<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ------------
Commission File Number 0-9160
INTEK DIVERSIFIED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2450145
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
970 West 190th Street, Suite 720
Torrance, California 90502
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 366-7335
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------ ------
The number of shares outstanding of each of the issuer's classes of
Common Stock, $0.01 par value, as of November 14, 1995, is 10,571,873 shares.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995, THE PERIOD
FROM INCEPTION (FEBRUARY 4, 1994) THROUGH SEPTEMBER 30, 1994, AND FOR THE
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1994 (UNAUDITED)
Three Months Ended Sept 30 Nine Months Ended Sept 30
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
Net Sales $ 805,514 $ - $ 2,325,852 $ -
Cost of goods sold 681,720 - 2,080,517 -
------------ ------------ ------------ ------------
Gross Profit 123,794 - 245,335 -
Selling, general
and administrative
expense 1,080,292 318,030 2,675,227 781,894
------------ ------------ ------------ ------------
Operating loss (956,498) (318,030) (2,429,892) (781,894)
Other income (exp):
Interest (107,270) 1,180 (753,615) 3,259
Other 22,369 - 28,067 -
------------ ------------ ------------ ------------
Loss from
continuing
operations (1,041,399) (316,850) (3,155,440) (778,635)
Gain (loss) from
discontinued
operations net of
applicable income
taxes 43,485 - 1,195,025 -
------------ ------------ ------------ ------------
Net loss before tax (997,914) (316,850) (1,960,415) (778,635)
Income tax - - - -
------------ ------------ ------------ ------------
Net loss $ (997,914) $ (316,850) $(1,960,415) $ (778,635)
============ ============ ============ ============
Per Share Data:
Continuing
Operations $ (.10) $ (.11) $ (.33) $ (.28)
Discontinued
Operations $ (.00) $ - $ .13 $ -
------------ ------------ ------------ ------------
Net loss per share $ (.10) $ (.11) $ (.20) $ (.28)
============ ============ ============ ============
Weighted average
shares outstanding 10,056,834 2,817,249 9,351,944 2,817,249
============ ============ ============ ============
The accompanying notes are an integral part of these condensed
consolidated statements.
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD
FROM INCEPTION (FEBRUARY 4, 1994) THROUGH SEPTEMBER 30,1995(UNAUDITED)
February 4, 1994
Through
September 30, 1995
------------
Net Sales $ 2,654,862
Cost of goods sold 2,372,993
------------
Gross Profit 281,869
Selling, general
and administrative
expense 3,617,446
------------
Operating loss (3,335,577)
Other income (expense):
Interest (794,558)
Other 35,955
------------
Loss from
continuing
operations (4,094,180)
Gain (loss) from
discontinued
operations net of
applicable income
taxes 1,195,025
------------
Net loss before tax (2,899,155)
Income Tax
------------
Net loss $ (2,899,155)
============
Per Share Data:
Continuing
Operations $ (.62)
Discontinued
Operations $ .18
------------
Net loss per share $ (.42)
============
Weighted average
shares outstanding 6,767,285
============
The accompanying notes are an integral part of these condensed
consolidated statements.
2
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1995 (Unaudited) and December 31, 1994
ASSETS
UNAUDITED
September 30, December 31,
1995 1994
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 744,526 $ 1,557,363
Accounts receivable, net of allowance
for doubtful accounts of $35,287
in 1994 and $60,798 in 1995 582,783 921,538
Note receivable 174,123 67,500
Deposits 147,120 -
Inventories 1,964,971 1,127,127
Prepaid expenses and
other current assets 259,777 483,389
Net assets of discontinued operations 868,864 2,732,098
------------ ------------
Total current assets 4,742,164 6,889,015
------------ ------------
EQUIPMENT, AT COST 6,429,855 794,217
Less--Accumulated Depreciation 71,382 22,642
------------ ------------
6,358,473 771,575
Investment in joint venture 136,333 0
------------ ------------
$11,236,970 $ 7,660,590
============ ============
The accompanying notes are an integral part of these condensed
consolidated statements.
3
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1995 (Unaudited) and December 31, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
UNAUDITED
September 30, December 31,
1995 1994
------------ ------------
CURRENT LIABILITIES:
Accounts payable $ 586,904 $ 355,353
Accrued liabilities 653,735 131,847
Related party payable 2,192,991 1,292,078
Note payable 1,600,000 2,500,000
------------ ------------
Total current liabilities 5,033,630 4,279,278
DEFERRED INCOME TAXES 26,241 116,300
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value
Authorized - 20,000,000 shares
Issued - 9,382,831 shares
in 1994 and 10,571,873 in 1995 105,718 93,825
Capital in excess of par value 9,740,927 4,880,318
Treasury stock, at cost - 465,582
shares in 1994 and 1995 (770,391) (770,391)
Deficit accumulated during development
stage (2,899,155) (938,740)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 6,177,099 3,265,012
------------ ------------
$11,236,970 $ 7,660,590
============ ============
The accompanying notes are an integral part of these condensed
consolidated statements.
4
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995, THE PERIOD
FROM INCEPTION (FEBRUARY 4, 1994) THROUGH SEPTEMBER 30, 1994, AND FOR THE
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1994 (UNAUDITED)
Three Months Ended Sept 30 Nine Months Ended Sept 30
------------------------- -------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
Cash Flows From
Operating Activities:
Net loss $ (997,914) $ (316,850) $(1,960,415) $ (778,635)
Adjustments to
reconcile net loss
to net cash provided
by operating activities:
Depreciation 10,301 989 48,740 2,103
Loss (gain) from sale
of assets held
for sale (43,485) - (1,195,025) -
Changes in assets
and liabilities:
Decrease (increase) in:
Accounts receivable (196,117) (48,045) 338,755 (48,045)
Deposits (147,120) - (147,120) -
Inventories 776,325 - (837,844) -
Prepaid expenses
and other current
assets (61,343) (62,204) 223,612 (62,204)
Increase (decrease) in:
Accounts payable 254,608 733,785 231,551 794,344
Accrued liabilities 1,197,479 - 521,888 -
Deferred Income Taxes (90,059) (90,059)
------------ ------------ ------------ ------------
Total Adjustments 1,700,589 624,525 (905,502) 686,198
------------ ------------ ------------ ------------
Net cash provided by
(used in) operating
activities 702,675 307,675 (2,865,917) (92,437)
Cash flows from
investing activities:
Capital expenditures (2,741,015) (238,023) (5,635,638) (386,299)
Net change in assets
held for sale (1,373,504) - (797,525) -
Proceeds from sale
of net assets of
discontinued
operations 483,205 - 3,855,784 -
Proceeds from notes
receivable 35,465 - 60,000 -
5
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Notes receivable
from sale of
discontinued
operations 220,205 - (166,623) -
Investment in joint
venture (11,333) - (136,333) -
------------ ------------ ------------ ------------
Net cash provided by
(used in)investing
activities (3,386,977) (238,023) (2,820,335) (386,299)
Cash flows from
financing activities:
Common stock issuance 237,500 - 4,872,502 500,000
Repayment of debt - - (900,000) -
Related party payable 2,022,016 (213,565) 900,913 47,437
------------ ------------ ------------ ------------
Net cash provided by
financing activities 2,259,516 (213,565) 4,873,415 547,437
------------ ------------ ------------ ------------
Net increase (decrease)
in cash and cash
equivalents $(424,786) (143,913) $(812,837) 68,701
Cash and equivalents
at beginning of period 1,169,312 212,614 1,557,363 -
------------ ------------ ------------ ------------
Cash and equivalents
at end of period $ 744,526 $ 68,701 $ 744,526 $ 68,701
============ ============ ============ ============
The accompanying notes are an integral part of these condensed
consolidated statements.
6
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (FEBRUARY 4, 1994)
THROUGH SEPTEMBER 30,1995 (UNAUDITED)
February 4, 1994
Through
September 30, 1995
------------
Cash Flows From
Operating Activities:
Net loss $(2,899,155)
Adjustments to
reconcile net loss
to net cash provided
by operating activities:
Depreciation 96,725
Loss (gain) from sale
of assets held
for sale (1,195,025)
Changes in assets
and liabilities:
Decrease (increase) in:
Accounts receivable 124,954
Deposits (147,120)
Inventory (1,964,971)
Prepaid expenses and
other current assets (142,485)
Increase (decrease) in:
Accounts payable 586,905
Accrued liabilities 653,735
Deferred income taxes (90,059)
------------
Total Adjustments (2,077,341)
------------
Net cash used in
operating activities (4,976,496)
Cash flows from
investing activities:
Capital expenditures (6,429,855)
Equity acquired in reverse
merger 3,227,866
Net change in assets acquired
in reverse merger (3,738,971)
Net change in assets
held for sale (797,525)
Proceeds from sale
of net assets of
discontinued operations 3,855,784
Proceeds from notes
receivable 60,000
Notes receivable
7
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from sale of
discontinued
operations (166,623)
Investment in joint
venture (136,333)
------------
Net cash used in investing
activities (4,125,657)
Cash flows from
financing activities:
Common stock issuance 5,372,502
Loan proceeds 2,500,000
Repayment of debt (900,000)
Related party payable 2,192,991
------------
Net cash provided by
financing activities 9,165,493
------------
Net increase
in cash and cash
equivalents $ 63,340
Cash and equivalents
at beginning of period 427,218
Cash and equivalents
acquired in reverse merger 253,968
------------
Cash and equivalents
at end of period $ 744,526
============
The accompanying notes are an integral part of these condensed
consolidated statements.
8
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INTEK DIVERSIFIED CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 (UNAUDITED)
(1) PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by INTEK Diversified Corporation (the "Company" or "INTEK"), pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, and the Company
believes that the disclosures are adequate to not make the information presented
misleading. These condensed consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
The information furnished herein reflects all adjustments which are, in the
opinion of management, necessary to a fair presentation of the condensed
consolidated financial statements for the interim periods presented taken as
a whole. These adjustments are of a normal and recurring nature. The results
of the interim periods are not necessarily indicative of results to be
expected for the entire year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. PRINCIPLES OF CONSOLIDATION
INTEK was incorporated in 1969 and was primarily engaged in the business of
molding, fabricating and selling plastic products through its wholly owned
subsidiary, Olympic Plastics Corporation ("Olympic").
On September 23, 1994, a newly formed, wholly-owned subsidiary of INTEK, Romnet,
Inc., a Delaware corporation, acquired all of the issued and outstanding stock
of Simrom, Inc. ("Simrom"), an Ohio corporation in exchange for 6,000,000 shares
of INTEK common stock. Effective September 23, 1994, Simrom merged with and into
Romnet, Inc. (the "Merger"). After the Merger, the surviving corporation changed
its name to Roamer One, Inc. ("Roamer One"). The Company subsequently decided to
re-focus its resources to the development of the Roamer One business and the
telecommunications industry and to discontinue and divest the operations of
Olympic. Since the former shareholders of Roamer One retained more than a 50
percent controlling interest in INTEK, the business combination was treated as
a reverse merger for accounting purposes, with Roamer One considered the
acquiring company, although INTEK is the surviving company under corporate law.
The consolidated financial statements for the nine months ended September 30,
1995 and for the period from inception (February 4, 1994) through September 30,
1994 include the accounts of INTEK, and its wholly-owned subsidiaries: Olympic,
Roamer One, IDC International Corporation ("IDC"), and IMCX Corporation("IMCX").
Olympic's assets are reported as Net Assets of Discontinued Operations. The
Consolidated Statement of Operations and the Condensed Consolidated Statement of
Cash Flows for the period from inception (February 4, 1994 through September 30,
1994) include only the accounts of Roamer One as continuing operations. All
9
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significant intercompany accounts and transactions have been eliminated in
consolidation.
b. DESCRIPTION OF BUSINESS
The Company's principal subsidiary, Roamer One, is engaged in developing and
operating Specialized Mobile Radio ("SMR") systems within the United States on
the recently licensed 220 to 222 MHz ("220 MHz") narrowband spectrum.
c. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
d. INVENTORIES
Inventories are stated at the lower of cost or market.
e. EQUIPMENT, AT COST
Depreciation is provided on the straight-line method over the estimated
useful lives of the assets which are five to ten years. The Company's policy
is to begin depreciating repeater site equipment at such time as it begins to
generate subscriber revenues. Normal maintenance and repairs are charged to
expense as incurred. Expenditures which increase the useful lives of the
assets are capitalized.
f. REVENUE RECOGNITION
Revenue is recognized for sales of equipment when delivered.
g. INCOME TAXES
There was no provision for income taxes for the nine months ended September
30, 1995. The Company is expecting an "ordinary" loss for the current fiscal
year and this, combined with net operating loss carryforwards from the
previous years, are expected to offset any current tax liability.
The Company and its subsidiaries file consolidated Federal and combined state
income tax returns. Effective January 1, 1991, the Company adopted Statement of
Financial Accounting Standard No. 109 "Accounting for Income Taxes" (SFAS 109).
SFAS 109 requires, among other things, a change to the liability method of
computing deferred income taxes.
The Company provides for deferred income taxes relating to timing differences
in the recognition of income and expense items (primarily relating to
depreciation, amortization and certain leases) for financial and tax
reporting purposes. Such amounts are measured using current tax laws and
regulations in accordance with the provisions of SFAS 109.
h. NET LOSS PER SHARE
The net loss per share for all periods shown is based upon the weighted
average number of shares outstanding for the periods. No common stock
equivalents are included in the calculation since they would have an
anti-dilutive effect.
10
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i. RECLASSIFICATIONS
Certain amounts in the December 31, 1994 Consolidated Financial Statements
have been reclassified to conform with the current period presentation.
(3) INVENTORIES
Inventories at September 30, 1995 consist of work in process $1,179,820 and
finished goods of $785,151. Inventories at December 31, 1994, consist of work
in process of $1,127,127.
(4) RELATED PARTY TRANSACTIONS
Pursuant to an agreement, INTEK pays an annual management fee of $200,000 to
Peter Paul Corporation, Inc., an affiliate of Anglo York, a shareholder of
the Company. Peter Paul Corporation, Inc. makes the services of Mr. Vincent
Paul, Vice Chairman of the Board of Directors of INTEK, available to the
Company without additional compensation. The agreement expires on December
31, 1999. For the nine months ended September 30, 1995, INTEK paid Peter Paul
Corporation, Inc. $150,003.
For the nine months ended September 30, 1995, INTEK incurred and paid $90,000
to Roamer One Holdings, Inc., a shareholder of INTEK and a company controlled
by Nicholas R. Wilson, Chairman of the Board of INTEK for management
services. In addition, the Company paid $30,000 to Roamer One Holdings, Inc.
that had been accrued as of December 31, 1994.
For the nine months ended September 30, 1995, INTEK incurred and paid $90,000
to Simmonds Capital Limited, formerly Simmonds Communications Ltd ("SCL"), a
shareholder of the Company, for management services. In addition, the Company
paid $30,000 to SCL that had been accrued as of December 31, 1994.
For the nine months ended September 30, 1995, INTEK incurred and paid $88,000
to Simmonds Mercantile,a company controlled by SCL, for consulting services.
On April 18, 1995, Roamer One and Midland International Corporation of Kansas
City ("Midland"), a subsidiary of SCL, entered into a Memorandum of
Understanding granting Midland exclusive sales and distribution rights for
all Roamer One private branded 220 MHz radio product in the United States.
Midland will be paid a commission on sales of such radios. Roamer One also
entered into an agreement with Linear Modulation Technology Limited ("LMT"),
a division of Securicor Group, plc ("Securicor"), whereby LMT will supply
Securicor radios bearing the Roamer One logo. Pursuant to the agreement, an
initial order of 3,600 units will be shipped directly to Midland for
distribution throughout the network of Roamer One 220 MHz dealers.
On June 30, 1995, the Company entered into a Purchase Agreement with SCL
pursuant to which the Company will acquire certain assets and subsidiaries of
SCL (including Midland) relating to SCL's wireless communications business,
including substantially all of SCL's two-way radio equipment and systems
integration business. The purchase price for such assets will be 15,000,000
shares of common stock of INTEK plus the assumption of certain SCL
intercompany debt which will be paid by INTEK through the issuance of INTEK
convertible preferred stock and a promissory note. The Company and SCL are
finalizing the details of the formula for the amount of intercompany debt to
be assumed, the features of the preferred stock and the terms of the
promissory note. Under the terms of the Purchase
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Agreement, as amended, the deadline to complete the transaction is January
31, 1996. Under the terms of the proposed transaction, SCL will sell to INTEK
all of its wireless communications business including Midland International
Corporation ("MIC") which is a wholly owned subsidiary of SCL, Inc., the
operating assets of Midland International Limited ("MIL"), and SCL Systems.
MIC is a distributor and value added reseller of wireless communication
products for the professional land mobile radio market. MIL is a Canadian
corporation which distributes Midland wireless communication products in
Canada and internationally. SCL Systems is a systems integrator for large,
wide-area wireless communications networks. The transaction was approved at a
September 26, 1995 meeting of SCL shareholders. The transaction is subject to
the approval of the Board of Directors of INTEK, due diligence, regulatory
approval, and shareholder approval.
Pursuant to a Financing Agreement and related agreements between INTEK,
Roamer One, LMT and SCL, LMT has delivered approximately $4,000,000 worth of
base station equipment and mobile radios in exchange for 937,042 shares of
the Company's common stock to Securicor International Limited, a wholly-owned
subsidiary of Security Services, plc, of which Securicor is a majority owner.
Pursuant to the Financing Agreement, the shares were issued at a share price
of $4.26875. The Financing Agreement provides that approximately $3.9 million
in additional equipment will be financed by LMT over a period of 12 months
upon the delivery of letters of credit by INTEK to LMT. On October 13, 1995,
one letter of credit in the amount of $750,000 was issued to LMT.
The law firm of Kohrman Jackson & Krantz, of which Steven L. Wasserman is a
Principal, renders legal services to INTEK and its subsidiaries for which it
received fees of $123,381 during the nine months ended September 30, 1995
from INTEK. Mr. Wasserman is a member of the Board of Directors of INTEK.
For the nine months ended September 30, 1995, Roamer One was invoiced
$7,839,335 for radio equipment and installation services from SCL. Previous
accounts payable for equipment totaled $1,212,300. During the nine months
ended September 30, 1995, Roamer One made payments to SCL totaling $6,923,422
leaving an ending accounts payable balance of $2,128,213. This amount is
included in related party payable.
(5) INVESTMENT IN JOINT VENTURE
In May 1995, INTEK contributed $125,000 for a 50% interest in SLW Properties,
Ltd., an Ohio limited liability company ("SLWLLC"). The assets of SLWLLC
consisted of twenty-five percent (25%) of the outstanding shares of common
stock of Pagers Plus Cellular, a California corporation ("PPC"), a $250,000
secured promissory note issued by PPC to SLWLLC on May 9, 1995, a security
interest in certain assets of PPC, the right to appoint a director to PPC's
Board of Directors, and the right to assume PPC's rights under certain
management and joint venture agreements if PPC fails to repay the note by
November 11, 1995. On July 12, 1995, the members of SLWLLC assigned all of
the assets of SLWLLC to Brookline Capital Corp "Brookline Capital", formerly
known as Brook SIG Corp). Brookline Capital was formed for the purpose of
providing financing to various 220 MHz specialized mobile ratio ("SMR")
management companies in the United States. The Company and SCL were
shareholders of Brookline Capital. On September 20, 1995, the Company sold
its shares in Brookline Capital to Brookline Minerals, Inc. In exchange for
its shares in Brookline Capital, the Company will receive certain shares of
Brookline Minerals common stock pursuant to a formula based on the number of
SMR systems financed by Brookline Capital. SCL also exchanged certain assets
and Brookline Capital shares for shares of Brookline
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Minerals common stock pursuant to the same formula. Intek and SCL entered
into separate management services agreements with Brookline Minerals to
provide certain management services and technical expertise for the
development and implementation of Brookline Mineral's ongoing business
strategy. Nicholas Wilson, a director of the Company, is a director of
Brookline Capital and Brookline Minerals, John Simmonds, a director of the
Company, is a director of Brookline Capital and Brookline Minerals and the
President of Brookline Capital and Steven L. Wasserman, a director of the
Company, is the Secretary of Brookline Capital.
(6) NOTE PAYABLE
In November 1994, INTEK borrowed $2,500,000 (the "Loan") against a short-term
promissory note from Noramco Mining Corporation, now known as Quest Capital
Corporation ("Quest"), bearing interest at the rate of twelve percent (12%)
per annum. The Loan was originally due in installments of $1,000,000 on
December 30, 1994 and $1,500,000 on March 31, 1995. Quest has agreed to
extend the term of the Loan until the earlier of December 15, 1995, the sale
of the Property (as defined below) or closing of any equity financing by
INTEK, in exchange for 162,000 shares of common stock of INTEK. The cost of
$532,500 for 142,000 shares was amortized over the first six months of 1995
and is included as a component of interest expense on the Condensed
Consolidated Statement of Operations. The cost of $102,500 for 20,000 shares
is being amortized as a component of interest expense over the extension
period from July through December 1995. The Loan is secured by a first
mortgage on the real property owned by Olympic (the "Property") and a
guarantee from SCL. In return for its guarantee, INTEK has agreed to provide
SCL with a pledge of Olympic's outstanding common shares and a second
mortgage on the Property. Approximately $1,600,000 remains outstanding on the
Loan.
(7) COMMITMENTS
As of September 30, 1995, Roamer One has entered into 89 site leases to
permit installation, operation, and maintenance of transmission/reception
equipment facilities in connection with the SMR systems. These leases
generally have a five year term, with three consecutive five-year extension
periods upon the mutual agreement of the parties.
As of September 30, 1995, future minimum lease payments are as follows:
1995 $ 204,193
1996 747,220
1997 691,020
1998 597,619
1999 540,823
2000 208,225
----------
$2,989,100
==========
In November 1994, INTEK entered into a management services agreement with
Quest for corporate finance and managing corporate restructuring services. In
consideration for these services, INTEK paid $1,000 and issued 100,000 shares
of its common stock. In connection with the issuance of stock, INTEK entered
into a registration rights agreement pursuant to which Quest is entitled to
certain registration rights.
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(8) MAJOR CUSTOMERS
Roamer One has commenced construction and management of 220 MHz Specialized
Mobile Radio systems pursuant to Management Agreements. Of these agreements,
161 obligate the licensee to provide the funds for system construction and
operating costs. During the nine months ended September 30, 1995, billing for
site equipment, construction and installation accounted for 100% of
consolidated net sales. The Company expects to deliver at least 50 systems to
its major customer, Voice Data Communications, ("VDC") prior to the deadline
imposed by the Federal Communications Commission ("FCC") of December 31,
1995. As of September 30, 1995, a total of 30 systems had been completely
constructed for VDC. During the nine months ended September 30, 1995, a total
of 32 systems had been delivered and invoiced to VDC at a gross profit of
$221,385.
(9) DISCONTINUED OPERATIONS
Subsequent to the Merger, the Company redirected its business from
fabricating and selling plastic products, primarily by injection and
compression molding of various plastic resins, to customers in the
electronics aerospace and commercial aircraft markets to the business of
developing and managing a SMR Network in the United States utilizing the
recently licensed 220 MHz narrowband spectrum. Consequently, during the first
half of 1995, the Company entered into agreements to sell its machinery,
equipment and inventory to four separate buyers.
As of September 30, 1995, the Company completed four sales totaling
$4,022,407 for equipment and inventory. The Company received cash of
$3,855,784 and a note in the remaining principal amount of $166,623 bearing
interest at the rate often percent (10%) per annum with monthly principal and
interest payments and a maturity date of July, 1998. The first three payments
under this note were interest only.
Of the proceeds from these sales, $263,000 was applied against a note payable
secured by Olympic's assets, $900,000 was repaid to Quest under the Loan and
the remainder was used for working capital.
A summary of the net assets of discontinued operations is as follows:
1995 1994
----------- -----------
Property, Plant & Equipment, Net $1,523,314 $4,334,183
Liabilities (654,450) (1,602,085)
----------- -----------
Net Assets $868,864 2,732,098
=========== ===========
(10) DIRECTOR COMPENSATION
On June 20, 1995, the Board of Directors approved a resolution that directors
will be compensated for services at the rate of $4,000 per year plus $500 per
meeting to a maximum of $10,000 per director, retroactive to January 1, 1995.
For the nine months ended September 30, 1995, the Company paid Directors fees
of $51,500 and has accrued $8,000 for unpaid directors fees.
14
<PAGE>
(11) STOCK OPTION PLANS
On June 23, 1995 the Company filed with the Securities and Exchange
Commission a registration statement on Form S-8 for the offering and sale by
the Company of up to 500,000 shares of the Company's common stock, par value
$0.01 pursuant to stock options granted or to be granted under the 1988 INTEK
Diversified Corporation Key Employee Incentive Stock Option Plan.
At the Annual Meeting of Shareholders held on July 5, 1995, the shareholders
voted to approve the 1994 Stock Option Plan which provides for the granting
of options of up to 600,000 shares of the Company's Common Stock. The 1994
Plan provides for the granting of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended ( the
"Code"), and "nonqualified stock options", which are not intended to qualify
under any provision of the Code. Each grant shall specify the number of
shares of Common Stock to which it pertains; provided, however, that no
optionee may be granted stock options for more than 60,000 shares in any
fiscal year of the Company.
The shareholders also voted to approve the 1994 Directors' Stock Option Plan
(the "Directors' Plan") which provides for the granting of options of up to
300,000 shares of the Company's Common Stock. Under the terms of the
Directors' Plan, each member of the Stock Option Committee received an option
to purchase 40,000 shares of Common Stock on September 24, 1994. In addition,
each director who was not a director on September 23, 1994 will receive, on
the date of his or her initial election as a director, an option to purchase
20,000 shares of Common Stock. Options are exercisable on the first
anniversary of the date of grant, provided the optionee remains a director on
such anniversary. No person may receive an option pursuant to the Directors'
Plan more than once.
On August 2, 1995 the Company filed with the Securities and Exchange
Commission a registration statement on Form S-8 for the offering and sale by
the Company of up to 900,000 shares of the Company's common stock, par value
$0.01 pursuant to stock options granted or to be granted under the INTEK
Diversified Corporation 1994 Stock Option Plan and the INTEK Diversified
Corporation Directors' 1994 Stock Option Plan.
A summary of the Company's Stock Option Plans is as follows:
15
<PAGE>
OPTION
PRICE PER
1988 PLAN SHARES SHARE
- --------- -------- ---------
Shares granted:
January 1, 1987 155,000 $1.75
Shares terminated (90,000) 1.75
Shares exercised (50,000) 1.75
--------
Shares under option 15,000
1994 STOCK OPTION PLAN
- ----------------------
Shares granted:
September 23, 1994 50,000 $2.75
September 23, 1994 330,000 3.75
Shares exercised (40,000) 3.75
--------
Shares under option 340,000
1994 DIRECTORS' STOCK OPTION PLAN
- ---------------------------------
Shares granted:
September 23, 1994 120,000 $3.75
--------
Total shares under option 475,000
========
As of June 30, 1995, options available for future grant were as follows:
1988 Plan 345,000
1994 Stock Option Plan 220,000
1994 Directors Plan 180,000
-------
745,000
=======
(12) SUBSEQUENT EVENTS
On August 21, 1995, the Company signed a letter of intent with NovAtel
Communications Ltd. ("NovAtel") of Calgary, Alberta, Canada to acquire
certain wireless communication business, research and development, and
manufacturing capability for a total consideration of US $30 million. At the
time the letter of intent was signed, the Company paid a refundable deposit
of $147,120 to NovAtel. The Company and NovAtel were unable to reach
agreement by the deadline of September 30, 1995. The Company has requested
that NovAtel repay the Company's deposit.
16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1995 AND
FOR THE PERIOD FROM INCEPTION (FEBRUARY 4, 1994) THROUGH SEPTEMBER 30,
1994
The following discussion and analysis sets forth certain factors which
produced changes in the Company's results of operations during the nine
months ended September 30, 1995 and as compared with the same period in 1994
as indicated in the Company's consolidated financial statements in accordance
with reverse merger accounting treatment.
RESULTS OF THREE QUARTERS ENDED SEPTEMBER 30, 1995 COMPARED TO THE PERIOD FROM
INCEPTION (FEBRUARY 4, 1994) THROUGH SEPTEMBER 30, 1994:
On September 23, 1994, a newly formed, wholly owned, subsidiary of the
Company, Romnet, Inc., a Delaware corporation, merged with Simrom, an Ohio
corporation (the "Merger"), whose principal assets were certain rights
relating to licenses granted by the Federal Communications Commission ("FCC")
for the 220 MHz to 222 MHz narrow band Specialized Mobile Radio ("SMR")
spectrum. After the Merger, the surviving corporation changed its name to
Roamer One, Inc. ("Roamer One"). The Company has now refocused its business
from fabricating and selling plastics products primarily from injection and
compression molding of various plastic resins to customers in the
electronics, aerospace and commercial aircraft markets (the "Plastic
Business") to a development stage enterprise of developing, constructing and
managing a SMR network in the United States utilizing 220 MHz narrowband
spectrum. The Company has disposed of a substantial portion of the assets
relating to the Plastics Business. See Financial Footnote 9--"Discontinued
Operations".
Roamer One currently holds management agreements with various licensee of the
newly allocated 220 MHz SMR frequencies. Roamer One has grouped these
agreements under three general categories which collectively represent 448
licenses and 2,240 channels (5 channels per license). Category I & II
agreements provide the Company with an option to purchase the system in
exchange for certain payments or conditions, including equipment financing.
The systems require a capital investment of approximately $75,000 per site to
construct. Category III management agreements provide for the payment of
construction and operating expenses by the licensee. There is no option to
purchase Category III licenses. These licenses account for 187 licenses to be
built without need of Roamer One funding. The equipment is to be purchased
from Roamer One.
Roamer One currently holds a total of Category I & II management agreements,
containing an option to purchase the license together with the system,
covering 261 licenses. As of September 30, 1995, a total of 99 systems had
been completely constructed. Of these, 69 systems had been constructed for
management agreements containing an option to purchase. The option
to purchase the system from the licensee can be exercised at any time after
construction is complete. Roamer One has entered into Category III
187 management agreements with licensees who provide for the construction and
operating expenses on their own behalf. As of September 30, 1995, 30 systems
had been completely constructed under Category III agreements.
17
<PAGE>
Roamer One provides services related to its managed systems as well as to
third parties that include:
1.) System design and construction
2.) Marketing support
3.) Mobile radio supply and distribution
4.) Subscriber acquisition and loading
5.) Dealer network establishment
6.) Subscriber billing and tracking
7.) Budget administration
8.) System management, maintenance, and repair
The management fees charged to licensees range from 20% to 60% of gross
revenues derived from system operations. The company will withhold its fees
prior to disbursement of revenues to the licensee.
While Roamer One has a long term focus on the revenues derived from air time
billing, management realizes the need to insure that a sufficient
distribution channel to market exists to provide subscriber equipment to the
end-user. Midland International Corporation of Kansas City ("Midland") has
entered into a sales and distribution agreement with Roamer One. Midland is a
wholly-owned subsidiary of Simmonds Communications Ltd. ("SCL"), one of
INTEK's major shareholders. Midland is rated as the fourth largest
distributor of land mobile radio products in the United States. Through
agreements with major vendors, Securicor in particular, Roamer One will be
supplied with subscriber product bearing the Roamer One name and logo.
Midland will warehouse, distribute, and service the product throughout the
growing Roamer dealer network. This "private labeling" of radio equipment will
help establish Roamer One name recognition in the marketplace and create a
value added incentive for dealers to offer activation on the Roamer One North
American Wireless Network of systems. Roamer One will augment sales by
telemarketing, direct mail, and personal calls to larger accounts in the
transportation, public utilities, and service industries. The initial radios
will be of traditional voice dispatch variety and management estimates
indicate that a subscriber population of approximately 120 units per system
will be required for the Company to realize a positive cash flow from
operations. All additional subscribers, including eventual data users, will
add revenues to the Company without further contribution of capital for
equipment or significant increase in cost of goods sold.
On June 30, 1995, the Company entered into a Purchase Agreement with Simmonds
Capital Limited, formerly Simmonds Communications Ltd. ("SCL") pursuant to
which the Company will acquire certain assets and subsidiaries of SCL
(including Midland) relating to SCL's wireless communications business,
including substantially all of SCL's two-way radio equipment and systems
integration business. The purchase price for such assets will be 15,000,000
shares of common stock of INTEK plus the assumption of certain SCL
intercompany debt which will be paid by INTEK through the issuance of INTEK
convertible preferred stock and a promissory note. The Company and SCL are
finalizing the details of the formula for the amount of intercompany debt to
be assumed, the features of the preferred stock and the terms of the
promissory note. Under the terms of the Purchase Agreement, as amended, the
deadline to complete the transaction is January 31, 1995. Under the terms of
the proposed transaction, SCL will sell to INTEK all of its wireless
communications business including Midland International Corporation ("MIC")
which is a wholly owned subsidiary of SCL, Inc., the operating assets of
Midland International Limited ("MIL"), and SCL Systems. MIC is a distributor
and value added reseller of wireless communication products for the
professional land mobile radio market. MIL is a Canadian corporation which
distributes Midland wireless communication products in Canada and
internationally. SCL Systems is a
18
<PAGE>
systems integrator for large, wide-area wireless communications networks. The
transaction was approved at a September 26, 1995 meeting of SCL shareholders.
The transaction is subject to the approval of the Board of Directors of
INTEK, due diligence, regulatory approval, and shareholder approval.
As of September 30, 1995, the Company completed construction of 99 systems
pursuant to its Management Agreements. Of its Management Agreements, 187
obligate the licensee to provide the funds for system construction and
operating costs. During the nine months ended September 30, 1995, billings to
licensees for site equipment, construction and installation resulted in
equipment sales of $2,325,852.
Cost of goods sold as a percentage of net equipment sales was 89%.
Selling, general and administrative expense increased by $1,893,333 over the
same period last year since the 1994 expenses include only Roamer One
expenses. The expansion of Roamer One's activities since September, 1994 has
increased operating expenses for repeater sites including tower leases, and
utilities. INTEK has incurred significant expenses for accounting and legal
fees related to audits, regulatory reporting, the proposed Merger and its
financing activities.
Net Interest Expense of $753,615, related primarily to the short-term
promissory note from Quest. See Financial Footnote 6--"Note Payable."
The loss from continuing operations was $2,376,805 greater than last year due
to the increase in selling, general and administrative expenses and the
interest costs related to the extension of the maturity date of the Quest
Loan (as defined below).
Liquidity and Capital Resources.
At September 30, 1995, working capital was $(291,466). Approximately $1.6
million remains outstanding on the loan (the "Loan") from Quest in the
original principal amount of $2.5 million. The Loan was originally due in
installments of $1,000,000 on December 30, 1994 and $1,500,000 on March 31,
1995. See Financial Footnote 6--"Note Payable". Quest agreed to extend the
term of the outstanding amount under the Loan until the earlier of December
15, 1995, the sale of the Property (as defined below) or closing of any
equity financing by INTEK, unless an extension is obtained. Quest agreed to
the extension in exchange for 162,000 shares of common stock of INTEK. The
cost of $532,500 for 142,000 shares was amortized over the first six months
and is included as a component of interest expense on the Condensed
Consolidated Statements of Operations. The cost of $102,500 for 20,000 shares
is being amortized over the extension period from July through December 1995.
The Company is pursuing the sale of the remaining non-performing assets of
Olympic which consist of land and a building (the "Property"). The Company
has not received any offers on the Property. The Company has signed an
Exclusive Authorization to Sell with Daum Commercial Industrial Real Estate.
The agreement grants the broker an exclusive right to sell the Property
through December 31, 1995. If the Company is successful in selling the
Property (which Property is encumbered by a lien in favor of Quest), the loan
to Quest will be repaid with the proceeds of such sale. Any remaining
proceeds will be used for working capital. While the Property is appraised
at an amount in excess of $2 million, the Property is located in Southern
California where demand for and market value
19
<PAGE>
of commercial real estate remain depressed thereby adversely impacting the
ability of the Company to sell the Property. No assurance can be made that
the Property will be sold in the near term or that it will be able to sell it
at a price close to the appraised value.
Pursuant to a Financing Agreement and related agreements between INTEK,
Roamer One, LMT and SCL, LMT has delivered approximately $4,000,000 worth of
base station equipment and mobile radios in exchange for 937,042 shares of
the Company's common stock to Securicor International Limited, a wholly-owned
subsidiary of Security Services, plc, of which Securicor is a majority owner.
Pursuant to the Financing Agreement, the shares were issued at a share price
of $4.26875. The Financing Agreement provides that approximately $3.9 million
in additional equipment will be financed by LMT over a period of 12 months
upon the delivery of Letters of Credit by INTEK to LMT. On October 13, 1995,
one Letter of Credit in the amount of $750,000 was issued to LMT.
The Company is contemplating the raising of additional capital through either
a private placement of its securities or offerings of its securities pursuant
to Regulation S under the Securities Act of 1933. As discussed above, any
proceeds from such offerings must be used to repay the Loan unless a waiver
of such requirement is obtained from Quest. No assurance can be made that
the Company will successfully complete such offerings, that adequate funds
will be raised to repay Quest and fund the Company's working capital needs or
that a waiver will be obtained from Quest.
Subsequent to the end of the third quarter, Roamer One received a confirmed
order from its customer, Voice Data Communications ("VDC") for an additional
28 systems for delivery prior to December 15, 1995. The order represents
approximately $2.1 million in sales revenues to Roamer One through December
1995. VDC has posted a non-refundable $500,000 deposit against the order
with the balance due upon delivery of the systems to the construction site.
The ratio of current assets to current liabilities as of September 30, 1995 was
0.94 to 1, compared to 1.6 to 1 as of December 31, 1994. Cash decreased by
$812,837 while book value of property of discontinued operations decreased by
$1,863,234 due to the sale of a portion of Olympic's assets. See Financial
Footnote 9--"Discontinued Operations".
RESULTS OF THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO PRIOR YEAR:
During the three months ended September 30, 1995, billings to licensees for
site equipment, construction and installation resulted in equipment sales of
$805,514.
Cost of goods sold as a percentage of net equipment sales was 85%.
Selling, general and administrative expense increased by $724,549 over the
same period last year since the 1994 expenses include only Roamer One
expenses. The expansion of Roamer One's activities since September, 1994 has
increased operating expenses for repeater sites. INTEK has incurred
significant expenses for accounting and legal fees related to audits,
regulatory reporting, the proposed Merger and its financing activities.
Net Interest Expense of $107,270, related primarily to the short-term
promissory note from Quest. See Financial Footnote 6--"Note Payable"
20
<PAGE>
The loss from continuing operations was $681,064 greater than last year due to
the increase in selling, general and administrative expenses and the interest
costs related to the extension of the maturity date of Quest's Loan.
PART II.
OTHER INFORMATION.
Item 1. Legal Proceedings. None
Item 2. Changes In Securities. None
Item 3. Defaults Upon Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
(a) On July 5, 1995, the Company held its annual meeting of
stockholders.
(b) At the annual meeting, the following directors were elected:
Nicholas R. Wilson, Vincent P. Paul, John G. Simmonds, Harry Dunstan, Peter
A. Heinke, Steven L. Wasserman, David Neibert and Christopher Branston.
(c) The following proposals were considered at the annual meeting
and the number of shares voting for or against such proposals is listed below.
Proposal #1 - Election of Directors
For Against
Nicholas R. Wilson 7,837,433 0
Vincent P. Paul 7,835,433 2,000
John G. Simmonds 7,837,433 0
Harry Dunstan 7,837,433 0
Peter A. Heinke 7,837,433 0
Steven L. Wasserman 7,837,433 0
David Neibert 7,837,433 0
Christopher Branston 7,837,433 2,000
Proposal #2 - Approve 1994 Stock Option Plan which provides for the
granting of stock options for up to an aggregate of 600,000 shares of the
Company's common stock to officers and other key employees and consultants.
7,836,933 For
1,500 Against
Proposal #3 - Approve 1994 Directors' Stock Option Plan which
provides for the granting of up to 300,000 shares of the Company's common
stock to the Company's directors.
7,835,933 For
2,500 Against
21
<PAGE>
Proposal #4 - Ratify Appointment of Arthur Andersen LLP as
independent accountants for the fiscal year ending December 31, 1995.
7,838,433 For
0 Against
Item 5. Other Information. None
Item 6. Exhibits and Reports on FORM 8-K.
a. Exhibits
10.20 Amendment to Loan Agreement dated as of February 9, 1995 between
Quest Capital Corporation and INTEK Diversified Corporation
10.21 Agreement dated as of February 9, 1995 between Quest Capital
Corporation and INTEK DIversified Corporation.
10.23 Asset Purchase Agreement between Brookline Minerals Inc. and
Orvilliers Resources Ltd. dated as of August 24, 1995
10.24 Escrow Agreement between Simmonds Communications Ltd., Sendeck
Travel, Limited and INTEK Diversified Corporation dated
September 20, 1995.
10.25 Management Services Agreement dated as of August 24, 1995 between
INTEK Diversified Corporation and Brookline Minerals Inc.
10.26 Management Services Agreement dated as of August 24, 1995 among
Brookline Minerals Inc., Simmonds Communications Ltd. and Midland
International Corporation.
10.27 Share Purchase Agreement dated as of August 24, 1995 among
Brookline Minerals Inc., Simmonds Communications Ltd., INTEK
Diversified Corporation and Sendek Travel, Limited.
27.1 Financial Data Schedule.
b. Reports on Form 8-K
The Registrant filed one report on Form 8-K during the third quarter of
1995. The report, filed on August 30, 1995, related to the announcement of
the execution of a letter of intent between the Company and NovAtel
Communications Ltd. ("NovAtel") pursuant to which the Company would acquire
certain wireless communications business, research and development and
manufacturing capability of NovAtel for approximately $30 million in cash and
common stock and warrants of the Company. The report was filed pursuant to
Item 5 on Form 8-K.
22
<PAGE>
INTEK DIVERSIFIED CORPOR ATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE ENTERPRISE)
September 30, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: November 14, 1995
INTEK DIVERSIFIED CORPORATION
By: /s/ PETER A. HEINKE
---------------------------------------
Peter A. Heinke
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and Chief
Accounting Officer)
23
<PAGE>
AMENDMENT TO LOAN AGREEMENT
This Amendment to Loan Agreement ("Amendment") dated as of February
9, 1995, amends that certain Loan Agreement (the "Loan Agreement") dated
November 4, 1994 between Noramco Mining Corporation, now known as Quest
Capital Corporation ("Quest") and INTEK Diversified Corporation ("INTEK"), as
amended by that certain letter dated February 9, 1995 (the "Letter").
R E C I T A L S
A. Quest extended a loan (the "Loan") in the amount of $2,500,000 to INTEK of
which $1,599,999.91 remains outstanding as of July 31, 1995.
B. Quest has agreed to extend the term of the Loan upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. The Letter shall have no further force or effect.
2. Section 4 of the Loan Agreement is hereby deleted and replaced with
the following:
4. REPAYMENT
INTEK shall repay the principal of the Loan upon the sooner to occur:
a. December 15, 1995; or
b. The sale of the California real property located at 5800 West
Jefferson Boulevard, Los Angeles, California; or
1
<PAGE>
c. The closing of any financing by INTEK pursuant to which INTEK
sells for cash newly issued shares of its common stock,
excluding any sales to employees or others pursuant to INTEK's
stock option plans.
3. Section 5 of the Loan Agreement shall be amended by adding the
following sentence to the end of the paragraph:
The Loan shall be secured by a deed of trust, which shall be prior in
right to all monetary encumbrances excluding liens for taxes not yet
due, on the real property located at 5800 West Jefferson Boulevard,
Los Angeles, California owned by Olympic Plastics Inc., a wholly-
owned subsidiary of INTEK.
4. A new Section 20 to the Loan Agreement is added as follows:
20. ADDITIONAL CONSIDERATION. As additional consideration for the
extension of the term set forth in Section 4 of the Loan Agreement,
Quest has been issued 40,000 shares of common stock of INTEK (the
"Issued Shares") and shall be issued an additional 122,000 shares of
common stock of INTEK (the "Shares"), provided that Quest shall
execute the agreement attached hereto as Annex A, the facts and
circumstances referred to in such agreement are true and correct as
of the date thereof and hereof, and the actions contemplated thereby
shall have occurred.
5. All other terms and conditions contained in the Loan Agreement and
that certain Registration Rights Agreement between INTEK and Roamer One, Inc.
("Roamer"), Simmonds Communications Ltd., ("SCL"), Anglo York Industries,
Inc. ("Anglo") and Harold H. Davis ("Davis") dated September 23, 1994, as
amended by Amendment No. 1 to Registration Rights Agreement dated November 4,
1994 and Amendment No. 2 to Registration Rights Agreement dated as of April
17, 1995 among INTEK and Roamer, SCL, Anglo, Davis and Quest and Amendment
No. 3 to Registration Rights Agreement dated July 27, 1995 among INTEK and
Roamer, SCL, Anglo, Davis, Quest and Securicor International Limited shall
remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Amendment as of the
______ day of August, 1995.
Dated: August 29, 1995 QUEST CAPITAL CORPORATION
By /s/
_____________________________
Its Managing Director
_____________________________
Dated: August 29, 1995 INTEK DIVERSIFIED CORPORATION
By /s/
____________________________
Its Chief Financial Officer
____________________________
The Guarantee referred to in the Loan Agreement and executed by Simmonds
Communications Ltd. shall remain in full force and effect.
Dated: August 29, 1995 SIMMONDS COMMUNICATIONS LTD.
By /s/
____________________________
Its Chief Executive Officer
____________________________
3
<PAGE>
AGREEMENT
This Agreement ("Agreement") is made as of the 9th day of February,
1995 by and between Quest Capital Corporation, formerly known as Noramco
Mining Corporation, a corporation incorporated under the laws of the Province
of British Columbia, Canada ("Quest") and INTEK Diversified Corporation
("INTEK").
R E C I T A L S
A. Quest has advanced a loan ("Loan") to INTEK in the original
principal amount of $2,500,000 pursuant to that certain Loan Agreement dated
November 4, 1994 (the "Loan Agreement").
B. Quest has agreed to extend the term of the Loan pursuant to the
terms of that certain Amendment to Loan Agreement dated the same date hereas
(the "Amendment").
C. Pursuant to the Amendment, Quest is entitled to receive an
additional 120,000 shares of common stock of INTEK (the "Extension Shares")
under the Amendment.
D. Quest and INTEK entered into a Management Services Agreement dated
November 4, 1994 pursuant to which Quest was entitled to receive 100,000
shares of common stock of INTEK (the "Management Shares") for services Quest
would provide to INTEK.
E. Quest received such Management Shares which contained an
inappropriate legend on the certificate.
F. INTEK and Quest desire to enter into this Agreement whereby Quest
will be issued the Extension Shares and the Management Shares in accordance
with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 In this Agreement:
(a) "Act" means the SECURITIES ACT of 1993, as amended;
(b) "Exchange Act" means the SECURITIES EXCHANGE ACT OF 1934,
as amended;
<PAGE>
(c) "Regulation S" shall mean Rules 901-904 promulgated under the
Act, as it may be amended from time to time or interpreted by the staff of
the Securities and Exchange Commission.
(d) "Shares" shall mean the Extension Shares and the Management
Shares.
(e) "United States" means the United States of America, its
territories and possessions, any state of the United States, and the District
of Columbia.
(f) "U.S. Person" has the meaning given that term in Rule 902(o) of
Regulation S under the Act and includes, with certain exceptions stated in
that Rule, the following:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) any estate of which any executor or administrator is a
U.S. Person;
(iv) any trust of which any trustee is a U.S. Person;
(v) any agency or branch of a foreign entity located in the
United States;
(vi) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person;
(vii) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(viii) any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B) formed
by a U.S. Person principally for the purpose of investing in securities
not registered under the U.S. Securities Act unless it is organized or
incorporated, and owned, by Accredited Investors who are not natural
persons, estates or trusts.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF QUEST
2.1 By executing this Agreement, Quest represents and warrants to INTEK
(and acknowledges that INTEK and its counsel are relying thereon):
(a) Quest is acquiring the Shares as principal for its own account
for investment purposes only and not with a view to resale or distribution
except as may be lawfully permitted, and
-2-
<PAGE>
not for the benefit of any other person and that INTEK has the right to take
all steps necessary (including issuing stop transfer orders) to ensure
compliance with Regulation S;
(b) Quest is a corporation that was not incorporated or created
primarily for investment purposes;
(c) Quest understands that the certificate representing the Shares
will contain a legend providing that (i) the Shares have not been registered
under the Act, (ii) transfer of the Shares represented by the certificate is
prohibited except in accordance with the provisions of Regulation S and (iii)
transfer of the Shares into the United States or to or for the account or
benefit of a U.S. Person (as defined under Regulation S) is restricted for a
period of forty (40) days following the date of issuance;
(d) Quest certifies that (i) it is not a "U.S. Person" as defined
under Regulation S and that it is not buying the Shares for the account or
benefit of a U.S. Person and (ii) no offer to buy the Shares was made to
Quest in the United States;
(e) Quest shall resell the Shares only in accordance with
Regulation S, pursuant to registration under the Act or pursuant to an
available exemption from registration under the Act;
(f) Except pursuant to an effective registration statement, Quest
will not transfer the Shares held by it into the United States or to or for
the account or benefit of a U.S. Person for a period of forty (40) days after
the date of issuance;
(g) Quest has received and reviewed all information Quest
considered necessary or appropriate for deciding whether to acquire the
Shares;
(h) Quest has had a reasonable opportunity to ask questions and
receive answers from INTEK and its officers and employees regarding the
business, financial affairs and other aspects of INTEK;
(i) Quest is an investor who, by virtue of its net worth and
investment experience or by virtue of consultation with or advice from a
person who is not an insider of INTEK is able to evaluate the investment in
the Shares on the basis of the available public information concerning INTEK;
(j) Quest's Shares are not being purchased by Quest as a result of
any material information concerning INTEK that has not been publicly
disclosed;
(k) Quest is a valid and subsisting corporation, has the necessary
corporate capacity and authority to execute and deliver this Agreement and to
observe and perform its covenants and obligations hereunder and has taken all
necessary corporate action in respect thereof and constitutes a legal, valid
and binding contract of Quest enforceable against Quest in accordance
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<PAGE>
with its terms; and such corporation has not been formed for the specific
purpose of acquiring the Shares;
(l) Quest has not acquired the Shares as a result of any press
release or any general solicitation or general advertising including
advertisement, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television,
or any seminar or meeting whose attendees have been invited by general
solicitation or general advertising;
(m) Quest understands that in making an investment decision, Quest
must rely on its own examination of INTEK, including the merits and risks
involved in such an investment;
(n) Quest understands that upon the issuance of the Shares and
until such time as the same is no longer required under applicable
requirements of the Act, a certificate representing the Shares will bear the
following legend:
THE (1) SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), (2) SECURITIES HAVE BEEN SOLD UNDER
THE SECURITIES ACT IN RELIANCE ON RULE 903 OF REGULATION S, (3)
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S, AND (4) THE SECURITIES ARE SUBJECT TO A RESTRICTED PERIOD WHICH
EXPIRES FORTY DAYS FROM THE DATE OF ISSUE.
(o) Quest consents to INTEK making a notation on its records or
giving instructions to any transfer agent of INTEK's securities to implement
the restrictions on transfer set forth and described herein;
(p) Quest has not paid, has no agreement to pay, and will not pay,
directly or indirectly, any commission, fee or other remuneration to any
person in connection with Quest's acquisition of the Shares;
(q) Quest shall indemnify and hold harmless INTEK and each officer,
director or control person of INTEK, and their respective agents, who is or
may be a party or is or may be threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of or arising from any
act or omission to represent or state facts made or alleged to have been made
by Quest to INTEK (or any agent or representative of INTEK), or omitted or
alleged to have been omitted by Quest concerning Quest or the Quest's
authority to invest or financial position in connection with the acquisition
of the
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<PAGE>
Shares, including, without limitation, any such misrepresentation,
misstatement or omission contained in this Agreement or any other document
submitted by Quest to INTEK, against losses, liabilities and expenses for
which INTEK or any officer, director, control person or agent of INTEK has
not otherwise been reimbursed (including attorneys' fees, judgments, fines
and amounts paid in settlement) actually and reasonably incurred by INTEK or
such officer, director or control person in connection with such action suit
or proceeding; and
(r) the foregoing representations and warranties are made by the
undersigned with the intent that they may be relied upon in determining the
undersigned's eligibility to acquire the Shares under the Act.
2.2 The representations and warranties of Quest contained in this
Agreement shall be true and correct on the date first written above and on
the date this Agreement is executed.
3. REPRESENTATIONS AND WARRANTIES OF INTEK
3.1 INTEK represents and warrants to Quest, and acknowledges that Quest
will be relying upon such representations and warranties in entering into
this Agreement, that:
(a) INTEK and its subsidiaries are valid and subsisting
corporations duly incorporated and in good standing under the laws of the
jurisdictions in which they are incorporated;
(b) the common shares of INTEK are quoted on the Nasdaq market and,
to the best of its knowledge, INTEK is not in default of any of the
requirements of Nasdaq; and
(c) the audited financial statements of INTEK for its fiscal year
ended December 31, 1994 and the unaudited financial statements of INTEK for
the interim six month period ended June 30, 1995 (collectively the "Financial
Statements"), are true and correct in all material respects, present fairly
and accurately the financial position and results of the operations of INTEK
for the periods then ended, contain no untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading and
INTEK's Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
3.2 The representations and warranties of INTEK contained in this
Agreement shall be true on the date first written above and on the date this
Agreement is executed.
4. ADDITIONAL COVENANTS
4.1 Quest shall tender the stock certificates numbered 11707 and 11751
Quest presently holds to American Stock Transfer (the "Transfer Agent") for
cancellation. In the event that the Transfer Agent requests an opinion of
U.S. counsel (such counsel being reasonably acceptable to the Transfer Agent
and INTEK) to the effect that such shares may be cancelled or that any
proposed sale
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<PAGE>
or transfer of Shares by Quest is made in compliance with Regulation S or
pursuant to an available exemption from registration under the Act, and
accordingly that the legend on the certificate representing such Shares may
be removed, Quest shall supply such legal opinion(s) to the Transfer Agent at
Quest's cost.
4.2 Upon Quest's tender to the Transfer Agent of the opinion referred to
in Section 4.1 above, INTEK shall issue such instructions to the Transfer
Agent as are necessary to cause the legend to be removed from the Shares.
5. RESALE RESTRICTIONS
5.1 Quest understands and acknowledges that Quest's Shares will be
subject to certain resale restrictions under the Act and that certificates
representing the Shares will bear a legend to that effect.
5.2 Quest also acknowledges that it has been advised to consult its own
legal advisors with respect to applicable resale restrictions and that it is
solely responsible (and INTEK is not in any manner responsible) for complying
with such restrictions.
6. COUNTERPARTS
This Agreement may be executed in one or more counterparts by the parties
hereto. All counterparts shall be construed together and shall constitute
one agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
Dated: August 29, 1995 QUEST CAPITAL CORPORATION
By /s/
______________________________
Its Managing Director
_____________________________
Dated: August 29, 1995 INTEK DIVERSIFIED CORPORATION
By /s/
______________________________
Its Chief Financial Officer
______________________________
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT entered into in the City of Toronto, Province of Ontario
as of August 24, 1995
BETWEEN: BROOKLINE MINERALS INC., a company incorporated under the laws of
Canada, having its head office at 900-999 West Hastings Street,
Vancouver, British Columbia, V6C 2W2
("Brookline")
AND: ORVILLIERS RESOURCES LTD., a company incorporated under the
laws of Canada, having its head office at 900-999 West
Hastings Street, Vancouver, British Columbia, V6C 2W2
("Orvilliers")
WHEREAS Brookline has agreed to sell to Orvilliers, and Orvilliers has
agreed to purchase from Brookline, the entire interest of Brookline in the
Properties and all of Brookline's interest in the assets, contracts and
agreements located on or related to the Properties, on and subject to the
terms and conditions of this Agreement;
WITNESSES THAT, in consideration of the mutual covenants and agreements
of the parties herein contained and other good and valuable consideration
(the receipt and sufficiency of which are hereby mutually acknowledged), the
parties agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. In this Agreement, unless the subject matter or
context is inconsistent therewith:
"AGREEMENT", "HEREIN", "HEREOF", "HEREUNDER" and words of similar
import mean this agreement and all amendments made hereto in writing
by the parties hereto;
"ASSUMED OBLIGATIONS" has the meaning specified in subsection 3.4;
"BROOKLINE SUCCESSORS" means all successors of Brookline;
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"CLAIMS" means all mining claims and mining leases held by Brookline;
"CLOSING DATE" means the date of execution of this Agreement;
"CONTRACTS" means contracts and agreements entered into before the
Closing Date (including leases, rights to use land, guarantees,
warranties and indemnities) to which Brookline is a party or subject
or of which Brookline has any benefit or advantage in connection with
the Properties;
"ENCUMBRANCE", in respect of any property or assets, means any
encumbrance or title defect of whatever kind or nature, regardless
of form, whether or not registered or registrable and whether or not
consensual or arising by law (statutory or otherwise), including any
hypothec, privilege, lien, mortgage, right of giving in payment,
resolutory clause, charge, pledge, security interest, assignment,
lease, option, easement, servitude, right-of-way, encroachment
(whether from or on such property or assets), restrictive covenant,
right of use or usufruct, royalty right or any other right or claim
of any kind or nature whatsoever which affects ownership or
possession of, or title to, or any interest in, or the right to use
or occupy such property or assets;
"ENVIRONMENTAL LAWS" means all laws, statutes, acts, by-laws,
regulations, ordinances, orders, orders in council, rules and codes,
certificates of authorization, permits, authorizations, policies,
directives and guidelines adopted or issued either by or under the
authority of, or any agreements with or requests from, any
Governmental Authority having jurisdiction over the Purchased
Assets, or the Properties, relating in whole or in part to the
environment or its protection;
"ENVIRONMENTAL LIABILITIES" means all liabilities (whether present
or future or accrued, actual, contingent or otherwise), fines,
penalties, claims, suits, actions, debts, damages, costs,
obligations, judgments, decisions, rulings, awards, demands orders,
ordinances, directives, declarations, injunctions, decrees, writs,
requests and notices for which Brookline or any Brookline Successor,
is or may become responsible and which relate to, result from or
could result from (i) environmental conditions on or in respect of
the Purchased Assets, or the Properties, whether such environmental
conditions are on, in, above or under the Purchased Assets, or the
Properties, or any other property and whether they existed prior to,
are existing on, or arise subsequent to the Closing Date, or (ii)
any past, present or future activities carried on or to be carried
on by any Person at, from or in connection with the Purchased Assets
or the Properties which had, has or could have any impact on the
environment;
"GOVERNMENTAL AUTHORITY" means Canada, any Province or Territory of
Canada in which any of the Properties are located and any regional,
municipal, local or other political subdivision of such Province or
Territory and includes any agency, department, commission, board,
bureau or instrumentality thereof and any other
<PAGE>
-3-
Person exercising executive, legislative, judicial, regulatory or
administrative functions thereof or pertaining thereto;
"GST" means federal goods and services tax imposed under Part IX of
the EXCISE TAX ACT (Canada);
"IMPROVEMENTS" means any mill and plants, buildings, structures,
fixtures and other improvements situate on or in any way
appertaining to the Properties as the case may be;
"PERMITS" means all permits, licenses, certificates, approvals,
authorizations, consents and the like issued by any Governmental
Authority which are held by or for Brookline in connection with the
Purchased Assets;
"PERSON" includes any individual, corporation, body corporate,
partnership, limited partnership, joint venture, trust, estate,
unincorporated association or other entity or any government or
governmental authority (including any Governmental Authority)
however designated or constituted;
"PROPERTIES" means the properties described in Schedule "A";
"PURCHASED ASSETS" has the meaning specified in subsection 2.1; and
"RECORDS" means plans, specifications, drawings (including
electrical, mechanical and structural drawings), manuals,
architects' renderings, engineering reports, appraisals, mining
reports, maps, surveys and other similar documentation and records
pertaining to the Properties.
1.2 SCHEDULES. The following are the Schedules attached to this
Agreement:
Schedule A: Properties
1.3 INTERPRETATION. In and for the purpose of this Agreement, except as
otherwise expressly provided:
1.3.1 all references in this Agreement to designated "Articles",
"subsections" and other subdivisions or Schedules are to the
designated Articles, subsections and other subdivisions or Schedules
of or attached to this Agreement;
<PAGE>
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1.3.2 the headings are for convenience only and do not form a part of this
Agreement and are not intended to interpret, define or limit the
scope, extent or intent of this Agreement or any provision hereof;
1.3.3 the singular of any term includes the plural, and vice versa, the
use of any term is generally applicable to any gender and where
applicable, a body corporate, the word "or" is not exclusive and the
word "including" is not limiting (whether or not non-limiting
language (such as "without limitation" or "but not limited to " or
words of similar import) is used with reference thereto);
1.3.4 all amounts in this Agreement are stated and are to be paid in
lawful currency of Canada; and
1.3.5 any reference to a corporate entity includes and is also a reference
to a corporate entity that is a successor to such corporate entity.
1.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof. There are no
warranties, representations, covenants or agreements between the parties in
connection with such subject matter except as specifically set forth or
referred to in this Agreement.
1.5 GOVERNING LAW. This Agreement will be interpreted and the rights
and remedies of the parties hereto determined in accordance with the laws of
the Province of Quebec. The parties hereto agree to the jurisdiction of the
Superior Court, District of Montreal.
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE. On and subject to the terms and conditions
hereof, Orvilliers hereby purchases from Brookline and Brookline hereby
sells, assigns and transfers to Orvilliers the entire right, title and
interest of Brookline in and to all of the property and assets of every kind
and description relating to the Properties (collectively the "Purchased
Assets"), including (without duplication):
2.1.1 the Claims;
2.1.2 all surface rights and other rights pertaining to the Properties;
2.1.3 the Improvements;
<PAGE>
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2.1.4 the machinery and equipment and rolling stock belonging to Brookline
located on or used in connection with the Properties;
2.1.5 the rights of Brookline under all Contracts relating to the
Properties;
2.1.6 the Records; and
2.1.7 the Permits, to the extent the same are assignable.
2.2 BASIS OF SALE. Orvilliers acknowledges and agrees in favour of
Brookline that:
2.2.1 Orvilliers is acquiring the Purchased Assets from Brookline on an "AS
IS WHERE IS" basis, at the sole risk and peril of Orvilliers and
subject to no representations and warranties other than the
representations and warranties of Brookline set forth in subsection
4.1 of this Agreement;
2.2.2 Orvilliers is familiar with and has made all such inspections,
investigations and verifications of the Purchased Assets as
Orvilliers has deemed appropriate; and
2.2.3 in the event the consents of certain Persons are required for the
transfer of the Purchased Assets, Orvilliers undertakes to obtain all
such consents to the complete exoneration of Brookline.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE. The purchase price ("Purchase Price") payable by
Orvilliers to Brookline for the Purchased Assets shall be the issuance by
Orvilliers of fully paid and non-assessable common shares in its capital
stock.
3.2 Upon the Closing, Orvilliers will issue to Brookline one thousand
(1,000) fully paid and non-assessable Common shares in its capital stock.
3.3 The parties agree to file a joint election in accordance with
subsection 85(1) of the Income Tax Act (Canada) and section 518 of the Quebec
Taxation Act so that the Purchased Assets will be deemed to have been sold by
Brookline to Orvilliers and acquired by Orvilliers for a consideration equal
to the cost amount of the Purchased Assets for income tax purposes.
3.4 ASSUMPTION OF LIABILITIES. Orvilliers hereby assumes and undertakes
to observe, perform, pay, fulfil and discharge to the entire exoneration of
Brookline, the Brookline Successors and their respective directors and
officers (past, present and future):
<PAGE>
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3.4.1 all of the obligations and liabilities (whether present or future or
accrued, actual, contingent or otherwise) of Brookline, the
Brookline Successors and their respective directors and officers
(past, present and future) relating to the Purchased Assets or the
Properties, including without limitation all liabilities, penalties
and obligations arising from a cause of action or event or condition
or state of facts occurring or existing at or prior to or after the
Closing Date or relating to any past, present or future activities
carried on or to be carried on by any Person at or from or in
connection with the Purchased Assets or the Properties; and
3.4.2 all Environmental Liabilities;
(all of the foregoing obligations and liabilities in paragraphs 3.4.1 and
3.4.2 are herein collectively referred to as the "Assumed Obligations").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 BROOKLINE'S REPRESENTATIONS AND WARRANTIES. Brookline represents
and warrants to Orvilliers that:
4.1.1 Brookline is a corporation duly incorporated and validly subsisting
under the laws of Canada with the corporate power to own its assets
and to carry on its business as presently conducted by it;
4.1.2 Brookline has all of the necessary corporate power and authority to
enter into this Agreement, and to carry out its obligations
hereunder; the execution and delivery of this Agreement, and the
completion and performance of Brookline's obligations hereunder have
been duly authorized by all necessary corporate action on the part
of Brookline; and this Agreement has been executed by its duly
authorized officers and constitutes a legal, valid and binding
obligation of Brookline, enforceable in accordance with its terms;
4.1.3 neither the entering into or delivery of this Agreement by
Brookline, nor the completion of any of the transactions
contemplated hereby violate, contravene, breach or result in a
default under any provision of any existing law, statute or
regulation to which Brookline is subject, its constating documents
or by-laws or any resolution of its directors or shareholders or any
indenture, loan, agreement or other instrument to which it is a
party or by which it is bound; and
4.1.4 Brookline is not a non-resident within the meaning of the INCOME TAX
ACT (Canada) and the TAXATION ACT (Quebec).
<PAGE>
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4.2 ORVILLIERS' REPRESENTATIONS AND WARRANTIES. Orvilliers represents
and warrants to Brookline that:
4.2.1 Orvilliers is a corporation duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation with the
corporate power to own its assets and to carry on its business as
presently conducted by it;
4.2.2 Orvilliers has all of the necessary corporate power and authority to
enter into this Agreement and to carry out its obligations
hereunder; the execution and delivery of this Agreement and the
completion and performance of Orvilliers's obligations hereunder
have been duly authorized by all necessary corporate action on the
part of Orvilliers; and this Agreement has been executed by its duly
authorized officers and constitutes a legal, valid and binding
obligation of Orvilliers, enforceable in accordance with its terms;
4.2.3 neither the entering into or delivery of this Agreement nor the
completion of any of the transactions contemplated hereby violate,
contravene, breach or result in a default under any provision of any
existing law, statute or regulation to which Orvilliers is subject,
its constating documents or by-laws or any resolution of its directors
or shareholders or any indenture, loan, agreement or other
instrument to which it is a party or by which it is bound; and
4.2.4 except for the approvals and consents referred to in paragraph
2.2.3, all of which have been obtained, no consent or approval is
required from any Person to permit each of Orvilliers and Brookline
to enter into, execute and deliver and to perform its obligations
under this Agreement.
4.3 SURVIVAL OF ORVILLIERS' REPRESENTATIONS. The representations and
warranties and indemnities of Orvilliers contained herein shall survive, and
shall continue in full force and effect, following the completion of the sale
and purchase herein provided for.
ARTICLE 5
INDEMNITIES
5.1 ORVILLIERS INDEMNITY. Orvilliers shall indemnify and hold
Brookline, the Brookline Successors and their respective directors and
officers (past, present and future) harmless from and against, and shall, if
requested, assume the defence of Brookline, the Brookline Successors and such
directors and officers in connection with, all losses, liabilities (whether
present or future or accrued, actual, contingent or otherwise), claims,
demands, damages, suits, actions, debts, penalties, charges, judgments,
costs, expenses (including reasonable legal and consultants' fees, expenses
and costs) and other injuries (collectively the "Liabilities") directly or
indirectly or in
<PAGE>
-8-
any manner accruing from, arising out of or with respect to or relating to
any representation or warranty of Orvilliers contained herein being untrue or
incorrect or the failure of Orvilliers to diligently and promptly observe,
perform, pay, fulfil or discharge any of its obligations pursuant hereto or
thereto, including the obligations set forth in subsection 3.4.
5.2 THIRD PARTY PROCEEDING. Brookline (or Brookline Successors, as the
case may be) will promptly notify Orvilliers of any proceeding commenced by
any Person against Brookline in respect of which Brookline, the Brookline
Successors or their respective directors and officers intends to make a claim
under subsection 5.1 (provided that any failure to so notify shall not in any
way impact or restrict the rights to indemnification provided for under
subsection 5.1) and the following provisions will govern any such proceeding:
5.2.1 if requested, Orvilliers will be obligated to assume the defence of
such proceeding against Brookline, the Brookline Successors and such
directors and officers in a bona fide and diligent fashion and will
bear all Liabilities associated therewith;
5.2.2 Brookline, the Brookline Successors and such directors and officers
will have the right to join Orvilliers as a party to such proceeding
and Orvilliers hereby agrees to the entry of an order making
Orvilliers a party to such proceeding;
5.2.3 if Orvilliers assumes the defence of such proceeding;
5.2.3.1 Brookline and the Brookline Successors will cooperate with
Orvilliers in connection therewith (including by providing to
Orvilliers information in the possession of Brookline and the
Brookline Successors which is requested by Orvilliers for use in
contesting the same) provided that Orvilliers on demand pays all
costs and expenses incurred by Brookline and the Brookline
Successors in doing so,
5.2.3.2 Orvilliers will provide Brookline and the Brookline
Successors with copies of all pleadings and other documents in
connection with such proceeding and such other information in
respect of the same as Brookline and the Brookline Successors may
from time to time request,
5.2.3.3 Orvilliers will select and employ legal counsel to appear
and to participate in such proceeding on behalf of Brookline and the
Brookline Successors and such directors and officers (subject to the
approval of such legal counsel by Brookline and the Brookline
Successors, which approval will not be unreasonably withheld),
5.2.3.4 Orvilliers will have the sole authority for the direction
of such proceeding provided that such proceeding seeks only monetary
damages and does not seek any injunction or other extraordinary
relief or specific performance against Brookline and the Brookline
Successors and such directors and officers but, otherwise, Brookline
and the Brookline Successors will be entitled to participate in and,
in the
<PAGE>
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event of disagreement between Brookline and the Brookline Successors and
Orvilliers, to make all decisions regarding the direction of such proceeding
in respect of any injunction or other extraordinary relief or specific
performance against Brookline and the Brookline Successors sought in such
proceeding, and
5.2.3.5 Orvilliers will be the sole judge of the acceptability of any
compromise or settlement of such proceeding:
5.2.3.5.1 which results in the complete release of Brookline
and the Brookline Successors and such directors and officers
from all Liabilities which are the subject of such proceeding
in respect of which Brookline, the Brookline Successors and
such directors and officers have made or intend to make a claim
under subsection 5.1,
5.2.3.5.2 the terms of which involve no more than the payment
of money (that is Brookline, the Brookline Successors and such
directors and officers are not required to admit any wrongdoing
or to take or refrain from taking any substantial action), and
5.2.3.5.3 so long as Brookline and the Brookline Successors are
satisfied acting reasonably, that the full amount of money
required to be paid by Brookline and the Brookline Successors
as a result of such settlement and in connection with such
Liabilities will be paid by Orvilliers,
but, otherwise, such compromise or settlement will require the
prior written approval of Brookline and the Brookline
Successors (which approval will not be unreasonably withheld),
and
5.2.4 if Orvilliers does not assume the defence of such proceeding,
Brookline and the Brookline Successors will be entitled (but not
obligated) to assume the defence of such proceeding in which case
Orvilliers will bear all Liabilities associated therewith without
prejudice to Brookline's and the Brookline Successors' rights to
require Orvilliers to assume such defence and to all of their
recourse against Orvilliers, including their right to recovery
against Orvilliers under subsection 5.1.
5.3 BROOKLINE INDEMNITY. Brookline hereby agrees to indemnify and save
harmless Orvilliers from and against all losses, liabilities (whether present
or future or accrued, actual, contingent or otherwise), claims, demands,
damages, suits, actions, penalties, debts, charges, judgments, costs,
expenses (including reasonable legal and consultants' expenses and costs) and
other injury directly or in any manner accruing from, arising out of or with
respect to or relating to any representation or warranty of Brookline
contained herein being untrue or incorrect or the failure of Brookline to
observe or perform any of its obligations pursuant hereto.
<PAGE>
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The provisions of subsection 5.2 will apply, MUTATIS MUTANDIS, to any
proceeding commenced by any Person against Orvilliers in respect of which
Orvilliers intends to make a claim under this section as if references
therein to Brookline were to Orvilliers and references therein to Orvilliers
were to Brookline.
ARTICLE 6
GENERAL
6.1 TAXES. Orvilliers will pay all GST, provincial sales taxes,
transfer taxes and other similar taxes and duties (other than income or
capital gains taxes) to the extent such taxes and duties are exigible in
connection with the transactions contemplated hereby.
6.2 EXPENSES. All costs and expenses (including, without limitation,
the fees and disbursements of legal counsel, but excluding all taxes and
duties referred to in subsection 6.1) incurred in connection with the
negotiation and the execution and delivery of this Agreement shall be paid by
the party incurring such expenses.
6.3 TIME. Time shall be of the essence hereof.
6.4 ENUREMENT AND ASSIGNMENT. This Agreement shall enure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties hereto.
6.5 NO BROKER. Each party represents and warrants to the other that it
has not been represented by or engaged the services of any broker, agent or
other intermediary in connection with this Agreement and all transactions
contemplated herein and shall indemnify each other party against any claim
resulting from a breach of this warranty.
6.6 NOTICES. Any demand, notice or other communication
("Communication") to be given in connection with this Agreement shall be
given in writing by personal delivery or by facsimile communication addressed
to the recipient as follows:
to Orvilliers Resources Ltd.: Orvilliers Resources Ltd.
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
ATTENTION: PRESIDENT
to Brookline Minerals Inc.: Brookline Minerals Inc.
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
<PAGE>
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ATTENTION: PRESIDENT
or to such other address, facsimile number or individual as may be designated
by notice given by either party to the other. Any communication given by
personal delivery shall be conclusively deemed to have been given on the day
of actual delivery thereof and, if given by facsimile, on the day of
transmittal thereof.
6.7 LANGUAGE OF CONTRACT. Each of the parties acknowledges having
requested and being satisfied that this document be drawn in English.
Chacune des parties reconnait avoir demande que ce document soit redige en
anglais et s'en declare satisfaite.
6.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF the parties have duly executed this Agreement in
the City of Vancouver, Province of British Columbia as of the date first
above written.
BROOKLINE MINERALS INC.
per: /s/
___________
ORVILLIERS RESOURCES LTD.
per: /s/
___________
(121298)
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT made this 20th day of September, 1995.
AMONG: SIMMONDS COMMUNICATIONS LTD., a corporation duly constituted
having its head office at 5255 Yonge Street, Suite 1050,
Willowdale, Ontario (hereinafter referred to as "Simmonds")
SENDEK TRAVEL, LIMITED, a corporation duly constituted having
its head office at 6655 West Sahara Boulevard, Suite B200, Las
Vegas, Nevada (hereinafter referred to as "Sendek")
INTEK DIVERSIFIED CORPORATION, a corporation duly constituted
having its head office at 970 West 190th Street, Suite 720
Torrance, California (hereinafter referred to as "Intek")
(hereinafter called collectively the "Security Holders")
OF THE FIRST PART
AND: MONTREAL TRUST COMPANY OF CANADA, 1800, McGill College Avenue,
Montreal, Quebec,
(hereinafter called the "Trustee")
OF THE SECOND PART
AND: BROOKLINE MINERALS INC., a corporation duly constituted having
its head office at 900 - 999 West Hastings Street, in the City
of Vancouver, Province of British Columbia,
(hereinafter called the "Issuer")
<PAGE>
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OF THE THIRD PART
WHEREAS the Security Holders are about to receive up to seventeen
million and one (17,000,001) common shares of the Issuer (the "Shares") in
connection with the transactions (the "Transactions") contemplated by the
share purchase agreement (the "Share Purchase Agreement") made as of August
24, 1995 among the Issuer and the Security Holders; and
WHEREAS in furtherance of complying with the requirements of the
Montreal Exchange (the "Exchange"), each of the Security Holders is desirous
of depositing in escrow a number of Shares corresponding to 80% of the Shares
that are issued to him pursuant to the Transactions; and
WHEREAS the Trustee has agreed to undertake and perform its duties
according to the terms and conditions hereof.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH that for and in consideration
of the aforesaid agreements, and of the sum of one dollar ($1.00) now paid by
the parties hereto each to the other (receipt of which the parties do hereby
respectively acknowledge each to the other) the Security Holders, the Issuer
and the Trustee covenant and agree each with the other as follows:
1. For the purposes of this agreement, terms and expressions with initial
capital letters used but not otherwise specifically defined in this Agreement
shall have the respective meanings attributed to such terms and expressions
in the Share Purchase Agreement.
2. The Security Holders hereby undertake and agree to place and deposit in
escrow with the Trustee the Shares which are represented by the certificates
described or referred to in Schedule "A" hereto together with certificates
representing 80% of the Shares issued to them in the future as part of the
Transactions (up to a maximum of 13,600,001 Shares) and hereby undertake and
agree forthwith to deliver from time to time those certificates (including
any replacement securities or certificates, if, as and when such are issued)
to the Trustee for deposit in escrow (the "Escrowed Securities") pursuant to
the terms of this Agreement. To this end the Security Holders hereby
irrevocably mandate, direct and authorize the Issuer to deliver to the
Trustee, on behalf of the Security Holders, certificates representing 80% of
the Shares which are issued from time to time to the Security Holders as part
of the Transactions, to be held by the Trustee pursuant to the terms of this
Agreement.
3. The parties hereby agree that the Escrowed Securities and the beneficial
ownership of or any interest in them and the certificates representing them
(including any replacement securities or certificates) shall not be sold,
assigned, hypothecated, pledged, charged, alienated, released from escrow,
transferred within escrow, or otherwise in any manner dealt with, without the
express prior consent, order or direction in writing of the Exchange. The
foregoing shall not
<PAGE>
-3-
prevent any transfer or assignment which may be required by reason of the
bankruptcy of the Security Holders, in which case, the Trustee shall hold the
said Escrowed Securities and certificates in escrow, subject to the
provisions of this agreement, for whatever person or company shall be legally
entitled to be or become the registered owner thereof.
4. Notwithstanding paragraph 3, it is agreed that Escrowed Securities will
be automatically released from escrow from time to time as follows:
on September 20, 1996: one third of the Escrowed Securities then held
by the Trustee
on September 20, 1997: one half of the Escrowed Securities then held by
the Trustee
on September 20, 1998: the balance of the Escrowed Securities
such releases on September 20, 1996 and 1997 to be done as between the
Security Holders pro rata to the number of Escrowed Securities then held on
behalf of each of them.
5. The Security Holders hereby direct the Trustee to retain their
respective Escrowed Securities and the certificates (including any
replacement securities or certificates) representing the same and not to do
or cause anything to be done to release the same from escrow or to allow any
sale, assignment, hypothecation, pledge, charge, or alienation thereof
except, as provided in Section 4 hereof or, with the prior written consent,
order or direction of the Exchange. The Trustee accepts the responsibilities
placed on it hereby and agrees to perform the same in accordance with the
terms hereof.
6. If during the period in which any of the said Escrowed Securities are
retained in escrow pursuant hereto any cash dividend is received by the
Trustee in respect of the Escrowed Securities, any such cash dividend shall
be forthwith paid or transferred to the respective Security Holders entitled
thereto. If during the period in which any of the said Escrowed Securities
are retained in escrow pursuant hereto, any share dividend or other
distribution of securities is received by the Trustee in respect of the
Escrowed Securities, any certificates representing such share dividend or
securities must be held by the Trustee on and subject to the terms of this
agreement. If during the period in which any of the said Escrowed Securities
are retained in escrow pursuant hereto, any share dividend or other
distribution of securities is received by the Security Holders in respect of
the Escrowed Securities, any certificates representing such share dividend or
securities must be forthwith deposited with the Trustee to be held by the
Trustee on and subject to the terms of this agreement.
7. All voting rights attached to the Escrowed Securities shall at all times
be exercised by the respective beneficial owners thereof and the Trustee
shall take all necessary steps from time to time to permit the beneficial
owners to exercise such rights.
8. The Security Holders hereby agree to and do hereby release and indemnify
and save harmless the Trustee from and against all claims, suits, demands,
costs, damages and expenses
<PAGE>
-4-
which may be occasioned by reason of the Trustee's compliance in good faith
with the terms hereof.
9. The Issuer hereby acknowledges the terms and conditions of this
agreement and agrees to take all reasonable steps to facilitate its
performance.
10. If the Trustee should wish to resign, it shall give at least six months'
notice to the Issuer and the Exchange, whereupon the Issuer, may, with the
written consent of the Exchange, by writing appoint another Canadian trust
company as trustee in its place and such appointment shall be binding on the
Security Holders and the new trustee shall assume and be bound by the
obligations of the Trustee hereunder.
11. The written consent, order or direction of the Exchange to a release
from escrow of all or any part of the Escrowed Securities shall terminate
this agreement only in respect of those Escrowed Securities so released. For
greater certainty, this clause does not apply to Escrowed Securities
transferred within escrow.
12. The Security Holders may hypothecate, pledge or charge any or all
securities owned by them and deposited in escrow hereunder to a financial
institution, provided that prior to such hypothecation, pledge or charge,
such financial institution enters into an agreement with the Trustee and the
Issuer whereby it agrees to be bound by the provisions of this agreement and
acknowledges that the securities so hypothecated, pledged or charged may not
be sold, transferred or otherwise dealt with except in accordance with the
provisions of this agreement.
13. If the Issuer is delisted by the Exchange, thereafter any consent, order
or direction of the Exchange herein required will, instead, require the
consent, order or direction of the Quebec Securities Commission.
14. This agreement may be executed in several parts in the same form and
such parts as so executed shall together form one original agreement, and
such parts if more than one shall be read together and construed as if all
the signing parties hereto had executed one copy of this agreement.
15. Wherever the singular or masculine are used throughout this agreement,
the same shall be construed as being the plural or feminine or neuter where
the context so requires.
16. This agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the Province of
Ontario. Each of the parties hereto irrevocably attorns to the jurisdiction
of the courts of the Province of Ontario.
17. This agreement shall enure to the benefit of and be binding upon the
parties hereto, their heirs, executors, administrators, successors and
assigns.
<PAGE>
-5-
IN WITNESS WHEREOF, the parties hereto have executed these presents the
day and year first above written.
SIGNED, SEALED AND DELIVERED ) Simmonds Communications Ltd.
)
in the presence of )
) Per: /s/
) ________________________
)
) Sendek Travel, Limited
)
)
) Per: /s/
) ________________________
)
) Intek Diversified Corporation
)
)
) Per: /s/
________________________
BROOKLINE MINERALS INC.
Per: /s/
________________________
MONTREAL TRUST COMPANY OF CANADA
Per: /s/
________________________
Per: /s/
________________________
<PAGE>
-6-
SCHEDULE "A"
Name of Holder: Address: Number of Certificate Number
Shares
deposited
on
September
20, 1995
Simmonds 5255 Yonge Street 200,000
Communications Ltd. Suite 1050
Willowdale, Ontario
Sendek Travel, Limited 6655 West Sahara Boulevard --
Suite B200
Las Vegas, Nevada
Intek Diversified 970 West 190th Street 200,000
Corporation Suite 720
Torrance, California
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the 24th day of August, 1995.
B E T W E E N:
BROOKLINE MINERALS INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
INTEK DIVERSIFIED CORPORATION,
a corporation incorporated under the laws of the State of
Delaware
(hereinafter referred to as "Intek")
OF THE SECOND PART
RECITALS:
1. The Corporation and Simmonds Communications Ltd., Intek and Sendek Travel,
Limited (collectively, the "Vendors") have entered into an agreement of
purchase and sale made as of the 24th day of August, 1995 (the "Share
Purchase Agreement"), pursuant to which the Corporation has agreed to
purchase from the Vendors all of the issued and outstanding shares of Brook
SIG Corp. ("BSIG"), a company whose primary business objective is to
provide financing to management companies who construct, manage and operate
wireless specialized mobile radio systems on behalf of United States 220
MHz narrowband licensees.
2. In conjunction with the share purchase transaction, Intek has agreed to
provide certain management services to the Corporation.
3. Pursuant to the Share Purchase Agreement, the execution and delivery by the
Corporation and Intek of a management services agreement which obliges
Intek to provide the services described herein in exchange for the common
shares of the Corporation which are issuable to Intek hereunder, is a
condition precedent to the completion of the share purchase transaction
contemplated thereby.
<PAGE>
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NOW THEREFORE, in consideration of the mutual covenants and agreements set
out herein and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
1.. DEFINITIONS. For the purpose of this Agreement, in addition to the
definitions set out above:
(i) "AFFILIATE" means, with respect to any corporation, any other
corporation which directly or indirectly controls or is controlled by or is
under direct or indirect common control with such first mentioned corporation,
and for the purpose of this definition "control" means, with respect to any
corporation, the ownership of voting securities to which are attached 20 per
cent or more of the voting rights attached to all outstanding voting securities
of the corporation;
(ii) "AGREEMENT" means this management services agreement, as the same may
be amended and supplemented from time to time;
(iii) "BROOKLINE COMMON SHARES" means common shares in the capital of
the Corporation as constituted at the date hereof;
(iv) "BROOKLINE MANAGEMENT CONTRACT COMMON SHARES" has the meaning ascribed
thereto in section 4;
(v) "CLOSING DATE" has the meaning ascribed to that term in the Share
Purchase Agreement; and
(vi) "TERM" means the term of this Agreement.
2.. RETAINER TO PROVIDE MANAGEMENT SERVICES. The Corporation hereby retains
Intek to provide it and its subsidiary, BSIG, with various management services
as specified in section 7, during the Term.
3.. TERM. The Term shall commence on the date hereof and terminate on the
first anniversary of such date. The Corporation shall be entitled to terminate
this Agreement at any time upon thirty (30) days prior written notice to Intek,
but in that event, except where the termination is for "just cause", the
Corporation shall immediately issue to Intek all of the Brookline Management
Contract Common Shares which remain unissued, whether or not accrued. For the
purposes of this section 3, "just cause" shall mean a fundamental breach of this
Agreement by Intek which, under common law, entitles the Corporation to
terminate all of its obligations under this Agreement.
<PAGE>
-3-
4.. MANAGEMENT SERVICES FEES.
(a) In consideration of the management services to be provided by Intek to the
Corporation and BSIG hereunder, Intek shall be entitled to receive one million
(1,000,000) Brookline Common Shares (the "Brookline Management Contract Common
Shares"). Subject to section 4.2, two hundred and fifty thousand (250,000)
Brookline Management Contract Common Shares shall be issued to Intek on each of
the following dates:
(i) the Closing Date;
(ii) the date which is three (3) months after the Closing Date;
(iii) the date which is six (6) months after the Closing Date; and
(iv) the date which is nine (9) months after the Closing Date.
(b) If Brookline, at any time during which any Brookline Management Contract
Common Shares remain unissued, shall take any of the actions contemplated by the
provisions of section 2.7 of the Share Purchase Agreement, then the procedure
set out in that section shall be followed and the appropriate equitable and
proportionate adjustment determined pursuant to the provisions of section 2.7,
if any, shall be made to the number of unissued Brookline Management Contract
Common Shares.
(c) Intek agrees that, without the prior written consent of the Corporation, it
will not sell, assign or otherwise transfer any of the Brookline Management
Contract Common Shares for a period of three (3) years from the Closing Date,
except that this restriction shall not apply to the following transactions in
such shares:
(a) pledges to secure bona fide debts or other obligations; or
(b) sales or transfers to Affiliates of Intek who agree to be bound
by the provisions of this section 4.3.
5.. EXPENSES. The Corporation shall, or shall cause BSIG to, reimburse
Intek for all of its reasonable expenses incurred in connection with the
provision of management services to either the Corporation or BSIG within thirty
(30) days following submission of applicable receipts or other supporting
documentation. For greater certainty, the expenses of Intek shall be deemed not
to include salaries or other compensation paid or payable by Intek to its
employees, or any amounts paid to consultants or independent contractors who
have been hired to perform any portion of the services described in section 7.
6.. ACCESS TO INFORMATION. During the Term, the Corporation shall, or shall
cause BSIG to, ensure that Intek and its representatives have access to all
financial statements and other records
<PAGE>
-4-
and information of the Corporation and
BSIG which are available to the shareholders and directors of those corporations
generally. In addition, the Corporation agrees to provide Intek and its
representatives with access to its management information systems and to cause
BSIG to do the same.
7.. RESPONSIBILITIES OF INTEK. During the Term, both directly and through its
subsidiary Roamer One, Inc. ("Roamer One"), Intek shall provide the Corporation
and BSIG with certain administrative and management services including, INTER
ALIA, the following services:
(i) Site Selection. Representatives of Intek and/or Roamer One will be
available to the Corporation and BSIG for consultation regarding the
selection of sites to be financed.
(ii) Infrastructure Equipment and System Compatibility. Intek shall
provide advice and assistance to the Corporation and BSIG, from time
to time, on the evaluation of infrastructure equipment and system
capability.
(iii) FCC Matters. Intek shall assist the Corporation and BSIG, from
time to time, in matters regarding the United States Federal
Communications Commission (the "FCC"), including providing
notification to the FCC, as required.
(iv) Contract Management. Intek and/or Roamer One shall provide advice
and assistance to the Corporation and BSIG, from time to time, on
the management of contracts for 220 MHz and site licenses, as
required.
(v) Negotiation of Financing Contracts. Intek shall assist the
Corporation and BSIG, from time to time, in the negotiation of
contracts to provide financing in various forms for management
companies who construct, manage and operate wireless specialized
mobile radio systems on behalf of United States 220 MHz narrowband
licensees, including consulting on the business assessment and
technical review of the 220 MHz systems to be constructed.
8.. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to Intek that:
(i) the Corporation has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(ii) the Corporation has taken all necessary corporate action to
authorize the execution and delivery of this Agreement and
the performance of its obligations hereunder;
<PAGE>
-5-
(iii) this Agreement has been duly executed and delivered by the
Corporation and constitutes a valid and binding obligation of the
Corporation, enforceable against it in accordance with its terms;
(iv) the Corporation has duly authorized the issuance of such number of
Brookline Common Shares as shall be necessary to issue the Brookline
Management Contract Common Shares as contemplated herein and such
shares, when issued, will be validly issued as fully paid shares of
the Corporation; and
(v) other than any required stock exchange approvals, no consent is
required of, or notice required to be given to, any person by the
Corporation in respect of any of the transactions contemplated
herein or any part thereof.
9.. MISCELLANEOUS.
9.1 In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
9.2 The headings in this Agreement are for convenience of reference only and
shall not be given any effect in the interpretation of this Agreement.
9.3 This Agreement and all amendments hereof and waivers and consents
hereunder shall be governed by and construed in accordance with the law of
the Province of British Columbia and the laws of Canada applicable therein
and the parties hereby irrevocably attorn to the jurisdiction of the courts
of British Columbia.
9.4 Time shall be of the essence of this Agreement.
9.5 The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
9.6 All notices, consents and other communications required or permitted to
be given under or by reason of this Agreement shall be in writing, shall be
delivered personally or by facsimile as described below, and shall be deemed
given on the date on which such delivery is made. Any such delivery shall be
addressed to the intended recipient at the following addresses (or at such
other address for a party as shall be specified by such party by like notice
to the other parties):
<PAGE>
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(a) if to the Corporation:
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
Attention: The President
Facsimile: (604) 683-6958
(b) if to Intek:
970 West 190th Street
Suite 720
Torrance, California
90502
Attention: David Neibert
Facsimile: (310) 366-7712
9.7 Subject to Intek's right to assign its rights and obligations hereunder
to an Affiliate capable of performing Intek's obligations hereunder, neither
party may assign any of its rights or delegate any of its duties under this
Agreement without the prior written consent of the other party.
9.8 The failure of a party to insist upon strict adherence to a term of this
Agreement on an occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. No purported waiver shall be effective
unless in writing. The waiver by any party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent or other breach.
9.9 This Agreement supersedes any other agreement, whether written or oral
(including a letter of intent between the Corporation and Simmonds
Communications Ltd. dated July 12, 1995), that may have been made or entered
into by the parties relating to the matters contemplated hereby and
constitutes the entire agreement between the parties with respect to such
matters.
9.10 This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, all as of the date first above written.
BROOKLINE MINERALS INC.
<PAGE>
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By: /s/
_________________________________
By: /s/
_________________________________
INTEK DIVERSIFIED CORPORATION
By: /s/
_________________________________
By: /s/
_________________________________
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the 24th day of August, 1995.
B E T W E E N:
BROOKLINE MINERALS INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
SIMMONDS COMMUNICATIONS LTD.,
a corporation incorporated under the laws of the Province of
Ontario
(hereinafter referred to as "SCL")
OF THE SECOND PART
- and -
MIDLAND INTERNATIONAL CORPORATION,
a corporation incorporated under the laws of the State of
Delaware
(hereinafter referred to as "Midland")
OF THE THIRD PART
RECITALS:
1. The Corporation and SCL, Intek Diversified Corporation and Sendek Travel,
Limited (collectively, the "Vendors") have entered into an agreement of
purchase and sale made as of the 24th day of August, 1995 (the "Share
Purchase Agreement"), pursuant to which the Corporation has agreed to
purchase from the Vendors all of the issued and outstanding shares of Brook
SIG Corp. ("BSIG"), a company whose primary business objective is to
provide financing to management companies who construct, manage and operate
wireless specialized mobile radio systems on behalf of United States 220
MHz narrowband licensees.
2. In conjunction with the share purchase transaction, SCL has agreed to
provide certain management services to the Corporation.
3. Midland is a wholly-owned subsidiary of SCL.
4. Pursuant to the Share Purchase Agreement, the execution and delivery by the
Corporation, SCL and Midland of a management services agreement which
obliges SCL
<PAGE>
-2-
to provide the services described herein in exchange for the
common shares of the Corporation which are issuable to SCL hereunder, is a
condition precedent to the completion of the share purchase transaction
contemplated thereby.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
out herein and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
1. DEFINITIONS. For the purpose of this Agreement, in addition to the
definitions set out above:
(a) "AFFILIATE" means, with respect to any corporation, any other
corporation which directly or indirectly controls or is controlled by or is
under direct or indirect common control with such first mentioned corporation,
and for the purpose of this definition "control" means, with respect to any
corporation, the ownership of voting securities to which are attached 20 per
cent or more (or, for the purpose of section 9.1 only, 50 per cent or more) of
the voting rights attached to all outstanding voting securities of the
corporation;
(b) "AGREEMENT" means this management services agreement, as the same may
be amended and supplemented from time to time;
(c) "BROOKLINE COMMON SHARES" means common shares in the capital of the
Corporation as constituted at the date hereof;
(d) "BROOKLINE MANAGEMENT CONTRACT COMMON SHARES" has the meaning ascribed
thereto in section 4;
(e) "CLOSING DATE" has the meaning ascribed to that term in the Share
Purchase Agreement; and
(f) "TERM" means the term of this Agreement.
2. RETAINER TO PROVIDE MANAGEMENT SERVICES. The Corporation hereby retains
SCL to provide it and its subsidiary, BSIG, with various management services as
specified in section 7, during the Term.
3. TERM. The Term shall commence on the date hereof and terminate on the
first anniversary of such date. The Corporation shall be entitled to terminate
this Agreement at any time upon thirty (30) days prior written notice to SCL,
but in that event, except where the termination is for "just cause", the
Corporation shall immediately issue to SCL all of the Brookline Management
Contract Common Shares which remain unissued, whether or not accrued. For the
purposes of this section 3, "just cause" shall mean a fundamental breach of this
Agreement by SCL which, under common law, entitles the Corporation to terminate
all of its obligations under this Agreement.
<PAGE>
-3-
4. MANAGEMENT SERVICES FEES.
4.1 In consideration of the management services to be provided by SCL to the
Corporation and BSIG hereunder, SCL shall be entitled to receive one million
(1,000,000) Brookline Common Shares (the "Brookline Management Contract Common
Shares"). Subject to section 4.2, two hundred and fifty thousand (250,000)
Brookline Management Contract Common Shares shall be issued to SCL on each of
the following dates:
(a) the Closing Date;
(b) the date which is three (3) months after the Closing Date;
(c) the date which is six (6) months after the Closing Date; and
(d) the date which is nine (9) months after the Closing Date.
4.2 If Brookline, at any time during which any Brookline Management Contract
Common Shares remain unissued, shall take any of the actions contemplated by the
provisions of section 2.7 of the Share Purchase Agreement, then the procedure
set out in that section shall be followed and the appropriate equitable and
proportionate adjustment determined pursuant to the provisions of section 2.7,
if any, shall be made to the number of unissued Brookline Management Contract
Common Shares.
4.3 SCL agrees that, without the prior written consent of the Corporation, it
will not sell, assign or otherwise transfer any of the Brookline Management
Contract Common Shares for a period of three (3) years from the Closing Date,
except that this restriction shall not apply to the following transactions in
such shares:
(a) pledges to secure bona fide debts or other obligations; or
(b) sales or transfers to Affiliates of SCL who agree to be bound by
the provisions of this section 4.3.
5. EXPENSES. The Corporation shall, or shall cause BSIG to, reimburse SCL
for all of its reasonable expenses incurred in connection with the provision of
management services to either the Corporation or BSIG within thirty (30) days
following submission of applicable receipts or other supporting documentation.
For greater certainty, the expenses of SCL shall be deemed not to include
salaries or other compensation paid or payable by SCL to its employees, or any
amounts paid to consultants or independent contractors who have been hired to
perform any portion of the services described in section 7.
6. ACCESS TO INFORMATION. During the Term, the Corporation shall, or shall
cause BSIG to, ensure that SCL and its representatives have access to all
financial statements and other records and information of the Corporation and
BSIG which are available to the shareholders and directors of those corporations
generally. In addition, the Corporation agrees to provide SCL and its
representatives with access to its management information systems and to cause
BSIG to do the same.
<PAGE>
-4-
7. RESPONSIBILITIES OF SCL. During the Term, SCL shall provide the
Corporation and BSIG with certain administrative and management services
including, INTER ALIA, the following services:
(a) STRATEGIC PLANNING. By making its Chairman and Chief Executive
Officer and its Executive Vice-President available to the Corporation
on a part time basis, SCL shall provide the Corporation with advice
and assistance on the formulation and implementation of its strategic
planning initiatives.
(b) FIELD ASSESSMENT AND MARKETING ASSISTANCE. Both directly and through
Midland, SCL shall provide advice and assistance to the Corporation
and BSIG, from time to time, on their field assessment and marketing
activities.
(c) ACCOUNTING AND FINANCIAL MANAGEMENT. SCL shall provide advice and
assistance to the Corporation, from time to time, on the management of
its accounting function and corporate finance activities.
(d) NEGOTIATION OF FINANCING CONTRACTS. SCL shall assist the Corporation
and BSIG, from time to time, in the negotiation of contracts to
provide financing in various forms for management companies who
construct, manage and operate wireless specialized mobile radio
systems on behalf of United States 220 MHz narrowband licensees,
including consulting on the business assessment and technical review
of the 220 MHz systems to be constructed.
(e) NEGOTIATIONS WITH EQUIPMENT SUPPLIERS. SCL, either directly or
through Midland, shall assist the Corporation and BSIG, from time to
time, in the negotiation of purchasing terms with suppliers of radio
equipment and in the selection of such equipment.
(f) PUBLIC RELATIONS. SCL may assist the corporation, upon request, with
the management of its corporate public relations function, including
advising it on handling its relations with its shareholders.
(g) COMPUTER SERVICES. SCL shall, to the extent feasible, provide the
Corporation with computer-related services.
8. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to SCL that:
(a) the Corporation has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(b) the Corporation has taken all necessary corporate action to authorize
the execution and delivery of this Agreement and the performance of
its obligations hereunder;
<PAGE>
-5-
(c) this Agreement has been duly executed and delivered by the Corporation
and constitutes a valid and binding obligation of the Corporation,
enforceable against it in accordance with its terms;
(d) the Corporation has duly authorized the issuance of such number of
Brookline Common Shares as shall be necessary to issue the Brookline
Management Contract Common Shares as contemplated herein and such
shares, when issued, will be validly issued as fully paid shares of
the Corporation; and
(e) other than any required stock exchange approvals, no consent is
required of, or notice required to be given to, any person by the
Corporation in respect of any of the transactions contemplated herein
or any part thereof.
9. MISCELLANEOUS.
9.1 Midland shall pay (or shall cause its Affiliates to pay, as applicable),
the Corporation semi-annually within 30 days of June 30 and December 31 an
amount equal to 5% of the net selling price paid for radio equipment by
management companies who purchase such equipment from Midland or any of its
Affiliates for use in the construction or operation of Qualifying Systems (as
that term is defined in the Share Purchase Agreement).
9.2 In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
9.3 The headings in this Agreement are for convenience of reference only and
shall not be given any effect in the interpretation of this Agreement.
9.4 This Agreement and all amendments hereof and waivers and consents hereunder
shall be governed by and construed in accordance with the law of the Province of
British Columbia and the laws of Canada applicable therein and the parties
hereby irrevocably attorn to the jurisdiction of the courts of British Columbia.
9.5 Time shall be of the essence of this Agreement.
9.6 The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
9.7 All notices, consents and other communications required or permitted to be
given under or by reason of this Agreement shall be in writing, shall be
delivered personally or by facsimile as described below, and shall be deemed
given on the date on which such delivery is made. Any such delivery shall be
addressed to the intended recipient at the following addresses (or at such other
address for a party as shall be specified by such party by like notice to the
other parties):
<PAGE>
-6-
(a) if to the Corporation:
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
Attention: The President
Facsimile: (604) 683-6958
(b) if to SCL:
5255 Yonge Street, Suite 1050
Willowdale, Ontario
M2N 6P4
Attention: David C. O'Kell
Facsimile: (416) 221-3800
(c) if to Midland:
5255 Yonge Street, Suite 1050
Willowdale, Ontario
M2N 6P4
Attention: Harry Dunstan
Facsimile: (416) 221-3800
9.8 Subject to SCL's right to assign its rights and obligations hereunder to an
Affiliate capable of performing SCL's obligations hereunder, neither party may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other party.
9.9 The failure of a party to insist upon strict adherence to a term of this
Agreement on an occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. No purported waiver shall be effective unless in
writing. The waiver by any party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent or other breach.
9.10 This Agreement supersedes any other agreement, whether written or oral
(including a letter of intent between the Corporation and SCL dated July 12,
1995), that may have been made or entered into by the parties relating to the
matters contemplated hereby and constitutes the entire agreement between the
parties with respect to such matters.
9.11 This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.
<PAGE>
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, all as of the date first above written.
BROOKLINE MINERALS INC.
By: /s/
_________________________________
By: /s/
_________________________________
SIMMONDS COMMUNICATIONS LTD.
By: /s/
_________________________________
By: /s/
_________________________________
MIDLAND INTERNATIONAL CORPORATION
By: /s/
_________________________________
By: /s/
_________________________________
<PAGE>
BROOKLINE MINERALS INC.
- AND -
SIMMONDS COMMUNICATIONS LTD.
- AND -
INTEK DIVERSIFIED CORPORATION
- AND -
SENDEK TRAVEL, LIMITED
SHARE PURCHASE AGREEMENT
Made as of August 24, 1995
HEENAN BLAIKIE
TORONTO
<PAGE>
SHARE PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 - INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Interpretation Not Affected by Headings, Etc.. . . . . . . . . . . . 5
1.4 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 - SHARE PURCHASE AND REORGANIZATION. . . . . . . . . . . . . . . . . 6
2.1 Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Brookline Performance Common Shares. . . . . . . . . . . . . . . . . 6
2.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Board of Directors of Purchaser, Section 2.1 Transaction, etc. . . . 8
2.5 Chairman and President of Purchaser. . . . . . . . . . . . . . . . . 8
2.6 Change of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Adjustment Provisions. . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . .10
3.1 Representations and Warranties of the Vendors. . . . . . . . . . . .10
3.2 Representations and Warranties of the Purchaser. . . . . . . . . . .11
ARTICLE 4 - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.1 Covenants of Vendors . . . . . . . . . . . . . . . . . . . . . . . .14
4.2 Covenants of Purchaser . . . . . . . . . . . . . . . . . . . . . . .14
4.3 Mutual Covenant. . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE 5 - CONDITIONS PRECEDENT AND SUBSEQUENT. . . . . . . . . . . . . . . .16
5.1 Mutual Conditions Precedent. . . . . . . . . . . . . . . . . . . . .16
5.2 Conditions Precedent of the Purchaser. . . . . . . . . . . . . . . .16
5.3 Conditions Precedent of the Vendors. . . . . . . . . . . . . . . . .17
5.4 Conditions Precedent Notices . . . . . . . . . . . . . . . . . . . .18
5.5 Satisfaction of Conditions Precedent . . . . . . . . . . . . . . . .19
5.6 Mutual Condition Subsequent. . . . . . . . . . . . . . . . . . . . .19
ARTICLE 6 - TERMINATION, SURVIVAL AND AMENDMENT. . . . . . . . . . . . . . . .19
6.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 7 - GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
7.1 Commissions, Fees and Expenses . . . . . . . . . . . . . . . . . . .20
7.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
7.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
7.4 Confidentiality and Public Notices . . . . . . . . . . . . . . . . .22
7.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
7.6 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . .22
7.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . .22
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 24th day of August, 1995.
AMONG:
BROOKLINE MINERALS INC., a corporation
incorporated under the laws of Canada
(hereinafter referred to as the "Purchaser")
OF THE FIRST PART
- and -
SIMMONDS COMMUNICATIONS LTD., a corporation
incorporated under the laws of the Province of
Ontario
(hereinafter referred to as "Simmonds")
OF THE SECOND PART
- and -
INTEK DIVERSIFIED CORPORATION, a corporation
incorporated under the laws of the State of
Delaware
(hereinafter referred to as "Intek")
OF THE THIRD PART
- and -
SENDEK TRAVEL, LIMITED, a limited liability
company formed under the laws of the State of
Nevada
(hereinafter referred to as "Sendek")
OF THE FOURTH PART
<PAGE>
-2-
RECITALS:
1. Brook SIG Corp. ("BSIG"), a corporation incorporated under the laws of
the State of Delaware, and which intends to change its name to Brookline Capital
Corp., intends to purchase, directly or indirectly, from Simmonds, Intek and
Sendek certain assets, including, among other things, cash, a loan receivable
from Pagers Plus Cellular, and equity in Pagers Plus Cellular.
2. Financing provided by BSIG (which will include, to the extent
available, an equity interest in the borrower) will be used by management
companies to construct wireless specialized mobile radio systems on behalf of
certain United States 220 MHz narrowband licensees.
3. All of the issued and outstanding shares of BSIG are owned by
Simmonds, Intek and Sendek (sometimes hereinafter, each referred to as a
"Vendor", and collectively referred to as the "Vendors").
4. The Purchaser and Simmonds, on behalf of the Vendors, entered into a
letter of intent accepted on the 12th day of July, 1995 (the "Letter of Intent")
pursuant to which, among other things, the Vendors agreed to sell and the
Purchaser agreed to purchase all of the issued and outstanding shares of BSIG.
5. In view of the foregoing, and in accordance with the Letter of Intent,
the parties wish to now enter into this Agreement in order to set out in greater
detail the terms of the transaction as described in the Letter of Intent.
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
For the purpose of this Agreement, in addition to the definitions set
out above:
"AFFILIATE" means, with respect to any corporation or limited liability company,
any other corporation which directly or indirectly controls or is controlled by
or is under direct or indirect common control with such first mentioned
corporation or limited liability company, and for the purpose of this definition
"control" means, with respect to any corporation or limited liability company,
the ownership of voting securities to which are attached 20 per cent or more of
the voting rights attached to all outstanding voting securities of such
corporation or limited liability company;
<PAGE>
-3-
"AGREEMENT" means this Agreement and all schedules attached to this Agreement,
in each case as they may be amended or supplemented from time to time, and the
expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar
expressions refer to this Agreement and unless otherwise indicated, references
to Articles and sections are to Articles and sections in this Agreement and
references to parties are to the parties to this Agreement;
"ASSET PURCHASE AGREEMENT" means the agreement between the Purchaser and
Orvilliers in the form attached hereto as Schedule "D";
"AUDITORS" has the meaning ascribed thereto in section 2.7;
"BROOKLINE COMMON SHARES" means common shares in the capital of the Purchaser at
the date hereof;
"BROOKLINE MANAGEMENT CONTRACT COMMON SHARES" means the Brookline Common Shares
issuable pursuant to the Management Contracts;
"BROOKLINE PERFORMANCE COMMON SHARES" means the Brookline Common Shares issuable
pursuant to section 2.2;
"BROOKLINE SHAREHOLDERS" means the holders of Brookline Common Shares;
"BROOKLINE SHAREHOLDERS CONSENT" means the written consent of the holders of a
majority of the outstanding Brookline Common Shares to be obtained in connection
with the transaction contemplated by section 2.1;
"BROOKLINE SHAREHOLDERS MEETING" has the meaning ascribed thereto in section
2.4;
"BSIG ASSET ACQUISITION" means the sale and assignment by the Vendors to BSIG of
certain assets and agreements relating to the specialized mobile radio systems
industry, as listed in Schedule "A" hereto, in exchange for the Purchased
Shares;
"BSIG PRO FORMA BALANCE SHEET" has the meaning ascribed thereto in subsection
4.1.4;
"BUSINESS DAY" means any day, other than Saturday, Sunday or any statutory
holiday in the Provinces of Ontario, Quebec, British Columbia and the State of
Ohio;
"CLOSING DATE" has the meaning ascribed thereto in section 2.3;
"FCC" means the United States Federal Communications Commission;
"FINANCING" means financing of any kind, including equity, secured debt and
lease financing, which is provided to assist with construction or development of
SMR 220 Mhz Systems or which is related in any way to their construction or
development, whether directly or indirectly;
<PAGE>
-4-
"FINDER'S FEE BROOKLINE COMMON SHARES" means the 400,000 Brookline Common Shares
issuable on the Closing Date to Murray Sinclair, Sr., or his nominee, subject to
regulatory approvals, as a finder's fee in connection with the transaction
contemplated by this Agreement;
"INTEK MANAGEMENT CONTRACT" means the agreement between Intek and the Purchaser
in the form attached hereto as Schedule "C";
"MANAGEMENT CONTRACTS" means collectively the Simmonds Management Contract and
the Intek Management Contract;
"ME" means the Montreal Exchange;
"MIDLAND" means Midland International Corporation, a corporation incorporated
under the laws of the State of Delaware;
"ORVILLIERS" means Orvilliers Resources Inc., a corporation incorporated under
the laws of Canada;
"PERSON" means an individual, general partnership, limited partnership, limited
liability company, syndicate, sole proprietorship, company or corporation with
or without share capital, unincorporated association, trust, trustee, executor,
administrator or other legal or personal representative, regulatory body or
agency, government or governmental agency, authority or entity, however
designated or constituted;
"PURCHASER PRO FORMA BALANCE SHEET" has the meaning ascribed thereto in
subsection 4.2.4;
"PURCHASED SHARES" has the meaning ascribed thereto in section 2.1;
"QUALIFYING SYSTEM" has the meaning ascribed thereto in subsection 2.2.1;
"SIMMONDS MANAGEMENT CONTRACT" means the agreement among Simmonds, Midland and
the Purchaser in the form attached hereto as Schedule "B";
"SMR 220 MHZ SYSTEMS" means specialized mobile radio systems using the 220 MHz
narrowband spectrum;
"TERMINATION DATE" means September 30, 1995; and
"VSE" means the Vancouver Stock Exchange.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are
expressed in lawful money of Canada unless otherwise specified.
<PAGE>
-5-
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into Articles, sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
1.4 GENDER AND NUMBER
In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa and words importing
gender include all genders.
1.5 SCHEDULES
The following schedules are attached to and form part of this
Agreement:
Schedule "A" - BSIG Assets
Schedule "B" - Simmonds Management Contract
Schedule "C" - Intek Management Contract
Schedule "D" - Asset Purchase Agreement
1.6 ENTIRE AGREEMENT
This Agreement, including the schedules hereto, together with
documents or instruments contemplated by or referred to in this Agreement,
constitute the entire agreement between the parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, between the parties with respect to
the subject matter hereof, and without limiting the generality of the foregoing,
this Agreement supersedes the Letter of Intent. There are no representations,
warranties, covenants or conditions with respect to the subject matter hereof,
except as contained herein and in any other written agreement, document or
instrument signed and delivered contemporaneously with the execution and
delivery of this Agreement or contemplated by or referred to in this Agreement.
1.7 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof.
1.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein and the parties hereby irrevocably attorn to the jurisdiction of the
courts of British Columbia.
<PAGE>
-6-
ARTICLE 2
SHARE PURCHASE AND REORGANIZATION
2.1 PURCHASE
2.1.1 The Purchaser shall purchase from the Vendors and the Vendors
shall sell to the Purchaser the number of common shares (the "Purchased Shares")
of BSIG opposite each Vendor's name below. In addition, Simmonds shall assign
to the Purchaser all of its right, title and interest in and to 285,714 shares
of common stock of American Digital Communications, Inc. ("ADC") and certain
options to purchase additional common stock of ADC, all as described more fully
in that certain letter of intent dated May 9, 1995 between Simmonds and ADC (the
"ADC Securities"). In consideration for the Purchased Shares and the ADC
Securities, the Purchaser shall cause the Brookline Performance Common Shares to
be issued to the Vendors on the basis set out in section 2.2 and shall cause one
Brookline Common Share to be issued to Simmonds on the Closing Date.
VENDOR'S NAME NUMBER OF PURCHASED SHARES
Simmonds 300
Intek 300
Sendek 300
2.1.2 At the request of Simmonds, the Purchaser will jointly elect with
Simmonds in the prescribed form and within the time prescribed under subsection
85(1) of the INCOME TAX ACT (Canada) (the "Act") as to the amount they have
agreed on to be deemed to be Simmonds' proceeds of disposition of the ADC
Securities and the Purchaser's cost thereof. In any such election, such amount
will be the "cost amount" of the ADC Securities to Simmonds within the meaning
of the Act.
2.2 BROOKLINE PERFORMANCE COMMON SHARES
2.2.1 Subject to section 2.7 and subsections 2.2.3 and 2.2.4, 33,333.33
Brookline Performance Common Shares shall be issuable to each of the Vendors for
each SMR 220 MHz System for which Financing is provided by BSIG (a "Qualifying
System").
2.2.2 For greater certainty, the eight SMR 220 MHz Systems for which
funds have already been advanced to Pagers Plus Cellular shall be deemed to be
Qualifying Systems as of the date of this Agreement.
2.2.3 Upon receipt by the Purchaser, from time to time, of certificates
signed by or on behalf of either Intek or Simmonds, as applicable, certifying
that the number of Qualified Systems indicated below have been built to FCC
specifications:
<PAGE>
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(a) 50 Qualifying Systems, in aggregate;
(b) 100 Qualifying Systems, in aggregate;
(c) 150 Qualifying Systems, in aggregate; or
(d) such number of Qualifying Systems as have been completed by the
second anniversary of the Closing Date, if that number is greater
than 50 and less than 150,
the unissued Brookline Performance Common Shares which are issuable based on
such certificates in accordance with this section 2.2 shall be issued by the
Purchaser to the Vendors.
2.2.4 In the event that less than 50 Qualifying Systems have been built
to FCC specifications by the second anniversary of the Closing Date, the
Purchaser shall issue to each of the Vendors the greater of:
(i) 33,333.33 Brookline Performance Common Shares for each Qualifying
System which has been built to FCC specifications; and
(ii) the lesser of:
(A) 1,666,667 Brookline Common Shares; and
(B) that number of Brookline Common Shares having a fair market value
equal to one-third of the aggregate net value represented by,
realized from or generated by, as applicable, in any manner
whatsoever, the assets listed in Schedule A hereto and the ADC
Securities (all as determined by the Auditors, as defined below,
as of the second anniversary of the Closing Date),
upon receipt by the Purchaser of a certificate signed by or on behalf of either
Intek or Simmonds, as applicable, certifying the number of Qualified Systems
built to FCC specifications. For the purposes of this section 2.2.4, the "fair
market value" of a Brookline Common Share will be deemed to be $0.82, which was
the last trading price of the Brookline Common Shares on the ME prior to the
announcement of the transaction contemplated by section 2.1.
2.2.5 During the period from the Closing Date to and including the
third anniversary of the Closing Date, each Vendor shall not transfer in any
matter whatsoever any Brookline Performance Common Shares issued to such Vendor,
except: (a) with the written consent of the Purchaser; or (b) for transfers
which constitute pledges of Brookline Performance Common Shares to secure BONA
FIDE debts or other obligations of such Vendor; or (c) for transfers to
Affiliates of such Vendor, provided such Affiliates agree in writing to be bound
by the provisions of this paragraph.
<PAGE>
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2.3 CLOSING
The transaction contemplated by section 2.1 shall be completed on
September 20, 1995 (the "Closing Date") at 2:30 p.m. (Eastern Standard Time) (or
on such other date as the parties may agree to in writing) at which time,
provided all conditions precedent set out in Article 5 have been satisfied or
waived, the Vendors shall deliver to the Purchaser share certificates
representing the Purchased Shares and Simmonds shall deliver to the Purchaser
any share certificates or other documents in its possession evidencing title to
the ADC Securities, all duly endorsed for transfer in blank, and the Purchaser
shall deliver to Simmonds a share certificate representing one Brookline Common
Share.
2.4 BOARD OF DIRECTORS OF PURCHASER, SECTION 2.1 TRANSACTION, ETC.
At the meeting of the Brookline Shareholders scheduled to be held on
or about September 26, 1995, including any adjournments thereof (the "Brookline
Shareholders Meeting"), the Brookline Shareholders shall be asked to, among
other things: (a) approve, ratify and confirm the transaction contemplated by
section 2.1; (b) elect Mr. Nicholas Wilson, Mr. John Simmonds and Mr. David
O'Kell directors of the Purchaser; and (c) approve amendments to the Purchaser's
Stock Option Plan (1995), as amended, to authorize the issuance of an additional
1,800,000 Brookline Common Shares pursuant to options granted under such Plan.
2.5 CHAIRMAN AND PRESIDENT OF PURCHASER
As soon as possible following the completion of the transaction
contemplated by section 2.1, the Board of Directors of the Purchaser shall meet
to appoint Mr. John Simmonds and Mr. David O'Kell the Chairman and the
President, respectively, of the Purchaser.
2.6 CHANGE OF NAME
At the Brookline Shareholders Meeting, the Brookline Shareholders
shall also be asked to approve the change of the Purchaser's name to "Brookline
Capital Inc.". As soon as possible following such approval by the Brookline
Shareholders at the Brookline Shareholders Meeting, the Purchaser shall cause
articles of amendment to be filed changing the Purchaser's name to "Brookline
Capital Inc.".
2.7 ADJUSTMENT PROVISIONS
If the Purchaser, at any time during which any Brookline Performance
Common Shares remain unissued and potentially issuable on or after the date of
this Agreement and within two years of the Closing Date, shall:
<PAGE>
-9-
(a) issue or cause to be issued any Brookline Common Shares or
securities convertible into or granting rights to acquire Brookline
Common Shares (unless contemplated by this Agreement) at an issue
price which is less than that permitted by the rules of the ME for
private placement offerings by listed companies; or
(b) effect any changes to its share capital which affect the
Brookline Common Shares, including without limitation, the
subdivision, consolidation, exchange, conversion or reclassification
of Brookline Common Shares, the reorganization of its share capital or
any consequential change thereto resulting from the merger or
amalgamation by the Purchaser with any other corporation; or
(c) declare a share dividend on Brookline Common Shares;
then the number of Brookline Performance Common Shares which remain unissued and
potentially issuable shall be equitably and proportionately adjusted, based on a
determination of the external independent auditors of the Purchaser (the
"Auditors"), with a view to ensuring that the Vendors ultimately are entitled to
receive the number of Brookline Performance Common Shares as a proportion of all
Brookline Common Shares outstanding after the event or change described in
paragraph (a), (b) or (c) above, as they would have been entitled to receive if
all Brookline Performance Common Shares issuable hereunder had been issued on
the Closing Date. Pursuant to the Management Contracts, if any of the foregoing
events or changes occur, a corresponding adjustment shall be made to the number
of Brookline Management Contract Common Shares which remain issuable thereunder.
If any event occurs of the type contemplated by the provisions of this
section 2.7, or is similar thereto, but is not expressly provided for by such
provisions, then the Purchaser's Board of Directors will direct the Auditors to
determine an appropriate adjustment in the number of Brookline Performance
Common Shares and, pursuant to the Management Contracts, in the number of
Brookline Management Contract Common Shares, which remain unissued and
potentially issuable, so as to protect the rights of the Vendors.
Proportionate adjustments shall be carried out in the following
manner:
(i) the Purchaser shall give not less than 14 Days notice to the
Vendors and the Auditors of its intention to cause any of the events
or effect any of the changes mentioned above;
(ii) the notice shall contain a description of the event or change
contemplated by the Purchaser in sufficient detail to permit a full
understanding and assessment thereof; and
(iii) the Auditors shall provide written notice to the Vendors and
the Purchaser of their determination of the required adjustment not
less than 5 Days prior to the
<PAGE>
-10-
event or change, failing which (unless
the Vendors consent otherwise in writing) the Purchaser shall not
proceed with the event or change.
The Purchaser shall not be required to make any adjustment if the
determination of the Auditors indicates that pursuant to the adjustment, the
Vendors would receive less than one percent (1%) more or less Brookline
Performance Common Shares or Brookline Management Contract Common Shares, as
applicable, than they would otherwise receive; provided however, that any
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken in to account in any subsequent adjustment.
The adjustments provided for in this section 2.7 are cumulative and
will be made successively whenever an event referred to herein occurs.
The adjustments provided for in this section 2.7 shall not be applied
to any Brookline Performance Common Shares issuable pursuant to subclause
(ii)(B) of section 2.2.4, unless the event referred to herein occurs between the
second anniversary of the Closing Date and the date upon which such shares are
issued to the Vendors.
The determination of the equitable and proportionate adjustment made
by the Auditors shall be binding upon the parties.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE VENDORS
Each Vendor severally (and, for further certainty, not jointly or
jointly and severally) represents and warrants to the Purchaser that:
3.1.1 each Vendor is duly incorporated or formed, as applicable, and
validly existing under the laws of its jurisdiction of incorporation or
formation and has the corporate or other necessary power, as applicable, and
authority to own, lease and operate its properties and assets;
3.1.2 each Vendor has the corporate or other necessary power, as
applicable, and authority to enter into this Agreement and to perform its
obligations hereunder and this Agreement has been duly executed and delivered by
each Vendor and constitutes a valid and binding obligation of each Vendor
enforceable against it in accordance with its terms, subject to the availability
of equitable remedies and the enforcement of creditors' rights generally;
3.1.3 the execution and delivery of this Agreement by each Vendor and
the consummation by each Vendor of the transaction contemplated hereby do not
contravene the articles or other constating documents of such Vendor, or any
applicable laws which could reasonably be expected to prevent or materially
hinder the completion of the transaction
<PAGE>
-11-
contemplated by this Agreement, or any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument, written or oral, to
which each Vendor is a party or by which it is bound;
3.1.4 all necessary corporate or other necessary action, as applicable,
will, prior to the Closing Date, be taken by each Vendor to authorize the
execution and delivery by each Vendor of this Agreement and, in the case of
Simmonds and Intek, the Management Contract to which it is a party. On the
Closing Date, the Management Contract to which each of Simmonds and Intek is a
party will be duly executed and delivered by each such Vendor and will
constitute a valid, binding and legally enforceable agreement of such Vendor
enforceable against it in accordance with its terms, subject to the availability
of equitable remedies and the enforcement of creditors' rights generally;
3.1.5 BSIG is duly incorporated and validly existing under the laws of
the State of Delaware and has the corporate power and authority to own, lease
and operate its properties and assets, to carry on its business as it is now
being carried on, and to carry on the business described in the recitals to this
Agreement;
3.1.6 the authorized capital of BSIG consists of 900 common shares, all
of which have been duly issued and are outstanding as fully paid;
3.1.7 there are no agreements, options, warrants, rights of conversion
or other rights pursuant to which BSIG is or may become obligated to issue any
common shares or any securities convertible into common shares;
3.1.8 on the Closing Date, all agreements or restrictions which limit
or restrict the transfer of the Purchased Shares to the Purchaser will have been
complied with and each Vendor will have good and marketable title to its
Purchased Shares and the full legal right, power and authority to sell and
transfer its Purchased Shares to the Purchaser free and clear of all liens,
charges, encumbrances and adverse claims;
3.1.9 BSIG owns and has good and marketable title, free and clear of
all liens, charges and encumbrances, to all assets used in connection with its
business (which, when acquired, will include all assets acquired under the BSIG
Asset Acquisition);
3.1.10 there are no actions, suits, investigations or other proceedings in
progress, pending or threatened against BSIG;
3.1.11 immediately following completion of the transaction contemplated by
section 2.1, the BSIG Pro Forma Balance Sheet will be correct in all material
respects; and
3.1.12 the foregoing representations and warranties of each Vendor will be
true on and as of the Closing Date with the same effect as if made on and as of
the Closing Date, except as affected by
<PAGE>
-12-
the transactions contemplated or permitted by this Agreement or agreements
scheduled or ancillary hereto.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendors that:
3.2.1 the Purchaser is duly incorporated and validly existing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to own, lease and operate its properties and assets, to carry on its
business as it is now being carried on and to assist BSIG in carrying on the
business to be carried on by BSIG as described in the recitals to this
Agreement;
3.2.2 the Purchaser has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder and this Agreement has
been duly executed and delivered by the Purchaser and constitutes a valid and
binding obligation of the Purchaser enforceable against it in accordance with
its terms, subject to the availability of equitable remedies and the enforcement
of creditors' rights generally;
3.2.3 the execution and delivery of this Agreement by the Purchaser and
the consummation by the Purchaser of the transaction contemplated hereby do not
contravene the articles or other constating documents of the Purchaser, or any
applicable laws which could reasonably be expected to prevent or materially
hinder the completion of the transaction contemplated by this Agreement, or any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument, written or oral, to which the Purchaser is a party or by which it
is bound;
3.2.4 the authorized capital of the Purchaser consists of an unlimited
number of Brookline Common Shares, of which 21,248,636 have been duly issued and
are outstanding as fully paid, and there are no options, warrants or other
rights, commitments or other agreements outstanding that obligate the Purchaser
to issue any Brookline Common Shares, options, or other rights to acquire
Brookline Common Shares or acquire securities which are convertible or
exchangeable directly or indirectly into Brookline Common Shares, other than (a)
as contemplated by this Agreement, and (b) unexercised options to purchase
2,000,000 Brookline Common Shares issued under the Purchaser's Stock Option Plan
(1995), as amended;
3.2.5 the Purchaser has filed all tax returns required to be filed by
it in all applicable jurisdictions and it has paid all taxes, levies,
assessments, reassessments, penalties, interest and fines due and payable by it
and all such tax returns properly reflect the taxable income and liability for
taxes of the Purchaser in the relevant tax year;
3.2.6 provided that the transaction contemplated by this Agreement is
completed on the terms set forth herein and the Brookline Shareholders Consent
is obtained, the Brookline Performance Common Shares and the Brookline
Management Contract Common Shares to be
<PAGE>
-13-
issued will be duly and validly authorized for issuance as of the Closing
Date and, upon their issuance, will be duly and validly issued and
outstanding as fully paid Brookline Common Shares;
3.2.7 all necessary corporate action will, prior to the Closing Date,
be taken by the Purchaser to authorize the execution and delivery by the
Purchaser of this Agreement, the Simmonds Management Contract, the Intek
Management Contract and the Asset Purchase Agreement, which on the Closing Date,
will each be duly executed and delivered by the Purchaser and will constitute
valid, binding and legally enforceable agreements of the Purchaser enforceable
against it in accordance with their terms, subject to the availability of
equitable remedies and the enforcement of creditors' rights generally;
3.2.8 the Purchaser is a reporting issuer not in default under
applicable securities laws in the Provinces of Quebec, British Columbia and
Ontario; the Brookline Common Shares are listed on the ME and VSE and have not
been cease traded by any applicable Canadian securities regulatory authority;
3.2.9 apart from the liabilities to be assumed by Orvilliers pursuant
to the Asset Purchase Agreement, the Purchaser has, and shall have as of the
Closing Date, no liabilities (actual, accrued, contingent or otherwise) other
than liabilities incurred in the ordinary course of business not exceeding
$100,000;
3.2.10 there are no actions, suits, investigations or other proceedings in
progress, pending or threatened against or of the Purchaser;
3.2.11 since July 12, 1995, the Purchaser has not taken any action, directly
or indirectly, with the intention of adversely affecting the approval of the
transaction contemplated by this Agreement or the completion thereof and, there
has been no material adverse change (or any event, condition or state of facts
which may reasonably be expected to give rise to any such change), in the
assets, financial condition, business or prospects of the Purchaser;
3.2.12 since July 12, 1995, the Purchaser has conducted its business in the
ordinary course consistent with prior practice and has not entered into any
transactions with Persons not dealing at arm's length (within the meaning of the
INCOME TAX ACT (CANADA));
3.2.13 to the best of its knowledge, there is no valid basis for any action,
suit, investigation or other proceeding against or of the Purchaser under any
applicable law relating to the environment or the release of any hazardous
substance into the environment;
3.2.14 immediately following completion of the transaction contemplated by
section 2.1, the Purchaser Pro Forma Balance Sheet will be correct in all
material respects;
3.2.15 the Purchaser is in compliance with all laws applicable to it, the
non-compliance with which could reasonably be expected to result in a material
adverse change in the Purchaser or prevent the completion of the transaction
contemplated by this Agreement; and
<PAGE>
-14-
3.2.16 the foregoing representations and warranties of the Purchaser will be
true on and as of the Closing Date with the same effect as if made on and as of
the Closing Date, except as affected by the transactions contemplated or
permitted by this Agreement or agreements scheduled or ancillary hereto.
ARTICLE 4
COVENANTS
4.1 COVENANTS OF VENDORS
Each Vendor severally (and, for further certainty, not jointly or
jointly and severally) covenants to:
4.1.1 cause BSIG to give to the Purchaser's representatives full access
during business hours from the date hereof to the Closing Date to all its
assets, agreements and records and furnish them with such information as they
may reasonably request;
4.1.2 on the Closing Date, cause all directors and officers of BSIG to
resign, and if requested by the Purchaser, shall cause nominees of the Purchaser
to be elected or appointed directors of BSIG;
4.1.3 not take any action which might, directly or indirectly,
interfere or be inconsistent with or otherwise adversely affect the consummation
of the transaction contemplated by this Agreement;
4.1.4 cause BSIG to deliver to the Purchaser within two Business Days
of the date of this Agreement an internally prepared PRO FORMA balance sheet
(the "BSIG Pro Forma Balance Sheet") reflecting accurately in all material
respects the financial position of BSIG immediately following completion of the
transaction contemplated by section 2.1; and
4.1.5 provide the Purchaser with all relevant information, if any, for
inclusion in an information circular to be provided to Brookline Shareholders in
connection with the Brookline Shareholders Meeting to enable the Purchaser to
meet applicable standards for such documentation.
4.2 COVENANTS OF PURCHASER
The Purchaser covenants to:
4.2.1 not take any action which might, directly or indirectly,
interfere or be inconsistent with or otherwise adversely affect the consummation
of the transaction contemplated by this Agreement;
<PAGE>
-15-
4.2.2 in connection with each approval, consent, waiver or order
required to be obtained from the Brookline Shareholders or any regulatory or
governmental authority or private party in connection with approval of the
transaction contemplated by this Agreement, recommend that Brookline
Shareholders vote for, or consent in writing to, the approval of the transaction
and support the granting of any such approval, consent, waiver or order by such
regulatory or governmental authority or private party;
4.2.3 give the Vendors' representatives full access during business
hours from the date hereof to the Closing Date to all its assets, agreements and
records and furnish them with such information as they may reasonably request;
4.2.4 deliver to the Vendors within two Business Days of the date of
this Agreement an internally prepared PRO FORMA balance sheet (the "Purchaser
Pro Forma Balance Sheet") reflecting accurately in all material respects the
financial position of the Purchaser immediately following completion of the
transaction contemplated by section 2.1;
4.2.5 not take any action, while section 2.7 continues to apply, to
cause the Purchaser to become a private company or to cause the Brookline Common
Shares to cease to be listed on the ME or the VSE, except with the written
consent of the Vendors entitled to any potentially issuable Brookline
Performance Common Shares or Brookline Management Contract Common Shares;
4.2.6 continue being a reporting issuer in good standing in the
jurisdictions where it is currently one for not less than 40 months from the
Closing Date; and
4.2.7 in a timely manner, prepare and file an information circular
relating to the approval by Brookline Shareholders of the matters contemplated
by sections 2.4 and 2.6 in all jurisdictions where the same is required and mail
the same in accordance with applicable law, and ensure that such information
circular complies with all applicable disclosure laws, and without limiting the
generality of the foregoing, will provide Brookline Shareholders with
information in sufficient detail to permit them to form a reasoned judgement
concerning the matters before them.
4.3 MUTUAL COVENANT
Each of the Vendors and the Purchaser covenants to use its best
efforts to satisfy, or cause the satisfaction of, the conditions precedent to
its obligations hereunder and take, or cause to be taken, all other action and
do, or cause to be done, all other things necessary, proper or advisable under
applicable law and regulations to complete the transaction contemplated hereby
and use its best efforts to cooperate with the other parties in connection with
the performance by the others of their obligations under this Agreement.
<PAGE>
-16-
ARTICLE 5
CONDITIONS PRECEDENT AND SUBSEQUENT
5.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of the Vendors and the Purchaser to
complete the transaction contemplated by section 2.1 shall be subject to the
fulfilment, or mutual waiver in writing by the Vendors and the Purchaser, on or
before the Closing Date, of each of the following conditions precedent:
5.1.1 receipt of the Brookline Shareholders Consent;
5.1.2 all other consents, waivers, orders, exemptions and approvals,
including any regulatory and judicial approvals and orders (including the
conditional approval of the ME and the VSE, subject to ratification of the
transaction by the Brookline Shareholders at the Brookline Shareholders Meeting,
of the listing of the Brookline Performance Common Shares and the Brookline
Management Contract Common Shares), which the Vendors and the Purchaser agree
are required for the completion of the transaction contemplated by section 2.1,
shall have been obtained or received and reasonably satisfactory evidence
thereof shall have been delivered to all parties;
5.1.3 the Closing Date shall occur on or prior to the Termination Date;
and
5.1.4 no preliminary or permanent injunction, restraining order, cease
trading order or other order of any court, regulatory body or agency which
prevents the consummation of the transaction contemplated by this Agreement
shall have been issued and remain in effect and no action or proceeding to
obtain such an order shall be pending or threatened.
5.2 CONDITIONS PRECEDENT OF THE PURCHASER
The obligation of the Purchaser to complete the transaction
contemplated by section 2.1 shall be subject to the fulfilment, or waiver in
writing by the Purchaser, on or before the Closing Date, of each of the
following conditions precedent:
5.2.1 the Purchaser, acting reasonably and diligently, shall have
completed its due diligence review of BSIG and the Vendors and the results of
such review shall be satisfactory to the Purchaser in its sole discretion acting
reasonably;
5.2.2 Simmonds, Midland and Intek shall have executed and delivered the
respective Management Contracts;
5.2.3 the BSIG Asset Acquisition shall have been completed to the
satisfaction of the Purchaser acting reasonably;
<PAGE>
-17-
5.2.4 all necessary corporate or other necessary action, as applicable,
shall have been taken by each of the Vendors to authorize the execution and
delivery of this Agreement and any agreements scheduled or ancillary hereto to
which such Vendor is a party and each Vendor shall have performed in all
material respects each obligation to be performed by it prior to the Closing
Date either hereunder or thereunder;
5.2.5 the representations and warranties of each Vendor set out in
Article 3 shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement or agreements scheduled
or ancillary hereto;
5.2.6 each of the Vendors shall have observed its covenants hereunder
in all material respects;
5.2.7 the Purchaser shall have received a certificate of each of the
Vendors, dated the Closing Date, signed in each case by a senior officer to the
effect that, to the best of the knowledge, information and belief of such
officer, the conditions precedent specified in subsections 5.2.1, 5.2.2, 5.2.3,
5.2.4, 5.2.5 and 5.2.6 have been fulfilled; and
5.2.8 the Purchaser shall have received opinions of counsel to the
Vendors and BSIG concerning the transaction contemplated by this Agreement in
form and substance satisfactory to counsel to the Purchaser, acting reasonably.
5.3 CONDITIONS PRECEDENT OF THE VENDORS
The obligations of the Vendors to complete the transaction
contemplated by section 2.1 shall be subject to the fulfilment, or waiver in
writing by each of the Vendors, on or before the Closing Date, of each of the
following conditions precedent:
5.3.1 each of the Vendors, acting reasonably and diligently, shall have
completed its due diligence review of the Purchaser and the results of such
review shall be satisfactory to each of the Vendors in its sole discretion
acting reasonably;
5.3.2 the sale of assets and assignment of obligations of the Purchaser
to Orvilliers pursuant to the Asset Purchase Agreement shall have been completed
and photocopies of an executed copy of the Asset Purchase Agreement and all
material documents ancillary thereto have been delivered to each of the Vendors;
5.3.3 the Purchaser shall hold cash or treasury bills or other
evidences of indebtedness issued, or fully guaranteed as to principal and
interest, by any of the Federal, Provincial or Territorial Governments of Canada
maturing not more than 30 days from the Closing Date having an aggregate fair
market value of not less than $5,000,000 (less the Purchaser's reasonable costs
related to the transaction contemplated by this Agreement and normal course
business expenses of the Purchaser incurred after the date hereof and prior to
the Closing Date, all of the foregoing
<PAGE>
-18-
not to exceed $100,000 in aggregate), to which the Purchaser shall have good
and marketable title, free and clear of all liens, charges, encumbrances and
adverse claims;
5.3.4 the Purchaser shall have executed and delivered the Management
Contracts and have issued to each of Simmonds and Intek 250,000 Brookline
Management Contract Common Shares;
5.3.5 the board of directors of Intek and the managing members of
Sendek shall have approved the transaction contemplated by this Agreement;
5.3.6 all necessary corporate action shall have been taken by the
Purchaser to authorize the execution and delivery of this Agreement and any
agreements scheduled or ancillary hereto to which it is a party and the
Purchaser shall have performed in all material respects each obligation to be
performed by it hereunder or thereunder;
5.3.7 the representations and warranties of the Purchaser set out in
Article 3 shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement or agreements scheduled
or ancillary hereto;
5.3.8 the Purchaser shall have observed its covenants hereunder in all
material respects;
5.3.9 the ME and the VSE shall have confirmed that trading of Brookline
Common Shares will resume on the Closing Date or the next following Business Day
upon those exchanges being notified by the Purchaser that the transaction
contemplated by section 2.1 has been completed;
5.3.10 the Vendors shall have received a certificate of the Purchaser, dated
the Closing Date, signed by a senior officer of the Purchaser to the effect
that, to the best of the knowledge, information and belief of such officer, the
conditions precedent specified in subsections 5.3.1, 5.3.2, 5.3.3, 5.3.4, 5.3.5,
5.3.6, 5.3.7, 5.3.8 and 5.3.9 have been fulfilled; and
5.3.11 the Vendors shall have received an opinion of counsel to the Purchaser
concerning the transaction contemplated by this Agreement in form and substance
satisfactory to counsel to the Vendors, acting reasonably.
5.4 CONDITIONS PRECEDENT NOTICES
5.4.1 Each of the Vendors and the Purchaser shall give prompt notice to
the others of the occurrence or failure to occur, at any time from the date
hereof to the Closing Date, of any event or state or facts which occurrence or
failure would, or would be likely to:
(a) cause any of the representations or warranties of any party
contained herein to be untrue or inaccurate in any material respect,
or
<PAGE>
-19-
(b) result in the failure to comply with or satisfy any covenant,
condition precedent or agreement to be complied with or satisfied by
any party hereunder;
provided, however, that no such notification shall affect the representations or
warranties of the parties or the conditions precedent to the obligations
hereunder.
5.4.2 No party may elect not to complete the transaction contemplated
by section 2.1 pursuant to the conditions precedent contained herein unless, on
or prior to the Closing Date, the party intending to rely thereon has delivered
a written notice to the party it alleges to be in breach (the "Defaulting
Party"), specifying in reasonable detail all breaches of covenants,
representations and warranties or other matters which the party delivering such
notice is asserting as the basis of the non-fulfilment of the applicable
condition precedent.
5.5 SATISFACTION OF CONDITIONS PRECEDENT
The conditions precedent set out in this Article 5 shall be
conclusively deemed to have been satisfied, waived or released when the
transaction contemplated by section 2.1 has been completed on the Closing Date.
5.6 MUTUAL CONDITION SUBSEQUENT
Unless the ME waives, in form and on terms satisfactory to the
parties, the requirement for Brookline Shareholder approval of the transaction
contemplated by section 2.1, if such approval is not obtained at the Brookline
Shareholders Meeting, the parties will forthwith negotiate in good faith the
means of most expeditiously reversing the transactions contemplated by this
Agreement with a view to restoring the parties as nearly as practically possible
to their respective positions prior to the Closing Date, except that Simmonds
and Intek shall be entitled to retain any Brookline Management Contract Common
Shares issued at any time prior to the date of the Brookline Shareholders
Meeting.
ARTICLE 6
TERMINATION, SURVIVAL AND AMENDMENT
6.1 TERMINATION
Unless the parties agree otherwise in writing, this Agreement,
excluding sections 7.1 and 7.4, shall forthwith terminate in the event the
Closing Date does not occur on or before the Termination Date.
6.2 SURVIVAL
<PAGE>
-20-
Subject to section 6.1, this Agreement will survive completion of the
transaction contemplated by section 2.1, including, for greater certainty, but
without limiting the generality of the foregoing, the provisions set out below:
(a) the representations and warranties of each of the parties in
Article 3 shall survive notwithstanding any investigations made by or
on behalf of any of the parties;
(b) the obligations of the Purchaser in section 2.2 shall survive
until 15,000,000 Brookline Performance Common Shares (or such greater
or lesser number as may be determined to be the maximum number
issuable in accordance with section 2.7) have been issued pursuant
thereto;
(c) the obligations of the Purchaser in sections 2.4, 2.5 and 2.6
shall survive until completed pursuant to the terms thereof;
(d) the provisions of section 2.7 shall survive and continue to
apply to section 2.2 and to the Management Contracts until all
potentially issuable Brookline Performance Common Shares and Brookline
Management Contract Common Shares have been issued; and
(e) the provisions of section 5.6 shall survive until the earliest
of:
(i) waiver by the ME, in form and on terms satisfactory to the
parties, of the requirement for Brookline Shareholder
approval of the transaction contemplated by section 2.1,
(ii) Brookline Shareholder approval of the transaction
contemplated by section 2.1 being obtained, and
(iii) reversal of the transactions contemplated by this
Agreement as described in section 5.6.
6.3 AMENDMENT
Subject to applicable law, this Agreement may, at any time and from
time to time before and after the Brookline Shareholders Meeting, be amended by
written agreement of the parties without further notice to or action on the part
of the Brookline Shareholders; provided that, after ratification of the
transaction contemplated by section 2.1 at the Brookline Shareholders Meeting,
this Agreement shall not be amended in a manner materially prejudicial to the
Brookline Shareholders without the approval of the Brookline Shareholders given
in the same manner as required for the approval of the transaction contemplated
by section 2.1.
<PAGE>
-21-
ARTICLE 7
GENERAL
7.1 COMMISSIONS, FEES AND EXPENSES
Each of the parties represents and warrants to the others that it has
not done any act which would give rise to any valid claim against another party
for a brokerage commission, finder's fee or other like payment, other than the
right to the Finder's Fee Brookline Common Shares granted by the Purchaser.
Each party acknowledges that it shall be responsible for its own out-
of-pocket fees and expenses (including fees and expenses of legal advisers,
accountants and other professional advisers) incurred by them, respectively, in
connection with the transaction contemplated by this Agreement, regardless of
whether the transaction is completed or not.
7.2 NOTICES
Notices and other communications hereunder shall be in writing and
shall be delivered by hand or sent by telecopier to the parties at the following
addresses or such other addresses as shall be specified by the parties by like
notice, and shall be deemed to be received at the time of delivery by hand or at
the time such telecopy is received:
(a) if to Simmonds: Simmonds Communications Ltd.
5255 Yonge Street
Suite 1050
Toronto, Ontario
M2N 6P4
Attention: David O'Kell
Telecopier: (416) 221-3800
(b) if to Intek: Intek Diversified Corporation
970 West 190th Street
Suite 720
Torrance, California
90502
Attention: David Neibert
Telecopier: 310-366-7712
(c) if to Sendek: Sendek Travel, Limited
6655 West Sahara Boulevard
Suite B200
Las Vegas, Nevada
<PAGE>
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89102
Attention: Ms. Geri Morrison
(d) if to the Purchaser: Brookline Minerals Inc.
999 West Hastings Street
Suite 900
Vancouver, British Columbia
V6C 2W2
Attention: Murray Sinclair, Sr.
Telecopier: (604) 683-6958
7.3 ASSIGNMENT
This Agreement and all the provisions hereof shall be binding upon and
enure to the benefit of the parties and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights hereunder shall
be assigned by any party without the prior written consent of the other parties.
7.4 CONFIDENTIALITY AND PUBLIC NOTICES
The Purchaser shall not, directly or indirectly, use for its own
purposes or communicate to any other Person any confidential information or data
relating to the Vendors or BSIG or their respective businesses which becomes
known to the Purchaser, its accountants, legal advisers or representatives as a
result of the Vendors making the same available in connection with the
transaction contemplated hereby.
Subject to applicable laws and regulatory requirements, no press
release or other announcement concerning the transaction contemplated by this
Agreement shall be made by the Vendors or the Purchaser without the prior
written consent of the others (such consent not to be unreasonably withheld).
If a public announcement is necessary due to applicable laws and/or regulatory
requirements, the party making the announcement shall use its best efforts to
give prior oral or written notice to the other parties, and if such prior notice
is not possible, to give such notice immediately following the making of such
disclosure.
7.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.
7.6 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
<PAGE>
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7.7 FURTHER ASSURANCES
Each of the parties shall properly do, make, execute or deliver or
cause to be done, made, executed or delivered, all such further acts, documents
and things as the other parties may reasonably require from time to time for the
purpose of giving effect to this Agreement and shall use reasonable efforts and
take all such steps as may be reasonably within
its power to implement to the full extent the provisions of this Agreement.
<PAGE>
-24-
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.
BROOKLINE MINERALS INC.
Per: /s/
_________________________________
SIMMONDS COMMUNICATIONS LTD.
Per: /s/
_________________________________
INTEK DIVERSIFIED CORPORATION
Per: /s/
_________________________________
SENDEK TRAVEL, LIMITED
Per: /s/
_________________________________
<PAGE>
SCHEDULE "A"
BSIG ASSETS
1. 57,691.5 shares of common stock of Pagers Plus Cellular, a California
corporation ("PPC").
2. A Secured Promissory Note in the principal amount of U.S. $250,000 issued
by PPC to SLW Properties, Ltd. ("SLWP") on May 9, 1995 (the "Note") pursuant to
a Loan Agreement between SLWP and PPC dated as of May 9, 1995.
3. A security interest in certain assets of PPC pursuant to a Security
Agreement between SLWP and PPC dated as of May 9, 1995.
4. The right of SLWP to assume PPC's rights under certain management and joint
venture agreements if PPC fails to repay the Note by November 11, 1995 as
provided in an Assignment Agreement among SLWP, PPC and Kohrman Jackson & Krantz
dated as of May 9, 1995.
5. U.S. $25,000 in cash.
6. The rights and interests of Simmonds under that certain letter of intent,
dated May 9, 1995, between Simmonds and American Digital Communications, Inc., a
Wyoming corporation ("ADC"), other than the rights and interest of Simmonds to
purchase 285,714 shares of common stock of ADC and options to purchase
additional common stock of ADC.
<PAGE>
SCHEDULE "B"
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the day of August, 1995.
B E T W E E N:
BROOKLINE MINERALS INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
SIMMONDS COMMUNICATIONS LTD.,
a corporation incorporated under the laws of the Province of
Ontario
(hereinafter referred to as "SCL")
OF THE SECOND PART
- and -
MIDLAND INTERNATIONAL CORPORATION,
a corporation incorporated under the laws of the State of
Delaware
(hereinafter referred to as "Midland")
OF THE THIRD PART
RECITALS:
1. The Corporation and SCL, Intek Diversified Corporation and Sendek Travel,
Limited (collectively, the "Vendors") have entered into an agreement of
purchase and sale made as of the 24th day of August, 1995 (the "Share
Purchase Agreement"), pursuant to which the Corporation has agreed to
purchase from the Vendors all of the issued and outstanding shares of Brook
SIG Corp. ("BSIG"), a company whose primary business objective is to
provide financing to management companies who construct, manage and operate
wireless specialized mobile radio systems on behalf of United States 220
MHz narrowband licensees.
2. In conjunction with the share purchase transaction, SCL has agreed to
provide certain management services to the Corporation.
3. Midland is a wholly-owned subsidiary of SCL.
<PAGE>
-2-
4. Pursuant to the Share Purchase Agreement, the execution and delivery by the
Corporation, SCL and Midland of a management services agreement which
obliges SCL to provide the services described herein in exchange for the
common shares of the Corporation which are issuable to SCL hereunder, is a
condition precedent to the completion of the share purchase transaction
contemplated thereby.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
out herein and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
1. DEFINITIONS. For the purpose of this Agreement, in addition to the
definitions set out above:
(a) "AFFILIATE" means, with respect to any corporation, any other
corporation which directly or indirectly controls or is controlled by or is
under direct or indirect common control with such first mentioned corporation,
and for the purpose of this definition "control" means, with respect to any
corporation, the ownership of voting securities to which are attached 20 per
cent or more (or, for the purpose of section 9.1 only, 50 per cent or more) of
the voting rights attached to all outstanding voting securities of the
corporation;
(b) "AGREEMENT" means this management services agreement, as the same may
be amended and supplemented from time to time;
(c) "BROOKLINE COMMON SHARES" means common shares in the capital of the
Corporation as constituted at the date hereof;
(d) "BROOKLINE MANAGEMENT CONTRACT COMMON SHARES" has the meaning ascribed
thereto in section 4;
(e) "CLOSING DATE" has the meaning ascribed to that term in the Share
Purchase Agreement; and
(f) "TERM" means the term of this Agreement.
2. RETAINER TO PROVIDE MANAGEMENT SERVICES. The Corporation hereby retains
SCL to provide it and its subsidiary, BSIG, with various management services as
specified in section 7, during the Term.
3. TERM. The Term shall commence on the Closing Date and terminate on the
first anniversary of such date. The Corporation shall be entitled to terminate
this Agreement at any time upon thirty (30) days prior written notice to SCL,
but in that event, except where the termination is for "just cause", the
Corporation shall immediately issue to SCL all of the Brookline Management
Contract Common Shares which remain unissued, whether or not accrued. For the
purposes of this section 3, "just cause" shall mean a fundamental breach of this
Agreement by SCL which, under common law, entitles the Corporation to terminate
all of its obligations under this Agreement.
<PAGE>
-3-
4. MANAGEMENT SERVICES FEES.
4.1 In consideration of the management services to be provided by SCL to the
Corporation and BSIG hereunder, SCL shall be entitled to receive one million
(1,000,000) Brookline Common Shares (the "Brookline Management Contract Common
Shares"). Subject to section 4.2, two hundred and fifty thousand (250,000)
Brookline Management Contract Common Shares shall be issued to SCL on each of
the following dates:
(a) the Closing Date;
(b) the date which is three (3) months after the Closing Date;
(c) the date which is six (6) months after the Closing Date; and
(d) the date which is nine (9) months after the Closing Date.
4.2 If Brookline, at any time during which any Brookline Management Contract
Common Shares remain unissued, shall take any of the actions contemplated by the
provisions of section 2.7 of the Share Purchase Agreement, then the procedure
set out in that section shall be followed and the appropriate equitable and
proportionate adjustment determined pursuant to the provisions of section 2.7,
if any, shall be made to the number of unissued Brookline Management Contract
Common Shares.
4.3 SCL agrees that, without the prior written consent of the Corporation, it
will not sell, assign or otherwise transfer any of the Brookline Management
Contract Common Shares for a period of three (3) years from the Closing Date,
except that this restriction shall not apply to the following transactions in
such shares:
(a) pledges to secure bona fide debts or other obligations; or
(b) sales or transfers to Affiliates of SCL who agree to be bound by
the provisions of this section 4.3.
5. EXPENSES. The Corporation shall, or shall cause BSIG to, reimburse SCL
for all of its reasonable expenses incurred in connection with the provision of
management services to either the Corporation or BSIG within thirty (30) days
following submission of applicable receipts or other supporting documentation.
For greater certainty, the expenses of SCL shall be deemed not to include
salaries or other compensation paid or payable by SCL to its employees, or any
amounts paid to consultants or independent contractors who have been hired to
perform any portion of the services described in section 7.
6. ACCESS TO INFORMATION. During the Term, the Corporation shall, or shall
cause BSIG to, ensure that SCL and its representatives have access to all
financial statements and other records and information of the Corporation and
BSIG which are available to the shareholders and directors of those corporations
generally. In addition, the Corporation agrees to provide SCL and its
representatives with access to its management information systems and to cause
BSIG to do the same.
<PAGE>
-4-
7. RESPONSIBILITIES OF SCL. During the Term, SCL shall provide the
Corporation and BSIG with certain administrative and management services
including, INTER ALIA, the following services:
(a) STRATEGIC PLANNING. By making its Chairman and Chief Executive
Officer and its Executive Vice-President available to the Corporation
on a part time basis, SCL shall provide the Corporation with advice
and assistance on the formulation and implementation of its strategic
planning initiatives.
(b) FIELD ASSESSMENT AND MARKETING ASSISTANCE. Both directly and through
Midland, SCL shall provide advice and assistance to the Corporation
and BSIG, from time to time, on their field assessment and marketing
activities.
(c) ACCOUNTING AND FINANCIAL MANAGEMENT. SCL shall provide advice and
assistance to the Corporation, from time to time, on the management of
its accounting function and corporate finance activities.
(d) NEGOTIATION OF FINANCING CONTRACTS. SCL shall assist the Corporation
and BSIG, from time to time, in the negotiation of contracts to
provide financing in various forms for management companies who
construct, manage and operate wireless specialized mobile radio
systems on behalf of United States 220 MHz narrowband licensees,
including consulting on the business assessment and technical review
of the 220 MHz systems to be constructed.
(e) NEGOTIATIONS WITH EQUIPMENT SUPPLIERS. SCL, either directly or
through Midland, shall assist the Corporation and BSIG, from time to
time, in the negotiation of purchasing terms with suppliers of radio
equipment and in the selection of such equipment.
(f) PUBLIC RELATIONS. SCL may assist the corporation, upon request, with
the management of its corporate public relations function, including
advising it on handling its relations with its shareholders.
(g) COMPUTER SERVICES. SCL shall, to the extent feasible, provide the
Corporation with computer-related services.
8. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to SCL that:
(a) the Corporation has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(b) the Corporation has taken all necessary corporate action to authorize
the execution and delivery of this Agreement and the performance of
its obligations hereunder;
(c) this Agreement has been duly executed and delivered by the Corporation
and constitutes a valid and binding obligation of the Corporation,
enforceable against it in accordance with its terms;
<PAGE>
-5-
(d) the Corporation has duly authorized the issuance of such number of
Brookline Common Shares as shall be necessary to issue the Brookline
Management Contract Common Shares as contemplated herein and such
shares, when issued, will be validly issued as fully paid shares of
the Corporation; and
(e) other than any required stock exchange approvals, no consent is
required of, or notice required to be given to, any person by the
Corporation in respect of any of the transactions contemplated herein
or any part thereof.
9. MISCELLANEOUS.
9.1 Midland shall pay (or shall cause its Affiliates to pay, as applicable),
the Corporation semi-annually within 30 days of June 30 and December 31 an
amount equal to 5% of the net selling price paid for radio equipment by
management companies who purchase such equipment from Midland or any of its
Affiliates for use in the construction or operation of Qualifying Systems (as
that term is defined in the Share Purchase Agreement).
9.2 In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
9.3 The headings in this Agreement are for convenience of reference only and
shall not be given any effect in the interpretation of this Agreement.
9.4 This Agreement and all amendments hereof and waivers and consents hereunder
shall be governed by and construed in accordance with the law of the Province of
British Columbia and the laws of Canada applicable therein and the parties
hereby irrevocably attorn to the jurisdiction of the courts of British Columbia.
9.5 Time shall be of the essence of this Agreement.
9.6 The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
9.7 All notices, consents and other communications required or permitted to be
given under or by reason of this Agreement shall be in writing, shall be
delivered personally or by facsimile as described below, and shall be deemed
given on the date on which such delivery is made. Any such delivery shall be
addressed to the intended recipient at the following addresses (or at such other
address for a party as shall be specified by such party by like notice to the
other parties):
<PAGE>
-6-
(a) if to the Corporation:
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
Attention: The President
Facsimile: (604) 683-6958
(b) if to SCL:
5255 Yonge Street, Suite 1050
Willowdale, Ontario
M2N 6P4
Attention: David C. O'Kell
Facsimile: (416) 221-3800
(c) if to Midland:
5255 Yonge Street, Suite 1050
Willowdale, Ontario
M2N 6P4
Attention: Harry Dunstan
Facsimile: (416) 221-3800
9.8 Subject to SCL's right to assign its rights and obligations hereunder to an
Affiliate capable of performing SCL's obligations hereunder, neither party may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other party.
9.9 The failure of a party to insist upon strict adherence to a term of this
Agreement on an occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. No purported waiver shall be effective unless in
writing. The waiver by any party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent or other breach.
9.10 This Agreement supersedes any other agreement, whether written or oral
(including a letter of intent between the Corporation and SCL dated July 12,
1995), that may have been made or entered into by the parties relating to the
matters contemplated hereby and constitutes the entire agreement between the
parties with respect to such matters.
9.11 This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.
<PAGE>
-7-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, all as of the date first above written.
BROOKLINE MINERALS INC.
By: _________________________
By: __________________________
SIMMONDS COMMUNICATIONS LTD.
By: __________________________
By: __________________________
MIDLAND INTERNATIONAL CORPORATION
By: ___________________________
By: ___________________________
<PAGE>
SCHEDULE "C"
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the day of August, 1995.
B E T W E E N:
BROOKLINE MINERALS INC.,
a corporation incorporated under the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
- and -
INTEK DIVERSIFIED CORPORATION,
a corporation incorporated under the laws of the State of
Delaware
(hereinafter referred to as "Intek")
OF THE SECOND PART
RECITALS:
1. The Corporation and Simmonds Communications Ltd., Intek and Sendek Travel,
Limited (collectively, the "Vendors") have entered into an agreement of
purchase and sale made as of the 24th day of August, 1995 (the "Share
Purchase Agreement"), pursuant to which the Corporation has agreed to
purchase from the Vendors all of the issued and outstanding shares of Brook
SIG Corp. ("BSIG"), a company whose primary business objective is to
provide financing to management companies who construct, manage and operate
wireless specialized mobile radio systems on behalf of United States 220
MHz narrowband licensees.
2. In conjunction with the share purchase transaction, Intek has agreed to
provide certain management services to the Corporation.
3. Pursuant to the Share Purchase Agreement, the execution and delivery by the
Corporation and Intek of a management services agreement which obliges
Intek to provide the services described herein in exchange for the common
shares of the Corporation which are issuable to Intek hereunder, is a
condition precedent to the completion of the share purchase transaction
contemplated thereby.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
out herein and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:
<PAGE>
-2-
1. DEFINITIONS. For the purpose of this Agreement, in addition to the
definitions set out above:
(a) "AFFILIATE" means, with respect to any corporation, any other
corporation which directly or indirectly controls or is controlled by or is
under direct or indirect common control with such first mentioned corporation,
and for the purpose of this definition "control" means, with respect to any
corporation, the ownership of voting securities to which are attached 20 per
cent or more of the voting rights attached to all outstanding voting securities
of the corporation;
(b) "AGREEMENT" means this management services agreement, as the same may
be amended and supplemented from time to time;
(c) "BROOKLINE COMMON SHARES" means common shares in the capital of the
Corporation as constituted at the date hereof;
(d) "BROOKLINE MANAGEMENT CONTRACT COMMON SHARES" has the meaning ascribed
thereto in section 4;
(e) "CLOSING DATE" has the meaning ascribed to that term in the Share
Purchase Agreement; and
(f) "TERM" means the term of this Agreement.
2. RETAINER TO PROVIDE MANAGEMENT SERVICES. The Corporation hereby retains
Intek to provide it and its subsidiary, BSIG, with various management services
as specified in section 7, during the Term.
3. TERM. The Term shall commence on the Closing Date and terminate on the
first anniversary of such date. The Corporation shall be entitled to terminate
this Agreement at any time upon thirty (30) days prior written notice to Intek,
but in that event, except where the termination is for "just cause", the
Corporation shall immediately issue to Intek all of the Brookline Management
Contract Common Shares which remain unissued, whether or not accrued. For the
purposes of this section 3, "just cause" shall mean a fundamental breach of this
Agreement by Intek which, under common law, entitles the Corporation to
terminate all of its obligations under this Agreement.
4. MANAGEMENT SERVICES FEES.
4.1 In consideration of the management services to be provided by Intek to the
Corporation and BSIG hereunder, Intek shall be entitled to receive one million
(1,000,000) Brookline Common Shares (the "Brookline Management Contract Common
Shares"). Subject to section 4.2, two hundred and fifty thousand (250,000)
Brookline Management Contract Common Shares shall be issued to Intek on each of
the following dates:
(a) the Closing Date;
(b) the date which is three (3) months after the Closing Date;
<PAGE>
-3-
(c) the date which is six (6) months after the Closing Date; and
(d) the date which is nine (9) months after the Closing Date.
4.2 If Brookline, at any time during which any Brookline Management Contract
Common Shares remain unissued, shall take any of the actions contemplated by the
provisions of section 2.7 of the Share Purchase Agreement, then the procedure
set out in that section shall be followed and the appropriate equitable and
proportionate adjustment determined pursuant to the provisions of section 2.7,
if any, shall be made to the number of unissued Brookline Management Contract
Common Shares.
4.3 Intek agrees that, without the prior written consent of the Corporation, it
will not sell, assign or otherwise transfer any of the Brookline Management
Contract Common Shares for a period of three (3) years from the Closing Date,
except that this restriction shall not apply to the following transactions in
such shares:
(a) pledges to secure bona fide debts or other obligations; or
(b) sales or transfers to Affiliates of Intek who agree to be bound
by the provisions of this section 4.3.
5. EXPENSES. The Corporation shall, or shall cause BSIG to, reimburse
Intek for all of its reasonable expenses incurred in connection with the
provision of management services to either the Corporation or BSIG within thirty
(30) days following submission of applicable receipts or other supporting
documentation. For greater certainty, the expenses of Intek shall be deemed not
to include salaries or other compensation paid or payable by Intek to its
employees, or any amounts paid to consultants or independent contractors who
have been hired to perform any portion of the services described in section 7.
6. ACCESS TO INFORMATION. During the Term, the Corporation shall, or shall
cause BSIG to, ensure that Intek and its representatives have access to all
financial statements and other records and information of the Corporation and
BSIG which are available to the shareholders and directors of those corporations
generally. In addition, the Corporation agrees to provide Intek and its
representatives with access to its management information systems and to cause
BSIG to do the same.
7. RESPONSIBILITIES OF INTEK. During the Term, both directly and through its
subsidiary Roamer One, Inc. ("Roamer One"), Intek shall provide the Corporation
and BSIG with certain administrative and management services including, INTER
ALIA, the following services:
(a) SITE SELECTION. Representatives of Intek and/or Roamer One will be
available to the Corporation and BSIG for consultation regarding the
selection of sites to be financed.
(b) INFRASTRUCTURE EQUIPMENT AND SYSTEM COMPATIBILITY. Intek shall
provide advice and assistance to the Corporation and BSIG, from time
to time, on the evaluation of infrastructure equipment and system
capability.
<PAGE>
-4-
(c) FCC MATTERS. Intek shall assist the Corporation and BSIG, from time
to time, in matters regarding the United States Federal Communications
Commission (the "FCC"), including providing notification to the FCC,
as required.
(d) CONTRACT MANAGEMENT. Intek and/or Roamer One shall provide advice and
assistance to the Corporation and BSIG, from time to time, on the
management of contracts for 220 MHz and site licenses, as required.
(e) NEGOTIATION OF FINANCING CONTRACTS. Intek shall assist the
Corporation and BSIG, from time to time, in the negotiation of
contracts to provide financing in various forms for management
companies who construct, manage and operate wireless specialized
mobile radio systems on behalf of United States 220 MHz narrowband
licensees, including consulting on the business assessment and
technical review of the 220 MHz systems to be constructed.
8. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
represents and warrants to Intek that:
(a) the Corporation has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(b) the Corporation has taken all necessary corporate action to authorize
the execution and delivery of this Agreement and the performance of
its obligations hereunder;
(c) this Agreement has been duly executed and delivered by the Corporation
and constitutes a valid and binding obligation of the Corporation,
enforceable against it in accordance with its terms;
(d) the Corporation has duly authorized the issuance of such number of
Brookline Common Shares as shall be necessary to issue the Brookline
Management Contract Common Shares as contemplated herein and such
shares, when issued, will be validly issued as fully paid shares of
the Corporation; and
(e) other than any required stock exchange approvals, no consent is
required of, or notice required to be given to, any person by the
Corporation in respect of any of the transactions contemplated herein
or any part thereof.
9. MISCELLANEOUS.
9.1 In this Agreement, unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
9.2 The headings in this Agreement are for convenience of reference only and
shall not be given any effect in the interpretation of this Agreement.
9.3 This Agreement and all amendments hereof and waivers and consents hereunder
shall be governed by and construed in accordance with the law of the Province of
British Columbia
<PAGE>
-5-
and the laws of Canada applicable therein and the parties hereby irrevocably
attorn to the jurisdiction of the courts of British Columbia.
9.4 Time shall be of the essence of this Agreement.
9.5 The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
9.6 All notices, consents and other communications required or permitted to be
given under or by reason of this Agreement shall be in writing, shall be
delivered personally or by facsimile as described below, and shall be deemed
given on the date on which such delivery is made. Any such delivery shall be
addressed to the intended recipient at the following addresses (or at such other
address for a party as shall be specified by such party by like notice to the
other parties):
(a) if to the Corporation:
900-999 West Hastings Street
Vancouver, British Columbia
V6C 2W2
Attention: The President
Facsimile: (604) 683-6958
(b) if to Intek:
970 West 190th Street
Suite 720
Torrance, California
90502
Attention: David Neibert
Facsimile: (310) 366-7712
9.7 Subject to Intek's right to assign its rights and obligations hereunder to
an Affiliate capable of performing Intek's obligations hereunder, neither party
may assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other party.
9.8 The failure of a party to insist upon strict adherence to a term of this
Agreement on an occasion shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. No purported waiver shall be effective unless in
writing. The waiver by any party of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent or other breach.
<PAGE>
-6-
9.9 This Agreement supersedes any other agreement, whether written or oral
(including a letter of intent between the Corporation and Simmonds
Communications Ltd. dated July 12, 1995), that may have been made or entered
into by the parties relating to the matters contemplated hereby and constitutes
the entire agreement between the parties with respect to such matters.
9.10 This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto, all as of the date first above written.
BROOKLINE MINERALS INC.
By: ____________________________
By: ____________________________
INTEK DIVERSIFIED CORPORATION
By: ____________________________
By: ____________________________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 744,526
<SECURITIES> 0
<RECEIVABLES> 643,581
<ALLOWANCES> 60,798
<INVENTORY> 1,964,971
<CURRENT-ASSETS> 4,742,164
<PP&E> 6,429,855
<DEPRECIATION> 71,382
<TOTAL-ASSETS> 11,236,970
<CURRENT-LIABILITIES> 5,033,630
<BONDS> 0
<COMMON> 9,076,254
0
0
<OTHER-SE> (2,899,155)
<TOTAL-LIABILITY-AND-EQUITY> 11,236,970
<SALES> 805,514
<TOTAL-REVENUES> 805,514
<CGS> 681,720
<TOTAL-COSTS> 681,720
<OTHER-EXPENSES> 1,080,292
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 107,270
<INCOME-PRETAX> (1,041,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,041,399)
<DISCONTINUED> 43,485
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (997,914)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
