InterTAN Receives Purported Termination Notice From RadioShack
BARRIE, Ontario, April 6--InterTAN, Inc. , a leading consumer electronics
retailer of both private-label and internationally branded products, today
announced that it has received a letter from RadioShack Corporation purporting
to terminate the Third Amended and Restated InterTAN Advertising Agreement, the
Second Amended and Restated License Agreement and the Second Amended and
Restated Merchandise Agreement among InterTAN and RadioShack (and certain of
their affiliates). The letter from RadioShack stated, as grounds for such
termination, that InterTAN has not paid a $55,000 annual fee under the
Advertising Agreement for 2004, which amount has not yet been invoiced by
RadioShack. RadioShack also filed a lawsuit in Texas state court seeking to
terminate the agreements. InterTAN believes the notice is invalid, and intends
to vigorously contest the purported termination of these agreements. Attached to
this press release is a copy of today's response to RadioShack by InterTAN.
Yesterday's termination notice follows a notice received from RadioShack on
March 31, 2004, after the announcement of the execution of the merger agreement
between InterTAN and Circuit City Stores, Inc., exercising RadioShack's right to
terminate the License Agreement effective as of June 30, 2009. The License
Agreement had been set to expire June 30, 2010.
Circuit City has been advised of both RadioShack's actions and InterTAN's
response, and W. Alan McCollough, Chairman, President, and Chief Executive
Officer of Circuit City has stated that "Circuit City is aware of RadioShack's
position with respect to these agreements, and remains strongly committed to
consummating the previously announced combination of InterTAN and Circuit City."
Further information on the Circuit City transaction can be found online at
http://www.intertan.com/.
InterTAN, Inc., headquartered in Barrie, Ontario, operates through approximately
980 company retail stores and dealer outlets in Canada under the trade names
RadioShack(R), Rogers Plus(R), and Battery Plus(R).
Certain information disclosed in this press release, including statements
regarding the pending acquisition of InterTAN, constitutes forward-looking
statements that involve risks and uncertainties. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to, the failure to complete the
combination or to complete it in a timely manner, consumer demand and
preference, product availability, development of new technology, global
political and economic conditions, and other risks indicated in filings with the
Securities and Exchange Commission such as InterTAN's previously filed periodic
reports, including its Form 10-K for the 2003 fiscal year.
Additional Information
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell securities of InterTAN. At the time the offer is commenced, Circuit City
will file a tender offer statement with the U.S. Securities and Exchange
Commission and Canadian security regulatory authorities and InterTAN will file a
solicitation/recommendation statement with respect to the offer. Investors and
InterTAN stockholders are strongly advised to read the tender offer statement
(including an offer to purchase, letter of transmittal and related tender
documents) and the related solicitation/recommendation statement when they are
available because they will contain important information. These documents will
be made available to all InterTAN stockholders at no expense to them and, when
available, may be obtained at no charge at the SEC's Web site at
http://www.sec.gov/ and at the Canadian Securities Administrator's SEDAR Web
site at http://www.sedar.com/ or from InterTAN either at its website at
http://www.intertan.com/ or by directing a request to InterTAN, Inc., 279
Bayview Drive, Barrie, Ontario, Canada L4M 4W5.
[InterTAN, Inc. Letterhead]
Jeffrey A. Losch
Senior Vice President
Secretary & General Counsel
Direct: (705) 728-6242 - Ext. 4118
Fax: (705) 728-6742
VIA FAX and COURIER
April 5, 2004
Mr. Mark C. Hill
RadioShack Corporation
100 Throckmorton Street
Suite 1900
Fort Worth, Texas 76102
Re: Third Amended & Restated InterTAN Advertising Agreement
("Advertising Agreement")
Dear Mr. Hill:
We saw for the first time today your letter dated April 2, 2004, which
purports to terminate the above-referenced agreement and, through cross-default
provisions, the License Agreement and the Merchandise Agreement (each as defined
in your letter). A few hours ago, we received another letter from you notifying
us that RadioShack filed suit today without giving us the courtesy of time to
respond to your first letter (which was faxed to a central fax machine in the
afternoon of Friday, April 2).
Your letters are transparently a pretext for RadioShack Corporation to
terminate the Advertising, License and Merchandising Agreements because of
InterTAN, Inc.'s announcement of its pending acquisition by Circuit City Stores,
Inc., which termination is expressly prohibited by our letter agreement dated
April 6, 2001. Please be advised that InterTAN intends to hold RadioShack
responsible for all damages or losses that result to InterTAN or its
stockholders from your bad faith purported termination of these agreements in
breach of the April 6 letter.
Section 5 of the Advertising Agreement clearly contemplates that RadioShack
will invoice InterTAN for the 2004 $55,000 payment provided for by Section 3(a).
Indeed, in 2002 and 2003, RadioShack sent such invoices in January and May,
respectively, for the annual payments, and InterTAN paid both invoices. As you
know, we have not received an invoice for 2004. Thus, your purported termination
violates the terms of the Advertising Agreement, the meaning of which is
evidenced by RadioShack's own prior course of conduct under the Advertising
Agreement. For those reasons, among others, we reject your invalid purported
termination and instead will treat your letter as the invoice required under the
Advertising Agreement. Accordingly, enclosed is InterTAN's check for $55,000,
representing the 2004 payment. Additionally, although we do not believe interest
is due on this amount, to eliminate any uncertainty about our full compliance
with the Advertising agreement, we are tendering a separate check in the amount
of $1,157.26 representing accrued interest on this payment.
We will respond to your lawsuit in due course.
Very truly yours,
/s/ Jeffrey A. Losch
Jeffrey A. Losch