EXHIBIT 10.5
EXECUTION COPY
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REVOLVING CREDIT AGREEMENT
Dated as of July 23, 1996
between
CALCOMP TECHNOLOGY, INC.,
a Delaware corporation,
as Borrower
and
LOCKHEED ▇▇▇▇▇▇ CORPORATION,
a Maryland corporation,
as Lender
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TABLE OF CONTENTS
Page
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SECTION 1. INTERPRETATIONS AND DEFINITIONS.
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1.1 Definitions............................................................. 1
SECTION 2. THE LOANS./
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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.
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3.1 All Loans................................................................ 14
3.2 Initial Loan............................................................. 15
SECTION 4. REPRESENTATIONS AND WARRANTIES.
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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.
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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.
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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.
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SECTION 8. MISCELLANEOUS.
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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
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REVOLVING CREDIT AGREEMENT, dated as of July 23, 1996, between CALCOMP
TECHNOLOGY, INC., a Delaware corporation (the "Borrower"), and LOCKHEED ▇▇▇▇▇▇
CORPORATION, a Maryland corporation (the "Lender").
SECTION 1. INTERPRETATIONS AND DEFINITIONS.
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1.1 Definitions. The following terms, as used herein, shall
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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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 $28,000,000, as such amount may be reduced from
time to time pursuant to Section 2.7 hereof.
"Consolidated" refers to the results obtained by the consolidation of
the accounts of the Borrower and its Subsidiaries in accordance with Generally
Accepted Accounting Principles.
"Consolidated Subsidiaries" means the Subsidiaries of Borrower which
are consolidated with Borrower for financial reporting purposes.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all liabilities of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, (vi) all Debt of others
Guaranteed by such Person and (vii) all obligations of such Person (contingent
or otherwise) in respect of letters of credit and banker's acceptances.
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time, or both, would
become an Event of Default.
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"Depreciation and Amortization Expense" means all amounts reported by
the Borrower in its Consolidated financial statements as expense for
depreciation, depletion and amortization, plus amortization of goodwill and
intangibles, during the relevant period.
"Dollars" and the sign "$" 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
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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
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(b) Preferred Dividends during such period, plus
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(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
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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
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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.
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"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.
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"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
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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
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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
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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 ▇▇▇▇▇▇ 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
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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
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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.
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2.1 Commitment to Lend.
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(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.
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(a) With respect to each Loan made pursuant to Section 2.1
hereof, except as provided in paragraph (c) below, the Borrower shall give the
Lender a notice of borrowing notifying the Lender of its request to borrow
hereunder which notice will specify (i) the date of the Loan, which date shall
be a Business Day, (ii) whether the Loan will be a Base Rate Loan or a LIBOR
Loan, (iii) the principal amount of the Loan, which in the case of a LIBOR Loan
shall be $500,000 or a greater multiple thereof, and (iv) in the case of a LIBOR
Loan, the duration thereof which shall be one, two
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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.
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(a) The Borrower agrees that it shall repay each LIBOR Loan at
the end of the period of duration applicable thereto and it shall repay all
Loans no later than the Termination Date.
(b) The Lender may, in its sole discretion, set off any amounts
due and owing to it by the Borrower hereunder (and not otherwise paid by the
Borrower) against amounts owed by the Lender to the Borrower as provided in
Section 8.8.
(c) The Borrower may repay or prepay the outstanding principal
amount of Loans in whole or in part on any Business Day upon irrevocable notice
to the Lender given not later than 1:00 p.m. (Eastern Time) on the Business Day
prior to the proposed payment date, provided, however, that the Borrower may
make repayments pursuant to Section 4(a) of the Cash Management
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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;
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(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
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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;
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(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,
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requests, demands or other communications to or from the parties hereto shall be
made by personal delivery, mail or telecopy and shall be effective upon receipt
by such party. Any such notice, request, demand or communication shall be
delivered or addressed as follows:
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(i) if to the Borrower, to it at:
CalComp Technology, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone: 512-835-____
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to the Lender, to it at:
Lockheed ▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Lockheed ▇▇▇▇▇▇ Information & Technology Services
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or telex number or telecopy number as any party hereto
may designate by written notice to the other party hereto.
8.2 Amendments and Waivers; Cumulative Remedies.
-------------------------------------------
(a) None of the terms of this Agreement may be waived, altered or
amended except by an instrument in writing duly executed by the Borrower and the
Lender; and
(b) No failure or delay on the part of the Lender in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
provided and contemplated by this Agreement are cumulative and not exclusive of
any rights or remedies provided by law.
8.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, provided that the Borrower may not assign its rights and
obligations hereunder without the prior written consent of the Lender. The
Lender shall notify the Borrower in writing promptly upon any assignment by the
Lender of its rights and obligations hereunder, including any such assignment to
any Subsidiary of Lender.
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8.4 Expenses and Withholding.
------------------------
(a) The Borrower shall pay all out-of-pocket expenses of the
Lender in connection with the preparation and administration of this Agreement
and, if there is an Event of Default, all out-of-pocket expenses incurred by the
Lender (including reasonable fees and disbursements of counsel and reasonable
time charges of lawyers who may be employees of the Lender) in connection with
such Event of Default and collection and other enforcement proceedings resulting
therefrom.
(b) All payments to be made by or on behalf of the Borrower under
or in connection with this Agreement are to be made without deduction or
withholding for or on account of any Tax. If any Tax is deducted or withheld
from any payment, the Borrower shall promptly remit to the Lender the equivalent
of the amount so deducted or withheld together with relevant receipts, if
available, addressed to the Lender. If the Borrower is prevented by operation of
law or otherwise from paying, causing to be paid or remitting such Tax, the
interest payable under this Agreement shall be increased to such rates as are
necessary to yield and remit to the Lender the principal sum advanced together
with interest at the rates specified in this Agreement after provision for
payment of such Tax. The Borrower shall from time to time at the request of the
Lender execute and deliver any and all further instruments necessary or
advisable to give full force and effect to such increase in the rates of
interest as are necessary to yield to the Lender interest at the specified
rates. The Borrower shall also indemnify the Lender in respect of any claim or
loss which it may suffer as a result of the delay or failure of the Borrower to
make any such payment including penalties relating thereto or interest thereon.
8.5 Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
8.6 Headings; Table of Contents. The section and subsection headings
---------------------------
used herein and the Table of Contents have been inserted for convenience of
reference only and do not constitute matters to be considered in interpreting
this Agreement.
8.7 Governing Law; Arbitration.
--------------------------
(a) This Agreement shall be construed in accordance with and
governed by the laws of the State of Maryland, without reference to the conflict
of law provisions of such laws.
(b) The Borrower (i) hereby irrevocably submits to the
jurisdiction of the courts of the State of Maryland over any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby and (ii) hereby agrees with the Lender that the courts of
the State of Maryland will have exclusive jurisdiction over any such suits,
actions or
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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 ▇▇▇▇▇▇ CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Treasurer
CALCOMP TECHNOLOGY, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President,
Controller and Treasurer
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SCHEDULE 4.12
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ERISA Affiliates
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Plans
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S-1