THIS AGREEMENT is made the 14th day of August 1998
BETWEEN
1. Securicor Radiocoms Limited a company incorporated in England whose
registered office is at Xxxxxx Park House, 00 Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxx XX0 0XX, Xxxxxxx ("the Vendor") being a wholly owned subsidiary of
Intek Global Corporation, a Delaware, USA publicly traded corporation
("Intek").
2. Securicor Information Systems Limited a company incorporated in England and
whose registered office is at Xxxxxx Xxxx Xxxxx, 00 Xxxxxxxxxx Xxxx,
Xxxxxx, Xxxxxx XX0 0XX ('the Purchaser') being a wholly owned subsidiary of
Securicor plc, a company registered in England and Wales whose shares are
publicly traded on the London Stock Exchange.
WHEREAS:-
1. The Vendor wishes to sell and the Purchaser wishes to purchase the Goodwill
and Assets of the Business known as the Equipment and Services Unit of the
Vendor.
2. The parties have agreed to transact on the terms set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
'ASSETS' - those assets of the Business listed in Schedule 1.
'BALANCE SHEET' - the balance sheet of the Business as of the Balance Sheet
Date.
'BALANCE SHEET DATE' - 31 July 1998.
'BUSINESS' - the business carried on by the Vendor under the name of the
Equipment and Services Unit which is comprised of:
(i) the supply and maintenance of mobile radio products;
(ii) the sale of National Band 3 and Relayfone III Airtime;
(iii) the ownership and management of aerial sites and paging and other
ancillary businesses;
'COMPLETION DATE' - 30th day of September 1998.
'CONTRACTS' - all the Contracts of the Business including in particular the
material contracts listed in Schedule 2.
'DEBTORS' - the amounts owed to the Vendor in the normal course of trading
operations at the Completion Date.
'DISCLOSURE LETTER' - the letter of even date with this Agreement from the
Purchaser to the Vendor setting out exceptions and qualifications to the
warranties set out in clause 6, together with the documents attached
thereto.
'EMPLOYEES'- the employees listed in Schedule 3.
'GOODWILL' - the goodwill of the Vendor in relation to the Business
including the exclusive right to carry on the Business in succession to the
Vendor.
'PREMISES' - the premises details of which are set out in Schedule 4.
2. SALE
The Vendor shall on the Completion Date sell to the Purchaser the Goodwill,
Debtors and the Assets.
3. CONSIDERATION
3.1 Subject to clauses 3.3, 3.4 and 3.5, in consideration of the sale to
it of the Goodwill, the Assets and the Debtors the Purchaser shall
pay to the Vendor L5,000,000 and shall assume the liabilities of the
Vendor relating to the Business as shown in the Balance Sheet.
3.2 The consideration referred to in clause 3.1 shall be paid in two
installments as follows:-
(a) on the date of this Agreement L2,500,00 by way of
deposit refundable to the Purchaser plus interest at Lloyds
Bank plc base rate plus 2% from the date of payment if the
sale of the Business is not completed by the Completion Date.
(b) the balance of L2,500,000 shall be paid on the Completion
Date.
3.3 Within 30 days following Completion, the Vendor shall prepare and
deliver to the Purchaser a balance sheet showing a true and fair
view of the assets and liabilities of the Business as at the
Completion Date and, within 30 days of receipt thereof, the
Purchaser shall inform the Vendor whether it accepts such balance
sheet and, if not, what changes it considers should be made to such
balance sheet. In the event that the parties are unable to agree
upon such balance sheet within 60 days of the Completion date,
either party may refer the matter for determination by an
independent accountant appointed by agreement of the parties, or if
the parties cannot agree upon such appointment, appointed by the
President for the time being of the Institute of Chartered
Accountants upon the application of either party. Such independent
accountant shall be requested to determine the balance sheet within
30 days of his appointment and the parties shall give such
accountant all reasonable assistance and co-operation in relation
thereto.
3.4 If the balance sheet as agreed by the parties or, as the case may
be, determined by an independent accountant, pursuant to clause 3.3
shows the value of the Assets to be less than their value as shown
in the Balance Sheet by a factor of 5% or greater, than the
consideration paid pursuant to this clause 3 shall be reduced by an
amount equal to the whole of such diminution and the amount of any
reduction of the consideration
pursuant to this clause 3.4 shall be paid by the Vendor to the
Purchaser within 7 days of the date on which such balance sheet
is agreed or determined, as appropriate.
3.5 In the event that the aggregate revenue of the Business from its
Band III, Service and Maintenance, Relayfone and PMR Hire products
and services during the period of two years ending 30 September 2000
is less than an amount equal to two times the aggregate revenue of
the Business from such products and services during the year ending
30 September 1998, the Vendor shall repay to the Purchaser, no later
than 31 December 2000, a sum equal to such shortfall, up to a
maximum of L500,000 PROVIDED THAT in the event that the Purchaser
disposes of or discontinues to a material extent any part of the
Business which consists of the supply of any of such products and
services, the provisions of this clause 3.5 shall be of no effect in
relation to any period following any such disposal or cessation.
Any repayment made pursuant to this clause 3.5 shall be treated as a
reduction in the consideration payable pursuant to this Agreement.
4. COMPLETION
4.1 The Vendor shall deliver or cause to be delivered to the Purchaser
on completion:-
(a) such of the Assets referred to in schedule 1 as a are capable
of being transferred by delivery;
(b) such documents as a are required to complete the sale and
purchase of the Assets;
(c) such books, records, contracts and other documents relating to
the Business as a the Purchaser may reasonably require.
5. EMPLOYEES
5.1 The parties accept that the sale of the Business is governed by the
Transfer of Undertakings (Protection of Employment) Regulations 1981
and that the contracts of
employment of the Employees will be transferred to the Purchaser
with effect from the Completion Date on the terms of such
Regulations.
5.2 All salaries, wages and other payments due in respect of a period
preceding the Completion Date and relating to the employees shall be
borne by the Vendor.
5.3 All salaries, wages and other payments due in respect of a period
after the Completion Date will be borne by the Purchaser.
5.4 The Purchaser shall notify the Inland Revenue as a soon as a
practicable following Completion of the change of the PAYE reference
number of the Employees to that of the Purchaser.
6. WARRANTIES
6.1 The Vendor warrants to the Purchaser that (except as a set out in
sufficient detail in the Disclosure Letter to enable the Purchaser
to be aware of the extent to which any of the following warranties
is accurate):-
(a) the Assets are owned absolutely by the Vendor free from any
encumbrance and good title in the Assets will pass to the
Purchaser on completion of the sale and purchase;
(b) all statutory requirements relating to the Business have been
complied with;
(c) there has been no loss of a Significant Customer of the
Business since 1 April 1998; for this purpose a 'Significant
Customer' means a customer whose business represents more than
five per cent of the sales revenue of the Business;
(d) since the Balance Sheet Date, there has been no material
adverse change in the financial position of the Business, the
Business has been carried on in the ordinary course and there
has been no unusual increase or decrease in the level of stock
of the Business;
(e) the Vendor will take all necessary steps and co-operate with
the Purchaser to ensure that it obtains the full benefit of
the Business and shall execute such documents and take such
other steps as a are necessary for vesting in the Purchaser
all its rights and interests in the Business including in
particular relating to:-
- the assignment of the Contracts
- the transfer of licences for the Relayfone 3 radio system
(f) all business conducted by the Business is on the terms, or
substantially on the terms of the standard conditions of the
Business disclosed to the Purchaser prior to the Completion
Date;
(g) the accounting and other information provided to the Purchaser
prior to the Completion Date including in particular the
Balance Sheet for the Business as a at 31 July 1998 is
accurate in all material respects;
(h) there is so far as a the Vendor is aware no litigation,
arbitration or other legal claim pending or threatened
relating to the Business.
6.2 The Vendor will be under no liability in respect of any breach or
non-fulfillment of any of the Warranties unless the Purchaser has
served on the Vendor written notice on or before the date one year
from the Completion Date giving reasonable details of the breach or
non-fulfillment including the Purchaser's best estimate of the
amount of liability of the Vendor.
6.3 The Purchaser will not knowingly compromise or settle any claim
which may give rise to a claim against the Vendor under the terms of
this Agreement without prior
consultation and the prior written consent of the Vendor, such
consent not to be unreasonably withheld or delayed.
6.4 The Vendor will not be liable in respect of any claim for breach of
the Warranties unless such claim individually exceeds L10,000 and
unless the aggregate amount of all such claims exceed L50,000 and if
such aggregate amount does exceed L50,000 the Vendor's liability
will not be limited to the excess and the whole amount will be
recoverable in full.
6.5 The aggregate amount of the liability of the Vendor in respect of
any breach of the warranties will in no event exceed the aggregate
amount of the sum received by the Vendor under this Agreement.
7. CONTRACTS
7.1 In so far as a the benefit and burden of any of the Contracts cannot
effectively be assigned by the Vendor to the Purchaser except by
novation or with the consent of any third party:
7.1.1 the Vendor and the Purchaser shall co-operate to take all
reasonable steps to procure that the Contracts are novated as
a aforesaid; and
7.1.2 unless and until any such Contracts shall be novated, the
Purchaser shall perform and discharge the outstanding
obligations and liabilities of the Vendor under the Contracts,
except for any obligations or liabilities attributable to a
breach on the part of the Vendor and shall indemnify the
Vendor on demand against all actions, proceedings, costs,
damages, claims, liabilities and reasonable costs and expenses
in respect of any failure on the part of the Purchaser after
the Completion Date to carry out, perform and complete the
outstanding obligations and liabilities of the Vendor under
the Contracts (other than any obligations or liabilities
attributable to a breach on the part of the Vendor).
8. INDEMNITY
8.1 The Vendor shall discharge and indemnify the Purchaser against any
liability incurred or costs, claims and demands arising in
connection with the Business carried on by the Vendor prior to the
Completion Date, save to the extent that details thereof are set out
in the Disclosure Letter.
8.2 The Purchaser will discharge and indemnify the Vendor in the same
terms as a 8.1 above (mutatis mutandis) in relation to the Business
after the Completion Date except to the extent caused by the act or
default of the Vendor, its employees or agents.
9. APPORTIONMENT OF PROFITS AND RECEIPTS
9.1 All profits and receipts of the Business and all losses and
outgoings in respect of the Business up to the Completion Date shall
belong to and be paid by the Vendor. After the Completion Date all
profits and receipts and all losses and outgoings of the Business
shall belong to and be paid and discharged by the Purchaser.
Prepayments and payments in arrears shall be apportioned on a daily
basis as a at the Completion Date.
9.2 The parties will use all reasonable endeavors to agree such
apportionments within one month after the Completion Date. If the
matter cannot be resolved between the parties, either party may then
refer the matter to an independent accountant acceptable to the
parties. If no such accountant can be agreed within 30 days, an
accountant will be appointed by the President for the time being of
the Institute of Chartered Accountants of England and Wales. The
decision of such accountant (acting as a expert not arbitrator) will
be final and binding on the parties (in the absence of manifest
error). The cost of such referral will be borne by the parties in
such manner as a the independent accountant shall determine.
10. PREMISES
The Vendor will procure the transfer of its interests (or, in the case of
the Cardiff site, that of its wholly owned subsidiary, Private Mobile Radio
Limited) in the Premises to the Purchaser on or before the Completion Date
free of all claims and encumbrances, except as a may be set out in the
Disclosure Letter or otherwise disclosed in writing to the Purchaser prior
to the Completion Date.
11. VALUE ADDED TAX
11.1 The parties intend that the Business will be sold as a a going
concern for VAT purposes and accordingly:
(i) the Vendor and the Purchaser will when required to do so give
notice of such sale to HM Customs & Excise as a required by
law;
(ii) the Vendor will on Completion deliver to the Purchaser all
relevant VAT records.
12. USE OF SECURICOR RADIOCOMS NAME
The Purchaser will have the transitional right to use the Securicor
Radiocoms name for a three month transitional period from the Completion
Date during which time Securicor Radiocoms Limited will change its name to
another name and the Purchaser will then have the right to use the
Securicor Radiocoms name.
13. RESTRICTIVE COVENANT
The Vendor undertakes with the Purchaser and its successors in title
(subject to the Distributor Agreement in clause 14 below) that it will not
directly or indirectly:
(a) for a period of 5 years following the Completion Date set up,
acquire or be directly or indirectly interested in a business
distributing, marketing or servicing mobile radio products or
networks in the United Kingdom except that this provision will not
prevent
Intek (or its subsidiary companies) appointing non-exclusive
distributors for its linear modulation or associated products in the
United Kingdom during such 5 year period;
(b) at any time after the Completion Date make use of or furnish to any
other person the Vendor's know-how or information of a confidential
or secret nature relating to the Business and or any of the Assets
unless so requested in writing by the Purchaser or required or
requested by any competent authority in the exercise of any legal
power or unless the same becomes public knowledge other than by
reason of breach of this clause.
14. DISTRIBUTOR AGREEMENT
The parties agree to negotiate in good faith for the drawing up of a
distributor agreement including the following terms:-
(i) the non-exclusive right for the Purchaser to distribute throughout
the countries comprising the European Union linear modulation and
other products marketed by Intek or any subsidiary of Intek;
(ii) non-exclusive rights for the Vendor, Intek, or any subsidiary of
Intek as a the Vendor may nominate, to distribute in North America
products and systems handled by the Purchaser.
15. TRANSITIONAL PROVISION OF ADMINISTRATIVE SERVICES
The Vendor agrees to provide and the Purchaser to accept administrative
services for a transitional period of three months from the Completion Date
in consideration of the payment by the Purchaser to the Vendor of a
peppercorn and thereafter, if so required by the Purchaser, on such terms
as a may reasonably be agreed between the parties; thereafter subject to
the right of eight party to terminate all or some of such services on
giving not less than 30 days prior written notice to the other. The
services to be covered will include:-
(i) information technology support including access to the Vendor's
Visibility software;
(ii) salary administration;
(iii) health and safety advice;
(iv) other services as a currently provided to the Vendor's Equipment and
Services Unit by central support staff based at Midsomer Norton.
16. GENERAL PROVISIONS
16.1 This Agreement shall be binding upon and enure for the benefit of
successors of the parties but shall not be assignable.
16.2 This Agreement together with the Schedules constitutes the whole
Agreement between the parties and no variations shall be effective
unless made in writing and signed by an authorized representative of
the parties. No representation or warranty shall be binding unless
expressly incorporated in this Agreement.
16.3 Each party shall bear its own legal and other costs incidental to
the preparation of this Agreement and the completion of the
Transaction hereby agreed.
16.4 This Agreement will be conditional on:-
(i) receipt by the Vendor of a fairness opinion from Xxxxxxxxxx &
Co.;
(ii) approval by the Board of Directors of Intek Global
Corporation;
(iii) approval by the Board of Directors of Securicor plc.;
(iv) completion of the Purchaser to its satisfaction of due
diligence relating to the Business.
16.5 For the avoidance of doubt and subject to the provisions of clause
16.3 above, the Purchaser shall be responsible for all and any stamp
duty, land registry fees and other
charges relating to the transactions contemplated by this Agreement
PROVIDED THAT the Vendor will co-operate with the Purchaser in
taking reasonable steps to minimize any such charges.
17. NOTICES
17.1 Any notice required to be given by any party hereto to any other
party shall be deemed validly served if sent by prepaid letter,
telex or facsimile to the relevant address given in this Agreement
or to such other address as a may from time to time be notified for
this purpose.
17.2 The relevant addresses as a at the date of this Agreement are:
VENDOR: Securicor Radiocoms Limited
Cross Xxxx Xxxxx
Xxxxxxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Xxxx XX0 0XX
for the attention of Mr. T. Little;
with copies to:
Intek Global Corporation
0000 X. Xxxxxxx Xxxxxx
Xxxxxx Xxxx
XX 00000
XXX;
and
Intek Global Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx
XX 00000-0000
XXX
PURCHASER: Securicor Information Systems Limited
Xxxxxxxxxx
Xxxxxxxxxx
Xxxxxxxxx XX00 0XX
for the attention of Mr. B. Brain.
SIGNED BY /s/
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FOR SECURICOR RADIOCOMS LIMITED
IN THE PRESENCE OF: /s/
SIGNED BY /s/
-----------------------------------------------
FOR SECURICOR INFORMATION SYSTEMS LIMITED
IN THE PRESENCE OF: /s/
