<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 8)*
Intek Diversified Corporation
------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
------------------------------------------------------------
(Title of Class of Securities)
458134 10 3
------------------------------------------------------------
(CUSIP Number)
Nicholas R. Wilson
Chairman
Intek Diversified Corporation
5800 West Jefferson Boulevard
Los Angeles, California 90016
(310) 366-7703
------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 16, 1995
------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 3d-(a) for other parties to whom copies are to
be sent.
__________________________________
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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<TABLE>
<CAPTION>
CUSIP NO. 458134 10 3 13D PAGE 2 OF 5 PAGES
-----------
<S> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Simmonds Communications Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
7 SOLE VOTING POWER
3,658,850
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY --
EACH REPORTING
PERSON WITH 9 SOLE DISPOSITIVE POWER
3,658,850
10 SHARED DISPOSITIVE POWER
--
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,658,850
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41 %
14 TYPE OF REPORTING PERSON*
CO
<FN>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE> 3
SCHEDULE 13D
The Schedule 13D filed on March 7, 1994 (the "Schedule 13D") and
amended on March 29, 1994 ("Amendment No. 1"), on July 22, 1994 ("Amendment No.
2"), on September 23, 1994 ("Amendment No. 3"), on April 10, 1995 ("Amendment
No. 4"), on May 10, 1995 ("Amendment No. 5"), and on June 5, 1995 ("Amendment
No. 6") on behalf of Simmonds Communications Ltd. ("SCL") is hereby amended as
follows:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended as follows:
Item 3 is amended by deleting the second sentence thereof and
inserting in its stead the following:
After the disposition of 852,000 shares of Common Stock
described in Item 5 subparts (c), (h), (i), (j), and
(k), SCL is the beneficial owner of 3,658,850 shares of
Common Stock.
Item 3 is amended by inserting a new subparagraph (g) as
follows:
(g) One June 16, 1995, SCL entered into an option
agreement (the "SCL Option Agreement") (a copy of
which is attached hereto as Exhibit K) with Roamer
One Holdings, Inc., pursuant to which SCL paid
(out of SCL's working capital) Roamer One
Holdings, Inc. One Million Eight Hundred Thousand
Dollars ($1,800,000) to acquire five (5) year
options to purchase up to One Million Eight Hundred
Thousand (1,800,000) shares of Common Stock for
$1.50 per share.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is amended by inserting a new paragraph at the end of the
section labeled "Other Purchases" as follows:
On June 16, 1995, SCL entered into the SCL Option Agreement and
paid Roamer One Holdings, Inc. One Million Eight Hundred
Thousand Dollars ($1,800,000) for five (5) year options to
purchase up to One Million Eight Hundred Thousand (1,800,000)
shares of Common Stock for $1.50 per share. In connection with
the SCL Option Agreement, as of June 16, 1995, Roamer One
Holdings, Inc. and SCL also entered into a pledge agreement
(the "SCL/Roamer One Holdings Pledge Agreement") (a copy of
which is attached hereto as Exhibit L) pursuant to which Roamer
One Holdings, Inc. pledged One Million Eight Hundred Thousand
(1,800,000) shares of Common Stock to SCL in support of Roamer
One Holdings, Inc.'s obligations under the SCL Option Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended as follows:
Add a new subparagraph (l) as follows:
(l) On June 16, 1995, SCL acquired, pursuant to the
terms of the SCL Option Agreement and at a
purchase price of One Million Eight Hundred
Thousand Dollars ($1,800,000), options to acquire
1,800,000 shares of Common Stock from Roamer One
Holdings, Inc., exercisable for a period of five
(5) years at an exercise price of $1.50 per share
of Common Stock.
Page 3 of 5 Pages
<PAGE> 4
Delete the penultimate sentence of Item 5 and insert in its
stead the following:
As of June 16, 1995, SCL beneficially owned 3,658,850
shares of Common Stock, subject to various contracts
and arrangements. See Item 6.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is amended as follows:
The fifth paragraph of Item 6 is amended by deleting the term
"Optionee" therefrom and inserting in its stead the word "EC".
The sixth paragraph of item 6 is amended by deleting the
parenthetical "(the "Pledge Agreement")" and inserting in its
stead the parenthetical "(the "EC Pledge Agreement")".
A new paragraph is inserted immediately following the fifth
paragraph of item 6, as follows:
As of June 16, 1995, SCL entered into the "SCL Option
Agreement with Roamer One Holdings, Inc., pursuant to
which SCL paid Roamer One Holdings, Inc. One Million
Eight Hundred Thousand Dollars ($1,800,000) for five (5)
year options to purchase up to One Million Eight
Hundred Thousand (1,800,000) shares of Common Stock for
$1.50 per share. In connection with the SCL Option
Agreement, as of June 16, 1995, Roamer One Holdings,
Inc. and SCL also entered into the "SCL/Roamer One
Holdings Pledge Agreement pursuant to which Roamer One
Holdings, Inc. pledged One Million Eight Hundred
Thousand (1,800,000) shares of Common Stock to SCL in
support of Roamer One Holdings, Inc.'s obligations
under the SCL Option Agreement.
ITEM 7. EXHIBITS.
Item 7 is amended as follows:
Exhibit H is amended by inserting the word "EC" immediately
prior to the words "Pledge Agreement."
Item 7 is amended by adding at the end thereof the following
new exhibits:
Exhibit K - SCL Option Agreement
Exhibit L - SCL/Roamer One Holdings Pledge Agreement
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
Page 4 of 5 Pages
<PAGE> 5
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth herein is true, complete and correct.
SIMMONDS COMMUNICATIONS LTD.
June 26, 1995
--------------------------------------------------------
(Date)
/s/David O'Kell
--------------------------------------------------------
(Signature)
David C. O'Kell, Executive Vice President and Secretary
--------------------------------------------------------
(Name/Title)
Page 5 of 5 Pages
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Exhibit K
THIS OPTION AND THE OPTIONED SHARES GRANTED HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED OR
SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.
OPTION AGREEMENT
----------------
TO: Simmonds Communications, Ltd.
5255 Yonge Street, Suite 1050
Willowdale, Ontario, Canada
M2N 6P4
1. GRANT OF OPTION
---------------
In consideration of the payment by you today to the undersigned of
U.S. $1,800,000 and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by the undersigned), the
undersigned grants to you, subject to the terms and conditions hereof, an
irrevocable option (the "Option") to purchase up to 1,800,000 shares of common
stock (the "Optioned Shares") in the capital of INTEK Diversified
Corporation("INTEK"), at a price of U.S. $1.50 per Optioned Share. The Option
with respect to the Optioned Shares shall be exercisable at any time and from
time to time during the period commencing on the date hereof up to and
including, but not after 4:00 p.m. E.D.T. on the fifth (5th) anniversary of the
date set out below. The period during which the Option is exercisable as
aforesaid is herein referred to as the "Option Period". Following the
expiration of the Option Period, the Option shall forthwith terminate and be of
no further force or effect as to such of the Optioned Shares in respect of
which the Option has not then been exercised.
2. EXERCISE OF OPTION
------------------
(a) Subject to the terms and conditions hereof, this Option shall
be exercisable at any time and from time to time during the Option Period by
you giving written notice (a "Notice of Exercise") to the undersigned by
personal delivery to the address specified below or by transmittal by
telecopier at the number specified below or to such other address or telecopier
number as the undersigned may from time to time notify you in writing, which
Notice of Exercise shall specify therein the number of Optioned Shares in
respect of which the Option is being exercised. Upon delivery of the Notice of
Exercise as aforesaid, the undersigned (hereinafter in this Paragraph 2
1
<PAGE> 7
referred to as the "Vendor") will sell and you or your assigns (hereinafter in
this Paragraph 2 referred to as the "Purchaser") shall purchase the number of
Optioned Shares set forth in the Notice of Exercise (the "Purchased Shares").
The said sale shall be closed at 10:00 a.m. on the fifth (5th) business day in
both Toronto and Cleveland following delivery of the Notice of Exercise at the
offices of the Purchaser or at such other time and place outside of the United
States as is agreed between the Purchaser and the Vendor (such place and time
are for the purposes of subparagraph 2(b) referred to as the "Place of Closing"
and the "Time of Closing", respectively). Nothing herein contained or done
pursuant hereto shall obligate you to purchase and/or pay for any Optioned
Shares except those Optioned Shares in respect of which you shall have
exercised the Option in the manner hereinbefore provided.
(b) At the Place of Closing at the Time of Closing:
(i) the Purchase shall deliver to the Vendor a certified
check payable to or to the order of the Vendor in the
amount of the purchase price payable by the Purchaser
for the Purchased Shares; and
(ii) the Vendor shall deliver to the Purchaser:
(A) a receipt for the certified check referred to
in clause 2(b)(i);
(B) a share certificate or certificates
representing the Purchased Shares duly
endorsed in blank for transfer (with
signatures guaranteed) which shall contain a
legend to the effect that "The shares of
common stock represented by this certificate
have not been registered under the Securities
Act of 1933 and have been offered and sold
pursuant to Regulation S promulgated under
the Securities Act of 1933. They may not be
offered or sold prior to June 16, 1996 except
in accordance with the terms of this Option
Agreement dated as of June 16, 1995, and
after June 16, 1996 unless the shares are
registered under the Securities Act of 1933
or an exemption from the registration
requirements of the Securities Act of 1933 is
available";
(C) a representation and warranty from the Vendor:
(1) that the Vendor is, at the Time of
Closing, the beneficial owner of the
Purchased Shares with good and
marketable title thereto, free and
clear of all mortgages, liens,
charges, security interests, adverse
claims, pledges, encumbrances,
options, rights, privileges,
agreements and demands whatsoever
(except those created pursuant to
the Pledge Agreement referred to in
Paragraph 4 hereof);
2
<PAGE> 8
(2) that the sale by the Vendor to the
Purchaser does not contravene any
applicable laws, regulations or
policies of securities regulatory
authorities in the United States or
Canada, nor any of the By-Laws,
regulations or policies of the
National Association of Securities
Dealers Automated Quotation System
or any other applicable stock
exchange; and
(3) that, in circumstances where part or
all of the Purchased Shares are
restricted shares of common stock,
the Vendor does not, after taking
into account the sale of Purchased
Shares, beneficially own any
registered and freely tradeable
shares of common stock in the
capital of INTEK.
3. IF ALL SHARES NOT PURCHASED
---------------------------
If you or your assigns exercise the Option in respect of a lesser
number of Optioned Shares than the total number of Optioned Shares referred to
in this Agreement, you or your assigns shall retain the Option to purchase
during the Option Period the remaining Optioned Shares referred to in this
Agreement but not purchased, subject to the terms and conditions set forth
herein.
4. SECURITY
--------
As security for the performance by the undersigned of its obligations
herein, including without limitation, its obligation to deliver Optioned Shares
in accordance with the terms hereof, the undersigned hereby agrees to pledge in
your favor 1,800,000 common shares of INTEK with respect to which the
representations and warranties of the Vendor specified in subparagraph
2(b)(ii)(C) are correct today and to deposit with you or your agent share
certificate(s) duly endorsed in blank (with signature guaranteed) representing
such pledged shares, all in accordance with the terms of a pledge agreement
(the "Pledge Agreement"), the form of which is annexed hereto as Schedule A.
5. SUBDIVISION, CONSOLIDATION AND RECLASSIFICATION OF UNDERLYING SHARES
--------------------------------------------------------------------
(a) In the event of any subdivision or redivision of the common
stock of INTEK at any time prior to the expiration of the Option Period into a
greater number of common stock, the undersigned shall deliver at the time of
any exercise thereafter of the Option, such additional number of shares of
common stock as would have resulted from such subdivision or redivision if
such exercise of the Option could have been and had been effected immediately
prior to the date of such subdivision, redivision or other change.
(b) In the event of any consolidation or other change of the
common stock of INTEK at any time prior to the expiration of the Option Period
into a lesser number of common stock, the number of shares of common stock of
INTEK deliverable by the undersigned on any exercise thereafter of the Option
shall be reduced to such number of shares of common stock as would have
3
<PAGE> 9
resulted from such consolidation or other change if such exercise of the Option
could have been and had been effected immediately prior to the date of such
consolidation or other change.
(c) In the event of any reclassification of the common stock of
INTEK or a capital reorganization of INTEK other than as described in
subparagraphs 5(a) or (b) or a consolidation, amalgamation or merger of INTEK
with or into any other body corporate at any time prior to the expiration of
the Option Period, the undersigned shall deliver at the time of any exercise
thereafter of the Option, in lieu of the number of Optioned Shares otherwise
deliverable to you upon such exercise, the number of shares of common stock or
other securities of INTEK or of the body corporate resulting from such merger,
amalgamation or consolidation that you would have been entitled to receive upon
such reclassification, capital reorganization, consolidation, amalgamation or
merger, if such exercise of the Option could have been and had been effected
immediately prior to the date of such reclassification, capital reorganization,
consolidation, amalgamation or merger.
(d) On the happening of each and every event described in
subparagraphs 5(a) to 5(c) above, the applicable provisions of this Agreement
and the Option created hereby shall be deemed to be amended accordingly.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
(a) The undersigned represents and warrants in your favor, and
acknowledges that you are relying on such representations and warranties in
paying the amount referred to in Paragraph 1 hereof and in entering into this
Agreement and the Pledge Agreement, namely: (i) that it is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; (ii) that is has the corporate power and authority to execute and
deliver this Agreement and the Pledge Agreement and to perform its obligations
hereunder and thereunder; (iii) that it has taken all necessary corporate
action to authorize its execution, delivery and performance of this Agreement
and the Pledge Agreement; (iv) that the execution and delivery of this
Agreement and the Pledge Agreement and the consummation of the transactions
contemplated hereby and thereby does not and will not (A) conflict with, or
violate or result in a breach of, any law, regulation, order, writ, injunction,
decree, determination or award of any court, governmental department, board,
agency or instrumentality or arbitrator applicable to it; or (B) conflict with,
or violate or result in a breach of, any of the terms, conditions or provisions
of its articles of incorporation, by-laws or other similar charter documents,
or any other agreement or instrument to which it is a party; (v) that no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality or any third party is or will be necessary
for, or in connection with, the execution or delivery of this Agreement or the
Pledge Agreement or for the performance of its obligations hereunder and
thereunder; (vi) that there is no litigation or governmental proceeding or
investigation pending or, to its knowledge threatened, against it which calls
or might call into question its validity or any action taken or to be taken
pursuant hereto or thereto nor to its knowledge has there occurred any event or
does there exist any condition on the basis of which any such litigation,
governmental proceeding or investigation might properly be instituted; (vii)
that the granting of the Option to purchase the Optioned Shares and the sale of
the Optioned Shares by the undersigned does not, and will not contravene any
applicable
4
<PAGE> 10
laws, regulations or policies of securities regulatory authorities in the
United States or Canada, nor any of the by-laws, regulations or securities
related policies of the National Association of Securities Dealers Automated
Quotation System or any other applicable stock exchange; and (viii) that the
undersigned is the beneficial owner of 3,600,000 unregistered shares of common
stock in the capital of INTEK.
(b) you represent and warrant in favor of the undersigned, namely:
(i) that the offer to purchase the Optioned Shares was
received in Canada and the undersigned accepted such offer in
Canada; (ii) that the execution of this Agreement occurred in
Canada; (iii) that you are not a U.S. Person as the term is
defined in Rule 902(c) of Regulation S under the Securities
Act of 1933; (iv) that you are purchasing the Option for your
own account and not on behalf of or for the account of any
U.S. Person, you have not made any prearrangement and do not
intend to transfer the Option or the Optioned Shares to a U.S.
Person or to return the Optioned Shares to the United States
securities markets (which includes short sales in the United
States within the restricted period to be covered by delivery
of the Optioned Shares), and you are not purchasing the Option
or the Optioned Shares as part of any plan or scheme to evade
the registration requirements of the Securities Act of 1933;
(v) that you understand that the shares have not been
registered under the Securities Act of 1933 and that the
offering restrictions applicable to the Option or the Optioned
Shares restricts you from selling any of the Option or
Optioned Shares to any person in the United States or to any
U.S. Person or for the account or benefit of any U.S. Person
during a one-year restricted period commencing upon completion
of the sale; (vi) that all offers and sales of the Option or
the Optioned Shares by you, if any, in the United States or to
any U.S. Person or for the account or benefit of any U.S.
Person or otherwise prior to the expiration of the restricted
period shall be made only pursuant to a registration of the
Option or the Optioned Shares under the Securities Act of 1933
or a valid exemption from registration thereunder; and (vii)
that you did not receive any printed offering materials or
attend any meetings in connection with the Option or Optioned
Shares, nor did you participate in any other activity
undertaken for the purpose of, or which could reasonably be
expected to have the effect of, conditioning the market for
the Option or the Optioned Shares.
7. FILINGS
-------
Each of you and the undersigned agrees to make, in a timely fashion,
all necessary registrations, filings or notifications as may be required by
applicable securities regulatory bodies or stock exchanges.
8. ASSIGNMENT, ETC.
----------------
This Agreement shall be binding upon and enure to the benefit of our
successors and assigns except that the undersigned shall not have the right to
assign its rights or obligations hereunder or
5
<PAGE> 11
any interest herein, but you shall have, after one year after the date hereof,
the right to assign this Agreement and the Option hereby created, in whole or
in part, without the consent of the undersigned, provided that such assignment
shall not be made to any party who, by virtue of exercising its rights under
this Agreement, would contravene any applicable securities laws, regulations or
policies in the United States and Canada, nor any of the by-laws, regulations
or securities related policies of the National Association of Securities
Dealers Automated Quotation System or any other applicable stock exchange.
Prior to one year after the date hereof, you shall have the right to
assign this Agreement and the Option hereby created, in whole or in part,
without the consent of the undersigned, provided that such assignment is made
pursuant to an effective registration statement under the Securities Act of
1933 or pursuant to an opinion of counsel reasonably satisfactory to INTEK that
the Option and Optioned Shares may be transferred in accordance with the
requirements of the Securities Act of 1933. You acknowledge that stop transfer
instructions shall be given to INTEK's transfer agents with respect to the
Optioned Shares that are acquired by you prior to June 16, 1996 after such
shares have been registered in your name. Such stop transfer restrictions
shall be lifted at the earlier of (i) June 16, 1996; (ii) the transfer of the
shares pursuant to a registration statement declared effective under the
Securities Act of 1933; and (iii) the provisions of an opinion of counsel
reasonably satisfactory to INTEK that the shares may be transferred in
accordance with the requirements of the Securities Act of 1933 without an
effective registration statement under the Securities Act of 1933.
9. TIME OF ESSENCE
---------------
Time shall be of the essence hereof.
10. GOVERNING LAW
-------------
This Agreement and our relationship hereunder shall be governed by the
laws of the State of Ohio and you and the undersigned attorn to the
jurisdiction of the courts of the State of Ohio.
[ THIS SPACE INTENTIONALLY LEFT BLANK]
6
<PAGE> 12
11. U.S. FUNDS
----------
All dollar amounts referred to herein shall refer to lawful money of
the United States.
This Agreement has been executed in Toronto, Canada and is dated as of
this 16th day of June, 1995.
----
ROAMER ONE HOLDINGS, INC.
c/o Kohrman Jackson & Krantz
Attention: Steven L. Wasserman, Esq.
1375 East Ninth Street
One Cleveland Center - 20th Floor
Cleveland, Ohio 44114
Telephone: 216-696-8700
Facsimile: 216-621-6536
By: /s/Nicholas R. Wilson
------------------------
Nicholas R. Wilson, President
Accepted and agreed to this 16th day of June, 1995
----
SIMMONDS COMMUNICATIONS, LTD.
5255 Yonge Street, Suite 1050
Willowdale, Ontario, Canada
M2N 6P4
Telephone: 416-221-1900
Facsimile: 416-221-3800
By: /s/John G. Simmonds
--------------------
Its: Chief Executive Officer
------------------------
7
<PAGE> 13
Exhibit L
PLEDGE AGREEMENT
----------------
MEMORANDUM OF AGREEMENT made as of the 16th day of June, 1995.
B E T W E E N:
ROAMER ONE HOLDINGS, INC.
a corporation incorporated under the
laws of the State of Ohio,
(hereinafter referred to as the "Vendor"),
OF THE FIRST PART
- and -
SIMMONDS COMMUNICATIONS LTD.,
a corporation incorporated under the
laws of the Province of Ontario,
(hereinafter referred to as "Simmonds")
OF THE SECOND PART,
- and -
THE R-M TRUST COMPANY,
a trust company duly authorized to carry
on business in the Province of Ontario
(hereinafter referred to as "R-M Trust"),
OF THE THIRD PART.
WHEREAS, pursuant to the terms of an option agreement (the
"Option Agreement") dated as of June 16th, 1995, between Vendor and Simmonds,
Vendor granted Simmonds the option to purchase up to 1,800,000 shares of common
stock of Intek Diversified Corporation ("Intek") beneficially owned by Vendor;
AND WHEREAS, as security for the due and punctual performance
of all obligations of any kind or nature now or at any time and from time to
time owing by Vendor to Simmonds pursuant to or by virtue of the Option
Agreement, Vendor has agreed to pledge
<PAGE> 14
- 2 -
1,800,000 shares of common stock in the capital of Intek (the "Share
Collateral") to Simmonds and to enter into this Agreement and to perform its
obligations hereunder;
AND WHEREAS R-M Trust has agreed to act as collateral agent
for Simmonds and to hold certificates representing the Share Collateral as
agent for Simmonds pursuant to the terms and conditions of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises hereof and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each of the
parties), the parties hereby covenant and agree as follows:
ARTICLE 1
1. INTERPRETATION
--------------
1.1 DEFINITIONS: In this Agreement and any amendments
hereto, the following terms shall have the following meanings, respectively:
(a) "ACT" means the Personal Property Security Act
(Ontario), as now in effect, or any legislation that
may be substituted therefor, and as the same may from
time to time hereafter be amended;
(b) "BUSINESS DAY" means a day of the year other than a
Saturday, a Sunday or a day observed as a statutory
holiday in Ontario or Ohio;
(c) "OBLIGATIONS" means all liabilities and obligations
of any kind or nature now or at any time and from
time to time owing by Vendor to Simmonds pursuant to
or by virtue of this Agreement and the Option
Agreement;
(d) "COLLATERAL" means the Share Collateral and any other
securities or instruments deposited or delivered by
Vendor with or to Simmonds or R-M Trust hereunder;
(e) "EVENT OF DEFAULT" has the meaning ascribed thereto
in Section 6.1;
(f) "PROCEEDS" means identifiable or traceable personal
property in any form (including money) derived,
directly or indirectly from any dealing with the
Collateral or proceeds therefrom and includes any
payment that indemnifies or compensates for loss or
damage to the Collateral or Proceeds therefrom; and
<PAGE> 15
- 3 -
(g) "SECURITY INTEREST" has the meaning ascribed thereto
in Section 2.1.
All capitalized terms which are not otherwise defined herein shall have the
meanings ascribed to them, respectively, in the Option Agreement.
1.2 UNITED STATES FUNDS: Unless otherwise indicated, all
dollar amounts referred to herein shall refer to lawful money of the United
States.
1.3 HEADINGS, ETC.: The division of this Agreement into
articles, sections and subsections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
1.4 RULES OF CONSTRUCTION: Unless the context otherwise
requires,
(a) words importing the singular number only shall
include the plural and vice versa and words importing
the use of either gender shall include both genders
and words importing individuals shall include firms
and corporations and vice versa; and
(b) reference herein to any agreement, indenture or other
instrument in writing means such agreement, indenture
or other instrument in writing as amended, modified
or supplemented from time to time.
1.5 GOVERNING LAW: This Agreement shall be construed in
accordance with the laws of the Province of Ontario and shall be treated in all
respects as an Ontario contract.
1.6 SEVERABILITY: If any provision herein contained is
determined to be void, voidable or unenforceable, in whole or in part, by a
court of competent jurisdiction, such determination shall not effect or impair
and shall be deemed not to effect or impair the validity of any other covenant
or provision herein contained and each such covenant and provision is hereby
declared to be separate, severable and distinct.
1.7 TIME: Time shall be of the essence of this
Agreement.
ARTICLE II
2. CREATION OF SECURITY INTEREST
-----------------------------
2.1 SECURITY INTEREST: As continuing security for the
due and timely performance by Vendor of the Obligations, Vendor hereby grants a
security interest in and pledges the Collateral to and in favour of Simmonds
(the said security interest and pledge of the Collateral being hereinafter
referred to as the "Security Interest"). Simmonds acknowledges that
<PAGE> 16
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it has no rights in the Collateral other than the Security Interest and its
rights hereunder and under the Option Agreement.
2.2 PROCEEDS: The Security Interest shall extend to the
Proceeds.
2.3 ATTACHMENT AND VALUE: Vendor acknowledges and agrees
that the Security Interest is intended to attach to the Collateral upon the
date of execution of this Agreement.
ARTICLE III
3. PROVISIONS RELATING TO COLLATERAL
---------------------------------
3.1 COLLATERAL AGENT, DEPOSIT OF CERTIFICATES AND ESCROW
PROCEDURES: Simmonds hereby appoints R-M Trust to act, and R-M Trust hereby
agrees to act, as agent on behalf of Simmonds to hold the share certificates
evidencing the Share Collateral as agent for and on behalf of Simmonds. Vendor
delivers herewith to R-M Trust share certificates evidencing 1,800,000 shares
of common stock of Intek, which share certificates shall be held by R-M Trust
as agent for Simmonds.
3.2 TRANSFERABILITY: All Collateral shall be freely
transferable by delivery or shall be accompanied by any and all endorsements,
powers of attorney or instruments necessary to permit the transfer, disposition
and, if applicable, the re-registration of the Collateral as may be required as
a result of Simmonds exercising its remedies under subsection 6.2(c). Each of
the parties hereto acknowledges that the certificates evidencing the Share
Collateral are being held by R-M Trust as agent for Simmonds to perfect the
Security Interest created by this Agreement in favour of Simmonds and that R-M
Trust may also hold such certificates on behalf of any assignee(s) of Simmonds
to perfect such assignee's(s') Security Interest.
3.3 DISTRIBUTIONS AND RECEIPTS ON COLLATERAL: Unless and
until an Event of Default shall have occurred and be continuing, Vendor shall
be entitled to receive all interest, dividends or other like payments or
distributions (whether in cash, security (as such term is defined in subsection
1(1) of the Act) or other property) at any time payable on or with respect to
the Collateral and unless and until an Event of Default shall have occurred and
be continuing, all such interest, dividends or other like payments or
distributions at any time payable to Vendor on or with respect to the
Collateral received by Simmonds or R-M Trust shall forthwith be paid or
delivered by Simmonds or R- M Trust to Vendor or as it may direct, free and
clear of the Security Interest.
3.4 VOTING, ETC. OF COLLATERAL: Unless and until an
Event of Default shall have occurred and be continuing, Vendor shall be
entitled to vote the Collateral and to give
<PAGE> 17
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consents, waivers, notices and ratifications, and to take other action in
respect of the Collateral, provided however, that no vote shall be cast or
consent, waiver, notice or ratification given or action taken which would
impair the Collateral or be inconsistent with or violate any provision of this
Agreement or the Option Agreement.
3.5 RIGHTS OF SIMMONDS: It is understood and agreed that
Simmonds, at any time and from time to time when an Event of Default shall have
occurred and be continuing with respect to the Obligations, may enforce any and
all of the rights of Vendor with respect to the Collateral, including those
rights described in Section 3.4.
ARTICLE IV
4. POSSESSION OF COLLATERAL
------------------------
4.1 DUTY OF CARE: R-M Trust shall not have any duty of
care whatsoever with respect to the Collateral other than to use the same care
in the custody and preservation thereof as it would with its own property.
Neither Simmonds nor R-M Trust need take any steps of any nature to defend or
preserve the rights of Vendor therein against the claims or demands of others
provided that Simmonds or R-M Trust, as the case may be, shall immediately give
notice to Vendor of any such claim or demand of which it becomes aware and
shall provide Vendor with a reasonable opportunity to defend or contest the
same.
4.2 R-M TRUST AS COLLATERAL AGENT: R-M Trust agrees to
act, in its capacity as agent on behalf of Simmonds, upon such instructions
with respect to the shares held by R-M Trust which form part of the Share
Collateral, as Simmonds may, in its sole discretion, direct from time to time
provided that such instructions do not violate the terms of this Agreement and
provided that:
(a) R-M Trust shall not be responsible or liable in any
manner whatever for the sufficiency, correctness,
genuineness or validity of any security deposited
with it;
(b) R-M Trust shall be protected in acting upon any
written notice, request, waiver, consent, receipt,
statutory declaration or other paper or document
furnished to it, and signed by Simmonds, not only as
to its due execution and the validity and
effectiveness of its provisions, but also as to the
truth and acceptability of any information therein
contained;
(c) except for acts of negligence or misconduct, R-M
Trust shall not be liable for any act done or step
taken or omitted by it in good faith;
(d) R-M Trust shall have no duties except those which are
expressly set forth herein, and it shall not be bound
by any notice of claim or demand with
<PAGE> 18
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respect thereto, or any waiver, modification,
amendment, termination or rescission of this
Agreement, unless received in writing, and signed by
the parties hereto and, if R-M Trust's duties herein
are affected, unless it shall have given its prior
written consent thereto;
(e) R-M Trust may, at its own discretion, consult with
counsel to the parties hereto and seek instructions
with respect to any matter pertaining to its duties
hereunder; and
(f) in the event of a dispute between the parties with
respect to the matters herein, R-M Trust may, at its
option, deposit all documents and certificates held
by it hereunder with a court of competent
jurisdiction and seek directions from such court.
4.3 COLLATERAL HELD IN ONTARIO: Subject to release
pursuant to section 4.4, R-M Trust shall hold the Collateral in Ontario.
4.4 RELEASE OF COLLATERAL: R-M Trust, Simmonds and
Vendor agree that R-M Trust shall not release the Collateral, or any part
thereof, to Simmonds or any assignee unless (a) the Option (as defined in the
Option Agreement) has been exercised and payment therefor made, and only to the
extent of such exercise and payment, or (b) an Event of Default has occurred
which has not been cured within any applicable grace period.
4.5 INDEMNIFICATION OF R-M TRUST: Each of Vendor and
Simmonds agrees to indemnify and save harmless R-M Trust from and against any
and all liabilities and claims made against it in respect of any action or
thing it may take or do or omit to take or do in connection herewith except as
a result of R-M Trust's wilful neglect or default hereunder. This indemnity
shall survive the termination of this Agreement.
4.6 CONSENT OF VENDOR: Vendor consents to the
appointment of R-M Trust to act as collateral agent on behalf of Simmonds and
to the appointment by Simmonds of R-M Trust as agent to hold the Collateral on
behalf of Simmonds or any assignee(s) of Simmonds.
ARTICLE V
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
5.1 REPRESENTATIONS AND WARRANTIES: Vendor hereby
represents and warrants to Simmonds as follows and acknowledges that Simmonds
is relying on such representations and warranties in advancing funds to Vendor,
namely, that:
<PAGE> 19
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(a) it has not entered into any agreement with or granted
to any person, firm or corporation any option or any
right or privilege capable of becoming an agreement
or option to acquire any right or interest in any of
the Share Collateral (other than as created by this
Agreement and the Option Agreement);
(b) all of the Share Collateral is beneficially owned by
Vendor free and clear of all liens, charges, pledges
and encumbrances (other than as created by this
Agreement and the Option Agreement);
(c) it has the full right and legal capacity to enter
into this Agreement and to grant to Simmonds the
Security Interest in the Collateral;
(d) this Agreement has been duly executed and delivered
by it and constitutes a legal, valid and binding
obligation of it enforceable against it in accordance
with its terms;
(e) the pledge and delivery of the Share Collateral
pursuant to this Agreement creates a valid first
pledge of and a perfected security interest in such
Share Collateral and the Proceeds, subject to no
prior pledge, lien, mortgage, hypothecation, security
interest, charge, option or encumbrance; and
(f) the chief executive office of the Vendor is located
at 1431 West 117th Street, Cleveland, Ohio, 44107.
5.2 COVENANTS OF VENDOR: Vendor hereby covenants and
agrees with Simmonds as follows:
(a) in the event of any subdivision, redivision or other
change of the shares of common stock of Intek at any
time prior to the termination of this Agreement into
a greater number of shares of common stock, Vendor
shall, as soon as practicable following receipt
thereof, deliver to R-M Trust (or as Simmonds may
otherwise direct) such additional number of shares of
common stock as would have resulted had such
subdivision, redivision or other change occurred
immediately prior to the execution of this Agreement;
and
(b) in the event of any reclassification of the common
stock of Intek or a capital reorganization of Intek
other than as described in Section 5.2(a) or 5.3 or a
consolidation, amalgamation or merger of Intek with
or into any other body corporate at any time prior to
the termination of this Agreement, Vendor shall
deliver to R-M Trust (or as Simmonds may otherwise
direct), in substitution for the Share Collateral,
the number of
<PAGE> 20
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shares of common stock or other securities of Intek
or of the body corporate resulting from such merger,
amalgamation or consolidation that R-M Trust, as
agent on behalf of Simmonds would have been entitled
to hold under this Agreement if such
reclassification, capital reorganization,
consolidation, amalgamation or merger had been
effected immediately prior to the execution of this
Agreement.
5.3 COVENANT OF R-M TRUST: In the event of any
consolidation or other change of the common stock of Intek at any time prior to
the termination of this Agreement into a lesser number of shares of common
stock, the number of shares of common stock of Intek held by R-M Trust, as
agent on behalf of Simmonds, shall be reduced to such number of shares of
common stock as would have resulted had such consolidation or other change
occurred immediately prior to the execution of this Agreement. R-M Trust, as
agent on behalf of Simmonds shall, as soon as practicable following receipt
thereof, deliver to Vendor certificates representing the number of excess
shares as a result of such consolidation or other change.
ARTICLE VI
6. DEFAULT AND REMEDIES
--------------------
6.1 EVENTS OF DEFAULT: The occurrence of any one or more
of the following events (each such event being herein referred to as an "Event
of Default") shall constitute a default under this Agreement
(a) if Vendor shall neglect to observe or perform any
covenant or condition herein contained or in the
Option Agreement on its part to be observed or
performed and, after notice in writing has been given
by Simmonds (or its assignee(s)) to Vendor specifying
such default and requiring Vendor to cure the same,
Vendor fails to cure such default within a period of
ten Business Days;
(b) if a decree or order of a court having jurisdiction
is entered adjudging Vendor a bankrupt or insolvent,
or approving as properly filed a petition seeking the
winding-up of Vendor under the Companies' Creditors
Arrangement Act (Canada), the Bankruptcy and
Insolvency Act (Canada) or the Winding Up Act
(Canada) or any other bankruptcy, insolvency or
analogous laws of any other applicable jurisdiction
or process of execution against, or against any
substantial part of the property of, Vendor or
ordering the winding-up or liquidation of its
affairs, and any such decree or order continues
unstayed and in effect for a period of 15 days and
which adversely affects in any material manner
Simmonds' ability to obtain performance by Vendor of
its obligations under the Option Agreement;
<PAGE> 21
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(c) if a resolution is passed for the winding-up or
liquidation of Vendor or if Vendor institutes
proceedings to be adjudicated a bankrupt or
insolvent, or consents to the institution of
bankruptcy or insolvency proceedings against it, or
files a petition or answer or consent seeking
reorganization or relief under the Companies'
Creditors Arrangement Act (Canada), the Bankruptcy
and Insolvency Act (Canada) or the Winding Up Act
(Canada) or any other bankruptcy, insolvency or
analogous laws of any other applicable jurisdiction
or consents to the filing of such petition or to the
appointment of a receiver of, or a substantial part
of the property of Vendor or makes a general
assignment for the benefit of creditors, or admits in
writing its inability to pay its debts generally as
they become due or takes corporate action in
furtherance of any of the aforesaid purposes and
provided any such actions or events adversely affect
in any material manner Simmonds' ability to obtain
performance by Vendor of its obligations under the
Option Agreement; and
(d) if any representation or warranty made by Vendor in
this Agreement or the Option Agreement or in any
certificate or other document at any time delivered
hereunder or thereunder to Simmonds shall prove
incorrect or misleading in any material respect on
and as of the date thereof until the Expiry Date (as
defined in the Option Agreement).
6.2 REMEDIES: If an Event of Default occurs under
Section 6.1, the Security Interest shall immediately become enforceable and
Simmonds may, forthwith or at any time thereafter (and, subject to Sections 3.2
and 3.3., in the event that Simmonds shall proceed under any of subsections
6.2(b) to 6.2(h) inclusive, upon ten Business Days' notice to Vendor), except
in the event such Event of Default shall have been cured prior to any action by
Simmonds, under this Section 6.2 or except as provided by applicable law or
this Agreement, take any one or more of the following actions:
(a) declare any or all of the Obligations to be
immediately due and payable by giving notice in
writing thereof to Vendor and, in such event, such
Obligations shall be forthwith due and owing by
Vendor to Simmonds;
(b) commence legal action to enforce payment or
performance of the Obligations;
(c) subject to any applicable law, dispose of, or direct
R-M Trust to dispose of, the Collateral by private
sale, public sale or otherwise upon such terms and
conditions as Simmonds may determine; provided that
Simmonds may apply and allocate any proceeds arising
from the realization of the Collateral to the
Obligations in such manner as Simmonds in its
absolute discretion, shall deem appropriate;
<PAGE> 22
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(d) elect to retain the Collateral or any
portion thereof irrevocably by giving written
notice of such election to Vendor;
(e) exercise any or all of the rights and privileges
attaching to any of the Collateral as if Simmonds
were the absolute owner thereof;
(f) file such proofs of claims or other documents as may
be necessary or desirable to have its claim lodged in
any bankruptcy, winding-up, liquidation, arrangement,
dissolution or other proceedings (voluntary or
otherwise) relating to Vendor;
(g) where the Collateral has been disposed of by Simmonds
or R-M Trust as provided herein, commence legal
action against Vendor for the difference, if any,
between (i) any damages suffered by Simmonds or its
assigns resulting directly or indirectly from the
violation by Vendor of the Option Agreement or this
Agreement; and (ii) the proceeds received by Simmonds
on a disposition of the Collateral or Proceeds
(hereinafter referred to as the "Deficiency"); or
(h) take any other action, suit, remedy or proceeding
authorized or permitted by this Agreement or by law
or equity.
6.3 SALE OF COLLATERAL: Any sale referred to in
subsection 6.2(c) may be a sale of all or any portion of the Collateral and may
be by way of public auction, public tender, private contract or otherwise.
Simmonds shall be authorized at any such sale (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own
account in compliance with Regulation S, Rule 144 or Rule 144A under the
Securities Act of 1933 or any other applicable exemption available under such
Act, and upon consummation of any such sale Simmonds shall have the right to
assign, transfer, endorse and deliver to the purchaser or purchasers thereof,
the Collateral or any interest therein so sold, provided that, subject to
Sections 6.4 and 6.8, Simmonds shall give to Vendor written notice three
Business Days prior to the date of such sale. Any sale pursuant to this
Section 6.3 may be made with or without any special condition as to the upset
price, reserve bid, title or evidence of title or other matter and may be made
from time to time as Simmonds, in its sole discretion deems fit, with power to
vary or rescind any such sale or buy in at any public sale and resell without
being answerable for any loss. Simmonds may sell, or direct R-M Trust to sell,
the Collateral for a consideration payable by instalments either with or
without taking security for the payment of such deeds, assurances and
conveyances of the Collateral and give receipts for the purchase money, and any
such sale shall be a perpetual bar, both at law and in equity, against Vendor
and all those claiming Collateral sold by, from, through or under Vendor. In
the event of any sale pursuant to this Section 6.3, Vendor hereby covenants and
agrees to provide all information, certificates and consents required under
applicable securities laws or under the rules, by-laws or policies of the
exchange(s) on which
<PAGE> 23
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any of the Collateral is listed and posted for trading to permit the due and
valid sale of the Collateral in compliance with such laws, rules, by-laws or
policies.
6.4 COMMERCIALLY REASONABLE DISPOSITION: Vendor agrees
that a sale at arm's length to a financial institution or any other person,
with or without public advertisement or the services of a broker or other
dealer in securities, for the best price obtainable from a canvass of three
potential arm's length purchasers will be a commercially reasonable method of
disposition of the Collateral in the circumstances. Vendor further agrees that
such canvass may be conducted by telephone during the course of five Business
Days and that the Collateral is such that Simmonds has reasonable grounds to
believe that the Collateral may speedily decline in value and, therefore, that
no notice of such intended disposition otherwise required by any applicable
legislation need be given to Vendor. Vendor further understands that
compliance with the Securities Act of 1933, as now or hereafter in effect, or
any similar statute hereafter enacted analogous in purpose or effect (such Act
and any such similar statute as from time to time in effect being hereinafter
called the "Federal Securities Laws"), may very strictly limit the course of
conduct of Simmonds if Simmonds were to attempt to dispose of all or any part
of the Collateral and may also limit the extent to which or the manner in which
any subsequent transferee of any Collateral may dispose of the same. There may
be other legal restrictions or limitations affecting in any attempt to dispose
of all or any part of the Collateral under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. Simmonds shall
not incur any liability as a result of the sale of the Collateral or any part
thereof at any private sale which Vendor hereby agrees is commercially
reasonable. Vendor hereby waives any claims against Simmonds arising by reason
of the fact that the price at which the Collateral may have been sold at such
sale was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Obligations. The provisions of this
Section 6.4 shall not preclude any sale or other disposition of the Collateral
in any other manner which is commercially reasonable.
6.5 REASONABLE EXPENSES: Vendor shall pay to Simmonds on
demand all costs and expenses of Simmonds (including legal fees) incurred in
exercising its rights hereunder, which costs and expenses shall form part of
the Obligations, and shall be paid by Vendor to Simmonds, forthwith after
demand therefor shall have been made by Simmonds to Vendor together with
interest from and including the date of demand or, if Simmonds has taken steps
to exercise its rights under Section 6.2, from and including the date upon
which the cost or expense is incurred at a rate per annum that is equal to 1%
in excess of the prime rate of interest then quoted by Bank of Montreal for
loans in Canadian dollars to its commercial customers in Canada (the "Prime
Rate"), payable before and after demand, maturity, default and judgment, with
interest on amounts in default at the same rate. All such interest shall be
payable on demand, shall be determined daily and shall be compounded monthly in
arrears on the last day of each month. Payment of such interest shall be
secured by the Security Interest.
6.6 DEFICIENCY: Where the Collateral has been disposed
of by Simmonds or R-M Trust as provided herein, the Deficiency shall be paid by
Vendor to Simmonds, forthwith after demand therefor shall have been made by
Simmonds to Vendor together with interest from
<PAGE> 24
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and including the date upon which the Deficiency arises at a rate per annum
that is equal to 1% in excess of the Prime Rate payable before and after
demand, maturity, default and judgment, with interest on amounts in default at
the same rate. All such interest shall be payable on demand, shall be
determined daily and shall be compounded monthly in arrears on the last day of
each month. Payment of the Deficiency together with such interest shall be
secured by the Security Interest.
6.7 OBLIGATIONS OF SIMMONDS: Simmonds shall not be under
any obligation, or be liable or accountable for any failure, to enforce payment
or performance of the Obligations or to exercise any of its rights and remedies
hereunder and shall not be under any obligation to institute proceedings for
any of such purposes.
6.8 REDEMPTION OF COLLATERAL: At any time before
Simmonds or R-M Trust has disposed of the Collateral as provided for herein or
before Simmonds has elected, in the manner set out in subsection 6.2(d), to
retain all or part of the Collateral irrevocably, Vendor may redeem the
Collateral by satisfying all of its obligations and liabilities under the
Option Agreement and this Agreement.
ARTICLE VII
7. ACKNOWLEDGEMENTS BY VENDOR
--------------------------
7.1 ACKNOWLEDGEMENTS: Vendor hereby:
(a) acknowledges receipt of a copy of this Agreement;
(b) acknowledges and agrees that this Agreement and the
rights and obligations of Simmonds contained in the
Option Agreement may be assigned in whole or in part
by Simmonds without notice or consent and, in the
event of any assignment, the assignee(s) shall be
entitled to all the rights and remedies, and subject
to the obligations, of Simmonds set forth in this
Agreement and the Option Agreement, provided that
such assignment shall not be made to any party who,
by virtue of exercising its rights under the Option
Agreement, would contravene any applicable securities
laws, regulations or policies in the United States or
Canada or any of the by-laws, regulations or policies
of the National Association of Securities Dealers
Automated Quotation System or any other applicable
stock exchange; and
(c) agrees not to assert against Simmonds or any assignee
of Simmonds, and the rights of Simmonds or any such
assignee shall not be subject to, any claim, defense,
demand, set-off or other right, whether at law or in
equity, that Vendor has or may have against Simmonds
or any such
<PAGE> 25
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assignee under any agreement or instrument
other than this Agreement or the Option Agreement.
ARTICLE VIII
8. NOTICES AND SERVICE
-------------------
8.1 NOTICES: Except as otherwise provided herein, any
notice or other document required or permitted to be given to any party shall
be validly given if delivered personally or sent by telecopy to any party at
the following address:
(a) if to Vendor:
Roamer One Holdings, Inc.
c/o Kohrman Jackson & Krantz
Attention: Steven L. Wasserman, Esq.
1375 East Ninth Street
One Cleveland Center - 20th Floor
Cleveland, Ohio
44114
Telephone: (216) 696-8700
Telecopy: (216) 621-6535
(b) if to Simmonds:
Simmonds Communications Ltd.
1050 - 5255 Yonge Street
Willowdale, Ontario
M2N 6P4
Telecopy: (416) 221-3800
Attention: David O'Kell
(c) if to R-M Trust:
The R-M Trust Company
393 University Avenue
5th Floor
Toronto, Ontario
M5G 2M7
<PAGE> 26
- 14 -
Telecopy: (416) 813-4555
Attention: George Nagy
Any such notice or other document delivered personally or sent by telecopy
shall be deemed to have been received by and given on the date of such delivery
or telecopy (provided that it is received within the normal business hours of
the recipient and such day is a Business Day and, if not, on the next following
Business Day). Any party may at any time give notice to the other parties
hereto of any change of address in accordance with the foregoing provisions
hereof.
ARTICLE IX
9. WAIVER
------
9.1 WAIVER BY SIMMONDS: With respect to the Obligations,
Simmonds may, at any time by written notice delivered to Vendor, waive in whole
or in part any breach of this Agreement, any Event of Default or any rights and
remedies of Simmonds hereunder or otherwise and may grant extension of time or
other indulgences to, accept compositions from or grant releases and discharges
to Vendor in respect of the Collateral or otherwise deal with Vendor or with
the Collateral and any other security held by Simmonds, all as Simmonds may see
fit. Vendor hereby agrees that any such waiver shall not be a waiver of any
other or subsequent breach of this Agreement or Event of Default and that any
failure by Simmonds to exercise any of its rights or remedies hereunder or
otherwise shall in no way effect or impair Simmonds' Security Interest or the
rights and remedies of Simmonds hereunder or otherwise.
ARTICLE X
10. EFFECTIVE DATE AND TERMINATION
------------------------------
10.1 EFFECTIVE DATE: This Agreement shall become
effective when it shall have been executed by Vendor, R-M Trust and Simmonds.
This Agreement and the Security Interest are in addition to and not in
substitution for any other security granted by Vendor to Simmonds, whether
before or after the execution of this Agreement. The Security Interest shall
be a general and continuing security interest in respect of the Obligations and
shall continue in full force and effect until terminated as provided in Section
10.2.
10.2 TERMINATION: This Agreement shall be terminated on
the earlier of (i) the completion of the purchase and sale of all of the
Optioned Shares (as that term is defined in the Option Agreement) in accordance
with the terms and conditions of the Option Agreement; and (ii) one Business
Day after the expiry of the Option Period (as that term is defined in the
Option Agreement) provided that, in either case, all of the Obligations have
been fully satisfied by Vendor. Upon and notwithstanding termination of this
Agreement in accordance with the
<PAGE> 27
- 15 -
provisions of this Section 10.2, each of Simmonds and R-M Trust shall, at
Simmonds' expense, deliver to Vendor possession of all Collateral or remaining
part thereof (unless all the Optioned Shares have been purchased by Simmonds),
make and do all such acts and things and execute and deliver all such
instruments, agreements and documents as Vendor shall consider reasonably
necessary or desirable to discharge the Security Interest, to release and
discharge the Collateral therefrom and to record such release and discharge in
all appropriate offices of public record.
ARTICLE XI
11. POWER OF ATTORNEY
-----------------
11.1 POWER OF ATTORNEY: Vendor irrevocably constitutes
and appoints Simmonds and its directors and officers holding office from time
to time as the true and lawful attorney of Vendor with full power of
substitution in the name of Vendor to do any and all such acts or things or
execute and deliver all such agreements, documents and instruments as Simmonds,
in its sole discretion, considers necessary or desirable to carry out the
provisions and purposes of this Agreement or to exercise its rights and
remedies hereunder, including without in any way limiting the generality of the
foregoing: (i) transferring any or all of the Collateral into the name of
Simmonds or to any person who acquires the same pursuant to the provisions of
Section 6.2; (ii) endorsing, negotiating or redeeming any Collateral; (iii)
subject to Section 3.4 exercising any voting rights associated with the
Collateral and executing any proxies or similar instruments in furtherance
thereof; and (iv) realizing or collecting any Proceeds or any dividends,
principal, interest or other payments on the Collateral or in respect thereof.
Vendor hereby ratifies and agrees to ratify all acts of any such attorney taken
or done in accordance with this Section 11.1. This power of attorney being
coupled with an interest shall not be revoked or terminated by any act or thing
and shall remain in full force and effect until this Agreement has been
terminated.
ARTICLE XII
12. MISCELLANEOUS
-------------
12.1 FURTHER ASSURANCES: Vendor will, from time to time
at the request of Simmonds, make and do all such acts and things and execute
and deliver all such instruments, agreements and documents as Simmonds shall
reasonably request by notice in writing given to Vendor in order to create,
preserve, perfect, validate or otherwise protect the Security Interest, to
enable Simmonds to exercise and enforce any of their rights and remedies
hereunder and generally to carry out the provisions and purposes of this
Agreement.
12.2 FILINGS: Vendor will promptly effect all
registrations, filings, recordings and all re-registrations, re-filings and
re-recordings of or in respect of this Agreement and
<PAGE> 28
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Security Interest in all offices in all jurisdictions and at such times as may
be necessary or of advantage in perfecting, maintaining and protecting the
validity, effectiveness and priority hereof or of the Security Interest.
Notwithstanding the foregoing, Simmonds is authorized, at its option, to make
such registrations, filings or recordings or such re-registrations, re-filings
or re-recordings against Vendor as it may deem necessary or appropriate to
perfect or secure the Security Interest.
12.3 AMENDMENTS, ETC.: This Agreement may not be modified
or amended except with the written consent of the parties hereto.
12.4 ATTORNMENT: Each of the parties hereby irrevocably
submits to the non-exclusive jurisdiction of any court in the Province of
Ontario for the purposes of any legal or equitable suit, action or proceeding
in connection with this Agreement.
12.5 ENUREMENT: This Agreement shall be binding on and
enure to the benefit of the parties hereto and their respective successors and
assigns except that Vendor shall not have the right to assign its rights or
obligations hereunder or any interest herein, but Simmonds and its assignee(s)
shall have the right to assign their respective rights and obligations
hereunder, in whole or in part, without the consent of Vendor.
12.6 JUDGMENT CURRENCY:
-----------------
(a) If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder
or under the Option Agreement (collectively, the
"Documents") in any currency (the "Original
Currency") into another currency (the "Other
Currency"), the rate of exchange used shall be that
at which, in accordance with normal banking
procedures, Simmonds could purchase the Original
Currency with the Other Currency on the Business Day
preceding that on which final judgment is given or,
if permitted by applicable law, on the day on which
such judgment is paid or satisfied.
(b) The obligations of Vendor in respect of any sum due
in the Original Currency to Simmonds under any of the
Documents shall, notwithstanding any judgment in any
Other Currency, be discharged only to the extent that
on the Business Day following receipt of Simmonds
thereof, Simmonds may, in accordance with normal
banking procedures, purchase the Original Currency.
Vendor, as a separate obligation and notwithstanding
any such judgment, shall indemnify Simmonds against
such loss, and if the amount of the Original Currency
so purchased exceeds the sum originally due to
Simmonds in the Original Currency, Simmonds agrees to
remit such excess to Vendor.
<PAGE> 29
- 17 -
12.7 FEES AND EXPENSES: Simmonds shall be responsible for
all fees and expenses incurred by R-M Trust with respect to the transactions
contemplated hereunder. If there is an Event of Default, Vendor shall
reimburse Simmonds for all fees and expenses paid to R-M Trust.
12.8 COUNTERPARTS: This Agreement, or any amendment to
it, may be executed in multiple counterparts, each of which shall be deemed to
be an original agreement, and all of which shall constitute one agreement. All
counterparts shall be construed together and shall constitute one and the same
agreement. Any delivery of any executed copy of this Agreement by way of
telecopy or facsimile shall constitute delivery hereof, provided that any party
delivering by way of telecopy or facsimile shall, as soon as reasonably
practicable, deliver the original executed copy to the other parties.
IN WITNESS WHEREOF the parties have executed this
Agreement as of the date first written above.
ROAMER ONE HOLDINGS, INC. SIMMONDS COMMUNICATIONS LTD.
By: /s/ Steven L. Wasserman By: /s/ David C. O'Kell
------------------------ --------------------------
And: And:
----------------------- --------------------------
THE R-M TRUST COMPANY
By: /s/ Neville R. Dacosta
-----------------------
And: /s/ George Nagy
----------------------
