<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 13)*
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 720
Torrance, California 90502
(310) 366-7335
______________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 28, 1996
________________________________________________
(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 4 PAGES
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 458134 10 3 Page 2 of 4 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"), on November 27, 1995 ("Amendment No. 11"), and on March
18, 1996 ("Amendment No. 12") on behalf of Simmonds Capital Limited (f/k/a
Simmonds Communications Ltd.) ("SCL") is hereby amended as follows:
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 of the Schedule 13D is hereby amended by inserting immediately
prior to the penultimate paragraph thereof, the following:
On March 28, 1996, SCL borrowed the original principal amount
of U.S. $3,000,000 from Quest Capital Corporation, a British Columbia
company ("Quest"), pursuant to a Loan Agreement between SCL and Quest
(the "Quest Loan Agreement," a copy of which is attached hereto as
EXHIBIT P and incorporated herein). In connection with such loan, SCL
issued a promissory note dated March 28, 1996, in favor of Quest and
in the original principal amount of U.S. $3,000,000 (the "Quest
Promissory Note," a copy of which is attached hereto as EXHIBIT Q and
incorporated herein). The Quest Promissory Note bears interest at the
rate of 12.68% per annum and is due on the earlier of (i) July 28,
1996, (ii) the occurrence of an event of default, or (iii) the
completion by SCL of a public debt financing, a private debt financing
to the extent such private debt financing is in excess of
C$20,000,000, a private equity financing or a public equity financing.
To secure SCL's repayment of the Quest Promissory Note and the
performance by SCL of all SCL obligations to Quest, SCL:
a. granted Quest a security interest in all of SCL's
present and after acquired personal property pursuant
to the terms and provisions of that certain Security
Agreement dated March 28, 1996, between SCL and Quest
(the "Quest Security Agreement," a copy of which is
attached hereto as EXHIBIT R and incorporated
herein);
b. pledged 1,000,000 shares of Common Stock pursuant to
the terms of a Pledge Agreement dated March 28, 1996
between SCL and Quest (the "Quest Pledge Agreement,"
a copy of which is attached hereto as EXHIBIT S and
incorporated herein).
ITEM 7. EXHIBITS.
Item 7 of the Schedule 13D is hereby amended by inserting the
following new Exhibits at the end thereof:
Exhibit P Loan Agreement between SCL and Quest dated the 28th
day of March, 1996
Exhibit Q Promissory Note of SCL dated March 28, 1996, in favor
of Quest and in the original principal amount of
U.S. $3,000,000
Exhibit R Security Agreement dated March 28, 1996 between
SCL and Quest
Exhibit S Stock Pledge Agreement dated March 28, 1996 between
SCL and Quest
[SIGNATURES COMMENCE ON NEXT PAGE.]
CUSIP NO. 458134 10 3 Page 3 of 4 Pages
<PAGE> 4
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.
April 8, 1996
--------------------------------------------------------
(Date)
/s/ David O'Kell
--------------------------------------------------------
(Signature)
David C. O'Kell, Executive Vice President and Secretary
--------------------------------------------------------
(Name/Title)
CUSIP NO. 458134 10 3 Page 4 of 4 Pages
<PAGE> 5
EXHIBIT P
LOAN AGREEMENT
--------------
THIS AGREEMENT made on the 28th day of March, 1996,
BETWEEN:
QUEST CAPITAL CORPORATION, a British Columbia company, having
an office at Suite 900 - 999 West Hastings Street, Vancouver,
British Columbia, V6C 2W2
(the "Lender")
AND:
SIMMONDS CAPITAL LIMITED, an Ontario corporation having an
office at Ste. 1050 - 5255 Yonge Street, Toronto, Ontario M2N
6P4
(the "Borrower")
WHEREAS the Lender has agreed to lend to the Borrower the sum of $3,000,000 on
the terms and conditions of this Agreement (the "Loan").
AGREEMENTS:
For good and valuable consideration, the receipt and sufficiency of which each
party acknowledges, the parties agree as follows:
1. ADVANCE AND ACKNOWLEDGMENT OF LOAN
The Loan shall be advanced by the Lender in full on the date hereof
and the Borrower shall acknowledge receipt of the Loan, as received.
2. TERM
The Loan shall be due and payable by the Borrower to the Lender on the
earliest of:
(a) July 28, 1996;
(b) the date of completion by the Borrower of:
(i) a public debt financing;
(ii) a private debt financing in excess of $20,000,000;
<PAGE> 6
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(iii) a public equity financing; or
(iv) a private equity financing
including, without limitation, through the exercise of any
outstanding stock options or warrants issued by the Borrower;
(c) the occurrence of an Event of Default, as defined in
paragraph 9 hereof.
In respect of paragraph (b)(ii) of this paragraph 2, repayment of the Loan will
only be required to the extent that the financing exceeds the $20,000,000
threshold.
On the completion date of any sale of the assets or undertaking of the Borrower
outside of the normal course of business, for a price equal to or in excess of
$1,000,000 (the "Sale Price"), the Borrower shall repay from the proceeds of
such sale that portion of the Loan (up to the full amount of the Loan and all
accrued interest thereon) equal to the Sale Price, less transaction costs and
the amount of any other loan which was incurred by the Borrower to purchase
such assets or undertaking.
The Borrower may repay the Loan at any time prior to maturity without notice or
penalty.
3. INTEREST
Interest shall accrue on the principal amount of the Loan, calculated
from this date, at the rate of one (1%) percent per month (12.68% per
annum), and be payable at the end of each month both before and after
each of maturity of the Loan, default and judgment and be payable by
the Borrower to the Lender at maturity.
4. FEES
The Borrower shall pay to the Lender all of the Lender's legal fees
and other costs, charges and expenses of and incidental to the
preparation, execution and carrying out of this Agreement and the
registration of any security documents required by the Lender to
complete this transaction.
5. COMMITMENT FEE
The Borrower shall, subject to such regulatory approval as may be
required, cause to be delivered to the Lender in respect of the Loan,
a commitment fee of 100,000 free-trading common shares in the capital
of the Borrower (the "Bonus Shares") on or before March 28, 1996. In
order to deliver Bonus Shares, the Borrower may issue treasury shares
in the name of the Lender which may be subject to certain resale
restrictions, then substitute for them an equal number of free-trading
common shares presently held by senior officers or directors of the
Borrower.
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6. SECURITY/CONDITIONS PRECEDENT
As security for payment of all of the Borrower's indebtedness and
liabilities under the Loan and this Agreement, the Borrower, shall,
concurrently with and as a condition precedent to the advance of the
Loan:
(a) execute and deliver to the Lender a promissory note, in the
form and terms attached hereto as Schedule "A" (the "Loan
Note");
(b) execute and deliver to the Lender a pledge (the "Pledge
Agreement") of 1,000,000 issued and outstanding shares (the
"Intek Shares") in the capital of Intek Diversified
Corporation ("Intek") represented by certificate no. 12059,
together with a duly executed stock power of attorney
providing for the transfer of the shares to the Lender and a
certified extract of the Borrower's directors' resolution
authorizing the pledge and transfer of the Intek Shares,
subject to the covenants, representations and resale
restrictions under U.S. securities laws set out on Schedule
"B" hereto;
(c) execute and deliver to the Lender a security agreement in the
form and terms attached hereto as Schedule "C" (the "Security
Agreement").
7. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
(a) the Borrower is a duly incorporated corporation and is in good
standing under the laws of the Province of Ontario and has the
power and authority to carry on its business as now being
conducted, and has full power to acquire, own, hold, lease and
mortgage its assets, real and personal;
(b) this Agreement, the Loan Note, the Security Agreement and the
Pledge Agreement have been duly authorized by all necessary
action of the Borrower and each constitutes a legal, valid and
binding obligation of the Borrower enforceable against the
Borrower in accordance with their terms;
<PAGE> 8
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(c) the Intek Shares were issued to the Borrower by Intek on
September 24, 1994 and the Borrower is the registered and
beneficial owner of the Intek Shares, free and clear of all
liens, claims and encumbrances, subject only to the resale
restrictions reflected in paragraph 3 of Schedule "B" hereto;
(d) the Borrower is an "affiliate" of Intek within the meaning of
that term in Rule 144(d) of the U.S. Securities Act of 1933;
(e) the Borrower will not be in breach or default by April 15,
1996 under any obligation in respect of borrowed money and the
execution and delivery of this Agreement, and the Loan Note
and all ancillary instruments or security documents issued
hereunder, and performance of the terms hereof and thereof
will not be, or result in, a violation or breach of, or
default under, any law, agreement or instrument to which it is
party or may be bound;
(f) no litigation or administrative proceedings before any court
or governmental authority are presently pending, or have been
threatened in writing, against the Borrower or any of its
assets or affecting it or any of its assets which could have a
material adverse effect on its business or assets;
(g) the Borrower's financial statements for the nine month period
ended September 30, 1995 (the "Financial Statements") fairly
present the financial affairs of the Borrower as of the date
to which they are made up and they have been prepared in
accordance with generally accepted accounting principles
consistently applied and in conformity with the applicable
guidelines of the Canadian Institute of Chartered Accountants;
(h) there has been no material change (actual, contemplated or
threatened) in the property, assets or business of the
Borrower since September 30, 1995, other than as publicly
disclosed by the Borrower prior to the date of this Agreement;
and
(i) the Borrower is a reporting issuer under the Securities Act
(Ontario) and is in compliance with its obligations under that
Act and under the rules, regulations and policies of the
Toronto Stock Exchange.
8. COVENANTS
---------
The Borrower covenants and agrees that so long as any monies shall be
outstanding under this Agreement, it will:
(a) duly perform this Agreement;
<PAGE> 9
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(b) carry on and conduct its business in a proper business-like
manner in accordance with good business practice and will keep
or cause to be kept proper books of account in accordance with
generally accepted accounting principles;
(c) furnish and give to the Lender within 30 days of delivery of a
written demand from the Lender such reports, certificates and
documents and such other information with respect to the
Borrower as the Lender may request;
(d) furnish and give to the Lender (if such is the case) notice
that there has occurred and is continuing an Event of Default
under this Agreement and specifying the same;
(e) perform and do all such acts and things as are necessary to
perfect and maintain the security provided to the Lender
pursuant to this Agreement.
9. EVENTS OF DEFAULT
Each and every one of the events set forth in this paragraph shall be
an event of default ("Event of Default") provided that in respect of
subparagraphs (b), (c), (d) and (f) hereunder the Borrower shall have
five (5) business days to cure any default or vacate any filings or
proceedings, as applicable:
(a) if the Borrower fails to make any payment of principal or
interest when due hereunder, and such failure continues for
five (5) business days thereafter;
(b) if the Borrower defaults in observing or performing any term,
covenant or condition of this Agreement, other than the
payment of monies as provided for in subparagraph (a) hereof,
on its part to be observed or performed;
(c) if at any time prior to the Borrower's repayment in full of
the Loan any representation or warranty made by the Borrower
under this Agreement is incorrect in any material respect;
(d) if the Borrower defaults in observing or performing any term,
covenant or condition of any debt instrument or obligation by
which it is bound, makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts
as they become due, or is adjudicated bankrupt or insolvent;
(e) if the Borrower petitions or applies to any tribunal for the
appointment of a trustee, receiver or liquidator or commences
any proceedings under any bankruptcy, insolvency, readjustment
of debt or liquidation law of any jurisdiction, whether now or
hereafter in effect; and
<PAGE> 10
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(f) if any petition or application for appointment of a trustee,
receiver or liquidator is filed, or any proceedings under any
bankruptcy, insolvency, readjustment of debt or liquidation
law are commenced, against the Borrower or an order, judgment
or decree is entered appointing any such trustee, receiver, or
liquidator, or approving the petition in any such proceeding.
10. EFFECT OF EVENT OF DEFAULT
If any one or more of the Events of Default occurs or occur and is or
are continuing, the Lender may without limitation in respect of any
other rights they may have in law or hereunder but subject to the
applicable grace periods set out in paragraph 9 above, demand
immediate payment of all monies owing hereunder. The Lender may also
take any steps necessary to realize on its security.
11. NOTICES UNDER THIS AGREEMENT
Notices, demands and communications required or permitted to be given
hereunder shall be in writing and sufficiently given if addressed and
delivered by hand, by courier or by facsimile transmission:
if to the Borrower:
Simmonds Capital Limited
Ste. 1050 - 5255 Yonge Street
Toronto, Ontario M2N 6P4
Attention: John Simmonds
Facsimile No.: (416) 221-3800
to the Lender:
Quest Capital Corporation
#900 - 999 West Hastings Street
Vancouver, BC V6C 2W2
Attention: Brian Bayley
Facsimile No.: (604) 683-6958
Any notice so given shall be deemed conclusively to have been given
and received when so delivered by hand or sent by facsimile or on the
second day following the sending thereof by courier.
<PAGE> 11
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Any party hereto may from time to time change its address for notice
by notice to the other party given in the manner aforesaid, effective
upon delivery. Any change of address under this paragraph will also
be a change of address with respect to such address as it appears on
any schedule or document ancillary hereto.
12. ASSIGNMENT, SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
13. WAIVERS
No failure or delay on the Lender's part in exercising any power or
right hereunder shall operate as a waiver thereof. The Lender's
rights and remedies hereunder are cumulative and not exclusive of any
rights or remedies provided by law. Time is of the essence.
14. INVALIDITY
If at any time any one or more of the provisions hereof is or becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
15. GOVERNING LAWS
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province British Columbia and the laws of Canada
applicable therein.
16. AMENDMENT
This Agreement may be changed only by or pursuant to an agreement in
writing signed by all parties.
17. SCHEDULES
Each of the schedules hereto shall be deemed fully a part of this
Agreement.
<PAGE> 12
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18. CURRENCY
All references herein to "dollars" or "$" are to United States
dollars, unless otherwise indicated.
TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on
the date first above written.
QUEST CAPITAL CORPORATION
Per: /s/ Brian Bailey
--------------------------------
Authorized Signatory
SIMMONDS CAPITAL LIMITED
Per: /s/ John Simmonds
--------------------------------
John Simmonds
<PAGE> 13
SCHEDULE "A"
PROMISSORY NOTE
---------------
Due: JULY 28, 1996
Principal Amount: US$3,000,000 Vancouver, B.C.
For value received, SIMMONDS CAPITAL LIMITED hereby promises
to pay to QUEST CAPITAL CORPORATION on the earlier of July 28, 1996 and such
other date as provided in that certain Loan Agreement between Quest Capital
Corporation as "Lender" and Simmonds Capital Limited as "Borrower", dated March
28, 1996, the sum of THREE MILLION UNITED STATES (US$3,000,000) DOLLARS with
interest accruing from the date hereof at a rate of ONE (1%) PERCENT per month,
compounded monthly (12.68% per annum), before and after each of maturity,
default and judgment, payable by certified cheque, cash, bank draft or wire
transfer and delivered to QUEST CAPITAL CORPORATION at #900 - 999 West Hastings
Street, Vancouver, BC V6C 2W2.
The undersigned hereby waives notice of dishonour and presentment.
Dated at Vancouver, British Columbia this 28th day of March, 1996.
SIGNED, SEALED AND DELIVERED
by SIMMONDS CAPITAL LIMITED
the presence of:
______________________________
Authorized Signatory
<PAGE> 14
SCHEDULE "B"
1. Notwithstanding anything to the contrary contained herein, the Lender
agrees that it shall not sell, transfer, assign, pledge or otherwise
dispose of, or cause the sale, transfer, assignment, pledge or other
disposition of, the Intek Shares unless such sale, transfer,
assignment, pledge or other disposition has been registered or is
exempt under the United States Securities Act of 1993 (the "U.S. Act")
and has been registered or qualified or is exempt from registration or
qualification under applicable securities laws and the Lender provides
to Intek an opinion of counsel satisfactory to Intek that a sale,
transfer, assignment, pledge or other disposition of the Intek Shares
may be made without registration.
2. The Lender represents as follows:
(i) the Lender's interest in the Intek Shares is for its own
accounts and not with a view to, or present intention of,
distribution thereof in violation of the U.S. Act, or any
applicable state securities laws and will not be disposed
of in contravention of the U.S. Act or any applicable state
securities laws;
(ii) the Lender is sophisticated in financial matters and is
able to evaluate the risks and benefits of any investment
in the Intek Shares;
(iii) the executive officers of the Lender have had an
opportunity to ask questions and received answers
concerning the terms and conditions of the acquisition of
the Intek Shares and have had full access to such other
information concerning Intek as the Lender has requested.
(iv) the Lender is able to bear the economic risk of any
investment in the Intek Shares for an indefinite period of
time because the Intek Shares have not been registered
under the U.S. Act and, therefore, cannot be sold unless
subsequently registered under the U.S. Act or an exemption
from such registration is available.
3. The Lender acknowledges that until such time as the Intek Shares have
been registered for resale pursuant to the U.S. Act (or an opinion of
counsel reasonably satisfactory to Intek is provided that a public
sale, transfer, or assignment of the Intek Shares may be made without
registration under the U.S. Act), each certificate representing the
Intek Shares shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS THEY HAVE FIRST BEEN REGISTERED UNDER
<PAGE> 15
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SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE
HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO THE CORPORATION (WHICH MAY INCLUDE, AMONG
OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION.)
4. The Lender acknowledges that Intek may place stop transfer orders
against the registration or transfer of the Intek Shares until such
time as the requirements of the foregoing legend are satisfied.
<PAGE> 16
SCHEDULE "C"
SECURITY AGREEMENT
THIS AGREEMENT dated March 28, 1996 is between:
SIMMONDS CAPITAL LIMITED, an Ontario corporation having an
office at Ste. 1050 - 5255 Yonge Street, Toronto, Ontario
M2N 6P4
(the "Debtor")
AND
QUEST CAPITAL CORPORATION, a British Columbia company,
having at office at Suite 900 - 999 West Hastings Street,
Vancouver, British Columbia V6C 2W2
(the "Secured Party")
1. GENERAL UNDERSTANDINGS. The Secured Party and the Debtor confirm that
the Secured Party has extended credit to the Debtor, or that in the future the
Secured Party may, at their sole discretion, extend credit to the Debtor. To
the extent that any provisions of the loan agreement between the Debtor and the
Secured Party dated the date hereof (the "Loan Agreement") conflict with any
provisions of this Security Agreement, the provisions of the Loan Agreement
will prevail. The Debtor states that it has entered into this Security
Agreement in order to induce the Secured Party to extend such credit.
2. GRANT OF RIGHTS AND SECURITY INTEREST. In order to secure the payment
and performance of all indebtedness, liability and obligation of the Debtor to
the Secured Party, whether present or future, absolute, contingent, direct,
indirect, liquidated or unliquidated, pursuant to the Loan Agreement
(collectively "Obligations"), the Debtor grants to the Secured Party, and the
Secured Party takes a security interest in all of the Debtor's present and
after acquired personal property (the "Collateral"). The Secured Party hereby
acknowledges and agrees, notwithstanding the relative order of execution,
registration, advance, delivery, attachment, possession, perfection or demand,
that all security interests of the Secured Party in the Collateral (but
excluding the Intek Shares (as defined in the Loan Agreement) which are subject
to a security interest under a pledge agreement between the parties hereto) is
subordinate to the security interests currently existing or hereafter provided
to: (i) the Debtor's day-to-day banker, as may be changed from time to time,
provided that the Debtor notifies the Secured Party of any change in its
day-to-day banker and gives particulars of the security granted to such banker,
and (ii) Extra Clearing B.V., to secure a loan facility in the principal amount
of US $3,000,000.
<PAGE> 17
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3. COVENANTS WITH RESPECT TO COLLATERAL.
(a) The Debtor will have the right to possession and control of
the Collateral until an Event of Default (as defined in the
Loan Agreement) occurs, at which time the Secured Party will
be entitled to possession and control of the Collateral. The
Debtor will maintain accurate records of the Collateral and,
upon request by the Secured Party, furnish copies of the
records to the Secured Party. The Secured Party may, from
time to time, examine the books and records of the Debtor with
respect to the Collateral and may, from time to time, examine
the Collateral during business hours.
(b) The Debtor will keep the Collateral free of all liens and
encumbrances at all times, except for the Permitted
Encumbrances as listed in Schedule "A", if any, and pay, or
cause to be paid, all rent due on the premises where the
Collateral is or may be stored. The Debtor will protect the
Collateral, and the Collateral will be insured by the Debtor
at all times and against all risks to which it is exposed and
with policies satisfactory to the Secured Party and payable to
both the Secured Party and the Debtor as their interests
appear. The Debtor will assume all risks of loss from
casualty or other losses.
(c) The Debtor will pay promptly when due all taxes and
assessments upon the Collateral.
4. REMEDIES UPON DEFAULT. In the event of a default by the Debtor, the
Secured Party will, if it so elects, have the following remedies, subject to
the grace period provided in paragraph 9 of the Loan Agreement:
(a) the unpaid balance of the Obligations will be accelerated and
become immediately due and payable;
(b) the Secured Party will have all the rights of a secured party
under the Personal Property Security Act of Ontario.
Specifically, and without prejudice to any of the Secured
Party's rights, the Secured Party may enter upon the Debtor's
premises and remove the Collateral; and
(c) the Secured Party may appoint by instrument in writing a
receiver or receiver-manager of all or any part of the
Collateral who will have all the rights of a secured party
under the Personal Property Security Act of Ontario and all
the rights of the Secured Party provided under this Security
Agreement.
5. TERM AND TERMINATION. This Security Agreement will take effect on the
date first above written, and will remain in full force and effect for so long
as the Debtor remains in any way indebted or obligated to the Secured Party.
This Security Agreement may be terminated only by written agreement signed by
both the Debtor and the Secured Party, or upon filing by the Secured Party of a
financing change statement or a verification change statement discharging the
financing statement
<PAGE> 18
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giving notice of the security interest created under this Security Agreement in
the Personal Property Registry in the Province where the Collateral is located.
6. MISCELLANEOUS.
(a) The parties understand and agree that the signatures on the
signature page of this Security Agreement will constitute and
be considered the acceptance and lawful execution of this
Security Agreement by the parties.
(b) For the purpose of attachment of the security interests
created in this Security Agreement, as defined in the Personal
Property Security Act of Ontario, the parties agree that the
time of attachment is not intended to be and will not be
postponed.
(c) The provisions of this Security Agreement will be considered
to be separate, and any invalidity of any provision will not
affect the validity of the remaining provisions. Any
invalidity of any security interest attempted to be created in
any item or part of the Collateral will not affect the
validity of the security interest created in the remaining
items or parts of the Collateral.
(d) The Secured Party may remedy any default under this Security
Agreement, and may waive any default, without waiving the
default remedied or without waiving any other prior or
subsequent default.
(e) Upon the occurrence of any Event of Default or under any
indebtedness or obligation of the Debtor to the Secured Party,
the Secured Party will be entitled to recover from the Debtor
all costs and expenses incurred, or to be incurred, by reason
of such default, including, and not limited to, reasonable
attorney's fees, court costs, witness fees, expenses of
litigation, and any and all other expenses of repossessing,
safeguarding and selling the Collateral.
(f) This Security Agreement will be governed by the laws of the
Province of Ontario.
<PAGE> 19
- 4 -
7. ACKNOWLEDGMENT. The Debtor acknowledges receiving a copy of this
Security Agreement.
TO EVIDENCE ITS AGREEMENT the Debtor has executed this Agreement on
the date appearing below.
SIMMONDS CAPITAL LIMITED
By:
______________________________
Authorized Signatory
Dated:________________________
<PAGE> 20
SCHEDULE "A"
PERMITTED ENCUMBRANCES
1. Security interests over the assets of the Debtor granted to the
day-to-day bankers of the Debtor.
2. Security interests over the assets of the Debtor granted to Extra
Clearing B.V., to secure a loan facility in the principal amount of
US$3,000,000.
<PAGE> 21
EXHIBIT Q
PROMISSORY NOTE
---------------
Due: JULY 28, 1996
Principal Amount: US$3,000,000 Vancouver, B.C.
For value received, SIMMONDS CAPITAL LIMITED hereby promises
to pay to QUEST CAPITAL CORPORATION on the earlier of July 28, 1996 and such
other date as provided in that certain Loan Agreement between Quest Capital
Corporation as "Lender" and Simmonds Capital Limited as "Borrower", dated March
28, 1996, the sum of THREE MILLION UNITED STATES (US$3,000,000) DOLLARS with
interest accruing from the date hereof at a rate of ONE (1%) PERCENT per month,
compounded monthly (12.68% per annum), before and after each of maturity,
default and judgment, payable by certified cheque, cash, bank draft or wire
transfer and delivered to QUEST CAPITAL CORPORATION at #900 - 999 West Hastings
Street, Vancouver, BC V6C 2W2.
The undersigned hereby waives notice of dishonour and presentment.
Dated at Vancouver, British Columbia this 28th day of March, 1996.
SIGNED, SEALED AND DELIVERED
by SIMMONDS CAPITAL LIMITED
the presence of:
/s/ David O'Kell
- ----------------------------
Authorized Signatory
<PAGE> 22
EXHIBIT R
SECURITY AGREEMENT
THIS AGREEMENT dated March 28, 1996 is between:
SIMMONDS CAPITAL LIMITED, an Ontario corporation having an
office at Ste. 1050 - 5255 Yonge Street, Toronto, Ontario M2N
6P4
(the "Debtor")
AND
QUEST CAPITAL CORPORATION, a British Columbia company, having
at office at Suite 900 - 999 West Hastings Street, Vancouver,
British Columbia V6C 2W2
(the "Secured Party")
1. GENERAL UNDERSTANDINGS. The Secured Party and the Debtor confirm that
the Secured Party has extended credit to the Debtor, or that in the future the
Secured Party may, at their sole discretion, extend credit to the Debtor. To
the extent that any provisions of the loan agreement between the Debtor and the
Secured Party dated the date hereof (the "Loan Agreement") conflict with any
provisions of this Security Agreement, the provisions of the Loan Agreement
will prevail. The Debtor states that it has entered into this Security
Agreement in order to induce the Secured Party to extend such credit.
2. GRANT OF RIGHTS AND SECURITY INTEREST. In order to secure the payment
and performance of all indebtedness, liability and obligation of the Debtor to
the Secured Party, whether present or future, absolute, contingent, direct,
indirect, liquidated or unliquidated, pursuant to the Loan Agreement
(collectively "Obligations"), the Debtor grants to the Secured Party, and the
Secured Party takes a security interest in all of the Debtor's present and
after acquired personal property (the "Collateral"). The Secured Party hereby
acknowledges and agrees, notwithstanding the relative order of execution,
registration, advance, delivery, attachment, possession, perfection or demand,
that all security interests of the Secured Party in the Collateral (but
excluding the Intek Shares (as defined in the Loan Agreement) which are subject
to a security interest under a pledge agreement between the parties hereto) is
subordinate to the security interests currently existing or hereafter provided
to: (i) the Debtor's day-to-day banker, as may be changed from time to time,
provided that the Debtor notifies the Secured Party of any change in its
day-to-day banker and gives particulars of the security granted to such banker,
and (ii) Extra Clearing B.V., to secure a loan facility in the principal amount
of US $3,000,000.
<PAGE> 23
- 2 -
3. COVENANTS WITH RESPECT TO COLLATERAL.
(a) The Debtor will have the right to possession and control of
the Collateral until an Event of Default (as defined in the
Loan Agreement) occurs, at which time the Secured Party will
be entitled to possession and control of the Collateral. The
Debtor will maintain accurate records of the Collateral and,
upon request by the Secured Party, furnish copies of the
records to the Secured Party. The Secured Party may, from
time to time, examine the books and records of the Debtor with
respect to the Collateral and may, from time to time, examine
the Collateral during business hours.
(b) The Debtor will keep the Collateral free of all liens and
encumbrances at all times, except for the Permitted
Encumbrances as listed in Schedule "A", if any, and pay, or
cause to be paid, all rent due on the premises where the
Collateral is or may be stored. The Debtor will protect the
Collateral, and the Collateral will be insured by the Debtor
at all times and against all risks to which it is exposed and
with policies satisfactory to the Secured Party and payable to
both the Secured Party and the Debtor as their interests
appear. The Debtor will assume all risks of loss from
casualty or other losses.
(c) The Debtor will pay promptly when due all taxes and
assessments upon the Collateral.
4. REMEDIES UPON DEFAULT. In the event of a default by the Debtor, the
Secured Party will, if it so elects, have the following remedies, subject to
the grace period provided in paragraph 9 of the Loan Agreement:
(a) the unpaid balance of the Obligations will be accelerated and
become immediately due and payable;
(b) the Secured Party will have all the rights of a secured party
under the Personal Property Security Act of Ontario.
Specifically, and without prejudice to any of the Secured
Party's rights, the Secured Party may enter upon the Debtor's
premises and remove the Collateral; and
(c) the Secured Party may appoint by instrument in writing a
receiver or receiver-manager of all or any part of the
Collateral who will have all the rights of a secured party
under the Personal Property Security Act of Ontario and all
the rights of the Secured Party provided under this Security
Agreement.
5. TERM AND TERMINATION. This Security Agreement will take effect on the
date first above written, and will remain in full force and effect for so long
as the Debtor remains in any way indebted or obligated to the Secured Party.
This Security Agreement may be terminated only by written agreement signed by
both the Debtor and the Secured Party, or upon filing by the Secured Party of a
financing change statement or a verification change statement discharging the
financing statement
<PAGE> 24
- 3 -
giving notice of the security interest created under this Security Agreement in
the Personal Property Registry in the Province where the Collateral is located.
6. MISCELLANEOUS.
(a) The parties understand and agree that the signatures on the
signature page of this Security Agreement will constitute and
be considered the acceptance and lawful execution of this
Security Agreement by the parties.
(b) For the purpose of attachment of the security interests
created in this Security Agreement, as defined in the Personal
Property Security Act of Ontario, the parties agree that the
time of attachment is not intended to be and will not be
postponed.
(c) The provisions of this Security Agreement will be considered
to be separate, and any invalidity of any provision will not
affect the validity of the remaining provisions. Any
invalidity of any security interest attempted to be created in
any item or part of the Collateral will not affect the
validity of the security interest created in the remaining
items or parts of the Collateral.
(d) The Secured Party may remedy any default under this Security
Agreement, and may waive any default, without waiving the
default remedied or without waiving any other prior or
subsequent default.
(e) Upon the occurrence of any Event of Default or under any
indebtedness or obligation of the Debtor to the Secured Party,
the Secured Party will be entitled to recover from the Debtor
all costs and expenses incurred, or to be incurred, by reason
of such default, including, and not limited to, reasonable
attorney's fees, court costs, witness fees, expenses of
litigation, and any and all other expenses of repossessing,
safeguarding and selling the Collateral.
(f) This Security Agreement will be governed by the laws of the
Province of Ontario.
<PAGE> 25
- 4 -
7. ACKNOWLEDGMENT. The Debtor acknowledges receiving a copy of this
Security Agreement.
TO EVIDENCE ITS AGREEMENT the Debtor has executed this Agreement on
the date appearing below.
SIMMONDS CAPITAL LIMITED
By:
/s/ David O'Kell
______________________________
Authorized Signatory
Dated:________________________
<PAGE> 26
SCHEDULE "A"
PERMITTED ENCUMBRANCES
1. Security interests over the assets of the Debtor granted to the
day-to-day bankers of the Debtor.
2. Security interests over the assets of the Debtor granted to Extra
Clearing B.V., to secure a loan facility in the principal amount of
US$3,000,000.
<PAGE> 27
EXHIBIT S
SHARE PLEDGE AGREEMENT
THIS AGREEMENT dated March 28, 1996 is between:
SIMMONDS CAPITAL LIMITED, an Ontario corporation having an
office at Ste. 1050 - 5255 Yonge Street, Toronto, Ontario M2N
6P4
(the "Borrower")
AND
QUEST CAPITAL CORPORATION, a British Columbia company, having
at office at Suite 900 - 999 West Hastings Street, Vancouver,
British Columbia V6C 2W2
(the "Lender")
BACKGROUND
A. The Lender has agreed to make a loan to the Borrower upon the terms
and conditions contained in a loan agreement dated March 28, 1996 and made
between the Borrower and the Lender (the "Loan Agreement").
B. The Borrower has agreed to execute and deliver this Agreement to the
Lender as security for the payment and performance of its obligations under the
Loan Agreement.
AGREEMENTS
For good and valuable consideration, the receipt and sufficiency of
which each party acknowledges, the parties agree as follows:
1. SHARE PLEDGE. The Borrower assigns, mortgages, charges and pledges to
and deposits with the Lender, and grants to the Lender a security interest in,
the securities relating to the security certificates referred to below, along
with any substitutions, additions, proceeds or claims by the Borrower in
respect of them (collectively, the "Intek Shares"), and deposits with the
Lender the security certificates referred to below, accompanied by a duly
executed stock power of attorney:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Number & Class Certificate
Security Issuer of Shares Number
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Intek Diversified Corporation 1,000,000 common 12059
- -----------------------------------------------------------------------------------------------------------
</TABLE>
to be held by the Lender as a general and continuing collateral security for
the payment of all present and future debts, liabilities and obligations of the
Borrower to the Lender under the Loan Agreement
<PAGE> 28
- 2 -
and the performance of all other obligations of the Borrower under the Loan
Agreement (collectively the "Obligations") until repayment in full of the
Obligations.
2. REPRESENTATIONS. The Borrower represents to the Lender that:
(a) it is the registered and beneficial owner of the Intek
Shares; and
(b) the Intek Shares are free and clear of all liens, mortgages,
charges and security interests other than those created under
this Agreement in favour of the Lender.
3. REALIZATION ON DEFAULT. On the occurrence and during the continuance
of an Event of Default (as defined in the Loan Agreement), the Lender may at
any time in its sole discretion, in accordance with any applicable law and
subject to the covenants, representations and resale restrictions under U.S.
securities laws set out on Schedule "A" hereto, realize upon or otherwise
dispose of the Intek Shares by sale, transfer, or delivery or may, to the
fullest extent permitted by law, exercise and enforce all rights and remedies
of a holder of the Intek Shares as if the Lender were absolute owner of them,
without notice to or control by the Borrower, and such remedies may be
exercised separately or in combination and will be in addition to and not in
substitution for any other rights the Lender may have.
4. COSTS AND EXPENSES. All costs and charges incurred by or on behalf of
the Lender with reference to the Intek Shares or their realization (including
without limitation all legal fees and court costs and all expenses of taking
possession of, protecting and realizing upon the Intek Shares including costs
and charges in connection with realizing, collecting, selling, transferring or
delivering the Intek Shares or exercising or enforcing any rights under them)
will be added to and form part of the Obligations and will be a first charge on
the proceeds of any realization, collection, sale, transfer, delivery, exercise
or enforcement.
5. APPLICATION OF PROCEEDS. The proceeds of the Intek Shares will be
applied by the Lender on account of the Obligations in such manner, order and
priority as the Lender may in its discretion determine.
6. NO EXHAUSTION OF RECOURSE. The Lender will not be obliged to exhaust
recourse against the Borrower or any other person or persons, or against any
other security it may hold in respect of the Obligations before realizing upon
or otherwise dealing with the Intek Shares in such manner as it considers
desirable. The Lender may grant extensions or other indulgences, take and give
up securities, accept compositions, grant releases and discharges and otherwise
deal with the Borrower and with other parties, guarantors, indemnitors or
securities as the Lender may see fit without prejudice to the rights of the
Lender in respect of the Intek Shares.
7. NO MERGER. This security will not operate by way of merger of any of
the Obligations and no judgment recovered by the Lender will operate by way of
merger of or in any way affect the
<PAGE> 29
- 3 -
security now or in the future held by the Lender in respect of the obligations
or in respect of any other obligations of the Borrower.
8. DIVIDENDS, ETC. The Lender need not see to the collection of
dividends on, or exercise any option or right in connection with, the Intek
Shares and need not protect or preserve then from any loss of value and the
Lender will be bound to exercise in the keeping of the Intek Shares only the
same degree of care as it would exercise concerning its own shares at the same
place.
9. APPOINTMENT OF ATTORNEY. Any person who is at any relevant time an
officer of the Lender is irrevocably appointed attorney of the Borrower with
full powers of substitution from time to time to endorse or transfer, or both,
the Intek Shares or any of them to the Lender, its nominees, or transferees,
and the Lender and its nominees or transferees are empowered to exercise all
rights and powers and to perform all acts of ownership concerning the Intek
Shares to the same extent as the Borrower might do. The power of attorney
granted in this Agreement is in addition to, and not in substitution for, any
stock power of attorney delivered by the Borrower with the delivery of the
Intek Shares, and such powers of attorney may be relied upon by the Lender
severally or in combination.
10. RIGHTS OF BORROWER. Until the occurrence of an Event of Default and a
determination by the Lender to enforce the rights granted to it under this
Agreement, the Borrower will be entitled to vote the Intek Shares and to
receive all cash dividends concerning them. Any other monies which may be
received by the Borrower or the Borrower for or in respect of the Intek Shares
will be received as trustee for the Lender and will immediately be paid over to
the Lender and be held by the Lender under the mortgage, charge, hypothecation,
pledge and grant of security interest made by this Agreement. The Lender
agrees that it will not require the Intek Shares to be registered in its name
or in the name of a nominee unless and until the occurrence of an Event of
Default.
11. ATTACHMENT. The Borrower and the Lender acknowledge that it is their
intention that the security interest created by this Agreement attach on
execution by the Borrower and that value has been given.
12. ALTERATION OF CAPITAL. In the event of any consolidation,
subdivision, reclassification, stock divide or other alteration to the capital
of the Intek Diversified Corporation ("Intek"), the term "Intek Shares" will be
considered to refer to the Intek Shares described in paragraph 1 as increased,
decreased, amended or supplemented and the Borrower will deliver immediately
any replacement or additional share certificates accompanied by a duly executed
stock power of attorney to the Lender to be held in accordance with the terms
of this Agreement.
13. DISCHARGE. Upon payment in full of the Obligations, the Lender will
return the share certificates representing the Intek Shares to the Borrower,
will release the Intek Shares from the assignment, mortgage, charge,
hypothecation, pledge and security interest created by this Agreement and will
execute and deliver to the Borrower such releases and reassignments as the
Borrower may reasonably require for such purpose.
<PAGE> 30
- 4 -
14. CONFLICT. This Agreement is entered into under and is subject to the
terms of the Loan Agreement. If there is any discrepancy or inconsistency
between the terms of this Agreement and the terms of the Loan Agreement, the
terms of the Loan Agreement will prevail.
15. BINDING EFFECT. The provisions of this Agreement will be binding upon
and enure to the benefit of the Lender, the Borrower and the Borrower and their
respective successors and assigns.
16. GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable in British Columbia and will be treated in all respects as a
British Columbia contract.
17. NOTICES. In this Agreement:
(a) any notice or communication required to be given under this
Agreement will be in writing and will be considered to have
been given if delivered by hand, transmitted by facsimile
transmission or mailed by prepaid registered post in Canada,
to the address or facsimile number of each party set out
below:
(i) if to the Lender
Quest Capital Corporation
900 - 999 West Hastings Street
Vancouver, BC V6C 2W2
Attention: Brian Bayley
Fax No: (604) 683-6958
(ii) if to the Borrower:
Simmonds Capital Limited
Ste. 1050 - 5255 Yonge Street
Toronto, Ontario M2N 6P4
Attention: John Simmonds
Fax No: (416) 221-3800
or to such other address or facsimile
transmission number as any party may
designate in the manner set out above;
(b) notice or communication will be considered to have been
received:
(i) if delivered by hand during business hours on a
business day, upon receipt by a responsible
representative of the receiver, and if not
delivered during business hours, upon the
commencement of business on the next business day;
<PAGE> 31
- 5 -
(ii) if sent by facsimile transmission during business
hours on a business day, upon the sender receiving
confirmation of the transmission, and if not
transmitted during business hours, upon the
commencement of business on the next business day;
and
(iii) if mailed by prepaid registered post in Canada,
upon the fifth business day following posting;
except that, in the case of a disruption or an
impending or threatened disruption in postal
services every notice or communication will be
delivered by hand or sent by facsimile
transmission;
(c) for the purposes of this paragraph "business day" means a day
which is not a Saturday, Sunday or a holiday in British
Columbia or Ontario.
18. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which so executed will be considered to be an original and such
counterparts together will be one and the same instrument.
19. FURTHER ASSURANCES. The Borrower will from time to time, whether
before or after the occurrence of an Event of Default, do all such acts and
things and execute and deliver all such deed, transfers, assignments and
instruments as the Lender may reasonably require for perfecting the security
interest constituted by this Agreement and for facilitating the sale of the
Intek Shares in connection with any realization and for exercising all powers,
authorities and discretions conferred upon the Lender.
20. SEVERABILITY. If any term of this Agreement is determined to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability will attach only to such term or part term, and the remaining
part of the term and all other terms of this Agreement will continue in full
force and effect. The parties will negotiate in good faith to agree to a
substitute term that will be as close as possible to the intention of any
invalid or unenforceable term while being valid and enforceable. The
invalidity or unenforceability of any term in any particular jurisdiction will
not affect its validity or enforceability in any other jurisdiction where it is
valid or enforceable.
TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement on
the date appearing below.
SIMMONDS CAPITAL LIMITED
By:
/s/ David O'Kell
______________________________
Authorized Signatory
Dated:________________________
<PAGE> 32
- 6 -
QUEST CAPITAL CORPORATION
By:
/s/ Brian Bailey
______________________________
Authorized Signatory
Dated:________________________
<PAGE> 33
- 7 -
SCHEDULE "A"
1. Notwithstanding anything to the contrary contained herein, the Lender
agrees that it shall not sell, transfer, assign, pledge or otherwise
dispose of, or cause the sale, transfer, assignment, pledge or other
disposition of, the Intek Shares unless such sale, transfer,
assignment, pledge or other disposition has been registered or is
exempt under the United States Securities Act of 1933 (the "U.S. Act")
and has been registered or qualified or is exempt from registration or
qualification under the applicable securities laws and the Lender
provides to Intek an opinion of counsel satisfactory to Intek that a
sale, transfer, assignment, pledge or other disposition of the Intek
Shares may be made without registration.
2. The Lender represents as follows:
(i) the Lender's interest in the Intek Shares is for its own
account and not with a view to, or present intention of,
distribution thereof in violation of the U.S. Act, or any
applicable state securities laws and will not be disposed
of in contravention of the U.S. Act or any applicable state
securities laws;
(ii) the Lender is sophisticated in financial matters and is
able to evaluate the risks and benefits of any investments
in the Intek Shares;
(iii) the executive officers of the Lenders have had an
opportunity to ask questions and received answers
concerning the terms and conditions of the acquisition of
the Intek Shares and have had full access to such other
information concerning Intek as the Lender has requested.
(iv) the Lender is able to bear the economic risk of any
investment in the Intek Shares for an indefinite period of
time because the Intek Shares have not been registered
under the U.S. Act and, therefore, cannot be sold unless
subsequently registered under the U.S. Act or an exemption
from such registration is available.
3. The Lender acknowledges that until such time as the Intek Shares have
been registered for resale pursuant to the U.S. Act (or an opinion of
counsel reasonably satisfactory to Intek is provided that a public
sale, transfer, or assignment of the Intek Shares may be made without
registration under the U.S. Act), each certificate representing the
Intek Shares shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF UNLESS THEY HAVE FIRST BEEN REGISTERED UNDER
<PAGE> 34
- 8 -
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE
CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE
HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO THE CORPORATION (WHICH MAY INCLUDE, AMONG
OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION.)
4. The Lender acknowledges that Intek may place stop transfer orders
against the registration or transfer of the Intek Shares until such
time as the requirements of the foregoing legend are satisfied.
