EXHIBIT 3
$15,000,000
LOAN AGREEMENT
Dated as of September 19, 1996
between
MIDLAND USA, INC.
as Borrower
and
SECURICOR COMMUNICATIONS LIMITED
as Lender
TABLE OF CONTENTS
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SECTION Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 2
2. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . 10
2.1. Revolving Credit Advances . . . . . . . . . 10
2.2. Letters of Credit . . . . . . . . . . . . . 11
2.3. Use of Proceeds . . . . . . . . . . . . . . 12
2.4. Interest on Revolving Credit Loan . . . . . 12
2.5. Extension Fee . . . . . . . . . . . . . . . 13
2.6. Receipt of Payments . . . . . . . . . . . . 13
2.7. Application of Payments . . . . . . . . . . 13
2.8. Accounting . . . . . . . . . . . . . . . . 14
2.9. Indemnity . . . . . . . . . . . . . . . . . 14
2.10. Access . . . . . . . . . . . . . . . . . . 14
2.11. Taxes . . . . . . . . . . . . . . . . . . . 15
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 16
3.1. Conditions to the Initial Revolving
Credit Advance and Letter of Credit . . . . 16
3.2. Further Conditions to Each Revolving
Credit Advance and Letter of Credit . . . . 19
4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 19
4.1. Corporate Existence; Compliance
with Law . . . . . . . . . . . . . . . . . 19
4.2. Executive Offices . . . . . . . . . . . . .
4.3. Subsidiaries . . . . . . . . . . . . . . . 20
4.4. Corporate Power; Authorization;
Enforceable Obligations . . . . . . . . . . 20
4.5. Solvency . . . . . . . . . . . . . . . . . 21
4.6. Labor Matters . . . . . . . . . . . . . . . 21
4.7. Investment Company Act . . . . . . . . . . 21
4.8. Margin Regulations . . . . . . . . . . . . 21
4.9. No Litigation . . . . . . . . . . . . . . . 21
4.10. Asset and Trademark Agreement . . . . . . . 22
4.11. Hitachi Supply Agreement . . . . . . . . . 22
4.12. Outstanding Stock; Options;
Warrants, Etc. . . . . . . . . . . . . . . 22
4.13. Patents, Trademarks, Copyrights and
Licenses . . . . . . . . . . . . . . . . . 22
4.14. Liens . . . . . . . . . . . . . . . . . . . 22
4.15. No Material Adverse Effect . . . . . . . . 22
5. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . 23
5.1. Reports and Notices . . . . . . . . . . . . 23
5.2. Communication with Accountants . . . . . . 23
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SECTION Page
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . 24
6.1. Maintenance of Existence and Conduct of
Business. . . . . . . . . . . . . . . . . . 24
6.2. Payment of Obligations . . . . . . . . . . 24
6.3. Books and Records . . . . . . . . . . . . . 25
6.4. Litigation . . . . . . . . . . . . . . . . 25
6.5. Insurance . . . . . . . . . . . . . . . . . 25
6.6. Compliance with Law. . . . . . . . . . . . 25
6.7. Supplemental Disclosure . . . . . . . . . . 25
7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 25
7.1. Mergers, Etc. . . . . . . . . . . . . . . . 25
7.2. Investments; Loans and Advances . . . . . . 25
7.3. Indebtedness . . . . . . . . . . . . . . . 26
7.4. Capital Structure . . . . . . . . . . . . . 26
7.5. Maintenance of Business . . . . . . . . . . 26
7.6. Transactions with Affiliates. . . . . . . . 26
7.7. Guaranteed Indebtedness . . . . . . . . . . 26
7.8. Liens . . . . . . . . . . . . . . . . . . . 26
7.9. Sales of Assets . . . . . . . . . . . . . . 27
7.10. Events of Default . . . . . . . . . . . . . 27
7.11. Restricted Payments . . . . . . . . . . . . 27
8. TERM . . . . . . . . . . . . . . . . . . . . . 27
8.1. Termination . . . . . . . . . . . . . . . . 27
8.2. Survival of Obligations Upon Termination
of Financing Arrangement . . . . . . . . . 27
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . 27
9.1. Events of Default . . . . . . . . . . . . . 27
9.2. Remedies . . . . . . . . . . . . . . . . . 30
9.3. Waivers by Borrower . . . . . . . . . . . . 30
9.4. Right of Set-Off . . . . . . . . . . . . . 30
10. 10.14. MISCELLANEOUS . . . . . . . . . . . . . . . 31
10.1. Complete Agreement; Modification
of Agreement; Sale of Interest . . . . . . 31
10.2. Fees and Expenses . . . . . . . . . . . . . 31
10.3. No Waiver by Lender . . . . . . . . . . . . 32
10.4. Remedies . . . . . . . . . . . . . . . . . 32
10.5. WAIVER OF JURY TRIAL . . . . . . . . . . . 32
10.6. Severability . . . . . . . . . . . . . . . 32
10.7. Parties . . . . . . . . . . . . . . . . . . 33
10.8. Conflict of Terms . . . . . . . . . . . . . 33
10.9. GOVERNING LAW . . . . . . . . . . . . . . . 33
10.10. Notices . . . . . . . . . . . . . . . . . . 33
10.11. Survival . . . . . . . . . . . . . . . . . 35
SECTION Page
10.12. Section Titles . . . . . . . . . . . . . . 35
10.13. Counterparts . . . . . . . . . . . . . . . 35
SCHEDULES
Schedule 2.3 Intek Purchase Orders
Schedule 3.1(n) Xxxxxxxx and Midland Invoices
Schedule 4.1 Corporate Matters
Schedule 4.2 Executive Office
Schedule 4.13 Patents, Trademarks, Copyrights and
Licenses
Schedule 7.3 Indebtedness
Schedule 7.6 Certain Transactions
EXHIBITS
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Non-Recourse Guaranty and Pledge Agreement
Exhibit D - Form of Security Agreement
Exhibit E - Form of Trademark Agreement
Exhibit F - Form of Legal Opinion of Counsel to Borrower
Exhibit G - Form of Legal Opinion of Counsel to Intek
Exhibit H - Form of New York Legal Opinion of Counsel to Borrower
and Intek
Exhibit I - Form of Xxxxx, Day, Xxxxxx & Xxxxx Legal Opinion to Intek
LOAN AGREEMENT, dated as of September 19, 1996, between
MIDLAND USA, INC., a Delaware corporation having an office at 0000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("Borrower") and a
wholly-owned subsidiary of INTEK DIVERSIFIED CORPORATION ("Intek"),
and SECURICOR COMMUNICATIONS LIMITED, a company incorporated under the
laws of England and Wales having an office at 00 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxxxx, XX0 0XX, Xxxxxxx ("Lender").
W I T N E S S E T H :
-------------------
WHEREAS, Midland International Corporation, a Delaware
corporation ("Midland"), Intek and Xxxxxxxx Capital Limited, an
Ontario corporation ("Xxxxxxxx"), entered into an Amended and Restated
Sale of Assets and Trademark License Agreement, dated as of September
19, 1996 (the "Asset and Trademark Agreement"), pursuant to which
Midland agreed to sell to Intek the Trademark (as defined herein) and
certain other assets, as described therein (collectively, the
"Acquired Assets"), in consideration for up to 2,500,000 shares of
common stock, par value $0.01 per share of Intek, an assumption of
certain liabilities of Midland (the "Assumed Liabilities") and a cash
payment, all as set forth in the Asset and Trademark Agreement (the
"Midland Transaction"); and
WHEREAS, Intek has assigned and transferred to Borrower all
of its right, title and interest in and to the Acquired Assets and the
Asset and Trademark Agreement (and all other agreements entered into
by Intek in connection therewith) and Borrower has assumed the Assumed
Liabilities and all obligations of Intek under the Asset and Trademark
Agreement (and all other agreements entered into by Intek in
connection therewith), all in accordance with the terms of the
Assignment and Assumption Agreement (as defined herein) and referred
to herein as the "Intek-Borrower Transfer"; and
WHEREAS, Intek and Lender entered into a Stock Purchase
Agreement, dated as of June 18, 1996, as amended by agreement of the
parties dated as of September 19, 1996 (the "Stock Agreement"),
pursuant to which Lender agreed to sell to Intek all of the
outstanding securities (other than certain preferred shares) of
Lender's wholly-owned subsidiary, Securicor Radiocoms Limited
("Radiocoms"), in consideration for 25,000,000 shares of Common Stock
(the "Securicor Transaction"); and
WHEREAS, pursuant to the Stock Agreement, Lender has agreed,
among other things, to loan up to $15 million to Intek following the
consummation of the Securicor Transaction to
NYFS09...:\73\73273\0003\1224\AGR0306W.580
finance the combined business of Intek, the U.S. LMR Distribution
Business and Radiocoms (the "New Intek Loan"); and
WHEREAS, it is currently contemplated that the Midland
Transaction will be consummated on or about September 19, 1996; and
WHEREAS, it is currently contemplated that the Securicor
Transaction will be consummated during the fourth quarter of 1996; and
WHEREAS, following the consummation of the Midland
Transaction, Borrower will require significant funding to finance its
operations until such time as the Securicor Transaction is consummated
and the proceeds of the New Intek Loan are available and has requested
that Lender provide such funding on the terms and subject to the
conditions set forth herein; and
WHEREAS, Borrower has secured the Obligations by a perfected
first priority security interest in the Collateral (as defined
herein); and
WHEREAS, Lender, Borrower and Intek have agreed that in the
event the Securicor Transaction is consummated, the Obligations (as
defined herein) outstanding hereunder on the date of such consummation
shall thereafter be assumed by Intek and become obligations under the
New Intek Loan (subject to the terms thereof), as set forth in that
certain letter agreement between the parties, dated September 19, 1996
(the "Intek Loan Assumption Agreement"); and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. DEFINITIONS
-----------
In addition to the defined terms appearing above,
capitalized terms used in this Agreement shall have (unless otherwise
provided elsewhere in this Agreement) the following respective
meanings when used herein:
"Acquired Assets" shall have the meaning ascribed to it in
the recitals hereof.
"Affiliate" shall mean, with respect to any Person, any
other Person that controls such Person or is controlled by or under
common control with such Person.
"Agreement" shall mean this Loan Agreement, including all
amendments, modifications and supplements hereto and any appendices,
exhibits or schedules to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference
becomes operative.
"Ancillary Agreements" shall mean all supplemental
agreements, undertakings, instruments, documents or other writings
executed by Borrower.
"Asset and Trademark Agreement" shall have the meaning
ascribed to it in the recitals hereof.
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, dated as of September 19, 1996,
by and between Intek and Borrower.
"Balance Sheet Date" shall have the meaning ascribed to it
in the recitals hereof.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed
in the State of New York.
"Cash Collateral Account" shall have the meaning ascribed to
it in Section 2.2(c) hereof.
"Cash Equivalents" shall mean (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
of America or any agency thereof maturing within one year from the
date of acquisition thereof; (ii) commercial paper maturing no more
than one year from the date of creation thereof and at the time of
their acquisition having the highest rating obtainable from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc.; and
(iii) certificates of deposit, maturing no more than one year from the
date of creation thereof, issued by commercial banks incorporated
under the laws of the United States of America, each having combined
capital, surplus and undivided profits of not less than $200,000,000
and having a rating of "A" or better by a nationally recognized rating
agency.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental taxes at the time due
and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) Borrower's or any of its Subsidiaries' ownership or
use of any of its assets, or (iv) any other aspect of Borrower's or
any of the Subsidiaries' business.
"Closing Date" shall mean the date of the initial Revolving
Credit Advance.
"Code" shall mean the Uniform Commercial Code of the
jurisdiction with respect to which such term is used, as in effect
from time to time.
"Collateral" shall mean the collateral covered by the
Security Agreement, the Trademark Agreement and the Non-Recourse
Guaranty and Pledge Agreement.
"Collateral Documents" shall mean the Security Agreement,
Trademark Agreement and the Non-Recourse Guaranty and Pledge
Agreement.
"Common Stock" shall mean common stock, par value $0.01 of
Intek.
"Default" shall mean any event which, with the passage of
time or notice or both would, unless cured or waived, become an Event
of Default.
"Event of Default" shall have the meaning ascribed to it in
Section 9.1 hereof.
"Extension Fee" shall have the meaning ascribed to it in
Section 2.5 hereof.
"FCC" shall mean the Federal Communications Commission, or
any successor thereto.
"Federal Reserve Board" shall have the meaning ascribed to
it in Section 4.8 hereof.
"Fiscal Year" shall mean the calendar year. Subsequent
changes of the fiscal year of Borrower shall not change the term
"Fiscal Year," unless Lender shall consent in writing to such changes.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner including, without
limitation, any obligation or arrangement of such Person (a) to
purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency
or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect
thereof.
"Hitachi Supply Agreement" shall mean the agreement between
Midland and Hitachi Denshi Ltd., a Japanese corporation ("Hitachi"),
dated as of May 12, 1994 and pursuant to which Hitachi agreed, among
other things, to manufacture and sell to Midland certain mobile
radios.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price
of property or services (including, without limitation, reimbursement
and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary
course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreements
with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
property), (iv) all Guaranteed Indebtedness, (v) all Indebtedness
referred to in clause (i), (ii), (iii) or (iv) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, and (vi) the
Obligations.
"Intek-Borrower Transfer" shall have the meaning ascribed to
it in the recitals hereof.
"Intek Loan Assumption Agreement" shall have the meaning
ascribed to it in the recitals hereof.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Lender at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in
connection with the issuance or guarantee, by Lender or another, of
letters of credit, bank acceptances in respect of letters of credit,
or the like. The amount of such Letter of Credit Obligations shall
equal the maximum amount which may be payable by Lender thereupon or
pursuant thereto.
"Letters of Credit" shall mean commercial or standby letters
of credit issued at the request and for the account of Borrower, and
bankers' acceptances issued by Borrower, for which Lender has incurred
Letter of Credit Obligations pursuant thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any lease or title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting a security
interest under the Code or comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Note, the
Collateral Documents, those other Ancillary Agreements as to which
Lender is a party or a beneficiary and all other agreements,
instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore,
now or hereafter executed by or on behalf of Borrower or any of its
Affiliates, or any employee of Borrower or any of its Affiliates, and
delivered to Lender in connection with this Agreement or the
transactions contemplated hereby.
"Material Adverse Effect" or "Material Adverse Change" shall
mean an event or circumstance which materially adversely affects the
business, properties, financial condition or operations (taken as a
whole) of Borrower.
"Maximum Lawful Rate" shall have the meaning ascribed to it,
in Section 2.4(c) hereof.
"Maximum Revolving Credit Loan" shall mean, at any
particular time, an amount equal to $15,000,000.
"Mees Pierson" shall mean Mees Pierson ICS Limited, a
company incorporated under the laws of England and Wales.
"Midland" shall have the meaning ascribed to it in the
recitals hereof.
"Net Cash Proceeds" shall have the meaning ascribed to it in
Section 2.4(a) hereof.
"New Intek Loan" shall have the meaning ascribed to it in
the recitals hereof.
"Non-Recourse Guaranty and Pledge Agreement" shall mean the
Agreement made in favor of Lender by Intek, substantially in the form
attached as Exhibit C hereto, including all amendments, modifications
and supplements thereto, and shall refer to the Non-Recourse Guaranty
and Pledge Agreement as the same may be in effect at the time such
reference becomes operative.
"Note" shall mean the Revolving Credit Note.
"Obligations" shall mean all loans, advances, debts,
liabilities, and obligations, for monetary amounts (whether or not
such amounts are liquidated or determinable) owing by Borrower to
Lender (including all Letter of Credit Obligations), and all covenants
and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other
instrument, arising under any of the Loan Documents. This term
includes, without limitation, all interest (whether capitalized or
otherwise), charges, expenses, attorneys' fees and any other sum
chargeable to Borrower (including the Extension Fee) under any of the
Loan Documents.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other
governmental charges or levies, either not yet due and payable or to
the extent that nonpayment thereof is permitted by the terms of this
Agreement; (ii) pledges or deposits securing obligations under
workmen's compensation, unemployment insurance, social security or
public liability laws or similar legislation; (iii) pledges or
deposits securing bids, tenders, contracts (other than contracts for
the payment of money) or leases to which Borrower is a party as lessee
made in the ordinary course of business; (iv) deposits securing public
or statutory obligations of Borrower; (v) workers', mechanics',
suppliers',
carriers', warehousemen's or other similar liens arising in the
ordinary course of business and securing indebtedness aggregating not
in excess of $100,000 at any time outstanding, not yet due and
payable; (vi) deposits securing, or in lieu of, surety, appeal or
customs bonds in proceedings to which Borrower is a party; (vii) any
attachment or judgment lien, unless the judgment it secures shall not,
within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay; and
(viii) zoning restrictions, easements, licenses, or other restrictions
on the use of real property or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not
materially impair the use, value, or marketability of such real
property, leases or leasehold estates.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Radiocoms" shall have the meaning ascribed to it in the
recitals hereof.
"Repayment Date" means the first to occur of the following:
(a) the date (the "Specified Repayment Date") 30 days after the
Termination Date, provided that if the Intek shareholder meeting to
consider the Securicor Transaction is held after October 31, 1996 but
before November 30, 1996 then the Specified Repayment Date shall be
extended by such number of days (up to a maximum of 30 days) as is
equal to the number of days between October 31, 1996 and the date of
such meeting and (b) the date on which the Securicor Transaction is
consummated.
"Restricted Payment" shall mean (i) the declaration of any
dividend or the incurrence of any liability to make any other payment
or distribution of cash or other property or assets in respect of
Borrower's Stock or (ii) any payment on account of the purchase,
redemption or other retirement of Borrower's Stock or any other
payment or distribution made in respect thereof, either directly or
indirectly.
"Revolving Credit Advance" shall have the meaning ascribed
to it in Section 2.1(a) hereof.
"Revolving Credit Loan" shall mean the aggregate amount of
Revolving Credit Advances outstanding at any time.
"Revolving Credit Note" shall have the meaning ascribed to
it in Section 2.1(b) hereof.
"Securicor Transaction" shall have the meaning ascribed to
it in the recitals hereof.
"Security Agreement" shall mean the agreement entered into
between Lender and Borrower, substantially in the form attached as
Exhibit D hereto, including all amendments, modifications and
supplements thereto, and shall refer to the Security Agreement as the
same may be in effect at the time such reference becomes operative.
"Xxxxxxxx" shall have the meaning ascribed to it in the
recitals hereof.
"Solvent" shall mean, when used with respect to any Person,
that:
(a) the present fair saleable value of such Person's
assets (including, without limitation, the fair saleable value of
the goodwill arising in connection with the Midland Transaction
and other intangible assets) is in excess of the total amount of
such Person's liabilities;
(b) such Person is able to pay its debts as they
become due; and
(c) such Person does not have unreasonably small
capital to carry on such Person's business as theretofore
operated and all businesses in which such Person is about to
engage.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership or
equivalent entity whether voting or nonvoting, including, without
limitation, common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
"Subsidiary" shall mean any Person 50% or more of whose
issued and outstanding voting securities is owned or controlled,
directly or indirectly, by the specified Person.
"Taxes" shall have the meaning ascribed thereto in Section
2.11 hereof.
"Termination Date" shall mean the first to occur of the
following: (i) the date on which the Stock Agreement is terminated
pursuant to Section 3.2 thereof or (ii) December 31, 1996.
"Trademark Agreement" shall mean the Trademark Agreement
relating to the grant of a security interest in the Trademark, made in
favor of Lender by Borrower, substantially in the form attached as
Exhibit E hereto.
"Trademark" shall mean the Trademark described on Schedule
4.13(b) hereto and the trade name "Midland" and similar variations
thereof, and all registrations, applications and renewals thereof and
all logos, whether or not registered, used in connection therewith.
"US LMR Distribution Business" shall mean the business
consisting of the sale and distribution of LMR Products bearing the
Trademark within the US LMR Distribution Territory as conducted by
Borrower and in no event shall include the business carried on
directly by Intek or any of its subsidiaries other than Borrower.
"US LMR Distribution Territory" shall mean the United States
of America and the territories and possessions thereof.
Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP consistently
applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the Code as in effect in the State of New
York to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended,
modified or
supplemented, and not to any particular section, subsection or clause
contained in this Agreement.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, the feminine and the neuter.
2. AMOUNT AND TERMS OF CREDIT
--------------------------
2.1. Revolving Credit Advances. (a) Upon and subject to
-------------------------
the terms and conditions hereof, Lender shall make available, from
time to time, until the Termination Date, for Borrower's use and upon
the request of Borrower therefor, advances (each, a "Revolving Credit
Advance") in an aggregate amount outstanding (which amount shall
include all outstanding Letter of Credit Obligations, whether or not
then due and payable) which shall not at any given time exceed the
Maximum Revolving Credit Loan. Subject to the provisions of Section
2.4 hereof and the applicable conditions set forth in Section 3
hereof, and until all amounts outstanding in respect of the Revolving
Credit Loan shall become due and payable on the Repayment Date,
Borrower may from time to time borrow, repay and reborrow under this
Section 2.1(a). Each Revolving Credit Advance shall be made on
notice, given no later than 1:00 P.M. (New York City time) on the
second Business Day prior to the proposed Revolving Credit Advance, by
Borrower to Lender. Each such notice (a "Notice of Revolving Credit
Advance") shall be in writing in substantially the form of Exhibit A
hereto, executed by Xxxxxx Xxxxxxxxx (or such other officer of
Borrower approved by Lender in its sole and absolute discretion in
writing) and either Xxxxx Xxxxxxx or Xxxxx Xxxxxxx specifying therein
the requested date and amount of such Advance. Lender shall, before
5:00 P.M. (New York City time) on the date of the proposed Revolving
Credit Advance, upon fulfillment of the applicable conditions set
forth in Section 3, wire to a bank designated by Borrower and
reasonably acceptable to Lender the amount of such Revolving Credit
Advance.
(b) The Revolving Credit Loan made by Lender shall be
evidenced by a promissory note to be executed and delivered by
Borrower at the time of the Revolving Credit Loan, the form of which
is attached hereto and made a part hereof as Exhibit B (the "Revolving
Credit Note"). The Revolving Credit Note shall be payable to the
order of Lender and shall represent the obligation of Borrower to pay
the amount of the Maximum Revolving Credit Loan or, if less, the
aggregate unpaid principal amount of all Revolving Credit Advances
made by Lender to Borrower, with
interest thereon as prescribed in Section 2.4(a). The date and amount
of each Revolving Credit Advance and each payment of principal and
interest or capitalization of interest with respect thereto shall be
recorded on the books and records of Lender, which books and records
shall constitute prima facie evidence of the accuracy of the
-----------
information therein recorded. The entire unpaid balance of the
Revolving Credit Loan (including capitalized interest thereon) and all
other Obligations shall be due and payable on the Repayment Date.
2.2. Letters of Credit. (a) Lender shall, subject to the
-----------------
terms and conditions hereinafter set forth, (i) incur Letter of Credit
Obligations in respect of the issuance, on the Closing Date, of such
Letters of Credit supporting obligations of Borrower, as Borrower
shall request by written notice to Lender (executed by Xxxxxx
Xxxxxxxxx (or such other officer of Borrower approved by Lender in its
sole and absolute discretion in writing) and either Xxxxx Xxxxxxx or
Xxxxx Xxxxxxx) which is received by Lender not less than 2 Business
Days prior to the Closing Date, and (ii) incur from time to time on
written request of Borrower, additional Letter of Credit Obligations
in respect of Letters of Credit supporting obligations of Borrower;
provided, however, that no such Letter of Credit shall have an expiry
-------- -------
date which is after March 31, 1997. It is understood that the
determination of the bank or other legally authorized Person
(including Lender) which shall issue or accept, as the case may be,
any letter of credit or bankers acceptance contemplated by this
Section 2.2(a) shall be made by Lender, in its sole discretion.
(b) In the event that Lender shall make any payment on or
pursuant to any Letter of Credit Obligation, such payment shall then
be deemed to constitute a Revolving Credit Advance under Section
2.1(a) hereof.
(c) In the event that any Letter of Credit Obligation,
whether or not then due and payable, shall for any reason be
outstanding on the Termination Date, Borrower will pay to Lender cash
or Cash Equivalents in an amount equal to the maximum amount then
available to be drawn under the Letter of Credit. Such funds or Cash
Equivalents shall be held by Lender in a cash collateral account (the
"Cash Collateral Account"). The Cash Collateral Account shall be in
the name of Lender (as a cash collateral account), and shall be under
the sole dominion and control of Lender and subject to the terms of
this Section 2.2. Borrower hereby pledges, and grants to Lender a
security interest in, all such funds or Cash Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof, as
security for the payment of all amounts due in respect of the Letter
of Credit Obligations, whether or not then due.
From time to time after funds are deposited in the Cash
Collateral Account, Lender may apply such funds or Cash Equivalents
then held in the Cash Collateral Account to the payment of any
amounts, in such order as Lender may elect, as shall be or shall
become due and payable by Borrower to Lender with respect to such
Letter of Credit Obligations.
Neither Borrower nor any person or entity claiming on behalf
of or through Borrower shall have any right to withdraw any of the
funds or Cash Equivalents held in the Cash Collateral Account, except
that upon the termination of any Letter of Credit Obligation in
accordance with its terms and the payment of all amounts payable by
Borrower to Lender in respect thereof, any funds remaining in the Cash
Collateral Account in excess of the then remaining Letter of Credit
Obligations shall be promptly returned to Borrower.
Lender shall not have any obligation to invest the funds in
the Cash Collateral Account or deposit such funds in an interest-
bearing account, and interest and earnings thereon, if any, shall be
the property of Lender. Interest and earnings on the Cash Equivalents
in the Cash Collateral Account shall be the property of Borrower.
(c) In the event that Lender shall incur any Letter of
Credit Obligations pursuant hereto at the request or on behalf of
Borrower hereunder, Borrower shall pay to Lender, as compensation to
Lender for such Letter of Credit Obligation, all fees and charges paid
by Lender on account of such Letter of Credit Obligation to the issuer
or like party. Fees payable in respect of Letter of Credit
Obligations shall be paid to Lender, in arrear, on the first day of
each month for the preceding month.
2.3. Use of Proceeds. Borrower shall apply the proceeds
---------------
of the Revolving Credit Advances only for the US LMR Distribution
Business (including for the repayment of Intek for the outstanding
deposits made in connection with the equipment relating to the US LMR
Distribution Business ordered by Intek and evidenced by the purchase
orders listed on Schedule 2.3 hereto).
2.4. Interest on Revolving Credit Loan. (a) Interest
---------------------------------
accrues on the amount outstanding from time to time under the
Revolving Credit Loan at the rate of 11% per annum, calculated on the
basis of a 360 day year for the number of days elapsed.
Interest will be capitalized on a monthly basis and shall be added to
the principal amount outstanding from time to time under the Revolving
Credit Loan. Interest accrued and uncapitalized on the Repayment Date
shall be payable on such date.
(b) So long as any Event of Default shall be continuing,
the interest rate applicable to the Revolving Credit Loan shall be
increased by 3% per annum above the rate otherwise applicable.
(c) Notwithstanding anything to the contrary set forth in
this Section 2.4, if at any time until payment in full of all of the
Obligations 11% exceeds the highest rate of interest permissible under
any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful Rate"),
then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time thereafter
-------- -------
the 11% is less than the Maximum Lawful Rate, Borrower shall continue
to pay interest hereunder at the Maximum Lawful Rate until such time
as the total interest received by Lender from the making of advances
hereunder is equal to the total interest which Lender would have
received had the 11% been (but for the operation of this paragraph)
the interest rate payable since the Closing Date. Thereafter, the
interest rate payable hereunder shall be the 11%, unless and until
such rate shall again exceed the Maximum Lawful Rate, in which event
this paragraph shall again apply.
2.5. Extension Fee. Borrower shall pay to Lender a fee
-------------
(the "Extension Fee") equal to $500,000 payable on the Repayment Date
in the event that all the Obligations have not been repaid (or assumed
by Intek) in full on or prior to the Termination Date.
2.6. Receipt of Payments. (a) Borrower shall make each
-------------------
payment under this Agreement not later than 11:00 A.M. (New York City
time) on the day when due in lawful money of the United States of
America in immediately available funds to Lender's depositary bank as
designated by Lender from time to time for deposit in Lender's
depositary account. For purposes only of computing interest
hereunder, all payments shall be applied by Lender on the day payment
has been credited by Lender's depository bank to Lender's account in
immediately available funds. For purposes of determining the amount
of funds available for borrowing by Borrower pursuant to Section
2.1(a) hereof, such payments shall be applied by Lender against the
outstanding
amount of the Revolving Credit Loan at the time they are credited to
its account.
2.7. Application of Payments. Borrower irrevocably waives
-----------------------
the right to direct the application of any and all payments at any
time or times hereafter received by Lender from or on behalf of
Borrower, and Borrower irrevocably agrees that Lender shall have the
continuing exclusive right to apply any and all such payments against
the then due and payable Obligations of Borrower and in repayment of
the Revolving Credit Loan as Lender may deem advisable. Lender is
authorized to, and at its option may, make advances on behalf of
Borrower for payment of all fees, expenses, charges, costs, principal
and interest incurred by Borrower hereunder when and as Borrower fails
to promptly pay any such amounts. At Lender's option and to the
extent permitted by law, any advances so made may be deemed Revolving
Credit Advances constituting part of the Revolving Credit Loan
hereunder.
2.8. Accounting. Lender will provide a monthly accounting
----------
of transactions under the Revolving Credit Loan to Borrower within 10
days of the end of the month. Each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein, unless
Borrower, within 20 days after the date any such accounting is
rendered, shall notify Lender in writing of any objection which
Borrower may have to any such accounting, describing the basis for
such objection with specificity. In that event, only those items
expressly objected to in such notice shall be deemed to be disputed by
Borrower. Lender's determination, based upon the facts available, of
any item objected to by Borrower in such notice shall (absent manifest
error) be final, binding and conclusive on Borrower, unless Borrower
shall commence a judicial proceeding to resolve such objection within
45 days following Lender's notifying Borrower of such determination.
2.9. Indemnity. Borrower shall indemnify and hold Lender
---------
and its officers, directors, employees, agents, Affiliates and
shareholders (collectively, the "Indemnified Persons") harmless from
and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and disbursements, including those incurred
upon any appeal) which may be instituted or asserted against or
incurred by any Indemnified Person as the result of the execution of
the Loan Documents or extension of credit hereunder; provided,
--------
however, that Borrower shall not be liable for such indemnification to
-------
such Indemnified Person to the extent that any such suit, action,
proceeding, claim, damage, loss, liability or expense results from
such Indemnified Person's negligence or willful misconduct.
2.10. Access. Lender and any of its officers, employees
------
and/or agents shall have the right, exercisable as frequently as
Lender determines to be appropriate, during normal business hours (or
at such other times as may reasonably be requested by Lender), to
inspect the properties and facilities of Borrower and to inspect,
audit and make extracts from all of Borrower's records, files and
books of account. Borrower shall deliver any document or instrument
reasonably necessary for Lender, to obtain records from any service
bureau maintaining records for Borrower, and shall maintain duplicate
records or supporting documentation on media, including, without
limitation, computer tapes and discs owned by Borrower. Borrower
shall instruct its banking and other financial institutions to make
available to Lender such information and records as Lender may
reasonably request.
2.11. Taxes. (a) Any and all payments by Borrower
-----
hereunder or under the Note shall be made, in accordance with this
Section 2.11, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding
taxes imposed on or measured by the net income of Lender by the
jurisdiction under the laws of which Lender is organized or any
political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Note to Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 2.11) Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxing or other authority in
accordance with applicable law.
(b) In addition, Borrower shall pay any present or future
stamp or documentary taxes or any other sales, transfer, excise,
mortgage recording or property taxes, charges or similar levies that
arise from any payment made hereunder or under the Note or from the
execution, sale, transfer, delivery or registration of, or otherwise
with respect to the Loan Documents and any other agreements and
instruments contemplated thereby (hereinafter referred to as "Other
Taxes").
(c) Borrower shall indemnify Lender for the full amount
of Taxes or Other Taxes (including without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the
date such Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of
Taxes, Borrower shall furnish to Lender, at its address referred to in
Section 10.10, the original or a certified copy of a receipt
evidencing payment thereof.
(d) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this Section 2.11 shall survive both (i) the
payment in full of principal and interest hereunder and under the
Notes and (ii) the Termination of this Agreement.
3. CONDITIONS PRECEDENT
--------------------
3.1. Conditions to the Initial Revolving Credit Advance
--------------------------------------------------
and Letter of Credit. Notwithstanding any other provision of this
--------------------
Agreement and without affecting in any manner the rights of Lender
hereunder, Borrower shall have no rights under this Agreement (but
shall have all applicable obligations hereunder), and Lender shall not
be obligated to make available any Revolving Credit Advance or Letter
of Credit, unless and until Borrower shall have delivered to Lender,
in form and substance satisfactory to Lender and (unless otherwise
indicated) each dated the Closing Date:
(a) A Revolving Credit Note to the order of Lender duly
executed by Borrower.
(b) Opinions of Manatt, Xxxxxx & Xxxxxxxx, LLP (counsel
to Borrower), Xxxxxxx Xxxxxxx & Xxxxxx (counsel to Intek) and Xxxxxx,
Xxxxxx & Xxxxxx (counsel to Borrower and Intek with respect to issues
involving New York law), substantially in the forms attached as,
respectively, Exhibits F, G and H hereto.
(c) Opinion of Xxxxx, Day, Xxxxxx & Xxxxx counsel to
Midland, substantially in the form attached as Exhibit I hereto.
(d) Resolutions of the boards of directors of Borrower,
Midland and Intek, certified by the Secretary or
Assistant Secretary of such entity, as the case may be, as of the
Closing Date, to be duly adopted and in full force and effect on such
date, authorizing (i) the consummation of each of the transactions
contemplated by the Loan Documents and (ii) specific officers to
execute and deliver this Agreement and the other Loan Documents.
(e) A copy of the organizational charter and all
amendments thereto of each of Borrower and Intek, certified as of a
recent date by the Secretary of State of the jurisdiction of its
organization, and copies of each of Borrower's and Intek's by-laws,
certified by the Secretary or Assistant Secretary of Borrower or
Intek, as the case may be, as true and correct as of the Closing Date.
(f) Governmental certificates, dated the most recent
practicable date prior to the Closing Date, with telegram updates
where available, showing that the Borrower is organized and in good
standing in the jurisdiction of its organization and is qualified as a
foreign corporation and in good standing in all other jurisdictions in
which it is qualified to transact business.
(g) The Asset and Trademark Agreement duly executed and
delivered by Midland, Intek and Xxxxxxxx, together with:
(i) copies of all closing documents and certificates
delivered in connection therewith, including a letter from
each counsel delivering an opinion in connection therewith
stating that Lender can rely on such opinion as if addressed
to it; and
(ii) a certificate from the chief executive officer of
Intek certifying that the transactions contemplated by the
Asset and Trademark Agreement have been completed.
(h) The Assignment and Assumption Agreement duly executed
and delivered by Borrower and Intek.
(i) The Security Agreement and the Trademark Agreement,
duly executed and delivered by Borrower; the Non-Recourse Guaranty and
Pledge Agreement duly executed and delivered by Intek; together with:
(i) acknowledgement copies of proper Financing
Statements (Form UCC-1) duly filed under the Uniform
Commercial Code of each jurisdiction as may be
necessary or, in the opinion of Lender, desirable to perfect
the security interests created by the Security Agreement,
(ii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing the
Financing Statements referred to in paragraph (i) above and
all other effective financing statements which name Borrower
or Intek (under their present names and any previous names)
as debtor and which are filed in the jurisdictions referred
to in said paragraph (i), together with copies of such other
financing statements (none of which shall cover the
Collateral purported to be covered by the Security
Agreement),
(iii) evidence of the completion of all recordings and
filings of the Security Agreement and Trademark Agreement as
may be necessary or, in the opinion of Lender, desirable to
perfect the security interests and liens created by the
Security Agreement and Trademark Agreement,
(iv) certificates representing the Pledged Shares
referred to in the Non-Recourse and Guaranty and Pledge
Agreement and undated stock powers for such certificates
executed in blank,
(v) evidence that all other actions necessary or, in
the opinion of Lender, desirable to perfect and protect the
security interests created by the Security Agreement,
Trademark Agreement and Non-Recourse Guaranty and Pledge
Agreement have been taken.
(j) Releases duly executed and delivered by Mees Pierson
and Octagon Capital Canada Corporation (with respect to Midland) and
Mees Pierson (with respect to Intek), releasing any liens or claims on
or security interests in, the Collateral or in the rights in the Asset
and Trademark Agreement, as well as waiving any claims each may have
arising from the Midland Transaction or the transactions contemplated
by the Loan Documents, together with acknowledgement copies of proper
Financing Statements (Form UCC-2 or 3) duly filed under the Uniform
Commercial Code of each jurisdiction as may be necessary to evidence
the foregoing releases.
(k) A certificate of the chief executive officer of
Borrower that Borrower is Solvent after giving effect to the initial
Revolving Credit Advance and the payment of all estimated
legal, investment banking, accounting and other fees related hereto
and thereto (such certificate may state that in making the
representation therein Borrower has relied on the projections attached
thereto, provided that Borrower states that it believes that the
assumptions underlying such projections are reasonable).
(l) A certificate of the chief executive officer of
Borrower stating that all of the representations and warranties of the
Borrower contained herein or in any of the Loan Documents are correct
on and as of the Closing Date as though made on and as of such date,
and no event has occurred and is continuing, or would result from the
Revolving Credit Advance, if made on the Closing Date, which
constitutes or would constitute a Default or an Event of Default.
(m) Certificates of the Secretary or an Assistant
Secretary of each of Borrower and Intek, dated the Closing Date, as to
the incumbency and signatures of the officers of, respectively,
Borrower or Intek executing any of the Loan Documents and any other
certificate or other document to be delivered pursuant hereto or
thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(n) Evidence satisfactory to Lender that Xxxxxxxx shall
have paid to Lender in cash $2,187,603.00 in satisfaction of all
outstanding invoices payable by Xxxxxxxx or Midland issued on or prior
to the date hereof (as set forth on Schedule 3.1(n) hereto).
(o) Such additional information and materials as Lender
may reasonably request, including, without limitation, copies of any
debt agreements, security agreements and other material contracts.
3.2. Further Conditions to Each Revolving Credit Advance
---------------------------------------------------
and Letter of Credit. It shall be a further condition to the funding
--------------------
of each subsequent Revolving Credit Advance and incurrence of Letter
of Credit Obligations that the following statements shall be true on
the date of each such funding or advance:
(a) All of the representations and warranties of the Loan
Parties contained herein or in any of the Loan Documents shall be
correct on and as of the Closing Date and the date of each such
Revolving Credit Advance as though made on and as of such date, except
to the extent that any such representation or warranty expressly
relates to an earlier date and for changes therein permitted or
contemplated by this Agreement.
(b) No event shall have occurred and be continuing, or
would result from the funding of any Revolving Credit Advance, which
constitutes or would constitute a Default or an Event of Default.
(c) The aggregate unpaid principal amount of the
Revolving Credit Loan after giving effect to such Revolving Credit
Advance shall not exceed the Maximum Revolving Credit Loan.
The acceptance by Borrower of the proceeds of any Revolving
Credit Advance or the incurrence by Lender of Letter of Credit
Obligations shall be deemed to constitute, as of the date of such
acceptance, (i) a representation and warranty by Borrower that the
conditions in this Section 3.2 have been satisfied and (ii) a
confirmation by Borrower of the granting and continuance of Lender's
Lien pursuant to the Collateral Documents.
Notwithstanding the foregoing, the satisfaction of the
conditions set out in clause (a) and (b) above shall not be required
in respect of a $450,000 Revolving Credit Advance to be made on or
after October 20, 1996 to be used solely to repay Intek for the
outstanding deposits made in respect of equipment relating to the US
LMR Distribution Business ordered by Intek and evidenced by the
purchase orders listed on Schedule 2.3 hereto.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lender to make the Revolving Credit Loan, as
herein provided for, Borrower makes the following representations and
warranties to Lender, each and all of which shall be true and correct
as of the date of execution and delivery of this Agreement:
4.1. Corporate Existence; Compliance with Law. Borrower
----------------------------------------
(i) is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation; (ii) except as
indicated on Schedule 4.1(ii) hereto, is duly qualified to do business
and is in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires
such qualification (except for jurisdictions in which such failure to
so qualify or to be in good standing would not have a Material Adverse
Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to
conduct its business as now, heretofore and proposed to be conducted;
(iv) except as
indicated on Schedule 4.1(iv) hereto, has all material licenses,
permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its
certificate of incorporation and by-laws; and (vi) is in compliance
with all applicable provisions of law where the failure to comply
would have a Material Adverse Effect.
4.2. Executive Offices. The current location of
-----------------
Borrower's executive offices and principal place of business is set
forth in Schedule 4.2 hereto.
4.3. Subsidiaries. Borrower currently has no
------------
Subsidiaries.
4.4. Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. The execution, delivery and performance by Borrower of
-----------
the Loan Documents, Ancillary Agreements and all instruments and
documents to be delivered by Borrower, to the extent it is a party
thereto, hereunder and thereunder and the creation of all Liens
provided for herein and therein: (i) are within Borrower's corporate
power; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of
Borrower's certificates or articles of incorporation or by-laws;
(iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality in any material respect;
(v) will not conflict with or result in the breach or termination of,
constitute a default under or accelerate any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of
its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower other than
those in favor of Lender, all pursuant to the Loan Documents; and
(vii) do not require the consent or approval of any Governmental
Authority or any other Person. Each of the Loan Documents has been
duly executed and delivered for the benefit of or on behalf of
Borrower and each constitutes a legal, valid and binding obligation of
Borrower, to the extent it is a party thereto, enforceable against it
in accordance with its terms.
4.5. Solvency. After giving effect to the initial
--------
Revolving Credit Advance, if made on the Closing Date, and the payment
of all estimated legal, investment banking, accounting and other fees
related hereto, Borrower will be Solvent as of and on the Closing Date
(it being understood that in making such representation Borrower has
relied on the projections previously
provided to Lender, which are based on assumptions that Borrower
believes are reasonable).
4.6. Labor Matters. There are no strikes or other labor
-------------
disputes against Borrower pending or, to Borrower's knowledge,
threatened which would have a Material Adverse Effect.
4.7. Investment Company Act. Borrower is not an
----------------------
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended. The
making of the Revolving Credit Advances by Lender, the application of
the proceeds and repayment thereof by Borrower and the consummation of
the transactions contemplated by this Agreement and the other Loan
Documents will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder.
4.8. Margin Regulations. Borrower does not own any
------------------
"margin security," as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and the proceeds of the Revolving Credit Advances
will be used only for the purposes contemplated hereunder. The
Revolving Credit Advances will not be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the
purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other
purpose which might cause any of the loans under this Agreement to be
considered a "purpose credit" within the meaning of Regulations G, T,
U or X of the Federal Reserve Board. Borrower will not take or permit
any agent acting on its behalf to take any action which might cause
this Agreement or any document or instrument delivered pursuant hereto
to violate any regulation of the Federal Reserve Board.
4.9. No Litigation. No action, claim or proceeding is now
-------------
pending or, to the knowledge of Borrower, threatened against Borrower
at law, in equity or otherwise, before any court, board, commission,
agency or instrumentality of any federal, state, or local government
or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which, if determined adversely, could have a
Material Adverse Effect, nor to the knowledge of Borrower does a state
of facts exist which is reasonably likely to give rise to such
proceedings.
4.10. Asset and Trademark Agreement. The closing of the
-----------------------------
Midland Transaction and the consummation of the Intek-
Borrower Transfer will occur immediately prior to the Closing Date. A
true and complete copy of each of the Asset and Trademark Agreement
(including all exhibits, schedules and amendments thereto) and all
documents delivered by any party in connection therewith has been
delivered to Lender.
4.11. Hitachi Supply Agreement. Borrower is a "Midland
------------------------
Affiliate" under the Hitachi Supply Agreement and entitled to make
purchases thereunder.
4.12. Outstanding Stock; Options; Warrants, Etc. The Stock
------------------------------------------
of Borrower owned by Intek as at the date of this Agreement
constitutes all of the issued and outstanding Stock of Borrower.
Borrower has no outstanding rights, options, warrants or agreements
pursuant to which it may be required to issue or sell any Stock or
other equity security.
4.13. Patents, Trademarks, Copyrights and Licenses.
--------------------------------------------
Borrower owns all material patents, patent applications, copyrights,
trademarks, trademark applications, and know-how (collectively,
"Intangible Property") necessary to continue to conduct its business
as heretofore conducted by it, now conducted by it and proposed to be
conducted by it, each of which is listed, together with Patent and
Trademark Office application or registration numbers, where
applicable, on Schedule 4.13(a) hereto. Further, (i) Borrower has
good and lawful title to the Intangible Property (subject to the
licenses set forth on Schedule 4.13(d) hereto); (ii) to Borrower's
knowledge, the Intangible Property is valid and subsisting and is
enforceable; (iii) to Borrower's knowledge, there are no actual or
threatened claims by third parties regarding the Intangible Property;
(iv) to Borrower's knowledge, the Intangible Property does not
infringe or otherwise violate any rights of any third party, except
where any violation or infringement would not have a Material Adverse
Effect.
4.14. Liens. The Liens granted to Lender pursuant to the
-----
Collateral Documents will at the Closing Date be fully perfected first
priority Liens in and to the Collateral described therein.
4.15. No Material Adverse Effect. No event has occurred
--------------------------
and is continuing which has had or could have a Material Adverse
Effect.
5. FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
5.1. Reports and Notices. Borrower covenants and agrees
-------------------
that from and after the Closing Date and until the Termination Date,
it shall deliver to Lender:
(a) Within 30 days after the end of each fiscal month,
(i) a copy of the unaudited balance sheets of Borrower as of the end
of such month and the related statements of income and cash flows for
that portion of the Fiscal Year ending as of the end of such month,
and (ii) a copy of the unaudited statements of income of Borrower for
such month, all prepared in accordance with GAAP (subject to normal
year-end adjustments), accompanied by the certification of the chief
executive officer or chief financial officer of Borrower that all such
financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments), the
financial position, the results of operations and the statements of
cash flows of Borrower as at the end of such month and for the period
then ended, and that there was no Default or Event of Default in
existence as of such time.
(b) As soon as practicable, but in any event within two
(2) Business Days after Borrower becomes aware of the existence of any
Default or Event of Default, or any development or other information
which would have a Material Adverse Effect, telephonic or telegraphic
notice specifying the nature of such Default or Event of Default or
development or information, including the anticipated effect thereof,
which notice shall be promptly confirmed in writing within five (5)
days.
(c) If requested by Lender, copies of all federal, state,
local and foreign tax returns and reports in respect of income,
franchise or other taxes on or measured by income (excluding sales,
use or like taxes) filed by Borrower.
(d) Such other information respecting Borrower's business
(including with respect to orders received and inventory purchased),
financial condition or prospects as Lender may, from time to time,
reasonably request.
5.2. Communication with Accountants. Borrower authorizes
------------------------------
Lender to communicate directly with its independent certified public
accountants and tax advisors and authorizes those accountants to
disclose to Lender any and all financial statements and other
supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition
and other affairs of Borrower. At
Lender's request, Borrower shall deliver a letter addressed to such
accountants and tax advisors instructing them to comply with the
provisions of this Section 5.2.
6. AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, unless Lender shall
otherwise consent in writing, from and after the date hereof and until
the Repayment Date:
6.1. Maintenance of Existence and Conduct of Business.
------------------------------------------------
Borrower shall: (a) do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence,
and its rights and franchises; (b) transact business only in such
names as Borrower shall specify to Lender in writing not less than
thirty days prior to the first date such name is used by Borrower and
(c) at all times maintain, preserve and protect all of its Trademarks
and any tradenames.
6.2. Payment of Obligations. Borrower shall: (i) pay and
----------------------
discharge or cause to be paid and discharged all its Indebtedness,
including, without limitation, all the Obligations as and when due and
payable, and (ii) pay and discharge or cause to be paid and discharged
promptly all (A) Charges imposed upon it, its income and profits, or
any of its property (real, personal or mixed), and (B) lawful claims
for labor, materials, supplies and services or otherwise before any
thereof shall become in default.
(a) Borrower may in good faith contest, by proper legal
actions or proceedings diligently pursued, the validity or amount of
any Charges or claims arising under Section 6.2(a)(ii), provided that
at the time of commencement of any such action or proceeding, and
during the pendency thereof (i) adequate reserves with respect thereto
are maintained on the books of Borrower, in accordance with GAAP;
(ii) such contest operates to suspend collection of the contested
Charges or claims and is maintained and prosecuted continuously with
diligence; (iii) none of the Collateral would be subject to forfeiture
or loss or any Lien by reason of the institution or prosecution of
such contest; (iv) no Lien shall exist for such Charges or claims
during such action or proceeding; (v) Borrower shall promptly pay or
discharge such contested Charges and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Lender evidence
acceptable to Lender of such compliance, payment or discharge, if such
contest is terminated or discontinued adversely to Borrower; and
(vi) Lender has not advised Borrower in writing that Lender
reasonably believes that nonpayment or nondischarge thereof would have
a Material Adverse Effect.
(b) Notwithstanding anything to the contrary contained in
Section 6.2(b) above, Borrower shall have the right to pay the charges
or claims arising under Section 6.2(a)(ii) and in good faith contest,
by proper legal actions or proceedings, the validity or amount of such
Charges or claims.
6.3. Books and Records. Borrower shall keep its books,
-----------------
accounts and records in the ordinary course of business.
6.4. Litigation. Borrower shall notify Lender in writing,
----------
promptly upon learning thereof, of any litigation commenced against
Borrower, and of the institution against any of them of any suit or
administrative proceeding that may have a Material Adverse Effect.
6.5. Insurance. Borrower shall maintain insurance
---------
covering, without limitation, fire, theft, burglary, public liability,
property damage, product liability and insurance on all property and
assets, all in amounts customary for its business and in any event in
compliance with any insurance requirements under any Loan Documents
and with a lender's loss payable clause for the benefit of Lender.
6.6. Compliance with Law. Borrower shall comply in all
-------------------
material respects with all federal, state and local laws and
regulations applicable to it.
6.7. Supplemental Disclosure. From time to time as may be
-----------------------
necessary (in the event that such information is not otherwise
delivered by Borrower to Lender pursuant to this Agreement), so long
as there are Obligations outstanding hereunder, Borrower will
supplement each Schedule (if any) or representation herein with
respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in
such Schedule or representation which has been rendered inaccurate
thereby; provided, however, that such supplement to such Schedule or
-------- -------
representation shall not be deemed an amendment thereof unless
otherwise consented to by the Lender.
7. NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, without Lender's prior
written consent, from and after the date hereof and until the
Repayment Date:
7.1. Mergers, Etc. Borrower shall not directly or
------------
indirectly, by operation of law or otherwise, merge with, consolidate
with, acquire all or substantially all of the assets or capital stock
of, or otherwise combine with, any Person or form any Subsidiary.
7.2. Investments; Loans and Advances. Borrower shall not
-------------------------------
make any investment in, or make or accrue loans or advances of money
to any Person, through the direct or indirect holding of securities or
otherwise.
7.3. Indebtedness. (a) Except as otherwise expressly
------------
permitted by this Section 7.3 or by any other section of this
Agreement or as set forth on Schedule 7.3 hereto, Borrower shall not
create, incur, assume or permit to exist any Indebtedness, except
(i) Indebtedness secured by Liens permitted under Section 7.8 hereof,
(ii) the Revolving Credit Loan, and (iii) the Letter of Credit
Obligations.
(b) Except as otherwise expressly permitted by Section
7.9 hereof, Borrower shall not sell or transfer, either with or
without recourse, any assets, of any nature whatsoever, in respect of
which a Lien is granted or to be granted pursuant to any Loan Document
or engage in any sale-leaseback or similar transaction involving any
of such assets.
7.4. Capital Structure. Borrower shall not make any
-----------------
changes in its capital structure (including, without limitation, in
the terms of its outstanding Stock) or amend its certificate of
incorporation or by-laws.
7.5. Maintenance of Business. Borrower shall not engage
-----------------------
in any business other than the US LMR Distribution Business.
7.6. Transactions with Affiliates. (a) Borrower shall not
-----------------------------
enter into or be a party to any transaction with any Affiliate of
Borrower, other than with Intek, and then only in the ordinary course
of and pursuant to the reasonable requirements of Borrower's business
and upon fair and reasonable terms that are fully disclosed to Lender
and are no less favorable to Borrower than would be obtained in a
comparable
arm's-length transaction with a Person not an Affiliate of Borrower.
(b) Except as set forth on Schedule 7.6(b) hereto,
Borrower shall not enter into any agreement or transaction to pay to
any Person any management or similar fee based on or related to
Borrower's operating performance or income or any percentage thereof,
nor pay any management or similar fee to an Affiliate.
7.7. Guaranteed Indebtedness. Borrower shall not incur
-----------------------
any Guaranteed Indebtedness except (i) by endorsement of instruments
or items of payment for deposit to the general account of Borrower,
and (ii) for Guaranteed Indebtedness incurred for the benefit of
Borrower if the primary obligation is permitted by this Agreement.
7.8. Liens. Borrower shall not create or permit any Lien
-----
on any of its properties or assets except:
(a) presently existing or hereafter created Liens in
favor of Lender; and
(b) Permitted Encumbrances.
7.9. Sales of Assets. Borrower shall not sell, transfer,
---------------
convey or otherwise dispose of any assets or properties; provided,
--------
however, that the foregoing shall not prohibit (i) the sale of
-------
inventory in the ordinary course of business, (ii) the sale of surplus
or obsolete equipment and fixtures, and (iii) transfers resulting from
any casualty or condemnation of assets or properties.
7.10. Events of Default. Borrower shall not take or omit
-----------------
to take any action, which act or omission would constitute (i) a
default or an event of default pursuant to, or noncompliance with any
of, the terms of any of the Loan Documents or (ii) a material default
or an event of default pursuant to, or noncompliance with any other
contract, lease, mortgage, deed of trust or instrument to which it is
a party or by which it or any of its property is bound, or any
document creating a Lien, unless such default, event of default or
non-compliance would not have a Material Adverse Effect.
7.11. Restricted Payments. Borrower shall not make any
-------------------
Restricted Payments.
8. TERM
----
8.1. Termination. Subject to the provisions of Section 2
-----------
hereof, the financing arrangement contemplated hereby in respect of
the Revolving Credit Loan shall be in effect until the Termination
Date.
8.2. Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangement. Except as otherwise expressly provided for in the Loan
-----------
Documents, no termination or cancellation (regardless of cause or
procedure) of any financing arrangement under this Agreement shall in
any way affect or impair the powers, obligations, duties, rights and
liabilities of Borrower or the rights of Lender relating to any
transaction or event occurring prior to such termination. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations
contained in the Loan Documents shall survive such termination or
cancellation and shall continue in full force and effect until such
time as all of the Obligations have been paid in full in accordance
with the terms of the agreements creating such Obligations, at which
time the same shall terminate.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
9.1. Events of Default. The occurrence of any one or more
-----------------
of the following events (regardless of the reason therefor) shall
constitute an "Event of Default" hereunder:
(a) Borrower shall fail to make any payment of principal
of, or interest on or any other amount owing in respect of, the
Revolving Credit Loan or any of the other Obligations when due and
such failure continues for a period of five (5) days.
(b) Borrower shall fail or neglect to perform, keep or
observe any of the provisions of Section 7 hereof.
(c) Borrower shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other
Loan Documents and the same shall remain unremedied for a period
ending on the first to occur of twenty (20) days after Borrower shall
receive written notice of any such failure from any Lender or forty
five (45) days after Borrower shall become aware thereof.
(d) A default shall occur under any other agreement,
document or instrument to which Borrower is a party or by which
Borrower's property is bound, and such default (i) involves the
failure to make any payment (whether of principal, interest or
otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of
Borrower in an aggregate amount exceeding $50,000, or (ii) causes (or
permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness or a portion thereof in an aggregate amount exceeding
$50,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan
Document or in any written statement pursuant thereto or hereto,
report, financial statement or certificate made or delivered to Lender
by Borrower shall be untrue or incorrect in any material respect, as
of the date when made or deemed made (including those made or deemed
made pursuant to Section 3.2).
(f) Any provision of any Collateral Document, after
delivery thereof pursuant to Section 3.1, shall for any reason cease
to be valid or enforceable in accordance with its terms, or any
security interest created under any Collateral Document shall cease to
be a valid and perfected first priority security interest or Lien
(except as otherwise stated therein) in any of the Collateral
purported to be covered thereby.
(g) Any of the assets of Borrower shall be attached,
seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of Borrower and shall remain
unstayed or undismissed for thirty (30) consecutive days; or any
Person other than Borrower shall apply for the appointment of a
receiver, trustee or custodian for any of the assets of Borrower and
shall remain unstayed or undismissed for thirty (30) consecutive days;
or Borrower shall have concealed, removed or permitted to be concealed
or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them or made or suffered a transfer of
any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other
similar law.
(h) A case or proceeding shall have been commenced
against Borrower in a court having competent jurisdiction seeking a
decree or order in respect of Borrower (i) under title 11 of the
United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Borrower or
of any substantial part of its or their properties, or (iii) ordering
the winding-up or liquidation of the affairs of Borrower and such case
or proceeding shall remain undismissed or unstayed for thirty (30)
consecutive days or such court shall enter a decree or order granting
the relief sought in such case or proceeding.(i) Borrower shall
(i) file a petition seeking relief under title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy or other similar law,
(ii) consent to the institution of proceedings thereunder or to the
filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Borrower or of any substantial
part of its properties, (iii) fail generally to pay its debts as such
debts become due, or (iv) take any corporate action in furtherance of
any such action.
(j) There shall have been a change of control of Intek or
a sale of a material part of its assets and for this purpose, "change
of control" means the acquisition, whether directly or indirectly by
an entity other than Midland of more than 20% of the Stock or assets
of Intek.
(k) Xxxxxx Xxxxxxxxx (or such replacement as is approved
by Lender in its reasonable discretion) for any reason ceases to serve
as a consultant to Borrower and is not replaced within ten (10) days
with a replacement approved by Lender in its reasonable discretion or
the responsibilities of his position are materially diminished from
those he had with respect to the US LMR Distribution Business when
employed by Midland prior to the consummation of the Midland
Transaction.
(l) The Hitachi Supply Agreement is terminated for any
reason without the prior written agreement of Lender, such agreement
is amended without the prior written agreement of Lender or Borrower
ceases to be able to make purchases thereunder on the terms in effect
on the date of this Agreement.
9.2. Remedies. If any Event of Default shall have
--------
occurred and be continuing, Lender shall without notice, (i) terminate
this facility with respect to further Revolving Credit Advances,
whereupon no Revolving Credit Advances may be made hereunder, and/or
(ii) declare all Obligations to be forthwith due and payable,
whereupon all Obligations shall become and be due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are expressly waived by Borrower.
9.3. Waivers by Borrower. Except as otherwise provided
-------------------
for in this Agreement and applicable law, Borrower waives
(i) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Lender on which Borrower may in any way
be liable and hereby ratifies and confirms whatever Lender may do in
this regard, (ii) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or
levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its
remedies, and (iii) the benefit of all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been advised by
counsel of its choice with respect to this Agreement, the other Loan
Documents and the transactions evidenced by this Agreement and the
other Loan Documents.
9.4. Right of Set-Off. Upon the occurrence and during the
----------------
continuance of any Event of Default, Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender to or for the credit or the
account of Borrower against any and all of the obligations of Borrower
now or hereafter existing under this Agreement, and the Note held by
Lender irrespective of whether or not Lender shall have made any
demand under this Agreement or such Note and although such obligations
may be unmatured. Lender agrees promptly to notify Borrower after any
such set-off and application made by Lender; provided, however, that
-------- -------
the failure to give such notice shall not affect the validity of such
set-off and application. The rights of Lender under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have.
10. MISCELLANEOUS
-------------
10.1. Complete Agreement; Modification of Agreement; Sale
---------------------------------------------------
of Interest. (a) The Loan Documents constitute the complete
-----------
agreement between the parties with respect to the subject matter
hereof and may not be modified, altered or amended except by an
agreement in writing signed by Borrower and Lender. Borrower may not
sell, assign or transfer any of the Loan Documents or any portion
thereof (other than pursuant to the
Intek Assumption Agreement), including, without limitation, Borrower's
rights, title, interests, remedies, powers and duties hereunder or
thereunder. Borrower hereby consents to Lender's sale of
participations, assignment, transfer or other disposition, at any time
or times, of any of the Loan Documents or of any portion thereof or
interest therein, including, without limitation, Lender's rights,
title, interests, remedies, powers or duties thereunder, whether
evidenced by a writing or not. Borrower agrees that it will use its
best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in
or assignments of any of the Loan Documents or of any portion thereof
or interest therein.
(b) In the event Lender assigns or otherwise transfers
all or any part of the Revolving Credit Note Borrower shall, upon the
request of Lender, issue a new Revolving Credit Note to effectuate
such assignment or transfer.
10.2. Fees and Expenses. If, at any time or times,
-----------------
regardless of the existence of an Event of Default (except with
respect to paragraphs (ii) and (iii), which shall be subject to an
Event of Default having occurred and be continuing), Lender shall
employ counsel or other advisors for advice or other representation or
shall incur reasonable legal or other costs and expenses in connection
with:
(i) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by Lender, Borrower or any
other Person) in any way relating to the Collateral, any of
the Loan Documents or any other agreements to be executed or
delivered in connection herewith;
(ii) any attempt to enforce any rights of Lender;
(iii) any attempt to verify, protect, collect, sell,
liquidate or otherwise dispose of the Collateral;
then, and in any such event, the attorneys' and other parties' fees
reasonably arising from such services, including those of any
appellate proceedings, and all expenses, costs, charges and other fees
reasonably incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions
described in this Section shall be payable, on demand, by Borrower to
Lender and shall be additional Obligations secured under this
Agreement and the other Loan Documents. Without limiting the
generality of the foregoing,
such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants' and investment bankers' fees, costs
and expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
10.3. No Waiver by Lender. Lender's failure, at any time
-------------------
or times, to require strict performance by Borrower or Intek of any
provision of this Agreement any of the other Loan Documents shall not
waive, affect or diminish any right of Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver
by Lender of an Event of Default by Borrower under the Loan Documents
shall not suspend, waive or affect any other Event of Default by
Borrower under this Agreement and any of the other Loan Documents
whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement and no defaults by Borrower
or Intek under any of the other Loan Documents shall be deemed to have
been suspended or waived by Lender, unless such suspension or waiver
is by an instrument in writing signed by an officer of Lender and
directed to Borrower or Intek specifying such suspension or waiver.
10.4. Remedies. Lender's rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Lender may have under any other agreement, including
without limitation, the Loan Documents, by operation of law or
otherwise.
10.5. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL
--------------------
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THE LOAN DOCUMENTS.
10.6. Severability. Wherever possible, each provision of
------------
this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
10.7. Parties. This Agreement and the other Loan Documents
-------
shall be binding upon, and inure to the benefit of, the successors of
Borrower and Lender and the assigns, transferees and endorsees of
Lender.
10.8. Conflict of Terms. Except as otherwise provided in
-----------------
this Agreement or any of the other Loan Documents by specific
reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in any of the other Loan Documents,
the provision contained in this Agreement shall govern and control.
10.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
-------------
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND BORROWER
AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS
TO VENUE IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF
PROCESS ON BORROWER OR LENDER IN ANY ACTION ARISING OUT OF OR RELATING
TO ANY OF THE LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH
PARTY AT THE ADDRESS LISTED IN SECTION 10.10 HEREOF. NOTHING HEREIN
SHALL PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
10.10. Notices. Except as otherwise provided herein,
-------
whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any
of the parties desires to give or serve upon another any communication
with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in
writing and either shall be delivered in person with receipt
acknowledged or by registered or certified mail, return receipt
requested, postage prepaid, or telecopied and confirmed by telecopy
answerback addressed as follows:
(a) If to Lender at:
00 Xxxxxxxxxx Xxxx
Xxxxxx
Xxxxxx XX0 0XX
Xxxxxxx
Attention: Xx Xxxxx
Telecopy No. (0000) 000 0000
With copies to:
Weil, Gotshal & Xxxxxx
00 Xxxxxxxxxxx
Xxxxxx, XX0X 0XX
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy No. 0171 426 0990
(b) If to Borrower, at:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telecopy No. 000 000 0000
With copies to:
Intek Diversified Corporation
000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx
Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy No. 310 366 7712
Manatt, Xxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx
Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy No. 000 000 0000
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.
10.11. Survival. The representations and warranties of
--------
Borrower in this Agreement shall survive the execution, delivery and
acceptance hereof by the parties hereto and the closing of the
transactions described herein or related hereto.
10.12. Section Titles. The Section titles and Table of
--------------
Contents contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.
10.13. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
MIDLAND USA, INC.
By: /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Title: President
SECURICOR COMMUNICATIONS LIMITED
By: /s/ X.X. Xxxxxxxxx
----------------------------
Name: X.X. Xxxxxxxxx
Title: Director
The undersigned hereby guarantees to Borrower the performance by
Lender of all of its obligations under this Agreement.
SECURITY SERVICES PLC
By: /s/ X. Xxxxxxxxx
----------------------------
Name: X. Xxxxxxxxx
Title: Director
Date: September 19, 1996
SCHEDULE 2.3
INTEK PURCHASE ORDERS
---------------------
3058
3081
3082
3084
3085
3087
3074
3102
3105
3108
3107
3071
3078
3079
3088
3090
3092
3022
3023
3024
3028
3029
3031
3032
3033
3037
3038
3039
3041
3042
3043
3046
3047
3048
3050
3052
3054
3056
SCHEDULE 3.1(n)
XXXXXXXX AND MIDLAND INVOICES
------------------------------
WHEEL
SCL MIDLAND TOTAL ROAMER
BALANCE 1,177,237 1,208,009 2,385,246 - 235,831 per Xxxx Wheel Memo Jul
18
Less 2 returned 68,380
systems
Duty credit due 2,689 12,000 $12k to be confirmed by
Xxxxx X.
NEW BALANCE 1,106,168 1,196,009 2,302,177 - 235,831
DISPUTED ITEMS
Systems delivered (2) 68,380
Duty on systems (2) 2,522
Engineering 44,030
turnkey
Sub-total 26,872
BALANCE 1,079,296 1,196,009 2,275,305 - 235,831
Roamer mobile payment 77,700 - 77,700 per Neilbert Memo
FINAL BALANCE DUE $1,001,596 $1,196,009 $2,197,605 - $158,131
Due by Roamer to SCL
re mobiles
$260,000 Mobiles $ 2,000
Price $ 550
Agreed per Xxxxxxxx Capital Total $ 1,100,000
Limited as amended Sept 17,
1996
Payments $ 762,300
Agreed per Securicor $ 77,700
Radiocoms Limited as amended $ 840,000
Sept 17, 1996
BALANCE $ 260,000
SCHEDULE 4.1
CORPORATE MATTERS
------------------
4.1(ii) Qualified to Do Business
------------------------
Colorado
Florida
Kansas
Indiana
Massachusetts
Michigan
Nevada
North Carolina
Ohio
Texas
4.1(iv) Licenses, Permits, Consents, Approvals
--------------------------------------
Employment Taxes:
----------------
Colorado
Florida
Kansas
Indiana
Massachusetts
Michigan
Missouri
Nevada
North Carolina
Ohio
Texas
Resale Permits:
--------------
Colorado
Florida
Missouri
North Carolina
Texas
SCHEDULE 4.2
EXECUTIVE OFFICE
-----------------
The executive offices and principal place of business of Midland USA,
Inc. are located at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx
00000.
SCHEDULE 4.13
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
---------------------------------------------
4.13(a) Patents
-------
US Patent Number 4,718,586 (Swivel Fastening Device)
4.13(b) Trademarks
----------
The trademark "Midland" Reg. No 927193, serial number 72-277,496,
first registered on January 18, 1972 and renewed on December 13, 1991.
The trademark "Midland" Reg. No 895483, serial number 72-156,089,
first registered on July 28, 1970 and renewed on December 18, 1990.
4.13(c) Copyrights
----------
None
4.13(d) Licenses
--------
1) Midland USA - Midland International Corp. Trademark License
Agreement dated September 19, 1996.
2) Midland International Corp. - Midland Consumer Int'l. Exclusive
License Agreement dated June 30, 1995.
3) Midland International Corp. - LETT Electronics Private Label
Agreement dated March 1, 1995.
4) Midland International Corp. - American Digital Communications,
Inc. Asset Purchase Agreement dated December 29, 1995.
SCHEDULE 7.3
INDEBTEDNESS
-------------
1. Equipment leases (i) which Midland is assigning pursuant to the
Asset and Trademark Agreement or (ii) entered into by the Borrower
having annual payments less than or equal to $50,000.
2. Purchase orders for product to be purchased from vendors for use
in the U.S. LMR Distribution Business.
SCHEDULE 7.6
CERTAIN TRANSACTIONS
---------------------
1. The Product Purchasing Services Agreement, dated September 19,
1996, between Midland and Borrower.
2. The Computer Services Agreement, dated September 19, 1996,
between Borrower and Xxxxxxxx Capital Limited.
3. The Consignment Agreement, dated as of September 19, 1996,
between Borrower and Midland.
4. The License Agreement, dated September 19, 1996, between Borrower
and Midland.
