AGREEMENT AND PLAN OF REORGANIZATION
by and among
ANTARES RESOURCES CORPORATION
a New York corporation
and
UNITED KINA BREWING GROUP, LTD.
a Bermuda corporation
effective as of September 30, 1996
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into
this 30th day of September 1996, by and between ANTARES RESOURCES
CORPORATION, a New York corporation with its principal place of
business located at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx Xxxxx, Xxxxxxx
00000 ("ARC") and UNITED KINA BREWING GROUP, LTD., a Bermuda
corporation with its principal place of business located at 00xx
Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx, Xxxx Xxxx ("Kina"), who hereby agree as
follow:
Premises
A. This Agreement provides for the reorganization of Kina with
and into ARC, with Kina becoming a wholly-owned subsidiary of ARC, and
in connection therewith, the exchange of the outstanding common stock
of Kina into shares of common voting stock of ARC, all for the purpose
of effecting a tax-free reorganization pursuant to sections 354 and
368(a) of the Internal Revenue Code of 1986, as amended.
B. The boards of directors of Kina and ARC have determined,
subject to the terms and conditions set forth in this Agreement, that
the exchange contemplated hereby, as a result of which Kina would
become a wholly owned subsidiary of ARC is desirable and in the best
interests of their stockholders. This Agreement is being entered into
for the purpose of setting forth the terms and conditions of the
proposed exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter set
forth and the mutual benefits to the parties to be derived herefrom,
it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF KINA
As an inducement to and to obtain the reliance of ARC, Kina
represents and warrants as follows:
Section 1.1 Organization. Kina is a corporation duly organized,
validly existing, and in good standing under the laws of Bermuda and
has the corporate power and is duly authorized, qualified, franchised
and licensed under all applicable laws, regulations, ordinances and
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orders of public authorities to own all of its properties and assets
and to carry on its business in all material respects as it is now
being conducted, including qualification to do business as a foreign
corporation in the jurisdiction in which the character and location of
the assets owned by it or the nature of the business transacted by it
requires qualification. Included in the Kina Schedules (as
hereinafter defined) are complete and correct copies of the articles
of incorporation, bylaws and amendments thereto of Kina as in effect
on the date hereof. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not violate any
provision of Kina's articles of incorporation or bylaws. Kina has
full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. The authorized capitalization of
Kina consists of 1,200,000 Common Shares, $0.01 par value per share
(the "Kina Common Shares"). As of the date of this Agreement, all of
the authorized common shares are issued and outstanding. All issued
and outstanding shares are legally issued, fully paid and
nonassessable and are not issued in violation of the preemptive or
other rights of any person. Kina has no other securities, warrants or
options authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except
as otherwise set forth in the Kina Schedules, Kina does not have any
other subsidiaries and does not own, beneficially or of record, any
shares of any other corporation. For purposes herein, all references
to Kina shall include Kina and all of its subsidiaries.
Section 1.4 Financial Statements. Included in the Kina
Schedules are draft unaudited financial statement prepared by Deloitte
Touche in accordance with international accounting standards (IAS) for
the three (3) years ended December 31, 1995 and interim unaudited
financial statements prepared by Kina for the period ended June 30,
1996. Relevant thereto:
(a) the Kina balance sheet presents fairly as of its date the
financial condition of Kina. Kina does not have, as of the date of
such balance sheet, except as noted and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto and all assets reflected therein are properly reported and
present fairly the value of the assets of Kina, in accordance with
international accounting principles;
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(b) Kina has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) Kina has filed all state, federal and local income tax
returns required to be filed by it from inception to the date hereof,
if any;
(d) The books and records, financial and others, of Kina are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) except as and to the extent disclosed in the most recent Kina
balance sheet and the Kina Schedules, Kina has no material contingent
liabilities, direct or indirect, matured or unmatured.
Section 1.5 Information. The information concerning Kina set
forth in this Agreement and in the Kina Schedules is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which
they were made, not misleading.
Section 1.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which Kina
is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as set
forth in this Agreement, the Kina Schedules, or as otherwise disclosed
to ARC, since June 30, 1996:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Kina; or (ii)
any damage, destruction or loss to Kina (whether or not covered by
insurance) materially and adversely affecting the business,
operations, properties, assets or condition of Kina;
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(b) Kina has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Kina; (iv) made any material change in its
method of management, operation or accounting other than in its
ordinary course of business; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees.
(c) Kina has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Kina balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted
any amendment or termination of any contract, agreement or license to
which it is a party if such amendment or termination is material,
considering the business of Kina; or (vi) issued, delivered or agreed
to issue or deliver any stock, bonds or other corporate securities,
including debentures (whether authorized and unissued or held as
treasury stock); and
(d) to the best knowledge of Kina, it has not become subject to
any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of Kina.
Section 1.8 Title and Related Matters. Except as provided
herein or in the Kina Schedules, Kina has good and marketable title to
and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal
including technical information, copyrights, trademarks, service marks
and tradenames (collectively, the "Assets") which are reflected in the
most recent Kina unaudited balance sheet and the Kina Schedules or
acquired after that date (except properties, interests in properties
and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges,
charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not
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and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such
properties; and (c) as described in the Kina Schedules. Except as set
forth in the Kina Schedules, Kina owns free and clear of any liens,
claims, encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data,
and all procedures, techniques, marketing plans, business plans,
methods of management or other information utilized in connection with
Kina's business. Except as set forth in the Kina Schedules, no third
party has any right to, and Kina has not received any notice of
infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially
adverse affect on the business, operations, financial conditions or
income of Kina or any material portion of its properties, assets or
rights.
Section 1.9 Litigation and Proceedings. To the best of Kina's
knowledge and belief, there are no actions, suits, proceedings or
investigations pending or threatened by or against Kina or affecting
Kina or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before
any arbitrator of any kind that would have a material adverse affect
on the business, operations, financial condition or income of Kina.
Kina does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator or governmental agency or
instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Kina Schedules, there
are no material contracts, agreements, franchises, license agreements
or other commitments to which Kina is a party or by which it or any of
its assets, products, technology or properties are bound;
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(b) Except as included or described in the Kina Schedules or
reflected in the most recent Kina balance sheet, Kina is not a party
to any oral or written: (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days or
less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Kina is a primary obligor, for collection and
other guaranties of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of $10,000 in
the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of Kina; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the aggregate; and
(c) To Kina's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which Kina is a party or
by which its properties are bound and which are material to the
operations of Kina taken as a whole, are valid and enforceable by Kina
in all respects, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
Section 1.11 Material Contract Defaults. Except as set forth in
the Kina Schedules, to the best of Kina's knowledge and belief, Kina
is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or condition
of Kina, and there is no event of default in any material respect
under any such contract, agreement, lease or other commitment in
respect of which Kina has not taken adequate steps to prevent such a
default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution
of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any
material indenture, mortgage, deed of trust or other material
contract, agreement or instrument to which Kina is a party or to which
any of its properties or operations are subject.
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Section 1.13 Governmental Authorizations. To the best of Kina's
knowledge and except as provided herein or in the Kina Schedules, Kina
has all licenses, franchises, permits or other governmental authoriza-
tions legally required to enable Kina to conduct its business in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and
delivery by Kina of this Agreement and the consummation by Kina of the
transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the best
of Kina's knowledge, except as disclosed in the Kina Schedules, Kina
has complied with all applicable statutes and regulations of any
federal, state or other governmental entity or agency thereof, except
to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of
Kina or would not result in Kina's incurring any material liability.
Section 1.15 Insurance. All of the insurable properties of Kina
are insured for Kina's benefit in accordance with the insurance
policies disclosed in the Kina Schedules under valid and enforceable
policies issued by insurers of recognized responsibility. Such policy
or policies containing substantially equivalent coverage will be
outstanding and in full force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors of
Kina has authorized the execution and delivery of this Agreement by
Kina, has approved the transactions contemplated hereby and approved
the submission of this Agreement and the transactions contemplated
hereby to the stockholders of Kina for their unanimous approval, which
approval has been provided.
Section 1.17 Material Transactions or Affiliations. Except as
disclosed herein and in the Kina Schedules, there exists no material
contract, agreement or arrangement between Kina and any predecessor
and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known
by Kina to own beneficially, ten percent (10%) or more of the issued
and outstanding Kina Common Shares and which is to be performed in
whole or in part after the date hereof. In all of such transactions,
the amount paid or received, whether in cash, in services or in kind,
has been during the full term thereof, and is required to be during
the unexpired portion of the term thereof, no less favorable to Kina
than terms available from otherwise unrelated parties in arms length
transactions. There are no commitments by Kina, whether written or
oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
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Section 1.18 Labor Relations. Kina has never had a work
stoppage resulting from labor problems. To the best knowledge of
Kina, no union or other collective bargaining organization is
organizing or attempting to organize any employee of Kina.
Section 1.19 Previous Sales of Securities. Since inception,
Kina has issued Kina Common Shares in reliance upon applicable
exemptions from the registration requirements under the laws of the
jurisdiction of Bermuda. All such sales (the "Sales") were made in
accordance with the laws of Bermuda and no sales were made to any
resident of the United States.
Section 1.20 Kina Schedules. Upon execution hereof, Kina will
deliver to ARC the following schedules, which are collectively eferred
to as the "Kina Schedules" and which consist of separate schedules
dated as of the date of this Agreement and instruments and data as of
such date, all certified by the chief executive officer of Kina as
complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of Kina;
(b) the financial statements of Kina referenced hereinabove in
Section 1.4;
(c) a list indicating the name and address of the stockholders
of Kina, together with the number of shares owned by them;
(d) the Kina Information Statement which includes, among other
matters, information concerning all of Kina's material licenses,
permits and other governmental authorizations, requests or
applications therefor, pursuant to which Kina carries on or proposes
to carry on its business (except those which in the aggregate, are
immaterial to the present or proposed business of Kina), as well as a
description of any material adverse change in the business operations,
property, inventory, assets or condition of Kina since the most recent
Kina balance sheet required to be provided pursuant to Section 1.7;
and
Kina shall cause the Kina Schedules and the instruments and data
delivered to ARC hereunder to be updated after the date hereof up to
and including the Closing Date, as hereinafter defined.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF ARC
As an inducement to, and to obtain the reliance of Kina, ARC
represents and warrants as follows:
Section 2.1 Organization. ARC is a corporation duly organized,
validly existing and in good standing under the laws of the state of
New York and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of
its properties and assets and to carry on its business in all material
respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states in which the character
and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the ARC
Schedules (as hereinafter defined) are complete and correct copies of
the articles of incorporation, amended articles of incorporation
(collectively, hereinafter referred to as the "articles of
incorporation") and bylaws of ARC as in effect on the date hereof.
The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of
ARC's articles of incorporation or bylaws. ARC has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
ARC has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, bylaws or otherwise to
consummate the transactions herein contemplate.
Section 2.2 Capitalization. The authorized capitalization of
ARC consists of 200,000,000 shares of Common Stock, par value $0.001
per share and 5,000,000 shares of Preferred Stock, par value $0.01
per share. Simultaneous with the Closing of this Agreement, the Board
of Directors of ARC shall authorize and approve undertake a reverse
split of the ARC issued and outstanding Common Stock, whereby 1 share
of Common Stock shall be issued in exchange for every 10 shares of
Common Stock presently issued and outstanding, which reverse split
shall have an effective date of September 30, 1996. As a result and
on Closing Date, as defined herein, there will be no more than
2,500,000 common shares issued and outstanding and reserved for
issuance (including shares reserved for issuance applicable to issued
and outstanding Common Stock Purchase Warrants) (the "ARC Common
Shares"), except that said number of ARC Common Shares may be
increased by no more than 5% and 126,000 shares of Series B
Convertible Preferred Stock issued and outstanding (the "ARC Preferred
Shares"), convertible upon receipt by ARC of notice of the same into
an aggregate 25,200 shares of common stock (post reverse split), held
by the then existing securities holders of ARC. All issued and
outstanding ARC Common Shares and Preferred Shares have been legally
issued, fully paid and are nonassessable.
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In addition, ARC has adopted three (3) separate Stock Plans (the
"ARC Stock Plans"), copies of which have been provided to Kina. At
the Closing Date, ARC shall have outstanding an aggregate of 15,500
stock options issued pursuant to said Plans, exercisable to purchase
an aggregate 15,500 shares of ARC Common Stock. The applicable
exercise price of each of these options is included on Schedule 2.2
herein.
Section 2.3 Subsidiaries. ARC has three (3) wholly owned
subsidiaries, including Empire Energy, Inc., Southern Trailer
Manufacturing, Inc. and Cherokee Sun Corp. Simultaneous with the
transaction proposed herein, ARC shall undertake all action necessary
in order to sell or otherwise assign all of the capital stock of these
subsidiaries. ARC does not own, beneficially or of record, any other
corporation. At the Closing, other than as disclosed herein, ARC
shall own no securities or have any interest in any corporation,
partnership, or other form of business organization, including its
current subsidiaries.
Section 2.4 Financial Statements.
(a) Included in the ARC Schedules are the audited consolidated
balance sheet of ARC for the years ended September 30, 1995 and 1994
and the unaudited financial statements for the nine month period ended
June 30, 1996 and the related statements of operations, stockholders'
equity and cash flows for the years and nine month period then ended,
which are included in the schedules identified in Section 2.20(c).
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. The ARC balance sheets
presents fairly as of their respective dates the financial condition
of ARC. ARC did not have as of the date of any of such ARC balance
sheets, any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto prepared
in accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of ARC, in accordance with generally accepted
accounting principles. The statements of operations, stockholders'
equity and changes in financial position reflect fairly the
information required to be set forth therein by generally accepted
accounting principles;
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(c) The books and records, financial and others, of ARC are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices;
(d) ARC has no liabilities with respect to the payment of any
federal, state, county, local or other taxes, current or accrued
(including any deficiencies, interest or penalties);
(e) As of the Closing Date, as defined herein the ARC balance
sheet and the notes thereto, shall reflect that ARC has: (i) no
receivables; (ii) no accounts payable; (iii) except as stated herein
or in the ARC Schedules, no liabilities, whether absolute, accrued,
known or unknown, contingent or otherwise, whether due or to become
due, including, without limitation, liabilities as guarantor under any
guaranty or other governmental charges; (iv) 400,000 shares of
Preferred Stock of JJFN Services, Inc.; and (v) $100,000 in cash;
(f) ARC is party to certain equipment and automobile leases, as
well as guarantor of a certain office lease and mortgages applicable
to the purchase of automobiles. ARC represents that it has requested
releases from the applicable lessors. At Closing, these leases and
mortgages shall be assigned to and assumed by those existing ARC
subsidiary companies. As part of the material terms of this
Agreement, the interest in and to the stock of these subsidiaries is
to be disposed of in accordance with Section 2.3 herein. In the event
a release of ARC from each applicable lease and mortgage is not
obtained, each applicable subsidiary company and appropriate current
officers and "inside" directors of ARC shall provide ARC with an
indemnification and hold harmless agreement relevant to the leases and
mortgage obligations referenced herein.
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Section 2.5 Information. The information concerning ARC as set
forth in this Agreement and in the ARC Schedules is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which
they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as
described herein or in the ARC Schedules, since June 30, 1996:
(a) ARC has not: (i) amended its articles of incorporation or
bylaws; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of ARC; (iii) made
any material change in its method of management, operation or
accounting; or (iv) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(b) Except as disclosed to Kina or as included in the ARC
Schedules, ARC has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or
other right has not been cancelled as of the Closing Date; (ii)
borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; and
(c) to the best knowledge of ARC, it has not become subject to
any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of ARC.
(d) in the event ARC is bound by or otherwise liable for any
contract, lease or other agreement or any other liability at the date
of Closing, ARC's existing "inside" officers and directors shall
execute and deliver a binding Indemnification and Hold Harmless
Agreement at Closing relevant to such obligations.
Section 2.7 Title and Related Matters. As of the Closing Date,
ARC will own no real, personal or intangible property, other than as
disclosed herein.
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Section 2.8 Litigation and Proceedings. There are no actions,
suits or proceedings pending or, to the best of ARC's knowledge and
belief, threatened by or against or affecting ARC, at law or in
equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any
kind that would have a material adverse effect on the business,
operations, financial condition, income or business prospects of ARC.
ARC does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 2.9 Contracts. On the Closing Date and other than as
disclosed herein in Schedule 2.9 or otherwise:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which ARC is a party or by
which it or any of its properties are bound;
(b) ARC is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as ARC
can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of ARC; and
(c) ARC is not a party to any material oral or written: (i)
contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as
amended; (iii) agreement, contract or indenture relating to the
borrowing of money; (iv) guaranty of any obligation for the borrowing
of money or otherwise, excluding endorsements made for collection and
other guaranties of obligations, which, in the aggregate exceeds
$1,000; (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payments in excess of
$10,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of ARC; or
(viii) contract, agreement, or other commitment involving payments by
it of more than $10,000 in the aggregate.
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Section 2.10 No Conflict With Other Instruments. The execution
of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any
material indenture, mortgage, deed of trust or other material
contract, agreement or instrument to which ARC is a party or to which
any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. To the best of ARC's
knowledge and belief, ARC is not in default in any material respect
under the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations, properties,
assets or condition of ARC, and there is no event of default in any
material respect under any such contract, agreement, lease or other
commitment in respect of which ARC has not taken adequate steps to
prevent such a default from occurring.
Section 2.12 Governmental Authorizations. To the best of ARC's
knowledge, ARC has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to
conduct its business operations in all material respects as conducted
on the date hereof. Except for compliance with federal and state
securities or corporation laws, no authorization, approval, consent or
order of, or registration, declaration or filing with, any court or
other governmental body is required in connection with the execution
and delivery by ARC of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best
of ARC's knowledge and belief, ARC has complied with all applicable
statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations,
properties, assets or condition of ARC or would not result in ARC's
incurring any material liability.
Section 2.14 Insurance. ARC has no insurable properties and no
insurance policies will be in effect at the Closing Date, as
hereinafter defined.
Section 2.15 Approval of Agreement. The board of directors of
ARC has authorized the execution and delivery of this Agreement by ARC
and has approved the transactions contemplated hereby. The approval of
this Agreement by ARC's shareholders is not required.
Section 2.16 Material Transactions or Affiliations. Except as
stated herein or in the ARC Schedules, as of the Closing Date there
will exist no material contract, agreement or arrangement between ARC
and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known
by ARC to own beneficially, ten percent (10%) or more of the issued
and outstanding common stock of ARC and which is to be performed in
whole or in part after the date hereof. ARC has no commitment,
whether written or oral, to lend any funds to, borrow any money from
or enter into any other material transactions with, any such
affiliated person.
14
Section 2.17 Labor Relations. ARC has never had a work stoppage
resulting from labor problems. ARC has no employees other than its
officers and directors.
Section 2.18 Taxes. (a) ARC has timely filed (within the
applicable extension periods) with the appropriate governmental
agencies all governmental tax returns, information returns, tax
reports and declarations which are monetary liabilities. All
governmental tax returns, information returns, tax reports and
declarations filed by ARC for years for which the statute of
limitations has not run (the "Tax Returns") are correct in all
material respects. ARC has timely paid (or has collected and paid
over in the case of sales, use or similar taxes) all taxes, additions
to tax, penalties, interest, assessments, deposits, and other
governmental charges imposed by law upon it or any of its properties,
tangible or intangible assets, income, receipts, payrolls,
transactions, capital, net worth and franchises, or upon the sale, use
or delivery of any item sold by the Company, other than as may be
disclosed in the Schedule of Taxes. Except as set forth in the
Schedule of Taxes, no tax returns have been examined by the Internal
Revenue Service or any other governmental authority. Except as may be
disclosed in the Schedule of Taxes or in any document delivered to ARC
therewith, ARC (i) is not currently being audited with respect to any
tax, assessment or other governmental charge; (ii) has not received
formal or informal notice from any governmental agency that an audit
or investigation with respect to any tax, assessment or other
governmental charge is to be initiated; (iii) is not formally or
informally discussing material pending ruling requests or other
material tax or assessment issues with the Internal Revenue Service or
any other governmental taxing authority in connection with any matter
concerning any member of ARC's group; or (iv) has not been formally or
informally notified of any potential tax or assessment issue which the
Internal Revenue Service or any other governmental taxing authority
intends to raise in connection with any matter concerning any member
of ARC's group. Except (i) as may be disclosed in the Schedule of
Taxes, or (ii) in connection with any pending audit or investigation,
ARC has not granted or proposed any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment or collection of, or any offer in compromise of any
governmental tax. The accruals and reserves for taxes reflected in
the financial statements are adequate to cover substantially all taxes
(including additions to tax, interest, penalties, and other charges or
assessments, if any) which become due and payable or accruable by
reason of the business conducted by ARC through the Closing Date
herein. ARC is not now or has it ever been a corporation which meets
the tests of Section 542(b)(2) of the Internal Revenue Code. ARC has
not participated in, or is required to participate in, for any period
prior to the date of this Agreement the filing of any consolidated tax
return other than (i) as set forth in the Schedule of Taxes, or (ii)
as a member of an affiliated group of which ARC is the common parent.
15
(b) Management of ARC hereby represents and confirms that Empire
Energy, Inc., a wholly owned subsidiary of ARC, is presently engaged
in an IRS audit. Relevant thereto, any tax liabilites which may be
deemed to be due and owing by Empire shall remain an obligation of
Empire subsequent to the Closing Date herein. To the best knowledge
of present management of ARC, this audit does not involve any matter
applicable to ARC.
Section 2.19 Reporting Act Documents. Except as set forth in
ARC's Schedules, ARC has, in all reporting act documents, complied in
all material respects with the reporting and proxy requirements of the
Exchange Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. The information contained
in each reporting act document of ARC is true and correct in all
material respects as of the date thereof, and no reporting act
document contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading as of the date thereof. To
the best knowledge of current management of ARC, there is no
outstanding negative matters which are outstanding concerning Exchange
Act reports filed by ARC prior to the Closing hereof or with the
Nasdaq.
Section 2.20 ARC Schedules. Upon execution hereof, ARC shall
deliver to Kina the following schedules, which are collectively
referred to as the "ARC Schedules" which are dated the date of this
Agreement, all certified by an officer of ARC to be complete, true and
accurate:
(a) complete and correct copies of the articles of incorporation
and bylaws of ARC as in effect as of the date of this Agreement;
(b) copies of all financial statements of ARC identified in
Section 2.4(a);
16
(c) the description of any material adverse change in the
business, operations, property, assets, or condition of ARC since June
30, 1996 required to be provided pursuant to Section 2.6; and
(d) any other information deemed relevant by ARC.
ARC shall cause the ARC Schedules and the instruments to be
delivered to Kina hereunder to be updated after the date hereof up to
and including the Closing Date.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Delivery of Kina Securities. On the Closing Date,
the holders of the Kina Common Shares shall deliver to ARC (i)
certificates or other documents evidencing all of the issued and
outstanding Kina Common Shares, duly endorsed in blank or with
executed stock power attached thereto in transferrable form and (ii)
investment letters, the form of which is attached hereto as Exhibit
"F".
Section 3.2 Issuance of ARC Common Shares. (a) In exchange for
all of the Kina Common Share tendered pursuant to Section 3.1, ARC
shall instruct its Transfer Agent to issue an aggregate of 33,500,000
(post reverse split) "restricted" ARC Common Shares to the Kina
shareholders on a pro rata basis.
(b) No fractional ARC Common Shares shall be issued pursuant to
this Section 3.2. In lieu of such fractional shares, all shares to be
issued shall be rounded up or down to the nearest whole share.
(c) The 33,500,000 shares to be issued to the Kina shareholders
by ARC (the "Kina Shares") are not being registered under the
Securities Act of 1933, as amended (the "Securities Act") on the
ground that the offer and sale of Kina Shares are exempt from the
registration provisions of Section 5 of the Securities Act pursuant to
Regulation S promulgated thereunder for offers and sales of securities
that occur outside the United States, and that the Kina Shares may not
be offered or sold in any transaction subject to Section 5 of the
Securities Act unless registered or an exemption from registration is
available for such offer or sale, and that the certificates
representing the Kina Shares will bear a legend to that effect,
substantially in the form set forth in Schedule 3.2, as follows:
17
"TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE SECURITIES
ACT OF 1933 (THE "ACT"). THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE ACT AND MAY NOT BE OFFERED OR SOLD
IN ANY TRANSACTION SUBJECT TO REGISTRATION REQUIREMENTS OF THE ACT
UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE ACT OF AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
Section 3.3 Undertakings.
(a) Upon execution hereof or as soon thereafter as practical,
management of ARC and Kina shall execute, acknowledge and deliver (or
shall cause to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement
to be so delivered, together with such other items as may be
reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
(b) Kina hereby undertakes and provides assurances to ARC that
it will file a current report on Form 8-K within 15 days of the
Closing in compliance with the Exchange Act, with the audited
financial statements of Kina and the pro forma statements required by
the Exchange Act and by Regulation S-K by amendment of the Form 8-K
within the time parameters established by the Exchange Act, and will
otherwise comply with the reporting requirements of the Exchange Act
and all material requirements of NASDAQ following the Closing.
Additionally, Kina shall cause to be issued a press release within 48
hours after the Closing advising of such Closing. Kina and its
officers and directors hereby indemnify and hold harmless ARC's
present officers and directors from any and all liabilities which may
arise out of Kina's failure to comply with the undertakings described
herein.
Section 3.4 Closing. The closing ("Closing") of the
transactions contemplated by this Agreement shall be as of the date in
which all of the shareholders of Kina have approved the terms of this
Agreement ("Closing Date"), all conditions to Closing referenced in
Section 6.6 below and elsewhere in this Agreement have been satisfied
or waived by Kina and all documentation referenced herein is delivered
to the respective party herein, unless a different date is mutually
agreed to in writing by the parties hereto.
18
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors
of either ARC or Kina at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or
any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and which,
in the judgment of such board of directors, made in good faith and
based on the advice of its legal counsel, makes it inadvisable to
proceed with the exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved
by any regulatory authority whose approval is required to consummate
such transactions; or
(iii) the conditions described in Section 6.6 below have not been
satisfied in full; or
(iv) the Closing does not take place by the close of business on
or before September 30, 1996, this Agreement shall be cancelled and
void, unless the Closing date is extended by the mutual consent of the
parties hereto in writing.
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of ARC if Kina shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the
representations or warranties of Kina contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days' written notice thereof is given to Kina.
If this Agreement is terminated pursuant to this paragraph (b) of this
Section 3.5, this Agreement shall be of no further force or effect and
no obligation, right or liability shall arise hereunder; and
19
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Kina if ARC shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the
representations or warranties of ARC contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days written notice thereof is given to ARC. If
this Agreement is terminated pursuant to this paragraph (c) of Section
3.5, this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder.
Section 3.6 Directors of ARC. Upon the Closing, the present
members of ARC's Board of Directors shall tender their resignations
seriatim so that the following persons are appointed directors of ARC
in accordance with procedures set forth in the ARC bylaws: Xxxxxxxx
Xxx (who shall be appointed Chairman of the Board of Directors),
Xxxxxxxx With-Seidelin, Xxx Xxx and Qiangfu He. Each director shall
hold office until his successor shall have been duly elected and shall
have qualified or until his or her earlier death, resignation or
removal.
Section 3.7 Officers of ARC. Upon the Closing, the present
officers of ARC shall tender their resignations and provide ARC with
applicable releases concerning their respective employment agreements.
Simultaneous therewith, the following persons shall be elected as
officers of ARC in accordance with procedures set forth in the ARC
bylaws:
NAME OFFICE
---- ------
Xxxxxxxx Xxx Chairman of the Board,
Chief Executive Officer, President
Xxx Xxx Secretary
Section 3.8 Effective Date. The parties hereto hereby agree
that the Effective Date of the transaction proposed herein shall be
11:50 P.M. Eastern Time on September 30, 1996, unless the parties
agree otherwise, in writing.
20
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. ARC and Kina will
each afford to the officers and authorized representatives of the
other full access to the properties, books and records of ARC and
Kina, as the case may be, in order that each may have full opportunity
to make such reasonable investigation as it shall desire to make of
the affairs of the other and each will furnish the other with such
additional financial and operating data and other information as to
the business and properties of ARC and Kina, as the case may be, as
the other shall from time to time prior to Closing reasonably request.
In addition, ARC shall provide to Kina subsequent to Closing all
information necessary to allow Kina to properly prepare and file all
reports required to be filed pursuant to the Exchange Act, including
all information concerning ARC's subsidiaries which existed prior to
Closing.
Section 4.2 Information for ARC Public Reports. Kina will
furnish ARC with all information concerning Kina and the Kina
Stockholders, including all financial statements, required for
inclusion in any public report to be filed by ARC pursuant to the
Securities Act, the Exchange Act, or any other applicable federal or
state law. Kina covenants that all information so furnished to ARC,
including the financial statements described in Section 1.4, shall be
true and correct in all material respects without omission of any
material fact required to make the information stated not misleading.
Similarly, ARC will provide all information concerning its history and
operations reasonably requested by Kina.
Section 4.3 Special Covenants and Representations Regarding the
ARC Common Shares to be Issued in the Exchange. The consummation of
this Agreement, including the issuance of the ARC Common Shares to the
stockholders of Kina as contemplated hereby, constitutes the offer and
sale of securities under the Securities Act, and applicable state
statutes. Such transaction shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements
of such statutes which depend, inter alia, upon the circumstances
under which the Kina stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and
prospectus delivery requirements for such transactions, at the
Closing, Kina shall cause to be delivered, and the Kina stockholders
shall deliver to ARC, the investment letter referenced in Section 3.1.
Section 4.4 Third Party Consents. ARC and Kina agree to
cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein contemplated.
21
Section 4.5 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the ARC or Kina Schedules or as
permitted or contemplated by this Agreement, Kina will each use its
best efforts to:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization intact, to
retain its key employees and to maintain its relationship with its
material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and
all rules, regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither ARC nor Kina will, without the prior consent of the
other party:
(i) except as otherwise specifically set forth herein, make any
change in their respective certificates or articles of incorporation
or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
22
(iv) issue any shares of its capital stock except pursuant to an
offering or offerings of ARC Common Shares, or conversion of
debentures to Common Shares, each at a per share price of at least
$3.50;
(v) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire any
shares of its capital stock; or
(vi) purchase or redeem any shares of its capital stock, except
as disclosed herein.
Section 4.6 Indemnification.
(a) Kina hereby agrees to indemnify ARC and each of the
officers, agents and directors of ARC as of the date of execution of
this Agreement against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made in this Agreement.
The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months; and
(b) ARC and its officers and directors hereby agree to indemnify
Kina and each of the officers, agents, directors and current
shareholders of Kina as of the Closing Date against any loss,
liability, claim, damage or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened
or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section 2.4(b).
The indemnification provided for in this Section shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months.
23
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF ARC
The obligations of ARC under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
Section 5.1 Accuracy of Representations. The representations
and warranties made by Kina in this Agreement were true when made and
shall be true at the Closing Date with the same force and effect as if
such representations and warranties were made at the Closing Date
(except for changes therein permitted by this Agreement), and Kina
shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Kina
prior to or at the Closing. ARC shall be furnished with a
certificate, signed by a duly authorized officer of Kina and dated the
Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of Kina
shall have unanimously approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
Section 5.3 Officer's Certificate. ARC shall have been
furnished with a certificate dated the Closing Date and signed by a
duly authorized officer of Kina to the effect that no litigation,
proceeding, investigation or inquiry is pending or, to the best
knowledge of Kina, threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the Kina Schedules,
by or against Kina which might result in any material adverse change
in any of the assets, properties, business or operations of Kina.
Section 5.4 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in the
financial condition, business or operations of nor shall any event
have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial
condition, business or operations of Kina.
Section 5.5 Opinion of Counsel to Kina. ARC shall receive an
opinion dated the Closing Date, counsel to Kina, in substantially the
following form:
(a) Kina is a corporation duly organized, validly existing, and
in good standing under the laws of Bermuda and has the corporate power
to carry on the business set out in its Memorandum of Association
outside of Bermuda from a place of business in Bermuda;
24
(b) To the best knowledge of such legal counsel, the execution
and delivery by Kina of this Agreement and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in the breach of any
term or provision of Kina's articles of incorporation or bylaws or
violate any court order, writ, injunction or decree applicable to
Kina, or its properties or assets;
(c) The authorized capitalization of Kina consists of 1,200,000
Common Shares, $0.01 par value per share. As of the Closing Date, all
of the authorized common shares will be issued and outstanding. All
issued and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive rights of
any person. Except as set forth in the Kina Schedules, to the best
knowledge of such legal counsel, there are no outstanding
subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments obligating Kina to issue any
additional shares of any class of its capital stock.
(d) This Agreement has been duly and validly authorized,
executed and delivered by Kina;
(e) To the best knowledge of such legal counsel, except as set
forth in the Kina Schedules, there are no actions, suits or
proceedings pending or threatened by or against or affecting Kina or
its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before
any arbitrator of any kind;
(f) Kina has taken all actions required by the applicable laws
of Bermuda to permit the transfer of the Kina Common Shares to ARC.
Section 5.6 Other Items. ARC shall have received such further
documents, certificates or instruments relating to the transactions
contemplated hereby as ARC may reasonably request.
25
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF KINA
The obligations of Kina under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise
indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The representations
and warranties made by ARC in this Agreement were true when made and
shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing
Date, and ARC shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with
by ARC prior to or at the Closing. Kina shall have been furnished
with a certificate, signed by a duly authorized executive officer of
ARC and dated the Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. Kina shall be furnished with
a certificate dated the Closing Date and signed by a duly authorized
officer of ARC to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of ARC,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to
the extent not disclosed in the ARC Schedules, by or against ARC which
might result in any material adverse change in any of the assets,
properties, business or operations of ARC.
Section 6.3 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in the
financial condition, business or operations of nor shall any event
have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial
condition, business or operations of ARC.
Section 6.4 Opinion of Counsel to ARC. Kina shall receive an
opinion dated the Closing Date of Xxxxxx X. Xxxxxx, P.C., counsel to
ARC, in substantially the following form:
(a) ARC is a corporation duly organized, validly existing, and
in good standing under the laws of the state of New York and has the
corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances and orders
of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the states in which the character and location of the
assets owned by it or the nature of the business transacted by it
requires qualification;
(b) To the best knowledge of such legal counsel, the execution
and delivery by ARC of this Agreement and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in the breach of any
term or provision of ARC's articles of incorporation or bylaws or
constitute a default or give rise to a right of termination,
cancellation or acceleration under any material mortgage, indenture,
deed of trust, license agreement or other obligation or violate any
court order, writ, injunction or decree applicable to ARC or its
properties or assets;
(c) The authorized capitalization of ARC consists of 200,000,000
shares of Common Stock, par value $0.001 per share and 5,000,000
shares of Preferred Stock, par value $0.01 per share. As of the
Closing Date, there will be no more than 2,500,000 (post reverse
split) common shares issued and outstanding and reserved for issuance
(except that said number of common shares may be increased by no more
than 5%) and 126,000 shares of Series B Convertible Preferred Stock
issued and outstanding, convertible upon receipt by ARC of notice of
the same into an aggregate 25,200 shares of common stock (post reverse
split), held by the then existing securities holders of ARC. All
issued and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive rights of
any person.
(d) The ARC Common Shares to be issued to the Kina stockholders
pursuant to the terms of this Agreement will be, when issued in accor-
dance with the terms hereof, legally issued, fully paid and non-
assessable;
(e) This Agreement has been duly and validly authorized,
executed, and delivered and constitutes the legal and binding
obligation of ARC, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally;
(f) To the best knowledge of such counsel, except as set forth
in the ARC Schedules, there are no actions, suits or proceedings
pending or threatened by or against ARC or affecting ARC's properties,
at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of any
kind; and
(g) ARC has taken all actions required by the applicable laws of
the state of New York to permit the issuance of the ARC Common Shares
to the Kina stockholders.
27
Section 6.5 Additional Equity Infusion Into Kina. At the
Closing, Kina shall have received at least $5,000,000 in net proceeds
from the debt or equity financing under the terms and conditions
acceptable to Kina. The proceeds of such financing shall be deposited
in the designated escrow account and released to Kina upon the Closing
of the transaction contemplated hereby.
Section 6.6 Compliance with Reporting Requirements. As of the
Closing Date, ARC shall be current in, and in compliance with all
requirements of, all filings required to be tendered to the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
Section 6.7 Other Items. Kina shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Kina may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in
Schedule 7.1, each party hereto hereby represents and warrants that it
is under no obligation, express or implied, to pay certain finders in
connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement. The
parties each agree to indemnify the other against any claim by any
third person not listed in Schedule 7.1 for any commission, brokerage
or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or
understanding between the indemnifying party and such third person,
whether express or implied from the actions of the indemnifying party.
Section 7.2 Law. Forum and Jurisdiction. This Agreement shall
be construed and interpreted in accordance with the laws of the State
of New York, except as the corporate law of Bermuda applies to Kina
and as federal law may be applicable.
Section 7.3 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or certified
mail, postage prepaid, or by prepaid telegram addressed as follows:
If to ARC: Xxxxxxx X. Xxxxx III
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
28
With copies to: Xxxxxx X. Xxxxxx, Esq.
0000 X. Xxxxxx Xx., Xxxxx 000
Xxxxxx, XX 00000
If to Kina: Xx. Xxxxxxxx Xxx
United Kina Brewing Group, Ltd.
00xx Xxxxx, Xxxxxxx Xxxxx
Xxxxxxx, Xxxx Xxxx
With copies to: Xxxxx Xxxxx, Esq.
00000 Xxxxxx Xxxxxxx, Xxxxx X
Xxxxxx Xxxxxx, XX 00000
or such other addresses as shall be furnished in writing by any party
in the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so
delivered, mailed, or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to secure
relief from any default hereunder or breach hereof, the breaching
party or parties shall reimburse the non-breaching party or parties
for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the
other parties that, unless and until the reorganization contemplated
by this Agreement has been consummated, they and their representatives
will hold in strict confidence all data and information obtained with
respect to another party or any subsidiary thereof from any
representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall
not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or
is required by law to be published; and (ii) to the extent that such
data or information must be used or disclosed in order to consummate
the transactions contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to
have full knowledge of all information set forth in the other party's
schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely
between ARC and Kina and, except for the Kina shareholders or as
otherwise specifically provided herein, no director, officer, stock-
holder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agree-
ment.
29
Section 7.8 Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter
hereof. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There
are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by a
written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive the
Closing Date and the consummation of the transactions herein
contemplated for three years.
Section 7.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and
all of which taken together shall be but a single instrument.
Section 7.11 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and remedy,
whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the
same or any other default then, theretofore, or thereafter occurring
or existing. At any time prior to the Closing Date, this Agreement
may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of
this Agreement may be waived or the time for performance hereof may be
extended by a writing signed by the party or parties for whose benefit
the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals
hereof are incorporated by this reference and are made a part hereof
as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all of
their respective costs and expenses incurred in connection with the
negotiation of this Agreement and in the consummation of the
transactions provided for herein and the preparation therefor.
Section 7.14 Headings; Context. The headings of the sections
and paragraphs contained in this Agreement are for convenience of
reference only and do not form a part hereof and in no way modify,
interpret or construe the meaning of this Agreement.
30
Section 7.15 Benefit. This Agreement shall be binding upon and
shall insure only to the benefit of the parties hereto, and their
permitted assigns hereunder. This Agreement shall not be assigned by
any party without the prior written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by
law, neither party shall make any public announcement or filing with
respect to the transactions provided for herein without the prior
consent of the other party hereto.
Section 7.17 Severability. In the event that any particular
provision or provisions of this Agreement or the other agreements
contained herein shall for any reason hereafter be determined to be
unenforceable, or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not affect the
remaining provisions of such agreements, which shall continue in full
force and effect and be binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the event
any of the conditions specified in this Agreement shall not be
fulfilled on or before the Closing Date, either of the parties have
the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement without liability to
any other party. The election to proceed shall not affect the right
of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair meaning
and intendment, and not strictly for or against either party hereto,
regardless of who drafted or was principally responsible for drafting
the Agreement or terms or conditions hereof.
Section 7.20 Execution Knowing and Voluntary. In executing this
Agreement, the parties severally acknowledge and represent that each:
(a) has fully and carefully read and considered this Agreement; (b)
has been or has had the opportunity to be fully apprised of its
attorneys of the legal effect and meaning of this document and all
terms and conditions hereof; and (c) is executing this Agreement
voluntarily, free from any influence, coercion or duress of any kind.
Section 7.21 Joint Preparation. This Agreement is to be deemed
to have been prepared jointly by the parties hereto and any
uncertainty or ambiguity existing herein, if any, shall not be
interpreted against any party, but shall be interpreted according to
the application of the rules of interpretation for arm's length
agreements.
31
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly
authorized, and entered into as of the date first above written.
ANTARES RESOURCES CORPORATION
ATTEST:
By:/s/ Xxxxxxx X. Xxxxx
-------------------------- ----------------------------
Secretary or Xxxxxxx X. Xxxxx, President
Assistant Secretary
ATTEST: UNITED KINA BREWING GROUP, LTD.
By: /s/ Xxxxxxxx Xxx
--------------------------- -----------------------------------
Secretary or Xxxxxxxx Xxx, President
Assistant Secretary
33
EXHIBIT "A"
-----------
LIST OF KINA SHAREHOLDERS
-------------------------
34
List of Kina Shareholders
# of Kina Shares # of ARC Shares
Name to be Exchanged to be Issued
---- --------------- ---------------
Richland Asia Limited 57,600 1,608,000
Xxxxxxxxxx Worldwide
Holdings Ltd. 27,876 871,286
Inter-Asia Investments
Ltd. 58,800 1,641,500
Prime Force (Asia)
Limited 1,055,724 29,379,214
-------------- -------------
TOTAL 1,200,000 33,500,000
35
EXHIBIT "B"
-----------
TERMS OF ARC SERIES B PREFERRED STOCK
--------------------------------------
36
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
LIMITATIONS AND RELATIVE RIGHTS OF
SERIES B 9% CONVERTIBLE PREFERRED STOCK
OF
ANTARES RESOURCES CORPORATION
ANTARES RESOURCES CORPORATION, a corporation organized and
existing under the laws of the State of New York (the "Company" or
"Corporation")
DOES HEREBY CERTIFY THAT, pursuant to the authority contained in
the Certificate of Incorporation, as amended, and in accordance with
the laws of the State of New York, the Company's Board of Directors
has duly adopted the following resolution creating a series of the
class of its authorized preferred stock, designated as "Series B 9%
Convertible Preferred Stock" effective as of March 23, 1995:
RESOLVED THAT:
WHEREAS, pursuant to the Company's Certificate of Incorporation, as
amended, the Board of Directors of the Company has the authority to
divide and issue the Company's authorized preferred stock in series,
to designate the same to distinguish it from the shares of all other
series, to divide the class of preferred shares into series and to fix
and determine the relative rights and preferences of the shares of any
such series so established to the fullest extent permitted by said
Certificate of Incorporation, as amended, and the laws of the State of
New York, and hereby wishes to do so,
NOW, THEREFORE, BE IT
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation, as amended, the Board
of Directors hereby creates a series of Preferred Stock of the
Corporation to consist initially of 400,000 shares, and hereby fixes
the designations, powers, conversion privileges, preferences and other
special rights, and the qualifications, limitations or restrictions of
the shares of such Series (in addition to the designations, powers,
preferences and other special rights, and the qualifications,
limitations or restrictions thereof set forth in the Certificate of
Incorporation, as amended, which are applicable to the Preferred Stock
of all series) as follows:
37
1. Designation of Series and Number of Shares.
-------------------------------------------
The designation of the series of Preferred Stock created by this
Resolution shall be "Series B 9% Convertible Preferred Stock"
(hereinafter in this Resolution referred to as "This Series"), and the
number of shares that shall constitute This Series shall be 400,000,
which number of shares may be decreased (but not below the number of
shares thereof then outstanding) from time to time by the Board of
Directors. Shares of This Series shall be issued and become
outstanding as determined by the Board of Directors
2. Effective Date.
---------------
The effective date of This Series shall be March 23, 1995.
3. Dividends.
----------
The holders of This Series shall be entitled to receive a nine percent
(9%) per annum cumulative dividend out of the assets of the Company
which are legally available therefore from and after the effective
date.
4. Voting Powers.
--------------
The designation, preferences and rights of This Series shall not be
amended without the approval of a majority of the outstanding shares
of This Series, voting separately as a class. Other than the
foregoing, the holders of shares of This Series shall have no voting
rights with regard to the affairs of the Corporation; provided,
however, that the foregoing limitation on the voting rights of This
Series shall not impair any contractual rights of any kind granted by
the Corporation to the holders of This Series.
5. Redemption.
-----------
The shares of This Series shall not be subject to redemption.
38
6. Conversion of This Series into Common Stock.
--------------------------------------------
a. The shares of This Series shall be convertible, at the option of
the respective owners of record thereof, at any time commencing
thirteen months from the effective date of This Series or upon the
effectiveness of the Company's proposed registration statement,
whichever event occurs earlier, except that the Board of Directors
may, in its sole discretion, by resolution, authorize conversion prior
thereto, into fully paid and non-assessable shares of Common Stock of
the Company in the ratio of one (1) share of Common Stock for each
share of This Series in accordance with and subject to the following
terms and conditions:
(1) Such shares shall be convertible at the office of the
Transfer Agent for the Corporation's Common Stock (or at such other
place or places as may be designated by the Corporation with notice to
the holders of record of This Series) into fully paid and non-
assessable shares of Common Stock at the rate of one (1) share of
Common Stock for each share of This Series, subject to adjustment as
provided herein.
(2) In order to convert shares of This Series into Common Stock,
the holder thereof shall surrender the certificate or certificates for
shares of This Series, duly endorsed to the Corporation or in blank,
or accompanied by proper instruments of transfer to the Corporation or
in blank (or, in the case of a lost or destroyed certificate, proof of
loss or destruction and indemnity as required by the Corporation), at
the office of the Transfer Agent, and shall give written notice to the
Corporation that he elects to convert the same and shall state therein
the name or names in which he wishes the certificates or certificates
for Common Stock to be issued. If the certificates for Common Stock
are to be issued in a name or names other than that in which such
shares of This Series was registered, the holder of the certificates
being surrendered shall, with such written notice, pay to the Transfer
Agent a sum to cover any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the
satisfaction of the Transfer Agent that such tax has been paid or is
not due and payable. The Transfer Agent will, as soon as practicable
thereafter, deliver at such office to such holder, or to his nominee
or nominees, a certificate or certificates for the number of full
shares of Common Stock to which he shall be entitled as aforesaid,
subject to any adjustment, as provided in Paragraph 8. Shares of This
Series shall be deemed to have been converted as of the date of the
surrender of such shares for conversion as provided above, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holders of such shares of Common Stock on such date.
39
(3) The conversion rate provided in clause (1) above shall be
subject to adjustment as set forth in Paragraph 8. Upon each
adjustment of the conversion rate, a written instrument signed by an
officer of the Corporation setting forth the adjustment and
accompanied by an opinion of an independent public accountant or
accountants (who may be the independent public accountant or
accountants then acting as auditor or auditors for the Corporation)
setting forth the computation of the adjustment and a summary of the
facts upon which it is based, together with a copy of the resolutions,
if any, of the Board of Directors passed in connection therewith,
shall forthwith be filed with the Transfer Agent for the shares of
This Series and transmitted to the holders of This Series, and any
adjustment so evidenced, made in good faith, shall be binding upon all
stockholders and the Corporation.
(4) All shares of This Series which shall have been converted
into Common Stock as provided in this Paragraph 6 shall not be
reissued as shares of This Series but shall have the status of
authorized and unissued shares of Preferred Stock undesignated as to
series.
b. Fractional shares of Common Stock shall not be issued upon the
conversion of This Series but shall be addressed by the Corporation
through the rounding of such fraction upon to the nearest whole share
of Common Stock.
40
7. Liquidation or Dissolution.
---------------------------
In the event of any liquidation, dissolution, or winding up of the
affairs of the Company, whether voluntary or involuntary, after
payment or provision for payment of the debts or liabilities of the
Corporation, the holders of shares of This Series shall be preferred
over all other holders of stock of the Company, to the amount of $2.50
per share. Neither the merger or consolidation of the Corporation,
nor the sale, lease or conveyance of all or a part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning hereof.
8. Adjustment of Conversion Rate.
------------------------------
The rate at which each share of This Series may be converted into
Common Stock (hereinafter called the "conversion rate") shall be
subject to the following adjustments:
a. While any such share of This Series shall be outstanding, in case
this Corporation shall subdivide the outstanding shares of Common
Stock into a greater number of shares of Common Stock, the conversion
rate in effect immediately prior to such subdivision, shall be
proportionately increased, such increase to become effective
immediately after the opening of business on the date following the
day upon which such subdivision becomes effective.
b. Any dividend to holders of Common Stock in shares of Common Stock
shall be considered a subdivision of the outstanding shares of Common
Stock and an adjustment in the conversion rate shall be made in
accordance with the provisions of Paragraph 8a, with respect to the
subdivision of outstanding shares of Common Stock.
c. No adjustment of the conversion rate shall be made by reason of
the issuance of Common Stock to non-shareholders of the Corporation in
exchange for cash, property or services, provided that if the
Corporation shall offer to the holders of the Corporation's Common
Stock any rights to subscribe for any securities of the Corporation,
then the holders of This Series shall be entitled to subscribe for the
purchase of the same number of securities on identical terms as they
would have been entitled had they held that number of shares of Common
Stock into which the shares of This Series was convertible on such
date.
41
d. In case the Corporation shall be reorganized or recapitalized or
shall be consolidated with or merged into another corporation, or
shall sell or transfer its property and assets as, or substantially
as, an entirety, proper provisions shall be made as part of the terms
of such reorganization, recapitalization, consolidation, merger, sale
or transfer whereby the holder of any shares of This Series
outstanding immediately prior to such event shall thereafter be
entitled to such conversion rights with respect to securities of the
corporation resulting from such reorganization, recapitalization,
consolidation or merger, or to which such sale or transfer shall be
made, as shall be substantially equivalent to the conversion rights
provided for herein with respect to such shares of This Series.
9. Other Rights.
-------------
Except as provided by law, the shares of This Series shall not have
any designation, preferences, or relative, participating, optional or
other special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein and in the Certificate of
Incorporation, as amended, of the Corporation.
IN WITNESS WHEREOF, Antares Resources Corporation has caused this
Certificate to be signed by its duly authorized officers.
Dated: , 1996.
ANTARES RESOURCES CORPORATION
By:-------------------------------
President or Vice President
ATTEST:
By:-------------------------------
Secretary or Assistant Secretary
42
EXHIBIT "C"
-----------
FORM OF INVESTMENT LETTER
---------------------------
44
INVESTMENT LETTER
September 30, 1996
Antares Resources Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common
stock of United Kina Brewing Group, Ltd., a Bermuda corporation,
("Kina"), as described below (endorsed, or having executed stock
powers attached) in acceptance of and subject to the terms and
conditions of that certain Agreement and Plan of Reorganization (the
"Agreement"), between Kina and Antares Resources Corporation ("ARC" or
the "Company"), dated September , 1996, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of ARC (the
"Exchange Shares"). If any condition precedent to the Agreement is
not satisfied within the relevant time parameters established in the
Agreement (or any extension thereof), the certificate(s) are to be
returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees
with you that, in connection with the undersigned's acceptance of the
Exchange Shares and as of the date of this letter:
1. The undersigned is aware that his, her or its acceptance of
the Exchange Shares is irrevocable, absent an extension of the
Expiration Date of any material change to any of the terms and
conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares
referred to above and that ARC will acquire a good and unencumbered
title thereto.
3. The undersigned has full power and authority to enter into
this agreement and that this agreement constitutes a valid and legally
binding obligation of the undersigned.
45
4. By execution hereof, the undersigned hereby confirms that the
ARC common stock to be received in exchange for Kina common stock (the
"Securities"), will be acquired for investment for the undersigned's
own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the undersigned
has no present intention of selling, granting any particiaption in, or
otherwise distributing the same. By execution hereof, the undersigned
further represents the undersigned does not have any contract,
undertaking, agreement or arrangement with any third party, with
respect to any of the Securities.
5. The undersigned understands that the Securities are being
issued pursuant to available exemption thereto and have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under any state securities laws. The undersigned
understands that no registration statement has been filed with the
United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as me by an impartial review of such
a registration statement by the Securities and Exchange Commission or
other regulatory authority will not be forthcoming. the undersigned
understands that he/she/it cannot sell the Securities unless such sale
is registered under the 1933 Act and applicable state securities laws
or exemptions from such registration become available. In this
connection the undersigned understands that the Company has advised
the Transfer Agent for the Common Shares that the Securities are
"restricted securities" under the 1933 Act and that they may not be
transferred by the undersigned to any person without the prior consent
of the Company, which consent of the Company will require an opinion
of my counsel to the effect that, in the event the Securities are not
registered under the 1933 Act, any transfer as may be proposed by the
provisions of the 1933 Act. To this end, the undersigned acknowledges
that a legend to the following effect will be placed upon the
certificate representing the Securities and that the Transfer Agent
has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERD UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF WHICH MUST
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on the
undersigned's certificate for the Common Shares limits their value,
including their value as collateral.
46
6. The undersigned represents that it is experienced in
evaluation and investing in securities of companies and acknowledges
that he/she/it is able to fend for itself, can bear the economic risk
of this investment and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of the investment in Securities.
In Witness Whereof, the undersigned has duly executed this
Investment Letter as of the date indicated hereon.
Dated: , 1996
Very truly yours,
----------------------
(signature)
----------------------
(print name in full)
----------------------
(street address)
----------------------
(city, state, zip)
----------------------
(social security number or
employer identification no.)---------------------------
47
Antares Resources Corporation
September , 1996
Page 50
