SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 3, 1996
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INTEK Diversified Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-9160 04-450145
(State or other (Commission IRS Employer Iden-
jurisdiction of File Number) tification No.)
incorporation)
970 West 190th St., Suite 720, Torrance, CA 90502
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 310-366-7335
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Item 1. CHANGES IN CONTROL OF REGISTRANT
As a result of the consummation of the Acquisition (as
described below), Securicor Communications Limited ("Securicor
Communications") owns, directly or indirectly through its
affiliates, approximately 65.0% of the issued and outstanding
common stock of INTEK, par value $0.01 per share ("Common Stock")
as of December 18, 1996. Prior to the Acquisition, Securicor
International Limited, an affiliate of Securicor Communications
owned 6.3% of the issued and outstanding Common Stock. Based on
this ownership of INTEK, Securicor Communications and its
affiliates will virtually control all matters requiring approval
of the stockholders of the Company including the election of
directors.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 3, 1996 (the "Closing Date"), INTEK Diversified
Corporation, a Delaware corporation ("INTEK") consummated the
acquisition (the "Acquisition") of all of the issued and
outstanding common stock of Securicor Radiocoms Limited (the
"Radiocoms Stock"), a wholly owned subsidiary of Securicor
Communications Limited, a corporation organized under the laws of
England and Wales, which is a wholly owned subsidiary of Security
Services plc, a corporation organized under the laws of England
and Wales and an indirect wholly owned subsidiary of Securicor
plc, a corporation organized under the laws of England and Wales
("Radiocoms"). Radiocoms designs, develops and manufactures a
range of land mobile radio equipment using linear modulation
technology. The purchase price for the Radiocoms Stock was
25,000,000 shares of INTEK's Common Stock. The Acquisition was
approved by the stockholders of INTEK at INTEK's 1996 Annual
Meeting held on December 3, 1996.
In addition, as previously disclosed by INTEK, upon closing
of the Acquisition, Midland International Corporation ("MIC")
received 1,695,000 shares of Common Stock that were held in
escrow pursuant to the terms of the acquisition on September 20,
1996 by INTEK of MIC's U.S. land mobile radio business.
Simultaneous with the Acquisition, (i) Securicor
Communications, INTEK and Midland USA, Inc., a Delaware
corporation and wholly owned subsidiary of INTEK ("MUSA"),
entered into an Assumption and Release Agreement on December 3,
1996, under which Securicor Communications agreed to release MUSA
from its obligations under that certain loan agreement dated as
of September 19, 1996 between Securicor Communications and MUSA
("MUSA Loan Agreement") and INTEK agreed to assume all of MUSA's
obligations outstanding under the MUSA Loan Agreement and (ii)
Securicor Communications and INTEK entered into an Amended and
Restated Loan Agreement dated December 31, 1996 (the "INTEK Loan
Agreement"), whereby the MUSA Loan Agreement was amended and
restated to provide for INTEK as the Borrower under the INTEK
Loan Agreement. The obligations outstanding of MUSA under the
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MUSA Loan Agreement have become INTEK's obligations under the
INTEK Loan Agreement.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF SECURICOR RADIOCOMS LIMITED
(RADIOCOMS)
INTEK has found that it is impracticable to provide the
required financial statements of Radiocoms as of the date of
filing of this Form 8-K. Registrant intends to file no later
than sixty (60) days after this report on Form 8-K the following
financial statements:
1. Audited Balance Sheets of Radiocoms as of
September 30, 1996 and 1995 and related
Statements of Operations and Net Worth and
Cash Flows for the years ended September 30,
1996, 1995, and 1994; and
(b) PRO FORMA FINANCIAL INFORMATION.
INTEK has found that it is impracticable to provide the
required pro forma financial statements as of the date of filing
of this Form 8-K. Registrant intends to file no later than sixty
(60) days after this report on Form 8-K the following financial
statements:
1. Pro forma Combined Balance Sheet of INTEK and
Radiocoms dated September 30, 1996; and
2. Pro forma Statements of Operations and Cash
Flows of INTEK and Radiocoms based on audited
Statements of Operations and Statement of
Cash Flows of INTEK for the year ended
December 31, 1995, and the nine-month period
ended September 30, 1996, and on the audited
Statements of Operations and Cash Flows for
Radiocoms for the years ended September 30,
1996 and 1995.
(c) EXHIBITS.
2.1. Stock Purchase Agreement dated as of June 18,
1996, as amended by Amendment No. 1 dated as
of September 19, 1996, by and among INTEK
Diversified Corporation and Securicor
Communications Limited.
10.1 Assumption and Release Agreement dated as of
December 3, 1996, by and between INTEK
Diversified Corporation, Securicor
Communications Limited and Midland USA, Inc.
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10.2 Amended and Restated Loan Agreement dated as
of December 3, 1996, between INTEK
Diversified Corporation and Securicor
Communications Limited.
10.3 Revolving Credit Note dated December 3, 1996,
by INTEK Diversified Corporation to the order
of Securicor Communications Limited.
SCHEDULES
Pursuant to Item 601(b)(2) of Regulation S-K, certain
schedules to the Stock Purchase Agreement set forth above have
been omitted. INTEK hereby agrees to furnish such schedules upon
request of the Securities and Exchange Commission.
SCHEDULES OMITTED
Section 4.3(b) Radiocoms - Capitalization
Section 4.4(a) Radiocoms - Subsidiaries
Section 4.4(e) Radiocoms - Investments in Third
Parties
Section 4.7 Radiocoms - Exceptions
Section 4.8 Radiocoms - Financial Statements
Section 4.9 Radiocoms - Undisclosed Liabilities
Section 4.10 Radiocoms - Absence of Certain
Developments
Section 4.11(j) Radiocoms - Acquisitions Under
Section 171 of the
Taxation of Chargeable
Gains Act
Section 4.10(o) Radiocoms - Assets Under Sections
178 or 179 of the
Taxation of Chargeable
Gains Act
Section 4.12(a) Radiocoms - Real Property
Section 4.12(b) Radiocoms - Material Imperfections of
Title
Section 4.13(a) Radiocoms - Personal Property Leases
Section 4.14 Radiocoms - Intangible Property
Section 4.15(a) Radiocoms - Material Contracts
Section 4.15(c) Radiocoms - Transactions Between
Radiocoms and EFJ
Section 4.16(b) Radiocoms - Employee Benefit Schemes
Section 4.16(i) Radiocoms - Timing of Contributions
Section 4.16(p) Radiocoms - Dispensations and
Notice Granted by the
Inland Revenues
Section 4.16(s) Radiocoms - Rate of Contributions
Section 4.17(d) Radiocoms - Salaried Employees
Section 4.18(a) Radiocoms - Litigation
Section 4.19(b) Radiocoms - Compliance with Laws
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Section 4.22 Radiocoms - Related Party Transactions
Section 4.23 Radiocoms - Financial Advisors
Section 4.25 Radiocoms - Licenses; Permits;
Authorizations
Section 4.28 Radiocoms - Accounts Receivable
Section 4.30 Radiocoms - Inventory
Section 4.31 Radiocoms - Products
Section 7.1(b) Radiocoms - Consents and Waivers
Necessary for Closing
Section 5.3 INTEK - Capitalization
Section 5.4 INTEK - Subsidiaries
Section 5.6(b) INTEK - Conflicts; Consents of
and 7.1(a) Third Parties
Section 5.11 INTEK - Absence of Certain
Developments
Section 5.12 INTEK - Taxes
Section 5.13(a) INTEK - Real Property
Section 5.14 INTEK - Tangible Personal Property
Section 5.15 INTEK - Intangible Property
Section 5.16 INTEK - Materials Contracts
Section 5.17(a),(b) INTEK - Employee Benefits
Section 5.18 INTEK - Labor
Section 5.19 INTEK - Litigation
Section 5.20 INTEK - Noncompliance with Laws
Section 5.21 INTEK - Environmental Matters
Section 5.23 INTEK - Related Party Transactions
Section 5.24 INTEK - Financial Advisors
Section 5.25 INTEK - Claims to Property
Section 5.27 INTEK - FCC Matters
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, INTEK has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
Dated: December 18, 1996 NTEK Diversified Corporation
By:/s/ David Neibert
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Name: David Neibert
Title: Executive Vice President
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INDEX TO EXHIBITS
EXHIBIT
PAGE
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2.1 Stock Purchase Agreement dated as of June 18, 1996, as
amended by Amendment No. 1 dated as of September 19,
1996, by and among INTEK Diversified Corporation and
Securicor Communications Limited.
10.1 Assumption and Release Agreement dated as of
December 3, 1996, by and between INTEK Diversified
Corporation, Securicor Communications Limited and
Midland USA, Inc.
10.2 Amended and Restated Loan Agreement dated as of
December 3, 1996, between INTEK Diversified Corporation
and Securicor Communications Limited.
10.3 Revolving Credit Note dated December 3, 1996, by INTEK
Diversified Corporation to the order of Securicor
Communications Limited.
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STOCK PURCHASE AGREEMENT
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 :
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WHEREAS, Seller is currently engaged, through Radiocoms
and its Subsidiaries (and previously was engaged through certain
Affiliates), in the Business (as defined below); and
WHEREAS, (i) as of the date hereof, Seller owns 100,000
ordinary shares, L1.00 par value per share (the "Existing
Shares") and (ii) as of the Closing, Seller will own an aggregate
of 100,000 deferred shares, L1.00 par value per share (the
"Deferred Shares"), and an aggregate of 150,000 ordinary shares,
$0.10 par value per share (the "Ordinary Shares" and,
collectively with the Deferred Shares, the "Shares"), and an
aggregate of 20,000 redeemable preference shares, $1,000 par
value per share (the "Preferred Shares"), of Radiocoms, which
Shares and Preferred Shares will constitute, at the time of the
Closing, all of the issued share capital of Radiocoms; and
WHEREAS, Radiocoms owns (i) an aggregate of 925,850
shares of Series I Class B Preferred Stock, $.01 par value per
share (the "EFJ Shares") of E.F. Johnson Company, a Minnesota
corporation ("EFJ"), and (ii) a warrant providing for the
purchase of up to 291,790 shares of the common stock, $.01 par
value per share, of EFJ (the "EFJ Warrant"); and
WHEREAS, Seller desires to sell to Purchaser, and
Purchaser desires to purchase from Seller, the Shares, for the
purchase price and upon the terms and conditions hereinafter set
forth; and
WHEREAS, the consummation of the transactions contem
plated hereby is a condition precedent to, and is conditioned
upon, the consummation of certain other transactions pursuant to
that certain Sale of Assets and Trademark License Agreement,
dated as of the date hereof (the "Midland Agreement"), by and
among Purchaser, Midland International Corporation, a Delaware
corporation ("Midland US") and a wholly-owned indirect subsidiary
of Simmonds Capital Limited, an Ontario corporation ("Simmonds"),
and Simmonds (collectively with each other agreement, document,
instrument or certificate contemplated by the Midland Agreement,
the "Other Transaction Documents") (the transactions contemplated
<PAGE>
by the Midland Agreement being referred to herein collectively as
the "Other Transactions" and, together with the transactions
contemplated by this Agreement, as the "Transactions"); and
WHEREAS, simultaneously with the execution of this
Agreement, Purchaser has obtained the unconditional written
agreement (the "Voting Agreement") of Simmonds and RoameR One
Holdings, Inc., as stockholders of Purchaser, (i) to vote all of
their respective shares of the common stock of Purchaser in favor
of the approval of the issuance of the Purchaser Shares (as here
inafter defined) pursuant hereto and (ii) not to sell, transfer
or dispose of any such shares prior to the consummation of the
Transactions or the termination of this Agreement except in
accordance with the terms of the Voting Agreement; and
WHEREAS, the consummation of the Transactions will be
mutually beneficial to Purchaser and Seller; and
WHEREAS, certain terms used in this Agreement are
defined in Section 10.1.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements hereinafter contained, the
parties hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 SALE AND PURCHASE OF SHARES. Upon the terms and
subject to the conditions contained herein, on the Closing Date,
Seller shall sell, assign, transfer, convey and deliver to
Purchaser, and Purchaser shall purchase from Seller, the Shares.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 AMOUNT AND PAYMENT OF PURCHASE PRICE. In
consideration of the sale of the Shares to Purchaser, the
Purchaser shall deliver to Seller, on the Closing Date,
25,000,000 shares of the common stock, $.01 par value (the
"Purchaser Common Stock"), of Purchaser (the "Purchaser Shares").
ARTICLE III
CLOSING AND TERMINATION
3.1 CLOSING DATE. Subject to the satisfaction of
the conditions set forth in Sections 7.1, 7.2 and 7.3 hereof (or
the waiver thereof by the party or parties entitled to waive that
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condition), the closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take
place at 10:00 a.m., New York City time, at the offices of Weil,
Gotshal & Manges LLP, located at 767 Fifth Avenue, New York, New
York (or at such other place as the parties may designate in
writing), five (5) Business Days after the conditions listed in
Article VII have been satisfied or waived or on such other date
as Seller and Purchaser may designate in writing. The date on
which the Closing shall be held is referred to in this Agreement
as the "Closing Date."
3.2 TERMINATION OF AGREEMENT. This Agreement may be
terminated prior to the Closing as follows:
(a) At the election of Seller or Purchaser after
December 31, 1996, if the Closing shall not have occurred by the
close of business on such date, provided that the terminating
party is not in default of any of its obligations hereunder;
(b) by mutual written consent of Seller and Purchaser;
(c) by Seller or Purchaser, if there shall be in
effect a final nonappealable Order of a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby or the Other Transactions; it being agreed that the
parties hereto (or Purchaser, in the case of any Order that
relates solely to the Other Transactions) shall promptly appeal
any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence);
(d) by Seller, if (i) there shall have been a breach
of any representation or warranty on the part of Purchaser set
forth in this Agreement, or if any representation or warranty of
Purchaser shall have become untrue, in either case such that the
condition set forth in Section 7.3(a) would be incapable of being
satisfied by December 31, 1996 (or as otherwise extended) or (ii)
there shall have been a breach by Purchaser of any of its
covenants or agreements having a Material Adverse Effect on
Purchaser and its Subsidiaries, taken as a whole, or materially
adversely affecting (or materially delaying) the consummation of
the transactions contemplated hereby or the Other Transactions,
and Purchaser has not cured such breach within ten Business Days
after notice by Seller thereof, provided that Seller has not
breached any of its obligations hereunder;
(e) by Purchaser, if (i) there shall have been a
breach of any representation or warranty on the part of Seller
set forth in this Agreement or if any representation or warranty
of Seller shall have become untrue, in either case such that the
condition set forth in Section 7.2(a) would be incapable of being
satisfied by December 31, 1996 (or as otherwise extended); or
(ii) there shall have been a breach by Seller of its covenants or
agreements hereunder having a Material Adverse Effect on the
<PAGE>
Business or Radiocoms and its Subsidiaries, taken as a whole, or
materially adversely affecting (or materially delaying) the
consummation of the transactions contemplated hereby or the Other
Transactions, and Seller has not cured such breach within ten
Business Days after notice by Purchaser thereof, provided that
Purchaser has not breached any of its obligations hereunder;
(f) by Seller, if the Board of Directors of Purchaser
shall have withdrawn, modified or changed its approval or
recommendation of this Agreement and the transactions
contemplated hereby, or shall have failed to give such
recommendation or to call, give notice of, convene or hold the
Purchaser Stockholders' Meeting in accordance with the terms of
this Agreement, or shall have adopted any resolution to effect
any of the foregoing;
(g) by Purchaser, if the Board of Directors of
Purchaser or a Special Committee thereof, in its good faith
judgment, after consultation with independent legal counsel,
shall have withdrawn, modified or changed its approval or
recommendation of this Agreement and the transactions
contemplated hereby (having determined that it is necessary to do
so in order to comply with its fiduciary duties to stockholders
under applicable law);
(h) by Purchaser or Seller, if Purchaser shall have
duly called and convened the Purchaser Stockholders' Meeting and
shall have failed to obtain the requisite vote of its
stockholders; or
(i) by Seller, if, at any time after sixty days from
the date hereof, the closing conditions set forth in Section
7.3(j) or Section 7.3(k) shall not be satisfied.
3.3 PROCEDURE UPON TERMINATION. In the event of
termination by Purchaser or Seller pursuant to Section 3.2
hereof, written notice thereof shall forthwith be given to the
other party, and this Agreement shall terminate, and the purchase
of the Shares hereunder shall be abandoned, without further
action by Purchaser or Seller. If this Agreement is terminated,
as provided herein, each party shall redeliver all documents,
work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same, or,
promptly following the request of the furnishing party, destroy
all such documents, work papers or other materials.
3.4 EFFECT OF TERMINATION. In the event that this
Agreement is validly terminated as provided herein, then each of
the parties shall be relieved of their duties and obligations
arising under this Agreement after the date of such termination,
and such termination shall be without liability to Purchaser,
Radiocoms or Seller; PROVIDED, HOWEVER, that the provisions of
this Section 3.4 and Sections 3.5, 10.3 and 10.6 hereof shall
<PAGE>
survive any such termination and shall be enforceable hereunder;
and PROVIDED, FURTHER, that nothing in this Section 3.4 shall
relieve Purchaser or Seller of any liability for a breach of this
Agreement.
3.5 EXPENSE REIMBURSEMENT. If this Agreement is
terminated by Seller pursuant to Section 3.2(f) or by Purchaser
pursuant to Section 3.2(g), Purchaser shall reimburse Seller and
its Affiliates (not later than ten business days after the
submission of statements therefor) for all documented out-of-
pocket fees and expenses actually and reasonably incurred by any
of them or on their behalf in connection with the consummation of
all transactions contemplated by this Agreement (including,
without limitation, fees payable to investment bankers, counsel
to any of the foregoing, and accountants); PROVIDED, HOWEVER,
that such expense reimbursement shall be payable only if (i)(a)
after the date hereof and prior to such termination, Purchaser
(or its agents) had negotiations with a view towards a Third
Party Acquisition or furnished information to a Third Party with
a view towards a Third Party Acquisition and (b) Purchaser
consummates a Third Party Acquisition within twelve months
following any such termination, (ii)(a) after the date hereof and
prior to such termination a Third Party (other than an Third
Party referred to in clause (a)(i)) submitted a proposal for a
Third Party Acquisition to Purchaser (or its agents), or
expressed an interest in a Third Party Acquisition to Purchaser
(or its agents) and (b) Purchaser consummates a Third Party
Acquisition with such Third Party or an Affiliate thereof within
twelve months following any such termination or (iii) Purchaser
accepted a proposal for a Third Party Acquisition on or prior to
the date of termination pursuant to Section 3.2(f) or Section
3.2(g).
"Third Party Acquisition" means the occurrence of any
of the following events: (i) the acquisition of Purchaser by
merger or otherwise by any Person (which includes a "person" as
such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) or entity other than Seller or
any Affiliate thereof (a "Third Party"); (ii) the acquisition by
a Third Party of more than 50% of the total assets of Purchaser
and its subsidiaries, taken as a whole; or (iii) the acquisition
by a Third Party of 50% or more of the outstanding shares of
Purchaser Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser
that:
4.1 ORGANIZATION AND GOOD STANDING. Each of
Radiocoms and Seller is a corporation duly organized, validly
<PAGE>
existing and in good standing under the Laws of England and
Wales. EFJ is a corporation validly existing and in good
standing under the Laws of Minnesota. Each of Radiocoms, Seller,
and, to the knowledge of Seller, EFJ, has all requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as now conducted. Radiocoms is duly
qualified or authorized to do business as a foreign corporation
and is in good standing under the Laws of each jurisdiction in
which it owns or leases real property and each other jurisdiction
in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except
where the failure to be so qualified or authorized could not
reasonably be expected to have a Material Adverse Effect on
Radiocoms and its Subsidiaries, taken as a whole. Radiocoms is
not subject to any agreement, commitment or understanding which
restricts or may restrict the conduct of the Business in any
jurisdiction or location in any material respect. Copies of the
Memorandum of Association and Articles of Association (together
with all amendments thereto) of Radiocoms and the articles of
incorporation of EFJ have heretofore been provided or made
available to Purchaser and such copies are true, correct and
complete copies of such instruments.
4.2 AUTHORIZATION OF AGREEMENT. Seller has all
requisite power, authority and legal capacity to execute and
deliver this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be
executed by Seller in connection with the consummation of the
transactions contemplated by this Agreement (together with this
Agreement, the "Seller Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and each of the Seller Documents has
been duly and validly authorized by the Board of Directors of
Seller, and no other corporate proceedings on the part of Seller
will be necessary to authorize this Agreement and the
transactions contemplated hereby or the Other Transactions.
Assuming the due authorization, execution and delivery by the
other parties hereto and thereto, this Agreement constitutes, and
each of the Seller Documents when executed and delivered will
constitute, legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganiza
tion, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in
equity) (the "Bankruptcy Exception").
4.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital
stock of (i) Radiocoms consists of 100,000 Existing Shares (ii)
EFJ consists of 10,000,000 common shares, $.01 par value per
<PAGE>
share, 80,000 shares of preferred stock, $100.00 par value per
share, and 2,000,000 shares of Class B Preferred Stock, $.01 per
value per share. As of the date hereof, there are (i) 100,000
Existing Shares issued and outstanding and no shares of any class
are held by Radiocoms as treasury stock and (ii) to the knowledge
of Seller, 10,000,000 shares of common stock of EFJ, 80,000
shares of preferred stock of EFJ and 2,000,000 shares of Class B
Preferred Stock of EFJ issued and outstanding. As of the Closing
Date, there will be 100,000 Deferred Shares, 150,000 Ordinary
Shares and 20,000 shares of Radiocoms Preferred Stock issued and
outstanding, and no shares of any class will be held by Radiocoms
as treasury stock. All of the Existing Shares were duly
authorized for issuance and are validly issued, fully paid and
non-assessable. Upon issuance thereof prior to the Closing, all
of the Shares and the Preferred Shares will have been duly
authorized for issuance and validly issued, fully paid and non-
assessable. To the knowledge of Seller, the EFJ Shares and the
EFJ Warrant were duly authorized for issuance and are validly
issued, fully paid and non-assessable.
(b) Except for the EFJ Warrant or as set forth in
Section 4.3(b) of the disclosure letter delivered by Seller to
Purchaser on the date hereof (the "Radiocoms Disclosure Letter"),
there is no existing option, warrant, call, right, commitment or
other agreement of any character to which Seller or Radiocoms or,
to the knowledge of Seller, EFJ is a party requiring, and there
are no securities of Radiocoms or, to the knowledge of Seller,
EFJ, as the case may be, outstanding which upon conversion or
exchange would require, the issuance, sale or transfer of any
additional shares of capital stock or other equity securities of
Radiocoms or EFJ, as the case may be, or other securities
convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity
securities of Radiocoms or EFJ, as the case may be. Except as
set forth in Section 4.3(b) of the Radiocoms Disclosure Letter,
neither Seller nor Radiocoms, nor, to the knowledge of Seller,
EFJ is a party to any voting trust or other voting agreement with
respect to any of the shares of Common Stock or the EFJ Shares or
to any agreement relating to the issuance, sale, redemption,
transfer or other disposition of the capital stock of Radiocoms
or EFJ, as the case may be, except for the EFJ Warrant.
4.4 SUBSIDIARIES.
(a) Set forth in Section 4.4(a) of the Radiocoms
Disclosure Letter is the name of each of the Subsidiaries of
Radiocoms and any Affiliate of Radiocoms that is conducting
(including through ownership of properties or through its
employees) (or has conducted during the periods covered by the
Radiocoms Financial Statements) the Business (a "Relevant
Affiliate") and, with respect to each such Subsidiary or Relevant
Affiliate, the jurisdiction in which it is incorporated, the
number of shares of its authorized capital stock, the number and
class of shares thereof duly issued and outstanding, the names of
<PAGE>
all stockholders and the numbers of shares of stock owned by each
stockholder. Each such stockholder is the record and beneficial
owner of the shares set forth opposite its name in Section 4.4(a)
of the Radiocoms Disclosure Letter. The outstanding shares of
capital stock of each Subsidiary of Radiocoms have been duly
authorized, validly issued and fully paid and are non-assessable.
(b) All shares of Subsidiaries that are set forth in
Section 4.4(a) of the Radiocoms Disclosure Letter are owned by
such stockholders free and clear of all Liens. No shares of
capital stock are held by any Subsidiary of Radiocoms as treasury
stock.
(c) None of the Subsidiaries of Radiocoms has
outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or any other agreements of any
character obligating any of them to issue, sell or transfer any
shares of its capital stock or other equity interests or any
securities convertible into or evidencing the right to subscribe
for or purchase any shares of such stock or other equity
interests with any Person, and there are no agreements or
understandings with respect to the voting, sale or transfer of
shares of the capital stock of any Subsidiary of Radiocoms to
which Radiocoms or any Subsidiary thereof is a party.
(d) Each Subsidiary of Radiocoms is a corporation duly
organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation. Each Subsidiary of
Radiocoms has full corporate power and authority to own, lease
and operate its properties and to carry on its business as it is
now being conducted. Each Subsidiary of Radiocoms is duly
qualified and in good standing as a foreign corporation under the
Laws of each jurisdiction in which the conduct of its business or
the ownership of its assets requires such qualification, except
where the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect on Radiocoms and its
Subsidiaries, taken as a whole. No Subsidiary of Radiocoms is
subject to any agreement, commitment or understanding which
restricts or may restrict the conduct of the Business in any
jurisdiction or location in any material respect. Copies of the
Memorandum of Association and Articles of Association or
equivalent organizational documents (together with all amendments
thereto) of each Subsidiary of Radiocoms have heretofore been
provided or made available to Purchaser and such copies are true,
correct and complete copies of such instruments.
(e) Except as set forth in Section 4.4(e) of the
Radiocoms Disclosure Letter, neither Radiocoms nor any of its
Subsidiaries owns, beneficially or of record, any shares of
capital stock or any other security of any corporation or other
legal entity, or has any option or obligation to acquire any such
stock or other security, or has any investments in securities or
owns, directly or indirectly, any interest in any partnership,
joint venture or other business enterprise.
<PAGE>
4.5 CORPORATE RECORDS. The minute books of Radiocoms
and each of its Subsidiaries previously made available to
Purchaser contain complete and accurate records, in all material
respects, of all meetings, and accurately reflect, in all
material respects, all other corporate actions of the
stockholders and board of directors (including committees
thereof) of Radiocoms and each of its Subsidiaries. The stock
certificate books and stock transfer ledgers of Radiocoms and its
Subsidiaries previously made available to the Purchaser are true,
correct and complete. All stock transfer taxes levied or payable
with respect to all transfers of shares of Radiocoms and its
Subsidiaries prior to the date hereof (if any) have been paid and
appropriate transfer tax stamps affixed.
4.6 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) None of the execution and delivery by Seller of
this Agreement and the Seller Documents, the consummation of the
transactions contemplated hereby or thereby (including, without
limitation, the transaction referred to in the second sentence of
Section 4.7), or compliance by Seller with any of the provisions
hereof or thereof do or will (i) conflict with, or result in the
breach of, any provision of the Memorandum of Association or
Articles of Association or comparable organizational documents of
Seller, Radiocoms or any of Radiocoms's Subsidiaries or Relevant
Affiliates; (ii) conflict with, violate, result in the breach or
termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or
obligation to which Seller, Radiocoms or any of its Subsidiaries
or Relevant Affiliates is a party or by which Seller, Radiocoms
or any of its Subsidiaries or Relevant Affiliates or any of their
respective properties or assets is bound, including, without
limitation, the EFJ Shareholders' Agreement (as hereinafter
defined) and any other such agreement that relates in any way to
the EFJ Shares or the EFJ Warrant; (iii) violate any statute,
rule, regulation, order or decree of any Governmental Body by
which Seller, Radiocoms or any of its Subsidiaries or Relevant
Affiliates is bound; or (iv) result in the creation of any Lien
upon the properties or assets of Seller, Radiocoms or any of its
Subsidiaries or Relevant Affiliates except, in case of clauses
(ii), (iii) and (iv), for such violations, breaches or defaults
as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Radiocoms and its
Subsidiaries, taken as a whole, or materially delay the consumma
tion of the transactions contemplated hereby.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification
to, any Person or Governmental Body is required on the part of
Seller, Radiocoms or any Subsidiary or Relevant Affiliate of
Radiocoms in connection with the execution and delivery of this
Agreement or the Seller Documents, or the compliance by Seller or
any of its Relevant Affiliates with any of the provisions hereof
or thereof, except (i) for compliance with the applicable
<PAGE>
requirements of the HSR Act, (ii) for amendments to Seller's
Schedule 13D filing with respect to Purchaser to reflect the
execution of this Agreement and the consummation of the
Transactions, and (iii) where the failure to obtain such consent,
waiver, approval, Order, Permit or authorizations, or to make
such declaration or filing, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on Radiocoms and its Subsidiaries, taken as a whole, or
materially delay the consummation of the transactions
contemplated hereby.
4.7 OWNERSHIP AND TRANSFER OF SHARES; OWNERSHIP OF
EFJ SHARES AND EFJ WARRANT. Seller is the sole record and
beneficial owner of the Existing Shares (and, as of the Closing,
Seller will be the sole record and beneficial owner of the
Shares), and, except as set forth in Section 4.7 of the Radiocoms
Disclosure Letter, Radiocoms is the sole record and beneficial
owner of the EFJ Shares and the EFJ Warrant, in each case free
and clear of any and all Liens, except (in the case of the EFJ
Warrant and the EFJ Warrant) for that certain Shareholders
Agreement, dated as of March 14, 1995, among certain shareholders
of E.F. Johnson Company (the "EFJ Shareholders' Agreement"), to
which the EFJ Shares, and any shares issuable pursuant to the EFJ
Warrant, are subject. The EFJ Shares and the EFJ Warrant
constitute all of the securities of EFJ owned or held by
Radiocoms or any of its Affiliates, and were transferred to
Radiocoms by Securicor Communications Inc. in exchange for a one-
year note of Radiocoms (the "EFJ Note") in an aggregate principal
amount of $10,000,000 on June 17, 1996. Seller has the corporate
power and authority to sell, transfer, assign and deliver the
Shares, and such delivery will convey to Purchaser good and
marketable title to the Shares, free and clear of any and all
Liens.
4.8 FINANCIAL STATEMENTS. Seller has delivered to
Purchaser copies of (a) the audited consolidated balance sheet of
Radiocoms and its Subsidiaries as at September 30, 1995, and the
related audited consolidated statements of income and of cash
flows of Radiocoms and its Subsidiaries (determined as of
September 30, 1995) for the year then ended and (b) the unaudited
consolidated balance sheet of Radiocoms and its Subsidiaries as
at March 31, 1996, and the related statements of income and cash
flows of Radiocoms and its Subsidiaries (determined as of March
31, 1996) for the six-month period then ended (the "Interim
Statements") (such audited and unaudited statements, including
the related notes and schedules thereto, are referred to herein
as the "Radiocoms Financial Statements"). Each of the Radiocoms
Financial Statements (i) is complete and correct in all material
respects, (ii) has been prepared in accordance with GAAP (subject
to normal year-end adjustments in the case of the Interim
Statements), in accordance with the books and records of
Radiocoms and its Subsidiaries and in conformity with the
practices consistently applied by Radiocoms without modification
of the accounting principles used in the preparation thereof,
<PAGE>
except that such financial statements have been conformed to GAAP
and except as set forth in Section 4.8 of the Radiocoms
Disclosure Letter, (iii) except for the issuance of the Shares
and the Preferred Shares, the transfer of the EFJ Shares and EFJ
Warrant to Radiocoms, and the cancellation of intercompany
indebtedness, reflects all transactions relating to the Business
including, without limitation, operations of Radiocoms and the
Subsidiaries and any transaction with Securicor plc or its
Subsidiaries, and (iv) presents fairly the financial position,
results of operations and cash flows of Radiocoms and its
Subsidiaries as at the dates and for the periods indicated. The
Pro Forma Balance Sheet (as defined in Section 6.9(c)) will
present fairly the financial position of Radiocoms and its
Subsidiaries on a pro forma basis as at the date indicated, as
adjusted as described in Section 6.9(c), in accordance with GAAP
(subject to normal year-end adjustments).
For the purposes hereof, the audited balance sheet of
Radiocoms as at September 30, 1995 and the unaudited balance
sheet of Radiocoms as at March 31, 1996, respectively, are
referred to as the "Radiocoms Balance Sheet" and the "March
Radiocoms Balance Sheet," respectively, and September 30, 1995
and March 31, 1996, respectively, are referred to as the
"Radiocoms Balance Sheet Date" and the "March Radiocoms Balance
Sheet Date," respectively.
4.9 NO UNDISCLOSED LIABILITIES. Radiocoms and its
Subsidiaries have no indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) (a) that would be required by GAAP
to be reflected in, reserved against or otherwise described in
the consolidated balance sheet of Radiocoms and its Subsidiaries
(including the notes thereto) or (b) which could reasonably be
expected to have a Material Adverse Effect on Radiocoms and its
Subsidiaries, taken as a whole, except (i) as set forth on the
March Radiocoms Balance Sheet or in the notes thereto, (ii) for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the March Radiocoms
Balance Sheet Date and (iii) as set forth in Section 4.9 of the
Radiocoms Disclosure Letter.
4.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as
expressly contemplated by this Agreement or as set forth in
Section 4.10 of the Radiocoms Disclosure Letter, since the
Radiocoms Balance Sheet Date:
(a) there has not been any Material Adverse Change nor
has there occurred any event which is reasonably likely to result
in a Material Adverse Change with respect to the Business or
Radiocoms and its Subsidiaries, taken as a whole;
(b) there has not been any damage, destruction or
loss, whether or not covered by insurance, with respect to the
property and assets of the Business having a replacement cost of
<PAGE>
more than L10,000 for any single loss or L10,000 for all such
losses;
(c) there has not been any declaration, setting aside
or payment of any dividend or other distribution in respect of
any shares of capital stock of Radiocoms or any of its
Subsidiaries or any repurchase, redemption or other acquisition
by Seller, Radiocoms or any Subsidiary of Radiocoms of any
outstanding shares of capital stock or other securities of, or
other ownership interest in, Radiocoms or any of its
Subsidiaries, except for (i) dividends to Radiocoms by any of its
wholly owned Subsidiaries and (ii) Seller's acquisition of the
Shares and the Preferred Shares as contemplated by this
Agreement;
(d) neither Radiocoms nor any or its Subsidiaries has
issued any equity securities or any securities convertible into
or exchangeable for equity securities of Radiocoms or any of its
Subsidiaries, other than the Shares and the Preferred Shares;
(e) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has awarded or paid any bonuses to employees
of the Business or Radiocoms with respect to the fiscal year
ended September 30, 1995 and the period ended March 31, 1996,
except to the extent accrued on the Radiocoms Balance Sheet or
the March Radiocoms Balance Sheet, or entered into any
employment, deferred compensation, severance or similar agreement
(or amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of its
directors, officers, employees, agents or representatives or
agreed to increase the coverage or benefits available under any
severance pay, termination pay, vacation pay, company awards,
salary continuation for disability, sick leave, deferred compen
sation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan, payment or arrangement made to,
for or with such directors, officers, employees, agents or
representatives (other than normal increases in the ordinary
course of business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of Radiocoms and its
Subsidiaries, taken as a whole);
(f) there has not been any change by Radiocoms or any
of its Subsidiaries or Relevant Affiliates in accounting or Tax
reporting principles, methods or policies relating to the
Business;
(g) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has entered into any transaction or Contract
or conducted its business related to the Business other than in
the ordinary course consistent with past practice, and no
Relevant Affiliate of Radiocoms has entered into any transaction
or Contract or conducted any business related to the Business
other than in the ordinary course consistent with past practice,
<PAGE>
except for the acquisition by Radiocoms of the EFJ Shares, the
EFJ Warrant and the issued and outstanding capital stock of
Linear Modulation Technology Limited ("LMT") and Securicor
Electronics Limited ("SEL");
(h) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has failed to promptly pay and discharge
current liabilities of the Business, except where disputed in
good faith by appropriate proceedings;
(i) neither Radiocoms nor any of its Subsidiaries has
made any loans (other than as evidenced by the EFJ Note),
advances or capital contributions to, or investments in, any
Person or paid any fees or expenses to Seller or any Affiliate of
Seller;
(j) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has mortgaged, pledged or subjected to any
Lien any assets related to the Business, or acquired any assets
or sold, assigned, transferred, conveyed, leased or otherwise
disposed of any assets of Radiocoms or its Subsidiaries or
Relevant Affiliates related to the Business, except for (i)
assets acquired or sold, assigned, transferred, conveyed, leased
or otherwise disposed of in the ordinary course of business
consistent with past practice, (ii) the transfer of the ownership
of the issued and outstanding capital stock of LMT and SEL from
Seller to Radiocoms on May 14, 1996 and (iii) the acquisition by
Radiocoms of the EFJ Shares and the EFJ Warrant from Securicor
Communications Inc. on June 17, 1996;
(k) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has discharged or satisfied any Lien related
to the Business, or paid any obligation or liability (fixed or
contingent) related to the Business, except (i) in the ordinary
course of business consistent with past practice and which, in
the aggregate, would not be material to Radiocoms and its
Subsidiaries, taken as a whole, and (ii) for the refinancing of
all of the outstanding indebtedness owed by Radiocoms to Seller
and its Affiliates in connection with the issuance of the
Preferred Shares;
(l) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has canceled or compromised any debt or claim
related to the Business or amended, canceled, terminated,
relinquished, waived or released any Contract or right related to
the Business except in the ordinary course of business consistent
with past practice and which, in the aggregate, would not be
material to the Business or Radiocoms and its Subsidiaries, taken
as a whole;
(m) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has instituted or settled any material Legal
Proceeding related to the Business;
<PAGE>
(n) neither the Business nor Radiocoms or any of its
Subsidiaries has suffered any extraordinary loss or extraordinary
losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants
and any amendments or interpretations thereof) (individually, an
"Extraordinary Loss" and, collectively, "Extraordinary Losses");
(o) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has transferred or granted any material
rights under any concessions, leases, licenses, agreements,
patents, inventions, trademarks, trade names, service marks,
brandmarks, brand names, copyrights or the like, or with respect
to any know-how, in any case related to the Business;
(p) neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has received any notice or citation for any
violation of, nor, to the knowledge of Seller, has any complaint
been filed with the Department of Trade and Industry ("DTI")
alleging a violation of any rule, regulation or policy of the DTI
related to the Business, or allowed any equipment authorization
related to the Business issued by the FCC to Radiocoms or any of
its Subsidiaries or Relevant Affiliates to lapse or be impaired
in any manner, or operated any of its businesses related to the
Business in any manner not in compliance with its FCC equipment
authorizations and all applicable DTI or FCC rules, regulations
and policies; and
(q) none of Seller or its Relevant Affiliates (on
behalf of Radiocoms or any Subsidiary thereof), Radiocoms or any
Subsidiary of Radiocoms has agreed to do anything set forth in
this Section 4.10.
4.11 TAXES.
(a) (A) All material Tax Returns required to be filed
by or on behalf of Radiocoms and each of its Subsidiaries and
Relevant Affiliates, or the Affiliated Group(s) of which any of
them is or was a member, have been duly and timely filed with the
appropriate taxing authorities in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all
such Tax Returns were true, complete and correct in all material
respects; (B) all Taxes payable by or on behalf of Radiocoms, its
Subsidiaries and Relevant Affiliates, either directly, as part of
an Affiliated Group Tax Return, or otherwise, have been fully and
timely paid, except to the extent adequately reserved for in
accordance with GAAP on the March Radiocoms Balance Sheet, and
adequate reserves or accruals for Taxes related to the Business
have been provided in accordance with GAAP on the March Radiocoms
Balance Sheet with respect to any period through the date thereof
for which Tax Returns have not yet been filed or for which Taxes
are not yet due and owing; and (C) no agreement, waiver or other
document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes
<PAGE>
related to the Business (including, but not limited to, any
applicable statute of limitation) has been executed or filed with
any taxing authority by or on behalf of Radiocoms or any of its
Subsidiaries or Relevant Affiliates, or any Affiliated Group(s)
of which any of them is or was a member.
(b) Radiocoms and each of its Subsidiaries and
Relevant Affiliates has complied in all material respects with
all applicable Laws, rules and regulations relating to the
payment and withholding of Taxes related to the Business and has
duly and timely withheld from employee salaries, wages and other
compensation related to the Business and has paid over to the
appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable Laws.
(c) Purchaser has received (A) complete copies of all
material income, franchise or corporation Tax Returns of
Radiocoms and each of its Subsidiaries and Relevant Affiliates
(or, in the case of Tax Returns filed for an Affiliated Group,
the portion of such Tax Returns relating to Radiocoms or any of
its Subsidiaries or Relevant Affiliates) relating to the taxable
periods since October 1, 1993 and (B) details of all material
issues of which Seller has knowledge raised by any taxing
authority within the last six years relating to any material
Taxes due from Radiocoms and each of its Subsidiaries and
Relevant Affiliates with respect to the income, assets or
operations of the Business.
(d) No claim has been made by a taxing authority in a
jurisdiction where Radiocoms or any of its Subsidiaries or
Relevant Affiliates does not file an income, franchise or
corporation Tax Return such that Radiocoms or such Subsidiary or
Relevant Affiliate is or may be subject to taxation related to
the Business by that jurisdiction.
(e) All deficiencies asserted or assessments made as a
result of any examinations by any taxing authority of the Tax
Returns of or covering or including Radiocoms and/or its
Subsidiaries or Relevant Affiliates have been fully paid, and
there are no other audits or investigations by any taxing
authority in progress, nor have Seller, Radiocoms or any of its
Subsidiaries or Relevant Affiliates received any written notice
from any taxing authority that it intends to conduct such an
audit or investigation with respect to the Business. No request
for a ruling, clearance or a determination letter related to the
Business is pending with any taxing authority. No issue has been
raised in writing by any taxing authority in any current or prior
examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed
deficiency against Radiocoms or any Subsidiary or Relevant
Affiliate for any subsequent taxable period that could be
material.
<PAGE>
(f) Neither Radiocoms (except with one or more of its
Subsidiaries or Relevant Affiliates) nor any Subsidiary or
Relevant Affiliate (except with Radiocoms or another Subsidiary
or Relevant Affiliate) is a party to any Tax Sharing Agreement or
similar agreement or arrangement (whether or not written)
pursuant to which it will have any obligation to make any
payments after the Closing.
(g) There are no liens as a result of any unpaid Taxes
upon any of the assets of Radiocoms or any of its Subsidiaries or
Relevant Affiliates.
(h) Radiocoms, its Subsidiaries and its Relevant
Affiliates have not made any payment to or provided any benefit
for any of its officers, employees, former officers or former
employees and have not made or agreed to make a payment of an
income nature which would not be allowable as a deduction in
computing its profits for corporation tax purposes except in the
ordinary course of business.
(i) As of the Closing, Radiocoms and its Subsidiaries
will have received payment equal to the tax benefit obtained by
the claimant company for all amounts surrendered as group relief
in accordance with Section 402 of the Income and Corporation
Taxes Act 1988.
(j) Neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has acquired any of its assets by virtue of a
transfer from a group company under Section 171 of the Taxation
of Chargeable Gains Act 1992, except for those specified in
Section 4.11(j) of the Radiocoms Disclosure Letter.
(k) No claim has been made under Section 152 of the
Taxation of Chargeable Gains Act 1992, which affects the amount
of the consideration which would be allowable under Section 8 of
the Taxation of Chargeable Gains Act 1992 on a disposal of an
asset by Radiocoms or its Subsidiaries or Relevant Affiliates.
(l) Except for the issuances of the Shares and the
Preferred Shares contemplated by this Agreement, Radiocoms, its
Subsidiaries and its Relevant Affiliates have at no time after
April 6, 1965 repaid, redeemed or purchased or agreed to repay,
redeem or purchase, or granted an option under which it may
become liable to purchase, any shares of any class of its issued
share capital nor have they after that date capitalized or agreed
to capitalize in the form of shares or debentures any profits or
reserves of any class or description or otherwise issued or
agreed to issue any share capital other than for the receipt of a
new consideration (within the meaning of Part VI of the Income
and Corporation Taxes Act 1988) or passed or agreed to pass any
resolution to do so.
(m) No securities (within the meaning of Part VI of
the Income and Corporation Taxes Act 1988) issued by Radiocoms or
<PAGE>
any of its Subsidiaries and its Relevant Affiliates remaining in
issue at the date of the Closing were issued in such
circumstances that any interest or any other distribution out of
assets in respect thereof falls to be treated as a distribution
under Section 209(2)(d), (da) or (e).
(n) Neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has received any capital distribution to
which the provisions of Section 189 of the Taxation of Chargeable
Gains Act 1992 could apply.
(o) Except as disclosed in Section 4.11(o) of the
Radiocoms Disclosure Letter, no asset of Radiocoms or its
Subsidiaries or Relevant Affiliates shall be deemed under
Sections 178 or 179 of the Taxation of Chargeable Gains Act 1992
to have been disposed of and reacquired by virtue of or in conse
quence of the entering into or performance of this Agreement or
any other event since the Radiocoms Balance Sheet Date.
(p) Neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has been a party to or otherwise involved in
any arrangement of which the main purpose was the avoidance of
liability to taxation or any transaction to which any of the
following provisions could apply:
(i) Sections 29-34 of the Taxation of Chargeable
Gains Act 1992;
(ii) Sections 116-118 of the Income and
Corporation Taxes Act 1988;
(iii) Section 399 of the Income and Corporation
Taxes Act 1988; or
(iv) Sections 729-746 or Sections 774-778 of Part
XVII of the Income and Corporation Taxes Act 1988.
4.12 REAL PROPERTY.
(a) Section 4.12(a) of the Radiocoms Disclosure Letter
describes (i) all real property and all interests therein owned
of record or beneficially by Radiocoms or any of its Subsidiaries
or, by any Relevant Affiliate of Radiocoms and occupied by or
used in the Business (the "Radiocoms Real Properties"), (ii) all
leases of real property directly or principally related to the
Business or to which Radiocoms or any of its Subsidiaries is a
party or by which Radiocoms or any of its Subsidiaries is bound
and (iii) the purposes for which such properties are used. True,
correct and complete copies of all documents referred to in
Section 4.12(a) of the Radiocoms Disclosure Letter have been
delivered or made available to Purchaser.
(b) (i) Radiocoms or one of its Subsidiaries or
Relevant Affiliates (which Relevant Affiliate is identified
<PAGE>
in Section 4.12(a) of the Radiocoms Disclosure Letter) has
(A) good and marketable title to the Radiocoms Real
Properties, free and clear of all Liens except for
imperfections of title, if any, that do not materially
detract from the value of the property subject thereto, or
materially interfere with the manner in which such property
is currently being used or is proposed to be used in the
Business by Radiocoms or any of its Subsidiaries or
materially impair the operations of the Business or
Radiocoms or any of its Subsidiaries and which do not secure
obligations for borrowed money used in the Business or the
deferred portion of the purchase price of acquired property
used in the Business (collectively, the "Radiocoms Permitted
Encumbrances"), and (B) all material easements and rights,
including, but not limited to, easements for power lines,
water lines, sewers, roadways and other means of ingress and
egress, necessary to conduct the business conducted on the
Radiocoms Real Properties; and none of the Liens set forth
in Section 4.12(b) of the Radiocoms Disclosure Letter has
had or could reasonably be expected to have a Material
Adverse Effect on the Business or Radiocoms and its
Subsidiaries, taken as a whole;
(ii) Neither the whole nor any portion of any of
the Radiocoms Real Properties is subject to any pending
condemnation or similar proceeding by any Governmental Body,
and Seller does not know that any such condemnation or
taking is threatened or contemplated;
(iii) Neither Radiocoms nor any of its Subsid
iaries is, or as of the Closing Date will be, in violation
of any applicable Law or Order relating to the Radiocoms
Real Properties, except where the failure to be in compli
ance with such Law or Order could not reasonably be expected
to have a Material Adverse Effect on the Business or
Radiocoms and its Subsidiaries, taken as a whole, and no
notice from any Governmental Body has been served upon
Radiocoms or any of its Subsidiaries or Affiliates claiming
any material violation thereof or calling attention to the
need for any material work, repairs, construction,
alterations, installations on or in connection with said
owned or leased real properties used in connection with the
Business or by Radiocoms and its Subsidiaries;
(iv) Radiocoms or one of its Subsidiaries or
Relevant Affiliates has obtained all permits, licenses or
certificates of occupancy pertaining to the ownership or
operation of any of the owned or leased real properties of
the Business or Radiocoms or any of its Subsidiaries
(including, without limitation, the Radiocoms Real
Properties) that are required to be obtained from any
Governmental Body by a Relevant Affiliate (in connection
with the Business) or by Radiocoms or any of its
Subsidiaries, except where the failure to obtain such
<PAGE>
permits, licenses or certificates of occupancy could not
reasonably be expected to have a Material Adverse Effect on
the Business or on Radiocoms and its Subsidiaries, taken as
a whole;
(v) Each of the leases of real property referred
to in Section 4.12(a) above is valid and enforceable in
accordance with its terms, subject to the Bankruptcy
Exception, and there is not under any such lease any
existing breach, default, event of default or event which,
with notice and/or lapse of time, would constitute a breach,
default or event of default (A) by Radiocoms or any of its
Subsidiaries or Relevant Affiliates or (B) to the knowledge
of Seller, by any other party to any such lease, except
where such breach, default or event of default could not
reasonably be expected to have a Material Adverse Effect on
the Business or Radiocoms and its Subsidiaries, taken as a
whole;
(vi) No previous or current party to any such
lease has given notice of or made a claim with respect to
any breach or default, the consequences of which,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Business
or Radiocoms and its Subsidiaries, taken as a whole;
(vii) None of the rights of Radiocoms or any of
its Subsidiaries or Relevant Affiliates under any of such
leases will be subject to termination or modification as the
result of the consummation of the transactions contemplated
by this Agreement; and
(viii) No consent or approval of any third party
is required under any of such real property leases to the
consummation of the transactions contemplated hereby.
4.13 TANGIBLE PERSONAL PROPERTY.
(a) Section 4.13(a) of the Radiocoms Disclosure Letter
sets forth all leases of personal property related to the
Business, other than leases for motor vehicles, involving annual
payments in excess of L10,000 to which Radiocoms or any of its
Subsidiaries or Relevant Affiliates is a party or by which
Radiocoms or any of its Subsidiaries or Relevant Affiliates is
bound. True, correct and complete copies of all documents
referred to in Section 4.13(a) of the Radiocoms Disclosure Letter
have been delivered or made available to Purchaser.
(b) (i) Each of the leases of personal property
referred to in Section 4.13(a) is valid and enforceable in
accordance with its terms, subject to the Bankruptcy
Exception, and there is not, under any such lease, any
existing breach, default, or event of default or event
which, with notice and/or lapse of time, would constitute a
<PAGE>
breach, default or event of default (A) by Radiocoms or any
of its Subsidiaries or Relevant Affiliates or, (B) to the
knowledge of Seller, by any other party to any such lease,
except where such breach, default, event of default could
not reasonably be expected to have a Material Adverse Effect
on the Business or Radiocoms and its Subsidiaries, taken as
a whole;
(ii) No previous or current party to any such
lease has given notice of or made a claim with respect to
any breach or default thereunder, the consequences of which,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Business
or Radiocoms and its Subsidiaries, taken as a whole;
(iii) None of the rights of any of Radiocoms or
any of its Subsidiaries or Relevant Affiliates under any of
such leases will be subject to termination or modification
as the result of the consummation of the transactions
contemplated by this Agreement;
(iv) No consent or approval of any third party is
required under any lease referred to in Section 4.13(a) for
the consummation of the transactions contemplated hereby;
(v) Radiocoms or one of its Subsidiaries or
Relevant Affiliates (which is identified) has good title to
all material items of tangible personal property reflected
on the March Radiocoms Balance Sheet (except as sold or
disposed of subsequent to the date thereof in the ordinary
course of business consistent with past practices), free and
clear of Liens; and
(vi) All of the items of tangible personal
property not owned by Radiocoms or one of its Subsidiaries
or Relevant Affiliates, but used in the Business and which,
individually or in the aggregate, are material to the
conduct of such business, are in such condition that upon
the return of such properties to their owners in the current
condition of such properties, normal wear and tear excepted,
at the end of the relevant lease terms or as otherwise
contemplated by the applicable agreements with owners
thereof, the obligations of Radiocoms or its Subsidiaries or
Relevant Affiliates (as applicable) to such owners will be
discharged in all material respects.
4.14 INTANGIBLE PROPERTY. Section 4.14 of the
Radiocoms Disclosure Letter sets forth a list of each letters
patent, material trademark, material trade name, registered
copyright, material service mark, and any other similar,
registered property or trade right owned by Radiocoms or any of
its Subsidiaries, or owned by a Relevant Affiliate of Radiocoms
and used in the Business (collectively, together with all know-
how, processes, formulae, trade secrets, inventions, designs,
<PAGE>
industrial models, computer programs and other technical data or
drawings, the "Radiocoms Intellectual Property"), and sets forth
all applications and licenses for any of the foregoing, and all
licenses or similar agreements or arrangements relating to the
operation of the Business or of Radiocoms or any of its
Subsidiaries or to which Radiocoms or any of its Subsidiaries is
a party or subject (property of the foregoing type being
hereinafter collectively referred to as the "Radiocoms IP
Licenses"), including all licenses or similar agreements or
arrangements by which Radiocoms or its Subsidiaries or Relevant
Affiliates are authorized to use intellectual property of a third
party related to the Business or have granted to a third party
rights to use intellectual property related to the Business.
Except as indicated in Section 4.14 of the Radiocoms Disclosure
Letter:
(a) Radiocoms or one of its Subsidiaries owns all
title and interest in, and, to the knowledge of Seller, right and
authority to use, in connection with the conduct of the Business
as such Business is presently conducted, all of the Radiocoms
Intellectual Property and Radiocoms IP Licenses listed in Section
4.14 of the Radiocoms Disclosure Letter, free and clear of all
Liens. The Radiocoms Intellectual Property and Radiocoms IP
Licenses (other than licenses granted to third parties), to the
knowledge of Seller, constitute all of the intellectual property
that Radiocoms needs to conduct the Business as currently con
ducted. The operation of the Business by Radiocoms and its Sub
sidiaries or Relevant Affiliates does not, to the knowledge of
Seller, infringe upon, misappropriate or violate (in each case,
in any material respect) any valid patent, trade name, trademark,
service mark, trade secret, brand mark and brand name and other
property or trade right of any other person, firm or corporation.
None of Radiocoms or any of its Subsidiaries or Affiliates has
received any notice or has knowledge pertaining to any actual or
threatened, infringement, misappropriation or violation of the
items of intellectual property listed in the preceding sentence;
(b) There are no asserted or, to the knowledge of
Seller, threatened, governmental, judicial or adversarial
proceedings, hearings, arbitrations, disputes or claims with
respect to any of the Radiocoms Intellectual Property or
Radiocoms IP Licenses listed in Section 4.14 of the Radiocoms
Disclosure Letter;
(c) To the knowledge of Seller, no third party is
infringing or engaging in an unauthorized use of the Radiocoms
Intellectual Property or Radiocoms IP Licenses; and
(d) To the knowledge of Seller, neither Seller nor any
of its Affiliates has made any disclosure to a third party that
would materially impair the value of any confidential Radiocoms
Intellectual Property or confidential Radiocoms IP Licenses, and
Seller and its Affiliates have treated such confidential
<PAGE>
information in a manner reasonably designed to preserve its
confidentiality.
4.15 MATERIAL CONTRACTS.
(a) Section 4.15(a) of the Radiocoms Disclosure Letter
sets forth (i) each oral or written agreement, arrangement or
commitment of any nature relating to the Business or to which
Radiocoms or any of its Subsidiaries is a party or by which it is
bound involving (A) a commitment of more than L50,000 or (B) the
purchase or sale of any assets relating to the Business or of
Radiocoms or its Subsidiaries having a book value or more than
L50,000 and (ii) all (A) loan or credit agreements, indentures,
guaranties, promissory notes, pledge agreements, mortgages,
security agreements or other instruments in respect of borrowed
funds, (B) distributorship, agency, representation, dealer or
similar agreements, (C) covenants not to compete or other
agreements or understandings which would restrict the
distribution or sale of any of the products of the Business or of
Radiocoms or any of its Subsidiaries in any geographical area or
to any person or class of persons, or which in any way affects
the price or other terms at which the Business or Radiocoms or
any of its Subsidiaries or any agent or representative of the
Business or Radiocoms or any of its Subsidiaries may sell
products or services, (D) contracts or commitments for capital
expenditures, and (E) partnership or joint venture agreements.
Agreements, arrangements and commitments of the types described
in subsections (i) and (ii) above are hereinafter collectively
referred to as the "Radiocoms Material Agreements."
(b) Each Radiocoms Material Agreement is valid and
enforceable in accordance with its terms, subject to the
Bankruptcy Exception. (i) Neither Radiocoms nor any of its
Subsidiaries or Relevant Affiliates nor, to the knowledge of
Seller, any other party thereto, is in breach of or in default
under any Radiocoms Material Agreement, (ii) to the knowledge of
Seller, there has not occurred any event which, after the giving
of notice or the lapse of time or both, would constitute a
default under, or result in a breach of, any Radiocoms Material
Agreement, (iii) no previous or current party to any Radiocoms
Material Agreement has given notice of or made a claim or, to the
knowledge of the Seller, threatened to make a claim, with respect
to any breach or default thereunder, the consequences of which,
in the case of clauses (i), (ii) and (iii), individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect on the Business or Radiocoms and its Subsidiaries,
taken as a whole, (iv) none of the rights of Radiocoms or any of
its Subsidiaries or Affiliates under any of the Radiocoms
Material Agreements will be subject to termination or
modification as a result of the consummation of the transactions
contemplated by this Agreement, (v) no consent or approval of any
third party is required under any Radiocoms Material Agreement to
the consummation of the transactions contemplated hereby and (vi)
<PAGE>
no power of attorney that remains in effect has been granted by
Radiocoms or its Subsidiaries.
(c) Section 4.15(c) of the Radiocoms Disclosure Letter
sets forth a true and accurate list of all oral or written
agreements, arrangements or commitments of any nature between
Radiocoms or any of its Subsidiaries or Affiliates, on the one
hand, and EFJ, on the other hand.
4.16 EMPLOYEE BENEFITS.
(a) For purposes of this Agreement, the following
terms shall have the following meanings: (i) "Approved" means
approved by the Board of Inland Revenue as an exempt approved
scheme (within the meaning of Section 592 Income and Corporation
Taxes Act of 1988) and "Approval" has the corresponding meaning;
(ii) "Retirement/Death/Disability Benefit" means any pension,
lump sum, gratuity or other like benefit given or to be given on
retirement or on death, or in anticipation of retirement, or, in
connection with past service after retirement or death, or to be
given on or in anticipation of, or in connection with any change
in the nature of the service of the employee in question or given
or to be given on or in connection with the illness, injury or
disability of, or suffering of any accident by, an employee of
Radiocoms or any of its Subsidiaries or Relevant Affiliates;
(iii) "Scheme" means those of the Schemes participated in by
Radiocoms, or any of its Subsidiaries or Relevant Affiliates,
such Schemes being referred to on Section 4.16(b) of the
Radiocoms Disclosure Letter; (iv) "Scheme Documents" means the
documents constituting and governing a Scheme (including all
notices, announcements and explanatory literature of current
effect) and all documents relating to the participation by
Radiocoms or any of its Subsidiaries or Relevant Affiliates in
and obligations of those entities under such Scheme; (v)
"Trustees" means the trustees of a Scheme and includes their
predecessors as trustees; (vi) "Valuation" means the most recent
actuarial valuation of a Scheme as set forth on Section 4.16(b)
of the Radiocoms Disclosure Letter with respect to each Scheme
where such a Valuation is required by the Inland Revenue; and
(vii) "Valuation Date" and "Valuation Report" mean, respectively,
the date as at which the Valuation was carried out and the report
of the actuary preparing the Valuation.
(b) Section 4.16(b) of the Radiocoms Disclosure Letter
sets forth a list of all Schemes. All information made available
to Purchaser in connection with each Scheme is complete and
accurate in all material respects. Except pursuant to the
Schemes, neither Radiocoms nor any of its Subsidiaries or
Relevant Affiliates has paid, provided or contributed toward, and
neither Radiocoms nor any of its Subsidiaries or Relevant
Affiliates is under any obligation or commitment (whether or not
legally enforceable) to pay, provide or contribute towards, any
Retirement/Death/Disability Benefit for and or in respect of any
present or past employee (or any spouse, child or dependent of
<PAGE>
any them) of Radiocoms or any of its Subsidiaries or Relevant
Affiliates.
(c) Seller has made available to Purchaser prior to
the date hereof: (i) true, complete and correct copies of all
Scheme Documents; (ii) the names and addresses of the current
trustees and administrators of each Scheme; (iii) a complete copy
of the latest Trustees' Report to members of the audited accounts
of each Scheme (including the auditor's report); (iv) a complete
copy of the most recent Valuation Report and, if not stated
therein, the name and address of the current actuary to each
Scheme; (v) a list of each Scheme's active members, pensioners
and deferred pensioners who are employees or past employees of
Radiocoms with particulars relevant to establish their
entitlement to benefits thereunder; (vi) a statement of the rate
at which during the current and preceding Scheme year each
participating employer contributes to the Scheme and makes
payments in respect of the expenses of administration, management
and trusteeship of the Scheme and of any proposal to change such
rate; (vii) the identity of the principal employer of each Scheme
and particulars of the terms of participation of each of
Radiocoms and any of its Subsidiaries in each Scheme; (viii) all
material particulars of the assets currently held by each Scheme
by reference to the categories listed in Schedule 3 to the
Occupational Pension Schemes (Disclosure of Information)
Regulations 1986 (including full particulars of any employer-
related investment as defined in Section 112 of the Pension
Schemes Act 1993) of any investment in which more than 5% of the
total value of the net assets of the Scheme is invested and of
any requirements relating to the Schemes' investments imposed by
the Inland Revenue (other than requirements relating to Approved
Retirement Benefit Schemes generally) and all material
particulars of any common investment fund in which the Scheme
participates; (ix) all material particulars of any surplus
payment within the meaning of the Pension Scheme Surpluses
(Administration) Regulations 1987 which has been made or is
proposed to be made from such Scheme; (x) a complete copy (or, in
the case of an oral contract, full written particulars) of any
contract with any person providing services of any nature in
connection with the Scheme, including, without limitation,
investment management or advisory services, custody services,
administration and data processing services; (xi) all material
particulars of any discretionary practice of the Scheme in
relation to employees or past employees of Radiocoms or any of
its Subsidiaries or Relevant Affiliates in the preceding three
years (other than pension increases and individual enhancements
or additions); (xii) a complete copy of each contract of
insurance and of any associated agreement with the insurance
company relating to the Scheme and full particulars of the
premiums payable under them; (xiii) a complete copy of the
contracting-out certificate relating to the participation of
Radiocoms and any of its Subsidiaries or Relevant Affiliates and
of the Inland Revenue's Letter of Approval in force in relation
to such Scheme; and (xiv) the basic information about the Scheme
<PAGE>
required to be given under Schedule 1 of the Occupational Pension
Schemes (Disclosure of Information) Regulations 1986.
(d) Each Scheme is Approved as of its commencement
and, to Seller's knowledge, there is no ground on which Approval
may be withdrawn or cease to apply.
(e) The active members of the Scheme employed by
Radiocoms or any of its Subsidiaries or Relevant Affiliates are
contracted out of the State Earnings-Related Pension Scheme by
reference to the Scheme. To Seller's knowledge, there is no
ground on which such contracted-out status may be withdrawn or
cease to apply. All state scheme premiums, within the meaning of
the Pension Schemes Act 1993, due in respect of any member or
former member of the Scheme who is an employee or past employee
of Radiocoms or any of its Subsidiaries or Relevant Affiliates
have been paid in accordance with applicable statutory
requirements.
(f) Every employee of Radiocoms or any of its
Subsidiaries who is entitled to membership of the Scheme (whether
under the Scheme Documents or any applicable law) has been
invited to join the Scheme as of the date on which he became
entitled. Radiocoms and its Subsidiaries or Relevant Affiliates
have been properly admitted to participation in each Scheme in
which employees of Radiocoms and its Subsidiaries or Relevant
Affiliates participate.
(g) Since the effective date of the Valuation, no
power has been exercised under the Scheme to admit to membership
any employee of Radiocoms or any of its Subsidiaries or Relevant
Affiliates who is not automatically eligible for membership under
the Scheme Documents or to grant or augment any benefit under the
Scheme in respect of employees of Radiocoms or its Subsidiaries
or Relevant Affiliates which would not otherwise have been pro
vided in the ordinary course under the Scheme Documents.
(h) To Seller's knowledge, the books of account,
Trustees' minutes and other records of the Scheme have been
properly and accurately maintained in all material respects and,
to Seller's knowledge, all such books, minutes and records and
originals of the Scheme Documents are in the possession of the
Trustees.
(i) All contributions and expenses payable by
Radiocoms or any of its Subsidiaries or Relevant Affiliates
(including actuarial, trusteeship, consultancy, legal, audit and
administrative expenses) in respect of the Scheme have been paid
and, to Seller's knowledge, no services have been rendered or
requested in respect of the Scheme of which an account has not
been rendered and which when rendered would tend to increase
materially the rate of contribution of Radiocoms or any of its
Subsidiaries or Relevant Affiliates to each of the Schemes in
respect of the recoupment of such expenses or costs.
<PAGE>
(j) Each contract and agreement referred to in sub-
paragraph (c)(xii) is enforceable and, to Seller's knowledge,
there is no ground on which the insurers might avoid liability
under it. All premiums payable under all such contracts have
been paid. Without limiting the foregoing, all lump sum and
pension benefits payable in the event of the death of an employee
of Radiocoms or any of its Subsidiaries or Relevant Affiliates
while in service are fully insured, and all benefits in respect
of employees of Radiocoms or any of its Subsidiaries or Relevant
Affiliates which are in payment and which are paid up (payment
not having commenced) and all contingent benefits are fully
secured, with a reputable insurance company authorized to carry
on ordinary long-term insurance business under the Insurance
Companies Act 1982.
(k) To Seller's knowledge, the Scheme has at all times
been operated in all material respects in accordance with, and
the Trustees and all of the employers participating in the Scheme
have observed and performed all their obligations under, the
Scheme Documents, the requirements of the Inland Revenue for
Approval, the requirements of the Occupational Pensions Board
applicable to the Scheme and all applicable laws.
(l) To Seller's knowledge, the Valuation is accurate
in all material respects on the basis of the information supplied
to the actuary who carried out the Valuation. Such information
supplied to the actuary was complete and accurate in all material
respects as of the date when it was so supplied, including the
information relating to the assets held by the Scheme and to any
augmentation of benefits, and to any benefits which would not
otherwise have been provided under the Scheme Documents, to or in
respect of employees of Radiocoms or any of its Subsidiaries or
Relevant Affiliates. Since the Valuation Date: (i) pensionable
earnings of employees of Radiocoms or any of its Subsidiaries or
Relevant Affiliates have not increased at a rate greater than the
rate of increase assumed for the purpose of the Valuation Report;
and (ii) no action has been taken by Seller or by Radiocoms or
any of its Subsidiaries or Relevant Affiliates (including,
without limitation, by way of a change relating to the assets
held by the Scheme or in investment policy or practice or in the
number, age or sex distribution of members) which might cause the
result of an actuarial valuation carried out at Closing, adopting
the same actuarial methods and assumptions as were adopted for
the purpose of the Valuation, to be materially different from the
result of the Valuation.
(m) At Closing the Scheme will hold assets which have
a value at least as great as the value of the assets as stated in
the Valuation increased since the Valuation Date at a rate not
lower than the rate of investment return assumed for the purpose
of the Valuation. On the basis of the methods and assumptions
used for the Valuation, the rate of contributions payable by
Radiocoms or any of its Subsidiaries or Relevant Affiliates
recommended in the Valuation Report will be adequate to fund the
<PAGE>
benefits in payment and prospectively or contingently payable
under the Scheme in respect of employees of Radiocoms or any of
its Subsidiaries or Relevant Affiliates.
(n) Each transfer payment received by the Scheme after
17th May, 1990 in respect of employees or pensioners or deferred
pensioners who are past employees of Radiocoms or any of its
Subsidiaries or Relevant Affiliates and who are members of the
Scheme has been calculated in such a way that it does not treat
men and women unequally insofar as the payment relates to
employment after that date but disregards the application of any
actuarial assumption which may by law differ as between men and
women for this purpose.
(o) No Scheme is registered under Chapter III of Part
V of the Income and Corporation Taxes Act 1988 and no application
for such a registration has been made.
(p) Section 4.16(p) of the Radiocoms Disclosure Letter
sets out full details of all current dispensations and notices
granted by the Inland Revenue relating to Radiocoms, its
Subsidiaries and Relevant Affiliates under Section 166 of the
Income and Corporation Taxes Act 1988.
(q) No Scheme is subject to the provisions of Section
187 and Schedule 9 of the Income and Corporation Taxes Act 1988.
(r) No employee share ownership trust established in
respect of the employees of Radiocoms or its Subsidiaries or
Relevant Affiliates is subject to any charge to tax under Section
68 or Section 71 of the Finance Act 1989 and there are no
circumstances likely to lead to such a charge and Radiocoms, its
Subsidiaries and its Relevant Affiliates are not subject to any
liability whether actual or potential under Section 68(3) of the
Finance Act 1989 to pay tax otherwise due from the trustees of
any such trust.
(s) Each Scheme has been operated in accordance and in
compliance with the recommendations set forth in Section 5 of the
most recent Valuation Report that is set forth in the Radiocoms
Disclosure Letter.
4.17 LABOR.
(a) No employees of the Business or Radiocoms or any
of its Subsidiaries are represented by any labor organization,
and no labor organization or group of employees of the Business
or Radiocoms or any of its Subsidiaries has made a demand for
recognition, has filed a petition seeking a representation
proceeding or given Radiocoms or any of its Subsidiaries or
Relevant Affiliates written notice of any intention to be
represented by a collective bargaining representative. No
collective bargaining agreement is currently being negotiated
<PAGE>
with respect to any employees of the Business or Radiocoms or any
of its Subsidiaries.
(b) (i) The Business and Radiocoms and each of its
Subsidiaries is in material compliance with all applicable Laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and with each
collective bargaining agreement applicable to it, and is not
engaged in any unfair labor practice; (ii) to the knowledge of
Seller, there is no unfair labor practice charge, complaint or
similar claim relating to the Business against Radiocoms or any
of its Subsidiaries or Relevant Affiliates pending or threatened
before any Governmental Body charged with the regulation or
oversight of labor relations or similar matters; (iii) there is
no labor strike, work slowdown or stoppage or other significant
labor dispute or disturbance pending or, to the knowledge of
Seller, threatened against or affecting the Business or Radiocoms
or any of its Subsidiaries; (iv) to the knowledge of Seller,
there is no representation claim or petition pending before any
Governmental Body charged with the regulation or oversight of
labor relations or similar matters, and no question concerning
representation exists with respect to the respective employees of
the Business or Radiocoms or any of its Subsidiaries; (v) no
grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending, and no claim
therefor exists, which in any case could reasonably be expected
to have a Material Adverse Effect on the Business or Radiocoms
and its Subsidiaries, taken as a whole; and (vi) neither the
Business nor Radiocoms or any of its Subsidiaries has experienced
any work stoppage or other significant labor difficulty during
the past three years.
(c) There are no agreements or supplemental agreements
currently in effect between Radiocoms or any of its Subsidiaries
or Affiliates and any collective bargaining representative
representing a group of employees employed by the Business or
Radiocoms or any of its Subsidiaries.
(d) Section 4.17(d) of the Radiocoms Disclosure Letter
sets forth the names of all present salaried employees of the
Business or of Radiocoms and its Subsidiaries and their current
annual salaries and other compensation.
4.18 LITIGATION.
(a) Except as disclosed in Section 4.18(a) of the
Radiocoms Disclosure Letter, (i) there are no Legal Proceedings
(including, but not limited to, any proceedings which seek the
revocation, non-renewal or the adverse modification of any DTI
license) asserted or, to the knowledge of Seller, threatened, or
any governmental investigation pending or, to the knowledge of
Seller, threatened, against or affecting the Business or
Radiocoms or any of its Subsidiaries at law or in equity, before
or by any federal, state, municipal or other governmental
<PAGE>
department, commission, board, bureau, agency, court or other
instrumentality, or by any private person, firm, corporation or
other entity (such representation being limited, in the case of
any such matter in which the sole remedy sought or threatened to
be sought, as the case may be, is the payment of money, to
matters in which the sum sought or threatened to be sought is
unspecified or in excess of L10,000), (ii) to the knowledge of
Seller, there is no basis for any such Legal Proceeding which
could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Business or Radiocoms
and its Subsidiaries, taken as a whole and (iii) there are no
existing or, to the knowledge of Seller, threatened orders,
judgments or decrees of any court or governmental agency
affecting the Business or Radiocoms or any of its Subsidiaries or
any of their respective properties or assets.
(b) Seller is not aware of any facts which would
disqualify Radiocoms or any of its Subsidiaries under the
Telecommunications Act of 1984 or the rules, regulations and
practices of the DTI from transferring ownership of the Business
and Radiocoms to Purchaser. Neither Radiocoms or any of its
Subsidiaries nor the Seller or any of its Affiliates shall take
any action which would cause such disqualification or fail to
take any action if the failure to take such action would cause
such disqualification.
(c) There are no Legal Proceedings asserted or, to the
knowledge of Seller, threatened against, or any governmental
investigation pending or, to the knowledge of Seller, threatened
against, the Business, Radiocoms or any of its Subsidiaries or
Seller or any of its Affiliates which would give any third party
the right to enjoin or rescind the transactions contemplated by
this Agreement or otherwise prevent any of the parties hereto
from complying with the terms and provisions of this Agreement.
(d) There are no applications, complaints or
proceedings pending or, to the knowledge of Seller, threatened
before the DTI, relating (i) to the Business or (ii) to Radiocoms
and its Subsidiaries or Relevant Affiliates which, if adversely
determined, could reasonably be expected to have a Material
Adverse Effect on the Business or Radiocoms and its Subsidiaries,
taken as a whole.
4.19 COMPLIANCE WITH LAWS.
(a) To the knowledge of Seller, Radiocoms and each of
its Subsidiaries and Relevant Affiliates is in compliance with
all Laws applicable to the Business or the conduct of the Busi
ness or its operations or the use of its properties (including
any leased properties) and assets, except for Environmental Laws
(which are addressed in Section 4.20) and such instances of non-
compliance as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Business or Radiocoms and its Subsidiaries, taken as a whole.
<PAGE>
Neither Seller nor Radiocoms or any of its Subsidiaries has
received any written notice alleging any non-compliance with
applicable Laws.
(b) Except as set forth in Section 4.19(b) of the
Radiocoms Disclosure Letter, Radiocoms or one of its Subsidiaries
has timely obtained all required FCC consents or authorizations
or consents or authorizations of other Governmental Entities that
perform functions or regulate matters similar to those performed
or regulated by the FCC (the "Equipment Authorizations")
necessary to manufacture and commercially distribute its linear
modulation technology in the United States and the United Kingdom
and each other country in which such technology has been or is
being sold by Radiocoms, its Subsidiaries or any of the Relevant
Affiliates. The Equipment Authorizations are valid and in full
force and effect. The equipment for which Radiocoms or any of
its Subsidiaries has received the Equipment Authorizations
conforms to the terms and conditions of such Authorizations and,
to the knowledge of Seller, otherwise complies with all
applicable rules, regulations and policies (including, without
limitation, those of the FCC), except for such instances of non-
compliance as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Business or Radiocoms and its Subsidiaries, taken as a whole.
4.20 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section 4.20, "Real Property"
means all real property presently owned or operated by Radiocoms
or any of its Subsidiaries or by Relevant Affiliates and used in
the Business and all real property (including property held as
trustee or in any other fiduciary capacity) over which Radiocoms
or any of its Subsidiaries currently exercises ownership,
dominion, management or control. "Divested Real Property" means
any real property formerly owned or operated by Radiocoms or its
Subsidiaries or Relevant Affiliates which, if it were still so
owned or operated, would constitute Real Property.
(b) Except as would not individually or in the
aggregate have a Material Adverse Effect on Radiocoms and its
Subsidiaries, taken as a whole, or the Business,
(i) the operations of the Business, Radiocoms and
each of its Subsidiaries (and, with respect to the Business,
each of its Relevant Affiliates) are and have been in com
pliance with all applicable Environmental Laws,
(ii) to the knowledge of Seller, the Real
Property does not (and any Divested Property at the time of
its disposition did not) contain any Hazardous Substance in
violation of any applicable Environmental Law,
(iii) neither Radiocoms nor any of its Subsid
iaries or Relevant Affiliates has any knowledge that, or has
<PAGE>
received any written notices, demand letters or written
requests for information from any Governmental Body or any
third party indicating that, it may be in violation of, or
liable under, any Environmental Law,
(iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge
of Seller, threatened against Radiocoms or any of its Sub
sidiaries or Affiliates with respect to the Business or the
Real Property (or any Divested Real Property) relating to
any violation or alleged violation, of any Environmental
Law,
(v) no reports have been filed, or are required
to be filed, by Radiocoms or any of its Subsidiaries or
Affiliates concerning the release of any Hazardous Substance
or the threatened or actual violation of any Environmental
Law on or at the Real Property (or any Divested Real
Property),
(vi) to the knowledge of Seller, there are no
underground storage tanks on, in or under any of the Real
Property, and there were no underground storage tanks on, in
or under any Divested Real Property at the time of its
disposition; and no underground storage tanks have been
closed or removed from any Real Property or Divested Real
Property while such Real Property or Divested Real Property
was owned or operated by Radiocoms or any of its
Subsidiaries, and
(vii) neither Radiocoms nor any of its
Subsidiaries (or, with respect to the Business, any of its
Relevant Affiliates) has incurred, and none of the Real
Property is presently subject to, any liabilities fixed (or,
to the knowledge of Seller, contingent) relating to any
suit, settlement, court order, administrative order, judg
ment or claim asserted or arising under any Environmental
Law.
(c) There are no permits or licenses required under
any Environmental Law in respect of the Real Property, except for
such permits or licenses the absence of which could not
reasonably be expected to have a Material Adverse Effect on
Radiocoms and its Subsidiaries, taken as a whole, or the
Business.
(d) Neither Radiocoms nor any of its Subsidiaries or
Affiliates has received written notice or otherwise has knowledge
that any part of the Real Property or any Divested Real Property
has been or is listed as a site containing Hazardous Substances
pursuant to any Environmental Law.
<PAGE>
4.21 INSURANCE. Seller has made available to
Purchaser true, complete and correct copies of all policies of
insurance of any kind or nature covering the Business or
Radiocoms or any of its Subsidiaries or any of their respective
employees, properties or assets, including, without limitation,
policies of life, disability, fire, theft, workers compensation,
employee fidelity, product liability, and other casualty and lia
bility insurance. All such policies are in full force and effect
and have not been reduced or cancelled; no change in any such
insurance policy has been notified to Radiocoms or any of its
Subsidiaries or Affiliates; and, to the Seller's knowledge,
neither Radiocoms nor any of its Subsidiaries or any Relevant
Affiliate is in default of any provision thereof, except for such
defaults as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Business or Radiocoms and its Subsidiaries, taken as a whole.
4.22 RELATED PARTY TRANSACTIONS. Except as set
forth in Section 4.22 of the Radiocoms Disclosure Letter, neither
Seller nor any of its Affiliates has borrowed any moneys from or
has outstanding any indebtedness or other similar obligations to
Radiocoms or any of its Subsidiaries, and neither Radiocoms nor
any of its Subsidiaries has borrowed any moneys from or has any
indebtedness or other similar obligations to Seller or any of its
Affiliates or any holder of more than 15% of Securicor plc's
issued and outstanding shares of capital stock. Except as set
forth in Section 4.22 of the Radiocoms Disclosure Letter, none of
the Seller, Radiocoms or any of its Subsidiaries, any Affiliate
of Radiocoms or Seller or, to the knowledge of Seller, any holder
of more than 15% of Securicor plc's issued and outstanding shares
of capital stock, nor, to the knowledge of Seller, any officer or
employee of Radiocoms or its Affiliates (i) owns any direct or
indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to
or borrower from or has the right to participate in the profits
of, any Person which is (A) a competitor, supplier, customer,
landlord, tenant, creditor or debtor of Radiocoms or any of its
Subsidiaries, (B) engaged in a business related to the business
of Radiocoms or any of its Subsidiaries, or (C) a participant in
any transaction to which Radiocoms or any of its Subsidiaries is
a party, except where any officer or employee of Radiocoms or its
Affiliates owns less than 5% of the issued and outstanding
capital stock of such Person and such Person's equity securities
are traded or quoted on a recognized stock exchange or quotation
system, or (ii) is a party to any Contract with Radiocoms or any
of its Subsidiaries.
4.23 FINANCIAL ADVISORS. Except as set forth in
Section 4.23 of the Radiocoms Disclosure Letter, no Person has
acted, directly or indirectly, as a broker, finder or financial
advisor for Seller in connection with the transactions
contemplated by this Agreement and no Person is entitled to any
fee or commission or like payment in respect thereof. Seller and
its Affiliates have entered into no agreement or arrangement
<PAGE>
which would require Purchaser or any of its Subsidiaries to pay
any such fee or commission.
4.24 CLAIMS TO PROPERTY. Except as otherwise
disclosed in this Agreement, Seller and its Affiliates (other
than Radiocoms and its Subsidiaries) will, as of the Closing
Date, have no claim to any property, asset or right owned by
Radiocoms or any of its Subsidiaries or used in the Business by
Radiocoms or any of its Subsidiaries or Relevant Affiliates.
4.25 LICENSES; PERMITS; AUTHORIZATIONS.
(a) Except as set forth in Section 4.25 of the
Radiocoms Disclosure Letter, Radiocoms and its Subsidiaries have
all material approvals, authorizations, consents, licenses
(including DTI licenses), orders and permits (except for sales
and use tax permits, franchise tax registrations and zoning
ordinances, variances and permits) of all Governmental Bodies
required by the nature of the operations of the Business or
Radiocoms or any of its Subsidiaries to permit the operations
thereof in the manner in which they are currently conducted
(collectively, the "Radiocoms Licenses"). Radiocoms or one of
its Subsidiaries is the authorized legal holder of the Radiocoms
Licenses issued to and used by it, none of which is subject to
any restriction or condition which would limit in any material
respect the full operation of the Business or Radiocoms or any of
its Subsidiaries as now or proposed to be operated.
(b) Except as set forth in Section 4.25 of the
Radiocoms Disclosure Letter, there are no competing applications
or proceedings pending or complaints filed or, to the knowledge
of Seller, threatened, as of the date hereof, before the DTI
relating to the Business or its operations of Radiocoms other
than applications, proceedings or complaints which generally
affect the land mobile radio industry. The Radiocoms Licenses
are in good standing, are in full force and effect and are
unimpaired in any material respect by any act or omission of the
officers, directors or employees of Radiocoms or Seller or their
respective Affiliates, and the operation of the Business and
Radiocoms and its Subsidiaries are in accordance therewith in all
material respects and no registration, clearance or
prenotification is required in respect of them in connection with
the Transactions. Seller has no reason to believe that any of
such Radiocoms Licenses will not be renewed in the ordinary
course on their existing or no less favorable terms.
4.26 INVESTMENT IN PURCHASER SHARES.
(a) Seller will hold the Purchaser Shares issued to it
pursuant to this Agreement for investment and not with a view to,
or for resale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Seller does not have any present intention of
selling, offering to sell or otherwise disposing of or
<PAGE>
distributing the Purchaser Shares issued to it pursuant to this
Agreement.
(b) Seller acknowledges that Purchaser has disclosed
that the Purchaser Shares to be issued to Seller pursuant to this
Agreement have not been registered under the Securities Act and,
therefore, cannot be resold unless they are registered under the
Securities Act or unless an exemption from registration is
available.
(c) Seller is sophisticated in financial matters and
is able to evaluate the risks and benefits of the investment in
the Purchaser Shares.
(d) Seller has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the
acquisition of the Purchaser Shares and has had full access to
such other information concerning the Purchaser as Seller has
requested.
(e) Seller is able to bear the economic risk of its
investment in the Purchaser Shares for an indefinite period of
time, recognizing that the Purchaser Shares have not been
registered under the Securities Act and, therefore, cannot be
sold unless subsequently registered under the Securities Act or
an exemption from such registration is available.
(f) Seller acknowledges that until such time as the
Purchaser Shares have been registered, or are otherwise eligible,
for resale in accordance with the Securities Act, each
certificate representing the Purchaser Shares shall be endorsed
with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE FIRST BEEN
REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE CORPORATION SHALL
HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER, EVIDENCE
OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE
CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION)."
4.27 INVESTMENTS IN PURCHASER. Except as set forth
in Section 4.27 of the Radiocoms Disclosure Letter or in Schedule
13D filings under the Exchange Act by Securicor plc, or as
contemplated by this Agreement, neither Securicor plc nor any of
its Affiliates has, or has had within the preceding twelve
months, any direct or indirect beneficial interest (including,
without limitation, any right to acquire any interest) in the
capital stock of Purchaser.
<PAGE>
4.28 ACCOUNTS RECEIVABLE. Each of the accounts
receivable recorded on the books of Radiocoms and any of its
Subsidiaries or Relevant Affiliates related to the Business is a
bona fide account receivable which has arisen in the ordinary
course of business. Except as set forth in Section 4.28 of the
Radiocoms Disclosure Letter, the reserves for such accounts
receivable were calculated in a manner consistent with past
practices of Radiocoms and its Subsidiaries and Relevant
Affiliates. To the knowledge of Seller, such accounts
receivable, in the aggregate, (a) are collectible, net of
reserves with respect thereto, within the greater of 120 days and
the date when they are due in accordance with their terms or (b)
are adequately secured.
4.29 ACCOUNTS PAYABLE. Each of the accounts payable
recorded on the books of Radiocoms and each of its Subsidiaries
or Relevant Affiliates that is related to the Business is valid
and represents obligations in respect of good or services related
to the Business which have been received by Radiocoms or one of
its Subsidiaries or Relevant Affiliates, respectively and were
priced no higher than market value.
4.30 INVENTORY. All inventory of the Business
recorded in the books of Radiocoms and its Subsidiaries or
Relevant Affiliates is carried at the lower of cost or market
value, and, to the knowledge of Seller, except as set forth in
Section 4.30 of the Radiocoms Disclosure Letter, consists of a
quality and quantity usable and saleable in the ordinary course
of the Business. To the knowledge of Seller, no material part of
such inventories has been priced in excess of its ultimate net
expected realizable value and the present quantities of
inventories of the Business are reasonable and warranted in the
present circumstances of the Business. All of the inventory of
the Business is located on Radiocoms or its Subsidiaries'
properties.
4.31 PRODUCTS. Section 4.31 of the Radiocoms
Disclosure Letter sets forth all generic products and lines of
products sold or distributed by the Business or by Radiocoms
and/or its Subsidiaries, and Seller has made available to
Purchaser all material information with respect to the brand
names, technical specifications, origin, approval numbers and
prices of such products and all information usually supplied to
dealers or customers. Radiocoms and/or its Subsidiaries have all
necessary rights and authority to sell and distribute such
products as presently sold or distributed.
4.32 NO MISREPRESENTATION. No representation or
warranty of Seller contained in this Agreement or in the
Radiocoms Disclosure Letter or in any certificate or other
instrument furnished by Seller to the Purchaser pursuant to the
terms hereof contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller
that:
5.1 ORGANIZATION AND GOOD STANDING. Purchaser is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted.
Purchaser is duly qualified or authorized to do business as a
foreign corporation and is in good standing under the Laws of
each jurisdiction in which it owns or leases real property and
each other jurisdiction in which the conduct of its business or
the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified or
authorized could not reasonably be expected to have a Material
Adverse Effect on Purchaser and its Subsidiaries, taken as a
whole. Purchaser is not subject to any agreement, commitment or
understanding which restricts or may restrict the conduct of its
business in any jurisdiction or location in any material respect.
Copies of the Certificate of Incorporation and By-Laws (together
with all amendments thereto) of Purchaser have heretofore been
provided or have been made available to the Seller and such
copies are true, correct and complete copies of such instruments.
5.2 AUTHORIZATION OF AGREEMENTS.
(a) Purchaser has all requisite power, authority and
legal capacity to execute and deliver this Agreement, each other
agreement, document, instrument or certificate contemplated by
this Agreement or to be executed by Purchaser in connection with
the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "Purchaser
Documents") and each of the Other Transaction Documents, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement, the Midland Agreement,
each of the Purchaser Documents and each of the Other Transaction
Documents has been duly and validly ratified and/or authorized by
the Board of Directors of Purchaser, and (assuming the accuracy
of Seller's representation in Section 4.27) no other corporate
proceedings on the part of Purchaser will be necessary to
authorize this Agreement, the issuance of the Purchaser Shares,
or the other transactions contemplated hereby or the Other
Transactions, except for the stockholder approval referred to in
Section 5.2(b). Assuming the due authorization, execution and
delivery by the other parties hereto and thereto, this Agreement
and the Midland Agreement will constitute, and each of the
Purchaser Documents and the Other Transaction Documents to which
Purchaser is a party, when executed and delivered will
constitute, legal, valid and binding obligations of Purchaser,
<PAGE>
enforceable against Purchaser in accordance with their respective
terms, subject to the Bankruptcy Exception.
(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, the other transactions contemplated hereby or
the Other Transactions.
5.3 CAPITALIZATION.
(a) The authorized capital stock of Purchaser consists
of 20,000,000 shares of Purchaser Common Stock. As of the date
hereof, there are 11,125,278 shares of the Purchaser Common Stock
issued and outstanding and 465,582 shares of the Purchaser Common
Stock are held by Purchaser as treasury stock. All of the issued
and outstanding shares of Common Stock were duly authorized for
issuance and are validly issued, fully paid and non-assessable.
(b) Except as set forth in Section 5.3 of the
disclosure letter delivered by Purchaser to Seller on the date
hereof (the "Purchaser Disclosure Letter") and except for matters
arising after the date hereof as permitted in accordance with
Section 6.2, there is no existing option, warrant, call, right,
commitment or other agreement of any character to which the
Purchaser is a party requiring, and there are no securities of
Purchaser outstanding which upon conversion or exchange would
require, the issuance, sale or transfer of any additional shares
of capital stock or other equity securities of Purchaser or other
securities convertible into, exchangeable for or evidencing the
right to subscribe for or purchase shares of capital stock or
other equity securities of Purchaser. Purchaser is not a party
to any voting trust or other voting agreement with respect to any
of the shares of the Purchaser Common Stock or to any agreement
relating to the issuance, sale, redemption, transfer or other
disposition of the capital stock of Purchaser, except for matters
arising after the date hereof as permitted by Section 6.2.
5.4 SUBSIDIARIES.
(a) Set forth in Section 5.4 of the Purchaser
Disclosure Letter is the name of each of the Subsidiaries of
Purchaser and, with respect to each Subsidiary, the jurisdiction
in which it is incorporated, the number of shares of its
authorized capital stock, the number and class of shares thereof
duly issued and outstanding, the names of all stockholders and
the numbers of shares of stock owned by each stockholder. Each
such stockholder is the record and beneficial owner of the shares
set forth opposite its name in Section 5.4 of the Purchaser
Disclosure Letter. The outstanding shares of capital stock of
<PAGE>
each Subsidiary of Purchaser have been duly authorized, validly
issued and fully paid and are non-assessable.
(b) Except as set forth in Section 5.4 of the
Purchaser Disclosure Letter, all such shares are owned by such
stockholders free and clear of all Liens. No shares of capital
stock are held by any Subsidiary of Purchaser as treasury stock.
(c) None of the Subsidiaries of Purchaser has
outstanding or authorized subscriptions, options, warrants,
calls, rights, commitments or any other agreements of any
character obligating any of them to issue, sell or transfer any
shares of its capital stock or other equity interests or any
securities convertible into or evidencing the right to subscribe
for or purchase any shares of such stock or other equity
interests with any Person, and there are no agreements or
understandings with respect to the voting, sale or transfer of
shares of the capital stock of any Subsidiary of Purchaser to
which Purchaser or Subsidiary thereof is a party.
(d) Each Subsidiary of Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation. Each Subsidiary of
Purchaser has full corporate power and authority to own, lease
and operate its properties and to carry on its business as it is
now being conducted. Each Subsidiary of Purchaser is duly
qualified and in good standing as a foreign corporation under the
Laws of each jurisdiction in which the conduct of its business or
the ownership of its assets requires such qualification, except
where the failure to be so qualified could not reasonably be
expected to have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole. No Subsidiary of Purchaser is
subject to any agreement, commitment or understanding which
restricts or may restrict the conduct of its business in any
jurisdiction or location in any material respect. Copies of the
Certificate or Articles of Incorporation and By-Laws (together
with all amendments thereto) of each Subsidiary of Purchaser have
heretofore been provided to Seller and such copies are true,
correct and complete copies of such instruments.
(e) Except as set forth in Section 5.4 of the
Purchaser Disclosure Letter or as permitted by Section 6.2,
neither Purchaser nor any of its Subsidiaries owns, beneficially
or of record, any shares of capital stock or any other security
of any corporation or other legal entity, or has any option or
obligation to acquire any such stock or other security, or has
any investments in securities or owns, directly or indirectly,
any interest in any partnership, joint venture or other business
enterprise.
5.5 CORPORATE RECORDS. The minute books of Purchaser
and each of its Subsidiaries previously made available to Seller
contain complete and accurate records, in all material respects,
of all meetings and accurately reflect, in all material respects,
<PAGE>
all other corporate action of the stockholders and board of
directors (including committees thereof) of Purchaser and each of
its Subsidiaries.
5.6 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) Except as set forth in Section 5.6 of the
Purchaser Disclosure Letter, none of the execution and delivery
by Purchaser of this Agreement and the Purchaser Documents, the
consummation of the transactions contemplated hereby or thereby,
or compliance by Purchaser with any of the provisions hereof or
thereof will (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws or
comparable organizational documents of Purchaser or any of its
Subsidiaries; (ii) conflict with, violate, result in the breach
or termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or
obligation to which Purchaser or any of its Subsidiaries is a
party or by which Purchaser or any of its Subsidiaries or any of
its properties or assets is bound; (iii) violate any statute,
rule, regulation, order or decree of any Governmental Body by
which Purchaser or any of its Subsidiaries is bound; or (iv)
result in the creation of any Lien upon the properties or assets
of Purchaser and its Subsidiaries except, in case of clauses
(ii), (iii) and (iv), for such violations, breaches or defaults
as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole, or materially delay the
consummation of the transactions contemplated hereby.
(b) Except as set forth in Section 5.6(b) of the
Purchaser Disclosure Letter, no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on
the part of the Purchaser or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or
the Purchaser Documents, or the compliance by the Purchaser with
any of the provisions hereof or thereof, except for compliance
with the applicable requirements of the HSR Act and except where
the failure to obtain such consent, waiver, approval, Order,
Permit or authorization, or to make such declaration or filing,
could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole, or materially delay the
consummation of the transactions contemplated hereby.
5.7 ISSUANCE OF PURCHASER SHARES.
(a) Except as provided in Section 5.2(b), the issuance
of the Purchaser Shares to Seller in accordance with the terms of
this Agreement has been duly authorized by all necessary action
on the part of Purchaser. The Purchaser Shares, upon issuance to
Seller in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable
<PAGE>
and free of preemptive rights, and will be registered on the
stock certificate books and stock transfer ledgers of Purchaser
solely in the name of Seller. The Purchaser Shares, upon
issuance to Seller in accordance with the terms of this
Agreement, will be approved for quotation on the National
Association of Securities Dealers Automatic Quotation System
("NASDAQ") Small Cap Market (the "Small Cap Market"). Seller
will receive good and marketable title to the Purchaser Shares as
of the Closing Date, free and clear of any and all Liens.
(b) Based upon Seller's representation and warranty in
Section 4.26 hereof, the issuance of the Purchaser Shares to
Seller in accordance with the terms of this Agreement will be
exempt from (i) the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, and (ii) the
registration and/or qualification provisions of all applicable
state securities or "blue sky" Laws.
5.8 FINANCIAL STATEMENTS. Purchaser has delivered
to Seller copies of (a) the audited consolidated balance sheets
of Purchaser and its Subsidiaries as at December 31, 1995, 1994
and 1993 and the related audited consolidated statements of
operations and of cash flows of Purchaser and its Subsidiaries
for the years then ended and (b) the unaudited consolidated
balance sheet of Purchaser and its Subsidiaries as at March 31,
1996 and the related consolidated statements of operations and
cash flows of Purchaser and its Subsidiaries for the three-month
period then ended (such audited and unaudited statements,
including the related notes and schedules thereto, are referred
to herein as the "Purchaser Financial Statements"). Each of the
Purchaser Financial Statements (i) is complete and correct in all
material respects, (ii) has been prepared in accordance with GAAP
(subject to normal year-end adjustments and the absence of
footnotes in the case of the unaudited statements), in accordance
with the books and records of Purchaser and its Subsidiaries and
in conformity with the practices consistently applied by
Purchaser without modification of the accounting principles used
in the preparation thereof, (iii) reflects all transactions
relating to the business or operations of Purchaser and its
Subsidiaries, including, without limitation, any transactions
with Simmonds or its Affiliates, and (iv) presents fairly the
financial position, results of operations and cash flows of
Purchaser and its Subsidiaries as at the dates and for the
periods indicated.
For the purposes hereof, the audited balance sheet of
Purchaser and its Subsidiaries as at December 31, 1995 is
referred to as the "Purchaser Balance Sheet" and December 31,
1995 is referred to as the "Purchaser Balance Sheet Date."
5.9 NO UNDISCLOSED LIABILITIES. Purchaser and its
Subsidiaries have no indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and
<PAGE>
whether due or to become due) (a) that would be required by GAAP
to be reflected in, reserved against or otherwise described in
the consolidated balance sheet of Purchaser and its Subsidiaries
(including the notes thereto) or (b) which could reasonably be
expected to have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole, except (i) as set forth on the
Purchaser Balance Sheet or in the notes thereto and (ii) for
liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the Purchaser
Balance Sheet Date.
5.10 PERIODIC SEC FILINGS. Purchaser has filed all
required forms, reports and documents with the Securities and
Exchange Commission (the "SEC") since January 1, 1993, each of
which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, each as in effect on
the dates such forms, reports and documents were filed.
Purchaser has heretofore delivered or made available to Seller
true and complete copies of all reports (including Current
Reports on Form 8-K) and proxy statements filed by Purchaser
with, and all registration statements of Purchaser declared
effective by, the SEC since January 1, 1993 (such public filings
with the SEC, as the same have been amended, are hereinafter
referred to as the "SEC Documents"). None of such forms, reports
or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference
therein or any SEC Documents, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The consolidated financial statements of Purchaser included in
the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto and fairly
present, in conformity with GAAP (except as may be indicated in
the notes thereto), the consolidated financial position of
Purchaser and its Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial
position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end
adjustments). Since December 31, 1995, there has not been any
change, or any application or request for any change, by
Purchaser or any of its Subsidiaries in accounting principles,
methods or policies for financial accounting or tax purposes
(subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
5.11 ABSENCE OF CERTAIN DEVELOPMENTS. Except as
expressly contemplated by this Agreement or as set forth in
Section 5.11 of the Purchaser Disclosure Letter, since the
Purchaser Balance Sheet Date:
<PAGE>
(a) there has not been any Material Adverse
Change nor has there occurred any event which is reasonably
likely to result in a Material Adverse Change with respect
to Purchaser and its Subsidiaries, taken as a whole;
(b) there has not been any damage, destruction or
loss, whether or not covered by insurance, with respect to
the property and assets of Purchaser or any of its
Subsidiaries having a replacement cost of more than $20,000
for any single loss or $20,000 for all such losses;
(c) there has not been any declaration, setting
aside or payment of any dividend or other distribution in
respect of any shares of capital stock of Purchaser or any
repurchase, redemption or other acquisition by Purchaser or
any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interest
in, Purchaser or any of its Subsidiaries, except for
dividends to Purchaser by any of its wholly owned
Subsidiaries;
(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;
(e) neither Purchaser nor any of its Subsidiaries
has awarded or paid any bonuses to employees of Purchaser or
any of its Subsidiaries with respect to the fiscal year
ended December 31, 1995, except to the extent accrued on the
Purchaser Balance Sheet, or entered into any employment,
deferred compensation, severance or similar agreement (or
amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of
its directors, officers, employees, agents or representa
tives or agreed to increase the coverage or benefits
available under any severance pay, termination pay, vacation
pay, company awards, salary continuation for disability,
sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with such
directors, officers, employees, agents or representatives
(other than normal increases in the ordinary course of
business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of Purchaser and its
Subsidiaries, taken as a whole);
(f) there has not been any change by Purchaser or
any of its Subsidiaries in accounting or Tax reporting
principles, methods or policies except as may be required by
a change in national accounting standards;
<PAGE>
(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;
(h) neither Purchaser nor any of its Subsidiaries
has failed to promptly pay and discharge current liabilities
except where disputed in good faith by appropriate
proceedings;
(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;
(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 or otherwise disposed of any assets of
Purchaser or its Subsidiaries, except for assets acquired or
sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the ordinary course of business consistent
with past practice;
(k) neither Purchaser nor any of its Subsidiaries
has discharged or satisfied any Lien, or paid any obligation
or liability (fixed or contingent), except in the ordinary
course of business consistent with past practice and which,
in the aggregate, would not be material to Purchaser and its
Subsidiaries, taken as a whole;
(l) neither Purchaser nor any of its Subsidiaries
has canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or released any
Contract or right except in the ordinary course of business
consistent with past practice and which, in the aggregate,
would not be material to Purchaser and its Subsidiaries,
taken as a whole;
(m) neither Purchaser nor any of its Subsidiaries
has instituted or settled any material Legal Proceeding;
(n) neither Purchaser nor any of its Subsidiaries
has suffered any Extraordinary Loss or Extraordinary Losses;
(o) neither Purchaser nor any of its Subsidiaries
has transferred or granted any material rights under any
concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, servicemarks,
brandmarks, brand names, copyrights or the like, or with
respect to any know-how;
<PAGE>
(p) neither Purchaser nor any of its Subsidiaries
has (A) received any notice or citation for any violation
of, nor, to the best knowledge of Purchaser, has any
complaint been filed with the FCC alleging a violation of,
any rule, regulation or policy of the FCC by the Purchaser
or any of its Subsidiaries or the FCC licensee with respect
to any System (as defined in Section 5.27), or (B) allowed
any license issued by the FCC to Purchaser or any of its
Subsidiaries or any FCC licensee with respect to any System
(individually, a "Purchaser FCC License" and, collectively,
the "Purchaser FCC Licenses") to lapse or be impaired in any
manner, or operated any of its businesses in any manner not
in compliance with its FCC authorization and all applicable
FCC rules, regulations and policies; and
(q) neither Purchaser nor any of its Subsidiaries
has agreed to do anything set forth in this Section 5.11.
5.12 TAXES.
(a) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, (A) all material Tax Returns
required to be filed by or on behalf of Purchaser and each of its
Subsidiaries, or the Affiliated Group(s) of which any of them is
or was a member have been duly and timely filed with the
appropriate taxing authorities in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all
such Tax Returns were true, complete and correct in all material
respects; (B) all Taxes payable by or on behalf of Purchaser and
its Subsidiaries, either directly as part of an Affiliated Group
Tax Return or otherwise, have been fully and timely paid, except
to the extent adequately reserved therefor in accordance with
GAAP on the Purchaser Balance Sheet, and adequate reserves or
accruals for Taxes have been provided in the Purchaser Balance
Sheet with respect to any period through the date thereof for
which Tax Returns have not yet been filed or for which Taxes are
not yet due and owing; and (C) no agreement, waiver or other
document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes
(including, but not limited to, any applicable statute of
limitation) has been executed or filed with any taxing authority
by or on behalf of Purchaser or any of its Subsidiaries, or any
Affiliated Group(s) of which any of them is or was a member.
(b) Purchaser and each of its Subsidiaries has
complied in all material respects with all applicable Laws, rules
and regulations relating to the payment and withholding of Taxes
and has duly and timely withheld from employee salaries, wages
and other compensation and has paid over to the appropriate
taxing authorities all amounts required to be so withheld and
paid over for all periods under all applicable Laws.
<PAGE>
(c) Seller has received complete copies of (A) all
material income or franchise Tax Returns of Purchaser and each of
its Subsidiaries relating to the taxable periods since January 1,
1994 and (B) any audit report issued within the last three years
relating to any material Taxes due from or with respect to
Purchaser and each of its Subsidiaries with respect to its
income, assets or operations.
(d) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, no claim has been made by a taxing
authority in a jurisdiction where Purchaser or any of its
Subsidiaries does not file an income or franchise Tax Return such
that Purchaser or such Subsidiary is or may be subject to
taxation by that jurisdiction.
(e) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, all deficiencies asserted or
assessments made as a result of any examinations by any taxing
authority of the Tax Returns of or covering or including
Purchaser and/or its Subsidiaries have been fully paid, and there
are no other audits or investigations by any taxing authority in
progress, nor has Purchaser received any written notice from any
taxing authority that it intends to conduct such an audit or
investigation. No requests for a ruling or a determination
letter are pending with any taxing authority. No issue has been
raised in writing by any taxing authority in any current or prior
examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed
deficiency against Purchaser or any Subsidiary for any subsequent
taxable period that could be material.
(f) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, neither Purchaser, any Subsidiary
nor any other Person on behalf of Purchaser or any Subsidiary has
(A) filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by Purchaser or any
Subsidiary, (B) agreed to or is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision
of state, local or foreign law by reason of a change in account
ing method initiated by the Purchaser or any Subsidiary or has
any knowledge that the Internal Revenue Service has proposed any
such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to
the business or operations of Purchaser or any Subsidiary, or (C)
executed or entered into a closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof or any
similar provision of state, local or foreign law with respect to
Purchaser or any of its Subsidiaries.
(g) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, no property owned by Purchaser or
<PAGE>
any Subsidiary is (i) property required to be treated as being
owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act
of 1986, (ii) constitutes "tax-exempt use property" within the
meaning of Section 168(h)(1) of the Code or (iii) is "tax-exempt
bond financed property" within the meaning of Section 168(g) of
the Code.
(h) Neither Purchaser (except with one or more
Subsidiaries) nor any Subsidiary (except with Purchaser) is a
party to any tax sharing or similar agreement or arrangement
(whether or not written) pursuant to which it will have any
obligation to make any payments after the Closing.
(i) There is no contract, agreement, plan or
arrangement covering any person that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible by the Purchaser, the Affiliates or their
respective affiliates by reason of Section 280G of the Code, or
would constitute compensation in excess of the limitation set
forth in Section 162(m) of the Code.
(j) There are no liens as a result of any unpaid Taxes
upon any of the assets of Purchaser or any Subsidiary thereof.
(k) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, Purchaser has no elections in effect
for federal income tax purposes under Sections 108, 168, 338,
441, 463, 472, 1017, 1033 or 4977 of the Code.
(l) Except as set forth in Section 5.12 of the
Purchaser Disclosure Letter, none of the members of Purchaser's
Affiliated Group has any net operating loss carryovers.
5.13 REAL PROPERTY.
(a) Section 5.13(a) of the Purchaser Disclosure Letter
describes (i) all real property and all interests therein owned
of record or beneficially by Purchaser (other than site leases
for use with FCC Licenses) or any of its Subsidiaries (the
"Purchaser Real Properties"), (ii) all leases of real property to
which Purchaser or any of its Subsidiaries is a party or by which
Purchaser or any of its Subsidiaries is bound (other than site
leases for use with FCC Licenses) and (iii) the purposes for
which such properties are used. True, correct and complete
copies of all documents referred to in Section 5.13(a) of the
Purchaser Disclosure Letter have been delivered or made available
to Seller.
(b) Except as set forth in Section 5.13(b) of the
Purchaser Disclosure Letter:
<PAGE>
(i) Purchaser or one of its Subsidiaries has (A)
good and valid title to the Purchaser Real Properties, free
and clear of all Liens except for imperfections of title, if
any, that do not materially detract from the value of the
property subject thereto, or materially interfere with the
manner in which such property is currently being used or is
proposed to be used by Purchaser or any of its Subsidiaries
or materially impair the operations of Purchaser or any of
its Subsidiaries and which do not secure obligations for
borrowed money or the deferred portion of the purchase price
of acquired property (collectively, "Purchaser Permitted
Encumbrances"), and (B) all material easements and rights,
including but not limited to easements for power lines,
water lines, sewers, roadways and other means of ingress and
egress, necessary to conduct the business conducted on the
Purchaser Real Properties; and none of the Liens set forth
in Section 5.13(b) of the Purchaser Disclosure Letter has
had or could reasonably be expected to have a Material
Adverse Effect on Purchaser and its Subsidiaries, taken as a
whole;
(ii) Neither the whole nor any portion of any of
the Purchaser Real Properties is subject to any pending
condemnation or similar proceeding by any governmental
authority, and Purchaser does not know that any such
condemnation or taking is threatened or contemplated;
(iii) Neither Purchaser nor any of its
Subsidiaries is, or as of the Closing Date will be, in
violation of any applicable Law or Order relating to the
Purchaser Real Properties, except (A) for Environmental Laws
(which are addressed in Section 5.21), (B) for compliance
with the rules and regulations of the FCC (which are
addressed in Section 5.27) and (C) where the failure to be
in compliance with such Law or Order could not reasonably be
expected to have a Material Adverse Effect on Purchaser and
its Subsidiaries, taken as a whole, and no notice from any
Governmental Body has been served upon Purchaser or any of
its Subsidiaries or Affiliates claiming any material
violation thereof or calling attention to the need for any
material work, repairs, construction, alterations,
installations on or in connection with said owned or leased
real properties used by Purchaser or its Subsidiaries;
(iv) Purchaser or one of its Subsidiaries has
obtained all permits, licenses or certificates of occupancy
pertaining to the ownership or operation of any of the owned
or leased real properties of Purchaser or any of its
Subsidiaries (including, without limitation, the Purchaser
Real Properties) that are required to be obtained from any
Governmental Body by Purchaser or any of its Subsidiaries,
except where the failure to obtain such permits, licenses or
certificates of occupancy could not reasonably be expected
<PAGE>
to have a Material Adverse Effect on Purchaser and its
Subsidiaries taken as a whole;
(v) Each of the leases of real property referred
to in Section 5.13(a) above is valid and enforceable in
accordance with its terms, subject to the Bankruptcy
Exception, and there is not under any such lease any
existing breach, default, event of default or event which,
with notice and/or lapse of time, would constitute a breach,
default or event of default (A) by Purchaser or any of its
Subsidiaries or (B) to the knowledge of Purchaser, by any
other party to any such lease, except where such breach,
default or event of default could not reasonably be expected
to have a Material Adverse Effect on Purchaser and its Sub
sidiaries, taken as a whole;
(vi) No previous or current party to any such
lease has given notice of or made a claim with respect to
any breach or default, the consequences of which,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Purchaser and
its Subsidiaries, taken as a whole;
(vii) None of the rights of Purchaser or any of
its Subsidiaries under any of such leases will be subject to
termination or modification as the result of the
consummation of the transactions contemplated by this
Agreement; and
(viii) No consent or approval of any third party
is required under any lease referred to in Section 5.13(a)
to the consummation of the transactions contemplated hereby.
5.14 TANGIBLE PERSONAL PROPERTY.
(a) Section 5.14(a) of the Purchaser Disclosure Letter
sets forth all leases of personal property, other than leases for
motor vehicles, involving annual payments in excess of $20,000 to
which Purchaser or any of its Subsidiaries is a party or by which
Purchaser or any of its Subsidiaries is bound. True, correct and
complete copies of all documents referred to in Section 5.14(a)
of the Purchaser Disclosure Letter have been delivered or made
available to Seller.
(b) Except as set forth in Section 5.14(b) of the
Purchaser Disclosure Letter:
(i) Each of the leases of personal property
referred to in Section 5.14(a) is valid and enforceable in
accordance with its terms, subject to the Bankruptcy
Exception, and there is not, under any such lease, any
existing breach, default, or event of default or event
which, with notice and/or lapse of time, would constitute a
breach, default or event of default (A) by Purchaser or any
<PAGE>
of its Subsidiaries or, (B) to the knowledge of Purchaser,
by any other party to any such lease, except where such
breach, default or event of default could not reasonably be
expected to have a Material Adverse Effect on Purchaser and
its Subsidiaries, taken as a whole;
(ii) No previous or current party to any such
lease has given notice of or made a claim with respect to
any breach or default thereunder, the consequences of which,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Purchaser and
its Subsidiaries, taken as a whole;
(iii) None of the rights of any of Purchaser or
any of its Subsidiaries under any of such leases will be
subject to termination or modification as the result of the
consummation of the transactions contemplated by this
Agreement;
(iv) No consent or approval of any third party is
required under any lease referred to in Section 5.14(a) to
the consummation of the transactions contemplated hereby;
(v) Purchaser or one of its Subsidiaries has good
title to all material items of tangible personal property
reflected on the Purchaser Balance Sheet (except as sold or
disposed of subsequent to the date thereof in the ordinary
course of business consistent with past practices), free and
clear of Liens; and
(vi) All of the items of tangible personal
property not owned by Purchaser or one of its Subsidiaries
but used in the business of Purchaser and which,
individually or in the aggregate, are material to the
conduct of such business, are in such condition that upon
the return of such properties to their owners in the current
condition of such properties, normal wear and tear excepted,
at the end of the relevant lease terms or as otherwise
contemplated by the applicable agreements with owners
thereof, the obligations of Purchaser or its Subsidiaries
(as applicable) to such owners will be discharged in all
material respects.
5.15 INTANGIBLE PROPERTY. Section 5.15 of the
Purchaser Disclosure Letter sets forth a list of each letters
patent, material trademark, material trade name, registered
copyright, material service mark, and any other similar,
registered property or trade right owned by Purchaser or any of
its Subsidiaries, or used by Purchaser or any of its Subsidiaries
in its business (collectively, together with all know-how,
processes, formulae, trade secrets, inventions, designs,
industrial models, computer programs and other technical data or
drawings, the "Purchaser Intellectual Property"), and sets forth
all applications and licenses for any of the foregoing, and all
<PAGE>
licenses or similar agreements or arrangements relating to the
operation of the business of Purchaser or any of its Subsidiaries
or to which Purchaser and its Subsidiaries is a party or subject
(property of the foregoing type being hereinafter collectively
referred to as the "Purchaser IP Licenses"), including all
licenses or similar agreements or arrangements by which Purchaser
or its Subsidiaries are authorized to use intellectual property
of a third party or have granted a third party rights to use
intellectual property related to the business of Purchaser or any
of its Subsidiaries. Except as indicated in Section 5.15 of the
Purchaser Disclosure Letter:
(a) Purchaser or one of its Subsidiaries owns all
title and interest in, and, to the knowledge of Purchaser, right
and authority to use, in connection with the conduct of the
business of Purchaser and its Subsidiaries as such business is
presently conducted, all of the Purchaser Intellectual Property
and Purchaser IP Licenses listed in Section 5.15 of the Purchaser
Disclosure Letter free and clear of all Liens. The Purchaser
Intellectual Property and Purchaser IP Licenses, to the knowledge
of Purchaser, constitute all of the intellectual property that
Purchaser needs to conduct its (and its Subsidiaries) business as
currently conducted. The operation of the business of Purchaser
and its Subsidiaries does not, to the knowledge of Purchaser,
infringe upon, misappropriate or violate any patent, trade name,
trademark, service mark, trade secret, brand mark and brand name
and other property or trade right of any other person, firm or
corporation, and none of Purchaser or any of its Subsidiaries has
received any notice or has knowledge pertaining to any actual or
threatened, infringement, misappropriation or violation of the
items of intellectual property listed in the preceding sentence;
(b) There are no asserted or, to the knowledge of
Purchaser, threatened governmental, judicial or adversarial
proceedings, hearings, arbitrations, disputes or claims with
respect to any of the Purchaser Intellectual Property or
Purchaser IP Licenses listed in Section 5.15 of the Purchaser
Disclosure Letter;
(c) To the knowledge of Purchaser, no third party is
infringing or engaging in an unauthorized use of the Purchaser
Intellectual Property or Purchaser IP Licenses; and
(d) To the knowledge of Purchaser, neither Purchaser
nor any of its Subsidiaries or Affiliates has made any disclosure
to a third party that would materially impair the value of any
confidential Purchaser Intellectual Property or confidential
Purchaser IP Licenses, and Purchaser and its Affiliates have
treated such confidential information in a manner reasonably
designed to preserve its confidentiality.
<PAGE>
5.16 MATERIAL CONTRACTS.
(a) Section 5.16 of the Purchaser Disclosure Letter
sets forth (i) each oral or written agreement, arrangement or
commitment of any nature to which Purchaser or any of its
Subsidiaries is a party or by which it is bound involving (A) a
commitment of more than $75,000, or (B) the purchase or sale of
any assets of Purchaser or its Subsidiaries having a book value
of more than $75,000 and (ii) all (A) loan or credit agreements,
indentures, guaranties, promissory notes, pledge agreements,
mortgages, security agreements or other instruments in respect of
borrowed funds, (B) distributorship, agency, representation,
dealer or similar agreements, (C) covenants not to compete or any
other agreements or understandings which would restrict the
operation of Purchaser's or any of its Subsidiaries' businesses
in any geographical area or to any person or class of persons, or
which in any way affects the price or other terms at which such
businesses or Purchaser or any of its Subsidiaries or any agent
or representative of such businesses or Purchaser or any of its
Subsidiaries may sell products or services, (D) contracts or
commitments for capital expenditures and (E) partnership or joint
venture agreements. Agreements, arrangements and commitments of
the types described in subsections (i) and (ii) above, other
than System management and option agreements, are hereinafter
collectively referred to as the "Purchaser Material Agreements."
(b) Each Purchaser Material Agreement is valid and
enforceable in accordance with its terms, subject to the
Bankruptcy Exception. Except as set forth in Section 5.16 of the
Purchaser Disclosure Letter, (i) neither Purchaser nor any of its
Subsidiaries nor, to the knowledge of Purchaser, any other party
thereto, is in breach of or in default under any Purchaser
Material 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 default under, or
result in a breach of, any Purchaser Material Agreement, (iii) no
previous or current party to any Purchaser Material Agreement has
given notice of or made a claim, or, to the knowledge of
Purchaser, threatened to make a claim, with respect to any breach
or default thereunder, the consequences of which, in the case of
clauses (i), (ii) and (iii), individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on
Purchaser and its Subsidiaries, taken as a whole, (iv) none of
the rights of Purchaser or any of its Subsidiaries under any of
the Purchaser Material Agreements will be subject to termination
or modification as a result of the consummation of the
transactions contemplated by this Agreement, and (v) no consent
or approval of any third party is required under any Purchaser
Material Agreement to the consummation of the transactions
contemplated hereby.
(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
<PAGE>
schedules thereto) as in effect on the date hereof. The Midland
Agreement 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 Closing Date. (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.
5.17 EMPLOYEE BENEFITS.
(a) Section 5.17(a) of the Purchaser Disclosure Letter
sets forth a complete and correct list of (i) all "employee
benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
any other pension plans, employee benefit plans, programs or
arrangements, payroll practices (including, without limitation,
severance pay, vacation pay, company awards, consulting or other
compensation arrangements, salary continuation for disability,
sick leave, retirement, deferred compensation, bonus or other
incentive compensation, stock purchase, hospitalization, medical
insurance, life insurance and scholarship programs) maintained by
Purchaser or its Subsidiaries or to which Purchaser or any of its
Subsidiaries contributes or is obligated to contribute thereunder
with respect to employees of Purchaser or any of its Subsidiaries
(the "Purchaser Employee Benefit Plans") and (ii) all "employee
pension plans," as defined in Section 3(2) of ERISA, maintained
by Purchaser or its Subsidiaries or any trade or business
(whether or not incorporated) which are under control, or which
are treated as a single employer with Purchaser and any of its
Subsidiaries under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which Purchaser, any of its
Subsidiaries or any ERISA Affiliate contributed or is obligated
to contribute thereunder (the "Purchaser Pension Plans").
Section 5.17(a) of the Purchaser Disclosure Letter clearly
identifies, in separate categories, the Purchaser Employee
Benefit Plans or the Purchaser Pension Plans that are (i) subject
to Section 4063 and 4064 of ERISA ("Multiple Employer Plans"),
(ii) multiemployer plans (as defined in Section 4001(a)(3) of
<PAGE>
ERISA) ("Multiemployer Plans") or (iii) "group health plans,"
within the meaning of Section 5000(b)(1) of the Code providing
continuing benefits after the termination of employment (other
than as required by Section 4980B of the Code or Part 6 of
Subtitle B of Title I of ERISA and at the former employee's or
his beneficiary's sole expense).
(b) None of Purchaser, any Subsidiary or any ERISA
Affiliate has withdrawn in a complete or partial withdrawal from
any Multiemployer Plan prior to the Closing Date, nor has any of
them incurred any liability due to the termination or
reorganization of a Multiemployer Plan; and Seller shall not have
(i) any obligation to make any contribution to any Multiemployer
Plan or (ii) any withdrawal liability from any such Multiemployer
Plan under Section 4201 of ERISA which it would not have had it
not received the Purchaser Shares from Purchaser at the Closing
in accordance with the terms of this Agreement.
(c) Each of the Purchaser Employee Benefit Plans and
Purchaser Pension Plans intended to qualify under Section 401 of
the Code ("Qualified Plans") so qualify and the trusts maintained
thereto are exempt from federal income taxation under Section 501
of the Code, and, except as disclosed in Section 5.17(b) of the
Purchaser Disclosure Letter, nothing has occurred with respect to
the operation of any such plan which could cause the loss of such
qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code.
(d) All contributions, including all employer
contributions and employee salary reduction contributions and
premiums required by Law or by the terms of any Purchaser
Employee Benefit Plan or Purchaser Pension Plan as of the Closing
Date, have been timely made (without regard to any waivers
granted with respect thereto) to any funds or trusts established
thereunder or in connection therewith, and no accumulated funding
deficiencies exist in any of the Purchaser Employee Benefit Plans
or Purchaser Pension Plans subject to Section 412 of the Code.
(e) The benefit liabilities, as defined in Section
4001(a)(16) of ERISA, of each of the Purchaser Employee Benefit
Plans and Purchaser Pension Plans subject to Title IV of ERISA
using the actuarial assumptions that would be used by the Pension
Benefit Guaranty Corporation (the "PBGC") in the event it
terminated each such plan do not exceed the fair market value of
the assets of each such plan. The liabilities of each Purchaser
Employee Benefit Plan or Purchaser Pension Plan that has been
terminated or otherwise wound up, have been fully discharged in
full compliance with applicable Law.
(f) There has been no "reportable event" as that term
is defined in Section 4043 of ERISA and the regulations
thereunder with respect to any of the Purchaser Employee Benefit
Plans or Purchaser Pension Plans subject to Title IV of ERISA
which would require the giving of notice or any event requiring
<PAGE>
notice to be provided under Section 4041(c)(3)(C) or 4063(a) of
ERISA.
(g) There has been no violation of ERISA with respect
to the filing of applicable returns, reports, documents and
notices regarding any of the Purchaser Employee Benefit Plans or
Purchaser Pension Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such notices or
documents to the participants or beneficiaries of the Purchaser
Employee Benefit Plans or Purchaser Pension Plans.
(h) True, correct and complete copies of the following
documents, with respect to each of the Purchaser Employee Benefit
Plans and Purchaser Pension Plans (as applicable), have been
delivered to the Seller: (i) any plans and related trust
documents, and all amendments thereto, (ii) the most recent Form
5500s for the past three years and schedules thereto, (iii) the
most recent financial statements and actuarial valuations for the
past three years, (iv) the most recent Internal Revenue Service
determination letter, (v) the most recent summary plan descrip
tions (including letters or other documents updating such
descriptions), (vi) written descriptions of all non-written
agreements relating to the Purchaser Employee Benefit Plans and
Purchaser Pension Plans and (vii) all written communications to
employees relating to the Purchaser Employee Benefit Plans or
Purchaser Pension Plans.
(i) There are no pending Legal Proceedings which have
been asserted or instituted against any of the Purchaser Employee
Benefit Plans or Purchaser Pension Plans, the assets of any such
plans of Purchaser, or the plan administrator or any fiduciary of
the Purchaser Employee Benefit Plans or Purchaser Pension Plans
with respect to the operation of such plans (other than routine,
uncontested benefit claims), and there are no facts or
circumstances which could form the basis for any such Legal
Proceeding.
(j) Each of the Purchaser Employee Benefit Plans and
Purchaser Pension Plans has been maintained, in all material
respects, in accordance with its terms and all provisions of
applicable Law. All amendments and actions required to bring
each of the Purchaser Employee Benefit Plans and Purchaser
Pension Plans into conformity in all material respects with all
of the applicable provisions of ERISA and other applicable Laws
have been made or taken except to the extent that such amendments
or actions are not required by Law to be made or taken until a
date after the Closing Date and are disclosed in Section 5.17(j)
of the Purchaser Disclosure Letter.
(k) Purchaser, any of its Subsidiaries and any ERISA
Affiliate which maintains a "group health plan" within the
meaning of Section 5000(b)(1) of the Code have complied with the
notice and continuation requirements of Section 4980B of the
<PAGE>
Code, Part 6 of Subtitle B of Title I of ERISA and the applicable
regulations thereunder.
(l) None of the Purchaser, any of its Subsidiaries,
any ERISA Affiliate or any organization to which any is a
successor or parent corporation, has divested any business or
entity maintaining or sponsoring a defined benefit pension plan
having an "amount of unfunded benefit liabilities" (within the
meaning of Section 4001(a)(18) of ERISA) or transferred any such
plan to any person other than the Purchaser or any ERISA
Affiliate during the six-year period ending on the Closing Date.
(m) Neither Purchaser, any of its Subsidiaries nor any
"party in interest" or "disqualified person" with respect to the
Purchaser Employee Benefit Plans or Purchaser Pension Plans has
engaged in a "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA. No fiduciary
has any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or
investment of the assets of any Employee Benefit Plan and Pension
Plan.
(n) None of Purchaser, its Subsidiaries, or any ERISA
Affiliate has terminated any Purchaser Employee Benefit Plan or
Purchaser Pension Plan subject to Title IV of ERISA, or incurred
any outstanding liability under Section 4062 of ERISA to the PBGC
or to a trustee appointed under Section 4042 of ERISA. All
premiums due to the PBGC with respect to the Purchaser Employee
Benefit Plans and Purchaser Pension Plans have been paid.
(o) Except as disclosed on Schedule 5.17(o) of the
Purchaser Disclosure Letter, none of Purchaser or any of its Sub
sidiaries maintains retiree life or retiree health insurance
plans which are "welfare benefit plans" within the meaning of
Section 3(1) of ERISA.
(p) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any
current, former or retired employee of Purchaser or any of its
Subsidiaries; (ii) increase any benefits otherwise payable under
any Purchaser Employee Benefit Plan or Purchaser Pension Plan; or
(iii) result in the acceleration of the time of payment or
vesting of any such benefits.
(q) No stock or other security issued by Purchaser or
any of its Subsidiaries forms or has formed a material part of
the assets of any Purchaser Employee Benefit Plan or Purchaser
Pension Plan.
5.18 LABOR.
(a) Except as set forth in Section 5.18 of the
Purchaser Disclosure Letter, no employees of Purchaser or any of
<PAGE>
its Subsidiaries are represented by any labor organization, and
no labor organization or group of employees of Purchaser or any
of its Subsidiaries has made a demand for recognition, has filed
a petition seeking a representation proceeding or given Purchaser
or any of its Subsidiaries written notice of any intention to be
represented by a collective bargaining representative. No
collective bargaining agreement is currently being negotiated
with respect to any employees of Purchaser or any of its
Subsidiaries.
(b) Except to the extent set forth in Section 5.18 of
the Purchaser Disclosure Letter, (i) to the knowledge of each of
Purchaser and its Subsidiaries, Purchaser and each of its
Subsidiaries is in material compliance with all applicable Laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and with each
collective bargaining agreement applicable to it, and is not
engaged in any unfair labor practice; (ii) to the knowledge of
Purchaser, there is no unfair labor practice charge, complaint or
similar claim against Purchaser or any of its Subsidiaries
pending or threatened before the National Labor Relations Board
or any similar foreign Governmental Body; (iii) there is no labor
strike, work slowdown or stoppage or other significant labor
dispute or disturbance pending or, to the knowledge of Purchaser,
threatened against or affecting Purchaser and its Subsidiaries;
(iv) to the knowledge of Purchaser, there is no representation
claim or petition pending before the National Labor Relations
Board or any similar foreign Governmental Body, and no question
concerning representation exists with respect to the respective
employees of Purchaser or any of its Subsidiaries; (v) no
grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending, and no claim
therefor exists, which in any case could reasonably be expected
to have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole; and (vi) neither Purchaser nor
any of its Subsidiaries has experienced any work stoppage or
other significant labor difficulty during the past three years.
(c) Section 5.18 of the Purchaser Disclosure Letter
sets forth each agreement and supplemental agreement currently in
effect between Purchaser or any of its Subsidiaries and each
collective bargaining representative representing a group of
employees employed by Purchaser or any of its Subsidiaries, and
Seller has been furnished with a true and complete copy of each
such agreement and supplemental agreement.
(d) Section 5.18 of the Purchaser Disclosure Letter
sets forth the names of all present salaried employees of
Purchaser or its Subsidiaries and their current annual salaries
or other compensation.
5.19 LITIGATION.
<PAGE>
(a) Except as disclosed in Section 5.19 of the
Purchaser Disclosure Letter, (i) there are no Legal Proceedings
(including, but not limited to, any proceedings which seek the
revocation, non-renewal or the adverse modification of any
license) asserted or, to the knowledge of Purchaser, threatened,
or any governmental investigation asserted or threatened, against
or affecting Purchaser or any of its Subsidiaries, at law or in
equity, before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency, court
or other instrumentality, or by any private person, firm,
corporation or other entity (such representation being limited,
in the case of any such matter in which the sole remedy sought or
threatened to be sought, as the case may be, is the payment of
money, to matters in which the sum sought or threatened to be
sought is unspecified or in excess of $15,000), (ii) to the
knowledge of Purchaser, there is no basis for any such Legal
Proceeding which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Purchaser and its Subsidiaries, taken as a whole and (iii) there
are no existing or, to the knowledge of Purchaser, threatened
orders, judgments or decrees of any court or governmental agency
affecting Purchaser or any of its Subsidiaries or any of their
respective properties or assets.
(b) Except as set forth in Section 5.19 of the
Purchaser Disclosure Letter, as of the date hereof, there are no
Legal Proceedings pending or, to the knowledge of Purchaser,
threatened against, or any governmental investigation asserted
or, to the knowledge of Purchaser, threatened against, Purchaser
or any of its Subsidiaries which would give any third party the
right to enjoin or rescind the transactions contemplated by this
Agreement or otherwise prevent any of the parties hereto from
complying with the terms and provisions of this Agreement.
5.20 COMPLIANCE WITH LAWS. To the knowledge of
Purchaser, Purchaser and each of its Subsidiaries is in com
pliance with all Laws applicable to it or to the conduct of its
business or operations or the use of its properties (including
any leased properties) and assets, except for (a) Environmental
Laws (which are addressed in Section 5.21), (b) as may be
disclosed in Section 5.27 (including, to the extent set forth
therein, in the Recent SEC Documents) or in Section 5.27 of the
Purchaser Disclosure Letter, and (c) such instances of non-
compliance as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Purchaser and its Subsidiaries, taken as a whole. Neither
Purchaser nor any of its Subsidiaries has received any written
notice alleging any non-compliance with applicable Laws, except
as set forth in Section 5.20 of the Purchaser Disclosure Letter.
5.21 ENVIRONMENTAL MATTERS.
(a) For purposes of this Section 5.21, "Real Property"
means all real property presently owned or operated by Purchaser
<PAGE>
or any of its Subsidiaries on which facilities are located and
all real property (including property held as trustee or in any
other fiduciary capacity) over which Purchaser or any of its
Subsidiaries currently exercises ownership, dominion, management
or control. To the extent that Real Property includes site
leases (the "Site Leases"), any representation or warranty set
forth in this Section 5.21 shall, with respect to such Site
Leases, be deemed to be given to the knowledge of Purchaser,
without any independent investigation. "Divested Real Property"
means any real property formerly owned or operated by Purchaser
or its Subsidiaries which, if it were still so owned or operated,
would constitute Real Property.
(b) Except as set forth in Section 5.21 of the
Purchaser Disclosure Letter or as would not individually or in
the aggregate have a Material Adverse Effect on Purchaser and its
Subsidiaries, taken as a whole,
(i) The operations of Purchaser and each of its
Subsidiaries are and have been in compliance with all
applicable Environmental Laws,
(ii) to the knowledge of Purchaser, the Real
Property does not (and any Divested Real Property at the
time of its disposition did not) contain any Hazardous
Substance in violation of any applicable Environmental Law,
(iii) neither Purchaser nor any of its
Subsidiaries has any knowledge that, or has received any
written notices, demand letters or written requests for
information from any Governmental Body or any third party
indicating that, it may be in violation of, or liable under,
any Environmental Law,
(iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge
of Purchaser, threatened against Purchaser or any of its
Subsidiaries with respect to the business or operations of
Purchaser or any of its Subsidiaries or the Real Property
(or any Divested Real Property) relating to any violation or
alleged violation, of any Environmental Law,
(v) no reports have been filed, or are required
to be filed, by Purchaser or any of its Subsidiaries
concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law on
or at the Real Property (or any Divested Real Property),
(vi) to the knowledge of Purchaser, there are no
underground storage tanks on, in or under any of the Real
Property, and there were no underground storage tanks on, in
or under any Divested Real Property at the time of its
disposition; and no underground storage tanks have been
<PAGE>
closed or removed from any Real Property or Divested Real
Property while such Real Property or Divested Real Property
was owned or operated by Purchaser or any of its
Subsidiaries, and
(vii) neither Purchaser nor any of its
Subsidiaries has incurred, and none of the Real Property is
presently subject to, any liabilities fixed (or, to the
knowledge of Purchaser, contingent) relating to any suit,
settlement, court order, administrative order, judgment or
claim asserted or arising under any Environmental Law.
(c) There are no permits or licenses required under
any Environmental Law in respect of the Real Property, except for
such permits or licenses the absence of which could not
reasonably be expected to have a Material Adverse Effect on
Purchaser and its Subsidiaries, taken as a whole.
(d) Neither Purchaser nor any of its Subsidiaries has
received written notice or otherwise has knowledge that any part
of the Real Property or any Divested Real Property has been or is
listed as a site containing Hazardous Substances pursuant to any
Environmental Law.
5.22 INSURANCE. Purchaser has made available to
Seller true, complete and correct copies of all policies of
insurance of any kind or nature covering Purchaser or any of its
Subsidiaries or any of their respective employees, properties or
assets, including, without limitation, policies of life,
disability, fire, theft, workers compensation, employee fidelity,
product liability and other casualty and liability insurance.
All such policies are in full force and effect and have not been
reduced or cancelled; no change in any such insurance policy has
been notified to Purchaser; and, to the Purchaser's knowledge,
neither Purchaser nor any of its Subsidiaries is in default of
any provision thereof, except for such defaults as could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Purchaser and its Subsidiaries,
taken as a whole.
5.23 RELATED PARTY TRANSACTIONS. Except as set
forth in Section 5.23 of the Purchaser Disclosure Letter, no
Affiliate of Purchaser (other than its Subsidiaries) has borrowed
any moneys from or has outstanding any indebtedness or other
similar obligations to Purchaser or any of its Subsidiaries, and
neither Purchaser nor any of its Subsidiaries has borrowed any
moneys from or has any indebtedness or other similar obligations
to any Affiliates of Purchaser (other than its Subsidiaries) or
any holder of more than 15% of Purchaser's issued and outstanding
shares of capital stock. Except as set forth in Section 5.23 of
the Purchaser Disclosure Letter, no Affiliate (other than
Subsidiaries) or, to the knowledge of Purchaser, holder of more
than 15% of the issued and outstanding common stock of Purchaser
nor, to the knowledge of Purchaser, any officer or employee of
<PAGE>
Purchaser or its Affiliates (i) owns any direct or indirect
interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or
borrower from or has the right to participate in the profits of,
any Person which is (A) a competitor, supplier, customer,
landlord, tenant, creditor or debtor of Purchaser or any of its
Subsidiaries, (B) engaged in a business related to the business
of Purchaser or any of its Subsidiaries, or (C) a participant in
any transaction to which Purchaser or any of its Subsidiaries is
a party or except where any officer or employee of Purchaser or
its Affiliates owns less than 5% of the issued and outstanding
capital stock of such Person and such Person's equity securities
are traded or quoted on a recognized stock exchange or quotations
system, (ii) is a party to any Contract with Purchaser or any of
its Subsidiaries.
5.24 FINANCIAL ADVISORS. Except as set forth in
Section 5.24 of the Purchaser Disclosure Letter, no Person has
acted, directly or indirectly, as a broker, finder or financial
advisor for the Purchaser in connection with the transactions
contemplated by this Agreement and no Person is entitled to any
fee or commission or like payment in respect thereof. Purchaser
and its Affiliates have entered into no agreement or arrangement
which would require Seller or any of its Affiliates to pay any
such fee or commission.
5.25 CLAIMS TO PROPERTY. Except as otherwise
disclosed in this Agreement or the Purchaser Disclosure Letter,
no Affiliates of Purchaser (other than its Subsidiaries) have any
claim to any property, asset or right owned by Purchaser or any
of its Subsidiaries or used by Purchaser or any of its
Subsidiaries in the conduct of its business.
5.26 LICENSES; PERMITS; AUTHORIZATIONS. Purchaser
and its Subsidiaries have all material approvals, authorizations,
consents, licenses (excluding FCC licenses), orders and permits
(except for sales and use tax permits, franchise tax
registrations and zoning ordinances, variances and permits) of
all Governmental Bodies, required by the nature of the operations
of Purchaser or any of its Subsidiaries to permit the operation
thereof in the manner in which they are currently conducted
(collectively, the "Purchaser Licenses"). Purchaser or one of
its Subsidiaries is the authorized legal holder of the Purchaser
Licenses issued to and used by it, none of which is subject to
any restriction or condition which would limit in any material
respect the full operation of Purchaser or any of its
Subsidiaries as now or proposed to be operated.
5.27 FCC MATTERS.
(a) Section 5.27(a) of the Purchaser Disclosure Letter
sets forth a true and complete list of the following information
for each 220 MHz land mobile radio system under management by
Purchaser or any of its Subsidiaries or which Purchaser or any of
<PAGE>
its Subsidiaries holds an option to acquire (individually, a
"System," and, collectively, the "Systems"):
(i) the name of the FCC licensee of the System
(and an appropriate notation if any such licensee is an
Affiliate or an "associate" (as defined under the Securities
Exchange Act of 1934, as amended) of Purchaser), the call
sign, the licensed transmitter location (by site coordinates
and city) and the transmitter location (by site coordinates
and city) on which a system has been constructed that is
different from the licensed location, the frequency or
frequencies authorized, the date of construction of the
frequencies, the number of frequencies constructed and the
license renewal date;
(ii) a list and current copies (or written
summaries, including all material terms, in the case of oral
agreements) of all contracts (excluding customer contracts),
leases and site licenses related to Purchaser's SMR business
and the Systems, including, without limitation, all
agreements between purchaser and licensee, all site
licenses, equipment leases or installment sale contracts,
partnership, joint-venture or joint-use agreements,
management agreements, dealer agreements, short-space
agreements or the like;
(iii) to Purchaser's knowledge, a list of all
agreements between the licensee and any third party relating
to the license, including, without limitation, rights of
first refusal, options and other such rights or obligations
which may affect the rights of Purchaser to manage the
license or to exercise any of Purchaser's option or right of
first refusal to acquire the license; and
(iv) a list of all installed equipment with
respect to such System for which title is held by Purchaser.
(b) Except as set forth in Section 5.27(a) of the
Purchaser Disclosure Letter, all of the contracts, leases and
site licenses relating to the Systems have been entered into by
Purchaser on arm's length terms with non-Affiliates. Neither
Purchaser nor any of its Subsidiaries nor, to the knowledge of
Purchaser, any of the other contracting parties is in default in
any material respect, or has acted or failed to act in a manner
which, with notice or the passage of time or both, will result in
a material default, under any of the contracts, leases, and site
licenses, and no penalties have been incurred nor are any
material amendments pending with respect to any of such
contracts, leases and site licenses.
(c) Except as set forth in Section 5.27(c) of the
Purchaser Disclosure Letter or in the Purchaser's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995 or
Quarterly Report on Form 10-Q for the period ended March 31, 1996
<PAGE>
(collectively, as filed prior to the date hereof, without taking
into account any amendments filed after the date hereof, the
"Recent SEC Documents"), all of the properties, equipment and
systems of the Purchaser or any of its Subsidiaries, and all of
the properties, equipment and systems of the Systems and all
properties, equipment and systems of Purchaser or any of its Sub
sidiaries and the Systems to be added in connection with any
contemplated system expansion or construction prior to Closing
are and will be in compliance with all standards or rules imposed
by any Governmental Body, including, without limitation, the FCC
and (if applicable) any public utilities commission or other
state or local governments or instrumentalities (but excluding
Environmental Laws, which are not addressed hereby) or as imposed
under any agreements with customers, and are and will be in good
repair and working order.
(d) Except as set forth in Section 5.27(d) of the
Purchaser Disclosure Letter or the Recent SEC Documents, to the
knowledge of Purchaser, all franchise, license or other fees and
charges which have become due with respect to the FCC licenses
for the Systems have been duly and timely paid, and Purchaser or
one of its Subsidiaries has made appropriate provision for any
such fees and charges which have accrued and remain unpaid.
Except as set forth in Section 5.27(d) of the Purchaser
Disclosure Letter or the Recent SEC Documents, to the knowledge
of Purchaser, all licenses, necessary permits, consents and
authorizations required to construct and operate the Systems from
the FCC and, if applicable, any public utilities commission, have
been duly obtained in compliance with all FCC Rules, regulations
and policies and are in good standing. Except as set forth in
Section 5.27(d) of the Purchaser Disclosure Letter or the Recent
SEC Documents, to the knowledge of Purchaser, the FCC licenses
for the Systems are valid and in full force and effect without
conditions except for such conditions as are stated on the FCC
license or as are generally applicable to holders of 220 MHz non-
nationwide FCC licenses in the Private Land Mobile Radio Service.
Except as set forth in Section 5.27(d) of the Purchaser
Disclosure Letter or the Recent SEC Documents, to the knowledge
of Purchaser, no event has occurred or is continuing which could
(i) result in the revocation or termination or adverse
modification of any FCC license that is managed by, or under
option to, Purchaser or any of its Subsidiaries, or (ii)
adversely affect any of the rights of the FCC licensee or
Purchaser or any of its Subsidiaries thereunder. Except as set
forth in Section 5.27(d) of the Purchaser Disclosure Letter or
the Recent SEC Documents, Purchaser has no reason to believe or
any knowledge that the FCC licenses will not be renewed in the
ordinary course or that a transfer or assignment to Purchaser of
the FCC licenses will not be granted in the ordinary course.
(e) Except as set forth in Section 5.27(e) of the
Purchaser Disclosure Letter or the Recent SEC Documents, to the
knowledge of Purchaser, Purchaser's (or its Subsidiary's) manage
ment of the Systems complies with the FCC's rules, regulations
<PAGE>
and policies. Except as set forth in Section 5.27(e) of the
Purchaser Disclosure Letter or the Recent SEC Documents, to the
knowledge of Purchaser, there is no investigation, inquiry or
other proceeding pending, or, to Purchaser's knowledge,
threatened before the FCC or other Governmental Body which
relates to the Communications Act or the FCC's rules, regulations
or policies and concerns Purchaser or its Subsidiaries, the FCC
licensees or the Systems.
(f) Except as set forth in Section 5.27(f) of the
Purchaser Disclosure Letter, no additional FCC, state or local
public utilities commission or other authority of like
jurisdiction permits, licenses, consents and authorizations will
be required to be obtained by Purchaser or any of its
Subsidiaries as a result of the Closing of the transactions
contemplated hereunder.
(g) Section 5.27(a) of the Purchaser Disclosure Letter
contains a complete list of all Systems that have been
constructed (the "Constructed Systems"), and Section 5.27(g) of
the Purchaser Disclosure Letter contains a complete list of all
Systems whose license has been the subject of an FCC Form 600
modification application request (the "Modified Systems"). All
of the Constructed Systems were constructed and placed in
operation in accordance with their license or any Special
Temporary Authorities ("STAs") granted by the FCC prior to
January 26, 1996. Except as set forth in Section 5.27(g) of the
Purchaser Disclosure Letter or in the SEC Documents, to the
knowledge of Purchaser, all required construction notifications
to the FCC for the Constructed Systems have been properly and
timely made. From and after the date hereof, Purchaser shall
notify Seller of (i) the completion of construction of any
additional Systems (the "Additional Systems"), (ii) the
decommissioning of any System that had been constructed and (iii)
the termination, cancellation or expiration without renewal of
any agreements referred to in Section 5.27(a)(ii) with respect to
any System, in each case within five business days of such
completion, decommissioning, termination, cancellation or
expiration, as applicable, and shall provide all information with
respect to any Additional Systems as required by Section 5.27 of
this Agreement. The Additional Systems shall be subject to and
included within Purchaser's warranties and representations of
this Section 5.27.
(h) Except as set forth in Section 5.27(h) of the
Purchaser Disclosure Letter or the Recent SEC Documents, to the
knowledge of Purchaser, none of the FCC licenses under management
by, or option to, Purchaser or any of its Subsidiaries are
subject to third-party agreements that would materially restrict
Purchaser's or such Subsidiary's management of said licenses or
the exercise of Purchaser's or such Subsidiary's option to
acquire the Systems.
<PAGE>
(i) Except as set forth in Section 5.27(i) of the
Purchaser Disclosure Letter or the Recent SEC Documents,
Purchaser is not aware of any facts which would disqualify
Purchaser or any of its Subsidiaries under the Communications
Act, or the rules, regulations and practices of the FCC, from
transferring control of Purchaser and its Subsidiaries to Seller,
as contemplated by this Agreement and neither Purchaser nor any
of its Subsidiaries shall take any action which would cause such
disqualification or fail to take any action if the failure to
take such action would cause such disqualification.
(j) There are no applications, complaints or
proceedings pending or, to the knowledge of Purchaser, threatened
before the FCC, relating to the business and operations of
Purchaser or any of its Subsidiaries which, if adversely
determined, could reasonably be expected to have a Material
Adverse Effect on Purchaser and its Subsidiaries, taken as a
whole.
(k) Except as set forth in Section 5.27(k) of the
Purchaser Disclosure Letter or the Recent SEC Documents, there
are no competing applications or proceedings pending or
complaints filed of which Purchaser and its Subsidiaries have
received notice or, to the best knowledge of Purchaser,
threatened, as of the date hereof, before the FCC relating to the
business or operations of Purchaser and its Subsidiaries other
than applications, proceedings or complaints which generally
affect the land mobile radio industry or 220 MHz licenses.
(l) Neither Purchaser nor any of its Subsidiaries is,
as of the date hereof, the record or beneficial licensee and
owner of any FCC licenses, and Purchaser or its Subsidiaries are
entitled to act and is acting, as of the date hereof, as manager,
pursuant to valid and subsisting management agreements of each of
the FCC licenses identified as Systems in Section 5.27(l) of the
Purchaser Disclosure Letter (and, to the knowledge of Purchaser,
the persons identified on Section 5.27(l) of the Purchaser
Disclosure Letter as the holders of such Systems are the sole
record and beneficial licensees and owners of such Systems).
Purchaser and its Subsidiaries are, as of the date hereof, in
compliance in all material respects with all regulations
concerning construction and spacing of the Systems or the
facilities associated therewith. None of the Systems is
currently subject to or operating under any short-space or any
other agreement encumbering any of them or any FCC waiver of
otherwise applicable rules or regulations, except as disclosed in
Section 5.27(l) of the Purchaser Disclosure Letter.
(m) Section 5.27(m) of the Purchaser Disclosure Letter
sets forth a true and complete list, by customer, of the units in
service in Purchaser's 220-222 MHz business (the "Units in
Service"). The Units in Service are, to the knowledge of
Purchaser, in the possession of the indicated customers, which
customers are billed for their use of such Units in Service at
<PAGE>
the actual customer rates shown in Schedule 5.27(m) of the
Purchaser Disclosure Letter and which customers are required to
pay such billed amounts in full (subject to Purchaser's normal
prompt payment, volume and similar discounts, all of which have
been disclosed in writing to Seller) on or before the relevant
due date reflected in the relevant billing.
5.28 INVESTMENT IN SHARES.
(a) Purchaser will hold the Shares transferred to it
pursuant to this Agreement for investment and not with a view to,
or for resale in connection with, any distribution thereof within
the meaning of the Securities Act. Subject to the terms of
Section 6.10, Purchaser does not have any present intention of
selling, offering to sell or otherwise disposing of or
distributing the Shares transferred to it pursuant to this
Agreement.
(b) Purchaser acknowledges that Seller has disclosed
that the Shares to be transferred to Purchaser pursuant to this
Agreement have not been registered under the Securities Act, as
amended, and, therefore, cannot be resold unless they are
registered under the Securities Act or unless an exemption from
registration is available.
(c) Purchaser is sophisticated in financial matters
and is able to evaluate the risks and benefits of the investment
in the Shares.
(d) Purchaser has had an opportunity to ask questions
and receive answers concerning the terms and conditions of the
acquisition of the Shares and has had full access to such other
information concerning the Seller as Purchaser has requested.
(e) Purchaser is able to bear the economic risk of its
investment in the Shares for an indefinite period of time,
recognizing that the Shares have not been registered under the
Securities Act and, therefore, cannot be sold unless subsequently
registered under the Securities Act or an exemption from such
registration is available.
5.29 GENERAL PARTNERSHIPS.
(a) Purchaser has received inquiries from securities
regulators in Kansas, North Carolina, North Dakota and South
Dakota regarding the syndication of general partnership interests
in certain partnerships (the "Partnerships") for the purpose of
the acquisition of stations licensed by the FCC to operate in the
220-222 MHz band (the "220 MHz Band"). Purchaser has not
received inquiries from any other Governmental Bodies with
respect to the Partnerships or any similar partnerships.
(b) None of Purchaser or its Subsidiaries (including,
without limitation, Roamer One, Inc. ("Roamer One")), their
<PAGE>
respective affiliates or predecessors-in-interest or any of their
respective officers and directors or, to the knowledge of
Purchaser, Simmonds or any of its affiliates, predecessors-in-
interest, officers or directors:
(i) has had any direct participation or role in
developing, preparing or marketing materials for the syndication
of the Partnerships or any similar partnerships;
(ii) has had any involvement in the organization,
planning, formation, or promotion of the Partnerships or any
similar partnerships, or had or has any direct or indirect
ownership Interests in any such partnerships;
(iii) authorized the use of the "Roamer One" name,
trademark or network map in any promotional material associated
with the syndication of any partnership interests (including,
without limitation, interests in the Partnerships); or
(iv) has received directly or indirectly any of the
proceeds of any syndications of such partnership interests
(including, without limitation, interests in the Partnerships)
(other than the receipt by Roamer One of payments in return for
Roamer One services as may have been made pursuant to an
Exclusive Management Agreement and Right of First Refusal entered
into between Roamer One and such partnerships or the Supply
Agreement between Roamer One and Voice Data Communications, Inc.
("VDC") entered into on May 3, 1994).
5.30 NO MISREPRESENTATION. No representation or
warranty of Purchaser contained in this Agreement or in the
Purchaser Disclosure Letter or in any certificate or other
instrument furnished by Purchaser to Seller pursuant to the terms
hereof, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE VI
COVENANTS
6.1 ACCESS TO INFORMATION. Each of Seller and
Purchaser agrees that, prior to the Closing Date, the other party
hereto shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal and
financial advisors and accountants), to make such investigation
of the properties, businesses and operations of the Business and
Radiocoms or Purchaser and their respective Subsidiaries, as
applicable, and such examination of the books, records and
financial condition of the Business and Radiocoms or Purchaser
(and their respective Subsidiaries), as applicable, as such other
party reasonably requests and to make extracts and copies of such
books and records. Any such investigation and examination shall
<PAGE>
be conducted during regular business hours and under reasonable
circumstances, and each of Seller and Purchaser shall cooperate,
and shall cause their respective Subsidiaries to cooperate, fully
therein. No investigation by Seller or Purchaser prior to or
after the date of this Agreement shall diminish or obviate any of
the representations, warranties, covenants or agreements of the
other party thereto contained in this Agreement or any other
agreements or certificates in connection with the transactions
contemplated by this Agreement or the Midland Agreement. In
order that each of Purchaser and Seller may have full opportunity
to make such physical, business, accounting and legal review,
examination or investigation as it may reasonably request of the
affairs of the Business and Radiocoms or Purchaser (and their
respective Subsidiaries), as applicable, Seller and Purchaser
shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of Radiocoms or
Purchaser, as applicable, to cooperate fully with such represen
tatives in connection with such review and examination.
6.2 CONDUCT OF PURCHASER'S AND RADIOCOMS'S RESPEC
TIVE BUSINESSES PENDING THE CLOSING.
(a) Prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement or with the prior
unanimous written consent of a committee (the "Committee")
composed of Ed Hough, John Simmonds and Nicholas Wilson, which
consent will not be unreasonably withheld, Seller shall cause
Radiocoms and its Subsidiaries (and, to the extent they are
engaged in the Business, any Relevant Affiliates) to, and
Purchaser shall, and shall cause its Subsidiaries to:
(i) conduct its business only in the ordinary
course consistent with past practice;
(ii) use its best efforts to (A) preserve its
present business operations, organization (including,
without limitation, management and the sales force) and
goodwill, (B) preserve its present relationship with Persons
having business dealings with it, and (C) take such actions
as may be reasonably necessary to maintain in good standing
all FCC licenses with respect to any Systems or DTI
licenses, permits or authorizations, as applicable;
(iii) maintain (A) all its assets and properties
in their current condition, ordinary wear and tear excepted,
and (B) insurance upon all of its properties and assets in
such amounts and of such kinds comparable to that in effect
on the date of this Agreement;
(iv) (A) maintain its books, accounts and records
in the ordinary course of business consistent with past
practices, (B) continue to collect accounts receivable and
pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts (other
<PAGE>
than in the ordinary course of business), and (C) comply
with all contractual and other obligations applicable to its
operations; and
(v) comply in all material respects with
applicable Laws.
(b) Prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement 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:
(i) declare, set aside, make or pay any dividend
or other distribution in respect of its capital stock or
repurchase, redeem or otherwise acquire any outstanding
shares of the capital stock or other securities of, or other
ownership interests in, itself or any of its Subsidiaries,
except for the cancellation of the Existing Shares and the
issuance of the Deferred Shares in lieu thereof; PROVIDED,
HOWEVER, that any wholly owned Subsidiaries of Radiocoms or
Purchaser shall be permitted to declare and pay dividends to
Radiocoms or Purchaser, as applicable, to the extent that
funds are legally available therefor;
(ii) transfer, issue, sell or dispose of any
shares of its capital stock or other securities of itself or
its Subsidiaries or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the
capital stock or other securities of itself or any of its
Subsidiaries; PROVIDED, HOWEVER, that (A) Purchaser may
issue and sell up to 1,000,000 shares of Purchaser Common
Stock and may, subject in each instance to the prior
unanimous written consent of the Committee, which approval
will not be unreasonably withheld, issue up to an aggregate
of 1,500,000 shares of Purchaser Common Stock to acquire
interests in additional FCC licenses to be used in the
operation or development of its business, (B) any such
Person may issue debt securities as permitted by clause
(vi), and (C) Seller may cause shares of any Relevant
Affiliate owning any part of the Business to be transferred
to Radiocoms and its Subsidiaries, may cause Radiocoms to
issue the Shares and up to a maximum of 20,000 Preferred
Shares (having a liquidation preference not in excess of
$20,000,000) to Seller;
(iii) effect any recapitalization, reclassifi
cation, stock split or like change in its capitalization
except, in the case of Seller, as may be required to
authorize the issuance of the Shares and the Preferred
Shares;
<PAGE>
(iv) amend its certificate of incorporation, by-
laws, memorandum or articles of association or similar
organizational documents, except that Seller may cause
Radiocoms to amend its Memorandum of Association and
Articles of Association solely for the purposes of
authorizing the Shares and the Preferred Shares as
contemplated by this Agreement, or changing the name of
Radiocoms so as to delete the word "Securicor" therefrom,
and Purchaser may amend its certificate of incorporation to
increase the number of authorized shares as necessary to
permit Purchaser to consummate the transactions contemplated
hereby;
(v) (A) materially increase the annual level of
compensation of any employee, (B) increase the annual level
of compensation payable or to become payable by it or any of
its Subsidiaries to any of their respective executive
officers, (C) grant any bonus, benefit or other direct or
indirect compensation to any employee, director or
consultant, other than in the ordinary course consistent
with past practice and in such amounts as are fully reserved
against in the Radiocoms Financial Statements or the
Purchaser Financial Statements, as applicable, (D) increase
the coverage or benefits available under any (or create any
new) severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit
plan or arrangement made to, for, or with any of its or its
Subsidiaries' directors, officers, employees, agents or
representatives or otherwise modify or amend or terminate
any such plan or arrangement or (E) enter into any employ
ment, deferred compensation, severance, consulting, non-
competition or similar agreement (or amend any such
agreement) to which it or any of its Subsidiaries is a
party or involving a director, officer or employee of it or
any of its Subsidiaries in his or her capacity as a
director, officer or employee;
(vi) except (A) for trade payables and (B) for
pledges of assets and indebtedness for borrowed money which
do not exceed, individually or in the aggregate, $500,000
(it being understood that (1) such amount shall not include
indebtedness existing or assets pledged prior to the date of
this Agreement and (2) the transaction value of any asset
pledges shall be deemed to be equal to the fair market value
of the assets pledged in such transaction), borrow monies
for any reason or draw down on any line of credit or debt
obligation, or become the guarantor, surety, endorser or
otherwise liable for any debt, obligation or liability
(contingent or otherwise) of any other Person; PROVIDED,
HOWEVER, that, subject to the unanimous prior written
consent of the Committee, which consent will not be
unreasonably withheld, Purchaser may issue an unsecured
<PAGE>
debenture, which shall be a general obligation of Purchaser,
in an aggregate principal amount of up to $2,500,000 on such
terms as may be reasonably determined by Purchaser;
(vii) except as may be permitted pursuant to
clause (vi) above, subject to any Lien (except for leases
that do not materially impair the use of the property
subject thereto in their respective businesses as presently
conducted), any of its properties or assets (whether
tangible or intangible);
(viii) acquire any material properties or assets
(other than, in the case of Purchaser, FCC licenses as
contemplated by clause (ii) above) or sell, assign,
transfer, convey, lease or otherwise dispose of any of its
FCC authorizations, FCC licenses, DTI licenses or material
properties or assets, or its rights to any of the foregoing
or to any FCC licenses issued to or held by other Persons
(except for fair consideration in the ordinary course of
business consistent with past practice), or in the case of
Purchaser, take any action, other than in the exercise of
its reasonable business judgment, that causes, or take any
action that could reasonably be expected to cause, the FCC
licensees with respect to any System to cancel, assign,
transfer or otherwise dispose of their FCC license in a
manner that would be adverse to Purchaser;
(ix) cancel or compromise any debt or claim or
waive or release any material right except in the ordinary
course of business consistent with past practice, except, in
the case of Radiocoms for cancellations of intercompany
indebtedness contemplated hereby;
(x) other than, in the case of Purchaser, capital
expenditures necessary for the build-out of the Systems
pursuant to Purchaser's contractual obligations, enter into
any commitment for capital expenditures in excess of $20,000
for any individual commitment and $100,000 for all
commitments in the aggregate;
(xi) enter into, modify or terminate any labor or
collective bargaining agreement or, through negotiation or
otherwise, make any commitment or incur any liability to any
labor organization;
(xii) introduce any material change with respect
to its operations, including, without limitation, any
material change in its "roll-out" plans or the types,
nature, composition or quality of its products or services,
or, other than in the ordinary course of business, make any
material change in product specifications or prices or terms
of distributions of such products;
<PAGE>
(xiii) enter into any transaction or make or
enter into any Contract which by reason of its size or
otherwise is not in the ordinary course of business
consistent with past practice;
(xiv) enter into or agree to enter into any
merger or consolidation with, any corporation or other
entity, or engage in any new business or invest in, make a
loan, advance or capital contribution to, or otherwise
acquire the securities of any other Person except that
Seller may engage in such transactions solely to the extent
required to transfer any part of the Business to Radiocoms
and its Subsidiaries;
(xv) transfer any funds or assets to any of its
Affiliates, which funds and assets are, in the aggregate,
worth in excess of $500,000, except for the purchase of
goods and services from any such Affiliate in the ordinary
course of business at the fair market value for such goods
and services and transactions solely to the extent required
to transfer any part of the Business to Radiocoms and its
Subsidiaries; or
(xvi) agree to do anything prohibited by this
Section 6.2 or anything which would make any of the
representations and warranties of the Purchaser or the
Seller in this Agreement or the Purchaser Documents or the
Seller Documents untrue or incorrect in any material respect
as of any time through and including the Closing Date.
6.3 CONSENTS AND APPROVALS.
(a) Seller and Purchaser shall use their respective
best efforts, and shall cooperate with each other, to obtain at
the earliest practicable date all consents and approvals required
to consummate the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that neither Seller nor Purchaser shall be
obligated to pay any consideration therefor to any third party
from whom consent or approval is requested.
(b) Promptly following the date of this Agreement,
Purchaser shall prepare and file with the Securities and Exchange
Commission a proxy statement and related solicitation materials
relating to a special meeting of the holders of the Purchaser
Common Stock (the "Purchaser Stockholders' Meeting") to approve
the issuance of Purchaser Shares pursuant hereto (such proxy
statement, as amended or supplemented from time to time, being
hereinafter referred to as the "Proxy Statement"), and shall use
its best efforts to cause the Proxy Statement to be mailed to its
stockholders at such time and in such manner as permits the
Purchaser Stockholders' Meeting to be held as promptly as
practicable. Seller shall furnish all information as may be
reasonably requested by Purchaser and, in any case, as required
with respect to Purchaser by Regulation 14A under the Securities
<PAGE>
Exchange Act of 1934, as amended, for inclusion in the Proxy
Statement. The information provided by Purchaser and Seller,
respectively, for use in the Proxy Statement shall, on the date
when the Proxy Statement is first mailed to Purchaser's
stockholders, and on the date of the Purchaser Stockholders'
Meeting, be true and correct in all material respects and shall
not omit to state any material fact required to be stated therein
or necessary in order to make the statements contained therein
not misleading, and Purchaser and Seller each agree to promptly
correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading. Seller
and Purchaser shall instruct, and shall use all reasonable
efforts to cause, their respective accountants to deliver to each
other a letter dated the time the Proxy Statement is mailed to
Purchaser's stockholders, addressed to such party, containing
such matters as are required in accordance with F.A.S. No. 72 and
deliver a letter dated as of the Closing Date bringing down the
matters contained in such letter.
(c) Purchaser shall duly call, give notice of, convene
and hold the Purchaser Stockholders' Meeting, for the purpose of
approving, among other matters, the issuance of the Purchaser
Shares pursuant hereto. Purchaser, through its Board of
Directors, shall recommend to its stockholders approval of the
foregoing; PROVIDED, HOWEVER, that if Purchaser's Board of
Directors determines, in its good faith judgment after
consultation with independent legal counsel, that it is necessary
to do so in order to comply with its fiduciary duties to
stockholders under applicable law, Purchaser's Board of Directors
may withdraw or modify such recommendation. The Proxy Statement
shall comply as to form in all material respects with all
applicable requirements of the Securities Exchange Act of 1934,
as amended, and no amendment or supplement to the Proxy Statement
shall be made by Purchaser without the prior written approval of
Seller unless Purchaser determines such amendment or supplement
is required by law.
6.4 FILINGS WITH GOVERNMENTAL BODIES. As promptly
as practicable after the execution of this Agreement, each party
shall, in cooperation with the other, file or cause to be filed
any reports, notifications or other information that may be
required under the HSR Act and shall furnish or cause to be
furnished to the other all such information in its possession as
may be reasonably necessary for the completion of the reports,
notifications or submissions to be filed by the other. Each
party hereto agrees to use its reasonable best efforts to comply
and cause its Affiliates to comply in a full and timely manner
with any request from a Governmental Body for additional informa
tion. The filing fee with respect to the reports, notifications
or other information that may be required under the HSR Act with
respect to the Transactions shall be borne solely by Purchaser.
<PAGE>
6.5 OTHER ACTIONS.
(a) Each of Seller and Purchaser shall use its best
efforts to (i) take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement and
(ii) cause the fulfillment at the earliest practicable date of
all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.
(b) Purchaser shall use its reasonable best efforts to
(i) take all actions necessary or appropriate to consummate the
Other Transactions and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to its obligations to
consummate the Other Transactions.
(c) Purchaser shall use its best efforts to assure
that, prior to the Closing, the Purchaser Shares have been
approved for quotation on the Small Cap Market, subject to
official notice of issuance.
6.6 PRESERVATION OF RECORDS. Subject to Section
6.9(a) hereof (relating to the preservation of Tax records),
Seller and Purchaser agree that each of them shall preserve and
keep the records held by it relating to the Business for a period
of three years from the Closing Date and shall make such records
and personnel available to the other as may be reasonably
required by such party in connection with, among other things,
any insurance claims by, legal proceedings against or
governmental investigations of Seller or Purchaser or any of
their Affiliates or in order to enable Seller or Purchaser to
comply with their respective obligations under this Agreement and
each other agreement, document or instrument contemplated hereby
or thereby. In the event Seller or Purchaser wishes to destroy
such records after that time, such party shall first give ninety
(90) days' prior written notice to the other and such other party
shall have the right at its option and expense, upon prior
written notice given to such party within that ninety (90) day
period, to take possession of the records within one hundred and
eighty (180) days after the date of such notice.
6.7 PUBLICITY. Neither Seller nor Purchaser shall
issue any press release or public announcement concerning this
Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of Purchaser or Seller, disclosure
is otherwise required by applicable Law or by the applicable
rules of any stock exchange on which Purchaser or Seller (or any
Affiliates thereof) lists securities; PROVIDED that, to the
extent required by applicable Law, the party intending to make
such release shall use commercially reasonable efforts consistent
with such applicable Law to consult with the other party with
respect to the text thereof.
<PAGE>
6.8 AGREEMENTS WITH RESPECT TO OTHER TRANSACTIONS.
From and after the execution and delivery of this Agreement,
Purchaser shall not amend, modify, supplement, waive any rights
or remedies under or grant any consents under either the Midland
Agreement or the Asset Purchase Agreement (including, in each
case, any schedules or exhibits thereto), or agree to do any of
the foregoing, without the prior written consent of Seller.
6.9 TAX AND ACCOUNTING MATTERS.
(a) Purchaser and Seller agree to furnish or cause to
be furnished to each other, and each at their own expense, as
promptly as practicable, such information (including access to
books and records) and assistance, including making employees
available on a mutually convenient basis to provide additional
information and explanations of any material provided, relating
to the Business and/or Radiocoms, its Subsidiaries and/or its
Relevant Affiliates as is reasonably necessary for the filing of
any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating
to any adjustment or proposed adjustment with respect to Taxes.
Purchaser or Radiocoms shall retain in its possession, and shall
provide Seller reasonable access to (including the right to make
copies of), such supporting books and records and any other
materials that Seller may specify with respect to Tax matters of
Radiocoms, its Subsidiaries and/or its Relevant Affiliates for
any taxable period ending on or prior to the Closing Date until
the relevant statute of limitations has expired. After such
time, Purchaser may dispose of such material; PROVIDED that
prior to such disposition Purchaser shall give Seller ninety (90)
days' prior written notice thereof, and Seller may, at any time
during such ninety (90) day period, at its own expense, take
possession of such materials.
(b) Seller shall be liable for and shall pay (and
shall indemnify and hold harmless Purchaser against) all sales,
use, stamp, documentary, filing, recording, transfer or similar
fees or taxes or governmental charges as levied by any taxing
authority or governmental agency in connection with the transfer
of the Shares contemplated by this Agreement or any
recapitalization of Radiocoms or any transfer to Radiocoms of
assets or shares that takes place in contemplation of this
Agreement. Purchaser likewise shall be liable for and shall pay
(and shall indemnify and hold harmless Seller against) any such
fees, taxes or governmental charges as levied by any taxing
authority or governmental agency in connection with the issuance
of the Purchaser Shares contemplated by this Agreement.
(c) Within 14 days following the date hereof, Seller
will deliver to Purchaser (i) the Interim Statements, together
with an unqualified audit report thereon by Radiocoms'
independent public accountants and (ii) an unaudited pro forma
consolidated balance sheet of Radiocoms and its Subsidiaries as
at March 31, 1996 after giving effect to the transactions
<PAGE>
contemplated by this Agreement, including without limitation the
issuance of the Shares and the Preferred Shares, the transfer of
the EFJ Shares and the EFJ Warrant and the refinancing of
intercompany indebtedness (the "Pro Forma Balance Sheet").
(d) Seller shall (i) take all actions and make any
necessary elections so that, to the maximum extent permissible
under applicable Law, Seller shall obtain the tax benefits in the
United Kingdom and other jurisdictions attributable to Radiocoms
and its Subsidiaries for the tax year ending September 30, 1996
and any tax year thereafter to the extent permitted by Law and
(ii), promptly after the relevant Tax Returns are filed with the
applicable taxing authorities, transfer funds to Radiocoms equal
to the cash value of such tax benefits to Seller.
6.10 NO SOLICITATION. Purchaser, its affiliates and
their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with
respect to (except as otherwise expressly permitted by this
Agreement) any acquisition of all or any material portion of the
assets of, or (except as otherwise expressly permitted by this
Agreement) any equity interest in, Purchaser or its Subsidiaries
or any business combination with Purchaser or its Subsidiaries.
Purchaser may, directly or indirectly, furnish information and
access, in each case only in response to unsolicited requests
therefor, to any corporation, partnership, person or other entity
or group pursuant to confidentiality agreements, and may
participate in discussions and negotiate with such entity or
group concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction involving Purchaser or any
Subsidiary or division of Purchaser, if such entity or group has
submitted a written proposal to Purchaser relating to any such
transaction and Purchaser's Board of Directors by a majority vote
determines in its good faith judgment, after consultation with
independent legal counsel, that it is necessary to do so to
comply with its fiduciary duties to shareholders under applicable
law. Purchaser's Board of Directors shall provide a copy of any
such written proposal and a summary of any oral proposal to
Seller immediately after receipt thereof and thereafter keep
Seller promptly advised of any material development with respect
thereto. Except as set forth above, neither Purchaser nor any of
its Affiliates shall, nor shall Purchaser authorize or permit any
of its or their respective officers, directors, employees,
representatives or agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Seller
or any affiliate or associate of Seller) concerning any merger,
sale of assets, sale of shares of capital stock or similar
transaction involving Purchaser or any Subsidiary or division of
Purchaser; PROVIDED, HOWEVER, that nothing herein shall prevent
Purchaser's Board of Directors from taking, and disclosing to
Purchaser's shareholders, a position contemplated by Rules 14d-9
<PAGE>
and 14e-2 promulgated under the Exchange Act with regard to any
tender offer; PROVIDED, FURTHER, that nothing herein shall
prevent Purchaser's Board of Directors from making such
disclosure to Purchaser's shareholders as, in the good faith
judgment of Purchaser's Board of Directors, after consultation
with independent legal counsel, is necessary to comply with its
fiduciary duties to shareholders under applicable law.
6.11 RECAPITALIZATION; REFINANCING OF INTERCOMPANY
DEBT. Prior to the Closing Date, Seller shall take all actions
necessary so that (a) the Existing Shares shall be cancelled and
the Shares shall be issued, substantially on the terms heretofore
disclosed to Purchaser and (b) any debt owed by Radiocoms and any
of its Subsidiaries to Seller and its Affiliates at the Closing
Date (including, without limitation, the EFJ Note) is refinanced
such that, after giving effect to such refinancing and the
issuance of the Preferred Shares in connection therewith, the
aggregate liquidation preference of the Preferred Shares,
together with all debt outstanding of Radiocoms and its
Subsidiaries, in each case at the Closing Date, will not exceed
$22 million. Any Preferred Shares issued to Seller or its
Affiliates shall have the terms and conditions provided in
Exhibit A; PROVIDED, that in no event shall the aggregate
liquidation preference of the Preferred Shares so issued to
Seller in connection with such refinancing exceed the amount of
such indebtedness of Radiocoms and its Subsidiaries to Seller and
its Affiliates prior to such refinancing. For greater certainty,
as of the Closing, all debt so owed by Radiocoms and its
Subsidiaries to Seller and its Affiliates shall be satisfied and
cancelled as of the Closing.
6.12 UPDATES TO DISCLOSURE LETTERS. Each of Seller
and Purchaser shall update the Seller Disclosure Letter and
Purchaser Disclosure Letter from time to time and all
representations and warranties that speak as of the date hereof
shall be updated as of the Closing Date; PROVIDED that no such
update shall be deemed to waive any breaches of the
representation and warranties disclosed as a result of such
updates.
6.13 NON-COMPETE. Seller agrees, as a means to
assure Purchaser obtains the full value of the Shares and not in
exchange for separately bargained-for consideration, that for a
period of three (3) years following the Closing, neither
Securicor plc nor its direct or indirect Subsidiaries (other than
Purchaser and its Subsidiaries) will, anywhere in the world, (i)
sell, manufacture, distribute or otherwise transfer "land mobile
radio" products or (ii) engage in the provision of services
related to the construction or integration of land mobile radio
product systems; PROVIDED, HOWEVER, that this covenant shall
not apply (a) to the extent that any law, regulation or order of
any Governmental Body would be violated thereby, (b) to the
business or operations of Dopra Systems Integration, Ltd.
("Dopra") or Securicor Datatrak, Ltd. ("Datatrak") or Securicor
<PAGE>
Cellular Services, Ltd. ("Cellular") or Securicor TrakBak, Ltd.
("TrakBak") as conducted or proposed to be conducted as of the
date hereof or as the reasonable expansion and growth of such
businesses and operations may require in order to retain their
competitiveness in the marketplace. It is understood and agreed
that, if Seller shall sell, transfer or otherwise dispose of
Dopra or Datatrak or Cellular or TrakBak (whether by merger, sale
of stock, sale of all or substantially all of the business and
assets or otherwise) in a transaction with a non-Affiliate, the
provisions of this Section 6.13 shall cease to apply to the
business so sold, transferred or otherwise disposed of.
Notwithstanding the foregoing, to the extent any of the terms of
this Section 6.13 is held to be unenforceable, it is the
intention of the parties that such provision shall be replaced by
any court holding such terms to be unenforceable with another,
enforceable provision that shall as closely as possible
approximate the original, unenforceable term.
6.14 FCC MATTERS.
(a) From and after the date of this Agreement, until
the earlier of the Closing Date or the termination of this
Agreement, Purchaser undertakes and agrees that it will
diligently pursue appeals of the denial by the FCC of any request
by Purchaser or its Affiliates for the modification of any FCC
licenses and will keep Seller informed with respect to any
material developments with respect to such appeals. Purchaser
will copy Seller on any documents delivered by it to the FCC in
connection with any of such appeals and will supply Seller with
copies of any documents received from the FCC with respect to any
of such appeals.
(b) Purchaser and Seller shall cooperate in the
preparation, filing and prosecution of a request to the FCC
seeking a waiver of Section 310(b)(4) of the Communications Act
of 1934, as amended, to permit Purchaser upon Closing to acquire
such FCC licenses as may be agreed by the parties and to
participate in such 220 MHz Band spectrum auctions as may be
conducted by the FCC.
6.15 INDEMNIFICATION; DIRECTORS AND OFFICERS
INSURANCE.
(a) For a period of three years after the Closing
Date, Seller shall, to the extent that it remains the majority
stockholder of Purchaser during such period, cause Purchaser to
maintain an extension of coverage of Purchaser's policy of
directors' and officers' liability insurance maintained by
Purchaser for the benefit of those persons who are covered by
such policy at the time of the Closing with respect to matters
occurring prior to the Closing Date, provided that in no event
shall Purchaser be required to expend more than $100,000 per
annum to maintain such insurance.
<PAGE>
(b) Seller further agrees that for a period of six
years after the Closing Date, Seller shall, to the extent that
Seller remains the majority stockholder of Purchaser, (i) cause
the by-laws of Purchaser to continue to contain the provisions
with respect to indemnification which are set forth in such by-
laws as of the date hereof, and (ii) not permit such provisions
to be amended, repealed or otherwise modified in any manner that
would adversely affect the rights thereunder of individuals who
at the Closing Date were directors, officers, employees or agents
of Purchaser, unless such modification is required by applicable
law.
6.16 PENSION SCHEMES. Seller agrees that following
the Closing Date, any employee of Radiocoms as of the Closing
Date who is a participant in any pension scheme of Seller shall
be eligible to participate in the same pension scheme of Seller
that such employee participated in as of the Closing Date subject
to the same terms and conditions of participation (including,
without limitation, the terms of such pension schemes as they may
be amended and applicable laws relating to pensions in England
and Wales) that such employee was subject to on the day that
immediately preceded the Closing Date; PROVIDED, HOWEVER, that
the foregoing shall not preclude Seller from amending or
terminating any of its pension schemes in accordance with the
terms of such pension scheme and the laws of England and Wales.
6.17 TRANSFER OF THE BUSINESS TO RADIOCOMS AND ITS
SUBSIDIARIES. Prior to Closing, Seller shall (i) cause its
Relevant Affiliates, if any, to transfer any and all of their
respective right, title and interest in any parts of, or benefits
of or rights in, the Business currently not held or owned by
Radiocoms or its Subsidiaries to Radiocoms or one of its
Subsidiaries in such manner so as to ensure that Radiocoms and
its Subsidiaries after the Closing will enjoy and have all
rights, benefits, operations and assets of the Business without
any material diminution of the value or utility of any such
rights, benefits, operations and assets and/or (ii) transfer or
cause to be transferred to Radiocoms all of the issued and
outstanding capital stock of its Relevant Affiliates, if any.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
AND SELLER. The obligation of each of Purchaser and Seller to
consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date of
each of the following conditions (any or all of which may be
waived by Purchaser and Seller in whole or in part to the extent
permitted by applicable Law):
<PAGE>
(a) Purchaser shall have obtained all consents and
waivers referred to in Section 7.1(a) of the Purchaser Disclosure
Letter with respect to the transactions contemplated by this
Agreement and the Purchaser Documents;
(b) Seller shall have obtained all consents and
waivers referred to in Section 7.1(b) of the Radiocoms Disclosure
Letter with respect to the transactions contemplated by this
Agreement and the Seller Documents;
(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 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;
(d) The waiting period under the HSR Act shall have
expired or early termination shall have been granted;
(e) All approvals required to be obtained by Seller,
Purchaser or Midland US from any Governmental Body with respect
to any of the Transactions shall have been obtained;
(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 and the consummation of each of the Transactions;
(g) The Other Transactions shall have been consummated
as contemplated in the Midland Agreement, or shall be consummated
simultaneously with the transactions contemplated by this
Agreement; and
(h) Purchaser shall have received the opinion of
Fahnestock & Co. Inc. ("Fahnestock") on the date on which
Purchaser's Board of Directors voted to approve this Agreement
and the Midland Agreement, and the written opinion of Fahnestock,
dated on or prior to the date of the mailing of the Proxy
Statement, that the consideration to be paid by Seller to
Purchaser under this Agreement in respect of the Purchaser Shares
(as well as the consideration to be paid by Seller to Simmonds
under the Midland Agreement) is fair to Purchaser and its
stockholders from a financial point of view, and such opinion
shall not have been withdrawn or modified in any material
respect.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER. The obligation of Purchaser to consummate the
transactions contemplated by this Agreement is subject to the
fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by
<PAGE>
Purchaser in whole or in part to the extent permitted by
applicable Law):
(a) Except for facts, events or changes arising or
occurring between the date hereof and the Closing Date which are
expressly permitted by this Agreement, all representations and
warranties of Seller contained herein shall be true and correct
as of the date hereof; and except for facts, events or changes
arising or occurring between the date hereof and the Closing Date
which are expressly permitted by this Agreement, all
representations and warranties of Seller contained herein
qualified as to materiality shall be true and correct, and the
representations and warranties of Seller contained herein not
qualified as to materiality shall be true and correct in all
material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been
made again at and as of that time;
(b) Seller shall have performed and complied in all
material respects with all obligations and covenants required by
this Agreement to be performed or complied with by it on or prior
to the Closing Date;
(c) Purchaser shall have been furnished with
certificates (dated the Closing Date and in form and substance
reasonably satisfactory to Purchaser) executed by Seller,
certifying as to the fulfillment of the conditions specified in
Sections 7.2(a) and 7.2(b) hereof;
(d) Certificates representing the Shares shall have
been, or shall at the Closing be, validly delivered and
transferred to the Purchaser, free and clear of any and all
Liens, together with appropriate stock powers executed by Seller;
(e) There shall not have been or occurred any Material
Adverse Change with respect to Radiocoms and its Subsidiaries,
taken as a whole;
(f) Seller shall have delivered to Purchaser a loan
agreement incorporating the terms set forth on Exhibit B hereto
(the "Loan Agreement") to make available to Purchaser $15 million
of financing;
(g) Seller shall have delivered to Purchaser an
agreement incorporating the terms set forth on Exhibit C hereto
(the "Support Services Agreement") to provide certain services to
Radiocoms and its Subsidiaries after the Closing;
(h) The EFJ Note shall have been cancelled; and
(i) Seller shall have executed and delivered to
Purchaser the Registration Rights Agreement (as hereinafter
defined).
<PAGE>
7.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller in whole
or in part to the extent permitted by applicable Law):
(a) Except for facts, events or changes arising or
occurring between the date hereof and the Closing Date which are
expressly permitted by this Agreement, all representations and
warranties of Purchaser contained herein shall be true and
correct as of the date hereof; and except for facts, events or
changes arising or occurring between the date hereof and the
Closing Date which are expressly permitted by this Agreement, all
representations and warranties of Purchaser contained herein
qualified as to materiality shall be true and correct, and the
representations and warranties of Purchaser contained herein not
qualified as to materiality shall be true and correct in all
material respects, at and as of the Closing Date with the same
effect as though those representations and warranties had been
made again at and as of that time;
(b) Purchaser shall have performed and complied in all
material respects with all obligations and covenants required by
this Agreement to be performed or complied with by it on or prior
to the Closing Date;
(c) Seller shall have been furnished with certificates
(dated the Closing Date and in form and substance reasonably
satisfactory to Seller) executed by Purchaser, certifying as to
the fulfillment of the conditions specified in Sections 7.3(a)
and 7.3(b) hereof;
(d) Certificates representing 25,000,000 shares of
Purchaser Common Stock (the Purchaser Shares) shall have been, or
shall at the Closing be, validly delivered to and duly registered
in the name of the Seller, free and clear of any and all Liens;
(e) The Purchaser Shares shall have been approved for
quotation on the Small Cap Market, subject to official notice of
issuance;
(f) Purchaser shall have executed and delivered to
Seller that certain Registration Rights Agreement (the
"Registration Rights Agreement"), in the form of Exhibit D, and
that certain Registration Rights Agreement, dated as of September
23, 1994, among the Company, Simmonds, RoameR One Holdings, Inc.,
Anglo York Industries, Inc. and Howard Davis shall have been
terminated;
(g) Purchaser shall have furnished evidence of the due
election and qualification to its Board of Directors of the
persons designated prior to Closing by Seller and the removal or
<PAGE>
resignation of any other members of Purchaser's Board of
Directors designated prior to Closing by Seller;
(h) There shall not have been or occurred any Material
Adverse Change with respect to Purchaser or Midland US;
(i) Purchaser shall have entered into a warrant
agreement in favor of Seller substantially on the terms set forth
in Exhibit E hereto (the "Warrant Agreement");
(j) Purchaser shall have at Closing a minimum of 162
Constructed Systems (as that term is defined in Section 5.27(f))
under management pursuant to valid and subsisting management
agreements, including a minimum of 73 Constructed Systems under
Category I management and 26 Constructed Systems under Category
II management by Purchaser pursuant, respectively, to valid and
subsisting Category I and Category II Exclusive Management
Agreements and Rights of First Refusal and valid and subsisting
Option to Purchase Agreements as reflected in Section 5.27(a)(iv)
of the Purchaser Disclosure Letter, which Constructed Systems
shall have been timely and validly constructed at primary
transmitter sites licensed by the FCC pursuant to an order that
is not subject to reconsideration or appeal and for which the
time for the request for any such reconsideration or appeal has
expired;
(k) There shall be no material Legal Proceedings
pending, threatened or reasonably likely to be asserted against
Purchaser or its Subsidiaries in any federal or state court,
agency or other Governmental Body with respect to Purchaser's
performance, including its construction or failure to construct
of any System in accordance with the FCC's rules and regulations
or the terms of any FCC license, under any of its management
agreements or other agreements concerning any 220-222 MHz band
radio system;
(l) Purchaser shall have delivered a valid, binding
and fully executed Termination and Release of that certain Letter
of Understanding entered into on January 28, 1994 by and between
Roamer One, Inc., Angell Communications, Nancy M. Wilson, Square
1 Communications Partnership, Nicholas R. Wilson and NICMAR;
(m) Purchaser shall have delivered a valid, binding
and fully executed Amendment to the Management Agreement and
Options agreement entered into by and between Roamer One, Inc.,
and NICMAR dated January 31, 1994 adding as a system subject to
the management by Roamer One, Inc. and under option to Roamer
One, Inc. the following stations: WPCW452, Reno, Nevada and
WPFP940, Denison, Texas; and
(n) Seller shall have received from the United Kingdom
Inland Revenue advance clearance under Section 138 of the
Taxation of Chargeable Gains Act of 1992 to the effect that the
consummation of the transactions contemplated by this Agreement
<PAGE>
do not give rise to a capital gain on the transfer of the Shares
or the receipt of the Purchaser Shares.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 DOCUMENTS TO BE DELIVERED BY SELLER. At the
Closing, Seller shall deliver, or cause to be delivered, to
Purchaser the following:
(a) stock certificates representing the Shares, duly
endorsed in blank or accompanied by a stock transfer power and
with all requisite stock transfer tax stamps attached;
(b) the certificates referred to in Section 7.2(c)
hereof;
(c) the opinion of Messrs. Herbert Smith, U.K. counsel
to Seller, in form and substance reasonably satisfactory to
Purchaser;
(d) copies of all consents, waivers and approvals
referred to in Section 7.1(a) and (e) hereof, to the extent such
consents, waivers and approvals are required to be obtained by
Seller;
(e) an executed copy of the Loan Agreement;
(f) an executed copy of the Registration Rights
Agreement;
(g) an executed copy of the Support Services
Agreement; and
(h) such other documents as the Purchaser shall
reasonably request.
8.2 DOCUMENTS TO BE DELIVERED BY PURCHASER. At the
Closing, Purchaser shall deliver to the Seller the following:
(a) stock certificates representing the Purchaser
Shares, registered in the name of Seller;
(b) the certificates referred to in Section 7.3(c)
hereof;
(c) the opinion of, Kohrman, Jackson & Krantz PLL,
counsel to Purchaser, in form and substance reasonably
satisfactory to Seller;
(d) copies of all consents, waivers or approvals
referred to in Section 7.2(a) and (e) to the extent such
<PAGE>
consents, waivers or approvals are required to be obtained by
Purchaser;
(e) an executed copy of the Registration Rights
Agreement;
(f) an executed copy of the Warrant Agreement; and
(g) such other documents as Seller shall reasonably
request.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION.
(a) Seller hereby agrees to indemnify and hold
Purchaser, Radiocoms, and their respective directors, officers,
employees, Affiliates, agents, successors and assigns
(collectively, the "Purchaser Indemnified Parties") harmless from
and against:
(i) any and all losses, liabilities, obligations,
damages, costs and expenses based upon, attributable to or
resulting from the failure of any representation or warranty
of Seller hereof to be true and correct in all respects as
of the date made;
(ii) any and all losses, liabilities,
obligations, damages, costs and expenses based upon,
attributable to or resulting from the Excluded Liabilities;
(iii) any and all losses, liabilities,
obligations, damages, costs and expenses based upon,
attributable to or resulting from any breach by Seller of
any covenant of Seller;
(iv) any and all losses, liabilities,
obligations, damages, costs and expenses based upon,
attributable to or resulting from the transfer of the EFJ
Shares and the EFJ Warrant to Radiocoms (including, without
limitation, any Tax liability occurring, on redemption of
the EFJ Shares or their use to redeem the Preferred Shares,
by reason of the tax basis of the EFJ Shares and the EFJ
Warrant being considered to be less than the face amount of
the EFJ Note); and
(v) any and all notices, actions, suits, pro
ceedings, claims, demands, assessments, judgments, costs,
penalties and reasonable expenses, including reasonable
attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all losses,
liabilities, obligations, damages, costs and expenses with
<PAGE>
respect to which indemnification is provided hereunder
(collectively, "Losses").
(b) Purchaser hereby agrees to indemnify and hold
Seller and its respective directors, officers, employees,
Affiliates, agents, successors and assigns (collectively, the
"Seller Indemnified Parties") harmless from and against:
(i) any and all Losses based upon, attributable
to or resulting from the failure of any representation or
warranty of the Purchaser to be true and correct in all
respects as of the date made;
(ii) any and all Losses based upon, attributable
to or resulting from any breach by Purchaser of any covenant
of Purchaser;
(iii) any and all Losses based upon, attributable
to or resulting from the failure of the property located at
5800 West Jefferson Boulevard, Los Angeles, California 90016
(the "Site") to comply with any Environmental Law
(including, without limitation, any environmental clean-up
costs, whether such environmental clean-up costs are
incurred by Intek voluntarily or in response to actions by
Governmental Bodies or other Persons); PROVIDED, HOWEVER,
(A) that, if the Site is sold by Purchaser to a third party
in a bona fide transaction within one year following the
date hereof, the amount of such Losses shall be deemed to be
reduced by the amount, if any, by which the net proceeds to
Purchaser upon the sale of the Site exceed the net book
value of the Site as reflected on the Purchaser Financial
Statements, and (B) that, in all other cases, the amount of
such Losses shall be deemed to be reduced by $250,000;
(iv) any and all Losses attributable to the
Olympic Plastics Simplified Employees Pension Plan referred
to in Section 5.17(a) of the Purchaser Disclosure Letter;
and
(v) any and all Expenses incident to the
foregoing.
9.2 LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF
REPRESENTATIONS AND WARRANTIES.
(a) An indemnifying party shall not have any liability
for a breach of a representation or warranty under Section
9.1(a)(i) or (b)(i) hereof unless the aggregate amount of Losses
and Expenses to the indemnified parties finally determined to
arise thereunder based upon, attributable to or resulting from
the failure of any representation or warranty to be true and
correct, exceeds $300,000 (the "Basket") and, in such event, the
indemnifying party shall be required to pay the entire amount of
such Losses and Expenses without regard to the Basket.
<PAGE>
(b) Notwithstanding anything contained in this
Agreement to the contrary, (i) the aggregate liability of Seller
and its Affiliates under Section 9.1(a)(i), except for any
liability arising as a result of the failure of Seller's
representations and warranties set forth in Section 4.14 to be
true and correct, shall not exceed $6,000,000 (the "Seller Cap")
and (ii) the aggregate liability of Purchaser and its Affiliates
under Section 9.1(b)(i), except for any liability arising as a
result of the failure of Purchaser's representations and
warranties set forth in Section 5.27 to be true and correct,
shall not exceed $4,000,000 (the "Purchaser Cap").
9.3 INDEMNIFICATION PROCEDURES.
(a) In the event that any Legal Proceedings shall be
instituted or that any claim or demand ("Claim") shall be
asserted by any Person in respect of which payment may be sought
under Section 9.1 hereof (regardless of the Basket referred to
above), the indemnified party shall reasonably and promptly cause
written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded to
the indemnifying party. The indemnifying party shall have the
right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to
the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder. If the indemnifying party elects
to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses indemnified against hereunder,
it shall within five (5) days (or sooner, if the nature of the
Claim so requires) notify the indemnified party of its intent to
do so. If the indemnifying party elects not to defend against,
negotiate, settle or otherwise deal (as provided herein) with any
Claim which relates to any Losses indemnified against hereunder,
fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified
party against such Losses under this Agreement, the indemnified
party may defend against, negotiate, settle or otherwise deal
with such Claim; PROVIDED, HOWEVER, that the indemnified party
may not settle such Claim without the consent of the indemnifying
party, which consent will not be unreasonably withheld or
delayed. If the indemnified party defends any Claim, then the
indemnifying party shall reimburse the indemnified party for the
Expenses of defending such Claim upon submission of periodic
bills; PROVIDED, HOWEVER, that, if the indemnifying party
reasonably contests its obligation to indemnify the indemnified
party against such Losses under this Agreement, the indemnifying
party may defer the reimbursement of the periodic bills with
respect to such Losses until such time as it is obligated to make
payment to the indemnified party under Section 9.3(b). If the
indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in
the defense of such Claim; PROVIDED, HOWEVER, that such
indemnified party shall be entitled to participate in any such
<PAGE>
defense with separate counsel at the expense of the indemnifying
party if, (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the
indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that
would make such separate representation advisable; and PROVIDED,
FURTHER, that the indemnifying party shall not be required to pay
for more than one such counsel for all indemnified parties in
connection with any Claim. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation
or settlement of any such Claim.
(b) After any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency
of competent jurisdiction and the expiration of the time in which
to appeal therefrom, or a settlement shall have been consummated,
or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party in
accordance with Section 9.3(d).
(c) The failure of the indemnified party to give
reasonably prompt notice of any Claim shall not release, waive or
otherwise affect the indemnifying party's obligations with
respect thereto except to the extent that the indemnifying party
can demonstrate actual loss and prejudice as a result of such
failure.
(d) Except as set forth in Section 9.3(e), all
payments of Claims to an indemnified party may be made by wire
transfer of immediately available funds within 10 business days
after the date of the notice of sums due and owing provided for
in Section 9.3(b). In addition, except as set forth in Section
9.3(e), Seller or Purchaser may elect, at its option, to pay any
Claims to an indemnified party in shares of Purchaser Common
Stock, and the number of shares of Purchaser Common Stock to be
transferred in satisfaction of such liabilities, and the terms of
any such transfer, shall be determined as set forth in Sections
9.3(f). In the event that Purchaser is the indemnifying party
and Seller is the indemnified party with respect to any Claim,
the amount of such Claim shall be increased as appropriate to
reflect the percentage of Purchaser's issued and outstanding
capital stock that is owned beneficially or of record by Seller
as of the date of the notice delivered pursuant to Section 9.3(b)
with respect to such Claim. As an example, if Purchaser must
indemnify Seller for a Claim otherwise amounting to $100,000 and
Seller owns 60% of Purchaser's issued and outstanding capital
stock at such time, the amount of Seller's Claim shall be deemed
to be increased to $250,000 (the amount which, when 60% of its
value is subtracted, equals the original amount of the Claim).
<PAGE>
(e) Notwithstanding any other provision of this
Agreement to the contrary, any liability of Seller under Section
9.1(a)(i), up to the Seller Cap, and any liability of Purchaser
under Section 9.1(b)(i), up to the Purchaser Cap, shall be
payable solely in shares of Purchaser Common Stock. The number
of shares of Purchaser Common Stock to be transferred with
respect to any such liability being paid in shares of Purchaser
Common Stock shall be determined as set forth in Section 9.3(f).
(f) In the event that Seller or Purchaser, in
accordance with Section 9.3(d), elects or is required to pay any
liabilities owing by it in shares of Purchaser Common Stock, the
number of shares to be transferred with respect to any such
liability shall be determined by dividing the amount of such
liability (as such amount may be adjusted pursuant to Section
9.3(d)) by the Applicable Average Share Value. The "Applicable
Average Share Value" shall be equal to the average of the Daily
Closing Prices for each of the ten Business Days immediately
preceding the date of the notice provided for in Section 9.3(b);
and the "Daily Closing Price" for each such day shall be average
of the last bid and ask price of Purchaser Common Stock quoted on
such day on the Small Cap Market (or such exchange or quotation
system as shall report the trading prices of Purchaser Common
Stock at the relevant time).
(g) Purchaser covenants and agrees that, in the event
it issues any shares of Purchaser Common Stock to Seller in
payment of any Claim of Seller ("Additional Shares") hereunder,
it will take such actions as may be necessary to assure that,
upon issuance, such Additional Shares (i) will be duly
authorized, validly issued, fully paid and non-assessable and
free of preemptive rights, and will be registered on the stock
certificate books and stock transfer ledgers of Purchaser solely
in the name of Seller and (ii) will be approved for quotation on
the Small Cap Market, subject to official notice of issuance.
Seller will receive good and marketable title to any Additional
Shares within 10 business days after the date of the notice
provided for in Section 9.3(b), free and clear of any and all
Liens.
(h) Seller covenants and agrees that, in the event it
transfers any shares of Purchaser Common Stock to Purchaser in
payment of any Claims hereunder ("Adjustment Shares"), it will
take such actions as may be reasonably necessary to assure that,
upon such transfer, Seller shall have delivered to Purchaser good
and marketable title to such Adjustment Shares, free and clear of
any and all Liens. Any such transfers of Adjustment Shares will
be made within 10 business days after the date of the notice
provided for in Section 9.3(b).
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms shall have the meanings specified
in this Section 10.1:
" AFFILIATE" means, with respect to any Person, any
other Person controlling, controlled by or under common control
with such Person. Roamer One Holdings Inc., Nicholas Wilson and
their respective affiliates and associates shall be deemed to be
Affiliates of Purchaser for the purposes of this Agreement.
" AFFILIATED GROUP" means, with respect to any entity,
a group of entities required or permitted to file consolidated,
combined or unitary Tax Returns, including, without limitation,
Chapter IV of Part X of the Income and Corporation Taxes Act
1988.
" BASKET" shall have the meaning set forth in Section
9.2.
" BUSINESS" means any and all (a) operations, assets,
rights or liabilities of Radiocoms and its Subsidiaries
whatsoever and (b) operations, assets and rights or liabilities
of other of Seller's Affiliates, other than Dopra, Datatrak,
Cellular and TrakBak, related directly and principally to the
business of manufacturing and selling land mobile radio
equipment.
" BUSINESS DAY" means any day of the year on which
national banking institutions in New York and London are open to
the public for conducting business and are not required or
authorized to close.
" CLOSING" shall have the meaning set forth in Section
3.1.
" CLOSING DATE" shall have the meaning set forth in
Section 3.1 hereof.
" CODE" shall mean the Internal Revenue Code of 1986,
as amended.
" COMMITTEE" has the meaning set forth in Section 6.2.
" COMMUNICATIONS ACT" has the meaning set forth in
Section 5.27(h).
" CONTRACT" means any contract, agreement, indenture,
note, bond, loan, instrument, lease, commitment or other
arrangement or agreement.
<PAGE>
" DTI" means the Department of Trade and Industry.
" Efj shares" shall have the meaning set forth in the
recitals to this Agreement.
" ENVIRONMENTAL LAW" means any applicable federal,
state or local statute, law ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order,
judgment, decrees, injunction, directive, requirement or
agreement with any Governmental Body, now existing, relating to:
(a) the protection, preservation or restoration of the
environment (including, without limitation, air water vapor,
surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural
resource), or to human health or safety, or (b) the exposure to,
or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances, in each case as
amended. The term Environmental Law includes, without
limitation, (a) the following statutes, each as amended: (i) the
Federal Clean Air Act; (ii) the Federal Clean Water Act; (iii)
the Federal Resource Conservation and Recovery Act of 1976
("RCRA"); (iv) the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("CERCLA"); (v) the
Federal Toxic Substances Control Act; (vi) the Federal
Occupational Safety and Health Act of 1970; (vii) the Federal
Safe Drinking Water Act; (viii) the Federal Insecticide,
Fungicide and Rodenticide Act; (ix) the California Hazardous
Waste Control Law; (x) the California Hazardous Substance Account
Act; (xi) the Porter-Cologne Water Quality Control Act; and (xii)
the California Air Pollution Control Law; and (b) any common law
or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass
and strict liability) that may impose liability or obligations
for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Substance.
" EXCLUDED LIABILITIES" means any and all liabilities
of Radiocoms and its Subsidiaries or Affiliates not directly
related to the Business, including, without limitation:
(a) any and all Tax liabilities of Radiocoms and its
Subsidiaries attributable to any asset, right, liability or
operation of Securicor plc or its Affiliates (other than
Radiocoms and its Subsidiaries) that are not included in the
Business (including, without limitation, liabilities arising from
any Tax Sharing Agreement (except to the extent attributable to
income, assets or liabilities of the Business) and any liability
for value-added Taxes arising from activities that are not part
of the Business);
(b) any and all liabilities and obligations related to
employees of Radiocoms or any of its Subsidiaries other than
<PAGE>
those employees listed on Section 4.17(d) of the Radiocoms
Disclosure Letter;
(c) all liabilities of Radiocoms and its Subsidiaries
to Seller and its Affiliates except in respect of the Preferred
Shares;
(d) any and all Tax liabilities of Radiocoms and its
Subsidiaries arising as a result of the provisions of sections 94
or 582 of the Income and Corporation Taxes Act 1988 or sections
178 or 179 of the Taxation of Chargeable Gains Act 1992 by virtue
of or in consequence of the entering into or performance of this
Agreement, including, without limitation, Tax liabilities arising
from the transfer of shares of capital stock or other assets to
Radiocoms to ensure that Radiocoms owns all assets related to the
Business as of the Closing Date; and
(e) any Tax liability of Radiocoms and its Sub
sidiaries arising as a result of the denial of a deduction for
interest accrued on any intercompany indebtedness which is
refinanced in accordance with Section 6.11 of this Agreement.
" EXPENSES" shall have the meaning set forth in Section
9.1(a).
" FCC" means the Federal Communications Commission.
" GAAP" means, with respect to financial or accounting
information concerning any Person, generally accepted accounting
principles as of the date hereof in the United States.
" GOVERNMENTAL BODY" means any government or govern
mental or regulatory body thereof, or political subdivision
thereof, whether federal, state, local or foreign, or any agency,
instrumentality or authority thereof, or any court or arbitrator
(public or private).
" HAZARDOUS SUBSTANCE" means any substance, whether
liquid, solid or gas, listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, under any
applicable Environmental Law, whether by type or by quantity.
Hazardous Substance includes, without limitation, (aa) any
"hazardous substance" as defined in CERCLA, (bb) any "hazardous
waste" as defined in RCRA, and (cc) any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous
waste, special waste or petroleum or any derivative or by-product
thereof, radon, radioactive material, friable asbestos, asbestos
containing material releasing friable asbestos, urea formaldehyde
foam insulation, lead and polychlorinated biphenyls ("PCBs").
" HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
<PAGE>
" KNOWLEDGE" means, with respect to any Person, the
actual or constructive knowledge of such Person and, in the case
of a corporation, the actual or constructive knowledge of its
executive officers and directors, after reasonable investigation
(except as set forth in Section 5.21); PROVIDED, HOWEVER, that
with respect to any representation or warranty of Seller
concerning EFJ which is qualified as to knowledge, "knowledge"
means the actual knowledge of Seller's executive officers and
directors without any independent investigation.
" LAW" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regu
lation or other requirement.
" LEGAL PROCEEDING" means any judicial, administrative
or arbitral actions, suits, proceedings (public or private),
claims or governmental proceedings.
" MIDLAND AGREEMENT" shall have the meaning set forth
in the recitals to this Agreement.
" LIEN" means any lien, pledge, mortgage, deed of
trust, security interest, claim, lease, charge, option, right of
first refusal, easement, servitude, transfer restriction under
any shareholder or similar agreement, encumbrance or any other
restriction or limitation whatsoever.
" LOAN AGREEMENT" has the meaning set forth in Section
7.2(f).
" LOSSES" shall have the meaning set forth in Section
9.1(a).
" MATERIAL ADVERSE CHANGE" means, with respect to any
Person or the Business, any material adverse change in the
business, properties, results of operations, condition (financial
or otherwise) of such Person, it being presumed that any such
change which results in the decrease of the net asset value of a
Person or the Business by 10% or more constitutes a Material
Adverse Change.
" MATERIAL ADVERSE EFFECT" means any effect which has
resulted in, or could be reasonably likely to result in, a
Material Adverse Change.
" MIDLAND US" shall have the meaning set forth in the
recitals to this Agreement.
" ORDER" means any order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award.
" OTHER TRANSACTIONS" shall have the meaning set forth
in the recitals to this Agreement.
<PAGE>
" PERMITS" means any approvals, authorizations,
consents, licenses, permits or certificates.
" PERMITTED EXCEPTIONS" means (i) all defects,
exceptions, restrictions, easements, rights of way and
encumbrances disclosed in policies of title insurance which have
been made available to Purchaser or Seller, as applicable; (ii)
statutory liens for current taxes, assessments or other
governmental charges not yet delinquent or the amount or validity
of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and
similar Liens arising or incurred in the ordinary course of
business that are not material to the business, operations and
financial condition of the property so encumbered or owner
thereof; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that
such regulations have not been violated; and (v) such other
imperfections in title, charges, easements, restrictions and
encumbrances which do not detract more than 10% from the value of
or materially interfere with the present use of any property
subject thereto or affected thereby.
" PERSON" means any individual, corporation, part
nership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other
entity.
" PURCHASER" shall have the meaning set forth in the
recitals to this Agreement.
" PURCHASER DISCLOSURE LETTER" shall have the meaning
set forth in the Section 5.4(a).
" PURCHASER SHARES" shall have the meaning set forth in
Section 2.1.
" PURCHASER STOCKHOLDERS' MEETING" shall have the
meaning ascribed thereto in Section 6.3(b).
" RADIOCOMS" shall have the meaning set forth in the
recitals to this Agreement.
" RADIOCOMS DISCLOSURE LETTER" shall have the meaning
set forth in Section 4.4(a).
" RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or
leaching into the indoor or outdoor environment, or into or out
of any property.
" RELEVANT AFFILIATE" shall have the meaning set forth
in Section 4.4(a).
<PAGE>
" REMEDIAL ACTION" means all actions to (x) clean up,
remove, treat or in any other way address any Hazardous Material;
(y) prevent the Release of any Hazardous Material so it does not
endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
" SELLER" shall have the meaning set forth in the
recitals to this Agreement.
" SHARES" shall have the meaning set forth in the
recitals to this Agreement.
" SIMMONDS" shall have the meaning set forth in the
recitals to this Agreement.
" SUBSIDIARY" means any other Person of which a
majority of the outstanding voting securities or other voting
equity interests are owned, directly or indirectly, by such
Person.
" TAXES" means (i) all federal, state, local or foreign
taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, national
insurance, unemployment, excise, severance, stamp, occupation,
property, corporation and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever; (ii) all
interest, penalties, fines, additions to tax or additional
amounts imposed by any taxing authority in connection with any
item described in clause (i); and (iii) any transferee liability
in respect of any items described in clauses (i) and/or (ii).
" TAX RETURN" means all returns, declarations, reports,
estimates, information returns and statements required to be
filed in respect of any Taxes.
" TAX SHARING AGREEMENT" means an agreement (whether or
not in writing) pursuant to which Tax losses of one entity are
made available to another entity of the "group" or Affiliates for
purposes of Taxes.
" TRANSACTIONS" shall have the meaning set forth in the
recitals to this Agreement.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The parties hereto hereby agree that the representations and
warranties of Seller and of Purchaser shall survive the execution
and delivery of this Agreement, and the Closing hereunder,
regardless of any investigation made by the parties hereto, for a
period of eighteen months following the Closing. Any claims or
actions with respect to any representation or warranty that
<PAGE>
survives the execution and delivery of this Agreement and the
Closing hereunder shall terminate unless, within eighteen months
after the Closing Date, written notice of such claims is given to
the indemnifying party or such actions are commenced.
10.3 EXPENSES. Except as otherwise provided in this
Agreement, Seller and Purchaser shall each bear its own expenses
incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby.
10.4 FURTHER ASSURANCES. Seller and Purchaser each
agrees to execute and deliver such other documents or agreements
and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.
10.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This
Agreement (including the exhibits hereto), the Radiocoms Disclos
ure Letter and the Purchaser Disclosure Letter represent the
entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived,
only by written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No
information disclosed in any Section of the Radiocoms Disclosure
Letter or Purchaser Disclosure Letter shall be deemed to have
been disclosed for purposes of any other Section without being
specifically cross-referenced in such Section. No action taken
pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance
with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver
of any other or subsequent breach. No failure on the part of any
party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by
such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other
remedies provided by Law.
10.6 GOVERNING LAW. This Agreement 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).
10.7 TABLE OF CONTENTS AND HEADINGS. The table of
contents and section headings of this Agreement are for reference
<PAGE>
purposes only and are to be given no effect in the construction
or interpretation of this Agreement.
10.8 NOTICES. All notices and other communications
under this Agreement shall be in writing and shall be deemed
given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and may also be
transmitted by facsimile to the Persons receiving copies thereof)
at the following addresses (or to such other address as a party
may have specified by notice given to the other party pursuant to
this provision):
If to Seller, to:
Securicor Communications Ltd.
Sutton Park House
15 Carshalton Road
Sutton, Surrey, SM1 4LD England
Attn: Dr. Ed Hough
Telecopier: (011 44) 181-661-0205
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Howard Chatzinoff, Esq.
Telecopier: (212) 310-8007
If to Purchaser, to:
Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrance, California 90502
Attn: David Neibert
Telecopier: (310) 366-7712
With a copy to:
Kohrman Jackson & Krantz PLL
One Cleveland Center, 20th Floor
1375 East Ninth Street
Cleveland, Ohio 44114
Attn: Steven L. Wasserman, Esq.
Telecopier: (216) 621-6536
10.9 SEVERABILITY. If any provision of this
Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
10.10 BINDING EFFECT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in
this Agreement shall create or be deemed to create any third
<PAGE>
party beneficiary rights in any person or entity not a party to
this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made
by either Seller or Purchaser (by operation of Law or otherwise)
without the prior written consent of the other parties hereto and
any attempted assignment without the required consents shall be
void.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first written above.
INTEK DIVERSIFIED CORPORATION
By:_________________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:_________________________________
Name:
Title:
<PAGE>
Each of the undersigned hereby agrees that he will not
unreasonably withhold his consent to any action as to which the
consent of the Committee (as defined in the foregoing Agreement)
is required under Sections 6.2(a) or 6.2(b) of the foregoing
Agreement.
________________________________
Ed Hough
________________________________
John Simmonds
________________________________
Nicholas Wilson
<PAGE>
Security Services plc, a corporation formed under the
laws of England and Wales and the owner of 100% of the issued and
outstanding capital stock of Securicor Communications Limited
("SCL") hereby guarantees the obligations of SCL under Section
9.1(a) of the foregoing Stock Purchase Agreement and agrees to
cause SCL to provide the financing contemplated under Section
7.2(f) thereof.
SECURITY SERVICES PLC
By: ________________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
-----------------------------
Page
------
ARTICLE I - SALE AND PURCHASE OF SHARES............................2
1.1 Sale and Purchase of Shares..........................2
ARTICLE II - PURCHASE PRICE AND PAYMENT............................2
2.1 Amount and Payment of Purchase Price.................2
ARTICLE III - CLOSING AND TERMINATION..............................3
3.1 Closing Date.........................................3
3.2 Termination of Agreement.............................3
3.3 Procedure Upon Termination...........................4
3.4 Effect of Termination................................5
3.5 Expense Reimbursement................................5
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER..............6
4.1 Organization and Good Standing.......................6
4.2 Authorization of Agreement...........................6
4.3 Capitalization.......................................7
4.4 Subsidiaries.........................................8
4.5 Corporate Records....................................9
4.6 Conflicts; Consents of Third Parties.................9
4.7 Ownership and Transfer of Shares; Ownership of EFJ
Shares and EFJ Warrant.......................10
4.8 Financial Statements.................................11
4.9 No Undisclosed Liabilities...........................12
4.10 Absence of Certain Developments.....................12
4.11 Taxes .............................................15
4.12 Real Property.......................................18
4.13 Tangible Personal Property..........................20
4.14 Intangible Property.................................22
4.15 Material Contracts..................................23
4.16 Employee Benefits...................................24
4.17 Labor .............................................29
4.18 Litigation..........................................30
4.19 Compliance with Laws................................31
4.20 Environmental Matters...............................32
4.21 Insurance...........................................33
4.22 Related Party Transactions..........................34
4.23 Financial Advisors..................................34
4.24 Claims to Property..................................34
4.25 Licenses; Permits; Authorizations...................35
4.26 Investment in Purchaser Shares......................35
4.27 Investments in Purchaser............................36
4.28 Accounts Receivable.................................37
4.29 Accounts Payable....................................37
4.30 Inventory...........................................37
4.31 Products............................................37
4.32 No Misrepresentation................................37
<PAGE>
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER............38
5.1 Organization and Good Standing.......................38
5.2 Authorization of Agreements..........................38
5.3 Capitalization.......................................39
5.4 Subsidiaries.........................................40
5.5 Corporate Records....................................41
5.6 Conflicts; Consents of Third Parties.................41
5.7 Issuance of Purchaser Shares.........................42
5.8 Financial Statements.................................42
5.9 No Undisclosed Liabilities...........................43
5.10 Periodic SEC Filings................................43
5.11 Absence of Certain Developments.....................44
5.12 Taxes .............................................46
5.13 Real Property.......................................49
5.14 Tangible Personal Property..........................51
5.15 Intangible Property.................................52
5.16 Material Contracts..................................53
5.17 Employee Benefits...................................55
5.18 Labor .............................................59
5.19 Litigation..........................................60
5.20 Compliance with Laws................................60
5.21 Environmental Matters...............................61
5.22 Insurance...........................................62
5.23 Related Party Transactions..........................63
5.24 Financial Advisors..................................63
5.25 Claims to Property..................................63
5.26 Licenses; Permits; Authorizations...................64
5.27 FCC Matters.........................................64
5.28 Investment in Shares................................68
5.29 General Partnerships................................69
5.30 No Misrepresentation................................70
ARTICLE VI - COVENANTS.............................................70
6.1 Access to Information................................70
6.2 Conduct of Purchaser's and Radiocoms's Respective
Businesses Pending the Closing...............71
6.3 Consents and Approvals...............................75
6.4 Filings with Governmental Bodies.....................76
6.5 Other Actions........................................77
6.6 Preservation of Records..............................77
6.7 Publicity............................................77
6.8 Agreements with Respect to Other Transactions........78
6.9 Tax and Accounting Matters...........................78
6.10 No Solicitation.....................................79
6.11 Recapitalization; Refinancing of Intercompany Debt
............................................80
6.12 Updates to Disclosure Letters.......................80
6.13 Non-Compete.........................................81
6.14 FCC Matters.........................................81
6.15 Indemnification; Directors and Officers Insurance...82
6.16 Pension Schemes.....................................82
6.17 Transfer of the Business to Radiocoms and Its
Subsidiaries.................................82
<PAGE>
ARTICLE VII - CONDITIONS TO CLOSING................................83
7.1 Conditions Precedent to Obligations of Purchaser and
Seller.......................................83
7.2 Conditions Precedent to Obligations of Purchaser.....84
7.3 Conditions Precedent to Obligations of Seller........85
ARTICLE VIII - DOCUMENTS TO BE DELIVERED...........................87
8.1 Documents to be Delivered by Seller..................87
8.2 Documents to be Delivered by Purchaser...............88
ARTICLE IX - INDEMNIFICATION.......................................88
9.1 Indemnification......................................88
9.2 Limitations on Indemnification for Breaches of
Representations and Warranties...............90
9.3 Indemnification Procedures...........................90
ARTICLE X -
MISCELLANEOUS.............................................93
10.1 Certain Definitions.................................93
10.2 Survival of Representations and Warranties..........100
10.3 Expenses............................................100
10.4 Further Assurances..................................100
10.5 Entire Agreement; Amendments and Waivers............100
10.6 Governing Law.......................................101
10.7 Table of Contents and Headings......................101
10.8 Notices.............................................101
10.9 Severability........................................102
10.10 Binding Effect; Assignment.........................102
EXHIBITS
A Term Sheet for Redeemable Preference Stock
B Term Sheet for Delayed Drawdown Senior Subordinated
Note
C Term Sheet for Support Services Agreement
D Form of Registration Rights Agreement
E Term Sheet for Warrants
<PAGE>
STOCK PURCHASE AGREEMENT
BETWEEN
INTEK DIVERSIFIED CORPORATION
AND
SECURICOR COMMUNICATIONS LIMITED
Dated as of June 18, 1996
<PAGE>
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,
L1.00 par value per share, deferred shares, L1.00 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.
<PAGE>
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:
"(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
<PAGE>
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:
"(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
<PAGE>
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".
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,
<PAGE>
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 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
<PAGE>
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.
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>
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
<PAGE>
ASSUMPTION AND RELEASE AGREEMENT
This Assumption and Release Agreement ("Release") is entered
into and effective as of December 3, 1996, by and between INTEK
Diversified Corporation ("INTEK"), Midland USA, Inc. ("MUSA"), a
wholly owned subsidiary of INTEK, and Securicor Communications
Limited ("Securicor"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Loan
Agreement (the "Loan Agreement") dated as of September 19, 1996,
between Securicor and MUSA.
WHEREAS, MUSA and Securicor entered into (a) the Loan
Agreement and (b) the Security Agreement, dated as of September
19, 1996 (the "Security Agreement"), pursuant to which MUSA
granted a security interest in the collateral described therein
(the "Collateral") for the purpose of securing the obligations
under the Loan Agreement to Securicor;
WHEREAS, in connection with the Loan Agreement, INTEK and
Securicor entered into a Non-Recourse Guaranty and Pledge
Agreement, dated as of September 19, 1996 (the "Pledge
Agreement"), pursuant to which INTEK granted a security interest
in the collateral described therein (the "Pledge Agreement
Collateral") and a guarantee of prompt payment and performance of
MUSA's obligations under the Loan Agreement;
WHEREAS, pursuant to MUSA's obligations under the Loan
Agreement, MUSA made and delivered to Securicor a Revolving
Credit Note, dated September 19, 1996, for the amount of
$15,000,000 (the "Note");
WHEREAS, in connection with that certain Amended and
Restated Sale of Assets and Trademark Agreement, dated as of
September 19, 1996, by and between INTEK, Simmonds Capital
Limited, an Ontario corporation, and Midland International
Corporation, a Delaware corporation, INTEK agreed to assume the
obligations and liabilities of MUSA under the Loan Agreement; and
WHEREAS, as of the date hereof, the Loan Agreement is being
amended and restated (the "Amended and Restated Loan Agreement")
so as to, among other things, confirm the substitution of INTEK
as the "Borrower" thereunder and provide for certain other
matters.
NOW, THEREFORE, for good and valuable consideration, receipt
and sufficiency of which are hereby acknowledged, INTEK, MUSA and
Securicor hereby agree as follows:
1. INTEK hereby expressly assumes all outstanding
obligations and liabilities of MUSA under the Loan Agreement
("Assumed Obligations"), which Assumed Obligations shall become
part of the obligations and liabilities of INTEK under the
Amended and Restated Loan Agreement.
<PAGE>
2. Securicor does hereby release, acquit and forever
discharge, effective as of the date first above written, each and
every security interest, lien, charge, encumbrance or other
interest granted to it with respect to Collateral under the
Security Agreement. Upon the execution and delivery of this
Release, Securicor shall deliver to MUSA such termination
statements on Form UCC-2 and other releases as are necessary to
effectuate the releases contemplated by this Section 2. MUSA and
Securicor agree that the Security Agreement is hereby terminated.
3. Securicor does hereby release, acquit and forever
discharge, effective as of the date first abovewritten, each and
every security interest, lien, charge, encumbrance or other
interest granted to it with respect to Pledge Agreement
Collateral. Upon the execution and delivery of this Release,
Securicor shall deliver to INTEK such termination statements on
Form UCC-2 and other releases as are necessary to effectuate the
releases contemplated by this Section 5. INTEK and Securicor
agree that the Pledge Agreement is hereby terminated and INTEK
acknowledges receipt of the stock certificate # 1 issued by MUSA
to INTEK and previously delivered to Securicor pursuant to the
Pledge Agreement.
4. Securicor does hereby release, acquit and forever
discharge, effective as of the date first above written, MUSA and
its successors and assigns from any and all outstanding
obligations and liabilities under the Loan Agreement. MUSA and
Securicor agree that the Loan Agreement is hereby terminated.
Securicor hereby cancels the Note and releases, acquits and
forever discharges, effective as of the date first above written,
MUSA and its successors and assigns from any and all outstanding
obligations and liabilities under the Note.
5. Securicor shall execute and deliver upon MUSA's or
INTEK's request therefor any and all termination statements,
additional agreements, releases, and other documents reasonably
necessary to effectuate the releases and terminations
contemplated by this Release.
6. In the event of any inconsistency between this Release
and the Loan Agreement, the terms of this Release shall prevail
and be binding on the parties hereto, however, in any event it is
understood and agreed that INTEK shall be released hereby from
any of its obligations, covenants or agreements under or in
connection with the Amended and Restated Loan Agreement.
7. This Release shall be binding upon and shall inure to
the benefit of each of the parties to this Release and its
successors and assigns.
8. This Release shall be governed by and construed in
accordance with the internal substantive laws of the State of
California.
<PAGE>
9. INDEMNIFICATION. From and after the Closing, but
subject to the conditions and limitations set forth in this
Assumption and Release Agreement, INTEK shall defend, indemnify
and save MUSA and its directors, officers, employees, affiliates,
agents, successors and assigns harmless from and against any and
all loss, cost, damage or expense (including attorneys' fees)
whatsoever (the "Damages") resulting from or arising out of the
Assumed Obligations, whether arising prior to, on or after the
Effective Date.
10. 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 INTEK at:
INTEK Diversified Corporation
970 West 190th Street, Suite 720
Torrance, California 90502
Attention: David Neibert
Telecopy No.: (310) 366-7712
with a copy to:
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
Attention: Nancy H. Wojtas, Esq.
Telecopy No.: (310) 312-4224
to MUSA at:
Midland USA, Inc.
970 West 190th Street, Suite 720
Torrance, California 90502
Attention: David Neibert
Telecopy No.: (310) 366-7712
with a copy to
Kohrman, Jackson & Krantz, P.L.L.
One Cleveland Center
1375 East 9th Street
Cleveland, Ohio 44114
Attention: Steven Wasserman, Esq.
Telecopy No.: (216) 621-6536
to Securicor at:
Securicor Communications Limited
Sutton Park House
15 Carshalton Road
Sutton, Surrey SM I 4LD England
<PAGE>
Attention:
Telecopy: (181)770-7000
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
Telecopy: (212) 310-8007
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 in the
United States, or when delivered to the telegraph company,
confirmed by telex answerback, telecopied with confirmation or
receipt, delivered to the cable company, or delivered by hand to
the addressee or its agent, respectively.
11. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement shall in any event be effective
unless the same shall be in writing, approved and signed by the
parties hereto and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose
for which given.
12. NO WAIVER: REMEDIES.
(a) No failure on the part of either party 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.
(b) Failure by any party at any time or times
hereafter to require strict performance by any other person of
any of the provisions, warranties, terms or conditions contained
herein shall not waive, affect or diminish any right of any party
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 any party, or
any agent, officer or employee of such party.
13. SUCCESSORS AND ASSIGNS. This Agreement and all
obligations of the parties hereunder shall be binding upon the
successors and assigns of such parties.
14. GOVERNING LAW. This Agreement shall be governed by,
<PAGE>
and be construed and interpreted in accordance with, the law of
the State of California. 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.
15. 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 parties have entered into this
Release as of the date first written above.
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT, dated as of
December 3, 1996, between INTEK DIVERSIFIED CORPORATION, a
Delaware corporation having an office at 970 West 190th Street,
Torrance, California 90502 (the "Borrower"), 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"), Borrower 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 sold to Borrower 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, Borrower assigned and transferred all of its
right, title and interest in and to the Acquired Assets and the
Asset and Trademark Agreement (and certain other agreements) to
its wholly-owned Subsidiary, Midland USA, Inc. ("MUSA"), and MUSA
has conducted the U.S. LMR Distribution Business since the
consummation of the Midland Transaction;
WHEREAS, Borrower 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
Borrower 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 advance up to $15 million to
Borrower following the consummation of the Securicor Transaction
to finance the combined business of Borrower, the U.S. LMR
Distribution Business and Radiocoms;
WHEREAS, it is currently contemplated that the
Securicor Transaction will be consummated on or about December 3,
1996; and
WHEREAS, in connection with the consummation of the
Midland Transaction on September 20, 1996, Lender and Midland
USA, Inc. ("MUSA"), a wholly owned subsidiary of Borrower,
<PAGE>
entered into that certain Loan Agreement, dated as of September
19, 1996 (the "MUSA Loan Agreement"), wherein Lender agreed,
among other things, to loan up to $15 million to MUSA to fund
Borrower's operations until the closing of the Securicor
Transaction; and
WHEREAS, Lender, Borrower and MUSA have agreed that
upon the consummation of the Securicor Transaction, the
"Obligations" (as defined in the MUSA Loan Agreement) of MUSA
outstanding under the MUSA Loan Agreement on the date of such
consummation will be assumed by Borrower and become obligations
under this Amended and Restated Loan Agreement (subject to the
terms hereof), as set forth in that certain letter agreement
between the parties, dated September 19, 1996 (the "Intek Loan
Assumption Agreement"); and
WHEREAS, the aggregate amount outstanding under the
MUSA Loan Agreement, including accrued interest thereon, as of
the date hereof, is $5,912,047.22 and
WHEREAS, the parties wish to amend and restate the MUSA
Loan Agreement as set forth herein to, among other things,
confirm the substitution of Borrower as the obligor with respect
to all Obligations (rather than MUSA) and provide for certain
other changes;
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.
"Advance" shall have the meaning ascribed to it in
Section 2.1(a) 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.
"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.
<PAGE>
"Ancillary Agreements" shall mean any and 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.
"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 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.
"Change of Control" shall mean any acquisition,
directly or indirectly, in one transaction or a series of
transactions, by any Person, other than Lender or any Affiliate
thereof, of greater than (i) 50% or more of the issued and
outstanding Common Stock, or (ii) 50% or more of the assets of
Borrower and its Subsidiaries, taken as a whole (including
without limitation the sale by Borrower of the stock of a
Subsidiary or Subsidiaries whose combined assets represent 50% or
more of the assets of Borrower and its Subsidiaries, taken as a
whole).
"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.
"Closing Date" shall mean the date on which all of the
conditions precedent to the effectiveness of this Agreement have
been satisfied.
"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.
"Commitment Termination Date" shall mean December 31,
1997.
<PAGE>
"Common Stock" shall mean common stock, par value
$0.01, of Borrower.
"Composite Prime Rate" shall mean the average of the
rate of interest per annum publicly announced from time to time
by each of The Chase Manhattan Bank, The Bank of New York, N.A.
and Citibank, N.A. as its prime rate in effect at its principal
office in New York City (each change in any such prime rate to be
effective on the date such change is publicly announced).
"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.
"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.
"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
<PAGE>
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 oblig
ations 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 Loan Assumption Agreement" shall have the
meaning ascribed to it in the recitals hereof.
"Letter of Credit Obligations" shall mean all out
standing 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).
<PAGE>
"Loan" shall mean the aggregate amount of Advances
outstanding at any time plus the amount of any interest
capitalized with respect thereto.
"Loan Documents" shall mean this Agreement, the Note,
and any 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 of Borrower and its Subsidiaries (taken as a whole).
"Maximum Lawful Rate" shall have the meaning ascribed
to it, in Section 2.4(c) hereof.
"Midland" shall have the meaning ascribed to it in the
recitals hereof.
"MUSA" shall have the meaning ascribed to it in the
recitals hereof.
"MUSA Loan Agreement" shall have the meaning ascribed
to it in the recitals hereof.
"Net Worth" shall mean the total assets less the total
liabilities of Borrower and its consolidated Subsidiaries as
determined in accordance with GAAP; provided, however, that in no
event shall the par value of the Radiocoms Preferred Stock be
counted as a liability in making such calculation.
"Note" shall have the meaning ascribed to it in Section
2.1(b).
"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 under
any of the Loan Documents.
<PAGE>
"Person" shall mean any individual, sole pro
prietorship, 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.
"Radiocoms Preferred Stock" shall mean the 20,000
shares of Preference Stock of Radiocoms, par value $1,000 per
share, which are issued and outstanding as of the date hereof.
"Repayment Date" means June 30, 2001.
"Securicor Transaction" shall have the meaning ascribed
to it in the recitals hereof.
"Senior Debt" shall mean all Indebtedness of Borrower
(including without limitation all principal of and premium, if
any, and interest on, and all other amounts of any nature
whatsoever owing in respect of such Indebtedness, as the same may
be amended, modified or supplemented and any refinancing thereof
from time to time) other than Indebtedness which, in accordance
with its terms, ranks pari passu or junior to the Loan.
"Senior Indebtedness" shall have the meaning ascribed
to it in Section 10.1 hereof.
"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
<PAGE>
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).
"Subordinated Indebtedness" shall have the meaning
ascribed to it in Section 10.1 hereof.
"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.
"Trademarks" shall mean the Trademarks described on
Schedule 4.12(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 land mobile radio
products bearing the Trademarks within the US LMR Distribution
Territory as conducted by MUSA.
"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
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.
<PAGE>
2. AMOUNT AND TERMS OF CREDIT
2.1. ADVANCES. (a) Upon and subject to the terms and
conditions hereof, Lender shall make available, from time to
time, until the Commitment Termination Date, for Borrower's use
and upon the request of Borrower therefor, advances (each, an
"Advance") in an aggregate amount (which amount shall include all
outstanding Letter of Credit Obligations, whether or not then due
and payable) which shall not exceed $15,000,000 (less the amounts
outstanding as of the Closing Date, as set forth in Section
2.1(b)). Each 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 Advance, by Borrower to Lender and no
Advance shall be requested unless the amount thereof is equal to
the lesser of (i) $500,000 and (ii) a whole number multiple of
$500,000 in excess thereof unless the availability under this
Agreement is less than $500,000 in which case such Advance shall
equal such amount; provided, however, that there shall be no
minimum Advance with respect to any Letter of Credit Obligations
to be incurred pursuant to Section 2.2. Each such notice (a
"Notice of Advance") shall be in writing in substantially the
form of Exhibit A hereto, executed by any duly authorized officer
of Borrower, 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 Advance, upon fulfillment of
the applicable conditions set forth in Section 3, wire to a bank
in the United States or the United Kingdom designated by Borrower
and reasonably acceptable to Lender the amount of such Advance.
(b) The Loan made by Lender shall be evidenced by a
promissory note to be executed and delivered by Borrower at or
prior to the Closing Date, the form of which is attached hereto
and made a part hereof as Exhibit B (the "Note"). The Note shall
be payable to the order of Lender and shall represent the
obligation of Borrower to pay the amount of the Loan, with
interest thereon as prescribed in Section 2.4. The date and
amount of each Advance and each payment of principal and interest
or any 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. Borrower acknowledges that,
(i) as of the date hereof, the amount outstanding under the MUSA
Loan Agreement is $5,912,047.22, (ii) that such amount
constitutes the amount outstanding under this Agreement as of the
date hereof, and (iii) that the amount of the Loan shall be
increased by the amount of any payments on or pursuant to any
Letter of Credit Obligations that Lender incurred pursuant to the
MUSA Loan Agreement, regardless of the date of such payments.
The entire unpaid balance of the Loan 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
<PAGE>
Date, of such Letters of Credit supporting obligations of
Borrower or its Subsidiaries, as Borrower shall request by
written notice to Lender executed by any duly authorized officer
of Borrower, 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 or its Subsidiaries, additional
Letter of Credit Obligations in respect of Letters of Credit
supporting obligations of Borrower or its Subsidiaries;
PROVIDED, HOWEVER, that no such Letter of Credit shall have an
expiry date which is after March 31, 1998. 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 an Advance under Section
2.1(a) hereof (whether or not Borrower is then permitted to
request Advances at such time).
(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
arrears, on the first day of each month for the preceding month.
2.3. USE OF PROCEEDS. Borrower shall apply the
proceeds of the Advances for the general corporate purposes of
Borrower and its Subsidiaries.
2.4. INTEREST ON LOAN. (a)(i) From the Closing Date
through and including the Commitment Termination Date, interest
accrues on the amount outstanding from time to time under the
Loan at the Composite Prime Rate plus one percent (1%) per annum,
calculated on the basis of a 360 day year for the number of days
elapsed. Interest will be capitalized on the Commitment
Termination Date and shall be added to the principal amount
outstanding at such time under the Loan.
(ii) Following the Commitment Termination Date,
interest accrues on the amount outstanding from time to time
under the Loan at the rate of 11% per annum, calculated on the
basis of a 360 day year for the number of days elapsed. Interest
will be capitalized on a monthly basis and shall be added to the
principal amount outstanding from time to time under the Loan.
Interest accrued and uncapitalized on the Repayment Date shall be
payable on such date.
<PAGE>
(b) So long as any Event of Default shall be
continuing, the interest rate applicable to the 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, the applicable rate of interest under this
Agreement 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 applicable rate of interest
under this Agreement 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
applicable rate of interest under this Agreement 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 applicable rate of interest under this
Agreement, unless and until such rate shall again exceed the
Maximum Lawful Rate, in which event this paragraph shall again
apply.
2.5. PREPAYMENTS. (a) Upon the occurrence of a Change
of Control of Borrower, the commitment of Lender to make Advances
under this Agreement shall immediately terminate, and Borrower
shall immediately pay to Lender the full amount of the Loan then
outstanding, together with any accrued but uncapitalized interest
thereon.
(b) Borrower shall have the right, at any time, to
prepay the Loan, in whole or in part, without premium or penalty,
upon at least three Business Days irrevocable notice to Lender
specifying (i) the amount to be repaid and (ii) the date of such
repayment. If any such notice is given, Borrower shall make the
prepayment specified therein, and such prepayment shall be due
and payable as specified therein. Amounts prepaid may not be
reborrowed. Each partial prepayment of the Loan pursuant to this
Section 2.5(b) shall be in an amount equal to the lesser of
$500,000 or a whole number multiple of $500,000 in excess thereof
or such lesser amount outstanding.
2.6. RECEIPT OF PAYMENTS. 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
<PAGE>
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
amount of the 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 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 Advances constituting part of
the Loan hereunder.
2.8. ACCOUNTING. Lender will, upon Borrower's
request, provide a monthly accounting of transactions under the
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 mani
fest 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,
proceeding, claim, damage, loss, liability or expense results
from such Indemnified Person's negligence or willful misconduct.
<PAGE>
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").
(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
<PAGE>
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 11.10, the original or a certified copy of a
receipt evidencing payment thereof.
(e) 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 Note and (ii) the termination of this Agreement.
3. CONDITIONS PRECEDENT
3.1. CONDITIONS TO THE EFFECTIVENESS. Notwithstanding
any other provision of this Agreement and without affecting in
any manner the rights of Lender under the MUSA Loan Agreement,
this Agreement shall not be effective, and Borrower shall have no
rights under this Agreement, and Lender shall not be obligated to
make available any Advance or Letter of Credit hereunder, unless
and until Borrower shall have delivered to Lender, in form and
substance satisfactory to Lender and (unless otherwise indicated)
each dated not later than the Closing Date:
(a) The Note to the order of Lender duly executed by
Borrower.
(b) Resolutions of the board of directors of Borrower
certified by the Secretary or Assistant Secretary of Borrower, 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.
(c) A copy of the organizational charter and all
amendments thereto of Borrower and each of its Subsidiaries,
certified as of a recent date by the Secretary of State of the
jurisdiction of its organization, and copies of Borrower's by-
laws, certified by the Secretary or Assistant Secretary of
Borrower as true and correct as of the Closing Date.
(d) Governmental certificates, dated the most recent
practicable date prior to the Closing Date, with telegram updates
where available, showing that the Borrower and each of its
Subsidiaries 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.
(e) (i) Copies of all closing documents and
certificates delivered in connection therewith; and
<PAGE>
(ii) a certificate from the chief executive
officer of Borrower certifying that the transactions
contemplated by the Stock Agreement have been
completed.
(f) 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 any Advance, if made on the Closing Date, which
constitutes or would constitute a Default or an Event of Default.
(g) Certificates of the Secretary or an Assistant
Secretary of Borrower, dated the Closing Date, as to the
incumbency and signatures of the officers of, respectively,
Borrower 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.
(h) 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 ADVANCE AND LETTER OF
CREDIT. It shall be a further condition to the funding of each
subsequent Advance and incurrence of Letter of Credit Obligations
that the following statements shall be true on the date of each
such Advance or incurrence:
(a) All of the representations and warranties of
Borrower 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 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 contem
plated by this Agreement.
(b) No event shall have occurred and be continuing, or
would result from the funding of any Advance, which constitutes
or would constitute a Default or an Event of Default.
(c) The aggregate principal amount of the Advances
made to Borrower hereunder after giving effect to such Advance,
plus the aggregate amount of all outstanding Letter of Credit
Obligations (whether or not then due or payable), shall not
exceed $15,000,000.
The acceptance by Borrower of the proceeds of any
Advance or the incurrence by Lender of Letter of Credit
Obligations shall be deemed to constitute, as of the date of such
<PAGE>
acceptance, a representation and warranty by Borrower that the
conditions in this Section 3.2 have been satisfied.
4. REPRESENTATIONS AND WARRANTIES
To induce Lender to make the 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 and each Subsidiary of 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 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 location of Borrower's
executive offices and principal place of business is set forth in
Schedule 4.2 hereto, and, after the Closing Date, as set forth in
a written amendment thereto delivered by Borrower to Lender.
4.3. SUBSIDIARIES. There exist, and upon consummation
of the Securicor Transaction there shall exist, no Subsidiaries
of Borrower other than (a) as set forth on Schedule 4.3 hereto,
which sets forth such Subsidiaries, together with their
respective jurisdictions of organization, and the authorized and
outstanding capital Stock of each such Subsidiary, by class and
number and percentage of each class legally owned by Borrower or
a Subsidiary of Borrower or any other Person, or to be owned by
the Closing Date or (b) after the Closing Date, as set forth in a
written amendment to Schedule 4.3 delivered by Borrower to
Lender. There are no options, warrants, rights to purchase or
similar rights covering capital Stock for any such Subsidiary.
4.4. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Borrower
of the Loan Documents, Ancillary Agreements and all instruments
<PAGE>
and documents to be delivered by Borrower, to the extent it is a
party thereto, hereunder and thereunder: (i) are within
Borrower's corporate power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in con
travention 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 or any of its Subsidiaries is
a party or by which Borrower or any of its Subsidiaries or any of
their respective properties is bound; (vi) will not result in the
creation or imposition of any Lien upon any of the property of
Borrower or any of its Subsidiaries; 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 assumption
by Borrower of MUSA's obligation under the MUSA Loan Agreement
and the initial Advance, if made on the Closing Date, and the
payment of all estimated legal, investment banking, accounting
and other fees related hereto or to the Stock Agreement, 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 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. Neither Borrower nor any
of its Subsidiaries is 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 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. Neither Borrower nor any of
its Subsidiaries owns 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 Advances will be used only for the purposes
contemplated hereunder. The Advances will not be used, directly
<PAGE>
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
Subsidiary or 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 or any of its Subsidiaries 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. STOCK AGREEMENT. The closing of the Securicor
Transaction and the consummation of the transactions contemplated
thereby will occur immediately prior to the Closing Date.
4.11. HITACHI SUPPLY AGREEMENT. MUSA is a "Midland
Affiliate" under the Hitachi Supply Agreement and entitled to
make purchases thereunder.
4.12. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.
Borrower and each of its Subsidiaries 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 4.12(a) hereto. Further, (i) Borrower
and each of its Subsidiaries has good and lawful title to the
Intangible Property owned by it (subject to the licenses set
forth on Schedule 4.12(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.
4.13. NO MATERIAL ADVERSE EFFECT. No event has
occurred and is continuing which has had or could have a Material
Adverse Effect.
<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
Commitment Termination Date, it shall deliver to Lender:
(a) Within 45 days after the end of each fiscal
quarter, (i) a copy of the unaudited consolidated balance sheets
of Borrower as of the end of such month and the related state
ments 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 consolidated 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 or any of
its Subsidiaries.
(d) Such other information respecting Borrower's or
its Subsidiaries' 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 (or any of its
Subsidiaries') 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 or any of its Subsidiaries. At 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.
<PAGE>
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 the corporate
existence, and the rights and franchises of Borrower and each of
its Subsidiaries; (b) transact business on behalf of itself or
any Subsidiary 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. (a) Borrower shall:
(i) pay and discharge or cause to be paid and discharged all its
and its Subsidiaries' 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.
(b) Borrower, on behalf of itself or any Subsidiary,
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) no Lien shall exist for such Charges or
claims during such action or proceeding; (iv) 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 (v) Lender has not
advised Borrower in writing that Lender reasonably believes that
nonpayment or nondischarge thereof would have a Material Adverse
Effect.
(c) 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.
<PAGE>
6.3. BOOKS AND RECORDS. Borrower shall keep, and
shall cause its Subsidiaries to keep, all 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 or any of its Subsidiaries, 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 of Borrower and its Subsidiaries, all in
amounts customary for its business and in any event with a
lender's loss payable clause for the benefit of Lender.
6.6. COMPLIANCE WITH LAW. Borrower shall, and shall
cause its Subsidiaries to, 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.
6.8. NET WORTH. Borrower shall maintain at all times,
on a consolidated basis with its Subsidiaries, a Net Worth of not
less than $20 million.
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. MAINTENANCE OF BUSINESS. Borrower shall not and
shall not permit any of its subsidiaries to engage in any
business other than the business currently engaged in by Borrower
or such Subsidiary.
7.2. TRANSACTIONS WITH AFFILIATES. (a) Except as set
forth on Schedule 7.2(b), Borrower shall not, and shall not
<PAGE>
permit any of its Subsidiaries to, enter into or be a party to
any transaction with any Affiliate of Borrower, other than with
Securicor, and then only in the ordinary course of and pursuant
to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms that are fully
disclosed to Lender and are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of Borrower.
(b) Except as set forth on Schedule 7.2(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.
7.3. EVENTS OF DEFAULT. Borrower shall not, and shall
not permit any of its Subsidiaries to, 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.
8. TERM
8.1. TERMINATION. Subject to the provisions of
Section 2 hereof, the financing arrangement contemplated hereby
in respect of the Loan shall be in effect until the Commitment
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
<PAGE>
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 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 6.8 or 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.
(d) A default shall occur under any other agreement,
document or instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower's or any of its
Subsidiaries' property is bound, and such default 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 of the assets of Borrower or any of its
Subsidiaries 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 or any Subsidiary 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 or any Subsidiary of Borrower and shall remain unstayed
or undismissed for thirty (30) consecutive days; or Borrower or
any Subsidiary of 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.
<PAGE>
(g) A case or proceeding shall have been commenced
against Borrower or any Subsidiary of Borrower in a court having
competent jurisdiction seeking a decree or order in respect of
Borrower or any Subsidiary 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
other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or any Subsidiary 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 or any
Subsidiary 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.
(h) Borrower or any Subsidiary of 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 any Subsidiary of Borrower or of any
substantial part of its or their 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.
9.2. REMEDIES. If any Event of Default specified in
Section 9.1 shall have occurred and be continuing, Lender may, by
written notice to Borrower and the lender with respect to any
Senior Debt (the "Senior Lender") declare all Obligations to be
forthwith due and payable, whereupon all such Obligations,
without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by Borrower, shall become
due and payable (x) if none of the Senior Debt is outstanding,
immediately and (y) if any Senior Debt is outstanding, upon the
first to occur of (1) acceleration of any Senior Debt or (2) the
fifth Business Day after receipt by Borrower and the Senior
Lender of such written notice given hereunder, unless on or prior
to the date such amounts become due and payable Borrower shall
have cured the default, event or condition resulting in such
Event of Default and no other Event of Default is then continuing
and Borrower shall have given notice of such cure to Agent and
Lenders; provided, however, that upon the occurrence of an Event
of Default specified in Section 9.1(f), (g) or (h) hereof, such
Obligations shall become due and payable without declaration,
notice or demand by Lender. Notwithstanding the above, at any
time after such declaration of acceleration has been made and
before payment in full of the Obligations, Lender, by written
notice to Borrower, may rescind and annul such declaration and
its consequences if all Events of Default, other than the non-
payment of principal of the Loan which has become due solely by
such declaration of acceleration, have been cured or waived.
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, 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. SUBORDINATION
10.1. LOAN SUBORDINATED TO SENIOR INDEBTEDNESS.
Borrower covenants and agrees, and Lender likewise covenants and
agrees, that all payments of the principal of (and premium, if
any), and interest on, the Loan and all other Obligations by
Borrower pursuant to this Agreement (collectively the
"Subordinated Indebtedness") shall be subordinated in accordance
with the provisions of this Section 10 to the prior payment in
full of all Senior Indebtedness of Borrower. For purposes of
this Section 10, the term "Senior Indebtedness" shall mean the
Senior Debt of Borrower and shall include principal of and
<PAGE>
premium, if any, and interest (including interest accruing at the
rate provided for in the documents evidencing such Senior
Indebtedness after the commencement of any proceeding of the type
referred to in Section 10.2(a) hereof, whether or not an allowed
claim in such proceeding) on all loans and other extensions of
credit under, and all expenses, fees, reimbursements, indemnities
and other amounts owing pursuant to, all such Senior Debt of the
Borrower.
10.2. PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN
EVENTS.
(a) Upon payment or distribution of assets or
securities of Borrower of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or
total or partial liquidation or reorganization of Borrower,
whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings or upon an assignment for the
benefit of creditors or any other marshalling of the assets and
liabilities of Borrower, all Senior Indebtedness shall first be
paid in full in cash, or payment provided for in cash or cash
equivalents in a manner satisfactory to the holders of Senior
Indebtedness, before any direct or indirect payments or
distributions, including, without limitation, by exercise of set-
off, of any cash, property or securities on account of principal
of (or premium, if any) or interest on the Subordinated Notes and
to that end the holders of Senior Indebtedness shall be entitled
to receive (pro rata on the basis of the respective amounts of
Senior Indebtedness held by them) directly, for application to
the payment thereof (to the extent necessary to pay all Senior
Indebtedness in full after giving effect to any substantially
concurrent payment or distribution to or provision for payment to
the holders of such Senior Indebtedness), any payment or
distribution of any kind or character, whether in cash, property
or securities, in respect of the Subordinated Indebtedness. The
holders of Senior Indebtedness are hereby authorized to file an
appropriate claim for and on behalf of Lender if they or any of
them do not file, and there is not otherwise filed on behalf of
the Holders, a proper claim or proof of claim in the form
required in any such proceeding prior to 30 days before the
expiration of the time to file such claim or claims.
(b) No direct or indirect payment by or on behalf of
Borrower of principal of (premium, if any), or interest on, the
Loan, whether pursuant to the terms of this Agreement, upon
acceleration or otherwise, shall be made if at the time of such
payment there exists (i) a default in the payment of all or any
portion of principal of (premium, if any), interest on, fees or
other amounts owing in connection with any Senior Indebtedness,
or (ii) any other default or event of default under any document
or instrument evidencing the Senior Indebtedness as the same may
be amended, modified or otherwise refinanced (and Lender has
received notice thereof from the agent for or representative of
the holders of a majority of the outstanding principal amount of
<PAGE>
the Senior Indebtedness (the "Representative") as provided
below), and in either case such default or event of default shall
not have been cured or waived in writing; provided, however, that
if within the period specified in the next sentence with respect
to a default or event of default referred to in clause (ii)
above, the holders of Senior Indebtedness have not declared the
Senior Indebtedness to be immediately due and payable (or have
declared such Senior Indebtedness to be immediately due and
payable and within such period have rescinded such acceleration),
then and in that event, payment of principal of, and interest on,
the Loan shall be resumed. With respect to any default or event
of default under clause (ii) above the period referred to in the
preceding sentence shall commence upon receipt by Lender of a
written notice or notices (which shall specify all defaults and
events of default existing under such documents or instruments on
the date of such notice and of which the Representative,
whichever is giving such notice, had actual knowledge at such
time) of the commencement of such period from the Representative,
and shall end at the completion of the 180th day after the
beginning of such period. Only one such 180 day period may
commence within any 360 consecutive days. Upon termination of
any such period, Borrower shall resume payments on account of the
principal of (premium, if any), and interest on, the Loan, and on
account of all other Subordinated Indebtedness, subject to the
provisions of Sections 10.1 and 10.2 hereof.
(c) (i) In the event that, notwithstanding the
foregoing provision prohibiting such payment or
distribution, Lenders shall have received any payment
on account of the Subordinated Indebtedness at a time
when such payment is prohibited by such provision
before the Senior Indebtedness is paid in full, then
and in such event, such payment or distribution shall
be received and held in trust by Lender apart from its
other assets and paid over or delivered to the holders
of the Senior Indebtedness remaining unpaid to the
extent necessary to pay in full in cash the principal
of (premium, if any), and interest on, such Senior
Indebtedness in accordance with its terms and after
giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness.
(ii) Nothing contained in this Section 10 will
limit the right of the Lender to take any action to
accelerate the maturity of the Subordinated
Indebtedness pursuant to Section 9.2 hereof.
(iii) Upon any payment or distribution of assets or
securities referred to in this Section 10, Lender shall
be entitled to rely upon any order or decree of a court
of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings
are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or
<PAGE>
other person making any such payment or distribution,
delivered to Lender for the purpose of ascertaining the
persons entitled to participate in such distribution,
the holders of Senior Indebtedness and other
Indebtedness of Borrower, the amount thereof or payable
thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to
this Section 10.
10.3. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO
BE IMPAIRED. No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act
or failure to act by any such holder, or by any noncompliance by
Borrower with the terms and provisions and covenants herein
regardless of any knowledge thereof such holder may have or
otherwise be charged with.
The provisions of this Section 10 are intended to be
for the benefit of, and shall be enforceable directly by, the
holders of the Senior Indebtedness. Borrower and Lender
acknowledges that the holders of the Senior Indebtedness are or
will be relying upon the provisions of this Section 10 in
extending such Senior Indebtedness.
10.4. SUBROGATION. Upon the payment in full of all
Senior Indebtedness, Lender shall be subrogated to the extent of
the payments or distributions made to the holders of, or
otherwise applied to payment of, the Senior Indebtedness pursuant
to the provisions of this Section 10 and to the rights of the
holders of Senior Indebtedness to receive payments or
distributions of assets of Borrower made on the Senior
Indebtedness until Loan shall be paid in full; and for the
purposes of such subrogation, no payments or distributions to
holders of Senior Indebtedness of any cash, property or
securities to which Lender would be entitled except for the
provisions of this Section 10, and no payment over pursuant to
the provisions of this Section 10 to holders of Senior
Indebtedness by Lender, shall, as between Borrower, their
creditors other than holders of Senior Indebtedness and Lender,
be deemed to be payment by Borrower to or on account of Senior
Indebtedness, it being understood that the provisions of this
Section 10 are solely for the purpose of defining the relative
rights of the holders of Senior Indebtedness, on the one hand,
and Lender, on the other hand.
If any payment or distribution to which Lender would
otherwise have been entitled but for the provisions of this
Section 10 shall have been applied, pursuant to the provisions of
this Section 10, to the payment of Senior Indebtedness, then and
in such case, Lender shall be entitled to receive from the
holders of Senior Indebtedness at the time outstanding any
payments or distributions received by such holders of Senior
<PAGE>
Indebtedness in excess of the amount sufficient to pay all Senior
Indebtedness in full.
10.5. OBLIGATIONS OF BORROWER UNCONDITIONAL. Nothing
contained in this Section 10 or elsewhere in this Agreement or in
the Note is intended to or shall impair, as between Borrower and
Lender, the obligations of Borrower, which are absolute and
unconditional, to pay to Lender the principal of (premium, if
any), and interest on, the Loan as and when the same shall become
due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of Lender and creditors of
Borrower other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by applicable law
upon the occurrence of a default or event of default under this
Agreement, subject to the rights, if any, under this Section 10
of the holders of Senior Indebtedness in respect of cash,
property or securities of Borrower received upon the exercise of
any such remedy.
The failure to make a payment on account of principal
of, or interest on, the Loan by reason of any provision of this
Section 10 shall not be construed as preventing the occurrence of
a Default or an Event of Default hereunder.
10.6. NOTICE TO LENDER. Borrower shall give prompt
written notice to Lender of any fact known to Borrower which
would prohibit the making of any payment on or in respect of the
Loan, but failure to give such notice shall not affect the
subordination of the Subordinated Indebtedness to the Senior
Indebtedness provided in this Section 10. Notwithstanding the
provisions of this Section 10 or any other provision of this
Agreement or the Loan, Lender shall not be charged with knowledge
of the existence of any facts which would prohibit the making of
any payment to or in respect of the Loan, unless and until Lender
shall have received written notice thereof from Borrower, the
Representative or other holder of Senior Indebtedness, and, prior
to the receipt of any such written notice, subject to the
provisions of this Section 10, Lender shall be entitled in all
respects to assume no such facts exist. Nothing contained in
this Section 10.6 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by Sections 10.1
and 10.2.
10.7. RIGHT OF LENDER AS HOLDER OF SENIOR
INDEBTEDNESS. Lender in its individual capacity shall be
entitled to all the rights set forth in this Section 10 with
respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Agreement shall deprive Lender
of any of its rights as such holder.
10.8. REINSTATEMENT. The provisions of this Section
10 shall continue to be effective or be reinstated, and the
<PAGE>
Senior Indebtedness shall not be deemed to be paid in full, as
the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization
of the Borrower or otherwise, all as though such payment had not
been made.
11. MISCELLANEOUS
11.1. 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 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 Note Borrower shall, upon the request of
Lender, issue a new Note to effectuate such assignment or
transfer.
11.2. FEES AND EXPENSES. If, at any time or times,
regardless of the existence of an Event of Default, 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 any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Lender,
Borrower or any other Person) in any way relating to any of the
Loan Documents or any other agreements to be executed or
delivered in connection herewith, 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, such expenses, costs,
charges and fees may include: paralegal fees, costs and
expenses; accountants' and investment bankers' fees, costs and
<PAGE>
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.
11.3. NO WAIVER BY LENDER. Lender's failure, at any
time or times, to require strict performance by Borrower 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 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 specifying such suspension or
waiver.
11.4. 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.
11.5. 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.
11.6. 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.
11.7. 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.
11.8. 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
<PAGE>
inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
11.9. 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 11.10 HEREOF. NOTHING HEREIN SHALL
PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
11.10. 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:
(a) If to Lender at:
15 Carshalton Road
Sutton
Surrey SM1 4LD
England
Attention: Edmund Hough
Telecopy No. (0181) 661 0205
With copies to:
Weil, Gotshal & Manges LLP
99 Bishopsgate
London, EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy No. 0171 426 0990
(b) If to Borrower, at:
<PAGE>
Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrance
California 90502
Attention: David Neibert
Telecopy No. 310 366 7712
With copies to:
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
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.
11.11. 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.
11.12. 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.
11.13. COUNTERPARTS. This Agreement may be executed
in any number of separate counterparts, each of which shall,
collectively and separately, constitute one agreement.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date first written above.
<PAGE>
INTEK DIVERSIFIED CORPORATION
By:_______________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:_______________________________
Name:
Title
The undersigned hereby guarantees to Borrower the performance by
Lender of all of its obligations under this Agreement.
SECURITY SERVICES PLC
By:_______________________________
Name:
Title:
Date: December 3, 1996
<PAGE>
SCHEDULE 4.1
CORPORATE MATTERS
4.1(ii) Qualified to Do Business
Midland USA, Inc. is not qualified to do business in the
states of Massachusetts and Texas.
<PAGE>
SCHEDULE 4.2
EXECUTIVE OFFICES
The executive offices and principal place of business of Intek
Diversified Corporation are located at 970 West 190th Street,
Torrance, California 90502.
<PAGE>
SCHEDULE 4.3
SUBSIDIARIES
<TABLE>
Percentage of
Jurisdiction of Classes of Number of Shares Issued Class Owned by
Name of Subsidiary Incorporation Capital Stock and Outstanding Borrower
- - - ------------------ --------------- ------------- ----------------------- --------------
<S> <C> <C> <C> <C>
Roamer One, Inc. Delaware common stock 100 100%
Midland USA, Inc. Delaware common stock 100 100%
Olympic Plastics
Company, Inc. California common stock 253,164 100%
IMCX Corporation California common stock 100 100%
IDC International
Corporation Florida common stock 1,000 100%
</TABLE>
<PAGE>
SCHEDULE 4.12
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
4.12(a) Patents
Midland USA, Inc.:
US Patent Number 4,718,586 (Swivel Fastening Device)
4.12(b) Trademarks
Midland USA, Inc.:
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.
Roamer One, Inc.:
The trademark "ROAMER R and design" Reg. No. 1,494,062,
first registered June 28, 1988.
The trademark "ROAMER R and design" Reg. No. 1,494,063,
first registered June 28, 1988.
The trademark "ROAMER" Reg. No. 1,494,064, first
registered June 28, 1988.
The trademark "R and design" Reg. No. 1,599,916, first
registered June 5, 1990.
The trademark "RoameR" Reg. No. 1,625,235, first
registered on November 27, 1990.
The trademark "ROAMER" Reg. No. 1,634,393, first
registered on February 5, 1991.
The trademark "RENT-A-ROAMER and . . ." Reg. No.
1,635,737, first registered on February 19, 1991.
The trademark "ROAMER ONE", serial number 74/198,033.
The application for this trademark has been approved
and will be issued shortly.
The trademark "ROAMER", Canadian Reg. No. 594,735.
4.12(c) Copyrights
None
<PAGE>
4.12(d) Licenses
Midland USA, Inc.:
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>
SCHEDULE 7.2(b)
CERTAIN TRANSACTIONS
Any management or consulting agreement referenced in the
Borrower's Proxy Statement, dated November 8, 1996, under the
caption "Certain Relationships and Related Transactions."
<PAGE>
EXHIBIT A
NOTICE OF ADVANCE
_____________, 199_
Securicor Communications Limited
15 Carshalton Road
Sutton, Surrey
SM1 4LDAttention:Michael Wilkinson
Gentlemen:
The undersigned, INTEK DIVERSIFIED CORPORATION, refers
to the Amended and Restated Loan Agreement, dated as of December
3, 1996 (the "Loan Agreement", the terms defined therein being
used herein as therein defined), between the undersigned and
SECURICOR COMMUNICATIONS LIMITED, and hereby gives you notice,
irrevocably, pursuant to Section 2.1 of the Loan Agreement, that
the undersigned hereby requests an Advance under the Loan
Agreement, and in that connection sets forth below the
information relating to such Advance as required by Section
2.1(a) of the Loan Agreement:
(i) The date of the requested Advance shall be
_______________, 199_.
(ii) The aggregate amount of the requested Advance
is $___________ (minimum: $500,000).
(iii) The Advance shall be used solely as permitted
by Section 2.3 of the Loan Agreement.
<PAGE>
The undersigned hereby certifies that the statements
contained in Section 3.2 of the Loan Agreement are true on the
date hereof, and will be true on the date of the requested
Advance, before and after giving effect thereto and to the
application of the proceeds therefrom.
Very truly yours,
INTEK DIVERSIFIED CORPORATION
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
SECTION Page
1. DEFINITIONS.......................................................2
2. AMOUNT AND TERMS OF CREDIT........................................9
2.1. ADVANCES.................................................9
2.2. LETTERS OF CREDIT...........................................9
2.3. USE OF PROCEEDS.............................................10
2.4. INTEREST ON LOAN............................................10
2.6. RECEIPT OF PAYMENTS.........................................11
2.7. APPLICATION OF PAYMENTS.....................................12
2.8. ACCOUNTING..................................................12
2.9. INDEMNITY...................................................12
2.10. ACCESS.....................................................13
2.11. TAXES......................................................13
3. CONDITIONS PRECEDENT..............................................14
3.1. CONDITIONS TO THE EFFECTIVENESS.............................14
3.2. FURTHER CONDITIONS TO EACH ADVANCE
AND LETTER OF CREDIT....................................15
4. REPRESENTATIONS AND WARRANTIES....................................16
4.1. CORPORATE EXISTENCE;
COMPLIANCE WITH LAW.....................................16
4.2. EXECUTIVE OFFICES...........................................16
4.3. SUBSIDIARIES................................................16
4.4. CORPORATE POWER; AUTHORIZATION;
ENFORCEABLE OBLIGATIONS.................................16
4.5. SOLVENCY....................................................17
4.6. LABOR MATTERS...............................................17
4.7. INVESTMENT COMPANY ACT......................................17
4.8. MARGIN REGULATIONS..........................................17
4.9. NO LITIGATION...............................................18
4.10. STOCK AGREEMENT............................................18
4.11. HITACHI SUPPLY AGREEMENT...................................18
4.12. PATENTS, TRADEMARKS,
COPYRIGHTS AND LICENSES................................18
4.13. NO MATERIAL ADVERSE EFFECT.................................18
5. FINANCIAL STATEMENTS AND
INFORMATION.......................................................19
5.1. REPORTS AND NOTICES.........................................19
5.2. COMMUNICATION WITH ACCOUNTANTS..............................19
6. AFFIRMATIVE COVENANTS.............................................20
6.2. PAYMENT OF OBLIGATIONS......................................20
6.3. BOOKS AND RECORDS...........................................21
6.4. LITIGATION..................................................21
6.5. INSURANCE...................................................21
6.6. COMPLIANCE WITH LAW.........................................21
6.7. SUPPLEMENTAL DISCLOSURE.....................................21
6.8. NET WORTH...................................................21
7. NEGATIVE COVENANTS................................................21
7.1. MAINTENANCE OF BUSINESS.....................................21
7.2. TRANSACTIONS WITH AFFILIATES................................21
<PAGE>
7.3. EVENTS OF DEFAULT...........................................22
8. TERM .............................................................22
8.1. TERMINATION.................................................22
8.2. SURVIVAL OF OBLIGATIONS UPON
TERMINATION
OF FINANCING ARRANGEMENT................................22
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES............................22
9.1. EVENTS OF DEFAULT...........................................23
9.2. REMEDIES....................................................24
9.3. WAIVERS BY BORROWER.........................................25
9.4. RIGHT OF SET-OFF............................................25
10. SUBORDINATION.........................................................25
10.1. LOAN SUBORDINATED TO SENIOR
INDEBTEDNESS...........................................25
10.2. PRIORITY AND PAYMENT OVER OF
PROCEEDS IN CERTAIN EVENTS.............................26
10.3. RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS NOT TO BE IMPAIRED........................28
10.4. SUBROGATION................................................28
10.5. OBLIGATIONS OF BORROWER UNCONDITIONAL......................29
10.6. NOTICE TO LENDER...........................................29
10.7. RIGHT OF LENDER AS HOLDER OF SENIOR
INDEBTEDNESS...........................................29
10.8. REINSTATEMENT..............................................29
11. MISCELLANEOUS.....................................................30
11.1. COMPLETE AGREEMENT; MODIFICATION OF
AGREEMENT; SALE OF INTEREST............................30
11.2. FEES AND EXPENSES..........................................30
11.3. NO WAIVER BY LENDER........................................31
11.4. REMEDIES...................................................31
11.5. WAIVER OF JURY TRIAL.......................................31
11.6. SEVERABILITY...............................................31
11.7. PARTIES....................................................31
11.8. CONFLICT OF TERMS..........................................31
11.9. GOVERNING LAW..............................................32
11.10. NOTICES...................................................32
11.11. SURVIVAL..................................................33
11.12. SECTION TITLES............................................33
11.13. COUNTERPARTS..............................................33
<PAGE>
SCHEDULES
Schedule 4.1 Corporate Matters
Schedule 4.2 Executive Office
Schedule 4.3 Subsidiaries
Schedule 4.12 Patents, Trademarks, Copyrights and Licenses
Schedule 7.3 Certain Transactions
EXHIBITS
Exhibit A-Form of Notice of Advance
Exhibit B-Form of Note
<PAGE>
$15,000,000
AMENDED AND RESTATED
LOAN AGREEMENT
Dated as of December 3, 1996
between
INTEK DIVERSIFIED CORPORATION
as Borrower
and
SECURICOR COMMUNICATIONS LIMITED
as Lender
PROMISSORY NOTE
$15,000,000 New York, New York
December 3, 1996
FOR VALUE RECEIVED, the undersigned, INTEK DIVERSIFIED
CORPORATION, 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
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 of outstanding Advances under the
Loan Agreement (as hereinafter defined) PLUS the unpaid amount of
any capitalized interest arising pursuant to the terms of the
Loan Agreement, together with interest on the unpaid principal
amount of this Note (including capitalized interest) outstanding
from time to time from the date hereof at the rate or rates
provided in the Loan Agreement.
This Note is issued pursuant to that certain Amended
and Restated Loan Agreement dated as of December 3, 1996 between
Borrower and Lender (the "Loan Agreement"), to which reference is
hereby made for a statement of all of the terms and conditions
under which the Advances evidenced hereby are 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 the Commitment Termination
Date and thereafter on a monthly basis. All accrued interest
(whether or not capitalized) shall be due and payable on the
Repayment Date.
If any payment on this 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.
The rights of Lender under this Note are subordinate
and junior to the rights of the holders of Senior Debt, as
defined in, and to the extent set forth in, Article 10 of the
Loan Agreement. This Note is subject to the provisions of such
<PAGE>
Article 10, and any payment pursuant hereto shall be made in
accordance with the provisions thereof.
Upon and after the occurrence of an Event of Default,
this Note may, as provided in the Loan Agreement, and without
demand, notice or legal process of any kind, be declared or may
automatically become, and immediately shall become, due and
payable.
Demand, presentment, protest and notice of nonpayment
and protest are hereby waived by Borrower.
THIS 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.
INTEK DIVERSIFIED CORPORATION
By:________________________________
Name:
Title:
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