MANATT, PHELPS & PHILLIPS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ATTORNEYS AT LAW
NANCY H. WOJTAS
DIRECT DIAL (310) 312-4307
11355 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064-1614
TELEPHONE (310) 312-4000 FAX (310) 312-4224
1601 M STREET N.W., SUITE 700
WASHINGTON, D.C. 20006-1702
TELEPHONE (202) 463-4300
FAX (202-463-4394
33 MUSIC SQUARE WEST, SUITE 106-B
NASHVILLE, TENNESSEE 37203-3226
TELEPHONE (616) 269-1240
FAX (616)-259-1289
July 11, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: INTEK Diversified Corporation
a Delaware corporation
File No. 0-9160
------------------------------------------
Ladies and Gentlemen:
On behalf of INTEK Diversified Corporation, a Delaware
corporation (the "Registrant"), submitted herewith pursuant to
the requirements of EDGAR please find Registrant's current report
on Form 8-K, including exhibits thereto.
<PAGE>
Any comments or questions concerning the Form 8-K should be
directed to the undersigned at (310) 312-4307.
Sincerely,
/s/
Nancy H. Wojtas
Manatt, Phelps & Phillips
NHW:et
Enclosures
<PAGE>
MANATT, PHELPS & PHILLIPS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
ATTORNEYS AT LAW
NANCY H. WOJTAS
DIRECT DIAL (310) 312-4307
11355 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064-1614
TELEPHONE (310) 312-4000 FAX (310) 312-4224
1601 M STREET N.W., SUITE 700
WASHINGTON, D.C. 20006-1702
TELEPHONE (202) 463-4300
FAX (202-463-4394
33 MUSIC SQUARE WEST, SUITE 106-B
NASHVILLE, TENNESSEE 37203-3226
TELEPHONE (616) 269-1240
FAX (616)-259-1289
July 11, 1995
National Association of
Securities Dealers, Inc.
1735 "K" Street, N.W.
Washington, D.C. 20006
Re: INTEK Diversified Corporation
a Delaware corporation
------------------------------------------
Ladies and Gentlemen:
On behalf of INTEK Diversified Corporation, a Delaware
corporation (the "Registrant"), submitted herewith pursuant to
the requirements of EDGAR please find Registrant's current report
on Form 8-K, including exhibits thereto.
<PAGE>
Any comments or questions concerning the Form 8-K should be
directed to the undersigned at (310) 312-4307.
Sincerely,
/s/
Nancy H. Wojtas
Manatt, Phelps & Phillips
NHW:et
Enclosures
PURCHASE AGREEMENT
THIS AGREEMENT, dated as of June 30, 1995 (this
"Agreement"), is made by and between INTEK DIVERSIFIED
CORPORATION, a Delaware corporation ("Buyer"), and SIMMONDS
COMMUNICATIONS LTD., an Ontario corporation ("Seller").
WHEREAS, Seller and Buyer desire to enter into this
Agreement pursuant to which Seller (or one or more subsidiaries
of Seller, collectively referred to herein as "Seller") will
sell, transfer, convey, assign and deliver to Buyer and Buyer
will buy, acquire, receive and accept from Seller certain shares
of a subsidiary and certain assets and liabilities owned by
Seller. This subsidiary and these assets comprise the wireless
communications business of Seller, which consists of the
distribution of two-way radio communication products for use in
commercial, industrial and governmental markets and the design,
construction and project management of two-way radio networks
(the "Business"). The assets and liabilities related to the
Business as of April 30, 1995, are set forth in (a) an unaudited
balance sheet of SCL, Inc., a Delaware corporation ("SCLI"),
which owns all of the outstanding shares of capital stock of
Midland International Corp., a Delaware corporation ("MIC"),
attached hereto as Exhibit A and (b) an unaudited consolidated
balance sheet of SCL Systems & Infrastructure, a division of
Seller ("Systems"), and of Midland International Ltd., an Ontario
corporation and wholly-owned subsidiary of Seller ("MIL"),
attached hereto as Exhibit B (collectively, the "Balance
Sheets");
NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants, agreements and conditions
contained herein, Seller and Buyer agree as follows:
1. STRUCTURE OF TRANSACTION.
1.1 TRANSFER OF SHARES. At the Closing (as hereinafter
defined), on the terms and subject to the conditions set forth in
this Agreement, Seller shall transfer to Buyer all of the
outstanding capital stock of SCLI.
<PAGE>
1.2 Sale and Purchase of Assets. At the Closing, on the
terms and subject to the conditions set forth in this Agreement,
Seller shall sell and transfer to Buyer and Buyer shall acquire
from Seller all of Seller's right, title and interest in and to
the following assets of Seller, free and clear of all liens,
charges, encumbrances and restrictions whatsoever.
(a) All of the following assets of Systems and MIL,
which assets will on the Closing Date be owned by Seller:
(i) All accounts receivable of Systems and
MIL arising out of the operation of the Business and
existing on the Closing Date.
(ii) All inventories of Systems and MIL
arising out of the operation of the Business and
existing on the Closing Date, including without
limitation, raw materials, work in process, finished
goods, component parts, spare parts, supplies and
samples (the "Inventory").
(iii) All machinery, equipment, furniture and
fixtures of Systems and MIL related to the Business and
existing on the Closing Date, including the items
listed on Schedule 3.8.
(iv) All manufacturing and assembly tooling of
Systems and MIL related to the Business and existing on
the Closing Date.
(v) The real property owned by Systems and
MIL and located at Villede Lemoyne, Quebec, as is more
fully described on Schedule 3.7(a), together with all
buildings, improvements, rights, tenements,
hereditaments, privileges, appurtenances and fixtures
thereon or belonging thereto (hereinafter referred to
as the "Owned Property").
(vi) The real property leased by Systems and
MIL and located at 975 Dillingham Road, Pickering,
Ontario, as is more fully described on Schedule 3.7(b),
together with all buildings, improvements, rights,
tenements, hereditaments, privileges, appurtenances and
fixtures thereon or thereunto belonging (hereinafter
referred to as the "Leased Property").
<PAGE>
(vii) All leases for personal property of
Systems and MIL related to the Business, each of which
shall be duly assigned to Buyer (the "Equipment
Leases"), including those listed on Schedule 3.8.
(viii) All of the product formulae, designs,
discoveries, inventions, patents, trade names,
trademarks, service marks, copyrights and other
intellectual property, and all applications to register
any of the foregoing, customer lists, vendor lists and
brochures (the "Intangible Assets"), including the
items listed on Schedule 3.10, each of which shall be
duly assigned to Buyer; provided, however, that Buyer
shall not acquire any rights to SCL or Simmonds trade
names.
(ix) All engineering, product, manufacturing
and assembly specifications, data, processes,
procedures, drawings, blueprints and related data and
materials and all parts, repair and overhaul manuals
and all customer, supplier and sales records and
materials related to the Business.
(x) All office and factory supplies related
to the Business.
(xi) All prepayments and deposits related to
the Business which have been made or paid by Systems
and MIL, to the extent to which an economic benefit is
transferable to Buyer, and the books and records of
Systems and MIL.
(xii) All rights of Systems and MIL under
existing contracts, agreements, commitments, and
purchase and sales orders related to the Business,
each of which shall be duly assigned to Buyer;
provided, however, that to the extent that the
assignment of any agreement, contract, commitment and
purchase or sale order requires the consent of the
other party thereto, this Agreement shall not
constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof,
but Seller agrees that it will use its best efforts
(which it is understood shall not require any payment
to the other party other than
<PAGE>
any payment required by the agreement being assigned) to obtain
the written consent of the parties to any such agreement,
contract, commitment and purchase or sales order to the
assignment thereof to Buyer, and if such consent is not obtained,
Seller will cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such
agreement, contract, commitment and purchase or sales order.
(xiii) All licenses, permits, orders or
approvals of governmental or regulatory agencies that
are material to the conduct of the Business and that
are assignable to Buyer (collectively, the "Permits").
Each and all of the foregoing items shall be referred to
hereinafter as the "Assets."
1.3 BALANCE SHEETS. Seller and Buyer agree that the
Balance Sheets are intended to represent the entire Business (as
of the date thereof) that is to be transferred to Buyer pursuant
to this Agreement. Within 30 days after the date of this
Agreement Seller agrees to provide to Buyer (a) Balance Sheets as
of May 31, 1995 (the "May Balance Sheets") and (b) schedules
setting forth a description of the assets and liabilities that
are included in the May Balance Sheets ("Schedule 1"), containing
reasonably sufficient detail so that Buyer and its advisors may
verify that all of the assets and liabilities of the Business are
included in the May Balance Sheets. Subject to Section 1.8
hereof, Buyer and Seller agree that the Balance Sheets include
the consumer electronics business being sold by MIC and that the
proceeds of the sale, or if the sale has not been consummated,
the rights to the sale agreement, will be owned by MIC on the
Closing Date.
1.4 Review of Schedule 1. Buyer shall have 10 days after
receipt of Schedule 1 from Seller within which to complete its
review and verification of the assets and liabilities included
therein. During such 10-day period, Seller and Buyer shall use
their best efforts to resolve any questions and disputes that may
develop regarding the accuracy or adequacy of the May Balance
Sheets and Schedule 1. Seller and Buyer
<PAGE>
agree that the May Balance Sheets will be restated to reflect any
additions, deletions or changes to the amounts of assets and
liabilities that may be agreed upon as a result of Seller's
preparation or Buyer's review of Schedule 1. Any such restated
May Balance Sheets shall be substituted for the Balance Sheets.
In the event that Buyer is not reasonably satisfied with the May
Balance Sheets or Schedule 1 or any disputes have not been
resolved at the end of such 10-day period, Buyer may terminate
this Agreement pursuant to Section 7.1 hereof.
1.5 TRANSFER AND ASSUMPTION OF LIABILITIES. At the
Closing, on the terms and subject to the conditions set forth in
this Agreement, Buyer agrees to assume and pay or discharge all
past, present and future obligations and liabilities of MIC,
Systems and MIL and all obligations of Seller directly related to
the Business as they exist at the Closing, other than as set
forth in Section 1.6 hereof.
1.6 DEBT TO SELLER. All of SCLI's, MIC's and Systems and
MIL's debt to Seller, as included in the Balance Sheets and
described in Schedule 1, which shall be consolidated into a
promissory note of Buyer payable to Seller, with interest at the
rate of 10% per annum, payable quarterly. The principal balance
shall be payable over a term of three years following the Closing
Date in the following annual installments, payable on the first,
second and third anniversary dates of the Closing Date: 20%;
40%; and 40%.
1.7 SALES AND TRANSFER TAXES AND FEES. All applicable
sales, transfer, documentary, use, and other taxes and fees that
may be due or payable as a result of the conveyance, assignment,
transfer, or delivery of the Assets, if any, whether levied on
Seller or Buyer, shall be borne by Seller except that Buyer shall
bear all conveyance, filing and recording fees that are payable
in connection with the transfer of the Assets. The parties agree
that, subject to the exceptions noted, Buyer shall not pay or be
responsible for any such tax, but that all such taxes shall be
the responsibility of and shall be paid by Seller, subject to its
right to contest in good faith the validity or amount thereof in
proper proceedings at its own expense.
<PAGE>
1.8 SALE OF CONSUMER ELECTRONICS BUSINESS. Notwithstanding
anything contained herein to the contrary, Buyer acknowledges and
agrees that Seller may sell the consumer electronics business of
the Business for whatever consideration the Buyer deems
appropriate and any such sale shall not result in or be deemed a
violation of any representation or warranty or covenant or other
term, condition or obligation under this Agreement, provided that
Buyer has the right to such proceeds or the rights related to
such sale pursuant to Section 1.3.
2. PURCHASE PRICE.
2.1 PURCHASE PRICE. Subject to the terms and conditions of
this Agreement, Buyer will issue and deliver to Seller
certificate(s) representing Fifteen Million (15,000,000) shares
of its Common Stock, $.01 par value (the "Shares"), which shall
be referred to hereinafter as the "Purchase Price".
2.2 PAYMENT OF THE PURCHASE PRICE.
The Purchase Price shall be paid in the following
manner:
(a) Delivery to the Seller at Closing of
certificate(s) representing Thirteen Million Five Hundred
Thousand (13,500,000) Shares in exchange for all of the shares of
capital stock of SCLI; and
(b) Delivery to the Seller at Closing of
certificate(s) representing One Million Five Hundred Thousand
(1,500,000) Shares in exchange for all of the Assets.
2.3 CLOSING; TIME AND PLACE. On the terms and subject to
the conditions set forth in this Agreement, the closing of the
transactions contemplated hereby (the "Closing") shall take place
at the offices of Seller, 5255 Yonge Street, Willowdale, Ontario,
Canada, commencing at 10:00 A.M., local time, on the first
business day after the later of the meeting of shareholders of
Buyer or Seller called to approve the transactions contemplated
by this Agreement, or as soon as practicable thereafter, or at
such other place, time and/or date as the parties hereto may
agree (the date of the Closing being hereinafter referred to as
the "Closing Date"). The Closing shall be deemed to have
occurred at the close of business on the Closing Date.
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Seller that:
3.1. CORPORATE ORGANIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to do business as
a foreign corporation in each jurisdiction in which its ownership
or lease of property or the nature of the business conducted by
it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not
have a Material Adverse Effect (as defined herein) on Buyer.
Buyer has the requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its
business as it is now being conducted. Buyer has heretofore
delivered to Seller true and complete copies of its Certificate
of Incorporation and By-laws.
3.2. AUTHORITY. Buyer has the requisite corporate power
and authority to execute and deliver this Agreement and, except
for the approval of Buyer's shareholders required to increase the
authorized capital stock of Buyer, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
and, subject to the fulfillment or waiver at or prior to the
Closing Date of the conditions set forth in Sections 6.1 and 6.3,
the consummation of the transactions contemplated hereby have
been duly approved by the Board of Directors of Buyer, and no
other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions so
contemplated, subject only to approval by the shareholders of
Buyer with respect to the amendment to the Certificate of
Incorporation of Buyer to authorize additional shares of Common
Stock to be issued to Seller pursuant to this Agreement. This
Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Buyer, enforceable
against Buyer in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and
except that the availability of the
<PAGE>
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any
proceedings may be brought.
3.3. CAPITALIZATION. (a) As of the date hereof, the
authorized capital stock of Buyer consists of 20,000,000 shares
of Common Stock, $.01 par value. As of the date hereof, (i)
9,564,831 shares of Common Stock were issued and outstanding;
(ii) 466,082 shares of Common Stock were held in treasury; (iii)
500,000 shares of Common Stock were reserved for issuance under
the Buyer's 1988 Key Employee Stock Option Plan (the "1988 Option
Plan"), and options representing the right to purchase 65,000
shares of Common Stock were granted under the 1988 Option Plan;
(iv) 600,000 shares of Common Stock were reserved for issuance
under the Buyer's 1994 Stock Option Plan (the "1994 Option
Plan"), and options representing the right to purchase 380,000
shares of Common Stock were granted under the 1994 Option Plan;
and (v) 300,000 shares of Common Stock were reserved for issuance
under the Buyer's 1994 Directors' Stock Option Plan (the
"Directors' Option Plan"), and options representing the right to
purchase 120,000 shares of Common Stock were granted under the
Directors' Option Plan. All shares of Common Stock outstanding
or held in treasury are duly authorized, validly issued, fully
paid and nonassessable and are not subject to preemptive rights.
Except as set forth in this Section 2.3(a) or in Schedule 2.3(a),
as of the date hereof, there are no shares of capital stock of
Buyer authorized, issued or outstanding and there are no
outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or
other securities of Buyer obligating Buyer to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares
of capital stock of Buyer or obligating Buyer to grant, extend or
enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment. There are no
voting trusts or other agreements or understandings to which
Buyer or its subsidiaries is a party with respect to the voting
of the capital stock of Buyer. All of the shares of Common Stock
issuable to Seller in accordance with this
<PAGE>
Agreement shall be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and shall not be subject to
preemptive rights.
(b) As of the date hereof, all 9,564,831 shares of
Common Stock which are issued and outstanding are listed and
traded on the (NASDAQ) Small-Cap Market under the symbol "INTEK",
and Buyer is in full compliance with its listing agreement.
3.4 SUBSIDIARIES. Schedule 2.4 sets forth the name and
state of incorporation of each subsidiary (as defined herein) of
Buyer (collectively, the "Buyer Subsidiaries") existing as of the
date hereof. Each of the Buyer Subsidiaries is a corporation
duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and is duly
qualified to do business as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the
nature of the business conducted by it makes such qualification
necessary, except for such jurisdictions in which the failure to
be so qualified would not have a Material Adverse Effect on
Buyer. Each of the Buyer Subsidiaries has the requisite
corporate power and authority to own, lease and operate its
properties and assets and to carry on its businesses as they are
now being conducted. Except as set forth on Schedule 2.4, all
outstanding shares of capital stock of each Buyer Subsidiary are
owned by Buyer or another Buyer Subsidiary and are validly
issued, fully paid and nonassessable, are not subject to
preemptive rights and are owned free and clear of all liens,
claims and encumbrances. There are no outstanding subscriptions,
options, warrants, rights, convertible securities or any other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of any Buyer
Subsidiary obligating any Buyer Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares
of its capital stock or obligating any Buyer Subsidiary to grant,
extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment.
3.5 INFORMATION IN DISCLOSURE DOCUMENTS. The information
with respect to Buyer or any subsidiary of Buyer provided by
Buyer for inclusion in (together with any
<PAGE>
information incorporated by reference) (i) any registration/proxy
statement of Buyer (the "Buyer Registration/Proxy Statement")
mailed to Buyer's shareholders in connection with the
transactions contemplated by this Agreement, shall not, at the
time of the mailing of the Buyer Registration/Proxy Statement and
any amendments or supplements thereto, and at the time of the
Buyer Meeting (as defined herein), contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Buyer Registration/Proxy Statement shall
comply as to form in all material respects with the provisions of
the Securities Act of 1933, as amended (the "1933 Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the respective rules and regulations promulgated thereunder.
3.6 CONSENTS AND APPROVALS: NO VIOLATION. Neither the
execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby
(a) conflicts with or results in any breach of any provision of
its Certificate of Incorporation or By-laws, (b) except as set
forth on Schedule 2.6, violates, conflicts with, constitutes a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or results in the termination
of, or accelerates the performance required by, or results in the
creation of any lien or other encumbrance upon any of the
properties or assets of Buyer or any of the Buyer Subsidiaries
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Buyer or any
Buyer Subsidiary is a party or to which they or any of their
respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other encumbrances, which,
individually or in the aggregate, would not have a Material
Adverse Effect on Buyer or (c) require any consent, approval,
authorization or permit of or from, or filing with or
notification to, any court, governmental authority or other
regulatory or administrative agency or commission, domestic or
foreign ("Governmental
<PAGE>
Entity"), or other third party except (i) pursuant to the 1933
Act and the Exchange Act, (ii) filings with, and approvals by,
the Federal Communications Commission or any successor thereto
(the "FCC"), (iii) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made would
not, individually or in the aggregate, have a Material Adverse
Effect on Buyer or (iv) third party consents, approvals,
authorizations, permits, filings or notifications which if not
obtained or made would not, individually or in the aggregate,
have a Material Adverse Effect on Buyer.
3.7 REPORTS AND FINANCIAL STATEMENTS. Since January 1,
1995, Buyer has filed all reports, registration statements and
prospectuses, together with any required amendments thereto, that
they were required to file with the Securities and Exchange
Commission (the "Commission"), including, but not limited to
Forms 10-K, Forms 10-Q and proxy statements (the "Buyer
Reports"). Buyer has previously furnished or shall, upon
request, promptly furnish Seller with true and complete copies of
each of the Buyer Reports. As of their respective dates, the
Buyer Reports complied with the requirements of the Commission
and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim
financial statements of Buyer included in the Buyer Reports have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the
consolidated financial position of Buyer and each Buyer
Subsidiary as at the dates thereof and the consolidated results
of their operations and statements of cash flow for the periods
then ended subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments
and any other adjustments described therein. Since January 1,
1995, Buyer and each Buyer Subsidiary has filed all required
forms,
<PAGE>
reports and documents required to be filed with each Governmental
Entity or self-regulatory organization which is charged with
regulating or supervising any business conducted by Buyer or any
Buyer Subsidiary, other than any such forms, reports and
documents which if not filed would not have a Material Adverse
Effect on Buyer.
3.8 TAXES. Buyer shall promptly make available to Seller,
upon request by Seller, true and correct copies of the federal
income tax returns, state income, or franchise tax returns, state
sales tax returns and any other material federal, state or local
tax returns filed by Buyer and each Buyer Subsidiary for each of
the fiscal years ended December 31, 1990, 1991, 1992, 1993, and
1994, inclusive. Buyer and each Buyer Subsidiary have prepared in
good faith and duly and timely filed, or caused to be duly and
timely filed, all federal, state, local and foreign income,
franchise, sales and other tax returns or reports required to be
filed by them on or before the date hereof, except where the
failure to file would not have a Material Adverse Effect on
Buyer. Buyer and each Buyer Subsidiary have paid, or have made
adequate provision or set up an adequate accrual or reserve for
the payment of all taxes, interest and penalties shown to be
owing on all such returns or reports. Except as set forth in
Schedule 2.8, neither Buyer nor any Buyer Subsidiary is a party
to any action or proceeding, nor is any such action or proceeding
threatened, by any Governmental Entity for the assessment or
collection of any taxes, and no deficiency notices or reports
have been received by Buyer or any Buyer Subsidiary in respect of
any material deficiencies for any tax, assessment, or government
charges. Buyer and each Buyer Subsidiary have paid, or have made
adequate provision or set up an adequate accrual or reserve for
the payment of, all taxes, interest, additions to tax, and
penalties due with respect to completed and settled examinations
or concluded litigation relating to Buyer and each Buyer
Subsidiary. Except as set forth in Schedule 2.8, Buyer and each
Buyer Subsidiary have not executed an extension or waiver of any
statute of limitations on the assessment or collection of any tax
due that would have a Material Adverse Effect on Buyer, which
extension or waiver is still in effect.
3.9 EMPLOYEE PLANS. Except as set forth on Schedule 2.9,
all employee benefit, welfare, bonus, deferred compensation,
pension, profit sharing, stock option, employee stock ownership,
consulting, severance, or fringe benefit plans, formal or
<PAGE>
informal, written or oral, and all trust agreements related
thereto, relating to any present or former directors, officers or
employees of Buyer or any Buyer Subsidiary ("Buyer Employee
Plans") have been maintained, operated, and administered in
substantial compliance with their terms and currently comply, and
have at all relevant times complied, in all material respects
with the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Internal Revenue Code of 1986, as amended
(the "Code"), to the extent applicable, and any other applicable
laws. With respect to each Buyer Employee Plan which is a
pension plan (as defined in Section 3(2) of ERISA), except as set
forth in Schedule 2.9: (a) each pension plan as amended (and any
trust relating thereto) intended to be a qualified plan under
Section 402(a) of the Code either has been determined by the
Internal Revenue Service ("IRS") to be so qualified or is the
subject of a pending application for such determination that was
timely filed, (b) there is no accelerated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, and no waiver of the minimum funding
standards of such sections has been requested from the IRS,
(c) no reportable event described in Section 4043 of ERISA has
occurred, (d) no defined benefit plan has been terminated, nor
has the Pension Benefit Guaranty Corporation ("PBGC") instituted
proceedings to terminate a defined benefit plan or to appoint a
trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042 of
ERISA entitling the PBGC to institute any such proceedings,
(e) no pension plan is a "multi-employer plan" within the meaning
of Section 3(37) of ERISA and (f) as of the last day of the most
recent plan year which ended prior to the date hereof and for
which an actuarial valuation has been issued by the plan's
actuary, with respect to each defined benefit plan which is a
"single-employer plan" (within the meaning of Section 4001(a)(15)
of ERISA) the actuarially determined present value of all
"benefit liabilities" (within the meaning of Section 4001(a)(16)
of ERISA), as determined on the basis of the actuarial
assumptions contained in the plan's most recent actuarial
valuation, did not exceed the then current value of the assets of
the plan and there has been no material change in the financial
condition of
<PAGE>
the plan since the last day of the most recent plan year. No
liability under subtitle C or D of Title IV of ERISA has been
incurred by Buyer or any Buyer Subsidiary with respect to any
"single-employer plan", formerly maintained by any of them or by
any entity which is considered one employer with Buyer under
Section 4001 of ERISA or Section 414 of the Code.
3.10 MATERIAL CONTRACTS. Except as set forth in Schedule
2.10 or disclosed in the Buyer Reports, neither Buyer nor any
Buyer Subsidiary is a party to, or is bound by (a) as of the date
hereof, any agreement, indenture or other instrument relating to
the borrowing of money by Buyer or any such Buyer Subsidiary or
the guarantee by Buyer or any such Buyer Subsidiary of any such
obligation (other than trade payables and instruments relating to
transactions entered into in the ordinary course of business),
(b) as of the date hereof, any contract or agreement or amendment
thereto that would be required to be filed as an exhibit to a
Form 10-K filed by Buyer with the Commission, (c) any contract
relating to the disposition of any assets or any business
interests of the Buyer under which the Buyer has any continuing
obligations or indemnity arrangements, (d) any warranty or other
agreement relating to any products manufactured or distributed by
Buyer or any Buyer Subsidiary, (e) any other contract or
agreement or amendment thereto that places any restrictions on
the ability of Buyer or any Buyer Subsidiary to engage in any
business activity which restrictions would have a Material
Adverse Effect on Buyer (collectively, the "Buyer Contracts").
Neither Buyer nor any Buyer Subsidiary is in default under any
Buyer Contract, which default is reasonably likely to have,
either individually or in the aggregate, a Material Adverse
Effect on Buyer, and there has not occurred any event that with
the lapse of time or the giving of notice or both would
constitute such a default.
3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Buyer Reports filed by Buyer with the Commission
prior to the date of this Agreement, since December 31, 1993,
Buyer and each Buyer
<PAGE>
Subsidiary have conducted their respective businesses only in the
ordinary course and there has not been any change in the
financial condition, results of operations or business of Buyer
and each Buyer Subsidiary taken as a whole that has had or would
have a Material Adverse Effect on Buyer.
3.12 LITIGATION. Except as disclosed in Buyer Reports filed
by Buyer with the Commission prior to the date of this Agreement,
there is no legal, administrative, arbitral or other suit,
action, investigation or proceeding pending, or, to the knowledge
of Buyer, threatened against or affecting Buyer or any Buyer
Subsidiary which is reasonably expected to result in a Material
Adverse Effect on Buyer, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or
arbitrator, outstanding against Buyer or any Buyer Subsidiary
having, or which, insofar as reasonably can be foreseen, in the
future would have, any such Material Adverse Effect.
3.13 COMPLIANCE WITH LAWS AND ORDERS. Except as
specifically disclosed in Buyer Reports filed by Buyer with the
Commission prior to the date of this Agreement, the businesses of
Buyer and each Buyer Subsidiary have not been, and are not being,
conducted in violation of any law, ordinance, regulation,
judgment, order, decree, license or permit of any Governmental
Entity, except for possible violations which individually or in
the aggregate do not, and in the future shall not, have an
adverse effect on Buyer in excess of Thirty-Five Thousand Dollars
($35,000). Except as set forth in Schedule 2.13, no investigation
or review by any Governmental Entity with respect to Buyer or any
Buyer Subsidiary is pending or, to the knowledge of Buyer,
threatened, nor has any Governmental Entity indicated an
intention to conduct the same in each case other than those the
outcome of which shall not have a Material Adverse Effect on
Buyer.
3.14 FEES. Neither Buyer nor any Buyer Subsidiary has paid
or become obligated to pay any fee or commission to any broker,
finder or intermediary in connection with the transactions
contemplated by this Agreement.
3.15 BUYER CORPORATE ACTION. The Special Committee of the
Board and Board of Directors of Buyer has by the requisite vote
of all directors present (a) determined that the transaction
contemplated by this Agreement is advisable and in the best
<PAGE>
interests of Buyer and its shareholders, (b) authorized this
Agreement and, subject to the fulfillment or waiver at or prior
to the Closing Date of the conditions set forth in Sections 6.1
and 6.3, the transactions contemplated hereby and (c) taken all
action required to be taken by it with respect to the
authorization and issuance of the additional shares of Common
Stock, and directed the submission for consideration by the
shareholders of Buyer of an amendment of the Certificate of
Incorporation of Buyer to authorize additional shares of Common
Stock.
3.16 VOTE REQUIRED. No action of holders of the capital
stock of Buyer is necessary to approve this transaction or to
consummate the transactions so contemplated, except that the
affirmative vote of the holders of a majority of the outstanding
shares of Buyer's Common Stock is necessary to approve the
authorization of additional shares of Buyer Common Stock.
3.17 ENVIRONMENTAL MATTERS. (a) For purposes of this Section
3.17 and Section 4.20, the following terms shall have the
indicated meaning:
"Real Property" means all real property presently or
formerly owned or operated by Buyer or any Buyer Subsidiary
on which facilities are or were located and all real
property (including property held as trustee or in any other
fiduciary capacity) over which Buyer or any Buyer Subsidiary
currently or formerly has exercised dominion, management or
control.
"Environmental Law" means any applicable federal, state
or local statute, law, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order,
judgment, decree, injunction, directive, requirement or
agreement with any Governmental Entity, now existing,
relating to: (a) the protection, preservation or restoration
of the environment, (including, without limitation, air,
water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life
or any other natural resource), or to human health or
safety, or (b) the exposure to, or the use, storage,
recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or
disposal of Hazardous Substances, in each case
<PAGE>
as amended. The term Environmental Law includes, without
limitation, (x) the following statutes, each as amended:
(i) the federal Clean Air Act;
(ii) the federal Clean Water Act;
(iii) the federal Resource Conservation and
Recovery Act of 1976 ("RCRA");
(iv) the federal Comprehensive Environmental
Response Compensation and Liability Act of 1980
("CERCLA");
(v) the federal Toxic Substances Control Act;
(vi) the federal Occupational Safety and Health
Act of 1970;
(vii) the federal Safe Drinking Water Act;
(viii) the Federal Insecticide, Fungicide and
Rodenticide Act;
(ix) the California Hazardous Waste Control
Law;
(x) the California Hazardous Substance Account
Act;
(xi) the Porter-Cologne Water Quality Control
Act;
(xii) the California Air Pollution Control Law;
and (y) any common law or equitable doctrine
(including, without limitation, injunctive relief and
tort doctrines such as negligence, nuisance, trespass
and strict liability) that may impose liability or
obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure
to any Hazardous Substance.
"Hazardous Substance" means any substance, whether
liquid, solid or gas, listed, defined, designated or
classified as hazardous, toxic, radioactive or
dangerous, under any applicable Environmental Law,
whether by type or by quantity. Hazardous Substance
includes, without limitation, (i) any "hazardous
substance" as defined in CERCLA, (ii) any "hazardous
waste" as defined in RCRA, and (iii) any toxic waste,
pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste or petroleum
or any derivative or by-product thereof,
<PAGE>
radon, radioactive material, friable asbestos, asbestos
containing material releasing friable asbestos, urea formaldehyde
foam insulation, lead and polychlorinated biphenyls ("PCBs" ).
(b) Except as set forth on Schedule 2.17 or as would
not individually or in the aggregate have a Material Adverse
Effect on Buyer,
(i) Buyer and each Buyer Subsidiary is and has
been in compliance with all applicable Environmental
Laws,
(ii) the Real Property does not contain any
Hazardous Substance in violation of any applicable
Environmental Law,
(iii) neither Buyer nor any Buyer Subsidiary has
received any written notices, demand letters or written
requests for information from any Governmental Entity
or any third party indicating that Buyer or such Buyer
Subsidiary may be in violation of, or liable under, any
Environmental Law,
(iv) there are no civil, criminal or
administrative actions, suits, demands, claims,
hearings, investigations or proceedings pending or
threatened against Buyer or any Buyer Subsidiary with
respect to Buyer or any Buyer Subsidiary or the Real
Property relating to any violation, or alleged
violation, of any Environmental Law,
(v) no reports have been filed, or are
required to be filed, by Buyer or any Buyer Subsidiary
concerning the release of any Hazardous Substance or
the threatened or actual violation of any Environmental
Law on or at the Real Property,
(vi) to the knowledge of Buyer, there are no
underground storage tanks on, in or under any of the
Real Property and no underground storage tanks have
been closed or removed from any Real-Property while
such Real Property was owned or operated by Buyer or
any Buyer Subsidiary, and
<PAGE>
(vii) to the knowledge of Buyer, neither Buyer
nor any Buyer Subsidiary has incurred, and none of the
Real Property is presently subject to, any liabilities
(fixed or, to the knowledge of Buyer, contingent)
relating to any suit, settlement, court order,
administrative order, judgment or claim asserted or
arising under any Environmental Law.
(c) For purposes of this Section 2.17, "to the
knowledge of Buyer" shall mean to the knowledge of Messrs.
Nicholas R. Wilson, David Neibert and Gregg Marston.
(d) There are no permits or licenses required under
any Environmental Law in respect of the Real Property presently
operated by Buyer or any Buyer Subsidiary.
(e) Neither Buyer nor any Buyer Subsidiary has
received written notice that any part of the Real Property has
been or is listed as a site containing Hazardous Substances
pursuant to any Environmental Law.
3.18 LABOR RELATIONS. Except as set forth in Schedule 2.18,
neither Buyer nor any Buyer Subsidiary is a party to or bound by
any collective bargaining agreement respecting its employees, nor
is there pending, or to the best knowledge of Buyer threatened,
any strike, walkout or other work stoppage or labor
organizational effort, and neither Buyer nor any Subsidiary has
received any union grievances, complaints, or claims, the
liability for which would have a Material Adverse Effect on
Buyer.
3.19 REAL ESTATE. Except as set forth on Schedule 2.19, no
real estate is owned by Buyer or any Buyer Subsidiary.
3.20 PRODUCT LIABILITY. Except as set forth in Schedule
2.20, neither Buyer nor any Buyer Subsidiary has been subject to
any claim or liability with respect to any product manufactured
or distributed by either of them.
3.21 DELIVERY OF BUYER'S DISCLOSURE SCHEDULES. Buyer shall
deliver to Seller, within 30 days after the date of this
Agreement, Schedule 2 containing the information referred to in
this Section 3 ("Schedule 2"). Seller shall have 10 days after
receipt of Schedule 2 from Buyer within which to complete its
review and verification of
<PAGE>
disclosures included therein. During such 10-day period, Seller
and Buyer shall use their best efforts to resolve any questions
and disputes that may develop regarding the accuracy or adequacy
of Schedule 2. In the event that Seller is not reasonably
satisfied with Schedule 2 or any disputes have not been resolved
at the end of such 10-day period, Seller may terminate this
Agreement pursuant to Section 7.1 hereof.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer that:
4.1 Corporate Organization. Each of Seller, SCLI and MIC
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and is duly qualified to do business as a foreign corporation in
each jurisdiction in which its ownership or lease of property or
the nature of the business conducted by it makes such
qualification necessary, except for such jurisdictions in which
the failure to be so qualified would not have a Material Adverse
Effect on the Business. Each of Seller, SCLI and MIC has the
requisite corporate power and authority to own, lease and operate
its properties and assets and to carry on its business as it is
now being conducted. Seller has heretofore delivered to Buyer
true and complete copies of the Articles of Incorporation and
Bylaws of each of Seller, SCLI and MIC.
4.2 AUTHORITY. Seller has the requisite corporate power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and, subject to the
fulfillment or waiver at or prior to the Closing Date of the
conditions set forth in Sections 6.1 and 6.2, the consummation of
the transactions contemplated hereby have been duly approved by
the Board of Directors of Seller, and no other corporate
proceedings on the part of Seller are necessary to authorize this
Agreement or to consummate the transactions so contemplated,
except for any approval of Seller's shareholders. This Agreement
has been duly executed and delivered by, and constitutes a valid
and binding obligation of, Seller, enforceable against Seller in
accordance with its terms, except as enforceability hereof may be
limited by applicable bankruptcy, insolvency,
<PAGE>
reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court
before which any proceedings may be brought.
4.3 CAPITALIZATION. As of the date hereof, the authorized
capital stock of SCLI consists of 20,000 shares of Common Stock
and the authorized capital stock of MIC consists of 10,000 shares
of Common Stock. As of the date hereof and at the Closing Date,
35 shares of Common Stock of SCLI and 10,000 shares of Common
Stock of MIC are, and will be, issued and outstanding and no
shares of Common Stock are, or will be, held in treasury or
reserved for issuance upon exercise of outstanding employee stock
options. All outstanding shares of capital stock of SCLI and MIC
are duly authorized, validly issued, fully paid and nonassessable
and are not subject to preemptive rights. Except as set forth in
this Section 4.3 or in Schedule 3.3 there are no shares of
capital stock of Seller authorized, issued or outstanding and
there are no outstanding subscriptions, options, warrants,
rights, convertible securities or any other agreements or
commitments of any character relating to the issued or unissued
capital stock or other securities of SCLI or MIC obligating them
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or obligating them to
grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or
commitment. Except as set forth in Schedule 3.3, there are no
voting trusts or other agreements or understandings to which SCLI
or MIC is a party with respect to the voting of their capital
stock.
4.4 INFORMATION IN DISCLOSURE DOCUMENTS. The information
with respect to MIC, MIL and Seller provided by Seller for
inclusion in (together with any information incorporated by
reference in) the Buyer Registration/Proxy Statement shall not,
at the time of the mailing of the Buyer Registration/Proxy
Statement and any amendments or supplements thereto, and at the
time of the meeting of shareholders of either Buyer or Seller,
contain any untrue statement of a material fact
<PAGE>
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
4.5 CONSENT AND APPROVALS: NO VIOLATION. Except as set
forth in Schedule 3.5, neither the execution and delivery of this
Agreement by Seller nor the consummation by Seller of the
transactions contemplated hereby (a) conflicts with or results in
any breach of any provision of its Articles of Incorporation or
Regulations, (b) violates, conflicts with, constitutes a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, or results in the termination of, or
accelerates the performance required by, or results in the
creation of any lien or other encumbrance upon any of the
properties or assets of Seller under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which Seller is a party or to which they or any of
their respective properties or assets are subject, except for
such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens or other encumbrances, which
individually or in the aggregate, would not have a Material
Adverse Effect on Seller, or (c) require any consent, approval,
authorization or permit of or from, or filing with or
notification to, any Governmental Entity, or other third party,
except (i) pursuant to the 1933 Act or the Exchange Act, (ii)
filings with, and approval by, the FCC, (iii) consents,
approvals, authorizations, permits, filings or notifications
which, if not obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Seller, or (iv)
third party consents, approvals, authorizations, permits, filings
or notifications which if not obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect
on Seller.
4.6 REPORTS AND FINANCIAL STATEMENTS. The audited
consolidated financial statements of Seller and its subsidiaries
and the unaudited Balance Sheets as set forth on Schedule 3.6
have been prepared in accordance with U. S. or Canadian generally
accepted accounting principles, as the case may be, applied on a
consistent basis (except as may be indicated therein or in the
notes thereto) and fairly presents the financial position of
Seller and its subsidiaries as at the dates of such financial
<PAGE>
statements. Except as set forth on Schedule 3.6, since January
1, 1995, Seller has filed all required forms, reports and
documents required to be filed with each Governmental Entity or
self-regulatory organization which is charged with regulating or
supervising any aspect of the Business other than any such forms,
reports and documents which if not filed would not have a
Material Adverse Effect on the Business.
4.7 REAL PROPERTY. (a) The Owned Property is described in
Schedule 3.7(a). Except as set forth in Schedule 3.7(a) and
except for liens, charges or encumbrances none of which impairs
the continued use of the Owned Property in the ordinary course of
the Business, there are no liens or encumbrances upon the Owned
Property, the Owned Property is zoned to permit its present use,
there is no record of any violation of any zoning, building or
other restriction relating to the use of the Owned Property and
all certificates, permits, licenses and other authorizations of
governmental bodies or authorities which are necessary to permit
the use and occupancy of the Owned Property for its current
operations have been obtained by Seller, have not been violated
or breached, and are in full force and effect.
(b) The Leased Property is described in Schedule
3.7(b). Except as set forth in Schedule 3.7(b) and except for
any matters that would not impair the continued use of the Leased
Property in the ordinary course of the Business, Seller is not in
default under any lease for Leased Property, and, with respect to
Seller, there is no default or event of default or set of facts
which has occurred which, with notice or lapse of time or both,
would constitute a default and the Leased Property is zoned to
permit its present use, there is no record of any violation of
any zoning, building or other restriction relating to the use of
the Leased Property and all certificates, permits, licenses and
other authorizations of governmental bodies or authorities which
are necessary to permit the use and occupancy of the Leased
Property for its current operations have been obtained by Seller,
have not been violated or breached, and are in full force and
effect.
4.8 EQUIPMENT. Schedule 3.8 sets forth a true and complete
list of all the material equipment, furniture and fixtures owned
by MIC and Seller (relating to Systems
<PAGE>
and MIL) as of May 31, 1995 (the "Equipment"). Except as set
forth in Schedule 3.8 and except for any encumbrance that would
not impair the continued use of the Equipment in the ordinary
course of the Business, MIC or Seller has good and marketable
title to the Equipment, free and clear of all mortgages, liens,
charges, security interests and any other encumbrances. Each of
MIC or Seller has the right to make or cause to be made all
transfers of the Equipment as required under this Agreement and
at the Closing will have transferred all of its right, title and
interest in and to the Equipment in accordance with the
provisions hereof. No one other than MIC or Seller has any
right, title or interest, in or to the Equipment.
4.9. CONTRACTS. Schedule 3.9 sets forth a true and complete
list of the material contracts related to the Business as of May
31, 1995 (the "Contracts"). Except as set forth in Schedule 3.9,
each of the Contracts is in full force and effect and MIC or
Seller is entitled to the full benefit and advantage of each such
Contract in accordance with the terms thereof. Except as
disclosed on Schedule 3.9, each Contract is in full force and
effect and there has not been any material default by any party
thereunder nor any dispute between Seller and any party
thereunder. Except as disclosed on Schedule 3.9, no Contract
requires the consent from or delivery of notice to any person in
connection with the transactions contemplated hereby and the
rights of Seller and MIC under the Contracts are assignable to
Buyer and upon assignment Buyer shall be entitled to the full
right, title and benefit under each Contract.
4.10 INTANGIBLE PROPERTY. Schedule 3.10 sets forth as of
May 31, 1995, all patents, trademarks, copyrights, service marks
and trade names, all applications for any of the foregoing, and
all permits, grants and licenses or other rights running to or
from Seller or MIC relating to any of the foregoing that are
material to the Business (collectively, "Patents and
Trademarks"). Except as set forth on Schedule 3.10, Seller or
MIC has the right to use, free and clear of any claims or rights
of others, all trade secrets, inventions, know how, processes,
logos and technology, designs utilized in or incident to the
conduct of the Business ("Trade Secrets"). Except as set forth
on Schedule 3.10, Seller or MIC does not have any notice that any
other person or entity
<PAGE>
disputes Seller's or MIC's ownership or right to use any Patents
and Trademarks and/or Trade Secrets, or notice of any claim of
any other person or entity relating to any of the Patents and
Trademarks or any of the Trade Secrets, and neither the Seller
nor MIC knows of any basis for any such dispute or claim. Except
as set forth on Schedule 3.10, neither the Seller nor MIC has any
knowledge that any person or entity has infringed upon the rights
of Seller and MIC with respect to any Patents and Trademarks or
Trade Secrets, and Seller and MIC have not infringed upon any
patent, copyright, trademark, trade secret or other intellectual
property right of any other person or entity.
4.11 LIABILITIES. As of May 31, 1995, neither Seller nor
MIC has any indebtedness, liability, claim or loss, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise relating to the Business, of a kind required by
generally accepted accounting principles to be set forth on a
financial statement or in the notes thereto ("Liabilities") that
were not fully and adequately reflected or reserved against on
the Balance Sheets or described on any Schedule hereto. Except
as set forth on Schedule 3.11, Seller and MIC have not, except in
the ordinary course of business, incurred any Liabilities since
May 31, 1995.
4.12 SUPPLIERS AND CUSTOMERS. Schedule 3.12 lists the five
largest suppliers and ten largest customers of the Business
during the fiscal year ending December 31, 1994. Except as set
forth on Schedule 3.12, to Seller's knowledge no such supplier or
customer has cancelled or otherwise terminated, or threatened to
cancel or otherwise terminate, its relationship with MIC or
Seller or has during the last 12 months decreased materially, or
threatened to decrease or limit its services, supplies or
materials to MIC or Seller or its usage or purchase of services
or products of MIC or Systems and MIL, as the case may be.
Seller has no knowledge that any such supplier or customer
intends to cancel or otherwise modify its relationship with MIC
or Seller or to decrease materially or limit its services,
supplies or materials to MIC or Seller or its usage or purchase
of services or products of the Business, and the contemplated
transactions will not materially adversely affect the
relationship of the Business with any such supplier or customer.
<PAGE>
4.13 TAXES. Seller has prepared in good faith and duly and
timely filed, or caused to be duly and timely filed, all federal,
state, local and foreign income, franchise, sales and other tax
returns or reports required to be filed by it on or before the
date hereof, except where the failure to file would not have a
Material Adverse Effect on the Business. Seller has paid, or has
made adequate provision or set up an adequate accrual or reserve
for the payment of all taxes, interest and penalties shown to be
owing on all such returns or reports with respect to the
Business. Except as set forth in Schedule 3.13 none of SCLI, MIC
or Seller are not a party to any action or proceeding, nor is any
such action or proceeding threatened, by any Governmental Entity
for the assessment or collection of any taxes with respect to the
Business, and no deficiency notices or reports have been received
by SCLI, MIC or Seller in respect of any material deficiencies
for any tax, assessment, or government charges with respect to
the Business. SCLI, MIC or Seller has paid, or has made adequate
provision or set up an adequate accrual or reserve for the
payment of, all taxes, interest, additions to tax, and penalties
due with respect to completed and settled examinations or
concluded litigation relating to the Business. None of SCLI, MIC
or Seller has executed an extension or waiver of any statute of
limitations on the assessment or collection of any tax due that
would have a Material Adverse Effect on the Business, which
extension or waiver is still in effect.
4.14 EMPLOYEE PLANS. Except as set forth on Schedule 3.14,
SCLI, MIC or Seller has no employee benefit, welfare, bonus,
deferred compensation, pension, profit sharing, stock option,
employee stock ownership, consulting, severance, or fringe
benefit plans, formal or informal, written or oral and all trust
agreements related thereto, relating to any present or former
directors, officers or employees of the Business.
4.15 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on Schedule 3.15, since January 1, 1995, each of SCLI, MIC
and Systems and MIL has conducted the Business only in the
ordinary course and there has not been any change in the
financial condition, results of operations or business of any of
them taken as a whole that has had or would have a Material
Adverse Effect on the Business.
<PAGE>
4.16 LITIGATION. Except as set forth in Schedule 3.16,
there is no legal, administrative, arbitral or other suit,
action, investigation or proceeding pending, or, to the knowledge
of Seller, threatened against or affecting SCLI, MIC or Seller
which is reasonably expected to result in a Material Adverse
Effect on the Business, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or
arbitrator, outstanding against SCLI, MIC or Seller having, or
which, insofar as reasonably can be foreseen, in the future would
have, any such Material Adverse Effect.
4.17 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth
on Schedule 3.17, the Business has not been, and is not being,
conducted in violation of any law, ordinance, regulation,
judgment, order, decree, license or permit of any Governmental
Entity, except for possible violations which in the aggregate do
not, and, insofar as reasonably can be foreseen, in the future
shall not, have a Material Adverse Effect on the Business.
Except as set forth in Schedule 3.17, no investigation or review
by any Governmental Entity with respect to SCLI, MIC or Seller is
pending or, to the knowledge of SCLI, MIC or Seller, threatened,
nor has any Governmental Entity indicated an intention to conduct
the same in each case other than those the outcome of which shall
not have a Material Adverse Effect on the Business.
4.18 FEES. None of SCLI, MIC or Seller has paid or become
obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated by
this Agreement.
4.19 SELLER CORPORATE ACTION. The Board of Directors of
Seller has by the requisite vote of all directors present
approved this Agreement and, subject to the fulfillment or waiver
at or prior to the Closing Date of the conditions set forth in
Sections 6.1 and 6.3, the transactions contemplated hereby.
4.20 ENVIRONMENTAL MATTERS. (a) For purposes of this
Section 4.20, the following terms shall have the indicated
meaning:
"Seller Real Property" means all real property
presently or formerly owned or operated by SCLI, MIC or
Seller that is related to the Business and on which
facilities are or were located and all real property
(including property held as
<PAGE>
trustee or in any other fiduciary capacity) over which Seller
currently or formerly has exercised dominion, management or
control.
(b) Except as set forth on Schedule 3.20 or as would
not individually or in the aggregate have a Material Adverse
Effect on the Business,
(i) each of SCLI, MIC and Seller is and has
been in compliance with all applicable Environmental
Laws,
(ii) the Seller Real Property does not contain
any Hazardous Substance in violation of any applicable
Environmental Law,
(iii) None of SCLI, MIC or Seller has received
any written notices, demand letters or written requests
for information from any Governmental Entity or any
third party indicating that SCLI, MIC or Seller may be
in violation of, or liable under, any Environmental
Law,
(iv) there are no civil, criminal or
administrative actions, suits, demands, claims,
hearings, investigations or proceedings pending or
threatened against MIC, MIL or Seller with respect to
any of them or the Seller Real Property relating to any
violation, or alleged violation, of any Environmental
Law,
(v) no reports have been filed, or are
required to be filed, by MIC, MIL or Seller concerning
the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law
on or at the Seller Real Property,
(vi) to the knowledge of Seller, there are no
underground storage tanks on, in or under any of the
Seller Real Property and no underground storage tanks
have been closed or removed from any Seller Real
Property while such Seller Real Property was owned or
operated by any of SCLI, MIC or Seller, and
(vii) to the knowledge of Seller, none of SCLI,
MIC or Seller has incurred, and none of the Seller Real
Property is presently subject to, any liabilities
(fixed or, to the knowledge of Seller, contingent)
relating to any
<PAGE>
suit, settlement, court order, administrative order, judgment or
claim asserted or arising under any Environmental Law.
(c) For purposes of this Section 4.20 "to the
knowledge of Seller" shall mean to the knowledge of Messrs. J.
Harry Dunstan, Marvin Marstall, David O'Kell and Michael St. Eve.
(d) There are no permits or licenses required under
any Environmental Law in respect of the Seller Real Property.
(e) None of SCLI, MIC or Seller has received written
notice that any part of the Seller Real Property has been or is
listed as a site containing Hazardous Substances pursuant to any
Environmental Law.
4.21 LABOR RELATIONS. None of SCLI, MIC or Seller is a
party to or bound by any collective bargaining agreement
respecting its employees employed in the Business, nor is there
pending, or to the best knowledge of Seller threatened, any
strike, walkout or other work stoppage or labor organizational
effort related to the Business.
4.22 PRODUCT WARRANTY. Liability arising after the Closing
for claims for replacement, repair or refunds of products sold by
MIC and MIL between January 1, 1993 and the Closing in connection
with applicable contractual commitments or express or implied
warranties does not exceed, in the aggregate, the reserves set
forth in the Balance Sheets (less the amount of liability
incurred by MIC and MIL prior to the Closing for claims for
replacement, repair or refunds or products sold during such
period). Except as set forth on Schedule 3.22, and other than
statutory warranties where the breach thereof would not have a
Material Adverse Effect on the Business, no product manufactured,
sold, licensed, leased or delivered by MIC or MIL is subject to
any guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Schedule 3.22
includes copies of such standard terms and conditions for sale or
lease for MIC (containing applicable guaranty, warranty and
indemnity provisions).
<PAGE>
4.23 PRODUCT LIABILITY. Except as set forth on Schedule
3.23, since January 1, 1993, none of SCLI, MIC or Seller has been
subject to any claim or liability with respect to any product
manufactured or distributed by it that would have a Material
Adverse Effect on the Business.
4.24 DELIVERY OF SELLER'S DISCLOSURE SCHEDULES. Seller
shall deliver to Buyer, within 30 days after the date of this
Agreement, Schedule 3 containing the information referred to in
this Section 4 ("Schedule 3"). Buyer shall have 10 days after
receipt of Schedule 3 from Seller within which to complete its
review and verification of disclosures included therein. During
such 10-day period, Seller and Buyer shall use their best efforts
to resolve any questions and disputes that may develop regarding
the accuracy or adequacy of Schedule 3. In the event that Buyer
is not reasonably satisfied with Schedule 3 or any disputes have
not been resolved at the end of such 10-day period, Buyer may
terminate this Agreement pursuant to Section 7.1 hereof.
5. COVENANTS.
5.1 VOTING IN FAVOR OF TRANSACTION. Subject to obtaining
any required approval by its shareholders, Seller agrees to vote
its shares of Common Stock of Buyer to approve the transactions
contemplated by this Agreement. Buyer agrees to use its best
efforts to obtain from Roamer One Holdings, Inc., as soon as
practicable after the date hereof, its written agreement to vote
its shares of Common stock of Buyer to approve the transactions
contemplated by this Agreement.
5.2 INTERIM OPERATIONS. During the period from the date of
this Agreement to the Closing Date, except as expressly provided
in this Agreement, as required by law, or as otherwise approved
in writing and in either advance by Buyer or Seller, as
appropriate (which approval shall not be unreasonably withheld):
5.2.1 CONDUCT OF BUSINESS. Except for the
amalgamation of MIL with Seller and except as described in
Schedule 3.5.2.1, each of SCLI, MIC, Systems and MIL and Buyer
shall conduct its business only in, and not take any action
except in, the ordinary course of business. Each of SCLI, MIC,
Systems and MIL and Buyer shall use reasonable efforts to
preserve intact the business organization of each, to keep
<PAGE>
available the services of its and their present key officers and
employees and to preserve the goodwill of those having business
relationships with each.
5.2.2 ARTICLES OF INCORPORATION AND REGULATIONS.
Except as contemplated by this Agreement, none of SCLI, MIC or
Buyer shall make any change or amendment to its Certificate of
Incorporation or Bylaws.
5.2.3 CAPITAL STOCK: OPTIONS. Except as may be
permitted under existing agreements, plans and commitments and
except for a proposed private placement of not more than the
greater of 1,000,000 shares or $10,000,000 in value of Buyer's
securities, none of SCLI, MIC, or Buyer shall issue or sell any
shares of capital stock or any other securities or issue any
subscriptions, options, warrants, rights, convertible securities
or enter into any agreements or commitments of any character
relating to their issued or unissued capital stock or other
securities obligating any of them to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of their
capital stock or obligating any of them to grant, extend or enter
into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment or enter into
any arrangement or contract with respect to the purchase or
voting of shares of their capital stock, or adjust, split,
combine or reclassify any of their capital stock or other
securities or make any other changes in their capital structures;
nor shall any of them grant options under any incentive stock
option plan.
5.2.4 DIVIDENDS. None of SCLI, MIC or Buyer shall
declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with
respect to, or purchase or redeem, any shares of their capital
stock.
5.2.5 EMPLOYEE PLANS, COMPENSATION. ETC. Except as
set forth on Schedule 3.5.2.5 or except as required by law, none
of SCLI, MIC, Seller (with respect to the employees of Systems
and MIL) or Buyer (except for the employment of any new employee
whose annual base compensation does not exceed $50,000) shall
adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds, employee stock ownership,
consulting, severance or
<PAGE>
fringe benefit plan, formal or informal, written or oral, or
other arrangements for the benefit or welfare of any director,
officer or employee, or (except for increases in the ordinary
course of business) increase the compensation or fringe benefits
of any director, officer or employee or pay any benefit not
required by any existing plan or arrangement or take any action
or grant any benefit not required under the terms of any existing
agreements, trusts, plans, funds or other such arrangements or
enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
5.3 ACCESS AND INFORMATION. Upon reasonable notice, each
of SCLI, MIC, Seller (only with respect to the Business) and
Buyer shall afford to the others and their representatives
(including, without limitation, directors, officers and employees
of the other party hereto and its affiliates, and counsel,
accountants and other professionals retained by it) such access
during normal business hours throughout the period prior to the
Closing Date to the books, records (including, without
limitation, tax returns and work papers of independent auditors),
properties, personnel and to such other information as each of
them reasonably requests; provided, however, that none of them
shall be required to provide access to any such information if
the providing of such access (i) would violate a binding
contractual obligation, (ii) would, as advised by outside
counsel, be reasonably likely to result in the loss or impairment
of any privilege with respect to such information or (iii) would
be precluded by any law, ordinance, regulation, judgment, order,
decree, license or permit of any Governmental Entity.
5.4 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Buyer and
Seller shall (a) promptly file all applications and reports
required to be filed with the Governmental Entities between the
date of this Agreement and the Closing Date with respect to the
transactions contemplated by this Agreement, (b) cooperate with
one another (i) in promptly determining whether any other filings
are required to be made or consents, approvals, permits or
authorizations are required to be obtained under any other
applicable federal, state or foreign law or regulation and (ii)
in promptly making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any
such consents, approvals, permits or authorizations and (c)
subject to the
<PAGE>
qualifications set forth in the proviso in Section 5.4, deliver
to the other parties to this Agreement copies of all such reports
and filings promptly after they are filed.
5.5 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of Buyer and Seller agrees to
use its best efforts to take promptly, or cause to be taken, all
actions and to do promptly, or cause to be done, all things
required hereunder or necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using
its best efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable
Governmental Entities, effecting all necessary filings
(including, without limitation, making all filings under any
securities laws) and obtaining any required contractual consents.
If, at any time after the Closing Date, the Buyer considers or is
advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in the Buyer its right,
title or interest in, to or under any of the rights, properties
or assets acquired or to be acquired by the Buyer as a result of,
or in connection with the transactions contemplated by this
Agreement or otherwise to carry out the purposes of this
Agreement, the officers and directors of SCLI, MIC and Seller
shall be authorized to execute and deliver all such deeds, bills
of sale, assignments and assurances and to take and do all such
other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Buyer
or otherwise to carry out the purposes of this Agreement.
5.6 PUBLICITY. The initial press release announcing this
Agreement shall be a joint press release, and thereafter Seller
and Buyer shall each provide prior written notice to the other
party with respect to any statements about the financial effects
of the transaction to analysts and before (i) issuing any press
releases or otherwise making public statements with respect to
the transactions contemplated hereby, or (ii) making
<PAGE>
any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
5.7 PROXY STATEMENT. As soon as practicable after the date
hereof, Buyer and Seller shall cooperate to prepare the Buyer
Registration/Proxy Statement, file it with the Commission,
respond to comments of the Staff of the Commission (except for
matters that would create an unreasonable burden on either Buyer
or Seller), clear the Buyer Registration/Proxy Statement with the
Staff of the Commission, and promptly thereafter Buyer shall mail
the Buyer Registration/Proxy Statement to all holders of Buyer
Common Stock. Such Buyer Registration/Proxy Statement shall
comply in all material respects with the 1933 Act and regulations
thereunder and the Proxy Rules under Section 14 of the Exchange
Act. All costs and expenses incurred in connection with the
preparation of the Buyer Registration/Proxy Statement shall be
paid by Buyer (including accounting fees and expense of Seller up
to $25,000), except that Seller shall pay all of its legal fees
and expenses in connection with the Buyer Registration/Proxy
Statement. Buyer or Seller shall instruct, and shall use all
reasonable efforts to cause their respective accountants, to
deliver to the Seller or Buyer, as the case may be, a letter
dated at the time the Buyer Registration/Proxy Statement becomes
effective, addressed to such party, containing such matters as
are required in accordance with F.A.S. No. 72 and deliver a
letter dated as of the Closing Date bringing down the matters
contained in such letter.
5.8 SHAREHOLDERS' MEETINGS.
(a) Buyer shall take all action necessary, in
accordance with applicable law and its Certificate of
Incorporation and By-Laws, to convene a special meeting of the
holders of shares of Common Stock (the "Buyer Meeting") as
promptly as practicable for the purpose of considering and taking
action upon the transactions contemplated by this Agreement which
are submitted for the approval of Buyer's stockholders.
(b) The Special Committee and Board of Directors of
Buyer shall recommend that the holders of such shares vote in
favor of and approve (i) this
<PAGE>
Agreement and (ii) an amendment of the Certificate of
Incorporation of Buyer to increase the authorized shares of Buyer
Common Stock to Sixty Million (60,000,000) (or such smaller
number as Buyer and Seller may agree to) at the Buyer Meeting;
provided, however, that such recommendation may be withdrawn,
modified or amended to the extent the Board of Directors of Buyer
deems it necessary, upon advice of outside counsel, in the
exercise of its fiduciary obligations under applicable law, in
which event the Board of Directors of Buyer shall not be
obligated to submit the Agreement for consideration by Buyer's
stockholders, and shall immediately notify Seller of such
determination.
5.9 SELLER'S REPRESENTATION LETTER. Unless the Shares are
registered under the 1933 Act, prior to the Closing Date, Seller
shall execute and deliver a written representation letter (a
"Shareholder Representation Letter") with respect to the Buyer
Common Stock to be delivered to Seller pursuant to this Agreement
providing that:
(a) Seller agrees that it shall not sell, transfer,
assign, pledge or otherwise dispose of the Buyer Common
Stock unless such sale, transfer, assignment, pledge or
other disposition has been registered or is exempt under the
Securities Act of 1933, as amended (the "Securities Act")
and has been registered or qualified or is exempt from
registration or qualification under applicable securities
laws and Seller provides to Buyer an opinion of counsel
satisfactory to Buyer that a sale, transfer, assignment,
pledge or other disposition of such Buyer Common Stock may
be made without registration.
(b) Seller represents as follows:
(i) The Buyer Common Stock to be acquired by
Seller will be acquired for Seller's own account and
not with a view to, or present intention of,
distribution thereof in violation of the Securities
Act, or any applicable state securities laws and will
not be disposed of in contravention of the Securities
Act or any applicable state securities laws;
<PAGE>
(ii) Seller is sophisticated in financial
matters and is able to evaluate the risks and benefits
of the investment in the Buyer Common Stock;
(iii) Seller has had an opportunity to ask
questions and receive answers concerning the terms and
conditions of the acquisition of Buyer Common Stock and
has had full access to such other information
concerning Buyer as Seller has requested; and
(iv) Seller is able to bear the economic risk
of any investment in the Buyer Common Stock for an
indefinite period of time because the Buyer Common
Stock has not been registered under the Securities Act
and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption
from such registration is available.
(c) Seller acknowledges that until such time as the
Buyer Common Stock has been registered for resale pursuant to the
Securities Act, each certificate representing the Buyer Common
Stock shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE FIRST BEEN
REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE CORPORATION SHALL
HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF,
EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO
THE CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS,
AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION).
(d) Seller acknowledges that Buyer may place stop
transfer orders against the registration or transfer of any Buyer
Common Stock until such time as the requirements of the foregoing
legend are satisfied.
<PAGE>
(e) Seller acknowledges that the legend described in
(c) hereof and any stop transfer instructions issued pursuant to
(c) hereof shall be removed promptly and Buyer shall issue
promptly a new certificate to Seller of such Buyer Common Stock
if the sale of such Buyer Common Stock has been registered under
the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available or if Seller
provides to Buyer an opinion of counsel satisfactory to Buyer
that a public sale, transfer or assignment of such Buyer Common
Stock may be made without registration.
5.10 FAIRNESS OPINION. Buyer shall enter into an engagement
with an investment banking firm to provide an fairness opinion,
and SCLI, MIC, Seller and Buyer shall provide such appraisal firm
with all information and material necessary for such firm to
complete and deliver such fairness opinion in a timely manner.
The cost of such fairness opinion shall be borne by Buyer.
5.11 REGISTRATION RIGHTS AGREEMENT. Buyer and Seller shall
use their best efforts to amend the Registration Rights
Agreement, dated as of September 23, 1994, as amended, to (a)
include the Shares to be issued to Seller as "Registrable
Securities" (notwithstanding the registration of the Shares under
the Buyer Registration/Proxy Statement) and (b) to the extent
that the shareholders are restricted by the managing underwriter
from selling all Registrable Shares requested by them, limit the
number of Shares that may be included in any piggy-back
registration to 35% of the total number of shares of Buyer when
all shareholders of Buyer who have registration rights
participate in any such piggy-back registration, and in any
demand registration, to 50% of the total number of shares of
Buyer when all shareholders of Buyer who have registration rights
participate in any such demand registration, provided, however,
that when fewer than all shareholders who have registration
rights participate in any such piggy-back or demand registration,
as the case may be, such percentages shall be increased on a pro
rata basis to reflect the pro rata division of the interests of
the non-participating shareholders.
<PAGE>
5.12 EMPLOYEES OF THE BUSINESS. As of and after the Closing
Date, Buyer shall employ all active employees of the Seller
employed in the Business that are not former or retired employees
at substantially equivalent salaries, wages and employee benefits
(including bonus, commission and sales incentive programs) and on
substantially the same terms and conditions as those in effect
immediately prior to the Closing Date. Buyer shall assume all
obligations of Seller under all individual agreements (including,
but not limited to, employment and consulting and severance
agreements) with any employee which relate to employment or
compensation or benefits. Notwithstanding the foregoing and
subject to the other provisions of this Section, at any time and
from time to time on or after the Closing Date, Buyer shall have
the right to alter, amend or otherwise change the terms and
conditions of employment of any employee and Buyer further
reserves the right to terminate any employee at any time on or
after the Closing Date; provided, however, that Buyer shall
indemnify Seller and hold it harmless from and against any losses
which may be incurred or suffered by it by reason of any such
alteration, amendment or change, or termination of employment.
5.13 SALE OF SHARES OF SCLI. Notwithstanding anything to
the contrary that may be contained herein, Seller may at any time
prior to the Closing Date transfer any of its shares of Common
Stock of SCLI to a third party provided that such third party
complies with the Seller's obligations under this Agreement to
deliver to Buyer such shares of Common Stock of SCLI, in return
for which Buyer shall transfer a portion of the Shares specified
in Section 2.2, which portion shall be designated by Seller, to
such third party.
6. CONDITIONS.
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CLOSE. The
respective obligations of each party to close the transactions
contemplated by this Agreement shall be subject to the
fulfillment at or prior to the Closing Date of the following
conditions:
<PAGE>
(a) The amendment to the Certificate of Incorporation
of Buyer authorizing additional shares of Buyer Common Stock
shall have been approved and adopted by the requisite votes of
the holders of the Buyer Common Stock.
(b) All authorizations, consents, orders or approvals
of, and all expirations of waiting periods imposed by, any
Governmental Entity or other third party (collectively,
"Consents") which are necessary for the consummation of the
transactions contemplated by this Agreement (other than
immaterial Consents, the failure to obtain which would not have a
Material Adverse Effect on the Business) shall have been obtained
or shall have occurred and shall be in full force and effect at
the Closing Date.
(c) No temporary restraining order, preliminary or
permanent injunction or other order by any federal or state court
in the United States which prevents the consummation of the
transactions contemplated by this Agreement shall have been
issued and remain in effect.
6.2 CONDITIONS TO OBLIGATION OF SELLER TO CLOSE. The
obligation of Seller to close the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver at
or prior to the Closing Date of the additional following
conditions:
(a) Buyer shall have performed in all material
respects its covenants contained in this Agreement required to be
performed at or prior to the Closing Date.
(b) The representations and warranties of Buyer
contained in this Agreement shall be true in all material
respects when made, and as of the Closing Date as if made at and
as of such time, except as expressly contemplated or permitted by
this Agreement and except for representations and warranties
relating to a time or times other than the Closing Date which
were or shall be true in all material respects at such time or
times.
(c) Buyer shall have furnished Seller a Certificate
dated the date of the Closing, signed by the President or Chief
Executive Officer and the Chief Financial Officer of Buyer that,
to the best of their knowledge and relief after due inquiry, the
conditions set forth in Sections 6.2(a) and 6.2(b) have been
satisfied.
<PAGE>
(d) Buyer shall have delivered to Seller an opinion of
Kohrman Jackson & Krantz, counsel to Buyer, substantially in a
form reasonably satisfactory to Seller.
(e) The Agreement shall have been approved and adopted
by the requisite vote of the shareholders of Seller.
6.3 CONDITIONS TO OBLIGATION OF BUYER TO CLOSE. The
obligation of Buyer to close the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver at
or prior to the Closing Date of the additional following
conditions:
(a) Seller shall have performed in all material
respects its covenants contained in this Agreement required to be
performed at or prior to the Closing Date.
(b) The representations and warranties of Seller
contained in this Agreement shall be true in all material
respects when made and as of the Closing Date as if made at and
as of such time, except as expressly contemplated or permitted by
this Agreement and except for representations and warranties
relating to a time or times other than the Closing Date which
were or shall be true in all material respects at such time or
times.
(c) Seller shall have furnished Buyer a Certificate
dated the date of the Closing, signed by the President or Chief
Executive Officer and the Chief Financial Officer of each that,
to the best of their knowledge and belief after due inquiry, the
conditions set forth in Sections 6.3(a) and (b) have been
satisfied.
(d) Buyer shall have obtained a fairness opinion from
an investment banking firm, reasonably satisfactory in form and
substance to Buyer, to the effect that the exchange of Shares for
the shares of SCLI and the Assets is fair to the public
shareholders of Buyer from a financial point of view.
(e) Seller shall have delivered to Buyer an opinion of
Jones, Day, Reavis & Pogue, counsel to MIC, MIL and Seller, in a
form reasonably satisfactory to Buyer.
<PAGE>
(f) Buyer shall have obtained opinion(s) from Canadian
legal counsel in form and substance reasonably satisfactory to it
with respect to the Canadian tax and other legal effects of the
transactions contemplated by this Agreement.
(g) Completion by Buyer by September 30, 1995, of the
construction, in accordance with FCC requirements, of not fewer
than 130 SMR (200 to 222 megahertz) systems for which Roamer One,
Inc. has management agreements, provided that Buyer has used its
best efforts to complete such construction.
7. MISCELLANEOUS.
7.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval
by the shareholders of Buyer and/or the stockholders of Seller:
<PAGE>
(a) by mutual consent of the Board of Directors of
Buyer and the Board of Directors of Seller;
(b) by either Buyer or Seller if the transactions
shall not have been consummated on or before October 30, 1995
(provided the terminating party is not otherwise in material
breach of its obligations under this Agreement);
(c) by Buyer or Seller, if its Board of Directors so
determines by vote of a majority of the members of its entire
Board, in the event of (i) a breach by the other party of any
representation or warranty contained herein, which breach has not
been cured within thirty (30) days after the giving of written
notice to the breaching party of such breach and which breaches,
individually or in the aggregate, would cause the conditions set
forth in Section 6.2(b) or 6.3(b), as the case may be, not to be
met if the date of the Board action described above were the date
of the Closing or (ii) a material breach by the other party of
any of the covenants or agreements contained herein, which breach
has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach;
(d) by Seller if any of the conditions specified in
Sections 6.1 and 6.2 have not been met or waived by Seller at
such time as such condition can no longer be satisfied;
(e) by Buyer if any of the conditions specified in
Sections 6.1 and 6.3 have not been met or waived by Buyer at such
time as such condition can no longer be satisfied;
(f) by Seller, if (either before or after its approval
by the stockholders of Seller) its Board of Directors so
determines by a vote of a majority of the members of its entire
Board, if the Buyer Common Stock is delisted from the NASDAQ
Small-Cap Market;
(g) by Buyer, if the Balance Sheet Schedules referred
to in Section 1.5 hereof are not reasonably satisfactory to
Buyer, subject to the terms and conditions of such Section;
<PAGE>
(h) by Seller, if the Buyer's Disclosure Schedules
referred to in Section 3.21 are not reasonably satisfactory to
Seller, subject to the terms and conditions of such Section; or
(i) by Buyer, if Seller's Disclosure Schedules
referred to in Section 4.24 are not reasonably satisfactory to
Buyer, subject to the terms and conditions of such Section.
7.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall
forthwith become void and, except for a termination resulting
from a breach by a party of this Agreement, there shall be no
liability on the part of either Buyer or Seller or their
respective officers and directors.
7.3 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and covenants in
this Agreement shall terminate at the Closing Date or the earlier
termination of this Agreement pursuant to Section 7.1, as the
case may be; provided, however, that Section 7.11 hereof shall in
all events survive any termination of this Agreement.
7.4 WAIVER AND AMENDMENT. Any provision of this Agreement
may be waived at any time by the party which is, or whose
shareholders are, entitled to the benefits thereof, and this
Agreement may be amended or supplemented at any time. No such
waiver, amendment or supplement shall be effective unless in a
writing which makes express reference to this Section 7.4 and is
signed by the party or parties sought to be bound thereby.
7.5 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between Buyer and Seller with respect to the
transactions contemplated hereby, and supersedes all prior
agreements among the parties with respect to such matters.
7.6 APPLICABLE LAW; CONSENT TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
7.7 CERTAIN DEFINITIONS; HEADINGS.
(a) For purposes of this Agreement the term:
<PAGE>
(i) "affiliate" shall have the meaning
ascribed to it in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act;
(ii) "control" (including the terms "controlled
by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction
of the management or policies of a person, whether
through the ownership of stock, as trustee or executor,
by contract or credit arrangement or otherwise;
(iii) "person" means an individual, corporation,
partnership, association, trust or unincorporated
organization; and
(iv) "Material Adverse Effect" on Seller, the
Business or Buyer, as the case may be, means a material
adverse effect (other than as a result of a change of
generally accepted accounting principles or as a result
of events or circumstances disclosed by Buyer or
Seller, as the case may be, in any Schedule to this
Agreement) that would (x) materially and adversely
affect (i) the ability of Seller or Buyer, as the case
may be, to consummate the transactions contemplated
hereby or (ii) the business or financial condition of
Seller, the Business or Buyer, as the case may be or
(y) substantially impair the results of operations, as
computed on an annual basis, of the Business or Buyer,
as the case may be, taken as a whole.
(v) "subsidiary" of the Seller or Buyer or any
other person means, except where the context otherwise
requires, any corporation, partnership, trust or
similar entity of which the Seller or Buyer or any
other person, as the case may be (either alone or
through or together with any other subsidiary), owns,
directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are
generally entitled to vote for the election of the
board of directors or other governing body of such
corporation.
<PAGE>
(vi) "upon advice of outside counsel" or any
similar phrase shall mean upon advice of outside
counsel, which advice shall be evidenced at least by a
resolution or other writing by or on behalf of Buyer or
Seller, as the case may be.
(b) The descriptive headings contained in this
Agreement are for convenience and reference only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(c) Unless the context of this Agreement expressly
indicates otherwise, (i) any singular term in this Agreement
shall include the plural and any plural term shall include the
singular and (ii) the term section or schedule shall mean a
section or schedule of or to this Agreement.
7.8 NOTICES. All notices, consents, requests, demands and
other communications hereunder shall be in writing and shall be
deemed to have been duly given or delivered if delivered
personally, telexed with receipt acknowledged, mailed by
registered or certified mail return receipt requested, sent by
facsimile with confirmation of receipt, or delivered by a
recognized commercial courier addressed as follows:
If to Seller to:
Simmonds Communications Ltd.
5255 Yonge Street, Suite 1050
Willowdale, Ontario M2N 6PA
Canada
Attention: John Simmonds
With copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue North Point
Cleveland, Ohio 44114
Attention: Mary Lynn Durham, Esq.
<PAGE>
If to Buyer to:
INTEK Diversified Corporation
970 West 190th Street, Suite 20
Torrance, California 90502
Attention: Harry Dunstan
With a copy to:
Kohrman Jackson & Krantz
One Cleveland Center, 20th Floor
Cleveland, OH 44114
Attention: Steven L. Wasserman, Esq.
H. Clark Harvey, Esq.
or to such other address as any party may have furnished to the
other parties in writing in accordance with this Section 7.8.
7.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original but all of which together shall constitute but one
agreement.
7.10 PARTIES IN INTEREST; ASSIGNMENT. This Agreement is not
intended to nor shall it confer upon any other person (other than
the parties hereto) any rights or remedies.
7.11 EXPENSES; DAMAGES.
(a) Subject to Section 5.7 hereof, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including but not limited to
attorneys' fees, shall be paid by the party incurring the same.
Neither party shall engage legal counsel on behalf of the other
without the prior written consent of the other.
(b) Notwithstanding anything contained in Section
7.11(a) to the contrary, if this Agreement is terminated by
Seller or Buyer pursuant to Section 7.1(c), Section 7.1(d) or
Section 7.1(e), respectively, because of the willful breach by
the other party of any representation, warranty, covenant,
undertaking or restriction contained in this Agreement and if the
terminating party is not in material breach of any
<PAGE>
representation, warranty, covenant, undertaking or restriction
contained in this Agreement, then the breaching party shall pay
all costs and expenses of the terminating party; provided,
however, that if this Agreement is terminated under circumstances
other than those described in the preceding clauses of this
Section 7.11(b), all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses.
Nothing contained in this Section 7.11(b) shall constitute or
shall be deemed to constitute liquidated damages for the willful
breach by a party of the terms of this Agreement or otherwise
limit the rights of the nonbreaching party.
(c) Final settlement with respect to payment of fees
and expenses by the parties to this Agreement pursuant to (b)
shall be made within thirty (30) days of the termination of this
Agreement.
7.12 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other terms and provisions
of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are
consummated to the extent possible.
[THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their
duly authorized representatives to execute this Agreement as of
the date first above written.
SIMMONDS COMMUNICATIONS LTD.
By____________________________
Its:__________________________
INTEK DIVERSIFIED CORPORATION
By____________________________
Its:__________________________
PAGE
<PAGE>
PURCHASE AGREEMENT
dated as
of June 30, 1995
by and between
INTEK DIVERSIFIED CORPORATION
and
SIMMONDS COMMUNICATIONS LTD.
PAGE
<PAGE>
TABLE OF CONTENTS
1. Structure of Transaction . . . . . . . . . . . . . . . . . . . . .1
1.1 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . .1
1.2 Sale and Purchase of Assets . . . . . . . . . . . . . . . . .2
1.3 Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . .4
1.4 Review of Schedule 1. . . . . . . . . . . . . . . . . . . . .5
1.5 Transfer and Assumption of Liabilities. . . . . . . . . . . .5
1.6 Debt to Seller. . . . . . . . . . . . . . . . . . . . . . . .5
1.7 Sales and Transfer Taxes and Fees . . . . . . . . . . . . . .6
1.8 Sale of Consumer Electronics Business . . . . . . . . . . . .6
2. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Payment of the Purchase Price . . . . . . . . . . . . . . . .6
2.3 Closing; Time and Place . . . . . . . . . . . . . . . . . . .7
3. Representations and Warranties of Buyer . . . . . . . . . . . . . .7
3.1 Corporate Organization. . . . . . . . . . . . . . . . . . . .7
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . .8
3.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . .9
3.5 Information in Disclosure Documents . . . . . . . . . . . . .9
3.6 Consents and Approvals; No Violation. . . . . . . . . . . . 10
3.7 Reports and Financial Statements. . . . . . . . . . . . . . 11
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Material Contracts. . . . . . . . . . . . . . . . . . . . . 13
3.11 Absence of Certain Changes or Events. . . . . . . . . . . . 14
3.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Compliance with Laws and Orders . . . . . . . . . . . . . . 15
3.14 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.15 Buyer Corporate Action. . . . . . . . . . . . . . . . . . . 15
3.16 Vote Required . . . . . . . . . . . . . . . . . . . . . . . 15
3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . 16
3.18 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . 19
3.20 Product Liability . . . . . . . . . . . . . . . . . . . . . 19
3.21 Delivery of Buyer's Disclosure Schedules. . . . . . . . . . 19
4. Representations and Warranties of Seller. . . . . . . . . . . . . 19
4.1 Corporate Organization. . . . . . . . . . . . . . . . . . . 19
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Information in Disclosure Documents . . . . . . . . . . . . 21
4.5 Consent and Approvals; No Violation . . . . . . . . . . . . 21
4.6 Reports and Financial Statements. . . . . . . . . . . . . . 22
4.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 Intangible Property . . . . . . . . . . . . . . . . . . . . 23
4.11 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 24
4.12 Suppliers and Customers . . . . . . . . . . . . . . . . . . 25
4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.14 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . 26
4.15 Absence of Certain Changes or Events. . . . . . . . . . . . 26
4.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 26
4.17 Compliance with Laws and Orders . . . . . . . . . . . . . . 26
4.18 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.19 Seller Corporate Action . . . . . . . . . . . . . . . . . . 27
4.20 Environmental Matters . . . . . . . . . . . . . . . . . . . 27
4.21 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 29
4.22 Product Warranty. . . . . . . . . . . . . . . . . . . . . . 29
4.23 Product Liability . . . . . . . . . . . . . . . . . . . . . 29
4.24 Delivery of Seller's Disclosure Schedules . . . . . . . . . 29
5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Voting in Favor of Transaction. . . . . . . . . . . . . . . 30
5.2 Interim Operations. . . . . . . . . . . . . . . . . . . . . 30
5.2.1 Conduct of Business. . . . . . . . . . . . . . . . . 30
5.2.2 Articles of Incorporation and Regulations. . . . . . 30
5.2.3 Capital Stock; Options . . . . . . . . . . . . . . . 30
5.2.4 Dividends. . . . . . . . . . . . . . . . . . . . . . 31
5.2.5 Employee Plans, Compensation, Etc. . . . . . . . . . 31
5.3 Access and Information. . . . . . . . . . . . . . . . . . . 32
5.4 Certain Filings, Consents and Arrangements. . . . . . . . . 32
5.5 Additional Agreements . . . . . . . . . . . . . . . . . . . 32
5.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.7 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . 33
5.8 Shareholders' Meetings. . . . . . . . . . . . . . . . . . . 34
5.9 Seller's Representation Letter. . . . . . . . . . . . . . . 35
5.10 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . 36
5.11 Registration Rights Agreement . . . . . . . . . . . . . . . 37
5.12 Employees of the Business . . . . . . . . . . . . . . . . . 37
5.13 Sale of Shares of SCLI. . . . . . . . . . . . . . . . . . . 38
6. Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Conditions to Each Party's Obligations to Close . . . . . . 38
6.2 Conditions to Obligation of Seller to Close . . . . . . . . 39
6.3 Conditions to Obligation of Buyer to Close. . . . . . . . . 39
7. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 42
7.3 Non-Survival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Waiver and Amendment. . . . . . . . . . . . . . . . . . . . 42
7.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 42
7.6 Applicable Law; Consent to Jurisdiction . . . . . . . . . . 42
7.7 Certain Definitions; Headings . . . . . . . . . . . . . . . 42
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 45
7.10 Parties in Interest; Assignment . . . . . . . . . . . . . . 45
7.11 Expenses; Damages . . . . . . . . . . . . . . . . . . . . . 45
7.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . 46
