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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 17)*
Intek Diversified Corporation
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
458134 10 3
--------------
(CUSIP Number)
Nicholas R. Wilson
Chairman
Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrance, California 90502
(310) 366-7335
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 18, 1996
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement o. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 3d-(a) for other parties to whom copies are to be sent.
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The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 458134 10 3 13D PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Simmonds Capital Limited
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC; OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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7 SOLE VOTING POWER
3,010,850
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY --
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
3,010,850
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10 SHARED DISPOSITIVE POWER
--
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,010,850
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.75%
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14 TYPE OF REPORTING PERSON*
CO
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 6 Pages
CUSIP NO. 458134 10 3
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SCHEDULE 13D
The Schedule 13D filed on March 7, 1994 (the "Schedule 13D") and
amended on March 29, 1994 ("Amendment No. 1"), on July 22, 1994 ("Amendment No.
2"), on September 23, 1994 ("Amendment No. 3"), on April 10, 1995 ("Amendment
No. 4"), on May 10, 1995 ("Amendment No. 5"), on June 5, 1995 ("Amendment No.
6"), on June 9, 1995 ("Amendment No. 7"), on June 26, 1995 ("Amendment No. 8"),
on July 10, 1995 ("Amendment No. 9"), on August 9, 1995 ("Amendment No. 10"), on
November 27, 1995 ("Amendment No. 11"), on March 18, 1996 ("Amendment No. 12"),
on April 8, 1996 ("Amendment No. 13"), on April 16, 1996 ("Amendment No. 14"),
on April 23, 1996 ("Amendment No. 15"), and on June 10, 1996 ("Amendment No.
16") on behalf of Simmonds Capital Limited ("SCL") is hereby further amended as
follows:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
Subparagraph (h) of Item 3 is hereby amended by deleting the second,
third and fourth sentences thereof in their entirety and by adding the following
reference to the end thereof:
Reference is made to Item 4 - "WIRELESS COMMUNICATION'S MERGER" of this
Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
Item 4 is hereby amended by deleting therefrom the first paragraph of
the section entitled "WIRELESS COMMUNICATIONS MERGER" in its entirety, and
inserting in its stead the following:
WIRELESS COMMUNICATION'S MERGER. On June 18, 1996, pursuant to the
March 7, 1996 Letter of Intent, SCL, Midland International Corporation
("Midland"), a Delaware corporation and wholly owned indirect
subsidiary of SCL through which SCL operates, among other business, its
U.S. wireless communication's business, and Intek entered into a Sale
of Assets and Trademark License Agreement (the "Sale of Assets and
Trademark License Agreement," a copy of which is attached hereto as
EXHIBIT Z and is incorporated herein in its entirety) pursuant to which
Intek is to acquire Midland's U.S. LMR Distribution and an exclusive
license to sell and distribute LMR Products under Midland's trademark
in the United States, its territories and possessions, in exchange for
the issuance of 2,500,000 shares of Common Stock to Midland. The terms
"U.S. LMR Distribution" and "LMR Products" are defined in Section 1 of
the Sale of Assets and Trademark License Agreement and are subject to
certain qualifications as specified therein. At the closing of the
transactions contemplated in the Sale of Assets and Trademark License
Agreement, Midland is to deposit 500,000 shares of Common Stock into
escrow to provide security to Intek that the benefits of the supply
agreement between Midland and Hitachi Denshi Ltd. are provided to Intek
for not less than one year after the closing (all as described in the
Escrow Agreement attached as Exhibit A to the Sale of Assets and
Trademark License Agreement). In addition, at such closing:
(a) Midland will obtain certain registration rights with respect
to its shares of Common Stock as set forth in the Registration
Rights Agreement attached as Exhibit E to the Sale of Assets
and Trademark License Agreement and hereby incorporated herein
in its entirety; and
(b) Intek will enter into a Consignment Agreement and management
and operations agreements with Midland and SCL whereby Intek
will have an option to acquire Midland's inventory and will
obtain certain management and operation services to assist in
Intek's operation of the U.S. LMR Distribution. The terms of
such management and operations agreements are set forth as
Exhibit B to the Sale of Assets and Trademark License
Agreement. The form of Consignment Agreement is attached as
Exhibit F to the Sales of Assets and License Agreement and is
hereby incorporated herein in its entirety.
Midland's and SCL's obligations under the Sale of Assets and Trademark
License Agreement are conditioned on the closing of the transactions
contemplated in the Stock Purchase Agreement (the "Securicor Stock
Purchase Agreement"), dated as of June 18, 1996, between Intek and
Securicor Communications Limited, a corporation organized under the
laws of England and Wales and a wholly owned subsidiary of Securicor
(the "Securicor Stock Purchase Agreement") for the conveyance of
Securicor's wireless communication's business to Intek in consideration
for 25,000,000 shares of Common Stock, the approval by Intek's
shareholders of an amendment to Intek's Certificate
Page 3 of 6 Pages
CUSIP NO. 458134 10 3
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of Incorporation to authorize the issuance of 50,000,000 shares of
Common Stock, and certain other conditions including the receipt of
regulatory and third party approvals and consents.
A copy of the joint press release issued by Intek, SCL and Securicor
Limited on June 18, 1996 announcing execution of definitive documents
in connection with the Wireless Communications Merger is attached
hereto as EXHIBIT AA and incorporated herein in its entirety.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-------------------------------------
Subparagraph (p) of Item 5 is amended by deleting the first sentence
thereof in its entirety and inserting in its stead the following:
On June 18, 1996, SCL, Midland and Intek executed definitive documents
setting forth the terms and conditions for consummating SCL and
Midland's portion of the Wireless Communications Merger by conveying
Midland's U.S. LMR Distribution business to Intek and granting Intek a
license to market LMR Products under Midland's trademark in the United
States, its territories and possessions. At the closing of the
transactions contemplated in the Sale of Assets and Trademark License
Agreement, Midland is to acquire 2,500,000 shares of Common Stock. The
closing of the transactions set forth in the Sale of Assets and
Trademark License Agreement is conditioned upon the consummation of the
transactions contemplated in the Securicor Stock Purchase, the approval
by Intek's shareholders of the transactions contemplated in the Sale of
Assets and Trademark License Agreement and the Securicor Stock Purchase
Agreement and the amendment of Intek's Certificate of Incorporation to
authorize the issuance of 50,000,000 shares of Common Stock, and
certain other conditions, including the receipt of regulatory and third
party approvals and consents. If the transactions contemplated in the
Sales of Assets and Trademark License Agreement and the Securicor Stock
Purchase Agreement were closed (assuming that Intek does not issue or
redeem any shares of Common Stock except as provided in such agreements
and that SCL does not acquire or dispose of shares of Common Stock in
the period prior to Closing), SCL would own a beneficial interest in
5,510,850 shares of Common Stock or approximately 14.27% of 38,605,278
shares of Common Stock then outstanding.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
-------------------------------------------------------------
RESPECT TO SECURITIES OF THE ISSUER.
------------------------------------
Item 6 is amended by the following text at the end of such Item 6:
On June 18, 1996, Midland, SCL and Intek executed the Sale of Assets
and Trademark License Agreement in furtherance of the transactions set
forth in the March 7, 1996 Letter of Intent. At the closing of the
transactions contemplated in the Sale of Assets and Trademark License
Agreement, Intek is to acquire the principal assets constituting
Midland's U.S. LMR Distribution and an exclusive license to market LMR
Products under the Midland trademark in the United States of America
and its territories. In consideration for its conveyance of the U.S.
LMR Distribution and the grant of a license to use the Midland
trademark, Midland is to acquire at the closing 2,500,000 shares of
Common Stock. The closing of the transactions contemplated in the Sale
of Assets and Trademark License Agreement is conditioned on the
consummation of the transactions contemplated in the Securicor Stock
Purchase Agreement and the satisfaction of certain other preconditions
to closing set forth in the Sale of Assets and Trademark License
Agreement. Reference is made to Section 4 - "WIRELESS COMMUNICATIONS
MERGER" of this Schedule 13D.
In connection with the execution of Sale of Asset and Trademark License
Agreement, SCL, Roamer, Securicor Communications Limited, and Securicor
International Limited, a corporation organized under the laws of
England and Wales and a wholly owned subsidiary of Securicor, entered
into a Voting Agreement pursuant to which each party thereto agreed to
vote all of the shares of common stock it owns in favor of the Wireless
Communications Merger and, upon consummation of the Wireless
Communications Merger, to vote its shares for a two year period after
such closing in favor of a designee of Roamer (reasonably acceptable to
Intek and Securicor) to the Intek Board of Directors. A copy of the
Voting Agreement is attached hereto as EXHIBIT BB and is incorporated
herein in its entirety.
Page 4 of 6 Pages
CUSIP NO. 458134 10 3
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ITEM 7. EXHIBITS.
---------
Item 7 of Schedule 13D is hereby amended by inserting the following new
Exhibits at the end thereof:
Exhibit Z Sale of Assets and Trademark License Agreement
dated June 18, 1996 among Intek, SCL and Midland
Exhibit AA Press Release dated June 18, 1996
Exhibit BB Voting Agreement dated June 18, 1996 among SCL,
Midland, Roamer, Securicor Communications and
Securicor International
BALANCE OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE IS ON FOLLOWING PAGE.
Page 5 of 6 Pages
CUSIP NO. 458134 10 3
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth herein is true, complete and
correct.
SIMMONDS CAPITAL LIMITED
June 25, 1996
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(Date)
/s/ David C. O'Kell
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(Signature)
David C. O'Kell, Executive Vice President and Secretary
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(Name/Title)
Page 6 of 6 Pages
CUSIP NO. 458134 10 3
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EXHIBIT Z
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SALE OF ASSETS
AND
TRADEMARK LICENSE
AGREEMENT
BY AND AMONG
INTEK DIVERSIFIED CORPORATION,
MIDLAND INTERNATIONAL CORPORATION
AND
SIMMONDS CAPITAL LIMITED
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TABLE OF CONTENTS
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<TABLE>
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1. DEFINITIONS............................................................................................. 2
1.1 "Acquired Assets"............................................................................. 2
1.2 "Affiliate"................................................................................... 2
1.3 "Assumed Liabilities"......................................................................... 2
1.4 "Bankruptcy Exception"........................................................................ 2
1.5 "Beneficiary"................................................................................. 2
1.6 "Business Day"................................................................................ 2
1.7 "Claimant".................................................................................... 3
1.8 "Closing"..................................................................................... 3
1.9 "Code"........................................................................................ 3
1.10 "Common Stock"................................................................................ 3
1.11 "Consignment Agreement"....................................................................... 3
1.12 "Contracts"................................................................................... 3
1.13 "Direct Claim"................................................................................ 3
1.14 "Direct Claim Notice"......................................................................... 3
1.15 "Dollar"...................................................................................... 3
1.16 "ERISA"....................................................................................... 3
1.17 "Escrow Agreement"............................................................................ 3
1.18 "Exchange Act"................................................................................ 3
1.19 "Fixed Assets"................................................................................ 4
1.20 "Governmental Entity"......................................................................... 4
1.21 "Hart-Scott-Rodino Act"....................................................................... 4
1.22 "Indemnitor".................................................................................. 4
1.23 "Intek Disclosure Schedules".................................................................. 4
1.24 "Intek Documents"............................................................................. 4
1.25 "Intek Materials"............................................................................. 4
1.26 "Intek Officer's Certificate"................................................................. 4
1.27 "Intek Subsidiaries".......................................................................... 4
1.28 "IRS"......................................................................................... 4
1.29 "Legal Proceeding"............................................................................ 4
1.30 "License"..................................................................................... 4
1.31 "License Agreement"........................................................................... 5
1.32 "LMR Products"................................................................................ 5
1.33 "Management and Operations Agreements"........................................................ 5
1.34 "Managed Licenses"............................................................................ 5
1.35 "Material Adverse Change" or "Material Adverse
Effect"....................................................................................... 5
1.36 "Midland Consumer Products"................................................................... 6
1.37 "Midland Disclosure Schedules"................................................................ 6
1.38 "Midland Documents"........................................................................... 6
1.39 "Midland Materials"........................................................................... 7
1.40 "Midland Officer's Certificate"............................................................... 7
1.41 "Multiemployer plan".......................................................................... 7
1.42 "Person"...................................................................................... 7
1.43 "Prepaid Expenses"............................................................................ 7
1.44 "Proxy Statement"............................................................................. 7
1.45 "Registration Rights Agreement"............................................................... 7
1.46 "Responsible Party"........................................................................... 7
1.47 "Securicor Agreement"......................................................................... 8
1.48 "SMR"......................................................................................... 8
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1.49 "Subsidiary".................................................................................. 8
1.50 "Taxes"....................................................................................... 8
1.51 "Territory"................................................................................... 8
1.52 "Third Party Claim"........................................................................... 8
1.53 "Third Party Claim Notice".................................................................... 8
1.54 "Trademark"................................................................................... 8
1.55 "Transferred Employees"....................................................................... 9
1.56 "To the Knowledge of the Executive Officers of
Intek"........................................................................................ 9
1.57 "To the Knowledge of the Executive Officers of
Midland"...................................................................................... 9
1.58 "U.S. LMR Distribution"....................................................................... 9
2. SALE OF ASSETS.......................................................................................... 9
2.1 Sale of Assets and Grant of Trademark License................................................. 9
2.2 Assignability and Consents.................................................................... 12
2.3 Assumed Liabilities........................................................................... 13
3. CONSIDERATION........................................................................................... 16
3.1 Purchase Price................................................................................ 16
3.2 Transfer Taxes................................................................................ 17
4. CLOSING AND TERMINATION................................................................................. 18
4.1 Closing Date.................................................................................. 18
4.2 Termination of Agreement...................................................................... 18
4.3 Procedure Upon Termination.................................................................... 21
4.4 Effect of Termination......................................................................... 21
5. REPRESENTATIONS AND WARRANTIES.......................................................................... 22
5.1 Representations and Warranties of Midland and
Simmonds...................................................................................... 22
(a) Organization and Standing; Power and
Authority.............................................................................. 22
(b) Business in Ordinary Course.............................................................. 23
(c) Contracts................................................................................ 25
(d) Consents and Approvals; No Violation..................................................... 26
(e) Acquired Assets.......................................................................... 28
(f) Intangible Property...................................................................... 28
(g) Brokers, Finders and Agents.............................................................. 29
(h) Employee Benefit Plans................................................................... 29
(i) Litigation, Product Liability............................................................ 31
(j) Suppliers and Customers.................................................................. 32
(k) Information in Disclosure Documents...................................................... 33
(l) Financial Statements..................................................................... 33
(m) Real Property............................................................................ 34
(n) Tangible Personal Property............................................................... 35
(o) Compliance with Laws..................................................................... 36
(p) FCC Licenses............................................................................. 36
(q) Disclaimers of Midland................................................................... 37
5.2 Representations and Warranties of Intek....................................................... 37
(a) Organization and Standing; Corporate Power and
Authority.............................................................................. 37
(b) Capitalization........................................................................... 39
(c) Shares Issued to Midland................................................................. 40
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(d) Subsidiaries............................................................................. 41
(e) Business in Ordinary Course.............................................................. 42
(f) Consents and Approvals; No Violation..................................................... 43
(g) Brokers, Finders and Agents.............................................................. 44
(h) Employee Relations....................................................................... 44
(i) Employee Plans........................................................................... 45
(j) Material Contracts....................................................................... 46
(k) Intek Corporate Action................................................................... 48
(l) Financial Statements..................................................................... 48
(m) Environmental Matters.................................................................... 49
(n) Labor Relations.......................................................................... 54
(o) Real Estate.............................................................................. 54
(p) Litigation............................................................................... 54
(q) Information in Disclosure Documents...................................................... 55
(r) Licenses................................................................................. 56
(s) Units in Service......................................................................... 58
(t) Contracts, Leases and Site Licenses...................................................... 58
(u) Related Party Transactions............................................................... 59
(v) Compliance with Laws..................................................................... 60
(w) Tax Matters.............................................................................. 60
6. COVENANTS OF MIDLAND.................................................................................... 61
6.1 General....................................................................................... 61
6.2 Rights of Inspection.......................................................................... 61
6.3 Confidentiality of Information................................................................ 62
6.4 Management and Operations Agreements.......................................................... 64
6.5 Midland's Representation Letter............................................................... 65
7. COVENANTS OF INTEK...................................................................................... 67
7.1 General....................................................................................... 67
7.2 Rights of Inspection; Confidentiality of
Information................................................................................... 68
7.3 Employee Matters.............................................................................. 69
7.4 Ownership and Proprietary Rights.............................................................. 70
7.5 Agreements with Respect to Other Transactions................................................. 71
7.6 Replacement of Performance Bonds.............................................................. 71
8. MUTUAL ADDITIONAL COVENANTS............................................................................. 71
8.1 Expenses...................................................................................... 71
8.2 Public Announcement........................................................................... 72
8.3 Cooperation................................................................................... 72
8.4 Disposition of Fixed Assets................................................................... 72
8.5 Interim Operations............................................................................ 73
8.6 Certain Filings, Consents and Arrangements.................................................... 77
8.7 Proxy Statement............................................................................... 78
8.8 Stockholders' Meeting......................................................................... 79
8.9 Hitachi Supply Agreement...................................................................... 80
9. CONDITIONS PRECEDENT.................................................................................... 81
9.1 Conditions Precedent to Intek's Obligations................................................... 81
(a) Midland Officer's Certificate............................................................ 81
(b) No Material Adverse Change............................................................... 82
(c) Board Ratification....................................................................... 82
</TABLE>
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(d) Hart-Scott-Rodino Compliance; No Adverse
Action................................................................................... 83
(e) Opinion of Counsel for Midland........................................................... 83
(f) Consents, Permits and Governmental Approvals............................................. 83
(g) Conveyancing Documents................................................................... 83
(h) License Agreement........................................................................ 84
(i) Management and Operations Agreements..................................................... 84
(j) Securicor Agreement...................................................................... 84
(k) Registration Rights Agreement............................................................ 84
(l) Escrow Agreement......................................................................... 84
(m) Consignment Agreement.................................................................... 84
(n) Fairness Opinion......................................................................... 84
(o) Stockholder Approval..................................................................... 85
9.2 Conditions Precedent to Midland's Obligations................................................. 85
(a) Intek Officer's Certificate.............................................................. 85
(b) No Material Adverse Change............................................................... 86
(c) Hart-Scott-Rodino Compliance; No Adverse
Action................................................................................... 86
(d) Capitalization........................................................................... 87
(e) Opinion of Counsel for Intek............................................................. 87
(f) Consents, Permits and Governmental Approvals............................................. 87
(g) Instruments of Assumption................................................................ 87
(h) Replacement of Performance Bonds......................................................... 87
(i) Management and Operations Agreements..................................................... 88
(j) Securicor Agreement...................................................................... 88
(k) Registration Rights Agreements........................................................... 88
(l) Escrow Agreement......................................................................... 88
(m) Consignment Agreement.................................................................... 88
(n) Stockholder Approval..................................................................... 88
10. INDEMNIFICATION......................................................................................... 88
10.1 Midland's and Simmonds' Indemnification
Obligations................................................................................... 88
10.2 Intek's Indemnification Obligations........................................................... 89
10.3 Notice and Opportunity to Defend.............................................................. 90
10.4 Payment of Damages............................................................................ 94
10.5 Exclusive Remedy.............................................................................. 94
11. ASSIGNMENT AND SUBLICENSE............................................................................... 95
12. MISCELLANEOUS POST CLOSING COVENANTS.................................................................... 95
12.1 Non-Compete................................................................................... 95
12.2 Liquidation of Midland into SCL, Inc.......................................................... 96
13. MISCELLANEOUS........................................................................................... 97
13.1 Amendments........................................................................................ 97
13.2 Entire Agreement.................................................................................. 97
13.3 Governing Law..................................................................................... 97
13.4 Notices........................................................................................... 97
13.5 Counterparts...................................................................................... 98
13.6 Bulk Sales........................................................................................ 98
13.7 Waivers........................................................................................... 98
13.8 Third Parties..................................................................................... 99
13.9 Schedules and Exhibits............................................................................ 99
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13.10 Headings......................................................................................... 99
13.11 Independent Contractor........................................................................... 99
13.12 Specific Performance............................................................................. 99
13.13 Arbitration......................................................................................100
</TABLE>
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Schedules and Exhibits
----------------------
Exhibits
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Exhibit A Escrow Agreement
Exhibit B Term Sheet for Management and
Operations Agreements
Exhibit C Registration Rights Agreement
Exhibit D License Agreement
Exhibit E Consignment Agreement
Schedules
---------
Schedule 1.19 Fixed Assets
Schedule 1.54 Trademark
Schedule 1.56 Executive Officers of Intek
Schedule 1.57 Executive Officers of Midland
Schedule 2.1(b) Contracts
Schedule 2.1(d) Miscellaneous Assets
Schedule 2.1(e) Real Property Leases
Schedule 2.1(h) Prepaid Expenses
Schedule 7.3(a) Transferred Employees
Schedule 9.2(g) Performance Bonds / Letters of Credit
/ Guaranties
Midland Disclosure Schedules
----------------------------
Schedule 5.1(a) Midland - Organization and Standing;
Power and Authority
Schedule 5.1(b) Midland - Exceptions to Business in
Ordinary Course
Schedule 5.1(c) Midland - Compliance with Contracts
Schedule 5.1(d) Midland - Consents and Approvals; No
Violation
Schedule 5.1(e) Midland - Exceptions to Title
Schedule 5.1(f) Midland - Intellectual Property
Matters
Schedule 5.1(i) Midland - Legal Proceedings
Schedule 5.1(j) Midland - Suppliers and Customers
Schedule 5.1(n) Midland - Personal Property Leases
Schedule 5.1(p) Midland - FCC Licenses
Schedule 5.1(q) Midland - Tax Matters
Intek Disclosure Schedules
--------------------------
Schedule 5.2(a) Intek - Organization and Standing;
Power and Authority
Schedule 5.2(b) Intek - Options, Warrants
Schedule 5.2(d) Intek - Subsidiaries
Schedule 5.2(e) Intek - Exceptions to Business in
Ordinary Course
Schedule 5.2(f) Intek - Consents, Approvals; No
Violations
Schedule 5.2(h) Intek - Employee Relations
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Schedule 5.2(i) Intek - Employee Plans
Schedule 5.2(j) Intek - Material Contracts
Schedule 5.2(m) Intek - Environmental Matters
Schedule 5.2(n) Intek - Labor Relations
Schedule 5.2(o) Intek - Real Property Matters
Schedule 5.2(p) Intek - Legal Proceedings
Schedule 5.2(r) Intek - FCC Licenses
Schedule 5.2(s) Intek - Units In Service
Schedule 5.2(t) Intek - Contracts, Leases and Site
Licenses
Schedule 5.2(u) Intek - Related Party Transactions
Schedule 5.2(v) Intek - Compliance with Laws
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SALE OF ASSETS AND TRADEMARK LICENSE AGREEMENT
----------------------------------------------
This SALE OF ASSETS AND TRADEMARK LICENSE AGREEMENT dated as of June
18, 1996 (the "Agreement") is made and entered into by and among Intek
Diversified Corporation, a Delaware corporation ("Intek"), Midland International
Corporation, a Delaware corporation ("Midland"), and Simmonds Capital Limited,
an Ontario corporation, which indirectly owns all of the capital stock of
Midland ("Simmonds").
RECITALS
--------
A. Midland is in the business of developing, distributing and reselling
LMR Products (as defined in Section 1.28 of this Agreement) under the Trademark
(as defined in Section 1.51 of this Agreement) and is the owner of the
Trademark.
B. Intek, through its subsidiaries, is in the business of developing,
constructing and managing specialized mobile radio ("SMR") networks in the
United States utilizing licenses granted by the Federal Communications
Commission ("FCC") for the 220 to 222 megahertz narrow band spectrum.
C. Midland desires to grant to Intek a license to sell LMR Products
under the Trademark in the Territory and to sell certain other assets of Midland
to Intek, and Intek desires to acquire such license and assets, all upon the
terms and conditions set forth in this Agreement.
D. Intek and Securicor Communications Limited., an England
and Wales corporation ("Securicor"), have on the date hereof
entered into a Stock Purchase Agreement (the "Securicor
Agreement") pursuant to which Securicor shall on the date of the
<PAGE> 10
Closing (as defined herein) sell all of the outstanding securities (other than
certain preferred shares) of Securicor's wholly-owned subsidiary, Securicor
Radiocoms Limited. ("Radiocoms"),to Intek in consideration for 25,000,000 shares
of common stock, par value $0.01 per share of Intek.
A G R E E M E N T
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
parties agree as follows:
1. DEFINITIONS
-----------
1.1 "Acquired Assets" shall have the meaning set forth in Section 2.1.
1.2 "Affiliate" means, with respect to any Person, any other Person that
controls such Person, or is controlled by or under common control with such
Person. With respect to Intek, the term "Affiliate" shall not include Securicor
Group plc, Securicor, Midland, Simmonds nor their respective subsidiaries.
1.3 "Assumed Liabilities" shall have the meaning set forth in Section
2.3(b).
1.4 "Bankruptcy Exception" shall have the meaning set forth in Section
5.1(a).
1.5 "Beneficiary" shall have the meaning set forth in Section 10.3(a).
1.6 "Business Day" shall mean any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
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1.7 "Claimant" shall have the meaning set forth in Section 10.3(f).
1.8 "Closing" and "Closing Date" shall have the meanings set forth in
Article 4.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as amended, in
effect as of the date of this Agreement.
1.10 "Common Stock" shall have the meaning set forth in Section 3.1.
1.11 "Consignment Agreement" shall mean the Consignment Agreement dated as
of the Closing Date between Midland and Intek.
1.12 "Contracts" shall have the meaning set forth in Section 2.1(b).
1.13 "Direct Claim" shall have the meaning set forth in Section 10.3(f).
1.14 "Direct Claim Notice" shall have the meaning set forth in Section
10.3(f).
1.15 "Dollar" shall mean United States Dollar.
1.16 "ERISA" shall the Employee Retirement Income Security Act of 1974, as
amended.
1.17 "Escrow Agreement" shall mean the Escrow Agreement entered into
between Midland and Intek with respect to 500,000 Shares of the Common Stock to
be issued to Midland pursuant to Section 3.1 of this Agreement in substantially
the form attached hereto as EXHIBIT A.
1.18 "Exchange Act" shall have the meaning set forth in Section 5.2(p).
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1.19 "Fixed Assets" shall mean the equipment and assets listed on Schedule
1.19 to this Agreement.
1.20 "Governmental Entity" shall have the meaning set forth in Section
5.2(f).
1.21 "Hart-Scott-Rodino Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.22 "Indemnitor" shall have the meaning set forth in Section 10.3(a).
1.23 "Intek Disclosure Schedules" shall mean the disclosure schedules
prepared by Intek and delivered to Midland and Simmonds simultaneously with the
execution and delivery of this Agreement.
1.24 "Intek Documents" shall have the meaning set forth in Section 5.2(a).
1.25 "Intek Materials" shall have the meaning set forth in Section 7.2(a).
1.26 "Intek Officer's Certificate" shall have the meaning set forth in
Section 9.2(a).
1.27 "Intek Subsidiaries" shall have the meaning set forth in Section
5.2(d).
1.28 "IRS" shall have the meaning set forth in Section 5.2(i).
1.29 "Legal Proceeding" shall have the meaning set forth in Section 5.1(i).
1.30 "License" shall mean the license to use the Trademark granted by
Midland to Intek pursuant to Section 2.1(a) of this Agreement.
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1.31 "License Agreement" shall have the meaning set forth in Section
2.1(a).
1.32 "LMR Products" means any existing and future land mobile radio
products for use in the professional and/or commercial markets, including,
without limitation, antennas which are usable with both Midland Consumer
Products and LMR Products; PROVIDED, HOWEVER, that notwithstanding Section 12.1
of this Agreement or any other provision contained herein to the contrary, such
antennas may be manufactured, promoted, sold and/or distributed in the Territory
by both Midland and Intek. The term "LMR Products" is not intended to include
and shall not include (a) Midland Consumer Products, or (b) the Midland 70-1336,
70-1526, 70-9020 and 70-9405 products, or (c) and any subsequent upgrades,
enhancements, modifications or improvements of the products described in
Sections 1.32(a) and 1.32(b).
1.33 "Management and Operations Agreements" means agreements providing for
operating and management services as more fully described in the term sheet
attached hereto as EXHIBIT B.
1.34 "Managed Licenses" shall have the meaning set forth in Section 5.2(t).
1.35 "Material Adverse Change" or "Material Adverse Effect" means an event
or circumstance which materially adversely affects the business, properties,
financial condition or operations (taken as a whole) of the U.S. LMR
Distribution, in the case of Midland, or of Intek and its subsidiaries (taken as
a whole), in the case of Intek.
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1.36 "Midland Consumer Products" means consumer wireless products and
consumer electronic products consisting of consumer communications equipment,
consumer automotive equipment, consumer marine equipment, consumer amateur radio
products and consumer audio products and/or video home entertainment equipment,
which are being sold at any time in department stores and/or in electronic
specialty stores, including, but not limited to, citizen band radios, GMRS
radios, marine radios, scanners, intercoms, radio recorders, car radios,
itinerant radios, consumer GPS marine products, satellite receivers, video
cassette recorders, video cameras, stereophonic and high fidelity components
and/or systems, compact disc players, laser disc players, cordless telephones,
consumer paging products, telephones with video, and other telephones and
antennas and other accessories for the foregoing. "Midland Consumer Products"
specifically does not include cellular telephones, personal communications
systems (PCS) telephones, commercial and two-way paging products, commercial
wireless satellite antennas, LMR antenna products, all other electronic or
communications equipment for use in the professional and commercial market, and
antennas and other accessories for the foregoing.
1.37 "Midland Disclosure Schedules" shall mean the disclosure schedules
prepared by Midland and delivered to Intek simultaneously with the execution and
delivery of this Agreement.
1.38 "Midland Documents" shall have the meaning set forth in Section
5.1(a).
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1.39 "Midland Materials" shall have the meaning set forth in Section 6.2.
1.40 "Midland Officer's Certificate" shall have the meaning set forth in
Section 9.1(a).
1.41 "Multiemployer plan" shall have the meaning defined in Section
4001(a)(3) of ERISA.
1.42 "Person" means an individual, partnership (general or limited),
corporation, association or other form of business organization (whether or not
regarded as a legal entity under applicable law), trust, estate or any other
entity.
1.43 "Prepaid Expenses" shall have the meaning set forth in Section 2.1(h)
of this Agreement.
1.44 "Proxy Statement" means the proxy statement to be mailed to Intek's
stockholders in connection with the solicitation of such stockholders' approval
with respect to the amendment to the certificate of incorporation of Intek to
authorize additional shares of Common Stock to be issued to Midland and
Securicor pursuant to this Agreement and the Securicor Agreement.
1.45 "Registration Rights Agreement" means the registration rights
agreement, in the form attached hereto as EXHIBIT C, that shall be entered into
by and among Intek, Roamer One, Inc., Securicor Communications Limited,
Securicor International Limited, Simmonds, Midland, Anglo York Industries, Inc.,
Choi & Choi, HK Limited, Octagon Investments Limited, Murray Sinclair and
certain other holders of the Common Stock of Intek.
1.46 "Responsible Party" shall have the meaning set forth in Section
10.3(d).
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1.47 "Securicor Agreement" shall have the meaning set forth in the
Recitals.
1.48 "SMR" shall have the meaning set forth in the Recitals.
1.49 "Subsidiary" means any Person fifty percent (50%) or more of whose
issued and outstanding voting securities is owned or controlled, directly or
indirectly, by the specified Person.
1.50 "Taxes" means all federal, state, local or foreign taxes, imposts,
levies, or other assessments, including, without limitation, gross receipts,
franchise, income, profits, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profit, environmental, customs duties,
capital, withholding, payroll, social security, unemployment, disability, real
property, personal property, inventory, sales, use, transfer, registration,
gains, value added, alternative or add-on minimum, estimated, or other tax of
any kind or nature whatsoever, including any interest, penalty or addition
thereto and any transferee or successor liability therefor (by contract or
otherwise), whether imposed singly or on a consolidated, combined or unitary
basis, and whether disputed or not.
1.51 "Territory" means the United States of America and the territories and
possessions thereof.
1.52 "Third Party Claim" shall have the meaning set forth in Section
10.3(a).
1.53 "Third Party Claim Notice" shall have the meaning set forth in Section
10.3(a).
1.54 "Trademark" shall mean the trademark described on Schedule 1.54 of the
Midland Disclosure Schedules and the trade
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name "Midland" and similar variations thereof, and all registrations,
applications and renewals thereof, in the Territory, and all logos, whether or
not registered, used in the Territory in connection therewith, used exclusively
in connection with the LMR Products. Trademark expressly does not include any
use of the word "Midland" in any combination including the word "Consumer."
1.55 "Transferred Employees" means those employees of Midland listed on
Schedule 7.3(a) that accept Intek's offer of employment pursuant to Section
7.3(a).
1.56 "To the Knowledge of the Executive Officers of Intek" means what the
corporate officers of Intek and the Intek Subsidiaries, all as listed on
Schedule 1.56 of the Intek Disclosure Schedules, actually know or would know
after reasonable investigation, in light of their positions and responsibilities
with Intek.
1.57 "To the Knowledge of the Executive Officers of Midland" means to what
the corporate officers of Midland listed on Schedule 1.57 of the Midland
Disclosure Schedules, actually know or would know after reasonable
investigation, in light of their positions and responsibilities with Midland.
1.58 "U.S. LMR Distribution" means the sale and distribution of LMR
Products bearing the Trademark within the Territory, as presently conducted by
Midland.
2. SALE OF ASSETS AND GRANT OF TRADEMARK LICENSE
---------------------------------------------
2.1 SALE OF ASSETS AND GRANT OF TRADEMARK LICENSE. At the Closing, Midland
shall grant, sell or assign to Intek, the
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following rights, assets and interests related to the conduct of
the U.S. LMR Distribution (collectively the "Acquired Assets"):
(a) A paid-up perpetual exclusive license to market and sell LMR
Products bearing the Trademark solely within the Territory and to use the
Trademark and the name "Midland" in connection with the promotion, sale and
distribution of LMR Products bearing the Trademark in the Territory in
accordance with the agreement substantially in the form of EXHIBIT D (the
"License Agreement").
(b) Subject to Sections 2.2 and 2.3, an assignment of all of Midland's
right, title and interest in or to all of Midland's:
(i) written or oral supply agreements under which Midland is the
purchaser;
(ii) quotations;
(iii) dealer and distributor relationships;
(iv) customer supply and support obligations;
(v) backlog orders; and
(vi) other contracts, agreements, commitments or undertakings;
which are listed on Schedule 2.1(b) (collectively, the "Contracts") which
Contracts constitute all of the material contracts of any nature (other
than contracts relating to the use and acquisition of tooling) entered into
by Midland which relate principally to the U.S. LMR Distribution or which
are assets necessary for the conduct of the U.S. LMR Distribution.
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(c) To the extent such information relates to the U.S. LMR
Distribution, all customer lists, the sales history, warranty claims
records, manuals, non-proprietary books and records, and credit information
with respect to customers of the U.S. LMR Distribution(collectively, the
"Records").
(d) Certain other assets, rights and property related to the U.S. LMR
Distribution as listed on Schedule 2.1(d), and all of Midland's right,
title and interest in and to the invention described in U.S. Patent
#4,718,586 (Swivel Fastening Device) which patent has expired for
nonpayment of maintenance fees.
(e) All of Midland's leasehold and other interests in the real
property leases listed on Schedule 2.1(e), including, without limitation,
any easements and rights-of-way and any prepaid rent, security deposits and
options to renew or purchase under any such leases.
(f) All U.S. telephone numbers used by Midland for the U.S. LMR
Distribution and keys for all Acquired Assets where = such exist.
(g) All of Midland's rights under or pursuant to all warranties,
representations, indemnities and guarantees made by suppliers,
manufacturers and contractors in connection with the Acquired Assets listed
in Sections 2.1(b) and 2.1(d).
(h) All deferred and prepaid charges, sums, and fees of Midland which
relate solely to the Acquired Assets and/or the
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operation of the U.S. LMR Distribution as set forth on Schedule 2.1(h)
("Prepaid Expenses").
(i) All permits or authorizations issued by Governmental Entities held
or used by Midland solely in connection with the operation of the U.S. LMR
Distribution (to the extent transfer thereof is permitted by applicable
law), including without limitation all FCC Title III radio licenses (the
"FCC Licenses") and grantee codes, type acceptances, certifications or
other equipment authorizations (the "Equipment Authorizations") used by
Midland exclusively in connection with the U.S. LMR Distribution.
2.2 ASSIGNABILITY AND CONSENTS. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall not constitute an agreement to assign any
order, contract, agreement, lease, commitment, license, franchise, authorization
or concession, if an attempted assignment thereof, without the consent of
another party thereto or of a Governmental Entity would constitute a breach of
any such order, contract, agreement, lease, commitment, license, franchise,
authorization or concession. Midland shall use its reasonable efforts, and Intek
shall cooperate in all reasonable respects with Midland, to obtain consent to
any such assignment. For any item for which such consent is not obtained,
Midland shall, for a period commencing on the Closing Date and ending upon
expiration of the current term of such nonassignable item (without giving effect
to any extension thereof, whether automatic or otherwise) or, if no expiration
date is stated therein, twelve months after the Closing Date, provide
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to Intek the benefit of any such nonassignable item, and promptly pay to Intek
when received all monies received by Midland under any such nonassignable item,
provided that Intek makes all payments required to be made by Midland pursuant
to the terms of such nonassignable items and that Intek performs or obtains
performance of all obligations required of Midland under such nonassignable
items, in advance of or at such time as such payment or performance is required.
At the end of period described in the immediately preceding sentence, Midland
shall have no further duties or obligations hereunder with respect to such
nonassignable items and the failure to obtain any necessary consent or waiver
with respect thereto shall not be a breach of any provision of this Agreement.
2.3 ASSUMED LIABILITIES.
(a) On the terms and subject to the conditions of this Agreement,
Intek shall assume, and thereafter pay, perform and discharge, and promptly
reimburse Midland for any payments made thereafter by Midland with respect
to, the Assumed Liabilities.
(b) The "Assumed Liabilities" shall include only the following
liabilities and obligations of Midland, whether primary or secondary,
direct or indirect, absolute or contingent:
(i) except as set forth under (iii) below, all liabilities or
obligations arising after the Closing Date under or with respect to
any of the Acquired Assets or in connection with the operation of the
U.S. LMR
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Distribution, including, without limitation, all of Midland's
liabilities arising after the Closing Date under the Contracts, but
excluding any liabilities or obligations of Midland for Taxes for
taxable periods ended on or before the Closing Date, and (but only to
the extent attributable to the period ending at the close of business
on the Closing Date) for taxable periods including the Closing Date;
(ii) all liabilities or obligations arising or existing under any
unfilled customer orders included in the Acquired Assets;
(iii) all liabilities and obligations with respect to the
Transferred Employees incurred or accrued after the Closing Date and
the liabilities and obligations with respect to vacation pay and sick
leave for Transferred Employees accrued as of the Closing Date with
respect to periods prior to the Closing. Notwithstanding anything to
the contrary in this Section 2.3(b), Intek shall not assume any
obligations or liabilities of Midland or Simmonds with respect to any
Transferred Employee or any other employee or former employee of
Midland or employee benefit plan maintained by Midland, including, but
not limited to, any liabilities or obligations with respect to (A) any
employee benefit plan under ERISA or the Code (other than with respect
to claims incurred after the Closing Date with respect to the health
and life insurance plans
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assumed by Intek under the provisions of Section 7.3(a)); (B)
continuation requirements of Section 4980B of the Code and Part 6 of
Title I of ERISA in respect of any Midland employee who does not
become a Transferred Employee; (C) any severance plan, program,
agreement or arrangement or any other obligations relating to the
termination of employment with Midland of any Transferred Employee or
other employee of Midland (whether or not arising by reason of the
transaction contemplated by this Agreement); (D) any deferred
compensation plan, program, agreement, arrangement or the like
operated by Simmonds, Midland or any subsidiary of parent thereof in
respect to any Transferred Employee attributable to such employee's
employment with Midland on or prior to the Closing Date and with
respect to any other employee or former employee of Midland whether
attributable to such employment before or after the Closing Date; (E)
any obligation or liability with respect to workers' compensation in
respect of any Transferred Employee attributable to such employee's
employment with Midland on or prior to the Closing Date and with
respect to any other employee or former employee of Midland whether
attributable to such employment before or after the Closing Date; and
(F) any obligation or liability with respect to an inactive employee
listed on Schedule 7.3(a) prior to the date
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such employee accepts employment with Intek in accordance with the
provisions of Section 7.3(a);
(iv) all liabilities and obligations (including fines and
penalties) for death, personal injury, other injury to persons,
property damage or losses or deprivation of rights (A) resulting from,
directly or indirectly, use or exposure to any LMR Products sold in
the Territory or (B) resulting from directly or indirectly, any tort,
breach of contract or warranty, violation of any statute, ordinance,
regulation or other governmental requirement in connection with the
Acquired Assets or the conduct of the U.S. LMR Distribution (but
excluding any such liabilities or obligations with respect to which,
before the date of the Closing, (x) Midland has received a written
notice of a claim, or (y) to the Knowledge of the Executive Officers
of Midland, a claim has been asserted); and
(v) all liabilities and obligations for breach of product
warranties for LMR Products distributed by Midland in the conduct of
the U.S. LMR Distribution.
3. CONSIDERATION
-------------
3.1 PURCHASE PRICE.
(a) PAYMENT. In consideration of Midland's grant of the License and
sale of the Acquired Assets, at the Closing Intek shall (i) issue and deliver to
Midland certificate(s) representing 2,000,000 fully paid, nonassessable shares
of common stock, par value $0.01 per share (the "Common Stock") of Intek free
and clear
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of any liens and encumbrances and free and clear of restrictions except as
expressly acknowledged by Midland herein; (ii) assume certain fixed liabilities
of Midland owing to Simmonds or a Midland Affiliate (as identified by Midland in
writing on or before the Closing Date) in an aggregate amount equal to the
Prepaid Expenses as of the Closing; (iii) issue and deliver to American Stock
Transfer & Trust Company, a New York corporation, as escrow agent,
certificate(s) representing 500,000 fully paid, nonassessable shares of the
Common Stock free and clear of any liens and encumbrances and free and clear of
restrictions except as expressly acknowledged herein or pursuant to the Escrow
Agreement; and (iv) assume the Assumed Liabilities as provided in Section 2.3 of
this Agreement.
(b) CERTAIN ADJUSTMENTS TO THE PURCHASE PRICE. At the Closing, the
Purchase Price shall be reduced by the amount of any customer deposits for
services and equipment not performed prior to the Closing by Midland to the
extent that Intek assumes the obligations directly related to such customer
deposits. This Purchase Price adjustment shall be effected by Midland's
delivery, or release from consignment, to Intek of inventory appropriate for
application to such customer obligations and having an aggregate value (as
determined pursuant to the Consignment Agreement) equal to the aggregate amount
of all such customer deposits.
3.2 TRANSFER TAXES. Intek shall pay the cost of all Taxes and expenses, if
any, and all other charges of any Governmental Entity applicable to the
transactions contemplated by this Agreement, other than income, franchise or
gains taxes incurred by
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Midland or Simmonds in connection with the transactions contemplated hereby.
4. CLOSING AND TERMINATION.
------------------------
4.1 CLOSING DATE. On the terms and subject to the conditions set forth in
this Agreement, the closing of the transaction contemplated hereby (the
"Closing") and shall take place at 10:00 a.m., eastern standard time, at the
offices of Weil, Gotshal & Manges LLP, located at 767 Fifth Avenue, New York,
New York simultaneously with the closing of the transactions contemplated in the
Securicor Agreement provided that all conditions to Closing listed in Article 9
are satisfied or waived, or at such other place, time and date as the parties
hereto may agree in writing (the "Closing Date").
4.2 TERMINATION OF AGREEMENT. This Agreement may be terminated prior to the
Closing as follows:
(a) at the election of Midland, Simmonds and Intek 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 Midland, Simmonds and Intek;
(c) by Midland, Simmonds or Intek if there shall be in effect a final
nonappealable order of a Governmental Entity of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby or in the Securicor Agreement; it being
agreed that
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the parties (or Intek, in the case of any order that relates solely to the
Securicor Agreement and the transactions contemplated therein) shall
promptly appeal any adverse determination which is not nonappealable and
shall pursue such appeal with reasonable diligence);
(d) by Midland and Simmonds if (i) there shall have been a breach of
any representation or warranty on the part of Intek set forth in this
Agreement, or if any representation or warranty of Intek shall have become
untrue, in either case such that the condition set forth in Section 9.1(a)
would be incapable of being satisfied by December 31, 1996 (or as otherwise
extended) or (ii) there shall have been a breach by Intek of any of its
covenants or agreements having a Material Adverse Effect on Intek and its
Subsidiaries, taken as a whole or materially adversely affecting (or
materially delaying) the consummation of the transactions contemplated
hereby or in the Securicor Agreement, and Intek has not cured such breach
within ten business days after notice by Midland or Simmonds thereof,
provided that Midland and Simmonds has not breached any of its obligations
hereunder;
(e) by Intek if (i) there shall have been a breach of any
representation or warranty on the part of Midland or Simmonds set forth in
this Agreement or if any representation or warranty of Midland or Simmonds
shall have become untrue, in either case such as the condition set forth in
Section 9.2(a) would be incapable of being satisfied by
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December 31, 1996 (or as otherwise extended) or (ii) there shall have been
a breach by Midland or Simmonds of its covenants or agreements hereunder
having a Material Adverse Effect on the U.S. LMR Distribution or materially
adversely affecting (or materially delaying) the consummation of the
transactions contemplated hereby, and Midland and Simmonds have not cured
such breach within ten business days after notice by Intek thereof,
provided that Intek has not breached any of its obligations hereunder;
(f) by Midland and Simmonds if the Board of Directors of Intek shall
have withdrawn, modified or changed its recommendations 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 Intek
Stockholders' Meeting in accordance with the terms of this Agreement, or
shall have adopted any resolution to effect any of the foregoing;
(g) by Intek, if the Board of Directors of Intek 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); or
(h) by Intek or Midland or Simmonds if Intek shall have duly called
and convened the Intek Stockholders' Meeting and
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shall have failed to obtain the requisite vote of its stockholders.
4.3 PROCEDURE UPON TERMINATION. In the event of termination by Intek or
Midland or Simmonds pursuant to Section 4.2 hereof, written notice thereof shall
forthwith be given to the other party, and this Agreement shall terminate, and
the purchase of the Acquired Assets shall be abandoned, without further action
by Intek, Midland or Simmonds. 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.
4.4 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 Intek, Midland
or Simmonds PROVIDED, HOWEVER, that the obligations of the parties set forth in
Section 8.1 hereof shall survive any such termination and shall be enforceable
hereunder; PROVIDED FURTHER, HOWEVER, that nothing in this Section 4.4 shall
relieve Intek, Midland or Simmonds of any liability for a breach of this
Agreement.
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5. REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 REPRESENTATIONS AND WARRANTIES OF MIDLAND AND SIMMONDS. Midland and
Simmonds jointly and severally represent and warrant to Intek that:
(a) ORGANIZATION AND STANDING; POWER AND AUTHORITY. Midland is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Midland has all requisite corporate power
and authority to operate the U.S. LMR Distribution as it is now conducted,
and to enter and perform its obligations under this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by Midland in connection with the consummation
of the transactions contemplated by this Agreement (together with this
Agreement, the "Midland Documents"). Midland 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 the U.S. LMR
Distribution or the ownership of its properties requires such qualification
(all of which jurisdictions are listed on Schedule 5.1(a) of the Midland
Disclosure Schedules), except where the failure to be so qualified or
authorized could not reasonably be expected to have a Material Adverse
Effect on the U.S. LMR Distribution or the Acquired Assets. Except as set
forth on Schedule 5.1(a) of the Midland Disclosure Schedules, neither
Midland nor any of its Affiliates is subject to any
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agreement, commitment or understanding which restricts or may restrict the
conduct of the U.S. LMR Distribution in the Territory in any material
respect. The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby have been, and prior to the Closing
the execution of the other Midland Documents and the consummation of the
transactions contemplated therein will be, duly approved by the Board of
Directors of Midland and no other corporate proceedings on the part of
Midland are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been, and prior to the
Closing each of the other Midland Documents will be, duly executed and
delivered by, and constitutes, or will constitute, a valid and binding
obligation of Midland, enforceable against Midland in accordance with its
terms, except as enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceedings may be brought (the "Bankruptcy Exception").
(b) BUSINESS IN ORDINARY COURSE. Except as set forth in Schedule
5.1(b) of the Midland Disclosure Schedules, since March 7, 1996 Midland has
conducted the U.S. LMR Distribution only in the ordinary course of business
consistent with past practice. Since March 7, 1996, there has been no
Material
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Adverse Change in the U.S. LMR Distribution, nor has any event occurred,
nor has any condition or state of facts arisen, which has not been
disclosed to Intek and could, to the Knowledge of the Executive Officers of
Midland, reasonably be expected to be have a Material Adverse Effect on the
U.S. LMR Distribution. Except as set forth on Schedule 5.1(b) of the
Midland Disclosure Schedules, since March 7, 1996:
(i) Midland has not materially amended, canceled, terminated,
relinquished, waived or released any Contract, right, debt, claim or
obligation that otherwise would have been included as part of the
Acquired Assets except in the ordinary course of business consistent
with past practice of Midland;
(ii) Midland has not received any notice or citation for any
violation of, nor, to the Knowledge of the Executive Officers of
Midland, has any complaint been filed with the FCC alleging a
violation of, any rule, regulation or policy of the FCC, and Midland
has not allowed any equipment authorization issued by the FCC to
Midland to lapse or be impaired in any manner or, to the Knowledge of
the Executive Officers of Midland, operated the U.S. LMR Distribution
in any manner not in compliance with its FCC equipment authorizations
and all applicable FCC rules, regulations and policies; and
(iii) Midland has not agreed to do any of the foregoing.
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(c) CONTRACTS. Midland and its Affiliates have made available or
delivered to Intek true, correct and complete copies of all written
Contracts listed on Schedule 2.1(b) of the Midland Disclosure Schedules.
The Contracts constitute all of the material contracts of any nature
whatsoever entered into by Midland that relate principally to the U.S. LMR
Distribution. To the Knowledge of the Executive Officers of Midland, each
Contract is valid and enforceable in accordance with its terms, subject to
the Bankruptcy Exception. Midland has not amended or modified, other than
in the ordinary course of business, in any material respect or consented to
the termination of any Contract other than as contemplated under this
Agreement. Except as set forth on Schedule 5.1(c) of the Midland Disclosure
Schedules, to the Knowledge of the Executive Officers of Midland, Midland
has performed in all material respects all obligations required to be
performed by it to date under the Contracts, and neither Midland nor, to
the Knowledge of the Executive Officers of Midland, any other party to any
Contract has breached or improperly terminated any Contract, or is in
material default under any Contract, and, to the Knowledge of the Executive
Officers of Midland, there exists no condition or event which after notice
or lapse of time or both, would constitute any such breach, termination or
default. To the Knowledge of the Executive Officers of Midland, no previous
or current party to any material Contract has given notice of or made a
claim with respect to any breach or default
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thereunder, the consequences of which individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the U.S.
LMR Distribution or the Acquired Assets. Except as set forth in Schedule
5.1(d) of the Midland Disclosure Schedules and subject to Section 2.2
hereof, no Contract requires the consent from, or delivery of notice to,
any person in connection with the transactions contemplated hereby and the
rights of Midland under the Contracts are assignable to Intek (without
being subject to any rights of termination or modification as a result of
the transactions contemplated by this Agreement) and upon assignment as
provided herein Intek shall be entitled to the full right, title and
benefit under each Contract.
(d) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement or the other Midland Documents nor the
performance by Midland of the transactions contemplated hereby or thereby
(i) conflicts with or results in any breach of any provision of Midland's
certificate of incorporation or by-laws, (ii) except as set forth on
Schedule 5.1(d) of the Midland Disclosure Schedules, violates, conflicts
with, constitutes a material breach or default (or an event which, with
notice or lapse of time or both, would constitute a material breach or
default) under, or results in or gives rise to a right of termination of,
or accelerates the performance required by, or results in the creation of
any lien or other encumbrance upon any of the Acquired Assets or the
properties of the U.S. LMR
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Distribution under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement, or other obligation or instrument to which Midland is a party or
by which the Acquired Assets or the U.S. LMR Distribution is bound, which,
individually or in the aggregate, would have a Material Adverse Effect on
the Acquired Assets or the U.S. LMR Distribution, (iii) require any
consent, approval, authorization or permit of or from, or filing with or
notification to, any court, governmental authority or other regulatory or
administrative agency or commission, domestic or foreign ("Governmental
Entity"), or other third party except (A) filings under the
Hart-Scott-Rodino Act, (B) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Assets or the U.S. LMR Distribution or would materially delay or
impair the ability of Midland to consummate the transactions contemplated
hereby, or (C) third party consents, approvals, authorizations, permits,
filings or notifications which if not obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Assets or the U.S. LMR Distribution, or (iv) violates any statute,
rule, regulation, order or decree of any Governmental Entity by which
Midland or any of its assets is bound.
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<PAGE> 36
(e) ACQUIRED ASSETS. Except as set forth in Schedule 5.1(e) of the
Midland Disclosure Schedules, Midland has good and marketable title to and
owns the Acquired Assets referred to in Section 2.1(c), (d) and (e), free
and clear of all liens and claims of any kind or nature whatsoever. Except
as disclosed on Schedule 5.1(e) of the Midland Disclosure Schedules, none
of such Acquired Assets are subject to, or held under, any lease, mortgage,
security agreement, conditional sales contract or other title retention
agreement, or are other than in the sole possession and under the sole
control of Midland. Except as set forth on Schedule 5.1(e) of the Midland
Disclosure Schedules, the delivery by Midland to Intek at the Closing of
the Bill of Sale to be included among the Midland Documents and the other
instruments of transfer will vest Intek on the Closing Date with good and
marketable title to all of the Acquired Assets, free and clear of all liens
and claims whatsoever, except those liens created, imposed or granted by
Intek.
(f) INTANGIBLE PROPERTY. Except as set forth on Schedule 5.1(f) of the
Midland Disclosure Schedules, (i) Midland has good and lawful title to the
Trademark and any and all patent, copyrights, and know-how transferred
under this Agreement (collectively, "Intangible Property"); (ii) to the
knowledge of the Executive Officers of Midland, the Intangible Property is
valid and subsisting and is enforceable in whole or in part in the
Territory; (iii) to the Knowledge of the Executive Officers of Midland
there are
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no actual or threatened claims by third parties regarding the Intangible
Property; (iv) to the Knowledge of the Executive Officers of Midland the
Intangible Property does not infringe or otherwise violate any rights of
any third party; (v) no third party has been given the right or license to
use the Intangible Property in connection with the sale or distribution of
LMR Products in the Territory; and (vi) to the Knowledge of the Executive
Officers of Midland, no rights, licenses, or permissions of any Person are
used or needed to conduct the U.S. LMR Distribution.
(g) BROKERS, FINDERS AND AGENTS. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for Midland or its
Affiliates 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.
(h) EMPLOYEE BENEFIT PLANS.
(i) Except for the Midland International Corporation Employees'
Profit Sharing Thrift Plan, no "employee pension plan", as
defined in Section 3(2) of ERISA (a "Pension Plan"), is
maintained by Midland, Simmonds or any subsidiary or parent
thereof or any trade or business (whether or not
incorporated) which are under control, or which are treated
as a single employer with Midland, Simmonds or any
subsidiary or parent thereof under Section
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414(b), (c), (m) or (o) of the Code ("ERISA Affiliate"), or
to which Midland, Simmonds, or any subsidiary or parent
thereof or any ERISA Affiliate contributed or are obligated
to contribute. None of the Pension Plans is a "defined
benefit plan" as defined in Section 3(35) of ERISA, is a
"multiemployer plan" or is or has been subject to Sections
4063 or 4064 of ERISA; and, since January 1, 1990, none of
Midland, Simmonds or any subsidiary or any parent thereof or
any ERISA Affiliate has contributed, or been obligated to
contribute, to a multiemployer plan.
(ii) With respect to the Transferred Employees, Midland has
complied with the notice and continuation requirements of
Section 4980B of the Code and Part 6 of Title I of ERISA and
the applicable regulations thereunder.
(iii) Each "employee benefit plan," as defined in Section 3(3) of
ERISA (an "Employee Benefit Plan") maintained by Midland is
in material compliance with all applicable laws including
ERISA and the Code. Except as set forth on Schedule
5.1(h)(iii), no condition exists that is reasonably expected
to subject Midland to a material civil penalty under Section
502(i) of ERISA or material liability under Section 4069
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of ERISA or Section 4795 of the Code or other material
liability with respect to any Employee Benefit Plan. There
is no material violation of ERISA with respect to the
furnishing of applicable reports, documents and notices
regarding the Employee Benefit Plans to the Transferred
Employees. Each Employee Benefit Plan that is required to
file a Form 5500 with the Internal Revenue Service has
timely done so with respect to each of the last three
completed plan years.
(i) LITIGATION, PRODUCT LIABILITY. As of the date hereof, there is no
litigation, suit, proceeding, action, claim or investigation ("Legal
Proceeding") pending, or to the Knowledge of the Executive Officers of
Midland, threatened, that questions the validity of this Agreement, the
Midland Documents or any action taken or to be taken by Midland in
connection with the consummation of the transactions contemplated hereby or
thereby. Except as set forth on Schedule 5.1(i) of the Midland Disclosure
Schedules, there is no Legal Proceeding pending or, to the Knowledge of the
Executive Officers of Midland, threatened against Midland with respect to
the U.S. LMR Distribution or the Acquired Assets (including, without
limitation, any claims in respect of any warranties of Midland). Midland is
not subject to any outstanding judgment, decree or order entered in any
Legal Proceeding affecting or naming Midland or affecting the U.S.
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LMR Distribution or the Acquired Assets, and to the Knowledge of the
Executive Officers of Midland, no such judgment, order or decree has been
threatened. To the Knowledge of the Executive Officers of Midland, there is
no basis for any Legal Proceeding against Midland with respect to the U.S.
LMR Distribution or the Acquired Assets.
(j) SUPPLIERS AND CUSTOMERS. Schedule 5.1(j) of the Midland Disclosure
Schedules lists the three largest suppliers and ten largest customers of
the U.S. LMR Distribution in the Territory during the period commencing on
May 1, 1995 and ending on December 31, 1995. Except as set forth on
Schedule 5.1(j) of the Midland Disclosure Schedules, no supplier which is
material to the U.S. LMR Distribution or customer which is material to the
U.S. LMR Distribution has canceled or otherwise terminated, or, to the
Knowledge of the Executive Officers of Midland, threatened to cancel or
otherwise terminate, its relationship with Midland or has during the last
12 months decreased materially, or, to the Knowledge of the Executive
Officers of Midland, threatened to decrease or limit its services, supplies
or materials to Midland or its usage or purchase of services or products of
Midland. To the Knowledge of the Executive Officers of Midland, no such
supplier or customer intends to cancel or otherwise modify its relationship
with Midland or to decrease materially or limit its services, supplies or
materials to Midland or its usage or purchase of services or products of
the U.S. LMR Distribution, and the contemplated transactions
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will not materially adversely affect the relationship of the U.S. LMR
Distribution with any such supplier or customer.
(k) INFORMATION IN DISCLOSURE DOCUMENTS. To the Knowledge of the
Executive Officers of Midland, the information with respect to Midland and
its Affiliates provided by Midland for inclusion in Intek Proxy Statement
will not, at the time of the mailing of Intek Proxy Statement and any
amendments or supplements thereto, and at the time of the Intek meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
(l) FINANCIAL STATEMENTS. Midland has delivered to Intek true, correct
and complete copies of the audited consolidated balance sheet of Midland as
at December 31, 1995 (the "Balance Sheet Date") and the related audited
statements of income and of changes in financial position or of cash flows,
whichever is applicable, of Midland for the period then ended (including
the related notes and schedules thereto and all auditors' reports thereon,
the "Financial Statements"). Each of the Financial Statements is complete
and correct in all material respects, and, except as set forth in the
footnotes thereto, has been prepared in accordance with generally accepted
accounting principles ("GAAP") and presents fairly the financial position,
results of operations and changes in financial position or cash
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flows, whichever is applicable, of Midland and its subsidiaries as at the
date and for the period indicated.
(m) REAL PROPERTY. There does not exist any actual or, to the
Knowledge of the Executive Officers of Midland, threatened or contemplated
condemnation or eminent domain proceedings that affect any real estate
subject to real property leases set forth on Schedule 2.1(e) (each a "Real
Property Lease") or any part thereof, and Midland has not received any
notice, oral or written, of the intention of any Governmental Entity or
other Person to take or use all or any part thereof. The real property
covered by the Real Property Leases constitutes all of the real property
located in the Territory that is necessary for the conduct of the U.S. LMR
Distribution as presently conducted. Midland has actual and exclusive
possession of the leasehold estates in each Real Property Lease, free and
clear of any liens. Each of the Real Property Leases is valid and
enforceable in accordance with its terms, subject to the Bankruptcy
Exception, and there is not under any such Real Property 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
Midland, or (B) to the knowledge of the Executive Officers of Midland, 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 U.S. LMR Distribution. Upon consummation of the
transactions contemplated hereby, each
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Real Estate Lease will entitle Intek to the exclusive use, occupancy and
possession of the real estate specified therein for the purposes for which
Midland now uses such real estate in the conduct of the U.S. LMR
Distribution. True, correct and complete copies of all Real Property Leases
have been delivered or made available to Intek. No previous or current
party to any such Real Property Lease has given notice of or made a claim
with respect to any breach or default thereunder.
(n) TANGIBLE PERSONAL PROPERTY.
(i) Schedule 5.1(n) of the Midland Disclosure Schedules sets
forth all leases of personal property relating to personal property
used in or necessary to the operation of the U.S. LMR Distribution
requiring lease payments equal to or exceeding $20,000 per annum
("Personal Property Leases"). Midland has delivered to Intek true,
correct and complete copies of the Personal Property Leases, including
all amendments, modifications, supplements, side letters or consents
affecting the obligations of any party thereunder.
(ii) Except as set forth on Schedule 5.1(n) of the Midland
Disclosure Schedules:
(A) Each of the Personal Property Leases is in full force
and effect and is valid and enforceable in accordance with its
terms, subject to the Bankruptcy Exception, and there is no
default under any Personal Property Lease either by
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Midland or, to the Knowledge of the Executive Officers of
Midland, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would
constitute a default thereunder. Each of the Personal Property
Leases is freely transferable by Midland to Intek and no third
party consents are required for such transfer; and
(B) No previous or current party to any such Personal
Property Lease has given notice of or made a claim with respect
to any breach or default thereunder.
(iii) With respect to those Personal Property Leases that were
assigned or subleased to Midland by a third party, all necessary
consents to such assignments or subleases have been obtained. On the
Closing Date, Intek will succeed to all of the right, title and
interest of Midland under every Personal Property Lease.
(o) COMPLIANCE WITH LAWS. To the Knowledge of the Executive Officers
of Midland, Midland has complied with all laws applicable to the conduct of
the U.S. LMR Distribution and the use of the Acquired Assets, 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
Acquired Assets or the U.S. LMR Distribution-.
(p) FCC LICENSES. Except as set forth in Schedule 5.1(p) of the
Midland Disclosure Schedules:
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(i) each of the FCC Licenses is valid and in good standing;
(ii) Midland has operated any systems constructed pursuant to the
FCC Licenses in accordance with the terms of such FCC Licenses and in
compliance with all applicable FCC rules, regulations or policies;
(iii) there is no investigation pending, or to the Knowledge of
the Executive Officers of Midland threatened, concerning any FCC
Licenses or Equipment Authorizations; and
(iv) Midland has no reason to believe that the FCC will not
assign to Intek the FCC Licenses or that Intek will be unable to
obtain any comparable equipment authorizations to replace the
Equipment Authorizations.
(q) DISCLAIMERS OF MIDLAND. Except as otherwise expressly
provided herein in this Article 5, the Acquired Assets that consist of
tangible personal property, and each item thereof, are furnished AS
IS, WHERE IS AND WITH ALL FAULTS AND WITHOUT WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
5.2 REPRESENTATIONS AND WARRANTIES OF INTEK. Intek represents and warrants
to Midland that:
(a) ORGANIZATION AND STANDING; CORPORATE POWER AND AUTHORITY. Intek is
a corporation duly organized, validly existing and in good standing under
the laws of the State of
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Delaware. Intek has all requisite corporate power and authority to make and
perform its obligations under this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Intek in connection with the consummation of the transactions
contemplated by this Agreement (together with this Agreement, the "Intek
Documents"). Intek is duly qualified and 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 (all of which jurisdictions are
listed on Schedule 5.2(a) of the Intek Disclosure Schedules), except where
the failure to be so qualified or authorized could not reasonably be
expected to have a Material Adverse Effect on Intek. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been, and prior to the Closing the execution of
each of the other Intek Documents, and the consummation of the transaction
contemplated thereby will be, duly approved by unanimous vote of the
Special Committee of the Board of Directors of Intek, and no other
corporate proceedings on the part of Intek are necessary to authorize this
Agreement or to consummate the transactions so contemplated, subject only
to approval by the stockholders of Intek with respect to the amendment to
the certificate of incorporation of Intek to
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authorize additional shares of Common Stock to be issued to Midland
pursuant to this Agreement. This Agreement has been, and prior to the
Closing each of the other Intek Documents will be, duly executed and
delivered by, and constitutes, or will constitute, a valid and binding
obligation of, Intek, enforceable against Intek in accordance with its
terms, subject to the Bankruptcy Exception.
(b) CAPITALIZATION. As of the date hereof, the authorized capital
stock of Intek consists of 20,000,000 shares of Common Stock. As of the
date hereof, (i) 11,125,278 shares of Common Stock, were issued and
outstanding; (ii) 465,582 shares of Common Stock were held in treasury;
(iii) 500,000 shares of Common Stock were reserved for issuance under
Intek's 1988 Key Employee Stock Option Plan (the "1988 Option Plan"), and
no options representing the right to purchase shares of Common Stock are
outstanding under the 1988 Option Plan; (iv) 600,000 shares of Common Stock
were reserved for issuance under Intek's 1994 Stock Option Plan (the "1994
Option Plan"), and options representing the right to purchase 310,000
shares of Common Stock are outstanding under the 1994 Option Plan; and (v)
300,000 shares of Common Stock were reserved for issuance under Intek's
1994 Directors' Stock Option Plan (the "Directors' Option Plan"), and
options representing the right to purchase 120,000 shares of Common Stock
are outstanding under the Directors' Option Plan. All shares of Common
Stock outstanding or held in treasury are duly authorized, validly
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issued, fully paid and nonassessable and are not subject to preemptive
rights. Except as set forth in this Section 5.2(b) or in Schedule 5.2(b) of
the Intek Disclosure Schedules or as may be issued pursuant to the
Securicor Agreement or for issuance permitted by Section 8.4(a)(i), as of
the date hereof, there are no shares of capital stock of Intek authorized,
issued or outstanding and there are no outstanding subscriptions, options,
warrants, rights, convertible securities or any other agreements or
commitments of any character relating to the issued or unissued capital
stock or other securities of Intek obligating Intek to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
capital stock of Intek or obligating Intek to grant, extend or enter into
any subscription, option, warrant, right, convertible security or other
similar agreement or commitment. There are no voting trusts or other
agreements or understandings to which Intek or its subsidiaries is a party
with respect to the voting of the capital stock of Intek.
(c) SHARES ISSUED TO MIDLAND. All of the shares of Common Stock
issuable to Midland in accordance with this Agreement shall be, when so
issued, duly authorized, validly issued, fully paid and nonassessable, not
be subject to any preemptive rights, and be free and clear of any liens,
encumbrances or restrictions. The shares issued by Intek to Midland
hereunder shall equal approximately 6% of the outstanding shares of Common
Stock of Intek on a fully
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diluted basis as of the date of the Closing, assuming issuance of (i) all
shares of Common Stock Intek has a commitment to issue, (ii) the additional
shares of Common Stock Intek shall issue pursuant to this Agreement and the
Securicor Agreement, and (iii) the shares of Common Stock Intek is
permitted to issue pursuant to Section 8.4(a)(i). As of the date hereof,
all 11,125,278 shares of Common Stock which are issued and outstanding are
listed and traded on the National Association of Securities Dealers
Automatic Quotation System Small Cap Market (the "NASDAQ Small Cap Market")
under the symbol "IDCC", and Intek is in full compliance with its listing
agreement. The shares issued to Midland pursuant to this Agreement shall be
listed on the NASDAQ Small Cap Market.
(d) SUBSIDIARIES. Schedule 5.2(d) of the Intek Disclosure Schedules
sets forth the name and state of incorporation of each subsidiary (as
defined herein) of Intek (collectively, the "Intek Subsidiaries") existing
as of the date hereof. Each of the Intek Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is duly qualified to do
business as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the nature of the business conducted by
it makes such qualification necessary, except for such jurisdictions in
which the failure to be so qualified would not have a Material Adverse
Effect on Intek. Each of the Intek
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Subsidiaries has the requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its businesses as
they are now being conducted. Except as set forth on Schedule 5.2(d) of the
Intek Disclosure Schedules, all outstanding shares of capital stock of each
Intek Subsidiary are owned by Intek or another Intek Subsidiary and are
validly issued, fully paid and nonassessable, are not subject to preemptive
rights and are owned free and clear of all liens, claims and encumbrances.
Except as set forth on Schedule 5.2(d) of the Intek Disclosure Schedules,
there are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other
securities of any Intek Subsidiary obligating any Intek Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of its capital stock or obligating any Intek Subsidiary
to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment.
(e) BUSINESS IN ORDINARY COURSE. Except as set forth on Schedule
5.2(e) of the Intek Disclosure Schedules, since December 31, 1995, Intek
and each Intek Subsidiary have conducted their respective businesses only
in the ordinary course of business consistent with past practice and there
has been no Material Adverse Change with respect to Intek, nor has any
event occurred, nor has any condition or state of
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facts arisen, which has not been disclosed to Midland and could, to the
Knowledge of the Executive Officers of Intek, reasonably be expected to
have a Material Adverse Effect on Intek.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement or the other Intek Documents by Intek, nor the
consummation by Intek of the transactions contemplated hereby or thereby
(i) conflicts with or results in any breach of any provision of Intek's
certificate of incorporation or by-laws, (ii) except as set forth on
Schedule 5.2(f) of the Intek Disclosure Schedules, violates, conflicts
with, constitutes a material breach or default (or an event which, with
notice or lapse of time or both, would constitute a material breach or
default) under, or results in or gives rise to a right of termination of,
or accelerates the performance required by, or results in the creation of
any lien or other encumbrance upon any of the properties or assets of Intek
or any of the Intek Affiliates under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Intek is a
party or to which they or any of their respective properties or assets are
subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances,
which, individually or in the aggregate, would not have a Material Adverse
Effect on Intek or any Intek Affiliate, (iii) requires any consent,
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approval, authorization or permit of or from, or filing with or
notification to, any Governmental Entity, or other third party except (A)
pursuant to the Exchange Act, (B) filings with, and approvals by, the FCC
or any successor thereto, (C) filings under the Hart-Scott-Rodino Act, or
(D) third party consents, approvals, authorizations, permits, filings or
notifications which if not obtained or made would not, individually or in
the aggregate, have a Material Adverse Effect on Intek, or (iv) violates
any statute, rule, regulation, order or decree of any Governmental Entity
by which Intek, the Intek Subsidiaries, or any of their respective assets,
is bound.
(g) BROKERS, FINDERS AND AGENTS. Except for Fahnestock & Co. Inc., no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Intek or its Affiliates in connection with the transactions
contemplated by this Agreement, and no Person is entitled to any free or
commission or like payment in respect thereof. Intek shall be solely
responsible for, and shall hold Midland and Simmonds harmless from and
against, all expenses and fees payable to Fahnestock & Co. Inc. in
connection with the transactions contemplated hereunder.
(h) EMPLOYEE RELATIONS. Except as set forth in Schedule 5.2(h) of the
Intek Disclosure Schedules, there are no material controversies pending,
or, to the Knowledge of the Executive Officers of Intek, threatened that
involve any employees employed by Intek or of any Intek Subsidiary.
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(i) EMPLOYEE PLANS. Except as set forth on Schedule 5.2(i) of the
Intek Disclosure Schedules, all employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock
ownership, consulting, severance, or fringe benefit plans, formal or
informal, written or oral, and all trust agreements related thereto,
relating to any present or former directors, officers or employees of Intek
or any Intek Subsidiary (collectively, "Intek Employee Plans") have been
maintained, operated, and administered in substantial compliance with their
terms and currently comply, and have at all relevant times complied, in all
material respects with ERISA and the Code, to the extent applicable, and
any other applicable laws. With respect to each Intek Employee Plan which
is a pension plan (as defined in Section 3(2) of ERISA), except as set
forth in Schedule 5.2(i) of the Intek Disclosure Schedules: (i) each
pension plan as amended (and any trust relating thereto) intended to be a
qualified plan under Section 401(a) of the Code either has been determined
by the Internal Revenue Service ("IRS") to be so qualified or is the
subject of a pending application for such determination that was timely
filed, (ii) there is no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
and no waiver of the minimum funding standards of such sections has been
requested from the IRS, (iii) no reportable event described in Section 4043
of ERISA has occurred, (iv) no defined benefit plan has
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been terminated, nor has the Pension Benefit Guaranty Corporation
instituted proceedings to terminate a defined benefit plan or to appoint a
trustee or administrator of a defined benefit plan, and no circumstances
exist that constitute grounds under Section 4042 of ERISA entitling the
Pension Benefit Guaranty Corporation to institute any such proceedings, (v)
no pension plan is a "multiemployer plan" and (vi) as of the last day of
the most recent plan year which ended prior to the date hereof and for
which an actuarial valuation has been issued by the plan's actuary, with
respect to each defined benefit plan which is a "single-employer plan"
(within the meaning of Section 4001(a)(15) of ERISA) the actuarially
determined present value of all "benefit liabilities" (within the meaning
of Section 4001(a)(16) of ERISA), as determined on the basis of the
actuarial assumptions contained in the plan's most recent actuarial
valuation, did not exceed the then current value of the assets of the plan
and there has been no material change in the financial condition of the
plan since the last day of the most recent plan year. No liability under
subtitle C or D of Title IV of ERISA has been incurred by Intek or any
Intek Subsidiary with respect to any "single-employer plan", formerly
maintained by any of them or by any entity which is considered one employer
with Intek under Section 4001 of ERISA or Section 414 of the Code.
(j) MATERIAL CONTRACTS. Except as set forth in Schedule 5.2(j) of the
Intek Disclosure Schedules and for the
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Securicor Agreement, neither Intek nor any Intek Subsidiary is a party to,
or is bound by (i) any agreement, indenture or other instrument relating to
the borrowing of money by Intek or any such Intek Subsidiary or the
guarantee by Intek or any such Intek Subsidiary of any such obligation
(other than trade payables and instruments relating to transactions entered
into in the ordinary course of business), (ii) any contract or agreement or
amendment thereto that would be required to be filed as an exhibit to a
Report on Form 10-K filed by Intek with the Commission, (iii) any contract
relating to the disposition of any assets or any business interests of
Intek, other than in the ordinary course of business, under which the buyer
has any continuing obligations or indemnity arrangements, (iv) any warranty
or other agreement relating to any products manufactured or distributed by
Intek or any Intek Subsidiary, (v) any other contract or agreement or
amendment thereto that places any restrictions on the ability of Intek or
any Intek Subsidiary to engage in any business activity which restrictions
would have a Material Adverse Effect on Intek (collectively, the "Intek
Contracts"). Neither Intek nor any Intek Subsidiary is in default under any
Intek Contract, which default is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Intek, and
there has not occurred any event that with the lapse of time or the giving
of notice or both would constitute such a default.
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(k) INTEK CORPORATE ACTION. The Special Committee of the Board of
Directors of Intek has, by unanimous vote, (i) determined that the
transaction contemplated by this Agreement and the Securicor Agreement is
advisable and in the best interests of Intek and its stockholders, (ii)
approved this Agreement and the Securicor Agreement and, subject to the
fulfillment or waiver at or prior to the Closing Date of the conditions set
forth in Sections 9.1, the transactions contemplated hereby and by the
Securicor Agreement and (iii) taken all action required to be taken by it
with respect to the authorization and issuance of the additional shares of
Common Stock, and directed the submission for consideration by the
stockholders of Intek of an amendment of the certificate of incorporation
of Intek to authorize additional shares of Common Stock.
(l) FINANCIAL STATEMENTS. Intek has delivered to Midland true, correct
and complete copies of the audited consolidated balance sheet of Intek as
at December 31, 1995 (the "Intek Balance Sheet Date") and the related
audited statements of income and of changes in financial position or of
cash flows, whichever is applicable, of Intek for the period then ended
(including the related notes and schedules thereto and all auditors'
reports thereon, the "Intek Financial Statements"). Each of the Intek
Financial Statements is complete and correct in all material respects, and,
except as set forth in the footnotes thereto, has been prepared in
accordance with GAAP and presents fairly the
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financial position, results of operations and changes in financial position
or cash flows, whichever is applicable, of Intek and its subsidiaries as at
the date and for the period indicated.
(m) ENVIRONMENTAL MATTERS. (i) For purposes of this Section 5.2(m),
the following terms shall have the indicated meaning:
(A) "Real Property" means all real property presently or
formerly owned or operated by Intek or any Intek Subsidiary on
which facilities are or were located and all real property
(including property held as trustee or in any other fiduciary
capacity) over which Intek or any Intek Subsidiary currently or
formerly has exercised dominion, management or control. To the
extent that Real Property includes site leases, the
representations contained in the Section 5.2(m) shall be limited
to the Knowledge of the Executive Officers of Intek.
(B) "Environmental Law" means any applicable federal, state
or local statute, law ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment,
decree, injunction, directive, requirement or agreement with any
Governmental Entity, now existing, relating to: (aa) the
protection, preservation or restoration of the environment
(including, without limitation, air water vapor,
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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 (bb) 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,
(x) the following statutes, each as amended:
(1) the Federal Clean Air Act;
(2) the Federal Clean Water Act;
(3) the Federal Resource Conservation and Recovery Act of 1976
("RCRA");
(4) the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("CERCLA");
(5) the Federal Toxic Substances Control Act;
(6) the Federal Occupational Safety and Health Act of 1970;
(7) the Federal Safe Drinking Water Act;
(8 the Federal Insecticide, Fungicide and Rodenticide Act;
(9) the California Hazardous Waste Control Law;
(10) the California Hazardous Substance Account Act;
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(11) the Porter-Cologne Water Quality Control Act; and
(12) the California Air Pollution Control Law; and (y) any common
law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose
liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to
any Hazardous Substance.
(C) "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").
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(ii) Except as set forth on Schedule 5.2(m) of the Intek
Disclosure Schedules or as would not individually or in the aggregate
have a Material Adverse Effect on Intek,
(A) Intek and each Intek Subsidiary is and has been in
compliance with all applicable Environmental Laws,
(B) the Real Property does not contain any Hazardous
Substance in violation of any applicable Environmental Law,
(C) neither Intek nor any Intek Subsidiary has received any
written notices, demand letters or written requests for
information from any Governmental Entity or any third party
indicating that Intek or such Intek Subsidiary may be in
violation of, or liable under, any Environmental Law,
(D) to the Knowledge of the Executive Officers of Intek,
there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or proceedings pending
or to the Knowledge of the Executive Officers of Intek threatened
against Intek or any Intek Subsidiary with respect to Intek or
any Intek Subsidiary or the Real Property relating to any
violation, or alleged violation, of any Environmental Law,
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(E) no reports have been filed, or, to the Knowledge of the
Executive Officers of Intek, are required to be filed, by Intek
or any Intek Subsidiary concerning the release of any Hazardous
Substance or the threatened or actual violation of any
Environmental Law on or at the Real Property,
(F) to the Knowledge of the Executive Officers of Intek,
there are no underground storage tanks on, in or under any of the
Real Property and no underground storage tanks have been closed
or removed from any Real Property while such Real Property was
owned or operated by Intek or any Intek Subsidiary, and
(G) to the Knowledge of the Executive Officers of Intek,
neither Intek nor any Intek Subsidiary has incurred, and none of
the Real Property is presently subject to, any liabilities fixed
(or, to the knowledge of Intek, contingent) relating to any suit,
settlement, court order, administrative order, judgment or claim
asserted or arising under any Environmental Law. (iii) To the
Knowledge of the Executive Officers of Intek, there are no
permits or licenses required under any Environmental Law in
respect of the Real Property presently operated by Intek or any
Intek Subsidiary.
(iii) to the Knowledge of the Executive Officers of Intek, there
are no permits or licenses required under any environmental Law in
respect of the Real Property presently operated by Intek or any
Intek Subsidiary.
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(iv) Neither Intek nor any Intek Subsidiary has received written
notice that any part of the Real Property has been or is listed as a
site containing Hazardous Substances pursuant to any Environmental
Law.
(n) LABOR RELATIONS. Except as set forth in Schedule 5.2(n) of the
Intek Disclosure Schedules, neither Intek nor any Intek Subsidiary is a
party to or bound by any collective bargaining agreement respecting its
employees, nor is there pending, or to the Knowledge of the Executive
Officers of Intek threatened, any strike, walkout or other work stoppage or
labor organizational effort, and neither Intek nor any Intek Subsidiary has
received any union grievances, complaints, or claims, the liability for
which would have a Material Adverse Effect on Intek.
(o) REAL ESTATE. Except as set forth on Schedule 5.2(o) of the Intek
Disclosure Schedules, no real property is owned by Intek or any Intek
Subsidiary. Schedule 5.2(o) sets forth the description of all real property
leases to which Intek is a party. There does not exist any actual or, to
the Knowledge of the Executive Officers of Intek, threatened or
contemplated condemnation or eminent domain proceedings that affect any
real estate subject to real property leases set forth on Schedule 5.2(o),
or otherwise operated or utilized by Intek, or any part thereof, and Intek
has not received any notice, oral or written, of the intention of any
Governmental Entity or other Person to take or use all or any part thereof.
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(p) LITIGATION. As of the date hereof, there is no Legal Proceeding
pending, or to the Knowledge of the Executive Officers of Intek,
threatened, that questions the validity of this Agreement, the Intek
Documents or any action taken or to be taken by Intek in connection with
the consummation of the transactions contemplated hereby or thereby. Except
as set forth on Schedule 5.2(p) of the Intek Disclosure Schedules, there is
no Legal Proceeding pending or, to the Knowledge of the Executive Officers
of Intek, threatened against Intek or any Intek Subsidiary (including,
without limitation, any claims in respect of any warranties of Intek)
which, insofar as the Executive Officers of Intek can reasonably foresee,
would have a Material Adverse Effect on Intek. Neither Intek nor any Intek
Subsidiary is subject to any outstanding judgment, decree or order entered
in any Legal Proceeding affecting or naming Intek or any Intek Subsidiary
or having a Material Adverse Effect on Intek, and to the Knowledge of the
Executive Officers of Intek, no such judgment, order or decree has been
threatened. To the Knowledge of the Executive Officers of Intek, there is
no basis for any Legal Proceeding against Intek or any Intek Subsidiary
which could reasonably be expected to have a Material Adverse Effect on
Intek.
(q) INFORMATION IN DISCLOSURE DOCUMENTS. The information with respect
to Intek or any subsidiary of Intek provided by Intek for inclusion in the
Intek Proxy Statement mailed to Intek's shareholders in connection with the
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transactions contemplated by this Agreement, will not, at the time of the
mailing of the Intek Proxy Statement and any amendments or supplements
thereto, and at the time of the Intek meeting (as defined herein), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Intek Proxy Statement shall comply as to form in all
material respects with the provisions of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the respective rules and
regulations promulgated thereunder.
(r) LICENSES. Schedule 5.2(r) of the Intek Disclosure Schedules sets
forth a complete list of all FCC licenses in which Intek has an interest or
under which Intek operates any part of its business. Intek is not, as of
the date hereof, the record and beneficial licensee and owner of any FCC
licenses. Intek is 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 managed FCC Licenses on Schedule 5.2(r) of
the Intek Disclosure Schedules (the "Licenses") and, to the knowledge of
the Executive Officers of Intek, the persons identified on Schedule 5.2(r)
of the Intek Disclosure Schedules as the holders of the Licenses are the
sole record and beneficial licensees and owners of such Licenses). Except
as set forth on Schedule 5.2(r) of the Intek Disclosure Schedules, neither
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Intek nor any of its Affiliates currently owns, of record or beneficially,
or manages any other FCC licenses. Except as set forth on Schedule 5.2(r)
of the Intek Disclosure Schedules, to the knowledge of the Executive
Officers of Intek, there is no pending or threatened action by the FCC or
any other Governmental Entity or third party to suspend, revoke, terminate
or challenge any of the Licenses or otherwise investigate the operation of
Intek's SMR business or the accuracy of the loading of the system or
systems of Intek's SMR business. Except as set forth in Schedule 5.2(r) of
the Intek Disclosure Schedules, Intek is as of the date hereof in
compliance in all material respects with all regulations concerning
construction and spacing of the Licenses or the facilities associated
therewith, and all other federal statutes, and rules, regulations and
policies of the FCC applicable to Intek, the Licenses, or Intek's SMR
business. To the Knowledge of the Executive Officers of Intek, none of the
Licenses is currently subject to or operating under any short-space
agreement or any FCC waiver of otherwise applicable rules and regulations,
except as disclosed in Schedule 5.2(r) of the Intek Disclosure Schedules.
Except as disclosed in Schedule 5.2(r), there are no payments due and
payable by Intek, nor any dispute regarding any payments due from Intek
between Intek and the licensee of any of the Licenses and, to the knowledge
of the Executive Officers of Intek, there are no payments due and payable
by any third party (including any predecessor in
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interest with respect to the Licenses), nor any dispute regarding any
payments by any third party between such third party or Intek and the
licensees of any License relating to the Licenses, including without
limitation any payments to the licensees of the Licenses.
(s) UNITS IN SERVICE. Schedule 5.2(s) of the Intek Disclosure
Schedules sets forth a true and complete list, by customer, of the units in
service in connection with the Licenses (the "Units in Service"). The Units
in Service are, to the knowledge of the Executive of Officers of Intek, in
the possession of the indicated customers, which customers are billed for
their use of such Units in Service at the actual customer rates shown in
Schedule 5.2(s) of the Intek Disclosure Schedules and which customers are
required to pay such billed amounts in full (subject to Intek's normal
prompt payment, volume and similar discounts, all of which have been
disclosed in writing to Midland) on or before the relevant due date
reflected in the relevant billing.
(t) CONTRACTS, LEASES AND SITE LICENSES. Schedule 5.2(t) of the Intek
Disclosure Schedules sets forth a true and complete index and current
copies (or written summaries, including all material terms, in the case of
oral agreements) of all material contracts (excluding customer contracts),
leases and site licenses related to the assets, Intek's business and the
Licenses, including without limitation, site licenses, equipment leases or
installment sale contracts, partnership, joint-venture or joint-use
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agreements, management agreements, dealer agreements, short-space
agreements or the like. Except as set forth on Schedule 5.2(t) of the Intek
Disclosure Schedules, all of the contracts, leases and site licenses
relating to the Licenses have been entered into by Intek on arm's length
terms with non-Affiliates are in full force and effect and are valid and
enforceable in accordance with their terms. Intek has received no notice
from any Person of termination of any such contract, lease, or site
license, and the consummation of the transaction herein contemplated shall
not affect a termination of or give any Person the right to terminate or
modify any such contract, lease or site lease. Except as set forth on
Schedule 5.2(t) of the Intek Disclosure Schedules, to the Knowledge of the
Executive Officers of Intek, none of the 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 the contracts, leases and site licenses.
(u) RELATED PARTY TRANSACTIONS. Except as set forth in Schedule 5.2(u)
of the Intek Disclosure Schedules, no current shareholder, director, or
officer of Intek or any of its Subsidiaries is presently a party to, or
since January 1, 1996, has entered into, directly or indirectly through
his, her or its Affiliates, any arrangement or transaction with
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Intek or any of its Subsidiaries providing for the furnishing of services
(except as director or officer) by or to, or the rental of real or personal
property from or to, or otherwise requiring cash payments to or by any such
person (except as a director or officer), other than those that do not
involve payments, or the furnishing of goods or services having a fair
market value by, from or to Intek or any of its Subsidiaries of more than
$25,000 in any calendar year.
(v) COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.1(v) of
the Intek Disclosure Schedules, to the Knowledge of the Executive Officers
of Intek, each of Intek, its subsidiaries and its Affiliates has complied
with all laws applicable to the conduct of its business, 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 Intek.
(w) TAX MATTERS. Intek acknowledges that the transactions contemplated
herein whereby Midland shall sell substantially all of its assets to Intek
are intended by Midland and Simmonds to qualify as a tax-free
reorganization pursuant to the provisions of Section 368(a)(1)(C) of the
Code. Accordingly, Intek hereby represents, warrants and covenants to
Midland and Simmonds as follows:
(i) Intek has no plan or intention to reacquire any of the Common
Stock issued to Midland pursuant to the terms of this Agreement;
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(ii) Intek intends to use the Acquired Assets in the conduct of its
business and has no intention to sell or otherwise dispose of any
of the Acquired Assets except for dispositions in the ordinary
course of business. After the Closing, Intek will use the
Acquired Assets to continue the conduct of the U.S. LMR
Distribution;
(iii) There is no corporate indebtedness owing between Intek and
Midland that will be settled at a discount;
(iv) Intek is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code;
(v) Intek does not own, directly or indirectly, nor has it owned
during the past five (5) years, directly or indirectly, any of
the capital stock of Midland; and
(vi) Intek will, unless otherwise required by a relevant taxing
authority, report the transactions under this Agreement
consistently with such intent.
6. COVENANTS OF MIDLAND.
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6.1 GENERAL. Prior to the Closing Date, Midland shall, consistent with the
exercise of its reasonable business judgment, exercise the rights granted to it
in this Agreement so as to minimize interference with the orderly operations of
Intek and its Affiliates or with the relationships of Intek and its Affiliates
with current or former employees, suppliers, customers, creditors,
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lien-holders and others having business or governmental relations
with Intek and its Affiliates.
6.2 RIGHTS OF INSPECTION. Prior to the Closing, Midland shall provide Intek
and Securicor, through their respective officers, employees and legal and
financial advisors and accountants, with reasonable access, during normal
business hours and upon reasonable notice, to any records of Midland (the
"Midland Materials") relating to the Acquired Assets or the U.S. LMR
Distribution and to make copies and extracts of such records. Intek's and
Securicor's rights under this Section 6.2 shall be subject to and limited by
Midland's obligations (a) to protect proprietary information pursuant to
agreements between Midland and third persons or entities and (b) to comply with
governmental or other secrecy obligations.
6.3 CONFIDENTIALITY OF INFORMATION.
(a) The Midland Materials made available to Intek or Securicor by
Midland or Midland's Affiliate, whether in verbal, written or any other
form, are deemed to be confidential and proprietary information of Midland
to the extent such Midland Materials are not purchased as part of the
Acquired Assets. No such Midland Materials shall be copied, photographed,
or in any way duplicated without the express prior written consent of
Midland except to the extent such Midland Materials have previously been
made available to the general public other than by Intek, Securicor or
their Affiliates. Midland will provide copies of the Midland Materials, or
any part of them, to Intek or Securicor at its
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request. At the election of Midland, Securicor may be required to execute a
confidentiality agreement containing provisions no less burdensome than
those set forth in this Section 6.3 with respect to Intek prior to having
the Midland Materials made available to it hereunder.
(b) Intek shall notify all employees, agents or representatives
receiving or otherwise learning of the Midland Materials, that the contents
thereof must be kept confidential pursuant to this Agreement, and that any
disclosure to a third party or use of Midland Materials not purchased as
part of the Acquired Assets without Midland's written permission will
constitute a breach of this Agreement.
(c) Intek agrees, and agrees to obtain for the benefit of Midland from
any third party provided the Midland Materials in accordance with the
provisions hereof, that upon any repudiation of this Agreement or if there
is no Closing for any reason whatsoever, Intek or such third party will not
implement, use or disclose the Midland Materials not purchased as part of
the Acquired Assets for a period of three (3) years beginning on the date
of any repudiation regardless of whether Midland surrenders, assigns or
otherwise disposes of its rights and duties under the Agreement unless (i)
the Midland Materials are or become known to the general public, except if
such public knowledge is the result of Intek's or such third party's own
actions and/or breach of this Agreement; or (ii) Intek is obligated
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to disclose any Midland Materials under applicable law or an order of a
Governmental Entity. In the event that any repudiation shall occur, Intek
shall return, and cause to be returned, to Midland all tangible Midland
Materials, notes, records and recordings, except to the extent that such
Midland Materials have been purchased as Acquired Assets hereunder.
(d) Unless purchased by Intek pursuant to the terms of this Agreement,
the Midland Materials submitted or otherwise made known to Intek shall,
without limitation, remain the property of Midland, and upon the
termination of this Agreement shall be returned promptly to Midland at its
request, together with ALL copies, notes, extracts, summaries and analyses
thereof, whether or not such copies have been provided by Midland.
(e) Intek acknowledges that any violation of this Section 6.3 will
cause immediate and irreparable harm to Midland and that the damages which
Midland will suffer may be difficult or impossible to measure. Therefore,
upon any actual or impending violation of this Section 6.3, Midland will be
entitled to the issuance of a restraining order and/or a preliminary and
permanent injunction, without bond, restraining and/or enjoining such
violation by Intek or any entity or person acting in concert with Intek.
This remedy will be in addition to any other remedy which may otherwise be
available to Midland.
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6.4 MANAGEMENT AND OPERATIONS AGREEMENTS. Following the Closing, Midland
and its Affiliates will make available key Midland management staff and product
training as well as certain facilities for the operation of the U.S. LMR
Distribution and Intek shall pay for such services and use of facilities
(including without limitation payments for any use by Intek of Midland's
tooling, its Tokyo office, or its Korean representative) substantially upon the
terms and conditions of the Management and Operations Agreements to be entered
into as of the Closing.
6.5 MIDLAND'S REPRESENTATION LETTER. Midland and Intek shall execute and
deliver a written representation letter (a "Shareholder Representation Letter")
with respect to the Common Stock to be delivered to Midland pursuant to this
Agreement providing that:
(a) Midland agrees that it shall not sell, transfer, assign, pledge or
otherwise dispose of the Common Stock unless such sale, transfer,
assignment, pledge or other disposition has been registered or is exempt
under the Securities Act and has been registered or qualified or is exempt
from registration or qualification under applicable securities laws and
Midland provides to Intek an opinion of counsel satisfactory to Intek that
a sale, transfer, assignment, pledge or other disposition of such Common
Stock may be made without registration.
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(b) Midland represents as follows:
(i) The Common Stock to be acquired by Midland will be acquired
for Midland's own account and not with a view to, or present intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws and will not be disposed of in
contravention of the Securities Act or any applicable state securities
laws;
(ii) Midland is sophisticated in financial matters and is able to
evaluate the risks and benefits of the investment in the Common Stock.
(iii) The Executive Officers of Midland had an opportunity to ask
questions and receive answers concerning Intek and the terms and
conditions of the acquisition of the Common Stock and have had full
access to such other information concerning Intek as Midland has
requested.
(iv) Midland acknowledges that the Common Stock has not been
registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an
exemption from such registration is available, and Midland is able to
bear the economic risk of any investment in the Common Stock for an
indefinite period of time.
(c) Midland acknowledges that until such time as the Common Stock has
been registered for resale pursuant to the
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Securities Act, each certificate representing the Common Stock shall be
endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE FIRST BEEN
REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER,
EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE CORPORATION
(WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION).
(d) Midland acknowledges that Intek may place stop transfer orders
against the registration or transfer of any Common Stock until such time as
the requirements of the foregoing legend are satisfied.
(e) Intek acknowledges that the legend described in (c) hereof and any
stop transfer instructions issued pursuant to (d) hereof shall be removed
promptly and Intek shall issue promptly a new certificate to Midland of
such Common Stock if the sale of such Common Stock has been registered
under the Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available or if Midland provides to
Intek an opinion of counsel reasonably satisfactory to Intek that a public
sale, transfer or assignment of such Common Stock may be made without
registration.
7. COVENANTS OF INTEK
------------------
7.1 GENERAL. Prior to the Closing Date, Intek shall, consistent with the
exercise of its reasonable business judgment,
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exercise the rights granted to it in this Agreement so as to minimize
interference with the orderly operations of Midland and its Affiliates or with
the relationships of Midland and its Affiliates with current or former
employees, suppliers, customers, creditors, lien-holders and others having
business or governmental relations with Midland and its Affiliates.
7.2 RIGHTS OF INSPECTION; CONFIDENTIALITY OF INFORMATION.
(a) Prior to the Closing, Intek shall provide Midland and its
Affiliates with access, during normal business hours, and upon reasonable
notice, to any records of Intek (the "Intek Materials"). Midland's right
under this Section 7.2(a) shall be subject to and limited by Intek's
obligations (i) to protect proprietary information pursuant to agreements
between Intek and third persons or entities and (ii) to comply with
governmental or other secrecy obligations. Midland shall be bound by the
same obligations of confidentiality as to the Intek Materials, as Intek has
with respect to the Midland Materials pursuant to Section 6.3; and
(b) From and after the Closing, Intek shall, whenever reasonably
requested by Midland, permit Midland to have access to all business records
turned over to Intek pursuant to this Agreement. Intek shall preserve and
maintain the records relating to the U.S. LMR Distribution which are part
of the Acquired Assets for at least six years after the Closing.
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7.3 EMPLOYEE MATTERS.
(a) Prior to the Closing Date, but effective as of the Closing Date,
Intek will offer employment on an "at-will basis" to the employees of
Midland listed on Schedule 7.3(a); provided that any offer of employment by
Intek to an employee who is absent from active service on the Closing Date
shall not be offered employment by Intek unless and until such inactive
employee is capable of returning to active service in the same capacity and
position that such employee occupied immediately prior to his absence,
provided such return to active service occurs prior to the second
anniversary of the Closing Date. Nothing herein shall obligate Midland to
continue the employment of any employee. Employees receiving and accepting
Intek's offer of employment pursuant to the terms hereof shall hereinafter
be referred to as "Transferred Employees." Intek's offer of employment to
such Transferred Employees shall provide for the same base salary payable
to such Transferred Employee by Midland immediately prior to such offer of
employment by Intek, but on such other terms and conditions of employment,
if any, as Intek may offer to the Transferred Employee's in its sole
discretion; PROVIDED, HOWEVER, that Transferred Employees will be offered a
health and life insurance program which shall not exclude coverage for
conditions existing prior to Closing (except to the extent excluded prior
to the Closing) and which, taken as a whole, will be comparable to the
health and life insurance program now offered to such Transferred Employees
by Midland,
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provided that the insurance company which currently provides Midland with
health and life insurance coverage is willing to provide such coverage to
Intek on and after the Closing Date at a cost comparable to that paid by
Midland immediately before the Closing. Intek shall grant all Transferred
Employees credit for purposes of eligibility and vesting under Intek's
employee benefit plans, programs, agreements or arrangements for such
Transferred Employees' years of service as employees of Midland to the same
extent a similarly situated Intek employee's service with Intek is taken
into account for purposes of eligibility and vesting under such employee
benefit plans, programs, agreements or arrangements.
(b) No provision of this Section 7.3 shall create any right in any
Transferred Employee or in his or her beneficiaries.
(c) On and after the date of Closing, Midland shall not be liable
for any expense or liability that may arise from employment with or
termination of any Transferred Employee by Intek, provided that
nothing in this Section 7.3(c) shall limit Midland's indemnification
obligations under Section 10.1.
7.4 OWNERSHIP AND PROPRIETARY RIGHTS. Intek agrees that it will maintain
all patent, copyright, trade secret and other similar notices of the proprietary
rights of Midland or third parties in and on all copies of the Midland Materials
not purchased as Acquired Assets under this Agreement. Ownership of all Midland
Materials and of all intellectual property rights of
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Midland not purchased by Intek as Acquired Assets under this Agreement,
including the Trademark, is and shall remain in Midland, subject to the license
granted under the License Agreement. All intellectual property rights purchased
by Intek as Acquired Assets under this Agreement shall vest with Intek.
7.5 AGREEMENTS WITH RESPECT TO OTHER TRANSACTIONS. From and after the
execution and delivery of this Agreement, Intek shall not amend, modify,
supplement, waive any rights or remedies under or grant any consent under the
Securicor Agreement (including any schedule and exhibit thereto), or agree to do
any of the foregoing, without the prior written consent of Midland (which
consent shall not be unreasonably withheld).
7.6 REPLACEMENT OF PERFORMANCE BONDS. With respect to each of the Acquired
Assets, on or before the later of (a) the Closing, or (b) the date on which such
Acquired Asset is assigned to Intek, Intek shall provide all letters of credit,
guaranties and performance bonds as shall be necessary for Intek to obtain the
release of Midland and its Affiliates from any guaranties, letters of credit, or
performance bonds entered into in respect of such Acquired Asset.
8. MUTUAL ADDITIONAL COVENANTS
---------------------------
8.1 EXPENSES. Except as otherwise provided in this Agreement, each party
shall bear its own legal, accounting and other expenses incurred by it in
connection with this Agreement, and the other agreements and transactions
contemplated by this Agreement.
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8.2 PUBLIC ANNOUNCEMENT. The parties agree that neither Midland nor Intek
shall issue or cause publication of any press release or other announcement,
disclosure or public communication with respect to this Agreement or the
transactions contemplated by this Agreement without the consent of the other.
Nothing in this Agreement shall prohibit any party, after reasonable efforts to
consult with the other, from issuing or causing publication of any press
release, announcement or other public communication to the extent that such
party reasonably believes that the action is required by law in connection with
obtaining necessary approvals and consents, such as in order to make any filings
of Schedule 13D with the Securities and Exchange Commission with respect to this
Agreement and the transactions contemplated in this Agreement.
8.3 COOPERATION. Neither Midland nor Intek shall voluntarily undertake any
course of action inconsistent with satisfaction of the requirements applicable
to it under this Agreement. Intek and Midland shall each promptly take all
actions as may be appropriate to enable them to perform their obligations under
this Agreement.
8.4 DISPOSITION OF FIXED ASSETS. During the 30 day period commencing on the
date of this Agreement and ending on July 16, 1996, Midland shall not sell or
otherwise dispose of any of the Fixed Assets other than in the ordinary course
of business. If during such 30 day period Intek and Midland reach mutually
agreeable terms pursuant to which Intek would acquire all or a portion of the
Fixed Assets for a mutually agreeable price, then, at the Closing, Intek shall
acquire such portion of Fixed Assets
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at such agreed price and pursuant to such terms and conditions and Intek shall
pay for such acquired Fixed Assets by assuming an amount of Midland's fixed
liabilities to Simmonds as shall be equal to the agreed price of the Fixed
Assets to be acquired. Midland and Simmonds shall identify such fixed
liabilities to be acquired on or before the Closing. If Intek and Midland do not
reach agreement on terms and conditions for Intek's acquisition of all of the
Fixed Assets prior to July 16, 1996, then, at any time thereafter and from time
to time, Midland may, without notice to Intek, sell, transfer or otherwise
dispose of the Fixed Assets which Intek has not agreed to purchase, at such
price and upon such terms and conditions as Midland in its sole discretion may
elect.
8.5 INTERIM OPERATIONS. During the period from the date of this Agreement
to the Closing Date, except as expressly provided in this Agreement, as required
by law, or as otherwise unanimously approved in advance by a committee composed
of Ed Hough, Nicholas Wilson and John Simmonds (which approval shall not be
unreasonably withheld):
(a) Intek shall conduct its business and take any actions only in the
ordinary course, consistent with past practice;
(b) Midland shall conduct the U.S. LMR Distribution and take any
action in connection with the U.S. LMR Distribution only in the ordinary
course, consistent with past practice;
(c) Midland shall not increase the rate of compensation payable or to
become payable to any employees to be offered
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employment by Intek pursuant to Section 7.3(a) other than in the ordinary
course of business consistent with past practice;
(d) Midland will not, except for the sale of inventory in the ordinary
course of business, sell, assign, transfer, convey, lease or otherwise
dispose of, or agree to sell, assign, transfer, convey, lease or otherwise
dispose of, any of the Acquired Assets.
(e) Midland and Intek will promptly notify the other of any Legal
Proceeding commenced or threatened to be commenced by or against Midland or
any subsidiary of Midland and relating to the transactions contemplated by
this Agreement.
(f) Intek will not make any changes in the outstanding equity
securities of Intek, or Intek's subsidiaries, except for Intek's issuance
of a $2.5 million debenture, up to 1,000,000 shares of Common Stock in an
equity offering, and up to 1,500,000 shares of Common Stock to acquire
interests in additional SMR licenses; (PROVIDED, HOWEVER, that Intek shall
not issue any portion of the 1,500,000 shares of Common Stock to acquire
interests in additional SMR licenses unless Nicholas Wilson, Ed Hough and
John Simmonds are in mutual agreement, and PROVIDED, FURTHERMORE, that such
agreement shall not be unreasonably withheld).
(g) Intek will not make any changes in roll-out plans of Intek's SMR
systems or Intek managed SMR systems.
(h) Intek will not make any inter-affiliate transfers or related
series of inter-affiliate transfers of funds or
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assets involving Intek and amounts in excess of $500,000 (unless for the
purpose of purchasing or paying for the purchase of goods and services at
the fair market value of such goods and services).
(i) Intek and Midland will not incur any debt or pledge any assets or
engage in a related series of incurrences of debt or pledging of assets by
Intek, involving amounts in excess of $500,000, except that Midland may
incur debt and may pledge assets, including the Acquired Assets in
connection with the loan negotiated with Octagon Capital Canada Corporation
and its assignees; PROVIDED, HOWEVER, that all liens and encumbrances on
Acquired Assets in favor of Octagon Capital Canada shall be released
effective as of the Closing.
(j) Intek will use its best efforts to (i) preserve its present
business operations, organization (including, without limitation,
management and the sales force) and goodwill, and (ii) preserve its present
relationship with Persons having business dealings with it; and Midland
will use its best efforts to (x) preserve the present business operations,
organization (including, without limitation, management and sales force)
and goodwill of the U.S. LMR Distribution, and (y) preserve its present
relationship with Persons having business dealings with the U.S. LMR
Distribution to the extent such relationship relates to the U.S. LMR
Distribution.
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(k) Intek will maintain (i) all its assets and properties in their
current condition, ordinary wear and tear excepted and (ii) 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; and Midland
will maintain (x) all of the Acquired Assets in their current condition,
ordinary wear and tear excepted, and (y) insurance upon all of the Acquired
Assets in such amounts and of such kinds comparable to that in effect on
the date of this Agreement.
(l) Each of Intek and Midland will maintain its respective books,
accounts and records in the ordinary course of business consistent with
past practices.
(m) Intek will continue to collect accounts receivable and pay
accounts payable utilizing normal procedures and without discounting or
accelerating payment of such accounts (other than in the ordinary course of
business).
(n) Intek will comply with all contractual and other obligations
applicable to its operations.
(o) Midland will not amend any of the Contracts in a material manner.
(p) Except as contemplated by this Agreement or by the Securicor
Agreement, none of Intek or its Affiliates shall make any change or
amendment to its certificate of incorporation or by-laws.
(q) Intek shall not declare, set aside, pay or make any dividend or
other distribution or payment (whether in cash,
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stock or property) with respect to, or purchase or redeem, any shares of
its capital stock.
(r) Midland shall not enter into any collective bargaining agreement
or, through negotiation or otherwise, make any commitment or incur any
liability to any labor organization relating to any of the employees of the
U.S. LMR Distribution, or enter into, adopt, amend, alter or terminate
(partially or completely) any Employee Benefit Plan or Pension Plan.
(s) Midland shall maintain or cause to be maintained the Trademark in
full force and effect through the Closing Date.
8.6 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Intek and Midland shall, so
long as all related fees are reasonable or such actions are expressly approved
by a committee composed of Ed Hough, Nicholas Wilson and John Simmonds (which
approval shall not be unreasonably withheld), (a) promptly file all applications
and reports required to be filed with the Governmental Entities between the date
of this Agreement and the date of the Closing with respect to the transactions
contemplated by this Agreement, (b) cooperate with one another (i) in promptly
determining whether any other filings are required to be made or consents,
waivers, approvals, permits or authorizations are required to be obtained under
any other applicable federal, state or foreign law or regulation or any
Contracts and (ii) in promptly making any such filings, furnishing information
required in connection therewith and seeking in a timely fashion to obtain any
such consents,
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waivers, approvals, permits or authorizations and (c) deliver to the other
parties of this Agreement copies of all such reports and filings promptly after
they are filed. Intek shall be responsible for all fees required to be paid in
connection with any such consents, approvals, permits or authorizations,
including without limitation any fees in connection with filings under the
Hart-Scott-Rodino Act (which fees the parties agree are reasonable).
8.7 PROXY STATEMENT. Promptly following the date of this Agreement, Intek
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 Intek's common stock, $.01 par value (the "Intek
Stockholders' Meeting") concerning this Agreement, the Securicor Agreement and
the transactions contemplated herein and thereby (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
Intek Meeting to be held as promptly as practicable. Midland shall use its best
efforts to furnish all information as may be reasonably requested by Intek and,
in any case, as required with respect to Intek by Regulation 14A under the
Exchange Act for inclusion in the Proxy Statement. The information provided by
Intek and Midland, respectively, for use in the Proxy Statement shall, on the
date when the Proxy Statement is first mailed to Intek's stockholders, and on
the date of the Intek Stockholders' Meeting, be true and correct in all material
respects and shall not omit to
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state any material fact required to be stated therein or necessary in order to
make the statements contained therein not misleading, and Intek and Midland each
agree promptly to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading. Intek shall duly call,
give notice of, convene and hold the Intek Stockholders' Meeting, for the
purpose of approving, among other matters, the transactions contemplated under
this Agreement and the Securicor Agreement. Intek, through its Board of
Directors, shall recommend to its stockholders approval of the foregoing. The
Proxy Statement will comply as to form in all material respects with all
applicable requirements of the Exchange Act, and no amendment or supplement to
the Proxy Statement shall be made by Intek without the prior written approval of
Midland (which approval shall not be unreasonably withheld), except as otherwise
required by applicable laws.
8.8 STOCKHOLDERS' MEETING.
(a) Intek shall take all action necessary, in accordance with
applicable law and its certificate of incorporation and by-laws, to convene
the Intek Meeting as promptly as practicable for the purpose of considering
and taking action upon the transactions contemplated by this Agreement and
the Securicor Agreement which are submitted for the approval of Intek's
stockholders.
(b) The Special Committee and Board of Directors of Intek shall,
subject to their fiduciary duties to Intek's stockholders after
consultation with independent counsel,
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recommend that the holders of such shares vote in favor of and approve (i)
the issuances of Common Stock contemplated by this Agreement and the
Securicor Agreement and (ii) an amendment of the certificate of
incorporation of Intek to increase the authorized shares of Common Stock to
fifty million (50,000,000) at the Intek Meeting.
8.9 HITACHI SUPPLY AGREEMENT.
(a) After the Closing, neither Midland nor Simmonds will take any
action that would result in the termination or terminability of the Hitachi
Supply Agreement prior to its scheduled termination date, or take any
action that would result in Intek's failure to be included within the
definition of "Midland Affiliate" as set forth in the Hitachi Supply
Agreement; PROVIDED, HOWEVER, that nothing herein shall obligate Midland to
satisfy any minimum purchase requirements under the Hitachi Supply
Agreement.
(b) After the Closing, Intek will not take any action that would
result in the termination or terminability of the Hitachi Supply Agreement
prior to its scheduled termination date, and Intek will not take any action
that would result in Intek's failure to be included within the definition
of "Midland Affiliate" as set forth in the Hitachi Supply Agreement;
PROVIDED, HOWEVER, that Midland and Simmonds acknowledge that Intek intends
to continue to purchase 220 MHz products from Securicor and that Intek
shall have no obligation to satisfy any minimum purchase requirements under
the Hitachi Supply Agreement. Intek shall, however, use its
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best efforts in a commercially reasonable manner to market and sell Midland
and Hitachi products at a volume comparable to historical levels achieved
by Midland in its conduct of the U.S. LMR Distribution.
9. CONDITIONS PRECEDENT
--------------------
9.1 CONDITIONS PRECEDENT TO INTEK'S OBLIGATIONS. The obligations of Intek
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any one or more of which may be waived in whole or in part by Intek):
(a) MIDLAND OFFICER'S CERTIFICATE. (i) Each of the representations and
warranties of Midland contained in this Agreement shall be true, complete
and correct in all material respects on and as of the Closing, and (ii)
Midland shall have performed or complied with, in all material respects,
all covenants and agreements contemplated by this Agreement to be performed
or complied with by Midland at or prior to the Closing and (iii) Midland
shall have delivered to Intek a certificate of Midland's Chief Financial
Officer (the "Midland Officer's Certificate") certifying to the accuracy of
items (i) and (ii) above, or if Midland's Chief Financial Officer shall be
unable to certify the accuracy of (i) and (ii) above, then he shall set
forth in the Midland Officer's Certificate (x) the manner in which any of
the representations and warranties of Midland contained herein shall not be
true, complete and correct in all material respects, and (y) each failure
by Midland to perform or
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comply with, in all material respects, any covenant or agreement
contemplated by this Agreement to be performed or complied with by Midland
at or prior to the Closing. If Intek elects to consummate the transactions
contemplated under this Agreement after delivery of such Midland Officer's
Certificate, the items set forth in the Midland Officer's Certificate shall
not constitute a breach of this Agreement and Intek shall not be entitled
to any indemnity therefor.
(b) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall not
have been any Material Adverse Change in the U.S. LMR Distribution.
(c) BOARD RATIFICATION. On or prior to the Closing, Intek's Board of
Directors shall have ratified and reaffirmed the actions and determinations
of the Special Committee of the Board of Directors of Intek referenced in
this Agreement, including, without limitation, (i) the determination that
the transaction contemplated by this Agreement and the Securicor Agreement
is advisable and in the best interests of Intek and its stockholders, (iii)
the approval of this Agreement and the Securicor Agreement and, subject to
the fulfillment or waiver at or prior to the Closing Date of the conditions
set forth in Sections 9.1, the transactions contemplated hereby and by the
Securicor Agreement and (iii) all other action required to be taken to
authorize the issuance of the additional shares of Common Stock and to
submit for consideration by the stockholders of Intek an amendment of
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the certificate of incorporation of Intek to authorize additional shares of
Common Stock.
(d) HART-SCOTT-RODINO COMPLIANCE; NO ADVERSE ACTION. Any prescribed
waiting period under the Hart-Scott-Rodino Act with respect to the
transactions contemplated by this Agreement shall have expired; and no
preliminary or permanent injunction or other order (including a temporary
restraining order) of any governmental authority which prevents the
consummation of the transactions contemplated by this Agreement shall have
been issued and remain in effect.
(e) OPINION OF COUNSEL FOR MIDLAND. Jones, Day, Reavis & Pogue,
counsel to Midland, shall have delivered to Intek an opinion, dated the
Closing Date, in such form as shall be agreed upon.
(f) CONSENTS, PERMITS AND GOVERNMENTAL APPROVALS. All consents,
waivers, permits, authorizations and approvals (other than approvals to the
assignment of Contracts with Governmental Entities) required to be obtained
by Midland from any third party or any Governmental Entity prior to the
Closing (excluding such consents, waivers, permits, authorizations and
approvals the failure to obtain which, individually or in the aggregate,
will not have a Material Adverse Effect on the U.S. LMR Distribution or on
Midland's ability to consummate the transactions and receive the benefits
contemplated hereby) shall have been received.
(g) CONVEYANCING DOCUMENTS. Subject to Section 2.2 hereof, Midland
shall have delivered to Intek such bills of
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sale, assignments, quit claim deeds and other goods and sufficient
instruments of transfer conveying to Intek Midland's entire right, title
and interest in and to the Acquired Assets.
(h) LICENSE AGREEMENT. Midland and Intek shall have entered into the
License Agreement and Midland shall have recorded the reassignment of the
Trademark from Marine Midland Bank in the U.S. P.T.O.
(i) MANAGEMENT AND OPERATIONS AGREEMENTS. Midland and Intek shall have
entered into the Management and Operations Agreements.
(j) SECURICOR AGREEMENT. Intek shall have consummated the transactions
contemplated by the Securicor Agreement on or before Closing.
(k) REGISTRATION RIGHTS AGREEMENT. Intek, Roamer One Holdings, Inc.,
Securicor, Simmonds, Midland, Anglo York, Choi & Choi, HK Limited, Octagon
Investments Limited, Murray Sinclair and/or any of their Affiliates, and
any other party, as the parties may agree, shall have entered into the
Registration Rights Agreement.
(l) ESCROW AGREEMENT. Intek and Midland shall have entered into the
Escrow Agreement.
(m) CONSIGNMENT AGREEMENT. Intek and Midland shall have entered into
the Consignment Agreement substantially in the form of EXHIBIT E.
(n) FAIRNESS OPINION. Intek shall have received an opinion of
Fahnestock & Co. Inc. that the transactions
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contemplated by this Agreement and the Securicor Agreement are fair to the
stockholders of Intek and such opinion shall not have been modified or
withdrawn.
(o) STOCKHOLDER APPROVAL. The stockholders of Intek shall have
approved the amendment to the certificate of incorporation of Intek to
authorize additional shares of Common Stock to be issued to Midland and
Securicor pursuant to this Agreement and the Securicor Agreement.
9.2 CONDITIONS PRECEDENT TO MIDLAND'S OBLIGATIONS. The obligations of
Midland to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions (any one or more of which may be waived in whole or in part my
Midland):
(a) INTEK OFFICER'S CERTIFICATE. (i) Each of the representations and
warranties of Intek contained in this Agreement shall be true, complete and
correct in all material respects on and as of the Closing; (ii) Intek shall
have performed or complied with, in all material respects, all covenants
and agreements contemplated by this Agreement to be performed or complied
with by Intek at or prior to the Closing; and (iii) Intek shall have
delivered to Midland a certificate of Intek's Chief Financial Officer (the
"Intek Officer's Certificate") certifying as to the accuracy of items (i)
and (ii) above, or if Intek's Chief Financial Officer shall be unable to
certify the accuracy of (i) and (ii) above, then he shall set forth in the
Intek Officer's Certificate (x) the manner in which any of the
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representations and warranties of Intek contained herein shall not be true,
complete and correct in all material respects, and (y) each failure by
Intek to perform or comply with, in all material respects, any covenant or
agreement contemplated by this Agreement to be performed or complied with
by Intek at or prior to the Closing. If Midland elects to consummate the
transaction contemplated under this Agreement after delivery of such Intek
Officer's Certificate, the items set forth in the Intek Officer's
Certificate shall not constitute a breach of this Agreement and Midland
shall not be entitled to any indemnity therefor.
(b) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall not
have been any Material Adverse Change in the financial condition, results
of operation or business of Intek.
(c) HART-SCOTT-RODINO COMPLIANCE; NO ADVERSE ACTION. Any prescribed
waiting period under the Hart-Scott-Rodino Act with respect to the
transactions contemplated by this Agreement shall have expired, and no
preliminary or permanent injunction or other order (including a temporary
restraining order) of any governmental authority which prevents the
consummation of the transactions contemplated by this Agreement shall have
been issued and remain in effect, nor shall any action seeking to restrain
or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking damages in connection therewith, be pending, nor
shall any such action be overtly threatened.
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(d) CAPITALIZATION. Since the date hereof, Intek shall not have issued
any interest in its equity securities, except with the consent of Ed Hough,
John Simmonds and Nicholas Wilson, except for Intek's issuance of a $2.5
million debenture, up to 1,000,000 shares of Common Stock in an equity
offering.
(e) OPINION OF COUNSEL FOR INTEK. Kohrman Jackson & Krantz PLL,
counsel to Intek, shall have delivered to Midland an opinion, dated the
Closing Date, in a form to be agreed upon.
(f) CONSENTS, PERMITS AND GOVERNMENTAL APPROVALS. All consents,
waivers, permits, authorization and approvals required to be obtained by
Intek from any third party or Governmental Entity prior to the Closing
(excluding such consents, waivers, permits, authorizations and approvals
the failure to obtain which, individually or in the aggregate, will not
have a Material Adverse Effect on Intek's ability to consummate the
transactions and receive the benefits contemplated hereby) shall have been
received.
(g) INSTRUMENTS OF ASSUMPTION. Intek shall have delivered to Midland
such instruments of assumption of the Assumed Liabilities as Midland may
reasonably request.
(h) REPLACEMENT OF PERFORMANCE BONDS. Intek shall have provided all
letters of credit, guaranties and performance bonds as shall be necessary
for Intek to obtain the release of Midland and its Affiliates from any
guaranties, letters of credit, or performance bonds entered into in respect
of any
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of the Acquired Assets which are assigned or otherwise conveyed to Intek as
of the Closing, all as set forth on Schedule 9.2(g).
(i) MANAGEMENT AND OPERATIONS AGREEMENTS. Midland, Simmonds and Intek
shall have entered into the Management and Operations Agreements.
(j) SECURICOR AGREEMENT. Intek shall have consummated the transactions
contemplated by the Securicor Agreement on or before the Closing.
(k) REGISTRATION RIGHTS AGREEMENTS. Intek, Roamer, Securicor,
Simmonds, Midland and Anglo York, and/or any of their Affiliates, and any
other party, as the parties may agree, shall have entered into the
Registration Rights Agreement.
(l) ESCROW AGREEMENT. Intek and Midland shall have entered into the
Escrow Agreement.
(m) CONSIGNMENT AGREEMENT. Intek and Midland shall have entered into
the Consignment Agreement.
(n) STOCKHOLDER APPROVAL. The stockholders of Intek shall have
approved the amendment to the certificate of incorporation of Intek to
authorize additional shares of Common Stock to be issued to Midland and
Securicor pursuant to this Agreement and the Securicor Agreement.
10. INDEMNIFICATION
---------------
10.1 MIDLAND'S AND SIMMONDS' INDEMNIFICATION OBLIGATIONS. From and after
the Closing, but subject to the conditions and limitations of this Agreement or
any other Midland Document,
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Midland and Simmonds shall defend, indemnify and save Intek 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), net of any tax benefits (collectively "Damages") whatsoever resulting
from or arising out of (a) any breach or inaccuracy of any covenant,
representation or warranty or obligation of Midland contained in this Agreement,
(b) any liability or obligation of Midland other than the Assumed Liabilities,
whether arising prior to, on or after the Closing, (c) any claims by any
employee or former employee of Midland (whether or not a Transferred Employee)
arising out of the employment or termination of employment of the employee on or
prior to the Closing Date or as a result of transactions contemplated by this
Agreement, including any claim pursuant to the Worker Adjustment and Retraining
Notification Act, and (d) any liability for brokerage or finder's fee or
commission claimed by any person based upon the actions or alleged actions of
Midland for or on account of this Agreement or the transactions contemplated
hereby.
10.2 INTEK'S INDEMNIFICATION OBLIGATIONS. From and after the Closing, but
subject to the conditions and limitations this Agreement, Intek shall defend,
indemnify and save Midland, Simmonds and their respective directors, officers,
employees, Affiliates, agents, successors and assigns harmless from and against
any and all Damages whatsoever resulting from or arising out of (a) any breach
or inaccuracy of any covenant, representation or warranty of Intek contained in
this Agreement or
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any other Intek Document, (b) the conduct of the U.S. LMR Distribution by Intek
after the Closing, (c) the Assumed Liabilities, and (d) any liability for
brokerage or finder's fee or commission claimed by any person based upon the
actions or alleged actions of the Intek for or on account of this Agreement or
the transactions contemplated hereby.
10.3 NOTICE AND OPPORTUNITY TO DEFEND.
(a) In the event that any action, suit, proceeding, investigation,
claim or demand is asserted against or sought to be collected from an
indemnified party (a "Third Party Claim") for which such indemnified party
(each a "Beneficiary") intends to assert a right of indemnity under Section
10.1 or 10.2, the Beneficiary shall notify the other party (the
"Indemnitor") with reasonable promptness of such Third Party Claim,
specifying, to the extent known, the nature, circumstances and amount of
the Third Party Claim (a "Third Party Claim Notice"). The Indemnitor shall
have 14 days from its receipt of a Third Party Claim Notice to notify the
Beneficiary (i) whether the Indemnitor disputes the Beneficiary's right of
indemnity with respect to such Third Party Claim and (ii) if the Indemnitor
does not dispute such right, whether or not the Indemnitor desires to
defend the Beneficiary against such Third Party Claim.
(b) If the Indemnitor notifies the Beneficiary within the 14-day
period that the Indemnitor does not dispute the Beneficiary's right of
indemnity and the Indemnitor desires to defend against such Third Party
Claim, then the Indemnitor
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shall have the right to assume and control, at its sole cost and
expense, the defense of such Third Party Claim by appropriate
proceedings with counsel reasonably acceptable to the Beneficiary.
Beneficiary may participate in, but not control, any such defense or
settlement, at its sole cost and expense.
(c) If the Indemnitor (i) disputes the Beneficiary's right of
indemnity with respect to a Third Party Claim, or (ii) does not dispute
such right of indemnity but fails to promptly assume and prosecute the
defense of such Third Party Claim, then the Beneficiary shall be
entitled to assume and control the defense of such Third Party Claim,
and the Beneficiary shall be entitled to indemnification for the cost
of such defense.
(d) The party responsible for the defense of any Third Party
Claim (the "Responsible Party") shall, to the extent reasonably
requested by the other party, keep such other party informed as to the
status of any Third Party Claim for which such party is not the
Responsible Party, including, without limitation, all settlement
negotiations and offers.
(e) Neither Midland or Simmonds, on the one hand, nor
Intek, on the other hand, shall enter into any settlement of
any Third Party Claim without the prior written consent of
the other party. The Responsible Party shall promptly notify
the other party of each settlement offer (including whether
or not the Responsible Party is willing to accept the
proposed settlement with respect a Third Party Claim). Such
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other party agrees to notify the Responsible Party with reasonable
promptness whether or not such party is willing to accept the proposed
settlement offer. If the party other than the Responsible Party fails
to consent to any settlement offer of a Third Party Claim that only
involves the payment of a sum of money and has no other consequence,
such other party may continue to contest or defend such Third Party
Claim and, in such event, the maximum total indemnity with respect to
such Third Party Claim (including the reasonable costs and expenses of
contesting or defending such Third Party Claim incurred after the party
other than the Responsible Party fails to consent to such settlement
offer) shall not exceed the amount of such settlement offer.
(f) In the event that a Beneficiary has a claim for indemnity
that does not involve a Third Party Claim (a "Direct Claim"), Intek or
Midland or Simmonds, as the case may be, (a "Claimant") shall notify
the Indemnitor of such Direct Claim with reasonable promptness,
specifying, to the extent known, the nature, circumstances and amount
of such Direct Claim (a "Direct Claim Notice"). If the Indemnitor
notifies the Claimant that it disputes the claim for indemnity with
respect to a Direct Claim set forth in a Direct Claim Notice, the
resolution of such Direct Claim shall be determined in accordance with
Section 13.13.
(g) All claims for indemnification under this Article 10 must
be asserted by Intek or Midland or Simmonds, as the case may be, prior
to twelve (12) months after the Closing or
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with respect to any covenant, twelve (12) months after the later of the
Closing or the breach of such covenant.
(h) For purposes of this Agreement, the amount of damages of
Intek or Midland or Simmonds with respect to Third Party Claims and
Direct Claims shall be reduced to the extent of any applicable
insurance proceeds or other third party recovery received by it. Intek
or Midland or Simmonds, as applicable, shall timely file claims for
insurance proceeds and/or defense and pursue all other third party
reimbursement rights with respect to any Damages sustained by them.
(i) Notwithstanding Sections 10.1 and 10.2 of this Agreement,
neither Intek nor Midland shall be entitled to indemnification under
this Article 10 with respect to any breach of any representation or
warranty contained in this Agreement or any other Midland Document or
Intek Document unless and until its aggregate claims exceeds Fifty
Thousand Dollars ($50,000) calculated on a cumulative basis and not on
a per claim basis. Once indemnifiable claims by Midland or Intek exceed
$50,000, either Midland or Intek, as the case may be, shall be entitled
to payment for all amounts indemnifiable under this Section 10 in
excess of $50,000.
(j) Notwithstanding anything to the contrary contained in this
Agreement, (A) the aggregate liability of Midland and Simmonds under
Section 10.1(a), other than for Damages incurred by Intek as a direct
result of Midland's breach of its representations and warranties set
forth in Section 5.1(f) of this Agreement and/or its covenants set
forth in
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Sections 2.2, 7.2, and 12.1(a) of this Agreement, shall not exceed
$600,000 and (B) the aggregate liability of Intek under Section
10.2(a), other than for Damages incurred by Midland or Simmonds as a
direct result of Intek's breach of its representations and warranties
contained in Section 5.2(w) and its covenants set forth in Sections 3.2
and 6.3 of this Agreement, shall not exceed $600,000.
10.4 Payment of Damages. Claims to an indemnified party under this
Section 10 shall be paid in shares of Intek's Common Stock, and the number of
shares of Intek's Common Stock to be transferred in satisfaction of such Claims
and the terms of such transfer shall be determined by dividing the amount of
such Claims by the Applicable Average Share Value. For purposes hereof, 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
on which the amount of such Claims are determined.
10.5 Exclusive Remedy. From and after the Closing, the indemnification
rights set forth in this Section 10 and the right to specific performance under
Section 13.12 of this Agreement shall be the sole and exclusive remedy for
claims or Damages resulting from any misrepresentation, breach or inaccuracy of
any representation, warranty, covenant or agreement of Intek or Midland
contained in this Agreement, and none of Midland or Intek shall assert any such
claim except as provided in this Section 10; provided, however, that the
foregoing shall not apply to any
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claims or Damages based on fraud or a breach by any party hereto of its
obligations under Section 12.1 of this Agreement.
11. ASSIGNMENT AND SUBLICENSE. Neither party hereto may transfer its
rights or obligations hereunder, except that (a) Midland may assign in part or
in whole its rights and obligations hereunder to SCL, Inc., a Delaware
corporation and the sole shareholder of Midland ("SCL, Inc."), and SCL, Inc., in
turn, may assign in part or in whole its rights and obligations hereunder to any
Affiliate of SCL, Inc., and (b) Intek is authorized to assign its rights and
obligations hereunder to Midland USA, Inc., a Delaware corporation and wholly
owned subsidiary of Intek, and to appoint distributors and sublicensees in
accordance with the License Agreement; provided, however, that no such
assignment by Intek, Midland or SCL, Inc. shall relieve the assignor thereof of
any of its obligations under this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and shall inure to the benefit of the legal
representatives, successors and assigns of the parties hereto. No assignment of
this Agreement, nor any sale, assignment or transfer pursuant to this Section
11, shall release the assignor from any of its duties, obligations or
liabilities under this Agreement unless the other party shall consent to such
release in writing.
12. MISCELLANEOUS POST CLOSING COVENANTS
12.1 Non-Compete.
(a) Each of Simmonds and Midland agrees that for a period of
three (3) years following the Closing, neither Midland, Simmonds, nor
their respective subsidiaries will
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sell, distribute or otherwise transfer LMR Products within the
Territory, integrate LMR products from any source into LMR systems
within the Territory, or solicit or encourage any dealer of LMR
Products to modify or terminate its arrangements with Intek regarding
the distribution of any LMR Products; provided, however, that this
covenant shall not apply (i) with respect to the performance by Midland
or Simmonds or their respective subsidiaries of their obligations under
any agreement which is not included in the Acquired Assets and which is
in existence on the date hereof, (ii) with respect to the sale,
distribution or other transfer of LMR Products owned by or in transit
to Midland, Simmonds or their subsidiaries as of the Closing Date and
not acquired by Intek; provided that such sale or distribution does not
occur within sixty (60) days after the Closing, and (iii) to the extent
that any law, regulation or order of a Governmental Authority would be
violated thereby.
(b) Intek agrees that Intek will not directly or indirectly
sell, distribute or otherwise transfer, or permit Intek's Subsidiaries,
Affiliates, or sublicensees to sell, distribute or transfer LMR
Products using the "Midland" name to end-users outside the Territory.
12.2 Liquidation of Midland into SCL, Inc. As part of the transactions
contemplated hereby, Midland shall completely liquidate by merging with and into
SCL, Inc. as promptly as practical after the Closing.
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13. MISCELLANEOUS
13.1 Amendments. This Agreement may be amended only by a writing
executed by the parties.
13.2 Entire Agreement. This Agreement and the other agreements
expressly provided for in this Agreement set forth the entire understanding of
the parties to this Agreement and supersede all prior contracts, agreements,
arrangements, communications, discussions, representations and warranties,
whether oral or written, between the parties.
13.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
without giving effect to its principles of conflict of laws.
13.4 Notices. Any notice, request or other communication required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given (a) when received if personally delivered or after being sent by
telecopy, with confirmed answer back, or (b) within 1 business day of being sent
by established overnight courier, to the parties at their respective addresses
set forth below:
To Simmonds: c/o Simmonds Capital Limited
5255 Yonge Street, Suite 1050
Willowdale, Ontario
Canada, M2N 6P4
Attn: Mr. David O'Kell
With a copy to: Jones, Day, Reavis & Pogue
901 Lakeside Avenue
North Point
Cleveland, Ohio 44114
Attn: Mary Lynn Durham, Esq.
Fax: (216) 579-0212
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To Midland: Midland International Corporation
c/o Simmonds Capital Limited
5255 Yonge Street, Suite 1050
Willowdale, Ontario
Canada, M2N 6P4
Attn: Mr. David O'Kell
With a copy to: Jones, Day, Reavis & Pogue
901 Lakeside Avenue
North Point
Cleveland, Ohio 44114
Attn: Mary Lynn Durham, Esq.
Fax: (216) 579-0212
To Intek: Intek Diversified Corporation
970 West 190th Street, Suite 720
Torrence, California 90502
Attn: Mr. Nicholas Wilson
With a copy to: Kohrman Jackson & Krantz P.L.L.
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attn: Steven L. Wasserman, Esq.
Any party by written notice to the other may change the address or the persons
to whom notices or copies shall be directed.
13.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same instrument.
13.6 Bulk Sales Intek waives compliance by Midland with the provisions
of the so-called "bulk sales" laws of any state.
13.7 Waivers. Any waiver by any party of any violation of, breach of or
default under any provision of this Agreement or any other agreements provided
for in this Agreement, by the other party shall not be construed as, or
constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement
or any other agreements provided for in this Agreement.
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13.8 Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or entity
other than Intek, Midland, Simmonds and their Affiliates any rights or remedies
under or by reason of this Agreement, other than any rights specifically
conferred upon Securicor hereunder.
13.9 Schedules and Exhibits. The Intek Disclosure Schedules, the Midland
Disclosure Schedules and the other Schedules and Exhibits attached to this
Agreement are incorporated in this Agreement and shall be part of this Agreement
for all purposes as modified by the Intek Officer's Certificate or the Midland
Officer's Certificate, as the case may be.
13.10 Headings. The headings in this Agreement are solely for
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement.
13.11 Independent Contractor. Each party is and shall remain an
independent contractor. Nothing in this Agreement shall be deemed to establish a
partnership, joint venture, or agency relationship between the parties. Neither
party may obligate or bind the other party in any manner to a third party.
13.12 Specific Performance. Intek and Midland acknowledge and agree that
any breach by the other party of the foregoing provisions, including, without
limitation, any covenant of each party, may cause the injured party irreparable
injury for which there is no adequate remedy of law. Therefore, Intek and
Midland expressly agree that Midland or Intek shall be entitled, as the
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case may be, in addition to any remedy available, injunctive or other equitable
relief to require specific performance or prevent a breach of the foregoing
provisions.
13.13 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES COMMENCE ON NEXT PAGE.
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IN WITNESS WHEREOF, the parties have caused their
duly authorized representatives to execute this Agreement as of the date first
above written.
MIDLAND INTERNATIONAL CORPORATION
By: /s/John G. Simmonds
--------------------------------
Name: John G. Simmonds
Title: Chief Executive Officer
INTEK DIVERSIFIED CORPORATION
By: /s/Nicholas R. Wilson
--------------------------------
Name: Nicholas R. Wilson
Title: Chairman
SIMMONDS CAPITAL LIMITED
By: /s/David C. O'Kell
--------------------------------
Name: David C. O'Kell
Title: Executive Vice President
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EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement, dated as of ____________, 1996 (the "Closing Date"),
among INTEK DIVERSIFIED CORPORATION, a Delaware corporation ("Intek"), MIDLAND
INTERNATIONAL CORPORATION, a Delaware corporation ("Midland"), and AMERICAN
STOCK TRANSFER & TRUST COMPANY, a New York corporation, as escrow agent ("Escrow
Agent").
This is the Escrow Agreement referred to in Section 3.7 of the Sale of Assets
and Trademark License Agreement dated as of __________ __, 1996 (the "Sale
Agreement") among Intek, Midland and Simmonds Capital Limited, an Ontario
corporation which indirectly owns all of the capital stock of Midland.
Pursuant to the terms of the Sale Agreement, Midland agreed to assign to Intek,
or otherwise provide Intek the benefit of, that certain Agreement (the "Hitachi
Supply Agreement") dated May 12, 1994, between Midland and Hitachi Denshi, Ltd.,
a Japanese corporation ("Hitachi"), whereby Hitachi agreed to manufacture and
sell to Midland certain mobile radios ("Hitachi Products") and granted Midland
an exclusive right to sell Hitachi Products in a certain territory, as such
Hitachi Supply Agreement related to the Territory. The terms of the Hitachi
Supply Agreement provide, among other things, that Hitachi may terminate the
Hitachi Supply Agreement in the event of the transfer by Midland of "an
important part of the stock, assets or business to a third party. . . ."
The parties, intending to be legally bound, hereby agree as follows:
1. DEFINED TERMS
Defined terms used in the Sale Agreement and not expressly defined herein shall
have the meanings set forth in the Sale Agreement.
2. ESTABLISHMENT OF ESCROW
(a) Midland hereby deposits with Escrow Agent stock certificate(s) representing
500,000 shares of the common stock, par value $.01 per share, of Intek received
by it as a portion of the purchase price paid by Intek pursuant to the Sale
Agreement (as increased by future stock dividends or stock splits thereon and as
reduced by any disbursements, amounts withdrawn under Section 7(j), or losses on
investments, the "Escrow Fund"). Such stock certificates are accompanied by duly
executed assignments, with signature(s) guaranteed. Escrow Agent acknowledges
receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard,
invest and disburse the Escrow Fund pursuant to the terms and conditions hereof.
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(c) Midland shall have the rights to exercise any and all voting and other
consensual rights pertaining to the Escrow Fund and the right to receive and
retain any and all dividends and other nonstock distributions paid in respect of
the Escrow Fund.
3. INVESTMENT OF ESCROW FUND
The Escrow Agent shall not sell, encumber or otherwise dispose of the Intek
common stock held as a part of the Escrow Fund, except that the Escrow Agent
shall, upon the written direction of Midland, effect a sale or other disposition
for cash of the Intek stock in a transaction involving (a) the receipt by the
shareholders of Intek of cash in any merger or reorganization in exchange or
partly in exchange for shares of common stock of Intek; (b) the sale of all or
substantially all of the assets of Intek for cash and the distribution to
shareholders of Intek of the proceeds of such sale as a liquidating
distribution; or (c) a cash tender offer for all or a part of the shares of
common stock of Intek. In the event of any receipt of cash by the Escrow Agent
as a result of any of such transactions, such cash shall be invested by the
Escrow Agent, from time to time, to the extent possible, in United States
Treasury bills having a remaining maturity of 90 days or less and resale
obligations secured by such United States Treasury Bills or in money market
mutual funds invested solely in such United States Treasury Bills, with any
remainder being deposited and maintained in a money market deposit account with
Escrow Agent, until disbursement of the entire Escrow Fund. Escrow Agent is
authorized to liquidate in accordance with its customary procedures any portion
of the Escrow Fund consisting of investments to provide for payments required to
be made under this Agreement.
4. PURPOSE OF ESCROW
The purpose of this Escrow Agreement is to provide a mechanism for indemnifying
Intek against any actual out-of-pocket loss, cost, liability or expense incurred
by Intek ("Losses") and resulting from the termination by Hitachi of the Hitachi
Supply Agreement without the consent of Intek prior to May 12, 1997 (an
"Indemnity Event"); provided, however, that for purposes of this Agreement an
Indemnity Event shall not be deemed to have occurred and Intek shall not be
entitled to any portion of the Escrow Fund, if (a) Intek takes an action which
results in termination of the Hitachi Supply Agreement (excluding the
transactions contemplated by the Sale Agreement); provided, however, that, for
the purposes of the foregoing, Intek shall not be deemed to have taken any such
action if Intek fails to satisfy any minimum purchase requirements under the
Hitachi Supply Agreement or continues to purchase 220 MHz products from
Securicor or (b) Hitachi's action to terminate the Hitachi Supply Agreement
notwithstanding, Hitachi continues to be willing to sell Hitachi Products to
Intek after May 12, 1997, upon substantially the terms set forth in the Hitachi
Supply Agreement or on such other terms as are agreed to by Intek or (c) Intek
has not ordered any Hitachi Products pursuant to the Hitachi Supply Agreement
during the sixty (60) days immediately preceding Hitachi's termination of the
Hitachi Supply Agreement.
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5. PAYMENT OF CLAIMS
(a) Indemnity Claim. Within thirty (30) days after the occurrence of an
Indemnity Event, but in any event prior to the Termination Date (as hereinafter
defined), Intek shall give notice (the "Indemnity Notice") to Midland and Escrow
Agent specifying in reasonable detail the occurrence of such Indemnity Event and
the nature and dollar amount of Losses incurred by Intek resulting from the
occurrence of such Indemnity Event (a "Claim"); provided, however, that Intek
shall not be entitled to reimbursement or indemnity for Claims hereunder except
to the extent that such Claims, in the aggregate:
(i) exceed $50,000; and
(ii) are less than or equal to the then balance of the Escrow Fund
(after deducting all amounts expended or disbursed by Escrow
Agent pursuant to the terms of this Escrow Agreement).
Escrow Agent shall not independently inquire into or consider the merits of any
Claim but shall be entitled to rely upon and shall perform its duties hereunder
in strict accordance with the provisions of this Escrow Agreement.
(b) Satisfaction of Disputed Indemnity Claim. If Midland gives notice (a
"Counter Notice") to Intek and Escrow Agent disputing a Claim which Counter
Notice shall specify in reasonable detail the reason for the dispute and the
dollar amount in dispute (each a "Disputed Claim") within thirty (30) days
following receipt by Escrow Agent of the Indemnity Notice asserting such Claim
(the "Counter Notice Period"), Escrow Agent shall not make any payment to Intek
with respect to any such Disputed Claim except upon Escrow Agent's receipt of,
and then only in accordance with the terms of, (i) a joint written instruction
of Intek and Midland instructing Escrow Agent to disburse or retain all or a
portion of the Escrow Fund in resolution of such Disputed Claims, or (ii) a
Certified Court Order (as hereinafter defined). For purposes of this Escrow
Agreement, a "Certified Court Order" shall be a final non-appealable order of a
court of competent jurisdiction directing the Escrow Agent to disburse or retain
all or a portion of the Escrow Fund in satisfaction of such Disputed Claims and
accompanied by a legal opinion of counsel for the presenting party, satisfactory
to the Escrow Agent, to the effect that such court order is final and
non-appealable. Escrow Agent shall upon receipt and without further
investigation, act upon and comply with the terms of any such joint written
instruction or Certified Court Order.
(c) Satisfaction of an Undisputed Claim. If the Escrow Agent does not receive a
Counter Notice with respect to a Claim before expiration of the Counter Notice
Period (an "Undisputed Claim"), the amount of such Undisputed Claim shall be
deemed to be the amount set forth in the Indemnity Notice asserting such
Undisputed Claim and its shall be satisfied in the manner set forth in Section
5(d) of this Escrow Agreement.
(d) Payment of Claims. Escrow shall make any payment to Intek required pursuant
to Section 5(b) or Section 5(c) of this Agreement by withdrawing from the Escrow
Fund and transferring to Intek, first, a number of shares of Intek Common Stock
determined by
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dividing the amount of the Claim by the average of then applicable Average Share
Price. For purposes of this Agreement, "Average Share Price" shall mean the
average of the last reported sale price of Intek Common Stock on the NASDAQ
System for the ten (10) trading days immediately preceding, as applicable, (A)
the end of the Counter Notice Period (counting the last day of such Counter
Notice Period) with respect to any Undisputed Claim, or (B) the date upon which
Escrow Agent receives written joint written instructions from Midland and Intek
or a Certified Court Order, with respect to any Disputed Claim. If such transfer
of Intek Common Stock is insufficient to satisfy such Claim, then, to the extent
that there are cash or other proceeds remaining in the Escrow Account, Escrow
Agent shall liquidate such balance and apply it to satisfy the unpaid amount of
such Claim remaining after application of the Intek Common Stock thereto.
6. TERMINATION OF ESCROW
This Escrow Agreement shall terminate on the earlier of (the "Termination
Date"):
(a) Any sale, transfer or other disposition of all or substantially all of the
business or assets of Intek and its Subsidiaries, taken as a whole;
(b) Any transaction resulting in Securicor holding less 51% of the voting
securities of Intek;
(c) Disbursement by the Escrow Agent of the entire Escrow Fund pursuant to the
terms of this Escrow Agreement; and
(d) May 31, 1997;
except that this Escrow Agreement shall continue in effect with respect to, and
then only to the extent of, any amounts reserved against Claims pending as of
the termination date of this Escrow Agreement. Intek shall notify Escrow Agent
in writing of the occurrence of the events described in 6(a) and (b) above
within five business days after consummation of such events. On the Termination
Date (other than for a termination pursuant to 6(c) above), Escrow Agent shall
pay and distribute the then remaining balance of the Escrow Fund to Midland;
except that Escrow Agent shall retain an amount equal to the aggregate dollar
amount of any Claims asserted by Intek in a Claim Notice which are then pending
until such Claims have been resolved pursuant to Section 5(b) of this Agreement,
and will immediately after the resolution of such Claims distribute to Midland
the balance of such reserves which are not applied to satisfy such Claims.
7. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Fund held by it
hereunder any greater degree of care than it gives its own similar property and
shall not be required to invest any funds held hereunder except as directed in
this Agreement. Uninvested funds held hereunder shall not earn or accrue
interest.
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(b) Escrow Agent shall not be liable, except for its own gross negligence or
willful misconduct and, except with respect to claims based upon such gross
negligence or willful misconduct that are successfully asserted against Escrow
Agent, the other parties hereto shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and
all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms hereof,
including, without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund, or any loss of interest incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect to any
matter relating to this Agreement and shall not be liable for any action taken
or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund deposited
hereunder but is serving as escrow holder only and having only possession
thereof. Any payments of income from this Escrow Fund shall be subject to
withholding regulations then in force with respect to United States taxes. The
parties hereto will provide Escrow Agent with appropriate Internal Revenue
Service Forms W-9 for tax identification number certification, or non-resident
alien certifications. This Section 7(e) and Section 7(b) shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
(f) Escrow Agent makes no representation as to the validity, value, genuineness
or the collectability of any security or other document or instrument held by or
delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to the wisdom
in selling or retaining or taking or refraining from any action with respect to
any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time resign as such
by delivering the Escrow Fund to any successor Escrow Agent jointly designated
by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent
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shall be discharged of and from any and all further obligations arising in
connection with this Agreement. The resignation of Escrow Agent will take effect
on the earlier of (a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If at
that time Escrow Agent has not received a designation of a successor Escrow
Agent, Escrow Agent's sole responsibility after that time shall be to retain and
safeguard the Escrow Fund until receipt of a designation of successor Escrow
Agent or a joint written disposition instruction by the other parties hereto or
a final non-appealable order of a court of competent jurisdiction.
(i) Intek shall pay Escrow Agent compensation (as payment in full) for the
services to be rendered by Escrow Agent hereunder in the amount of $500.00 at
the time of execution of this Agreement and agrees to reimburse Escrow Agent for
all reasonable expenses, disbursements and advances incurred or made by Escrow
Agent in performance of its duties hereunder (including reasonable fees,
expenses and disbursements of its counsel).
(j) No printed or other matter in any language (including, without limitation,
prospectuses, notices, reports and promotional material) that mentions Escrow
Agent's name or the rights, powers, or duties of Escrow Agent shall be issued by
the other parties hereto or on such parties' behalf unless Escrow Agent shall
first have given its specific written consent thereto.
(k) The other parties hereto authorize Escrow Agent, for any securities held
hereunder, to use the services of any United States central securities
depository it reasonably deems appropriate, including, without limitation, the
Depositary Trust Company and the Federal Reserve Book Entry System.
8. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with respect
to any and all matters pertinent hereto. No implied duties or obligations shall
be read into this agreement against Escrow Agent. Escrow Agent shall not be
bound by the provisions of any agreement among the other parties hereto except
this Agreement.
9. OWNERSHIP FOR TAX PURPOSES
Midland agrees that, for purposes of federal and other taxes based on income, it
will be treated as the owner of the Escrow Fund, and that Midland will report
all income, if any, that is earned on, or derived from, the Escrow Fund as its
income, in the taxable year or years in which such income is properly includible
and pay any taxes attributable thereto.
10. NOTICES
All notices, consents, waivers and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt)
6
<PAGE> 116
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
Midland: c/o Simmonds Capital Limited
5255 Yonge Street, Suite 1050
Willowdale, Ontario, Canada, M2N 6P4
Attention: David O'Kell
Facsimile No.: 416-221-3800
with a copy to: Jones, Day Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Mary Lynn Durham, Esq.
Facsimile No.: 216-579-0212
Intek: 970 West 190th Street, Suite 720
Torrance, California 90502
Attention: David Neibert
Facsimile No.: 310-366-7712
with copies to: Securicor Communications Limited
Sutton Park House
15 Carshalton Road
Sutton, Surrey, SM1 4LD England
Attention: Dr. Ed Hough
Facsimile No.: 011-44-181-661-0205
Weil, Gotshal & Manges LLP
767 Park Avenue
New York, NY 10153
Attention: Howard Chatzinoff, Esq.
Facsimile No.: 212-310-8007
Kohrman Jackson & Krantz P.L.L.
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attention: Steven L. Wasserman, Esq.
Facsimile No.: 216-621-6536
7
<PAGE> 117
Escrow Agent: American Stock Transfer & Trust Company
6201 Fifteenth Street
Brooklyn, NY 11219
Attention: Executive Vice President
Facsimile No. 718-331-1852
with a copy to: Herbert Lemer, Esq.
American Stock Transfer & Trust Company
6201 Fifteenth Street
Brooklyn, NY 11219
Facsimile No.: 718-921-8331
11. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of Delaware, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original and all of which, when taken together, will be
deemed to constitute one and the same.
13. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.
14. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed
8
<PAGE> 118
to be a waiver of any obligation of such party or of the right of the party
giving such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
15. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with respect to
its subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the Intek, the Midland and
the Escrow Agent.
16. EXCLUSIVE REMEDY
Notwithstanding anything to the contrary contained herein, in the Sale Agreement
or otherwise, Intek's rights hereunder shall constitute Intek's sole and
exclusive remedy for any Losses or other injury incurred by Intek resulting if
Midland is unable to assign the Hitachi Supply Agreement to Intek or to
otherwise provide Intek with the benefit of the Hitachi Supply Agreement as
required pursuant to the Sale Agreement.
17. ASSIGNMENT
This Escrow Agreement shall inure to the benefit of and be binding upon each of
the parties hereto and their respective successors and assigns.
18. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware, without
regard to conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
INTEK DIVERSIFIED CORPORATION MIDLAND INTERNATIONAL
CORPORATION
By:____________________________________ By: __________________________________
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:___________________________________
9
<PAGE> 119
Page B-1
Exhibit B
Term Sheet for Management and Operations Agreements
BASIS OF PROPOSED SERVICE AGREEMENT FOR MIDLAND USA
TERM: One Year, renewable annually
PARTIES: Simmonds Capital Limited, Midland International Corporation and Intek
Diversified Corporation (or its Midland subsidiary)
SERVICES:
COMPUTER AND SOFTWARE SUPPORT
SCL to allow Intek access and use of the IBM AS400 computer located in Pickering
for the MIS support of the Midland LMR business in the USA.
Monthly fee for the hardware, including insurance and maintenance, and software
will be CDN$20,500 plus 65% of any extraordinary hardware maintenance charges or
software maintenance charges, as incurred.
Software changes or programming modifications required for the USA will be
estimated in advance and paid by Intek.
Intek will purchase or provide all computer terminal equipment and contract
directly for the telephone line connection between Midland USA and the computer
in Pickering, Ontario.
MIS personnel support (1.5 persons) to provide computer operating support will
be CDN$6,000 per month.
Other administrative support personnel as needed will be billed at the loaded
hourly rate.
MIDLAND INFRASTRUCTURE EQUIPMENT PRODUCTIONS
The existing production activity in Pickering will be relocated to Midland in
Kansas City. Intek will be responsible for the production line and any
relocation expenses. SCL may purchase these products from Intek at prices to be
agreed.
PRODUCT ENGINEERING SUPPORT
It is acknowledged that both SCL and Intek will from time to time require
engineering services and support from each other. Each party shall agree to
provide the other with up to 50 hours per month of engineering services at a
price of $50.00 per hour. Each party agrees to advise the other promptly and
with notice where possible, of any changes or proposed changes to the
engineering staff who have been identified to provide this service.
For the first three months following Closing, SCL shall agree to provide up to
100 hours per month of engineering support to Intek for an agreed monthly fee of
$4,000 and Intek shall agree to pay $4,000 as a minimum monthly fee for this
period.
New product development and other special projects will be quoted by project.
Intek shall assume responsibility post closing for the day to day engineering
product support required for US sales, including but not limited to product
manuals, sales literature, customer support or inquiries, and the maintenance of
type approvals for the USA.
<PAGE> 120
Page B-2
PRODUCT PURCHASING
Midland International maintains a supplier liaison office in Tokyo and a
purchasing representative in Korea. The costs for these services shall be shared
pro rata between Intek and SCL based upon the relative product volume purchased.
Intek's estimated share of the costs is $10,900 per month for Tokyo and $3,000
per month for Korea. The amount paid by Intek shall be estimated in advance and
adjusted annually against the audited volume of product purchased by Intek and
SCL.
TOOLING
The present method of payment for the use of tooling will be continued in
accordance with the past practice of the US LMR Distribution.
OTHER SERVICES
Management or marketing consulting services shall be provided to Intek as
requested by Intek at project or hourly fees to be agreed.
PAYMENT TERMS
All payments shall be due monthly.
The computer will be at a fixed monthly rate. Computer maintenance and
programming charges will be billed as incurred. The product purchasing charges
will be estimated in advance and paid monthly. The amount paid will be adjusted
annually based upon the relative amount of products purchased. The engineering
fees will be estimated in advance or billed quarterly. All quoted special
services or projects will be billed in accordance with the schedule agreed to as
part of the project estimate.
Agreed on this ___ day of May, 1996
on behalf of Midland International Corporation
Michael St. Eve
President
Agreed on this ___ day of May, 1996
on behalf of Simmonds Capital Limited
John G. Simmonds
Chief Executive Officer
Agreed on this ___ day of May, 1996
on behalf of Intek Diversified Corporation
Nicholas Wilson
Chairman
<PAGE> 121
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
among
INTEK DIVERSIFIED CORPORATION
and
ROAMER ONE HOLDINGS, INC.,
SECURICOR COMMUNICATIONS LIMITED,
SECURICOR INTERNATIONAL LIMITED
SIMMONDS CAPITAL LIMITED,
MIDLAND INTERNATIONAL CORPORATION,
ANGLO YORK INDUSTRIES, INC.,
CHOI & CHOI, HK LIMITED,
OCTAGON INVESTMENTS LIMITED,
and
MURRAY SINCLAIR
Dated as of ______ __, 1996
<PAGE> 122
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions................................................................................... 4
2. Demand Registration........................................................................... 6
a. Demand for Registration.............................................................. 6
b. Number of Demand Registrations....................................................... 6
c. Expenses............................................................................. 7
d. Effective Registration Statement..................................................... 8
e. Priority in Requested Registrations.................................................. 8
f. Selection of Underwriters............................................................ 9
3. Incidental Registration....................................................................... 9
a. Participation in Incidental Registrations............................................ 9
b. Priority in Incidental Registrations................................................. 10
4. Limitations................................................................................... 11
5. Registration Procedures....................................................................... 12
6. Expenses...................................................................................... 14
7. Indemnification............................................................................... 14
a. By the Company....................................................................... 14
b. By Holders of Registrable Securities................................................. 15
c. Notice............................................................................... 15
d. Contribution......................................................................... 16
8. Holder to Provide Information................................................................. 17
9. Rule 144 Reporting............................................................................ 17
10. Granting of Registration Rights............................................................... 18
11. Remedies...................................................................................... 18
12. MISCELLANEOUS................................................................................. 18
a. Waivers and Amendments............................................................... 18
b. Entire Agreement..................................................................... 19
c. Governing Law........................................................................ 19
d. Notices.............................................................................. 19
e. Counterparts......................................................................... 19
f. Successors and Assigns............................................................... 19
g. Third Parties........................................................................ 20
h. Termination of Prior Agreement....................................................... 20
</TABLE>
<PAGE> 123
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
as of _________ __, 1996, by and among INTEK DIVERSIFIED CORPORATION, a
California corporation (the "Company"), ROAMER ONE HOLDINGS, INC. ("Roamer"), a
Delaware corporation, SECURICOR COMMUNICATIONS LIMITED ("Securicor
Communications"), a corporation organized under the laws of England and Wales,
SECURICOR INTERNATIONAL LIMITED ("Securicor International" and, together with
Securicor Communications, "Securicor"), a corporation organized under the laws
of England and Wales, SIMMONDS CAPITAL LIMITED ("Simmonds"), a corporation
organized under the laws of Ontario, Canada, MIDLAND INTERNATIONAL CORPORATION
("Midland"), a Delaware corporation, ANGLO YORK INDUSTRIES, INC. ("Anglo York"),
a Delaware corporation, CHOI & CHOI, HK LIMITED ("Choi Choi"), a limited
liability company organized under the laws of Hong Kong, OCTAGON INVESTMENTS
LIMITED ("Octagon"), a corporation organized under the laws of Guernsey, MURRAY
SINCLAIR ("Sinclair") and such other holders of Registrable Securities (as
defined herein) as may execute and deliver a counterpart of this Agreement to
the Company.
Recitals
A. On September 23, 1994, the Company entered into a Registration Rights
Agreement (the "1994 Registration Rights Agreement") granting certain
registration rights to Simmonds, Roamer, Anglo York and Howard Davis.
B. On June 17, 1996, the Company entered into (1) a Sale of
Assets and Trademark License Agreement (the "SIMMONDS
AGREEMENT") with Simmonds and Midland, and (2) a Stock
Purchase Agreement with Securicor Communications (the
"SECURICOR AGREEMENT;" and collectively with the SIMMONDS
AGREEMENT, "INVESTOR AGREEMENTS"), pursuant to which
INVESTOR AGREEMENTS the Company as of the date hereof
acquired certain assets of Midland and the stock (other than
preferred stock) of a wholly-owned subsidiary of Securicor
and thereby consolidated the commercial wireless
communications businesses of Securicor Communications and
Midland (with respect to the U.S. market) with that of the
Company.
C. Pursuant to the terms of the SECURICOR AGREEMENT, Securicor
Communications acquired 25,000,000 shares of the common stock, par
value $0.01 per share, of the Company (the "Common Stock"), increasing
Securicor's holdings of Common Stock to _____________ shares (____% of
the currently outstanding shares of Common Stock).
D. Pursuant to the terms of the SIMMONDS AGREEMENT, Midland acquired,
among other consideration, 2,500,000 shares of the Common Stock thereby
increasing Midland and Simmonds's collective holdings of Common Stock
to 4,400,000 (net of put and call options not exercised as of the date
of this
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<PAGE> 124
Agreement) shares (_____% of the currently outstanding shares of Common
Stock).
E. The termination of the 1994 Registration Rights Agreement, the grant of
the registration rights and other shareholder rights contained herein
and the execution and delivery of this Agreement by the parties hereto
is a condition precedent to Securicor Communications' and Simmonds' and
Midland's obligations under the INVESTOR AGREEMENTS.
Agreements
NOW THEREFORE, the parties to this Agreement hereby agree as
follows:
1. Definitions.
For purposes of this Agreement, unless the context otherwise requires,
the following terms have the meanings set forth below:
"COMMISSION" means the Securities and Exchange Commission or
any other United States federal agency at the time administering the Securities
Act.
"COMMON STOCK" has the meaning provided in the
recitals.
"DEMAND REGISTRATION" means a registration of Registrable
Securities by the Company pursuant to a Demand Registration Request of a then
Eligible Demand Holder pursuant to Section 2 of this Agreement
"DEMAND REGISTRATION REQUEST" means a written request by a
then Eligible Demand Holder for the registration of Registrable Securities.
"ELIGIBLE DEMAND HOLDER" means (a) each of Securicor,
Simmonds, Midland and Roamer, and (b) Anglo York to the extent that Anglo York
holds, and only with respect to, Registrable Securities which are eligible to be
registered by the Company under the Securities Act on a Form S-3 Registration
Statement (as determined by agreement between the Company and the Holder of such
Registrable Securities).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission enacted from time to
time in connection therewith, as the same shall be in effect from time to time.
"HOLDER" means, so long as such Person owns a beneficial
interest in Common Stock, Roamer, Securicor, Simmonds, Anglo York, Choi Choi,
Octagon, Sinclair and such other holders of Registrable Securities who are
parties hereto, and their respective successors and permitted assigns.
4
<PAGE> 125
"PERSON" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization, or
governmental entity (including any department or agency thereof).
"REGISTRATION EXPENSES" means, except as otherwise set forth
in this Agreement, all expenses incident to the Company's performance of or
compliance with its obligations to register Registrable Securities under this
Agreement, including, without limitation, (a) all registration, filing and NASD
fees, (b) all fees and expenses of complying with applicable United States
federal and state securities laws, (c) all word processing, duplicating and
printing expenses, (d) messenger and delivery expenses, (e) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, (f) if
shares of Midland, Securicor or Roamer are being registered pursuant to a Demand
Registration under this Agreement, the reasonable fees and disbursements of
counsel retained by the Eligible Demand Holder initiating such registration, up
to an aggregate maximum amount of $25,000 for such registration (it being
understood that, if more than one of Midland, Securicor and Roamer is
participating in any such registration, they shall all be entitled to use such
counsel as shall have been selected by the Eligible Demand Holder initiating
such registration and that such counsel shall be reasonably acceptable to the
other Eligible Demand Holders desiring to have one counsel represent the
Eligible Demand Holders), (g) premiums and other costs of policies of insurance
against liabilities arising out of the public offering of Registrable Securities
(if the Company elects to obtain any such insurance), and (h) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding fees, discounts and commissions of underwriters,
selling brokers or dealers and transfer taxes, if any, related to the sale of a
Holder's Registrable Securities pursuant to such registration.
"REGISTRABLE SECURITIES" means (a) any share of Common Stock
now or hereafter held by a Holder, (b) any option or other right to acquire
Common Stock, and (c) any securities issued or issuable with respect to
Registrable Securities, whether by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. Registrable Securities shall cease to be
such when (i) such Registrable Securities have been disposed of in accordance
with a registration statement which shall have become effective under the
Securities Act, or (ii) such Registrable Securities shall have been sold in a
manner complying with the resale provisions of Rule 144 under the Securities Act
(or any successor provision thereto), or (iii) such Registrable Securities shall
have been transferred, new certificates evidencing such Registrable Securities
without legends restricting further transfer shall have been delivered by the
Company, and subsequent public distributions of such Registrable Securities
shall neither require registration under
5
<PAGE> 126
the Securities Act nor qualification (or any similar filing) under any state
securities or "blue sky" law then in effect, or (iv) such Registrable Securities
shall have ceased to be issued and outstanding.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission enacted from time to time in
connection therewith, as the same shall be in effect from time to time.
2. Demand Registration.
a. Demand for Registration. Upon the receipt from a then Eligible
Demand Holder of a Demand Registration Request for the registration of some or
all of the Registrable Securities owned by such Eligible Demand Holder at the
time of such Demand Registration Request, the Company shall, as soon as
reasonably practicable, but in any event within 30 calendar days after receipt
of a Demand Registration Request: (i) file a registration statement the form of
which is, under the rules and regulations of the Commission, suitable for
effecting a public offering in which the Eligible Demand Holders shall be
entitled to offer for sale and to sell, pursuant to such registration statement
and in the manner requested by such Eligible Demand Holder in the Demand
Registration Request, the amount of Registrable Securities as specified in such
Demand Registration Request; and (ii) use its best efforts to cause such
registration statement to become effective within 90 days after the filing of
the registration statement. The Company shall use its best efforts to cause such
registration statement to remain effective for the lesser of 150 days after the
date such registration statement is declared effective or the period required to
effect such sale of Registrable Securities; provided, however, that if all
shares registered pursuant to such registration statement are to be sold in a
firm commitment underwriting and the underwriter or underwriters determine, in
its or their sole discretion, that a period greater than 150 days is necessary
in order to consummate such offering, the Company shall use commercially
reasonable efforts to cause such registration statement to remain in effect for
the period requested by the underwriter or underwriters.
b. Number of Demand Registrations. Each of the Eligible Demand Holders
shall be entitled to the number of demand registrations under this Section 2(a)
as set forth below opposite their names, PROVIDED, that (i) the minimum number
of Registrable Securities offered for registration pursuant to a Demand
Registration shall be as set forth below opposite the name of the Holder
demanding such registration, and (ii) the reasonably anticipated aggregate
offering price of such Registrable Securities offered pursuant to such Demand
Registration exceeds Three Million Dollars ($3,000,000):
6
<PAGE> 127
<TABLE>
<CAPTION>
NO. OF DEMAND MINIMUM SHARES
ELIGIBLE DEMAND HOLDER REGISTRATIONS To be Registered
- ---------------------- ------------- ----------------
<S> <C> <C>
Securicor 5 2,500,000
Simmonds and Midland, 3 1,250,000
collectively
Roamer 2 1,250,000
Anglo York 1 NO MINIMUM
</TABLE>
; provided, however, that the minimum number of shares to be registered by each
Eligible Demand Holder shall be adjusted as appropriate to reflect any stock
dividends, stock splits, combinations, exchanges, reorganizations,
recapitalizations or reclassifications of the Registrable Securities or in
connection with any merger, consolidation or other similar business combination
transaction involving the Company. In the event that an Eligible Demand Holder
delivering a Demand Registration Request determines for any reason (other than
at the request or recommendation of the Company or the managing underwriters)
not to proceed with a registration of Registrable Securities requested pursuant
to this Section 2 at any time before the registration statement has been
declared effective by the Commission and such registration statement, if
theretofore filed with the Commission, is withdrawn with respect to the
Registrable Securities covered thereby, and such Eligible Demand Holder
reimburses the Company for the Registration Expenses incurred by it in
connection therewith, then the Eligible Demand Holder shall not be deemed to
have exercised one of its Demand Registration rights. If the Eligible Demand
Holder determines not to proceed with such a Demand Registration upon the
request or recommendation of the Company or the managing underwriters, the
Eligible Demand Holder shall not be required to reimburse the Company for its
Registration Expenses and the Eligible Demand Holder shall not be deemed to have
exercised one of its Demand Registration rights.
The Company shall not, without the prior written consent of Securicor,
Midland, Simmonds and Roamer, effect any registration of its securities (other
than on Form S-4 or Form S-8) from the date the Company receives a Demand
Registration Request until the earlier of (a) 90 days after the date on which
all securities covered by such Demand Registration Request have been sold or (b)
150 days after the effective date of the registration statement covering such
Registrable Securities. If the Company does not effect a registration statement
requested pursuant to a Demand Registration Request under this Section 2 for the
reasons set forth in the immediately preceding sentence, the Eligible Demand
Holders shall not be deemed to have exercised one of their Demand Registration
rights.
c. Expenses. Except as otherwise provided herein, the Company shall
bear all Registration Expenses associated with any Demand Registration
undertaken pursuant to a Demand Registration
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<PAGE> 128
Request initiated by Securicor, Midland or Roamer. The Company shall, in the
aggregate on a one-time basis, bear only $25,000 in Registration Expenses
incurred by Anglo York for registrations undertaken pursuant to this Section 2
which were initiated by a Demand Registration Request of Anglo York, with the
balance as reasonably estimated by the Company, or adequate security therefor as
determined in the sole discretion of the Company, to be provided or paid to the
Company by Anglo York at the time the Company agrees to undertake a Demand
Registration at its request. Each Holder participating in any such registration
shall be responsible for, and shall pay, any transfer taxes and any fees,
discounts or commissions of underwriters, selling brokers and dealers relating
to the sale or distribution of the Registrable Securities being sold by such
Holder pursuant to such registration and, except as set forth in the definition
of Registration Expenses, all fees and disbursements of counsel and accountants
for such Holder.
d. Effective Registration Statement. A registration requested pursuant
to this Section 2 shall not be deemed to be effected (i) if a registration
statement with respect thereto shall not have become effective, (ii) if, after
it has become effective, such registration is interfered with for any reason by
any stop order, injunction or other order or requirement of the Commission or
any Person, and the result of such interference is to prevent the Eligible
Demand Holder(s) of Registrable Securities to be sold thereunder from disposing
thereof in accordance with the intended methods of disposition, or (iii) if the
conditions to closing (other than those to be performed by the Eligible Demand
Holder(s)) specified in the purchase agreement or underwriting agreement entered
into in connection with any underwritten registration shall not be satisfied or
waived with the consent of the Eligible Demand Holder(s) of Registrable
Securities that were to have been sold thereunder.
e. Priority in Requested Registrations. If a Demand Registration
pursuant to this Section 2 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each Person
requesting registration of Registrable Securities) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range acceptable to the
Eligible Demand Holder(s) demanding such Demand Registration, the Company will
include in such registration to the extent of the number which the Company is so
advised can be sold in such offering (i) first, Registrable Securities requested
to be included in such registration for each Eligible Demand Holder exercising
its right to demand registration pursuant to this Section 2 in an amount
determined pursuant to the following formula: (x) the number of Registrable
Securities which such Eligible Demand Holder's Demand Registration Request
demands be included in such registration, divided by, (y) the aggregate number
of Registrable Securities for which Demand Registration Requests are made with
respect to the subject registration; and (ii) second, securities of the Company
proposed by the Company to be sold for its own account.
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<PAGE> 129
If two or more Eligible Demand Holders made demand and pursuant to the foregoing
managing underwriters opinion the aggregate number of Registrable Securities
stated in such Eligible Demand Holders' Demand Requests exceeds the number of
securities which can be sold in such offering within a price range acceptable to
the Eligible Demand Holder(s) demanding such Demand Registration, then any such
Eligible Demand Holders may withdraw its entire Demand Request without being
deemed to have exercised a Demand and without being liable to the Company for
any Registration Expenses. If this Section 2 is applicable in connection with
any such registration, (i) no securities other than Registrable Securities or
securities of the Company proposed by the Company to be sold for its own account
shall be covered by such registration, (ii) the Company will not grant any
registration rights inconsistent with the provisions of this Section 2, and
(iii) each Eligible Demand Holder selling Registrable Securities pursuant to
such registration shall be deemed to have exercised a Demand Right.
f. Selection of Underwriters. In the case of any public offering
pursuant to the exercise of a right for Demand Registration by an Eligible
Demand Holder, the underwriter or underwriters for such offering shall be
selected by the Company.
3. Incidental Registration.
a. Participation in Incidental Registrations. Each time the Company
shall determine to proceed with the preparation and filing of a registration
statement under the Securities Act in connection with the proposed offer and
sale for money of any of its equity securities, whether by the Company or any of
its security holders (other than on Forms S-4 or S-8, or any successor or
similar form), the Company shall give written notice of its determination to the
Holders as soon as practical, but in no event, less than 30 days prior to the
filing of such registration statement with the Commission. Upon the written
request of a Holder given to the Company within 15 days after the mailing of any
such notice by the Company, the Company shall, subject to Section 5 hereof,
cause all Registrable Securities which such Holder has requested to be
registered to be included in such registration statement; provided, however,
that if, at any time after giving written notice of its intention to register
any equity securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason either not to register or to delay registration of such
equity securities, the Company may, at its election, give written notice of such
determination to the Holders and, upon the giving of such notice, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
shall pay all Registration Expenses incurred by Holders of Registrable
Securities in connection therewith), and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other equity
securities. No
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registration effected under this Section 3 shall relieve the Company of its
obligation to effect any registration under Section 2, except as contemplated by
Section 4. A Holder's participation in any such incidental registration shall
not require that it pay any portion of the Registration Expenses incurred by the
Company, except transfer taxes, and any fees, discounts and commissions of
underwriters, selling brokers or dealers applicable to shares sold by such
Holder.
b. Priority in Incidental Registrations. If (i) a registration pursuant
to this Section 3 involves an underwritten offering of the securities so being
registered to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction, and (ii) the managing underwriter of such underwritten
offering shall inform the Company and the Holders (if any Registrable Securities
held by the Holders have been requested to be included in such underwritten
offering) by letter of its belief that the distribution of all or a specified
number of the Registrable Securities requested to be included concurrently with
the securities being distributed by such underwriters would interfere with the
successful marketing of the securities being distributed by such underwriters
(such writing to state the appropriate number of the Registrable Securities
requested to be included which may be distributed without such effect), then the
Company may, upon written notice to all the Holders, reduce (if and to the
extent stated by such managing underwriter to be necessary to eliminate such
effect) the number of the Registrable Securities requested to be included so
that the resultant aggregate number of the Registrable Securities requested to
be included that will be included in such registration shall be equal to the
maximum number of shares stated by such managing underwriter letter as would not
so interfere; provided, however, that the priority in such registration shall be
as follows, (i) first, securities offered for the account of the Company or, if
such registration is for a security holder exercising a Demand Registration,
then securities offered for the account of such security holder, and (ii)
second, the Registrable Securities of each Holder pro rata in proportion to
their share of the then outstanding Registrable Securities; provided, that
Registrable Securities of Securicor or any of its Affiliates shall not be
included in the first such registration by the Company after the date of this
Agreement unless, and only to the extent that, the aggregate number of
Registrable Securities being offered for the account of the Company, Simmonds,
Midland and Roamer, collectively, do not equal the maximum number of shares
stated by such managing underwriter letter; and provided, further, that during
the two-year period following the date hereof Securicor and its Affiliates shall
not, collectively or individually, be entitled, in any particular registration,
to offer for registration pursuant to the foregoing clause (ii) more than 25% of
the number of shares stated in such managing underwriter's letter.
Notwithstanding anything in this Section 3.b. to the contrary, Holders shall not
have any right to include their Registrable Securities in any distribution or
registration of
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securities by the Company, which is a result of a (1) merger, (2) consolidation,
(3) acquisition, (4) exchange offer, (5) recapitalization, (6) other
reorganization, (7) dividend reinvestment plan, (8) stock option plan or other
employee benefit plan, or (9) any similar transaction having the same effect.
4. Limitations. Notwithstanding the provisions of Sections 2, and 3 hereof:
a. the Company shall have the right to delay or suspend the preparation
and filing of a registration statement for up to 90 days if in the reasonable
and good faith judgment of a majority of the Directors on the Board of Directors
of the Company such preparation or filing would impede, delay or interfere in
any material fashion with any bona fide material financing or bona fide material
business transaction by the Company at time of receipt of the request for such
registration or with the ability of the Company to conduct its affairs or would
have a material adverse effect on the business, properties or financial
condition of the Company; provided, however, that the Company shall use its best
efforts to cause any such registration statement to become effective within 150
days of receipt of the request therefor and shall only be entitled to utilize
this clause once in any 12 month period;
b. if, prior to receiving a request for registration, the Company is
working on an underwritten public offering of Common Stock (a "Company Initiated
Public Offering") and is advised by the managing underwriter(s) in writing that
such offering would in its or their opinion be adversely affected by such
filing, then the Company shall have the right, upon notice to the Holder
requesting registration within 14 days after receipt of such request, to delay
or suspend the filing of the registration statement requested by such Holder;
provided that the Company shall use its best efforts to cause any such
registration statement requested by the Holders to become effective within 180
days (or, if required by the underwriters for the Company Initiated Public
Offering, within 270 days) after the date on which all securities covered by the
Company Initiated Public Offering have been sold, and that the Company shall use
its best efforts to include any Registrable Securities that are the subject of a
notice delivered by Holders under Section 3 in the registration statement for
such Company Initiated Public Offering; and
c. the Company shall not be required to prepare or file a registration
statement with respect to any Demand Request under Section 2 if the reasonably
anticipated aggregate offering price of such Registrable Securities does not
exceed Three Million Dollars ($3,000,000) or if the Holders making the Demand
Registration Requests would be able to sell all the Registrable Securities they
have requested to sell pursuant to Rule 144 under the Securities Act.
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5. Registration Procedures. If and whenever the Company is required by the
provisions of Sections 2 or 3 to effect the registration of any Registrable
Securities under the Securities Act, the Company will:
a. prepare and file with the Commission a registration statement with
respect to such Registrable Securities, and use its best efforts to cause such
registration statement to become effective as provided herein;
b. prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective until the earlier
of (i) the date on which all Registrable Securities covered by such registration
statement have been sold and (ii) 150 days after the effective date of such
registration statement;
c. use its best efforts to register or qualify the Registrable
Securities for sale under such other securities or blue sky laws of such
jurisdictions as the Holders may reasonably request (such reasonableness being
determined on the basis of factors such as the cost to the Company) and do any
and all other acts and things which may be reasonably necessary or desirable to
enable the Holders to consummate the disposition of the Registrable Securities
in such jurisdictions; provided, however, that the Company shall not be required
to qualify generally to do business as a foreign corporation, subject itself to
taxation, or consent to general service of process, in any jurisdiction wherein
it would not, but for the requirements of this Section 5, be obligated to be so
qualified;
d. furnish to the Holders and to the underwriters of the securities
being registered a reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus, and such other documents as the
Holders or underwriters may reasonably request in order to facilitate the public
offering of such securities;
e. prepare and file with the Commission, promptly upon the request of
the Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for the Holders (and concurred in by
counsel for the Company), is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the Registrable
Securities by the Holders;
f. prepare and promptly file with the Commission, and promptly notify
the Holders of the filing of, any amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to
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make the statement therein, in the light of the circumstances in which they were
made, not misleading;
g. notify each seller of any Registrable Securities covered by such
registration statement and the managing underwriter (as such term is defined in
Rule 12b-2 under the Exchange Act), if any, promptly and, if requested by any
such person, confirm such notification in writing, (i) when a prospectus or any
prospectus supplement has been filed with the Commission, and, with respect to a
registration statement or any post-effective amendment thereto, when the same
has been declared effective by the Commission, (ii) of any request by the
Commission for amendments or supplements to a registration statement or related
prospectus, or for additional information, (iii) of the issuance by the
Commission of any stop order or the initiation of any proceedings for such or a
similar purpose (and the Company shall make every commercially reasonable effort
to obtain the withdrawal of any such order at the earliest possible moment),
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose (and the Company shall make every commercially reasonable effort to
obtain the withdrawal of any such suspension at the earliest possible moment),
(v) of the occurrence of any event which requires the making of any changes to a
registration statement or related prospectus so that such documents will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (and
the Company shall promptly prepare and furnish to such seller and managing
underwriter a reasonable number of copies of a supplemented or amended
prospectus such that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading), and (vi) of the Company's determination
that the filing of a post-effective amendment to the Registration Statement
shall be necessary or appropriate. Each Holder shall be deemed to have agreed by
acquisition of Registrable Securities that upon the receipt of any notice from
the Company of the occurrence of any event of the kind described in clause (v)
of this Section 5(g), such Holder shall forthwith discontinue such Holder's
offer and disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder shall have
received copies of a supplemented or amended prospectus which is no longer
defective as contemplated by clause (v) of this Section 5(g), and, if so
directed by the Company, shall deliver to the Company, at the Company's expense,
all copies (other than permanent file copies) of the defective prospectus
covering such Registrable Securities which are then in such Holder's possession.
In the event the Company shall provide any notice of the type referred to in the
preceding sentence, the 150-day period mentioned in
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Section 5.b(ii) shall be extended by the number of days from and including the
date such notice is provided, to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received copies of the corrected prospectus contemplated by clause (v) of this
Section 5(g), plus an additional seven days;
h. at least three days prior to the filing of any amendment or
supplement to such registration statement or prospectus, furnish copies thereof
to the Holders and refrain from filing any such amendment or supplement to which
the Holders shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of the
Securities Act or the rules and regulations thereunder, unless in the opinion of
counsel for the Company the filing of such amendment or supplement is reasonably
necessary to protect the Company from any liabilities under any applicable
federal or state law and such filing will not violate applicable law; and
i. at the request of the Holders, obtain an opinion from counsel to the
Company, and a "cold comfort" letter from an independent certified public
accounting firm of national recognition and standing who have certified the
Company's financial statements included in the registration statement or any
amendment thereto, in each case in form and substance satisfactory to the
majority in interest of the Holders participating in the registration ("Majority
Holders"), and covering such matters of the type customarily covered by such
opinions and "cold comfort" letters as the Majority Holders shall reasonably
request.
6. Expenses. Except as otherwise provided herein, the Company shall bear all
reasonable Registration Expenses. Each Holder participating in any such
registration shall be responsible for, and shall pay, any transfer taxes and any
fees, discounts or commissions of underwriters, selling brokers and dealers
relating to the sale or distribution of the Registrable Securities being sold by
such Holder pursuant to such registration, as well as any fees of counsel to
such Holder that are not specifically designated as Registration Expenses in
Section 1 hereof and any fees and disbursements of any accountants retained by
such Holder.
7. Indemnification.
a. By the Company. The Company shall indemnify and hold harmless each
Holder, its officers, directors and employees, and any underwriter (as defined
in the Securities Act) for such Holder and each person, if any, who controls
such Holder or such underwriter within the meaning of the Securities Act, from
and against any and all loss, damage, liability or claims, to which such Holder,
or any officer, director or employee of such Holder, or any such underwriter or
controlling person becomes subject under the Securities Act or otherwise, and
subject to the provisions of Section 7(c) hereof to reimburse them, from time to
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time upon request, for any legal or other costs or expenses reasonably incurred
by them in connection with investigating any claims or defending any actions (as
provided herein), insofar as such losses, damages, liabilities, claims, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, damage, liability, claim, cost or expense arises out of or is based upon
(i) an untrue statement or alleged untrue statement or omission or alleged
omission (other than a statement or omission about the Company) made in
conformity with information furnished by the Holder seeking indemnification in
writing specifically for use in the preparation of a registration statement or
(ii) a Holder's failure to deliver a copy of the registration statement,
prospectus or any amendments or supplements thereto.
b. By Holders of Registrable Securities. Each Holder of Registrable
Securities included in a registration pursuant to this Agreement shall indemnify
and hold harmless the Company, its officers, directors and agents, each other
Holder, any underwriter and each person, if any, who controls the Company, such
other Holder or such underwriter, from and against any and all loss, damage,
liability or claim, to which the Company or its officers, directors or agents,
or such other Holder or any controlling person and/or any underwriter becomes
subject under the Securities Act or otherwise and to reimburse them, from time
to time upon request, for any legal or other costs or expenses reasonably
incurred by them in connection with investigating any claims or defending any
actions, insofar as such losses, damages, liabilities, costs, or expenses are
caused by any untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such indemnifying Holder
specifically for use in the preparation of such registration statement, provided
that the obligations of the Holder hereunder shall be limited to an amount equal
to the net proceeds to the Holder from the sale of such Holder's Registrable
Securities as contemplated hereunder.
c. Notice. Promptly after receipt by an indemnified party of notice of
the commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will promptly notify the
indemnifying party in writing of
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the commencement thereof; but the omission to so notify the indemnifying party
will not relieve such indemnifying party from any liability which it may have to
any indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such suit, action, claim or proceeding, (ii) the indemnifying party shall not
have employed counsel (reasonably satisfactory to the indemnified party) to take
charge of the defense of such action, suit, claim or proceeding within a
reasonable time after notice of commencement of the action, suit, claim or
proceeding, or (iii) such indemnified party shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to the indemnifying party which, if the indemnifying party and
the indemnified party were to be represented by the same counsel, could result
in a conflict of interest for such counsel or materially prejudice the
prosecution of the defenses available to such indemnified party. If any of the
events specified in clauses (ii) or (iii) of the preceding sentence shall have
occurred or shall otherwise be applicable, then the fees and expenses of one
counsel or firm of counsel selected by a majority in interest of the indemnified
parties shall be borne by the indemnifying party. If, in any case, the
indemnified party employs separate counsel, the indemnifying party shall not
have the right to direct the defense of such action, suit, claim or proceeding
on behalf of the indemnified party. Anything in this paragraph to the contrary
notwithstanding, an indemnifying party shall not be liable for the settlement of
any action, suit, claim or proceeding effected without its prior written consent
(which consent in the case of an action, suit, claim or proceeding exclusively
seeking monetary relief shall not be unreasonably withheld). Such
indemnification shall remain in full force and effect irrespective of any
investigation made by or on behalf of an indemnified party.
d. Contribution. If the indemnification from the indemnifying party as
provided in this Section 7 is unavailable or is otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses. The relative fault of such
indemnifying party shall be determined by reference to,
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among other things, whether any action in question, including any untrue (or
alleged untrue) statement of a material fact or omission (or alleged omission)
to state a material fact, has been made, or relates to information supplied by
such indemnifying party or such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7(c) hereof, any legal
or other fees or expenses reasonably incurred by such party in connection with
any such investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation other than as described above.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
If, however, indemnification is available under this Section
7, the indemnifying parties shall indemnify each indemnified party to the
fullest extent provided in this Section 7 without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration.
8. Holder to Provide Information. In the event a Holder requests a registration
of Registrable Securities, such Holder shall provide all such information and
materials and shall take all such actions as may be reasonably and customarily
required in order to permit the Company to comply with all applicable
requirements of the Commission and to obtain any desired acceleration of the
effective date of such registration statement. Specifically, the Company may
require a Holder to furnish the Company with such information regarding such
Holder and the distribution of its securities as is customarily required in such
registrations as the Company may from time to time reasonably request in writing
and as shall be required by law or the Commission.
9. Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the Commission which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to:
a. Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
b. Use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act; and
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c. So long as a Holder owns any Registrable Securities, furnish to a
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration.
10. Granting of Registration Rights. The Company shall not, without the prior
written consent of Holders holding at least 65% of the Registrable Securities
then held by all the Holders, grant to any Person registration rights of any
kind or nature with respect to Registrable Securities or other capital shares or
the Company if such rights would have priority over the rights granted to the
Holders pursuant to this Agreement, whether in terms of the number of shares
which holders may include in any registration, the timing of any registration of
shares, the rights of holders to demand registration of shares held by them at
the time requested by them, or in any other material respect.
11. Remedies. The Company recognizes and agrees that if the Company fails to
comply with its obligations under this Agreement, the Holders may not have an
adequate remedy at law. Such failure will cause the Holders irreparable harm for
which there may be no adequate remedy at law, and the Company hereby consents to
the issuance of an injunction in favor of the Holders by any court of competent
jurisdiction. The right of such Holders to obtain an injunction hereunder shall
not be considered a waiver of any right on the part of the Holders to recover
damages and to assert any other claims for remedies which the Holders may have
at law or in equity. The Company agrees to bear any expenses incurred by the
Holders, including reasonable attorneys fees, in enforcing their rights under
this Agreement except in cases in which it is determined that the Company was
not in breach of its obligation to provide such rights.
12. MISCELLANEOUS.
a. Waivers and Amendments. This Agreement may be amended or modified in
whole or in part only by a writing which makes reference to this Agreement
executed by the Company and Holders holding at least 65% of the Registrable
Securities then held by all the Holders. The obligations of any party hereunder
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the party
claimed to have given the waiver; provided, however, that any waiver by any
party of any violation of, breach of, or default under any provision of this
Agreement or any other agreement provided for herein shall not be construed as,
or constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement
or any other agreement provided for herein.
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b. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto and supersedes all prior contracts, agreements,
arrangements, communications, discussions, representations, and warranties,
whether oral or written, among the parties with respect to the subject matter
hereof.
c. Governing Law. This Agreement shall in all respects be governed by
and construed in accordance with the internal substantive laws of the State of
New York without giving effect to the principles of conflicts of law thereof.
d. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and be deemed to have been duly given if
personally delivered or five business days after being sent by registered or
certified mail, return receipt requested, postage prepaid, to the parties at
their respective addresses set forth below.
If to the Company: INTEK DIVERSIFIED CORPORATION
970 West 190th Street, Suite 720
Torrence, California 90502
Attn: President
with a copy to: Kohrman, Jackson & Krantz P.L.L.
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attn: Steven L. Wasserman, Esq.
If to a Holder: To the Person and Address
specified on the signature page for such
Holder.
Any party by written notice to the others may change the address of the persons
to whom notices or copies thereof shall be directed.
e. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same instrument.
f. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns, except that the Company may not assign or transfer its
rights hereunder without the prior written consent of the Holders. A Holder that
transfers not less than 100% of the Registrable Securities it then holds to an
entity in a transaction that is not registered under the Securities Act shall be
entitled to assign its rights to demand registration hereunder to such entity,
which entity shall become a "Holder" for purposes of this Agreement provided
that the assignee thereof assumes and agrees to perform all the obligations of a
Holder under this Agreement. A permitted assignee who acquires from a Holder
such number of Registrable Securities as shall be equal to or greater than 10%
of such Holder's holdings of Registrable Securities as of the date of
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this Agreement shall be entitled to exercise incidental registration rights
pursuant to the terms and provisions of Section 3 of this Agreement, provided
that such permitted assignee assumes and agrees to perform all of the
obligations of a Holder under this Agreement.
g. Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or entity
other than the parties hereto any rights or remedies under or by reason of this
Agreement.
h. Termination of Prior Agreement. This Registration Rights Agreement
supersedes and replaces that certain Registration Rights Agreement entered into
between the Company, Roamer, Simmonds, Anglo York and Howard Davis as of
September 23, 1994.
[Remainder of Page Intentionally Left Blank.]
[Signatures commence on next page.]
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IN WITNESS WHEREOF, the undersigned have executed, or have
caused their duly authorized representatives to execute, this Registration
Rights Agreement as of the date first written above.
INTEK DIVERSIFIED CORPORATION
By:_______________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED SECURICOR INTERNATIONAL LIMITED
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
Address:__________________________ Address:__________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
With copies to: With copies to:
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
SIMMONDS CAPITAL LIMITED MIDLAND INTERNATIONAL CORPORATION
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
Address:__________________________ Address:__________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
With copies to: With copies to:
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
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CHOI & CHOI, HK LIMITED OCTAGON INVESTMENTS LIMITED
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
Address:__________________________ Address:__________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
With copies to: With copies to:
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
ROAMER ONE HOLDINGS, INC. ANGLO YORK INDUSTRIES, INC.
By:_______________________________ _______________________________
Name: Name:
Title: Title:
Address:__________________________ Address:__________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
With copies to: With copies to:
__________________________ __________________________
__________________________ __________________________
__________________________ __________________________
Tel: __________________________ Tel: __________________________
Fax: __________________________ Fax: __________________________
22
<PAGE> 143
__________________________________
MURRAY SINCLAIR
Address:__________________________
__________________________
__________________________
Tel: __________________________
Fax: __________________________
With copies to:
__________________________
__________________________
__________________________
Tel: __________________________
Fax: __________________________
23
<PAGE> 144
REGISTRATION RIGHTS AGREEMENT
SHAREHOLDER SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have executed, or have
caused their duly authorized representatives to execute, this Registration
Rights Agreement as of the date first written above.
(If a corporation) ___________________________________
By:________________________________
Name:
Title:
(If an Individual) ____________________________________
Name:
Address: __________________________
__________________________
__________________________
Telephone:__________________________
Facsimile:__________________________
With copies to:__________________________
__________________________
__________________________
__________________________
Telephone:__________________________
Facsimile:__________________________
24
<PAGE> 145
EXHIBIT D
LICENSE AGREEMENT
This License Agreement (this "Agreement") is entered into as
of , 1996 by and between Midland International Corporation,
a Delaware corporation ("Midland"), and Intek Diversified Corporation, a
Delaware corporation ("Intek").
RECITALS
A. Midland is a distributor of LMR Products under the
Trademark (as defined in Section 1(h) of this Agreement) and is the owner of the
Trademark.
B. Pursuant to an Exclusive License Agreement by and between
Midland and Midland Consumer International, Ltd., a British Virgin Islands
corporation, entered into on June 30, 1995 and attached as Exhibit A (the
"Exclusive License Agreement"), Midland has granted to Midland Consumer
International an exclusive license to use the Trademark in connection with the
promotion, sale and distribution of Consumer Products (as defined in Section
1(c) of this Agreement) in certain countries, including the Territory (as
defined in Section 1(g) of this Agreement).
C. On______________________ , 1996, Midland, Intek and
Simmonds Capital Limited ("Simmonds") entered into a Sale of Assets and
Trademark License Agreement (the "Sale of Assets Agreement") pursuant to which
Midland has agreed, among other things, to grant a perpetual license to use the
Trademark in the Territory in connection with the promotion, manufacture, sale,
servicing and distribution of LMR Products (as defined in Section 1(e) of this
Agreement) in the Territory.
<PAGE> 146
2
D. Intek and Midland have agreed to enter into this Agreement
simultaneously with, and subject to consummation of, the Sale of Assets
Agreement.
E. Following consummation of this Agreement and the Sale of
Assets Agreement, Midland will be merged into SCL, Inc., a Delaware Corporation,
and any and all rights and obligations of Midland under this Agreement will be
transferred to, and assumed by, SCL, Inc.
A G R E E M E N T
NOW, THEREFORE, in accordance with the Sale of Assets
Agreement and in consideration of the mutual covenants and the provisions
hereinafter set forth, and for other good and valuable consideration, the
parties agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings specified below:
(a) "Affiliate" shall mean, with respect to any Person, any
other Person or entity that controls such Person, or any Person controlled by it
or under common control with it.
(b) "Exclusive License Agreement" shall have the meaning set
forth in the Recitals.
(c) "Consumer Products" shall mean all consumer wireless
products and consumer electronic products consisting of consumer communications
equipment, consumer automotive equipment, consumer marine equipment, consumer
amateur radio products and consumer audio products and/or video home
entertainment equipment, which are being sold at any time in department stores
and/or electronic specialty stores, including, but not limited
<PAGE> 147
3
to, citizen band radios, GMRS radios, marine radios, scanners, intercoms, radio
recorders, car radios, itinerant radios, consumer GPS marine products, satellite
receivers, video cassette recorders, video cameras, stereophonic and high
fidelity components and/or systems, compact disc players, laser disc players,
cordless telephones, consumer paging products, telephones with video, and other
telephones and antennas and other accessories for the foregoing. "Consumer
Products" specifically does not include cellular telephones, personal
communications systems (PCS) telephones, commercial and two-way paging products,
commercial wireless satellite antennas, LMR antenna products, all other
electronic or communications equipment for use in the professional and
commercial market and antennas and other accessories for the foregoing.
(d) "LMR Products" shall mean any existing and future land
mobile radio products for use in the professional and commercial markets,
including, without limitation, antennas which are usable with both Midland
Consumer Products and LMR Products, but LMR Products is not intended to include
and shall not include: (i) any existing and future Consumer Products, (ii) the
Midland 70-1336, 70-1526, 70-9020 and 70-9405 products and any subsequent
upgrades, enhancements, modifications or improvements of such products, or (iii)
any LMR Products promoted, sold or distributed outside of the Territory.
(e) "Person" shall mean an individual, partnership (general or
limited), corporation, association or other form of
<PAGE> 148
4
business organization (whether or not regarded as a legal entity under
applicable law), trust, estate or any other entity.
(f) "Sale of Assets Agreement" shall have the meaning set
forth in the Recitals.
(g) "Territory" shall mean the United States of America,
including all of its territories and possessions.
(h) "Trademark" shall mean the trademark described in Exhibit
B and the trade name "Midland" and similar variations thereof, all
registrations, applications and renewals thereof now existing or hereinafter
obtained by Midland in the Territory, and all logos used in connection therewith
in the Territory, whether or not registered, but shall exclude use of the word
"Midland" in any combination with the word "consumer", including, without
limitation, Midland Consumer Radio, Midland Consumer Products, Midland Consumer
Electronics, Midland Consumer International and Midland Consumer Communications.
(i) "Trademark Product" shall mean any LMR Product, or part of
a LMR Product, bearing the Trademark or used in connection with the Trademark.
2. Grant of License. Subject to and in consideration of the
terms and condition of this Agreement and the Sale of Assets Agreements, Midland
grants to Intek (i) a paid-up perpetual exclusive license to use the Trademark
in the Territory in connection with the promotion, manufacture, sale, servicing
and distribution of LMR Products, excluding antennas which are usable with both
Consumer Products and LMR Products and (ii) a paid-up perpetual non-exclusive
license to use the Trademark in
<PAGE> 149
5
the Territory in connection with the promotion, manufacture, sale, servicing and
distribution of antennas which are usable with both Consumer Products and LMR
Products.
Intek agrees that, without the prior written consent of
Midland, (i) neither Intek nor any of Intek's Affiliates or sublicensees will
store, sell, manufacture, distribute or otherwise transfer or permit to store,
sell, manufacture, distribute or transfer LMR Products using the Trademark to
end-users outside the Territory (and will take reasonable precautions to prevent
its distributees or agents from selling, distributing or transferring Trademark
Products to end users outside the Territory), (ii) it will not use the Trademark
in connection with the promotion, manufacture, sale, distribution or servicing
of any product other than the LMR Products, including as part of any trade
style, business or corporate name related to the promotion, manufacture, sale,
distribution or servicing of any product other than LMR Products, (iii) it will
not advertise or promote services in connection with the Trademark outside of
the Territory. The parties acknowledge that certain limited marketing and
promotional activities may be conducted by Midland from outside the Territory
which crosses-over into the Territory and, also, that certain limited marketing
and promotional activities may occur by Intek from within the Territory which
crosses-over into areas outside the Territory. The parties shall not target the
cross border market and shall minimize such marketing and promotional activities
that occur across the Territory's border, and agree that such minimal activity
shall
<PAGE> 150
6
not give rise to a breach of contract, Trademark infringement, or
other claim.
Nothing contained herein shall in any manner, restrict Midland
and its Affiliates from using or licensing to others the Trademark to promote,
sell, or distribute (i) products other than LMR Products and antennas which are
usable with both Consumer Products and LMR Products in the Territory, or (ii)
any products, including LMR Products, outside the Territory. In addition,
Midland shall have the right to store, promote, sell, distribute or otherwise
transfer in the Territory any Trademark Products owned by or in transit to
Midland or its Affiliates as of the date of this Agreement and not acquired by
Intek pursuant to the Sale of Assets Agreement.
3. Protection of Trademark. Intek shall provide reasonable
cooperation with Midland to protect the Trademark and shall refrain from any and
all acts of commission or omission that may in any way endanger Midland's
property rights or affect the validity of or impair Midland's rights with
respect to the Trademark. In furtherance of such purposes, Intek shall:
(a) Use the Trademark only in the manner reasonably approved
by Midland and follow Midland's reasonable instructions in connection
therewith;
(b) Affix appropriate notations, when legally required, as to
the ownership and registration of the Trademark on the LMR Products
and/or the promotional and advertising materials;
<PAGE> 151
7
(c) With the exception of trademarks or trade names listed on
Schedule __ which are currently owned or used by Intek or Securicor and
which use is hereby approved, refrain from using any name, mark,
device, symbol, insignia, designation, labeling or packaging linked
with the Trademark or to form a composite mark with the Trademark
without the prior written approval of Midland, which approval shall not
be unreasonably withheld. In the event Intek adopts a mark which is
approved by Midland and is used in a manner that is linked with the
Trademark (but does not form a composite mark), Intek may, with
Midland's prior consent, which consent shall not be unreasonably
withheld, apply to register any such linked trademark (exclusive of the
Trademark), in Intek's name and use such linked trademark subject to
the terms and conditions of this Agreement; and, further, provided that
Intek pays the full costs for any applications, registrations and
maintenance in connection therewith. In the event Intek adopts a mark
which is approved by Midland and is used in a manner that forms a
composite mark with the Trademark, all rights, title and interest in
such composite mark shall be owned by Midland and shall accrue to the
sole benefit of Midland; and
(d) Comply with all applicable laws and regulations,
including, but not limited to, customs laws and regulations, in
connection with the manufacture, promotion, sale, servicing,
distribution and importation of Trademark Products.
<PAGE> 152
8
4. Approval or Consent. Unless otherwise expressly set forth
herein, all requests for approval or consent required to be given hereunder
shall be responded to within thirty (30) days of the receipt of such request.
Any request not responded to within such period of time shall be deemed
automatically approved or consented to, as the case may be.
5. Promotional and Advertising Materials. In recognition of
the value of the Trademark to Midland and the loss and damage that Midland would
incur from any improper or inappropriate use of the Trademark, Intek shall:
(a) Submit to Midland within one month of publication one copy
of the promotional and advertising materials that uses the Trademark or
which refers to Midland or its Affiliates, except that Intek need not
submit to Midland promotional and advertising materials that use the
Trademark or which refer to Midland or its Affiliates in a manner
substantially similar to promotional and advertising materials
previously submitted and approved by Midland;
(b) Utilize its best efforts so that the Trademark is not used
in any manner that is reasonably likely to be considered offensive or
to tarnish the Trademark;
(c) Affix appropriate notations, when legally required, on any
promotional or advertising materials that in any way relate or refer to
the Trademark Products so as to confirm Midland's ownership and
registration of the Trademark.
<PAGE> 153
9
(d) Take such other and additional reasonable actions, as
Midland may from time to time reasonably request in order to protect
the Trademark and the value to the Trademark to Midland.
For purposes of this Section 5, "promotional and advertising
materials" shall include, without limitation, catalogues, labeling and packaging
materials, sales literature and similar items.
6. Conditions to Appearance of Trademark. Prior to any
application to LMR Products of the Trademark, Intek shall provide Midland with
an identification or sample of such product for review and approval. Intek will
display the Trademark only is such form and manner as shall be specifically
approved by Midland, which approval shall not be unreasonably withheld.
7. Notice of Infringement. Intek shall promptly notify Midland
of any infringement, suspected or threatened, of Midland's (or Intek's license)
rights in respect of the Trademark, or of any third party allegation or claim
that the Trademark is liable to cause deception or confusion to the public or is
liable to dilute or infringe any right.
8. Protection of Trademark Rights. Intek shall promptly
determine the most appropriate course of action in the Territory against any
third party to protect the Trademark, to prevent infringement, suspected or
threatened, of Midland's (or Intek's license) rights in respect of the
Trademark, and to defend any claim that the Trademark is liable to cause
deception or confusion to the public or is liable to dilute or infringe any
<PAGE> 154
10
right. Intek shall commence such course of action within thirty (30) days of
discovery of the infringement or the claim and prosecute it diligently. Intek
shall act in its own name and/or, unless Midland decides to join with Intek's
course of action, in Midland's name, as may be appropriate. Midland shall have
the option of joining with Intek in the conduct of any legal action commenced,
prosecuted or defended by Intek at any time and, if Intek fails to commence,
prosecute and defend any such legal action within sixty (60) days of discovery
of the infringement, to commence, prosecute or defend any action in its own name
or, with Intek approval, which shall not be unreasonably withheld, in the name
of Intek. Except as set forth in paragraph 11, nothing contained herein shall,
however, be deemed to require Midland or any of its Affiliates to commence and
pursue any such cause of action against any person, nor to prevent Midland or
any of its Affiliates from commencing and pursuing such course of action. If
Midland decides to join with Intek in the conduct of any such legal action,
Midland and Intek shall each assume their own expenses in connection with any
such course of action and any recoveries shall be divided between Midland and
Intek in proportion to their respective reasonable expenses in connection
therewith.
9. Other Actions. Intek shall cooperate with Midland in any
reasonable manner requested by Midland in order to protect the Trademark and
shall, among other things, execute such documents and take such actions as may
be reasonably required by Midland in connection with the protection of the
Trademark and
<PAGE> 155
11
the registrations thereof, including, without limitation, cooperating with
Midland in executing and filing necessary or desirable agreements for
registration as a user of the Trademark and in applying to register and renew
registrations of the Trademark in such classes and countries as Midland may
elect in its sole discretion. Midland shall keep all registrations for the
Trademark that are licensed hereunder valid and shall not allow such
registrations to lapse in a manner that would materially impair Intek's rights
under this license.
10. Quality Control Standards and Inspections.
(a) The quality of the Trademark Products promoted,
sold or distributed by Intek shall be at any time at least of a
standard similar to that of LMR Products sold or distributed by Midland
prior to the date hereof. Intek shall utilize and abide by standards
and specifications commensurate with such quality when servicing or
repairing any Trademark Product. Midland shall have the right, through
its employees or other designated representatives, to enter Intek's
premises or any place where the Trademark Products are manufactured or
stored, at any reasonable time, during normal business hours and upon
thirty (30) days prior written notice, to inspect, examine and test any
Trademark Product and review the applicable quality standards and
specifications, manufacturing procedures and product complaints and
remove, for examination and testing, a reasonable quantity of samples
of such Trademark Products selected by Midland or its designee from
Intek's line or
<PAGE> 156
12
inventory. Midland's right of inspection shall be exercised no more
frequently than once per year, except at such times that Intek is on
notice pursuant to section 10(b) and has not yet cured the deficiency,
in which case the right of inspection shall not be limited in number
for as long as the deficiency remains uncured, shall be limited to
matters related to the deficiency, and may be conducted on twenty-four
hours notice. All inspections shall be conducted so as to minimize any
disruption to the business. Midland will maintain in confidence any
proprietary or confidential information to which it is given access in
the course of such inspections and shall use such information only for
purposes of the quality control provisions of this agreement.
(b) In the event that any Trademark Products are reasonably
found by Midland or its designee not to satisfy the standards set forth
in this Section 10, Midland shall so notify Intek in writing and shall
specify the deficiencies in quality. Upon such notification, Intek
shall promptly institute reasonable actions necessary to remedy the
deficiencies and give written notice of such actions to Midland so that
the standards set forth in this Section 10 are promptly met to the
reasonable satisfaction of Midland.
11. Indemnification of Midland. (a) Notwithstanding any
provision in this Agreement to the contrary, Intek shall indemnify, defend and
hold Midland harmless from and against any and all liabilities, damages, losses,
claims, reasonable costs
<PAGE> 157
13
and expenses (including reasonable attorneys' fees and investigation costs),
actually incurred by Intek and net of any tax benefits to the indemnifying
party, arising out of or resulting from (i) any use of the Trademark by Intek or
any of its Affiliates other than as expressly permitted hereunder, or (ii) the
manufacture, promotion, distribution, sale, servicing, resale or use of, and any
warranty issued or contractual obligation undertaken in connection with any
Trademark Products after the date hereof by either Intek or any Person who
manufactures, promotes, sells or distributes the Trademark Products. If Midland
desires to make a claim against Intek under this Section 11 which involves a
claim by a person other than the parties, Midland shall make such claim in the
manner and subject to the terms and conditions set forth in Section 10.3(a)
through and including Section 10.3(f) of the Sale of Assets Agreement.
(b) Notwithstanding any provision in this Agreement to the
contrary, Midland shall indemnify, defend and hold Intek harmless from and
against any and all liabilities, damages, losses, claims, reasonable costs and
expenses (including reasonable attorneys' fees and investigation costs),
actually incurred by Intek and net of any tax benefits to the indemnifying
party, arising out of or resulting from (i) use of the Trademark by Intek or any
of its Affiliates as expressly permitted hereunder; (ii) any use of the
Trademark by Midland or a Midland licensee outside the Territory; or (iii) any
use of the Trademark by Midland or a Midland licensee on products other than LMR
Products. If Intek desires to make a claim against Midland under
<PAGE> 158
14
this Section 11 which involves a claim by a person other than the parties, Intek
shall make such claim in the manner and subject to the terms and conditions set
forth in Section 10.3(a) through and including Section 10.3(f) of the Sale of
Assets Agreement.
12. Breach or Default. Midland will have the right to
terminate this Agreement if: (i) Intek breaches any material term or condition
of this Agreement and fails to take reasonable action to remedy such breach
within sixty (60) calendar days after receipt from Midland of notice of such
breach; or (ii) Intek ceases conducting the LMR Business or using the Trademark
for a period of eighteen (18) months. Midland's knowledge of a breach shall not
prevent Midland from exercising any right under this section 12 at any time.
Upon termination, no payment shall be due by Midland, Intek shall immediately
cease to promote, sell and distribute the Trademark Products or to use the
Trademark or any confusingly similar trademark or name, provided, however, that
Intek shall have a period of three (3) months from the date of such termination
to use up its supplies of promotional and advertising materials and Trademark
Products on which the Trademark had been applied prior to the date of such
termination, unless Midland decides at its sole option, to purchase all of
Intek's LMR Products at a value equal to Intek's out-of-pocket costs incurred
for such LMR Products, and provided, further, that such use of the Trademark
Products shall otherwise be in accordance with the terms and conditions of this
Agreement.
13. Bankruptcy. If a petition in bankruptcy is filed by or
against Intek, or if Intek becomes insolvent, or makes an
<PAGE> 159
15
assignment for the benefit of its creditors or an arrangement pursuant to any
bankruptcy law, or if Intek discontinues its business or if a receiver is
appointed for it or its business, to the fullest extent permitted by law at the
time of such occurrence, the license hereby granted shall, at Midland's option,
terminate forthwith. In the event this license is so terminated, Intek, its
receivers, representatives, trustees, agents, administrators, successors, and/or
assigns shall have no right to sell, exploit, or in any way deal with or in any
Trademark Product.
14. Assignment and Sublicense.
(a) This Agreement shall not be assigned or transferred by
Intek (by reason of a corporate merger, insolvency proceedings or otherwise)
without the prior written consent of Midland, except that Intek may assign its
rights under this Agreement to any wholly-owned subsidiary, provided, and so
long as (i) the subsidiary remains at least fifty-one percent owned by Intek and
(ii) the subsidiary is primarily engaged in the LMR Business, and (iii) the
subsidiary agrees to abide and be bound by all terms and provisions of this
Agreement. Intek shall promptly notify Midland of such transfer.
(b) Intek shall have the power to appoint one or several
distributor(s) or sublicensee(s) to promote, manufacture, sell, service or
distribute the Trademark Products solely in the Territory, provided that such
distributor(s) or sublicensee(s) agrees to abide and be bound by all terms and
provisions of this Agreement and provided, further, that any breach or failure
to remedy a breach of any such distributor or sublicensee shall be
<PAGE> 160
16
deemed a breach or failure to remedy a breach by Intek. Any attempted sublicense
or assignment not permitted hereunder shall be null and void.
(c) Midland may assign and license or otherwise transfer the
Trademark to any Person, including, without limitation, SCL, Inc. or any other
Affiliate, without the prior consent of Intek, provided that such Person agrees
to abide and be bound by all terms and provisions of this Agreement. Midland
shall promptly notify Intek of any such transfer.
(d) Subject to the terms of this Section 14, this Agreement
shall be binding upon and shall inure to the benefit of the legal
representatives, successors and assigns of the parties hereto. No assignment of
this Agreement, nor any sale, assignment or transfer pursuant to this Section
14, shall release the assignor from any of its duties, obligations or
liabilities under this Agreement unless the other party shall consent to such
release in writing.
15. Reservation of Rights. No rights or licenses, express or
implied, other than those granted in Section 2 and Section 14, are granted by
this Agreement to Intek under any intellectual property owned or controlled by
Midland.
16. Ownership of Trademark.
(a) Because Midland is the owner of the Trademark, any and all
rights, title or interest in, to or under the Trademark or any composite mark
formed with the Trademark which may accrue to the benefit of, or be acquired by,
Intek as a result of its exercise of the rights and license granted pursuant
hereto will be
<PAGE> 161
17
assigned to and inure to the sole benefit of Midland; and Intek hereby agrees to
assign and assigns to Midland any and all such right, title and interest as and
to the extent reasonably requested by Midland.
(b) Intek will not assert any claim of ownership of, or any
claim to the Trademark or any goodwill associated with the Trademark or any
future trademark or composite mark formed with the Trademark or good will
developed by Midland by reason of Intek's licensed use thereof or otherwise.
Intek further agrees not to register in any country any name or trademark
confusingly similar to the Trademark. Intek shall at all times during and after
termination of this Agreement recognize the validity of the Trademark and the
ownership thereof by Midland, and shall not at any time challenge, either
directly or indirectly, the validity of the Trademark, whether in or outside the
Territory and in or without connection with LMR Products.
17. Specific Performance. Intek and Midland acknowledge and
agree that any breach by the other party of the foregoing provisions may cause
the injured party irreparable injury for which there is no adequate remedy of
law. Therefore, Intek and Midland expressly agree that Midland or Intek shall be
entitled, as the case may be, in addition to any remedy available at law, to
injunctive or other equitable relief to require specific performance or prevent
a breach of the foregoing provisions.
18. Severability. If any term, covenant, condition or
provision of this Agreement, or the application thereof to any
<PAGE> 162
18
Person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement or application of such term or provision to a Person
or circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant, condition or provision of
this Agreement shall be valid and be enforced to the fullest extent permitted by
law.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives.
MIDLAND INTERNATIONAL CORPORATION
By:________________________________
INTEK DIVERSIFIED CORPORATION
By:________________________________
<PAGE> 163
EXHIBIT E
CONSIGNMENT AGREEMENT
This CONSIGNMENT AGREEMENT (this "Consignment Agreement") dated as of
_____ __, 1996, is made by and between Intek Diversified Corporation, a Delaware
corporation (herein called "Consignee"), and Midland International Corporation,
a Delaware corporation (herein called "Consignor").
It is agreed as follows:
1. Consignment. Simultaneously with Consignees taking possession of the
facility located at __________________ (the "Facility") pursuant to the Sale of
Assets and Trademark License Agreement, dated as of the date hereof, by and
among Consignee, Consignor and Simmonds Capital Limited, an Ontario corporation
("Simmonds")(the "Asset Purchase Agreement"), Consignee shall pursuant to the
terms and provisions of this Consignment Agreement take possession of, on
Consignment from Consignor, the inventory of land mobile radio products and
antennas (collectively "LMR Products") listed on Schedule A annexed hereto, and
located at the Facility (the "Initial Consigned Goods"). Thereafter, Consignor
may from time to time deliver to Consignee, on consignment, such additional LMR
Products (collectively referred to with the Initial Consigned Goods as the
"Consigned Inventory") upon the terms and conditions set forth herein.
2. Location and Identification of Consigned Inventory. All Consigned
Inventory shall be held by Consignee pursuant to this Consignment Agreement at
the locations set forth on Schedule B annexed hereto. Consignee shall not,
without Consignor's prior written consent, move, or permit to be moved, any
Consigned Inventory to any other location, except upon a sale or return in the
ordinary course of Consignor's business as contemplated by this Consignment
Agreement. Consignee shall conspicuously identify all Consigned Inventory as the
property of the Consignor. Consignor shall have, upon request, the right to
inspect the Consigned Inventory and all books and records related thereto during
normal business hours. Consignee may remove any item of the Consigned Inventory
from consignment in order to deliver and sell such Consigned Inventory to a
customer in the ordinary course of business.
3. Returned Merchandise. Consigned Inventory which has been withdrawn
from Consignment and sold by Consignee pursuant to the last sentence of Section
2 of this Consignment Agreement and which is subsequently returned by the
purchaser thereof shall become and remain the property of Consignee upon its
return and shall not be Consigned Inventory.
4. Title. (a) Title to the Consigned Inventory shall at all times
remain in Consignor, but the Consignee shall have the power to transfer the
rights of Consignor in each item of Consigned Inventory to, and only to, a buyer
in the ordinary course of business.
<PAGE> 164
(b) Consignee shall indicate Consignor's retention of title to
the Consigned Inventory on all books and records relating thereto.
(c) Consignee represents, warrants and covenants that its
inventory of LMR Products is now, and at all times will be, owned by it free and
clear of all liens, security interests, claims and encumbrances (collectively,
"Liens"), except as set forth on Schedule C annexed hereto.
(d) Consignor represents and warrants that Consignee's
customers will receive good title to the Consigned Inventory purchased by them
in the ordinary course of Consignee's business free and clear of all liens,
claims and encumbrances created by or through the Consignor.
5. Delivery and Return of Consigned Inventory.
(a) Consignor shall prepare a memo invoice (each, a
"Consignment Memorandum") which will accompany each future shipment of Consigned
Inventory to Consignee. Each Consignment Memorandum shall describe and identify
the items of Consigned Inventory contained in that shipment. Within 2 business
days after receipt of any shipment of Consigned Inventory, the Consignee shall
notify the Consignor in writing of any damaged or defective Consigned Inventory
contained in such shipment and Consignee shall be entitled to return such
damaged or defective Consigned Inventory to the Consignor within five business
days after Consignee's receipt of such damaged or defective Consigned Inventory.
All returns of damaged or defective Consigned Inventory shall be shipped and
insured by Consignee in the manner provided in section 5(c) below. Consignor
shall credit Consignee's account for all reasonable shipping and insurance costs
incurred by Consignee for the return of damaged or defective Consigned Inventory
to Consignor pursuant to this Section 5(a).
(b) Consignor shall be entitled at any time and from time to
time to withdraw all or any part of the Consigned Inventory from consignment.
Upon receipt of written instructions from Consignor, Consignee shall ship
Consigned Inventory in the amounts and to the address and recipient designated
by the Consignor in such written instructions. All such shipments shall be
shipped and insured by Consignee in the manner provided in Section 5(c) below.
Consignor shall credit Consignee's account for all reasonable handling, shopping
and insurance costs incurred by Consignee pursuant to this Section 5(b).
(c) All Consigned Inventory returned to Consignor for any
reason, whether damaged, defective, returned for stock balancing or withdrawn
from Consignment by Consignor, shall be shipped prepaid by Consignee to
Consignor, or to such person or location as Consignor shall direct in writing,
via recognized common carrier designated by Consignor, and shall be insured for
100% of the full invoice value of such Consigned Inventory. The
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Consignee shall bear the risk of loss to Consigned Inventory until such
Consigned Inventory is received by Consignor or the recipient designated by
Consignor.
6. Invoices; Sales Reports. (a) Each Friday after the close of business
Consignee shall prepare and send to Consignor a sales report (each, a "Sales
Report") listing (i) the Consigned Inventory sold during the preceding week, and
(ii) the Consigned Inventory remaining unsold as of the close of business on the
date of such Sales Report.
(b) Upon receipt of a Sales Report, Consignor shall promptly
prepare an invoice setting forth the payment due from Consignee for Consigned
Inventory sold by Consignee as determined based upon the Sales Report. Consignee
pay the amount of such invoice to Consignor within 30 days after the date of
such invoice as follows:
(i) If Consignor has existing fixed liabilities for
amounts owing from Consignor to SCL, Inc., a Delaware
corporation and sole shareholder of Consignor, Simmonds or
other affiliate of Consignor (hereafter, "Assumable
Liabilities"), Consignee shall assume a portion of such
Assumable Liabilities as shall be designated by Consignor in a
sum equal to the lesser of the amount of such Assumable
Liabilities or the amount owing on such invoice, and Consignee
shall satisfy all liabilities so assumed in accordance with
their terms; and
(ii) If Consignor has no remaining Assumable
Liabilities or, if after applying to such invoice all then
existing Assumable Liabilities as provided in subparagraph
6(b)(i) above, a balance is still due and owing on such
invoice, then Consignee shall pay the balance due on such
invoice in cash.
(c) The prices to be charged by Consignor and to be paid by
Consignee for Consigned Inventory sold by Consignor shall be equal to the
replacement cost thereof, FOB Kansas City, Missouri, determined as of the date
of this Agreement.
(d) If Consignee determines that it is unable to sell certain
items of the Consigned Inventory, the Consignee may elect to return such items
of Consigned Inventory to the Consignor at the sole cost and expense of the
Consignee. All such returns of Consigned Inventory shall be shipped and insured
in accordance with the manner set forth in section 5(c) of this Consignment
Agreement. Notwithstanding anything to the contrary contained in this
Consignment Agreement, Consignee shall bear the risk of loss of all Consigned
Inventory returned to Consignor pursuant to this Section 6(d).
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7. Care of Consigned Inventory; Risk of Loss; Insurance. Consignee
shall prudently and properly store and care for the Consigned Inventory and
shall bear the entire risk of loss with respect thereto due to any cause,
including, without limitation, failure to properly store or care for the
Consigned Inventory, fire, theft, flood, weather, strike or public disturbance.
Consignee shall, at its sole cost and expense, insure the Consigned Inventory in
the name of and with loss payable solely to Consignor against loss or damage by
fire, theft, burglary, and such other risks, in an amount equal to not less than
100% of the replacement value of the outstanding Consigned Inventory as changed
from time to time, and with such carriers as may from time to time be requested
by or acceptable to Consignor (all such policies to provide for 30 days' minimum
notice to Consignor of cancellation or substantial modification). Additionally,
all insurance policies shall be placed with insurance companies licensed to do
business in each jurisdiction where the Consigned Inventory is located. Copies
or originals of all such policies shall be delivered to Consignor. Consignee
shall promptly notify Consignor of any loss or damage to any Consigned Inventory
and shall segregate, hold in trust and immediately deliver to Consignor any
insurance proceeds received by Consignee with respect to any of the Consigned
Inventory. Consignee warrants that it will promptly pursue all remedies and
payments in the event of a loss and will immediately notify Consignor of any
loss.
8. Warranties and Adjustments. Consignee shall not make any warranty on
behalf of the Consignor other than Consignor's standard express written
warranties in force at the date of the sale of the Consigned Inventory by
Consignee as furnished to Consignee in writing by Consignor from time to time.
SUCH STANDARD EXPRESS WRITTEN WARRANTIES SHALL BE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. In no event
shall Consignor be liable (by virtue of contract, warranty, negligence, strict
liability or otherwise) for any incidental or consequential damages unless
expressly and explicitly provided for in such standard express written warranty.
9. True Consignment; Further Assurances. (a) This Consignment Agreement
is intended to be a true consignment agreement, whereby title to the Consigned
Inventory remains with Consignor until sold to customers of Consignee in
accordance with this Consignment Agreement and title to the proceeds of the
sales of such Consigned Inventory shall vest in and belong to Consignor until
the cost of such Consigned Inventory sold by Consignee shall have been accounted
for and remitted by Consignee and received by Consignor. If, notwithstanding the
express intent of the parties hereto that this Consignment Agreement constitutes
a true consignment agreement, it is determined, for any reason, that the
consignment hereby created is one intended as security, or that the consignment
is a sale or return or other sale, this
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Consignment Agreement shall constitute a security agreement pursuant to Article
9 of the Uniform Commercial Code as adopted in the State of Missouri or other
relevant jurisdictions ("UCC") and the equivalent of such a security agreement
under the laws of Missouri in which Consignee grants, creates, and gives to
Consignor a security interest in (i) all of the Consigned Inventory now or
hereafter acquired by Consignee and (ii) all proceeds of such Consigned
Inventory (in any form) as security for payment of the Consigned Inventory and
the obligations of Consignee under this Consignment Agreement.
(b) Consignee agrees, at its cost and expense, to execute and
deliver to Consignor such Financing Statements pursuant to Article 9 of the UCC
in form satisfactory to Consignor, as Consignor may, from time to time,
reasonably request and to take such further steps as may be deemed necessary or
desirable by Consignor in order to carry out the provisions and purposes of this
Consignment Agreement or to protect the right, title and interest of Consignor
in and to the Consigned Inventory and the proceeds thereof. Consignee hereby
appoints, authorizes and empowers Consignor to act as Consignee's
attorney-in-fact to execute and to file any financing statements, continuation
statements or other documents or instruments necessary to carry out the terms of
this Consignment Agreement which may at any time be required in the reasonable
opinion of Consignor to protect or enforce Consignor's interest in the Consigned
Inventory.
(c) Consignee hereby agrees (i) to comply with any signage
legislation in effect in any jurisdiction where the Consigned Inventory may be
located, and (ii) to comply with all applicable provisions of Article 9 of the
UCC as adopted in such jurisdictions.
(d) Upon (i) termination of this Consignment Agreement, (ii)
receipt by Consignor of the return of all unsold Consigned Inventory, and (iii)
full payment for the cost of the Consigned Inventory not returned to Consignor
and for which payment is outstanding, at the request of Consignee, Consignor
agrees to execute and deliver to Consignee, a sufficient quantity of UCC
Termination Statements to terminate the UCC Financing Statements filed in
connection with this Consignment Agreement.
10. Representations, Warranties and Covenants. Consignee represents,
warrants and covenants that:
(a) the chief executive office of Consignee and the office
where Consignee keeps its books and records relating to the Consigned Inventory,
and all locations of the Consigned Inventory are at the addresses set forth on
Schedule E annexed hereto and, except as otherwise specified on Schedule E, have
been located at such addresses at all times during the four-month period prior
to the date hereof;
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(b) Consignee will not change its chief executive office or
office where its books and records are kept, or merge or consolidate with any
person, without at least 20 days prior written notice to Consignor;
(c) the Consigned Inventory is and shall remain free and clear
of all Liens created by or through the Consignee;
(d) except for the trade names, if any, set forth on Schedule
F annexed hereto, Consignee has not during the five-year period prior to the
date hereof been known by or used any trade name, fictitious name or any
corporate name other than Consignee's name as set forth next to its signature
below, and all invoices in connection with its accounts are billed under such
corporate name;
(e) Consignee will not change its corporate name without at
least 20 days prior written notice to Consignor;
(f) Consignee will pay all sales, use or other similar taxes
levied by a duly constituted taxing authority against or upon the Consigned
Inventory or otherwise arising out of this Consignment Agreement, exclusive,
however, of taxes based on the income of Consignor, which taxes shall be paid by
Consignor;
(g) Consignee shall permit Consignor, at reasonable hours and
upon reasonable notice, to have access to and the right of inspection of the
Consigned Inventory and any records pertaining thereto (and the right to make
extracts from and to receive from Consignee originals or true copies of such
records and any papers and instruments relating to any Consigned Inventory upon
request therefor);
(h) Consignee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to transact the business in which it is engaged;
(i) Consignee has the corporate power and authority to execute
and deliver, and to perform its obligations under, this Consignment Agreement,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Consignment Agreement;
(j) this Consignment Agreement constitutes the legal, valid
and binding obligation of Consignee, enforceable in accordance with its terms;
(k) the execution, delivery and performance of this
Consignment Agreement will not violate any law or regulation, or any order or
decree of any court or governmental instrumentality, or any provision of the
charter or by-laws of, or any securities issued by Consignee, and will not
conflict with, or result in the
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breach of, or constitute a default under, any indenture, mortgage, deed of
trust, agreement or other instrument to which Consignee is a party or by which
it is bound, and will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the property of Consignee pursuant to the
provisions of any of the foregoing;
(l) no consent of any other person (including, without
limitation, stockholders and creditors of Consignee) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental instrumentality is
required in connection with the execution, delivery, performance, validity or
enforceability of this Consignment Agreement, except for the filing of financing
statements pursuant to the UCC;
(m) Consignee shall use all reasonable efforts to promote the
sale of, and to sell, the Consigned Inventory;
(n) Consignee shall defend Consignor's title to the Consigned
Inventory and the proceeds thereof against any claim, lien or encumbrance
created by or through the Consignee; and
(o) Consignee shall promptly give Consignor written notice of
any Event of Default (as hereinafter defined), specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto.
11. Termination. (a) Unless earlier terminated pursuant to Section 12
of this Consignment Agreement this Consignment Agreement may be terminated by
either party upon not less than 30 days prior written notice to the other. Upon
the giving of such notice, Consignor shall have no further duty to ship or
deliver goods to Consignee. Upon the expiration of the 30 day notice period,
this Consignment Agreement shall automatically terminate.
(b) Upon any termination of this Consignment Agreement,
Consignee shall return to Consignor all unsold Consigned Inventory, at the sole
cost and expense, and at the sole risk of, Consignee. All returns of Consigned
Inventory pursuant to this Section 11(b) shall be shipped and insured by
Consignee in the manner provided in Section 5(c) of this Consignment Agreement.
Consignee shall bear the risk of loss of the Consigned Inventory returned
pursuant to this Section 11(b) until such Consigned Inventory is received by
Consignor.
(c) The final accounting and payment between the parties
hereto shall be made 30 days after the date set for termination pursuant to
Section 11(a) hereof.
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12. Events of Default. In the event of the occurrence of any one or
more of the following events (herein called "Events of Default"):
(a) default in the payment or performance of any of
Consignee's obligations, liabilities or indebtedness to Consignee hereunder
which continues for more than 5 days after written notice thereof; or
(b) any warranty, representation or statement of fact made
herein or in any certificate, statement or agreement furnished in connection
with this Consignment Agreement should prove to be false or misleading in any
material respect; or
(c) Consignee shall (i) become dissolved or insolvent (however
defined), (ii) make an assignment for the benefit of creditors, or (iii) file or
suffer the filing of any voluntary or involuntary petition under any chapter of
the United States Bankruptcy Code or any other Federal, state, or foreign
bankruptcy, insolvency, liquidation or similar law, or (iv) apply for, permit or
suffer the appointment of a receiver, trustee or custodian or similar official
of or for any of its property or business, or (v) make an admission of its
inability to pay its debts as they become due, or (vi) take any corporate action
for the purpose of effecting any of the foregoing;
then in any such event (other than an event described in paragraph (c) above),
and at any time thereafter during the continuance of such event, in addition to
all other rights and remedies available under law, in equity or otherwise, at
the option of the non-defaulting party, upon notice by such non-defaulting
party, this Consignment Agreement shall terminate, and Consignee shall
immediately return to Consignor all unsold Consigned Inventory, as provided by
Section 11(b) hereof; and, following any such event, all of Consignee's
obligations to Consignor shall become and be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived; provided, however, that with respect to a default
described in paragraph (c) above, in addition to all other rights and remedies
available under law, in equity or otherwise, this Consignment Agreement shall
automatically terminate, and Consignee shall immediately return to Consignor all
unsold Consigned Inventory, as provided in Section 11(b) hereof; and following
any such event, all of Consignee's obligations to Consignor shall become and be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived.
13. Removal of Consigned Inventory and Damages. Upon the occurrence of
an Event of Default, Consignor shall have, in addition to all other rights
provided pursuant to this Consignment Agreement, the UCC, or other applicable
law, the right, upon reasonable notice, to enter any or all of the
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locations wherein the Consigned Inventory is kept and remove such Consigned
Inventory. Consignee will cooperate in such removal and shall have an
opportunity to have a representative present when Consignor exercises any rights
under this Section.
14. Additional Remedies. In addition to all rights and remedies under
this Consignment Agreement, Consignor shall have all rights and remedies of a
consignor or secured party under applicable law, including without limitation,
the UCC, all of which rights and remedies shall be cumulative.
15. Authority. Consignee shall have only the authority granted in this
Consignment Agreement and shall in no event have any authority to make any
representations, express or implied, whether in connection with the sale of any
Consigned Inventory or otherwise, except as specifically contemplated under this
Consignment Agreement.
16. Waivers. No act, omission or delay by Consignor shall constitute a
waiver of its rights or remedies hereunder or otherwise. No single or partial
waiver by Consignor of any Event of Default or right or remedy which it may have
shall operate as a waiver of any other Event of Default, right or remedy or of
the same Event of Default, right or remedy on a future occasion.
17. Governing Law. THIS CONSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
18. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this
Consignment Agreement may be brought in the courts of the State of Delaware or
of the United States of America located in the State of Delaware, and, by
execution and delivery of this Consignment Agreement, Consignee hereby accepts
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Consignee hereby irrevocably waives, in
connection with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
(b) Consignee irrevocably consents to the service of process
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by certified mail, postage prepaid, to Consignee at
its address determined pursuant to Section 19 hereof.
(c) Nothing herein shall affect the right of Consignor to
serve process in any other manner permitted by law or to
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commence legal proceedings or otherwise proceed against Consignee in any other
jurisdiction.
19. Notices. All notices and other communications to any party
hereunder shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service or by telecopy and shall be given to the telecopier
number or address for such party set forth below such party's signature to this
Consignment Agreement, or to such other telecopier number or address as such
party may hereafter specify by notice to the other party. Each such notice or
other communication shall be effective (a) if given by telecopier, when such
telecopy is transmitted to the telecopier number specified by this Section and
the appropriate answer back or confirmation is received, (b) if given by
certified mail, 72 hours after such communication is deposited with the post
office, addressed as aforesaid, or (c) if given by any other means (including,
without limitation, by courier), when delivered at the address specified by this
Section.
20. Amendments and Waivers; Partial Invalidity; Acknowledgment of
Receipt. No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Consignment Agreement and to such
provision, and executed by the party to be charged. If any term of this
Consignment Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way by affected thereby.
Consignee acknowledges receipt of a copy of this Consignment Agreement.
21. Benefit of Agreement; Assignment. This Consignment Agreement shall
be binding upon the parties hereto, their successors and permitted assigns. No
right or interest in this Consignment Agreement shall be assigned, and no
delegation of any obligation owed, or the performance of any obligation, shall
be made by Consignee without the prior written consent of Consignor; provided,
however, that Consignee shall be entitled to assign all of its obligations and
rights hereunder to MIDLAND USA, INC., a Delaware corporation and wholly owned
subsidiary of Consignee, without the prior written consent of Consignor. Any
attempted assignment or delegation by Consignee shall be wholly void and totally
ineffective for all purposes unless made in conformity herewith.
22. Counterparts. This Consignment Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
and all of which shall together constitute one and the same agreement.
23. Captions. The captions of the sections of this Consignment
Agreement have been inserted for convenience only and
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shall not in any way affect the meaning or construction of any provision of this
Consignment Agreement.
IT WITNESS WHEREOF, the undersigned have executed or caused
this Consignment Agreement to be executed as of the date first above set forth.
MIDLAND INTERNATIONAL CORPORATION
By: ______________________________
Name:
Title:
Address:
INTEK DIVERSIFIED CORPORATION
By: _______________________________
Name:
Title:
Address:
11
<PAGE> 1
FOR IMMEDIATE RELEASE EXHIBIT AA
- ---------------------
NEWS RELEASE
INTEK, SIMMONDS CAPITAL AND SECURICOR
SIGN DEFINITIVE AGREEMENTS FOR 3-WAY WIRELESS MERGER
U.S.A., Canada and England - June 18, 1996 -- In a joint statement, Intek
Diversified Corporation ("Intek") of Los Angeles, California, Simmonds Capital
Limited ("SCL") of Toronto, Canada, and Securicor plc of Surrey, England, today
announced that definitive agreements have been signed to combine Intek's Roamer
One air time services business with the US Land mobile radio business of Midland
International Corporation ("Midland"), a wholly owned subsidiary of SCL, and the
narrowband wireless technology and manufacturing operations of Securicor
Radiocoms Limited ("SRL"), a wholly owned subsidiary of Securicor Communications
Limited.
The agreements provide for Intek to purchase from Securicor Communications all
of the shares of SRL (other than certain preferred shares), in exchange for 25
million common shares of Intek, and from Midland certain contractual rights and
a license for the use of the Midland trademark in the United States for the Land
Mobile Radio market, in exchange for 2.5 million common shares of Intek.
Securicor Communications will agree to provide a subordinated loan to Intek in
the amount of $15 million and Securicor Communications will receive warrants,
exercisable commencing five years following the closing, to acquire 1% of
Intek's common stock at $13 per share. Intek will also have the option to
purchase from Midland certain assets which are used in the business, subject to
terms to be agreed upon. The SRL business includes the Linear Modulated Radio
technology, a manufacturing facility in Bath, England, a network of wireless
dealers and resellers in the United Kingdom, a Specialized Mobile Radio network
in England, and a wireless system integration business. SRL also holds
redeemable preferred shares in E.F. Johnson Company, a manufacturer of wireless
communications equipment in Wascca, Minnesota.
The completion of the proposed transactions is subject, among other things, to
the approval of Intek's shareholders and, in the case of the Intek-Securicor
transaction, Intek having a specified minimum number of constructed Land Mobile
Radio systems under management and Securicor having received certain UK tax
clearances, as well as other customary conditions, including the absence of a
material adverse change in the parties' respective businesses and the expiration
or early termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act. The transactions are conditioned
on one another, and the parties expect the transactions to close during the
third quarter of 1996. Upon completion of the proposed transactions, there will
be approximately 40 million common shares of Intek outstanding, approximately 26
million of which will be held by Securicor.
<PAGE> 2
Securicor plc is a major UK international organization, with core businesses in
security services, parcels and freight distribution, and fixed and mobile
telecommunications. The telecommunications interests include a 40% stake in
Cellnet, the major UK cellular operator which currently has in excess of 2
million subscribers. Securicor's shares are traded on the London Stock Exchange
(Symbol: Securicor.)
Simmonds Capital Limited, Toronto, Ontario, is involved in the wireless
communications business as a systems integrator and in the electronics business
as a manufacturer and distributor of electronic components and related products.
SCL is listed on the Toronto Stock Exchange (Symbol: SMM).
Intek Diversified Corporation is a publicly traded company on the NASDAQ small
cap exchange. (symbol: IDCC). Through its wholly owned subsidiary, Roamer One,
Intek is developing a 220 MHz Specialized Mobile Radio network in the United
States.
The subject of this press release includes forward looking statements concerning
a contemplated transaction. The forward looking statements are made pursuant to
the safe harbor provision of the Private Securities Litigation Reform Act of
1995. There are many factors that could cause the events in such forward looking
statements to not occur, including the inability of the parties to obtain
regulatory or shareholder approvals.
For further information contact:
David Neibert Brian Faughnan Dr. Ed Hough
Intek Diversified Simmonds Capital Limited Securicor plc
Corporation
310-366-7703 416-221-1900 ext. 230 441-81-770-7000
<PAGE> 1
EXHIBIT BB
VOTING AGREEMENT
AGREEMENT, dated June 18, 1996 (this "Agreement"), by and
among SECURICOR COMMUNICATIONS LIMITED, a company organized under the laws of
England and Wales ("Securicor"), SECURICOR INTERNATIONAL LIMITED, a company
organized under the laws of England and Wales ("Securicor International") and
each of the other parties signatory hereto (each, including Securicor and
Securicor International, a "Stockholder" and, collectively, the "Stockholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, INTEK DIVERSIFIED CORPORATION,
a Delaware corporation (the "Company"), and Securicor are entering into a Stock
Purchase Agreement (as such agreement may hereafter be amended from time to
time, the "Stock Purchase Agreement;" capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Stock Purchase
Agreement) pursuant to which the Company will acquire from Securicor all of the
issued and outstanding capital stock (other than any preference shares) of
Securicor Radiocoms Limited ("Radiocoms"), a company organized under the laws of
England and Wales and a wholly-owned subsidiary of Securicor;
WHEREAS, each of the Stockholders owns the number of shares,
par value $.01 per share, of common stock of the Company (the "Shares" or
"Company Common Stock") set forth opposite such Stockholder's name on Schedule I
hereto and, upon consummation of the transactions contemplated by the Stock
Purchase Agreement, Securicor will own 25,000,000 shares;
WHEREAS, as an inducement and a condition to entering into the
Stock Purchase Agreement, the parties hereto have required the other
Stockholders to agree, and the Stockholders have agreed, to enter into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. PROVISIONS CONCERNING COMPANY COMMON STOCK. Each
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of (a) the Closing and (b) the
termination of the Stock Purchase Agreement in accordance with its terms, at any
meeting of the holders of Company Common Stock, however called, or in connection
with any written consent of the holders of Company
<PAGE> 2
Common Stock, such Stockholder shall vote (or cause to be voted) the Shares held
of record or Beneficially Owned (as defined below) by such Stockholder on the
date of such vote, whether heretofore owned or hereafter acquired, (i) in favor
of approval of the transactions contemplated by the Stock Purchase Agreement and
any actions required in furtherance thereof and hereof, including, without
limitation, the issuance of the Purchaser Shares to Securicor on the terms and
conditions set forth in the Stock Purchase Agreement; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Stock Purchase Agreement (after giving effect to any materiality or
similar qualifications contained therein); and (iii) except as otherwise agreed
to in writing in advance by Securicor, against any actions that are prohibited
pursuant to Section 6.2 of the Stock Purchase Agreement or that are intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially, adversely affect the transactions contemplated by this Agreement and
the Stock Purchase Agreement. Such Stockholder shall not enter into any
agreement or understanding with any Person (as defined below) the effect of
which would be inconsistent or violative of the provisions and agreements
contained in Section 1 or 2 hereof. For purposes of this Agreement,
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meanings of Section 13(d)(3) of
the Exchange Act. For purposes of this Agreement, "Person" shall mean an
individual, corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity. Notwithstanding anything to the
contrary, each Stockholder shall not be required to take any action which would
violate any provisions of applicable law or its obligations under agreements
existing on the date hereof as disclosed in this Agreement.
2. OTHER COVENANTS, REPRESENTATIONS AND WARRANTIES. Each
Stockholder hereby represents and warrants to the other Stockholders as follows:
(a) OWNERSHIP OF SHARES. Such Stockholder is the record and
Beneficial Owner of the number of Shares set forth opposite such Stockholder's
name on Schedule I hereto. On the date hereof, the Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder. Except as set forth on
Schedule 2(a) hereto, such Stockholder has sole voting power and sole power to
issue instructions with respect to the matters set forth in Section 1
2
<PAGE> 3
hereof, sole power of disposition, sole power to demand appraisal rights and
sole power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of the Shares set forth opposite such Stockholder's
name on Schedule I hereto, with no limitations, qualifications or restrictions
on such rights.
(b) POWER; BINDING AGREEMENT. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate the articles
of incorporation, by-laws or similar organizational documents of such
Stockholder or any other agreement to which such Stockholder is a party
including, without limitation, any voting agreement, stockholder agreement or
voting trust. This Agreement has been duly and validly authorized, executed and
delivered by such Stockholder and constitutes a valid and binding agreement of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, subject to the Bankruptcy Exception. There is no beneficiary or holder of
a voting trust certificate or other interest of any trust of which such
Stockholder is trustee whose consent is required for the execution and delivery
of this Agreement or the consummation by such Stockholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (1) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Stockholder is a
party or by which such Stockholder or any of such Stockholder's properties or
assets may be bound, or (2) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to such Stockholder or
any of such Stockholder's properties or assets.
(d) NO FINDER'S FEES. Except as set forth in Section 4.23 of
the Radiocoms Disclosure Letter or Section 5.24 of the Purchaser Disclosure
Letter, as the case may be, no Person has acted, directly or indirectly, as a
broker, Finder or financial adviser for such Stockholder, or to such
Stockholder's knowledge, the Company, in connection with the transactions
contemplated by the Stock Purchase Agreement, and no Person, to such
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Stockholder's knowledge, is entitled to any fee or commission or like payment in
respect thereof.
(e) OTHER POTENTIAL ACQUIRORS. From and after the date hereof
until termination of the Stock Purchase Agreement in accordance with its terms,
such Stockholder shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
merger, sale of a material portion of the assets (other than in the ordinary
course of business), sale of shares of capital stock or similar transaction
involving the Company or Radiocoms, or any subsidiary of either of them, and
such Stockholder shall not directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any merger, sale of a material portion of the assets (other than in the
ordinary course of business), sale of shares of capital stock of similar
transaction involving the Company or Radiocoms, or any subsidiary of either of
them, or agree to or endorse any merger, sale of assets, sale of shares, or
similar transaction involving the Company or Radiocoms, or any subsidiary of
either of them, or authorize or permit any of such Stockholder's agents to do
any of the foregoing, and such Stockholder shall promptly notify the other
Stockholders of any proposal and shall provide a copy of any such written
proposal and a summary of any oral proposal to the other Stockholders
immediately after receipt thereof and thereafter keep the other Stockholders
promptly advised of any development with respect thereto.
(f) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE.
Except pursuant to the agreements set forth on Schedule 2(f) hereto, such
Stockholder shall not, directly or indirectly: (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Stockholder's Shares or
any interest therein, unless any Person acquiring such Shares or any interest
therein agrees in writing to assume such Stockholder's obligations under clauses
(i), (ii) and (iii) of Section 1 with respect to such shares, and to be bound
by, this Agreement (other than Section 3 hereof); (ii) grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
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(g) RELIANCE BY SECURICOR. Such Stockholder (other than
Securicor and Securicor International) understands and acknowledges that
Securicor is entering into the Stock Purchase Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
3. BOARD REPRESENTATION. During the two-year period following
the consummation of the transactions contemplated by the Stock Purchase
Agreement, each of the parties hereto agrees that Roamer One Holdings, Inc.
("Roamer One"), shall be entitled to designate one member of the Board of
Directors of the Company, PROVIDED that such designee shall be reasonably
acceptable to each of the Company and Securicor. Each of the parties hereto
agrees to vote the shares of Company Common Stock held by it from time to time
in favor of any such acceptable designee of Roamer One.
4. STOP TRANSFER; RESTRICTIVE LEGEND. (a) Each Stockholder
agrees with, and covenants to, Securicor that such Stockholder shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement
(including, without limitation, the transfers permitted pursuant to Section 2(f)
hereof). In the event of a stock dividend or distribution, or any change in the
Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
the Shares may be changed or exchanged.
(b) All certificates representing any of such
Stockholder's Shares (other than those that are actually transferred to persons
who are not parties hereto pursuant to agreements set forth on Schedule 2(f)
shall contain the following legend:
"The securities represented by this certificate,
including certain voting and transfer rights with
respect thereto, are subject to the terms of a Voting
Agreement, dated June 18, 1996, among Securicor
Communications Limited, Securicor International
Limited and the parties listed on the signature pages
thereto, a copy of which is on file in the principal
office of the Issuer."
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Upon the earlier of the occurrence of the events specified in clauses (a) and
(b) of Section 1, such legend shall be removed from such certificate including,
without limitation, by issuance of new certificates in replacement of the
legended certificates.
5. TERMINATION. Except as otherwise provided herein,
the covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) termination of the Stock Purchase Agreement in
accordance with its terms and (b) the Closing thereunder.
6. STOCKHOLDER CAPACITY. Each Stockholder signs solely
in its capacity as the record and beneficial owner of such Stockholder's Shares.
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Stock Purchase
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(b) CERTAIN EVENTS. Except for transfers of shares made in
accordance with the terms of agreements set forth on Schedule 2(f), each
Stockholder agrees that this Agreement and the obligations hereunder (other than
the obligations under Section 3) shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including, without limitation, such Stockholder's corporate successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor,
except where the Shares were transferred pursuant to an agreement listed on
Schedule 2(f).
(c) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of Securicor (in
the case of any Stockholder) or each Stockholder (in the case of Securicor), as
applicable.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated, with
respect to any one or more Stockholders, except upon the execution and delivery
of a written agreement executed by the relevant parties hereto.
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(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to any Stockholder: At the respective addresses set forth on Schedule I
hereto
with a copy to: Kohrman Jackson & Krantz PLL
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attention: Steven L. Wasserman, Esq.
Telephone: (216) 696-8700
Facsimile: (216) 621-6536
If to Securicor: Securicor Group PLC
Sutton Park House
15 Carshalton Road
Sutton
Surrey SM1 4LD England
Attention: Angus Gribbon, Esq.
Telephone: 0181-770-7000
Facsimile: 0181-643-1059
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid
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under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction as if such invalid, illegal or unenforceable provision or
portion of any provision had never been contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
(l) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.
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(m) DESCRIPTIVE HEADINGS. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, Securicor and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
SIMMONDS CAPITAL LIMITED SECURICOR COMMUNICATIONS
LIMITED
By: /s/ David C. O'Kell By: /s/ Edmund Hough
------------------------------ -----------------------
Name: David C. O'Kell Name: Edmund Hough
Title: Executive Vice President Title: Director
ROAMER ONE HOLDINGS, INC. SECURICOR INTERNATIONAL
LIMITED
By: /s/ Nicholas R. Wilson By: /s/ Edmund Hough
------------------------------ -----------------------
Name: Nicholas R. Wilson Name: Edmund Hough
Title: President and Chief Executive Officer Title: Director
AGREED TO AND ACKNOWLEDGED
(with respect to Section 4):
INTEK DIVERSIFIED CORPORATION
By: /s/ Nicholas R. Wilson
-----------------------
Name: Nicholas R. Wilson
Title: Chairman
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