<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 12)*
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
970 West 190th Street, Suite 20
Torrance, California 90502
(310) 366-7335
------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 15, 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).
<PAGE> 2
CUSIP No. 458134 10 3 13D Page 2 of 10 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Simmonds Capital Limited
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC; OO
- --------------------------------------------------------------------------------
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
3,010,850
NUMBER OF --------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY --
EACH REPORTING --------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
3,010,850
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,010,850
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.76%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 13 Pages
<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"), on June 5, 1995 ("Amendment No. 6"), on
June 9, 1995 ("Amendment No. 7"), on June 26, 1995 ("Amendment No. 8"), on July
10, 1995 ("Amendment No. 9"), on August 9, 1995 ("Amendment No. 10"), and on
November 27, 1995 ("Amendment No. 11") on behalf of Simmonds Capital Limited
(f/k/a Simmonds Communications Ltd.) ("SCL") is hereby amended and restated in
full as follows:
ITEM 1. SECURITY AND ISSUER.
-------------------
The title of the class of equity securities to which this statement relates
is the Common Stock, par value $.01 per share (the "Common Stock"), of Intek
Diversified Corporation, a Delaware corporation ("Intek"). The principal
executive offices of Intek are located at 970 West 190th Street, Suite 20,
Torrance, California 90502.
ITEM 2. IDENTITY AND BACKGROUND.
------------------------
This statement is being filed by Simmonds Capital Limited, a Canadian
corporation incorporated under the laws of Ontario ("SCL"), whose principal
business is manufacturing and selling communications equipment and integrating
systems in the global wireless communications market. The address of SCL's
principal business and principal office is 5255 Yonge Street, Suite 1050,
Willowdale, Ontario Canada M2N 6P4.
The following are the executive officers and directors of SCL and certain
information relating thereto:
<TABLE>
<CAPTION>
Present Principal
Name Title Business Address Occupation
- ---- ----- ----------------- -----------------
<S> <C> <C> <C>
J. Harry Dunstan Vice President - 5255 Yonge Street, Suite 1050 Vice President - Technology
Technology and Willowdale, Ontario Canada and Business Development of
Business Development; M24 6P4 SCL
Director
Paul R. Francey Director 28 Oldham Crescent President of 84 Plus
Brampton, Ontario Canada Marketing Inc.,
28 Oldham Crescent
Brampton, Ontario Canada
Charles Gawlicki Director 8713 - 53rd Avenue President of SCL
Edmonton, Alberta Canada Distributors (Western) Ltd,
T6E 5E9 8713 - 53rd Avenue
Edmonton, Alberta Canada
T6E 5E9
Douglas F. Haslam Director 8 Falconer Drive, P.O. Box 610 Executive Vice-President
Streetsville, Ontario Canada of Menu Foods Ltd,
L5M 2C1 8 Falconer Drive
P.O. Box 610
Streetsville, Ontario Canada
L5M 2C1
Michael G. Smith Chief Financial Officer 5255 Yonge Street, Suite 1050 Chief Financial Officer of
Willowdale, Ontario Canada SCL
M2N 6P4
</TABLE>
Page 3 of 13 Pages
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Lyle C.W. Jones Director 1714 Saskatchewan Avenue President of Hub City
Saskatoon, Saskatchewan Canada Radio Ltd.,
S7K 1P8 1714 Saskatchewan Avenue
Saskatoon, Saskatchewan Canada
S7K 1P8
Harold Morton Director Field House, Uttoxeter Old Road Deputy Chairman of
Derby, England Mobicom Ltd.,
Field House
Uttoxeter Old Road
Derby, England
David C. O'Kell Executive 5255 Yonge Street, Suite 1050 Executive
Vice President and Willowdale, Ontario Canada Vice-President and
Secretary; Director M2N 6P4 Secretary of SCL
John G. Simmonds Chairman of the Board, 5255 Yonge Street, Suite 1050 Chairman of the Board,
President and Chief Willowdale, Ontario Canada President and Chief
Executive Officer M2N 6P4 Executive Officer of SCL
Michael W. St. Eve Director 975 Dillingham Road President of Midland
Pickering, Ontario Canada International, a division of SCL;
President of Midland Inter-
national Corporation, a wholly-
owned indirect subsidiary of SCL
</TABLE>
Except Harold Morton, who is a citizen of the United Kingdom, all of
the executive officers and directors of SCL are citizens of Canada.
During the last five years, neither SCL nor any of the directors or
executive officers of SCL has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or has been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
SCL acquired 2,710,850 shares of Common Stock and options to purchase
an additional 1,800,000 shares of Common Stock as described below. After the
disposition of 1,500,000 shares of Common Stock described in Item 5 subparts
(c), (h), (i), (j), (k), (m), (n) and (o), SCL is the beneficial owner of
3,010,850 shares of Common Stock. SCL acquired shares of Common Stock as
follows:
(a) Purchase of 220,500 shares of Common Stock in market
transactions effected between February 8, 1994 and February
28, 1994 for cash, from SCL's working capital, for an
aggregate purchase price of $393,488.20.
(b) Purchase of 21,500 shares of Common Stock in market
transactions in the first week of March, 1994, for an
aggregate purchase price of $51,095.
(c) Purchase of 15,000 shares of Common Stock in market
transactions between June 7, 1994 and June 20, 1994 for cash,
from SCL's working capital, for an aggregate purchase price of
$74,020.
(d) Acquisition of 2,400,000 Common Shares pursuant to terms of
Merger (See item 4 below).
(e) Between March 24, 1995 to March 30, 1995, purchases of 8,850
shares of Common Stock on the open market for cash, from SCL's
working capital, for an aggregate purchase price of $37,613.
Page 4 of 13 Pages
<PAGE> 5
(f) Between March 24, 1995 to March 30, 1995, purchases of 45,000
shares of Common Stock at $4.25 per share from certain of the
persons listed in Item 2 above (all as more fully described in
Item 5 subpart (g) below), for cash from working capital and
the additional consideration of options for the seller thereof
to reacquire shares of the Common Stock at $4.25 per share.
(g) One June 16, 1995, SCL entered into an option agreement (the
"SCL Option Agreement") (a copy of which is attached hereto as
EXHIBIT A) 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. On March 1, 1996, SCL exercised 200,000 of
the foregoing options to purchase Common Stock from Roamer One
Holdings, Inc.
(h) As of March 7, 1996, SCL, Intek and Securicor Group plc
("Securicor") of Surrey, England executed a letter of intent
(the "March 7, 1996 Letter of Intent;" a copy of which is
attached hereto as EXHIBIT B and incorporated herein) pursuant
to which they propose to combine certain of their wireless
communication businesses and related technologies (the
"Wireless Communications Merger"). Pursuant to the proposed
Wireless Communications Merger, SCL would acquire
approximately 2,500,000 shares of Common Stock in exchange for
a license from the U.S. Land Mobile Radio business (the "LMR
Business") of Midland International Corporation ("Midland"), a
wholly-owned indirect subsidiary of SCL. In addition, Intek
would purchase for cash from Midland certain assets which are
used in the LMR Business. See Item 4 "Wireless Communications
Merger." A copy of the Joint Press Release, dated March 8,
1996, of Intek, SCL and Securicor announcing the proposed
Wireless Communications Merger is attached hereto as EXHIBIT
C. See Item 4 "Wireless Communications Merger."
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
February 1994 Purchases
- -----------------------
SCL acquired 220,500 shares of Common Stock for investment purposes in
market transactions effected between February 8, 1994 and February 28, 1994.
At that time it was contemplated that most of these shares would be sold to
certain executive officers of (i) SCL, (ii) Midland International Corp., a
Delaware corporation ("Midland") and a wholly-owned subsidiary of SCL, Inc., a
Delaware corporation and a wholly-owned subsidiary of SCL and (iii) Roamer One,
Inc., a Delaware corporation ("Roamer"). It was also contemplated that a
portion of such shares would be sold to an individual employed by Hill &
Company, a Canadian firm of chartered accountants, which is an independent
contractor of SCL. SCL has subsequently disposed of 110,000 shares of the
Common Stock in accordance with SCL's stated intent. (See Item 5(c) below.) In
connection with any disposition by SCL of a portion of the 220,500 shares, SCL
has not entered and does not intend to enter into any agreement with respect
thereto, including, without limitation, any agreements relating to the voting
or disposition of such shares.
The Merger
- ----------
Prior to SCL's aforementioned purchase of 220,500 shares, on February
3, 1993, SCL, Roamer and Intek executed a non-binding letter of intent (the
"Letter of Intent"), a copy of which is attached hereto as EXHIBIT D, setting
forth the principal terms by which Intek would acquire the specialized mobile
radio carrier business of a joint venture ("Simrom") between SCL and Roamer in
exchange for 6 million shares of Common Stock. A copy of the Press Release of
SCL, Roamer and Intek, dated February 7, 1994, with respect to the Letter of
Intent is attached hereto as EXHIBIT E. Subsequent to execution of the Letter
of Intent, the parties entered into the Amendment to Letter of Intent dated
March 29, 1994 (a copy of which is attached hereto as EXHIBIT F) and extended
the expiration of the Letter of Intent from March 30, 1994 to April 20, 1994.
The Letter of Intent provides that upon consummation of the transaction, SCL
would receive 2.4 million shares of Common Stock and Roamer would receive 3.6
million shares of Common Stock.
To consummate the transactions contemplated in the Letter of Intent,
Simrom, Intek and Romnet, Inc., a Delaware corporation and a newly formed
wholly owned subsidiary of Intek, entered into a merger agreement (the "Merger
Agreement"), dated April 20, 1994, a copy of which is attached hereto as
EXHIBIT G. Pursuant to the Merger Agreement, Simrom merged into Romnet, with
Romnet as the surviving corporation (the "Merger") and at the Effective Time
(as defined in the Merger Agreement), each of the then issued and outstanding
shares of common stock, without par value, of Simrom (consisting of 10,000
shares) converted into the right to receive, subject to certain possible
subsequent
Page 5 of 13 Pages
<PAGE> 6
adjustments, 600 shares of the Common Stock. Immediately prior to the Merger,
sixty percent of the total outstanding voting stock of Simrom was held by
Roamer and the remaining forty percent was held by SCL. As a result of the
Merger, (i) Simrom's business is conducted by Romnet as a wholly owned
subsidiary of Intek, (ii) effective ultimate control of Intek was transferred
to Roamer and SCL and (iii) the business of Intek will be fundamentally
redirected.
On September 23, 1994, the Merger was consummated. Following the
Merger, and pursuant to the terms of the Merger Agreement, two of the three
elected Directors of Intek resigned, and three persons nominated by SCL, and
three persons nominated by Roamer and one person jointly nominated by SCL and
Roamer were elected to the Board of Directors of Intek.
Wireless Communications Merger
- ------------------------------
On March 7, 1996, Intek, SCL, Securicor Communications Limited and
Roamer One entered into the March 7, 1996 Letter of Intent pursuant to which
Intek, SCL and Securicor propose to combine certain of their wireless
communication businesses and related technologies (the "Wireless Communications
Merger"). If the transactions contemplated in the March 7, 1996 Letter of
Intent were consummated, SCL would acquire approximately 2,500,000 shares of
Common Stock in exchange for granting Intek a license to operate Midland's LMR
Business and for use of the Midland trademark in the United States. In
addition, Intek would purchase for cash from Midland certain assets which are
used in the LMR business. SCL would receive additional compensation for
providing certain management services to Intek to support the LMR Business in
the United States. Securicor would receive approximately 25,000,000 shares of
Common Stock in exchange for all of the issued and outstanding securities of
Securicor Radiocoms, Ltd. and of E.F. Johnson Company. The completion of the
proposed Wireless Communications Merger is subject to the completion of due
diligence reviews by the parties, the negotiation and execution of definitive
documentation and other customary closing conditions, including the receipt of
regulatory and third party approvals and consents and the approval of Intek's
shareholders to the transactions and the issuance of Common Stock. Intek has
also announced that following consummation of the transactions contemplated by
the March 7, 1996 Letter of Intent that Intek intends to effect a public
offering of its securities.
Concurrently with entering into the March 7, 1996 Letter of Intent,
SCL and Intek terminated the Purchase Agreement dated June 30, 1995 (a copy of
which is attached hereto as EXHIBIT H and incorporated herein in its entirety),
as subsequently amended, pursuant to which SCL had previously agreed to sell
Intek SCL's commercial wireless and communications business, consisting of the
distribution of two-way radio communication products for use in commercial,
industrial and governmental markets and the design, construction and project
management of two-way radio networks, for aggregate consideration of
15,000,000 shares of Common Stock and the assumption of certain liabilities and
obligations of the SCL.
Other Purchases
- ---------------
During 1994, SCL acquired an additional 36,500 shares of Common Stock
through open market transactions as follows:
During the first week of March, 1994, SCL acquired an additional
21,500 shares of Common Stock;
Between June 7, 1994 and June 10, 1994, SCL acquired an additional
10,000 shares of Common Stock; and
Between June 14, 1994 and June 20, 1994, SCL acquired an additional
5,000 shares of Common Stock.
Page 6 of 13 Pages
<PAGE> 7
Between March 24 and March 30, 1995, SCL purchased 8,850 shares of
Common Stock at an average price of $4.25 per share on the open market and an
additional 45,000 shares of Common Stock at $4.25 per share from persons listed
in Item 2 as follows:
<TABLE>
<CAPTION>
PERSON NUMBER OF SHARES
------ ----------------
<S> <C>
John Simmonds 16,150
Harry Dunstan 5,000
David O'Kell 8,850
Michael W. St. Eve 5,000
</TABLE>
In connection with SCL's purchase of the 45,000 shares of Common Stock, SCL has
agreed under the Employee Option Agreement dated as of April 7, 1995, (the
"Employee Option Agreement")(a copy of which is attached hereto as EXHIBIT I)
to permit each person from whom Intek shares were purchased to repurchase the
same number of such shares at $4.25 per share until March 31, 1997, subject to
SCL's right to cancel these options on 90 days written notice.
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
J) 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. On March 1,
1996, SCL exercised 200,000 of the foregoing options to purchase Common Stock
from Roamer One Holdings, Inc.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
The 3,010,850 shares of Common Stock were acquired by SCL through
purchases and dispositions of shares of Common Stock as follows:
(a) In February, 1994, SCL acquired 220,500 shares totalling 7.83%
of the then outstanding Common Stock based on the 2,816,499
shares of Common Stock then outstanding as reported by Intek
in its Form 10-K of the year ended December 31, 1993.
(b) In the first week of March, 1994, SCL acquired an additional
21,500 shares, bringing its total shares of Common Stock to
242,000 or 8.59% of the then outstanding shares of Common
Stock.
(c) In transactions effected between March 22, 1994 and March 29,
1994, SCL disposed of 110,000 shares of Common Stock through
sales to (i) certain executive officers of SCL and Midland
International Corp., (ii) Roamer, and (iii) an individual
employed by Hill and Company. These dispositions reduced
SCL's percentage ownership of the Common Stock to 132,000
shares of Common Stock or 4.69% of the then outstanding shares
of Common Stock as of March 29, 1994.
(d) Between June 7, 1994 and June 10, 1994, SCL acquired 10,000
shares of Common Stock, increasing its holding to 142,000,
constituting 5.04% of the 2,816,499 shares of Common Stock
then outstanding as reported by Intek in its Form 10-Q for the
quarter ended March 31, 1994.
(e) Between June 14, 1994 and June 20, 1994, SCL acquired an
additional 5,000 shares of Common Stock, bringing its total
holdings to 147,000 shares of Common Stock or 5.22% of the
then outstanding shares of Common Stock.
Page 7 of 13 Pages
<PAGE> 8
(f) On September 23, 1994, SCL acquired 2,400,000 additional
shares of Common Stock in the Merger, bringing SCL's total
holdings to 2,547,000 shares of Common Stock or 28.9% of the
then outstanding shares of Common Stock.
(g) Between March 24, and March 30, 1995, SCL acquired 53,850
shares of Common Stock on the Open Market and from persons
listed in Item 2 as follows and an additional 10,000 Shares
from Peter Heinke, then an officer of SCL:
<TABLE>
<CAPTION>
PERSON NUMBER OF SHARES
------ ----------------
<S> <C>
John Simmonds 16,150
Harry Dunstan 5,000
David O'Kell 8,850
Michael W. St. Eve 5,000
Open market 8,850
</TABLE>
This acquisition brought SCL's total holdings of shares of
Common Stock to 2,600,850 or 28.9% of the then outstanding
shares of Common Stock.
(h) On April 24, 1995, Extra Clearing B.V. exercised a portion of
the options granted to it by SCL to acquire 35,000 shares of
Common Stock.
(i) On May 1, 1995, Choi & Choi HK Limited exercised the options
granted to it by SCL and a portion of 600,000 additional
options which have been assigned to it by Mr. Murray Sinclair
to acquire 400,000 shares of Common Stock, reducing SCL's
total holdings to 2,165,850 shares of Common Stock (24.3% of
the total outstanding shares of Common Stock), subject to
various contracts and arrangements.
(j) On May 17, 1995, Extra Clearing B.V. exercised a portion of
the options granted to it by SCL to acquire 200,000 shares of
Common Stock reducing SCL's total holdings to 1,965,850 shares
of Common Stock (21.9 % of the total outstanding shares of
Common Stock), subject to various contracts and arrangements.
(k) On June 1, 1995, Extra Clearing B.V. exercised a portion of
the options granted to it by SCL to acquire 107,000 shares of
Common Stock reducing SCL's total holdings to 1,858,850 shares
of Common Stock (20.9% of the total outstanding shares of
Common Stock), subject to various contracts and arrangements.
(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. On
March 1, 1996, SCL exercised 200,000 of the foregoing options
to purchase Common Stock from Roamer One Holdings, Inc.
(m) On June 20, 1995, Extra Clearing, B.V. exercised a portion of
the options granted to it by SCL to acquire 58,000 shares of
Common Stock.
(n) On July 31, 1995, Extra Clearing B.V. exercised an additional
portion of such options to acquire 490,000 shares of Common
Stock reducing the total number of shares of Common Stock
beneficially owned by SCL to 3,110,850 (29.5% of the total
outstanding shares of Common Stock), subject to various
contracts and arrangements.
(o) On July 17, 1995, Bradley Ltd. exercised the options granted
to it by SCL to acquire 100,000 shares of Common Stock thereby
reducing the total number of shares of Common Stock
beneficially owned by SCL to 3,010,850 (27.76% of the total
outstanding shares of Common Stock), subject to various
contracts and arrangements.
Page 8 of 13 Pages
<PAGE> 9
(p) On March 7, 1996, SCL, Intek and Securicor Group executed the
March 7, 1996 Letter of Intent which contemplates a merger of
the Wireless Communications business of the parties thereto.
Upon consummation of the transactions contemplated therein,
SCL would acquire 2,500,000 shares of Common Stock as well as
certain other consideration. See Item 4 "Wireless
Communications Merger".
Of the persons listed in Item 2, the following beneficially own shares
of Common Stock in the amounts indicated:
<TABLE>
<CAPTION>
Person Number of Shares Sole/Shared Voting Power
------ ---------------- ------------------------
<S> <C> <C>
John Simmonds 1,350 (1) sole
<FN>
(1) Includes 1,000 shares gifted by Mr. Simmonds to a family member.
</TABLE>
Of the persons listed in Item 2, the following beneficially have acquired
options to purchase from SCL the number of shares of Common Stock indicated
opposite their name below at an exercise price of $4.25 per share:
<TABLE>
<CAPTION>
Person Number of Shares
------ ----------------
<S> <C>
John Simmonds 16,150
Harry Dunstan 5,000
David C. O'Kell 8,850
Michael W. St. Eve 5,000
</TABLE>
SCL has sole voting and investment power and the right to receive or
direct the receipt of all dividends from or the proceeds of the sale of all of
the shares of Common Stock owned by SCL.
Of the persons listed in Item 2, the following beneficially have
acquired options to purchase from Intek, pursuant to certain of Intek's 1994
Directors' Stock Option Plan or Intek's 1994 Stock Option Plan the number of
shares of Common Stock indicated opposite their name below at an exercise price
per share equal to the set forth below:
<TABLE>
<CAPTION>
Person Number of Shares Exercise Price per Share
------ ---------------- ------------------------
<S> <C> <C>
John Simmonds 40,000(1) $3.75
Harry Dunstan 40,000(2) $3.75
David C. O'Kell 40,000(2) $4.00
<FN>
(1) Incentive Stock Options granted pursuant to Intek 1994 Stock
Option Plan
(2) Non-qualified stock options granted pursuant to Intek 1994
Stock Option Plan
</TABLE>
Except as described above, (i) neither SCL nor, to the best of SCL's
knowledge, any person identified in Item 2 hereto beneficially owns any shares
of the Common Stock, and (ii) no transactions in such shares have been effected
during the past 60 days by SCL or, to the best of SCL's knowledge, any person
identified in Item 2 hereto.
As of March 1, 1996, SCL beneficially owned 3,010,850 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.
Intek, Roamer, SCL, Vincent Paul and Harold Davis, have entered into a
Registration Rights Agreement (the "Registration Rights Agreement") to provide
the holders with certain demand and "piggy-back" registration rights with
respect to each share of Intek's Common Stock to be received pursuant to the
Merger as Common Stock Consideration. The Registration Rights Agreement
provides for eligible holders to make up to two written demands that Intek
effect a registration under the Securities Act of 1933, as amended (the
"Securities Act"), of a specified number of shares of Intek's Common Stock.
Page 9 of 13 Pages
<PAGE> 10
On September 30, 1994, SCL entered into Memoranda of Understanding
(the "Memoranda of Understanding") (a copy of which is attached hereto as
EXHIBIT K) with Murray Sinclair and Choi & Choi HK Limited, pursuant to which
Mr. Sinclair and Choi & Choi HK Limited paid SCL Eight Hundred Thousand Dollars
($800,000) and Two Hundred Thousand Dollars ($200,000), respectively, for five
(5) year options to purchase up to eight hundred thousand (800,000) and two
hundred thousand (200,000) shares, respectively, of Intek Common Stock for
$1.50 per share. The options may be exercised partially or in whole at any
time, subject to any applicable regulatory or tax restrictions.
As of March 31, 1995, SCL entered into an option agreement (the "EC
Option Agreement") (a copy of which is attached hereto as EXHIBIT L) with Extra
Clearing B.V., a corporation incorporated under the laws of the Netherlands
("EC"), pursuant to which EC paid SCL Eight Hundred Ninety Thousand Dollars
($890,000) for five (5) year options to purchase up to eight hundred ninety
thousand (890,000) shares of Intek Common Stock for $1.50 per share. Four
hundred thirty-six thousand (436,000) of the options may be exercised partially
or in whole at any time, subject to any applicable regulatory or tax
restrictions. Four hundred fifty-four thousand (454,000) of the options are
subject to an additional requirement that they cannot be exercised for ninety
(90) days from the date of the EC Option Agreement.
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.
In connection with the EC Option Agreement, as of March 31, 1995 SCL
and the EC also entered into a pledge agreement (the "EC Pledge Agreement") (a
copy of which is attached hereto as EXHIBIT M), pursuant to which SCL pledged
eight hundred ninety thousand (890,000) shares of Intek Common Stock to EC in
support of its obligations under the EC Option Agreement.
See discussion regarding the Letter of Intent and the Employee Option
Agreement in Item 4 above.
As of May 25, 1995, SCL entered into an option agreement (the "Bradley
Option Agreement") (a copy of which is attached hereto as EXHIBIT N) with
Bradley Ltd. of Hamilton, Bermuda, pursuant to which Optionee paid SCL One
Hundred Thousand Dollars ($100,000) for options, exercisable through September
30, 1999, to purchase up to one hundred thousand (100,000) shares of Intek
Common Stock for $1.50 per share, subject to any applicable regulatory or tax
restrictions.
As of June 30, 1995, SCL agreed, subject to obtaining approval of the
shareholders of Intek to an increase in the authorized capital stock of Intek
and the satisfaction of certain other conditions, to acquire from the Company,
and the Company agreed to sell to SCL 15,000,000 shares of Common Stock in
consideration for the transfer to the Company of the assets and liabilities of
SCL and certain of SCL's affiliates which constitute the SCL Commercial
Wireless Communications Business and the assumption and satisfaction of the
liabilities and obligations of the SCL Commercial Wireless Communications
Business. This Agreement was subsequently terminated on March 8, 1996, when
SCL, Intek and Securicor entered into the March 7, 1996 Letter of Intent
pursuant to which SCL, Securicor and Intek propose to merge their wireless
communications businesses. See Item 4 "Wireless Communications Merger."
On September 15, 1995, SCL issued a debenture in favor of Octagon
Investment Group and in the original principal amount of $2,500,000 (the
"DEBENTURE," a copy of which is attached hereto as EXHIBIT O and incorporated
herein in its entirety). The Debenture is due on September 15, 2000 and bears
interest at 14% per annum. SCL has the option, after April 5, 1996, to prepay
the then outstanding principal and accrued interest on the Debenture by
transferring to Octagon shares of the Common Stock. The number of shares of
Common Stock necessary to settle any such optional prepayment is determined by
dividing the amount then due on the Note by $5.22 and rounding up to the next
whole number. From April 5, 1996, the minimum number of shares that SCL could
transfer pursuant to such a prepayment election is 510,524 and the maximum
number of shares is 922,134. If on any date on or after June 30, 1996, the
simple average of (a) the closing price for shares of Common Stock for each day
that there has been trading and (b) the simple average of the closing bid and
ask prices of Shares for each day on which there has been no trading, for the
five consecutive trading days on NASDAQ immediately preceding such date exceeds
$10.00 ("Trigger Price") then the holder of the Debenture, on 30 days' written
notice to SCL, may declare the principal amount of the Debenture and all
accrued and
Page 10 of 13 Pages
<PAGE> 11
unpaid interest thereon to be immediately due and payable, together with an
additional cash amount ("Additional Amount") to be determined as follows:
The initial Additional Amount is $562,500 for the six-month period
beginning March 15, 1996 and increases $562,500 for each additional
six-month period to a maximum Additional Amount of $5,062,500 for the
six-month period beginning March 15, 2000. Upon receipt of a written
notice subsequent to the occurrence of a Trigger Price, the reporting
person may elect to prepay the Note in shares of Common Stock without
paying the Additional Amount. SCL's contingent obligation to pay an
Additional Amount may be deemed to be a separate derivative security.
Except as set forth in this Item 6 and except for the Letter of Intent
and the proposed sale of a portion of the 220,500 shares described in Item 4
above, as to which no written agreements have been entered into, neither SCL
nor, to the best of SCL's knowledge, any person identified in Item 2 hereto has
any contracts, arrangements, understandings or relationships with any person
with respect to any securities of Intek.
Page 11 of 13 Pages
<PAGE> 12
ITEM 7. EXHIBITS.
---------
Exhibit A SCL Option Agreement (incorporated by reference to Exhibit K
to the reporting person's Amendment No. 8 on Form 13D).
Exhibit B Letter of Intent, dated March 7, 1996, among SCL, Intek and
Securicor.
Exhibit C Joint Press Release dated March 8, 1996 announcing the
proposed Wireless Communications Merger.
Exhibit D Letter of Intent, dated February 3, 1994, among SCL, Roamer
and Intek (incorporated by reference to Exhibit A to the
reporting person's initial report on Form 13D, filed on March
7, 1994).
Exhibit E Press Release of SCL, Roamer and Intek dated February 7, 1994
(incorporated by reference to Exhibit B to the reporting
person's initial report on Form 13D, filed on March 7, 1994).
Exhibit F Amendment to Letter of Intent, dated March 29, 1994, among
SCL, Roamer and Intek (incorporated by reference to Exhibit C
to the reporting person's Amendment No. 1 on Form 13D, filed
on March 31, 1994).
Exhibit G Merger Agreement, dated April 20, 1994, among Simrom, Romnet
and Intek (incorporated by reference to Exhibit D to the
reporting person's Amendment No. 2 on Form 13D, filed on July
22, 1994).
Exhibit H Purchase Agreement dated June 30, 1994 (incorporated by
reference to Exhibit M to the reporting person's Amendment No.
9 on Form 13D, filed on July 10, 1995).
Exhibit I Employee Option Agreement (incorporated by reference to
Exhibit I to the reporting person's Amendment No. 4 on Form
13D, filed on April 19, 1995).
Exhibit J SCL/Roamer One Holdings Pledge Agreement (incorporated by
reference to Exhibit L to the reporting person's Amendment No.
8 on Form 13D, filed on June 26, 1995).
Exhibit K Memorandum of Understanding (incorporated by reference to
Exhibit E to the reporting person's Amendment No. 4 on Form
13D, filed on October 3, 1995).
Exhibit L EC Option Agreement (incorporated by reference to Exhibit G to
the reporting person's Amendment No. 4 on Form 13D, filed on
April 19, 1995).
Exhibit M EC Pledge Agreement (incorporated by reference to Exhibit H to
the reporting person's Amendment No. 4 on Form 13D, filed on
April 19, 1995).
Exhibit N Bradley Option Agreement (incorporated by reference to Exhibit
J to the reporting person's Amendment No. 6 on Form 13D, filed
on June 5, 1995).
Exhibit O Debenture
Page 12 of 13 Pages
<PAGE> 13
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.
March 18, 1996
________________________________________
(Date)
/s/ David O'Kell
________________________________________
(Signature)
David C. O'Kell,
Executive Vice President and Secretary
________________________________________
(Name/Title)
Page 13 of 13 Pages
<PAGE> 14
EXHIBIT B
[INTEK LOGO]
970 West 190th Street, Suite 720
Torrance, California 90502
310-366-7335
Fax: 310-366-7712
March 7, 1996
Simmonds Capital Limited
5255 Yonge Street, Suite 1050
Willodale, Ontario M2N 6P4
CANADA
Securicor Communications Ltd.
Sutton Park House
15 Carshalton Road
Sutton Surrey SM1 4LD
ENGLAND
Roamer One Holdings, Inc.
1431 West 117th Street
Cleveland, Ohio 44107
Re: Proposed Combination of Land Mobile Radio Businesses
----------------------------------------------------
Gentlemen:
Intek Diversified Corporation, a Delaware corporation ("Intek"), proposes to
enter into agreements with Midland International Corporation ("Midland U.S."),
a Delaware corporation and a wholly-owned indirect subsidiary of Simmonds
Capital Limited, an Ontario corporation ("Simmonds"), pursuant to which it will
acquire a license (the "License" or the "License Agreement") to operate Midland
U.S.'s Land Mobile Radio ("LMR") business in the United States as specified
herein and will acquire certain intangible assets pursuant to an asset purchase
agreement (the "Asset Purchase Agreement"). Simultaneously, Intek also
proposes to enter into an agreement (the "Buy-Sell Agreement") with Securicor
Communications Ltd., a corporation formed under the laws of England and Wales
("Securicor"), pursuant to which Intek will acquire all of the outstanding
securities of Securicor's wholly-owned subsidiary, Securicor Radiocoms Ltd.
("Radiocoms"), together with all the Preferred Stock which Securicor holds in
E.F. Johnson Company, a Minnesota corporation ("Johnson"). All such
transactions (the "Transactions") are to be consummated at the Closing (as
hereinafter defined) on the following terms and conditions (PROVIDED THAT,
notwithstanding anything to the contrary
<PAGE> 15
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 2
contained herein which may state the form or structure of one or more of the
Transactions, the parties shall cooperate to create a structure for the
Transactions that meets the parties' business, tax and legal objectives):
1. Intek will acquire a perpetual, exclusive License to operate Midland
U.S.'s LMR business in the United States, including existing and future LMR
products, but excluding the Midland 70-1336 & 17-1526 and Midland 70-9020 &
70-9405 LTR products, and to use of all Midland U.S. trademarks and the
Midland name in the United States. Intek will also acquire: (i) rights and
obligations to purchase as a "Midland Affiliate" under the Midland Hitachi
Denshi Ltd. supply agreement dated May 12, 1994 (the "Hitachi Supply
Agreement"), and similar arrangements with other Midland vendors (with
applicable charges payable to Simmonds); (ii) all Midland U.S. direct supply
agreements and quotations; (iii) all Midland U.S. dealer relationships,
agreements and contracts; and (iv) all Midland U.S. customer order backlog.
Notwithstanding the foregoing, the License would not extend to (i) Midland U.S.
consumer products, Midland 70-1336 & 70-1526 or Midland 70-9020 & 70-9405
products or (ii) any sales or business outside of the United States. In
connection with the foregoing, Simmonds will enter into a noncompetition
agreement with Intek on terms to be mutually agreed and Simmonds and Intek will
enter into arrangements to ensure that each of them performs, after the
Closing, each of their respective continuing obligations under the Hitachi
Supply Agreement, including without limitation, fulfillment of minimum purchase
requirements under the Hitachi Supply Agreement to be allocated among Intek and
Simmonds.
2. In consideration of the License and the purchase of intangible assets
described in paragraph 1, Intek will issue to Simmonds 2,500,000 fully paid,
non-assessable shares of common stock, par value $0.01 per share (the "Common
Stock") of Intek. Such 2,500,000 shares of Common Stock would, as of March 7,
1996, assuming issuance of all shares of Common Stock Intek has a commitment to
issue and the additional shares of Common Stock contemplated to be issued under
this Letter of Intent, including without limitation under paragraph 7, equal
6.0% of the outstanding shares of Common Stock of Intek on a fully diluted
basis. Intek shall also assume certain obligations of Midland U.S., including
outstanding purchase orders for United States products, the Securicor supply
agreement and Roamer distribution agreement regarding 220 MHz mobiles/systems,
obligations on sales and backlog orders, and customer supply and support
obligations for the United States direct supply contracts.
3. At Intek's option, it may agree to purchase certain inventory and other
tangible assets of Midland for cash.
<PAGE> 16
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 3
Simmonds and/or Midland U.S. will also provide interim management services on
terms to be mutually agreed.
4. The securities to be acquired by Intek from Securicor under the Buy Sell
Agreement include all of the outstanding securities of Radiocoms and all of
Securicor's Preferred Stock of Johnson. The Buy Sell Agreement shall provide
for a description of the assets and business lines included in the Radiocoms
business and certain other terms to be agreed to by the parties.
5. In consideration of the purchase of the securities described in
paragraph 4, Intek shall issue to Securicor 25,000,000 fully paid, non-
assessable shares of Intek Common Stock. Such 25,000,000 shares of Common
Stock would, as of March 7, 1996, assuming issuance of all shares of Common
Stock Intek has a commitment to issue and the additional shares of Common Stock
contemplated to be issued under this Letter of Intent, including without
limitation under paragraph 7, equal 60.3% of the outstanding shares of Common
Stock of Intek on a fully diluted basis.
6. Simmonds shall transfer any Midland U.S. employees to Intek that
Securicor and Intek select.
7. From the date hereof through the earlier of the Closing and termination
of this Letter of Intent, Intek, Midland U.S. and Radiocoms will be operated in
the ordinary course of business and consistent with past practices. Except for
Intek's issuance of a $2.5 million debenture, up to 1,000,000 shares of Common
Stock in an equity offering, and up to 1,500,000 shares of Common Stock to
acquire additional licenses, as to which the parties have agreed, transactions
out of the ordinary course, including but not limited to any changes in the
outstanding equity securities of Intek or Radiocoms, any changes in roll-out
plans, any inter-affiliate transfer or related series of inter-affiliate
transfers of funds or assets involving Intek or Radiocoms and amounts in excess
of $500,000 (unless for the purpose of purchasing goods and services at the
fair market value of such goods and services) and any incurrence of debt or
pledging of assets or related series of incurrences of debt or pledging of
assets by Intek, Midland U.S. or Radiocoms, involving amounts in excess of
$500,000, will require the consent of Nicholas Wilson, John Simmonds and Ed
Hough. Notwithstanding the foregoing, Intek shall not issue any portion of the
1,500,000 shares of Common Stock to acquire additional licenses unless Nicholas
Wilson, John Simmonds or Ed Hough are in mutual agreement, provided that such
agreement shall not be unreasonably withheld. Upon or shortly following the
Closing of the Transactions, Intek shall endeavor to raise approximately
$40,000,000 by a suitable placement of securities to fund further expansion of
the business and provide working capital.
<PAGE> 17
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 4
8. The Closing of the Transactions will be conditioned on:
a. the negotiation and execution of a mutually satisfactory License
Agreement, Asset Purchase Agreement, Buy-Sell Agreement (collectively, the
"Transaction Agreements") and the other documents referred to therein or
otherwise required to consummate the Transactions, including, but not limited
to such supply agreements, customer supply and support agreements, and
management services agreements as the parties shall agree;
b. the accuracy of the representations and warranties of Intek, Midland
U.S., Simmonds and Securicor as of the Closing;
c. the receipt of all necessary governmental and regulatory approvals in
connection with the Transactions;
d. the receipt of all necessary third party consents in connection with
the Transactions, including without limitation, those related to Securicor's
Preferred Stock under that certain shareholders agreement between Securicor and
Johnson;
e. approval of the Transaction Agreements by the Boards of Directors of
Intek, Simmonds and Securicor;
f. the completion of, and satisfaction of the parties with, financial,
legal, environmental and operational due diligence regarding the Intek, Midland
U.S. and Radiocoms businesses, including, but not limited to, receipt of a
satisfactory fairness opinion by the Board of Directors of Intek;
g. the closing of the transactions contemplated under each of the
Transaction Agreements (the "Closing");
h. the provision of December 31, 1995 audited financial statements of
Intek, Radiocoms and the Midland U.S. businesses;
i. the absence of any material adverse change in the businesses of Intek,
Radiocoms and Midland U.S.; and
j. such other conditions as are customary in transactions such as the
Transactions.
9. In connection with the aforementioned due diligence reviews, the parties
will provide full access to their respective records, personnel and facilities.
<PAGE> 18
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 5
10. Each of Intek, Simmonds, Securicor and Roamer One Holdings, Inc. will
cause (i) any information received in connection with the Transactions; and
(ii) the substance of any discussions between the parties, to be held in
confidence and not to be disclosed or used for any purpose other than for the
review and furtherance of the Transactions, except to the extent required by
law or in connection with obtaining necessary approvals and consents (or
required or reasonably deemed appropriate in any filing with the Securities and
Exchange Commission or other similar foreign agency). The parties hereto
acknowledge that any announcement or other disclosure relating to the matters
herein (except disclosure to their respective professional advisors) shall be
made only upon their express mutual agreement, unless otherwise required by law
or in connection with obtaining necessary approvals and consents, such as in
order to make any filings of Schedules 13D with the Securities and Exchange
Commission with respect to the matters included herein, in which case, the
parties hereto shall consult with each other and coordinate such disclosure to
the extent reasonably feasible. The obligations of the parties under this
paragraph 10 shall survive any termination of this Letter of Intent for a
period of three (3) years thereafter.
11. Subject to the rights, if any, of a party arising out of the breach of
the binding portions of this Letter of Intent, whether or not the Transactions
are consummated, each of the parties hereto shall pay its legal, investment
banking and accounting fees, costs and expenses in connection with the
Transactions, including the fees and expenses of their advisors or other
representatives. Intek shall pay the fee for the Hart-Scott-Rodino filing.
The parties shall ensure that their respective advisors share equally in the
legal and other work required to consummate the Transactions to the extent
reasonably feasible.
12. This Letter of Intent shall be governed by and construed in accordance
with the laws of the State of New York without regard to its principles of
conflicts of laws.
13. This Letter of Intent may be terminated only (i) by mutual written
consent of the parties hereto, or (ii) upon written notice by any party to the
other parties hereto if the Transaction Agreements have not been executed by
April 30, 1996; provided however, that the termination of the binding
provisions shall not affect the liability of a party for breach of any such
provision prior to the termination. Upon termination of the binding
provisions, the parties shall have no further obligations hereunder, except as
provided for in paragraphs 10 through 15. Until the termination of this Letter
of Intent, each party agrees not to (and agrees to cause its affiliates and
shareholders not to) negotiate or enter into or continue discussions with any
<PAGE> 19
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 6
other person or entity or solicit or encourage, directly or indirectly, or
furnish information to any other person or entity regarding the sale or
purchase of all or any part of the securities, rights, and/or assets that are
the subject of this Letter of Intent.
14. Other than as set forth in paragraphs 7 and 10 through 15 hereof, this
Letter of Intent is a statement of intent only and is not intended to and does
not constitute a legally binding commitment or agreement of any party hereto,
nor is there any separate oral agreement with respect to the subject matter
hereof, and none of the parties hereto will have any liability to any other
party for any breach of the terms of this Letter of Intent, including the
failure to enter into any Transaction Agreement, other than for breach of any
of the terms of paragraphs 7 and 10 through 15. Statements herein as to what
either party may or will do are otherwise so expressed for convenience only,
and are understood to be non-binding indications of intent only. Paragraphs 7
and 10 through 15 however, are intended to be fully binding and enforceable by
and against the parties hereto.
15. Intek hereby represents that this Letter of Intent and the proposed
transaction have been duly approved by its Board of Directors, acting through a
committee of its disinterested directors, at a meeting duly noticed and
convened at which a quorum was present.
If the foregoing is acceptable to you, please sign the attached counterpart
of this Letter of Intent in the space provided below and return the counterpart
to the undersigned. This letter shall become effective when we have received
counterparts which have been duly executed by Simmonds, Securicor and Roamer
One Holdings, Inc.
INTEK DIVERSIFIED CORPORATION
By: /s/ Nicholas R. Wilson
---------------------------------
Title: Chairman
------------------------------
<PAGE> 20
Simmonds Capital Limited
Securicor Communications Ltd.
March 7, 1996
Page 7
Agreed to and accepted as of
the 7th day of March, 1996:
SIMMONDS CAPITAL LIMITED
By: /s/ John Simmonds
--------------------------
Title: President
-----------------------
SECURICOR COMMUNICATI0NS LTD.
By: /s/ Edward Hough
--------------------------
Title: Chief Executive
-----------------------
ROAMER ONE HOLDINGS, INC.
By: /s/ Nicholas R. Wilson
--------------------------
Title: President
-----------------------
<PAGE> 21
EXHIBIT C
NEWS RELEASE
Plan for 3-Way Wireless Merger
Announced By Intek, Simmonds Capital, and Securicor
U.S.A., Canada, and England - March 8, 1996 - In a joint statement, Intek
Diversified Corporation ("Intek") of Los Angeles, California and Simmonds
Capital Limited ("SCL") of Toronto, Canada and Securicor Group plc
("Securicor") of Surrey, England today announced that they have signed a Letter
of Intent to combine certain of their wireless communication businesses and
related technology. The transaction will combine Intek's Roamer One air time
services business with the US Land mobile radio business of Midland
International Corporation ("Midland"), a wholly owned subsidiary of SCL, and
the narrowband wireless technology and manufacturing operations of Securicor
Radiocoms Limited ("SRL"), a wholly owned subsidiary of Securicor. As a result
of the proposed transaction, Intek will become an integrated wireless company
providing air time services, product distribution and manufacturing for the
wireless Land Mobile Radio market.
The completion or the proposed transactions is subject to the completion of due
diligence reviews by the parties, the negotiation and execution of definitive
documentation and customary other closing conditions, including the receipt of
regulatory and third party approvals and consents and the approval of Intek's
shareholders to the transactions and the issuance of its common stock. The
parties expect the transactions to close during the second quarter of 1996.
Intek and SCL reported that the new three way transaction replaces the
previously announced proposed acquisition of Midland, which has been terminated
by mutual agreement of SCL and Intek.
Under the terms of the Letter of Intent, Intek will purchase a license from
Midland for the use of the Midland trademark in the United States for the Land
Mobile Radio market in exchange far approximately 2.5 million common shares of
Intek. In addition, Intek will purchase for cash from Midland certain assets
which are used in the business. SCL will retain the international operations
of Midland and the SCL Systems business which operates
<PAGE> 22
as a systems integrator for wide area communication networks. It is
contemplated that SCL will provide certain management services to Intek for the
support of the Midland two-way radio business in the United States.
The Letter of Intent also provides that Intek will acquire all of the shares at
SRL In exchange for approximately 25 million common shares of Intek. The SRL
business includes the Linear Modulated radio technology, a manufacturing
facility in Bath, England, a network of wireless dealers and resellers in the
United Kingdom, a Specialized Mobile Radio network in England, a wireless
systems integration business, and all of Securicor's convertible preferred
shares in E.F. Johnson, a manufacturer of wireless communications equipment in
Waseca, Minnesota.
Upon completion of the transactions contemplated by the Letter of Intent, there
will be approximately 39 million common shares of Intek outstanding, with
control passing to Securicor. It is contemplated by the parties that Intek
will then publicly offer securities to raise funds to continue the construction
of the Roamer One Specialized Mobile Radio system infrastructure and to provide
working capital. It is Securicor's current intention to maintain its
controlling interest in Intek.
Intek Diversified Corporation is a publicly traded company on the NASDAQ small
cap exchange. (Symbol: IDCC). Through its wholly owned subsidiary, Roamer
One, Intek is constructing a nationwide Specialized Mobile Radio network on the
220 MHz spectrum to provide voice dispatch and mobile data services.
Securicor Group plc is a major UK international organization, with core
businesses in security services, parcels and freight distribution, and fixed
and mobile telecommunications. The telecommunications interests include a 40%
stake in Cellnet, the major UK cellular operator which currently has in excess
of 2 million subscribers. Securicor's shares are traded on the London Stock
Exchange (Symbols: Securicor; Securicor 'A' and Security Services.)
Simmonds Capital Limited, Toronto, Ontario, is a diversified electronics
company. It is a manufacturer, distributor and systems integrator in the
global wireless communications market and the production and distribution of
electronic components. SCL is listed on The Toronto Stock Exchange (Symbol:
SMM).
The subject of this press release includes forward looking statements
concerning a contemplated transaction. The forward looking statements are made
pursuant to the safe harbor
<PAGE> 23
provisions of the Private Securities Litigation Reform Act of 1995. There are
many factors that could cause the events in such forward looking statements to
not occur, including the inability of the parties to negotiate final agreements
or to obtain regulatory or shareholder approvals.
For further information contact:
David Neibert Brian Faughnan
Intek Diversified Corporation Simmons Capital Limited
tel: 310-366-7703 416-221-19OO ext. 230
Dr. Ed Hough
Securicor Group
441-81-770-7000
<PAGE> 24
EXHIBIT O
DEBENTURE
---------
1. Simmonds Communications Ltd. (hereinafter called the "Company") for value
received, hereby acknowledges itself indebted and promises to pay Octagon
Limited (hereinafter called the "Holder") on the 15th day of September, 2000,
the sum of TWO MILLION, FIVE HUNDRED THOUSAND DOLLARS (US $2,500,000) in lawful
money of the United States of America (the "Principal Amount") and to pay
interest thereon from the date hereof annually in arrears on the 15th day of
September in each year at the rate of fourteen per cent (14%) per annum as well
after as before maturity, default and judgment, in like money and to pay
interest on overdue interest at the said rate.
2. (a) As security for the payment of the Obligations, the Company hereby
grants a security interest in and pledges the Collateral to and in
favour of the Holder (the said security interest and pledge of the
Collateral being hereinafter referred to as the "Security Interest").
The Holder shall have no rights in the Collateral other than the
Security Interest and its rights hereunder.
(b) The Security Interest shall extend to the Proceeds.
(c) The Company acknowledges and agrees that the Security Interest is
intended to attach to the Collateral upon the date of execution of this
Debenture.
(d) The Company delivers herewith to the Holder the original special Note
which shall be held by the Holder in accordance with the terms of this
Debenture.
(e) 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
<PAGE> 25
may be required as a result of the Holder exercising its remedies under
section 3 hereof.
(f) Unless and until an Event of Default shall have occurred and be
continuing, the Company 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 the Company on or with respect to
the Collateral received by the Holder shall forthwith be paid or
delivered by the Holder to the Company or as it may direct, free and
clear of the Security Interest.
(g) Unless and until an Event of Default shall have occurred and be
continuing, the Company shall be entitled to vote the Collateral and to
give consents, waivers, notices and ratification, 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 Debenture.
(h) It is understood and agreed that the Holder, at any time and from time
to time when an Event of Default shall have occurred and be continuing,
may enforce any and all of the rights of the Company with respect to the
Collateral, including those rights described in paragraph (g) of this
section 2.
3. (a) Each of the following events is herein sometimes referred to as an
"Event of Default";
(i) if default is made in the payment of the Principal Amount when
the same becomes due under the provisions hereof; or
<PAGE> 26
- 3 -
(ii) if default is made in the payment of any interest due hereunder
and such default shall have continued for a period of five
Business Days;
(iii) if default is made in the payment of any amounts payable under
section 6 hereof when the same became due under the provisions
hereof; or
(iv) if a decree or order of a court having jurisdiction is entered
adjudging the Company or any Significant Subsidiary a bankrupt
or insolvent, or approving as properly filed a petition
seeking reorganization or winding-up of the Company under the
Bankruptcy and Insolvency Act (Canada) or any bankruptcy,
insolvency or analogous laws or issuing process of execution
against any substantial part of the property of the Company or
any Significant Subsidiary, or appointing a receiver, or
ordering the winding-up or liquidation of the affairs, of the
Company or any Significant Subsidiary; or
(v) if a resolution is passed for the winding-up or liquidation of
the Company or any Significant Subsidiary (unless in
respect of a winding-up or liquidation of any Significant
Subsidiary, the proceeds of such winding-up or liquidation are
disbursed to the direct shareholders of such Significant
Subsidiary) or if the Company or any Significant Subsidiary
institutes proceedings to be adjudicated a bankrupt or
insolvent, or consents to the institution of bankruptcy or
insolvency proceedings against it or makes a general assignment
for the benefit of its creditors or a proposal under the
Bankruptcy and Insolvency Act (Canada) or analogous laws, or
consents to the filing of a petition for any such proceedings
or for the appointment of a receiver of, or of any substantial
part of, its property, or admits in writing its inability to
pay its debts generally as they become due or takes action in
furtherance of any of the aforesaid purposes; or
<PAGE> 27
- 4 -
(vi) if any event of default or any event which, with the passage of
time or the giving of notice or both, would constitute an
event of default, as defined in the indentures or
instruments under which the Company or any of its Significant
Subsidiaries has at the date hereof or shall hereafter have
outstanding indebtedness for borrowed money (which
indebtedness, in accordance with generally accepted accounting
principles, would be classified as a liability on a
consolidated balance sheet) in an aggregate amount equal to or
greater than U.S. $3,000,000, shall have occurred and be
continuing, and the trustees or holders of such indebtedness
have accelerated the maturity of such indebtedness; or
(vii) if the Company breaches any of its covenants hereunder
and such breach is not cured within 30 days of the Holder
giving notice thereof to the Company.
(b) In case any Event of Default has occurred and is continuing, the
Security Interest shall immediately become enforceable and the Holder
may, forthwith or at any time thereafter (and, in the event that the
Holder shall proceed under any of paragraphs (ii) to (viii) inclusive of
this paragraph (b) (other than in respect of an Event of Default
referred to in paragraph (a)(iii) of this section 3) upon five Business
Days' notice to the Company), except in the event such Event of Default
shall have been cured prior to any action by the Holder under this
paragraph (b) or except as provided by applicable law or this Debenture,
take any one or more of the following actions:
(i) declare any or all of the Obligations to be immediately due and
payable by giving notice in writing thereof to the Company and,
in such event, such Obligations shall be forthwith due and
owing by the Company to the Holder;
<PAGE> 28
- 5 -
(ii) commence legal action to enforce payment of the Obligations;
(iii) subject to any applicable law, dispose of the Collateral by
private sale, public sale or otherwise upon such terms and
conditions as the Holder may determine; provided that the
Holder may apply and allocate any proceeds arising from the
realization of the Collateral to the Obligations in such manner
as the Holder in its absolute discretion, shall deem
appropriate;
(iv) elect to retain the Collateral or any portion thereof
irrevocably in full and final satisfaction of the Obligations
by giving written notice of such election to the Company;
(v) exercise any or all of the rights and privileges attaching to
any of the Collateral as if the Holder were the absolute owner
thereof;
(vi) 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 the Company;
(vii) where the Collateral has been disposed of by the Holder as
provided herein, commence legal action against the
Company for the difference, if any, between (i) any damages
suffered by the Holder or its assigns resulting directly or
indirectly form the violation by the Company of this Debenture
(including, without limitation, the Obligations); and (ii) the
proceeds received by the Holder on a disposition of the
Collateral or Proceeds (hereinafter referred to as the
"Deficiency"); or
<PAGE> 29
- 6 -
(viii) take any other action, suit, remedy or proceeding authorized or
permitted by this Debenture or by law or equity.
For greater certainty, the existence of an Event of Default and the
delivery of a notice or notices or the taking of any action or actions
by the Holder pursuant to this paragraph (b) shall not affect the rights
of the Company pursuant to section 5 hereof.
(c) The Company shall pay to the Holder on demand all costs and expenses of
the Holder (including legal fees) incurred in exercising its rights
hereunder, which costs and expenses shall form part of the Obligations,
and shall be paid by the Company to the Holder forthwith after demand
therefor shall have been made by the Holder to the Company together with
interest from and including the date of demand or, if the Holder has
taken steps to exercise its rights under paragraph (b) of this section
3, from and including the date upon which the cost or expense is
incurred at a rate of fourteen percent (14%) per anum, 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.
(d) Where the Collateral has been disposed of by the Holder, the Deficiency
shall be paid by the Company to the Holder forthwith after demand
therefor shall have been made by the Holder to the Company together with
interest from and including the date upon which the Deficiency arises at
a rate of fourteen percent (14%) per annum 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.
<PAGE> 30
- 7 -
(e) The Holder 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.
(f) At any time before the Holder has disposed of the Collateral as provided
for herein or before the Holder has elected, in the manner set out in
paragraph (b)(iv) of this section 3, to retain all or part of the
Collateral irrevocably, the Company may redeem the Collateral by
satisfying all of its obligations and liabilities under this Debenture.
(g) The Company irrevocably constitutes and appoints the Holder and its
directors and officers holding office from time to time as the true and
lawful attorneys of the Company with full power of substitution in the
name of the Company to do any and all such acts or things or execute and
deliver all such agreements, documents and instruments as the Holder, in
its sole discretion, considers necessary or desirable to carry out the
provisions and proposes of this Debenture 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 the Holder or to any person who acquires the same pursuant
to the provisions of paragraph (b) of this section 3; (ii) endorsing,
negotiating or redeeming any Collateral; (iii) exercising any voting
rights associated with the Collateral and executing any proxies or
similar instruments in furtherance hereof; and (iv) realizing or
collecting any Proceeds or any dividends, principal, interest or other
payments on the Collateral or in respect hereof. The Company hereby
ratifies and agrees to ratify all acts of any such attorney taken or
done in accordance with this paragraph (g). 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
Debenture has been terminated.
<PAGE> 31
- 8 -
(h) The company will, from time to time at the request of the Holder, make
and do all such acts and things and execute and deliver all such
instruments, agreements and documents as the Holder shall reasonably
request by notice in writing given to the Holder in order to create,
preserve, perfect, validate or otherwise protect the Security Interest,
to enable the Holder to exercise and enforce any of its rights and
remedies hereunder and generally to carry out the provisions and
purposes of this Debenture.
4. The Company hereby covenants and agrees with the Holder that until all
monies owing hereunder are paid in full it will take or cause to be taken all
such steps and actions to ensure that an Event of Default shall not occur.
5. (a) Subject to paragraphs (b) to (d) of this section 5, on or after April
5, 1996, the Company shall have the option to prepay all (but not
less than all) of the Principal Amount, together with all accrued but
unpaid interest thereon, (collectively, the "Repayment Amount") by the
transfer to the Holder of such number of common shares of Intek
Diversified Corporation ("Intek") equal to the Repayment Amount
divided by U.S. $5.22, rounded up to the next whole number, (the
"Repayment Shares").
(b) If there occurs after the date hereof a reclassification of the
outstanding common shares of Intek (including a subdivision or
consolidation thereof) or a change or exchange of common shares of Intek
into or for other shares or into or for other securities or any other
capital reorganization, or a consolidation, amalgamation or merger of
Intek with or into any other corporation or other entity, or a transfer
of the undertaking or assets of Intek as an entirety to another
corporation or entity in which the holders of common shares of Intek are
entitled to receive shares, other securities or other property (any of
which events is hereinafter referred to as a "Capital Reorganization"),
and after the effective date of such Capital Reorganization the Company
exercises its right to prepay the Principal Amount
<PAGE> 32
- 9 -
pursuant to paragraph (a) of this section 5, such right will consist of
the right to make payment of all (but not less than all) of the
Principal Amount and any accrued but unpaid interest thereon by
transferring to the Holder the aggregate number of common shares
of Intek, other securities or other property which the Holder would have
been entitled to receive as a result of such Capital Reorganization if,
immediately prior to such Capital Reorganization being effected, the
Holder had been the registered holder of the Repayment Shares.
(c) On the happening of each and every Capital Reorganization, the applicable
provisions of this Debenture shall be deemed to be amended accordingly,
including, without limitation, the definition of Repayment Shares which
shall be amended such that it includes all shares, other securities and
other property received on the most recent Capital Reorganization as a
result of being the registered holder of the Repayment Shares as well as
any shares, other securities or other property constituting part of the
Repayment Shares which were not changed, exchanged or otherwise affected
by the most recent Capital Reorganization.
(d) Notwithstanding any provision hereof, the Repayment Shares or other
securities or other property received on a Capital Reorganization and
transferred to the Holder pursuant to this section 5 shall prior to such
transfer be beneficially owned by the Company free and clear of all
liens, claims, charges or encumbrances whatsoever and such securities or
other property shall be registered under applicable United States
Federal securities laws and regulations or otherwise freely tradeable in
the United States.
6. If on any date on or after June 30, 1996, the simple average of (a) the
closing price for the common shares of Intek for each day that there has ben
trading, and (b) the simple average of the closing bid and ask prices of common
shares of Intek for each day on which there has been no trading, for the five
consecutive trading days on NASDAQ immediately preceding such
<PAGE> 33
- 10 -
date exceeds US $10.00 (the "Trigger Price"), then the Holder, on thirty days'
written notice to the Company, may declare the Principal Amount and all accrued
and unpaid interest thereon to be immediately due and payable together with the
Additional Amount as determined on the date of the giving of such notice and on
the expiry of such five day period the Company shall forthwith pay all such
amounts to the Holder, provided always that, until the expiry of such notice
period, the Company shall continue to have the right to exercise its rights
under section 5 hereof and, upon the exercise by the Company of such rights
under section 5, there shall be no requirement for the Company to pay the
Additional Amount.
7. The Trigger Price in effect at any date shall be subject to adjustment from
time to time as follows:
(a) If and whenever at any time Intek shall (i) subdivide its outstanding
common shares into a greater number of common shares, (ii) consolidate
its outstanding common shares into a lesser number of common shares,
(iii) issue common shares to the holders of all or substantially all of
its outstanding common shares by way of stock dividend (other than as a
dividend paid in the ordinary course on the outstanding common shares)
or (iv) make a distribution on its outstanding common shares payable in
its common shares (other than as a dividend paid in the ordinary course)
(any of such events in these clauses (i), (ii), (iii) and (iv) being
called a "Share Reorganization"), the Trigger Price shall be adjusted
effective immediately on the effective date of such Share Reorganization
or the record date at which the holders of common shares of Intek are
determined for the purposes of the Share Reorganization by multiplying
the Trigger Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of outstanding
common shares of Intek on such record date before giving effect to such
Share Reorganization and the denominator of which shall be the number of
outstanding common shares of Intek after giving effect to such Share
Reorganization (including, in the case where securities exchangeable
for or convertible into common shares of Intek are distributed,
the number of
<PAGE> 34
- 11 -
common shares of Intek that would have been outstanding had such
securities been exchanged for or converted into common shares of
Intek on such record date). Such adjustment shall be made successively
wherever any such effective date or record date shall occur; and any
such issue of common shares of Intek by way of stock dividend or other
distribution shall be deemed to have been made on the record date for
the stock dividend or other distribution for the purpose of calculating
the number of outstanding common shares under paragraphs (b) and (d) of
this section 7.
(b) if Intek shall fix a time prior to the record date for the issuance of
rights, options or warrants to all or substantially all the holders of
the outstanding common shares of Intek entitling them, for a period
expiring not more than 45 days after such record date (the "Rights
Period"), to subscribe for or purchase common shares or securities
exchangeable for or convertible into common shares of Intek at a price
per share (or at an exchange or conversion price per share) of less than
95% of the Current Market Price (as defined in paragraph (d) of this
section 7) of a common share of Intek (any of such events being called a
"Rights Offering"), the Trigger Price shall be adjusted effective
immediately after the end of the Rights Period to a price determined by
multiplying the Trigger Price in effect immediately prior to the end of
the Rights Period by a fraction, of which the numerator shall be the
aggregate of the number of common shares of Intek outstanding as of the
record date for the Rights Offering plus the number of common shares of
Intek equal to the number arrived at by dividing the aggregate price of
the total number of additional common shares of Intek offered for
subscription or purchase or the aggregate conversion or exchange price of
the convertible securities so offered by such Current Market Price, and
of which the denominator shall be the number of common shares of Intek
outstanding after giving effect to the Rights Offering (including the
number of common shares of Intek actually issued or subscribed for
during the Rights Period upon exercise of the rights, warrants or
options under the Rights Offering). Common Shares of
<PAGE> 35
- 12 -
Intek owned by or held for the account of Intek or any subsidiary
thereof shall be deemed not to be outstanding for the purpose of any
such computation.
(c) If and whenever at any time Intek shall fix a record date for the making
of a distribution to all or substantially all the holders of its
outstanding common shares of (i) its shares of any class other than
common shares, (ii) rights, options or warrants to acquire its common
shares or securities exchangeable for or convertible into its common
shares or property or other assets of Intek, (iii) evidence of
indebtedness, or (iv) any property or other assets, if such distribution
does not constitute (a) a dividend paid in the ordinary curse, (b) a
Share Reorganization, or (c) a Rights Offering (any of such non-excluded
events herein called a "Special Distribution"), the Trigger Price shall
be adjusted effective immediately after the record date at which holders
of common shares of Intek are determined for purposes of the Special
Distribution to be a price determined by multiplying the Trigger Price
in effect on such record date by a fraction, of which the numerator
shall be the number of common shares of Intek outstanding on such record
date multiplied by the Current Market Price of a common share of Intek
on such record date, less the fair market value of such shares, rights,
options, warrants, evidences of indebtedness or property or other assets
issued or distributed, and of which the denominator shall be the number
of common shares of Intek outstanding on such record date multiplied by
such Current Market Price.
(d) For the purpose of any computation under paragraphs (b) or (c) of this
section 7, the "Current Market Price" of a common share of Intek at any
date shall be the weighted average price per share for common shares of
Intek for 30 consecutive trading days before such date on NASDAQ, or, if
the shares in respect of which a determination of Current Market Price
is being made are not listed thereon, on such stock exchange on which
such shares are listed as may be selected for such purpose by the
Company or, if such shares are not listed on any stock exchange, then on
the over the counter market. The weighted average price shall be
<PAGE> 36
- 13 -
determined by dividing the aggregate sale price of all such shares sold
on the said exchange or market, as the case may be, during the said 30
days by the total number of such shares so sold.
(e) The adjustments provided for in this section 7 are cumulative, shall be
computed to the nearest one tenth of one cent and shall be made
successively whenever an event referred to therein shall occur,
provided, that, notwithstanding any other provision of this section 7,
no adjustment of the Trigger Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Trigger Price then in effect; provided however, that any adjustments
which by reason of this paragraph (e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
(f) No adjustment of the Trigger Price shall be made pursuant to this
section 7 in respect of the issue from time to time of common shares of
Intek pursuant to any stock option or stock purchase plan(s) in force
from time to time for officers, employees or consultants of Intek or
shareholders of Intek who exercise an option to receive substantially
equivalent dividends in common shares of Intek in lieu of receiving a
cash dividend paid in the ordinary course, and any such issue shall be
deemed not to be a Share Reorganization.
(g) In the event of any question arising with respect to the adjustments
provided in this section 7, such questions shall be conclusively
determined by a firm of chartered accountants appointed by the Company
and acceptable to the Holder (who may be the auditors of the Company)
and such determination shall be binding upon the Company and the Holder.
8. Notwithstanding any provision contained herein, the Company shall not be
obliged to make any payments of interest or other amounts payable to the Holder
hereunder in excess of the amount or rate which would be prohibited by
applicable law or would result in the receipt
<PAGE> 37
- 14 -
by the Holder of interest at a criminal rate (as such terms are construed under
the Criminal Code (Canada)).
9. Subject to section 5 hereof, payments of the Principal Amount and interest
thereon and any other amount payable hereunder shall be made in lawful money of
the United States of America by wire transfer of immediately available funds to
an account designated by the Holder or to such other account or in such other
manner as shall have been designated by the Holder by written notice to the
Company.
10. If the date on which any payment is required to be made pursuant to the
provisions of this Debenture occurs on a day which is not a Business Day, such
payment shall be due and payable on the immediately succeeding Business Day.
11. Subject to sections 3, 5 and 6 hereof, no prepayment of the Principal
Amount may be made.
12. Upon the satisfaction of the Obligations, the Holder shall at its own
expense deliver to the Company possession of all Collateral and make and do all
such acts and things and execute and deliver all such instruments, agreements
and documents as the Company 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.
13. At any time and from time to time upon the Holder receiving:
(a) an Officer's Certificate requesting that additional property (the
"Additional Collateral") specifically enumerated therein be subject to
the Security Interest and stating that:
<PAGE> 38
- 15 -
(i) the Company has a good and valid title to and interest in the
Additional Collateral free and clear of any lien, charges, pledges and
encumbrances whatsoever and that the pledge and delivery of the
Additional Collateral pursuant hereto will create a valid first pledge
and perfected security interest in the Additional Collateral, subject
to no prior pledge, lien, mortgage, hypothecation, security interest,
charge or encumbrance;
(ii) the Company has the right and lawful authority to cause the Additional
Collateral to be subject to the Security Interest; and
(iii) all requirements imposed by the terms of this Debenture to make the
Additional Collateral subject to the Security Interest have been
fulfilled in accordance with the terms of this Debenture;
such Additional Collateral shall immediately form part of the Collateral
and become subject to the Security Interest.
14. At any time and from time to time, provided that no Event of Default under
this Debenture has occurred and is continuing, upon receiving:
(a) an Officer's Certificate dated the date of delivery thereof:
(i) requesting that the items of Collateral specifically enumerated
therein (the "Released Collateral") be released from the Security
Interest;
(ii) stating than no Default or Event of Default has occurred and is
continuing; and
(iii) specifying the aggregate Market Value of the Collateral, excluding
the Released Collateral, on such date; and
<PAGE> 39
- 16 -
(b) an Appraiser's Certificate, dated of even date with the Officer's
Certificate referred to in paragraph (a) of this section 14,
verifying the aggregate Market Value of the Collateral, excluding the
Released Collateral, on such date as specified in the Officer's
Certificate referred to in paragraph (a) of this section 14;
the Holder shall, provided that the aggregate Market Value of the Collateral,
excluding the Released Collateral, specified in such certificate and as
verified in the Appraiser's Certificate, is not less Canadian $3,000,000, at
the expense of the Company, promptly release the Released Collateral from the
Security Interest and deliver the certificates representing the same to the
Company and cancel and discharge the Security Interest insofar as it relates to
the Released Collateral and execute and deliver to the Company such deeds or
other instruments as may be required to so cancel and discharge the Security
Interest and to release to the Company in transferable form the Released
Collateral free and clear from the security constituted hereby.
15. In this Debenture 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) "ADDITIONAL AMOUNT" means in respect of notice being given by the
Holder pursuant to section 6 hereof during any six month period
specified below the amount specified below for such six month period:
<TABLE>
<CAPTION>
Six Month Period Beginning Additional Amount
-------------------------- -----------------
<S> <C>
March 15, 1996 US$562,500
September 15, 1996 US$1,125,000
March 15, 1997 US$1,687,500
</TABLE>
<PAGE> 40
- 17 -
<TABLE>
<S> <C>
September 15, 1997 US$2,250,000
March 15, 1998 US$2,812,500
September 15, 1998 US$3,375,000
March 15, 1999 US$3,937,500
September 15, 1999 US$4,500,000
March 15, 2000 US$5,062,500
</TABLE>
(c) "ADDITIONAL COLLATERAL" has the meaning ascribed thereto in section 13
hereof;
(d) "APPRAISER'S CERTIFICATE" means a certificate signed by an Independent
Appraiser in a form satisfactory to the Holder (acting reasonably),
together with detailed working papers in support of the conclusion set
out in such certificate;
(e) "BUSINESS DAY" means a day of the year other than a Saturday, a Sunday
or a day observed as a statutory holiday in Ontario;
(f) "COLLATERAL" means the Special Note and any securities issued on the
exercise, conversion or exchange thereof or any security or property
derived therefrom and any other securities or instruments deposited or
delivered by the Company with or to the Holder hereunder;
(g) "DEFAULT" means an event which with the passage of time or the giving of
notice or both would constitute an Event of Default;
(h) "EVENT OF DEFAULT" has the meaning ascribed thereto in section 3 hereof;
(i) "INDEPENDENT APPRAISER" means an independent member of the Investment
Dealers Association of Canada selected by the Company;
<PAGE> 41
- 18 -
(j) "MARKET VALUE" means:
(i) with respect to any security on any date, the simple average of the
following prices for the thirty consecutive Business Days immediately
preceding such date:
(I) if such security is listed on The Toronto Stock Exchange; (A) the
closing price of the security for each day that there has been
trading; (B) the simple average of the bid and ask prices for
each day on which there was no trading; or (C) if there is no
closing price or bid and ask price on the thirty preceding
Business Days, the fair market value thereof as determined by an
Appraiser's Certificate; or
(II) if such security is not listed on The Toronto Stock Exchange, but
quotations with respect thereto are publicly reported, the
Market Value thereof shall be determined by applying the
provision of subparagraph (I) above mutatis mutandis; and
(ii) with respect to all other Collateral, the Market Value shall be the
fair market value thereof in Canadian dollars as determined by an
Appraiser's Certificate;
For the foregoing purposes "fair market value" means the highest price
available on an open and unrestricted market between informed prudent
parties acting at arm's length and under no compulsion to act, expressed
in terms of money or money's worth;
<PAGE> 42
- 19 -
(k) "OBLIGATIONS" means all liabilities and obligations of any kind or
nature now or at any time and from time to time owing by the Company to
the Holder pursuant to or by virtue of this Debenture;
(l) "OFFICER'S CERTIFICATE" means a certificate in writing signed by any two
of the senior officers of the Company one of which must be the President
or Chief Executive Officer of the Company;
(m) "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;
(n) "RELEASED COLLATERAL" has the meaning ascribed thereto in section 14
hereof;
(o) "SECURITY INTEREST" has the meaning ascribed thereto in section 2
hereof;
(p) "SIGNIFICANT SUBSIDIARY" means any subsidiary of the Company the assets
of which represent greater than 20% of the consolidated assets of the
Company and the sales and operating revenues of which represent greater
than 20% of the consolidated sales and operating revenues of the
Company; and
(q) "SPECIAL NOTE" means the Canadian $1,025,000 principal amount Class A
Special Note Certificate dated July 14, 1995 made by Circuit World
Corporation in favour of Simmonds Mercantile & Management Inc.
16. All communications (including, without limitation, any demand for payment
hereunder) shall be effectively given if (i) delivered by hand, (ii) sent by
electronic or facsimile communication, or (iii) sent by prepaid courier service
addressed to the Company at 5255 Yonge
<PAGE> 43
- 20 -
Street, Willowdale, Ontario, M2N 6P4, Attention: David O'Kell (Facsimile (416)
221-3800) or to the Holder at Octagon Limited, 2nd Floor, Pollet House, Lower
Pollet, St. Peter Port, Geuernsey, Channel Islands, Attention: Bernard
Saunders (Facsimile 011 481 729331), with a copy to Octagon Capital Canada
Corporation, Suite 406, 181 University Avenue, Toronto, Ontario, M5H 3M7,
Attention: Laurence P. Haughton (Facsimile (416) 368-3811).
Any notice so given shall be deemed conclusively to have been given and
received when so delivered by hand or sent by electronic communication or
facsimile or on the second day following the sending thereof by courier. Any
other party may change any particulars of its address for notice to the other
in the manner aforesaid.
17. Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Debenture and, in case of any
such loss, theft or destruction of this Debenture, upon delivery of an
indemnity reasonably satisfactory to the Company in form and amount or, in the
case of any such mutilation, upon surrender of this Debenture for cancellation
at the offices of the Company, the Company at its expense will make and deliver
a new Debenture of like tenor in lieu of such lost, stolen, destroyed or
mutilated Debenture.
18. The Holder may compound, compromise, grant extension, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the Company and others and the Collateral as it sees fit without
prejudice to any of its rights hereunder. The Holder need not see to the
exercise of any option or right in connection with the Collateral and need not
protect or preserve it from, and is hereby released from all responsibility
for, depreciation in or loss of value of the Collateral and the Holder shall be
bound to exercise in the keeping of the Collateral only the same degree of care
as if it were the property of the Holder. No remedy hereby conferred upon or
reserved to the Holder for the realization of the Collateral, enforcement of
rights of the Holder or otherwise is intended to be exclusive of any other
remedy or remedies hereunder or any other security held hereto and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or under any other document or agreement in respect of
the amounts owing by the Company to the
<PAGE> 44
- 21 -
Holder. The taking of any action or proceedings or refraining from doing so or
any other dealings with any other security for the money hereby secured, shall
not release or affect the security hereunder. This Debenture and the security
hereunder are in addition to and not in substitution for any other security
held by the Holder and shall not operate as a merger of any debt or suspend the
fulfillment of or affect the rights, remedies and powers of the Holder in
respect of the Obligations or any security held by the Holder for the
fulfillment thereof.
19. This Debenture and any covenants and agreements of the Company herein
shall be binding upon and enforceable against the Company and its successors
and assigns and shall enure to the benefit of the Holder and its successors and
assigns provided that the Holder (and any successor and assign of the Holder)
may not assign its rights and obligations hereunder or any beneficial interest
therein to any person, corporation, or other entity (i) which is a resident of
Canada, (ii) which is a U.S. Person (as that term is defined in Rule 902(c) of
the Securities Act of 1993, as amended, of the United States of America), (iii)
whose identity, residency or relationship with Intek would cause the Company
not to be able to comply with paragraph (d) of section 5 hereof in
circumstances where it would be able to comply with such provision if the
Debenture were not so assigned, or (iv) in circumstances where if such person,
corporation or other entity was the holder of this Debenture, the Company
would, in order to exercise its rights under section 5 of this Debenture, be
compelled to make filings with regulatory authorities or take other action at
its cost or which would be detrimental to it unless such person, corporation or
other entity or the Holder fully indemnifies the Company for all such costs and
other matters, without the written consent of the Company.
20. This note shall be governed by and constructed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
21. The Company covenants and agrees that, to the fullest extent permitted by
the law, it shall make all payments hereunder without regard to any defence,
counterclaim or right of set-off available to it other than under this
Debenture and that any permitted assignee of the Holder shall have all of the
Holder's rights and remedies under this Debenture.
<PAGE> 45
- 22 -
IN WITNESS WHEREOF the Company caused its corporate seal to be hereunto and
this Debenture to be duly executed this 15th Day of September, 1995.
SIMMONDS COMMUNICATIONS LTD.
Per: /s/ John G. Simmonds
-------------------------------
John G. Simmonds
Chairman, President and CEO
