Plan, the number or exercise price of rights granted under Plan, the number of shares and the price per share subject to outstanding options, and may assume old options or substitute new options for old options, regardless of whether the price of any such options or right resulting from the proportional adjustment is less than the then fair market value of the subject shares. (b) In the event of a Change of Control, the vesting date of all outstanding options and rights shall be accelerated so as to cause all outstanding options and rights to become exercisable. For purposes of this Plan, a Change of Control shall include and be deemed to occur upon the following events: (i) A tender offer or exchange offer is consummated for the ownership of securities of the Corporation representing 25% or more of the combined voting power of the Corporation's then outstanding voting securities entitled to vote in the election of directors of the Corporation. (ii) The Corporation is merged, combined, consolidated, recapitalized or otherwise reorganized with one or more other entities that are not Subsidiaries and, as a result of the merger, combination, consolidation, recapitalization or other reorganization, less than 75% of the outstanding voting securities of the surviving or resulting corporation shall immediately after the event be owned in the aggregate by the stockholders of the Corporation (directly or indirectly), determined on the basis of record ownership as of the date of determination of holders entitled to vote on the action (or in the absence of a vote, the day immediately prior to the event). (iii) Any person (as this term is used in Sections 3(a)(9) and 13(d)(3) of the Exchange Act, but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 25% or more of the combined voting power of the Corporation's then outstanding securities entitled to vote in the election of directors of the Corporation. (iv) At any time within any period of two years after a tender offer, merger, combination, consolidation, recapitalization, or other reorganization or a contested election, or any combination of these events, the "Incumbent Directors" shall cease to constitute at least a majority of the authorized number of members of the Board. For purposes hereof, "Incumbent Directors" shall mean the persons who were members of the Board immediately before the first of these events and the persons who were elected or nominated as their successors or pursuant to increases in the size of the Board by a vote of at least three-fourths of the Board members who were then Board members (or successors or additional members so elected or nominated). (v) The stockholders of the Corporation approve a plan of liquidation and dissolution or the sale or transfer of substantially all of the Corporation's business and/or assets as an entirety to an entity that is not a Subsidiary. Notwithstanding the foregoing, the transaction contemplated in the Plan of Reorganization and Agreement for the Exchange of Stock of CalComp, Inc. for Stock of Summagraphics Corporation, dated ____, 1996, and Lockheed Martin Corporation's or its subsidiaries' resulting ownership of shares of the Corporation, shall not constitute, or be, an event which can give rise to a Change in Control. 9. Death, Disability, Termination of Employment, or Retirement (a) Death and Disability If a grantee dies or becomes disabled while employed by the Corporation or dies within three months after termination of employment, all of the grantee's outstanding options shall become vested. In case of death, options and rights may be exercised by the persons referred to in Section 5(c) only within three years from the date of death or, if shorter, the remaining exercise period. In case of disability, options and rights may be exercised during the remaining exercise period. For purposes of this section a grantee shall be considered disabled if he or she is eligible to receive disability benefits under the Lockheed Sanders Retirement Plan, or its successor, or if the grantee is not enrolled in such plan, any other Corporation sponsored plan which provides disability benefits. If the grantee is not enrolled in a Corporation sponsored plan which provides disability benefits, the grantee will be considered disabled if he or she is unable to perform the duties of any position for which he or she is qualified by reason of education, training and experience, as determined by the Committee in its sole discretion. (b) Layoff or Retirement If a grantee separates from service by reason of a layoff (i.e., termination for lack of work and the expectation that the position will not be filled for the next 12 months) or early or normal retirement, all of the grantee's options and rights that have been outstanding for 18 months or more will vest as though the grantee had remained in the employ of the Corporation. Options or rights that were outstanding for less than 18 months on the grantee's layoff or retirement date and are not then exercisable shall be forfeited. Vested options and rights may be exercised during the remaining exercise period. (c) Termination or Resignation In all other cases of a grantee's resignation or termination of employment by the Corporation, with or without cause, all unvested options and rights are forfeited. Vested options and rights must be exercised within 6 months of the grantee's separation from service. Nothing contained in the Plan or in any option or right granted hereunder shall confer upon any employee any right of continued employment by the Corporation nor limit in any way the right of the Corporation to terminate the employee's employment at any time. 10. Leave of Absence For purposes of the Plan, an employee on an approved leave of absence will be considered as still in the employ of the Corporation unless otherwise provided in an agreement between the employee and the Corporation. 11. Purchase or Exercise Price; Withholding The exercise or purchase price (if any) of the stock issuable pursuant to any option grant and any withholding obligation under applicable tax laws shall be paid in cash or, subject to the Committee's express authorization and the restrictions, conditions and procedures as the Committee may impose, any one or combination of (i) cash, (ii) the delivery of shares of stock, (iii) a reduction in the amount of stock or other amounts otherwise issuable or payable pursuant to a grant, or (iv) the delivery of a promissory note, or other obligation for the future payment in money, the terms and conditions of which shall be determined by the Committee. In the case of a payment by the means described in clause (ii) or (iii) above, the stock to be so delivered or offset shall be determined by reference to the fair market value of the stock on the date as of which the payment or offset is made. 12. Administration (a) Stock Option Committee (i) This Plan and all grants under this Plan shall be administered by the Stock Option Committee which shall be the Compensation Committee of the Board or such other committee of the Board as may be designated by the Board and constituted so as to permit this Plan to comply with the disinterested administration of Directors requirements of Rule 16b-3 under the Exchange Act and the "outside director" requirement of Code Section 162(m). The members of the Committee shall be designated by the Board of Directors. A majority of the members of the Committee (but not fewer than two) shall constitute a quorum. The vote of a majority of a quorum or the unanimous written consent of the Committee shall constitute action by the Committee. (ii) The Committee shall determine the employees who will participate in the Plan, the number of shares and rights subject to each grant, and shall have the authority to adopt rules and regulations for administering the Plan. (iii) As and to the extent authorized by the Board of Directors or the By-Laws, the Committee may exercise the powers and authority related to the Plan which are vested in the Board of Directors. The Committee may delegate to the officers or employees of the Corporation the authority to execute and deliver documents and to take such other steps deemed necessary or convenient for the efficient administration of the Plan. (b) Finality of Determinations The Board of Directors and the Committee shall have the power to interpret the Plan. All interpretations, determinations, and actions by the Board of Directors or by the Committee, to the extent authorized by the Plan, the Board of Directors or the By-Laws shall be final, conclusive, and binding upon all parties. 13. Qualified Incentive Stock Options If the Committee determines that tax laws warrant granting options that qualify as incentive stock options under Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"), some or all of the options authorized hereunder may be granted as qualified incentive stock options. The Plan may be amended by the Board of Directors to comply with Code Section 422 without further shareholder approval. 14. Amendment and Termination The Board of Directors shall have the power, in its discretion, to amend, suspend, or terminate the Plan or options and rights granted under the Plan (including the power to accelerate vesting) at any time; provided, however, that amendments to options and rights granted to persons subject to the requirements of Section 16 of the Exchange Act must be made by the Committee and may not permit the grantee to exercise the option or right within 181 days of the grant. It shall not, however, without further action by the stockholders, have the power to (a) change the class of employees eligible to receive grants under the Plan, (b) provide for options or rights exercisable more than ten years after the date granted, or (c) extend the expiration date of the Plan; nor shall it have the power (except as otherwise provided in the Plan) to (d) increase the number of shares subject to the Plan or (e) reduce the exercise price of an option or right below the fair market value of the stock at the time of the grant. No amendment, suspension or termination of the Plan or options or rights granted under the Plan shall, except with the consent of the grantee, adversely affect an option or right previously granted. 15. Duration The Plan shall remain in effect until all options and rights granted under the Plan have been exercised or terminated under the terms of the Plan, provided that options and rights under the Plan must be granted within ten years from the effective date of the Plan. EX-10.8 9 MANAGEMENT INCENTIVE COMPENSATION PLAN EXHIBIT 10.8 CalComp Technology, Inc. ------------------------ MANAGEMENT INCENTIVE COMPENSATION PLAN -------------------------------------- Approved July 23, 1996 ARTICLE I --------- PURPOSE OF THE PLAN ------------------- This plan is established to provide a further incentive to selected employees to promote the success of CalComp Technology, Inc. by providing an opportunity to receive additional compensation for above average performance measured against individual and business unit goals. The Plan is intended to achieve the following: 1. Improved cost effectiveness. 2. Stimulate employees to work individually and as teams to meet objectives and goals consistent with enhancing shareholders values. 3. Facilitate the Company's ability to retain qualified employees and to attract top executive talent. ARTICLE II ---------- STANDARD OF CONDUCT AND PERFORMANCE EXPECTATION ----------------------------------------------- 1. It is expected that the business and individual goals and objectives established for this Plan will be accomplished in accordance with the Company's policy on ethical conduct in business with the Government and all other customers. It is a prerequisite before any award can be considered that a participant will have acted in accordance with the CalComp Technology, Inc. Code of Ethics and Business Conduct and fostered an atmosphere to encourage all employees acting under the participants' supervision to perform their duties in accordance with the highest ethical standards. Ethical behavior is imperative. Thus, in achieving one's goals, their individual commitment and adherence to the Company's ethical standards will be considered paramount in determining awards under this Plan. 2. Plan participants whose individual performance is determined to be less than acceptable are not eligible to receive incentive awards. 1 ARTICLE III ----------- DEFINITIONS ----------- 1. ANNUAL SALARY -- The regular base salary of a Participant during a fiscal year of the Company, determined by multiplying by 52 the Participant's weekly base salary rate effective during the first full pay period in December preceding the year of payment, but excluding any incentive compensation, commissions, over-time payments, payments under work-week plan, indirect payments, retroactive payments not affecting the base salary or applicable to the current year, and any other payments of compensation of any kind. 2. BOARD OF DIRECTORS -- The Board of Directors of the Company. 3. COMMITTEE -- The Compensation Committee of the Board of Directors as from time to time appointed or constituted by the Board of Directors. 4. COMPANY -- CalComp Technology, Inc. and its Subsidiaries. 5. EMPLOYEE -- Any person who is employed by the Company and who is paid a salary as distinguished from an hourly wage. The term shall be deemed to include any person who was employed by the Company during all or any part of the year with respect to which an appropriation is made to the Plan by the Board of Directors but shall not include any employee who, during any part of such year, was represented by a collective bargaining agent. 6. PARTICIPANT -- Any Employee selected to participate in the Plan in accordance with its terms. 7. PLAN -- This CalComp Technology, Inc. Management Incentive Compensation Plan (MICP). ARTICLE IV ---------- ELIGIBILITY FOR PARTICIPATION ----------------------------- Those Employees who through their efforts are able to contribute significantly to the success of the Company in any given calendar year will be considered eligible for selection for participation in the Plan with respect to that year. Participants are selected each plan year based on recommendations by the Company President or Company function head. Those eligible shall include all Employees considered by the Committee to be key Employees of the Company. No member of the Committee shall be eligible for participation in the plan. 2 ARTICLE V --------- INCENTIVE COMPENSATION PAYMENTS ------------------------------- 1. CALCULATION OF PAYMENTS -- Incentive compensation payments to Participants shall be calculated in accordance with the formula and procedures set forth in Exhibit A hereto. All such payments shall be in cash. 2. INDIVIDUAL PERFORMANCE FACTORS - The Individual Performance Factors of Participants, as provided in Exhibit A shall be determined by the Company President or Company function head. The performance factors of the President of CalComp Technology, Inc. shall be determined by the Committee and the Committee shall review the Individual Performance Ratings of other Participants who are elected officers of the Company. The Committee may at the request of any member of the Committee review the performance ratings of any other Participant or groups of Participants. The Committee may make adjustments in any such performance factors as it considers appropriate. 3. COMPANY FACTORS - The company factors as provided for in Exhibit A, shall be determined by the Board of Directors and shall thereafter be reviewed with and be subject to the approval of the Committee. The Committee may make adjustments in any such factor as it considers appropriate. The Board of Directors shall, as soon as feasible in each year, review with the Committee the company objectives which may relate to the determination of such company factors. 4. RECOMMENDATION BY THE COMMITTEE. A. As early as feasible after the end of each year in respect of which incentive compensation payments are to be made, the Committee shall establish an incentive fund which shall be equal to a percentage, to be determined by the Committee at that time, to the Company's pretax earnings for the year in which incentive compensation payments are to be made. For purposes of the Plan, pretax earnings shall (i) consist of pretax earnings from operations; (ii) shall not include any earnings attributable to extraordinary items as determined by generally accepted accounting principles; and (iii) shall be computed prior to the deduction of incentive compensation payments to be paid under the Plan. 3 B. To the extent that the aggregate of all proposed payments of incentive compensation to all Participants as determined by the application of the formula set forth in Exhibit A (subject to any adjustments made by the Committee under Paragraph 2 or 3 above) exceeds the amount of the incentive fund as determined under Paragraph 4.A. above, all proposed payments of incentive compensation to Participants shall be reduced on a prorata basis. C. If the Company's pretax earnings, as defined in Paragraph 4A, are less than the aggregate of all proposed payments of incentive compensation (as determined by the application of the formula set forth in Exhibit A subject to 2 or 3 above), the Committee may, in its discretion, establish an incentive fund without regard to the pretax earnings guideline of Paragraph 4A. If the Committee does so, Paragraph 4B shall not apply and the Committee's recommendation to the Board of Directors shall both state that the pretax earnings would be exceeded and set forth the reasons the Committee believes that the proposed incentive compensation payments should nevertheless be made. D. The Committee will recommend to the Board of Directors the authorization of an appropriation to the Plan by the Company for distribution to Participants in an amount equal to the incentive fund as computed pursuant to the provisions of this Paragraph 4. 5. APPROPRIATIONS TO THE PLAN - The Board of Directors may, notwithstanding any provision of the Plan, make adjustments in proposed incentive compensation payment under the Plan, and subject to any such adjustments, the Board of Directors will appropriate to the Plan the amount as recommended by the Committee for distribution to the Participants; provided that, the Board of Directors may appropriate an amount which is less than the amount recommended by the Committee in which event all proposed payments of incentive compensation to Participants shall be reduced on a prorata basis. 6. METHOD OF PAYMENT - The amount so determined for each Participant with respect to each calendar year shall be paid to such Participant in full or on a deferred basis as determined by the Committee. Such determination as to deferred payments shall be governed by the Committee's judgement as to the time of payment best serving the interests of the Company. Deferred payments shall be made pursuant to such terms and conditions, as may be determined or provided for the by the Committee, only to Participants who continue in the employ of the Company or are retired under a retirement plan approved by the Board of Directors, or to the estates of, or beneficiaries designated by, Participants who shall have died while in such employ or after such retirement. In the event of termination of employment by a Participant for any reason other than such retirement or death, then such participant 4 or his estate or his beneficiary or beneficiaries, shall after such termination receive a distribution or distributions of any amounts deferred by the Committee, if any, the amount (not in excess of the unpaid deferred payments) and time of which shall be determined or provided for by the Committee. Participants may also elect to defer payments to the extent provided in the CalComp Technology, Inc. Deferred Management Incentive Plan. 7. RIGHTS OF PARTICIPANTS - All payments are subject to the discretion of the Board of Directors. No Participant shall have any right to require the Board of Directors to make any appropriation to the Plan for any calendar year, nor shall any Participant have any vested interest or property right in any share in any amounts which may be appropriated to the Plan. Payments made under the Plan and distributed to Participants shall not be recoverable from the Participant by the Company. ARTICLE VI ---------- ADMINISTRATION -------------- The Plan shall be administered under the direction of the Committee. The Committee shall have the right to construe the Plan, to interpret any provision thereof, to make rules and regulations relating to the Plan, and to determine any factual question arising in connection with the Plan's operation after such investigation or hearing as the Committee may deem appropriate. Any decision made by the Committee under the provisions of the Article shall be conclusive and binding on all parties concerned. The Committee may delegate to the officers or employees of the Company the authority to execute and deliver those instruments and documents, to do all acts and things, and to take all other steps deemed necessary, advisable or convenient for the effective administration of this MICP Plan in accordance with its terms and purpose. ARTICLE VII ----------- AMENDMENT OR TERMINATION OF PLAN -------------------------------- The Board of Directors shall have the right to terminate or amend this Plan at any time and to discontinue further appropriations thereto. 5 ARTICLE VIII ------------ EFFECTIVE DATE -------------- The Plan shall be effective with respect to the operations of the Company for the year 1996 and the years subsequent thereto. A participant who receives an award from this Plan is no longer eligible for any incentive compensation payment from any similar plan which may have been administered by the Lockheed Corporation, Martin Marietta Corporation, or the Lockheed Martin Corporation. 6 EXHIBIT A CALCULATION OF MANAGEMENT INCENTIVE COMPENSATION PAYMENTS A. AWARD FORMULA ------------- 1. Incentive compensation payments will be calculated by multiplying the Participant's Annual Salary by the applicable "target" of the Participant's position (as defined in B), and that result will then be multiplied by the Individual Performance Factor (as defined in C). The resulting award will be increased or decreased proportionately based on the appropriate Company Factor (as defined in D). 2. Partial awards for Participants who terminate employment during a Plan Year may be recommended for consideration based on the following at the discretion of the Company President and subsequent approval of the Board of Directors. Termination Method MICP Award Voluntary May be considered for an award if on active status January 2 of the following Plan Year with a minimum of six (6) full months as an active Plan Participant during the Plan Year. Lay Off May be pro-rated based on the conditions of the case with a minimum of six (6) full months as an active Plan Participant during the Plan Year. Retirement May be considered for a pro-rated award with a minimum of six (6) full months as an active Participant during the Plan Year and the Participant goes directly into retirement status upon termination. 3. The aggregate of all Participant's Incentive Awards determined under items C and D below will be recommended to the Committee for its consideration. 4. Any calculation of incentive awards under this exhibit shall be subject to the provisions of the Plan and in the event of any conflict between the terms or application of this Exhibit A and the Plan, the Plan shall prevail. 7 B. TARGET LEVELS ------------- Target levels are based on the level of importance and responsibility of the position in the organization as determined by the Company President or the Board of Directors, as appropriate.
Position Target -------- ------ President 45% Designated Officers 40% Other Eligible Positions 30% 20%
* Requires Board of Directors' approval C. INDIVIDUAL PERFORMANCE FACTORS ------------------------------ Individual performance factors are normally in increments of 0.10 and will have the following definitions:
Factor Definition ------ ---------- 1.30 - 1.40 Performance vastly superior to expectations and peers within the organization. 1.10 - 1.20 Consistently exceeds expected performance. 1.00 Consistently meets all requirements and expectations. 0.80 - 0.90 Performance meets most, but not all job requirements and expectations. 0.60 - 0.70 Performance meets some objectives, but overall performance below expected levels. 0.00 Performance fails to meet job requirements.
D. COMPANY PERFORMANCE FACTORS --------------------------- 1. Specific objectives will be established by the Board of Directors and the rating will depend on the assessment of the quality of performance by the Company in accomplishing the objectives based on the following schedule: 1.30 On balance, far exceeded high performance expectations. 8 1.10 - 1.20 Consistently exceeds high performance expectations. 1.00 Achieved all objectives or on balance met high performance expectations. 0.75 Met most objectives. Overall performance was good, but not as high as possible or expected. 0.50 Met few objectives, but overall performance not as good as possible or expected. 0.00 Did not achieve sufficient overall performance level. 2. Intermediate company factors as deemed appropriate by the Board of Directors for results achieved, may be assigned in increments of 0.05. 9 CALCOMP TECHNOLOGY INC. 1996 MANAGEMENT INCENTIVE COMPENSATION PLAN .Plan requires Board approval .Key features of Plan: -- Participants recommended by Company President -- Awards based upon annualized December salary and approved in first quarter of following year -- Participant's assigned MICP Target Percent based upon position . President 45% . Elected Officers 40% . Other Vice Presidents 30% . Directors 20% -- Performance Factors . Each employee receives an Individual Performance Factor (IPF) between 0.0 and 1.40 . Board will approve a Company Performance Factor (CPF) between 0.0 and 1.30 -- Award Formula . Base Salary times Target times IPF times CPF equals recommended MICP award . MICP = $100,000 x 0.40 x 1.10 x 0.90 = $39,600 MICP = Base Salary - $100,000 Target - 0.40 Individual Performance Factor - 1.10 Company Performance Factor - 0.90 . Individual award amounts may be adjusted up or down at the discretion of the Board EX-10.9 10 DEFERRED MGMT. INCENTIVE COMPENSATION PLAN EXHIBIT 10.9 CalComp Technology, Inc. ------------------------ DEFERRED MANAGEMENT INCENTIVE ----------------------------- COMPENSATION PLAN ----------------- (Adopted July 23, 1996) ARTICLE I --------- PURPOSES OF THE PLAN -------------------- The purposes of the CalComp Technology, Inc. Deferred Management Incentive Compensation Plan (the "Deferral Plan") are to provide certain key management employees of CalComp Technology, Inc. and its subsidiaries (the "Company") the opportunity to defer receipt of Incentive Compensation awards under the CalComp Technology, Inc. Management Incentive Compensation Plan (the "MICP"). Except as expressly provided hereinafter, the provisions of this Deferral Plan and the MICP shall be construed and applied independently of each other. The Deferral Plan applies solely to MICP awards and expressly does not apply to any special awards which may be made under any of the Company's other incentive plans, except and to the extent specifically provided under the terms of such other incentive plans and the relevant awards. ARTICLE II ---------- DEFINITIONS ----------- Unless the context indicates otherwise, the following words and phrases shall have the meanings hereinafter indicated: 1. ACCOUNT -- The bookkeeping account maintained by the Company for each Participant which is credited with the Participant's Deferred Compensation and earnings (or losses), and which is debited to reflect distributions and forfeitures. 2. ACCOUNT BALANCE -- The total amount credited to a Participant's Account at any point in time. 3. AWARD YEAR -- The calendar year with respect to which an Eligible Employee is awarded Incentive Compensation. 4. BENEFICIARY -- The person or persons (including a trust or trusts) validly designated by a Participant on the form -1- provided by the Company, to receive distributions of the Participant's Account Balance if any, upon the Participant's death. In the absence of a valid designation, or if the designated Beneficiary has predeceased the Participant, the Beneficiary shall be the person or persons entitled by will or the laws of descent and distribution to receive the amounts otherwise payable to the Participant under this Deferral Plan; a Participant may amend his or her Beneficiary designation at any time before the Participant's death. 5. BOARD -- The Board of Directors of CalComp Technology, Inc. 6. COMMITTEE -- The committee described in Section 1 of Article VIII. 7. COMPANY -- CalComp Technology, Inc. and its subsidiaries. 8. DEFERRAL AGREEMENT -- The written agreement executed by an Eligible Employee on the form provided by the Company under which the Eligible Employee elects to defer Incentive Compensation for an Award Year. 9. DEFERRED COMPENSATION -- The amount of Incentive Compensation credited to a Participant's Account under the Deferral Plan for an Award Year. 10. DEFERRAL PLAN -- The CalComp Technology, Inc. Deferred Management Incentive Compensation Plan, adopted by the Board on July 23, 1996. 11. ELIGIBLE EMPLOYEE -- An employee of the Company who is a participant in the MICP and who has satisfied such additional requirements for participation in this Deferral Plan as the Committee may from time to time establish. In the exercise of its authority under this provision, the Committee shall limit participation in the Plan to employees whom the Committee believes to be a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974 as amended. -2- 12. INCENTIVE COMPENSATION -- The MICP amount granted to an employee for an Award Year. 13. INTEREST -- The rate of return under which earnings will be credited to a Participant's Account based on the interest rate applicable under Cost Accounting Standard 415, Deferred Compensation. 14. MICP -- The CalComp Technology, Inc. Management Incentive Compensation Plan. 15. PARTICIPANT -- An Eligible Employee for whom Incentive Compensation has been deferred for one or more years under this Deferral Plan; the term shall include a former employee whose Deferred Compensation has not been fully distributed. ARTICLE III ----------- ELECTION OF DEFERRED AMOUNT --------------------------- 1. Timing of Deferral Elections. An Eligible Employee may elect to ---------------------------- defer Incentive Compensation for an Award Year by executing and delivering to the Company a Deferral Agreement no later than September 15 of the Award Year or such other date established by the Committee for an Award Year that is not later than September 30 of that Award Year. An employee who first qualifies as an Eligible Employee after September 15 of an Award Year may elect to defer Incentive Compensation for that Award Year by entering into a Deferral Agreement up to thirty (30) days after the date on which such employee first becomes a participant in the MICP. An Eligible Employee's Deferral Agreement shall be irrevocable when delivered to the Company. Each Deferral Agreement shall apply only to amounts deferred in that Award Year and a separate Deferral Agreement must be completed for each Award Year for which an Eligible Employee defers Incentive Compensation. -3- 2. Amount of Deferral Elections. An Eligible Employee's deferral ---------------------------- election may be stated as: (A) a dollar amount which is at least $5,000 and is an even multiple of $1,000, (B) the greater of $5,000 or a designated percentage of the Eligible Employee's Incentive Compensation (adjusted to the next highest multiple of $1,000), (C) the excess of the Eligible Employee's Incentive Compensation over a dollar amount specified by the Eligible Employee (which must be an even multiple of $1,000), or (D) all of the Eligible Employee's Incentive Compensation. An Eligible Employee's deferral election shall be effective only if the Participant is awarded at least $10,000 of Incentive Compensation for that Award Year, and, in the case of a deferral election under paragraph (c) of this Section 2, only if the resulting excess amount is at least $5,000. 3. Effect of Taxes on Deferred Compensation. The amount that ---------------------------------------- would otherwise be deferred and credited to an Eligible Employee's Account will be reduced by the amount of any tax that the Company is required to withhold with respect to the Deferred Compensation. ARTICLE IV ---------- CREDITING OF ACCOUNTS --------------------- 1. Crediting of Deferred Compensation. Incentive Compensation that ---------------------------------- has been deferred hereunder shall be credited to a Participant's Account as of the day on which the Incentive Compensation would have been paid to the Participant if no Deferral Agreement had been made. 2. Crediting of Earnings. Earnings shall be credited to a --------------------- Participant's Account beginning with the day as of which Deferred Compensation is credited to the Participant's Account. Any amount distributed from a Participant's Account shall be -4- credited with earnings through the last day of the month preceding the month in which a distribution is made. The earnings credited shall be determined as follows: The Participant's Account shall be credited with interest, compounded monthly, at a rate equivalent to the then published rate for computing the present value of future benefits at the time cost is assignable under Cost Accounting Standard 415, Deferred Compensation, as determined by the Secretary of the Treasury on a semi-annual basis pursuant to Pub. L. 92-41, 85 Stat. 97. ARTICLE V --------- PAYMENT OF BENEFITS ------------------- 1. General. The Company's liability to pay benefits to a ------- Participant or Beneficiary under this Deferral Plan shall be measured by and shall in no event exceed the Participant's Account Balance. Except as otherwise provided in this Deferral Plan, a Participant's Account Balance shall be paid to him in accordance with the Participant's elections under Sections 2 and 3 of this Article, and such elections shall be continuing and irrevocable. All benefit payments shall be made in cash and, except as otherwise provided, shall be debited against the Participant's Account Balance at the end of the month preceding the date of distribution. 2. Election for Commencement of Payment. At the time a ------------------------------------ Participant first completes a Deferral Agreement, he or she shall elect from among the following options governing the date on which the payment of benefits shall commence: (A) Payment to begin on or about the January 15th or July 15th next following the date of the Participant's termination of employment with the Company for any reason. (B) Payment to begin on or about January 15th of the year next following the year in which the Participant terminates employment with the Company for any reason. -5- (C) Payment to begin on or about the January 15th or July 15th next following the date on which the Participant has both terminated employment with the Company for any reason and attained the age designated by the Participant in the Deferral Agreement. 3. Election for Form of Payment. At the time a Participant first ---------------------------- completes a Deferral Agreement, he or she shall elect the form of payment of his or her Account Balance from among the following options: (A) A lump sum. (B) Annual payments for a period of years designated by the Participant which shall not exceed fifteen (15). The amount of each annual payment shall be determined by dividing the Participant's Account Balance at the end of the month prior to such payment by the number of years remaining in the designated installment period. The installment period may be shortened, in the sole discretion of the Committee, if the Committee at any time determines that the amount of the annual payments that would be made to the Participant during the designated installment period would be too small to justify the maintenance of the Participant's Account and the processing of payment. 4. Prospective Change of Payment Elections. At the time of --------------------------------------- entering into a Deferral Agreement for an Award Year, a Participant may modify his payment elections under Sections 2 and 3 with respect to the portion of his or her Account allocable to the amounts to be deferred for that Award Year and subsequent Award Years. If a Participant has different payment elections in effect, the Company shall maintain sub-accounts for the Participant to determine the amounts subject to each payment election; no modification of payment elections will be accepted if it would require the Company to maintain more than three (3) sub-accounts within the Participant's Account in order to make payments in accordance with the Participant's elections. 5. Acceleration upon Early Termination. Notwithstanding a ----------------------------------- Participant's payment elections under Sections -6- 2 and 3, if the Participant terminates employment with the Company other than by reason of layoff, death or disability and before the Participant is eligible to commence receiving retirement benefits under a pension plan maintained by the Company (or before the Participant has attained age 55 if the Participant does not participate in such a pension plan), the Participant's Account Balance shall be distributed to him or her in a lump sum on or about the January 15th or July 15th next following the date of the Participant's termination of employment with the Company. 6. Death Benefits. Upon the death of a Participant before a -------------- complete distribution of his or her Account Balance, the Account Balance will be paid to the Participant's Beneficiary in accordance with the payment elections applicable to the Participant. If a Participant dies while actively employed or otherwise before the payment of benefits has commenced, payments to the Beneficiary shall commence on the date payments to the Participant would have commenced, taking account of the Participant's termination of employment (by death or before) and, if applicable, by postponing commencement until after the date the Participant would have attained the commencement age specified by the Participant. Whether the Participant dies before or after the commencement of distributions, payments to the Beneficiary shall be made for the period or remaining period elected by the Participant. 7. Early Distributions in Special Circumstances. Notwithstanding -------------------------------------------- a Participant's payment elections under Sections 2 and 3 of this Article V, a Participant or Beneficiary may request an earlier distribution in the following limited circumstances: (a) Hardship Distributions. The Committee shall ---------------------- have the power and discretion at any time to approve a payment to a Participant if the Committee determines that the Participant is suffering from a serious financial emergency caused by circumstances beyond the Participant's control which would cause a hardship to the Participant unless such payment were made. Any such hardship payment will be in a lump sum and will not exceed the lesser of (i) the amount necessary to satisfy the financial emergency (taking account of the income tax liability associates with the distribution), or (ii) the Participant's Account Balance. -7- (b) Withdrawal with Forfeiture. A Participant may -------------------------- elect at any time to withdraw ninety percent (90%) of the amount credited to the Participant's Account. If such a withdrawal is made, the remaining ten percent (10%) of the Participant's Account shall be permanently forfeited, and the Participant will be prohibited from deferring any amount under the Deferral Plan for the Award Year in which the withdrawal is received (or the first Award Year in which any portion of the withdrawal is received). (c) Death or Disability. In the event that a ------------------- Participant dies or becomes permanently disabled before the Participant's entire Account Balance has been distributed, the Committee, in its sole discretion, may modify the timing of distributions from the Participant's Account, including the commencement date and number of distributions, if it concludes that such modification is necessary to relieve the financial burdens of the Participant or Beneficiary. 8. Acceleration upon Change in Control. ----------------------------------- (a) Notwithstanding any other provision of the Deferral Plan, the Account Balance of each Participant shall be distributed in a single lump sum within fifteen (15) calendar days following a "Change in Control." (b) For purposes of this Deferral Plan, a Change in Control shall include and be deemed to occur upon the following events: (1) A tender offer or exchange offer is consummated for the ownership of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding voting securities entitled to vote in the election of directors of the Company. (2) The Company is merged, combined, consolidated, recapitalized or otherwise reorganized with one or more other entities that are not Subsidiaries and, as a result of the -8- merger, combination, consolidation, recapitalization or other reorganization, less than 75% of the outstanding voting securities of the surviving or resulting corporation shall immediately after the event be owned in the aggregate by the stockholders of the Company (directly or indirectly), determined on the basis of record ownership as of the date of determination of holders entitled to vote on the action (or in the absence of a vote, the day immediately prior to the event). (3) At any time within any period of two years after a tender offer, merger, combination, consolidation, recapitalization, or other reorganization or a contested election, or any combination of these events, the "Incumbent Directors" shall cease to constitute at least a majority of the authorized number of members of the Board. For purposes hereof, "Incumbent Directors" shall mean the persons who were members of the Board immediately before the first of these events and the persons who were elected or nominated as their successors or pursuant to increases in the size of the Board by a vote of at least three-fourths of the Board members who were then Board members (or successors or additional members so elected or nominated). (4) The stockholders of the Company approve a plan of liquidation and dissolution or the sale or transfer of substantially all of the Company's business and/or assets as an entirety to an entity that is not a Subsidiary. (c) The Committee may cancel or modify this Section 8 at any time prior to a Change in Control. In the event of a Change in Control, this Section 8 shall remain in force and effect, and shall not be subject to cancellation or modification for a period of five years, and any defined term used in Section 8 shall not, for purposes of Section 8, be subject to cancellation or modification during the five year period. -9- (9) Deductibility of Payments. In the event that the payment of ------------------------- benefits in accordance with the Participant's elections under Sections 2 and 3 would prevent the Company from claiming an income tax deduction with respect to any portion of the benefits paid, the Committee shall have the right to modify the timing of distributions from the Participant's Account as necessary to maximize the Company's tax deductions. In the exercise of its discretion to adopt a modified distribution schedule, the Committee shall undertake to have distributions made at such times and in such amounts as most closely approximate the Participant's elections, consistent with the objective of maximum deductibility for the Company. The Committee shall have no authority to reduce a Participant's Account Balance or to pay aggregate benefits less than the Participant's Account Balance in the event that all or a portion thereof would not be deductible not by the Company. (10) Change of Law. Notwithstanding anything to the contrary herein, ------------- if the Committee determines in good faith, based on consultation with counsel, that the federal income tax treatment or legal status of the Plan has or may be adversely affected by a change in the Internal Revenue Code, Title I of the Employee Retirement Income Security Act of 1974, or other applicable law or by an administrative or judicial construction thereof, the Committee may direct that the Accounts of affected Participants or of all Participants be distributed as soon as practicable after such determination is made, to the extent deemed necessary or advisable by the Committee to cure or mitigate the consequences, or possible consequences of, such change in law or interpretation thereof. (11) Tax Withholding. To the extent required by law, the Company --------------- shall withhold from benefit payments hereunder, or with respect to any Incentive Compensation deferred hereunder, any Federal, state, or local income or payroll taxes required to be withheld and shall furnish the recipient and the applicable government agency or agencies with such reports, statements, or information as may be legally required. -10- ARTICLE VI ---------- EXTENT OF PARTICIPANTS' RIGHTS ------------------------------ 1. Unfunded Status of Plan. This Deferral Plan constitutes a mere ----------------------- contractual promise by the Company to make payments in the future, and each Participant's rights shall be those of a general, unsecured creditor of the Company. No Participant shall have any beneficial interest in any specific assets that the Company may hold or set aside in connection with this Deferral Plan. Notwithstanding the foregoing, to assist the Company in meeting its obligations under this Deferral Plan, the Company may set aside assets in a trust described in Revenue Procedure 92-64, 1964-2 C.B. 44, and the Company may direct that its obligations under this Deferral Plan be satisfied by payments out of such trust. The assets of any such trust will remain subject to the claims of the general creditors of the Company. It is the Company's intention that the Plan be unfunded for Federal income tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974. 2. Nonalienability of Benefits. A Participant's rights under this --------------------------- Deferral Plan shall not be assignable or transferable and any purported transfer, assignment, pledge or other encumbrance or attachment of any payments or benefits under this Deferral Plan, or any interest therein shall not be permitted or recognized, other than the designation of, or passage of payment rights to, a Beneficiary. ARTICLE VII ----------- AMENDMENT OR TERMINATION ------------------------ 1. Amendment. The Board may amend, modify, suspend or discontinue --------- this Deferral Plan at any time subject to any shareholder approval that may be required under applicable law, provided, however, that no such amendment shall have the effect of reducing a Participant's Account Balance or postponing the time when a Participant is entitled to received a distribution of his Account Balance. Further, no amendment may alter the formula for crediting interest to Participant's Accounts with respect to amounts for which deferral elections have previously been made, unless the amended formula is not less favorable to Participants than that previously in effect, or unless each affected Participant consents to such change. -11- 2. Termination. The Board reserves the right to terminate this ----------- Plan at any time and to pay all Participants their Account Balances in a lump sum immediately following such termination or at such time thereafter as the Board may determine. ARTICLE VIII ------------ ADMINISTRATION -------------- 1. The Committee. This Deferral Plan shall be administered by a ------------- Committee of Board Members who are not eligible to participate in the Plan. The members of the Committee shall be designated by the Board. A majority of the members of the Committee (but not fewer that two) shall constitute a quorum. The vote of a majority of a quorum or the unanimous written consent of the Committee shall constitute action by the Committee. The Committee shall have full authority to interpret the Plan, and interpretations of the Plan by the Committee shall be final and binding on all parties. 2. Delegation and Reliance. The Committee may delegate to the ----------------------- officers or employees of the Company the authority to execute and deliver those instruments and documents, to do all acts and things, and to take all other steps deemed necessary, advisable or convenient for the effective administration of this Deferral Plan in accordance with its terms and purpose. In making any determination or in taking or not taking any action under this Deferral Plan, the Committee may obtain and rely upon the advice of experts, including professional advisors to the Company. No member of the Committee or officer of the Company who is a Participant hereunder may participate in any decision specifically relating to his or her individual rights or benefits under the Deferral Plan. 3. Exculpation and Indemnity. Neither the Company nor any member ------------------------- of the Board or of the Committee, nor any other person participating in any determination of any question under this Deferral Plan, or in the interpretation, administration or application thereof, shall have any liability to any party for any action taken or not taken in good faith under this Deferral Plan or for the failure of the Deferral Plan or any Participant's rights under the Deferral Plan to achieve intended tax consequences, or to comply with any other law, compliance with which is not required on the part of the Company. -12- 4. Facility of Payment. If a minor, person declared incompetent, ------------------- or person incapable of handling the disposition of his or her property is entitled to receive a benefit, make an application, or make an election hereunder, the Committee may direct that such benefits be paid to, or such application or election be made by, the guardian, legal representative, or person having the care and custody of such minor, incompetent, or incapable person. Any payment made, application allowed, or election implemented in accordance with this Section shall completely discharge the Company and the Committee from all liability with respect thereto. 5. Proof of Claims. The Committee may require proof of the death, --------------- disability, incompetency, minority, or incapacity of any Participant or Beneficiary and of the right of a person to receive any benefit or make any application or election. 6. Claim Procedures. The procedures when a claim under this Plan ---------------- is denied by the Committee are as follows: (A) The Committee shall: (i) notify the claimant within a reasonable time of such denial, setting forth the specific reasons therefore; and (ii) afford the claimant a reasonable opportunity for a review of the decision. (B) The notice of such denial shall set forth, in addition to the specific reasons for the denial, the following: (i) identification of pertinent provisions of this Plan; (ii) such additional information as may be relevant to the denial of the claim; and (iii) an explanation of the claims review procedure and advice that the claimant may request an opportunity to -13- submit a statement of issues and comments. (C) Within sixty days following advice of denial of a claim, upon request made by the claimant, the Committee shall take appropriate steps to review its decision in light of any further information or comments submitted by the claimant. The Committee may hold a hearing at which the claimant may present the basis of any claim for review. (D) The Committee shall render a decision within a reasonable time (not to exceed 120 days) after the claimant's request for review and shall advise the claimant in writing of its decision, specifying the reasons and identifying the appropriate provisions of the Plan. ARTICLE IX ---------- GENERAL AND MISCELLANEOUS PROVISIONS ------------------------------------ 1. Neither this Deferral Plan nor a Participant's Deferral Agreement, either singly of collectively, shall in any way obligate the Company to continue the employment of a Participant with the Company, nor does either this Deferral Plan or a Deferral Agreement limit the right of the Company at any time and for any reason to terminate the Participant's employment. In no event shall this Plan or a Deferral Agreement, either singly or collectively, by their terms or implications constitute an employment contract of any nature whatsoever between the Company and a Participant. In no event shall this Plan or a Plan Agreement, either singly or collectively, by their terms or implications in any way obligate the Company to award Incentive Compensation to any Eligible Employee for any Award Year, whether or not the Eligible Employee is a Participant in the Deferral Plan for that Award Year, nor in any other way limit the right of the Company to change an Eligible Employee's compensation or other benefits. 2. Incentive Compensation deferred under this Deferral Plan shall not be treated as compensation for purposes of calculating the amount of a Participant's benefits or -14- contributions under any pension, retirement, or other plan maintained by the Company, except as provided in such other plan. 3. Any written notice to the Company referred to herein shall be made by mailing or delivering such notice to the Company at 2411 West LaPalma Avenue, P.O. Box 3250, Anaheim, CA 92803 to the attention of the Director, Human Resources. Any written notice to a Participant shall be made by delivery to the Participant in person, through electronic transmission, or by mailing such notice to the Participant at his or her place of residence or business address. 4. In the event it should become impossible for the Company or the Committee to perform any act required by this Plan, the Company or the Committee may perform such other act as it in good faith determines will most nearly carry out the intent and the purpose of this Deferral Plan. 5. By electing to become a Participant hereunder, each Eligible Employee shall be deemed conclusively to have accepted and consented to all of the terms of this Deferral Plan and all actions or decisions made by the Company, the Board, or Committee with regard to the Deferral Plan. 6. The provisions of this Deferral Plan and the Deferral Agreements hereunder shall be binding upon and inure to the benefit of the Company, its successors, and its assigns, and to the Participants and their heirs, executors, administrators, and legal representatives. 7. A copy of this Deferral Plan shall be available for inspection by Participants or other persons entitled to benefits under the Plan at reasonable times at the offices of the Company. 8. The validity of this Deferral Plan or any of its provisions shall be construed, administered, and governed in all respects under and by the laws of the State of Delaware, except as to matters of Federal law. If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective. 9. This Deferral Plan and its operation, including but not limited to, the mechanics of deferral elections, the issuance of securities, if any, or the payment of cash hereunder -15- is subject to compliance with all applicable federal and state laws, rules and regulations and such other approvals by any regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. 10. At no time shall the cumulative amount of Incentive Compensation deferred under this Deferral Plan by all Eligible Employees for all Award Years exceed $50,000,000. ARTICLE X --------- EFFECTIVE DATE -------------- This Deferral Plan was adopted by the Board on July 23, 1996 and became effective upon adoption to awards of Incentive Compensation for the Company's fiscal year ending December 31, 1996 and subsequent fiscal years. -16- EX-10.10 11 SENIOR EXECUTIVE RETIREMENT PLAN AGREEMENT EXHIBIT 10.10 [LETTERHEAD OF LOCKHEED MARTIN] MEMORANDUM TO: G. R. Long FROM: P. B. Teets DATE: November 8, 1995 SUBJECT: Senior Executive Retirement Plan - -------------------------------------------------------------------------------- This memorandum is to confirm our mutual agreement regarding the extension of your employment to January 31, 1997 under the Sanders Supplemental Executive Retirement Plan (SERP) provisions. This agreement will cancel your notice of retirement as detailed in your November 1, 1995 letter. Your employment will continue to January 31, 1997 and you will remain eligible for the SERP benefits as follows: . One year of salary continuation plus the average of the three prior years' incentive compensation. During this salary continuation period, all benefits and perquisites shall continue. . Consulting arrangement (at 35% of base annual salary at retirement) for a one year period following salary continuation. . One time relocation benefit within one year of retirement. At the end of the salary continuation period, the following retiree benefits will continue: . CalComp Retiree Medical Plan (if currently enrolled); . CalComp Retiree Life Coverage of $3,000; . Continuation of CalComp Dental Coverage for up to 18 months if elected and premiums paid. All other provisions of the Plan will remain the same. Please sign below if you are in agreement. /s/ Peter B. Teets /s/ Gary R. Long --------------------- ------------------ Peter B. Teets Gary R. Long President, Information & President Technology Services Sector CalComp [LOGO OF CALCOMP] A Lockheed Martin Company 2411 West La Palma Avenue Anaheim, CA 92801 **FACSIMILE TRANSMISSION** -------------------------- CONFIDENTIAL TO: GARY MANN DATE: July 1, 1996 NO. OF PAGES: 1 FROM: GARY LONG FAX REPLY: (714) 821-2074 PHONE REPLY: (714) 821-2172 SUBJECT: RETIREMENT TO NOTIFICATION The Sanders Early Retirement Program (SERP) requires a participant under the plan to notify management of his intention to retire six months prior to the planned retirement date. In order to meet that requirement, I am notifying you of my intention to retire on January 31, 1997. This is consistent with our discussion and the proxy. I acknowledge the "handshake" agreement I have with you and Pete Teets concerning continuing through calendar 1997, and it is my intention to meet this commitment. This notification is to ensure that I meet the requirements of the SERP. bjg copy: Kevin Coleman EX-10.11 12 EMPLOYMENT AGREEMENT W/ WINFRIED ROHLOFF EXHIBIT 10.11 [LETTERHEAD OF CALCOMP] AGREEMENT The following agreement is hereby made between 1. CalComp Inc., 2411 West La Palma Avenue, Anaheim, California 92801 USA, represented by Mr. Gary Long, president of CalComp Inc. 2. CalComp GmbH, Hermann-Klammt-Strasse 1,41460 Neuss, Germany, represented by its sole shareholder, CalComp Inc., the latter being represented by Mr. Gary Long, president of CalComp Inc. and 3. Mr. Winfried Rohloff, Im Wingert 19, 40699 Erkrath, Germany. 1.0 Mr. Rohloff is the managing director ("Geschaeftsfuehrer") of CalComp GmbH and vice president, Europe, for the CalComp group. He carries out his activities on the basis of the employment contract of December 1, 1987, together with the supplements of November 22, 1988; June 17, 1993; and August 23, 1994. 2.0 Mr. Rohloff is hereby appointed senior vice president for Worldwide Marketing, Sales, and Service of CalComp Inc. This does not affect his activities as managing director ("Geschaeftsfuehrer") and his employment contract together with the supplements of November 22, 1988; June 17, 1993; and August 23, 1994; apart from the time restriction modifications set out under point 4.0 of this agreement. 2.1 It is agreed that Mr. Rohloff will continue to perform activities on behalf and to the benefit of the German GmbH. Mr. Rohloff will therefore also spend, to a certain extent, working days with CalComp GmbH in Neuss. Therefore, the appropriate split between CalComp GmbH and CalComp Inc. of the remuneration payments to Mr. Rohloff has to be determined. Insofar as the remuneration relates to CalComp GmbH and is paid by CalComp GmbH, social security charges and wage taxes have to be withheld. 2.2 CalComp GmbH shall continue to provide all other benefits and fulfill all other obligations to which Mr. Rohloff is entitled in accordance with the employment contract. 3.0 Along with the above mentioned appointment, the remuneration of Mr. Rohloff per Section 3 of the employment contract from December 1, 1987, will be increased to DM 372,484 for the annual base salary and to 40 percent of the annual base salary for the targeted Management Incentive Compensation Plan award. For 1996, Mr. Rohloff will receive a bonus payout of DM 146,014 (MICP and bonus). Agreement:big Page 1 of 2 June 25, 1996 4.0 Mr. Rohloff shall perform his activities for the CalComp group between July 8, 1996, and June 30, 1997, primarily from Anaheim, California USA. Upon completion of this temporary assignment period, with management concurrence, Mr. Rohloff may choose to operate as senior vice president for Worldwide Marketing, Sales, and Service from the CalComp office in Neuss. 5.0 The guidelines for Mr. Rohloff's temporary assignment will be Lockheed Martin Corporate Policy Statement 539. Exceptions from that will be approved by Mr. Long. 6.0 Tax assistance will be provided to Mr. Rohloff through CalComp's agent, presently Ernst & Young, under the provisions covered by the Lockheed Martin policy as follows: - Preassignment Consultation - Tax Preparation - Tax Protection Anaheim: 6-25-96 Neuss: 6-25-96 ---------------- ------------------- (date) (date) /s/ Gary Long /s/ Gary Long ----------------------------- ------------------------------ Gary Long for CalComp Inc. Gary Long for CalComp GmbH Erkrath: 6-25-96 ------------------ (date) /s/ Winfried Rohloff ------------------------- Winfried Rohloff Agreement:bjg Page 2 of 2 June 25, 1996 [LETTERHEAD OF CALCOMP INC.] June 25, 1996 Mr. Winfried Rohloff Im Wingert 19 10699 Erkrath GERMANY Dear Mr. Rohloff: RE: YOUR TEMPORARY ASSIGNMENT TO CALCOMP INC., ANAHEIM, CALIFORNIA USA This letter confirms our discussion relative to the terms and conditions of your assignment based on the following guidelines of Lockheed Martin Corporate Policy Statement No. CPS-539 which states: "Lockheed Martin will compensate employees for extraordinary and additional expenses incurred in preparation for, while on, or in returning from a nondomestic assignment. It is the intent of this CPS to provide guidelines and maximum reimbursement levels for certain reasonable and necessary expenses in a manner that will minimize the financial impact of out-of-pocket expenses while an employee is on such as assignment." This policy has been applied as follows: SPOUSE: CalComp Inc. will reimburse the costs of travel, lodging, and other expense of your spouse associated with accompanying you or the cost of transportation and other expenses associated with visitations by your spouse. (Six round trips of business class travel not to exceed $5,000 each trip.) FOREIGN SERVICE PREMIUM (FSP): You will be provided a 10 percent FSP during the temporary assignment. This premium is intended to compensate you for leaving familiar working and living conditions. The FSP will be calculated on your base pay at the time of the assignment and will be adjusted each time the base salary changes. TRAVEL AND RELATED EXPENSES: For traveling to and from the temporary assignment, you will be reimbursed reasonable and actual food, lodging, and travel expenses from point of origin to the host location and return. FOOD AND LODGING: For the duration of the temporary assignment, CalComp will pay your lodging (not to exceed $2,000 a month), a per diem amount $38 a day to you to cover food and other expenses, and a per diem amount of $25 a day for your wife when she is visiting to cover food and other expenses. VEHICLE: CalComp Inc. will provide a leased vehicle for you at the host location (not to exceed $1,000 a month). You will be reimbursed for expenses associated with the use of the vehicle. Mr. Winfried Rohloff Page 2 of 2 June 25, 1996 HOME COUNTRY HOUSING: You will be reimbursed for reasonable actual fees for supervision of premises, nominal grounds maintenance, and increased insurance premiums to the extent incremental to current costs. RESIDENCE LOCATION FEES: CalComp will provide assistance in locating a temporary residence with our approved vendor and pay related fees and reasonable deposits. PERSONAL EFFECTS: You will be reimbursed for the transportation of up to 1,500 pounds of personal effects to and from your nondomestic location via air freight or surface transportation, as appropriate. INOCULATIONS/PASSPORT: You will be reimbursed for all expenses involved in securing required physical examinations, necessary inoculations, passports, visas, and other pertinent documents for you and your spouse. MEDICAL EXPENSE REIMBURSEMENT: You will be reimbursed for medical, hospital, and dental charges incurred by you and your spouse in excess of the charges you would normally have incurred for similar treatment in your home country. There will be no duplicate coverage of benefits provided. EMERGENCY LEAVE AND MEDICAL REPATRIATION: CalComp Inc. will establish reasonable practices regarding personal emergency situations and procedures for medical repatriation. In the event of your death, all reasonable transportation expenses to the point of origin will be paid by CalComp Inc. PAYMENT PROCEDURES: During the assignment, 27 percent of your base salary will be paid to you by CalComp GmbH in German DM. 73 percent of your base salary, total MICP, bonus, FSP, all expense reimbursements, as well as expenses and allowances as per (S) 4 point #1 of the employment contract of December 1, 1987, will be paid to you by CalComp Inc. in U.S. dollars. Pay periods end every-other Friday. We will use the DM currency exchange rate from the Wall ---- Street Journal for the day immediately preceding the submission of payroll for - -------------- processing. GENERAL: If you voluntarily terminate employment or are terminated for cause while on the temporary assignment, all allowances related to the temporary assignment will cease on the date of termination. Reimbursement will be paid for reasonable and actual travel and related expenses incurred in returning you and your spouse to the point of origin, not to exceed cost of being transferred to Anaheim. Sincerely, /s/ Gary R. Long Gary R. Long President CalComp Inc. Accepted: /s/ Winfried Rohloff 6-25-96 ____________________ _______ Winfried Rohloff (date) EX-10.12 13 EMPLOYMENT OFFER AND AGREEMENT W/ JOHN J. MILLERICK EXHIBIT 10.12 [LETTERHEAD OF CALCOMP] July 11, 1996 Mr. John J. Millerick 22 Putnam Road Acton, MA 01720 Dear Mr. Millerick: This letter is to confirm our offer of employment for the position of Senior Vice President, Chief Financial Officer reporting to me at our Anaheim facility. Your starting base salary will be $3,847 weekly with a $25,000 sign-on bonus. Your salary will be reviewed at twelve (12) month intervals. Presently, all merit reviews are conducted at the end of the third quarter of our fiscal year. We have a Management Incentive Compensation Plan and Stock Options Plan that are being recommended to our Board of Directors when we are a public company. The MICP Plan provides for a bonus opportunity at target of 40% and will be prorated for the year based on the number of months worked in 1996. However, in order for a partial payment of the MICP to be implemented, you must start work by August 15, 1996. The Stock Options Plan would offer 50,000 options the first year. The Stock Options Plan intent is to provide options that would be loaded heavily in the first year. The remainder of the options that are planned are 75,000 to be allocated in equal shares over a four year period subject to Board of Directors approval. I have been told that an Employment Agreement will be approved by the Board. It will be two years in duration and provide one year of severance if other than for just cause. This will be approved by the Board of Directors at a later Board meeting. The Company will arrange for the relocation of your family and household belongings under provisions of the Lockheed Martin Policy CPS-538. Your relocation costs will be covered up to $100,000, which also includes a home purchase offer. Temporary lodging, daily meal allowance (per diem) and car will be extended to you for one year. You will also be provided with two (2) round trips home each month during this one year period. You will be eligible for the relocation benefit during the first 18 months of your employment. Additionally, with respect to Section 10.0 Loss on Sale, in the Relocation Policy, capital improvements will be considered when calculating loss on sale. If not either pre-arranged or completed, this offer of employment is contingent upon your satisfactorily passing a pre-employment physical examination, including a drug screen urinalysis. If you have any questions, please call Roberta Diebold at (714) 821-2294. Employers are required to verify work authorization and identification for all new hires. We would appreciate your cooperation by bringing with you on the first day of employment documents to comply with this law. John J. Millerick July 11, 1996 Page 2 It is CalComp policy not to improperly use the intellectual property rights of others. You are requested not to bring or disclose any proprietary/confidential information of your former employers(s) to CalComp at any time. Among the benefits you will enjoy as a full-time CalComp employee, subject to certain eligibility requirements and waiting periods, is a program of Company paid group insurance which provides for basic life as well as accidental death and dismemberment. Employee paid benefits eligible to you are comprehensive medical, dental and vision coverage for you and your eligible dependents, and a program of income protection in case of long-term disability. In addition, you may obtain supplemental life insurance coverage for yourself and your dependents. Other benefits include paid sick leave, 12 paid holidays per year, paid vacation, pension plan, thrift plan, credit union and college tuition support programs. You will be entitled to three (3) weeks of vacation per year. Extra time will be granted by mutual agreement between you and me. Unfortunately, the plan document for the Lockheed Savings Plan Plus requires you to wait 12 months before being eligible to contribute, and this cannot be waived. It is a pleasure to make you this offer to join CalComp. We look forward to your association with the Company and know you will find it both personally and professionally rewarding. Please sign below and return this letter to us indicating your acceptance and start date. An additional copy is included for your records. Sincerely, /s/ GARY LONG - ------------- Gary Long President ved Enclosure /s/ JOHN J. MILLERICK 8-12-96 --------------------- ------------------ John J. Millerick Start Date [President's Stamp] [LETTERHEAD OF CALCOMP] July 12, 1996 Mr. John Millerick 22 Putnam Road Acton, MA 01720 Dear John: The following is provided as an addendum to my letter to you of July 11 and specifically addresses your interest in adding a severance clause to our offer letter. If, prior to the expiration of the two-year term of this agreement, employee's employment is terminated by the company other than for cause or due to death or disability, the company shall provide employee the following: a. One year's base salary plus one year's MICP at 100% in a lump sum in cash within thirty (30) days of the date termination. b. One year's benefits continuation as currently provided for company officers. c. Payment for executive out-placement services with the cost not to exceed ten percent (10%) of employee's annual base salary. Payment to be made as billed by the provider. Please acknowledge acceptance of this addendum by signing below and returning the signed copy to me. Regards, /s/ GARY R. LONG - ---------------- Gary R. Long Accepted: /s/ JOHN J. MILLERICK 7-12-96 ---------------------- ---------------- /s/ John J. Millerick Date [Stamp of President] [LOGO OF THE COMPANY] INTEROFFICE COMMUNICATION TO: JOHN MILLERICK IOC NO.: 96-AMEND FROM: KEVIN COLEMAN DATE: AUGUST 16, 1996 SUBJECT: AMENDMENT MS/EXT: 17/2622 This is an amendment to your offer of employment dated July 11, 1996. CalComp will reimburse you for COBRA payments through December 1996. All other conditions remain the same as stated in the previous letter. Sincerely, /s/ KEVIN COLEMAN - ----------------- Kevin Coleman Director Human Resources EX-10.13 14 SELEX MINI-ENGINE OEM AGREEMENT W/ SELEX SYSTEMS EXHIBIT 10.13 SELEX MINI-ENGINE OEM AGREEMENT This Agreement made as of the 26th day of May, 1994, by and between SELEX SYSTEMS U.S.A. Inc., a California corporation (hereinafter "SSUI") having its principal office at 1875 So. Grant, Suite 770, San Mateo, California 94402 and CALCOMP INC., a California corporation (hereinafter "Buyer"), having its principal office at 2411 West La Palma, Anaheim, California 92803. W I T N E S S E T H: ------------------- WHEREAS, Buyer desires to purchase from SSUI on a non-exclusive basis units of a certain component for incorporation by Buyer into ink jet plotters to be marketed by Buyer under its private label; and WHEREAS, SSUI agrees to cause the manufacture of such component by Copyer Co., Ltd. ("Copyer"), and to sell the same to Buyer in accordance with the terms of this Agreement; NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions ----------- A. The term "Equipment" means (i) certain items comprising a mini-engine which are described in the specifications annexed hereto as Exhibit A (collectively, the "Component"), including a certain engine controller (the "Engine Controller") developed by Buyer pursuant to a Development Agreement dated as of May 26, 1994 between Buyer and Copyer, (ii) the spare parts for the Component as listed in Exhibit B hereto, and (iii) a certain retaining pin, retaining shaft, and BJ Ink Cartridge, in each case with such engineering changes as may be incorporated therein under the provisions of paragraph 4 hereof. The term "Equipment" does not include any other items unless both parties agree in writing pursuant to a separate negotiation. B. "Calendar Quarter" as each calendar quarter, or part thereof, to occur during the relevant period. 2. Purchase and Sale ----------------- A. SSUI agrees to sell units of the Equipment to Buyer and Buyer agrees to purchase the same, upon the terms stated in this Agreement. Buyer agrees to purchase the Equipment only from SSUI. It is Buyer's non-binding forecast that during the first one (1) year of the term of this Agreement Buyer will purchase from SSUI approximately 7000 units of the Component. B. Buyer represents and warrants that it is purchasing the Equipment from SSUI solely for incorporation into ink jet plotters to be marketed by Buyer under its trade names and trademarks, as specified in paragraph 5.B below, and that is shall use the Equipment for no other purpose. Buyer represents and warrants that it is an experienced designer of equipment and/or software for its systems and that it needs no support from SSUI in incorporating the Equipment in its ink jet plotters. Buyer shall be fully responsible for all costs and expenses incurred by it in incorporating the Equipment in such ink jet plotters, including costs of related housing, assembly and packaging. C. Buyer represents and warrants that it is in the business of marketing, selling, and/or leasing plotter equipment worldwide, and that Buyer shall market the ink jet plotters containing the Equipment through its affiliates and distribution channels worldwide; provided that in the United States Buyer shall market its ink jet plotters only through its authorized dealer network and directly to large end user customers. D. Buyer represents that Buyer shall market and service the Equipment as part of ink jet plotters at its sole risk and without expense to SSUI, except for those responsibilities expressly undertaken by SSUI herein or in the Specifications annexed hereto as Exhibit A. Without limiting the foregoing, Buyer shall, in connection with the distribution efforts, be responsible for (i) the exportation of the Equipment from the United States, including compliance with all U.S. export control laws and regulations and payment of all applicable customs duty charges, and (ii) obtaining all necessary governmental approvals and complying with applicable laws and regulations, except as otherwise provided in Exhibit A. 3. Price, Delivery, Ordering and Payment Terms ------------------------------------------- A. The prices set forth in Exhibit C hereto shall be applicable to Buyer's purchase orders for the Component which are placed during the period through December 31, 1994. SSUI may change the prices for the Component ordered at any time thereafter during the term of this Agreement on ninety (90) days notice to Buyer. The spare parts pricing provisions are set forth in subparagraph 6.A. The prices set forth in Exhibit C-1 shall be applicable to Buyer's purchase orders for the retaining shaft, retaining pin and BJ Ink Cartridge, and SSUI shall have the right to change the prices therefor at any time upon ninety (90) days prior written notice. Once Buyer has placed an Order (as defined in Paragraph C below), the prices of the Equipment shall remain fixed except as follows: (i) The parties hereto acknowledge that the prices for the Equipment as set forth in Exhibit C hereto have been determined based on an -2- exchange rate of 107.50 Yen/Dollar (the "Base Exchange Rate"). Subject to the last paragraph of this subparagraph A, if, during any Calendar Quarter, the Exchange Rate (as hereinafter defined) varies from the Base Exchange Rate by 3% or more, the prices for the Equipment delivered to Buyer during the next succeeding Calendar Quarter shall be adjusted by the amount of the Exchange Rate fluctuation, in accordance with the following formula: AP = P x (ER + BER) ---------- 2ER AP: the adjusted price P: the price of Exhibit C ER: the applicable Exchange Rate BER: the Base Exchange Rate As used herein, the "Exchange Rate" shall mean the average of all the official quotation rates to customers quoted by the Bank of Tokyo, Ltd. (Middle Rate of Telegraphic Transfer Selling Rate and Telegraphic Transfer Buying Rate) for the U.S. Dollar in exchange for the Japanese Yen on each business day of the first two calendar months of the relevant Calendar Quarter. If, during any Calendar Quarter, the Exchange Rate varies from the Based Exchange Rate by 6% or more, the parties agree to meet and to negotiate in good faith an amendment hereto to remedy and hardship to the party affected by such extreme Exchange Rate fluctuation, which amendment may include a change in the prices for the Equipment, the formula provided above and/or the Base Exchange Rate. (ii) The prices of the Equipment have been determined based on assumed applicable United States customs duty rates ("Base Duty Rates"). The Base Duty Rates or each item of Equipment are set forth in Exhibit C hereto. If with respect to any deliveries hereunder the actual duty varies from the Base Duty Rate, of if any tariffs or surcharges are imposed on the Equipment, with the result that the actual duty rate (however designated) assessed on the importation of the Equipment vary from the Base Duty Rate, then the prices of the Equipment will be multiplied by 100% plus the percentage fluctuation from the Base Duty Rate. The parties recognize that on occasion the U.S. computes duty based on its estimate of fair value rather than the sales price agreed to by the parties, which may result in the duty actually paid being higher or lower than the sum which the percentage initially contemplated by the parties would have yielded. Such increase or decrease shall be treated as a change in duty rate. Further, in the event that the U.S. Government retroactively claims additional duty with respect to -3- orders that have already been paid for, then any such increase from the effective rate originally applied to the order shall be charged to Buyer as provided above. Any retroactive decreases in duty shall be credited to the Buyer as provided above. B. SSUI shall deliver all Equipment to Buyer F.O.B. SSUI's designated California area warehouse, whereupon all risk of loss shall pass to Buyer. Prices are inclusive of usual factory tests and inspection, standard commercial export packing for ocean shipment and freight transportation of a surface nature, but exclusive of all expedited transportation requested by Buyer to the point of delivery, all freight transportation or insurance from the point of delivery and any packing other than SSUI's standard commercial export packing, all of which shall be for Buyer's account. Each Order, if requested by Buyer, shall be shipped, at Buyer's expenses, by SSUI from the point of delivery to the destination specified by Buyer in its Order. C. Subject to subparagraph E below, Buyer shall order units of Equipment by formal, irrevocable monthly purchase orders ("Orders") which shall (a) incorporate the terms of this Agreement, by reference to its date, as the only operative terms of such Orders, (b) be received by SSUI before the termination of the Agreement (or thereafter, in the case of spare parts, as provided in subparagraph 6.A below or in the case of the retaining pin and the retaining shaft, as provided in subparagraph 6.C below) (c) identify each item of Equipment by model number, (d) indicate quantity, price (on a pro forma basis, with the invoice price to be determined in accordance with the provisions of this Agreement) and shipping instructions, and (e) specify delivery dates which shall be no sooner than four (4) months from the date of such Order. An Order shall not be deemed accepted unless and until written confirmation thereof is sent to Buyer. Within two (2) weeks of SSUI's receipt of an Order, SSUI shall either accept (as described above) or reject the Order. SSUI shall confirm Orders which are in conformity with the provisions of this Agreement. It is understood and agreed that for administrative convenience Buyer may use its form of purchase order to effect Orders hereunder. If SSUI elects to honor an Order which varies from the provisions hereof, any terms in such Order which conflict with, or supplement, the terms of this Agreement shall be deemed null and void, and this Agreement shall govern. D. Buyer may place Orders only during the first ten (10) business days of each calendar month during the terms of the Agreement (or thereafter in the case of spare parts, as provided in Section 6 below). Orders placed by Buyer prior to such ten (10) day period shall be irrevocable, but shall, for purposes of this paragraph 3, be deemed received by SSUI as of the first day of such ten (10) day period. Each such monthly Order shall specify the number of units to be delivered during the 4th succeeding month (for example, an Order placed during the first ten (10) days of -4- January shall be delivered during May). Orders shall be for not less than the minimum quantities set forth in Exhibits A and B. 1. Schedule 1 hereto lists the units of Equipment for which Buyer has heretofore placed Orders and the scheduled delivery dates thereof. The parties intend that all of such Orders shall be subject to the terms and conditions of this Agreement in all respects. E. Buyer shall have no right to cancel any Orders of Equipment which have been specifically modified for the Buyer. Buyer may cancel Orders of Equipment or decrease the quantity of Equipment covered by an Order upon written notice to SSUI prior to the then scheduled shipment date of such Equipment, and payment of the following cancellation charges for each unit of the Equipment cancelled:
Days Prior to then Scheduled Delivery Date that Written Percentage of Notice is Received by SSUI Purchase Price ---------------------------- -------------- 0-14 20% 15-30 15% 31-90 10% 91-150 3% 151+ 0%
Buyer may also defer scheduled deliveries of Equipment for up to ninety (90) days from the originally requested delivery date of Orders upon Buyer's payment of a deferral charge equal to 0.03% of the purchase price of the Equipment for each day the Order is deferred. SSUI and Buyer recognize that due to the nature of the Equipment the calculation of damages resulting from cancellation or deferral of Orders would be difficult. Therefore, the foregoing deferral and cancellation charges represent fixed and agreed upon liquidation damages in lieu of other damages and are not intended as a penalty. F. In each Order, Buyer shall include rolling forecasts estimating the Equipment to be ordered during the next succeeding three (3) months. Each of Buyer's estimates for a particular month shall not vary from the preceding estimate by more than twenty percent (20%) and each Order for a particular month shall not vary by more than twenty percent (20%) from the final monthly estimate for such month. G. SSUI shall use its reasonable efforts to ship Equipment to meet Buyer's requested delivery dates; provided, that Buyer's orders and the -------- requested delivery dates thereunder are in conformity with the provisions of this Agreement; -5- and provided further, that should worldwide demand for the Equipment exceed -------- ------- Copyer's supply thereof, SSUI shall have the right to allocate limited quantities of the Equipment in a fair and reasonable manner among all of its customers, even though this may effectively limit quantities requested by Buyer. H. In order to preserve SSUI's claims against its insurance carrier, Buyer shall give notice with respect to any obvious damage which appears to be attributable to conditions in transit no later than thirty (30) days after delivery of the shipment to Buyer (as evidenced by a shipper's receipt therefor), and Buyer shall in addition cooperate in connection with the inspection and insurance report which is customarily made following such notice of insurable damage. Buyer shall be liable for obvious damages to Equipment where the claim has been disallowed by the insurance carrier due to untimely notice by Buyer as required hereunder. I. Invoices shall be rendered at the time of delivery of the Equipment, and are payable net thirty (30) days from the actual or requested delivery date, whichever is later. There shall be added to the price of each unit the amount of sales or use tax applicable to the sale by SSUI to Buyer, unless Buyer shall furnish a resale or other exemption certificate to SSUI. Under no circumstances shall there be added to such price the amount of any tax measured by SSUI's gross or net income. J. Notwithstanding subparagraphs E and G above, Buyer may, at any time that an emergency situation exists, place an Order for such quantity of spare parts as is required, and SSUI shall use best efforts to deliver such emergency Order within two (2) business days of SSUI's receipt thereof; provided, that -------- SSUI shall not be required to maintain particular inventories of spare parts for purposes of filling any such emergency Orders and, should available inventories of spare parts requested by Buyer be limited, SSUI shall have the right to reasonably allocate available spare parts in light of the requirements of SSUI, Buyer and SSUI's other customers. Buyer shall pay a surcharge determined by SSUI to cover its costs and expenses in filling emergency Orders for spare parts. K. SSUI agrees that if it sells to any customer any product substantially similar to the Equipment in quantities less than or equal to the quantities previously purchased by Buyer hereunder at a per unit price less than the per unit price then applicable to Buyer in accordance with the provisions of this Section 3, then the per unit prices to Buyer for units of the Equipment delivered thereafter shall be such lower prices for so long as such lower prices remain in effect for the other customer. -6- 4. Modifications to Equipment -------------------------- The initial specifications for the Equipment are listed in Exhibit A hereto (the "Specifications"). SSUI, on its own, or at the instance and request of Buyer, may cause Copyer to modify the Equipment or mode of manufacture of the Equipment at any time to meet such amended Specifications which are furnished to Buyer and which improve or do not adversely affect performance, serviceability or salability of the ink jet plotters or interchangeability of spare parts therefor. If SSUI proposes modifications to the Equipment which would substantially change the size or weight of the same, or adversely affect performance, serviceability or salability of the ink jet plotters or interchangeability of spare parts, or materially change the external configuration thereof, SSUI shall discuss such modifications with Buyer in order to obtain Buyer's approval, in writing, which shall not be unreasonably withheld. Approvals shall be deemed given if Buyer does not disapprove the modifications within thirty (30) days of receipt of SSUI's written request therefor. 5. Service, Training and Promotional Activities -------------------------------------------- A. Buyer shall be required, at its own cost and expense, to provide adequate service, including in-warranty service, to Buyer's customers for the ink jet plotters containing the Equipment for a reasonable time (including after termination of the Agreement). B. Buyer shall promote and market the Equipment in ink jet plotters to be marketed under Buyer's own trade names and trademarks. Buyer shall not use SSUI trademarks and shall not describe itself as a "Selex Systems Distributor". Under no circumstances shall Buyer use the name "Selex" as part of its corporate or business name, or in any other way in connection with marketing of ink jet plotters. 6. Spare Parts ----------- A. SSUI's current list and prices of spare parts is set forth in Exhibit C-1 hereto. SSUI shall have the right to substitute a new list of spare parts, and to change the prices therefor, at any time upon ninety (90) days prior notice to Buyer. Buyer may place Orders pursuant to this Agreement during the term of the Agreement and for a period of five (5) years from the date of expiration or termination of the Agreement or the date of discontinuance of the Component, whichever event occurs first, for any spare parts (i) which during such five (5) year period are made generally available by SSUI through its published spare parts lists for the Component, or (ii) which are unique and not readily available from third party sources. SSUI may change the prices for spare parts at any time during such five (5) year period upon ninety (90) days prior notice to Buyer. Notwithstanding -7- the foregoing, SSUI will give Buyer prior written notice of the discontinuance of the Component and the withdrawal of any spare part from SSUI's published list of generally available spare parts, and Buyer shall have the opportunity to make a final purchase of such spare part. B. Buyer shall purchase a stock of spare parts adequate for Buyer to maintain a reasonable level of service of the Equipment. In this regard, Buyer and SSUI shall jointly determine an appropriate initial inventory of spare parts to be stocked by or on behalf of Buyer utilizing generally as the basis for such determination the SSUI estimates previously furnished Buyer. C. During the period that Buyer may place orders for spare parts hereunder, Buyer may also order the retaining shaft and retaining pin, and SSUI may change the prices for such items at any time on ninety (90) days prior notice. 7. Inspection and Warranty ----------------------- A. The Equipment shall have been inspected and where applicable tested prior to shipment to determine if the same conforms to the relevant specifications and Copyer's reference manuals and other technical information it has published. Buyer shall also have the right to conduct its own inspection test of the Equipment within thirty (30) days after the date of delivery. If Buyer determines that the items do not substantially so conform, it shall, within fifteen (15) days after completion of the inspection, notify SSUI and request SSUI to institute a consulting inspection. Even if the ensuing inspection results in a disagreement as to the conformity of the item(s), SSUI shall use its best efforts to achieve the required conformation at the least possible expense. If such effort does not yield a result satisfactory to Buyer and Buyer exercises its right of rejection SSUI has the right to repair or replace, at SSUI's option, rejected Equipment at no charge (including transportation charge) within thirty (30) days after SSUI's receipt of Buyer's fifteen (15) day notice. Should it be subsequently determined that Buyer has wrongfully rejected such item(s), Buyer shall be liable to SSUI for all expenses incurred. Upon shipment to Buyer, Equipment must be paid for within the time frames provided in this Agreement, even if thereafter rejected by Buyer for nonconformance under the circumstances set forth herein. In the event that SSUI does not replace rejected Equipment within the time frame specified above, SSUI shall grant Buyer a credit in an amount equal to the invoice price of the rejected item against future payments to be made by Buyer for Equipment hereunder. Such credit shall be reversed and invoiced when the replacement is effected. B. THE EQUIPMENT SOLD TO BUYER HEREUNDER IS SOLD "AS IS" AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING -8- ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THE USE OR PERFORMANCE OF THE EQUIPMENT. SSUI WILL NOT BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGE (UNLESS CAUSED BY SSUI'S NEGLIGENCE), LOSS OF PROFIT OR OTHER INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE EQUIPMENT, OR FOR ANY DAMAGES (REGARDLESS OF THEIR NATURE) TO THE EXTENT CAUSED BY BUYER'S FAILURE TO FULFILL ITS RESPONSIBILITIES AS SET FORTH IN THIS AGREEMENT. IN NO EVENT SHALL SSUI'S LIABILITY HEREUNDER EXCEED THE STATED SELLING PRICE OF THE EQUIPMENT TO BUYER. C. Buyer acknowledges that (i) SSUI has made no representations regarding software programming, and the design and implementation thereof, and shall have no liability for use or performance of any such programming or the Equipment in connection with the systems of Buyer's customers, even though Buyer discusses the same from time to time with SSUI employees, and (ii) payment for the Equipment is an independent obligation of Buyer and is not contingent on or dependent upon the services and performance of independent vendors of other components or software. D. SSUI shall make available to Buyer on such terms as are generally offered to SSUI's other customers for the Equipment, any modification kits, retrofits or other assistance being furnished by SSUI to assist such customers in correcting epidemic failures in the Equipment or in complying with federal and state laws applicable to the Equipment, it being understood that any such kits or retrofits shall be furnished without charge if made available generally by SSUI to comply with mandatory health or safety laws applicable to the Equipment. E. IT IS UNDERSTOOD AND AGREED THAT UPON SELLING OR LEASING THE INK JET PLOTTER THAT CONTAINS THE EQUIPMENT BUYER SHALL DELIVER ITS OWN WARRANTY TO ITS CUSTOMERS. 8. Relationship of the Parties, Indemnification and Limitation of Liability ------------------------------------------------------------------------ A. Nothing contained in this Agreement shall be construed to make either party the agent for the other party for any purpose, and neither party hereto shall have any right whatsoever to incur any liabilities or obligations on behalf of or binding upon the other party. Each party specifically agrees that it shall have no power or authority to represent the other party in any manner; that it will act as an independent contractor in accordance with the ----------- ---------- terms and conditions of this Agreement; and that it will not at any time represent orally or in writing to any person or corporation or other business entity that it has any right, power or authority not expressly granted by this Agreement. -9- B. Buyer agrees to indemnify and hold SSUI and Copyer free and harmless from any loss, damage or costs, including legal expenses and counsel fees, that SSUI or Copyer becomes liable for to third parties by reason of acts, or failure to act of Buyer in marketing and servicing the Equipment, including, but not limited to (a) warranties made by Buyer's personnel or agents regarding such ink jet plotters or the Equipment contained therein, or the use or performance of the same in connection with any other components or software programming, and (b) improper installation, support or maintenance of the ink jet plotters containing the Equipment. 9. Patent and Indemnification -------------------------- Nothing herein contained shall be construed as a representation or warranty by SSUI or Copyer that the Equipment furnished hereunder is or will be free from infringement or violation of any patent, copyright, trade secret or any other proprietary right of any third party. In the event of any claim by a third party against Buyer asserting a patent, copyright, trade secret or other proprietary right, infringement involving the Equipment in any country of the world (except those countries under Russian or Chinese control and such other countries as may be mutually agreed upon in writing by the parties hereto from time to time), SSUI will, at its expense, defend and/or settle such claim, and will indemnify Buyer against any damages, judgments or settlements, including any reasonable cost, legal fees or other expenses required for such defense, whether or not such claim is successful, provided, however that Buyer shall promptly notify SSUI in writing of such claim and shall furnish copies of all letters and other documents relating to the allegation of infringement, and SSUI shall be given full and sole authority to defend and settle such claim, action or allegation of infringement. If SSUI requests, Buyer agrees to assist and/or cooperate at SSUI's expense with SSUI in such defense and/or settlement. Anything herein to the contrary notwithstanding, SSUI shall not be obligated to defend or settle or be liable for costs, fees, expenses or damages if the infringement claim arises from the Engine Controller or out of compliance with Buyer's specifications, designs, drawings, instructions or other requirements or out of any addition to or modification of the Equipment of any combination thereof with other products after delivery by SSUI or from use of the Equipment in the practice of a process or system, or from use of the spare parts other than in connection with the Components, in any of which cases Buyer shall assume the defense and/or settlement thereof and pay all costs, fees, expenses, damages, judgments or settlements incurred by SSUI or Copyer. If any infringement claim is brought against Buyer and/or SSUI, or Copyer, or if in SSUI's opinion the Equipment is likely to become a subject of a claim of infringement or violation of any patent, copyright, trade secret or other proprietary right of any third party, SSUI shall be entitled at its option: (a) to procure for Buyer the right to continue the sale -10- and/or use of the Equipment at SSUI's expense, by acquiring a license in the name of SSUI or one of the SSUI's affiliated companies, or of Buyer, (b) to replace or modify the Equipment so as not to infringe such third party's rights while conforming, as closely as possible to original specifications, and in the event that either solution is adopted, SSUI shall be entitled to request a mutually agreeable price modification, or (c) to discontinue further supply of the Equipment in spite of any provisions hereof and without any breach hereof, but prior to SSUI choosing such discontinuance, SSUI agrees to enter into discussions with Buyer in good faith to determine whether a mutually acceptable arrangement (including price and other terms and conditions) for continuing the supply of the Equipment to Buyer can be agreed upon between the parties. In the event of such discontinuance, SSUI shall refund to Buyer the purchase price of units of infringing Equipment which are promptly returned to SSUI from Buyer's inventory in new condition and in unopened boxes. THE FOREGOING STATES THE ENTIRE LIABILITY OF SSUI, COPYER AND BUYER IN RESPECT OF INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADE SECRET OR ANY OTHER PROPRIETARY RIGHT OF ANY THIRD PARTY AND IS IN LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, IN REGARD THERETO, AND IN NO EVENT SHALL SSUI, COPYER OR BUYER BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS OR OTHER ECONOMIC LOSS. 10. Disclaimer of License --------------------- Buyer acknowledges that any and all of the patents, designs, trademarks, copyrights, and other rights including any unpatented confidential production method used or embodied in connection with the Equipment will remain the sole property of SSUI or Copyer, as the case may be. Except as shall be necessary to carry out the express provisions of this Agreement, nothing herein shall be construed as granting or conferring to Buyer any rights by license or otherwise, expressly, impliedly or otherwise, for such patents, designs, trademarks, copyrights or other rights, including any unpatented production method. 11. Force Majeure ------------- Neither SSUI or Buyer shall be in default on any obligation hereunder if such default results from governmental acts or directives (official or unofficial); strikes (legal or illegal); acts of God; war (declared or undeclared); insurrection, riot or civil commotion; fires; flooding or water damage; explosions; embargoes; or otherwise arises out of causes beyond the reasonable control of the party affected. Upon the occurrence of a force majeure event, the affected party shall give written notice thereof to the other party as soon as is practicable, and the -11- affected party shall take reasonable action to minimize the effect of such force majeure event. 12. Compliance with Applicable Laws ------------------------------- A. Nothing herein shall be construed to permit or require either party to do any act or thing in contravention of any laws or regulations applicable to the production or distribution of the Equipment (including those of the United States or of any agency or instrumentality of the United States or any of the various states). SSUI and Buyer mutually agree to do all things reasonably necessary in order to enable both or either of them to comply with all such laws and regulations. B. Without limiting the foregoing, SSUI's obligations hereunder shall at all times be subject to the respective export and import control laws and regulations of the Japanese and United States Governments. Buyer agrees that with respect to the resale or other disposition of the Equipment, Buyer shall comply fully with the customs and import control laws and regulations of the Untied States. 13. Non-Disclosure of Information; Publicity ---------------------------------------- A. Neither party desires to receive any confidential information from the other party and, accordingly, with respect to any information provided under this Agreement, neither party shall have any confidential obligation or use restriction and either party may freely use such information for any purpose without restriction. To the extent either party determines that there is a need to disclose information deemed confidential, such information shall be specifically identified and protected under the terms of a separate non- disclosure agreement signed by both parties. B. Except as may be required by Federal, State or Japanese law, neither Buyer nor SSUI shall release items of publicity of any kind (including, but not limited to, news releases, articles, brochures, reports, advertising and prepared speeches) related to the other party's involvement in the Equipment to be delivered hereunder, unless either party shall have first obtained written approval from the other party. 14. Term; Termination ----------------- A. This Agreement shall commence on the date hereof and shall continue in full force and effect for a period of three (3) years. It shall automatically renew thereafter on a year-to-year basis unless terminated by either party upon at least sixty (60) days notice prior to the end of the initial or any renewal term. -12- B. Without limiting any of the remedies which the non-breaching party may have, this Agreement and/or any Orders outstanding hereunder may be terminated by either party for substantial breach of any material provision of this Agreement by the other party, provided that written notice has been given to the other party of the alleged breach and the other party has not cured the breach within thirty (30) days after delivery of such notice, or has not in good faith made substantial effort and progress in curing the breach during such period while notifying the other party within the thirty (30) day period of the fact that the breach will not be cured, the steps taken and the estimated cure date for the breach. If, even with good faith efforts, the breach continues for a period of sixty (60) days after notice, the other party may terminate this Agreement and/or any Orders outstanding hereunder upon five (5) days notice. C. This Agreement and any Orders outstanding hereunder shall be terminated automatically and without notice, if either party ceases to function as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a petition in bankruptcy, has a petition filed against it and such petition continues for more than sixty (60) days without dismissal, or admits in writing its inability to pay its debts as they mature or if a receiver is appointed for a substantial part of its assets. D. This Agreement and/or any Orders outstanding hereunder may be terminated by SSUI on notice to Buyer if Buyer no longer engages in the plotter business substantially as engaged in by Buyer as of the date hereof, if Buyer sells or otherwise transfers all or substantially all of its plotter business and assets or if, whether by merger, sale of stock or otherwise, Lockheed Corporation no longer owns, directly or indirectly, 50% or more of the capital stock of Buyer. Buyer shall give SSUI advance notice prior to the occurrence of any of such proposed events and SSUI's right to terminate under this subparagraph D may be exercised by SSUI no later than sixty (60) days thereafter. E. Termination shall not relieve either party of obligations incurred prior thereto (including Buyer's obligation to pay the purchase price of Equipment theretofore shipped to Buyer), or for any obligation which by its terms is to take effect upon termination. F. NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR THE OTHER PARTY'S LOST PROFITS RESULTING IN ANY WAY FROM THIS AGREEMENT, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED FOR IN RESPECT OF EACH PARTY'S INDEMNIFICATION OF THE OTHER UNDER THIS AGREEMENT. - 13 - 15. Assignment ---------- This Agreement constitutes a personal contract and is not assignable by either party in whole or in part without the other party's written consent. 16. Notices ------- All notices required or permitted to be sent by the terms of this Agreement shall be either sent registered or certified mail, return receipt requested, via facsimile or served personally to the attention of (a) the President of SSUI; or (b) to each of Vice President, Manufacturing and Corporate Secretary of Buyer, at their respective addresses on the first page of this Agreement. All notices shall be deemed effective upon receipt. 17. Governing Law ------------- A. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. B. This agreement constitutes the entire agreement between the parties, superseding all previous proposals or understandings, oral or written, relating to the supply of the Equipment to Buyer. No representation or statement not contained on the original copy of this Agreement shall be binding on SSUI or Buyer as a warranty or otherwise, nor shall this Agreement be modified or amended unless in writing and signed by the President of each of SSUI and Buyer. Any suit between the parties relating to this Agreement, other than for payment of the purchase price of the Equipment, shall be commenced, if at all, within one (1) year of the date that it accrues. -14- C. If any one or more of the provisions contained in this Agreement or in any Schedule or Exhibit hereto shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired. IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first above written. SELEX SYSTEMS U.S.A., INC. CALCOMP INC. By: /s/ A. Nakazato By: /s/ Gary R. Long ------------------------- ------------------------- Name: A. Nakazato Name: Gary R. Long Title: President Title: President -15- EXHIBIT A List of Equipment and Specifications
Copyer Item # CalComp Item # Item Name Min. Order Quantity - ------------- -------------- --------- ------------------- - ------------ 22049-0015 Mini Engine 40 sets 595-0591-400 21545-0024 BJ Ink Cartridge 1 pallet (1,440 pcs.) 641-0017-000 22049-3050 Carriage Retaining Shaft 2,000 pcs. 641-0020-000 22049-3068 Retaining Pin 2,000 pcs.
EX-10.14 15 SELEX COLOR MINI-ENGINE SUPP. FOR SAKE PLOTTERS EXHIBIT 10.14 SELEX COLOR MINI-ENGINE SUPPLEMENT SUPPLEMENT (this "Supplement") made effective as of January 2, 1995 to the Selex Mini-Engine OEM Agreement dated as of May 26, 1994, as amended by Amendment No. 1 made effective as of January 2, 1995 (the "Agreement") between SELEX SYSTEMS U.S.A. INC., a California corporation ("SSUI") and CALCOMP INC., a California corporation ("Buyer"). SSUI and Buyer desire to supplement the Agreement to set forth the terms and conditions pursuant to which Buyer shall purchase from SSUI units of a newly developed component for incorporation into Buyer's color ink jet plotters. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. For purposes hereof, the term "Color Equipment" means (i) certain items comprising a mini-engine which are listed and described in Annex A hereto (collectively, the "Color Component"), including (A) a certain engine controller (the "Color Engine Controller") developed by Buyer pursuant to a Development Agreement dated as of October 31, 1993 between Buyer and Copyer and (B) a certain head driver (the "Head Driver"), (ii) the spare parts for the Color Component as listed in Annex B hereto, and (iii) a print head and BJ color ink tanks, in each case with such engineering changes as may be incorporated therein under the provisions of paragraph 4 of the Agreement. The term "Color Equipment" does not include any other items unless both parties agree in writing pursuant to a separate negotiation. 2. SSUI agrees to sell units of the Color Equipment to Buyer, and Buyer agrees to purchase the same. It is Buyer's non-binding forecast that during the one (1) year period ending December 31, 1995, Buyer will purchase from SSUI approximately 9,000 units of the Color Component. Buyer agrees to purchase the Color Equipment only from SSUI. Except as otherwise expressly provided in this Supplement, the terms and provisions of the Agreement shall apply to the purchase and sale of Color Equipment hereunder, and references in the Agreement to the "Equipment," the "Component," the "Engine Controller" and "spare parts" shall be deemed for purposes hereof to include, respectively, the Color Equipment, the Color Component, the Color Engine Controller and spare parts for the Color Component. 3. Buyer may place purchase orders hereunder for the Color Equipment during the Color Equipment Ordering Period. For purposes hereof, the "Color Equipment Ordering Period" shall mean the period commencing on the date hereof and ending on the first March 31 to occur after either party hereto gives notice to the other party that the ordering period hereunder shall terminate; provided, -------- that such notice is given at least sixty (60) days prior to the relevant March 31. Notwithstanding the foregoing, in no event shall the Color Equipment Ordering Period extend beyond the date on which the Agreement is terminated. 4. The prices set forth in Annex C hereto shall be applicable to Buyer's purchase orders for the Color Component which are placed during the one year period ending December 31, 1995. SSUI may from time to time change the prices for the Color Component ordered thereafter on ninety (90) days prior notice to Buyer. 5. SSUI's current list and prices of spare parts for the Color Component, and prices for the print head and the BJ color ink tanks, are set forth in Annex D hereto and are applicable to Buyer's purchase orders for such items which are placed during the one-year period ending December 31, 1995. SSUI shall have the right to change the prices for any of these items ordered thereafter on ninety (90) days prior written notice. Spare parts for the Color Component, the Print Head and the BJ ink tanks may be ordered for five (5) years after expiration of the Color Equipment Ordering Period. 6. Notwithstanding paragraph 3.B of the Agreement, SSUI shall deliver certain electronics of the Color Component (consisting of the Head Driver and the Color Engine Controller) to Buyer F.O.B. SSUI's designated New Hampshire area warehouse (which may be a Lockheed Commercial Electronics Co. warehouse), whereupon all risk of loss shall pass to Buyer. Notwithstanding paragraph 3.A(i) of the Agreement, the price of that portion of the Color Component which is delivered to Buyer in New Hampshire, as well as the prices of the Head Driver and Color Engine Controller when ordered by the Buyer as spare parts, shall not be subject to change to reflect exchange rate fluctuations. 7. For purposes of paragraph 9 of the Agreement, the term "Engine Controller" as used therein shall be deemed to include not only the Color Engine Controller but shall also include the Head Driver. IN WITNESS WHEREOF, the parties have signed this Amendment by their duly authorized representatives this 9th day of October, 1995. SELEX SYSTEMS U.S.A., INC. CALCOMP INC. /s/ A. Nakazato /s/ G.R. Long By:________________________ By:__________________________ Name: A. Nakazato Name: G.R. Long Title: President Title: President -2- ANNEX A List of Color Equipment and Specifications
Copyer Item # Cal Comp Item # Item Name Min. Order Quantity - ------------- --------------- --------- ------------------- --- 23106-0013/23107-0012 Sake Mini Engine 1 set (40 pcs.) 597-1011-500 22802-0012 Black 14cc Ink Tank 120 pcs. 597-0911-500 22802-0020 Cyan Ink Tank 120 pcs. 597-0921-500 22802-0038 Magnda Ink Tank 120 pcs. 597-0931-500 22802-0046 Yellow Ink Tank 120 pcs. 597-0601-500 22623-0092 Print Head 48 pcs.
-3- ANNEX B Spare Parts for Color Component
Copyer Item # CalComp Item # Item Name Min. Order Quantity - ------------- -------------- --------- ------------------- 600-1349-090 22623-0035 Service Station 40 pcs. 600-1359-090 22623-0076 Carriage Unit 40 pcs. 600-1389-090 22623-0050 Drain Sheet 40 pcs. 600-1399-090 22623-0050 Sub Drain Sheet 80 pcs. 600-1369-090 23125-0010 Head Driver 40 pcs. 600-1379-090 22719-0015 Color Engine Controller 40 pcs.
-4- EXHIBIT 10.15 AMENDMENT NO. 1 TO THE SELEX COLOR MINI-ENGINE SUPPLEMENT AMENDMENT NO. 1 (this "Amendment") to the Supplement made effective as of October , 1995 (the "Supplement") to the Selex Mini-Engine OEM Agreement dated as of May 26, 1994, as amended by Amendment No. 1 made effective as of January 2, 1995 (the "Agreement") between SELEX SYSTEMS USA, INC. a California Corporation ("SSUI") and CALCOMP INC., a California corporation ("BUYER"). For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree to amend the Supplement and Agreement as follows: 1. Each capitalized term in this Amendment not otherwise defined herein is used herein as defined in the Supplement. 2. Annex A of the Supplement is amended to include the following additional items of Color Equipment.
CalComp Minimum Copyer Item # Item # Item Name Order Quantity - ------------- ------- --------- -------------- 597-1521-500 23947-0016 25cc Black Ink Tank 60 Pieces 597-1531-500 23947-0024 25cc Cyan Ink Tank 60 Pieces 597-1541-500 23947-0032 25cc Magenta Ink Tank 60 Pieces 597-1551-500 23947-0040 25cc Yellow Ink Tank 60 Pieces
3. Annex D of the Supplement is amended to include the following prices for the additional items of Color Equipment (and the following revised price for the Print Head):
CalComp Copyer Item # Item # Item Name Pricing - ------------- ------- --------- ------- 597-1521-500 23947-0016 25cc Black Ink Tank $496.80 (60 Pieces) 597-1531-500 23947-0024 25cc Cyan Ink Tank $496.80 (60 Pieces) 597-1541-500 23947-0032 25cc Magenta Ink Tank $496.80 (60 Pieces) 597-1551-500 23947-0040 25cc Yellow Ink Tank $496.80 (60 Pieces) 595-0601-500 22623-0092 Print Head $4,215.84 (48 Pieces)
5. In all other respects the Supplement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment to the Supplement by their duly authorized representatives this day of October, 1995. SELEX SYSTEMS USA, INC. CALCOMP INC. By: /s/ A. Nakazato By: /s/ G. R. Long ----------------------- ------------------------- Name: A. Nakazato Name: G.R. Long Title: President Title: President AMENDMENT NO. 1 AMENDMENT NO. 1 (this "Amendment") made effective as of January 2, 1995 to the Selex Mini-Engine OEM Agreement dated as of May 26, 1994 (the "Agreement") between SELEX SYSTEMS U.S.A. INC., a California corporation ("SSUI") and CALCOMP INC., a California corporation ("Buyer"). For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree to amend the Agreement as follows: 1. Each capitalized term in this Amendment not otherwise defined herein is used herein as defined in the Agreement. 2. Notwithstanding the provisions of paragraph 3 of the Agreement: (a) The prices set forth in Schedule 1 hereto shall be applicable to Buyer's purchase orders for the Component which are placed at any time on or after the date hereof through December 31, 1995, subject to adjustment based on changes in the Exchange Rate as provided in paragraph 3.A(i) of the Agreement. SSUI may from time to time change the prices for such Equipment items ordered thereafter during the term of this Agreement on ninety (90) days notice to Buyer. (b) The Base Exchange Rate for purposes of all purchase orders for Equipment placed by Buyer from and after the date hereof, shall be 100 Yen/Dollar. 3. Paragraph 3.A(ii) of the Agreement is deleted in its entirety. 4. Notwithstanding the provisions of paragraph 6.A of the Agreement, the prices set forth in Schedule 2 hereto shall be applicable to Buyer's purchase orders for spare parts, the carriage retaining shaft, retaining pin and BJ ink cartridge which are placed at any time on or after the date hereof through December 31, 1995, subject to adjustment based on changes in the Exchange Rate as provided in paragraph 3.A(i) of the Agreement. SSUI may from time to time change the prices for such items ordered thereafter during the term of this Agreement on ninety (90) days prior notice to Buyer. 5. Paragraph 3.B of the Agreement is deleted in its entirety and replaced with the following: B. SSUI shall deliver all Equipment to Buyer F.O.B. carrier, Tokyo, whereupon all risk of loss pass to Buyer. Prices are inclusive of usual factory tests and inspection, standard commercial export packing for ocean shipment, but exclusive of all transportation, insurance or other charges from the point of delivery, and any packing other than SSUI's standard commercial export packing, all of which shall be for Buyer's account. Buyer shall be responsible for the importation of the Equipment into the United States, including compliance with all U.S. import control laws and regulations and payment of all applicable customs duty charges. 6. Paragraph 3.C and 3.D of the Agreement are amended to provide that each Order shall specify delivery during the 3rd month (rather than during the 4th month) from the date the Order is placed (for example, an Order placed during the first ten (10) days of January shall be delivered during April). 7. Paragraph 3.E of the Agreement is amended to change the schedule of cancellation charges to read as follows:
Days Prior to then Schedule Delivery Date that Written Percentage of Notice is Received by SSUI Purchase Price -------------------------- -------------- 0-14 20% 15-30 15% 31-90 10% 91-120 3% 121+ 0%
8. Paragraph 3.H of the Agreement is deleted in its entirety and replaced with the following: H. In order to preserve each party's claims against its insurance carrier, Buyer shall give notice with respect to any obvious damage which appears to be attributable to conditions in transit no later than thirty (30) days after delivery of the shipment to Buyer (fifty (50) days if the delivery point is an ocean vessel), and each party shall cooperate with the other in connection with the inspection and insurance report which is customarily made following such notice of insurable damage. Buyer shall be liable for obvious damage to Equipment where the claim has been disallowed by the relevant insurance carrier due to untimely notice by Buyer as required hereunder. -2- 9. The second sentence of Paragraph 7.A of the Agreement is amended to give Buyer the right to conduct its own inspection test of the Equipment within thirty (30) days after the date of delivery, if the delivery point is an aircraft, or within fifty (50) days after the date of delivery, if the delivery point is an ocean vessel. 10. In all other respects the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment by their duly authorized representatives this 9th day of October, 1995. SELEX SYSTEMS U.S.A., INC. CALCOMP INC. /s/ A. Nakazato /s/ G.R. Long By:_________________________ By:_________________________ Name: A. Nakazato Name: G.R. Long Title: President Title: President -3- EX-10.15 16 OEM AGREEMENT FOR ASAHI AND ABSOLUT PLOTTERS EXHIBIT 10.15 OEM AGREEMENT BY AND BETWEEN CALCOMP TECHNOLOGY, INC. AND COPYER CO., LTD OEM AGREEMENT TABLE OF CONTENTS ARTICLE I - DEFINITIONS ........................................ 1 ARTICLE II - TERM OF AGREEMENT ................................. 1 ARTICLE III - INTENTIONALLY DELETED ............................ 1 ARTICLE IV - PURCHASE, AND SALE ................................ 2 ARTICLE V - PRODUCT PRICES, PAYMENT AND TAXES .................. 2 ARTICLE VI - ORDERING AND SCHEDULING ........................... 2 ARTICLE VII - CANCELLATION OF ORDERS ........................... 3 ARTICLE VIII - PARTS .......................................... 3 ARTICLE IX - PACKING AND SHIPPING .............................. 3 ARTICLE X - INSPECTION, TESTING AND QUALITY REQUIREMENTS ....... 4 ARTICLE XI - DOCUMENTATION, TRAINING AND SUPPORT ............... 5 ARTICLE XII - WARRANTIES ....................................... 5 ARTICLE XIII - CHANGES ......................................... 6 ARTICLE XIV - PRODUCT IMPROVEMENTS ............................. 6 ARTICLE XV - PRODUCT DISCONTINUANCE ............................ 6 ARTICLE XVI - INTENTIONALLY DELETED ............................ 6 ARTICLE XVII - FORCE MAJEURE ................................... 6 ARTICLE XVIII - INFRINGEMENT ................................... 7 ARTICLE XIX - PROPRIETARY INFORMATION .......................... 8 ARTICLE XX - DEFAULT/LIMITATION OF LIABILITY/LICENSE RIGHTS .... 8 ARTICLE XXI - NOTICES .......................................... 8 ARTICLE XXII - PRODUCT LIABILITY/INSURANCE ..................... 9 ARTICLE XXIII - RIGHTS TO SELL AND DISTRIBUTE PRODUCT .......... 9 ARTICLE XXIV - GENERAL ......................................... 9 EXHIBIT TITLE ARTICLE A PRODUCT SPECIFICATIONS .................... I,II,III,X,XII B UNIT PRICE SCHEDULE .................................... V C SPARE PARTS .................................. I,V,VI,VIII D PACKAGING SPECIFICATIONS .............................. IX E QUALITY CONTROL AGREEMENT .............................. X F QUALITY AUDIT/FINAL ACCEPTANCE TEST .................... X G DOCUMENTATION ..................................... III,XI H TRAINING AND SUPPORT .................................. XI I LICENSE COST .......................................... XI OEM AGREEMENT This Agreement, which includes all Exhibits referred to herein, is entered into by and between CalComp Technology. Inc. including its subsidiaries and affiliates, having a place of business at 2411 West La Palma Avenue, Anaheim, California 92803 (hereinafter "CalComp"), and Copyer Co. Ltd, having a place of business at 6-3-3 Shimorenjaku, Mitaka-shi, Tokyo 181 Japan (hereinafter "Copyer"). R E C I T A L S WHEREAS CalComp has obtained evaluation units of the Products, as hereinafter defined, from Copyer for evaluation. WHEREAS Copyer has represented its ability to manufacture and supply CalComp with production quantities of the products. WHEREAS CalComp needs a dependable source for the Products and related services as described herein and is willing to obtain the Products from Copyer, in accordance with the provisions hereof. NOW THEREFORE, in consideration of the premises and the covenants set forth herein and intending to be legally bound, the parties hereby agree as follows: ARTICLE I - DEFINITIONS Words shall have their normally accepted meanings as employed in this Agreement. The terms "herein" and "hereof", unless specifically limited, shall have reference to the entire Agreement. The word "shall" is mandatory, the word "may" is permissive, the word "or" is not exclusive, the words "includes" and "including" are not limiting and the singular includes the plural and vice versa. The following terms shall have the described meanings: "Products" means the devices described in Exhibit A (Product Specifications) including related software and the Parts listed in Exhibit C (Spare Parts). "Parts" means the service parts and consumables described in Exhibit C (Spare Parts). The service parts are listed in Exhibit C Section A and the consumables are listed in Exhibit C Section B. "Unit" means an individual device described in the Product Specifications. "Finished Unit" means a unit of CalComp's plotter product produced by integrating an image controller developed by CalComp and other materials not supplied by Copyer, excluding tubing systems, with the engine Unit provided by Copyer. ARTICLE II - TERM OF AGREEMENT The term of this Agreement shall commence on the first day of the month following the date of signing by the last party to sign and shall continue in full force and effect for a period of three (3) years from such date, unless extended or earlier canceled as authorized hereunder. Either party has the right to extend the term for successive one year periods by giving written notice to the other party at least ninety (90) days prior to the end of the initial period or any extension thereof. ARTICLE III - INTENTIONALLY DELETED 1 ARTICLE IV - PURCHASE, AND SALE CalComp shall purchase Units of such Product from Copyer during the term of this Agreement and may purchase Parts and obtain services on the terms and conditions set forth herein; and Copyer shall sell such Products and furnish the services in accordance with these terms and conditions. ARTICLE V - PRODUCT PRICES, PAYMENT AND TAXES A. The prices for Units purchased under this Agreement shall be as indicated in Exhibit B (Unit Price Schedule) and the prices for Parts shall be as indicated in Exhibit C. The pricing detailed in Exhibit B (Unit Price Schedule) shall remain fixed for a period of each twelve (12) months from CalComp's first production shipment of mass production units. Three (3) months prior to the end of such twelve (12) month period the parties shall meet to agree the pricing to apply to Products shipped from Copyer for the following twelve (12) month period. B. Payment shall be made in Japanese Yen thirty (30) days after the date of the Bill of Lading for Products. Each invoice shall include the Order number and CalComp's & Copyer's part number of each item shipped or the service supplied, shipment or supply date, destination address, and identification of any optional features. C. With the exception of the items shown in Exhibit C (Spare Parts), the Products purchased hereunder and Finished Unit will be resold under CalComp's trade name or trademark. Copyer therefore shall not include in the prices any amount for taxes upon the sale of Products to CalComp. All other taxes upon the Products or sale thereof to CalComp which Copyer is required to pay or collect are included in the prices. Upon request, CalComp will provide Copyer with an exemption certificate for the resale of Products as such or as a part of another product or system. ARTICLE VI - ORDERING AND SCHEDULING A. The Products, and services when applicable, shall be ordered by purchase orders and change orders thereto (hereinafter individually or collectively "Orders") issued by CalComp's procurement department personnel. Each Order shall specify quantity, configuration, prices, delivery week dates (detailed on the Order Tracking Sheet described below) and destination, or service as applicable, and other such matters necessary for the individual transaction to be adequately described. All Orders, including those issued by CalComp in anticipation of the signing of this Agreement, and related instructions which are consistent with the terms of this Agreement are deemed accepted by Copyer upon receipt thereof and are covered hereby. B. Copyer shall acknowledge receipt of each Order within ten (10) days after receipt and shall deliver ordered Units and Parts in accordance with the delivery date indicated on the Order Tracking Sheet (herein after "OTS") provided such dates are consistent with the Order lead times, which are four (4) months for Units, four (4) months for the consumables listed in Exhibit C section B and service parts listed in Exhibit C section A, excluding initial provisioning and emergency Parts for which the lead time shall be stated in Exhibit C (Parts). Copyer shall make reasonable effort, however, to comply with CalComp's Orders which request delivery of Units in less than the lead time the aforementioned lead times. C. With respect to Units and Part Exhibit C section C, prior to the tenth (10) day of each month, CalComp shall send Copyer and OTS covering Units for the next six (6) calendar months. The first four (4) month of the deliveries shown on the OTS shall represent a firm purchase commitment not subject to withdrawal except as provided herein. The remaining period of the OTS shall represent a forecast of CalComp's anticipated purchases for such period, but is not a purchase commitment. Copyer shall acknowledge receipt of each OTS within ten (10) days after receipt thereof and simultaneously inform 2 CalComp of any problems that Copyer believes it may have in complying therewith. D. CalComp shall maintain a reasonable level of Finished Units in stock such as to support its sales activities. Periodically at its discretion CalComp may elect to share such stock data with Copyer for the purposed of manufacturing planning. E. This Agreement states the terms and conditions applicable to the Orders and replaces in their entirety both the pre-printed terms and conditions appearing on CalComp's Order forms and any additional terms or changes appearing on Copyer's acknowledgment of the Orders. ARTICLE VII - CANCELLATION OF ORDERS A. Without relieving CalComp of its obligations under its purchase commitment detailed under Exhibit B (Unit Price Schedule), CalComp may cancel any Order for Products issued hereunder, by giving written notice to Copyer prior to the weekly delivery date stated on the OTS, subject only to payment of a cancellation fee, which shall be limited to a percentage of the Product price as follows:
NOTICE OF CANCELLATION DAYS PRIOR TO CANCELLATION FEE SCHEDULED SHIP DATE (Maximum) ------------------- -------------- 121 days or more 0% 91-120 days 20% 90 days or less 25%
C. Each month CalComp shall be allowed to adjust its forecast for Product as indicated in the OTS by up to 30% from the previously indicated quantity in the OTS for the prior month. ARTICLE VIII - PARTS A. Copyer shall receive emergency Parts Orders for "site down" situations according to the conditions indicated in Exhibit C (Spare Parts). Copyer shall timely inform CalComp of shipping information such as a carrier, routing, air or waybill number, etc. B. In consideration of CalComp's purchase of Products during the term of this Agreement, CalComp shall have the right to purchase and Copyer shall be obligated to sell Parts, as provided in Exhibit C (Spare Parts), in such quantities as CalComp may need from Copyer, to support and maintain the Products until five (5) years after the date of the last delivery of Units hereunder. Thereafter Copyer shall continue to supply Parts and services at the prices Copyer may quote until Copyer notifies CalComp that Copyer intends to discontinue supplying any Parts, whereupon CalComp shall have forty five days to place a final Order for such Parts to be delivered within six months after CalComp's Order. ARTICLE IX - PACKING AND SHIPPING A. All Products shall be packed as set forth in Exhibit D (Packaging Specifications). A packing list shall accompany each shipment indicating the Products included therein. CalComp's Order numbers, Unit serial numbers and CalComp's & Copyer's Part numbers shall be indicated on the packing list and on all shipping packages. B. Shipment shall be F.O.B. port of export, Tokyo, Japan as indicated herein accordance with CalComp's designated freight forwarder. Risk of loss shall pass to CalComp at the F.O.B. point. 3 However, if the Copyer fails to follow CalComp's routing instructions, risk of loss shall remain with the Copyer. C. Copyer reserves the right to decline to expedite or delay requests by CalComp of more than one (1) month. CalComp reserves the right to refuse to take delivery of Products which are delivered to the freight forwarder by more than one (1) month in advance of the scheduled delivery date. In such case CalComp may take early delivery and hold Copyer's invoice for payment until the date it would be due if delivery had been made according to schedule. D. If Copyer is more than four (4) weeks late in delivering any Products, CalComp may require Copyer to ship some or all of such Products by air freight or other premium mode of transportation and to pay the cost differential between the normal and premium mode. E. If Copyer fails to deliver five percent (5%) or more of the Product scheduled for shipment during the first twelve (12) months of mass production shipments hereunder then CalComp may cancel some or all Orders for such delinquent Products without liability but in any event the canceled quantity shall be counted as though it had been accepted by CalComp for the purpose of any volume commitments hereunder. ARTICLE X - INSPECTION, TESTING AND QUALITY REQUIREMENTS A. Copyer shall establish and maintain a quality control system in accordance with its own Quality Control Agreement (QCA) Exhibit E (Quality Control Agreement). Copyer shall, prior to shipment, inspect and test each Product in accordance with Exhibit E. CalComp shall audit Copyer's quality assurance on the first lot and review, statistical process control, inspection and test procedures by observing tests being conducted by Copyer or by reviewing Copyer's test documentation; and CalComp may conduct its own source inspection and tests, as stated in Exhibit F (Source/Receiving Inspection and Test Protocol). Records of quality assurance inspection work performed on Products prior to delivery under this Agreement shall be retained by Copyer and be available to CalComp upon request. Nothing in this Agreement relating to inspection and test procedures will be construed as diminishing rights of CalComp under the warranty provisions hereof or as waiving, altering or modifying CalComp's right of final inspection, acceptance or rejection at its facility or installation site. B. Copyer shall strive to achieve Drop Ship status in accordance with the criteria of Paragraph 1.5 of Exhibit E (QCA) within six (6) consecutive months of Product shipments after shipment of the first production unit. If Copyer fails to achieve Drop Ship status within such period, then the parties shall convene a meeting to discuss the appropriate action. The same apply during any period in which Drop Ship status is suspended because of Copyer's failure to continue to comply with the requirements for such status. C. If inspection and testing by CalComp within fifteen (15) working days after receipt at CalComp reveals that any Product is defective with the requirements of Exhibit A (Product Specifications), CalComp may request Copyer to repair or replace the defective Product, as Copyer chooses, within a reasonable time after CalComp's request. Alternatively, CalComp may, without effecting the warranty provisions, with Copyer's approval, rework any rejected Product at a mutually agreed expense. Subject to the foregoing, Copyer shall be notified by CalComp and given an opportunity to inspect at CalComp's factory subject to CalComp's prior written consent. D. CalComp may inspect and test Drop Shipped Products or lot quantities of products accepted based on incoming inspection and testing after taking delivery thereof. Such Products or lot quantities, upon CalComp's inspection and test at its receiving location or installation site, shall demonstrate a Critical Defect Free (CDF) rate, a Major Defect Free (MADF) and a Minor Defect Free (MIDF) rates as define by Military standard 105E. These rates shall be decided by the test method described in Exhibit F 4 (Quality Audit/Final Acceptance Test). Non-compliance with either the CDF or the MADF specified rates shall be cause for Copyer to review its manufacturing process for possible corrective action. E. It is hereby understood that in the event of an amendment being necessary to change the provisions of Exhibit E (Quality Control Agreement), then such amendments may be executed by the Copyer Quality Center. ARTICLE XI - DOCUMENTATION, TRAINING AND SUPPORT A. Copyer shall provide CalComp with one set of Part lists and Service Manuals on a free of charge basis. B. Copyer shall provide training and support as set forth in Exhibit H (Training and Support) to enable CalComp to install, operate, test, maintain and repair the Products. C. Copyer grants CalComp the right and license, subject to the provisions of Article XIX, Proprietary Information, to use, reproduce, modify, translate and distribute the Documentation and training materials with legally effective copyright notice on a chargeable basis so that CalComp may make its own manuals. Such charges are detailed in Exhibit I (License Cost). ARTICLE XII - WARRANTIES A. Copyer warrants that the Products shall: 1. Conform to Exhibit A (Product Specification). 2. Comply with safety and emission standards of the regulatory agencies specified in Exhibit A (Product Specification). 3. Be free of defects in material and workmanship. 4. Be of new manufacture, merchantable and fit for use as a computer peripheral. 5. Be free of any claim, lien or encumbrance not caused by CalComp. B. In the event of a claim under the warranty provisions Copyer shall provide replacement Parts, to CalComp free of charge (including freight cost) for any Product found to be in breach of the provisions listed in paragraph A (1) through (5) above, within one hundred and ten (110) days after the Bill of Lading date (herein after "B/L Date"). In the event that a defect is not of a random nature but rather of an epidemic nature, as described in paragraph C, then the warranty shall be extended up to one (1) year after the B/L Date. The same shall apply to defects in the Products or their manufacturing processes that were not discernable by an inspection and test in accordance with the Acceptance Test Procedure of Exhibit F at the time of acceptance. Copyer shall provide the replacement Parts or an action plan within three (3) weeks after receipt of CalComp's written report of defects. In addition, in the event that the replacement Parts do not correct the defect then CalComp and Copyer shall have the option to decide the disposition of the defective Products. Such option shall only be exercised after reasonable good faith discussions between CalComp and Copyer. C. In the event that CalComp uncovers what it believes is an epidemic defect then CalComp shall provide Copyer data, in writing, in order to convince Copyer that such a defect exists. In the event the parties reach agreement as to the existence of an epidemic defect then Copyer shall provide CalComp with Parts, complying with the warranty, on a free of charge basis (including freight cost), necessary to fix all the Products as the parties determine. In the event that CalComp needs to effect repairs to Product 5 already in the field then Copyer and CalComp shall determine the cost of such field repairs and reach an agreement as to the apportionment of such costs. D. Warranty provisions shall not apply to the Parts listed in Exhibit C Section B Consumables but shall apply to Section A Service Parts. E. For countermeasures against epidemic defects of Product and Parts in the field, CalComp may propose to Copyer that Copyer package replacement Parts in the form of an FCN kit. In such case the cost apportionment of such "kitting" (but not the cost of the parts included therein) shall be discussed and agreed by the parties. F. CalComp shall submit warranty claims to Copyer in writing, within a reasonable time after becoming aware of any breach, indicating the nature and date of the claim and serial number of the defective Unit or Part. H. Copyer shall give CalComp prompt notice of any warranty problem that it becomes aware of and shall promptly correct such problems by making necessary changes in the Products or their manufacturing process subject to the provisions of Article XIII (changes). ARTICLE XIII - CHANGES Changes to the Products shall be conducted in accordance with the procedure described in Exhibit E (Quality Control Agreement) Appendix 1. ARTICLE XIV - PRODUCT IMPROVEMENTS Copyer shall offer improved and new products which it intends to market that are comparable in function and capability to the present Products for purchase by CalComp as additions to or as substitutes therefor under the terms and conditions of this Agreement. Copyer shall notify and make evaluation units of improved and new products available to CalComp sufficiently in advance of Copyer's planned initial shipment so as to afford CalComp reasonable opportunity to determine whether it would be interested in such products. ARTICLE XV - PRODUCT DISCONTINUANCE Copyer shall provide four (4) months written notice to CalComp of its intention to discontinue the manufacture of Product. The notice shall comprise the Copyer's part number, Product description and Copyer's replacement part number, where applicable. Such notices shall be sent to the CalComp contract administrator. By the tenth day of the last month of the notice period, CalComp may place Orders for delivery of Product for the last three (3) months of the subsequent six (6) months period. Such final Orders shall be deemed as being firm Orders, within the allowable variance, and cannot be canceled. ARTICLE XVI - INTENTIONALLY DELETED ARTICLE XVII - FORCE MAJEURE Neither Copyer nor CalComp shall be liable for any delay or failure of performance hereunder due to any contingency beyond its control which renders performance commercially unreasonable including, but not limited to an act of God, war, mobilization, riot, strike, embargo, fire, flood, earthquake or power failure. When only part of Copyer's or CalComp's capacity to perform is excused under this Article, Copyer or CalComp must 6 allocate production and deliveries or receipt of deliveries among various customers or suppliers then under contract for similar goods during the period when Copyer or CalComp is unable to perform. The allocation must be effected in a commercially fiar and equitable manner. When either Copyer or CalComp claims excuse for nonperformance under this Article, it must give notice in writing to the other party. When an allocation has been made, notice of the estimated quota made available for CalComp or Copyer, as the case may be, must be given. If the inability to perform continues for more than sixty (60) days, then thereafter Copyer shall not be obligated to sell Products that it is unable to deliver and CalComp shall not be obligated to purchase Products that it is unable to receive or use due to contingencies that are beyond control, and no Products are to be tendered by Copyer without the prior written consent of CalComp. Further, CalComp shall have the right to cancel this Agreement with respect to Product that Copyer is unable to deliver if Copyer's inability to deliver does, or it becomes obvious that it will, continue for more than sixty (60) days. ARTICLE XVIII - INFRINGEMENT A. Copyer represents that it is not aware of any trade secret misappropriation or patent, copyright or mask work infringement or claim thereof and has no reason to believe that any such misappropriation, infringement or claim will occur with regard to the Products and services delivered hereunder by Copyer or the use, sale or lease thereof by CalComp or its subsidiaries or affiliates or their respective distributors, dealers or customers. B. Copyer shall indemnify and hold CalComp and its Subsidiaries and affiliates and their respective distributors, dealers and customers harmless from any and all loss, damage or liability (including reasonable legal and other expenses and costs) that results from any claim or action for infringement of a domestic or foreign patent, copyright or mask work right or for misappropriation of any trade secret or other intellectual property right with respect to the Products and services furnished by Copyer under this Agreement; and Copyer shall defend or settle any such claim or action at its own expense provided that CalComp, upon becoming aware thereof, gives Copyer prompt written notice of such action or claim made against CalComp or its subsidiaries or affiliates or their respective distributors, dealers or customers. CalComp shall have the right, at its own expense, to participate in Copyer's defense of any such action through CalComp's own counsel. In the event that Copyer fails, after notice, to adequately defend or settle any action which it is obligated to defend or settle hereunder, CalComp shall have the right to prosecute or defend such action and the right to charge Copyer for the full cost and expense thereof (including court costs and attorneys' fees) plus all awards and damages in such action against CalComp. CalComp shall indemnify and hold Copyer harmless from any and all loss, damage or liability (including reasonable legal and other expenses and costs) that results from any claim or action for infringement of a domestic or foreign patent, copyright or mask work right or for misappropriation of any trade secret or other intellectual property right with respect to Copyer's modification of the Products to meet design requirements of the Products and such infringement or misappropriation would not have occurred but for Copyer's modification to CalComp's design. Then CalComp shall defend or settle any such claim or action at its own expense provided that Copyer, upon becoming aware thereof, gives CalComp prompt written notice of such action or claim made against Copyer. Copyer shall have the right, at its own expense, to participate in CalComp's defense of any such action through Copyer's own counsel. In the event that CalComp fails, after notice, to adequately defend or settle any action which it is obligated to defend or settle hereunder, Copyer shall have the right to prosecute or defend such action and the right to charge CalComp for the full cost and expense thereof (including court costs and attorneys' fees) plus all awards and damages in such action against Copyer. C. The foregoing states the entire liability of Copyer and CalComp for infringement and misappropriation except where it is proven to be willful in which case the other party shall have all available legal and equitable remedies. 7 ARTICLE XIX - PROPRIETARY INFORMATION A. Each party hereto shall treat the other party's proprietary information in accordance with the Mutual Non-Disclosure Agreement between the parties dated April 26, 1993. B. Neither party shall without prior written consent of both parties disclose the existence of or any terms and conditions of this Agreement or in any manner advertise or publish any information concerning this Agreement, except as is necessary for its performance hereunder or as may be required by law. ARTICLE XX - DEFAULT/LIMITATION OF LIABILITY/LICENSE RIGHTS A. If Copyer fails to render timely performance of its obligations with regard to delivering Products and Documentation and furnishing support, training and other services, CalComp may, upon giving Copyer written notice of such failure, stop further shipments of such Products, in whole or in part, and suspend performance of all or any portion of its other obligations hereunder with regard to such Products until the failure is cured. If Copyer does not cure the failure within twenty days after receipt of the notice, CalComp shall have the right to cancel this Agreement or any Orders, in whole or in part, with respect to Product for which Copyer is in default or with respect to all Products, effective immediately upon transmission of a written notice of cancellation to Copyer; provided, however, that CalComp may require Copyer to deliver some or all Products ordered prior to cancellation. In addition, in the event of cancellation, CalComp shall have the right, in order to satisfy its requirements for the Products, to purchase equivalent products from any available source. B. If CalComp fails to render timely performance of its obligations with regard to ordering, forecasting, providing shipping routing instructions and payment, Copyer may, upon giving CalComp written notice of such failure, stop further shipments of such Products, in whole or in part, and suspend performance of all or any portion of its other obligations hereunder with regard to such Products until the failure is cured. If CalComp does not cure the failure within twenty (20) days after receipt of the notice, Copyer shall have the right to cancel this Agreement or any Orders, in whole or in part, with respect to Product for which CalComp is in default or with respect to all Products, effective immediately upon transmission of a written notice of cancellation to CalComp. Cancellation of this Agreement by Copyer shall not relieve CalComp of its obligation to pay for product ordered. C. Except as expressly stated herein, neither party shall be liable to the other or to any third party for any incidental, indirect, special or consequential damages resulting from a breach of its obligations hereunder except in the case of material and willful breach. ARTICLE XXI - NOTICES All notices hereunder shall be in writing sent by certified mail, return receipt requested, addressed to the party to be notified as follows: To CalComp: Director, OEM Contracts CalComp Technology, Inc 2411 West La Palma Avenue Anaheim, California 92803 With a copy to: CalComp Corporate Secretary CalComp Technology, Inc 2411 West La Palma Avenue Anaheim, California 92803 8 To Copyer: Copyer Co. Ltd 6-3-3 Shimorenjaku, Mitaka-shi Tokyo 181, Japan. or to such other address or addresses as either party may designate from time to time. ARTICLE XXII - PRODUCT LIABILITY/INSURANCE Copyer shall indemnify and hold CalComp harmless from all cost, expense and liability arising out of or related to death or injury to persons or property resulting from any defect in design, manufacture, material or workmanship of the Products. Copyer shall maintain, at its expense, during the term of this Agreement, product liability insurance for the Products written by a responsible insurer with limits of at least $1,000,000.00. ARTICLE XXIII - RIGHTS TO SELL AND DISTRIBUTE PRODUCT Copyer grants to CalComp an exclusive world-wide right to sell and distribute the Finished Unit and a non-exclusive world-wide right to sell and distribute Parts. ARTICLE XXIV - GENERAL A. This Agreement constitutes the entire agreement between the parties. No waiver, consent, modification or change of terms of this Agreement shall bind either party unless in writing signed by both parties, and then such waiver, consent, modification, or change shall be effective only in the specific instance and for the specific purpose given. Any provision of an Order or acknowledgment thereof under this Agreement which is in any way inconsistent herewith shall be deemed deleted. This Agreement is entered into under the law of Japan. B. The headings of the Articles in this Agreement are included for convenience only and are not to be used in construing or interpreting the Agreement. C. If any part of this Agreement is declared by the Court of competent jurisdiction to be invalid, such invalidity shall not affect the enforceability of other parts not held to be invalid. D. This Agreement may not be assigned by either party without the prior written agreement of the other party and any purported attempt to do so shall be null and void. E. Upon termination or cancellation of this Agreement, Articles I, IV, V, VI, VIII, IX, X, XI, XII, XIII, XVI, XVII, XVIII, XIX, XX, XXI, XXII, XXIII and XXIV shall survive and continue to apply in accordance with their terms. 9 Last Revised: August 22, 1996 IN WITNESS WHEREOF, the parties hereto have caused their respective authorized representatives to execute and enter into this Agreement. CALCOMP TECHNOLOGY, INC. COPYER CO., LTD. BY: /s/ Gary Long BY: /s/ Takeshi Mitarai _______________________ _________________________ Signature Signature Name: Gary Long Name: Takeshi Mitarai Title: President Time: President Date: 9-13-96 Date: 9-19-96 ______________________ ________________________ 10 EX-10.16 17 OEM AGREEMENT FOR MODEL 2700 W/KATSURAGAWA ELEC. CO EXHIBIT 10.16 OEM AGREEMENT BY AND BETWEEN CALCOMP INC. AND KATSURAGAWA ELECTRIC CO., LTD. TABLE OF CONTENTS Article 1 - DEFINITIONS.......................................................1 Article 2 - GRANT OF RIGHTS...................................................2 Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING...................3 Article 4 - PRICING AND PAYMENT...............................................4 Article 5 - TECHNICAL TRAINING, MANUALS.......................................5 Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS..................6 Article 7 - WARRANTY..........................................................6 Article 8 - PATENTS...........................................................7 Article 9 - TRADEMARK.........................................................8 Article 10 - SECRECY...........................................................8 Article 11 - TERM OF AGREEMENT.................................................9 Article 12 - TERMINATION FOR SPECIAL REASONS..................................10 Article 13 - FORCE MAJEURE....................................................10 Article 14 - WAIVER...........................................................11 Article 15 - ASSIGNMENT.......................................................11 Article 16 - ENTIRE AGREEMENT.................................................11 Article 17 - GOVERNING LAW....................................................11 Article 18 - ARBITRATION......................................................11 Article 19 - NOTICE...........................................................12 Article 20 - REPRESENTATIONS..................................................12 Article 21 - MATTERS NOT PROVIDED FOR.........................................12 EXHIBITS -------- Annex I - Model 2700 Product Description Annex II - Pricing for Machines Annex III - KIP Model 2700 Parts Price List. Annex IV - Exchange Rate Procedure A G R E E M E N T ----------------- THIS AGREEMENT is made as of the 9th day of January 1996, by and between CALCOMP INC., having its principal place of business at 2411 West La Palma Avenue, Anaheim, California, U.S.A. (hereinafter called "CALCOMP") and KATSURAGAWA ELECTRIC CO., LTD., having its principal place of business at 21-3, Shimomaruko 4-chome, Ohta-ku, Tokyo, Japan (hereinafter called "KTA") WITNESSETH ---------- WHEREAS, KTA has been designing and developing a digital printer engine designated by KTA as its Model 2700 (hereinafter referred to as the "MACHINE", which term is more fully defined below); WHEREAS, CALCOMP desires to purchase MACHINES as well as spare parts, accessories and consumable products for use in and with MACHINES from KTA for the purpose of distributing the same in the TERRITORY on an OEM basis together with controllers, drivers and software designated by CALCOMP; and WHEREAS, the parties wish to enter into an Agreement setting forth the terms and conditions under which CALCOMP shall purchase and distribute such products from KTA. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: Article I - DEFINITIONS - ----------------------- Words shall have their normally accepted meanings as employed in this Agreement. The terms "herein" and "hereof", unless specifically limited, shall have reference to the entire Agreement. The word "shall" is mandatory, the word "may" is permissive, the word "or" is not exclusive, the words "includes" and "including" are not limiting and the singular includes the plural. The following terms shall have the described meanings: a) MACHINE shall mean the KIP model 2700 Digital Printer Engine designed ------- and developed by KTA, the specifications of which are set out in Annex I hereof. b) SPARE PARTS shall mean those parts used in the repair of the MACHINE ----------- and which are an integral part thereof. c) SUPPLY PRODUCTS shall mean SPARE PARTS plus accessories and consumable --------------- products such as Date Revised: May 13, 1996 1 developer, toner and a photosensitive drum to be used in or in connection with the MACHINE, but not including paper and other copying media. d) CONTRACT PRODUCTS shall mean the MACHINE or SUPPLY PRODUCTS. ----------------- e) OEM PRODUCTS shall mean the MACHINE, and the SUPPLY PRODUCTS, as ------------ integrated into a final product by CALCOMP, inter alia by providing the MACHINE with a controller driver and related software. f) TERRITORY shall mean all countries in the World. --------- g) CONTRACT YEAR shall mean the twelve (12) consecutive calendar month ------------- period after the first day of the month in which the first production order for the MACHINES is received or any subsequent twelve (12) consecutive calendar month period. Article 2 - GRANT OF RIGHTS - --------------------------- 2-1 - --- KTA hereby grants to CALCOMP the non-exclusive right to distribute the OEM PRODUCTS on an OEM basis within the TERRITORY during the term of this Agreement. The said right of CALCOMP shall include CALCOMP's right to have the OEM PRODUCTS distributed by its subsidiaries and distributors within the TERRITORY, provided that CALCOMP shall be responsible for the compliance by such subsidiaries and distributors with the terms of this Agreement. 2.2 - --- CALCOMP hereby agrees to use its best efforts to distribute the OEM PRODUCTS on an OEM non-exclusive basis within the TERRITORY during the term of this Agreement. 2.3 - --- Nothing in this Agreement is to be construed as giving either party the right to commit the other or to act as the legal representative of the other party. Date Revised: May 13, 1996 2 Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING - ----------------------------------------------------------- 3.1 - ---- KTA agrees to supply CALCOMP with the CONTRACT PRODUCTS ordered by CALCOMP for distribution by CALCOMP within the TERRITORY during the term of this Agreement. 3.2 - --- During the term hereof and for a period of at least five (5) years after the termination date of this Agreement, KTA shall supply CALCOMP with SUPPLY PRODUCTS which CALCOMP may order. If KTA at any time during such five (5) year period determines that it will no longer supply certain of the SUPPLY PRODUCTS after expiration of the said period, it will give at least three (3) months notice prior to the expiration of said five (5) year period to CALCOMP, identifying the SUPPLY PRODUCT to be discontinued. In such case CALCOMP shall be entitled to purchase one (1) final lot, in a reasonable quantity, of the SUPPLY PRODUCT concerned from KTA. 3.3 - --- CALCOMP agrees that none of the 120/220 volt units of the MACHINE shall be distributed in Japan as such or such converted into 100 volt units. 3.4 - --- CALCOMP agrees that it will place firm orders ("Firm Orders") for the CONTRACT PRODUCTS by means of a purchase order form, letter, or facsimile before the fifteenth (15th) of each month for the third (3rd) month following, and provide KTA with a forecast (the "Forecast") before the fifteenth (15th) of each month for the fourth (4th) and fifth (5th) months following. If any Firm Order is placed by facsimile, CALCOMP shall promptly send to KTA a confirmation copy by mail. Unless CALCOMP specifies otherwise and agrees to pay extra charges for the packaging concerned, the number of MACHINES specified in a Firm Order for a month shall be equal to or a multiple of twenty-two (22) (the number of MACHINES which fit in a 20 foot container) or forty-four (44) (the number of MACHINES which fit in a 40 foot container). Provided, however, that insofar as the packaging for the relevant MACHINES need not be changed, the number of MACHINES for such monthly order need not be equal to or a multiple of twenty two (22) or forty four (44). Date Revised: May 13, 1996 3 Firm orders may not deviate in quantity by more than twenty (20) percent (plus or minus) from the quantity provided in the related Forecast. KTA will confirm promptly its acceptance of such Firm Orders by facsimile to CALCOMP. If such acceptance is sent by facsimile, KTA shall promptly send to CALCOMP a confirmation copy by mail. 3.5 - --- The following shall be shipped by KTA, F.O.B. Taipei/Keelung Taiwan or F.O.B. Japan to CALCOMP within the times stipulated: a) MACHINES shall be shipped by KTA from its factory to CALCOMP within three (3) months from the fifteenth (15) of the month before which date the Firm Order for such MACHINES is placed. b) SUPPLY PRODUCTS shall be shipped by KTA from its factory to CALCOMP with the relevant lead time as stated in Annex III, KIP Model 2700 Parts Price List. 3.6 - --- On each Firm Order and each delivery made hereunder the terms and conditions hereof shall be exclusively applicable. General sales or purchase conditions of the parties hereto shall not be applicable. Special conditions for certain orders shall be clearly stated in writing and shall previously be accepted in writing by KTA and CALCOMP in order to be applicable and valid. Article 4-PRICING AND PAYMENT - ----------------------------- 4.1 - --- For the first CONTRACT YEAR, the prices for 120/220 volt unit and 100 volt unit of the MACHINE respectively shall be as set out in Annex II hereto, the 120/220 volt units of which shall be subject to adjustment with respect to fluctuations in the exchange rate as stated in Annex IV hereto. For the first CONTRACT YEAR, the prices for SUPPLY PRODUCTS are set out in Annex III hereto. 4.2 - --- Beginning at least ninety (90) days prior to the end of each CONTRACT YEAR, the parties will negotiate in good Date Revised: May 13, 1996 4 faith to arrive at the price and minimum purchase requirements for the MACHINE, and the price for the SUPPLY PRODUCTS to be applied in the subsequent CONTRACT YEAR. 4.3 - --- Payment for the MACHINES or SUPPLY PRODUCTS shall be made by CALCOMP to KTA in Japanese Yen via telegraphic transfer (TT) into an account so designated by KTA, within five (5) days of receipt of a copy of the relevant Bill of Lading or Airway Bill, for the shipment in question, having been sent via facsimile to CALCOMP. Article 5 - TECHNICAL TRAINING, MANUALS - --------------------------------------- 5.1 - --- KTA shall provide technical training to the service personnel of CALCOMP as follows: a) KTA shall provide, upon written request by CALCOMP, technical training courses ("Service Training Courses") to train a limited number of key technicians of CALCOMP at KTA's facility in Japan. KTA shall incur all costs and expenses for its own personnel and CALCOMP shall bear all travel costs and other expenses for its own personnel. b) At CALCOMP's request, KTA may agree to hold its Service Training Course at CALCOMP's facility, provided CALCOMP shall incur all costs and expenses of its own personnel, and KTA shall bear all travel costs and expenses of its own instructor. c) The obligation of KTA in paragraphs a) and b) above shall be limited to ten (10) man-days of instruction (e.g. one (1) key technician of CALCOMP for ten (10) working days or two (2) key technicians of CALCOMP for five (5) working days) during the first year of this Agreement. 5.2 - --- CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP, free of charge, all information regarding the CONTRACT PRODUCTS which may reasonably enable CALCOMP to prepare such documentation, including Date Revised: May 13, 1996 5 one (1) set in English of the parts manual, service manual, operation manual and interface-specifications for the CONTRACT PRODUCTS. Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS - ------------------------------------------------------------ KTA may make modifications of the CONTRACT PRODUCTS which do not alter the appearance or operation of the CONTRACT PRODUCTS or do not require any adaption by CALCOMP of electronic or mechanical items in the OEM PRODUCTS ("Minor Modifications"). KTA shall inform CALCOMP of such Minor Modifications at least one month prior to the shipment of the CONTRACT PRODUCTS containing such modifications. Any modification of the CONTRACT PRODUCTS other than Minor Modifications may only be made by KTA after having given CALCOMP six (6) months written notice of such modification. Further, for Engineering Change Information ("ECI"), KTA agrees to notify CALCOMP prior to making modifications in the following areas, 1) the appearance of the MACHINE, 2) matters relating to Agency approval, and 3) matters relating to the software and the controller. CALCOMP shall respond to all KTA ECI requests within thirty (30) days. Article 7 - WARRANTY - -------------------- 7.1 - --- KTA warrants that all CONTRACT PRODUCTS shall be free from defects in material and workmanship and shall be and operate according to the specifications appearing in Annex I. The said warranty shall apply during a period of six (6) months after installation of the OEM PRODUCTS at CALCOMP's customers' premises or for twelve (12) months after the date of shipment, whichever period is shorter, and is subject to the condition that CALCOMP has notified KTA in writing or by facsimile of any warranty claim within the warranty period. If such notice is sent by facsimile, CALCOMP shall promptly send to KTA a confirmation copy of the same by mail. 7.2 - --- KTA's sole obligation under the warranty in Article 7.1 is limited to either repairing or replacing at KTA's option and expense, those CONTRACT PRODUCTS or parts thereof which do not conform to the said specifications. CALCOMP may, if appropriate and after agreement with KTA, repair the defective CONTRACT PRODUCTS at the installation site, in which case KTA shall credit CALCOMP the costs of replacement parts used by CALCOMP. CALCOMP shall notify KTA of any defective component and allow KTA to evaluate the claim against the defective component. KTA or CALCOMP may request that the defective component be returned to KTA for failure analysis. Date Revised: May 13, 1996 6 7.3 - --- The above warranty does not extend to that part of the CONTRACT PRODUCTS modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA harmless from any and all claims related thereto. 7.4 - --- If it is unclear or cannot be determined from the nature of the defect whether Articles 7.1 and 7.2 or 7.3 should apply, the parties shall meet and determine in good faith a reasonable apportionment of the relevant repair or replacement costs. 7.5 - --- THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, AND ACTION UNDER THIS WARRANTY SHALL BE THE EXCLUSIVE REMEDY. Article 8 - PATENTS - ------------------- 8.1 - --- KTA declares that to the best of its knowledge as of the date hereof the CONTRACT PRODUCTS can be marketed and used in the TERRITORY without infringing any intellectual property rights or other rights of any third party. 8.2 - --- In the event CALCOMP or KTA receives any oral or written notice alleging that the CONTRACT PRODUCTS or any parts thereof furnished under this Agreement constitute an infringement of any patent in the TERRITORY, CALCOMP and KTA shall consult with each other in good faith and assist each other to the extent reasonably possible in the implementation of the particular plan agreed upon by CALCOMP and KTA as the best solution to the problem. Date Revised: May 13, 1996 7 8.3 - --- It is expressly agreed that in the event CALCOMP or KTA receives any such oral or written notice alleging patent infringement as described in the preceding Article 8.2, KTA shall have ninety (90) days from the date of its receipt of such notice to attempt at its expense to reach an accommodation with the patent claimant or holder or to modify or replace the CONTRACT PRODUCTS or any parts thereof with ones that are free from such allegation of infringement. 8.4 - --- KTA's obligations under this Article 8 extend only to the CONTRACT PRODUCTS and do not extend to that part of the MACHINES modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA harmless from all costs and expenses of patent infringement claims related thereto. 8.5 - --- If either party becomes aware of the possibility that the marketing, distribution or use of the CONTRACT PRODUCTS in the TERRITORY could affect or infringe intellectual property rights of third parties, it shall forthwith inform the other party thereof, specifying the details of the same. Article 9 - TRADEMARK - --------------------- CALCOMP shall market and advertise the OEM PRODUCTS only under the trademark "SOLUS 4" or any other trademark or trademarks of CALCOMP. Article 10 - SECRECY - -------------------- During the term of this Agreement, each party may divulge to the other information which is proprietary and confidential to it. Both parties hereby agree that: a) All information in written or other physical form, delivered to it by the Other Party and which is designated to be proprietary and confidential will be safeguarded in the same manner as it safeguards its own proprietary and confidential information of like character, and will not be divulged to third parties by it. Information which is initially orally or visually submitted and identified at the time of initial disclosure as Date Revised: May 13, 1996 8 proprietary shall also be safeguarded only if the Other Party notifies it in writing, within ten (10) business days of such initial oral or visual disclosure, with a specific identification of the proprietary information contained in such initial oral or visual disclosure. b) Such information designated as proprietary and confidential shall be used by it only for the purpose of this Agreement unless there is a specific written agreement permitting wider use. c) This commitment shall terminate five (5) years from the Termination Date of this Agreement. d) This paragraph shall not impose any obligation upon such party with respect to any portion of the received information which: 1. Is now, or which hereafter, through no act or failure to act on its part, becomes generally known or available. 2. Is known to such party at the time of receiving such information. 3. Is furnished to others without restriction on disclosure, or 4. Is hereafter furnished to such party by a third party, as a matter of right and without restriction on disclosure. e) Upon written request from the disclosing Party, the receiving Party will return all of disclosing Party's Proprietary and Confidential Information disclosed under this Agreement to the disclosing Party. Article 11 - TERM OF AGREEMENT - ------------------------------ This Agreement shall be effective as from the date hereof and shall continue for a period of three (3) CONTRACT YEARS. Thereafter, it shall be automatically continued for successive periods of 12 consecutive months until and unless terminated by one of the parties as at the end of the then current period by giving at least ninety (90) days written notice thereof. Date Revised: May 13, 1996 9 Article 12 - TERMINATION FOR SPECIAL REASONS - -------------------------------------------- 12.1 - ---- Without prejudice to any other remedy, any party may summarily terminate this Agreement by notice in writing to the other party if the other party: a) Commits a breach of any of the provisions of this Agreement and, if the subject breach is capable of remedy, does not remedy that breach within thirty (30) days of the receipt of written notice from the other party requiring it to do so; or b) ceases to carry on business, has a receiver appointed for its assets, enters into liquidation, whether compulsory or voluntary, or otherwise becomes subject to applicable insolvency laws; or c) fails to meet its obligations; or d) suffers a substantial change in the identity of its major shareholders, except in the event such change results from an internal reorganization within the present group of companies to which the respective party presently belongs. 12.2 - ---- Termination of this Agreement for whatever reason shall not prejudice the existing rights and obligations of either party to the other hereunder. 12.3 - ---- Any breach of this Agreement by either CALCOMP or KTA shall constitute a breach for which such party shall be severally liable. Article 13 - FORCE MAJEURE - -------------------------- Neither party shall be liable for any default hereunder due to causes beyond its control which originated without its fault or negligence including, but not limited to, acts of God, war, strikes, freight and shipping embargoes, government orders or regulations, provided that, the party which is unable to perform its obligations hereunder Date Revised: May 13, 1996 10 for reasons indicated above, shall upon the occurrence thereof notify the other of the occurrence and practical effect of any such event in writing. If, despite the best efforts of the party in default to remedy the situation of force majeure as indicated here above, the performance of the obligations of a party hereto has been prevented by occurrence of any event indicated above for a period of two (2) months or more, the other party is entitled to terminate this Agreement forthwith by registered letter. Article 14 - WAIVER - ------------------- The failure of either party hereto at any time to exercise any of its rights under this Agreement shall not be deemed a waiver thereof, nor shall such failure in any way prevent said party from subsequently asserting or exercising such rights. Article 15 - ASSIGNMENT - ----------------------- No rights or obligations of any party hereunder shall be assignable without the express prior consent of the other party in writing. Article 16 - ENTIRE AGREEMENT - ----------------------------- This Agreement supersedes all former agreements between the parties hereto insofar as the same are related to the distribution of the CONTRACT PRODUCTS. No change, addition or modification of any of the terms and provisions hereof shall be binding on either party unless accepted in writing by both parties. Article 17 - GOVERNING LAW - -------------------------- This Agreement shall be construed and governed according to Japanese law. Article 18 - ARBITRATION - ------------------------ Any dispute which may arise out of or relating to this Agreement and which cannot be solved by amicable settlement between the parties shall be determined by arbitration. If such arbitration is instituted by KTA against CALCOMP, the hearing shall be held in Anaheim, California, U.S.A. under the rules of the American Arbitration Association. If such arbitration is instituted by CALCOMP against KTA, the hearing shall be held in Tokyo, Japan under the rules of the Japan Commerical Arbitration Association. Date Revised: May 13, 1996 11 Article 19 - NOTICE - ------------------- All notices hereunder shall be deemed to be sufficiently given if in the English language and sent by one party to the other by facsimile or prepaid certified or registered airmail addressed to its office as hereinabove set forth or to such new address as such party may have specified to the other party by notice hereunder. Notices as provided herein shall be deemed given when received, or if correctly addressed and posted on the seventh day following the date of dispatch, whichever comes earlier. Notices to CALCOMP shall be addressed to: William L. Barber, Company Secretary (Fax: (714) 821-2470). Notices to KTA shall be addressed to: Mr. Masanori Watanabe, President (Fax: 03-3757-3451). Article 20 - REPRESENTATIONS - ---------------------------- Each party hereby warrants and represents to the other that it is legally free to enter into this Agreement and that it has no obligation to any other person, partnership, corporation, association or other business or legal entity which would affect or conflict in any way with any of its obligations or duties hereunder. Article 21 - MATTERS NOT PROVIDED FOR - ------------------------------------- Any matters not provided for herein shall be decided by mutual consultation, and such decision shall not take effect unless and until confirmed by the Parties in writing. IN WITNESS WHEREOF the parties have caused this Agreement to be executed on - ------------------ their behalf by duly authorized representatives as of the day and year first above written. CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD. By: /s/ Gary Long By: /s/ Masanori Watanabe --------------- --------------------- Name: Gary Long Name: Masanori Watanabe Title: President Title: President Date: 6-3-96 Date: 6-14-96 ---------------- ---------------------- Date Revised: May 13, 1996 12 AMENDMENT 1 TO THE AGREEMENT FOR THE MODEL 2700 ENGINE ------------------------------------------------------ This Amendment is made and entered into as of February 1, 1996, by and between KATSURAGAWA ELECTRIC CO., LTD., (hereinafter referred to as "KTA") and CALCOMP Inc., (hereinafter referred to as "CALCOMP"). R E C I T A L S --------------- WHEREAS KTA and CALCOMP have entered into an Agreement effective January 9, 1996 for the distribution of the Model 2700 Digital Print Engine. WHEREAS the parties hereto wish to amend the Agreement in order to provide for certain matters not previously addressed and to modify certain other terms; NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows: 1) Article 4 PRICING AND PAYMENT - Paragraph 4.1 revise wording as follows: "The prices for 120/220 volt unit and 100 volt unit of the MACHINE respectively shall be as set out in Annex II hereto, the 120/220 volt units of which shall be subject to adjustment with respect to fluctuations in the exchange rate as stated in Annex IV hereto. The prices for SUPPLY PRODUCTS are set out in Annex III hereto." 2) Article 5 TECHNICAL TRAINING AND MANUALS - Paragraph 5.2 - revise wording as follows: "CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP, free of charge, all information regarding the CONTRACT PRODUCTS which may reasonably enable CALCOMP to prepare such documentation, including one (1) set in English of the parts manual, service manual, operation manual and interface-specifications for the CONTRACT PRODUCTS. KTA grants CALCOMP the right and license, subject to the provisions of Article 10 Secrecy, to use, reproduce, modify, translate and distribute the documentation and training materials with legally effective copyright notice; provided however, that KTA shall not be liable for any damages incurred by CALCOMP or a third party due to, and CALCOMP shall indemnify and hold KTA harmless from liability for any damages incurred by CALCOMP or a third party due to any errors or omissions in the documentation used by CALCOMP using any information so provided by KTA." 3) Article 7 WARRANTY - Paragraph 7.1 - revise wording as follows: "KTA warrants that all CONTRACT PRODUCTS shall be free from defects in design, material and workmanship and shall be and operate according to the specifications appearing in Annex I; provided, however, that such warranty shall not apply to any defects which occur or arise as a result of changes in aspects, features or details of the CONTRACT PRODUCTS which are incorporated therein, adopted or implemented as a result of requests originated by CALCOMP, provided that a CALCOMP officer has previously agreed in writing that said warranty will not apply as a result of the incorporation, adoption, or implementation of said aspects, features or Date Revised: May 13, 1996 1 details. The said warranty shall apply during a period of six (6) months after installation of the OEM PRODUCTS at CALCOMP's customers' premises or for twelve (12) months after the date of shipment, whichever period is shorter, and is subject to the condition that CALCOMP has notified KTA in writing or by facsimile of any warranty claim within the warranty period. If such notice is sent by facsimile, CALCOMP shall promptly send to KTA a confirmation copy of the same by mail. The aforementioned warranty period shall be extended to three (3) years from the relevant shipping date for any latent defect which causes a breach of warranty in a series (for example, a range of serial numbers) of the CONTRACT PRODUCT resulting from a common defect in the CONTRACT PRODUCTS that was not discernible from an inspection and test of CONTRACT PRODUCTS. In the event such latent defect is agreed by KTA and CALCOMP in writing, then CALCOMP may elect to enter into a field replacement program of the affected part or assembly, prior to its failure, so as to prevent or minimize any liability or end user dissatisfaction with the CONTRACT PRODUCT. In such case KTA shall provide replacement parts at no cost." 4) Article 7 WARRANTY - Paragraph 7.5 - replace this paragraph with the following: "THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR OR INTENDED PURPOSE, AND ACTION UNDER THIS WARRANTY SHALL BE THE EXCLUSIVE REMEDY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM A BREACH OF ITS OBLIGATIONS HEREUNDER EXCEPT IN THE CASE OF A MATERIAL OR WILLFUL BREACH." 5) Article 10 SECRECY - sub-paragraph (a) - revise wording as follows: "All information in written or other physical form, delivered to it by the other party and which is designated to be proprietary and confidential will be safeguarded in the same manner as it safeguards its own proprietary and confidential information of like character, and will not be divulged to third parties by it. Information which is initially orally or visually submitted and identified at the time of initial disclosure as proprietary shall also be safeguarded only if the other party notifies it in writing, within ten (10) business days of such initial oral or visual disclosure, with a specific written identification of the proprietary information contained in such initial oral or visual disclosure. This Agreement shall not impose any obligation upon the receiving party with respect to any portion of the received information which (i) is now, or which hereafter, through no act or failure to act on the part of the receiving party, becomes generally known or available; (ii) is known to the receiving party at the time of receiving such information; (iii) is furnished to others by the disclosing party without restriction on disclosure; (iv) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure; or (v) is independently developed by the receiving party without recourse to the received information, provided that the receiving party can demonstrate by written documentation that it developed such information independently. Each party agrees that upon written request from the other it will return any identified proprietary and confidential written material furnished to it which has not been provided in accordance with Date Revised: May 13, 1996 2 some business agreement transferring rights to such material, and will state in writing that no copy of such material has been provided to others or has been retained (except for one archival copy which each party may retain in locked legal files)." 6) Article 10 SECRECY - sub-paragraph (c) - revise wording as follows: "This commitment shall terminate three (3) years from the Termination Date of this Agreement." 7) Article 15 ASSIGNMENT - Replace the existing language with the following: "This Agreement may not be assigned by either party without the prior written agreement of the other party and any purported attempt to do so shall be null and void. This Agreement shall, however, be binding upon and inure to the benefit of any successor in interest of a party hereto as a result of a merger or consolidation." 8) Add a new Article 22 entitle "MACHINE RESCHEDULE" with wording as follows: "CALCOMP may, without incurring liability for any additional or increased costs resulting therefrom, make changes in the quantities of the MACHINES scheduled to be delivered, provided written notice of such change is given to KTA no later than the period of time specified below as applicable to the percentage change in quantity."
DAYS PRIOR TO SCHEDULED PERCENTAGE CHANGE IN QUANTITY FOB DELIVERY DATE INCREASE DECREASE 0 - 60 0% 0% 61 or more 20% 10%"
9) Add a new Article 23 entitled "MACHINE DISCONTINUATION" with wording as follows: "KTA shall provide six (6) months written notice to CALCOMP of its discontinuance of the manufacture of the MACHINE. The notice shall comprise KTA's model number, description, CALCOMP part number and KTA's replacement part number, where applicable. Such notices shall be sent as provided for herein. During the notice period CALCOMP may place orders for delivery of the MACHINE, including life time buy purchase orders, for delivery during the notice period or in the subsequent six (6) month period provided that the delivery schedule for such six (6) month period is determined at the time of such orders." 10) Add a new Article 24 entitled "SURVIVAL PROVISIONS" with wording as follows: "Notwithstanding the termination or cancellation of this Agreement, the relevant provisions of Articles 2, 3, 5, 7, 8, 9, 10, 17, 18 and 19 and any other Articles for which the context so requires shall survive and shall continue to apply in accordance with their terms." 11) Replace Annex II with Annex II (Revision 1) attached hereto. Date Revised: May 13, 1996 3 12) All other terms and conditions of the Agreement as amended shall remain in full force and effect. The parties hereto ratify and confirm the Agreement as revised by this Amendment. IN WITNESS WHEREOF, the parties hereto have caused their authorized representatives to sign this Amendment on their behalf as of the date first above written. CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD. By: /s/ GARY LONG By: /s/ MASANORI WATANABE ------------- ------------------ Name: Gary Long Name: Masanori Watanabe Title: President Title: President Date: 6-3-96 Date: 6-14-96 -------------- -------------------- APPROVED AS TO FORM /s/ W. F. PORTER, JR. ----------------------- LEGAL DEPT. Date Revised: May 13, 1996 4 EX-10.17 18 OEM AGREEMENT FOR MODEL 1220 W/KATSURAGAWA ELEC. CO Exhibit 10.17 OEM Agreement By and Between CALCOMP INC. and KATSURAGAWA ELECTRIC CO., LTD. TABLE OF CONTENTS Article 1 - DEFINITIONS................................................... 1 Article 2 - GRANT OF RIGHTS............................................... 2 Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING............... 3 Article 4 - PRICING AND PAYMENT........................................... 4 Article 5 - TECHNICAL TRAINING, MANUALS................................... 5 Article 6 - PRODUCT SPECIFICATIONS: MODIFICATIONS OF PRODUCTS............. 6 Article 7 - WARRANTY...................................................... 6 Article 8 - PATENTS....................................................... 7 Article 9 - TRADEMARKS.................................................... 8 Article 10 - SECRECY...................................................... 9 Article 11 - TERM OF AGREEMENT............................................ 10 Article 12 - TERMINATION FOR SPECIAL REASONS.............................. 10 Article 13 - FORCE MAJEURE................................................ 11 Article 14 - WAIVER....................................................... 11 Article 15 - ASSIGNMENT................................................... 11 Article 16 - ENTIRE AGREEMENT............................................. 11 Article 17 - GOVERNING LAW................................................ 11 Article 18 - ARBITRATION.................................................. 12 Article 19 - NOTICE....................................................... 12 Article 20 - REPRESENTATIONS.............................................. 12 Article 21 - MATTERS NOT PROVIDED FOR..................................... 12
EXHIBITS -------- Annex I - Model 1220 Product Description Annex II - Pricing for Machines Annex III - KIP Model 1220 Parts Price List. Annex IV - Exchange Rate Procedure
AGREEMENT --------- THIS AGREEMENT is made as of the 9th day of January 1996, by and between CALCOMP INC., having its principal place of business at 2411 West La Palma Avenue, Anaheim, California, U.S.A. (hereinafter called "CALCOMP") and KATSURAGAWA ELECTRIC CO., LTD., having its principal place of business at 21-3, Shimomaruko 4-chome, Ohta-ku, Tokyo, Japan (hereinafter called "KTA") WITNESSETH ---------- WHEREAS, KTA has been designing and developing a digital printer engine designated by KTA as its Model 1220 (hereinafter referred to as the MACHINE", which term is more fully defined below); WHEREAS, CALCOMP desires to purchase MACHINES as well as spare parts, accessories and consumable products for use in and with MACHINES from KTA for the purpose of distributing the same in the TERRITORY on an OEM basis together with controllers, drivers and software designed by CALCOMP; and WHEREAS, the parties wish to enter into an Agreement setting forth the terms and conditions under which CALCOMP shall purchase and distribute such products from KTA. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: Article I - DEFINITIONS - ----------------------- Words shall have their normally accepted meanings as employed in this Agreement. The terms "herein" and "hereof", unless specifically limited, shall have reference to the entire Agreement. The word "shall" is mandatory, the word "may" is permissive, the word "or" is not exclusive, the words "includes" and "including" are not limiting and the singular includes the plural. The following terms shall have the described meanings: a) MACHINE shall mean the KIP model 1220 Digital Printer Engine designed and ------- developed by KTA, the specifications of which are set out in Annex I hereof. b) SPARE PARTS shall mean those parts used in the repair of the MACHINE and ----------- which are an integral part thereof. c) SUPPLY PRODUCTS shall mean SPARE PARTS plus accessories and consumable --------------- products such as developer, toner and a photosensitive drum to be used in or in connection with the MACHINE, but not including paper and other copying media. d) CONTRACT PRODUCTS, shall mean the MACHINE or SUPPLY PRODUCTS. ----------------- e) OEM PRODUCTS shall mean the MACHINE, and the SUPPLY PRODUCTS, as integrated ------------ into a final product by CALCOMP, inter alia by providing the MACHINE with a controller driver and related software. f) TERRITORY shall mean all countries in the World. --------- g) CONTRACT YEAR, shall mean the twelve (12) consecutive calendar month period ------------- after the first day of the month in which the first production order for the MACHINES is received or any subsequent twelve (12) consecutive calendar month period. Article 2 - GRANT OF RIGHTS - --------------------------- 2.1 - --- KTA hereby grants to CALCOMP the non-exclusive right to distribute the OEM PRODUCTS on an OEM basis within the TERRITORY during the term of this Agreement. The said right of CALCOMP shall include CALCOMP's right to have the OEM PRODUCTS distributed by its subsidiaries and distributors within the TERRITORY, provided that CALCOMP shall be responsible for the compliance by such subsidiaries and distributors with the terms of this Agreement. 2.2 - --- CALCOMP hereby agrees to use its best efforts to distribute the OEM PRODUCTS on an OEM non-exclusive basis within the TERRITORY during the term of this Agreement. 2.3 - --- Nothing in this Agreement is to be construed as giving either party the right to commit the other or to act as the legal representative of the other party. Article 3 - SUPPLY OBLIGATION, PURCHASE ORDERS AND SHIPPING - ----------------------------------------------------------- 3.1 - --- KTA agrees to supply CALCOMP with the CONTRACT PRODUCTS ordered by CALCOMP for distribution by CALCOMP within the TERRITORY during the term of this Agreement. 3.2 - --- During the term hereof and for a period of at least five (5) years after the termination date of this Agreement, KTA shall supply CALCOMP with SUPPLY PRODUCTS which CALCOMP may order. If KTA at any time during such five (5) year period determines that it will no longer supply certain of the SUPPLY PRODUCTS after expiration of the said period, it will give at least three (3) months notice prior to the expiration of said five (5) year period to CALCOMP, identifying the SUPPLY PRODUCT to be discontinued. In such case CALCOMP shall be entitled to purchase one (1) final lot, in a reasonable quantity, of the SUPPLY PRODUCT concerned from KTA. 3.3 - --- CALCOMP agrees that none of the 120 and 220 volt units of the MACHINE shall be distributed in Japan as such or converted into 100 volt units. 3.4 - --- CALCOMP agrees that it will place firm orders ("Firm Orders") for the CONTRACT PRODUCTS by means of a purchase order form, letter, or facsimile before the fifteenth (15th) of each month for the third (3rd) month following, and provide KTA with a forecast (the "Forecast") before the fifteenth (15th) of each month for the fourth (4th) and fifth (5th) months following. If any Firm Order is placed by facsimile, CALCOMP shall promptly send to KTA a confirmation copy by mail. Unless CALCOMP specifies otherwise and agrees to pay extra charges for the packaging concerned, the number of MACHINES specified in a Firm Order for a month shall be equal to or a multiple of twenty-four (24) (the number of MACHINES which fit in a 20 foot container) or fifty-seven (57) (the number of MACHINES which fit in a 40 foot container). Provided, however, that insofar as the packaging for the relevant MACHINES need not be changed, the number of MACHINES for such monthly order need not be equal to or a multiple of twenty- four (24) or fifty-seven (57). Firm orders may not deviate in quantity by more than twenty (20) per cent (plus or minus) from the quantity provided in the related Forecast. KTA will confirm promptly its acceptance of such Firm Orders by facsimile to CALCOMP. If such acceptance is sent by facsimile, KTA shall promptly send to CALCOMP a confirmation copy by mail. 3.5 - --- The following shall be shipped by KTA, F.O.B. Taipei/Keelung Taiwan or F.O.B. Japan to CALCOMP within the times stipulated: a) MACHINES shall be shipped by KTA from its factory to CALCOMP within three (3) months from the fifteenth (15th) of the month before which date the Firm Order for such MACHINES is placed. b) SUPPLY PRODUCTS shall be shipped by KTA from its factory to CALCOMP with the relevant lead time as stated in Annex III, KIP Model 1220 Parts Price List. 3.6 - --- On each Firm Order and each delivery made hereunder the terms and conditions hereof shall be exclusively applicable. General sales or purchase conditions of the parties hereto shall not be applicable. Special conditions for certain orders shall be clearly stated in writing and shall previously be accepted in writing by KTA and CALCOMP in order to be applicable and valid. Article 4 - PRICING AND PAYMENT - ------------------------------- 4.1 - --- For the first CONTRACT YEAR, the prices for 120, 220 volt unit and 100 volt unit of the MACHINE respectively shall be as set out in Annex II hereto, the 120 and 220 volt units of which shall be subject to adjustment with respect to fluctuations in the exchange rate as stated in Annex IV hereto. For the first CONTRACT YEAR, the prices for SUPPLY PRODUCTS are set out in Annex III hereto. 4.2 - --- Beginning at least ninety (90) days prior to the end of each CONTRACT YEAR, the parties will negotiate in good faith to arrive at the price and minimum purchase requirements for the MACHINE, and the price for the SUPPLY PRODUCTS to be applied in the subsequent CONTRACT YEAR. 4.3 - --- Payment for the MACHINES or SUPPLY PRODUCTS shall be made by CALCOMP to KTA in Japanese Yen via telegraphic transfer (TT) into an account so designated by KTA, within five (5) days of receipt of a copy of the relevant Bill of Lading or Airway Bill, for the shipment in question, having been sent via facsimile to CALCOMP. Article 5 - TECHNICAL TRAINING, MANUALS - --------------------------------------- 5.1 - --- KTA shall provide technical training to the service personnel of CALCOMP as follows: a) KTA shall provide, upon written request by CALCOMP, technical training courses ("Service Training Courses") to train a limited number of key technicians of CALCOMP at KTA's facility in Japan. KTA shall incur all costs and expenses for its own personnel and lodging expenses for CALCOMP'S personnel and CALCOMP shall bear all travel costs and other expenses (other than lodging expenses) for its own personnel. b) At CALCOMP's request, KTA may agree to hold its Service Training Course at CALCOMP's facility, provided CALCOMP shall incur all costs and expenses of its own personnel and lodging expenses for KTA's instructor, and KTA shall bear all travel costs and expenses (other than lodging expenses) of its own instructor. c) The obligation of KTA in paragraphs a) and b) above shall be limited to ten (10) man-days of instruction (e.g. one (1) key technician of CALCOMP for ten (10) working days or two (2) key technicians of CALCOMP for five (5) working days) during the first year of this Agreement. 5.2 - --- CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP, free of charge, all information regarding the CONTRACT PRODUCTS which may reasonably enable CALCOMP to prepare such documentation, including one (1) set in English of the parts manual, service manual, operation manual and interface-specifications for the CONTRACT PRODUCTS. Article 6 - PRODUCT SPECIFICATIONS: MODIFICATION OF PRODUCTS - ------------------------------------------------------------ KTA may make modifications of the CONTRACT PRODUCTS which do not alter the appearance or operation of the CONTRACT PRODUCTS or do not require any adaption by CALCOMP of electronic or mechanical items in the OEM PRODUCTS ("Minor Modifications"). KTA shall inform CALCOMP of such Minor Modifications at least one month prior to the shipment of the CONTRACT PRODUCTS containing such modifications. Any modification of the CONTRACT PRODUCTS other than Minor Modifications may only be made by KTA after having given CALCOMP six (6) months written notice of such modification. Further, for Engineering Change Information ("ECI"), KTA agrees to notify CALCOMP prior to making modifications in the following areas, 1) the appearance of the MACHINE, 2) matters relating to Agency approval, and 3) matters relating to the software and the controller. CALCOMP shall respond to all KTA ECI requests within thirty (30)days. Article 7 - WARRANTY - -------------------- 7.1 - --- KTA warrants that all CONTRACT PRODUCTS shall be free from defects in material and workmanship and shall be and operate according to the specifications appearing in Annex I. The said warranty shall apply during a period of six (6) months after installation of the OEM PRODUCTS at CALCOMP's customers' premises or for twelve (12) months after the date of shipment, whichever period is shorter, and is subject to the condition that CALCOMP has notified KTA in writing or by facsimile of any warranty claim within the warranty period. If such notice is sent by facsimile, CALCOMP shall promptly send to KTA a confirmation copy of the same by mail. 7.2 - --- KTA's sole obligation under the warranty in Article 7.1 is limited to either repairing or replacing at KTA's option. and expense, those CONTRACT PRODUCTS or parts thereof which do not conform to the said specifications. CALCOMP may, if appropriate and after agreement with KTA, repair the defective CONTRACT PRODUCTS at the installation site, in which case KTA shall credit CALCOMP the costs of replacement parts used by CALCOMP. CALCOMP shall notify KTA of any defective component and allow KTA to evaluate the claim against the defective component. KTA or CALCOMP may request that the defective component be returned to KTA for failure analysis. 7.3 - --- The above warranty does not extend to that part of the CONTRACT PRODUCTS modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA harmless from any and all claims related thereto. 7.4 - --- If it is unclear or cannot be determined from the nature of the defect whether Articles 7.1 and 7.2 or 7.3 should apply, the parties shall meet and determine in good faith a reasonable apportionment of the relevant repair or replacement costs. 7.5 - --- THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, AND ACTION UNDER THIS WARRANTY SHALL BE THE EXCLUSIVE REMEDY. Article 8 - PATENTS - ------------------- 8.1 - --- KTA declares that to the best of its knowledge as of the date hereof the CONTRACT PRODUCTS can be marketed and used in the TERRITORY without infringing any intellectual property rights or other rights of any third party. 8.2 - --- In the event CALCOMP or KTA receives any oral or written notice alleging that the CONTRACT PRODUCTS or any parts thereof furnished under this Agreement constitute an infringement of any patent in the TERRITORY, CALCOMP and KTA shall consult with each other in good faith and assist each other to the extent reasonably possible in the implementation of the particular plan agreed upon by CALCOMP and KTA as the best solution to the problem. 8.3 - --- It is expressly agreed that in the event CALCOMP or KTA receives any such oral or written notice alleging patent infringement as described in the preceding Article 8.2, KTA shall have ninety (90) days from the date of its receipt of such notice to attempt at its expense to reach an accommodation with the patent claimant or holder or to modify or replace the CONTRACT PRODUCTS or any parts thereof with ones that are free from such allegation of infringement. 8.4 - --- KTA's obligations under this Article 8 extend only to the CONTRACT PRODUCTS and do not extend to that part of the MACHINES modified, altered or improved by CALCOMP in creating the OEM PRODUCTS and CALCOMP shall indemnify and hold KTA harmless from all costs and expenses of patent infringement claims related thereto. 8.5 - --- If either party becomes aware of the possibility that the marketing, distribution or use of the CONTRACT PRODUCTS in the TERRITORY could affect or infringe intellectual property rights of third parties, it shall forthwith inform the other party thereof, specifying the details of the same. Article 9 - TRADEMARK - --------------------- CALCOMP shall market and advertise the OEM PRODUCTS only under the trademark "SOLUS 4" or any other trademark or trademarks of CALCOMP. Article 10 - SECRECY - -------------------- During the term of this Agreement, each party may divulge to the other information which is proprietary and confidential to it. Both parties hereby agree that: a) All information in written or other physical form, delivered to it by the Other Party and which is designated to be proprietary and confidential will be safeguarded in the same manner as it safeguards its own proprietary and confidential information of like character, and will not be divulged to third parties by it. Information which is initially orally or visually submitted and identified at the time of initial disclosure as proprietary shall also be safeguarded only if the Other Party notifies it in writing, within ten (10) business days of such initial oral or visual disclosure, with a specific identification of the proprietary information contained in such initial oral or visual disclosure. b) Such information designated as proprietary and confidential shall be used by it only for the purpose of this Agreement unless there is a specific written agreement permitting wider use. c) This commitment shall terminate five (5) years from the Termination Date of this Agreement. d) This paragraph shall not impose any obligation upon such party with respect to any portion of the received information which: 1. Is now, or which hereafter, through no act or failure to act on its part, becomes generally known or available. 2. Is known to such party at the time of receiving such information. 3. Is furnished to others without restriction on disclosure, or 4. Is hereafter furnished to such party by a third party, as a matter of right and without restriction on disclosure. e) Upon written request from the disclosing Party, the receiving Party will return all of disclosing Party's Proprietary and Confidential Information disclosed under this Agreement to the disclosing Party. Article 11 - TERM OF AGREEMENT - ------------------------------ This Agreement shall be effective as from the date hereof and shall continue for a period of three (3) CONTRACT YEARS. Thereafter, it shall be automatically continued for successive periods of 12 consecutive months until and unless terminated by one of the parties as at the end of the then current period by giving at least ninety (90) days written notice thereof. Article 12 - TERMINATION FOR SPECIAL REASONS - -------------------------------------------- 12.1 - ---- Without prejudice to any other remedy, any party may summarily terminate this Agreement by notice in writing to the other party if the other party: a) Commits a breach of any of the provisions of this Agreement and, if the subject breach is capable of remedy, does not remedy that breach within thirty (30) days of the receipt of written notice from the other party requiring it to do so; or b) ceases to carry on business, has a receiver appointed for its assets, enters into liquidation, whether compulsory or voluntary, or otherwise becomes subject to applicable insolvency laws; or c) fails to meet its obligations; or d) suffers a substantial change in the identity of its major shareholders, except in the event such change results from an internal reorganization within the present group of companies to which the respective party presently belongs. 12.2 - ---- Termination of this Agreement for whatever reason shall not prejudice the existing rights and obligations of either party to the other hereunder. 12.3 - ---- Any breach of this Agreement by either CALCOMP or KTA shall constitute a breach for which such party shall be severally liable. ARTICLE 13 - FORCE MAJEURE - -------------------------- Neither party shall be liable for any default hereunder due to causes beyond its control which originated without its fault or negligence including, but not limited to, acts of God, war, strikes, freight and shipping embargoes, government orders or regulations, provided that, the party which is unable to perform its obligations hereunder for reasons indicated above, shall upon the occurrence thereof notify the other of the occurrence and practical effect of any such event in writing. If, despite the best efforts of the party in default to remedy the situation of force majeure as indicated here above, the performance of the obligations of a party hereto has been prevented by occurrence of any event indicated above for a period of two (2) months or more, the other party is entitled to terminate this Agreement forthwith by registered letter. ARTICLE 14 - WAIVER - ------------------- The failure of either party hereto at any time to exercise any of its rights under this Agreement shall not be deemed a waiver thereof, nor shall such failure in any way prevent said party from subsequently asserting or exercising such rights. ARTICLE 15 - ASSIGNMENT - ----------------------- No rights or obligations of any party hereunder shall be assignable without the express prior consent of the other party in writing. ARTICLE 16 - ENTIRE AGREEMENT - ----------------------------- This Agreement supersedes all former agreements between the parties hereto insofar as the same are related to the distribution of the CONTRACT PRODUCTS. No change, addition or modification of any of the terms and provisions hereof shall be binding on either party unless accepted in writing by both parties. ARTICLE 17 - GOVERNING LAW - -------------------------- This Agreement shall be construed and governed according to Japanese law. ARTICLE 18 - ARBITRATION - ------------------------ Any dispute which may arise out of or relating to this Agreement and which cannot be solved by amicable settlement between the parties shall be determined by arbitration. If such arbitration is instituted by KTA against CALCOMP, the hearing shall be held in Anaheim, California, U.S.A. under the rules of the American Arbitration Association. If such arbitration is instituted by CALCOMP against KTA, the hearing shall be held in Tokyo, Japan under the rules of the Japan Commercial Arbitration Association. ARTICLE 19 - NOTICE - ------------------- All notices hereunder shall be deemed to be sufficiently given if in the English language and sent by one party to the other by facsimile or prepaid certified or registered airmail addressed to its office as hereinabove set forth or to such new address as such party may have specified to the other party by notice hereunder. Notices as provided herein shall be deemed given when received, or if correctly addressed and posted on the seventh day following the date of dispatch, whichever comes earlier. Notices to CALCOMP shall be addressed to: William L. Barber, Company Secretary (Fax: (714) 821-2470). Notices to KTA shall be addressed to: Mr. Masanori Wantanabe, President (Fax: 03-3757-3451). ARTICLE 20 - REPRESENTATIONS - ---------------------------- Each party hereby warrants and represents to the other that it is legally free to enter into this Agreement and that it has no obligation to any other person, partnership, corporation, association or other business or legal entity which would affect or conflict in any way with any of its obligations or duties hereunder. ARTICLE 21 - MATTERS NOT PROVIDED FOR - -------------------------------------- Any matters not provided for herein shall be decided by mutual consultation, and such decision shall not take effect unless and until confirmed by the Parties in writing. IN WITNESS WHEREOF the parties have caused this Agreement to be executed on - ------------------ their behalf by duly authorized representatives as of the day and year first above written. CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD. By: /s/ GARY LONG By: /s/ MASANORI WATANABE -------------------------- ----------------------------- Name: Gary Long Name: Masanori Watanabe Title: President Title: President Date: 4-17-96 Date: 4-23-96 ------------------------- ----------------------------- APPROVED AS TO FORM /s/ W.F. PORTER, JR. --------------------- LEGAL DEPT. AMENDMENT 1 TO THE AGREEMENT ---------------------------- This Amendment is made and entered into as of February 1, 1996, by and between KATSURAGAWA ELECTRIC CO., LTD., (hereinafter referred to as "KTA") and CALCOMP Inc., (hereinafter referred to as "CALCOMP"). RECITALS -------- WHEREAS KTA and CALCOMP have entered into an Agreement effective January 9, 1996. WHEREAS the parties hereto wish to amend the Agreement in order to provide for certain matters not previously addressed and to modify certain other terms; NOW, THEREFORE, the parties hereto agree to amend the Agreement as follows: 1) Article 4 PRICING AND PAYMENT - Paragraph 4.1 revise wording as follows: "The prices for 120 and 220 volt unit and 100 volt unit of the MACHINE respectively shall be as set out in Annex II hereto, the 120 and 220 volt units of which shall be subject to adjustment with respect to fluctuations in the exchange rate as stated in Annex IV hereto. The prices for SUPPLY PRODUCTS are set out in Annex III hereto." 2) Article 5 TECHNICAL TRAINING AND MANUALS - Paragraph 5.2 - revise wording as follows: "CALCOMP may prepare, at its own cost, its own manuals and catalogues regarding the OEM PRODUCTS. For that purpose KTA shall, upon request, furnish to CALCOMP, free of charge, all information regarding the CONTRACT PRODUCTS which may reasonably enable CALCOMP to prepare such documentation, including one (1) set in English of the parts manual, service manual, operation manual and interface-specifications for the CONTRACT PRODUCTS. KTA grants CALCOMP the right and license, subject to the provisions of Article 10 Secrecy, to use, reproduce, modify, translate and distribute the documentation and training materials with legally effective copyright notice; provided however, that KTA shall not be liable for any damages incurred by CALCOMP or a third party due to, and CALCOMP shall indemnify and hold KTA harmless from liability for any damages incurred by CALCOMP or a third party due to any errors or omissions in the documentation used by CALCOMP using any information so provided by KTA." 3) Article 7 WARRANTY - Paragraph 7.1 - revise wording as follows: "KTA warrants that all CONTRACT PRODUCTS shall be free from defects in design, material and workmanship and shall be and operate according to the specifications appearing in Annex I; provided, however, that such warranty shall not apply to any defects which occur or arise as a result of changes in aspects, features or details of the CONTRACT PRODUCTS which are incorporated therein, adopted or implemented as a result of requests originated by CALCOMP, provided that a CALCOMP officer has previously agreed in writing that said warranty will not apply as a result of the incorporation, adoption, or implementation of said aspects, features or details. The said warranty shall apply during a period of six (6) months after installation of the OEM PRODUCTS at CALCOMP's customers' premises or for twelve (12) months after the date of shipment, whichever period is shorter, and is subject to the condition that CALCOMP has notified KTA in writing or by facsimile of any warranty claim within the warranty period. If such notice is sent by facsimile, CALCOMP shall promptly send to KTA a confirmation copy of the same by mail. The aforementioned warranty period shall be extended to three (3) years from the relevant shipping date for any latent defect which causes a breach of warranty in a series (for example, a range of serial numbers) of the CONTRACT PRODUCT resulting from a common defect in the CONTRACT PRODUCTS that was not discernible from an inspection and test of CONTRACT PRODUCTS. In the event such latent defect is agreed by KTA and CALCOMP in writing, then CALCOMP may elect to enter into a field replacement program of the affected part or assembly, prior to its failure, so as to prevent or minimize any liability or end user dissatisfaction with the CONTRACT PRODUCT. In such case KTA shall provide replacement parts at no cost." 4) Article 7 WARRANTY - Paragraph 7.5 - replace this paragraph with the following: "THIS WARRANTY IS IN LIEU OF ALL OTHERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR OR INTENDED PURPOSE, AND ACTION UNDER THIS WARRANTY SHALL BE THE EXCLUSIVE REMEDY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM A BREACH OF ITS OBLIGATIONS HEREUNDER EXCEPT IN THE CASE OF A MATERIAL OR WILLFUL BREACH." 5) Article 10 SECRECY - sub-paragraph (a) - revise wording as follows: "All information in written or other physical form, delivered to it by the other party and which is designated to be proprietary and confidential will be safeguarded in the same manner as it safeguards its own proprietary and confidential information of like character, and will not be divulged to third parties by it. Information which is initially orally or visually submitted and identified at the time of initial disclosure as proprietary shall also be safeguarded only if the other party notifies it in writing, within ten (10) business days of such initial oral or visual disclosure, with a specific written identification of the proprietary information contained in such initial oral or visual disclosure. This Agreement shall not impose any obligation upon the receiving party with respect to any portion of the received information which (i) is now, or which hereafter, through no act or failure to act on the part of the receiving party, becomes generally known or available; (ii) is known to the receiving party at the time of receiving such information; (iii) is furnished to others by the disclosing party without restriction on disclosure; (iv) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure; or (v) is independently developed by the receiving party without recourse to the received information, provided that the receiving party can demonstrate by written documentation that it developed such information independently. Each party agrees that upon written request from the other it will return any identified proprietary and confidential written material furnished to it which has not been provided in accordance with some business agreement transferring rights to such material, and will state in writing that no copy of such material has been provided to others or has been retained (except for one archival copy which each party may retain in locked legal files)." 6) Article 10 SECRECY - sub-paragraph c - revise wording as follows: "This commitment shall terminate three (3) years from the Termination Date of this Agreement." 7) Article 15 ASSIGNMENT - Replace the existing language with the following: "This Agreement may not be assigned by either party without the prior written agreement of the other party and any purported attempt to do so shall be null and void. This Agreement shall, however, be binding upon and inure to the benefit of any successor in interest of a party hereto as a result of a merger or consolidation." 8) Add a new Article 22 entitled "MACHINE RESCHEDULE" with wording as follows: "CALCOMP may, without incurring liability for any additional or increased costs resulting therefrom, make changes in the quantities of the MACHINES scheduled to be delivered, provided written notice of such change is given to KTA no later than the period of time specified below as applicable to the percentage change in quantity. DAYS PRIOR TO SCHEDULED PERCENTAGE CHANGE IN QUANTITY FOB DELIVERY DATE INCREASE DECREASE 0-60 0% 0% 61 or more 20% 10%" 9) Add a new Article 23 entitled "MACHINE DISCONTINUATION" with wording as follows: KTA shall provide six (6) months written notice to CALCOMP of its discontinuance of the manufacture of the MACHINE. The notice shall comprise KTA's model number, description, CALCOMP part number and KTA's replacement part number, where applicable. Such notices shall be sent as provided for herein. During the notice period CALCOMP may place orders for delivery of the MACHINE, including life time buy purchase orders, for delivery during the notice period or in the subsequent six (6) month period provided that the delivery schedule for such six (6) month period is determined at the time of such orders." 10) Add a new Article 24 entitled "SURVIVAL PROVISIONS" with wording as follows: "Notwithstanding the termination or cancellation of this Agreement, the relevant provisions of Articles 2, 3, 5, 7, 8, 9, 10, 17, 18 and 19 and any other Articles for which the context so requires shall survive and shall continue to apply in accordance with their terms." 11) Replace Annex II with Annex II (Revision 1) attached hereto. 12) All other terms and conditions of the Agreement as amended shall remain in full force and effect. The parties hereto ratify and confirm the Agreement as revised by this Amendment. IN WITNESS WHEREOF, the parties hereto have caused their authorized representatives to sign this Amendment on their behalf as of the date first above written. CALCOMP INC. KATSURAGAWA ELECTRIC CO., LTD. By: /s/ Gary Long By: /s/ Masanori Watanabe -------------------------- -------------------------- Name: Gary Long Name: Masanori Watanabe Title: President Title: President Date: 4-17-96 Date: 4-23-96 ------------------------ ------------------------ EX-27 19 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q, NINE MONTHS ENDED SEPTEMBER 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-29-1996 JAN-01-1996 SEP-29-1996 14,787 0 65,226 5,447 55,323 133,757 134,244 80,983 287,427 104,782 0 0 0 454 0 287,427 168,370 168,370 130,427 130,427 70,998 0 (523) (31,870) 831 (32,701) 0 0 0 (32,701) 0 $0.78
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