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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. 3)
Intek Diversified Corporation
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(Name of Issuer)
Common Stock, $0.01 par value 458134 10 3
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(Title of class of securities) (CUSIP number)
Howard Chatzinoff, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
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(Name, address and telephone number of person authorized to receive
notices and communications)
November 1, 1996
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Note: When filing this statement in paper format, six copies of this
statement, including exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
(Continued on following page(s))
(Page 1 of 15 Pages)
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CUSIP No. 458134 10 3 13D Page 2 of 15
1 NAME OF REPORTING PERSON: Securicor International Limited
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United Kingdom
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 937,042
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 937,042
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 0
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 937,042
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.4%
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 458134 10 3 13D Page 3 of 15
1 NAME OF REPORTING PERSON: Security Services plc
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United Kingdom
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 937,042
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 937,042
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 0
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 937,042
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.4%
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 458134 10 3 13D Page 4 of 15
1 NAME OF REPORTING PERSON: Securicor Group plc
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United Kingdom
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 937,042
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 937,042
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 0
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 937,042
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.4%
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 458134 10 3 13D Page 5 of 15
1 NAME OF REPORTING PERSON: Securicor plc
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United Kingdom
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 937,042
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 937,042
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 0
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 937,042
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.4%
14 TYPE OF REPORTING PERSON: CO
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This amends and supplements the Statement on Schedule 13D filed with
the Securities and Exchange Commission (the "Commission") by Securicor
International Limited ("Securicor International") with respect to its
ownership of common stock, par value $.01 per share (the "Common
Stock"), of Intek Diversified Corporation (the "Issuer"). Unless
otherwise indicated, all capitalized terms used herein shall have the
meanings ascribed to them in the Schedule 13D.
Item 4. Purpose of the Transaction.
--------------------------
Item 4 is hereby amended and supplemented by the addition of the
following information:
Securicor Communications Limited ("Securicor Communications"), an
affiliate of the Corporations and a direct or indirect subsidiary of
each of the Security Services, Securicor Group and Securicor, entered
into a Stock Purchase Agreement (the "Original Stock Purchase
Agreement"), dated as of June 18, 1996, with the Issuer. On September
19, 1996, Securicor Communications and the Issuer entered into
Amendment No. 1 to Stock Purchase Agreement ("Amendment No. 1 to Stock
Purchase Agreement" and collectively with the Original Stock Purchase
Agreement, the "Stock Purchase Agreement"). If the transactions
contemplated by the Stock Purchase Agreement are consummated,
Securicor Communications will receive 25,000,000 shares of Common
Stock in exchange for all of the issued and outstanding securities
(other than certain preferred shares) of Securicor Radiocoms Limited
("Securicor Radiocoms"), a subsidiary of Securicor Communications.
Separately, the Issuer entered into a Sale of Assets and Trademark
License Agreement, dated as of June 18, 1996, with Simmonds Capital
Limited ("Simmonds Capital") and Midland International Corporation
("Midland"), an indirect wholly-owned subsidiary of Simmonds Capital,
which agreement was amended and restated pursuant to an Amended and
Restated Sale of Assets and Trademark Agreement, dated as of September
19, 1996 (the "Asset Sale Agreement"). On September 20, 1996 the
transactions contemplated by the Asset Sale Agreement were consummated
and the Issuer acquired the Acquired Assets (as defined in the Asset
Sale Agreement). Consequently, the closing condition contained in the
Stock Purchase Agreement regarding the consummation of the
transactions contemplated by the Asset Sale Agreement has been
satisfied. The purchase price for the Acquired Assets included up to
2,500,000 shares of Common Stock, cash consideration and the
assumption of certain liabilities. Midland received 150,000 shares of
Common Stock, and the Issuer issued 2,350,000 shares of Common Stock
to an escrow agent and deposited such shares into
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escrow pursuant to the terms of the Asset Sale Agreement and the
related escrow agreement. Until the consummation of the transactions
contemplated by the Stock Purchase Agreement (the "Securicor
Transaction"), Midland will not have title to, or voting rights with
respect to, or any right to encumber, any of the escrowed shares. The
escrowed shares will be released to Midland upon consummation of the
Securicor Transaction, or if Securicor Communications and the Issuer,
or their respective affiliates, enter into one or more transactions
within six months of the termination of the Stock Purchase Agreement
which, in the aggregate, convey majority control of the Issuer to
Securicor Communications, or its affiliates, upon the closing of such
transactions. The number of escrowed shares released to Midland is
subject to adjustments under certain circumstances.
The consummation of the Securicor Transaction is subject to numerous
contingencies and conditions that are not within the control of the
Corporations, including, among other things, (a) the approval of the
Issuer's shareholders, (b) the Issuer having a specified minimum
number of constructed Land Mobile Radio systems under management, (c)
Securicor Communications having received certain United Kingdom tax
clearances and (d) satisfaction or waiver of other conditions,
including the absence of a material adverse change in the parties'
respective businesses and the expiration or early termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act. Reference is hereby made to Article VII of the
Original Stock Purchase Agreement, filed as Exhibit (2) to Amendment
No. 2 to Schedule 13D, and to Section 1.13 of Amendment No. 1 to Stock
Purchase Agreement, attached as Exhibit (2) to this Amendment No. 3 to
Schedule 13D, with respect to the conditions to closing under the
Stock Purchase Agreement.
The closing of the transactions contemplated by the Stock Purchase
Agreement will result in the combination of the narrowband wireless
technology and manufacturing operations of Securicor Radiocoms with
the air time services business of Roamer One, Inc., a subsidiary of
the Issuer, and the U.S. Land Mobile Radio business previously owned
by Midland and acquired by the Issuer pursuant to the Asset Sale
Agreement. Upon the consummation of the Securicor Transaction, the
Reporting Persons and Securicor Communications will beneficially own
an aggregate of 25,937,042 shares of Common Stock, or approximately
63.7% of the 40,739,593 issued and outstanding shares of Common Stock
on a pro forma basis.
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Except as set forth herein, the Corporations have no present plans or
proposals which relate to or would result in any of the events
required to be disclosed under this Item 4.
Item 6. Contracts, Arrangements, Understandings or Relationships
--------------------------------------------------------
with Respect to Securities of the Issuer.
----------------------------------------
Item 6 is hereby amended and supplemented by the addition of the
following information:
There are no contracts, arrangements, understandings or relationships
with respect to any securities of the Issuer (i) among any of the
persons identified pursuant to Item 2 above, and (ii) between (a) any
of the persons identified pursuant to Item 2 and (b) any other person,
other than the following agreements:
On June 18, 1996, the Issuer and Securicor Communications entered into
the Original Stock Purchase Agreement, pursuant to which Securicor
Communications will acquire 25,000,000 shares of Common Stock in
exchange for all of the shares of Securicor Radiocoms (except certain
preferred shares). On September 19, 1996 the Issuer and Securicor
Communications entered into Amendment No. 1 to Stock Purchase
Agreement. Among other things, the Stock Purchase Agreement provides,
as a condition to closing, for the election to the Issuer's board of
directors of nominees designated by Securicor Communications and the
removal or resignation from such board of directors of such persons as
may be designated by Securicor Communications. See Item 4.
On June 18, 1996, the Issuer, Securicor Communications, Simmonds
Capital, Roamer One Holdings, Inc. and Securicor International entered
into a Voting Agreement. Such Voting Agreement was amended by
Amendment No. 1 thereto, dated as of November 1, 1996. As so amended,
the Voting Agreement provides that each party will vote, at any
meeting of the holders of the Common Stock until the termination of
the Stock Purchase Agreement in accordance with its terms, against any
action or agreement that would result in any breach of any covenant,
representation or warranty or any other obligation of the Issuer under
the Stock Purchase Agreement and, except as otherwise agreed to in
writing in advance by Securicor Communications, against any actions
that are prohibited pursuant to Section 6.2 of the Stock Purchase
Agreement or that are intended, or could reasonably be expected, to
impede, interfere with, delay, postpone, or materially, adversely
affect the transactions contemplated by the Voting Agreement and the
Stock Purchase Agreement. The parties to the Voting Agreement also
agreed, during the two-year period following the
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consummation of the transactions contemplated by the Stock Purchase
Agreement, to vote their respective shares in favour of one nominee to
the Issuer's board of directors to be designated by Roamer One
Holdings, Inc. In addition, the parties to the Voting Agreement who
are stockholders of the Issuer have agreed to provide limited proxies
to the Issuer, on or before October 30, 1996, so that all shares of
Common Stock held by them may be voted, with respect to all votes
relating to the Stock Purchase Agreement, the transactions
contemplated therein and the amendment to the Issuer's Restated
Certificate of Incorporation required thereby (each, a "Directed
Voting Proposal") as directed therein. With respect to any Directed
Voting Proposal, all such shares will be voted in the same manner as a
simple majority of the votes cast by stockholders who are not parties
to the Voting Agreement (but excluding abstentions and broker non-
votes).
On September 19, 1996, Midland, Simmonds Capital and the Issuer
entered into the Amended Sale and License Agreement whereby the
Issuer, though a wholly-owned subsidiary, Midland USA, Inc. ("MUSA"),
acquired immediately the U.S. LMR Distribution Business (the "Midland
Transaction").
Also on September 19, 1996, Securicor Communications and MUSA, a
wholly-owned subsidiary of the Issuer, entered into a Loan Agreement
(the "Loan Agreement"). Pursuant to the terms of the Loan Agreement,
Securicor Communications has agreed to extend to MUSA a line of credit
for an amount up to $15 million (the "Interim Loan"). As security for
the Interim Loan, MUSA has pledged all of its assets, and the Issuer
has pledged all of its shares in MUSA, to Securicor Communications.
In accordance with the terms of the Loan Agreement, MUSA may utilize
the proceeds under the Interim Loan solely for the operation of the
U.S. LMR Distribution Business, including the repayment to the Issuer
of certain advances made to key vendors of Midland for product
purchases to be received after August 1, 1996. Interest on the
advances under the Interim Loan accrues at the rate of eleven percent
(11%) per annum. Under the terms of the Interim Loan, and pursuant to
the Company Loan Assumption Agreement dated September 19, 1996 between
the Issuer, MUSA and Securicor Communications, upon consummation of
the Securicor Transaction, the Issuer has agreed to assume the
obligations outstanding under the Interim Loan and such obligations
shall become unsecured obligations outstanding under a Delayed
Drawdown Senior Subordinated Loan.
Reference is hereby made to the Original Stock Purchase Agreement and
the Voting Agreement filed as Exhibits (2) and (4), respectively, to
Amendment No. 2 to Schedule 13D, and to the Loan
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Agreement, Note, Pledge Agreement, Security Agreement and Amendment
No. 1 to Voting Agreement which are filed herewith as Exhibits (3),
(4), (5), (6), and (7) respectively.
Item 7. Material to be Filed as Exhibits.
--------------------------------
The following are filed herewith as exhibits to this
Schedule 13D:
(1) Press Release, dated September 20, 1996, of the Issuer, Simmonds
Capital and Securicor.
(2) Amendment No. 1 to Stock Purchase Agreement, dated September 19,
1996, between the Issuer and Securicor Communications.
(3) Loan Agreement, dated as of September 19, 1996, between MUSA and
Securicor Communications.
(4) Non-Recourse Guaranty and Pledge Agreement, dated as of September
19, 1996, between the Issuer and Securicor Communications.
(5) Revolving Credit Note, dated September 19, 1996, by MUSA.
(6) Security Agreement, dated September 19, 1996, by MUSA in favour
of Securicor Communications.
(7) Amendment No. 1 to Voting Agreement, dated as of November 1, 1996,
between the Issuer, Securicor Communications, Simmonds Capital,
Roamer One Holdings, Inc. and Securicor International.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
SECURICOR INTERNATIONAL LIMITED
Date: November 22, 1996 /s/ Nigel Griffiths
----------------------------
Signature
Nigel Griffiths/Director
----------------------------
Name/Title
11
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
SECURITY SERVICES PLC
Date: November 22, 1996 /s/ Nigel Griffiths
----------------------------
Signature
Nigel Griffiths/Director
----------------------------
Name/Title
12
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
SECURICOR GROUP PLC
Date: November 22, 1996 /s/ Nigel Griffiths
---------------------------
Signature
Nigel Griffiths/Director
----------------------------
Name/Title
13
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
SECURICOR PLC
Date: November 22, 1996 /s/ Nigel Griffiths
---------------------------------
Signature
Nigel Griffiths/Director
---------------------------------
Name/Title
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EXHIBIT INDEX
Exhibit No. Exhibit
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(1) Press Release, dated September 19, 1996, of the Issuer,
Simmonds Capital and Securicor.
(2) Amendment No. 1 to Stock Purchase Agreement, dated September
19, 1996, between the Issuer and Securicor Communications.
(3) Loan Agreement, dated as of September 19, 1996, between MUSA
and Securicor Communications.
(4) Non-Recourse Guaranty and Pledge Agreement, dated as of
September 19, 1996, between the Issuer and Securicor
Communications.
(5) Revolving Credit Note, dated September 19, 1996, by MUSA.
(6) Security Agreement, dated September 19, 1996, by MUSA in
favour of Securicor Communications.
(7) Amendment No. 1 to Voting Agreement, dated as of November 1,
1996, between the Issuer, Securicor Communications, Simmonds
Capital, Roamer One Holdings, Inc. and Securicor
International.
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NYFS01...:\73\73273\0003\5288\SCH6216L.28D
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EXHIBIT 1
NEWS RELEASE
INTEK ACQUIRES MIDLAND'S U.S. LAND MOBILE RADIO BUSINESS AND
ENTERS INTO $15 MILLION LOAN AGREEMENT WITH SECURICOR
LOS ANGELES, CALIFORNIA, TORONTO, ONTARIO AND LONDON, ENGLAND -
SEPTEMBER 20, 1996 - In a joint statement, Intek Diversified
Corporation ("Intek") of Los Angeles, California and Simmonds Capital
Limited ("SCL") of Toronto, Canada and Securicor Communications
Limited. ("Securicor") of Surrey, England today announced that Intek
has acquired the U.S. Land Mobile Radio business of Midland
International Corporation, a wholly owned subsidiary of SCL. Intek
has also obtained a $15 million loan facility from Securicor to
operate the business acquired from Midland. The business will be
opened through Midland USA, Inc., a wholly subsidiary of Intek.
This transaction completes the first part of the planned three-way
combination as previously announced on June 18, 1996, which would
combine Intek's Roamer One SMR airtime services business with the U.S.
Land Mobile Radio business of Midland and the Linear Modulation
wireless technology and manufacturing operations of Securicor
Radiocoms Limited ("Radiocoms"), a wholly owned subsidiary of
Securicor. Although at the time of the announcement of the
transactions, the parties had anticipated that all aspects of the
proposed merger would be completed simultaneously, they subsequently
agreed that it was necessary to obtain funding for Midland to maximize
existing business opportunities. To facilitate that funding the first
part of the combination was completed and Securicor agreed to extend
the loan, substantially as contemplated in the definitive agreements
signed on June 18th but directly to Midland USA, and earlier than the
closing date of the proposed combination. Midland USA has pledged its
assets, and Intek its ownership in Midland USA, as collateral for the
funds to be advanced by Securicor under the loan agreement.
Intek has acquired the U.S. Land Mobile Radio business of Midland, the
Midland trademark and the related contracts and goodwill of the
business for up to 2.5 million shares of Intek common stock plus cash
consideration for inventory and other assets which are used in the
business. Midland has received 150,000 common shares of Intek as a
result of the first closing and will receive from escrow, subject to
possible pricing adjustments, the additional 2,350,000 common shares
upon the completion of the acquisition by Intek of Radiocoms. Midland
USA is now operating at the former Midland facilities located in
Kansas City, Missouri and has retained all of the Midland employees.
With the acquisition of the Midland U.S. Land Mobile Radio business
completed, and funding secured, Intek will now proceed to complete and
file with the Securities and Exchange
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Commission a proxy statement for shareholder approval of the
previously announced Radiocoms acquisition. Upon completion of the
proposed Radiocoms acquisition, which would result in the issuance of
25 million Intek shares to Securicor, the loan will be amended to
provide working capital for all of the three wireless businesses to be
operated by Intek. In the event Intek fails to consummate the
Radiocoms transaction by December 31, 1996, Midland has been given,
subject to certain terms and conditions, an option to repurchase the
U.S. Land Mobile Radio business.
Intek Diversified Corporation is a publicly traded company listed on
the NASDAQ small cap exchange (symbol: "IDCC"). Through its wholly
owned subsidiary, Roamer One, Intek is developing a network of 220MHz
Specialized Mobile Radio systems in the United States.
Simmonds Capital Limited, Toronto, Ontario, is involved in the
wireless communications business as a systems integrator and in the
electronics business as a manufacturer and distributor of electronic
components and related products. SCL is listed on The Toronto Stock
Exchange (symbol: "SMM").
Securicor plc is a major UK international organization, with core
businesses in security services, parcel and freight distribution, and
fixed and mobile telecommunications. The telecommunications interests
include a 40% ownership in Cellnet, the major UK cellular operator
which currently has in excess of 2 million subscribers. Securicor's
shares are traded on the London Stock Exchange (symbol: "Securicor").
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The subject of this press release includes forward looking statements
concerning a contemplated transaction. The forward looking statements
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. There are many factors that
could cause the events in such forward looking statements to not
occur, including the inability of the parties to obtain regulatory or
shareholder approvals.
For further information contact:
INTEK
David Neibert
310-366-7703
SIMMONDS
Brian Faughnan
416-221-1900 #230
Securicor
Dr. Ed Hough
011-44-181-770-7000
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EXHIBIT 2
AMENDMENT NO. 1
----------------
TO STOCK PURCHASE AGREEMENT
----------------------------
THIS AMENDMENT NO. 1 ("Amendment No. 1"), dated as of
September 19, 1996, to that certain Stock Purchase Agreement, dated as
of June 18, 1996 (the "Agreement"), between Intek Diversified
Corporation, a Delaware corporation ("Purchaser"), and Securicor
Communications Limited, a corporation formed under the laws of England
and Wales ("Seller"), a wholly-owned indirect subsidiary of Securicor
plc and the sole shareholder of Securicor Radiocoms Limited, a
corporation formed under the laws of England and Wales ("Radiocoms").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser and Seller have entered into the
Agreement providing for Seller to sell to Purchaser, and Purchaser to
purchase from Seller, all of the ordinary shares, (pound)1.00 par value per
share, deferred shares, (pound)1.00 par value per share and ordinary
shares, $0.10 par value per share, of Radiocoms, for the purchase price and
upon the terms and conditions set forth in the Agreement;
WHEREAS, the consummation of the transactions contemplated
by the Agreement is a condition precedent to, and is conditioned upon,
the consummation of certain other transactions (the "Other
Transactions") pursuant to that certain Sale of Assets and Trademark
License Agreement, dated as of June 18, 1996 and as amended and
restated as of the date hereof (as so amended and restated, the
"Amended and Restated Midland Agreement"), by and among Purchaser,
Midland International Corporation, a Delaware corporation and a
wholly-owned indirect subsidiary of Simmonds Capital Limited, an
Ontario corporation ("Simmonds"), and Simmonds;
WHEREAS, Seller and Purchaser have determined that it is
mutually beneficial to amend the Agreement to provide for the
consummation of the Other Transactions prior to the consummation of
the transactions contemplated by the Agreement (the "Transactions")
and to make certain other changes as set forth therein, said amendment
to be in accordance with the terms and subject to the conditions set
forth in this Amendment No. 1; and
WHEREAS, capitalized terms used in this Amendment No. 1
without definition herein shall be deemed to have the meanings
ascribed to such terms in the Agreement.
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NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
ARTICLE I
1.1. Wherever in the Agreement (a) the term "Agreement"
appears it shall be deemed to refer to the Agreement as amended by
this Amendment No. 1, (b) the term "Midland Agreement" appears it
shall be deemed to refer to the Midland Agreement as amended and
restated in the Amended and Restated Midland Agreement and (c) the
term "Transactions" appears it shall be deemed to refer to the
transactions contemplated under the Agreement and not the transactions
contemplated under the Midland Agreement, which are referred to herein
as "Other Transactions", except in the case of each of the foregoing
where the context otherwise requires.
1.2. Section 4.6(b) of the Agreement is hereby amended by
deleting clause (ii) thereof in its entirety and such clause (ii) is
replaced with the following:
"(ii) for amendments to Seller's Schedule 13D filing with
respect to Purchaser to reflect the execution of this Agreement (or
any amendments hereto) and the consummation of the Transactions or the
Other Transactions, and"
1.3. Section 5.2(b) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(b) Assuming the accuracy of Seller's representation in
Section 4.27, the affirmative vote of the holders of a majority of the
outstanding shares of Purchaser Common Stock is the only vote of the
holders of any class or series of Purchaser's capital stock (under
applicable Law or otherwise) necessary to approve this Agreement, the
issuance of the Purchaser Shares or the Transactions, and no vote of
the holders of any class or series of Purchaser's capital stock (under
applicable Law or otherwise) is necessary to approve the Midland
Agreement or the Other Transactions."
1.4. Section 5.11(d) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
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"(d) Neither Purchaser nor any of its Subsidiaries has
issued any equity securities or any securities convertible into or
exchangeable for equity securities of Purchaser or any of its
Subsidiaries, except for the issuance of 2,500,000 shares of Purchaser
Common Stock in connection with the consummation of the Other
Transactions and the issuance of the option contemplated by the
Midland Agreement in respect of the capital stock of Midland USA, Inc.
("MUSA");"
1.5. Section 5.11(g) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(g) Neither Purchaser nor any of its Subsidiaries has
entered into any transaction or Contract or conducted its business
other than in the ordinary course consistent with past practice,
except for the consummation of the Other Transactions and in
connection with the Loan Agreement, dated the date hereof, by and
between MUSA and Seller (the "Loan Agreement") and the documents
thereunder to which MUSA or Purchaser is a party (the Loan Agreement
and such loan documents are collectively referred to herein as the
"Loan Documents");"
1.6. Section 5.11(i) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(i) Neither Purchaser nor any of its Subsidiaries has made
any loans, advances or capital contributions to, or investments in,
any Person or paid any fees or expenses to the Purchaser or any
Affiliate or holder of 15% or more of the issued and outstanding
capital stock of Purchaser, except in connection with the consummation
of the Other Transactions;"
1.7. Section 5.11(j) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(j) neither Purchaser nor any of its Subsidiaries has
mortgaged, pledged or subjected to any Lien any assets, or acquired
any assets or sold, assigned, transferred, conveyed, leased otherwise
disposed of any assets of Purchaser or its Subsidiaries, except in the
ordinary course of business consistent with past practice and except
in connection with the consummation of the Other Transactions or the
execution, delivery and performance of the Loan Documents."
1.8. Section 5.16(c) of the Agreement is hereby
deleted in its entirety and is replaced with the following:
<PAGE>
<PAGE>
"(c) Simultaneously with the execution of this Agreement,
Purchaser has delivered to Seller a true, complete and correct copy of
the Midland Agreement (including all exhibits and schedules thereto)
as in effect on the date hereof and will deliver to Seller a true,
complete and correct copy of any amendments to, or restatements of,
the Midland Agreement (or any exhibits or schedules thereto). The
Midland Agreement, as the same may be amended or restated from time to
time, is valid and enforceable in accordance with its terms, subject
to the Bankruptcy Exception. Each of the representations and
warranties of Purchaser contained in the Midland Agreement, and to
Purchaser's knowledge, each of the representations and warranties of
Midland US contained therein, is true and correct in all material
respects and will be true and correct in all material respects as of
the date of the consummation of the Other Transactions. (i) Neither
Purchaser nor, to the knowledge of Purchaser, Midland US, is in
material breach of or in material default under the Midland Agreement,
(ii) to the knowledge of Purchaser, there has not occurred any event
which, after the giving of notice or the lapse of time or both, would
constitute a material default under, or result in a material breach
of, the Midland Agreement, (iii) no party to the Midland Agreement has
given notice of or made a claim with respect to any material breach or
material default thereunder, (iv) except as set forth in the Midland
Agreement, none of the rights of Purchaser under the Midland Agreement
will be subject to termination or modification as a result of the
consummation of the transactions contemplated by this Agreement, and
(v) except as set forth therein, no consent or approval of any third
party is required under the Midland Agreement to the consummation of
the transactions contemplated thereby or hereby."
1.9. The prefatory clause of paragraph (b) of Section 6.2
of the Agreement is hereby deleted in its entirety and replaced with
the following:
"(b) Prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement, or in connection with, or as
a result of the consummation of the Other Transactions or the
execution, delivery and performance of the Loan Documents, or with the
prior unanimous written consent of the Committee (which consent shall
not be unreasonably withheld), Seller shall cause Radiocoms and its
Subsidiaries and to the extent that it is engaged in the Business, any
Relevant Affiliate, not to and Purchaser shall not, and shall cause
its Subsidiaries not to:"
1.10. Section 6.4 of the Agreement is hereby amended by
adding the words "and the Other Transactions" in the last sentence
thereof, immediately following the word "Transactions".
<PAGE>
<PAGE>
1.11. Section 7.1(c) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(c) No Legal Proceedings shall have been instituted or
threatened or claim or demand made against Seller, Radiocoms or
Purchaser seeking to restrain or prohibit or to obtain damages with
respect to the consummation of any of the Transactions or the Other
Transactions and there shall not be in effect any Order by
Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of any of the Transactions or
the Other Transactions;"
1.12. Section 7.1(e) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(e) All approvals required to be obtained by Seller,
Purchaser or Midland US from any Governmental Body with respect to any
of the Transactions or the Other Transactions shall have been
obtained;"
1.13. Section 7.1(f) of the Agreement is hereby deleted in
its entirety and is replaced with the following:
"(f) The Purchaser Stockholders' Meeting shall have been
duly convened and held, and Purchaser shall have obtained the
requisite vote so as to authorize this Agreement, the Midland
Agreement (if necessary) and the consummation of each of the
Transactions and (if necessary) the Other Transactions;"
ARTICLE II
2.1. It is understood and agreed that the consummation of
the Other Transactions prior to the consummation of the Transactions
and the execution, delivery and performance by MUSA of the Loan
Agreement and the execution, delivery and performance by MUSA and
Purchaser of the Loan Documents thereunder to which each is a party
will necessitate the updating of the Purchaser Disclosure Letter that
was delivered by Purchaser to Seller in connection with the execution
of the Agreement, as contemplated by Section 6.12 of the Agreement,
and in some cases (as where the Agreement does not contemplate any
exceptions being set forth in the Purchaser Disclosure Letter) will
necessitate a further amendment to the Agreement to provide for the
disclosure of information in the relevant section of the Purchaser
Disclosure Letter. Purchaser agrees to update the Purchaser
Disclosure Letter promptly following the execution of this
Amendment No. 1 (and Purchaser and Seller agree promptly to
enter into any further
<PAGE>
<PAGE>
amendment to the Agreement necessary to give effect thereto) and, in
any event, shall deliver a complete, revised Purchaser Disclosure
Letter to Seller within 20 Business Days following the date hereof
(and Purchaser and Seller agree to execute and deliver any amendment
to the Agreement required in connection therewith by such date). It
is understood and agreed that, to the extent such revised Purchaser
Disclosure Letter (or amendment) reflects (a) the addition of matters
that were disclosed as of June 18, 1996 in the "Midland Disclosure
Schedules" referred to in the Midland Agreement or matters resulting
directly from the consummation of the Other Transactions prior to the
consummation of the Transactions or (b) the transactions contemplated
by the Loan Documents, no representations or warranties of Purchaser
contained in the Agreement shall be deemed to be breached solely by
such additions.
2.2 It is understood and agreed that (a) the consummation
of the Other Transactions on or after the date of this Amendment No.
1, on the terms and in the manner contemplated by the Amended and
Restated Midland Agreement and (b) the consummation of the
transactions contemplated by the Loan Documents on the terms and in
the manner contemplated therein, shall not be deemed to violate any
covenants or other obligations of Purchaser pursuant to Section 6.2 of
the Agreement.
2.3. Pursuant to the provisions of Section 6.8 of this
Agreement, execution of this Agreement by Seller shall constitute the
written consent of Seller to the Amended and Restated Midland
Agreement.
ARTICLE III
3.1. Each of Purchaser and Seller hereby represents and
warrants to the other that: (a) it has all requisite power, authority
and legal capacity to execute and deliver this Amendment No. 1; (b)
the execution and delivery of this Amendment No. 1 has been duly and
validly authorized by its Board of Directors, and no other corporate
proceedings on its part will be necessary to authorize this Amendment
No. 1; and (c) assuming the due authorization, execution and delivery
by the other party hereto, this Amendment No. 1 constitutes its legal,
valid and binding obligation, enforceable against it in accordance
with its terms, subject to the Bankruptcy Exception.
<PAGE>
<PAGE>
ARTICLE IV
4.1. Except as expressly amended hereby, the Agreement shall
remain in full force and effect from and after the execution of this
Amendment No. 1.
4.2. This Amendment No. 1 shall be governed by and
construed in accordance with the Laws of the State of New York
(without application of its principles of conflicts of Laws).
4.3. This Amendment No. 1 may be executed in any number of
counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same instrument.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to the Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first written
above.
INTEK DIVERSIFIED CORPORATION
By: /s/ Steven L. Wasserman
-------------------------
Name: Steven L. Wasserman
Title: Secretary
SECURICOR COMMUNICATIONS LIMITED
By: /s/ M. Wilkinson
-------------------------
Name: M. Wilkinson
Title: Director
NYFS09...:\73\73273\0003\1224\AMD9166K.17A
<PAGE>
EXHIBIT 3
$15,000,000
LOAN AGREEMENT
Dated as of September 19, 1996
between
MIDLAND USA, INC.
as Borrower
and
SECURICOR COMMUNICATIONS LIMITED
as Lender
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 2
2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . 10
2.1. Revolving Credit Advances . . . . . . . . . 10
2.2. Letters of Credit . . . . . . . . . . . . . 11
2.3. Use of Proceeds . . . . . . . . . . . . . . 12
2.4. Interest on Revolving Credit Loan . . . . . 12
2.5. Extension Fee . . . . . . . . . . . . . . . 13
2.6. Receipt of Payments . . . . . . . . . . . . 13
2.7. Application of Payments . . . . . . . . . . 13
2.8. Accounting . . . . . . . . . . . . . . . . 14
2.9. Indemnity . . . . . . . . . . . . . . . . . 14
2.10. Access . . . . . . . . . . . . . . . . . . 14
2.11. Taxes . . . . . . . . . . . . . . . . . . . 15
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 16
3.1. Conditions to the Initial Revolving
Credit Advance and Letter of Credit . . . . 16
3.2. Further Conditions to Each Revolving
Credit Advance and Letter of Credit . . . . 19
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 19
4.1. Corporate Existence; Compliance
with Law . . . . . . . . . . . . . . . . . 19
4.2. Executive Offices . . . . . . . . . . . . .
4.3. Subsidiaries . . . . . . . . . . . . . . . 20
4.4. Corporate Power; Authorization;
Enforceable Obligations . . . . . . . . . . 20
4.5. Solvency . . . . . . . . . . . . . . . . . 21
4.6. Labor Matters . . . . . . . . . . . . . . . 21
4.7. Investment Company Act . . . . . . . . . . 21
4.8. Margin Regulations . . . . . . . . . . . . 21
4.9. No Litigation . . . . . . . . . . . . . . . 21
4.10. Asset and Trademark Agreement . . . . . . . 22
4.11. Hitachi Supply Agreement . . . . . . . . . 22
4.12. Outstanding Stock; Options;
Warrants, Etc. . . . . . . . . . . . . . . 22
4.13. Patents, Trademarks, Copyrights and
Licenses . . . . . . . . . . . . . . . . . 22
4.14. Liens . . . . . . . . . . . . . . . . . . . 22
4.15. No Material Adverse Effect . . . . . . . . 22
5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . 23
5.1. Reports and Notices . . . . . . . . . . . . 23
5.2. Communication with Accountants . . . . . . 23
j:\PUBDATA\73273\0003\265\AGR8116V.52I
<PAGE>
<PAGE>
SECTION Page
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . 24
6.1. Maintenance of Existence and Conduct of
Business. . . . . . . . . . . . . . . . . . 24
6.2. Payment of Obligations . . . . . . . . . . 24
6.3. Books and Records . . . . . . . . . . . . . 25
6.4. Litigation . . . . . . . . . . . . . . . . 25
6.5. Insurance . . . . . . . . . . . . . . . . . 25
6.6. Compliance with Law. . . . . . . . . . . . 25
6.7. Supplemental Disclosure . . . . . . . . . . 25
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 25
7.1. Mergers, Etc. . . . . . . . . . . . . . . . 25
7.2. Investments; Loans and Advances . . . . . . 25
7.3. Indebtedness . . . . . . . . . . . . . . . 26
7.4. Capital Structure . . . . . . . . . . . . . 26
7.5. Maintenance of Business . . . . . . . . . . 26
7.6. Transactions with Affiliates. . . . . . . . 26
7.7. Guaranteed Indebtedness . . . . . . . . . . 26
7.8. Liens . . . . . . . . . . . . . . . . . . . 26
7.9. Sales of Assets . . . . . . . . . . . . . . 27
7.10. Events of Default . . . . . . . . . . . . . 27
7.11. Restricted Payments . . . . . . . . . . . . 27
8. TERM . . . . . . . . . . . . . . . . . . . . . 27
8.1. Termination . . . . . . . . . . . . . . . . 27
8.2. Survival of Obligations Upon Termination
of Financing Arrangement . . . . . . . . . 27
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . 27
9.1. Events of Default . . . . . . . . . . . . . 27
9.2. Remedies . . . . . . . . . . . . . . . . . 30
9.3. Waivers by Borrower . . . . . . . . . . . . 30
9.4. Right of Set-Off . . . . . . . . . . . . . 30
10. 10.14. MISCELLANEOUS . . . . . . . . . . . . . . . 31
10.1. Complete Agreement; Modification
of Agreement; Sale of Interest . . . . . . 31
10.2. Fees and Expenses . . . . . . . . . . . . . 31
10.3. No Waiver by Lender . . . . . . . . . . . . 32
10.4. Remedies . . . . . . . . . . . . . . . . . 32
10.5. WAIVER OF JURY TRIAL . . . . . . . . . . . 32
10.6. Severability . . . . . . . . . . . . . . . 32
10.7. Parties . . . . . . . . . . . . . . . . . . 33
10.8. Conflict of Terms . . . . . . . . . . . . . 33
10.9. GOVERNING LAW . . . . . . . . . . . . . . . 33
10.10. Notices . . . . . . . . . . . . . . . . . . 33
10.11. Survival . . . . . . . . . . . . . . . . . 35
<PAGE>
<PAGE>
SECTION Page
10.12. Section Titles . . . . . . . . . . . . . . 35
10.13. Counterparts . . . . . . . . . . . . . . . 35
SCHEDULES
Schedule 2.3 Intek Purchase Orders
Schedule 3.1(n) Simmonds and Midland Invoices
Schedule 4.1 Corporate Matters
Schedule 4.2 Executive Office
Schedule 4.13 Patents, Trademarks, Copyrights and
Licenses
Schedule 7.3 Indebtedness
Schedule 7.6 Certain Transactions
EXHIBITS
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Non-Recourse Guaranty and Pledge Agreement
Exhibit D - Form of Security Agreement
Exhibit E - Form of Trademark Agreement
Exhibit F - Form of Legal Opinion of Counsel to Borrower
Exhibit G - Form of Legal Opinion of Counsel to Intek
Exhibit H - Form of New York Legal Opinion of Counsel to Borrower
and Intek
Exhibit I - Form of Jones, Day, Reavis & Pogue Legal Opinion to Intek
<PAGE>
<PAGE>
LOAN AGREEMENT, dated as of September 19, 1996, between
MIDLAND USA, INC., a Delaware corporation having an office at 1690
North Topping Avenue, Kansas City, Missouri 64120 ("Borrower") and a
wholly-owned subsidiary of INTEK DIVERSIFIED CORPORATION ("Intek"),
and SECURICOR COMMUNICATIONS LIMITED, a company incorporated under the
laws of England and Wales having an office at 15 Carshalton Road,
Sutton, Surrey, SM1 4LD, England ("Lender").
W I T N E S S E T H :
-------------------
WHEREAS, Midland International Corporation, a Delaware
corporation ("Midland"), Intek and Simmonds Capital Limited, an
Ontario corporation ("Simmonds"), entered into an Amended and Restated
Sale of Assets and Trademark License Agreement, dated as of September
19, 1996 (the "Asset and Trademark Agreement"), pursuant to which
Midland agreed to sell to Intek the Trademark (as defined herein) and
certain other assets, as described therein (collectively, the
"Acquired Assets"), in consideration for up to 2,500,000 shares of
common stock, par value $0.01 per share of Intek, an assumption of
certain liabilities of Midland (the "Assumed Liabilities") and a cash
payment, all as set forth in the Asset and Trademark Agreement (the
"Midland Transaction"); and
WHEREAS, Intek has assigned and transferred to Borrower all
of its right, title and interest in and to the Acquired Assets and the
Asset and Trademark Agreement (and all other agreements entered into
by Intek in connection therewith) and Borrower has assumed the Assumed
Liabilities and all obligations of Intek under the Asset and Trademark
Agreement (and all other agreements entered into by Intek in
connection therewith), all in accordance with the terms of the
Assignment and Assumption Agreement (as defined herein) and referred
to herein as the "Intek-Borrower Transfer"; and
WHEREAS, Intek and Lender entered into a Stock Purchase
Agreement, dated as of June 18, 1996, as amended by agreement of the
parties dated as of September 19, 1996 (the "Stock Agreement"),
pursuant to which Lender agreed to sell to Intek all of the
outstanding securities (other than certain preferred shares) of
Lender's wholly-owned subsidiary, Securicor Radiocoms Limited
("Radiocoms"), in consideration for 25,000,000 shares of Common Stock
(the "Securicor Transaction"); and
WHEREAS, pursuant to the Stock Agreement, Lender has agreed,
among other things, to loan up to $15 million to Intek following the
consummation of the Securicor Transaction to
NYFS09...:\73\73273\0003\1224\AGR0306W.580
<PAGE>
<PAGE>
finance the combined business of Intek, the U.S. LMR Distribution
Business and Radiocoms (the "New Intek Loan"); and
WHEREAS, it is currently contemplated that the Midland
Transaction will be consummated on or about September 19, 1996; and
WHEREAS, it is currently contemplated that the Securicor
Transaction will be consummated during the fourth quarter of 1996; and
WHEREAS, following the consummation of the Midland
Transaction, Borrower will require significant funding to finance its
operations until such time as the Securicor Transaction is consummated
and the proceeds of the New Intek Loan are available and has requested
that Lender provide such funding on the terms and subject to the
conditions set forth herein; and
WHEREAS, Borrower has secured the Obligations by a perfected
first priority security interest in the Collateral (as defined
herein); and
WHEREAS, Lender, Borrower and Intek have agreed that in the
event the Securicor Transaction is consummated, the Obligations (as
defined herein) outstanding hereunder on the date of such consummation
shall thereafter be assumed by Intek and become obligations under the
New Intek Loan (subject to the terms thereof), as set forth in that
certain letter agreement between the parties, dated September 19, 1996
(the "Intek Loan Assumption Agreement"); and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. DEFINITIONS
-----------
In addition to the defined terms appearing above,
capitalized terms used in this Agreement shall have (unless otherwise
provided elsewhere in this Agreement) the following respective
meanings when used herein:
"Acquired Assets" shall have the meaning ascribed to it in
the recitals hereof.
"Affiliate" shall mean, with respect to any Person, any
other Person that controls such Person or is controlled by or under
common control with such Person.
<PAGE>
<PAGE>
"Agreement" shall mean this Loan Agreement, including all
amendments, modifications and supplements hereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference
becomes operative.
"Ancillary Agreements" shall mean all supplemental
agreements, undertakings, instruments, documents or other writings
executed by Borrower.
"Asset and Trademark Agreement" shall have the meaning
ascribed to it in the recitals hereof.
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, dated as of September 19, 1996,
by and between Intek and Borrower.
"Balance Sheet Date" shall have the meaning ascribed to it
in the recitals hereof.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed
in the State of New York.
"Cash Collateral Account" shall have the meaning ascribed to
it in Section 2.2(c) hereof.
"Cash Equivalents" shall mean (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
of America or any agency thereof maturing within one year from the
date of acquisition thereof; (ii) commercial paper maturing no more
than one year from the date of creation thereof and at the time of
their acquisition having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc.; and
(iii) certificates of deposit, maturing no more than one year from the
date of creation thereof, issued by commercial banks incorporated
under the laws of the United States of America, each having combined
capital, surplus and undivided profits of not less than $200,000,000
and having a rating of "A" or better by a nationally recognized rating
agency.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes at the time due
and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) Borrower's or any of its Subsidiaries' ownership or
use of any of its assets, or (iv) any other aspect of Borrower's or
any of the Subsidiaries' business.
<PAGE>
<PAGE>
"Closing Date" shall mean the date of the initial Revolving
Credit Advance.
"Code" shall mean the Uniform Commercial Code of the
jurisdiction with respect to which such term is used, as in effect
from time to time.
"Collateral" shall mean the collateral covered by the
Security Agreement, the Trademark Agreement and the Non-Recourse
Guaranty and Pledge Agreement.
"Collateral Documents" shall mean the Security Agreement,
Trademark Agreement and the Non-Recourse Guaranty and Pledge
Agreement.
"Common Stock" shall mean common stock, par value $0.01 of
Intek.
"Default" shall mean any event which, with the passage of
time or notice or both would, unless cured or waived, become an Event
of Default.
"Event of Default" shall have the meaning ascribed to it in
Section 9.1 hereof.
"Extension Fee" shall have the meaning ascribed to it in
Section 2.5 hereof.
"FCC" shall mean the Federal Communications Commission, or
any successor thereto.
"Federal Reserve Board" shall have the meaning ascribed to
it in Section 4.8 hereof.
"Fiscal Year" shall mean the calendar year. Subsequent
changes of the fiscal year of Borrower shall not change the term
"Fiscal Year," unless Lender shall consent in writing to such changes.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
<PAGE>
<PAGE>
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner including, without
limitation, any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency
or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect
thereof.
"Hitachi Supply Agreement" shall mean the agreement between
Midland and Hitachi Denshi Ltd., a Japanese corporation ("Hitachi"),
dated as of May 12, 1994 and pursuant to which Hitachi agreed, among
other things, to manufacture and sell to Midland certain mobile
radios.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price
of property or services (including, without limitation, reimbursement
and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary
course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreements
with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
property), (iv) all Guaranteed Indebtedness, (v) all Indebtedness
referred to in clause (i), (ii), (iii) or (iv) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, and (vi) the
Obligations.
"Intek-Borrower Transfer" shall have the meaning ascribed to
it in the recitals hereof.
<PAGE>
<PAGE>
"Intek Loan Assumption Agreement" shall have the meaning
ascribed to it in the recitals hereof.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Lender at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance or guarantee, by Lender or another, of
letters of credit, bank acceptances in respect of letters of credit,
or the like. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by Lender thereupon or
pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters
of credit issued at the request and for the account of Borrower, and
bankers' acceptances issued by Borrower, for which Lender has incurred
Letter of Credit Obligations pursuant thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any lease or title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Note, the
Collateral Documents, those other Ancillary Agreements as to which
Lender is a party or a beneficiary and all other agreements,
instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore,
now or hereafter executed by or on behalf of Borrower or any of its
Affiliates, or any employee of Borrower or any of its Affiliates, and
delivered to Lender in connection with this Agreement or the
transactions contemplated hereby.
"Material Adverse Effect" or "Material Adverse Change" shall
mean an event or circumstance which materially adversely affects the
business, properties, financial condition or operations (taken as a
whole) of Borrower.
"Maximum Lawful Rate" shall have the meaning ascribed to it,
in Section 2.4(c) hereof.
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<PAGE>
"Maximum Revolving Credit Loan" shall mean, at any
particular time, an amount equal to $15,000,000.
"Mees Pierson" shall mean Mees Pierson ICS Limited, a
company incorporated under the laws of England and Wales.
"Midland" shall have the meaning ascribed to it in the
recitals hereof.
"Net Cash Proceeds" shall have the meaning ascribed to it in
Section 2.4(a) hereof.
"New Intek Loan" shall have the meaning ascribed to it in
the recitals hereof.
"Non-Recourse Guaranty and Pledge Agreement" shall mean the
Agreement made in favor of Lender by Intek, substantially in the form
attached as Exhibit C hereto, including all amendments, modifications
and supplements thereto, and shall refer to the Non-Recourse Guaranty
and Pledge Agreement as the same may be in effect at the time such
reference becomes operative.
"Note" shall mean the Revolving Credit Note.
"Obligations" shall mean all loans, advances, debts,
liabilities, and obligations, for monetary amounts (whether or not
such amounts are liquidated or determinable) owing by Borrower to
Lender (including all Letter of Credit Obligations), and all covenants
and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other
instrument, arising under any of the Loan Documents. This term
includes, without limitation, all interest (whether capitalized or
otherwise), charges, expenses, attorneys' fees and any other sum
chargeable to Borrower (including the Extension Fee) under any of the
Loan Documents.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other
governmental charges or levies, either not yet due and payable or to
the extent that nonpayment thereof is permitted by the terms of this
Agreement; (ii) pledges or deposits securing obligations under
workmen's compensation, unemployment insurance, social security or
public liability laws or similar legislation; (iii) pledges or
deposits securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which Borrower is a party as lessee
made in the ordinary course of business; (iv) deposits securing public
or statutory obligations of Borrower; (v) workers', mechanics',
suppliers',
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<PAGE>
carriers', warehousemen's or other similar liens arising in the
ordinary course of business and securing indebtedness aggregating not
in excess of $100,000 at any time outstanding, not yet due and
payable; (vi) deposits securing, or in lieu of, surety, appeal or
customs bonds in proceedings to which Borrower is a party; (vii) any
attachment or judgment lien, unless the judgment it secures shall not,
within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay; and
(viii) zoning restrictions, easements, licenses, or other restrictions
on the use of real property or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not
materially impair the use, value, or marketability of such real
property, leases or leasehold estates.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Radiocoms" shall have the meaning ascribed to it in the
recitals hereof.
"Repayment Date" means the first to occur of the following:
(a) the date (the "Specified Repayment Date") 30 days after the
Termination Date, provided that if the Intek shareholder meeting to
consider the Securicor Transaction is held after October 31, 1996 but
before November 30, 1996 then the Specified Repayment Date shall be
extended by such number of days (up to a maximum of 30 days) as is
equal to the number of days between October 31, 1996 and the date of
such meeting and (b) the date on which the Securicor Transaction is
consummated.
"Restricted Payment" shall mean (i) the declaration of any
dividend or the incurrence of any liability to make any other payment
or distribution of cash or other property or assets in respect of
Borrower's Stock or (ii) any payment on account of the purchase,
redemption or other retirement of Borrower's Stock or any other
payment or distribution made in respect thereof, either directly or
indirectly.
"Revolving Credit Advance" shall have the meaning ascribed
to it in Section 2.1(a) hereof.
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<PAGE>
"Revolving Credit Loan" shall mean the aggregate amount of
Revolving Credit Advances outstanding at any time.
"Revolving Credit Note" shall have the meaning ascribed to
it in Section 2.1(b) hereof.
"Securicor Transaction" shall have the meaning ascribed to
it in the recitals hereof.
"Security Agreement" shall mean the agreement entered into
between Lender and Borrower, substantially in the form attached as
Exhibit D hereto, including all amendments, modifications and
supplements thereto, and shall refer to the Security Agreement as the
same may be in effect at the time such reference becomes operative.
"Simmonds" shall have the meaning ascribed to it in the
recitals hereof.
"Solvent" shall mean, when used with respect to any Person,
that:
(a) the present fair saleable value of such Person's
assets (including, without limitation, the fair saleable value of
the goodwill arising in connection with the Midland Transaction
and other intangible assets) is in excess of the total amount of
such Person's liabilities;
(b) such Person is able to pay its debts as they
become due; and
(c) such Person does not have unreasonably small
capital to carry on such Person's business as theretofore
operated and all businesses in which such Person is about to
engage.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership or
equivalent entity whether voting or nonvoting, including, without
limitation, common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
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<PAGE>
"Subsidiary" shall mean any Person 50% or more of whose
issued and outstanding voting securities is owned or controlled,
directly or indirectly, by the specified Person.
"Taxes" shall have the meaning ascribed thereto in Section
2.11 hereof.
"Termination Date" shall mean the first to occur of the
following: (i) the date on which the Stock Agreement is terminated
pursuant to Section 3.2 thereof or (ii) December 31, 1996.
"Trademark Agreement" shall mean the Trademark Agreement
relating to the grant of a security interest in the Trademark, made in
favor of Lender by Borrower, substantially in the form attached as
Exhibit E hereto.
"Trademark" shall mean the Trademark described on Schedule
4.13(b) hereto and the trade name "Midland" and similar variations
thereof, and all registrations, applications and renewals thereof and
all logos, whether or not registered, used in connection therewith.
"US LMR Distribution Business" shall mean the business
consisting of the sale and distribution of LMR Products bearing the
Trademark within the US LMR Distribution Territory as conducted by
Borrower and in no event shall include the business carried on
directly by Intek or any of its subsidiaries other than Borrower.
"US LMR Distribution Territory" shall mean the United States
of America and the territories and possessions thereof.
Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP consistently
applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the State of New
York to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended,
modified or
<PAGE>
<PAGE>
supplemented, and not to any particular section, subsection or clause
contained in this Agreement.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
--------------------------
2.1. Revolving Credit Advances. (a) Upon and subject to
-------------------------
the terms and conditions hereof, Lender shall make available, from
time to time, until the Termination Date, for Borrower's use and upon
the request of Borrower therefor, advances (each, a "Revolving Credit
Advance") in an aggregate amount outstanding (which amount shall
include all outstanding Letter of Credit Obligations, whether or not
then due and payable) which shall not at any given time exceed the
Maximum Revolving Credit Loan. Subject to the provisions of Section
2.4 hereof and the applicable conditions set forth in Section 3
hereof, and until all amounts outstanding in respect of the Revolving
Credit Loan shall become due and payable on the Repayment Date,
Borrower may from time to time borrow, repay and reborrow under this
Section 2.1(a). Each Revolving Credit Advance shall be made on
notice, given no later than 1:00 P.M. (New York City time) on the
second Business Day prior to the proposed Revolving Credit Advance, by
Borrower to Lender. Each such notice (a "Notice of Revolving Credit
Advance") shall be in writing in substantially the form of Exhibit A
hereto, executed by Howard Parkinson (or such other officer of
Borrower approved by Lender in its sole and absolute discretion in
writing) and either David Neibert or Gregg Marston specifying therein
the requested date and amount of such Advance. Lender shall, before
5:00 P.M. (New York City time) on the date of the proposed Revolving
Credit Advance, upon fulfillment of the applicable conditions set
forth in Section 3, wire to a bank designated by Borrower and
reasonably acceptable to Lender the amount of such Revolving Credit
Advance.
(b) The Revolving Credit Loan made by Lender shall be
evidenced by a promissory note to be executed and delivered by
Borrower at the time of the Revolving Credit Loan, the form of which
is attached hereto and made a part hereof as Exhibit B (the "Revolving
Credit Note"). The Revolving Credit Note shall be payable to the
order of Lender and shall represent the obligation of Borrower to pay
the amount of the Maximum Revolving Credit Loan or, if less, the
aggregate unpaid principal amount of all Revolving Credit Advances
made by Lender to Borrower, with
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<PAGE>
interest thereon as prescribed in Section 2.4(a). The date and amount
of each Revolving Credit Advance and each payment of principal and
interest or capitalization of interest with respect thereto shall be
recorded on the books and records of Lender, which books and records
shall constitute prima facie evidence of the accuracy of the
-----------
information therein recorded. The entire unpaid balance of the
Revolving Credit Loan (including capitalized interest thereon) and all
other Obligations shall be due and payable on the Repayment Date.
2.2. Letters of Credit. (a) Lender shall, subject to the
-----------------
terms and conditions hereinafter set forth, (i) incur Letter of Credit
Obligations in respect of the issuance, on the Closing Date, of such
Letters of Credit supporting obligations of Borrower, as Borrower
shall request by written notice to Lender (executed by Howard
Parkinson (or such other officer of Borrower approved by Lender in its
sole and absolute discretion in writing) and either David Neibert or
Gregg Marston) which is received by Lender not less than 2 Business
Days prior to the Closing Date, and (ii) incur from time to time on
written request of Borrower, additional Letter of Credit Obligations
in respect of Letters of Credit supporting obligations of Borrower;
provided, however, that no such Letter of Credit shall have an expiry
-------- -------
date which is after March 31, 1997. It is understood that the
determination of the bank or other legally authorized Person
(including Lender) which shall issue or accept, as the case may be,
any letter of credit or bankers acceptance contemplated by this
Section 2.2(a) shall be made by Lender, in its sole discretion.
(b) In the event that Lender shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then
be deemed to constitute a Revolving Credit Advance under Section
2.1(a) hereof.
(c) In the event that any Letter of Credit Obligation,
whether or not then due and payable, shall for any reason be
outstanding on the Termination Date, Borrower will pay to Lender cash
or Cash Equivalents in an amount equal to the maximum amount then
available to be drawn under the Letter of Credit. Such funds or Cash
Equivalents shall be held by Lender in a cash collateral account (the
"Cash Collateral Account"). The Cash Collateral Account shall be in
the name of Lender (as a cash collateral account), and shall be under
the sole dominion and control of Lender and subject to the terms of
this Section 2.2. Borrower hereby pledges, and grants to Lender a
security interest in, all such funds or Cash Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof, as
<PAGE>
<PAGE>
security for the payment of all amounts due in respect of the Letter
of Credit Obligations, whether or not then due.
From time to time after funds are deposited in the Cash
Collateral Account, Lender may apply such funds or Cash Equivalents
then held in the Cash Collateral Account to the payment of any
amounts, in such order as Lender may elect, as shall be or shall
become due and payable by Borrower to Lender with respect to such
Letter of Credit Obligations.
Neither Borrower nor any person or entity claiming on behalf
of or through Borrower shall have any right to withdraw any of the
funds or Cash Equivalents held in the Cash Collateral Account, except
that upon the termination of any Letter of Credit Obligation in
accordance with its terms and the payment of all amounts payable by
Borrower to Lender in respect thereof, any funds remaining in the Cash
Collateral Account in excess of the then remaining Letter of Credit
Obligations shall be promptly returned to Borrower.
Lender shall not have any obligation to invest the funds in
the Cash Collateral Account or deposit such funds in an interest-
bearing account, and interest and earnings thereon, if any, shall be
the property of Lender. Interest and earnings on the Cash Equivalents
in the Cash Collateral Account shall be the property of Borrower.
(c) In the event that Lender shall incur any Letter of
Credit Obligations pursuant hereto at the request or on behalf of
Borrower hereunder, Borrower shall pay to Lender, as compensation to
Lender for such Letter of Credit Obligation, all fees and charges paid
by Lender on account of such Letter of Credit Obligation to the issuer
or like party. Fees payable in respect of Letter of Credit
Obligations shall be paid to Lender, in arrear, on the first day of
each month for the preceding month.
2.3. Use of Proceeds. Borrower shall apply the proceeds
---------------
of the Revolving Credit Advances only for the US LMR Distribution
Business (including for the repayment of Intek for the outstanding
deposits made in connection with the equipment relating to the US LMR
Distribution Business ordered by Intek and evidenced by the purchase
orders listed on Schedule 2.3 hereto).
2.4. Interest on Revolving Credit Loan. (a) Interest
---------------------------------
accrues on the amount outstanding from time to time under the
Revolving Credit Loan at the rate of 11% per annum, calculated on the
basis of a 360 day year for the number of days elapsed.
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<PAGE>
Interest will be capitalized on a monthly basis and shall be added to
the principal amount outstanding from time to time under the Revolving
Credit Loan. Interest accrued and uncapitalized on the Repayment Date
shall be payable on such date.
(b) So long as any Event of Default shall be continuing,
the interest rate applicable to the Revolving Credit Loan shall be
increased by 3% per annum above the rate otherwise applicable.
(c) Notwithstanding anything to the contrary set forth in
this Section 2.4, if at any time until payment in full of all of the
Obligations 11% exceeds the highest rate of interest permissible under
any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful Rate"),
then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time thereafter
-------- -------
the 11% is less than the Maximum Lawful Rate, Borrower shall continue
to pay interest hereunder at the Maximum Lawful Rate until such time
as the total interest received by Lender from the making of advances
hereunder is equal to the total interest which Lender would have
received had the 11% been (but for the operation of this paragraph)
the interest rate payable since the Closing Date. Thereafter, the
interest rate payable hereunder shall be the 11%, unless and until
such rate shall again exceed the Maximum Lawful Rate, in which event
this paragraph shall again apply.
2.5. Extension Fee. Borrower shall pay to Lender a fee
-------------
(the "Extension Fee") equal to $500,000 payable on the Repayment Date
in the event that all the Obligations have not been repaid (or assumed
by Intek) in full on or prior to the Termination Date.
2.6. Receipt of Payments. (a) Borrower shall make each
-------------------
payment under this Agreement not later than 11:00 A.M. (New York City
time) on the day when due in lawful money of the United States of
America in immediately available funds to Lender's depositary bank as
designated by Lender from time to time for deposit in Lender's
depositary account. For purposes only of computing interest
hereunder, all payments shall be applied by Lender on the day payment
has been credited by Lender's depository bank to Lender's account in
immediately available funds. For purposes of determining the amount
of funds available for borrowing by Borrower pursuant to Section
2.1(a) hereof, such payments shall be applied by Lender against the
outstanding
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<PAGE>
amount of the Revolving Credit Loan at the time they are credited to
its account.
2.7. Application of Payments. Borrower irrevocably waives
-----------------------
the right to direct the application of any and all payments at any
time or times hereafter received by Lender from or on behalf of
Borrower, and Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply any and all such payments against
the then due and payable Obligations of Borrower and in repayment of
the Revolving Credit Loan as Lender may deem advisable. Lender is
authorized to, and at its option may, make advances on behalf of
Borrower for payment of all fees, expenses, charges, costs, principal
and interest incurred by Borrower hereunder when and as Borrower fails
to promptly pay any such amounts. At Lender's option and to the
extent permitted by law, any advances so made may be deemed Revolving
Credit Advances constituting part of the Revolving Credit Loan
hereunder.
2.8. Accounting. Lender will provide a monthly accounting
----------
of transactions under the Revolving Credit Loan to Borrower within 10
days of the end of the month. Each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein, unless
Borrower, within 20 days after the date any such accounting is
rendered, shall notify Lender in writing of any objection which
Borrower may have to any such accounting, describing the basis for
such objection with specificity. In that event, only those items
expressly objected to in such notice shall be deemed to be disputed by
Borrower. Lender's determination, based upon the facts available, of
any item objected to by Borrower in such notice shall (absent manifest
error) be final, binding and conclusive on Borrower, unless Borrower
shall commence a judicial proceeding to resolve such objection within
45 days following Lender's notifying Borrower of such determination.
2.9. Indemnity. Borrower shall indemnify and hold Lender
---------
and its officers, directors, employees, agents, Affiliates and
shareholders (collectively, the "Indemnified Persons") harmless from
and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and disbursements, including those incurred
upon any appeal) which may be instituted or asserted against or
incurred by any Indemnified Person as the result of the execution of
the Loan Documents or extension of credit hereunder; provided,
--------
however, that Borrower shall not be liable for such indemnification to
-------
such Indemnified Person to the extent that any such suit, action,
<PAGE>
<PAGE>
proceeding, claim, damage, loss, liability or expense results from
such Indemnified Person's negligence or willful misconduct.
2.10. Access. Lender and any of its officers, employees
------
and/or agents shall have the right, exercisable as frequently as
Lender determines to be appropriate, during normal business hours (or
at such other times as may reasonably be requested by Lender), to
inspect the properties and facilities of Borrower and to inspect,
audit and make extracts from all of Borrower's records, files and
books of account. Borrower shall deliver any document or instrument
reasonably necessary for Lender, to obtain records from any service
bureau maintaining records for Borrower, and shall maintain duplicate
records or supporting documentation on media, including, without
limitation, computer tapes and discs owned by Borrower. Borrower
shall instruct its banking and other financial institutions to make
available to Lender such information and records as Lender may
reasonably request.
2.11. Taxes. (a) Any and all payments by Borrower
-----
hereunder or under the Note shall be made, in accordance with this
Section 2.11, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding
taxes imposed on or measured by the net income of Lender by the
jurisdiction under the laws of which Lender is organized or any
political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Note to Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 2.11) Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxing or other authority in
accordance with applicable law.
(b) In addition, Borrower shall pay any present or future
stamp or documentary taxes or any other sales, transfer, excise,
mortgage recording or property taxes, charges or similar levies that
arise from any payment made hereunder or under the Note or from the
execution, sale, transfer, delivery or registration of, or otherwise
with respect to the Loan Documents and any other agreements and
instruments contemplated thereby (hereinafter referred to as "Other
Taxes").
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<PAGE>
(c) Borrower shall indemnify Lender for the full amount
of Taxes or Other Taxes (including without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the
date such Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Lender, at its address referred to in
Section 10.10, the original or a certified copy of a receipt
evidencing payment thereof.
(d) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 2.11 shall survive both (i) the
payment in full of principal and interest hereunder and under the
Notes and (ii) the Termination of this Agreement.
3. CONDITIONS PRECEDENT
--------------------
3.1. Conditions to the Initial Revolving Credit Advance
--------------------------------------------------
and Letter of Credit. Notwithstanding any other provision of this
--------------------
Agreement and without affecting in any manner the rights of Lender
hereunder, Borrower shall have no rights under this Agreement (but
shall have all applicable obligations hereunder), and Lender shall not
be obligated to make available any Revolving Credit Advance or Letter
of Credit, unless and until Borrower shall have delivered to Lender,
in form and substance satisfactory to Lender and (unless otherwise
indicated) each dated the Closing Date:
(a) A Revolving Credit Note to the order of Lender duly
executed by Borrower.
(b) Opinions of Manatt, Phelps & Phillips, LLP (counsel
to Borrower), Kohrman Jackson & Krantz (counsel to Intek) and Howard,
Darbey & Levine (counsel to Borrower and Intek with respect to issues
involving New York law), substantially in the forms attached as,
respectively, Exhibits F, G and H hereto.
(c) Opinion of Jones, Day, Reavis & Pogue counsel to
Midland, substantially in the form attached as Exhibit I hereto.
(d) Resolutions of the boards of directors of Borrower,
Midland and Intek, certified by the Secretary or
<PAGE>
<PAGE>
Assistant Secretary of such entity, as the case may be, as of the
Closing Date, to be duly adopted and in full force and effect on such
date, authorizing (i) the consummation of each of the transactions
contemplated by the Loan Documents and (ii) specific officers to
execute and deliver this Agreement and the other Loan Documents.
(e) A copy of the organizational charter and all
amendments thereto of each of Borrower and Intek, certified as of a
recent date by the Secretary of State of the jurisdiction of its
organization, and copies of each of Borrower's and Intek's by-laws,
certified by the Secretary or Assistant Secretary of Borrower or
Intek, as the case may be, as true and correct as of the Closing Date.
(f) Governmental certificates, dated the most recent
practicable date prior to the Closing Date, with telegram updates
where available, showing that the Borrower is organized and in good
standing in the jurisdiction of its organization and is qualified as a
foreign corporation and in good standing in all other jurisdictions in
which it is qualified to transact business.
(g) The Asset and Trademark Agreement duly executed and
delivered by Midland, Intek and Simmonds, together with:
(i) copies of all closing documents and certificates
delivered in connection therewith, including a letter from
each counsel delivering an opinion in connection therewith
stating that Lender can rely on such opinion as if addressed
to it; and
(ii) a certificate from the chief executive officer of
Intek certifying that the transactions contemplated by the
Asset and Trademark Agreement have been completed.
(h) The Assignment and Assumption Agreement duly executed
and delivered by Borrower and Intek.
(i) The Security Agreement and the Trademark Agreement,
duly executed and delivered by Borrower; the Non-Recourse Guaranty and
Pledge Agreement duly executed and delivered by Intek; together with:
(i) acknowledgement copies of proper Financing
Statements (Form UCC-1) duly filed under the Uniform
Commercial Code of each jurisdiction as may be
<PAGE>
<PAGE>
necessary or, in the opinion of Lender, desirable to perfect
the security interests created by the Security Agreement,
(ii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing the
Financing Statements referred to in paragraph (i) above and
all other effective financing statements which name Borrower
or Intek (under their present names and any previous names)
as debtor and which are filed in the jurisdictions referred
to in said paragraph (i), together with copies of such other
financing statements (none of which shall cover the
Collateral purported to be covered by the Security
Agreement),
(iii) evidence of the completion of all recordings and
filings of the Security Agreement and Trademark Agreement as
may be necessary or, in the opinion of Lender, desirable to
perfect the security interests and liens created by the
Security Agreement and Trademark Agreement,
(iv) certificates representing the Pledged Shares
referred to in the Non-Recourse and Guaranty and Pledge
Agreement and undated stock powers for such certificates
executed in blank,
(v) evidence that all other actions necessary or, in
the opinion of Lender, desirable to perfect and protect the
security interests created by the Security Agreement,
Trademark Agreement and Non-Recourse Guaranty and Pledge
Agreement have been taken.
(j) Releases duly executed and delivered by Mees Pierson
and Octagon Capital Canada Corporation (with respect to Midland) and
Mees Pierson (with respect to Intek), releasing any liens or claims on
or security interests in, the Collateral or in the rights in the Asset
and Trademark Agreement, as well as waiving any claims each may have
arising from the Midland Transaction or the transactions contemplated
by the Loan Documents, together with acknowledgement copies of proper
Financing Statements (Form UCC-2 or 3) duly filed under the Uniform
Commercial Code of each jurisdiction as may be necessary to evidence
the foregoing releases.
(k) A certificate of the chief executive officer of
Borrower that Borrower is Solvent after giving effect to the initial
Revolving Credit Advance and the payment of all estimated
<PAGE>
<PAGE>
legal, investment banking, accounting and other fees related hereto
and thereto (such certificate may state that in making the
representation therein Borrower has relied on the projections attached
thereto, provided that Borrower states that it believes that the
assumptions underlying such projections are reasonable).
(l) A certificate of the chief executive officer of
Borrower stating that all of the representations and warranties of the
Borrower contained herein or in any of the Loan Documents are correct
on and as of the Closing Date as though made on and as of such date,
and no event has occurred and is continuing, or would result from the
Revolving Credit Advance, if made on the Closing Date, which
constitutes or would constitute a Default or an Event of Default.
(m) Certificates of the Secretary or an Assistant
Secretary of each of Borrower and Intek, dated the Closing Date, as to
the incumbency and signatures of the officers of, respectively,
Borrower or Intek executing any of the Loan Documents and any other
certificate or other document to be delivered pursuant hereto or
thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(n) Evidence satisfactory to Lender that Simmonds shall
have paid to Lender in cash $2,187,603.00 in satisfaction of all
outstanding invoices payable by Simmonds or Midland issued on or prior
to the date hereof (as set forth on Schedule 3.1(n) hereto).
(o) Such additional information and materials as Lender
may reasonably request, including, without limitation, copies of any
debt agreements, security agreements and other material contracts.
3.2. Further Conditions to Each Revolving Credit Advance
---------------------------------------------------
and Letter of Credit. It shall be a further condition to the funding
--------------------
of each subsequent Revolving Credit Advance and incurrence of Letter
of Credit Obligations that the following statements shall be true on
the date of each such funding or advance:
(a) All of the representations and warranties of the Loan
Parties contained herein or in any of the Loan Documents shall be
correct on and as of the Closing Date and the date of each such
Revolving Credit Advance as though made on and as of such date, except
to the extent that any such representation or warranty expressly
relates to an earlier date and for changes therein permitted or
contemplated by this Agreement.
<PAGE>
<PAGE>
(b) No event shall have occurred and be continuing, or
would result from the funding of any Revolving Credit Advance, which
constitutes or would constitute a Default or an Event of Default.
(c) The aggregate unpaid principal amount of the
Revolving Credit Loan after giving effect to such Revolving Credit
Advance shall not exceed the Maximum Revolving Credit Loan.
The acceptance by Borrower of the proceeds of any Revolving
Credit Advance or the incurrence by Lender of Letter of Credit
Obligations shall be deemed to constitute, as of the date of such
acceptance, (i) a representation and warranty by Borrower that the
conditions in this Section 3.2 have been satisfied and (ii) a
confirmation by Borrower of the granting and continuance of Lender's
Lien pursuant to the Collateral Documents.
Notwithstanding the foregoing, the satisfaction of the
conditions set out in clause (a) and (b) above shall not be required
in respect of a $450,000 Revolving Credit Advance to be made on or
after October 20, 1996 to be used solely to repay Intek for the
outstanding deposits made in respect of equipment relating to the US
LMR Distribution Business ordered by Intek and evidenced by the
purchase orders listed on Schedule 2.3 hereto.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to make the Revolving Credit Loan, as
herein provided for, Borrower makes the following representations and
warranties to Lender, each and all of which shall be true and correct
as of the date of execution and delivery of this Agreement:
4.1. Corporate Existence; Compliance with Law. Borrower
----------------------------------------
(i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (ii) except as
indicated on Schedule 4.1(ii) hereto, is duly qualified to do business
and is in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires
such qualification (except for jurisdictions in which such failure to
so qualify or to be in good standing would not have a Material Adverse
Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to
conduct its business as now, heretofore and proposed to be conducted;
(iv) except as
<PAGE>
<PAGE>
indicated on Schedule 4.1(iv) hereto, has all material licenses,
permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its
certificate of incorporation and by-laws; and (vi) is in compliance
with all applicable provisions of law where the failure to comply
would have a Material Adverse Effect.
4.2. Executive Offices. The current location of
-----------------
Borrower's executive offices and principal place of business is set
forth in Schedule 4.2 hereto.
4.3. Subsidiaries. Borrower currently has no
------------
Subsidiaries.
4.4. Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. The execution, delivery and performance by Borrower of
-----------
the Loan Documents, Ancillary Agreements and all instruments and
documents to be delivered by Borrower, to the extent it is a party
thereto, hereunder and thereunder and the creation of all Liens
provided for herein and therein: (i) are within Borrower's corporate
power; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of
Borrower's certificates or articles of incorporation or by-laws;
(iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality in any material respect;
(v) will not conflict with or result in the breach or termination of,
constitute a default under or accelerate any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of
its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower other than
those in favor of Lender, all pursuant to the Loan Documents; and
(vii) do not require the consent or approval of any Governmental
Authority or any other Person. Each of the Loan Documents has been
duly executed and delivered for the benefit of or on behalf of
Borrower and each constitutes a legal, valid and binding obligation of
Borrower, to the extent it is a party thereto, enforceable against it
in accordance with its terms.
4.5. Solvency. After giving effect to the initial
--------
Revolving Credit Advance, if made on the Closing Date, and the payment
of all estimated legal, investment banking, accounting and other fees
related hereto, Borrower will be Solvent as of and on the Closing Date
(it being understood that in making such representation Borrower has
relied on the projections previously
<PAGE>
<PAGE>
provided to Lender, which are based on assumptions that Borrower
believes are reasonable).
4.6. Labor Matters. There are no strikes or other labor
-------------
disputes against Borrower pending or, to Borrower's knowledge,
threatened which would have a Material Adverse Effect.
4.7. Investment Company Act. Borrower is not an
----------------------
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended. The
making of the Revolving Credit Advances by Lender, the application of
the proceeds and repayment thereof by Borrower and the consummation of
the transactions contemplated by this Agreement and the other Loan
Documents will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder.
4.8. Margin Regulations. Borrower does not own any
------------------
"margin security," as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and the proceeds of the Revolving Credit Advances
will be used only for the purposes contemplated hereunder. The
Revolving Credit Advances will not be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the
purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other
purpose which might cause any of the loans under this Agreement to be
considered a "purpose credit" within the meaning of Regulations G, T,
U or X of the Federal Reserve Board. Borrower will not take or permit
any agent acting on its behalf to take any action which might cause
this Agreement or any document or instrument delivered pursuant hereto
to violate any regulation of the Federal Reserve Board.
4.9. No Litigation. No action, claim or proceeding is now
-------------
pending or, to the knowledge of Borrower, threatened against Borrower
at law, in equity or otherwise, before any court, board, commission,
agency or instrumentality of any federal, state, or local government
or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which, if determined adversely, could have a
Material Adverse Effect, nor to the knowledge of Borrower does a state
of facts exist which is reasonably likely to give rise to such
proceedings.
4.10. Asset and Trademark Agreement. The closing of the
-----------------------------
Midland Transaction and the consummation of the Intek-
<PAGE>
<PAGE>
Borrower Transfer will occur immediately prior to the Closing Date. A
true and complete copy of each of the Asset and Trademark Agreement
(including all exhibits, schedules and amendments thereto) and all
documents delivered by any party in connection therewith has been
delivered to Lender.
4.11. Hitachi Supply Agreement. Borrower is a "Midland
------------------------
Affiliate" under the Hitachi Supply Agreement and entitled to make
purchases thereunder.
4.12. Outstanding Stock; Options; Warrants, Etc. The Stock
------------------------------------------
of Borrower owned by Intek as at the date of this Agreement
constitutes all of the issued and outstanding Stock of Borrower.
Borrower has no outstanding rights, options, warrants or agreements
pursuant to which it may be required to issue or sell any Stock or
other equity security.
4.13. Patents, Trademarks, Copyrights and Licenses.
--------------------------------------------
Borrower owns all material patents, patent applications, copyrights,
trademarks, trademark applications, and know-how (collectively,
"Intangible Property") necessary to continue to conduct its business
as heretofore conducted by it, now conducted by it and proposed to be
conducted by it, each of which is listed, together with Patent and
Trademark Office application or registration numbers, where
applicable, on Schedule 4.13(a) hereto. Further, (i) Borrower has
good and lawful title to the Intangible Property (subject to the
licenses set forth on Schedule 4.13(d) hereto); (ii) to Borrower's
knowledge, the Intangible Property is valid and subsisting and is
enforceable; (iii) to Borrower's knowledge, there are no actual or
threatened claims by third parties regarding the Intangible Property;
(iv) to Borrower's knowledge, the Intangible Property does not
infringe or otherwise violate any rights of any third party, except
where any violation or infringement would not have a Material Adverse
Effect.
4.14. Liens. The Liens granted to Lender pursuant to the
-----
Collateral Documents will at the Closing Date be fully perfected first
priority Liens in and to the Collateral described therein.
4.15. No Material Adverse Effect. No event has occurred
--------------------------
and is continuing which has had or could have a Material Adverse
Effect.
<PAGE>
<PAGE>
5. FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
5.1. Reports and Notices. Borrower covenants and agrees
-------------------
that from and after the Closing Date and until the Termination Date,
it shall deliver to Lender:
(a) Within 30 days after the end of each fiscal month,
(i) a copy of the unaudited balance sheets of Borrower as of the end
of such month and the related statements of income and cash flows for
that portion of the Fiscal Year ending as of the end of such month,
and (ii) a copy of the unaudited statements of income of Borrower for
such month, all prepared in accordance with GAAP (subject to normal
year-end adjustments), accompanied by the certification of the chief
executive officer or chief financial officer of Borrower that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments), the
financial position, the results of operations and the statements of
cash flows of Borrower as at the end of such month and for the period
then ended, and that there was no Default or Event of Default in
existence as of such time.
(b) As soon as practicable, but in any event within two
(2) Business Days after Borrower becomes aware of the existence of any
Default or Event of Default, or any development or other information
which would have a Material Adverse Effect, telephonic or telegraphic
notice specifying the nature of such Default or Event of Default or
development or information, including the anticipated effect thereof,
which notice shall be promptly confirmed in writing within five (5)
days.
(c) If requested by Lender, copies of all federal, state,
local and foreign tax returns and reports in respect of income,
franchise or other taxes on or measured by income (excluding sales,
use or like taxes) filed by Borrower.
(d) Such other information respecting Borrower's business
(including with respect to orders received and inventory purchased),
financial condition or prospects as Lender may, from time to time,
reasonably request.
5.2. Communication with Accountants. Borrower authorizes
------------------------------
Lender to communicate directly with its independent certified public
accountants and tax advisors and authorizes those accountants to
disclose to Lender any and all financial statements and other
supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition
and other affairs of Borrower. At
<PAGE>
<PAGE>
Lender's request, Borrower shall deliver a letter addressed to such
accountants and tax advisors instructing them to comply with the
provisions of this Section 5.2.
6. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, unless Lender shall
otherwise consent in writing, from and after the date hereof and until
the Repayment Date:
6.1. Maintenance of Existence and Conduct of Business.
------------------------------------------------
Borrower shall: (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence,
and its rights and franchises; (b) transact business only in such
names as Borrower shall specify to Lender in writing not less than
thirty days prior to the first date such name is used by Borrower and
(c) at all times maintain, preserve and protect all of its Trademarks
and any tradenames.
6.2. Payment of Obligations. Borrower shall: (i) pay and
----------------------
discharge or cause to be paid and discharged all its Indebtedness,
including, without limitation, all the Obligations as and when due and
payable, and (ii) pay and discharge or cause to be paid and discharged
promptly all (A) Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed), and (B) lawful claims
for labor, materials, supplies and services or otherwise before any
thereof shall become in default.
(a) Borrower may in good faith contest, by proper legal
actions or proceedings diligently pursued, the validity or amount of
any Charges or claims arising under Section 6.2(a)(ii), provided that
at the time of commencement of any such action or proceeding, and
during the pendency thereof (i) adequate reserves with respect thereto
are maintained on the books of Borrower, in accordance with GAAP;
(ii) such contest operates to suspend collection of the contested
Charges or claims and is maintained and prosecuted continuously with
diligence; (iii) none of the Collateral would be subject to forfeiture
or loss or any Lien by reason of the institution or prosecution of
such contest; (iv) no Lien shall exist for such Charges or claims
during such action or proceeding; (v) Borrower shall promptly pay or
discharge such contested Charges and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Lender evidence
acceptable to Lender of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to Borrower; and
(vi) Lender has not advised Borrower in writing that Lender
<PAGE>
<PAGE>
reasonably believes that nonpayment or nondischarge thereof would have
a Material Adverse Effect.
(b) Notwithstanding anything to the contrary contained in
Section 6.2(b) above, Borrower shall have the right to pay the charges
or claims arising under Section 6.2(a)(ii) and in good faith contest,
by proper legal actions or proceedings, the validity or amount of such
Charges or claims.
6.3. Books and Records. Borrower shall keep its books,
-----------------
accounts and records in the ordinary course of business.
6.4. Litigation. Borrower shall notify Lender in writing,
----------
promptly upon learning thereof, of any litigation commenced against
Borrower, and of the institution against any of them of any suit or
administrative proceeding that may have a Material Adverse Effect.
6.5. Insurance. Borrower shall maintain insurance
---------
covering, without limitation, fire, theft, burglary, public liability,
property damage, product liability and insurance on all property and
assets, all in amounts customary for its business and in any event in
compliance with any insurance requirements under any Loan Documents
and with a lender's loss payable clause for the benefit of Lender.
6.6. Compliance with Law. Borrower shall comply in all
-------------------
material respects with all federal, state and local laws and
regulations applicable to it.
6.7. Supplemental Disclosure. From time to time as may be
-----------------------
necessary (in the event that such information is not otherwise
delivered by Borrower to Lender pursuant to this Agreement), so long
as there are Obligations outstanding hereunder, Borrower will
supplement each Schedule (if any) or representation herein with
respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in
such Schedule or representation which has been rendered inaccurate
thereby; provided, however, that such supplement to such Schedule or
-------- -------
representation shall not be deemed an amendment thereof unless
otherwise consented to by the Lender.
<PAGE>
<PAGE>
7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, without Lender's prior
written consent, from and after the date hereof and until the
Repayment Date:
7.1. Mergers, Etc. Borrower shall not directly or
------------
indirectly, by operation of law or otherwise, merge with, consolidate
with, acquire all or substantially all of the assets or capital stock
of, or otherwise combine with, any Person or form any Subsidiary.
7.2. Investments; Loans and Advances. Borrower shall not
-------------------------------
make any investment in, or make or accrue loans or advances of money
to any Person, through the direct or indirect holding of securities or
otherwise.
7.3. Indebtedness. (a) Except as otherwise expressly
------------
permitted by this Section 7.3 or by any other section of this
Agreement or as set forth on Schedule 7.3 hereto, Borrower shall not
create, incur, assume or permit to exist any Indebtedness, except
(i) Indebtedness secured by Liens permitted under Section 7.8 hereof,
(ii) the Revolving Credit Loan, and (iii) the Letter of Credit
Obligations.
(b) Except as otherwise expressly permitted by Section
7.9 hereof, Borrower shall not sell or transfer, either with or
without recourse, any assets, of any nature whatsoever, in respect of
which a Lien is granted or to be granted pursuant to any Loan Document
or engage in any sale-leaseback or similar transaction involving any
of such assets.
7.4. Capital Structure. Borrower shall not make any
-----------------
changes in its capital structure (including, without limitation, in
the terms of its outstanding Stock) or amend its certificate of
incorporation or by-laws.
7.5. Maintenance of Business. Borrower shall not engage
-----------------------
in any business other than the US LMR Distribution Business.
7.6. Transactions with Affiliates. (a) Borrower shall not
-----------------------------
enter into or be a party to any transaction with any Affiliate of
Borrower, other than with Intek, and then only in the ordinary course
of and pursuant to the reasonable requirements of Borrower's business
and upon fair and reasonable terms that are fully disclosed to Lender
and are no less favorable to Borrower than would be obtained in a
comparable
<PAGE>
<PAGE>
arm's-length transaction with a Person not an Affiliate of Borrower.
(b) Except as set forth on Schedule 7.6(b) hereto,
Borrower shall not enter into any agreement or transaction to pay to
any Person any management or similar fee based on or related to
Borrower's operating performance or income or any percentage thereof,
nor pay any management or similar fee to an Affiliate.
7.7. Guaranteed Indebtedness. Borrower shall not incur
-----------------------
any Guaranteed Indebtedness except (i) by endorsement of instruments
or items of payment for deposit to the general account of Borrower,
and (ii) for Guaranteed Indebtedness incurred for the benefit of
Borrower if the primary obligation is permitted by this Agreement.
7.8. Liens. Borrower shall not create or permit any Lien
-----
on any of its properties or assets except:
(a) presently existing or hereafter created Liens in
favor of Lender; and
(b) Permitted Encumbrances.
7.9. Sales of Assets. Borrower shall not sell, transfer,
---------------
convey or otherwise dispose of any assets or properties; provided,
--------
however, that the foregoing shall not prohibit (i) the sale of
-------
inventory in the ordinary course of business, (ii) the sale of surplus
or obsolete equipment and fixtures, and (iii) transfers resulting from
any casualty or condemnation of assets or properties.
7.10. Events of Default. Borrower shall not take or omit
-----------------
to take any action, which act or omission would constitute (i) a
default or an event of default pursuant to, or noncompliance with any
of, the terms of any of the Loan Documents or (ii) a material default
or an event of default pursuant to, or noncompliance with any other
contract, lease, mortgage, deed of trust or instrument to which it is
a party or by which it or any of its property is bound, or any
document creating a Lien, unless such default, event of default or
non-compliance would not have a Material Adverse Effect.
7.11. Restricted Payments. Borrower shall not make any
-------------------
Restricted Payments.
<PAGE>
<PAGE>
8. TERM
----
8.1. Termination. Subject to the provisions of Section 2
-----------
hereof, the financing arrangement contemplated hereby in respect of
the Revolving Credit Loan shall be in effect until the Termination
Date.
8.2. Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangement. Except as otherwise expressly provided for in the Loan
-----------
Documents, no termination or cancellation (regardless of cause or
procedure) of any financing arrangement under this Agreement shall in
any way affect or impair the powers, obligations, duties, rights and
liabilities of Borrower or the rights of Lender relating to any
transaction or event occurring prior to such termination. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations
contained in the Loan Documents shall survive such termination or
cancellation and shall continue in full force and effect until such
time as all of the Obligations have been paid in full in accordance
with the terms of the agreements creating such Obligations, at which
time the same shall terminate.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
9.1. Events of Default. The occurrence of any one or more
-----------------
of the following events (regardless of the reason therefor) shall
constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment of principal
of, or interest on or any other amount owing in respect of, the
Revolving Credit Loan or any of the other Obligations when due and
such failure continues for a period of five (5) days.
(b) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 7 hereof.
(c) Borrower shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other
Loan Documents and the same shall remain unremedied for a period
ending on the first to occur of twenty (20) days after Borrower shall
receive written notice of any such failure from any Lender or forty
five (45) days after Borrower shall become aware thereof.
<PAGE>
<PAGE>
(d) A default shall occur under any other agreement,
document or instrument to which Borrower is a party or by which
Borrower's property is bound, and such default (i) involves the
failure to make any payment (whether of principal, interest or
otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of
Borrower in an aggregate amount exceeding $50,000, or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness or a portion thereof in an aggregate amount exceeding
$50,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto,
report, financial statement or certificate made or delivered to Lender
by Borrower shall be untrue or incorrect in any material respect, as
of the date when made or deemed made (including those made or deemed
made pursuant to Section 3.2).
(f) Any provision of any Collateral Document, after
delivery thereof pursuant to Section 3.1, shall for any reason cease
to be valid or enforceable in accordance with its terms, or any
security interest created under any Collateral Document shall cease to
be a valid and perfected first priority security interest or Lien
(except as otherwise stated therein) in any of the Collateral
purported to be covered thereby.
(g) Any of the assets of Borrower shall be attached,
seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of Borrower and shall remain
unstayed or undismissed for thirty (30) consecutive days; or any
Person other than Borrower shall apply for the appointment of a
receiver, trustee or custodian for any of the assets of Borrower and
shall remain unstayed or undismissed for thirty (30) consecutive days;
or Borrower shall have concealed, removed or permitted to be concealed
or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other
similar law.
(h) A case or proceeding shall have been commenced
against Borrower in a court having competent jurisdiction seeking a
decree or order in respect of Borrower (i) under title 11 of the
United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or
<PAGE>
<PAGE>
other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Borrower or
of any substantial part of its or their properties, or (iii) ordering
the winding-up or liquidation of the affairs of Borrower and such case
or proceeding shall remain undismissed or unstayed for thirty (30)
consecutive days or such court shall enter a decree or order granting
the relief sought in such case or proceeding.(i) Borrower shall
(i) file a petition seeking relief under title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any substantial
part of its properties, (iii) fail generally to pay its debts as such
debts become due, or (iv) take any corporate action in furtherance of
any such action.
(j) There shall have been a change of control of Intek or
a sale of a material part of its assets and for this purpose, "change
of control" means the acquisition, whether directly or indirectly by
an entity other than Midland of more than 20% of the Stock or assets
of Intek.
(k) Howard Parkinson (or such replacement as is approved
by Lender in its reasonable discretion) for any reason ceases to serve
as a consultant to Borrower and is not replaced within ten (10) days
with a replacement approved by Lender in its reasonable discretion or
the responsibilities of his position are materially diminished from
those he had with respect to the US LMR Distribution Business when
employed by Midland prior to the consummation of the Midland
Transaction.
(l) The Hitachi Supply Agreement is terminated for any
reason without the prior written agreement of Lender, such agreement
is amended without the prior written agreement of Lender or Borrower
ceases to be able to make purchases thereunder on the terms in effect
on the date of this Agreement.
9.2. Remedies. If any Event of Default shall have
--------
occurred and be continuing, Lender shall without notice, (i) terminate
this facility with respect to further Revolving Credit Advances,
whereupon no Revolving Credit Advances may be made hereunder, and/or
(ii) declare all Obligations to be forthwith due and payable,
whereupon all Obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower.
<PAGE>
<PAGE>
9.3. Waivers by Borrower. Except as otherwise provided
-------------------
for in this Agreement and applicable law, Borrower waives
(i) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Lender on which Borrower may in any way
be liable and hereby ratifies and confirms whatever Lender may do in
this regard, (ii) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or
levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its
remedies, and (iii) the benefit of all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been advised by
counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the
other Loan Documents.
9.4. Right of Set-Off. Upon the occurrence and during the
----------------
continuance of any Event of Default, Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender to or for the credit or the
account of Borrower against any and all of the obligations of Borrower
now or hereafter existing under this Agreement, and the Note held by
Lender irrespective of whether or not Lender shall have made any
demand under this Agreement or such Note and although such obligations
may be unmatured. Lender agrees promptly to notify Borrower after any
such set-off and application made by Lender; provided, however, that
-------- -------
the failure to give such notice shall not affect the validity of such
set-off and application. The rights of Lender under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
10. MISCELLANEOUS
-------------
10.1. Complete Agreement; Modification of Agreement; Sale
---------------------------------------------------
of Interest. (a) The Loan Documents constitute the complete
-----------
agreement between the parties with respect to the subject matter
hereof and may not be modified, altered or amended except by an
agreement in writing signed by Borrower and Lender. Borrower may not
sell, assign or transfer any of the Loan Documents or any portion
thereof (other than pursuant to the
<PAGE>
<PAGE>
Intek Assumption Agreement), including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or
thereunder. Borrower hereby consents to Lender's sale of
participations, assignment, transfer or other disposition, at any time
or times, of any of the Loan Documents or of any portion thereof or
interest therein, including, without limitation, Lender's rights,
title, interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Borrower agrees that it will use its
best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in
or assignments of any of the Loan Documents or of any portion thereof
or interest therein.
(b) In the event Lender assigns or otherwise transfers
all or any part of the Revolving Credit Note Borrower shall, upon the
request of Lender, issue a new Revolving Credit Note to effectuate
such assignment or transfer.
10.2. Fees and Expenses. If, at any time or times,
-----------------
regardless of the existence of an Event of Default (except with
respect to paragraphs (ii) and (iii), which shall be subject to an
Event of Default having occurred and be continuing), Lender shall
employ counsel or other advisors for advice or other representation or
shall incur reasonable legal or other costs and expenses in connection
with:
(i) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Lender, Borrower or any
other Person) in any way relating to the Collateral, any of
the Loan Documents or any other agreements to be executed or
delivered in connection herewith;
(ii) any attempt to enforce any rights of Lender;
(iii) any attempt to verify, protect, collect, sell,
liquidate or otherwise dispose of the Collateral;
then, and in any such event, the attorneys' and other parties' fees
reasonably arising from such services, including those of any
appellate proceedings, and all expenses, costs, charges and other fees
reasonably incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions
described in this Section shall be payable, on demand, by Borrower to
Lender and shall be additional Obligations secured under this
Agreement and the other Loan Documents. Without limiting the
generality of the foregoing,
<PAGE>
<PAGE>
such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and investment bankers' fees, costs
and expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
10.3. No Waiver by Lender. Lender's failure, at any time
-------------------
or times, to require strict performance by Borrower or Intek of any
provision of this Agreement any of the other Loan Documents shall not
waive, affect or diminish any right of Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver
by Lender of an Event of Default by Borrower under the Loan Documents
shall not suspend, waive or affect any other Event of Default by
Borrower under this Agreement and any of the other Loan Documents
whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement and no defaults by Borrower
or Intek under any of the other Loan Documents shall be deemed to have
been suspended or waived by Lender, unless such suspension or waiver
is by an instrument in writing signed by an officer of Lender and
directed to Borrower or Intek specifying such suspension or waiver.
10.4. Remedies. Lender's rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Lender may have under any other agreement, including
without limitation, the Loan Documents, by operation of law or
otherwise.
10.5. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL
--------------------
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THE LOAN DOCUMENTS.
10.6. Severability. Wherever possible, each provision of
------------
this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
<PAGE>
<PAGE>
10.7. Parties. This Agreement and the other Loan Documents
-------
shall be binding upon, and inure to the benefit of, the successors of
Borrower and Lender and the assigns, transferees and endorsees of
Lender.
10.8. Conflict of Terms. Except as otherwise provided in
-----------------
this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
10.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
-------------
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND BORROWER
AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS
TO VENUE IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF
PROCESS ON BORROWER OR LENDER IN ANY ACTION ARISING OUT OF OR RELATING
TO ANY OF THE LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH
PARTY AT THE ADDRESS LISTED IN SECTION 10.10 HEREOF. NOTHING HEREIN
SHALL PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
10.10. Notices. Except as otherwise provided herein,
-------
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any
of the parties desires to give or serve upon another any communication
with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in
writing and either shall be delivered in person with receipt
acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or telecopied and confirmed by telecopy
answerback addressed as follows:
<PAGE>
<PAGE>
(a) If to Lender at:
15 Carshalton Road
Sutton
Surrey SM1 4LD
England
Attention: Ed Hough
Telecopy No. (0181) 661 0205
With copies to:
Weil, Gotshal & Manges
99 Bishopsgate
London, EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy No. 0171 426 0990
(b) If to Borrower, at:
1690 North Topping Avenue
Kansas City
Missouri 64120
Attention: Howard Parkinson
Telecopy No. 816 920 1102
With copies to:
Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrance
California 90502
Attention: David Neibert
Telecopy No. 310 366 7712
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles
California 90064
Attention: Nancy Wojtas
Telecopy No. 310 312 4224
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such
<PAGE>
<PAGE>
notice. Every notice, demand, request, consent, approval, declaration
or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered, with
receipt acknowledged, telecopied and confirmed by telecopy answerback
or seven (7) Business Days after the same shall have been deposited
(i) in the United States mail (in the case of notice being given by
Borrower or any other Person in the United States) or (ii) in the
United Kingdom mail (in the case of notice being given by Lender or
any other Person located in the United Kingdom). Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.
10.11. Survival. The representations and warranties of
--------
Borrower in this Agreement shall survive the execution, delivery and
acceptance hereof by the parties hereto and the closing of the
transactions described herein or related hereto.
10.12. Section Titles. The Section titles and Table of
--------------
Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
10.13. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
MIDLAND USA, INC.
By: /s/ David Neibert
----------------------------
Name: David Neibert
Title: President
SECURICOR COMMUNICATIONS LIMITED
By: /s/ M.G. Wilkinson
----------------------------
Name: M.G. Wilkinson
Title: Director
The undersigned hereby guarantees to Borrower the performance by
Lender of all of its obligations under this Agreement.
SECURITY SERVICES PLC
By: /s/ N. Griffiths
----------------------------
Name: N. Griffiths
Title: Director
Date: September 19, 1996
<PAGE>
<PAGE>
SCHEDULE 2.3
INTEK PURCHASE ORDERS
---------------------
3058
3081
3082
3084
3085
3087
3074
3102
3105
3108
3107
3071
3078
3079
3088
3090
3092
3022
3023
3024
3028
3029
3031
3032
3033
3037
3038
3039
3041
3042
3043
3046
3047
3048
3050
3052
3054
3056
<PAGE>
<PAGE>
SCHEDULE 3.1(n)
SIMMONDS AND MIDLAND INVOICES
------------------------------
<TABLE>
<CAPTION>
WHEEL
SCL MIDLAND TOTAL ROAMER
<S> <C> <C> <C> <C> <C>
BALANCE 1,177,237 1,208,009 2,385,246 - 235,831 per Bill Wheel Memo Jul
18
Less 2 returned 68,380
systems
Duty credit due 2,689 12,000 $12k to be confirmed by
Peter H.
NEW BALANCE 1,106,168 1,196,009 2,302,177 - 235,831
DISPUTED ITEMS
Systems delivered (2) 68,380
Duty on systems (2) 2,522
Engineering 44,030
turnkey
Sub-total 26,872
BALANCE 1,079,296 1,196,009 2,275,305 - 235,831
Roamer mobile payment 77,700 - 77,700 per Neilbert Memo
FINAL BALANCE DUE $1,001,596 $1,196,009 $2,197,605 - $158,131
Due by Roamer to SCL
re mobiles
$260,000 Mobiles $ 2,000
Price $ 550
Agreed per Simmonds Capital Total $ 1,100,000
Limited as amended Sept 17,
1996
Payments $ 762,300
Agreed per Securicor $ 77,700
Radiocoms Limited as amended $ 840,000
Sept 17, 1996
BALANCE $ 260,000
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 4.1
CORPORATE MATTERS
------------------
4.1(ii) Qualified to Do Business
------------------------
Colorado
Florida
Kansas
Indiana
Massachusetts
Michigan
Nevada
North Carolina
Ohio
Texas
4.1(iv) Licenses, Permits, Consents, Approvals
--------------------------------------
Employment Taxes:
----------------
Colorado
Florida
Kansas
Indiana
Massachusetts
Michigan
Missouri
Nevada
North Carolina
Ohio
Texas
Resale Permits:
--------------
Colorado
Florida
Missouri
North Carolina
Texas
<PAGE>
<PAGE>
SCHEDULE 4.2
EXECUTIVE OFFICE
-----------------
The executive offices and principal place of business of Midland USA,
Inc. are located at 1690 North Topping Avenue, Kansas City, Missouri
64120.
<PAGE>
<PAGE>
SCHEDULE 4.13
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
---------------------------------------------
4.13(a) Patents
-------
US Patent Number 4,718,586 (Swivel Fastening Device)
4.13(b) Trademarks
----------
The trademark "Midland" Reg. No 927193, serial number 72-277,496,
first registered on January 18, 1972 and renewed on December 13, 1991.
The trademark "Midland" Reg. No 895483, serial number 72-156,089,
first registered on July 28, 1970 and renewed on December 18, 1990.
4.13(c) Copyrights
----------
None
4.13(d) Licenses
--------
1) Midland USA - Midland International Corp. Trademark License
Agreement dated September 19, 1996.
2) Midland International Corp. - Midland Consumer Int'l. Exclusive
License Agreement dated June 30, 1995.
3) Midland International Corp. - LETT Electronics Private Label
Agreement dated March 1, 1995.
4) Midland International Corp. - American Digital Communications,
Inc. Asset Purchase Agreement dated December 29, 1995.
<PAGE>
<PAGE>
SCHEDULE 7.3
INDEBTEDNESS
-------------
1. Equipment leases (i) which Midland is assigning pursuant to the
Asset and Trademark Agreement or (ii) entered into by the Borrower
having annual payments less than or equal to $50,000.
2. Purchase orders for product to be purchased from vendors for use
in the U.S. LMR Distribution Business.
<PAGE>
<PAGE>
SCHEDULE 7.6
CERTAIN TRANSACTIONS
---------------------
1. The Product Purchasing Services Agreement, dated September 19,
1996, between Midland and Borrower.
2. The Computer Services Agreement, dated September 19, 1996,
between Borrower and Simmonds Capital Limited.
3. The Consignment Agreement, dated as of September 19, 1996,
between Borrower and Midland.
4. The License Agreement, dated September 19, 1996, between Borrower
and Midland.
<PAGE>
EXHIBIT 4
NON-RECOURSE GUARANTY AND PLEDGE AGREEMENT
-------------------------------------------
NON-RECOURSE GUARANTY AND PLEDGE AGREEMENT, dated as of September 19,
1996, between INTEK DIVERSIFIED CORPORATION, a Delaware corporation
(the "Pledgor"), and SECURICOR COMMUNICATIONS LIMITED, a company
incorporated under the laws of England and Wales ("Lender").
W I T N E S S E T H :
-------------------
WHEREAS, Pledgor is the record and beneficial owner of the
shares of stock described in Schedule I hereto (the "Pledged Shares")
issued by Midland USA, Inc., a Delaware corporation ("Borrower"); and
WHEREAS, Borrower and Lender have entered into a Loan
Agreement, dated as of September 19, 1996 (as at any time amended,
modified or supplemented, the "Loan Agreement"), pursuant to which
Lender has agreed to make certain Revolving Credit Advances available
to Borrower (the "Loans") the proceeds of which are to be used for
Borrower's business as described in the Loan Agreement); and
WHEREAS, Pledgor will derive substantial direct and indirect
economic benefit from the making of the Loans; and
WHEREAS, in connection with the making of the Loans under
the Loan Agreement and as security for all of the Obligations of
Borrower under the Loan Agreement, Lender is requiring that Pledgor
shall have executed and delivered this Non-Recourse Guaranty and
Pledge Agreement and granted the security interest contemplated
hereby;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, and to induce Lender to make Loans
under the Loan Agreement, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms
-----------
defined in the Loan Agreement are used herein as therein defined, and
the following shall have (unless otherwise provided elsewhere in this
Non-Recourse Guaranty and Pledge Agreement) the following respective
meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Agreement" shall mean this Non-Recourse Guaranty and Pledge
Agreement, including all amendments, modifications and supplements and
any exhibits or schedules to any of the foregoing, and shall refer to
the Agreement as
<PAGE>
<PAGE>
the same may be in effect at the time such reference becomes operative.
"Bankruptcy Code" shall mean title 11, United States Code,
as amended from time to time, and any successor statute thereto.
"Pledged Collateral" shall have the meaning assigned to such
term in Section 2 hereof.
"Secured Obligations" shall have the meaning assigned to
such term in Section 3 hereof.
2. Pledge. Pledgor hereby pledges to Lender, and grants
------
to Lender, a first priority security interest in, all of the following
(collectively, the "Pledged Collateral") except as otherwise provided
in Section 8(b):
(a) the Pledged Shares owned by Pledgor and the
certificates representing the Pledged Shares, and all dividends,
distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Shares owned by
Pledgor; and
(b) all additional shares of capital stock of Borrower from
time to time acquired by Pledgor in any manner (which shares shall be
deemed to be part of the Pledged Shares), and the certificates
representing such additional shares, and all dividends, distributions,
cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares.
3. Security for Obligations. This Agreement secures, and
------------------------
the Pledged Collateral is security for, the prompt payment in full
when due, whether at stated maturity, by acceleration or otherwise,
and performance of the Obligations, whether for principal, premium,
interest, fees, costs and expenses of Lender incurred in connection
with this Agreement, and all obligations of Pledgor now or hereafter
existing under this Agreement (collectively, the "Secured
Obligations").
4. Delivery of Pledged Collateral. All certificates
------------------------------
representing or evidencing the Pledged Shares shall be delivered to
and held by or on behalf of Lender pursuant hereto and shall be
accompanied by duly executed instruments of transfer or assignment in
<PAGE>
<PAGE>
blank, all in form and substance satisfactory to Lender. Lender shall
have the right, at any time in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Lender or any of
its nominees any or all of the Pledged Shares. In addition, Lender
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Shares for certificates or instruments
of smaller or larger denominations.
5. Non-Recourse Guaranty. Pledgor hereby guarantees to
---------------------
Lender, on a non-recourse basis, prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of the Secured
Obligations, it being understood that Lender's sole recourse against
Pledgor shall be limited to the Pledged Collateral. Pledgor hereby
waives any right of subrogation, reimbursement, contribution or any
similar right against Borrower or any other guarantor in respect of
the Secured Obligations.
6. Representations and Warranties. Pledgor represents and
------------------------------
warrants to Lender that:
(a) Pledgor is, and at the time of delivery of the Pledged
Shares to Lender pursuant to Section 4 hereof will be, the sole holder
of record and the sole beneficial owner of the Pledged Collateral
pledged by Pledgor free and clear of any Lien thereon or affecting the
title thereto except for the Lien created by this Agreement.
(b) All of the Pledged Shares have been duly authorized,
validly issued and are fully paid and non-assessable.
(c) Pledgor has the right and requisite authority to
pledge, assign, transfer, deliver, deposit and set over the Pledged
Collateral pledged by such Pledgor to Lender as provided herein.
(d) None of the Pledged Shares of Pledgor has been issued
or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance
or transfer may be subject.
(e) No consent, approval, authorization or other order of
any Person and no consent, authorization, approval, or other action
by, and no notice to or filing with, any Governmental Entity is
<PAGE>
<PAGE>
required to be made or obtained by Pledgor either (i) for the pledge
by Pledgor of the Pledged Collateral pursuant to this Agreement or for
the execution, delivery or performance of this Agreement by Pledgor or
(ii) for the exercise by Lender of the voting or other rights provided
for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required in
connection with such disposition by laws affecting the offering and
sale of securities generally.
(f) The pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement will create a valid first
priority Lien on and a first priority perfected security interest in
the Pledged Collateral pledged by Pledgor, and the proceeds thereof,
securing the payment of the Secured Obligations, subject to no other
Lien or security interest.
(g) This Agreement has been duly executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting the rights of creditors generally or by the
application of general equity principles.
The representations and warranties set forth in this Section
6 shall survive the execution and delivery of this Agreement.
7. Covenants. Pledgor covenants and agrees that until the
---------
Repayment Date:
(a) Without the prior written consent of Lender, Pledgor
will not sell, assign, transfer, pledge, or otherwise encumber any of
its rights in or to the Pledged Collateral pledged by Pledgor or any
unpaid dividends or other distributions or payments with respect
thereto or grant a Lien on any of the foregoing except as otherwise
permitted by the Loan Agreement.
(b) Pledgor will, at its expense, promptly execute,
acknowledge and deliver all such instruments and take all such action
as Lender from time to time may request in order to ensure to Lender
the benefits of the Liens in and to the Pledged Collateral intended to
be created by this Agreement, including the filing of any necessary
<PAGE>
<PAGE>
Uniform Commercial Code financing statements, which may be filed by
Lender with or without the signature of Pledgor, and will cooperate
with Lender, at Pledgor's expense, in obtaining all necessary
approvals and making all necessary filings under federal or state law
in connection with such Liens or any sale or transfer of the Pledged
Collateral.
(c) Pledgor has and will defend the title to the Pledged
Collateral and the Liens of Lender thereon against the claim of any
Person and will maintain and preserve such Liens until the Repayment
Date.
(d) Pledgor will, upon obtaining any additional shares of
capital stock of Borrower which are not already Pledged Collateral,
promptly (and in any event within three (3) Business Days) deliver to
Lender a Pledge Amendment, duly executed by Pledgor, in substantially
the form of Schedule II hereto (a "Pledge Amendment"), in respect of
the additional Pledged Shares which are to be pledged pursuant to this
Agreement. Pledgor hereby authorizes Lender to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Shares listed
on any Pledge Amendment delivered to Lender shall for all purposes
hereunder be considered Pledged Collateral.
8. Pledgor's Rights. As long as no Default or Event of
----------------
Default shall have occurred and be continuing and until written notice
shall be given to Pledgor in accordance with Section 9(a) hereof,
(a) Pledgor shall have the right, from time to time, to
vote and give consents with respect to the Pledged Collateral or any
part thereof for all purposes not inconsistent with the provisions of
this Agreement, the Loan Agreement, and any other agreement; provided,
--------
however, that no vote shall be cast, and no consent shall be given or
-------
action taken, which would have the effect of impairing the position or
interest of Lender in respect of the Pledged Collateral or which would
authorize or effect (except as and to the extent expressly permitted
by the Loan Agreement) (i) the dissolution or liquidation, in whole or
in part, of Borrower, (ii) the consolidation or merger of Borrower
with any other Person, (iii) the sale, disposition or encumbrance of
all or substantially all of the assets of Borrower, (iv) any change in
the authorized number of shares, the stated capital or the authorized
share capital of Borrower or the issuance of any additional shares of
<PAGE>
<PAGE>
stock of Borrower, or (v) the alteration of the voting rights with
respect to the stock of Borrower;
(b) (i) Pledgor shall be entitled, from time to time, to
collect and receive for its own use and shall not be required to
pledge pursuant to Section 2, all cash dividends paid in respect of
the Pledged Shares to the extent not in violation of the Loan
Agreement other than any and all (A) dividends paid or payable other
than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral, (B) dividends and other
distributions paid or payable in cash in respect of any Pledged
Collateral in connection with a partial or total liquidation or
dissolution, and (C) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any
Pledged Collateral; provided, however, that until actually paid all
-------- -------
rights to such dividends shall remain subject to the Lien created by
this Agreement; and
(ii) all dividends (other than such cash dividends as
are permitted to be paid to Pledgor in accordance with clause (i)
above) and all other distributions in respect of any of the Pledged
Shares of Pledgor, whenever paid or made, shall be delivered to Lender
to hold as Pledged Collateral and shall, if recovered by Pledgor, be
received in trust for the benefit of Lender, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to
Lender as Pledged Collateral in the same form as so received (with any
necessary indorsement).
9. Defaults and Remedies. (a) Upon the occurrence of an
---------------------
Event of Default and during the continuation of such Event of Default,
then or at any time after the occurrence thereof and following written
notice thereof to Pledgor (provided that such notice is not rescinded
by Lender) Lender (personally or through an agent) is hereby
authorized and empowered to transfer and register in its name or in
the name of its nominee the whole or any part of the Pledged
Collateral, to exchange certificates or instruments representing or
evidencing Pledged Shares for certificates or instruments of smaller
or larger denominations, to exercise the voting rights with respect
thereto, to collect and receive all cash dividends and other
distributions made thereon, to sell in one or more sales after ten
(10) days' notice of the time and place of any public sale or of the
time after which a private sale is to take place (which notice Pledgor
<PAGE>
<PAGE>
agrees is commercially reasonable), but without any previous notice or
advertisement, the whole or any part of the Pledged Collateral and to
otherwise act with respect to the Pledged Collateral as though Lender
was the outright owner thereof, Pledgor hereby irrevocably
constituting and appointing Lender as the proxy and attorney-in-fact
of Pledgor, with full power of substitution to do so, and which shall
remain in effect until the Secured Obligations are paid in full;
provided, however, Lender shall not have any duty to exercise any such
-------- -------
right or to preserve the same and shall not be liable for any failure
to do so or for any delay in doing so. Any sale shall be made at a
public or private sale at Lender's place of business, or at any public
building in the City of New York or elsewhere to be named in the
notice of sale, either for cash or upon credit or for future delivery
at such price as Lender may deem fair, and Lender may be the purchaser
of the whole or any part of the Pledged Collateral
so sold and hold the same thereafter in its own right free from any
claim of Pledgor or any right of redemption. Each sale shall be made
to the highest bidder, but Lender reserves the right to reject any and
all bids at such sale which, in its discretion, it shall deem
inadequate. Demands of performance, except as otherwise herein
specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder
may be conducted by an auctioneer or any officer or agent of Lender.
(b) If, at the original time or times appointed for the
sale of the whole or any part of the Pledged Collateral, the highest
bid, if there be but one sale, shall be inadequate to discharge in
full all the Secured Obligations, or if the Pledged Collateral be
offered for sale in lots, if at any of such sales, the highest bid for
the lot offered for sale would indicate to Lender, in its discretion,
the unlikelihood of the proceeds of the sales of the whole of the
Pledged Collateral being sufficient to discharge all the Secured
Obligations, Lender may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at the
time of sale or the time of previous postponement of sale, and no
other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, however, that
-------- -------
any sale or sales made after such postponement shall be after seven
(7) days' notice to Pledgor.
(c) In the event of any sales hereunder, Lender shall,
after deducting all costs or expenses of every kind (including
<PAGE>
<PAGE>
reasonable attorneys' fees and disbursements) for care, safekeeping,
collection, sale, delivery or otherwise, apply the residue of the
proceeds of the sales to the payment or reduction, either in whole or
in part, of the Secured Obligations in accordance with the agreements
and instruments governing and evidencing such Obligations, returning
the surplus, if any, to Pledgor.
(d) If, at any time when Lender in its sole discretion
determines, following the occurrence and during the continuance of an
Event of Default, that, in connection with any actual or contemplated
exercise of its rights (when permitted under this Section 9) to sell
the whole or any part of the Pledged Collateral hereunder, it is
necessary or advisable to effect a public registration of all or part
of the Pledged Collateral pursuant to the Securities Act of 1933, as
amended (or any similar statute then in effect) (the "Act"), Pledgor
shall, in an expeditious manner, and to the extent Pledgor has
authority or the right to, cause Borrower to and if Pledgor cannot
cause Borrower to, then Pledgor must cooperate with Borrower to do all
things reasonably requested by Lender to effect such registration:
(e) Lender agrees that it will not seek any monetary
damages from any Pledgor and that it shall only seek specific
performance of its rights under this Agreement. Pledgor agrees that
monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(f) If, at any time when Lender shall determine to exercise
its right to sell the whole or any part of the Pledged Collateral
hereunder, such Pledged Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under
the Act, Lender may, in its discretion (subject only to applicable
requirements of law), sell such Pledged Collateral or part thereof by
private sale in such manner and under such circumstances as Lender may
deem necessary or advisable, but subject to the other requirements of
this Section 9, and shall not be required to effect such registration
or to cause the same to be effected. Without limiting the generality
of the foregoing, in any such event Lender in its discretion (a) may,
in accordance with applicable securities laws, proceed to make such
private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Collateral or part thereof could
<PAGE>
<PAGE>
be or shall have been filed under said Act (or similar statute),
(b) may approach and negotiate with a single possible purchaser to
effect such sale, and (c) may restrict such sale to a purchaser who
will represent and agree that such purchaser is purchasing for its own
account, for investment and not with a view to the distribution or
sale of such Pledged Collateral or part thereof. In addition to a
private sale as provided above in this Section 9, if any of the
Pledged Collateral shall not be freely distributable to the public
without registration under the Act (or similar statute) at the time of
any proposed sale pursuant to this Section 9, then Lender shall not be
required to effect such registration or cause the same to be effected
but, in its discretion (subject only to applicable requirements of
law), may require that any sale hereunder (including a sale at
auction) be conducted subject to restrictions (i) as to the financial
sophistication and ability of any Person permitted to bid or purchase
at any such sale, (ii) as to the content of legends to be placed upon
any certificates representing the Pledged Collateral sold in such
sale, including restrictions on future transfer thereof, (iii) as
to the representations required to be made by each Person bidding or
purchasing at such sale relating to that Person's access to financial
information about Pledgor and such Person's intentions as to the
holding of the Pledged Collateral so sold for investment, for its own
account, and not with a view to the distribution thereof, and (iv) as
to such other matters as Lender may, in its discretion, deem necessary
or appropriate in order that such sale (notwithstanding any failure so
to register) may be effected in compliance with the Bankruptcy Code
and other laws affecting the enforcement of creditors' rights and the
Act and all applicable state securities laws.
(g) Pledgor acknowledges that notwithstanding the legal
availability of a private sale or a sale subject to the restrictions
described above in paragraph (f), Lender may, in its discretion, elect
to register any or all the Pledged Collateral under the Act (or any
applicable state securities law) in accordance with its rights here-
under. Pledgor, however, recognizes that Lender may be unable to
effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof. Pledgor
also acknowledges that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
<PAGE>
<PAGE>
reasonable manner. Lender shall be under no obligation to delay a
sale of any of the Pledged Collateral for the period of time necessary
to permit the registrant to register such securities for public sale
under the Act, or under applicable state securities laws, even if
Pledgor would agree to do so.
(h) Pledgor agrees that following the occurrence and during
the continuance of an Event of Default it will not at any time plead,
claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in
order to prevent or delay the enforcement of this Agreement, or the
absolute sale of the whole or any part of the Pledged Collateral or
the possession thereof by any purchaser at any sale hereunder, and
Pledgor waives the benefit of all such laws to the extent it lawfully
may do so. Pledgor agrees that it will not interfere with any right,
power and remedy of Lender provided for in this Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, or
the exercise or beginning of the exercise by Lender of any one or more
of such rights, powers or remedies. No failure or delay on the part
of Lender to exercise any such right, power or remedy and no notice or
demand which may be given to or made upon Pledgor by Lender with
respect to any such remedies shall operate as a waiver
thereof, or limit or impair Lender's right to take any
action or to exercise any power or remedy hereunder, without
notice or demand, or prejudice its rights as against Pledgor in any
respect.
(i) Pledgor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to
Lender, that Lender has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant
contained in this Section 9 shall be specifically enforceable against
Pledgor, and Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing
and evidencing such obligations.
10. Application of Proceeds. Any cash held by Lender as
-----------------------
Pledged Collateral and all cash proceeds received by Lender in respect
of any sale of, liquidation of, or other realization upon all or any
part of the Pledged Collateral shall be applied by Lender as follows:
<PAGE>
<PAGE>
first, to Lender in an amount sufficient to pay in full the
-----
expenses of Lender in connection with such sale, disposition or
other realization, including all expenses, liabilities and
advances incurred or made by Lender in connection therewith,
including, without limitation, attorney's fees;
second, to Lender in an amount equal to the then unpaid
------
principal of and accrued interest and prepayment premiums, if
any, on the Secured Obligations;
third, to Lender in an amount equal to any other Secured
-----
Obligations which are then unpaid; and
finally, after payment in full of all Secured Obligations,
-------
to pay to Pledgor, or as a court of competent jurisdiction may
direct, any surplus then remaining from such proceeds.
11. Waiver. No delay on Lender's part in exercising any
------
power of sale, Lien, option or other right hereunder, and no notice or
demand which may be given to or made upon Pledgor by Lender with
respect to any power of sale, Lien, option or other right hereunder,
shall constitute a waiver thereof, or limit or impair Lender's right
to take any action or to exercise any power of sale, Lien, option,
or any other right hereunder, without notice or demand, or prejudice
Lender's rights as against Pledgor in any respect.
12. Assignment. Lender may assign, indorse or transfer any
----------
instrument evidencing all or any part of the Secured Obligations and
the holder of such instrument shall be entitled to the benefits of
this Agreement.
13. Termination. Immediately following the payment of all
-----------
Secured Obligations, Lender shall deliver to Pledgor the Pledged
Collateral pledged by Pledgor at the time subject to this Agreement
and all instruments of assignment executed in connection therewith,
free and clear of the Liens hereof and, except as otherwise provided
herein, all of Pledgor's obligations hereunder shall at such time
terminate.
14. Lien Absolute. All rights of Lender hereunder, and all
-------------
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
<PAGE>
<PAGE>
(a) any lack of validity or enforceability of the Loan
Agreement, the Note, any other Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any part of the Secured Obligations,
or any other amendment or waiver of or any consent to any departure
from the Loan Agreement, the Note, any other Loan Document or any
other agreement or instrument governing or evidencing any Secured
Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations; or
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, Pledgor.
15. Release. Pledgor consents and agrees that Lender may
-------
at any time, or from time to time, in its discretion (a) renew, extend
or change the time of payment, and/or the manner, place or terms of
payment of all or any part of the Secured Obligations and
(b) exchange, release and/or surrender all or any of the Pledged
Collateral, or any part(s) thereof, by whomsoever deposited, which is
now or may hereafter be held by Lender in connection with
all or any of the Secured Obligations; all in such manner
and upon such terms as Lender may deem proper, and
without notice to or further assent from Pledgor, it being hereby
agreed that Pledgor shall be and remain bound upon this Agreement,
irrespective of the existence, value or condition of any of the
Pledged Collateral, and notwithstanding any such change, exchange,
settlement, compromise, surrender, release, renewal or extension, and
notwithstanding also that the Secured Obligations may, at any time
exceed the aggregate principal amount thereof set forth in the Loan
Agreement, or any other agreement governing any Secured Obligations.
Pledgor hereby waives notice of acceptance of this Agreement, and also
presentment, demand, protest and notice of dishonor of any and all of
the Secured Obligations, and promptness in commencing suit against any
party hereto or liable hereon, and in giving any notice to or of
making any claim or demand hereunder upon Pledgor. No act or omission
of any kind on Lender's part shall in any event affect or impair this
Agreement.
<PAGE>
<PAGE>
16. Reinstatement. This Agreement shall remain in full
-------------
force and effect and continue to be effective should any petition be
filed by or against Pledgor for liquidation or reorganization, should
Pledgor become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of Pledgor's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment
and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent
conveyance", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
17. Miscellaneous. (a) Lender may execute any of its
-------------
duties hereunder by or through agents or employees and shall be
entitled to advice of counsel concerning all matters pertaining to its
duties hereunder.
(b) Neither Lender nor any of its officers, directors,
employees, agents or counsel shall be liable for any action lawfully
taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own negligence or willful
misconduct.
(c) THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS
SUCCESSORS AND ASSIGNS, AND SHALL INURE TO THE BENEFIT OF, AND BE
ENFORCEABLE BY, LENDER AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS IN EFFECT IN THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICT OF LAWS, AND NONE OF THE TERMS OR PROVISIONS
OF THIS AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT
IN WRITING DULY SIGNED FOR AND ON BEHALF OF LENDER AND PLEDGOR.
18. Severability. If for any reason any provision or
------------
provisions hereof are determined to be invalid and contrary to any
existing or future law, such invalidity shall not impair the operation
of or affect those portions of this Agreement which are valid.
<PAGE>
<PAGE>
19. Notices. Except as otherwise provided herein, whenever
-------
it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to
or served upon any of the parties by any other party, or whenever any
of the parties desires to give or serve upon any other a communication
with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in
writing and either shall be delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(a) If to Lender, at:
15 Carshalton Road
Sutton
Surrey SM1 4LD
Attention: Ed Hough
Telecopy Number: 0181 661 0205
with a copy to:
Weil, Gotshal & Manges
99 Bishopsgate
London EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy Number: 0171 426 1000
(b) If to Pledgor, at its address specified in Schedule I
With a copy to:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles
California 90064
Attention: Nancy Wojtas
Telecopy Number: 310 312 4224
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every
notice, demand, request, consent, approval, declaration or other
<PAGE>
<PAGE>
communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback, or
seven (7) Business Days after the same shall have been deposited (i)
in the United States mail (in the case of notice being given by the
Pledgor or any other Person located in the United States) or (ii) in
the United Kingdom mail (in the case of notice being given by the
Lender or any other Person located in the United Kingdom). Failure or
delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the
parties hereto.
21. Counterparts. This Agreement may be executed in any
------------
number of counterparts, which shall, collectively and separately,
constitute one agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Non-Recourse Guaranty and Pledge Agreement to be duly executed as of
the date first written above.
INTEK DIVERSIFIED CORPORATION
By: /s/ David Neibert
--------------------------------
Name: David Neibert
Title: Executive Vice President
Accepted and Acknowledged by:
SECURICOR COMMUNICATIONS LIMITED
By: /s/ M.G. Wilkinson
------------------------------
Name: M.G. Wilkinson
Title: Director
<PAGE>
<PAGE>
SCHEDULE I
Attached to and forming a part of that certain Non-Recourse
Guaranty and Pledge Agreement dated as of September 19, 1996 by
Pledgor to Securicor Communications Limited.
<TABLE>
<CAPTION>
Number of
Shares
Name and Address Class of Certificate Number of Issued and
of Pledgor Issuer Stock Number(s) Shares Outstanding
---------------- ------ -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Intek Diversified Corporation Midland USA, Inc. Common 1 100 100
970 West 190th Street Stock, par
Suite 970 value $0.01
Torrance, California 90502
</TABLE>
<PAGE>
<PAGE>
SCHEDULE II
to the Non-Recourse Guaranty and Pledge Agreement
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 19__ is delivered
pursuant to Section 7(d) of the Non-Recourse Guaranty and Pledge
Agreement referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to that certain Non-Recourse Guaranty
and Pledge Agreement, dated as of September 19, 1996 by the
undersigned and others, as Pledgor, to Securicor Communications
Limited, and that the Pledged Shares listed on this Pledge Amendment
shall be and become a part of the Pledged Collateral referred to in
said Non-Recourse Guaranty and Pledge Agreement and shall secure all
Secured Obligations referred to in said Non-Recourse Guaranty and
Pledge Agreement.
INTEK DIVERSIFIED CORPORATION
By:
---------------------------
Name:
Title:
<TABLE>
<CAPTION>
Number of
Shares
Name and Address Class of Certificate Number of Issued and
of Pledgor Issuer Stock Number(s) Shares Outstanding
---------------- ------ -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Intek Diversified Corporation Midland USA, Inc. Common
970 West 190th Street Stock, par
Suite 970 value $0.01
Torrance, California 90502
</TABLE>
NYFS09...:\73\73273\0003\1224\AGR8116W.53G
<PAGE>
EXHIBIT 5
REVOLVING CREDIT NOTE
----------------------
$15,000,000 New York, New York
September 19, 1996
FOR VALUE RECEIVED, the undersigned, MIDLAND USA, INC., a
Delaware corporation (hereinafter referred to as "Borrower"), hereby
PROMISES TO PAY to the order of SECURICOR COMMUNICATIONS LIMITED, a
corporation formed under the laws of England and Wales ("Lender"), at
15 Carshalton Road, Sutton, Surrey, SM1 4LD, or at such other place as
the holder of this Revolving Credit Note may designate from time to
time in writing, in lawful money of the United States of America and
in immediately available funds, the amount of fifteen million dollars
($15,000,000), or such lesser principal amount as may be outstanding
pursuant to the Loan Agreement (as hereinafter defined), together with
interest on the unpaid principal amount of this Revolving Credit Note
outstanding from time to time from the date hereof at the rate or
rates provided in the Loan Agreement.
This Revolving Credit Note is issued pursuant to that
certain Loan Agreement dated as of September 19, 1996 between Borrower
and Lender (the "Loan Agreement"), and is entitled to the benefit and
security of the Loan Documents provided for therein, to which
reference is hereby made for a statement of all of the terms and
conditions under which the loan evidenced hereby is made. All
capitalized terms, unless otherwise defined herein, shall have the
meanings ascribed to them in the Loan Agreement.
The principal amount of the indebtedness evidenced hereby
shall be payable on the Repayment Date. Interest thereon shall accrue
on a daily basis at the rate specified in the Loan Agreement and shall
be capitalized on a monthly basis. Any accrued but uncapitalized
interest shall be payable on the Repayment Date.
If any payment on this Revolving Credit Note becomes due and
payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall continue to accrue at
the then applicable rate during such extension.
Upon and after the occurrence of an Event of Default, this
Revolving Credit Note may, as provided in the Loan Agreement, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
<PAGE>
<PAGE>
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrower.
THIS REVOLVING CREDIT NOTE HAS BEEN EXECUTED, DELIVERED AND
ACCEPTED AT NEW YORK, NEW YORK AND SHALL BE INTERPRETED, GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
MIDLAND USA, INC.
By:
--------------------------------
Name:
Title:
NYFS09...:\73\73273\0003\1224\NTE8116W.32F
<PAGE>
EXHIBIT 6
SECURITY AGREEMENT
SECURITY AGREEMENT, dated September 19, 1996, made by
Midland USA, Inc., a Delaware corporation (the "Grantor") and a
wholly-owned subsidiary of Intek Diversified Corporation, a Delaware
corporation ("Intek"), in favor of Securicor Communications Limited, a
company incorporated under the laws of England and Wales (the
"Lender").
W I T N E S S E T H :
-------------------
WHEREAS, pursuant to that certain Loan Agreement dated as of
September 19, 1996 between Borrower and Lender (as the same may from
time to time be amended, modified or supplemented, the "Loan
Agreement"), Lender has agreed to make Revolving Credit Advances as
defined in the Loan Agreement; and
WHEREAS, Lender is willing to make the Revolving Credit
Advances but only upon the condition, among others, that Grantor shall
have executed and delivered to Lender this Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Defined Terms. As used in this Agreement, terms defined
-------------
in the Loan Agreement are used herein as therein defined, and the
following terms have the meanings specified below (such meanings being
equally applicable to both the singular and plural forms of the terms
defined):
"Account" means any "account," as such term is defined
-------
in Section 9-106 of the UCC, now owned or hereafter acquired by the
Grantor and, in any event, includes, without limitation, (i) all
accounts receivable, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or
Instruments) now owned or hereafter received or acquired by or
belonging or owing to the Grantor (including, without limitation,
under any trade name, style or division thereof) whether arising out
of goods sold or services rendered by the Grantor or from any other
transaction, whether or not the same involves the sale of goods or
services by the Grantor (including, without limitation, any such
obligation which might be characterized as an account or contract
right under the UCC), (ii) all of the Grantor's rights in, to and
under all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, and all of the Grantor's rights to
<PAGE>
<PAGE>
any goods represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods), (iii) all moneys due or to become due to the
Grantor under all contracts for the sale of goods or the performance
of services or both by the Grantor (whether or not yet earned by
performance on the part of the Grantor or in connection with any other
transaction), now in existence or hereafter occurring, including,
without limitation, the right to receive the proceeds of said purchase
orders and contracts, and (iv) all collateral security and guarantees
of any kind given by any Person with respect to any of the foregoing.
"Account Debtor" means any "account debtor," as such
--------------
term is defined in Section 9-105(1)(a) of the UCC.
"Blocked Account #1" means account # 010161070176 at
------------------
Boatman's First National Bank of Kansas City, 14 West 10th Street,
Kansas City, MO 64105.
"Blocked Account #2" means account # 010161070184 at
------------------
Boatman's First National Bank of Kansas City, 14 West 10th Street,
Kansas City, MO 64105.
"Blocked Accounts" means the blocked accounts
----------------
maintained by the Grantor with the Blocked Account Bank, all monies,
instruments and other property deposited therein and all certificates
and instruments, if any, representing or evidencing such Blocked
Accounts.
"Blocked Account Bank" means a financial institution
--------------------
selected or approved by the Lender and with respect to which the
Grantor has delivered to the Lender an executed Blocked Account
Letter.
"Blocked Account Letter" means a letter, substantially
----------------------
in the form of Annex I hereto (with such changes as may be agreed to
by the Lender), executed by the Grantor and the Lender and
acknowledged and agreed to by a Blocked Account Bank.
"Cash Collateral Account" has the meaning specified in
-----------------------
Section 5(s).
"Chattel Paper" means any "chattel paper," as such term
-------------
is defined in Section 9-105(1)(b) of the UCC, now owned or hereafter
acquired by the Grantor.
<PAGE>
<PAGE>
"Collateral" has the meaning assigned to it in Section
----------
2 of this Agreement.
"Contracts" means all contracts, undertakings or other
---------
agreements (other than Chattel Paper, Documents or Instruments) in or
under which the Grantor may now or hereafter have any right, title or
interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of
performance thereof.
"Copyrights" means copyrights, registrations and appli
----------
cations therefor, and any and all (i) renewals and extensions thereof,
(ii) income, royalties, damages and payments now and hereafter due or
payable or both with respect thereto, including, without limitation,
damages and payments for past or future infringements or
misappropriations thereof, (iii) rights to sue for past, present and
future infringements or misappropriations thereof, and (iv) all other
rights corresponding thereto throughout the world.
"Documents" means any "document," as such term is
---------
defined in Section 9-105(1)(f) of the UCC, now owned or hereafter
acquired by the Grantor.
"Equipment" means any "equipment," as such term is
---------
defined in Section 9-109(2) of the UCC, now owned or hereafter
acquired by the Grantor and, in any event, includes, without
limitation, all machinery, equipment, furnishings, fixtures, vehicles,
computers and other electronic data-processing and office equipment
now owned or hereafter acquired by the Grantor and any and all addi-
tions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles,"
-------------------
as such term is defined in Section 9-106 of the UCC, now owned or
hereafter acquired by the Grantor and, in any event, includes, without
limitation, all customer lists, Trademarks, Patents, rights in
Intellectual Property Collateral, Licenses, permits, Copyrights, Trade
Secrets, proprietary or confidential information, inventions (whether
patented or patentable or not) and technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and
records, goodwill, rights of indemnification and all right, title and
interest which the Grantor may now or hereafter have in or under any
Contract, now owned or hereafter acquired by the Grantor.
<PAGE>
<PAGE>
"Governmental Authority" means any nation or
----------------------
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Instrument" means any "instrument," as such term is
----------
defined in Section 9-105(1)(i) of the UCC, now owned or hereafter
acquired by the Grantor, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property Collateral" means:
--------------------------------
(a) All Trademarks of the Grantor, including, without
limitation, the Trademarks listed on Schedule III hereto;
(b) all Copyrights of the Grantor, including, without
limitation, the Copyrights listed on Schedule IV hereto;
(c) all Licenses of the Grantor, including, without
limitation, the Licenses listed on Schedule V hereto;
(d) all Patents of the Grantor, including, without
limitation, the Patents listed on Schedule VI hereto;
(e) all Trade Secrets of the Grantor; and
(f) the entire goodwill of the Grantor's business
connected with the use of and symbolized by the Trademarks.
"Inventory" means any "inventory," as such term is
---------
defined in Section 9-109(4) of the UCC, now owned or hereafter
acquired by the Grantor, and wherever located, and, in any event,
includes, without limitation, all inventory, merchandise, goods and
other personal property now owned or hereafter acquired by the Grantor
which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used
or consumed in the Grantor's business, or the processing, packaging,
delivery or shipping of the same, and all finished goods.
"Lender" has the meaning assigned to in the recitals
------
and in any event refers to Securicor Communications Limited in its
capacity as Lender.
<PAGE>
<PAGE>
"Licenses" means license agreements in which the
--------
Grantor grants or receives a grant of any interest in Copyrights,
Trademarks, Patents and Trade Secrets (all as defined herein) and
other intellectual property and any and all (i) renewals, extensions,
supplements, amendments and continuations thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable to
the Grantor with respect thereto, including, without limitation,
damages and payments for past, present and future violations or
infringements or misappropriations thereof, and (iii) rights to sue
for past, present and future violations or infringements or
misappropriations thereof.
"Obligor" has the meaning assigned to it in Section
-------
5(s)(iii) of this Agreement.
"Patents" means patents and patent applications along
-------
with any and all (i) inventions and improvements described and claimed
therein, (ii) reissues, divisions, continuations, renewals, extensions
and continuations-in-part thereof, (iii) income, royalties, damages
and payments now and hereafter due and/or payable to the Grantor with
respect thereto, including, without limitation, damages and payments
for past or future infringements or misappropriations thereof, (iv)
rights to sue for past, present and future infringements or
misappropriations thereof, and (v) all other rights corresponding
thereto throughout the world.
"Permitted Liens" means Liens permitted by Section 7.8
---------------
of the Loan Agreement existing as of the date hereof or to be created
hereafter.
"Proceeds" means "proceeds," as such term is defined in
--------
Section 9-306(1) of the UCC, and, in any event, shall include, without
limitation, (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Grantor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to the Grantor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of Govern-
mental Authority), and (iii) any and all other amounts from time to
time paid or payable under or in connection with any of the
Collateral.
"Secured Obligations" means (i) all of the unpaid
-------------------
principal amount of, and accrued interest on, the Note, (ii) the
Extension Fee, and all other fees owing by the Grantor under the Loan
Agreement to the Lender and (iii) all other Indebtedness,
<PAGE>
<PAGE>
liabilities and obligations of the Grantor to the Lender, whether now
existing or hereafter incurred, and whether created under, arising out
of or in connection with the Loan Agreement, this Security Agreement,
any of the other Loan Documents or otherwise.
"Trade Secrets" means trade secrets, along with any and
-------------
all (i) income, royalties, damages and payments now and hereafter due
and/or payable to the Grantor with respect thereto, including, without
limitation, damages and payments for past, present and future
infringements or misappropriations thereof, (ii) rights to sue for
past, present and future infringements or misappropriations thereof,
and (iii) all other rights corresponding thereto throughout the world.
"Trademarks" means trademarks including service marks
----------
and trade names, whether registered or at common law, registrations
and applications therefor, and the entire product lines and goodwill
of Grantor's business connected therewith and symbolized thereby,
together with any and all (i) renewals thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable or
both with respect thereto, including, without limitation, damages and
payments for past, present and future infringements or
misappropriations thereof, (iii) rights to sue for past, present and
future infringements or misappropriations thereof, and (iv) all other
rights corresponding thereto throughout the world.
"UCC" means the Uniform Commercial Code as the same
---
may, from time to time, be in effect in the State of New York;
provided, however, in the event that, by reason of mandatory
-------- -------
provisions of law, any or all of the attachment, perfection or
priority of the Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
2. Grant of Security Interest.
--------------------------
(a) As collateral security for the full and prompt payment
when due (whether at stated maturity, by acceleration or otherwise)
of, and the performance of, all the Secured Obligations and to induce
the Lender to make the Revolving Credit Advances available pursuant to
the Loan Agreement, the Grantor hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Lender, and hereby grants
to the Lender, a
<PAGE>
<PAGE>
security interest in, all of the Grantor's right, title and interest
in, to and under the following (all of which being hereinafter
collectively called the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts and any and all claims of the
Grantor for damages arising out of or for breach of or a default under
any Contract and the right of the Grantor to perform or to compel
performance under any Contract and to exercise all remedies
thereunder;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all present and future Blocked Accounts and all
funds, certificates and instruments, if any, from time to time held in
or representing or evidencing such Blocked Accounts provided, however,
-------- -------
the foregoing grant with respect to Blocked Account #1 shall not be
effective until the 30th day following the date hereof;
(x) all other goods and personal property of the
Grantor whether tangible or intangible or whether now owned or
hereafter acquired by the Grantor and wherever located; and
(xi) to the extent not otherwise included, all Proceeds
of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the
foregoing.
(b) In addition, as collateral security for the prompt and
complete payment when due of the Secured Obligations, the Lender is
hereby granted a lien and security interest in all property of the
Grantor held by the Lender including, without limitation, all property
of every description, now or hereafter in the possession or custody of
or in transit to the Lender for any purpose, including safekeeping,
collection or pledge, for the
<PAGE>
<PAGE>
account of the Grantor, or as to which the Grantor may have any right
or power.
3. Rights of the Lender; Limitations on Lender's
---------------------------------------------
Obligations.
-----------
(a) It is expressly agreed by the Grantor that, anything
herein to the contrary notwithstanding, the Grantor shall remain
liable under each of the Contracts and Licenses to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder and the Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such Contract and License. The Lender
shall not have any obligation or liability under any Contract or
License by reason of or arising out of this Agreement or the granting
of a security interest in any contract to the Lender or by reason of
the receipt by the Lender of any payment relating to any Contract or
License pursuant hereto, nor shall the Lender be required or obligated
in any manner to perform or fulfill any of the obligations of the
Grantor under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by
any party under any Contract or License, or to present or file any
claim, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) The Lender authorizes the Grantor to collect its
Accounts, Chattel Paper and Instruments, provided that such collection
is performed in a prudent and businesslike manner, and the Lender may,
upon the occurrence and during the continuance of any Event of Default
and without notice, limit or terminate said authority at any time. If
required by the Lender at any time during the continuance of any Event
of Default, any Proceeds, when first collected by the Grantor,
received in payment of any such Account or in payment for any of its
Inventory or on account of any of its Contracts, shall be promptly
deposited by the Grantor in precisely the form received (with all
necessary indorsements) in a special bank account maintained by the
Lender and subject to withdrawal only by the Lender, as hereinafter
provided, and until so turned over shall be deemed to be held in trust
by the Grantor for and as the Lender's property and shall not be
commingled with the Grantor's other funds or properties. Such
Proceeds, when deposited, shall continue to be collateral security for
all of the Secured Obligations and shall not constitute payment thereof
until applied as hereinafter provided.
<PAGE>
<PAGE>
The Lender shall apply all or a part of the funds on deposit in said
special account to the principal of or interest on or both in respect
of any of the Secured Obligations in accordance with the provisions of
Section 8(d) hereof and any part of such funds which the Lender elects
not so to apply and deem not required as collateral security for the
Secured Obligations shall be paid over from time to time by the Lender
to the Grantor. If an Event of Default has occurred and is
continuing, at the request of the Lender the Grantor shall deliver to
the Lender all original and other documents evidencing, and relating
to, the sale and delivery of such Inventory or the performance of
labor or service which created such Accounts, including, without limi-
tation, all original orders, invoices and shipping receipts; and,
prior to the occurrence of an Event of Default the Grantor shall
deliver photocopies thereof to the Lender at its request.
(c) The Lender may at any time, upon the occurrence and
during the continuance of any Default or Event of Default, after first
notifying the Grantor of its intention to do so, notify Account
Debtors of the Grantor, parties to Contracts of the Grantor, obligors
of Instruments of the Grantor and obligors in respect of Chattel Paper
of the Grantor that the Accounts and the right, title and interest of
the Grantor in and under such Contracts, such Instruments and such
Chattel Paper have been assigned to the Lender and that payments shall
be made directly to the Lender. Upon the request of the Lender, the
Grantor will so notify such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper. Upon the occurrence and during the continuance of
an Event of Default, the Lender may in its own name or in the name of
others communicate with such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper to verify with such Persons to the Lender's satis-
faction the existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper.
(d) Upon reasonable prior notice to the Grantor (unless a
Default or Event of Default has occurred and is continuing, in which
case no notice is necessary), the Lender shall have the right to make
test verifications of the Accounts and physical verifications of the
Inventory in any manner and through any medium that it considers
advisable, and the Grantor agrees to furnish all such assistance and
information as the Lender may require in connection therewith. The
Grantor, at its own cost and expense, will cause certified independent
public accountants satisfactory to the Lender to prepare and deliver
to the Lender, at any time and from time to time promptly upon the
Lender's request, the following reports: (i) a reconciliation of all
its
<PAGE>
<PAGE>
Accounts, (ii) an aging of all its Accounts, (iii) trial balances, and
(iv) a test verification of such Accounts as the Lender may request.
The Grantor at its expense will cause certified independent public
accountants satisfactory to the Lender to prepare and deliver to the
Lender the results of the annual physical verification of its
Inventory made or observed by such accountants.
(e) Notwithstanding anything to the contrary contained
herein, unless an Event of Default has occurred and is continuing, the
Grantor may continue to exploit, license, franchise, use, enjoy and
protect (whether in the United States of America or any foreign
jurisdiction) the Intellectual Property Collateral in the ordinary
course of business and the Lender shall from time to time execute and
deliver, upon written request of Grantor and at Grantor's sole cost
and expense, any and all instruments, certificates or other documents,
in the form so requested, necessary or appropriate in the judgment of
Grantor to enable Grantor to do so.
(f) In order to more fully protect the Intellectual
Property Collateral in respect of which security interests have been
granted to the Lender by the Grantor hereunder, the Grantor shall
hereafter transfer to the Lender such additional rights, privileges,
marks and licenses as Lender or Grantor may in its discretion
determine to be necessary and appropriate to the continuing
exploitation, licensing, use, enjoyment and protection (whether in the
United States of America or any foreign jurisdiction) of the
Intellectual Property Collateral.
(g) The Grantor shall have the duty to preserve and
maintain all rights in the Intellectual Property Collateral in respect
of which a failure to be able to continue to use the same would have a
Material Adverse Effect in a manner substantially consistent with its
present practices. The Grantor shall take all action reasonably
requested by the Lender to register, record and/or perfect the
Lender's rights hereunder. Such duties shall include, but not be
limited to, the following:
(i) The Grantor shall take appropriate action at its
expense to halt the infringement of any of the Intellectual Property
Collateral if such infringement would have a Material Adverse Effect
on the value of the Intellectual Property Collateral or the Grantor's
ability to use the Intellectual Property Collateral;
(ii) The Grantor shall not amend, modify, terminate or
waive any provisions of any other contract to which
<PAGE>
<PAGE>
the Grantor is a party in any manner which might have a Material
Adverse Effect upon the Intellectual Property Collateral.
4. Representations and Warranties. The Grantor hereby
------------------------------
represents and warrants to the Secured Parties as follows:
(a) The Grantor is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware.
(b) The execution, delivery and performance by the Grantor
of this Agreement are within the Grantor's corporate powers, have been
duly authorized by all necessary corporate action, do not contravene
the Grantor's certificate of incorporation or by-laws, any requirement
of law or any order or decree of any court, or any contractual
obligation of the Grantor, and do not result in or require the
creation of any Lien (other than pursuant to the Loan Agreement) upon
or with respect to any of its properties.
(c) No consent, authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the
Grantor of this Agreement.
(d) This Agreement has been duly executed and delivered by
the Grantor and is the legal, valid and binding obligation of the
Grantor, enforceable against the Grantor in accordance with its terms
except that enforceability hereof 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 equitable remedy of specific
performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought.
(e) There are no pending or threatened actions,
investigations or proceeding affecting the Grantor before any court,
Governmental Authority or arbitrator other than those that in the
aggregate, if adversely determined, would have no Material Adverse
Effect.
(f) The Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest
hereunder, having good title thereto, free and clear of any and all
Liens, except for the security interest granted pursuant to this
Agreement and other Permitted Liens. No material amounts payable
under or in connection with any of its Accounts or
<PAGE>
<PAGE>
Contracts are evidenced by Instruments which have not been delivered
to the Lender.
(g) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed by the Grantor
in favor of the Lender pursuant to this Agreement or such as relate to
other Permitted Liens.
(h) Appropriate financing statements having been filed in
the jurisdictions listed on Schedule I hereto, this Agreement is
effective to create a valid and continuing first priority Lien on the
Collateral, prior to all other Liens except Permitted Liens. All
action necessary or desirable to protect and perfect such security
interest in each item of the Collateral has been duly taken.
(i) The Grantor's principal place of business and the place
where its records concerning the Collateral are kept and the location
of its Inventory and Equipment are set forth on Schedule II hereto.
(j) The amount represented by the Grantor to the Lender
from time to time as owing by each Account Debtor or by all Account
Debtors in respect of the Accounts of the Grantor will at such time be
the correct amount actually and unconditionally owing by such Account
Debtors thereunder.
(k) With respect to the Intellectual Property Collateral:
(i) The Trademarks and the Copyrights, Licenses,
Patents and Trade Secrets are subsisting and have not been adjudged
invalid or unenforceable, in whole or in part;
(ii) The Grantor has the full right, power and
authority to grant all of the right, title and interest herein
granted;
(iii) The Grantor has not previously assigned,
transferred, conveyed or otherwise encumbered such right, title and
interest;
(iv) The Grantor is the sole and exclusive owner of the
Intellectual Property Collateral, all of which is free and clear of
any Liens, charges and encumbrances, and no other person
<PAGE>
<PAGE>
or entity has any claim with respect to the Intellectual Property
Collateral whatsoever;
(v) The Intellectual Property Collateral is sufficient
for the purpose of producing goods, performing services and otherwise
carrying on the business of the Grantor;
(vi) Schedules III, IV, V and VI attached hereto list
all Trademarks, Copyrights and Licenses and Patents related to the
Intellectual Property Collateral;
(vii) To the best of the Grantor's knowledge, the
Intellectual Property Collateral does not infringe any rights owned or
possessed by any third party except such infringements as could not
have a Material Adverse Effect;
(viii) There are no claims, judgments or settlements to
be paid by the Grantor or pending claims or litigation relating to the
Intellectual Property Collateral;
(ix) No effective security agreement, financing state-
ment, equivalent security or lien instrument or continuation statement
covering all or any part of the Intellectual Property Collateral is on
file or of record in any public office, except such as may have been
filed by the Grantor in favor of the Lender pursuant to this Agreement
or such as relate to other Permitted Liens; and
(x) All appropriate filings have been made with the
United States Patent and Trademark Office and the United States
Copyright Office and any appropriate filing offices located in foreign
countries, and this Agreement is effective to create a valid and
continuing first priority lien on and first priority security interest
in the Intellectual Property Collateral in favor of the Lender. All
action necessary or desirable to protect and create such security
interest in each item of the Intellectual Property Collateral has been
duly taken.
(l) The Grantor has no trade names, fictitious names or
other names except its legal name, and does not operate in any
jurisdiction under, and, except as set forth on Schedule II hereto,
has not had or operated in any jurisdiction within the five-year
period preceding the date hereof under, any trade name, fictitious
name or other name other than its legal name.
5. Covenants and Blocked Accounts. The Grantor covenants
------------------------------
and agrees with the Lender that from and after the date
<PAGE>
<PAGE>
of this Agreement and so long as the Loan Agreement is in effect or
any Secured Obligations are outstanding:
(a) Further Documentation; Pledge of Instruments. At any
--------------------------------------------
time and from time to time, upon the written request of the Lender,
and at the sole expense of the Grantor, the Grantor will promptly and
duly execute and deliver any and all such further instruments and
documents and take such further action as the Lender may reasonably
deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation,
using its best efforts to secure all consents and approvals necessary
or appropriate for the assignment to the Lender of any Contract held
by the Grantor or in which the Grantor has any rights not heretofore
assigned, the filing of any financing or continuation statements under
the UCC with respect to the Liens and security interests granted
hereby, transferring Collateral to the Lender's possession (if a
security interest in such Collateral can be perfected by possession)
and placing the interest of the Lender as lienholder on the certifi-
cate of title of any vehicle. The Grantor also hereby authorizes the
Lender to file any such financing or continuation statement without
the signature of the Grantor to the extent permitted by applicable
law. If any of the Collateral shall be or become evidenced by any
Instrument, the Grantor agrees to pledge such Instrument to the Lender
and shall duly endorse such Instrument in a manner satisfactory to the
Lender and deliver the same to the Lender.
(b) Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. The Grantor
will mark its books and records pertaining to the Collateral to
evidence this Agreement and the Lien and security interests granted
hereby. All Chattel Paper will be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are sub-
ject to the security interest of Securicor Communications Limited, as
the Lender". If requested by the Lender, the security interest of the
Lender shall be noted on the certificate of title of each vehicle.
For the Lender's further security, the Grantor agrees that the Lender
shall have a special property interest in all of the Grantor's books
and records pertaining to the Collateral and, upon the occurrence and
during the continuance of any Event of Default, the Grantor shall
deliver and turn over any such books and records to the Lender or to
its representatives at any time on demand of the Lender. Prior to the
occurrence of an Event of
<PAGE>
<PAGE>
Default and upon reasonable notice from the Lender, the Grantor shall
permit any representative of the Lender to inspect such books and
records and will provide photocopies thereof to the Lender.
(c) Indemnification. In any suit, proceeding or action
---------------
brought by the Lender relating to any Account, Chattel Paper,
Contract, General Intangible or Instrument for any sum owing
thereunder, or to enforce any provision of any Account, Chattel Paper,
Contract, General Intangible or Instrument, the Grantor will save,
indemnify and keep the Lender harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction of liability whatsoever of the
obligor thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement,
Indebtedness or liability at any time owing to, or in favor of, such
obligor or its successors from the Grantor, and all such obligations
of the Grantor shall be and remain enforceable against and only
against the Grantor and shall not be enforceable against the Lender.
(d) Compliance with Laws, Etc. The Grantor will comply, in
-------------------------
all material respects, with all acts, rules, regulations, orders,
decrees and directions of any Governmental Authority, applicable to
the Collateral or any part thereof or to the operation of the
Grantor's business; provided, however, that the Grantor may contest
-------- -------
any act, regulation, order, decree or direction in any reasonable
manner which shall not, in the sole opinion of the Lender, adversely
affect the Lender's rights hereunder or adversely affect the first
priority of its Lien on and security interest in the Collateral.
(e) Payment of Obligations. The Grantor will pay promptly
----------------------
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without limitation,
claims for labor, materials and supplies), except that no such charge
need be paid if (i) such non-payment does not involve any danger of
the sale, forfeiture or loss of any of the Collateral or any interest
therein, and (ii) such charge is adequately reserved against in
accordance with and to the extent required by GAAP.
(f) Compliance with Terms of Accounts, Etc. In all
--------------------------------------
material respects, the Grantor will comply with and perform all
obligations, covenants, conditions and agreements with respect to any
Account, Chattel Paper, Contract, License and all other agreements to
which it is a party or by which it is bound.
<PAGE>
<PAGE>
(g) Limitation on Liens on Collateral. The Grantor will
---------------------------------
not create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any Lien
on the Collateral except Permitted Liens, and will defend the right,
title and interest of the Lender in and to any of the Grantor's rights
under the Chattel Paper, Contracts, Documents, General Intangibles and
Instruments and to the Equipment and Inventory and in and to the
Proceeds thereof against the claims and demands of all Persons
whomsoever.
(h) Limitations on Modifications of Accounts. Upon the
----------------------------------------
occurrence and during the continuance of any Default or Event of
Default, the Grantor will not, without the Lender's prior written
consent, grant any extension of the time of payment of any of the
Accounts, Chattel Paper or Instruments, or compromise, compound or
settle the same for less than the full amount thereof, or release,
wholly or partly, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon.
(i) Maintenance of Insurance. The Grantor will maintain,
------------------------
with financially sound and reputable companies, insurance policies (i)
insuring its Inventory and Equipment against loss by fire, explosion,
theft and such other casualties as are usually insured against by
companies engaged in the same or similar businesses and (ii) insuring
the Grantor and the Lender against liability for personal injury and
property damage relating to such Inventory and Equipment, such
policies to be in such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged
in the same or a similar business, naming the Lender as an additional
insured with a lender loss payable clause in favor of the Lender. All
insurance with respect to the Inventory and Equipment shall (i)
contain a clause which provides that the Lender's interest under the
policy will not be invalidated by any act or omission of, or any
breach of warranty by, the insured, or by any change in the title,
ownership or possession of the insured property, or by the use of the
property for purposes more hazardous than is permitted in the policy,
and (ii) provide that no cancellation, reduction in amount or change
in coverage thereof shall be effective until at least ten days after
receipt by the Lender of written notice thereof.
(j) Limitations on Disposition. The Grantor will not sell,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so, except as permitted by the Loan
Agreement.
<PAGE>
<PAGE>
(k) Further Identification of Collateral. The Grantor
------------------------------------
will, if so requested by the Lender, furnish to the Lender, as often
as the Lender reasonably requests, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Lender may reasonably request,
all in reasonable detail.
(l) Notices. The Grantor will advise the Lender promptly,
-------
in reasonable detail, (i) of any material Lien or claim made or
asserted against any of the Collateral, (ii) of any material change in
the composition of the Collateral, and (iii) of the occurrence of any
other event which would have a Material Adverse Effect on the
aggregate value of the Collateral or in the security interests created
hereunder.
(m) Right of Inspection. Upon reasonable notice to the
-------------------
Grantor (unless a Default or an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Lender shall at
all times have full and free access during normal business hours to
all the books and records and correspondence of the Grantor, and the
Lender or its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and the Grantor agrees to
render to the Lender, at the Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard
thereto. Upon reasonable notice to the Grantor (unless a Default or
an Event of Default has occurred and is continuing, in which case no
notice is necessary), the Lender and its representatives shall also
have the right to enter into and upon any premises where any of the
Equipment or Inventory is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein.
(n) Maintenance of Equipment. The Grantor will keep and
------------------------
maintain the Equipment in good operating condition sufficient for the
continuation of the business conducted by the Grantor on a basis
consistent with past practices, and the Grantor will provide all
maintenance and service and all repairs necessary for such purpose.
(o) Continuous Perfection. The Grantor will not change its
---------------------
name, identity or corporate structure in any manner which might make
any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the UCC
(or any other then applicable provision of the UCC) unless the Grantor
shall have given the Lender at least 30 days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action
<PAGE>
<PAGE>
substantially simultaneously with such change if it is impossible to
take such action in advance) necessary or reasonably requested by the
Lender to amend such financing statement or continuation statement so
that it is not seriously misleading. The Grantor will not change its
principal place of business or remove its records or change the
location of its Inventory and Equipment, each as set forth on Schedule
II hereto, unless it gives the Lender at least 30 days' prior written
notice thereof and has taken such action as is necessary to cause the
security interest of the Lender in the Collateral to continue to be
perfected.
(p) Taxes. The Grantor will pay promptly when due all
-----
taxes, assessments and governmental charges or levies imposed upon the
Intellectual Property Collateral or in respect of its income or
profits therefrom and all claims of any kind, except that no such
charge need be paid if (i) such non-payment does not involve any
danger of forfeiture or loss of any of the Intellectual Property
Collateral or any interest therein and (ii) such charge is adequately
reserved against in accordance with and to the extent required by
GAAP.
(q) Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete records
of the Intellectual Property Collateral, including, without
limitation, a record of all payments received and all credits granted
with respect to the Intellectual Property Collateral and all other
dealings with the Intellectual Property Collateral. The Grantor will
mark its books and records pertaining to the Intellectual Property
Collateral to evidence this Agreement and the security interests
granted hereby. For the Lender's further security, the Grantor agrees
that the Lender shall have a special property interest in all of the
Grantor's books and records pertaining to the Intellectual Property
Collateral and, upon the occurrence and during the continuation of any
Event of Default, the Grantor shall deliver and turn over any such
books and records to the Lender or its representatives at any time on
demand of the Lender. Prior to the occurrence of an Event of Default
and upon reasonable notice from the Lender, the Grantor shall permit
any representative of the Lender to inspect such books and records as
set forth in Section 12.
(r) New Intellectual Property. In the event, prior to the
-------------------------
time the Secured Obligations have been indefeasibly paid in full, the
Grantor shall (i) obtain any rights to or interests in any new
inventions whether or not patentable, patents, patent applications or
any reissue, divisions, continuations, renewals, extensions, or
continuations-in-part of any patent or improvement of any patent,
trademarks, trade names, service marks, and
<PAGE>
<PAGE>
registrations or applications therefor, copyrights and registrations
or applications therefor, or licenses, or (ii) become entitled to the
benefit of any patent, copyright or trademark, or any registrations or
applications therefor, license, license renewal, trade secret or
copyright renewal, the provisions of this Agreement shall
automatically apply thereto and anything enumerated in clause (i) or
(ii) of this Section 5 shall constitute Intellectual Property
Collateral. The Grantor agrees, promptly following the written
request by the Lender, to amend this Agreement by amending any or all
of Schedules III, IV, V and VI, as applicable, to include any such
future trademarks, trademark registrations, trademark applications,
trade names, service marks, copyrights and licenses which would be
Intellectual Property Collateral, and to immediately prepare, execute
and record with all appropriate foreign country, Federal, state and/or
local offices and authorities a Security Agreement for any such new
Intellectual Property Collateral, in form and substance similar to
this Agreement, and to deliver to the Lender reasonable proof of such
recordation.
(s) The Blocked Accounts.
--------------------
(i) The Grantor hereby transfers to the Lender the
exclusive dominion and control of Blocked Account #2 effective the
date hereof and Blocked Account #1 effective on the 30th day following
the date hereof.
(ii) The Grantor agrees and covenants that all Proceeds
of Accounts shall be deposited into Blocked Account #1 in accordance
with the provisions of Section 3.5 of the Asset and Trademark
Agreement (and thereafter all or a portion of such proceeds shall be
transferred into Blocked Account #2 in accordance with the terms
thereof) and all other cash and Proceeds of all other Collateral shall
be deposited directly into Blocked Account #2.
(iii) The Grantor shall cause each Person obliged to
make payments to the Grantor for any reason (each such Person being an
"Obligor" of the Grantor) to make all payments, or to continue to make
all payments, as the case may be, with respect to all Collateral, to
Blocked Account #1 and, in any event the Borrower shall cause any
payments received by the Borrower or any other Person from any Obligor
to be deposited immediately upon receipt into such Blocked Account #1.
(iv) In the event the Grantor or any Blocked Account
Bank shall, after the date hereof, terminate the agreement with
respect to the maintenance of a Blocked Account
<PAGE>
<PAGE>
for any reason, or if the Lender shall demand such termination as a
result of the failure of the Blocked Account Bank to comply with any
of the terms of the Blocked Account Letter, or there shall occur and
be continuing an Event of Default or if the Lender determines in its
sole discretion that the financial condition of the Blocked Account
Bank has materially deteriorated, at the Lender's request, the Grantor
agrees to notify all of its Obligors that were making payments to such
terminated Blocked Account or Blocked Account Bank to make all future
payments to another Blocked Account Bank with respect to which the
Grantor has delivered to the Lender an executed Blocked Account
Letter, and which has not been terminated.
(v) The Grantor hereby agrees that it shall not make
or maintain any deposits in any account with, or maintain any
investment account with, any financial institution other than a
Blocked Account Bank.
(vi) So long as no Event of Default shall have occurred
and be continuing, the Grantor is hereby authorized by the Lender to
direct the disposition of such funds then on deposit with the Blocked
Account Bank (but in the case of Blocked Account #1, in and only in a
manner consistent with Section 3.5 of the Asset and Trademark
Agreement), which direction shall not be exercised by the Lender
unless and until an Event of Default shall have occurred and be
continuing. Lender agrees that in the event it gives directions with
respect to Blocked Account #1 pursuant hereto, it shall do so in and
only in a manner consistent with Section 3.5 of the Asset and
Trademark Agreement.
(vii) If any Event of Default shall have occurred and be
continuing, upon notification by the Lender to the Grantor and the
Blocked Account Bank the authorization of the Grantor under clause
(vi) above shall be revoked and all deposits contained therein (other
than any to which Grantor shall be obligated to turn over to Simmonds
or Midland pursuant to Section 3.5 of the Asset and Trademark
Agreement, which shall be so turned over) shall be transferred to an
account established by the Lender, in the name of the Lender and under
the sole dominion and control of the Lender (the "Cash Collateral
Account"), to be held by the Lender as Collateral for the Secured
Obligations or applied to the Secured Obligations in accordance with
this Agreement (all such deposits in any such Cash Collateral Account
shall constitute "Collateral" for all purposes of this Agreement).
<PAGE>
<PAGE>
6. The Lender's Appointment as Attorney-in-Fact.
--------------------------------------------
(a) The Grantor hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Grantor
and in the name of the Grantor or in its own name, from time to time
in the Lender's discretion, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which the
Lender may deem necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing,
hereby gives the Lender the power and right, on behalf of the Grantor,
without notice to or assent by the Grantor to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to become due
under any Collateral and, in the name of the Grantor or in its own
name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Lender for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called
for by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due,
and to become due thereunder, directly to the Lender or as the Lender
shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due, and to become due at any time,
in respect of or arising out of any Collateral; (C) to sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other
Documents constituting or relating to the Collateral; (D) to commence
and prosecute any
<PAGE>
<PAGE>
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against the Grantor with
respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Lender may deem
appropriate; (G) to license or, to the extent permitted by an
applicable license, sublicense, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any patent or
trademark, throughout the world for such term or terms, on such
conditions, and in such manner, as the Lender shall in its sole
discretion determine; and (H) generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Lender were the
absolute owner thereof for all purposes, and to do, at the Lender's
option and the Grantor's expense, at any time, or from time to time,
all acts and things which the Lender reasonably deems necessary
to protect, preserve or realize upon the Collateral and the Lender's
and the Banks' Lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
(b) The Lender agrees that, except upon the occurrence and
during the continuance of any Default or Event of Default, it will
forbear from exercising the power of attorney or any rights granted to
the Lender pursuant to this Section 6. The Grantor hereby ratifies,
to the extent permitted by law, all that any said attorney shall
lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 6, being coupled with an
interest, shall be irrevocable until the Secured Obligations are
indefeasibly paid in full.
(c) The powers conferred on the Lender hereunder are solely
to protect the Lender's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result
of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Grantor for
any act or failure to act, except for its own negligence or willful
misconduct.
(d) The Grantor also authorizes the Lender, at any time and
from time to time upon the occurrence and during the continuance of a
Default or Event of Default, (i) to communicate in its own name with
any party to any Contract with regard to the assignment of the right,
title and interest of the Grantor in and
<PAGE>
<PAGE>
under the Contracts hereunder and other matters relating thereto and
(ii) to execute, in connection with the sale provided for in Section 8
hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
7. Performance by the Lender of the Grantor's Obligations.
------------------------------------------------------
If the Grantor fails to perform or comply with any of its agreements
contained herein and the Lender, as provided for by the terms of this
Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable
expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then in
effect in respect of the Revolving Credit Advances, shall be payable
by the Grantor to the Lender on demand and shall constitute Secured
Obligations secured hereby.
8. Remedies, Rights Upon an Event of Default.
-----------------------------------------
(a) If any Default or Event of Default shall occur and be
continuing, the Lender shall have the right to exercise in addition to
all other rights and remedies granted to it in this Agreement and in
any other instrument or agreement securing, evidencing or relating to
the Secured Obligations, all rights and remedies of a secured party
under the UCC. Without limiting the generality of the foregoing, the
Grantor expressly agrees that in any such event the Lender, without
demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or
private sale) to or upon the Grantor or any other Person (all and each
of which demands, advertisements and/or notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or
sales, at any exchange or broker's board or any of the Lender's
offices or elsewhere at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit
risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of
redemption the Grantor hereby releases. The Grantor further agrees,
at the Lender's request to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably
select, whether at the Grantor's premises or
<PAGE>
<PAGE>
elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery receipt, appropriation, realization or sale, as
provided in Section 8(d) hereof, the Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after so
paying over such net proceeds and after the payment by the Lender of
any other amount required by any provision of law, including Section
9-504(1)(c) of the UCC, need the Lender account for the surplus, if
any, to the Grantor. To the maximum extent permitted by applicable
law, the Grantor waives all claims, damages, and demands against the
Lender arising out of the repossession, retention or sale of the
Collateral. The Grantor agrees that the Lender need not give more
than ten days' notice of the time and place of any public sale or of
the time after which a private sale may take place and that such
notice is reasonable notification of such matters. The Grantor shall
remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to
which the Lender is entitled, the Grantor also being liable for the
fees and expenses of any attorneys employed by the Lender to collect
such deficiency.
(b) The Grantor also agrees to pay all costs of the Lender,
including, without limitation, attorneys' fees, incurred in connection
with the enforcement of any of its rights and remedies hereunder.
(c) The Grantor hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law) of
any kind in connection with this Agreement or any Collateral.
(d) Without limitation of the foregoing, upon the
occurrence and during the continuation of a Default or an Event of
Default, the Lender may to the fullest extent permitted by applicable
law, without prior notice to the Grantor, and without advertisement,
hearing or process of law in any kind, (i) exercise any and all rights
as beneficial and legal owner of the Intellectual Property Collateral,
including, without limitation, any and all consensual rights and
powers with respect to the Intellectual Property Collateral, and (ii)
sell or assign or grant a license or franchise to use, or cause to be
sold or assigned or granted a license or franchise to use, any or all
of the Intellectual Property Collateral, in each case, free of all
rights and claims of the Grantor therein and thereto. Upon the occur-
rence and during the continuation of an Event of Default, the Lender
may (i) sell or assign the Intellectual Property Collateral, or any
part thereof, for cash upon credit as the Lender may deem appropriate
or (ii) grant licenses or franchises
<PAGE>
<PAGE>
or both to use the Intellectual Property Collateral on such terms and
conditions as the Lender shall determine. In connection therewith,
the Lender shall have the right to impose such limitations and
restrictions on the sale or assignment of the Intellectual Property
Collateral as the Lender may deem to be necessary or appropriate to
comply with any law, rule or regulation (Federal, state, local or that
of a foreign country) having applicability to any such sale and
requirements for any necessary governmental approvals.
(e) Notwithstanding any provisions of this Agreement to the
contrary, if, after giving effect to any sale, transfer, assignment or
other disposition of any or all of the Collateral pursuant hereto and
after the application of the proceeds hereunder to Secured
Obligations, any Secured Obligations remain unpaid or unsatisfied, the
Grantor shall remain liable for the unpaid and unsatisfied amount of
such Secured Obligations.
(f) Upon the declaration of an Event of Default, the
Grantor agrees that it will promptly (and in any event within three
Business Days) deliver to the Lender or its designee an assignment of
the Intellectual Property Collateral, duly executed by the Grantor, in
substantially the form of Annex II annexed hereto. The Grantor agrees
that the Lender may duly execute such an assignment as Grantor's true
and lawful attorney-in-fact pursuant to Section 6 hereof.
(g) Whenever an Event of Default shall have occurred and be
continuing, the Lender shall have the right, but shall in no way be
obligated, to bring suit in its own name to protect or enforce the
Trademarks, Copyrights, Licenses, Patents and Trade Secrets, and, if
the Lender shall commence any such suit, the Grantor shall, at the
request of the Lender, do any and all lawful acts and execute any and
all proper documents required by the Lender in aid of such protection
or enforcement.
(h) The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be
distributed by the Lender in the following order of priorities:
first, to the Lender in an amount sufficient to pay in full
-----
the expenses of Lender in connection with such sale, disposition
or other realization, including all expenses, liabilities and
advances incurred or made by Lender in connection therewith,
including, without limitation, attorney's fees;
<PAGE>
<PAGE>
second, to the Lender in an amount equal to the then unpaid
------
principal of and accrued interest and prepayment premiums, if
any, on the Secured Obligations;
third, to the Lender in an amount equal to any other Secured
-----
Obligations which are then unpaid; and
finally, upon payment in full of all of the Secured
-------
Obligations, to pay to the Grantor or as a court of competent
jurisdiction may direct, any surplus then remaining from such
Proceeds.
9. Limitation on the Lender's Duty in Respect of Col
-------------------------------------------------
lateral. The Lender shall have no duty as to any Collateral in its
-------
possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto,
except that the Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Upon request of
the Grantor, the Lender shall account for any moneys received by it in
respect of any foreclosure on or disposition of the Collateral.
10. Reinstatement. This Agreement shall remain in full
-------------
force and effect and continue to be effective should any petition be
filed by or against the Grantor for liquidation or reorganization,
should the Grantor become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of the Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of
the Secured Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
11. Notices. All notices and other communications provided
-------
for hereunder shall be in writing (including telegraphic, telex,
telecopy, or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered by hand, if to the Grantor, addressed
to it at 1690 North Topping Avenue, Kansas City, Missouri 64120,
Attention: Howard Parkinson,
<PAGE>
<PAGE>
Telecopy No: 816 920 1102 with copies to Manatt Phelps & Phillips LLP,
11355 West Olympic Boulevard, Los Angeles, California 90064,
Attention: Nancy Wojtas, Telecopy No: 310 312 4224 and Intek
Diversified Corporation, 970 West 190th Street, Suite 720, Torrance,
California 90502, Attention: David Neibert, Telecopy No: 310 366 7712
and if to the Lender, addressed to it at the address of the Lender
specified in the Loan Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this
Section. All such notices and other communications shall, when
mailed, telegraphed, telexed, telecopied, cabled or delivered, be
effective seven days after being deposited in the mail (i) in the
United States in the case of notice being given by any Person located
in the United States or (ii) in the United Kingdom in the case of
notice being given by any Person located in the United Kingdom, or
when delivered to the telegraph company, confirmed by telex answer-
back, telecopied with confirmation or receipt, delivered to the cable
company, or delivered by hand to the addressee or its agent,
respectively.
12. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the
Grantor therefrom shall in any event be effective unless the same
shall be in writing, approved and signed by the Lender and then any
such waiver or consent shall only be effective in the specific
instance and for the specific purpose for which given.
13. No Waiver; Remedies. (a) No failure on the part of
-------------------
the Lender to exercise, and no delay in exercising any right hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative, may be exercised singly or concurrently, and
are not exclusive of any remedies provided by law or any of the other
Loan Documents.
(b) Failure by the Lender at any time or times hereafter to
require strict performance by the Grantor or any other Person of any
of the provisions, warranties, terms or conditions contained in any of
the Loan Documents now or at any time or times hereafter executed by
the Grantor or any such other Person and delivered to the Lender shall
not waive, affect or diminish any right of any of the Lender at any
time or times hereafter to demand strict performance thereof, and such
right shall not be deemed to have been modified or waived by any
course of conduct or knowledge of the Lender, or any agent, officer or
employee of the Lender.
<PAGE>
<PAGE>
14. Successors and Assigns. This Agreement and all
----------------------
obligations of the Grantor hereunder shall be binding upon the
successors and assigns of the Grantor, and shall, together with the
rights and remedies of the Lender hereunder, inure to the benefit of
the Lender, and its successors and assigns.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
-------------
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY AND WITHOUT INVALIDATING THE REMAINING PROVISIONS OF THIS
AGREEMENT.
16. WAIVER OF JURY TRIAL. THE GRANTOR WAIVES ANY RIGHT IT
--------------------
MAY HAVE TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE LOAN AGREEMENT OR
UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT RELATING
TO ANY OF THE FOREGOING.
17. Further Indemnification. The Grantor agrees to pay,
-----------------------
and to save the Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise,
sales or other similar taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with
any of the transactions contemplated by this Agreement.
18. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of this Agreement.
IN WITNESS WHEREOF, The Grantor has caused this Agreement to
be executed and delivered by its duly authorized officer on the date
first above written.
MIDLAND USA, INC.
By: /s/ David Neibert
------------------------
Name: David Neibert
Title: President
<PAGE>
<PAGE>
Accepted and acknowledged by:
SECURICOR COMMUNICATIONS LIMITED, as Lender
By: /s/ M.G. Wilkinson
------------------------
Name: M.G. Wilkinson
Title: Director
<PAGE>
<PAGE>
SCHEDULE I
FILINGS
-------
JURISDICTION FILING OFFICE
------------ -------------
California Secretary of State
County of Los Angeles
Missouri Secretary of State
County of Jackson
<PAGE>
<PAGE>
SCHEDULE II
LOCATION OF RECORDS AND CERTAIN COLLATERAL; FICTITIOUS NAMES
------------------------------------------------------------
Principal Place
of Business
-----------
Midland USA, Inc.
1690 North Topping Avenue
Kansas City, MO 64120
Location of Books
and Records, Inventory
and Equipment
-------------
Midland USA, Inc.
1690 North Topping Avenue
Kansas City, MO 64120
Fictitious Names
----------------
Borrower operates under the name Intek-Midland USA, Inc. in California
<PAGE>
<PAGE>
SCHEDULE III
TRADEMARKS
----------
Mark Registered Number Serial Number Date of
---- ----------------- ------------- -------
Registration
------------
"Midland" 927193 72-277,496 January 18, 1972
renewed December 13,
1991
"Midland" 895483 72-156,089 July 28, 1970
renewed December 18,
1990
<PAGE>
<PAGE>
SCHEDULE IV
COPYRIGHTS
----------
None
<PAGE>
<PAGE>
SCHEDULE V
LICENSES
--------
1) Midland USA - Midland International Corp. Trademark License
Agreement dated September 19, 1996.
2) Midland International Corp. - Midland Consumer Int'l. Exclusive
License Agreement dated June 30, 1995.
3) Midland International Corp. - LETT Electronics Private Label
Agreement dated March 1, 1995.
4) Midland International Corp. - American Digital Communications,
Inc. Asset Purchase Agreement dated December 29, 1995.
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SCHEDULE VI
PATENTS
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US Patent Number 4,718,586 (Swivel Fastening Device)
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ANNEX I
BLOCKED ACCOUNT LETTER
Boatman's First National _______________, 19__
Bank of Kansas City
14 West 10th Street
Kansas City, MO 64105
Gentlemen:
We refer to the following account maintained with you by
Midland USA, Inc., a Delaware corporation (the "Company"), into which
certain monies, instruments and other property are deposited from time
to time (collectively, the "Blocked Account"): _______________. The
Company has granted to Securicor Communications Limited (a company
incorporated under the laws of England and Wales, the "Lender") under
the Loan Agreement, dated as of September 19, 1996, among the Company
and the Lender, a security interest in all assets and properties of
the Company, including, among other things, the Blocked Account, all
monies, instruments and other property deposited therein and all
certificates and instruments, if any, representing or evidencing the
Blocked Account. It is a condition to the continued maintenance of
the Blocked Account with you that you agree to this Letter Agreement.
By signing this Letter Agreement, you agree that from the
date hereof<F1> the Blocked Account shall be under the exclusive
dominion and control of the Lender, that you will act as its bailee
and that all monies, instruments or other property of the Company
received in connection therewith whether or not deposited in the
Blocked Account shall be held solely for the benefit of the Lender.
You agree to:
(a) follow your usual operating procedures for the handling
of any remittance received in the Blocked Account that is drawn in
foreign currency or that contains restrictive endorsements or
irregularities, such as a variance between the written and numerical
amounts, undated or postdated items, missing signature, incorrect
payee, etc;
<F1> [or such other date as may be provided in the Loan
Agreement]
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(b) indorse and process all checks and other remittance
items not covered by paragraph (a) above on which the payee or
endorsee is the Company or, in your sole discretion, a reasonable
variation of the Company (an "Acceptable Payee"), and deposit such
checks and other remittance items in the Blocked Account; and
(c) maintain a record of all checks and other remittance
items received in the Blocked Account and, in addition to providing
the Company with photostats, vouchers, enclosures, etc. of checks and
other remittance items received on a daily basis, as well as a monthly
statement, furnish to the Lender at its request, free of any service
charge payable by the Lender, your regular bank statement with respect
to the Blocked Account, with the words "Securicor Communications
Limited, as Lender Re: Midland USA, Inc." included thereon so that
there is no confusion as to ownership of the Blocked Account and so
that the Lender is able to properly identify the Blocked Account.
The Company shall hold in trust for the Lender until
remitted to you for deposit in the Blocked Account any and all cash
and cash equivalents received under the above paragraph.
You hereby agree to follow the instructions of the Company
with respect to the disposition of any and all money deposited in the
Blocked Account as directed by the Company unless and until you have
received written instructions to the contrary from the Lender, in
which case you agree to follow such instructions from the Lender.
The Company hereby agrees to pay, indemnify and hold you
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, legal fees) with respect to the performance by you or any
of your directors, officers, agents or employees of this Letter
Agreement, except for your (or such director's, officer's, agent's or
employee's) gross negligence or willful misconduct.
In addition, the Company hereby indemnifies and holds you
harmless from and against all actions, proceedings, claims,
dismissals, losses, outlays, damages or expenses, including legal
fees, of every nature and character as may arise or be made against
you arising out of or in connection with its depositing checks payable
to or endorsed in favor of an Acceptable Payee if such Acceptable
Payee is incorrect, except for your gross negligence or willful
misconduct.
The Company hereby agrees to pay to you such fees and
charges with respect to the Blocked Account in accordance with your
standard charges or as shall from time to time be mutually agreed upon
by the Company and you. If such fees and expenses have not been paid
when due, you shall be entitled to charge the Blocked Account for any
such fees and expenses.
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You undertake to perform only such duties as are expressly
set forth herein. Notwithstanding any other provision of this Letter
Agreement, it is agreed by the parties hereto that you shall not be
liable for any action taken by you or any of your directors, officers,
agents or employees in accordance with this Letter Agreement, except
for your (or such director's, officer's, agent's or employee's) gross
negligence or willful misconduct.
The Company acknowledges that the agreements made by it and
the authorizations granted by it herein are irrevocable unless
otherwise agreed to in writing by the Lender and that the
authorizations granted herein to you and the Lender are powers coupled
with an interest.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this Letter Agreement bar and estop
yourself from asserting, claiming or exercising, and you acknowledge
that you have not heretofore received a notice from any other party
asserting, claiming or exercising, any right of setoff, banker's lien
or other purported form of claim with respect to the Blocked Account
and funds from time to time therein. You shall have no rights in the
Blocked Account or the funds therein. To the extent you may ever have
any such rights, you hereby expressly subordinate all such rights to
all rights of the Lender.
This Letter Agreement shall be effective as of the day first
above written. To the extent inconsistent with this Letter Agreement,
this Letter Agreement shall supersede any other agreement relating to
the matters referred to herein, including any other account agreement
between the Company and you relating to the collection of receivables.
This Letter Agreement constitutes the entire agreement with respect to
the Blocked Account and is binding upon the parties hereto and their
respective successors and assigns and shall inure to their benefit.
Neither this Letter Agreement nor any provision hereof may be changed,
amended, modified or waived orally, but only by an instrument in
writing signed by the parties hereto. Any provision of this Letter
Agreement which may prove unenforceable under any law or regulation
shall not affect the validity of any other provision hereof.
You may terminate this Letter Agreement only upon thirty
days' prior written notice to that effect to the Company and the
Lender, by cancelling the Blocked Account maintained with you and
transferring all funds, if any, in such Blocked Account as directed by
the Lender. After any such termination, you shall nonetheless remain
obligated promptly to transfer to an account
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designated by the Lender anything from time to time received in the
Blocked Account from obligors of the Company.
All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by
telegraph, telecopy, telex or nationally recognized courier service),
and shall be deemed to have been duly given or made when delivered by
hand, or seven days after being deposited (i) in the United States
mail in the case of notice being given by a party located in the
United States or (ii) in the United Kingdom in the case of a party
located in the United Kingdom, in each case with postage prepaid, or,
in the case of telegraphic notice, when delivered to the telegraph
company, or, in the case of telex notice, when sent, answer back
received, or, in the case of telecopy notice, when sent, or, in the
case of an internationally recognized courier service, one business
day after delivery to such courier service, addressed as follows, or
to such other address as may be hereafter notified by the respective
parties hereto:
Midland USA, Inc.
1690 North Topping Avenue
Kansas City
Missouri 64120
USA
Attention: Howard Parkinson
Telecopy Number: 816 920 1102
With copies to:
Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrance, California 90502
Attention: David Neibert
Telecopy Number: 310 366 7712
Manatt, Phelps & Phillips LLP
11355 West Olympic Boulevard
Los Angeles
California 90064
Attention: Nancy Wojtas
Telecopy Number: 310 312 4224
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Securicor Communications Limited
15 Carshalton Road
Sutton
Surrey SM1 4LD
England
Attention: Ed Hough
Telecopy No. (0181) 661-0205
With copies to:
Weil, Gotshal & Manges
99 Bishopsgate
London, EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy No. 0171 426 0990
Blocked
Account Bank:
Boatman's First National
Bank of Kansas City
14 West 10th Street
Kansas City, MO 64105
Attention: Michael Austin
Telecopy No: 816 696-7426
You are hereby notified, pursuant to New York Uniform
Commercial Code Section 9-302 (1)(g), that the Company has granted a
security interest in favor of the Lender in the Blocked Account
identified above.
This Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
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This Letter Agreement may be executed in any number of
counterparts which together shall constitute one
and the same instrument.
Very truly yours,
MIDLAND USA, INC.
By:
--------------------------------
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:
--------------------------------
Name:
Title:
Acknowledged and agreed to as of
the date first above written.
BOATMAN'S FIRST NATIONAL
BANK OF KANSAS CITY
By:
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Name:
Title:
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ANNEX II
ASSIGNMENT OF INTELLECTUAL PROPERTY COLLATERAL
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AGREEMENT made this ___ day of ____________, 19__, by
and between Midland USA, Inc., a Delaware corporation (the "Assignor")
and Securicor Communications Limited, a company incorporated under the
laws of England and Wales (the "Lender").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Assignor and the Lender are parties to the Loan
Agreement dated as of September 19, 1996 (said Agreement, as it
hereafter may be amended or otherwise modified from time to time,
being referred to as the "Loan Agreement") and the Security Agreement
dated as of September 19, 1996 (the "Security Agreement") which
provides that upon the occurrence of certain events specified therein
Assignor and the Lender shall execute this Assignment; and
WHEREAS, the aforementioned events have occurred;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
(i) Incorporation. This Assignment is made pursuant to and
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subject to the terms of the Loan Agreement and the Security Agreement,
each of which is deemed incorporated herein by this reference and
shall constitute part of this Assignment as if fully set forth herein.
(ii) Assignment. Assignor hereby conveys, sells, assigns,
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transfers and sets over to the Lender all of Assignor's right, title
interest in and to the Intellectual Property Collateral (as defined in
the Security Agreement).
(iii) Notices. All notices hereunder to the parties hereto
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shall be made in the manner and to the addresses specified in the
Security Agreement.
(iv) Further Instruments. The parties agree to promptly
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execute and deliver all further instruments necessary or desirable to
carry out the purposes of this Agreement.
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(v) Schedules. The terms and conditions of the Schedules
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referred to herein are incorporated herein by this reference and shall
constitute part of this Assignment as if fully set forth herein.
(vi) Headings. The headings in this Assignment are for
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purposes of reference only and shall not in any way limit or otherwise
affect the meaning or interpretation of any of the terms hereof.
IN WITNESS WHEREOF, the parties have executed this
Assignment as of the date first written above.
MIDLAND USA, INC.
By:________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:________________________
Name:
Title:
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STATE OF )
ss.:
COUNTY OF )
On this ___ day of ___________, 19__, before me came
__________________________, to me known to be an officer of Midland
USA, Inc., the company described in and which executed the above
instrument, and duly acknowledged that he executed the same.
____________________________
NOTARY PUBLIC
STATE OF )
ss.:
COUNTY OF )
On this ___ day of ___________, 19__, before me came Midland
USA, Inc., to me known to be an officer of Securicor Communications
Limited, the company described in and which executed the above
instrument, and duly acknowledged that he executed the same.
____________________________
NOTARY PUBLIC
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EXHIBIT 7
AMENDMENT TO VOTING AGREEMENT
THIS FIRST AMENDMENT TO VOTING AGREEMENT (this "Amendment") is
made as of November 1, 1996, by and among INTEK DIVERSIFIED
CORPORATION, a Delaware corporation (the "Company"), SECURICOR
COMMUNICATIONS LIMITED, a corporation formed under the laws of England
and Wales ("Securicor"), SECURICOR RADIOCOMS LIMITED, a corporation
formed under the laws of England and Wales ("Radiocoms"), SECURICOR
INTERNATIONAL LIMITED, a corporation formed under the laws of England
and Wales ("Securicor International"), SIMMONDS CAPITAL LIMITED, a
corporation organized under the laws of Ontario ("Simmonds"), MIDLAND
INTERNATIONAL CORPORATION, a corporation organized under the laws of
Delaware ("MIC"), and ROAMER ONE HOLDINGS, INC., a corporation
organized under the laws of Delaware ("ROH"), and amends the Voting
Agreement by and among Securicor, Securicor Limited, Simmonds and
Roamer, agreed to and acknowledged by the Company, and made the 18th
day of June, 1996 (the "Voting Agreement"):
Recital
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Whereas, each of the parties hereto desires to amend the Voting
Agreement to provide that the shares of the Common Stock of the
Company owned by the parties to the Voting Agreement will be voted as
directed by the actual vote of shares not owned by such parties in
connection with the transactions contemplated in the Stock Purchase
Agreement between the Company and Securicor made the 18th day of June,
1996 (the "Stock Purchase Agreement").
Agreements
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NOW THEREFORE, the parties hereby agree to amend the Transaction
Agreements as follows:
1. Amendment to the Voting Agreement.
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(a) Section 1 of the Voting Agreement, "Provisions Concerning
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Company Common Stock, be and hereby is amended and restated in full as
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follows:
1. Provisions Concerning Company Common Stock.
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(a) Each Stockholder hereby agrees that during the
period commencing on the date hereof and continuing until
the termination of the Stock Purchase Agreement
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in accordance with its terms, at any meeting of the holders
of Company Common Stock, however called, or in connection
with any written consent of the holders of Company Common
Stock, such Stockholder shall vote (or cause to be voted)
the Shares held of record by such Stockholder on the date of
such vote whether heretofore owned or hereafter acquired,
(i) against any action or agreement that would result in a
breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company
under the Stock Purchase Agreement (after giving effect to
any materiality or similar qualifications contained there-
in); and (ii) except as otherwise agreed to in writing in
advance by Securicor, against any actions that are
prohibited pursuant to Section 6.2 of the Stock Purchase
Agreement or that are intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or
materially, adversely affect the transactions contemplated
by this Agreement and the Stock Purchase Agreement.
(b) In addition, on or before November 30, 1996, each
Stockholder shall execute and deliver to the Company a
limited proxy (collectively, the "Proxies"), directing the
Company to vote all of the Shares held of record by such
Stockholder on the date of such vote, whether heretofore
owned or hereafter acquired, with respect to all votes
relating to the Stock Purchase Agreement, the transactions
contemplated therein and the amendment to the Company's
Restated Certificate of Incorporation required pursuant to
section 7.1(f) of the Stock Purchase Agreement (each a
"Directed Voting Proposal"), in the manner determined as
follows:
(i) The Company shall first count the vote of the
Common Stock held and actually voted at the
Stockholders' Meeting by stockholders of the
Company who are not parties to the Voting
Agreement, but excluding abstentions and broker
non-votes.
(ii) If a simple majority of the vote determined pursuant
to subparagraph (i) of this Section 1(b) is in favor
of adoption of a Directed Voting Proposal, the
Company shall cast the vote of all of the shares
represented by the Proxies in favor of such
Directed Voting Proposal.
(iii) If a simple majority of the vote determined to
subparagraph (i) of this Section 1(b) is
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against adoption of a Directed Voting
Proposal, the Company shall cast the vote of all
of the shares represented by the Proxies against
adoption of such Directed Voting Proposal.
2. General Provisions.
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(a) Except as specifically amended hereby, the Voting Agreement
shall continue in full force and effect.
(b) This Amendment and the Voting Agreement, as amended hereby,
constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter
hereof.
(c) This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
(d) This Amendment may be executed in counterparts, each of
which shall be deemed an original but all of which taken
together shall constitute a single instrument.
(e) The headings used herein are inserted for convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Amendment.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Amendment to be duly executed as of the day and year first above
written.
INTEK DIVERSIFIED SECURICOR COMMUNICATIONS LIMITED
CORPORATION
By: /s/ David Neibert By /s/ M.G. Wilkinson
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Name: David Neibert Name: M.G. Wilkinson
Title: Executive Vice Title: Director
President
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SIMMONDS CAPITAL LIMITED SECURICOR RADIOCOMS LIMITED
By: /s/ David O'Kell By /s/ M.G. Wilkinson
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Name: David O'Kell Name: M.G. Wilkinson
Title: Secretary Title: Director
MIDLAND INTERNATIONAL SECURICOR INTERNATIONAL LIMITED
CORPORATION
By: /s/ David O'Kell By /s/ Nigel Griffiths
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Name: David O'Kell Name: Nigel Griffiths
Title: Secretary Title: Director
ROAMER ONE HOLDINGS, INC.
By: /s/ Nicholas Wilson
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Name: Nicholas Wilson
Title: Chairman
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