EXHIBIT 99.1
GTCO Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
January 18, 1999
CalComp Technology, Inc.
0000 Xxxx Xx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Senior Vice President
Gentlemen:
On behalf of GTCO Corporation ("GTCO"), we are pleased to submit to
you this binding offer for the purchase of certain of the operating assets of
the Input Technology Division ("ITD") from CalComp Technology, Inc. (the
"Seller"), the nonexclusive license described in Paragraph 5(b) below, the
assumption of related liabilities as specified below and the other matters
described herein, on the terms and conditions set forth below (the
"Transaction"). This offer is being made by GTCO, which shall have the right,
in its discretion, to assign to a wholly owned subsidiary all of its rights and
obligations hereunder no later than two business days prior to the Closing Date
(as hereinafter defined), provided that GTCO remains liable for performance of
the obligations set forth herein. GTCO or any such wholly owned subsidiary so
designated by GTCO is hereinafter referred to as the "Purchaser". The terms
pursuant to which the Purchaser will acquire the Assets (as defined below) of
ITD are set forth below.
1. Assets to be Acquired. The Seller shall transfer, sell, assign, and
---------------------
convey to the Purchaser, and the Purchaser shall purchase and acquire from the
Seller all of the accounts receivable, prepaid expenses, property, plant,
equipment, intellectual property, inventory, and customer lists relating solely
to the business of ITD, including the real estate owned by the Seller located at
00000 X. 00/xx/ Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (collectively, the "Assets").
A detailed list of the Assets is attached as Exhibit A. In addition, the Seller
shall provide the Purchaser with the nonexclusive license described in Paragraph
5(b) below.
2. Liabilities Being Assumed.
-------------------------
(a) The Purchaser shall assume [certain] liabilities and obligations
relating to or existing solely from the ITD (the "Assumed Obligations").
CalComp Technology, Inc.
January 18, 1999
Page 2
(b) At Closing, the Purchaser shall deliver an assumption agreement in
form and substance reasonably satisfactory to the Seller pursuant to which the
Purchaser will assume (and, if the Purchaser is other than GTCO, GTCO will
guaranty the assumption of) the Assumed Liabilities.
3. Amount and Form of Consideration. The consideration for the
--------------------------------
acquisition of the Assets shall be $6,500,000:
(a) Of such, $1,500,000 shall be a nonrefundable deposit (the "Deposit")
to be paid by wire transfer within 24 hours after all of the following shall
have occurred: (i) approval of the execution of this offer letter and
authorization of the consummation of the Transaction by the Board of Directors
of the Seller shall have occurred; (ii) this offer letter shall have been
executed by an executive officer of the Seller thereunto duly authorized; and
(iii) there shall have been delivered to the Purchaser, by facsimile
transmission to the attention of Xxxxxxx Xxxx at (000) 000-0000, a copy of
resolutions of the Board of Directors of the Seller approving the execution of
this offer letter and authorizing all actions necessary to consummate the
Transaction, with such resolutions accompanied by a certificate executed by the
Secretary or an Assistant Secretary of the Seller certifying (A) that the copy
of such resolutions is a true, correct, and complete copy of resolutions adopted
by the Board of Directors of the Seller with respect to such matters, (B) that
such resolutions were duly authorized by the requisite vote of the duly elected
members of the Board of Directors of the Seller, and (C) that neither such
resolutions nor the actions authorized thereby have been altered, modified or
rescinded
CalComp Technology, Inc.
January 18, 1999
Page 3
and that such resolutions, which are the only resolutions relating to the
subject matter thereof, remain in full force and effect as of the date of such
certificate. In the event that the Seller does not receive the Deposit on or
before the end of such 24-hour period, the Seller may, at its option, terminate
this offer letter without any further obligation to GTCO. In the event that the
Transaction is not consummated for any reason, the Seller shall be entitled to
retain for its own account the Deposit without any obligation to return any
portion thereof to GTCO.
(b) The $5,000,000 balance of such consideration shall be paid at Closing
(as hereinafter defined) as described in Paragraph 4 below.
4. Closing and Closing Date. The closing of the sale, transfer,
------------------------
assignment and conveyance of the Assets, and of the nonexclusive license of the
names "CalComp" and "Summagraphics" (the "Closing") to the Purchaser shall take
place on February 1, 1999 at the offices of Xxxx, Pittman, Xxxxx & Treebridge in
Washington, D.C., at 10:00 a.m. Eastern Standard Time, or at such other time and
place as agreed to by the Purchaser and the Seller. At Closing, the Purchaser
shall deliver to the Seller $5,000,000 by wire transfer in accordance with
instructions delivered to the Purchaser in writing by facsimile transmission to
the attention of Xxxxxxx Xxxx at (000) 000-0000, at least two business days
prior to Closing.
5. Other Terms of Transaction. The following additional terms and
--------------------------
provisions shall apply to the Closing of the Transaction:
(a) Real Property. At Closing, the Seller shall (i) have good, record and
-------------
marketable fee simple title to the real property located at 00000 X. 00/xx/
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 as more particularly described in Exhibit B
hereto, together with any and all improvements thereon and appurtenances thereto
(the "Real Property"), (ii) indefeasibly convey to the Purchaser such title in
fee simple, by special warranty deed with customary covenants, free and clear of
any and all liens and encumbrances (other than liens and encumbrances of record
as of the date hereof), but subject to any leases and subleases of the Real
Property, and (iii) indefensibly convey to the Purchaser by bill of sale,
assignment and other instruments of conveyance, in form and substance reasonably
satisfactory to the Purchaser, all of the Seller's right, title and interest in
and to all appurtenances, easements, licenses, privileges and other property
interests belonging or appurtenant to said property. In addition, the Seller
shall assign to the Purchaser, all of its rights, title and interest in and to
the real property at 0000 Xxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000 that is
leased by the Seller and approved in writing by Purchaser (the "Leased Real
Property"), by executing and delivering an Assignment (subject to the consent of
the Lessor) of Lease for such property.
CalComp Technology, Inc.
January 18, 1999
Page 4
(b) Intellectual Property. At Closing, the Seller shall transfer, sell,
---------------------
assign, and convey to the Purchaser, and the Purchaser shall purchase and
acquire from the Seller, all of the Seller's right, title and interest in and to
all patents, patent applications, trademarks, trade names, service marks, and
any registrations of or applications to register any of said marks; copyrights
and any copyright applications; trade secrets; any software or other forms of
intellectual property; all know-how, all of the foregoing to the extent relating
exclusively to the business of ITD; and the goodwill associated with any or all
of the foregoing, free and clear of any and all liens, claims and encumbrances,
other than any liens, claims or encumbrances relating to or arising out of
any licenses or similar agreement pursuant to which the Seller uses or possesses
such Asset. The Seller shall license to the Purchaser for use by the Purchaser
in connection with the sale after Closing of products of the type manufactured
by the ITD prior to Closing the names "CalComp" and "Summagraphics" and
variations thereof, on customary terms, on a nonexclusive, royalty-free basis
for an unlimited period. At Closing, the Seller shall deliver to the Purchaser
such executed copies of such assignments or licenses as are reasonably necessary
to accomplish and effectuate the foregoing and obtainable by the Seller
(provided that the Seller shall not be required to incur any additional costs in
order to accomplish and effectuate the foregoing unless the Purchaser approves
the incurrence of such costs and agrees to reimburse such amounts to the Seller
at Closing) and to record with the appropriate governmental agencies the
transfer, sale, assignment, conveyance and license referred to in this
subsection (b).
(c) Remaining Assets. At Closing, the Seller shall transfer, sell,
----------------
assign, and convey to the Purchaser, and the Purchaser shall purchase and
acquire from the Seller, all of the Assets (including but not limited to
Seller's Accounts Receivables and Prepaid Expenses arising solely from the
business of ITD and in existence at the Closing) not covered by the foregoing on
a "where is, as is" basis pursuant to a bill of sale from the Seller to the
Purchaser. Notwithstanding anything contained herein, this offer letter shall
not constitute an agreement to assign any Asset if any attempted assignment
thereof, without the consent of a third party, would constitute a breach or
other contravention thereof, be ineffective with respect to any party thereto or
in any way adversely affect the rights of the Seller or the Purchaser
thereunder. The Seller makes no representation or warranty as to the
effectiveness of the assignment of any contract that constitutes part of the
Assets which assignment requires the consent of any third party. Prior to
Closing, each of the Seller, the Purchaser and (if the Purchaser is other than
GTCO) GTCO will use commercially reasonable efforts but without any payment of
money by the Seller to any third party unless the Purchaser approves the
incurrence of such costs and agrees to reimburse such amounts to the Seller at
Closing) to obtain required consents to the sale or assignment of the Assets to
the Purchaser. If a required consent is not obtained, the Seller and the
Purchaser will cooperate in a mutually agreeable arrangement under which the
Purchaser would obtain the benefits and assume the obligations thereunder in
accordance
CalComp Technology, Inc.
January 18, 1999
Page 5
with the intent of this offer letter; provided, however, that the Seller shall
have no continuing obligation following Closing with respect thereto and by
closing the Transaction the Purchaser waives any claim against the Seller in
respect thereof.
(d) Special Provisions Relating to Belgian Assets. In connection with the
---------------------------------------------
transfer, sale, assignment and conveyance of the Assets located, or used by the
ITD operations, in Belgium (collectively, the "Belgian Assets"), the Seller
agrees to cooperate with the Purchaser in structuring the terms and conditions
for the transfer, sale, assignment and conveyance of the Belgian Assets, and in
executing such documents and instruments and taking such actions, as will permit
the Purchaser to acquire the Belgian Assets free and clear of any transfer or
similar tax imposed by national or local authorities in Belgium; provided that
(i) the Seller shall not incur any additional costs as a result thereof that are
not reimbursed to the Seller by the Purchaser at Closing, and (ii) the Closing
Date shall not be extended absent the agreement of the Seller.
(e) Assumption of Liabilities. At Closing, the Purchaser shall deliver to
-------------------------
the Seller an assumption agreement pursuant to which the Purchaser shall assume
(and, if the Purchaser is other than GTCO, GTCO will guaranty the assumption of)
all of the Assumed Liabilities.
6. Employees and Employee Benefit Matters.
--------------------------------------
(a) Effective as of the Closing, the Purchaser shall offer employment to
no fewer than 100 employees of ITD, on terms and conditions similar to the
employee plans and benefit arrangements offered by the Seller to such employees
on the date hereof. A list of such employees will be provided by the Purchaser
to the Seller within two business days after execution hereof by the Seller and
shall be attached hereto as Exhibit C.
(b) For a period of not less than six months following the Closing, the
Purchaser will provide compensation and employee benefits for the benefit of
employees that accept employment with the Purchaser (the "Employees") that are
similar to those offered by the Seller (except that the Purchaser shall not
provide benefits the same as or similar to those provided pursuant to Seller's
existing pension plan). Each Employee's years of service recognized under the
Seller's or its affiliates' plans or benefit arrangements will be credited by
the Purchaser for purposes of satisfying eligibility and vesting requirements of
the Purchaser's employee benefit plans and benefit arrangements. All Employees
shall be eligible to participate in the Purchaser's employee plans and benefit
arrangements as of the Closing Date. The Purchaser will take all actions
necessary to accept direct rollover contributions into its employee benefit
plans from the eligible plans of the Seller or any of its affiliates.
CalComp Technology, Inc.
January 18, 1999
Page 6
(c) Commencing on the Closing Date, the Purchaser shall assume all
responsibility and liability for (i) accrued but unpaid wages, bonuses, salary
and accrued vacation of Employees; (ii) all claims by Employees and
beneficiaries for severance or other termination benefits based on events
occurring after the Closing Date; and (iii) all claims relating to the terms and
conditions of employment, hiring, firing, supervision, occupational safety and
health, workplace, wages and hours provisions, promotion, employment practices
or treatment of Employees or beneficiaries regardless of whether such matter
arises from or relates to events on or after the Closing Date. For a period of
six months from the Closing Date, the Purchaser shall provide severance benefits
for Employees that are substantially the same as the severance plans provided by
the Seller as of the date hereof. Effective as of the Closing Date and at all
times thereafter, the Purchaser shall be responsible for the payment,
sponsorship, funding, operation, investment and administration of all
compensation, employee plans and benefit arrangements provided for any Employees
or beneficiaries.
(d) The Purchaser and the Seller will cooperate in insuring that benefit
coverage under the Seller's or its affiliates' welfare benefit plans for
Employees covered thereunder prior to the Closing is coordinated with coverage
under the Purchaser's benefit arrangements provided after the Closing. Without
limiting the generality of the foregoing, the Purchaser will use reasonable
efforts to ensure that the Purchaser's benefit arrangements will provide that
any expenses incurred by any Employee on or prior to the Closing Date, will be
taken into account for the purposes of satisfying deductible and co-insurance
requirements and satisfaction of maximum out-of-pocket provisions to the same
extent as if such expenses had been incurred after the Closing Date. In
addition, the Purchaser will use reasonable efforts to ensure that the group
health coverage provided by the Purchaser to Employees will not contain any
rating period or exclusion or limitation for pre-existing conditions with
respect to the benefits provided thereunder. No pre-qualification requirements
will apply to Employees for purposes of supplemental life insurance coverage
eligibility.
7. Obligations of the Seller and the Purchaser. The Seller and the
-------------------------------------------
Purchaser shall take all actions necessary to comply with all applicable state
and federal laws and regulations applicable to the Transaction.
8. Conditions to Closing. The Closing of the Transaction shall be
---------------------
subject to satisfaction or waiver of the following conditions:
(a) All necessary state and federal regulatory approvals and other
approvals that are necessary to consummate the Transaction shall have been
obtained on or before the Closing Date. Each of GTCO and Seller represents and
warrants for the benefit of the other that each has all requisite corporate
power and authority to execute and deliver this offer letter and to consummate
the Transaction and that no additional Board or shareholder approval is
required.
CalComp Technology, Inc.
January 18, 1999
Page 7
(b) The provisions of Paragraph 5 relating to the terms and conditions of
the transfer of the Assets, the assumption of liability by the Purchaser, and
the issuance to the Purchaser of the license shall have been satisfied.
9. Exclusivity. The Seller agrees that it will not, and will not permit
-----------
any stockholder, director, officer, employee, agent or representative of Seller
(including Xxxxxxx Xxxxx Xxxxxx) to, directly or indirectly, provide any
further information to or discuss or negotiate with ITD management or any third
party (other than the Purchaser) regarding the sale to ITD management or any
third party of any or all or substantially all of the Assets or any interest
therein (except for the sale of products to customers in the ordinary course of
the Seller's business) unless and until the Closing Date shall have passed and
the Closing shall not have occurred (absent the agreement of the parties to the
contrary), unless this offer has previously been terminated in accordance
herewith. The Purchaser acknowledges and agrees that it is aware of the
proposed shutdown and complete liquidation of the business of the Seller
(including ITD). The provisions of this Paragraph 9 shall not apply to the
Seller's execution of its shutdown and complete liquidation plan provided that
the Seller and its representatives do not provide additional information to or
engage in any negotiation with any third party (including ITD management) with
respect to the sale of ITD as a going concern separate from the other businesses
of the Seller. Further, the provisions of this Paragraph 9 shall not apply to
the sale of all or any part of the equity interests in the Seller by its
majority stockholder.
10. Public Announcement. Neither party shall issue any press release or
-------------------
make any public announcement of or relating to the Transaction without the prior
consent of the other, except where a public announcement is required by law or
the rules of any stock exchange on which the common stock of the Purchaser or
the Seller is then listed. Where such an announcement is required by law, in
the opinion of counsel to a party, the other party shall be given the
opportunity to review and comment on the proposed announcement.
11. Fees and Expenses. Whether or not the Transaction contemplated hereby
-----------------
is consummated, each party will pay its own costs and expenses, including fees
and disbursements of its counsel and accountants; provided, however, that the
Seller shall be entitled to retain the Deposit in all events.
The Purchaser will indemnify and hold the Seller harmless against any loss,
cost, damage, expense or liability incurred by the Seller as a result of the
retention by the Purchaser of The Xxxxxxxx Group or any other broker or finder
in connection with the transaction contemplated hereby. The Seller will
indemnify and hold the Purchaser harmless against any loss, cost, damage,
CalComp Technology, Inc.
January 18, 1999
Page 8
expense or liability incurred by the Purchaser as a result of the retention by
the Seller of Xxxxxxx Xxxxx Xxxxxx or any other broker or finder in connection
with the transaction contemplated hereby.
12. Confidentiality. The Seller and Xxxxxxx Xxxxx Xxxxxx shall not
---------------
disclose the contents of this letter to ITD's management or any third party
without the Purchaser's prior written consent, and the Purchaser shall not
disclose the contents of this letter to ITD's management or to any third party
without the Seller's prior written consent. However, each party may make such
disclosure to any of the following persons or entities who agree to keep such
information confidential: its partners, directors, officers, employees
(including ITD's management and employees), attorneys, accountants and other
advisors (together "Representatives"), as applicable, who need to know such
information in connection with the transaction contemplated hereby.
Furthermore, the parties agree that the terms and conditions contained in the
Confidentiality Agreement dated September 21, 1998 remain in full force and
effect.
13. Actions Taken as Principal; Binding Effect. The Purchaser confirms
------------------------------------------
that in submitting this offer, it is acting for its own account as principal and
not as an agent for another. The agreements and the obligations of the parties
set forth herein constitute a single agreement.
14. Termination. If this offer is not accepted in writing by the Seller
-----------
and a copy of an executed copy thereof delivered to the Purchaser, to the
attention of Xxxxxxx X. Xxxx, by facsimile transmission of written acceptance to
(000) 000-0000, together with written wire transfer instructions, on or before
5:30 p.m.. Eastern Standard Time, on January 18, 1999, this offer shall
terminate and be null and void after such time. The facsimile transmission
shall be followed by deliver of an originally executed copy hereof within two
business days thereafter to Xxxxxxx X. Xxxx, President, GTCO Corporation, 0000
Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000.
Very truly yours,
GTCO Corporation
By: /s/ S.T. Xxxx
--------------------------------------
Title: President
AGREED AND ACCEPTED:
CALCOMP TECHNOLOGY, INC.
By: /s/ X. Xxxxxxxxx
---------------------------------------------------------
Title: Senior Vice President and Chief Financial Officer
