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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------------
(Amendment No. 5)
INTEK DIVERSIFIED CORPORATION
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(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE 458134 10 3
- -------------------------------------- -----------------------------------
(Title of class of securities) (CUSIP number)
HOWARD CHATZINOFF, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, N.Y. 10153
(212) 310-8000
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(Name, address and telephone number of person authorized to receive notices and
communications)
DECEMBER 29, 1997
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
(Continued on following pages)
(Page 1 of 14 Pages)
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<PAGE>
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CUSIP No. 458134 10 3 13D Page 2 of 14
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1 NAMES OF REPORTING PERSONS: SECURICOR COMMUNICATIONS LIMITED
I.R.S. IDENTIFICATION NOS. N/A
OF ABOVE PERSONS:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: 00
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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 UNITED KINGDOM
ORGANIZATION:
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NUMBER OF 7 SOLE VOTING POWER: 25,000,000
SHARES
---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 25,000,000
REPORTING
---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 25,000,000
REPORTING PERSON:
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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): 61.84%
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14 TYPE OF REPORTING PERSON: CO
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<PAGE>
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CUSIP No. 458134 10 3 13D Page 3 of 14
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1 NAME OF REPORTING PERSON: SECURICOR INTERNATIONAL LIMITED
S.S. OR I.R.S. IDENTIFICATION N/A
OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: 00
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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 UNITED KINGDOM
ORGANIZATION:
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NUMBER OF 7 SOLE VOTING POWER: 937,042
SHARES
---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 937,042
REPORTING
---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 937,042
REPORTING PERSON:
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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): 2.32%
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14 TYPE OF REPORTING PERSON: CO
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<PAGE>
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CUSIP No. 458134 10 3 13D Page 4 of 14
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1 NAME OF REPORTING PERSON: SECURITY SERVICES PLC
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: N/A
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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 UNITED KINGDOM
ORGANIZATION:
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NUMBER OF 7 SOLE VOTING POWER: 25,937,042
SHARES
--------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
--------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 25,937,042
REPORTING
--------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 25,937,042
REPORTING PERSON:
- --------------------------------------------------------------------------------
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): 64.16%
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14 TYPE OF REPORTING PERSON: CO
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<PAGE>
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CUSIP No. 458134 10 3 13D Page 5 of 14
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1 NAMES OF REPORTING PERSONS: SECURICOR GROUP PLC
I.R.S. IDENTIFICATION NOS. N/A
OF ABOVE PERSONS:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: N/A
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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 UNITED KINGDOM
ORGANIZATION:
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NUMBER OF 7 SOLE VOTING POWER: 25,937,042
SHARES
---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 25,937,042
REPORTING
---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY 25,937,042
OWNED BY REPORTING PERSON:
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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): 64.16%
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14 TYPE OF REPORTING PERSON: CO
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<PAGE>
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CUSIP No. 458134 10 3 13D Page 6 of 14
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1 NAME OF REPORTING PERSON: SECURICOR PLC
S.S. OR I.R.S. IDENTIFICATION NO. N/A
OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: N/A
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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 UNITED KINGDOM
ORGANIZATION:
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NUMBER OF 7 SOLE VOTING POWER: 25,937,042
SHARES
---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 25,937,042
REPORTING
---------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 25,937,042
REPORTING PERSON:
- --------------------------------------------------------------------------------
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): 64.16%
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14 TYPE OF REPORTING PERSON: CO
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<PAGE>
This Amendment No. 5 amends and supplements the Statement on
Schedule 13D filed with the Securities and Exchange Commission (the
"Commission") by the reporting persons named therein (the "Corporations") with
respect to their ownership of common stock, par value $0.01 per share (the
"Common Stock"), of Intek Diversified Corporation (the "Issuer"). Unless
otherwise indicated, all capitalized terms used herein shall have the meanings
ascribed to them in such Schedule 13D, as previously amended.
Item 4. Purpose of the Transaction.
--------------------------
Item 4 is hereby amended and supplemented by the addition of
the following information:
On December 29, 1997, Securicor Communications Limited
("Securicor Communications") and the Issuer entered into a Preferred Stock
Purchase Agreement (the "Preferred Stock Purchase Agreement") pursuant to which
the Issuer has agreed to sell, and Securicor Communications has agreed to
purchase, an aggregate of 12,408 shares of the Issuer's Series A Convertible
Preferred Stock, par value $.001 per share and liquidation preference $1,000.00
per share (the "Preferred Stock"), in exchange for $12,408,000. The Preferred
Stock will be convertible into shares of Common Stock on the terms set forth in
the form of Certificate of Designations, Powers, Preferences and Rights of the
Preferred Stock filed as Exhibit (2) hereto (the "Certificate of Designations")
and shall have such other terms as are set forth therein. Cumulative dividends
shall accrue on the original issue price of $12,408,000 at the rate of eleven
and one-half percent per annum. The obligation of Securicor Communications to
purchase the Preferred Stock is conditioned upon, among other things, the
approval by the Issuer's stockholders by April 30, 1998 of an amendment to the
Issuer's Certificate of Incorporation to permit the issuance thereof.
Reference is hereby made to the Preferred Stock Purchase
--------------------------------------------------------
Agreement and the form of the Certificate of Designations filed herewith as
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Exhibits (1) and (2), respectively.
- ----------------------------------
Except as set forth in this Schedule 13D, as amended, the
Corporations have no present plans or proposals which relate to or would result
in any of the events required to be disclosed under this Item 4.
Item 6. Contracts, Arrangements, Understandings or
------------------------------------------
Relationships with Respect to Securities of the Issuer.
- ------------------------------------------------------
Item 6 is hereby amended and supplemented by the addition of
the following information:
On December 29, 1997, the Issuer and Securicor Communications
entered into a Second Amended and Restated Loan Agreement (the "Second Amended
Loan Agreement"). The Second Amended Loan Agreement amends and restates in their
entirety the Amended Loan Agreement, dated as of December 3, 1996, by and
between the Issuer and Securicor Communications, and certain other loans made by
Securicor Communications to the Issuer (collectively, the "Outstanding Loans").
The aggregate amount of
7
<PAGE>
the Outstanding Loans (including accrued interest thereon) as of December 29,
1997 was approximately $25.4 million. Pursuant to the terms of the Second
Amended Loan Agreement, the Issuer may borrow up to $29.5 million (which amount
includes the Outstanding Loans) and may utilize the proceeds for general
corporate purposes of the Issuer and its subsidiaries. Interest on borrowings
under the Second Amended Loan Agreement accrues at a rate of eleven and one-half
percent per annum. Accrued interest will be capitalized on June 30 of each year
and shall be added to the principal amount outstanding at such time. The
maturity date for loans under the Second Amended Loan Agreement is June 30,
2003, subject to certain mandatory prepayment provisions set forth in the Second
Amended Loan Agreement. Borrowings under the Second Amended Loan Agreement are
subordinate to the rights of certain senior indebtedness.
Pursuant to a Termination and Release, dated as of December
29, 1997 (the "Termination & Release"), the Issuer, in exchange for $2,592,000,
released Securicor Communications from all of its liabilities or obligations
under that certain Stock Purchase Agreement, dated as of June 18, 1996 and
amended by agreement of the parties as of September 19, 1996 (the "Stock
Purchase Agreement"), except as otherwise set forth in the Termination &
Release. Such Termination & Release settled all of the Issuer's claims related
to the ownership of certain securities by Securicor Radiocoms Limited, a former
subsidiary of Securicor Communications that was sold to the Issuer pursuant to
the Stock Purchase Agreement.
Reference is hereby made to the Second Amended Loan Agreement,
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the related Promissory Note and the Termination & Release filed herewith as
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Exhibits (3), (4) and (5), respectively.
- ---------------------------------------
Except as set forth in this Schedule 13D, as amended, there
are no contracts, arrangements, understandings or relationships with respect to
any securities of the Issuer (i) among any of the persons identified pursuant to
Item 2 and (ii) between (a) any of the persons identified pursuant to Item 2 and
(b) any other person.
Item 7. Material to be Filed as Exhibits.
--------------------------------
The following are filed herewith as exhibits to this Schedule
13D:
(1) Preferred Stock Purchase Agreement
(2) Form of Certificate of Designations
(3) Second Amended Loan Agreement
(4) Promissory Note
(5) Termination & Release
8
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
SECURICOR COMMUNICATIONS LIMITED
Date: January 6, 1998 By: /s/ Michael Wilkinson
----------------------
Name: Michael Wilkinson
Title: Director
9
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
SECURICOR INTERNATIONAL LIMITED
Date: January 6, 1998 By: /s/ Nigel Griffiths
--------------------
Name: Nigel Griffiths
Title: Director
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
SECURITY SERVICES PLC
Date: January 6, 1998 By: /s/ Nigel Griffiths
--------------------
Name: Nigel Griffiths
Title: Director and Secretary
11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
SECURICOR GROUP PLC
Date: January 6, 1998 By: /s/ Nigel Griffiths
--------------------
Name: Nigel Griffiths
Title: Director and Secretary
12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
SECURICOR PLC
Date: January 6, 1998 By: /s/ Nigel Griffiths
--------------------
Name: Nigel Griffiths
Title: Director and Secretary
13
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ---------- -------
(1) Preferred Stock Purchase Agreement
(2) Form of Certificate of Designations
(3) Second Amended Loan Agreement
(4) Promissory Note
(5) Termination & Release
14
NYFS09...:\73\73273\0003\1224\FRM1058M.08A
EXHIBIT 1
Execution Copy
INTEK DIVERSIFIED CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT, dated as of December 29, 1997,
between INTEK DIVERSIFIED CORPORATION, a Delaware corporation having an office
at 214 Carnegie Center, Suite 304, Princeton, New Jersey 08540 (the "Company"),
and SECURICOR COMMUNICATIONS LIMITED, a company incorporated under the laws of
England and Wales having an office at 15 Carshalton Road, Sutton, Surrey, SM1
4LD, England (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company desires to sell an aggregate of 12,408 shares (the
"Shares") of convertible preferred stock, $.001 par value (the "Preferred
Stock") which will, when authorized, have a liquidation preference of $1,000 per
share and the designations, powers, preferences, rights, qualifications,
limitations and restrictions substantially as those set forth in the Certificate
of Designation annexed hereto as Exhibit A (the "Designation") for an aggregate
of $12,408,000 to the Investor, who is an "accredited investor" within the
meaning of Rule 501(a) adopted under the Securities Act of 1933 (the " 1933
Act"); and
WHEREAS, the Investor wishes, pursuant to the terms and conditions
hereinafter set forth, to purchase the Preferred Stock referred to in the
proceeding paragraph.
NOW THEREFORE, in consideration of the premises, and the respective
representations and warranties hereinafter set forth, the Company and the
Investor agree as follows:
1. SUBSCRIPTION.
------------
(a) The Investor, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase the Preferred Stock, subject to the
conditions set forth in paragraph 1(b), below.
(b) The obligations of Purchaser to purchase the Preferred Stock is
conditioned upon:
(i) the approval of the Company's shareholders of
an amendment to the Company's Certificate of
Incorporation to permit the issuance of preferred
stock; and
(ii) the amendment described in Section 5.2 shall have
been approved by the Intek shareholders by April 30,
1998.
<PAGE>
2. PURCHASE AND CLOSING.
--------------------
2.1 At the Closing (as hereinafter defined), the Company shall issue
and sell to the Investor and the Investor shall purchase the Preferred Stock
from the Company.
2.2 The aggregate purchase price to be paid by the Investor to the
Company for the Preferred Stock (the "Purchase Price") at the Closing shall be
$12,408,000.
2.3 The closing of the purchase and sale of the Preferred Stock (the
"Closing") shall take place at 1:00 P.M. New York time on the business day
immediately following the date the Company files an amendment to its certificate
of incorporation permitting the issuance of preferred stock and the Designation.
The Closing shall take place at the offices of [INTEK] or at such other time and
place as the Company and Investor agree.
2.4 At Closing the Company will deliver the following to the
Investor:
(a) a certificate, in due and proper form, representing the
Preferred Stock purchased upon which a legend substantially in
the following form will be endorsed:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK INTO WHICH THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE CONVERTED HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE
SHARES UNDER THE SECURITIES ACT OF 1933 OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE"; and
(b) an opinion of Sommer & Schneider LLP addressed to the Company
which indicates that the Investor may rely upon it as to the
matters set forth in Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.7 and
6.8 of this Agreement, without reference to any pre-conditions
referred to therein.
2.5 At Closing, the Investor shall deliver the Purchase Price to
the Company, in immediately available funds by wire transfer
to a bank in the United States designated by the Company.
3. INVESTOR REPRESENTATIONS AND WARRANTIES.
---------------------------------------
The Investor hereby acknowledges, represents and warrants to (which
representations and will be true and correct as of the date of the Closing as if
the Agreement were made on the date of Closing), and agrees with, the Company as
follows:
2
<PAGE>
3.1 The Investor is acquiring the Preferred Stock for its own account
as principal, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof, in whole or in part;
3.2 The Investor acknowledges its understanding that the offering and
sale of the Preferred Stock is intended to be exempt from registration under the
1933 Act by virtue of Section 4(2) of the 1933 Act and the provisions of
Regulation D thereunder. In furtherance thereof, the Investor represents and
warrants to and agrees with the Company as follows:
(a) the Investor has the financial ability to bear the economic
risk of its investment, has adequate means for providing for
its current needs and has no need for liquidity with respect
to its investment in the Company;
(b) the Investor is a corporation, trust, estate benefit plan,
partnership other entity, which comes within a category of
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D under the 1933 Act (17 C.F.R. 230.501(a));
3.3 The Investor:
(a) has relied on all of the Company's reports and filings since
January 1, 1996 and the representations of the Company set
forth in the Second Amended and Restated Loan Agreement
between the Company, as Borrower and Investor, as Lender of
even date herewith (the "Documents") under the United States
Securities Exchange Act of 1934, as amended (the "1934 Act")
and any other documents which may have been requested and
has carefully read the Documents and understands and has
evaluated the risks of a purchase of Preferred Stock, and
has relied solely (except as indicated in subsections (b)
and (c) below) on the information contained in the
Documents;
(b) has been provided an opportunity to obtain additional
information concerning the Company and all other information
to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense;
(c) has been given the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions
of this investment, and has been given the opportunity to
obtain such additional information necessary to verify the
accuracy of the information contained in the Documents or that
which was otherwise provided in order for the Investor to
evaluate the merits and risks of purchase of the Preferred
Stock to the extent the Company possesses such information or
can acquire it without unreasonable efforts or expense, and
has not been furnished any other offering literature or
prospectus except as mentioned herein;
3
<PAGE>
(d) has not relied on any oral representation or oral information
in connection with the offering of the Preferred Stock which
is not contained in the Documents; and
(e) has determined that the Preferred Stock is a suitable
investment and that at the time of Closing the Investor could
bear a complete loss of its investment;
3.4 The Investor represents, warrants and agrees that it will not sell
or otherwise transfer the Preferred Stock or the shares of the Company's common
stock into which the Preferred Stock may be converted unless registered under
the 1933 Act (which registration may be pursuant to that Registration Rights
Agreement dated December 3, 1996 or otherwise) or in reliance upon an exemption
therefrom, and fully understands and agrees that it must bear the economic risk
of its purchase for an indefinite period of time because, among other reasons,
the Preferred Stock or underlying securities have not been registered under the
1933 Act or under the securities laws of certain states and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless they are
subsequently registered under the 1933 Act and under the applicable securities
laws of such states or an exemption from such registration is available. The
Investor also understands that except for the Company's independent obligation
to remain current in its filings under the 1934 Act, as amended, the Company is
under no obligation to register the Preferred Stock on its behalf or to assist
the Investor in complying with any exemption from registration under the 1933
Act. The Investor further understands that sales or transfers of the Preferred
Stock or underlying securities are restricted by the provisions of state
securities laws;
3.5 The person signing this Preferred Stock Purchase Agreement on
behalf of such entity has been duly authorized by such entity to do so;
3.6 No representation or warranties have been made to the Investor by
the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company herein;
3.7 The execution and delivery by the Investor of, and the performance
by the Investor of its obligations under this Agreement will not contravene any
provision of applicable law or the charter documents of the Investor or any
agreement or other instrument binding upon the Investor, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Investor, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Investor of its obligations under such Agreements in accordance with their
respective terms;
3.8 The Investor has been duly organized, is validly existing and is in
good standing under the laws of England and Wales. The Investor has full
corporate power and authority to enter into this Agreement and this Agreement
has been duly and validly authorized, executed and delivered by the Company and
are valid and binding obligations of the Investor, enforceable against the
Investor in accordance with their respective terms, except as such enforcement
may be limited by the laws effecting creditors rights, generally and general
equitable principles.
4
<PAGE>
3.9 The foregoing representations, warranties and agreements shall
survive the Closing.
4. INVESTOR AWARENESS.
------------------
The Investor acknowledges and is aware that:
4.1 No Federal or state agency has passed on the Preferred Stock or
made any finding or determination as to the fairness of this investment.
4.2 There are substantial restrictions on transferability of the
Preferred Stock.
4.3 The Company is a defendant in an action entitled Scott v. Steingold
et al in the United States District Court, Northern District of Ohio.
4.4 The foregoing acknowledgments shall survive the Closing.
5. APPROVAL OF AMENDMENT AND DESIGNATION.
-------------------------------------
5.1 As part of its 1998 Annual Meeting of Stockholders to be held no
later than April 30, 1998, the Company will propose to amend its certificate of
incorporation to, among other things, permit its board of directors to issue
shares of preferred stock in one or more series, including the series which will
include the Preferred Stock.
5.2 Pursuant to Section 218(c) of the Delaware General Corporation Law,
the Investor will agree with Robert Shiver, the Company's President, to vote
shares of the Company's common stock owned by it for such amendment consistent
with the resolutions of the directors of the Company dated November 20, 1997.
5.3 Investor agrees to cause its directors of the Company that are
employed directly or indirectly by Investor to abstain from voting on matters
concerning the authorization and issuance of the Preferred Stock to the
Investor.
6. COMPANY REPRESENTATIONS AND WARRANTIES.
--------------------------------------
The Company hereby acknowledges, represents and warrants to, and agrees
with the Investor (which representations and will be true and correct as of the
date of the Closing as if the Agreement were made on the date of Closing) as
follows:
6.1 The Company has been duly organized, is validly existing and is in
good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to enter into this Agreement and perform the
obligations hereunder. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforcement may be limited by the United States
Bankruptcy Code, laws effecting creditors rights, generally and general
equitable principles.
5
<PAGE>
6.2 Assuming the accuracy of the representations and warranties of the
Investor, the offering and sale of the Preferred Stock will be exempt from the
registration requirements of the 1933 Act and all applicable State Securities
Laws.
6.3 The execution and delivery by the Company of, and the performance
by the Company of its obligations under this Agreement in accordance with the
terms of this Agreement will not (a) contravene any provision of applicable law
or the charter documents or by-laws of the Company or any agreement or other
instrument binding upon the Company, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company, or; (b)
give any third party rights to acquire capital stock. No filing (except for a
Form D and For 8-K following the closing), notice, consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company of its obligations under
this Agreement in accordance with the terms of this Agreement.
6.4 The Documents did not, and through the date of the Closing will
not, contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made and at the time of their filing, not misleading.
6.5 All of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
free of preemptive or similar rights. The Company does not have any class of
authorized stock other than Common Stock. Following the amendment to the
Company's certificate of incorporation and approval of the Designation, the
Preferred Stock will have been duly authorized and, when issued and delivered as
provided by this Agreement, will be validly issued and fully paid and
non-assessable, and the Preferred Stock is not subject to any preemptive or
similar rights. In addition, the shares of Common Stock issuable upon the
conversion of the Preferred Stock, when issued as provided in the Designation
will be validly issued and fully paid and non-assessable, and such shares are
not subject to any preemptive or similar rights. Except for the approval of the
Company's shareholders, the issuance of the Preferred Stock in accordance with
the terms hereof has been duly authorized by all requisite action on the part of
the Company.
6.6 The Company is not in violation of its charter or bylaws and is not
in default in the performance of any bond, debenture, note or any other evidence
of indebtedness or any indenture, mortgage, deed of trust, license, contract,
lease or other instrument to which the Company is a party or by which it is
bound, or to which any of the property or assets of the Company is subject,
except such as have been waived or which would not have, singly or in the
aggregate, a material adverse effect on the Company, taken as a whole.
6
<PAGE>
6.7 Except as set forth in the Documents, there is no material
litigation or governmental proceeding pending, or to the knowledge of the
Company, threatened against, or involving the property or the business of the
Company, or, to the best knowledge of the Company which would adversely affect
the condition (financial or otherwise), business, prospects or results of
operations of the Company, taken as a whole.
6.8 The consolidated financial statements set forth in the Documents
fairly present the financial position and the results of operations of the
Company, at the dates and periods therein specified. Such financial statements
have been prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis throughout the respective periods
involved and are complete and accurate and are in accordance with the books and
records of the Company.
6.9 (a) The authorized capital stock of Purchaser consists of
60,000,000 shares of Purchaser Common Stock. As of the date hereof, there are
41,932,514 shares of the Purchaser Common Stock issued and outstanding and
465,582 shares of the Purchaser Common Stock are held by Purchaser as treasury
stock. All of the issued and outstanding shares of Common Stock were duly
authorized for issuance and are validly issued, fully paid and non-assessable.
(b) Except as set forth on Schedule 6.9 hereto, there is no
existing option, warrant, call, right, commitment or other agreement of any
character to which the Company is a party requiring, and there are no securities
of the Company outstanding which upon conversion or exchange would require the
issuance, sale or transfer of any additional shares of capital stock or other
equity securities of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of the Company. The Company is not a
party to any voting trust or other voting agreement with respect to any of the
shares of the Company Common Stock or to any agreement relating to the issuance,
sale, redemption, transfer or other disposition of the capital stock of the
Company, except for matters arising after the date hereof.
(c) The consummation of the transaction contemplated hereby
will not (i) conflict with, violate, result in the breach or termination of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which Purchase or any of its
Subsidiaries or any of its properties or assets is bound; (ii) violate any
statue, rule, regulation, order or decree of any Governmental Body by which
Purchase or any of its Subsidiaries is bound.
6.10 The Company at all times will keep sufficient shares of its Common
Stock available for issuance upon the conversion of the Preferred Stock.
6.11 The foregoing representations, warranties and agreements shall
survive the Closing.
7
<PAGE>
7. MISCELLANEOUS.
-------------
7.1 Complete Agreement; Modification of Agreement . The Agreement
constitutes the complete agreement between the parties with respect to the
subject matter hereof and may not be modified, altered or amended except by an
agreement in writing signed by Company and Investor.
7.2 Waiver Of Jury Trial . THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THE
LOAN DOCUMENTS.
7.3 Severability . Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
7.4 Parties . This Agreement shall be binding upon, and inure to the
benefit of, the successors of Company and Investor.
7.5 Governing Law . EXCEPT AS TO MATTERS OF INTERNAL CORPORATE LAW,
WHICH SHALL BE GOVERNED BY THE GENERAL CORPORATION LAW OF DELAWARE, IN ALL OTHER
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. INVESTOR AND COMPANY AGREE TO SUBMIT TO PERSONAL
JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK. SERVICE OF PROCESS ON COMPANY OR INVESTOR IN ANY ACTION
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE EFFECTIVE IF MAILED TO
SUCH PARTY AT THE ADDRESS LISTED IN SECTION 7.6 HEREOF.
7.6 Notices . Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
telecopied and confirmed by telecopy answerback addressed as follows:
8
<PAGE>
(a) If to Investor at:
15 Carshalton Road
Sutton
Surrey SM1 4LD
England
Attention: Nigel Griffiths, LLB
Telecopy No. (0181) 770 1145
With copies to:
Weil, Gotshal & Manges LLP
99 Bishopsgate
London, EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy No. (0171) 426 0990
(b) If to Company at:
Intek Diversified Corporation
214 Carnegie Center, Suite 304
Princeton, NJ 08540
Attention: Lee Montellaro
Telecopy No.: (609) 419-1222
With copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Howard Chatzinoff, Esq.
Telecopy No.: (212) 310-8007
9
<PAGE>
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
seven (7) Business Days after the same shall have been deposited (i) in the
United States mail (in the case of notice being given by Company or any other
Person in the United States) or (ii) in the United Kingdom mail (in the case of
notice being given by Investor or any other Person located in the United
Kingdom). Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.
7.7 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
INTEK DIVERSIFIED CORPORATION
By:_______________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:_______________________________
Name:
Title:
10
<PAGE>
The undersigned hereby guarantees to Company the performance by
Investor of all of its obligations under this Agreement.
SECURITY SERVICES PLC
By:_______________________________
Name:
Title:
Date:
-------------------------------------------------
Pursuant to Section 218(c) of the Delaware General Corporation Law, the
undersigned shareholders agree to vote (or give proxy's to vote) shares of Intek
Diversified Corporation's (the "Company") common stock owned by them on the
record date for the Company's next annual meeting as directed by the independent
directors of the Company on matters relating to amendments to the Company's
certificate of incorporation and the issuance of Preferred Stock consistent with
the resolutions of the Company's board of directors dated November 20, 1997.
Date:_____________________ ________________________________
Robert Shiver
Date:_____________________ SECURICOR COMMUNICATIONS LIMITED
By:______________________________
11
<PAGE>
Schedule 6.9
Outstanding Options, Warrants and Convertible Securities
12
EXHIBIT 2
EXECUTION COPY
INTEK DIVERSIFIED CORPORATION
Certificate of Designations, Powers,
Preferences and Rights of the
Series A Convertible
Preferred Stock, $.001 par value
---------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
---------------
INTEK DIVERSIFIED CORPORATION, a Delaware corporation (the
"Corporation"), by its President, the undersigned, does hereby certify that the
following resolution has been duly adopted by the Board of Directors of the
Corporation:
"Resolved, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation (the "Board of Directors")
by the provisions of the Certificate of Incorporation (the "Certificate of
Incorporation") of the Corporation, there hereby is created, out of the 12,408
shares of Preferred Stock of the Corporation authorized in Article Fourth of its
Certificate of Incorporation (the "Preferred Stock"), a series of 12,408 shares,
which series shall have the following designations, powers, preferences, rights,
qualifications, limitations and restrictions (in addition to the designations,
powers, preferences, rights, qualifications, limitations and restrictions set
forth in the Certificate of Incorporation which are applicable to the Preferred
Stock).
A. Designation; Number of Shares; Stated Value.
-------------------------------------------
The designation of said series of the Preferred Stock shall be Series A
Convertible Preferred Stock (the "Series A Preferred Stock"). The number of
shares of Series A Preferred Stock shall be 12,408. The liquidation value of the
Series A Preferred Stock shall be $1,000.00 per share (the "Original Issue
Price"). The shares of Series A Preferred Stock shall be issued as full shares
and shall have a par value of $.001 per share.
B. Senior Right to Dividends. The holders of Series A Preferred
-------------------------
Stock shall be entitled to a cumulative annual dividend. Dividends shall accrue
annually on the first business day of October of each year. Dividends shall
accrue at the rate of eleven and one half (11 1/2%) percent of the Original
Issue Price of $1,000.00 per share (that is, $110.00 per share per annum) and
shall be cumulative. Subject to any limitations under the General Corporation
Law of the State of Delaware ("GCL") and except as otherwise provided in
Sections C and D below, dividend payments will be due upon the conversion or
redemption of the Series A Preferred Stock or such earlier date as shall be
declared by the Corporations Board of Directors. As used herein, the first
"Dividend Year" shall be the period beginning on the date of original issuance
of
<PAGE>
the particular shares of Series A Preferred Stock and ending on September 30,
1998, and the successive Dividend Years shall be the successive periods
beginning October 1 and ending on September 30 of the next calendar year.
Dividends may be paid in any year to holders of any "Junior Stock," subject to
all of the preferential rights of the holders of any other Preferred Stock then
outstanding, and only after the Corporation shall have paid or provided for the
payment of dividends on all Series A Preferred Stock, including any amounts that
may have been accumulated but not declared or not paid for each Dividend Year
from the date of issuance to and including the Dividend Year in question. The
term "Junior Stock" shall mean shares of the Corporation's Common Stock and each
series of Preferred Stock of the Corporation ranking junior to the Series A
Preferred Stock as to dividends or distribution of assets on liquidation,
dissolution or winding up. Holders of Series A Preferred Stock shall not be
entitled to any cash or other dividend other than as provided in this Section B.
C. Senior Rights in Dissolution and Distribution of Assets. Upon
-------------------------------------------------------
liquidation, dissolution, or winding up of the Corporation, holders of Series A
Preferred Stock shall be entitled to receive, on a pro rata basis, prior to any
distribution to holders of any Junior Stock, a liquidation preference of
$1,000.00 per share plus all dividends accumulated but unpaid to the date such
payment is made available to such holders of Series A Preferred Stock. Holders
of Series A Preferred Stock shall not be entitled to any further payment as
dividends in liquidation or otherwise. After payment to the holders of the
Series A Preferred Stock, the holders of shares of Common Stock, subject to all
of the preferential rights of the holders of the Preferred Stock, shall be
entitled to receive, ratably, all remaining assets of the Corporation. A
consolidation or merger of the Corporation with or into any other corporation or
corporations shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section C.
D. Conversion. The holders of the Series A Preferred Stock shall have
----------
conversion rights as follows (the "Conversion Rights"):
1. Right to Convert.
----------------
(a) Each record holder of Series A Preferred
Stock of the Corporation shall be entitled to convert the shares of Series A
Preferred Stock held by such holder, at such holder's option, at any time the
Conversion Rate (defined below) equals or exceeds $6.00 for 20 consecutive
trading days and in the manner specified in Section D (2) below, into that
number of fully-paid and non-assessable shares of the Corporation's Common Stock
determined as follows: Each share of Series A Preferred Stock so surrendered for
conversion shall be converted into that number of shares of Common Stock derived
by dividing (a) the Original Issue Price by (b) the "Conversion Rate". As used
herein, the "Conversion Rate" shall be the average "Market Price" (defined
below) of the Corporation's Common Stock for the twenty (20) consecutive trading
days ending the day before the "Conversion Date" (as defined below), provided,
however, that the minimum Conversion Rate shall be $6.00. Following any such
conversion, the Corporation shall, as soon as reasonably practicable thereafter,
make provisions for payment of any dividends accumulated but unpaid, through the
Conversion Date, on any shares of Series A Preferred Stock so surrendered,
provided that such payment may be made, at the Corporation's sole election, in a
number of shares of the Corporation's Common Stock determined in accordance with
the provisions of this Section D(1).
2
<PAGE>
(b) "Market Price", when used with reference to
shares of Common Stock or other securities on any date, shall mean the closing
price per share of Common Stock or such other securities on such date and, when
used with reference to shares of Common Stock or other securities for any period
shall mean the average of the daily closing prices per share of Common Stock or
such other securities for such period. If the Common Stock or such other
securities are listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock or such other
securities are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Common Stock or such other securities are listed or admitted to
trading or, if the Common Stock or such other securities are not so listed on
any national securities exchange, as reported in the transaction reporting
system applicable to securities designated as a "national market system
security" or "small cap market security" on NASDAQ. If the Common Stock or such
other securities are not publicly held or so listed or designated, "Current
Market Price" shall mean the Fair Market Value per share of Common Stock or of
such other securities as determined in good faith by the Board of Directors of
the Corporation based on an opinion of an independent investment banking firm
with an established national reputation with respect to the valuation of
securities.
2. Mechanics of Conversion.
-----------------------
(a) In order to convert Preferred Stock into full
shares of Common Stock, the holder shall (i) fax or otherwise deliver a copy of
the fully executed notice of conversion in the form attached to the Preferred
Stock Purchase Agreement between the Corporation and the initial registered
holder of the Series A Preferred Stock ("Notice of Conversion") to the
Corporation at the office of the Corporation and of its designated Transfer
Agent for the Common Stock that the holder elects to convert the same, which
notice shall specify the number of Preferred Shares to be converted, the
applicable conversion price and a calculation of the number of shares of Common
Stock issuable upon such conversion (together with a copy of the first page of
each certificate to be converted) prior to Midnight, New York City time (the
"Conversion Notice Deadline") on the date of conversion specified on the Notice
of Conversion and (ii) surrender the original certificates representing the
Preferred Shares being converted (the "Preferred Stock Certificates"), duly
endorsed, along with a copy of the Notice of Conversion (together with the
Preferred Stock Certificates, the "Conversion Documents") no later than
Midnight, New York city time the next business day, to a common courier for
either overnight or 2-day delivery to the office of the Corporation or the
Transfer Agent for the Common Stock. The Corporation shall issue and deliver
within three (3) business days after delivery to the Corporation of the
facsimile copies of such Notice of Conversion and such Preferred Stock
Certificates to such holder at the address of the holder on the books of the
Corporation (or such other address as may be specified by such holder), a
certificate or certificates for the number of shares of Common Stock issuable
upon such conversion; provided, however, that the Corporation shall not be
3
<PAGE>
obligated to issue certificates evidencing the shares of Common Stock unless
either the original Preferred Stock Certificates have been received by the
Corporation or its Transfer Agent, or the holder notifies the Corporation or its
Transfer Agent, or the holder delivers to the Corporation an affidavit and
indemnification to the effect that such certificates have been lost, stolen or
destroyed.
(b) The registered holder of Series A Preferred Stock
may convert a portion of such shares. In the event of a partial conversion, the
Corporation shall issue to the registered holder a new certificate representing
the shares of Series A Preferred Stock which were not converted.
3. Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, the Corporation shall take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose.
4. Mandatory Conversion. At the Corporation's sole option, if
--------------------
the Conversion Rate equals or exceeds $9.00 for 20 consecutive trading days, the
Corporation may call each share of Series A Preferred Stock outstanding for
conversion into Common Stock on such date at the Conversion Rate then in effect
as provided in Section D(1) above.
5. Corporate Change. The Conversion Rate shall be
----------------
appropriately adjusted to reflect, as deemed equitable and appropriate by the
Board of Directors of the Corporation, any stock dividend, stock split or share
combination of the Common Stock or any distribution of a material portion of the
Corporation's assets to the holders of Common Stock. In the event of a merger,
reorganization, recapitalization or similar event of or with respect to the
Corporation (a "Corporate Change") (other than a Corporate Change in which the
Corporation is the surviving entity or in which all or substantially all of the
consideration received by the holders of the Corporation's capital stock upon
such Corporate Change consists of cash or assets other than securities issued by
the acquiring entity or any affiliate thereof), this Series A Preferred Stock
shall be assumed by the acquiring entity and thereafter this Series A Preferred
Stock shall be convertible into such class and type of securities as the holder
would have received had the holder converted this Series A Preferred Stock
immediately prior to such Corporate Change.
E. Redemption.
----------
1. Redemption.
----------
(a) The Corporation may at any time or from time to
time in amounts of not less than 1,000 shares for $1,065 per share, plus accrued
and unpaid dividends.
(b) Subject to the GCL, the Corporation shall be
bound to redeem all the Series A Preferred Stock in issue on June 30, 2003, plus
accrued and unpaid dividends.
4
<PAGE>
2. Mechanics of Redemption. The following procedures shall
-----------------------
apply to all redemptions of Series A Preferred Stock under Section E(1):
(a) The Corporation shall send a notice of
redemption (the "Redemption Notice") to each holder of record of shares to be
redeemed by facsimile, with the original to follow by 2-day courier addressed to
the holder at such holder's address appearing on the books of the Corporation or
given by the holder to the Corporation for the purpose of notice, or if there is
no such address, at the principal executive offices of the Corporation. The
Redemption Notice shall include the date of redemption, the Redemption Price to
be paid, the number of shares of Series A Preferred Stock to be redeemed, and
the place at which the shareholders may obtain payment of the Redemption Price
upon surrender of their share certificates.
(b) If funds are legally available for such
redemption on the date fixed in the Redemption Notice, then, whether or not the
share certificates are surrendered for payment of the Redemption Price, the
shares redeemed shall no longer be outstanding and the holders thereof shall
cease to be shareholders of the Corporation with respect to the shares redeemed
on and after the date fixed for redemption and shall be entitled only to receive
the Redemption Price without interest upon surrender of the share certificate.
If less than all of the shares represented by one certificate are to be
redeemed, the Corporation shall issue a new share certificate for the shares not
redeemed.
(c) On the Redemption Date the Corporation shall be
entitled and (upon delivery to the Corporation of the relevant shares
certificate) bound to redeem the shares of Series A Preferred Stock the subject
of the notice, and shall on the Redemption Date pay to the holder thereof the
amounts paid up or credited as paid up on such shares together with a sum equal
to all arrears and accruals (if any) of the preferential dividend thereon
irrespective of whether or not such dividend has been declared or earned or
become due and payable, to be calculated down to and including the Redemption
Date. Following such Redemption Date, the preferential dividend on any Series A
Preferred Stock to be redeemed shall cease to accrue, except in relation to any
such shares in respect of which payment of the redemption monies is not made
(for whatever reason) on the Redemption Date, in which case the preferential
dividend shall continue to accrue down to and including the actual date of
payment in full of such redemption monies.
(d) Certificates for shares of Series A Preferred
Stock shall be deemed to have been canceled to the extent appropriate on the
date on which payment is full is made of the redemption monies in respect of the
shares to which the certificate relates. Following any redemption of part only
of the shares of Series A Preferred Stock in issue, certificates (if any) which
then relate to Series A Preferred Stock which have not been redeemed shall be
delivered up to the Corporation and, subject only to such delivery up, the
Corporation shall issue without payment new definitive certificates in respect
of these Series A Preferred Shares which have not been redeemed.
(e) If on the Redemption Date the Corporation is
prohibited by law from redeeming all of the Series A Preferred Stock then
5
<PAGE>
required to be redeemed, it shall on such date redeem such number of the same as
it may then lawfully redeem and shall redeem the balance as soon thereafter as
it is not so prohibited. If the Corporation fails to make any partial redemption
of the Series A Preferred Stock on any Redemption Date, then any subsequent
redemptions of Series A Preferred Stock shall be deemed to be of those Series A
Preferred Stock which first became due for redemption. In addition, in the event
the Corporation is prohibited by law from redeeming, or otherwise unable to
redeem, any of the Series A Preferred Stock then required to be redeemed the
holder shall, in addition to the rights set forth in Section D above, have the
option of converting the shares of Series A Preferred Stock not redeemed into
shares of the Corporation's Common Stock. Each share of Series A Preferred Stock
so surrendered for conversion shall be converted into that number of shares of
Common Stock determined by dividing the original Issue Price by the average
market price of the Corporation's Common Stock for the 20 consecutive trading
days beginning on the Redemption Date.
(f) All references to payment in this Article E.2.
are exclusive of any associated tax credit.
F. Voting Rights. Except as otherwise provided by the GCL, the holders
-------------
of the Series A Preferred Stock shall have no voting power whatsoever, and no
holder of Series A Preferred Stock shall vote or otherwise participate in any
proceeding in which actions shall be taken by the Corporation or the
shareholders thereof or be entitled to notification as to any meeting of the
Board of Directors or the shareholders.
To the extent that under the GCL the vote of the holders of
the Series A Preferred Stock, voting separately as a class, is required to
authorize a given action of the Corporation, the affirmative vote or consent of
the holders of at least a majority of the outstanding shares of the Series A
Preferred Stock shall constitute the approval of such action by the class. To
the extent that under the GCL the holders of the Series A Preferred Stock are
entitled to vote on a matter with holders of Common Stock, voting together as
one class, each share of Series A Preferred Stock shall be entitled to a number
of votes equal to the number of shares of Common Stock into which it is then
convertible using the record date for the taking of such vote of stockholders as
the date as of which the Conversion Rate is calculated. Holders of the Series A
Preferred Stock shall be entitled to notice of all shareholder meetings or
written consents with respect to which they would be entitled to vote, which
notice would be provided pursuant to the Corporation's Bylaws and applicable
statutes.
G. Protective Provisions. So long as shares of Series A Preferred Stock
---------------------
are outstanding, the Corporation shall not without first obtaining the approval
(by voting or written consent, as provided by Delaware law) of the holders of at
least 90% of the then outstanding shares of Series A Preferred Stock:
1. alter or change the rights, preferences or privileges of
the shares of Series A Preferred Stock;
2. create any new class or series of stock having a preference
over the Series A Preferred Stock with respect to any dividends or distributions
under any circumstances;
6
<PAGE>
3. do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series A Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
H. Status of Redeemed or Converted Stock. In the event any shares of
-------------------------------------
Series A Preferred Stock shall be converted pursuant to Section D hereof, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class or series, and shall not be
issuable by the Corporation as Series A Preferred Stock.
I. Preference Rights. Subject to Section G above, the Board of
-----------------
Directors of the Corporation shall not otherwise be prevented from issuing one
or more series of preferred stock with such preferences as may be determined by
the Board of Directors, in its discretion.
DATED this _____ day of ____________, 1998.
-----------------------------------
, Chairman and CEO
-----------------------------------
, Secretary
STATE OF _______________)
) SS:
COUNTY OF _____________)
I, ______________________, a notary public, do hereby certify that on
this _____ day of ___________________, 19 ___, personally appeared before me
_________________________, who being by me first duly sworn, declared that he is
the ________________________ of
____________________________________________________, that he signed the
foregoing document as ______________________ of the corporation, and that the
statements therein contained are true.
------------------------------------
Notary Public
7
EXHIBIT 3
Execution Copy
$29,500,000
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
Dated as of December 29, 1997
between
INTEK DIVERSIFIED CORPORATION
as Borrower
and
SECURICOR COMMUNICATIONS LIMITED
as Lender
<PAGE>
SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of
December 29, 1997, between INTEK DIVERSIFIED CORPORATION, a Delaware corporation
having an office at 214 Carnegie Center, Suite 304, Princeton, New Jersey 08540
(the "Borrower"), and SECURICOR COMMUNICATIONS LIMITED, a company incorporated
under the laws of England and Wales having an office at 15 Carshalton Road,
Sutton, Surrey, SM1 4LD, England ("Lender").
W I T N E S S E T H :
WHEREAS, Borrower and Lender entered into a Stock Purchase
Agreement, dated as of June 18, 1996, as amended by agreement of the parties
dated as of September 19, 1996 (the "Stock Agreement"), pursuant to which Lender
sold Borrower all of the outstanding securities (other than certain preferred
shares) of Lender's wholly-owned subsidiary, Securicor Radiocoms Limited
("Radiocoms"), in consideration for 25,000,000 shares of Borrower's Common Stock
(the "Securicor Transaction"); and
WHEREAS, pursuant to the Stock Agreement, Lender agreed, among
other things, to advance up to $15 million to Borrower to finance the combined
business of Borrower, the U.S. LMR Distribution Business and Radiocoms which was
implemented by the Amended and Restated Loan Agreement between Borrower and
Lender dated as of December 3, 1996 (the "First Restated Loan Agreement");
WHEREAS, pursuant to the First Restated Loan Agreement,
Borrower assumed all of the obligations of Midland USA, Inc., a wholly owned
subsidiary of Borrower ("MUSA") outstanding under a Loan Agreement between
Borrower and MUSA dated as of September 19, 1996 and such obligations became
obligations of Borrower under the First Restated Loan Agreement; and
WHEREAS, the Lender has made additional advances to Borrower
(the "Other Advances") represented by the loan agreements (the "Other Loan
Agreements") listed in Schedule I hereto having various maturities and interest
rates; and
WHEREAS, the aggregate amount outstanding under the First
Restated Loan Agreement and Other Loan Agreements, including accrued interest
thereon, as of the date hereof, is $25,422,996.30 as of the date of this
amendment; and
WHEREAS, concurrently with the execution of this Agreement,
Borrower and Lender have entered into a "Preferred Stock Purchase Agreement and
"Termination and Release"; and
WHEREAS, the parties wish to amend and restate the Loan
Agreement as set forth herein to, among other things, provide for a single
integrated credit facility and provide for certain other changes;
<PAGE>
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. DEFINITIONS
-----------
In addition to the defined terms appearing above, capitalized terms
used in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Advance" shall have the meaning ascribed to it in Section 2.1(a) hereof.
"Affiliate" shall mean, with respect to any Person, any other Person that
controls such Person or is controlled by or under common control with such
Person.
"Agreement" shall mean this Loan Agreement, including all amendments,
modifications and supplements hereto and any appendices, exhibits or schedules
to any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Ancillary Agreements" shall mean any and all supplemental agreements,
undertakings, instruments, documents or other writings executed by Borrower.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Cash Equivalents" shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof; (ii) commercial
paper maturing no more than one year from the date of creation thereof and at
the time of their acquisition having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc.; and (iii)
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $200,000,000 and having a rating of "A" or better by a
nationally recognized rating agency.
"Change of Control" shall mean any acquisition, directly or indirectly, in one
transaction or a series of transactions, by any Person, other than Lender or any
Affiliate thereof, of greater than (i) 50% or more of the issued and outstanding
Common Stock, or (ii) 50% or more of the assets of Borrower and its
Subsidiaries, taken as a whole (including without limitation the sale by
Borrower of the stock of a Subsidiary or Subsidiaries whose combined assets
represent 50% or more of the assets of Borrower and its Subsidiaries, taken as a
whole).
"Charges" shall mean all federal, state, county, city, municipal, local, foreign
or other governmental taxes at the time due and payable, levies, assessments,
charges, liens, claims or encumbrances upon or relating to (i) the Collateral,
(ii) the Obligations, (iii) Borrower's or any of its Subsidiaries' ownership or
use of any of its assets, or (iv) any other aspect of Borrower's or any of the
Subsidiaries' business.
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"Closing Date" shall mean the date on which all of the conditions precedent to
the effectiveness of this Agreement have been satisfied.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with respect
to which such term is used, as in effect from time to time.
"Commitment Termination Date" shall mean December 31, 2002.
"Common Stock" shall mean common stock, par value $0.01, of Borrower.
"Default" shall mean any event which, with the passage of time or notice or both
would, unless cured or waived, become an Event of Default.
"Event of Default" shall have the meaning ascribed to it in Section 9.1 hereof.
"Federal Reserve Board" shall have the meaning ascribed to it in Section 4.8
hereof.
"Fiscal Year" shall mean the fiscal year ended September 30. Subsequent changes
of the fiscal year of Borrower shall not change the term "Fiscal Year," unless
Lender shall consent in writing to such changes.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner including, without limitation, any obligation or arrangement of such
Person (a) to purchase or repurchase any such primary obligation, (b) to advance
or supply funds (i) for the purchase or payment of any such primary obligation
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
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"Indebtedness" of any Person shall mean (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all Guaranteed Indebtedness, (v)
all Indebtedness referred to in clause (i), (ii), (iii) or (iv) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (vi) the Obligations.
"Letter of Credit Obligations" shall mean all outstanding obligations incurred
by Lender at the request of Borrower, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee, by
Lender or another, of letters of credit, bank acceptances in respect of letters
of credit, or the like. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by Lender thereupon or pursuant
thereto.
"Letters of Credit" shall mean commercial or standby letters of credit issued at
the request and for the account of Borrower, and bankers' acceptances issued by
Borrower, for which Lender has incurred Letter of Credit Obligations pursuant
thereto.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Loan" shall mean the aggregate amount of Advances outstanding at any time plus
the amount of any interest capitalized with respect thereto.
"Loan Documents" shall mean this Agreement, the Note, and any other Ancillary
Agreements as to which Lender is a party or a beneficiary and all other
agreements, instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of Borrower or any of its Affiliates, or any employee
of Borrower or any of its Affiliates, and delivered to Lender in connection with
this Agreement or the transactions contemplated hereby.
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<PAGE>
"Material Adverse Effect" or "Material Adverse Change" shall mean an event or
circumstance which materially adversely affects the business, properties,
financial condition or operations of Borrower and its Subsidiaries (taken as a
whole).
"Maximum Lawful Rate" shall have the meaning ascribed to it, in Section 2.4(c)
hereof.
"Net Worth" shall mean the total assets less the total liabilities of Borrower
and its consolidated Subsidiaries as determined in accordance with GAAP;
provided, however, that in no event shall the par value of the Radiocoms
Preferred Stock be counted as a liability in making such calculation nor shall
any outstanding preferred stock of Borrower be counted as a liability.
"Note" shall have the meaning ascribed to it in Section 2.1(b).
"Obligations" shall mean all loans, advances, debts, liabilities, and
obligations, for monetary amounts (whether or not such amounts are liquidated or
determinable) owing by Borrower to Lender (including all Letter of Credit
Obligations), and all covenants and duties regarding such amounts, of any kind
or nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under any of the Loan Documents. This term includes,
without limitation, all interest (whether capitalized or otherwise), charges,
expenses, attorneys' fees and any other sum chargeable to Borrower under any of
the Loan Documents.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Radiocoms" shall have the meaning ascribed to it in the recitals hereof.
"Radiocoms Preferred Stock" shall mean the 20,000 shares of Preference Stock of
Radiocoms, par value $1,000 per share, which are issued and outstanding as of
the date hereof.
"Repayment Date" means June 30, 2003.
"Securicor Transaction" shall have the meaning ascribed to it in the recitals
hereof.
"Senior Debt" shall mean all Indebtedness of Borrower (including without
limitation all principal of and premium, if any, and interest on, and all other
amounts of any nature whatsoever owing in respect of such Indebtedness, as the
same may be amended, modified or supplemented and any refinancing thereof from
time to time) other than Indebtedness which, in accordance with its terms, ranks
pari passu or junior to the Loan.
"Senior Indebtedness" shall have the meaning ascribed to it in Section 10.1
hereof.
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<PAGE>
"Significant Financing" shall mean any sale by the Borrower of equity, including
preferred stock (except preferred stock sold to Lender or any of its
affiliates), or indebtedness for cash (or a combination thereof) exceeding
$8,000,000.
"Solvent" shall mean, when used with respect to any Person, that:
the present fair saleable value of such Person's assets (including,
without limitation, the fair saleable value of the goodwill and other
intangible assets) is in excess of the total amount of such Person's
liabilities;
such Person is able to pay its debts as they become due; and
such Person does not have unreasonably small capital to carry on such
Person's business as theretofore operated and all businesses in which
such Person is about to engage.
"Stock" shall mean all shares, options, warrants, general or limited partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation, partnership or equivalent entity whether voting or
nonvoting, including, without limitation, common stock, preferred stock, or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
"Subordinated Indebtedness" shall have the meaning ascribed to it in Section
10.1 hereof.
"Subsidiary" shall mean any Person 50% or more of whose issued and outstanding
voting securities is owned or controlled, directly or indirectly, by the
specified Person.
"Taxes" shall have the meaning ascribed thereto in Section 2.11 hereof.
"Trademarks" shall mean the Trademarks described on Schedule 4.12(b) hereto and
the trade name "Midland" and similar variations thereof, and all registrations,
applications and renewals thereof and all logos, whether or not registered, used
in connection therewith.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. All other undefined terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement.
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<PAGE>
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
--------------------------
2.1. (a) Revolving Advances. Upon and subject to the terms and
conditions hereof (including the condition that at the time of such advance, the
Lender shall be the beneficial owner of 50% or more of the Borrower's common
stock), Lender shall make available, from time to time on a revolving basis,
until the Commitment Termination Date, for Borrower's use and upon the request
of Borrower therefor, advances (each, an "Advance") in an aggregate amount
(which amount shall include all outstanding Letter of Credit Obligations,
whether or not then due and payable) which shall not exceed $29,500,000 (less
the sum of Scheduled and Mandatory Prepayments set forth in Section 2.5(c) and
(d)). Each Advance shall be made on notice, given no later than 1:00 P.M. (New
York City time) on the second Business Day prior to the proposed Advance, by
Borrower to Lender and no Advance shall be requested unless the amount thereof
is equal to the greater of (i) $500,000 and (ii) a whole number multiple of
$500,000 in excess thereof unless the availability under this Agreement is less
than $500,000 in which case such Advance shall equal such amount; provided,
however, that there shall be no minimum Advance with respect to any Letter of
Credit Obligations to be incurred pursuant to Section 2.2. Each such notice (a
"Notice of Advance") shall be in writing in substantially the form of Exhibit A
hereto, executed by any duly authorized officer of Borrower, specifying therein
the requested date and amount of such Advance. Lender shall, before 5:00 P.M.
(New York City time) on the date of the proposed Advance, upon fulfillment of
the applicable conditions set forth in Section 3, wire to a bank in the United
States or the United Kingdom designated by Borrower and reasonably acceptable to
Lender the amount of such Advance.
(b) Note. The Loan made by Lender shall be evidenced by a promissory
note to be executed and delivered by Borrower at or prior to the Closing Date,
the form of which is attached hereto and made a part hereof as Exhibit B (the
"Note"). The Note shall be payable to the order of Lender and shall represent
the obligation of Borrower to pay the amount of the Loan, with interest thereon
as prescribed in Section 2.4. The date and amount of each Advance and each
payment of principal and interest or any capitalization of interest with respect
thereto shall be recorded on the books and records of Lender, which books and
records shall constitute prima facie evidence of the accuracy of the information
therein recorded. Borrower acknowledges that, (i) as of the date hereof, the
amount outstanding under the Restated Loan Agreement is $10,752,555, (ii) the
principal amount outstanding under the Other Loan Agreements is $12,500,000;
(iii) the amount of accrued and unpaid interest outstanding as of the date
hereof under the Restated Loan Agreement and the Other Loan Agreements is
$2,170,441.30; (iv) that such amount constitutes the amount outstanding under
this Agreement as of the date hereof, and (v) that the amount of the Loan shall
be increased by the amount of any payments on or pursuant to any Letter of
Credit Obligations, regardless of the date of such payments. The entire unpaid
balance of the Loan and all other Obligations shall be due and payable on the
Repayment Date.
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<PAGE>
(c) Termination of Other Loan Agreements. This Agreement shall
supersede and the Lender and Borrower agree that the other Loan Agreement are
hereby terminated.
2.2. Letters of Credit. (a) Lender shall, subject to the terms and
conditions hereinafter set forth, (i) incur Letter of Credit Obligations in
respect of the issuance, on the Closing Date, of such Letters of Credit
supporting obligations of Borrower or its Subsidiaries, as Borrower shall
request by written notice to Lender executed by any duly authorized officer of
Borrower, which is received by Lender not less than 2 Business Days prior to the
Closing Date, and (ii) incur from time to time on written request of Borrower or
its Subsidiaries, additional Letter of Credit Obligations in respect of Letters
of Credit supporting obligations of Borrower or its Subsidiaries; provided,
however, that no such Letter of Credit shall have an expiry date which is after
September 30, 1998. It is understood that the determination of the bank or other
legally authorized Person (including Lender) which shall issue or accept, as the
case may be, any letter of credit or bankers acceptance contemplated by this
Section 2.2(a) shall be made by Lender, in its sole discretion.
(b) In the event that Lender shall make any payment on or pursuant to
any Letter of Credit Obligation, such payment shall then be deemed to constitute
an Advance under Section 2.1(a) hereof (whether or not Borrower is then
permitted to request Advances at such time).
(c) In the event that Lender shall incur any Letter of Credit
Obligations pursuant hereto at the request or on behalf of Borrower hereunder,
Borrower shall pay to Lender, as compensation to Lender for such Letter of
Credit Obligation, all fees and charges paid by Lender on account of such Letter
of Credit Obligation to the issuer or like party. Fees payable in respect of
Letter of Credit Obligations shall be paid to Lender, in arrears, on the first
day of each month for the preceding month.
2.3. Use of Proceeds. Borrower shall apply the proceeds of the Advances
for the general corporate purposes of Borrower and its Subsidiaries.
2.4. Interest on Loan . (a) (i) From the Closing Date through and
including the Commitment Termination Date, interest accrues on the amount
outstanding from time to time under the Loan at the rate of eleven and one-half
percent (11-1/2%) per annum, calculated on the basis of a 360 day year for the
number of days elapsed. Interest will be capitalized on June 30, of each year of
the Loan and shall be added to the principal amount outstanding at such time
under the Loan.
(ii) Interest accrued and uncapitalized on the Repayment Date shall be
payable on such date.
(b) So long as any Event of Default shall be continuing, the interest
rate applicable to the Loan shall be increased by 3% per annum above the rate
otherwise applicable.
(c) Notwithstanding anything to the contrary set forth in this Section
2.4, if at any time until payment in full of all of the Obligations, the
applicable rate
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<PAGE>
of interest under this Agreement exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest payable hereunder shall be equal to the Maximum Lawful Rate;
provided, however, that if at any time thereafter the applicable rate of
interest under this Agreement is less than the Maximum Lawful Rate, Borrower
shall continue to pay interest hereunder at the Maximum Lawful Rate until such
time as the total interest received by Lender from the making of advances
hereunder is equal to the total interest which Lender would have received had
the applicable rate of interest under this Agreement been (but for the operation
of this paragraph) the interest rate payable since the Closing Date. Thereafter,
the interest rate payable hereunder shall be the applicable rate of interest
under this Agreement, unless and until such rate shall again exceed the Maximum
Lawful Rate, in which event this paragraph shall again apply.
2.5. Prepayments. (a) Upon the Lender ceasing to be the beneficial
owner of more than 50% of the Borrower's Common Stock as a result of any
transaction except the direct or indirect transfer of the Common Stock of
Borrower by Lender, the commitment of Lender to make Advances under this
Agreement shall immediately terminate, and Borrower shall immediately pay to
Lender the full amount of the Loan then outstanding, together with any accrued
but uncapitalized interest thereon.
(b) Borrower shall have the right, at any time, to prepay the Loan, in
whole or in part, without premium or penalty, upon at least three Business Days
irrevocable notice to Lender specifying (i) the amount to be repaid and (ii) the
date of such repayment. If any such notice is given, Borrower shall make the
prepayment specified therein, and such prepayment shall be due and payable as
specified therein. Amounts prepaid may be reborrowed, but only so long as Lender
retains beneficial ownership of more than 50% of Borrower's Common Stock. Each
partial prepayment of the Loan pursuant to this Section 2.5(b) shall be in an
amount equal to the lesser of $1,650,000 or a whole number multiple of
$1,650,000 in excess thereof or such lesser amount outstanding and shall be
accompanied by payment of interest (whether or not capitalized) allocable to the
amount of principal prepaid.
(c) Borrower will make mandatory principal prepayments (i) at the rate
of $500,000 per month beginning July 1, 2001; and (ii) at the rate of $1,000,000
per month beginning July 1, 2002 and ended May 1, 2003 ("Scheduled Prepayment")
or, if less, the amount of the Loan Outstanding..
(d) The Company will make additional prepayments of principal at the
rate of 50% of the net proceeds of a Significant Financing exceeding $8,000,000
on the second business day following the date the Borrower completes a
Significant Financing ("Mandatory Prepayments"). Concurrently with each
Mandatory Prepayment, the Borrower will pay interest (whether or not
capitalized) associated with such Mandatory Prepayment.
2.6. Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 11:00 A.M. (New York City time) on the day when due in
lawful money of the United States of America in immediately available funds to
Lender's
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<PAGE>
depositary bank as designated by Lender from time to time for deposit in
Lender's depositary account. For purposes only of computing interest hereunder,
all payments shall be applied by Lender on the day payment has been credited by
Lender's depository bank to Lender's account in immediately available funds. For
purposes of determining the amount of funds available for borrowing by Borrower
pursuant to Section 2.1(a) hereof, such payments shall be applied by Lender
against the outstanding amount of the Loan at the time they are credited to its
account.
2.7. Application of Payments. Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Lender from or on behalf of Borrower, and Borrower irrevocably
agrees that Lender shall have the continuing exclusive right to apply any and
all such payments against the then due and payable Obligations of Borrower and
in repayment of the Loan as Lender may deem advisable. Lender is authorized to,
and at its option may, make advances on behalf of Borrower for payment of all
fees, expenses, charges, costs, principal and interest incurred by Borrower
hereunder when and as Borrower fails to promptly pay any such amounts. At
Lender's option and to the extent permitted by law, any advances so made may be
deemed Advances constituting part of the Loan hereunder.
2.8. Accounting. Lender will, upon Borrower's request, provide a
monthly accounting of transactions under the Loan to Borrower within 10 days of
the end of the month. Each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon Borrower in all respects as
to all matters reflected therein, unless Borrower, within 20 days after the date
any such accounting is rendered, shall notify Lender in writing of any objection
which Borrower may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by Borrower. Lender's
determination, based upon the facts available, of any item objected to by
Borrower in such notice shall (absent manifest error) be final, binding and
conclusive on Borrower, unless Borrower shall commence a judicial proceeding to
resolve such objection within 45 days following Lender's notifying Borrower of
such determination.
2.9. Indemnity. Borrower shall indemnify and hold Lender and its
officers, directors, employees, agents, Affiliates and shareholders
(collectively, the "Indemnified Persons") harmless from and against any and all
suits, actions, proceedings, claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and disbursements,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any Indemnified Person as the result of the execution of
the Loan Documents or extension of credit hereunder; provided, however, that
Borrower shall not be liable for such indemnification to such Indemnified Person
to the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from such Indemnified Person's negligence or
willful misconduct.
2.10. Access. Lender and any of its officers, employees and/or agents
shall have the right, exercisable as frequently as Lender determines to be
appropriate, during normal business hours (or at such other times as may
reasonably be requested by Lender), to inspect the properties and facilities of
Borrower and to inspect, audit and make extracts from all of Borrower's records,
files and books of account. Borrower shall deliver any document or instrument
reasonably
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necessary for Lender, to obtain records from any service bureau maintaining
records for Borrower, and shall maintain duplicate records or supporting
documentation on media, including, without limitation, computer tapes and discs
owned by Borrower. Borrower shall instruct its banking and other financial
institutions to make available to Lender such information and records as Lender
may reasonably request.
2.11. Taxes. (a) Any and all payments by Borrower hereunder or under
the Note shall be made, in accordance with this Section 2.11, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of Lender by the
jurisdiction under the laws of which Lender is organized or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the Note to Lender, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.11) Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law.
(b) In addition, Borrower shall pay any present or future stamp or
documentary taxes or any other sales, transfer, excise, mortgage recording or
property taxes, charges or similar levies that arise from any payment made
hereunder or under the Note or from the execution, sale, transfer, delivery or
registration of, or otherwise with respect to the Loan Documents and any other
agreements and instruments contemplated thereby (hereinafter referred to as
"Other Taxes").
(c) Borrower shall indemnify Lender for the full amount of Taxes or
Other Taxes (including without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.11) paid by Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Lender, at its address referred to in Section 11.10, the
original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.11 shall survive both (i) the payment in full of principal and
interest hereunder and under the Note and (ii) the termination of this
Agreement.
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3. CONDITIONS PRECEDENT
--------------------
3.1. Conditions to the Effectiveness. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Lender under the Restated Loan Agreement or other Loan Agreements, this
Agreement shall not be effective, and Borrower shall have no rights under this
Agreement, and Lender shall not be obligated to make available any Advance or
Letter of Credit hereunder, unless and until Borrower shall have delivered to
Lender, in form and substance satisfactory to Lender and (unless otherwise
indicated) each dated not later than the Closing Date:
(a) The Note to the order of Lender duly executed by Borrower.
(b) Resolutions of the board of directors of Borrower certified by the
Secretary or Assistant Secretary of Borrower, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by the Loan Documents and
(ii) specific officers to execute and deliver this Agreement and the other Loan
Documents.
(c) A certificate of the chief executive officer of Borrower stating
that all of the representations and warranties of the Borrower contained herein
or in any of the Loan Documents are correct on and as of the Closing Date as
though made on and as of such date, and no event has occurred and is continuing,
or would result from any Advance, if made on the Closing Date, which constitutes
or would constitute a Default or an Event of Default.
(d) Certificates of the Secretary or an Assistant Secretary of Borrower,
dated the Closing Date, as to the incumbency and signatures of the officers of
Borrower executing any of the Loan Documents and any other certificate or other
document to be delivered pursuant hereto or thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.
(e) Such additional information and materials as Lender may reasonably
request, including, without limitation, copies of any debt agreements, security
agreements and other material contracts.
3.2. Further Conditions to Each Advance and Letter of Credit . It shall be a
further condition to the funding of each subsequent Advance and incurrence of
Letter of Credit Obligations that the following statements shall be true on the
date of each such Advance or incurrence:
(a) All of the representations and warranties of Borrower contained herein
or in any of the Loan Documents shall be correct on and as of the Closing Date
and the date of each such Advance as though made on and as of such date, except
to the extent that any such representation or warranty expressly relates to an
earlier date and for changes therein permitted or contemplated by this
Agreement.
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(b) No event shall have occurred and be continuing, or would result from
the funding of any Advance, which constitutes or would constitute a Default or
an Event of Default.
(c) The aggregate principal amount of the Advances made to Borrower
hereunder after giving effect to such Advance, plus the aggregate amount of all
outstanding Letter of Credit Obligations (whether or not then due or payable),
shall not exceed $29,500,000.
The acceptance by Borrower of the proceeds of any Advance or the
incurrence by Lender of Letter of Credit Obligations shall be deemed to
constitute, as of the date of such acceptance, a representation and warranty by
Borrower that the conditions in this Section 3.2 have been satisfied.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to make the Loan, as herein provided for, Borrower
makes the following representations and warranties to Lender, each and all of
which shall be true and correct as of the date of execution and delivery of this
Agreement:
4.1. Corporate Existence; Compliance with Law . Borrower and each
Subsidiary of Borrower (i) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation; (ii) except as
indicated on Schedule 4.1(ii) hereto, is duly qualified to do business and is in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification (except
for jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now, heretofore and proposed to be
conducted; (iv) except as indicated on Schedule 4.1(iv) hereto, has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (v) is in compliance with its certificate of
incorporation and by-laws; and (vi) is in compliance with all applicable
provisions of law where the failure to comply would have a Material Adverse
Effect.
4.2. Executive Offices . The location of Borrower's executive offices
and principal place of business is set forth in Schedule 4.2 hereto, and, after
the Closing Date, as set forth in a written amendment thereto delivered by
Borrower to Lender.
4.3. Subsidiaries. There exist no Subsidiaries of Borrower other than
(a) as set forth on Schedule 4.3 hereto, which sets forth such Subsidiaries,
together with their respective jurisdictions of organization, and the authorized
and outstanding capital Stock of each such Subsidiary, by class and number and
percentage of each class legally owned by Borrower or a Subsidiary of Borrower
or any other Person, or to be owned by the Closing Date or (b) after the Closing
Date, as set forth in a written amendment to Schedule 4.3 delivered by Borrower
to Lender. There are no options, warrants, rights to purchase or similar rights
covering capital Stock for any such Subsidiary.
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4.4. Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by Borrower of the Loan Documents, Ancillary
Agreements and all instruments and documents to be delivered by Borrower, to the
extent it is a party thereto, hereunder and thereunder: (i) are within
Borrower's corporate power; (ii) have been duly authorized by all necessary or
proper corporate action; (iii) are not in contravention of any provision of
Borrower's certificates or articles of incorporation or by-laws; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality in any material respect; (v) will not conflict with
or result in the breach or termination of, constitute a default under or
accelerate any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrower or any of its
Subsidiaries is a party or by which Borrower or any of its Subsidiaries or any
of their respective properties is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower or any of its
Subsidiaries; and (vii) do not require the consent or approval of any
Governmental Authority or any other Person. Each of the Loan Documents has been
duly executed and delivered for the benefit of or on behalf of Borrower and each
constitutes a legal, valid and binding obligation of Borrower, to the extent it
is a party thereto, enforceable against it in accordance with its terms.
4.5. Solvency. After giving pro forma effect to the Preferred Stock
Purchase and Termination and Release and the initial Advance, if made on the
Closing Date, and the payment of all estimated legal, accounting and other fees
related hereto, Borrower will be Solvent as of and on the Closing Date.
4.6 Labor Matters. There are no strikes or other labor disputes against
Borrower pending or, to Borrower's knowledge, threatened which would have a
Material Adverse Effect.
4.7 Investment Company Act. Neither Borrower nor any of its
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended. The making
of the Advances by Lender, the application of the proceeds and repayment thereof
by Borrower and the consummation of the transactions contemplated by this
Agreement and the other Loan Documents will not violate any provision of such
Act or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder.
4.8 Margin Regulations. Neither Borrower nor any of its Subsidiaries
owns any "margin security," as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), and the proceeds of the Advances will be used only for the purposes
contemplated hereunder. The Advances will not be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause
any of the loans under this Agreement to be considered a "purpose credit" within
the meaning of Regulations G, T, U or X of the Federal Reserve Board. Borrower
will not take or permit any Subsidiary or agent acting on its behalf to take any
action which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
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4.9 No Litigation. Except as set forth on Schedule 4.9 hereto, no
action, claim or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower or any of its Subsidiaries at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, which, if determined adversely,
could have a Material Adverse Effect, nor to the knowledge of Borrower does a
state of facts exist which is reasonably likely to give rise to such
proceedings.
4.10 Patents, Trademarks, Copyrights and Licenses. Borrower and each of
its Subsidiaries owns all material patents, patent applications, copyrights,
trademarks, trademark applications, and know-how (collectively, "Intangible
Property") necessary to continue to conduct its business as heretofore conducted
by it, now conducted by it and proposed to be conducted by it, each of which is
listed, together with Patent and Trademark Office application or registration
numbers, where applicable, on Schedule 4.11(a) hereto. Further, (i) Borrower and
each of its Subsidiaries has good and lawful title to the Intangible Property
owned by it (subject to the licenses set forth on Schedule 4.11(d) hereto); (ii)
to Borrower's knowledge, the Intangible Property is valid and subsisting and is
enforceable; (iii) to Borrower's knowledge, there are no actual or threatened
claims by third parties regarding the Intangible Property; (iv) to Borrower's
knowledge, the Intangible Property does not infringe or otherwise violate any
rights of any third party, except where any violation or infringement would not
have a Material Adverse Effect.
4.11 No Material Adverse Effect. No event has occurred and is
continuing which has had or could have a Material Adverse Effect.
5. FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
5.1. Reports and Notices. Borrower covenants and agrees that from and
after the Closing Date and until the Commitment Termination Date, it shall
deliver to Lender:
(a) Within 45 days after the end of each fiscal month, (i) a copy of
the unaudited consolidated balance sheets of Borrower as of the end of such
month and the related statements of income and cash flows for that portion of
the Fiscal Year ending as of the end of such month, and (ii) a copy of the
unaudited consolidated statements of income of Borrower for such month, all
prepared in accordance with GAAP (subject to normal year-end adjustments),
accompanied by the certification of the chief executive officer or chief
financial officer of Borrower that all such financial statements are complete
and correct and present fairly in accordance with GAAP (subject to normal
year-end adjustments), the financial position, the results of operations and the
statements of cash flows of Borrower as at the end of such month and for the
period then ended, and that there was no Default or Event of Default in
existence as of such time.
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(b) As soon as practicable, but in any event within two (2) Business
Days after Borrower becomes aware of the existence of any Default or Event of
Default, or any development or other information which would have a Material
Adverse Effect, telephonic or telegraphic notice specifying the nature of such
Default or Event of Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in writing
within five (5) days.
(c) If requested by Lender, copies of all federal, state, local and
foreign tax returns and reports in respect of income, franchise or other taxes
on or measured by income (excluding sales, use or like taxes) filed by Borrower
or any of its Subsidiaries.
(d) Such other information respecting Borrower's or its Subsidiaries'
business (including with respect to orders received and inventory purchased),
financial condition or prospects as Lender may, from time to time, reasonably
request.
5.2. Communication with Accountants. Borrower authorizes Lender to
communicate directly with its (or any of its Subsidiaries') independent
certified public accountants and tax advisors and authorizes those accountants
to disclose to Lender any and all financial statements and other supporting
financial documents and schedules including copies of any management letter with
respect to the business, financial condition and other affairs of Borrower or
any of its Subsidiaries. At Lender's request, Borrower shall deliver a letter
addressed to such accountants and tax advisors instructing them to comply with
the provisions of this Section 5.2.
6. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, unless Lender shall otherwise
consent in writing, from and after the date hereof and until the Repayment Date:
6.1. Maintenance of Existence and Conduct of Business. Borrower shall:
(a) do or cause to be done all things necessary to preserve and keep in full
force and effect the corporate existence, and the rights and franchises of
Borrower and each of its Subsidiaries; (b) transact business on behalf of itself
or any Subsidiary only in such names as Borrower shall specify to Lender in
writing not less than thirty days prior to the first date such name is used by
Borrower and (c) at all times maintain, preserve and protect all of its
Trademarks and any tradenames.
6.2. Payment of Obligations. (a) Borrower shall: (i) pay and discharge
or cause to be paid and discharged all its and its Subsidiaries' Indebtedness,
including, without limitation, all the Obligations as and when due and payable,
and (ii) pay and discharge or cause to be paid and discharged promptly all (A)
Charges imposed upon it, its income and profits, or any of its property (real,
personal or mixed), and (B) lawful claims for labor, materials, supplies and
services or otherwise before any thereof shall become in default.
(b) Borrower, on behalf of itself or any Subsidiary, may in good faith
contest, by proper legal actions or proceedings diligently pursued, the validity
or amount of any Charges or claims arising under Section 6.2(a)(ii), provided
that at the time of commencement of any such action or proceeding, and during
the pendency thereof (i) adequate reserves with respect thereto are maintained
on the books of Borrower, in accordance with GAAP; (ii) such contest operates to
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suspend collection of the contested Charges or claims and is maintained and
prosecuted continuously with diligence; (iii) no Lien shall exist for such
Charges or claims during such action or proceeding; (iv) Borrower shall promptly
pay or discharge such contested Charges and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Lender evidence acceptable
to Lender of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to Borrower; and (v) Lender has not advised
Borrower in writing that Lender reasonably believes that nonpayment or
nondischarge thereof would have a Material Adverse Effect.
(c) Notwithstanding anything to the contrary contained in Section
6.2(b) above, Borrower shall have the right to pay the charges or claims arising
under Section 6.2(a)(ii) and in good faith contest, by proper legal actions or
proceedings, the validity or amount of such charges or claims.
6.3 Books and Records. Borrower shall keep, and shall cause its
Subsidiaries to keep, all books, accounts and records in the ordinary course of
business.
6.4 Litigation. Borrower shall notify Lender in writing, promptly upon
learning thereof, of any litigation commenced against Borrower or any of its
Subsidiaries, and of the institution against any of them of any suit or
administrative proceeding that may have a Material Adverse Effect.
6.5 Insurance. Borrower shall maintain insurance covering, without
limitation, fire, theft, burglary, public liability, property damage, product
liability and insurance on all property and assets of Borrower and its
Subsidiaries, all in amounts customary for its business and in any event with a
lender's loss payable clause for the benefit of Lender.
6.6 Compliance with Law. Borrower shall, and shall cause its
Subsidiaries to, comply in all material respects with all federal, state and
local laws and regulations applicable to it.
6.7 Supplemental Disclosure. From time to time as may be necessary (in
the event that such information is not otherwise delivered by Borrower to Lender
pursuant to this Agreement), so long as there are Obligations outstanding
hereunder, Borrower will supplement each Schedule (if any) or representation
herein with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation or
which is necessary to correct any information in such Schedule or representation
which has been rendered inaccurate thereby; provided, however, that such
supplement to such Schedule or representation shall not be deemed an amendment
thereof unless otherwise consented to by the Lender.
6.8 Net Worth. Borrower shall maintain at all times, on a consolidated
basis with its Subsidiaries, a Net Worth of not less than $20 million.
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7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, without Lender's prior written
consent, from and after the date hereof and until the Repayment Date:
7.1. Maintenance of Business. Borrower shall not and shall not permit
any of its subsidiaries to engage in any business other than the business
currently engaged in by Borrower or such Subsidiary.
7.2. Transactions with Affiliates. Except as set forth on Schedule
7.2(b), Borrower shall not, and shall not permit any of its Subsidiaries to,
enter into or be a party to any transaction with any Affiliate of Borrower,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms that
are fully disclosed to Lender and are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of Borrower.
7.3. Events of Default. Borrower shall not, and shall not permit any of
its Subsidiaries to, take or omit to take any action, which act or omission
would constitute (i) a default or an event of default pursuant to, or
noncompliance with any of, the terms of any of the Loan Documents or (ii) a
material default or an event of default pursuant to, or noncompliance with any
other contract, lease, mortgage, deed of trust or instrument to which it is a
party or by which it or any of its property is bound, or any document creating a
Lien, unless such default, event of default or non-compliance would not have a
Material Adverse Effect.
8. TERM
8.1 Termination . Subject to the provisions of Section 2 hereof, the
financing arrangement contemplated hereby in respect of the Loan shall be in
effect until the Commitment Termination Date.
8.2 Survival of Obligations Upon Termination of Financing Arrangement .
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the powers, obligations,
duties, rights and liabilities of Borrower or the rights of Lender relating to
any transaction or event occurring prior to such termination. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations contained in
the Loan Documents shall survive such termination or cancellation and shall
continue in full force and effect until such time as all of the Obligations have
been paid in full in accordance with the terms of the agreements creating such
Obligations, at which time the same shall terminate.
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9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
9.1. Events of Default . The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, the Loan or any of the
other Obligations when due and such failure continues for a period of five (5)
days.
(b) Borrower shall fail or neglect to perform, keep or observe any of
the provisions of Section 6.8 or Section 7 hereof.
(c) Borrower shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents and the
same shall remain unremedied for a period ending on the first to occur of twenty
(20) days after Borrower shall receive written notice of any such failure from
any Lender or forty five (45) days after Borrower shall become aware thereof.
(a) (d) A default shall occur under any other agreement, document or
instrument to which Borrower or any of its Subsidiaries is a party or by which
Borrower's or any of its Subsidiaries' property is bound, and such default
causes (or permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness or a portion thereof in an aggregate amount exceeding $250,000 to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
(e) Any representation or warranty herein or in any Loan Document or in
any written statement pursuant thereto or hereto, report, financial statement or
certificate made or delivered to Lender by Borrower shall be untrue or incorrect
in any material respect, as of the date when made or deemed made (including
those made or deemed made pursuant to Section 3.2).
(f) Any of the assets of Borrower or any of its Subsidiaries shall be
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of Borrower or any Subsidiary of Borrower and shall
remain unstayed or undismissed for thirty (30) consecutive days; or any Person
other than Borrower shall apply for the appointment of a receiver, trustee or
custodian for any of the assets of Borrower or any Subsidiary of Borrower and
shall remain unstayed or undismissed for thirty (30) consecutive days; or
Borrower or any Subsidiary of Borrower shall have concealed, removed or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against Borrower or
any Subsidiary of Borrower in a court having competent jurisdiction seeking a
decree or order in respect of Borrower or any Subsidiary of Borrower (i) under
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title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or any Subsidiary of Borrower or
of any substantial part of its or their properties, or (iii) ordering the
winding-up or liquidation of the affairs of Borrower or any Subsidiary of
Borrower and such case or proceeding shall remain undismissed or unstayed for
thirty (30) consecutive days or such court shall enter a decree or order
granting the relief sought in such case or proceeding.
(h) Borrower or any Subsidiary of Borrower shall (i) file a petition
seeking relief under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) consent to the institution of proceedings thereunder
or to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or any Subsidiary of Borrower or
of any substantial part of its or their properties, (iii) fail generally to pay
its debts as such debts become due, or (iv) take any corporate action in
furtherance of any such action.
9.2. Remedies. If any Event of Default specified in Section 9.1 shall
have occurred and be continuing, Lender may, by written notice to Borrower and
the lender with respect to any Senior Debt (the "Senior Lender") declare all
Obligations to be forthwith due and payable, whereupon all such Obligations,
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrower, shall become due and payable (x) if none of
the Senior Debt is outstanding, immediately and (y) if any Senior Debt is
outstanding, upon the first to occur of (1) acceleration of any Senior Debt or
(2) the fifth Business Day after receipt by Borrower and the Senior Lender of
such written notice given hereunder, unless on or prior to the date such amounts
become due and payable Borrower shall have cured the default, event or condition
resulting in such Event of Default and no other Event of Default is then
continuing and Borrower shall have given notice of such cure to Agent and
Lenders; provided, however, that upon the occurrence of an Event of Default
specified in Section 9.1(f), (g) or (h) hereof, such Obligations shall become
due and payable without declaration, notice or demand by Lender. Notwithstanding
the above, at any time after such declaration of acceleration has been made and
before payment in full of the Obligations, Lender, by written notice to
Borrower, may rescind and annul such declaration and its consequences if all
Events of Default, other than the non-payment of principal of the Loan which has
become due solely by such declaration of acceleration, have been cured or
waived.
9.3. Waivers by Borrower. Except as otherwise provided for in this
Agreement and applicable law, Borrower waives (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard, (ii) all rights to
notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, any bond or security which might be
required by any court prior to allowing Lender to exercise any of its remedies,
and (iii) the benefit of all valuation, appraisal and exemption laws. Borrower
acknowledges that it has been advised by counsel of its choice with respect to
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
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9.4 Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default, Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by Lender to or for the credit or
the account of Borrower against any and all of the obligations of Borrower now
or hereafter existing under this Agreement, and the Note held by Lender
irrespective of whether or not Lender shall have made any demand under this
Agreement or such Note and although such obligations may be unmatured. Lender
agrees promptly to notify Borrower after any such set-off and application made
by Lender; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of Lender under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
10. SUBORDINATION
-------------
10.1. Loan Subordinated to Senior Indebtedness. Borrower covenants and
agrees, and Lender likewise covenants and agrees, that all payments of the
principal of (and premium, if any), and interest on, the Loan and all other
Obligations by Borrower pursuant to this Agreement (collectively the
"Subordinated Indebtedness") shall be subordinated in accordance with the
provisions of this Section 10 to the prior payment in full of all Senior
Indebtedness of Borrower. For purposes of this Section 10, the term "Senior
Indebtedness" shall mean the Senior Debt of Borrower and shall include principal
of and premium, if any, and interest (including interest accruing at the rate
provided for in the documents evidencing such Senior Indebtedness after the
commencement of any proceeding of the type referred to in Section 10.2(a)
hereof, whether or not an allowed claim in such proceeding) on all loans and
other extensions of credit under, and all expenses, fees, reimbursements,
indemnities and other amounts owing pursuant to, all such Senior Debt of the
Borrower.
10.2 Priority and Payment Over of Proceeds in Certain Events. (a) Upon
payment or distribution of assets or securities of Borrower of any kind or
character, whether in cash, property or securities, upon any dissolution or
winding up or total or partial liquidation or reorganization of Borrower,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings or upon an assignment for the benefit of creditors or any
other marshalling of the assets and liabilities of Borrower, all Senior
Indebtedness shall first be paid in full in cash, or payment provided for in
cash or cash equivalents in a manner satisfactory to the holders of Senior
Indebtedness, before any direct or indirect payments or distributions,
including, without limitation, by exercise of set-off, of any cash, property or
securities on account of principal of (or premium, if any) or interest on the
Subordinated Indebtedness and to that end the holders of Senior Indebtedness
shall be entitled to receive (pro rata on the basis of the respective amounts of
Senior Indebtedness held by them) directly, for application to the payment
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thereof (to the extent necessary to pay all Senior Indebtedness in full after
giving effect to any substantially concurrent payment or distribution to or
provision for payment to the holders of such Senior Indebtedness), any payment
or distribution of any kind or character, whether in cash, property or
securities, in respect of the Subordinated Indebtedness. The holders of Senior
Indebtedness are hereby authorized to file an appropriate claim for and on
behalf of Lender if they or any of them do not file, and there is not otherwise
filed on behalf of the Holders, a proper claim or proof of claim in the form
required in any such proceeding prior to 30 days before the expiration of the
time to file such claim or claims.
(b) No direct or indirect payment by or on behalf of Borrower of
principal of (premium, if any), or interest on, the Loan, whether pursuant to
the terms of this Agreement, upon acceleration or otherwise, shall be made if at
the time of such payment there exists (i) a default in the payment of all or any
portion of principal of (premium, if any), interest on, fees or other amounts
owing in connection with any Senior Indebtedness, or (ii) any other default or
event of default under any document or instrument evidencing the Senior
Indebtedness as the same may be amended, modified or otherwise refinanced (and
Lender has received notice thereof from the agent for or representative of the
holders of a majority of the outstanding principal amount of the Senior
Indebtedness (the "Representative") as provided below), and in either case such
default or event of default shall not have been cured or waived in writing;
provided, however, that if within the period specified in the next sentence with
respect to a default or event of default referred to in clause (ii) above, the
holders of Senior Indebtedness have not declared the Senior Indebtedness to be
immediately due and payable (or have declared such Senior Indebtedness to be
immediately due and payable and within such period have rescinded such
acceleration), then and in that event, payment of principal of, and interest on,
the Loan shall be resumed. With respect to any default or event of default under
clause (ii) above the period referred to in the preceding sentence shall
commence upon receipt by Lender of a written notice or notices (which shall
specify all defaults and events of default existing under such documents or
instruments on the date of such notice and of which the Representative,
whichever is giving such notice, had actual knowledge at such time) of the
commencement of such period from the Representative, and shall end at the
completion of the 180th day after the beginning of such period. Only one such
180 day period may commence within any 360 consecutive days. Upon termination of
any such period, Borrower shall resume payments on account of the principal of
(premium, if any), and interest on, the Loan, and on account of all other
Subordinated Indebtedness, subject to the provisions of Sections 10.1 and 10.2
hereof.
(c) (i) In the event that, notwithstanding the foregoing
provision prohibiting such payment or distribution, Lenders
shall have received any payment on account of the
Subordinated Indebtedness at a time when such payment is
prohibited by such provision before the Senior Indebtedness
is paid in full, then and in such event, such payment or
distribution shall be received and held in trust by Lender
apart from its other assets and paid over or delivered to
the holders of the Senior Indebtedness remaining unpaid to
the extent necessary to pay in full in cash the principal of
(premium, if any), and interest on, such Senior Indebtedness
in accordance with its terms and after giving effect to any
concurrent payment or distribution to the holders of such
Senior Indebtedness.
22
<PAGE>
(ii) Nothing contained in this Section 10 will limit the right of
the Lender to take any action to accelerate the maturity of
the Subordinated Indebtedness pursuant to Section 9.2
hereof.
(iii) Upon any payment or distribution of assets or securities
referred to in this Section 10, Lender shall be entitled to
rely upon any order or decree of a court of competent
jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and
upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making any such
payment or distribution, delivered to Lender for the purpose
of ascertaining the persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other
Indebtedness of Borrower, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Section 10.
10.3. Rights of Holders of Senior Indebtedness Not To Be Impaired . No
right of any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act by any such holder, or by any
noncompliance by Borrower with the terms and provisions and covenants herein
regardless of any knowledge thereof such holder may have or otherwise be charged
with.
The provisions of this Section 10 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of the Senior
Indebtedness. Borrower and Lender acknowledges that the holders of the Senior
Indebtedness are or will be relying upon the provisions of this Section 10 in
extending such Senior Indebtedness.
10.4 Subrogation . Upon the payment in full of all Senior Indebtedness,
Lender shall be subrogated to the extent of the payments or distributions made
to the holders of, or otherwise applied to payment of, the Senior Indebtedness
pursuant to the provisions of this Section 10 and to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of
Borrower made on the Senior Indebtedness until the Loan shall be paid in full;
and for the purposes of such subrogation, no payments or distributions to
holders of Senior Indebtedness of any cash, property or securities to which
Lender would be entitled except for the provisions of this Section 10, and no
payment over pursuant to the provisions of this Section 10 to holders of Senior
Indebtedness by Lender, shall, as between Borrower, their creditors other than
holders of Senior Indebtedness and Lender, be deemed to be payment by Borrower
to or on account of Senior Indebtedness, it being understood that the provisions
of this Section 10 are solely for the purpose of defining the relative rights of
the holders of Senior Indebtedness, on the one hand, and Lender, on the other
hand.
If any payment or distribution to which Lender would otherwise have
been entitled but for the provisions of this Section 10 shall have been applied,
pursuant to the provisions of this Section 10, to the payment of Senior
Indebtedness, then and in such case, Lender shall be entitled to receive from
the holders of Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all Senior Indebtedness in full.
23
<PAGE>
10.5. Obligations of Borrower Unconditional . Nothing contained in this
Section 10 or elsewhere in this Agreement or in the Note is intended to or shall
impair, as between Borrower and Lender, the obligations of Borrower, which are
absolute and unconditional, to pay to Lender the principal of (premium, if any),
and interest on, the Loan as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of Lender and creditors of Borrower other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by applicable law upon the
occurrence of a default or event of default under this Agreement, subject to the
rights, if any, under this Section 10 of the holders of Senior Indebtedness in
respect of cash, property or securities of Borrower received upon the exercise
of any such remedy.
The failure to make a payment on account of principal of, or interest
on, the Loan by reason of any provision of this Section 10 shall not be
construed as preventing the occurrence of a Default or an Event of Default
hereunder.
10.6. Notice to Lender . Borrower shall give prompt written notice to
Lender of any fact known to Borrower which would prohibit the making of any
payment on or in respect of the Loan, but failure to give such notice shall not
affect the subordination of the Subordinated Indebtedness to the Senior
Indebtedness provided in this Section 10. Notwithstanding the provisions of this
Section 10 or any other provision of this Agreement or the Loan, Lender shall
not be charged with knowledge of the existence of any facts which would prohibit
the making of any payment to or in respect of the Loan, unless and until Lender
shall have received written notice thereof from Borrower, the Representative or
other holder of Senior Indebtedness, and, prior to the receipt of any such
written notice, subject to the provisions of this Section 10, Lender shall be
entitled in all respects to assume no such facts exist. Nothing contained in
this Section 10.6 shall limit the right of the holders of Senior Indebtedness to
recover payments as contemplated by Sections 10.1 and 10.2.
10.7. Right of Lender as Holder of Senior Indebtedness . Lender in its
individual capacity shall be entitled to all the rights set forth in this
Section 10 with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Agreement shall deprive Lender of any of its rights as such
holder.
10.8 Reinstatement . The provisions of this Section 10 shall continue
to be effective or be reinstated, and the Senior Indebtedness shall not be
deemed to be paid in full, as the case may be, if at any time any payment of any
of the Senior Indebtedness is rescinded or must otherwise be returned by the
holder thereof upon the insolvency, bankruptcy or reorganization of the Borrower
or otherwise, all as though such payment had not been made.
24
<PAGE>
11. MISCELLANEOUS
-------------
11.1. Complete Agreement; Modification of Agreement; Sale of Interest.
(a) The Loan Documents constitute the complete agreement between the parties
with respect to the subject matter hereof and may not be modified, altered or
amended except by an agreement in writing signed by Borrower and Lender.
Borrower may not sell, assign or transfer any of the Loan Documents or any
portion thereof including, without limitation, Borrower's rights, title,
interests, remedies, powers and duties hereunder or thereunder. Borrower hereby
consents to Lender's sale of participations, assignment, transfer or other
disposition, at any time or times, of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, Lender's
rights, title, interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Borrower agrees that it will use its best efforts
to assist and cooperate with Lender in any manner reasonably requested by Lender
to effect the sale of participations in or assignments of any of the Loan
Documents or of any portion thereof or interest therein.
(b) In the event Lender assigns or otherwise transfers all or any part
of the Note Borrower shall, upon the request of Lender, issue a new Note to
effectuate such assignment or transfer.
11.2. Fees and Expenses . If, at any time or times, regardless of the
existence of an Event of Default, Lender shall employ counsel or other advisors
for advice or other representation or shall incur reasonable legal or other
costs and expenses in connection with any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to any of the Loan Documents or any other agreements
to be executed or delivered in connection herewith, including any future
amendments, supplements, waivers or consents at the request of Borrower, then,
and in any such event, the attorneys' and other parties' fees reasonably arising
from such services, including those of any appellate proceedings, and all
expenses, costs, charges and other fees reasonably incurred by such counsel and
others in any way or respect arising in connection with or relating to any of
the events or actions described in this Section shall be payable, on demand, by
Borrower to Lender and shall be additional Obligations secured under this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and investment bankers' fees, costs and
expenses; court costs and expenses; photocopying and duplicating expenses; court
reporter fees, costs and expenses; long distance telephone charges; air express
charges; telegram charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal services.
11.3. No Waiver by Lender . Lender's failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement any of
the other Loan Documents shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by Lender of an Event of Default by Borrower under the Loan Documents
shall not suspend, waive or affect any other Event of Default by Borrower under
25
<PAGE>
this Agreement and any of the other Loan Documents whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement and no defaults by Borrower under any
of the other Loan Documents shall be deemed to have been suspended or waived by
Lender, unless such suspension or waiver is by an instrument in writing signed
by an officer of Lender and directed to Borrower specifying such suspension or
waiver.
11.4 Remedies . Lender's rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Lender may
have under any other agreement, including without limitation, the Loan
Documents, by operation of law or otherwise.
11.5 WAIVER OF JURY TRIAL . THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THE
LOAN DOCUMENTS.
11.6 Severability . Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.7 Parties . This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower and Lender
and the assigns, transferees and endorsees of Lender.
11.8 Conflict of Terms . Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.9 GOVERNING LAW . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND BORROWER AGREE TO
SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF PROCESS ON BORROWER OR LENDER
IN ANY ACTION ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE
EFFECTIVE IF
26
<PAGE>
MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN SECTION 11.10 HEREOF. NOTHING
HEREIN SHALL PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
11.10 Notices . Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
telecopied and confirmed by telecopy answerback addressed as follows:
(a) If to Lender at:
15 Carshalton Road
Sutton
Surrey SM1 4LD
England
Attention: Nigel Griffiths, LLB
Telecopy No. (0181) 770 1145
With copies to:
Weil, Gotshal & Manges LLP
99 Bishopsgate
London, EC2M 3XD
Attention: David Lefkowitz, Esq.
Telecopy No. (0171) 426 0990
(b) If to Borrower, at:
Intek Diversified Corporation
214 Carnegie Center, Suite 304
Princeton, NJ 08540
Attention: Lee Montellaro
Telecopy No.: (609) 419-1222
27
<PAGE>
With copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Howard Chatzinoff, Esq.
Telecopy No.: (212) 310-8007
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback or
seven (7) Business Days after the same shall have been deposited (i) in the
United States mail (in the case of notice being given by Borrower or any other
Person in the United States) or (ii) in the United Kingdom mail (in the case of
notice being given by Lender or any other Person located in the United Kingdom).
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Survival . The representations and warranties of Borrower in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.
11.12 Section Titles . The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.13 Counterparts . This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
28
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
INTEK DIVERSIFIED CORPORATION
By:_______________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:_______________________________
Name:
Title:
The undersigned hereby guarantees to Borrower the performance by Lender of all
of its obligations under this Agreement.
SECURITY SERVICES PLC
By:_______________________________
Name:
Title:
Date:
29
<PAGE>
SCHEDULE I
OTHER LOANS
-----------
Annual
Agreement Date Principal Maturity Interest
- -------------- --------- -------- --------
September 11, 1997
(September Facility) $2.0 Million 10/15/98 12.5%
May 12, 1997
(March Facility) $6.0 Million 10/15/98 11.0%
May 20, 1997
(May Facility) $4.5 Million 10/15/98 17.5%
30
<PAGE>
SCHEDULE 4.1
CORPORATE MATTERS
-----------------
4.1(ii) Qualified to Do Business
Midland USA, Inc. is not qualified to do business in the states of Massachusetts
and Texas.
31
<PAGE>
SCHEDULE 4.2
EXECUTIVE OFFICES
-----------------
The executive office and principal place of business of Intek
Diversified Corporation is 214 Carnegie Center, Suite 304, Princeton, New Jersey
08540 .
32
<PAGE>
SCHEDULE 4.3
SUBSIDIARIES
------------
<TABLE>
<CAPTION>
Number Percentage
Name of Subsidiary Jurisdiction of Classes of of Shares Issued of Class
by Borrower Incorporation Capital Stock and Outstanding Owned
- ------------------ --------------- -------------- ------------------ ------------
<S> <C> <C> <C> <C>
Roamer One, Inc. Delaware common stock 100 100%
Midland USA, Inc. Delaware common stock 100 100%
Olympic Plastics
Company, Inc. California common stock 253,164 100%
IMCX Corporation California common stock 100 100%
IDC International
Corporation Florida common stock 1,000 100%
Securicor England and common stock -- 100%
Radiocoms Limited Wales preferred stock -- 0% (1)
Linear Modulation England and
Technology Limited Wales common stock -- 100%
</TABLE>
- -----------------
(1) Owned by Securicor Communications Limited
33
<PAGE>
SCHEDULE 4.9
LITIGATION
----------
Charlotte Scott et al v. Joseph Steingold et al, Case No. 97-6-7871 (U.S.
District Court, Northern District of Illinois).
34
<PAGE>
SCHEDULE 4.12
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
--------------------------------------------
4.12(a) Patents
Midland USA, Inc.:
US Patent Number 4,718,586 (Swivel Fastening Device)
4.12(b) Trademarks
Midland USA, Inc.:
The trademark "Midland" Reg. No 927193, serial number 72-277,496, first
registered on January 18, 1972 and renewed on December 13, 1991.
The trademark "Midland" Reg. No 895483, serial number 72-156,089, first
registered on July 28, 1970 and renewed on December 18, 1990.
Roamer One, Inc.:
The trademark "ROAMER R and design" Reg. No. 1,494,062, first
registered June 28, 1988.
The trademark "ROAMER R and design" Reg. No. 1,494,063, first
registered June 28, 1988.
The trademark "ROAMER" Reg. No. 1,494,064, first registered June 28,
1988.
The trademark "R and design" Reg. No. 1,599,916, first registered June
5, 1990.
The trademark "RoameR" Reg. No. 1,625,235, first registered on November
27, 1990.
The trademark "ROAMER" Reg. No. 1,634,393, first registered on February
5, 1991.
The trademark "RENT-A-ROAMER and..." Reg. No. 1,635,737, first
registered on February 19, 1991.
The trademark "ROAMER ONE", serial number 74/198,033. The application
for this trademark has been approved and will be issued shortly.
The trademark "ROAMER", Canadian Reg. No. 594,735.
35
<PAGE>
4.12(c) Copyrights
None
4.12(d) Licenses
Midland USA, Inc.:
1) Midland USA - Midland International Corp. Trademark License
Agreement dated September 19, 1996.
2) Midland International Corp. - Midland Consumer Int'l.
Exclusive License Agreement dated June 30, 1995.
3) Midland International Corp. - LETT Electronics Private Label
Agreement dated March 1, 1995.
4) Midland International Corp. - American Digital
Communications, Inc. Asset Purchase Agreement dated December
29, 1995.
36
<PAGE>
SCHEDULE 7.2(b)
CERTAIN TRANSACTIONS
--------------------
Any management or consulting agreement referenced in the Borrower's
Proxy Statement, dated November 8, 1996, under the caption "Certain
Relationships and Related Transactions."
Employment Agreement dated April 21, 1997 between Borrower and Donald
Goeltz.
Employment Agreement dated February 18, 1997 between Borrower and Lee
R. Montellaro.
Employment Agreement dated September 8, 1997 between Borrower and
Robert J. Schiver.
Inter-company loans between Borrower and its Subsidiaries.
37
<PAGE>
EXHIBIT A
NOTICE OF ADVANCE
-----------------
_____________, 199_
Securicor Communications Limited
15 Carshalton Road
Sutton, Surrey
SM1 4LDAttention:Michael Wilkinson
Gentlemen:
The undersigned, INTEK DIVERSIFIED CORPORATION, refers to the
Amended and Restated Loan Agreement, dated as of November __, 1997 (the "Loan
Agreement", the terms defined therein being used herein as therein defined),
between the undersigned and SECURICOR COMMUNICATIONS LIMITED, and hereby gives
you notice, irrevocably, pursuant to Section 2.1 of the Loan Agreement, that the
undersigned hereby requests an Advance under the Loan Agreement, and in that
connection sets forth below the information relating to such Advance as required
by Section 2.1(a) of the Loan Agreement:
(i) The date of the requested Advance shall be _______________, 199__.
(ii) The aggregate amount of the requested Advance is $___________
(minimum: $500,000).
(iii) The Advance shall be used solely as permitted by Section 2.3 of
the Loan Agreement.
38
<PAGE>
The undersigned hereby certifies that the statements contained
in Section 3.2 of the Loan Agreement are true on the date hereof, and will be
true on the date of the requested Advance, before and after giving effect
thereto and to the application of the proceeds therefrom.
Very truly yours,
INTEK DIVERSIFIED CORPORATION
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
39
EXHIBIT 4
PROMISSORY NOTE
---------------
$29,500,000 New York, New York
December 29, 1997
FOR VALUE RECEIVED, the undersigned, INTEK DIVERSIFIED
CORPORATION, a Delaware corporation (hereinafter referred to as "Borrower"),
hereby PROMISES TO PAY to the order of SECURICOR COMMUNICATIONS LIMITED, a
corporation formed under the laws of England and Wales ("Lender"), at 15
Carshalton Road, Sutton, Surrey, SM1 4LD, or at such other place as the holder
of this Note may designate from time to time in writing, in lawful money of the
United States of America and in immediately available funds, the amount of
twenty nine million five hundred thousand dollars ($29,500,000), or such lesser
principal amount of outstanding Advances under the Loan Agreement (as
hereinafter defined) PLUS the unpaid amount of any capitalized interest arising
pursuant to the terms of the Loan Agreement, together with interest on the
unpaid principal amount of the Note (including capitalized interest) outstanding
from time to time from the date hereof at the rate or rates provided in the Loan
Agreement.
This Note is issued pursuant to that certain Second Amended
and Restated Loan Agreement dated as of December 29, 1997 between Borrower and
Lender (the "Loan Agreement"), to which reference is hereby made for a statement
of all of the terms and conditions under which the Advances evidenced hereby are
made. All capitalized terms, unless otherwise defined herein, shall have the
meanings ascribed to them in the Loan Agreement.
The principal amount of the indebtedness evidenced hereby
shall be payable on the dates and in the amounts set forth in the Loan
Agreement. Interest thereon shall accrue on a daily basis at the rate specified
in the Loan Agreement and shall be capitalized annually on December 28th of each
year commencing December, 1998 and will be paid in the manner set forth in the
Loan Agreement. All accrued and unpaid interest (whether or not capitalized)
shall be due and payable on the Repayment Date.
If any payment on this Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall continue to accrue at the then applicable rate during such
extension.
The rights of Lender under this Note are subordinate and
junior to the rights of the holders of Senior Debt, as defined in, and to the
extent set forth in, Article 10 of the Loan Agreement. This Note is subject to
the provisions of such Article 10, and any payment pursuant hereto shall be made
in accordance with the provisions thereof.
<PAGE>
Upon and after the occurrence of an Event of Default, this
Note may, as provided in the Loan Agreement, and without demand, notice or legal
process of any kind, be declared or may automatically become, and immediately
shall become, due and payable.
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by Borrower.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT NEW
YORK, NEW YORK AND SHALL BE INTERPRETED, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
INTEK DIVERSIFIED CORPORATION
By: _______________________________
2
EXHIBIT 5
EXECUTION COPY
TERMINATION AND RELEASE
TERMINATION AND RELEASE dated as of December 29, 1997, between INTEK
DIVERSIFIED CORPORATION, a Delaware corporation having an office at 214 Carnegie
Center, Suite 304, Princeton, New Jersey 08540 (the "Intek"), and SECURICOR
COMMUNICATIONS LIMITED, a company incorporated under the laws of England and
Wales having an office at 15 Carshalton Road, Sutton, Surrey, SM1 4LD, England
("Securicor").
WHEREAS, Intek and Securicor entered into a Stock Purchase Agreement
dated as of June 18, 1996 (the "Stock Purchase Agreement"); and
WHEREAS, Intek and Securicor wish to settle certain liabilities under
the Stock Purchase Agreement; and
WHEREAS, Intek and Securicor propose to further amend (the "Loan
Amendment") that Amended and Restated Loan Agreement between Intek and Securicor
dated as of December 3, 1996 so as to include all outstanding loans and advances
to Intek and its subsidiaries from Securicor in a single integrated loan
agreement; and
WHEREAS, Intek and Securicor propose to enter into a Preferred Stock
Purchase Agreement (the "Preferred Stock Purchase Agreement").
NOW, THEREFORE, in consideration of the payments set forth herein and
other good and valuable consideration, it is hereby agreed as follows:
1. Settlement. In full settlement of all claims for
indemnification arising under Section 9.1(a)(iv) of the Stock Purchase Agreement
(relating to liabilities arising from the sale of "EFJ Shares and EFJ Warrants"
to Securicor Radiocoms Limited), Securicor will, upon the execution of this
Agreement, pay Intek U.S. $2,592,000 (the "Settlement Payment").
2. Releases. Subject to the satisfaction of the conditions set
forth in Section 4, below, and effective upon such satisfaction (the "Effective
Date"), notwithstanding the terms of the Stock Purchase Agreement, Intek hereby
releases Securicor, except as set forth in Section 3 of this Termination and
Release, from any and all liabilities or obligations arising under the Stock
Purchase Agreement.
3. Survival. The following rights and obligations of the
parties shall survive the Release set forth in Section 2, above (section
references and titles are to sections of the Stock Purchase Agreement):
ss.6.6 Preservation of Records
ss.6.9 Tax and Accounting Matters (except paragraph
6.9(c))
ss.6.13 Non-Compete
ss.6.14 FCC Matters
ss.6.15 Indemnification; Directors and Officers
ss.6.16 Pension Schemes
ss.10.4 Further Assurances
<PAGE>
4. Conditions Precedent to the Effectiveness of Releases. The
Release contained in Section 2 is conditioned upon the fulfillment of following
conditions, except to the extent waived by the parties in writing:
4.1 Execution of Second Amended and Restated Loan
Agreement. Intek and Securicor shall have executed the
Loan Amendment.
4.2 Execution of Preferred Stock Purchase Agreement.
Intek and Securicor shall have executed the Preferred
Stock Purchase Agreement.
4.3 Payment of the Settlement Payment. Intek shall have
received the Settlement Payment in immediately
available U.S. funds.
5. Miscellaneous. This Termination and Release shall be
binding upon and inure to the benefit of the Parties and their respective heirs,
assigns and successors in interest. This Termination and Release shall be
governed by and construed in accordance with the laws of England and Wales
applicable to agreements made and to be entirely performed therein. The Parties
covenant to each other to execute and deliver such further instruments and do
such further acts and things as may be reasonably required to carry out the
intent and purposes of this Termination and Release.
INTEK DIVERSIFIED CORPORATION
By: ______________________________
SECURICOR COMMUNICATIONS
LIMITED
By: ______________________________
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