<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1999.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ______________
COMMISSION FILE NUMBER: 0-9160
INTEK GLOBAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2450145
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
99 PARK AVENUE
NEW YORK, NEW YORK 10016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 949-4200
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of December 18, 1998, the aggregate market value of voting stock held by
non-affiliates was approximately $19,375,874. The number of shares
outstanding of the Registrant's Common Stock was 42,303,038 as of December
18, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS
The following are the biographies of Intek Global's current directors.
Effective July 20, 1998, John G. Simmonds resigned as a director of Intek
Global.
Robert J. Shiver CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF INTEK GLOBAL.
Age 44 Mr. Shiver has been the Chairman of the Board and
Director since 1997 Chief Executive Officer of Intek Global since August
1997. Mr. Shiver has been a member of Intek Global's
Nominating Committee since January 20, 1998. From 1994
until August 1997, Mr. Shiver served as Chief
Executive Officer and a director of Centennial
Security Holdings, Inc. and Centennial Security, Inc.,
a large provider of security systems and services in
North America. Mr. Shiver, since 1992, also has served
as Chairman and director of BDC Holdings, Inc.
Dean Howard Frank DEAN, ROBERT H. SMITH SCHOOL OF BUSINESS, UNIVERSITY
Age 57 OF MARYLAND, COLLEGE PARK. Dean Frank has served as
Director since 1998 the Dean of the Robert H. Smith School of Business
since September 1997. Dean Frank was a Senior Fellow
at the Wharton School of Business, University of
Pennsylvania from August 1993 until August 1997. As a
Senior Fellow, Dean Frank was on loan to the Defense
Advanced Research Projects Agency where he served as
Director of the Information Technology Office. Dean
Frank is also a partner in Howard Frank Associates.
Dean Frank has been a member of Intek Global's Audit
Committee since August 4, 1998 and serves as the
Chairman of that Committee.
Robert B. Kelly PARTNER, SQUIRE, SANDERS & DEMPSEY, L.L.P. Mr. Kelly
Age 42 has been a partner in the Washington, D.C. law firm of
Director since 1996 Squire, Sanders & Dempsey, L.L.P. since May 1998. Mr.
Kelly was a principal in the Washington, D.C. law firm
of Kelly & Povich, P.C. since its formation in October
1994 until May 1998. Mr. Kelly was a partner in the
Washington, D.C. firm of Piper & Marbury from January
1989 to March 1992, was a sole practitioner from March
1992 to February 1993 and was a principal in the firm
of Kelly, Hunter, Mow & Povich, P.C. from February
1993 to October 1994. Mr. Kelly is also a director of
Axiom, Inc. Securicor plc has agreed to indemnify Mr.
Kelly for certain liabilities arising out of his
duties as a director of Intek Global. Mr. Kelly has
been a member of Intek Global's Compensation Committee
since January 20, 1998, and a member of Intek Global's
Audit Committee since January 16, 1997.
Professor Eli M. Noam PROFESSOR, COLUMBIA UNIVERSITY. Professor Noam is a
Age 52 Professor of Finance and Economics, and Director of
Director since 1998 the Columbia Institute for Tele-Information at the
Columbia Business School, Columbia University. He has
served as a Professor since 1976. Professor Noam has
been a member of Intek Global's Compensation
Committee since August 4, 1998.
John Wareham CHIEF EXECUTIVE OFFICER OF WAREHAM ASSOCIATES, INC.
Age 59 Mr. Wareham is the founder and Chief Executive Officer
Director since 1998 for Wareham Associates, Inc., a human resources
consulting firm. Mr. Wareham founded the organization
approximately 30 years ago.
2
<PAGE>
Steven L. Wasserman PARTNER, KOHRMAN, JACKSON & KRANTZ, P.L.L. Mr.
Age 45 Wasserman has been the Secretary of Intek Global since
Director since 1994 September 1994. Mr. Wasserman is a member of Intek
Global's Audit Committee. Mr. Wasserman is an
attorney and a partner of the law firm of Kohrman
Jackson & Krantz, P.L.L., Cleveland, Ohio, since 1994.
From 1983 to 1994, Mr. Wasserman was a shareholder
and officer of Honohan, Harwood, Chernett & Wasserman
Co. LPA, Cleveland, Ohio. Mr. Wasserman also is a
director of SecurFone America, Inc., a prepaid
cellular and network service provider. He is a member
of the State bars of Ohio and Florida.
Roger Wiggs CHIEF EXECUTIVE OF SECURICOR PLC. Mr. Wiggs is a
Age 59 solicitor and is the Chief Executive of Securicor plc.
Director since 1997 Mr. Wiggs has been a member of Intek Global's
Nominating Committee since January 20, 1998. Mr.
Wiggs was appointed Director for Overseas Operations
of Securicor Limited in 1974 and subsequently Managing
Director of Securicor International Limited. In 1977,
Mr. Wiggs was appointed to the Board of Directors of
Securicor Group plc and Security Services plc. In
1985, Mr. Wiggs was elected Deputy Group Chief
Executive; in 1988, was elected Group Chief Executive;
and in 1996, when Securicor plc was formed, Securicor
plc Chief Executive. Mr. Wiggs is also a director of
Cellnet Group Limited and a non-executive Director of
BSM Group plc and The Crown Agents Foundation.
Michael G. Wilkinson FINANCIAL DIRECTOR OF SECURICOR COMMUNICATIONS
Age 48 LIMITED. Mr. Wilkinson has served as Financial
Director since 1997 Director of Securicor Communications Limited since
1992. Mr. Wilkinson has been a member of Intek
Global's Audit Committee since January 20, 1998.
EXECUTIVE OFFICERS
The following are the biographies of Intek Global's current executive
officers except for Mr. Shiver, the Chairman and Chief Executive Officer of
Intek Global, whose biography is included above under "Directors."
Robert M. Hardy PRESIDENT, U.S. OPERATIONS. Mr. Hardy has been the
Age 56 President of U.S. Operations of Intek Global since
July 1998. Mr. Hardy served as the interim Vice
President and Chief Operating Officer of ADE
Corporation from September 1996 until March 1998. Mr.
Hardy served as interim Vice President and Chief
Operating Officer of Beechwood Data Corporation from
August 1994 until April 1996 and was interim Senior
Vice President and Chief Operating Officer of Pavco
International from March 1993 until June 1994.
Louis J. Monari VICE PRESIDENT - ADMINISTRATION. Louis J. Monari
Age 48 became Vice President-Administration in December 1997.
From 1994 until he joined Intek Global, Mr. Monari
was Vice President and General Manager of a subsidiary
of Digital Solutions, Inc. From 1988 to 1994, Mr.
Monari was co-founder and President of Holgate
Associates, Inc., a management consulting firm. Prior
to 1988, Mr. Monari spent 16 years in various
management positions with Nabisco, Inc., including 7
years in international operations.
3
<PAGE>
David Neibert EXECUTIVE VICE PRESIDENT. Mr. Neibert has been an
Age 43 Executive Vice President of Intek Global since
September 1996. Mr. Neibert was a director (from 1992
until April 1997) and was the President (from June
1993 until September 1994) of Roamer One Holdings,
Inc., was a director of Intek Global from September
1994 until February 1998 and was the President of
Master Marine Incorporated D.B.A. Seamark Marine
Electronics (1987-1992). Mr. Neibert also was a
director of the American Mobil Telecommunications
Association and served as the Chairman of its 220MHz
Council until July 1996.
George Valenti CHIEF FINANCIAL OFFICER AND VICE PRESIDENT. Mr.
Age 48 Valenti has been the Chief Financial Officer of Intek
Global since August 1998. Mr. Valenti served as Chief
Financial Officer of Energy One, LLC from September
1997 until August 1998. From June 1994 through April
1997, Mr. Valenti was the Vice President-Financial
Services of TRC Environmental Corp. From 1985 to June
1994, Mr. Valenti was the Corporate Controller of
Rochester Telephone Corporation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and greater-than-10% stockholders to file
reports with the SEC and The Nasdaq Stock Market on changes in their
beneficial ownership of Intek Global common stock and to provide Intek
Global with copies of the reports. Based on our review of these reports and
of certifications furnished to us, we believe that all of these reporting
persons complied with their filing requirements for 1998 except for Donald
Goeltz who filed two late reports involving two transactions, Robert B. Kelly
who filed one late report involving one transaction, D. Gregg Marston who
filed two late reports involving two transactions, Louis J. Monari who filed
two late reports involving three transactions, David Neibert who filed three
late reports involving five transactions, Robert J. Shiver who filed two late
reports involving seven transactions and Steven L. Wasserman who filed one
late report involving one transaction.
ITEM 11. EXECUTIVE COMPENSATION
The tables below show salaries and bonuses paid during the last three
years, options granted in fiscal 1998 and fiscal year-end option values for
the Chief Executive Officer and our next four most highly compensated
executive officers.
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------- --------------------------
SECURITIES ALL OTHER
NAME AND PRINCIPAL RESTRICTED UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) STOCK ($) OPTIONS (#) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shiver 1998 $300,000 $114,000 -- 1,100,000 --
Chairman, Chief 1997 $ 25,000(1) $ 65,000 -- 20,000 $1,000,000(2)
Executive 1996 -- -- -- -- --
Officer
Donald Goeltz 1998 $191,322 $ 36,000 -- 100,000 --
Senior Vice 1997 $ 71,111 -- -- 160,000 --
President-Corporate 1996 -- -- -- -- --
Development(3)
D. Gregg Marston 1998 $124,048 $ 7,500 -- 100,000 --
Interim Chief 1997 $104,518 $ 17,500 -- -- --
Financial Officer and 1996 $105,180 $ 7,500 -- 30,000 --
Vice President-
Finance(4)
Louis J. Monari 1998 $118,683 $ 31,852 -- 275,000 --
Vice President - 1997 -- -- -- -- --
Administration(5) 1996 -- -- -- -- --
David Neibert 1998 $171,735 $ 46,000 -- 100,000 --
Executive Vice 1997 $200,405(6) -- -- -- --
President 1996 $153,860 -- -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include $4,500 Mr. Shiver received as compensation as a director
of Intek Global. Mr. Shiver began his employment with Intek Global on
August 27, 1997.
(2) Reflects 300,000 shares of Intek Global common stock issued to Mr.
Shiver pursuant to his employment agreement. If the fair market value of
such stock is less than $1,000,000 on December 31, 1998, Intek Global will
pay Mr. Shiver the difference in cash or Intek Global common stock, at Mr.
Shiver's option. Mr. Shiver elected to receive the difference in cash in
an amount equal to $643,750 which was paid in fiscal 1999.
(3) Mr. Goeltz resigned from the Company effective November 16, 1998.
(4) Mr. Marston resigned from the Company effective December 31, 1998.
(5) Mr. Monari began his employment with Intek Global on December 8, 1997.
(6) Does not include $7,000 Mr. Neibert received as compensation as a
director of Intek Global.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) EMPLOYEES ($/SH) DATE ($)(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert J. Shiver 800,000(2) 22.5% $1.97 9/08/07 $1,162,400
- --------------------------------------------------------------------------------------------
300,000(3) 8.4% $2.50 3/12/08 $ 754,350
- --------------------------------------------------------------------------------------------
Donald Goeltz 100,000(4) 2.8% $2.50 3/12/08 $ 251,450
- --------------------------------------------------------------------------------------------
D. Gregg Marston 100,000(5) 2.8% $2.50 3/12/08 $ 251,450
- --------------------------------------------------------------------------------------------
Louis J. Monari 275,000(6) 7.7% $2.50 3/12/08 $ 691,488
- --------------------------------------------------------------------------------------------
David Neibert 100,000(7) 2.8% $2.50 3/12/08 $ 251,450
- --------------------------------------------------------------------------------------------
</TABLE>
(1) We calculated the values using the Black-Scholes stock option pricing
model under which we made the following assumptions: volatility of
98.4%, risk-free rate of return of 5.64%, dividend yield of 0% and an
expected life of 4.8 years. We did not adjust the model for
non-transferability, risk of forfeiture, or vesting restrictions. The
actual value (IF ANY) an executive officer receives from a stock option
will depend upon the amount by which the market price of the Intek
Global common stock exceeds the exercise price of the option on the date
of exercise. There can be no assurance that the amount stated as "grant
date present value" will actually be realized.
(2) Exercisable 20% per year beginning on August 27, 1998 and on each of the
first four anniversary dates thereafter.
(3) Exercisable 50% per year beginning on January 1, 2000 and on the first
anniversary date thereafter.
(4) Exercisable 20% per year beginning on March 12, 1999 and on each of the
first four anniversary dates thereafter.
(5) Exercisable 20% per year beginning on March 12, 1999 and on each of the
first four anniversary dates thereafter.
(6) 55,000 shares exercisable on March 12, 1998 and on December 8, 1998 and
on each of the first three anniversary dates thereafter.
(7) Exercisable 20% per year beginning on March 12, 1999 and on each of the
first four anniversary dates thereafter.
6
<PAGE>
1998 FISCAL
YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS
HELD AT SEPTEMBER 30, 1998
---------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------
<S> <C> <C>
Robert J. Shiver 180,000 940,000
- -------------------------------------------------------------------------
Donald Goeltz 73,333(2) 186,667
- -------------------------------------------------------------------------
D. Gregg Marston 50,000 80,000
- -------------------------------------------------------------------------
Louis J. Monari 110,000 165,000
- -------------------------------------------------------------------------
David Neibert 40,000(3) 80,000
- -------------------------------------------------------------------------
</TABLE>
(1) No options listed are currently in-the-money.
(2) Of the 73,333 shares, 20,000 are exercisable within 60 days of January
26, 1999.
(3) Of the 40,000 shares, 20,000 are exercisable within 60 days of January
26, 1999.
7
<PAGE>
EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER
Intek Global's employment agreement with Mr. Shiver provides that he
will serve as the Chairman of the Board of Directors and Chief Executive
Officer. The agreement has a two-year term unless earlier terminated by
Intek Global or Mr. Shiver. Such term automatically renews for one year,
unless Intek Global or Mr. Shiver gives notice of its or his desire not to so
renew. Mr. Shiver receives a base salary of $300,000 per annum and
participates in bonus arrangements under which he is eligible to earn an
annual bonus equal to a maximum of 40% of his annual salary based on Intek
Global's achieving certain performance goals to be established by the Board
of Directors. Mr. Shiver also received a commencement bonus of $65,000.
Mr. Shiver is entitled to participate in Intek Global's applicable
long-term incentive compensation plan and was granted 300,000 shares (the
"Restricted Stock") of Intek Global common stock. In the event that on
December 31, 1998, at which time any restrictions will be lifted, the Fair
Market Value (as defined in Mr. Shiver's employment agreement) of the
Restricted Stock is less than $1,000,000, Intek Global has agreed to pay Mr.
Shiver a sum equal to the difference between $1,000,000 and such Fair Market
Value. Such payment is due on or before February 28, 1999 and is payable at
Mr. Shiver's option in cash or Intek Global common stock, or a combination of
both. Mr. Shiver elected to receive the difference in cash in an amount
equal to $643,750. Under the terms of Mr. Shiver's employment agreement, Mr.
Shiver also has an option to purchase 800,000 shares of Intek Global common
stock, which option will vest over a five-year period, and which option the
Committee granted at an exercise price of $1.97 per share under the 1997
Performance and Equity Incentive Plan.
If Mr. Shiver's employment is terminated other than for cause, or if he
resigns for good reason, Mr. Shiver is entitled to:
- his base salary earned but not paid to the date of the termination of
his employment;
- all annual incentive compensation awards with respect to any year
prior to the year of the termination of Mr. Shiver's employment which
have been earned but not paid;
- an amount equal to Mr. Shiver's base salary with respect to a period
equal to 18 months;
- a pro rata annual incentive compensation award for the year in which
Mr. Shiver's employment terminates;
- the immediate removal of restrictions on transferability with respect
to all shares of the Restricted Stock;
- exercise the exercisable portion of the options held by Mr. Shiver as
of the date of the termination of his employment until the earlier of
(i) the end of the 90-day period following the date his employment is
terminated and (ii) the date the options would otherwise expire;
- 100% of the unexercisable portion of the options as of the date his
employment is terminated which shall become exercisable immediately
until the earlier of (i) the end of the 90-day period following the
date his employment is terminated and (ii) the date the options would
otherwise expire;
- any other amounts earned, accrued or owing to Mr. Shiver as set forth
in his employment agreement;
8
<PAGE>
- continued participation, as if he were still an employee, in Intek
Global's medical, dental, hospitalization and life insurance plans,
programs and/or arrangements and in other employee benefit plans,
programs and/or arrangements in which he was participating on the
date of the termination of his employment until the earlier of:
-- the end of the 18-month period following the date Mr. Shiver's
employment is terminated; and
-- the date, or dates, Mr. Shiver receives equivalent coverage and
benefits under the plans, programs and/or arrangements of a
subsequent employer (such coverage and benefits to be determined on
a coverage-by-coverage or benefit-by-benefit basis); and
- such other or additional benefits, if any, as are provided under
applicable plans, programs and/or arrangements of Intek Global.
Upon a change-in-control, restrictions on transferability on the
Restricted Stock are removed and any unexercisable options granted pursuant
to Mr. Shiver's employment agreement become exercisable. Mr. Shiver also is
subject to restrictions prohibiting him from (i) engaging in competition
with Intek Global or any of our subsidiaries for a period commencing on
August 27, 1997 and ending on the later of August 27, 1999 or one (1) year
after the end of Mr. Shiver's employment with Intek Global, and (ii)
divulging any confidential or proprietary information he obtained while he
was our employee for a period covering the term of employment and thereafter.
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
As of July 15, 1998, Intek Global entered into an employment agreement
with Robert M. Hardy, pursuant to which Mr. Hardy agreed to serve as
President of U.S. operations of Intek Global until July 15, 2000, with an
automatic one-year renewal. Under the terms of the agreement, Mr. Hardy is
entitled to an annualized base salary of $225,000, and is entitled to
participate in Intek Global's applicable annual incentive compensation and
long-term incentive compensation plans. Under the terms of Mr. Hardy's
employment agreement, Mr. Hardy also is entitled to and has been granted an
option to purchase 250,000 shares of Intek Global common stock, which option
will vest over a five-year period. If Mr. Hardy's employment is terminated
other than for cause, or if he resigns for good reason, Mr. Hardy will
receive benefits substantially similar to those of Mr. Shiver under the same
circumstances. Finally, Mr. Hardy also is subject to restrictions
prohibiting him from (i) engaging in competition with Intek Global or any of
our subsidiaries for a period commencing on July 15, 1998 and ending one (1)
year after the end of Mr. Hardy's employment with Intek Global, and (ii)
divulging any confidential or proprietary information he obtained while he
was our employee for a period covering the term of employment and thereafter.
As of April 27, 1998, Intek Global entered into an employment agreement
with Louis J. Monari pursuant to which Mr. Monari agreed to serve as Vice
President-Administration of Intek Global until December 8, 1999, with an
automatic one-year renewal. Under the terms of the agreement, Mr. Monari is
entitled to an annualized base salary of $145,000, and is entitled to
participate in Intek Global's applicable annual incentive compensation and
long-term incentive compensation plans. Under the terms of Mr. Monari's
employment agreement, Mr. Monari also is entitled to and has been granted an
option to purchase 275,000 shares of Intek Global common stock, which option
will vest over a four-year period. If Mr. Monari's employment is terminated
other than for cause, or if he resigns for good reason, Mr. Monari will
receive benefits substantially similar to those of Mr. Shiver under the same
circumstances. Finally, Mr. Monari also is subject to restrictions
prohibiting him from (i) engaging in competition with Intek Global or any of
our subsidiaries for a period commencing on December 8, 1997 and ending one
(1) year after the end of Mr. Monari's employment with Intek
9
<PAGE>
Global, and (ii) divulging any confidential or proprietary information he
obtained while he was our employee for a period covering the term of
employment and thereafter.
Intek Global has entered into an employment agreement with George A.
Valenti dated as of August 27, 1998, pursuant to which Mr. Valenti agreed to
serve as Chief Financial Officer of Intek Global until August 3, 2000, with
an automatic one-year renewal. Under the terms of the agreement, Mr. Valenti
is entitled to an annualized base salary of $180,000, and is entitled to
participate in Intek Global's applicable annual incentive compensation and
long-term incentive compensation plans. Under the terms of Mr. Valenti's
employment agreement, Mr. Valenti also is entitled to and has been granted an
option to purchase 250,000 shares of Intek Global common stock, which option
will vest over a five-year period. If Mr. Valenti's employment is terminated
other than for cause, or if he resigns for good reason, Mr. Valenti will
receive benefits substantially similar to those of Mr. Shiver under the same
circumstances. Finally, Mr. Valenti also is subject to restrictions
prohibiting him from (i) engaging in competition with Intek Global or any of
our subsidiaries for a period commencing on August 3, 1998 and ending one (1)
year after the end of Mr. Valenti's employment with Intek Global, and (ii)
divulging any confidential or proprietary information he obtained while he
was our employee for a period covering the term of employment and thereafter.
REPORT ON EXECUTIVE COMPENSATION FOR 1998 BY THE BOARD
The Compensation Committee of the Board administers Intek Global's
executive compensation program. The Committee has furnished the following
report on executive compensation for 1998:
10
<PAGE>
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee has designed Intek Global's executive compensation program
to support what we believe to be an appropriate relationship between
executive pay and the creation of stockholder value. To emphasize equity
incentives, we link a significant portion of executive compensation to the
market performance of Intek Global common stock. The objectives of our
program are:
- To support a pay-for-performance policy that differentiates bonus
amounts among all executives based on both their individual
performance and the performance of Intek Global;
- To align the interests of executives with the long-term interests of
stockholders through awards whose value over time depends upon the
market value of Intek Global's common stock; and
- To motivate key executives to achieve strategic business initiatives
and to reward them for their achievement.
We compensate our executives through base salary, bonus paid in cash,
and long-term incentive awards (USUALLY GRANTS OF STOCK OPTIONS).
We also provide our executives with employee benefits, such as health
benefits, similar to those typically offered to executives by the
corporations with which we compete for talent. Intek Global has also entered
into employment agreements with certain of our executive officers to provide
for certain payments and other benefits if they are terminated following a
change in control of Intek Global. (These agreements are discussed elsewhere
in this report.)
In 1998, we paid Mr. Shiver, Intek Global's Chief Executive Officer, in
accordance with his employment agreement, $300,000 in salary and $114,000 as
a bonus and we granted to him options to purchase shares of Intek Global
common stock.
DEDUCTIBILITY OF COMPENSATION
As part of the Omnibus Reconciliation Act of 1993, Section 162(m) was
added to the Internal Revenue Code. Section 162(m) limits the deduction of
compensation paid to the chief executive officer and other named executive
officers to the extent the compensation of a particular executive exceeds $1
million, unless such compensation was based upon predetermined quantifiable
performance goals or paid pursuant to a written contract that was in effect
on February 17, 1993.
11
<PAGE>
The Committee will continue to review and modify Intek Global's
compensation practices and programs as necessary to ensure Intek Global's
ability to attract and retain key executives while taking into account the
deductibility of compensation payments. Under the 1988 Stock Incentive Plan,
awards of stock options and performance stock are designed to satisfy the
deductibility requirements of Section 162(m). However, awards under the 1997
Performance and Equity Incentive Plan may not be fully deductible since, in
designing the Plan, the Committee felt it was important to retain flexibility
to reward senior management for extraordinary contributions that cannot
properly be recognized under a predetermined quantitative plan.
The Compensation Committee
Robert B. Kelly
Professor Eli M. Noam
Dated: January 27, 1999
PERFORMANCE GRAPH
The graph below compares the five-year total return to stockholders
(STOCK PRICE APPRECIATION PLUS REINVESTED DIVIDENDS) for Intek Global common
stock with the comparable return of three indexes: The Nasdaq Stock Market,
the Nasdaq Telecommunication Stocks index (which includes wireless
communications companies quoted on the Nasdaq Stock Market) and the Nasdaq
Non-Financial Stocks Index (which includes manufacturing companies that are
quoted on the Nasdaq Stock Market). Points on the graph represent the
performance as of the last business day of each of the years indicated.
COMPARISON OF FIVE-YEAR TOTAL RETURN TO STOCKHOLDER
AMONG INTEK GLOBAL, NASDAQ STOCK MARKET,
NASDAQ TELECOMMUNICATIONS STOCKS AND
NASDAQ NON-FINANCIAL STOCKS
12
<PAGE>
<TABLE>
<CAPTION>
INTEK NASDAQ (US) NASDAQ Telecommunications NASDAQ Non-Financial
------------ ------------ ------------------------- --------------------
Individual Cum Cum Cum
Total Return Total Return Total Return Total Return
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
30-Sep-93 100.000 100.000 100.000 100.000
30-Sep-94 484.966 100.826 92.478 99.448
30-Sep-95 642.580 139.281 110.347 138.625
30-Sep-96 460.718 165.238 114.411 161.818
30-Sep-97 193.986 226.814 155.213 217.295
30-Sep-98 187.973 231.786 203.916 219.974
</TABLE>
INTEK GLOBAL, NASDAQ STOCK MARKET, NASDAQ TELECOMMUNICATIONS STOCKS AND
NASDAQ NON-FINANCIAL STOCKS
Since September 23, 1994, Intek Global redirected its business from
plastics manufacturing to the business of developing and managing 220 MHz SMR
(specialized mobile radio) Systems in the U.S. By May 15, 1995, Intek Global
sold substantially all of its assets relating to the plastics business. The
Nasdaq Non-Financial Stock Index (which includes manufacturing companies) is
used as a meaningful index against which to measure the Company's performance
prior to September 1994 since Intek Global was a plastics manufacturing
company. The Nasdaq Telecommunication Stocks Index is a meaningful index
against which to measure Intek Global's performance since September 1994 when
it redirected its business into the communications industry. As of September
30, 1998, a $100 investment made in September, 1994 would have increased to
$203.92 if invested in the Nasdaq Telecommunications Stock Index, and $187.97
invested in the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John G. Simmonds, the former Chief Executive Officer of Intek Global
from September 23, 1994 until December 3, 1996 and a former director of Intek
Global, served on the Compensation Committee during fiscal 1998 until his
resignation on July 20, 1998.
DIRECTORS COMPENSATION
ANNUAL FEE We compensate directors of Intek Global with a fee of $4,000
per year plus a one-time grant of 20,000 shares of Intek
Global common stock under our 1994 Directors' Stock Option
Plan upon election to the Board of Directors.
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<PAGE>
MEETING FEES We pay directors a fee of:
- $500 for attendance at each Board meeting;
- $500 for attendance at each Audit Committee meeting held
at the same time as a stockholder or Board meeting; and
- $500 for attendance at each special committee meeting.
The annual maximum fee per director is $10,000.
EXPENSES AND We reimburse all directors for reasonable travel and other
BENEFITS related expenses incurred in attending stockholders, Board and
committee meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table shows, as of January 26, 1999, all persons we know
to be "beneficial owners" of more than five percent of Intek Global common
stock (1). This information is based on Schedules 13D and 13G reports filed
with the Securities and Exchange Commission (SEC) by each of the firms listed
in the table below. If you wish, you may obtain these reports from the SEC.
<TABLE>
<CAPTION>
Name and Address of Number of Shares
Beneficial Owner Owned Beneficially(1) Percent of Class
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Securicor plc 25,937,042(2) 61.3%
Sutton Park House
15 Carshalton Road
Sutton, Surrey, SM 1 4LD, United Kingdom
Mees Pierson ICS Limited 3,824,382 9.0%
Camomile Court
23 Camomile Street
London EC3A 7PP, United Kingdom
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) "Beneficial ownership" is a technical term broadly defined by the SEC to
mean more than ownership in the usual sense. So, for example, you
"beneficially" own Intek Global common stock not only if you hold it
directly, but also if you indirectly (THROUGH A RELATIONSHIP, A POSITION
AS A DIRECTOR OR TRUSTEE, OR A CONTRACT OR UNDERSTANDING), have (OR
SHARE) the power to vote or sell the stock or the right to acquire it
within 60 days.
(2) 25,000,000 shares are owned by Securicor Communications Limited, a
corporation organized under the laws of England and Wales, and 937,042
shares are owned by Securicor International Limited, a corporation
organized under the laws of England and Wales. Securicor Communications
has the right, at any time, to convert $5.0 million of debt owed to it
by Intek Global into Intek Global common stock at a conversion price
equal to the average closing price of Intek Global common stock for the
20 trading days prior to December 16, 1998. Both Securicor
Communications and Securicor International are wholly owned direct
subsidiaries of Security Services plc which is itself a wholly owned
indirect subsidiary of Securicor plc, a corporation listed on the London
Stock Exchange. On December 3, 1996, Intek Global acquired all the
issued and outstanding common stock of Securicor Radiocoms Limited, a
wholly-owned subsidiary of Securicor Communications, in exchange for
25,000,000 shares of Intek Global common stock. A change in control of
Intek Global occurred as a result of that transaction.
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<PAGE>
The following table shows, as of January 26, 1999, the Intek Global
common stock owned beneficially by Intek Global directors and our Chief
Executive Officer and other executive officers who received salary and bonus
in excess of $100,000 during 1998. Except for Robert J. Shiver, no director
or executive officer owns beneficially 1% or more of the shares of Intek
Global common stock. All directors and executive officers as a group own
beneficially 2.4% of the shares of Intek Global common stock.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
- --------------------------------------------------------------------------------------
<S> <C> <C>
Robert J. Shiver 520,349(1) 1.2%
- --------------------------------------------------------------------------------------
Howard Frank 0(2) 0%
- --------------------------------------------------------------------------------------
Robert B. Kelly 48,000(3) *
- --------------------------------------------------------------------------------------
Louis J. Monari 125,176(4) *
- --------------------------------------------------------------------------------------
David Neibert 107,614(5) *
- --------------------------------------------------------------------------------------
Eli M. Noam 0(6) 0%
- --------------------------------------------------------------------------------------
John Wareham 45,000(7) *
- --------------------------------------------------------------------------------------
Steven L. Wasserman 93,000(8) *
- --------------------------------------------------------------------------------------
Roger Wiggs 45,000(9) *
- --------------------------------------------------------------------------------------
Michael G. Wilkinson 45,000(10) *
- --------------------------------------------------------------------------------------
All directors and executive 1,029,139 2.4%
officers as a group
(12 persons)(11)..........
- --------------------------------------------------------------------------------------
</TABLE>
*Less than 1%.
(1) 1,000 shares are held by BDC Holdings, Inc. Mr. Shiver is the sole
owner of BDC Holdings, Inc. Pursuant to the 1994 Directors' Stock
Option Plan, Mr. Shiver has an option to acquire 20,000 shares of Intek
Global common stock at an exercise price of $3.125 per share, and
pursuant to the 1997 Performance and Equity Incentive Plan, an option
to acquire 800,000 shares of Intek Global common stock at an exercise
price of $1.97 per share, of which 160,000 shares are exercisable, and
an option to acquire 300,000 shares of Intek Global common stock at an
exercise price of $2.50 per share, which will become exercisable in 50%
increments beginning on January 1, 2000.
(2) Pursuant to the 1994 Directors' Stock Option Plan, Dean Frank has an
option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $3.19 per share, which will become exercisable on
August 4, 1999.
(3) Pursuant to the 1994 Directors' Stock Option Plan, Mr. Kelly has an
option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $6.125 per share, and pursuant to the 1997
Performance and Equity Incentive Plan, an option to acquire 25,000
shares of Intek Global common stock at an exercise price of $2.50 per
share.
(4) Pursuant to the 1997 Performance and Equity Incentive Plan, Mr. Monari
has an option to acquire 275,000 shares of Intek Global common stock at
an exercise price of $2.50 per share, of which 110,000 shares are
exercisable.
(5) Pursuant to the 1994 Stock Option Plan, Mr. Neibert has an option to
acquire 20,000 shares of Intek Global common stock at an exercise price
of $3.75 per share, and pursuant to the 1997 Performance and Equity
Incentive
15
<PAGE>
Plan, an option to acquire 100,000 shares of Intek Global common stock
at an exercise price of $2.50 per share, of which 20,000 shares will
become exercisable within 60 days of January 26, 1999. Mr. Neibert
sold 300,000 shares to Ryan Consulting Limited pursuant to a Stock
Purchase Agreement dated as of December 30, 1997. While all rights
related to ownership have been transferred and conveyed to Ryan
Consulting, Mr. Neibert retains a security interest in such stock until
payment for the stock (which payment is due over a ten-year period
commencing July 1, 1998) has been made by Ryan Consulting. Mr. Neibert
disclaims beneficial ownership of such 300,000 shares.
(6) Pursuant to the 1994 Directors' Stock Option Plan, Professor Noam has
an option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $3.19 per share, which will become exercisable on
August 4, 1999.
(7) Pursuant to the 1994 Directors' Stock Option Plan, Mr. Wareham has an
option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $3.06 per share, of which 20,000 shares will become
exercisable within 60 days of January 26, 1999, and pursuant to the
1997 Performance and Equity Incentive Plan, an option to acquire 25,000
shares of Intek Global common stock at an exercise price of $2.50 per
share.
(8) Pursuant to the 1994 Directors' Stock Option Plan, Mr. Wasserman has an
option to acquire 40,000 shares of Intek Global common stock at an
exercise price of $3.75 per share, and pursuant to the 1997 Performance
and Equity Incentive Plan, an option to acquire 25,000 shares of Intek
Global common stock at an exercise price of $2.50 per share.
(9) Pursuant to the 1994 Directors' Stock Option Plan, Mr. Wiggs has an
option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $1.688 per share, and pursuant to the 1997
Performance and Equity Incentive Plan, an option to acquire 25,000
shares at an exercise price of $2.50 per share.
(10) Pursuant to the 1994 Directors' Stock Option Plan, Mr. Wilkinson has an
option to acquire 20,000 shares of Intek Global common stock at an
exercise price of $1.688 per share, and pursuant to the 1997
Performance and Equity Incentive Plan, an option to acquire 25,000
shares at an exercise price of $2.50 per share.
(11) Donald Goeltz and D. Gregg Marston were each executive officers who
received salary and bonus in excess of $100,000 during 1998. Each
resigned their positions at Intek Global and they beneficially owned in
the aggregate less than 1% of the outstanding shares of Intek Global
common stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
---------------------------------------------
On September 19, 1996, Midland USA, Inc. a wholly owned subsidiary of
Intek Global, entered into an agreement with Midland International
Corporation, whereby Midland International agreed to permit Midland USA to
make use of the services of the supplier liaison office maintained by Midland
International in Japan and Midland International's purchasing representative
in Korea. During fiscal 1998, Midland USA paid $56,000 to Midland
International. This agreement was terminated in January 1998.
On September 19, 1996, Midland USA and Simmonds Capital entered into a
Computer Services Agreement pursuant to which Simmonds Capital agreed to
provide Midland USA access to the IBM AS400 computer system, including
hardware and software, currently owned by Simmonds Capital for data
processing purposes. During fiscal 1998, Midland USA paid $16,000 to
Simmonds Capital. This agreement was terminated on October 31, 1997.
On December 3, 1996, Intek Global entered into a Registration Rights
Agreement to provide certain holders of Intek Global common stock, including
Securicor Communications, with certain demand and "piggy-back" registration
rights with respect to the Intek Global common stock owned by the holders.
Kohrman Jackson & Krantz, P.L.L., a Cleveland, Ohio law firm, of which
Mr. Wasserman is a partner, performs legal services for Intek Global and its
subsidiaries. Mr. Wasserman is a member of Intek Global's Board of Directors
and is the Secretary of Intek Global. Mr. Wasserman receives $2,000 per
month as
16
<PAGE>
compensation for his services as the Secretary of Intek Global. As of
December 31, 1998, for services rendered in fiscal 1998, Intek Global had
paid Kohrman Jackson & Krantz, P.L.L. $110,000 in fees.
As of December 31, 1998, Intek Global was indebted to Securicor
Communications in the amount of $69.4 million pursuant to a term loan with
principal payments due beginning July 1, 2001. Mr. Wiggs is Chief Executive
of Securicor plc. Mr. Wilkinson is financial director of Securicor
Communications. Both Messrs. Wiggs and Wilkinson are members of Intek
Global's Board of Directors.
Squire, Sanders & Dempsey, L.L.P., a Washington, D.C. law firm, of which
Mr. Kelly is a partner since May 1998, performs legal services for Intek
Global and its subsidiaries. Mr. Kelly is a member of Intek Global's Board
of Directors. As of December 31, 1998, for services rendered in fiscal 1998,
the Company had paid Squire, Sanders & Dempsey, L.L.P. $38,000 in fees.
Kelly & Povich, P.C., a Washington, D.C. law firm, of which Mr. Kelly was a
50% shareholder, performed legal services for Intek Global and its
subsidiaries during fiscal 1998. As of December 31, 1998, for services
rendered in fiscal 1998, the Company paid Kelly & Povich, P.C. $170,000.
Wareham Associates, Inc., of which Mr. Wareham is the Chief Executive
Officer, provided executive recruiting and management consulting services to
Intek Global. Mr. Wareham is a member of Intek Global's Board of Directors.
During fiscal 1998, Intek Global paid Wareham Associates, Inc. $249,000.
During the fourth quarter of fiscal 1998, Intek Global sold its
non-core, U.K.-based land mobile radio distribution and maintenance assets to
Securicor Information Systems Limited, a subsidiary of Securicor
Communications. The sale price for these assets was $8.5 million resulting
in a gain of $3.1 million. The sales price is subject to a post closing
adjustment up to 500,000 pounds equaling approximately $800,000 depending on
certain circumstances.
Securicor Radiocoms Limited, a wholly owned subsidiary of Intek Global,
sells its products to Securicor Communications. In fiscal year 1998,
revenues from such sales were $3.2 million.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on January 29,
1999.
INTEK GLOBAL CORPORATION
By: /s/ George A. Valenti
-------------------------------
George A. Valenti
Chief Financial Officer
