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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
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(Name of small business issuer in its charter)
British Columbia, Canada 75-2712845
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(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
1304 Avenue L, Cisco, Texas 76437
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (254) 442-2638
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of Class - Common Stock, No Par Value
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AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
Table of Contents
PART I
Item 1. Description of Business . . . . . . . . . . . . 3
Item 2. Plan of Operation and Recent Developments . . . 7
Item 3. Description of Property . . . . . . . . . . . . 10
Item 4. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . 12
Item 5. Directors, Executive Officers, Promoters
And Control Persons . . . . . . . . . . . . . . 14
Item 6. Executive Compensation . . . . . . . . . . . . 15
Item 7. Certain Relationships and Related Transactions 15
Item 8. Description of Securities . . . . . . . . . . . 16
PART II
Item 1. Market Price and Dividends on the Registrant's
Common Equity and Other Shareholder Matters . . 17
Item 2. Legal Proceedings . . . . . . . . . . . . . . . 17
Item 3. Changes In and Disagreements With Accountants . 17
Item 4. Recent Sales of Unregistered Securities . . . . 18
Item 5. Indemnification of Directors and Officers . . . 19
PART F/S . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART III
Item 1. Index to Exhibits . . . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . 20
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development
Australian-Canadian Oil Royalties Ltd. ("ACOR" or "the Company") was
incorporated in British Columbia, Canada, in April of 1997. The Company was
organized to purchase, hold and sell producing and non-producing oil and gas
royalty interests in Australia, Canada and the United States. Since its
organization, ACOR has acquired overriding royalty interests under fourteen
concessions covering 27,319,087 gross surface acres in Australia. Five of
the properties where ACOR holds ORRI are producing oil or gas, or production
has recently been discovered. The Company is currently receiving revenues
from two of these ORRIs, Authorities to Prospect 299 and 267. According to
the latest information available from the PEX "Who's Drilling" publications,
there were eight (8) wells drilled on Authority to Prospect (ATP) 299, and
no well drilled on ATP 267 during 1997. During 1998, eight (8) wells were
drilled on ATP 299 with no wells on ATP 267. Total wells drilled on both of
the aforementioned areas to 1997 and 1998 were 78 and 86, respectively.
Combined production on ATP 299 and ATP 267 during 1997 consisted of
approximately 2,313,690 barrels. Combined production from these ATP's during
1998 was approximately 1,583,005 barrels. Total net revenues received from
both ATP 299 and ATP 267 for the year 1997, was $9,265.92. Total net
revenues received from both ATP 299 and ATP 267 for the year 1998, was
$3,431.54.
The Company has joined a group of four other investors to form a new
Company, Cooper Basin Oil & Gas, Inc. ("CBOG") for the purpose of making
applications for areas in the Cooper Eromanga Basin of Australia. ACOR is a
twenty percent (20%) shareholder of CBOG. CBOG has made application for six
(6) areas comprising 4,773,000 acres in the Cooper Eromanga Basin of South
Australia under what was Petroleum Licenses ("PELs") 5 and 6, until February
28, 1999. PELs 5 and 6, prior to expiration, were producing $215,982,000 per
year worth of oil, gas, and associated hydrocarbons. All previous
production is still held by the original concession holder under a number of
small Petroleum Production Licenses (PPLs). This is the first time in forty
years any areas have been made available, out of PELs 5 and 6, from the
government of South Australia. Cooper Basin Oil & Gas, Inc. has also made
application for one area in the adjoining state of Queensland, also in the
Cooper Eromanga Basin. These are excellent areas and are subject to keen
competition. CBOG's applications were unsuccessful during the most recent
application process, however, CBOG plans to apply for further oil and gas
concessions in South Australia.
The Company plans to further develop its business by forming consortiums of
oil and gas entities with the requisite financial strength to apply for
Australian oil and gas concessions requiring certain financial
requirements for exploration and drilling activities.
Since its organization in 1997, the Company has not been involved in any
bankruptcy, receivership, or similar proceeding and has undergone no
material reclassification, merger, or consolidation.
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The Company held a private placement under Regulation D, closing November
30, 1998, with shares being offered at $0.25 per share. The Company sold
1,150,000 shares of Company stock for $287,500. Proceeds to the Company,
after costs of the issue of $53,042, were $234,458. ACOR plans to use these
proceeds to acquire additional oil and gas properties in Australia.
The following definitions are provided to clarify certain terms used in
this report:
Authority to Prospect ("ATP") -- a concession granted by the State of
Queensland, Australia, which entitles its holders to an exclusive right to
explore for oil and natural gas in Queensland in the particular area covered
by the ATP. Each ATP has an initial term of four years. The area covered
by an ATP is reduced by relinquishment of approximately one-fourth of the
area at the start of the third year of its effectiveness and an additional
one-fourth of the original area at the start of the fourth year of its
effectiveness. The area to be relinquished is chosen by the holder of the
ATP. An ATP will require some kind of geological and/or geophysical
operations, such as new seismic or seismic interpretation, drilling or other
operations during the term of the tenure. The amount of work to be
performed depends upon the expenditures required for each specific year of
the tenure. Holders are only required to expend those amounts as set out in
the original concession document. Applications for renewal may be filed at
the time of expiration of an ATP.
Developmental Wells -- oil and gas wells drilled within the proven area of
an oil or gas reservoir to the depth of a stratigraphic horizon known to be
productive.
Dry Hole -- a well found to be incapable of producing oil or gas in
sufficient quantities to justify completion.
Exploratory Well -- a well drilled to find and produce oil and gas in an
unproved area or to find a new reservoir in a field previously found to be
productive of oil or gas in another reservoir.
Gross Production -- the total production of oil, gas, or natural gas liquids
from a property or group of properties for any specified period of time.
MCF -- thousand cubic feet of natural gas
MMCF million cubic feet of natural gas
Net Royalty Acre -- generally, a measurement of royalty or overriding
royalty and the equivalent of the full customary one-eighth royalty of the
gross production of revenue free and clear of exploration, drilling and
production costs from one acre of land. The number of net royalty acres
used in this report applies to figures as of January 5, 1999 and the number
will change as relinquishments take place on the ATPs, as an ATP expires or
is canceled, or any new areas are added.
Overriding Royalty Interest ("ORRI") an interest assigned out of the
lessee's leasehold or working interest. The amounts payable from ORRIs are
payments calculated as a percentage of either gross production or the gross
revenues of the working interest (based on the wellhead price) from a
concession or lease, usually free and clear of all exploration, drilling
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and development and production costs, except for any applicable taxes and
federal levies. In calculating the wellhead price, pipeline and trucking
costs have already been deducted from the refinery price. The overriding
royalties discussed herein are generally expressed as a percent of the
gross production.
Petroleum Exploration License ("PEL") an exclusive oil and gas
exploration permit issued by the South Australian Department of Primary
Industries and Resources. The initial term of the tenure is for a five (5)
year period.
Producing Wells -- wells capable of producing oil or gas in commercial
quantities, including those wells capable of producing in commercial
quantities that are shut in, or wells which are not currently producing in
commercial quantities but have been commercially productive in the
past.
Royalty -- generally, a share of the production reserved by the grantor of
an oil or gas lease or concession. The royalty interest is customarily
free of cost or expense incident to exploration, development or production,
except for production or gathering taxes.
Working Interest ("WI") -- all or a fractional part of the ownership rights
granted by a concession or lease. The owner of a WI or a part thereof pays
all costs of exploration and is entitled to the gross production, less
royalties retained by the grantor or lessor, and less ORRIs or other
non-operating interests created and assigned from the WI. The owner of a WI
may incur operating expenses in excess of income.
(b) Business of Issuer
As a purchaser and holder of overriding royalty interests, ACOR's business
is related to the principal products of oil and gas, and is dependent on
various factors which are discussed following. The average sales price of
oil from Australia during 1998 was $US14.90.
The Company is presently involved, as a twenty percent (20%) interest
holder, in Cooper Basin Oil & Gas Inc. The Company will continue to further
develop its business by forming, or joining, consortiums of oil and gas
entities with the requisite financial strength to acquire, sell, and buy
interests in oil and gas properties and overriding royalties in the United
States, Canada, and Australia.
The acquisition, exploration, development, production and sale of oil and
gas are subject to many factors that are outside the Company's control.
These factors include: market prices; national and international economic
conditions; import and export quotas; availability of drilling rigs,
casing, pipe, and other equipment and supplies; availability of and
proximity to pipelines and other transportation facilities; the supply and
price of competitive fuels; and the regulation of prices, production,
transportation, and marketing by domestic and foreign governmental
authorities. Additionally, the Company generally has no control over
whether the owner or operator of leases to which its overriding royalty
interests are attributable will elect to explore for oil and gas on such
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properties, or to develop them following discoveries that may occur. Each
of these factors may affect the rate at which oil and gas are produced on
properties in which the Company has an interest or affect whether wells
will be drilled on such properties, and could otherwise materially affect
ACOR's earnings.
The sections which follow describe the impact of competition and
governmental regulation on the Company's business, as well as the impact
of foreign currency regulation and foreign taxes on earnings from oil and
gas properties located outside the United States.
Competition
The oil and gas industry is highly competitive in all of its phases, with
competition for favorable producing royalties and overriding royalties, and
oil and gas leases being particularly intense. The Company believes that
the exploration program, promised expenditures, geological and geophysical
skill, and familiarity with an area of operations are the primary
competitive factors in the identification, selection, and acquisition of
desirable leases. When attempting to purchase interests in such properties,
the Company competes with independent operators and occasionally major oil
companies, a number of which have substantially greater technical and
financial resources than the Company.
Governmental Regulation
Oil and gas operations are subject to federal, state and local laws and
regulations governing waste, environmental quality, pollution control,
conservation and other measures regarding environmental and ecological
matters. It is impossible to predict the impact of environmental
legislation and regulations on the Company's operations and earnings in the
future.
The Company's operations could also be affected from time to time by other
federal, state and local laws and regulations and by political developments,
such as the Native Title issue in on-shore Australia. The domestic
production and sale of oil and gas are subject to federal regulation by the
Department of Energy and the Federal Energy Regulation Commission. Rates of
production of oil and gas have for many years been subject to federal and
state conservation laws and regulations. In addition, oil and gas operations
are subject to extensive federal and state regulations concerning
exploration, development, production, transportation and pricing, and even
to interruption or termination by governmental authorities. Removal of
import duties on oil entering the U.S. has had an adverse affect on the
domestic oil industry.
In foreign countries, the Company may be subject to governmental
restrictions on production, pricing and export controls. Regulations
existing or imposed upon the Company or its properties at the time of their
acquisition may change to an unpredictable extent. The Company will have
little or no control over the change of regulations or imposition of new
regulations and restrictions, expropriation or nationalization by foreign
governments or the imposition of additional foreign taxes. Management
believes that these actions are unlikely to be undertaken by the state
governments of South Australia or Queensland, where all of the foreign oil
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and gas properties from which the Company receives royalty income are
currently located.
Foreign Currency
Due to the nature of the Company's activities in Australia, portions of the
Company's operating capital may at times be held in various foreign
currencies. This subjects the Company to the risk of currency fluctuations
and changes in rates of conversion for different currencies. The Company
does not engage or expect to engage in any hedging or other transactions
that are intended to manage risks relating to foreign currency fluctuations.
Additionally, revenues generated in foreign countries in which the Company
has or may acquire interests may be subject to governmental regulations
which restrict the free convertibility of such funds, and all remittances of
funds out of these countries might require the approval of the applicable
government's exchange control agency. Presently, the Company experiences no
difficulties with the free convertibility of funds from Australia. In the
Company's opinion, the foreign exchange control laws currently in effect in
Australia, do not unreasonably delay the remittance of funds generated in
Australia to the United States.
Foreign Taxes and United States Tax Credits
As a result of its overriding royalty interests attributable to properties
outside the United States, the Company is subject to the imposition of taxes
by foreign governments upon the Company's income derived from such foreign
jurisdictions. These taxes are of various types, with differing tax rates,
and are subject to change. Generally, the Company's income from a foreign
jurisdiction will be taxed in the same manner as that for other companies
operating in the jurisdiction, but discriminatory taxation by a particular
jurisdiction may occur. The current corporate income tax rate in Australia,
for ORRIs, is approximately 30% of net profits. Onshore production is exempt
from the 40% resources rent tax, which is applicable to large offshore
Australian production. The Company has no offshore producing properties at
present.
As a Canadian corporation, the Company is liable for income taxes under the
laws of Canada. Under Canadian law the Company's Australian-source income
is subject to a 46% tax (on Canadian dollars). We believe the 30% Australian
tax should be a credit toward the payment of the 46% Canadian tax under
double taxation between the countries.
The Company is taxable in the U.S. on U.S. source income. Because there
has been no U.S. source income nor any income effectively connected with a
U.S. trade or business there has been U.S. taxes incurred to date.
Employees
The Company employs two people who serve the Company as needed on a part-
time basis, and an outside consultant. The Company expects no significant
change in the number of employees during the next twelve months.
ITEM 2. PLAN OF OPERATION AND RECENT DEVELOPMENTS
The Company's present holdings consist entirely of overriding royalties. The
Company, as an overriding royalty holder, does not pay drilling,
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exploration, rental, or development costs because these costs are borne by
the Working Interest holders. This applies to the new wells completed on ATP
560 and all other wildcat, development, and appraisal wells on all
properties. All costs associated with all other third party operations,
(seismic acquisition and processing, aeromagnetics, etc.) are also covered
by the Working Interest holders, with no funding being required from the
overriding royalty interest holders.
The Company believes it can satisfy its cash requirements for the next
twelve months. The Company has very few operating expenses and it is
expected that operating revenues will increase during the next year.
Operating revenues totaled $5,545 during 1998. This money was entirely oil
and gas revenues received from the Company's overrides in Australia on ATP
299 and ATP 267. Seven (7) new oil wells came in on ATP 299 in 1998.
Further, three (3) new gas fields were discovered on the Patchawarra
Southwest Block during 1999. The Company expects oil and gas revenues to
increase from its interests in Australia because of the following: (1)
additional wells are currently planned for drilling; (2) there are numerous
undrilled locations in the twelve producing fields on ATP 299 waiting for
drilling in the future; (3) three new wells were completed on ATP 560 during
1997, which are presently shut-in, from which the Company will begin
receiving revenues; (4) one gas well has been completed on ATP 543 from
which the Company will begin receiving revenues; (5) the Company will begin
receiving revenues from the wells on the Patchawarra SW Block upon
completion of proper title transfer; and (6) the Company expects drilling
programs to begin on some of its currently non-producing concessions.
The Company has no material commitments for capital expenditures during the
next twelve months. All six (6) applications for new areas in Australia
were unsuccessful, thus, no funding is currently planned by the Company
until the Company, or its associates, apply for additional areas. The
Company plans to acquire additional overriding royalty interests in oil and
gas leases in Australia, the United States, and Canada. In addition, in
combination with affiliated and non-affiliated entities, the Company will
continue to attempt to form or join consortiums of oil and gas entities with
the requisite financial strength to apply for Australian oil and gas working
interest concessions, involving financial requirements for exploration and
drilling activities. Acquisition of working interest concessions in
Australia will place the Company in an active role in oil and gas
exploration, starting with a substantial twenty percent (20%) working
interest commitment, as a holder in Cooper Basin Oil & Gas, Inc.; however,
due to the unsuccessful applications mentioned above, no expenditures will
ensue until further areas are acquired through applications. Australia's
state government agencies granting concessions require such companies or
consortiums to have approximately $1,000,000 in cash to perform the
necessary first two years exploration activities. Certain portions of South
Australia and Queensland concessions have been relinquished to the
governments of South Australia and Queensland for future bidding. The other
interest holders in Cooper Basin Oil & Gas, Inc. are Ely Sakhai (20%),
Robert Kamon (20%), Kaye Kamon Eliasen (20%), and Golden Triangle
Industries, Inc. (20%).
Areas are being released in South Australia from ex-PEL's 5 and 6 on
February 28, 1999. This acreage was out of the original 16,000,000 acres of
PELs 5 and 6. The previous holders of PELs 5 and 6, Exxon-Santos et al, have
the right to retain small PPLs over producing fields in the area. PELs 5 and
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6 were held by Exxon-Santos et al forty (40) years prior to their expiration
in February, 1999. Companies have long awaited the opportunity to acquire
portions of PELs 5 and 6, which have the most profitable onshore production
in Australia. Competition for these areas is keen. There is $43.2 million
worth of seismic on eight areas, which the Company is currently examining.
Cooper Basin Oil & Gas, Inc. is reviewing the summary seismic in preparation
of the applications, which International Oil Lease Service Corp., as leasing
agent, has furnished to Cooper Basin Oil & Gas, Inc. Cooper Basin Oil &
Gas, Inc. intends to apply in future application rounds in the ex-PEL area
release.
RECENT DEVELOPMENTS
On October 13, 1999 Australian-Canadian Oil Royalties Ltd.(50%)("ACOR")in
conjunction with Ely Sakhai (50%) ("Sakhai") filed an offshore application
for V99-2, covering 214,000 acres located in the south Gippsland Basin in
the State of Victoria, in Australia. The nearest production is the Esso-BHP
Kingfish Field, located approximately 1 mile from the west line of V99-2.
This field is currently producing approximately 17,000 barrels of oil per
day. Two significant structures on V99-2 have been drilled, the Archer
Anticline and the Anemone Anticline. The in place potential for the Archer
#1 is 7.6 million barrels of oil and 73 billion cubic feet of gas for
proven, probable and possible. The in-place potential of the Anemone #1 are
proven - 192.2 billion cubic feet of gas, probable - 308 billion cubic feet
of gas and possible - 444 billion cubic feet of gas. Both of these wells
will need to be opened up. The SE Archer Anticline is located in the same
vicinity. The Anemone SE Anticline is estimated to be capable of holding up
to 32,000,000 barrels of recoverable oil if it is productive and the sands
are filled to the spillpoint on the closure.
The application involves the drilling of the Anemone SE, Kingfish SE and
Brontosaurus structures. The Kingfish SE could contain up to 117,000,000
barrels of oil and is approximately 1.6 miles southeast of the Kingfish
Field. The Brontosaurus structure is approximately 9 miles south of the
Kingfish Field and is estimated to be capable of containing between 40
million and 100 million barrels of oil.
The Company has paid its one-half of the $A3,000 application fee. ACOR and
Sakhai have entered into a leasing agreement with Australian Grazing &
Pastoral Co., Pty. Ltd. to lease the area for a consideration of $25,000 and
a 2% of all production overriding royalty, if awarded the concession, and
nothing if the application is unsuccessful.
An operating agreement has been entered into between ACOR and Sakhai whereby
if either party does not meet the expenditures they will assign their
interest to the other party, so that the exploration program can proceed
without delay.
Ely Sakhai is President of ACOR and holds 50% of the application
individually. Robert Kamon is Secretary and Director of ACOR and President
of Australian Grazing & Pastoral Co., Pty. Ltd.
The Company currently has cash on hand to meet its half of the first year's
exploration program and if granted the area plans to raise additional funds
through a stock issue and/or take in industry partners for the drilling and
development of the area.
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Disclosure Regarding Forward-Looking Statements
The forward-looking statements in this Form 10-SB reflect the Company's
current views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ from those anticipated. In the
Form 10-SB, the words "anticipates," "believes, "expects," "intends",
"future" and similar expressions identify forward-looking statements. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that may arise after the date
hereof. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by this section.
ITEM 4. DESCRIPTION OF PROPERTY
The following table sets forth the ATP number of each Australian concession
in which the Company had an ORRI as of January 5, 1999 (date of the title
searches on the properties), and upon which productive wells had been
drilled, the percentage interest of the Company therein, the number of such
wells, the gross acreage of each concession, and the net royalty acres held
in each concession.
Percentage
# of 1% of Net
of Gross Gross Royalty
Area Wells Concession Holder Acres Production Acres Blocks
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267 21 Santos Producing Block 558,000 17.15% 7,656 30
299 65 Santos Producing Block 592,295 05.75% 2,732 32
543 1 Vernon E. Faulconer
Australia Inc. 1,545,600 25.00% 30,912 84
560 3 First Sourcenergy
Group Inc. 868,430 25.00% 17,369 46
Patchawarra
SW Santos Producing Block 1,069,717 06.25% 5,349 58
The following table sets forth the undeveloped acreage in which the Company
had an ORRI in Australia as of January 5, 1999, the date of the title
searches on the Queensland properties.
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Percentage
of 1% of Net
Gross Gross Royalty
Area Concession Holder Acres Production Acres Blocks
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415 Bridge Oil 704,281 05.75% 3,243 37
538 Dyad Australia, Inc. 1,159,373 03.80% 3,524 60
542 Ron Marsh 1,932,000 50.00% 77,280 105
544 Australian Petroleum 1,237,482 08.08% 8,002 65
Industries Pty. Ltd.
550 Discovery Geo (AUSTRALIA) 571,335 25.00% 11,427 30
Corporation
554 Dyad Australia, Inc. 483,072 25.00% 9,662 25
582 Cooper-Eromanga Oil, Inc. 6,716,000 67.10% 360,515 365
615 Oil Seeps, Inc. 9,659,107 46.40% 358,545 499
616 East Jackson Oil, Inc. 222,395 333.33% 59,305 12
The estimated number of non-producing wells on the above areas is included
below:
Area Estimated number of
non-producing wells
267 5
299 8
543 10
560 8
415 4
538 2
542 2
544 6
550 5
554 2
582 1
615 3
616 3
The total acreage under which ACOR holds overriding royalty interest in
Queensland and South Australia is 95,521 net royalty acres under 27,319,087
gross surface acres.
ACOR holds overriding royalty interests in fourteen concessions covering
27,319,087 surface acres in the Eromanga and Cooper Basins in Australia.
Five of the concessions have producing wells and nine of the concessions are
currently non-producing. The Eromanga Basin encompasses the southwestern
portion of the province of Queensland and the northeast corner of South
Australia, and is Australia's main onshore producing oil and gas basin. The
Cooper Basin is located in the northeast part of the province of South
Australia. Management believes ACOR's overrides are in a prime location
since some 99% of ACOR's interests form nearly continuous blocks adjoining
the producing block of Santos et al. which has reserves in excess of
1,056,000,000 barrels of oil equivalent and is making $A930,000,000 worth of
oil, gas and associated hydrocarbons per year (equivalent to about $700
million in U. S. dollars).
On the 27,319,087 surface acres where ACOR holds overriding royalty
interests, there are giant anticlines, large faults and hundreds of seismic
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highs, all of which indicate possibilities of oil and gas reserves. In
addition, about $30 million worth of seismic information has been completed
and is available on the areas.
After record years in 1996 and 1997 with twenty-eight successful oil wells
completed on ATP 299, Santos, the operator controlling the prospect,
continued a successful drilling program in 1998 with the completion of seven
more new oil wells. Following is a list of the new wells completed as
producers: Kooroopa North #2, Ipundu #13, Ipundu #14, Ipundu #15, Ipundu
North #11, Talgeberry #7, and Ipundu #4A.
ACOR is currently receiving revenues from two of its overriding royalty
interests - ATP 267 and ATP 299. Twenty-one successful oil wells have been
completed on ATP 267 and sixty-five successful oil wells in twelve different
fields have been completed on ATP 299. With numerous undrilled locations in
each field, ACOR's revenues should be increasing from this overriding
royalty interest during coming years as development continues. Total gross
production for the last two years for the Santos et al producing areas (ATP
267 and TP 299) was approximately 3,898,694 barrels, and revenues on the
areas were approximately $30,716,494 (converted at $US.668).
Plans for the next twelve (12) months on the areas are at the discretion of
the working interest holders, as are any costs associated with operations.
All Company assets associated with these properties are overriding
royalties, therefore all exploration costs are borne by the working interest
holders.
In addition to the drilling success on ATP 299, drilling and seismic
programs were conducted during 1997 and 1998 on several concessions under
which ACOR holds ORRIs. During 1997 three producing wells were completed
on ATP 560 - the Utopia #1, Utopia #2, and Utopia #3, and four wells were
dry holes. One well drilled on ATP 550 was a dry hole. During 1998, a 50
kilometer seismic survey was completed on ATP 267, a 153 kilometer seismic
survey was completed on ATP 299, and a 176 kilometer seismic survey was
completed on ATP 543. Two unsuccessful wells were drilled during 1998, one
on ATP 267 and one on ATP 415. Another productive concession under which
ACOR holds an ORRI is ATP 543 where a successful gas well was drilled during
1996. The well had an initial potential test of 6.2 MMCFPD. This well has
just gone on line after completion of a new pipeline.
The four producing concessions described above are located in Queensland,
Australia. The other producing concession under which ACOR holds an ORRI
is the Patchawarra SW Block located in South Australia. This concession
has a number of producing wells, and has had three new gas fields
discovered during 1999. Due to incomplete title, the Company is not yet
receiving royalty income from this concession (see Part II, Item 2.
Legal Proceedings).
ITEM 5. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the common stock of the Company as of January 1, 1999 by each
of the Company's officers and directors, each person who is known by the
Company to own beneficially more than 5% of the outstanding common stock
and all officers and directors of the Company as a group. The title of
class is common stock, no par value.
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# of Shares
Name and Beneficially Percent of
Address of Stockholder Owned Class
- -------------------------------------- ----------- --------
Australian Grazing & Pastoral 1,008,000 19.57%
Co. Pty. Ltd.*
1304 Avenue L
Cisco, Texas 76437
Larry Braun -0- 00.00%
26 Lake Fraser Place, SE
Calgary, Alberta, T2J 3T5
Canada
Ken Campbell 100,000 01.94%
Box 5, Site 16, SS1
Calgary, Alberta T2M 4N3
Canada
Robert Kamon** 1,600,000 31.07%
1304 Avenue L
Cisco, Texas 76437
William A. Randall 20,000 00.39%
2100-1075 W. Georgia St.
Vancouver, British Columbia V6E 3G2
Canada
Ely Sakhai 1,400,000 27.18%
10 Windsor Dr.
Old Westbury, New York 11568
All officers and directors as a group 3,120,000 60.57%
Jan Soleimani 800,000 15.53%
21 Windsor Dr.
Old Westbury, New York 11568
*Australian Grazing is controlled by Robert Kamon.
**Robert Kamon (592,000 shares) and AGP's (1,008,000 shares) holdings are
included together in Robert Kamon's ownership percentage.
Note: The stockholders identified in this table have sole voting and
investment power with respect to the shares beneficially owned by them.
The owners have no rights to acquire additional shares through options,
warrants, rights, or conversion privileges within the next sixty days. The
present principal owners have not sold any of the original 4,000,000 shares
since incorporation, except that International Oil Lease Service Corp., an
original shareholder, sold 592,000 shares on December 1, 1997, to Robert
Kamon, prior to the Company initiating its 504 Regulation D issue.
Management is not aware of any current arrangements which would result in a
change of control of the Company.
-13-
<PAGE>
<PAGE>
ITEM 6. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors - The Board of Directors of the Company presently consists of
five members. Each director is elected at the annual meeting of
shareholders to hold office until the next annual meeting of shareholders
and until his successor has been elected and qualified. The following
table sets forth information concerning the persons currently serving as
directors of the Company.
Date First
Position With Elected
Name Age the Company as Director
---------------------- ---- ------------- -----------
Larry Braun 55 Director 1997
Kenneth W. Campbell 69 Director 1997
Robert Kamon 72 Director & 1997
Secretary
William A. Randall 58 Director 1997
Ely Sakhai 47 Director & 1997
President
Executive Officers - Unless otherwise specified by the Board, all executive
officers are elected for a term of one year, commencing with the date of the
first meeting of the Board following the annual meeting of shareholders, and
serve until their successors are elected or appointed and qualified, or
until their respective death, resignation, removal or disqualification. All
of the Company's officers are executive officers. The following table sets
forth certain information with respect to the persons currently serving as
executive officers of the Company.
Date First
Position With Elected
Name Age the Company as Director
---------------------- ---- ----------- ------------
Robert Kamon 72 Secretary and 1997
Director
Ely Sakhai 47 President and 1997
Director
There are no family relationships between any of the officers or directors
of the Company.
Larry Braun, Director, was president and owner of Cordoba Resources, Ltd.
previous to June 1993. Between June 1993 and May 1995, he was President of
Senercorp Ventures, Inc. Since May 1995, he has been a Vice President of
Carpatsky Petroleum in Calgary, Alberta, Canada.
Kenneth W. Campbell, Director, is a graduate of the University of Brandon
(Manitoba, Canada). He is President of Solar Energy Resources, Ltd., a
privately held independent Canadian oil and gas producer.
Robert Kamon, Director and Secretary, is a petroleum engineering graduate
of the University of Texas at Austin, Texas. Mr. Kamon has been President
of three NASDAQ listed companies. He is currently the President of several
private companies - Australian Grazing and Pastoral Co. Pty. Ltd. since
1954, International Oil Lease Service Corp. since 1961, and Tensleep Oil and
Production Inc. since 1989.
-14-
<PAGE>
<PAGE>
William A. Randall, Director, is a graduate of the University of British
Columbia and has an L.L.B. degree from the University of British Columbia.
He has been a practicing commercial attorney for the last thirty years, and
is currently a partner in the Vancouver firm of Russell and DuMoulin.
Ely Sakhai, Director and President, is a civil engineering graduate of
Columbia University. He has been engaged in the art gallery business in New
York City for the last fifteen years.
ITEM 7. EXECUTIVE COMPENSATION
Value of the office space used by ACOR was $600* for 1997 and $1,200* for
1998.
Value of the time cost by ACOR executives was $1,200* for 1997 and $2,400*
for 1998.
*These have been recorded as expenses and contributed capital in the
financial statements in their respective periods.
The executive officers of ACOR have received no salary, bonus or stock
compensation since the organization of the Company. The Company has no
bonus, pension, or profit sharing plans. The Company pays for copies, phone
usage and other labor to non-related parties.
ITEM 8. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, the Company issued stock for the package of overriding royalty
interest comprising 1,005,142.8 net royalty acres in Australia. Since these
properties were acquired from related parties (stockholders), they were
recorded by the Company at the transferor's cost basis. On May 19, 1997, the
Company acquired 60% of these interests from Ely Sakhai, Jan Soleimani and
Mike Altamura (Sakhai group) for 2,400,000 shares of the Company's common
stock. The Sakhai group had previously acquired these royalties from
Australian Grazing & Pastoral Co., Pty. Ltd. (AGP) at a cost of $300,000.
There was not affiliation between the Sakhai group and AGP. Therefore, this
transaction established the cost basis of the Sakhai group. This in turn
became the cost basis for recording the properties as received by the
Company in exchange for its stock. On May 22, 1997, the Company acquired
the remaining 40% of the overriding royalty package from AGP and
International Oil Lease Service Corp. (IOLS) for 1,600,000 shares of the
Company's common stock. This portion of the royalty package was recorded by
the Company at a cost of zero ($0), due to a SEC accounting rule.
Three of the directors of the Company, Robert Kamon, Ken Campbell and Larry
Braun, are active in the oil and gas industry personally. The activities of
each could result in a conflict of interest between their other oil and gas
activities and those of the Company.
Robert Kamon is President of International Oil Lease Service Corp. Mr.
Kamon is also President of Cooper Basin Oil & Gas, Inc. and Secretary of
Australian-Canadian Oil Royalties Ltd. Australia-Canadian Oil Royalties
Ltd. is a twenty percent (20%) stockholder in Cooper Basin Oil & Gas, Inc.
The other stockholders are Golden Triangle Industries, Inc., a public
company, Ely Sakhai, President of ACOR, Ken Kamon and Kaye Eliasen.
-15-
<PAGE>
<PAGE>
International Oil Lease Service Corp. Is in the business of applying for
and acquiring oil and gas concessions in Australia; therefore, its
activities may involve a conflict of interest with the Company.
Australian Grazing & Pastoral Co. Pty. Ltd., controlled by Robert Kamon, is
in the business of applying for and acquiring oil and gas concessions in
Australia and its activities may involve a conflict of interest with the
Company.
ITEM 9. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares
of common stock and 50,000,000 shares of preferred stock. Currently there
are 5,150,000 shares of common stock issued and outstanding, and 0 shares
of preferred stock issued and outstanding.
Dividend Rights and Policy - The holders of ACOR shares are entitled to
share equally, share for share, in such dividends as might be approved by
the Board of Directors. The Company does not anticipate paying cash
dividends in the foreseeable future. The Company intends to retain
earnings to provide funds for its operations. Future dividend policy will
be determined by the Board of Directors.
Voting Rights - Holders of ACOR are entitled to one vote per share with
respect to all matters that are required by law to be submitted to a vote
of shareholders. Cumulative voting rights are not available to ACOR
shareholders.
There are no British Columbia Law provisions specifically regulating
takeover bids or the acquisitions of a controlling interest.
Assessment and Redemption - All ACOR shares issued are and will be legally
issued, fully paid and non-assessable.
Purchase and Redemption Rights - Currently only one class of shares has
been issued and there are no purchase or redemption rights. However,
according to the Company's Articles, subject to the special rights and
restrictions attached to any class of shares, the Company may, by a
resolution of the Board of Directors, purchase any of its shares at the
price and upon the terms specified in such resolution or redeem any class
of its shares in accordance with the special rights and restrictions
attached thereto.
Preemptive Rights - Holders of ACOR shares have no preemptive rights.
Liability of Directors - See Part II, Item 5. Indemnification of Directors
and Officers
Liquidation Rights - Upon liquidation, dissolution or winding up of the
Company, the beneficial owners of the shares would be entitled to a pro
rata share of the assets of the Company.
Preferred Shares - To date, no shares of preferred stock have been issued.
The Company has reserved the right for the Board of Directors to designate
preferred shares in one or more classes or series, and to create, define
-16-
<PAGE>
<PAGE>
and attach special rights and restrictions to the preferred shares of each
series. Any such series or classes of preferred stock designated by the
Board in the future may effect the rights of the holders of the common
stock.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Currently, there is a public trading market for the Company's common stock
in the States of New York, Colorado, and Florida, for 1,150,000 of the total
5,150,000 shares of the Company; however, the Company is not presently a
member of any exchanges. There are currently 5,150,000 common shares issued
and outstanding. The 5,150,000 shares are owned by 23 shareholders. There
has been no market price set as there has not been any trading on the above
mentioned exchanges.
The Company plans to apply for listing on the OTC Bulletin Board in the
United States immediately, and in the future, apply for listing on the
Vancouver Stock Exchange in Canada, when the Company has met all exchange
requirements.
The Company does not anticipate the payment of cash dividends in the
foreseeable future. Payment of cash dividends is within the discretion of
the Company's Board of Directors and will depend on, among other factors,
earnings, capital requirements and the operating and financial condition of
the Company.
ITEM 2. LEGAL PROCEEDINGS
The Company was not a party to any legal proceedings as of December 31,
1998. However, the Company plans to work with legal counsel in
Australia to undertake necessary litigation to perfect its title in an
overriding royalty interest in the Patchawarra Southwest Block of PEL 5 and
PEL 6. The overriding royalty interest was created in June, 1971, and
since that time has been assigned to six different companies with the last
assignee being ACOR. The Company has determined that due to the extensive
time elapsing between assignments and the failure of some intermediate
assignees to properly assign title, it will be necessary to engage in
litigation in order to collect past royalty payments of approximately
$36,081, and royalty payments in the future. The expected cost of the
barrister's fees for ACOR's part will be approximately $15,750 in addition
to any stamp duty which may be required, or other potential fees.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
NONE
-17-
<PAGE>
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On April 28, 1997, the Company entered into an agreement whereby the Company
traded 4,000,000 shares of the Company's common stock for approximately
1,000,000 net royalty acres of overriding royalties in Australia. According
to the requirement of Item 701 (a) through (d) of Regulation s-B, certain
information is herewith included:
a. On April 28, 1997, Australian-Canadian Oil Royalties Ltd. traded
4,000,000 shares of the Company's common stock for approximately
1,000,000 net royalty acres of overriding royalties.
b. There was no underwriter for this transaction. The parties included
in the transaction were as follows:
Australian Grazing & Pastoral Co., Pty. Ltd. 1,008,000 shares
International Oil Lease Service Corp. 592,000 shares
Ely Sakhai 1,400,000 shares
Jan Soleimani 800,000 shares
Mike Altamura 200,000 shares
----------------
TOTAL SHARES 4,000,000 shares
c. There was no exchange of cash in the transaction. The securities were
traded for 1,000,000 net royalty acres of overriding royalties in oil
and gas properties located in Australia (see Item 4: Description of
Properties for breakdown of properties).
d. The transaction was an initial stock transaction between five
parties and a British Columbia corporation, and the Company was not
trading, thus no United States SEC rules or exemptions apply to this
transaction.
Closing November 30, 1998, the Company initiated a 504 private placement
under Regulation D, and sold 1,150,000 shares to a total of 17 shareholders.
The shares were priced at $0.25 (twenty-five cents) per share, and the
underwriter received $15,000 as a commission for the deal. According to the
requirement of Item 701 (a) through (d) of Regulation S-B, certain
information is herewith included:
a. Closing November 30, 1998, Australian-Canadian Oil Royalties Ltd.,
initiated a 504 private placement under Regulation D, and sold 1,150,000
shares of Company stock.
b. The principal underwriter was Grady & Hatch and Company of New York.
The stock purchasers of the issue are as follows:
Aaron Seligson Brookhsaven Beach Investment Co.
PS&R Joseph Anayati
Paramount Antiques Kenneth Campbell
Harun Sandjary Virganand Persuad
Shohei Yammotta Kaye Eliasen
Slyoun Mahfar Jonathan David
Jack Shaoul Barcan Estates, Inc.
George Naim Sam Nain
Mark Naim
-18-
<PAGE>
<PAGE>
c. The total offering price of the securities was twenty-five cents
($0.25) per share and the total underwriting commission was $15,000.
d. The issue was initiated under Rule 504 under Regulation D of the
United States Securities and Exchange Commission.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subject to the provisions of the Company Act, the directors shall cause the
Company to indemnify a director or former director of the Company and the
directors may cause the Company to indemnify a director or former director
of a corporation of which the Company is or was a member and the heirs and
personal representatives of any such person against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a
judgment, actually and reasonably incurred by him or them including an
amount paid to settle an action or satisfy a judgment in a civil, criminal
or administrative action or proceeding to which he is or they are made a
party by reason of his being or having been a director of the Company or a
director of such corporation, including any action brought by the Company or
any such corporation. Each director of the Company on being elected or
appointed shall be deemed to have contracted with the Company on the terms
of the foregoing indemnity.
Subject to the provisions of the Company Act, the directors may cause the
Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a member (notwithstanding that he
is also a director) and his heirs and personal representatives against all
costs, charges and expenses whatsoever incurred by him or them and resulting
from his acting as an officer, employee or agent of the Company or such
corporation. In addition the Company shall indemnify the Secretary or an
Assistant Secretary of the Company (if he shall not be a full time employee
of the Company and notwithstanding that he is also a director) and his
respective heirs and legal representatives against all costs, charges and
expenses whatsoever incurred by him or them and arising out of the functions
assigned to the secretary by the Company Act or these Articles and each such
secretary and assistant secretary shall on being appointed be deemed to have
contracted with the Company on the terms of the foregoing indemnity.
PART F/S
The financial statement information for ACOR is set forth immediately
following the signature page. See the Index to Consolidated Financial
Statements on page F-1.
-19-
<PAGE>
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit 2 - Charter and By-Laws
Articles of Incorporation
Exhibit 3 - Instruments Defining Rights of Securities Holders
See PARTS 12 and 21 of Articles of Incorporation presented
at Exhibit 2
Exhibit 5 - Voting Trust Agreement
Not Applicable
Exhibit 6 - Material Contracts and Agreements:
6.1 - Agreement between Australian Grazing and Pastoral
Ltd. and Sakhai Group
6.3 - Agreement between Sakhai Group and ACOR
6.3 - Agreement between Australian Grazing and Pastoral
Ltd. and ACOR
6.4 - Sample Leasing Agreement
6.5 - Sample Overriding Royalty Assignment
Exhibit 7 - Material Foreign Patents
Not Applicable
Exhibit 13 - Form F-X, "Appointment for Agent for Service of Process and
Undertaking"
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
AUSTRALIAN-CANADIAN OIL ROYALTIES
LTD.
Date: October 29, 1999 /s/ ELY SAKHAI
Ely Sakhai, President and
Director
/s/ ROBERT KAMON
Date: October 29, 1999 Robert Kamon, Secretary and
Director
-20-
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
INDEX TO FINANCIAL STATEMENTS
AUDITED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
Report of Independent Certified Public Accountants . . . . F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations and Comprehensive Income . . . . F-4
Statement of Changes in Stockholders' Equity . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . F-6
Notes to Audited Financial Statements . . . . . . . . . . F-7
INTERIM FINANCIAL STATEMENTS AS OF AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1999
Report On Review By Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-15
Balance Sheeets . . . . . . . . . . . . . . . . . . . . . . F-16
Statements of Operations . . . . . . . . . . . . . . . . . F-17
statements of Cash Flows . . . . . . . . . . . . . . . . . F-18
Selected Information For Financial Statements . . . . . . . F-19
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Australian-Canadian Oil Royalties Ltd.
Cisco, Texas
We have audited the accompanying balance sheet of Australian-Canadian Oil
Royalties Ltd. as of December 31, 1998, and 1997, and the related
statements of operations, changes in shareholders' equity, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Australian-Canadian Oil
Royalties Ltd. as of December 31, 1998, and 1997, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/S/ ROBERT EARLY & COMPANY, P.C.
Robert Early & Company, P.C.
Abilene, Texas
March 22, 1999
F-2
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Balance Sheets
As of December 31, 1998 and 1997
1998 1997
--------- ---------
Assets
CURRENT ASSETS
Cash $ 263,188 $ 39,347
Accounts receivable 1,674 1,439
Prepaid expenses 1,965 2,858
--------- ---------
Total current assets 266,827 43,644
--------- ---------
PROPERTY AND EQUIPMENT
Oil and Gas Properties 307,976 307,976
Accumulated Depletion (6,363) (3,427)
--------- ---------
Net Property and Equipment 301,613 304,549
--------- ---------
OTHER ASSETS
Organization Costs (net of accumulated
amortization of $926 and $396 respectively) 1,719 2,249
--------- ---------
TOTAL ASSETS $ 570,159 $ 350,442
========= =========
Liabilities & Stockholders' Equity
LIABILITIES $ 3,356 $ -
STOCKHOLDERS' EQUITY
Preferred stock no par (50,000,000 shares
authorized, none outstanding) - -
Common stock, no par (50,000,000 shares
authorized, 5,150,000 and 4,000,000 shares
respectively outstanding) 607,848 354,790
Accumulated deficit (40,708) (4,151)
Other comprehensive income:
Foreign currency translation adjustment (337) (197)
--------- ---------
Total Stockholders' Equity 566,803 350,442
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 570,159 $ 350,442
========= =========
[FN]
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statements of Operations and Comprehensive Income
For the years ended December 31, 1998 and 1997
1998 1997
--------- --------
OPERATING REVENUES
Oil & gas revenues $ 5,545 $ 8,201
OPERATING EXPENSES
Depletion and amortization 3,466 3,824
Personnel costs 6,136 1,640
Professional fees 24,164 -
General and administrative expenses 6,664 4,424
--------- --------
Total operating expenses 40,430 9,888
--------- --------
INCOME/(LOSS) BEFORE INCOME TAXES (34,885) (1,687)
Australian income taxes 1,672 2,464
--------- --------
NET LOSS (36,557) (4,151)
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment (140) (197)
--------- --------
TOTAL COMPREHENSIVE LOSS $ (36,697) $ (4,348)
========= ========
Net loss per weighted average share outstanding $ (0.01) $ 0.00
========= =========
Weighted average shares outstanding 4,098,833 4,000,000
========= =========
[FN]
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statement of Changes in Stockholders' Equity
For the years ended December 31
<TABLE>
Accumulated
Accumulated Other
Common Stock Earnings/ Comprehensive
Shares Amount (Deficit) Income
<S> <C> <C> <C> <C>
BALANCES, January 1, 1997 - $ - $ - $ -
Stock issued at inception 4,000,000 300,000 - -
Additional contributed capital - 54,790 - -
Net loss - - (4,151) -
Other comprehensive income:
Foreign currency translation
adjustment - - - (197)
--------- -------- --------- ----------
BALANCES, December 31, 1997 4,000,000 354,790 (4,151) (197)
Stock issued 1,150,000 287,500 - -
Direct costs of stock issue - (38,042) - -
Additional contributed capital - 3,600 - -
Net loss - - (36,557) -
Other comprehensive income:
Foreign currency translation
adjustment - - - (140)
--------- -------- --------- ----------
BALANCES, December 31, 1998 5,150,000 $607,848 $ (40,708) $ (337)
========= ======== ========= ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statements of Cash Flows
For the years ended December 31,
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(36,557) $ (4,151)
Adjustments to reconcile net income/(loss)
to net cash provided by operations:
Depletion and amortization 3,466 3,824
Adjustment for foreign currency
translation (140) (197)
Value of expenses contributed by officers 3,600 1,800
(Increase) in accounts receivable (234) (1,439)
(Increase)/decrease in prepaid expenses 893 (2,858)
Increase in accounts payable 3,356 -
Stock issued for expenses - 4,217
-------- ---------
NET CASH PROVIDED/(USED) BY
OPERATING ACTIVITIES (25,616) 1,196
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Organization costs - (635)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 249,457 38,786
--------- ---------
Increase in cash for period 223,841 39,347
Cash, Beginning of period 39,347 -
--------- ---------
Cash, End of period $ 263,188 $ 39,347
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash payments for:
Interest $ - $ -
Australian income taxes 1,654 1,846
Noncash investing and financing activities:
Stock issued for:
Oil and gas properties - 307,976
Organization costs and operating
expenses - 5,228
Contributed expenses 3,600 1,800
[FN]
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Notes to Audited Financial Statements
December 31, 1998 and 1997
GENERAL:
Australian-Canadian Oil Royalties Ltd. (the Company) was incorporated April
28, 1997 in Vancouver, British Columbia, Canada. Its primary business
activity is the purchase and sale of overriding royalties for long-term
passive income and capital gains. The Company also engages third parties for
leasing operations in various countries. At present, all of the properties
held by the Company are located in Australia's main onshore oil and gas
producing basin. These financial statements are prepared in U.S. dollars for
use in U.S. securities filings.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment -- The Company follows the full cost method of
accounting for oil and gas producing activities and, accordingly,
capitalizes all costs incurred in the acquisition, exploration, and
development of proved oil and gas properties, including the costs of
abandoned properties, dry holes, geophysical costs, and annual rentals.
Costs are recorded in cost centers on a country-by- country basis. At
present, all of the Company's oil and gas properties consist of overriding
royalty interests and are located in a single cost center - Australia.
The Company has not participated in the exploration and development of
proved oil and gas properties. Capitalized costs are subject to a "ceiling
test," which basically limits such costs to the aggregate of the "estimated
present value," discounted at a 10% interest rate of future net revenues
from proved reserves, based on current economic and operating conditions,
plus the lower of cost or fair market value of unproved properties. Costs
in excess of the ceiling test are adjusted against income. Sales or
abandonments of properties are accounted for as adjustments of overall
capitalized costs with no gain or loss recognized.
Costs of producing royalty interests are being amortized over the estimated
reserves reported by the Queensland, Australia government at June 30, 1997,
based on actual quantities sold. Costs of non-producing interests are not
being amortized pending development or production/sale of oil or gas.
Intangible Assets and Amortization -- Intangible assets consist of
organization costs. These costs, which were incurred in the formation of
the Company, are being amortized over a period of 60 months on a
straight-line basis. Amortization totaled $529 and $397 for 1998 and 1997.
These amounts are included with depletion expense for presentation
purposes.
Income Taxes -- Deferred tax liabilities and assets result from temporary
differences between the financial statement and income tax bases of assets
and liabilities. The Company records and adjusts any deferred tax asset
valuation based on judgments as to future realization of the deferred tax
benefits supported by demonstrated trends in the Company's operating
results.
F-7
<PAGE>
<PAGE>
As a Canadian corporation, the Company is liable for income taxes under the
laws of Canada. Under Canadian law the Company's Australian-source income
is subject to a 46% tax (on Canadian dollars). The operating losses can be
carried forward for seven years. The Company has available at December 31,
1998, unused operating loss carryforwards that may be applied against
future Canadian taxable income and that expire as presented below. Because
the timing of realization of the tax benefit from these loss carryforwards
cannot be currently projected, a valuation allowance has been established
to completely offset this asset.
Amount of Unused Operating Expiring During Year Ended
Loss Carryforwards ($C) December 31,
$ 1,242 2004
10,942 2005
--------
$ 12,184
========
The Company has no U.S. source income nor any income effectively connected
with a U.S. trade or business. Therefore, there is no U.S. tax liability
or benefit related to its activities to date.
The Company's Australian oil royalty income is subject to a 30% Australian
income tax on oil and gas production which is withheld by the royalty
payer. The Company incurred Australian income taxes on oil and gas
production totaling $1,673 and $2,464 in 1998 and 1997.
Earnings Per Share -- Accounting rules provide for the calculation of
"Basic" and "Diluted" earnings per share. Basic earnings per common share
excludes dilutive securities and is computed by dividing net income
available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per common share
reflects the potential dilution of securities that could share in the
earnings of the entity on an as if converted basis. This is done by
dividing net income available to common shareholders, as adjusted if
necessary, by the weighted average number of common shares outstanding plus
potential dilutive securities.
Weighted average shares outstanding was 4,095,833 for 1998 and 4,000,000
for 1997.
Foreign Currency Transactions -- As noted above, these statements have been
prepared in U.S. dollars. However, the Company conducts transactions in
Canadian, Australian and U.S. dollars. Transactions denominated in
Canadian or Australian dollars are translated to equivalent U.S. dollars
for recording in the financial statements based on the currency exchange
rates existing at the dates of the transactions. Ending balances of
accounts which are denominated in Canadian dollars are translated to U.S.
dollars based on the currency exchange rates existing at December 31, 1998,
or 1997 respectively. The exchange gains and losses that result from
translating these amounts to U.S. dollars are accumulated and reported as a
separate component of the Company's stockholders' equity.
Comprehensive Income During 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income",
F-8
<PAGE>
<PAGE>
which establishes standards for the reporting and display of comprehensive
income. Comprehensive income includes all changes in equity except those
resulting from investments by stockholders and distributions to
stockholders. The Company currently has only one component of
comprehensive income which is foreign currency translation adjustment. The
Company reported its current year change and accumulated amounts of
comprehensive income (loss) from foreign currency translation in its
financial statements. Due to the lack of probability of realizing the tax
benefit of its losses (as discussed under Income Taxes above), no income
tax effect is reported for comprehensive income amounts.
Cash Flows The Company considers cash to be its only cash equivalent for
purposes of presenting its Statement of Cash Flows.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2: ACCOUNTS RECEIVABLE
At December 31, 1998 and 1997 the Company has accrued receivables for oil
and gas production from its Australian overriding royalty interests
totaling $1,674 and $1,439, respectively. Collection of the accrued
Australian production generally occurs during the quarter following the
quarter of production. The cost basis of the receivable is believed to
approximate its fair value. No allowance for bad debts has been
established because the Company has not experienced any significant
inability to collect its receivables.
NOTE 3: PREPAID EXPENSES
During 1997, the Company advanced $C5,000 to Dales, Matheson, Carr-Hilton,
Chartered Accountants of Vancouver, British Columbia for services in
connection with the formation of the Company and the initial public
offering. As of December 31, 1997, this firm had billed the Company for
$C910 in services related to the corporate formation. These fees were
translated to $US635 and recorded as organization cost. The balance of the
advance was translated to $US2,858 and reported as prepaid expense. During
1998, the firm billed the Company for an additional $C1,070 for Canadian
accounting and tax services. This amount was translated to $US693 and
recorded as accounting fees. The balance of the advance as of December 31,
1998 was translated to $US1965 and reported as prepaid expense.
NOTE 4: OIL AND GAS PROPERTIES
During 1997, the Company acquired a package of overriding royalty interests
comprising 1,005,142.8 net royalty acres under 28,572,609 gross surface
acres in Australia's main onshore oil and gas producing basin in exchange
for 4,000,000 shares of its common stock as described in NOTE 5 below. In
F-9
<PAGE>
<PAGE>
addition to the acquisition cost, the Company incurred costs associated
with preparation of assignments and registering chain of title transactions
in Australia. Below is a summary of capitalized costs related to these oil
and gas properties:
1998 1997
Acquisition cost $ 300,000 $ 300,000
Assignment and transfer costs 7,976 7,976
--------- ---------
Total 307,976 307,976
Less accumulated depletion (6,363) (3,427)
--------- ---------
Net Oil and Gas Properties $ 301,613 $ 304,549
========= =========
Costs of royalty interests for producing properties are being amortized over
reserve estimates reported by the Queensland, Australia government for June
30, 1997, based on quantities produced. These producing properties are ATP
267 and ATP 299. Other interests have not produced saleable oil or gas from
which the Company has received revenues. The costs associated with these
non-producing properties are not being amortized pending determination of
reserve quantities and commencement of production. Depletion expense totaled
$2,936 and $3,427 for 1998 and 1997, respectively.
NOTE 5: STOCK TRANSACTIONS
During 1998, the Company undertook an offering of its common stock in New
York, Florida, and Colorado. Pursuant to this offering, the Company issued
1,150,000 shares of its no-par-value common stock for $287,500. The direct
costs incurred in the offering totaled $38,043.
NOTE 6: TRANSACTIONS WITH RELATED PARTIES
During 1997, the Company issued stock for the package of overriding royalty
interests comprising 1,005,142.8 net royalty acres in Australia as described
in NOTE 4 above. Since these properties were acquired from related parties
(stockholders), they were recorded by the Company at the transferor's cost
basis. On May 19, 1997, the Company acquired 60% of these interests from Ely
Sakhai, Jan Soleimani and Mike Altamura (Sakhai group) for 2,400,000 shares
of the Company's common stock. The Sakhai group had previously acquired
these royalties from Australian Grazing and Pastoral Co., Pty. Ltd. (AGP) at
a cost of $300,000. There was no affiliation between the Sakhai group and
AGP. Therefore, this transaction established the cost basis of the Sakhai
group. This in turn became the cost basis for recording the properties as
received by the Company in exchange for its stock. On May 22, 1997, the
Company acquired the remaining 40% of the overriding royalty package from AGP
and International Oil Lease Service. (IOLS) for 1,600,000 shares of the
Company's common stock. The cost basis of AGP and IOLS in these royalties is
not susceptible reasonable, cost-effective substantiation. As a result, this
portion of the royalty package was recorded by the Company at a cost of zero
($0).
During 1997 the Company received cash totaling $12,800 from stockholders.
These cash transfers were made as capital contributions to the Company and
were recorded as additional capital.
F-10
<PAGE>
<PAGE>
In addition, the Company incurred costs and operating expenses during 1997
totaling $14,204 which were paid by a stockholder on its behalf. These
payments were recorded as additional capital. Office space and time
provided by officers without compensation had estimated values of $3,600
$1,800 during 1998 and 1997, respectively. These amounts have been reported
as operating expenses and also recorded as additional capital in their
respective years.
During 1998, the Company undertook a private placement of its stock. The
chairman of the board of directors advanced $15,000 to an underwriter for
costs in connection with the placement of stock. The Company has
reimbursed the board chairman and recorded the associated expenses.
During 1998, the Company reimbursed a commonly-controlled entity for
personnel and offices expenses which were incurred in its behalf.
NOTE 7: FOREIGN OPERATIONS
The Company operates primarily in Australia where all of its properties are
presently located. All revenues reported by the Company during 1998 and
1997 were received from Australian oil and gas royalty interests.
Depletion expense and Australian income taxes reported by the Company
during 1998 and 1997 are also related to the revenue received from the
Australian royalties. The Company also incurred organization costs and
personnel and office expenses in the United States. All of the U.S. costs
and expenses were general and administrative in nature.
NOTE 8: SUBSEQUENT EVENT
Subsequent to its December 31, 1998 year-end, the Company has contributed 20%
of the creation capital of Cooper Basin Oil & Gas, Inc. (CBOG) for a 20%
ownership interest. CBOG has entered into an agreement with a third party to
attempt to negotiate on its behalf for six Petroleum Exploration Licenses in
Australia. If the third party is successful in negotiating these Australian
concessions, CBOG will be required to pay the application, permit and leasing
fees, as well as the exploration costs required to keep the concessions in
effect. As the owner of a 20% interest in CBOG, the Company has agreed to
fund 20% of the costs of any concession granted to CBOG or forfeit its
ownership interest. Based on estimates of the costs to acquire and maintain
the concessions, the Company's resulting commitment in the first year would
range from $15,344 for one concession to $85,774 for all six concessions.
However, these commitments will only be incurred if the third party is
successful in negotiating the concessions.
NOTE 9: CONTINGENCY
The package of Australian overriding royalty interests acquired by the
Company in 1997 includes a 1/8 of 1% interest in all production from the
Patchawarra Southwest Block of PEL's 5 & 6. This overriding royalty
comprises approximately 5,348 net royalty acres under 1,069,717 surface
acres. The Patchawarra Southwest Block became productive in June, 1989 and
has produced approximately $A67,119,716 in revenues from oil, gas and LPG
since that time. This overriding royalty was first created in June, 1971
as a 1/4 of 1% interest out of a 10% working interest. Since that time,
this interest has been assigned to six different companies with the last
F-11
<PAGE>
<PAGE>
assignee being Australian-Canadian Oil Royalties Ltd. During 1997, the
Company determined that, due to the extensive time elapsing between
assignments and the failure of some intermediate assignees to properly
assign title, it will be necessary to engage in litigation in order to
collect both past and future royalty payments. In addition to the legal
costs incurred in this litigation, the Company will be required to pay the
stamp duty, payable to the Australian government, for any previous
assignment between parties which has not been paid.
The Company is working with legal counsel in Australia to undertake the
necessary litigation to perfect its title in this royalty interest. As of
December 31, 1998, no litigation had been undertaken. Legal counsel has
advised the Company that the expected cost of the litigation process will
be in the range of $A25,000 in addition to any stamp duty which may be
required. The required stamp duty will be based on the state's
determination of value and will be required to be paid for each
unregistered transfer in the chain of title. At this time no estimate of
this cost can be made. Upon successfully clearing title to the property,
the Company expects to collect approximately $A42,000 in royalties on
previous production.
NOTE 10: CONCENTRATION OF RISK
The productive assets of the Company are all presently located in
Australia.
- ---------------------------------------------------------------------
F-12
<PAGE>
<PAGE>
SUPPLEMENTARY DATA - RESERVES OF OIL AND GAS
(UNAUDITED)
December 31, 1998 and 1997
Reserves of oil and gas - Royalty Interests
The current quantities of proved reserves of oil and gas relating to royalty
interests are not presented because the necessary information is not
available or the Company's interests are not large enough to economically and
reasonably obtain this information. The Company's share of oil and gas
produced from the producing interests is presented in the following schedule:
Australia
Oil (bbls.)
1998 1997
--------- ---------
Reserves reported by the Queensland
government as of June 30, 1997 3,962 3,962
Cumulative previous production (463) -
Production for the year (397) (463)
--------- ---------
Unrecovered reserves 3,102 3,499
========= =========
Results of Operations for Producing Activities
For the Years Ended December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Sales of oil and gas $ 5,545 $ 8,201
Production costs (including taxes) - -
Acquisition & exploration costs - -
Depletion 2,936 3,427
--------- ---------
Results of operations from producing
activities (excluding corporate overhead) $ 2,609 $ 4,774
========= =========
Capitalized Costs Relating to Oil and Gas Producing Activities
At December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Unproved properties (not being amortized) $ 184,404 $ 184,404
Proved properties (being amortized) 123,572 123,572
Unevaluated proved properties - -
Total Capitalized Costs 307,976 307,976
Accumulated Depletion (6,363) (3,427)
--------- ---------
Net Capitalized Costs $ 301,613 $ 304,549
========= =========
F-13
<PAGE>
<PAGE>
Costs Incurred in Oil and Gas Property Acquisition, Exploration and
Development
For the Years Ended December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Property acquisition costs:
Proved $ - $ 123,572
Unproved - 184,404
Exploration costs - -
Development costs - -
--------- ---------
Total $ - $ 307,976
========= =========
F-14
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
INTERIM FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Australian-Canadian Oil Royalties LTD.
Cisco, Texas
We have reviewed the accompanying balance sheet of Australian-Canadian Oil
Royalties LTD. as of September 30, 1999, and the related statements of
operations and cash flows for the three and nine months ended September 30,
1999 and 1998. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 1998, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated March 22,
1999, we expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying condensed balance
sheet as of December 31, 1998 is fairly stated in all material respects in
relation to the balance sheet from which it has been derived.
/s/ Robert Early & Company, P.C.
Robert Early & Company, P.C.
Abilene, Texas
October 21, 1999
F-15
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
BALANCE SHEETS
September 30, December 31,
1999 1998
(Unaudited)
------------ -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 253,921 $ 263,188
Royalties receivable 1,497 1,674
Interest receivable 311 -
Prepaid expenses 1,965 1,965
----------- -----------
Total Current Assets 257,694 266,827
PROPERTY AND EQUIPMENT
Oil and gas properties 307,976 307,976
Accumulated depletion (9,506) (6,363)
----------- -----------
Total Property and Equipment 298,470 301,613
OTHER ASSETS
Investment in Cooper Basin Oil & Gas, Inc. 2,112 -
Organization costs 2,645 2,645
Accumulated amortization (1,321) (926)
----------- -----------
Total Other Assets 3,436 1,719
----------- -----------
TOTAL ASSETS $ 559,600 $ 570,159
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 709 $ 3,356
----------- -----------
Total Current Liabilities 709 3,356
STOCKHOLDERS' EQUITY
Common stock (50,000,000 shares authorized;
no par value; 5,150,000 shares issued and
outstanding) 610,548 607,848
Accumulated deficit (51,320) (40,708)
Other comprehensive income:
Foreign currency translation adjustment (337)
(337)
----------- -----------
Total Stockholders' Equity 558,891 566,803
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 559,600 $ 570,159
=========== ===========
See accompanying selected information.
F-16
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 1999 and 1998
Three Months Nine Months
1999 1998 1999 1998
--------- --------- --------- ---------
OIL AND GAS REVENUES $ 1,789 $ 1,220 $ 4,415 $ 4,104
--------- --------- --------- ---------
COST OF SALES
Depletion 1,051 646 3,144 2,173
--------- --------- --------- ---------
GROSS PROFIT 738 574 1,271 1,931
OPERATING EXPENSES
Personnel costs 4,100 1,950 7,543 6,341
Professional fees 8 4,097 1,096 13,782
Accounting - 1,218 5,368 4,098
Other 900 1,091 2,381 3,561
--------- --------- --------- ---------
Total Operating Expenses 5,008 8,356 16,388 27,782
--------- --------- --------- ---------
OPERATING LOSS (4,270) (7,782) (15,117) (25,851)
OTHER INCOME
Interest and dividends 2,733 - 5,829 -
--------- --------- --------- ---------
NET LOSS BEFORE INCOME TAXES (1,537) (7,782) (9,288) (25,851)
Australian income taxes (536) (368) (1,324) (1,237)
--------- --------- --------- ---------
NET LOSS $ (2,073) $ (8,150) $ (10,612) $ (27,088)
========= ========= ========= =========
BASIC (LOSS) PER COMMON
SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.01)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Basic 5,150,000 4,000,000 5,150,000 4,000,000
========= ========= ========= =========
See accompanying selected information.
F-17
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
Increase/(Decrease) in Cash and Cash Equivalents
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (10,612) $ (27,088)
Adjustments to reconcile net (loss) to cash
flows from operating activities:
Depletion and amortization 3,538 2,564
Contributed expenses 2,700 2,700
Change in current assets:
Receivables (134) 198
Prepaid expenses - -
Change in current liabilities:
Accounts payable (2,647) 3,190
---------- ----------
Net Cash (Used In) Operating Activities (7,155) (18,436)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary - Cooper Basin
Oil and Gas, Inc. (2,112) -
CASH FLOWS FROM FINANCING ACTIVITIES - -
---------- ----------
NET DECREASE IN CASH (9,267) (18,436)
CASH, BEGINNING OF PERIOD 263,188 39,347
---------- ----------
CASH, END OF PERIOD $ 253,921 $ 20,911
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Income taxes $ 1,324 $ 1,237
Interest expense - -
Non-Cash Transactions
Contributed services and facilities 2,700 2,700
See accompanying selected information.
F-18
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
SELECTED INFORMATION FOR FINANCIAL STATEMENTS
(Unaudited)
September 30, 1999
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Regulation S-B. They do not include
all information and footnotes required by generally accepted accounting
principles for complete financial statements. However, except as disclosed
herein, there has been no material change in the information included in the
Company's Report on Form 10-SB for the year ended December 31, 1998. In the
opinion of Management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
The report of Robert Early and Company, P.C. commenting on their review
accompanies the condensed financial statements included in Item 1 of Part 1.
Operating results for the nine month period ended September 30, 1999, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.
NOTE 2: INVESTMENT IN SUBSIDIARY
During the first quarter of 1999, the Company invested $2,112 in Cooper Basin
Oil & Gas, Inc. for a 20% ownership interest. The amount invested was based
on 20% of the costs to file and pursue six Australian concessions. Cooper
Basin was unsuccessful in its effort to obtain a concession in this round.
However, the Company and its partners plan to have Cooper Basin continue its
efforts to obtain one or more Australian concessions. The Company will pay
its pro rata share of all costs of obtaining and maintaining any concessions
obtained by Cooper Basin and will share accordingly in any proceeds received
from activities regarding such concessions.
NOTE 3: CONTRIBUTED EXPENSES
Officers of the Company have not been paid for their services. Additionally,
the Company has not established an office separate from that of its officers.
The value of the officers' unpaid services and office space utilization have
currently been estimated at $600 and $300 per quarter. These costs have been
recorded as expenses and as additional capital.
F-19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The following schedule contains summary financial information which
has been extracted from the financial statements of Australian-Canadian Oil
Royalties LTD.s for the annual financial statements filed on Form 10SB for
the periods presented. These summary schedules are qualified in their
entirety by reference to such financial statements and the notes thereto.
</LEGEND>
<CIK> 0001061288
<NAME> AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1999 DEC-31-1999
<PERIOD-END> DEC-31-1998 DEC-31-1997 SEP-30-1999 SEP-30-1999
<CASH> 263,188 39,347 253,921 253,921
<SECURITIES> 0 0 0 0
<RECEIVABLES> 1,674 1,439 1,808 1,808
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 266,827 43,644 257,694 257,694
<PP&E> 307,976 307,976 307,976 307,976
<DEPRECIATION> (6,363) (3,427) (9,506) (9,506)
<TOTAL-ASSETS> 570,159 350,442 559,600 559,600
<CURRENT-LIABILITIES> 3,356 0 709 709
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 607,848 354,790 610,548 610,548
<OTHER-SE> (41,045) (4,348) (49,310) (49,310)
<TOTAL-LIABILITY-AND-EQUITY> 570,159 350,442 559,600 559,600
<SALES> 5,545 8,201 1,789 4,415
<TOTAL-REVENUES> 5,542 8,201 1,789 4,415
<CGS> 3,466 3,824 1,051 3,144
<TOTAL-COSTS> 3,466 3,824 1,051 3,144
<OTHER-EXPENSES> 36,964 6,064 5,008 16,388
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> (34,885) (1,687) (1,537) (9,288)
<INCOME-TAX> 1,672 2,464 536 1,324
<INCOME-CONTINUING> (36,557) (4,151) (2,073) (10,612)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (36,557) (4,151) (2,073) (10,612)
<EPS-BASIC> (0.01) (0.00) (0.00) (0.00)
<EPS-DILUTED> (0.01) (0.00) (0.00) (0.00)
</TABLE>
EXHIBIT 2
NUMBER:
541743
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
CERTIFICATE OF INCORPORATION
I Hereby Certify that
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
has this day been incorporated under the Company Act
Issued under my hand at Victoria, British Columbia on April 28, 1997
JOHN S. POWELL
Registrar of
Companies
<PAGE>
<PAGE>
PROVINCE OF BRITISH COLUMBIA
FORM 1
(Section 5)
COMPANY ACT
MEMORANDUM
I wish to be formed into a Company with limited liability under the Company
Act in pursuance of this memorandum.
1. The name of the Company is " AUSTRALIAN-CANADIAN OIL ROYALTIES LTD."
2. The authorized capital of the company consists of 100,000,000 shares
divided into:
50,000,000 Common shares without par value; and
50,000,000 Preferred shares without par value.
Each class of shares shall have attached thereto the special
rights
and restrictions set forth in the Articles of the company.
3. I agree to take the number, kind and class of shares in the company set
opposite my name.
FULL NAME, RESIDENT ADDRESS NUMBER, KIND AND CLASS OF
AND OCCUPATION OF SUBSCREBER SHARES TAKEN BY SUBSCRIBER
_/s/ William A. Randall__________
William A. Randall One (1) Common
6137 Collingwood Place
Vancouver, B.C. V6N IV2
Lawyer
TOTAL SHARES TAKEN: One (1) Common
DATED March 20, 1997.
<PAGE>
<PAGE>
ARTICLES
of
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
TABLE OF CONTENTS
PART 1
INTERPRETATION
1.1 Definitions 1
1.2 Construction of Words 2
1.3 Definitions Same as Company Act 2
1.4 Interpretation Act Rules of Construction Apply 2
1.5 References in Writing. 2
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Member Entitled to Certificate 2
2.2 Form of Certificate 2
2.3 Replacement of Lost or Defaced Certificate 2
2.4 Execution of Certificates 3
2.5 Recognition of Trusts 3
2.6 Delivery to Joint Holders 3
PART 3
ISSUE OF SHARES
3.1 Directors Authorized 3
3.2 Commissions and Discounts 4
3.3 Conditions of Issue 4
PART 4
SHARE REGISTERS
4.1 Registers of Members, Transfers and Allotments 4
4.2 Branch Registers of Members 5
4.3 No Closing of Register of Members. 5
PART 5
TRANSFER OF SHARES
5.1 Transfers of Shares 5
5.2 Execution of Instrument of Transfer 5
5.3 Inquiry as to Title Not Required 5
5.4 Submission of Instruments of Transfer 6
5.5 Transfer Fee 6
5.6 Consent of Directors Required 6
-i-
<PAGE>
<PAGE>
PART 6
TRANSMISSION OF SHARES
6.1 Personal Representatives Recognized on Death 6
6.2 Death or Bankruptcy 7
6.3 Persons in Representative Capacity 7
PART 7
ALTERATION OF CAPITAL
7.1 Increase of Authorized Capital 7
7.2 Other Capital Alterations. 7
7.3 Creation, Variation and Abrogation of Special
Rights and Restrictions 7
7.4 Special Rights of Conversion 8
7.5 Class Meetings of Member 8
PART 8
PURCHASE AND REDEMPTION OF SHARES
8.1 Company Authorized to Purchase or Redeem its Shares 8
8.2 Offer to Purchase Made Pro Rata 8
8.3 Selection of Shares to be Redeemed 9
8.4 Purchased or Redeemed Shares Not Voted 9
PART 9
BORROWING POWERS
9.1 Powers of Directors. 9
9.2 Negotiability of Debt Obligations 9
9.3 Special Rights Attached to Debt Obligations 9
9.4 Register of Debentureholders 10
9.5 Execution of Debt Obligations 10
9.6 Register of Indebtedness 10
PART 10
GENERAL MEETINGS
10.1 Annual General Meetings 10
10.2 Waiver of Annual General Meeting 10
10.3 Classification of General Meetings 10
10.4 Calling of Meetings 10
10.5 Advance Notice for Election of Directors 11
10.6 Notice for General Meeting 11
10.7 Waiver or Reduction of Notice 11
10.8 Notice of Special Business at General Meeting 11
10.9 Postponement of Meeting following Advance Notice 11
PART 11
PROCEEDINGS AT GENERAL MEETINGS
11.1 Special Business 12
11.2 Requirement of Quorum 12
11.3 Quorum 12
11.4 Lack of Quorum 12
- ii -
11.5 Chairman 12
11.6 Alternate Chairman 13
11.7 Adjournments 13
11.8 Resolutions Need Not be Seconded 13
11.9 Decisions by Show of Hands or Poll 13
11.10 Casting Vote 13
11.11 Manner of Taking Poll 13
11.12 Disputed Vote 14
11.13 Retention of Ballots Cast on a Poll 14
11.14 Casting of Votes 14
11.15 Ordinary Resolution Sufficient 14
11.16 Resolutions in Counterpart 14
PART 12
VOTES OF MEMBERS
12.1 Number of Votes Per Share or Member 14
12.2 Votes of Persons in Representative Capacity 14
12.3 Representative of a Corporate Member 15
12.4 Votes by Joint Holders 15
12.5 Votes by Committee for a Member 15
12.6 Appointment of Proxyholders 15
12.7 Qualification of Proxyholders 15
12.8 Execution of Form of Proxy 16
12.9 Deposit of Proxy 16
12.10 Directors May Make Regulations Relating
to Deposit of Proxies 16
12.11 Form of Proxy 16
12.12 Validity of Proxy Vote 16
12.13 Revocation of Proxy 17
12.14 Chairman to Determine Validity 17
PART 13
DIRECTORS
13.1 Number of Directors 17
13.2 Remuneration and Expenses of Directors 17
13.3 Qualification of Directors 18
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 Election at Annual General Meetings 18
14.2 Eligibility of Retiring Director 18
14.3 Continuance of Directors 18
14.4 Election of Less than Required Number of Directors 18
14.5 Filing a Casual Vacancy 19
14.6 Additional Directors 19
14.7 Alternate Directors 19
14.8 Termination of Directorship 19
14.9 Resignation of Directors 19
14.10 Removal of Directors 20
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PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 Management of Affairs and Business 20
15.2 Appointment of Attorney 20
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 Disclosure of Conflicting Interest 20
16.2 Voting and Quorum re Proposed Contract 20
16.3 Director May Hold Office or Position with the
Company 21
16.4 Director Acting in Professional Capacity 21
16.5 Director Receiving Remuneration from Other
Interests 21
PART 17
PROCEEDINGS OF DIRECTORS
17.1 Chairman and Alternate 22
17.2 Meetings - Procedure - Casting Vote 22
17.3 Meetings by Conference Telephone 22
17.4 Notice of Meeting 22
17.5 Waiver of Notice of Meeting 22
17.6 Quorum 23
17.7 Continuing Directors May Act During Vacancy 23
17.8 Validity of Acts of Directors 23
17.9 Resolutions in Writing Effective 23
17.10 Resolutions Need Not be Seconded and Chairman
May Move a Motion 23
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 Appointment of Executive Committee 23
18.2 Appointment of Committees 24
18.3 Procedure at Meetings 24
PART 19
OFFICERS
19.1 President and Secretary Required 25
19.2 Persons Holding More Than One Office and Remuneration 25
19.3 Disclosure of Conflicting Interest 25
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS
AND EMPLOYEES
20.1 Indemnification of Directors 25
20.2 Indemnification of Officers, Employees, Agents 25
20.3 Indemnification not Invalidated by Non-Compliance 26
20.4 Company May Purchase Insurance 26
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PART 21
DIVIDENDS AND RESERVE
21.1 Declaration of Dividends 26
21.2 Declared Dividend Rate 26
21.3 Proportionate to Number of Shares Held 26
21.4 Reserves 27
21.5 Receipts from Joint Holders 27
21.6 No Interest on Dividends 27
21.7 Payment of Dividends 27
21.8 Capitalization of Undistributed Surplus 27
21.9 Fractional Share Dividends 27
PART 22
DOCUMENTS, RECORDS AND REPORTS
22.1 Documents To Be Kept 28
22.2 Accounts To Be Kept 28
22.3 Inspection of Accounts 28
22.4 Financial Statements and Reports for General Meetings 28
22.5 Financial Statements and Reports for Members 28
PART 23
NOTICES
23.1 Method of Giving Notice 28
23.2 Notice to Joint Holders 29
23.3 Notice to Personal Representative 29
23.4 Persons to Receive Notice 29
PART 24
RECORD DATES
24.1 Record Date 29
24.2 No Record Date Fixed 29
PART 25
SEAL
25.1 Affixation of Seal to Documents 30
25.2 Reproduction of Seal 30
25.3 Official Seal for Other Jurisdictions 30
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
26.1 Instrument May Be Mechanically Signed 31
26.2 Definition of Instrument 31
PART 27
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED
SHARES
27.1 Directors' Right to Issue in One or More Series 31
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PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
of
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
PART 1
INTERPRETATION
1.1 Definitions. In these Articles, unless there is something in the
subject or context inconsistent therewith:
"Board of Directors", "Board", "the Directors" and "the directors" mean the
Directors or sole Director of the Company for the time being;
"Company" means the company named at the head of these Articles;
"Company Act" means the Company Act of the Province of British Columbia as
from time to time enacted and all amendments thereto and includes all
regulations and amendments thereto made pursuant to that Act;
"Member" means those persons defined as such in the Company Act and includes
any person who owns shares in the capital of the Company and whose name is
entered in the register of members or a branch register of members;
"Ordinary resolution" means an ordinary resolution as defined in the Company
Act;
"Registered owner" or "registered holder" when used with respect to a share
in the authorized capital of the Company means the person registered in the
register of members in respect of such share;
"Seal" means the common seal of the Company, if the Company has one;
"Solicitor of the Company" means any partner, associate or articled student
of the law firm retained by the Company in respect of the matter in
connection with which the term is used;
"Special resolution" means a special resolution as defined in the Company
Act; and "writing", "in writing" and like expressions include all modes of
representing, or reproducing, and recording words in visible form,
including: printing; lithographing; typewriting; and photostatic,
electrostatic and mechanical copying.
1.2 Construction of Words. Words importing the singular include the
plural and vice versa; and words importing male persons include female
persons and words importing persons shall include corporations.
1.3 Definitions Same as Company Act. Any words or phrases defined in the
Company Act shall, if not inconsistent with the subject or context, bear the
same meaning when used in these Articles.
1.4 Interpretation Act Rules of Construction Apply. The Rules of
Construction contained in the Interpretation Act of the Province of British
Columbia shall apply, mutatis mutandis, to the interpretation of these
Articles.
1.5 References in Writing. Reference in these Articles to writing shall
be construed as including references to printing, lithography, typewriting,
photography and other modes of representing or reproducing words in a
visible form.
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Member Entitled to Certificate. Every member is entitled, without
charge, to one certificate representing the share or shares of each class or
series held by him; provided that, in respect of a share or shares held
jointly by several persons, the Company shall not be bound to issue more
than one certificate, and delivery of a certificate for a share to one of
several joint registered holders or to his duly authorized agent shall be
sufficient delivery to all; and provided further that the Company shall not
be bound to issue certificates representing redeemable shares, if such
shares are to be redeemed within one month of the date on which they were
allotted. Any share certificate may be sent through the mail by registered
prepaid mail to the member entitled thereto, and neither the Company nor any
transfer agent shall be liable for any loss occasioned to the member owing
to any such share certificate so sent being lost in the mail or stolen.
2.2 Form of Certificate. Every share certificate issued by the Company
shall be in such form as the Directors approve and shall comply with the
Company Act.
2.3 Replacement of Lost or Defaced Certificate. If a share certificate:
(a) is worn or defaced, the Directors shall, upon production to them of
the said certificate and upon such other terms, if any, as they may
think fit, order the said certificate to be canceled and shall issue a
new certificate in lieu thereof;
(b) is lost, stolen or destroyed, then, upon proof thereof to the
satisfaction of the Directors and upon such indemnity, if any, as the
Directors deem adequate being given, a new share certificate in lieu
thereof shall be issued to the person entitled to such lost, stolen or
destroyed certificate; or
(c) represents more than one share and the registered owner thereof
surrenders it to the Company with a written request that the Company
issue in his name two or more certificates each representing a specified
number of shares and in the aggregate representing the same number of
shares as the certificate so surrendered, the Company shall cancel the
certificate so surrendered and issue in lieu thereof certificates in
accordance with such request.
There shall be paid to the Company such sum, not exceeding ten dollars, as
the Directors may from time to time fix, for each certificate to be issued
under this Article.
2.4 Execution of Certificates. Every share certificate shall be signed
manually by at least one Officer or Director of the Company, or by or on
behalf of a registrar, branch registrar, transfer agent or branch transfer
agent of the Company and any additional signatures may be printed or
otherwise mechanically reproduced and, in such event, a certificate so
signed is as valid as if signed manually, notwithstanding that any person
whose signature is so printed or mechanically reproduced shall have ceased
to hold the office that he is stated on such certificate to hold at the date
of the issue of the share certificate.
2.5 Recognition of Trusts. Except as required by law, statute or these
Articles, no person shall be recognized by the Company as holding any share
upon any trust, and the Company shall not be bound by or compelled in any
way to recognize (even when having notice thereof) any equitable,
contingent, future or partial interest in any share or in any fractional
part of a share or (except only as by law, statute or these Articles
provided or as ordered by a court of competent jurisdiction) any other
rights in respect of any share except an absolute right to the entirety
thereof in its registered holder.
2.6 Delivery to Joint Holders. The certificate representing shares
registered in the name of two or more persons shall be delivered to the
person first named on the register of members.
PART 3
ISSUE OF SHARES
3.1 Directors Authorized. Subject to the requirements of the Company Act
with respect to pro-rata offerings (if applicable) and otherwise and to any
direction to the contrary, save for a direction which, at the discretion of
the Directors, may not be proceeded with, contained in a resolution passed
at a general meeting authorizing any increase or alteration of capital, the
shares shall be under the control of the Directors who may, subject to the
rights of the holders of the shares of the Company for the time being
outstanding, issue, allot, sell or otherwise dispose of, and/or grant
options on or otherwise deal in, shares authorized but not outstanding, and
outstanding shares held by the Company, at such times, to such persons
(including Directors), in such manner, upon such terms and conditions and at
such price or for such consideration, as the Directors, in their absolute
discretion, may determine.
3.2 Commissions and Discounts. Subject to the provisions of the Company
Act, the Company, or the Directors on behalf of the Company, may pay a
commission or allow a discount to any person in consideration of his
subscribing or agreeing to subscribe, whether absolutely or conditionally,
for any shares in the Company, or procuring or agreeing to procure
subscriptions, whether absolutely or conditionally, for any such shares,
provided that, if the Company is not a specially limited company, the rate
of the commission and discount shall not in the aggregate exceed 25 per cent
of the amount of the subscription price of such shares, and if the Company
is a specially limited company, the rate of the commission and discount
shall not in the aggregate exceed 95 per cent of the amount of the
subscription price of such shares.
3.3 Conditions of Issue. No share may be issued until it is fully paid
and the Company shall have received tile full consideration therefor in
cash, property or past services actually performed for the Company. The
value of property or services for the purposes of this Article shall be the
value determined by the Directors by resolution to be, in all circumstances
of the transaction, the fair market value thereof, and the full
consideration received for a share issued by way of dividend shall be the
amount declared by the Directors to be the amount of the dividend.
PART 4
SHARE REGISTERS
4.1 Registers of Members, Transfers and Allotments. The Company shall
keep or cause to be kept a register of members, a register of transfers and
a register of allotments within British Columbia, all as required by the
Company Act, and may combine one or more of such registers. If the
Company's capital shall consist of more than one class of shares, a separate
register of members, register of transfers and register of allotments may be
kept in respect of each class of shares. The Directors on behalf of the
Company may appoint a trust company to keep the register of members,
register of transfers and register of allotments or, if there is more than
one class of shares, the Directors may appoint a trust company, which need
not be the same trust company, to keep the register of members, the register
of transfers and the register of allotments for each class of shares. The
Directors on behalf of the Company may also appoint one or more trust
companies, including the trust company which keeps the said registers of its
shares or of a class thereof, as transfer agent for its shares or such class
thereof, as the case may be, and the same or another trust company or
companies as registrar for its shares or such class thereof, as the case may
be. The Directors may terminate the appointment of any such trust company
at any time and may appoint another trust company in its place.
4.2 Branch Registers of Members. Subject to the provisions of the
Company Act, the Company may keep or cause to be kept one or more branch
registers of members at such place or places as the Directors may from time
to time determine.
4.3 No Closing of Register of Members. The Company shall not at any
time close its register of members.
PART 5
TRANSFER OF SHARES
5.1 Transfers of Shares. Subject to the restrictions, if any, set forth
in the Memorandum and these Articles, any member may transfer any of his
shares by instrument in writing executed by or on behalf of such member and
delivered to the Company or its transfer agent. The instrument of transfer
of any share of the Company shall be in the form, if any, on the back of the
Company's share certificates or in such other form as the Directors may from
time to time approve. If the Directors so determine, each instrument of
transfer shall be in respect of only one class of share. Except to the
extent that the Company Act may otherwise provide, the transferor shall be
deemed to remain the holder of the shares until the name of the transferee
is entered in the register of members or a branch register of members in
respect thereof.
5.2 Execution of Instrument of Transfer. The signature of the registered
owner of any shares, or of his duly authorized attorney, upon an authorized
instrument of transfer shall constitute a complete and sufficient authority
to the Company, its Directors, Officers and agents to register, in the name
of the transferee as named in the instrument of transfer, the number of
shares specified therein or, if no number is specified, all the shares of
the registered owner represented by share certificates deposited with the
instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and
sufficient authority to the Company, its Directors, Officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of
having the transfer registered, the number of shares if specified in the
instrument of transfer or, if no number is specified, all the shares
represented by all share certificates deposited with the instrument of
transfer.
5.3 Inquiry as to Title Not Required. Neither the Company nor any
Director, Officer or agent thereof shall be bound to inquire into the title
of the person named in the form of transfer as transferee, or, if no person
is named therein as transferee, of the person on whose behalf the
certificate is deposited with the Company for the purpose of having the
transfer registered or be liable to any claim by such registered owner or by
any intermediate owner or holder of the certificate or of any of the shares
represented thereby or any interest therein for registering the transfer,
and the transfer, when registered, shall confer upon the person in whose
name the shares have been registered a valid title to such shares.
5.4 Submission of Instruments of Transfer. Every instrument of transfer
shall be executed by the transferor and left at the registered office of the
Company or at the office of its transfer agent or registrar for registration
together with the share certificate for the shares to be transferred and
such other evidence, if any, as the Directors or the transfer agent or
registrar may require to prove the title of the transferor or his right to
transfer the shares and the right of the transferee to have the transfer
registered. All instruments of transfer, where the transfer is registered,
shall be retained by the Company or its transfer agent or registrar and any
instrument of transfer, where the transfer is not registered, shall be
returned to the person depositing the same together with the share
certificate which accompanied the same when tendered for registration.
5.5 Transfer Fee. There shall be paid to the Company in respect of the
registration of any transfer such sum, if any, as the Directors may from
time to time determine.
5.6 Consent of Directors Required. Notwithstanding any other provision
of these Articles, if the Company is, or becomes:
(a) a company which is not a reporting company; or
(b) a reporting company that has not, with respect to any of its
securities, filed a prospectus with the Executive Director of the
British Columbia Securities Commission ("Executive Director") or any
similar securities regulatory body within or outside British Columbia
and obtained therefor a receipt or its equivalent;
then no shares shall be transferred and entered on the register of members
without the previous consent of the Directors expressed by a resolution of
the Board and the Directors shall not be required to give any reason for
refusing to consent to any such proposed transfer. The consent of the Board
required by this Article may be in respect of a specific proposed trade or
trades or trading generally, whether or not over a specified period of time,
or by specific persons or with such other restrictions or requirements as
the Directors may determine.
PART 6
TRANSMISSION OF SHARES
6.1 Personal Representatives Recognized on Death. In the case of the
death of a member, the survivor or survivors, where the deceased was a Joint
registered holder, and the legal personal representative of the deceased,
where he was the sole holder, shall be the only persons recognized by the
Company as having any title to his interest in the shares. Before
recognizing any legal personal representative the Directors may require him
to deliver to the Company the original or a court-certified copy of a grant
of probate or letters of administration in British Columbia or such other
evidence and documents as the Directors consider appropriate to establish
the right of the personal representative to such title to the interest in
the shares of the deceased member.
6.2 Death or Bankruptcy. Upon the death or bankruptcy of a member, his
personal representative or trustee in bankruptcy, although not a member,
shall have the same rights, privileges and obligations that attach to the
shares formerly held by the deceased or bankrupt member if the documents
required by the Company Act shall have been deposited with the Company.
This Article does not apply on the death of a member with respect to shares
registered in his name and the name of another person in joint tenancy.
6.3 Persons in Representative Capacity. Any person becoming entitled to a
share in consequence of the death or bankruptcy of a member shall, upon such
documents and evidence being produced to the Company as the Company Act
requires, or who becomes entitled to a share as a result of an order of a
Court of competent jurisdiction or a statute, has the right either to be
registered as a member in his representative capacity in respect of such
share, or, if he is a personal representative, instead of being registered
himself, to make such transfer of the shares as the deceased or bankrupt
person could have made; but the Directors shall, as regards a transfer by a
personal representative or trustee in bankruptcy, have the right, if any, to
decline or suspend registration of a transferee as they would have in the
case of a transfer of a share by the deceased or bankrupt person before the
death or bankruptcy.
PART 7
ALTERATION OF CAPITAL
7.1 Increase of Authorized Capital. The Company may, by ordinary
resolution filed with the Registrar, amend its Memorandum to increase the
authorized capital of the Company by:
(a) creating shares with par value or shares without par value, or
both;
(b) increasing the number of shares with par value or shares without
par value, or both; or
(c) increasing the par value of a class of shares with par value, if no
shares of that class are issued.
7.2 Other Capital Alterations. The Company may, by special resolution,
alter its Memorandum to subdivide, consolidate, change from shares with par
value to shares without par value, or from shares without par value to
shares with par value, or change the designation of, all or any of its
shares but only to such extent, in such manner and with such consents of
members holding shares of a class or series which is the subject of or
affected by such alteration, as the Company Act provides.
7.3 Creation, Variation and Abrogation of Special Rights and
Restrictions. The Company may alter its Memorandum or these Articles:
(a) by special resolution, to create, define and attach special rights
or restrictions to any shares; and
(b) by special resolution and by otherwise complying with any
applicable provision of its Memorandum or these Articles, to vary or
abrogate any special rights and restrictions attached to any shares;
and in each case by filing a certified copy of such resolution with the
Registrar, but no right or special right attached to any issued shares
shall be prejudiced or interfered with unless all members holding shares of
each class or series whose right or special right is so prejudiced or
interfered with consent thereto in writing, or unless a resolution
consenting thereto is passed at a separate class or series meeting of the
holders of the shares of each such class or series by a majority of
three-fourths of the issued shares of such class or series or such greater
majority as may be specified by the special rights attached to the class or
series of shares.
7.4 Special Rights of Conversion. If the Company is or becomes a
reporting company, and if so required by the Company Act, no resolution to
create, vary or abrogate any special right of conversion attaching to any
class of shares shall be submitted to a general meeting or a class meeting
of members unless the Executive Director of the British Columbia Securities
Commission have first consented to the resolution.
7.5 Class Meetings of Members. Unless these Articles otherwise provide,
the provisions of these Articles relating to general meetings shall apply,
with the necessary changes and so far as they are applicable, to a class or
series meeting of members holding a particular class or series of shares,
provided that the quorum at a class or series meeting shall be one or more
persons holding or representing by proxy not less than one-third of the
shares affected.
PART 8
PURCHASE AND REDEMPTION OF SHARES
8.1 Company Authorized to Purchase or Redeem its Shares. Subject to the
special rights and restrictions attached to any class of shares, the Company
may, by a resolution of the Directors and in compliance with the Company
Act, purchase any of its shares at the price and upon the terms specified in
such resolution or redeem any class of its shares in accordance with the
special rights and restrictions attaching thereto. No such purchase or
redemption shall be made if the Company is insolvent at the time of the
proposed purchase or redemption or if the proposed purchase or redemption
would render the Company insolvent.
8.2 Offer to Purchase Made Pro Rata. Unless the shares of the Company
are to be purchased through a stock exchange, or from a bona fide employee
or bona fide former employee of the Company or of an affiliate of the
Company, or his personal representative, in respect of shares beneficially
owned by such employee or former employee, or the Company is purchasing the
shares from dissenting members pursuant to the requirements of the Company
Act, the Company shall make its offer to purchase pro rata to every member
who holds shares of the class or series to be purchased.
8.3 Selection of Shares to be Redeemed. If the Company proposes at its
option to redeem some but not all of the shares of any class or series, the
Directors may, subject to the special rights and restrictions attached to
such shares, decide the manner in which the shares to be redeemed shall be
selected and such redemption may or may not be made pro rata among every
member holding any such shares as the Directors may determine.
8.4 Purchased or Redeemed Shares Not Voted. Subject to the provisions of
the Company Act, any shares purchased or redeemed by the Company may be sold
or, if canceled, reissued by it, but, while such shares which have not been
canceled are held by the Company, it shall not exercise any vote in respect
of these shares and no dividend or other distribution shall be paid or made
thereon.
PART 9
BORROWING POWERS
9.1 Powers of Directors. Subject to the provisions of the Company Act,
the Directors may from time to time authorize the Company to:
(a) borrow money in such manner and amount, on such security, from
such sources and upon such terms and conditions as they think fit;
(b) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of the Company
or any other person;
(c) mortgage, charge, whether by way of specific or floating charge,
or give other security on the undertaking or on the whole or any part of
the property and assets of the Company, both present and future; and
(d) give financial assistance to any person, directly or indirectly,
by way of loan, guarantee, the provision of security, or otherwise.
9.2 Negotiability of Debt Obligations. The Directors may make any bonds,
debentures or other debt obligations issued by the Company by their terms
assignable free from any equities between the Company and the person to whom
they may be issued or any other person who lawfully acquires them by
assignment, purchase or otherwise.
9.3 Special Rights Attached to Debt Obligations. The Directors may
authorize the issue of any bonds, debentures or other debt obligations of
the Company at a discount, premium or otherwise and with special or other
rights or privileges as to redemption, surrender, drawings, allotment of or
conversion into or exchange for shares, attending at general meetings of the
Company and otherwise as the Directors may determine at or before the time
of issue.
9.4 Register of Debentureholders. The Company shall keep or cause to be
kept within the Province of British Columbia in accordance with the Company
Act a register of its debentures and a register of debentureholders, which
registers may be combined, and, subject to the provisions of the Company
Act, may keep or cause to be kept one or more branch registers of its
debentureholders at such place or places as the Directors may from time to
time determine and the Directors may by resolution, regulation or otherwise
make such provisions as they think fit respecting the keeping of such branch
registers.
9.5 Execution of Debt Obligations. Every bond, debenture or other debt
obligation of the Company shall be signed manually by at least one Director
or Officer of the Company or by or on behalf of a trustee, registrar, branch
registrar, transfer agent or branch transfer agent for the bond, debenture
or other debt obligations appointed by the Company or under any instrument
under which the bond, debenture or other debt obligation is issued and any
additional signatures may be printed or otherwise mechanically reproduced
thereon and, in such event, a bond, debenture or other debt obligation so
signed is as valid as if signed manually notwithstanding that any person
whose signature is so printed or mechanically reproduced shall have ceased
to hold the office that he is stated on such bond, debenture or other debt
obligation to hold at the date of the issue thereof.
9.6 Register of Indebtedness. If the Company is or becomes a reporting,
company, the Company shall keep or cause to be kept a register of its
indebtedness to every Director or Officer of the Company or an associate of
any of them in accordance with the provisions of the Company Act.
PART 10
GENERAL MEETINGS
10.1 Annual General Meetings. Subject to any extensions of time
permitted pursuant to the Company Act, the first annual general meeting of
the Company shall be held within 15 months from the date of incorporation
and thereafter an annual general meeting shall be held once in every
calendar year at such time (not being more than 13 months after the holding
of the last preceding annual general meeting) and place as may be determined
by the Directors.
10.2 Waiver of Annual General Meeting. If the Company is, or becomes, a
company which is not a reporting company and all the members entitled to
attend and vote at an annual general meeting consent in writing to all the
business which is required or desired to be transacted at the meeting, such
annual general meeting shall be deemed for the purpose of this Part to have
been held on the date specified in the consent, and it is not necessary for
the Company to hold that annual general meeting.
10.3 Classification of General Meetings. All general meetings other than
annual general meetings are herein referred to as and may be called
extraordinary general meetings.
10.4 Calling of Meetings. The Directors may, whenever they think fit,
convene an extraordinary general meeting. An extraordinary general meeting,
if requisitioned in accordance with the Company Act, shall be convened by
the Directors or, if not convened by the Directors, may be convened by the
requisitionists as provided in the Company Act.
10.5 Advance Notice for Election of Directors. If the Company is or
becomes a reporting company, advance notice of any general meeting at which
Directors are to be elected shall be published in the manner required by the
Company Act.
10.6 Notice for General Meeting. A notice convening a general meeting
specifying the place, the day, and the hour of the meeting, and, in case of
special business, the general nature of that business, shall be given as
provided in the Company Act and in the manner hereinafter in these Articles
mentioned, or in such other manner as may be prescribed by the Directors to
such persons as are entitled by law or under these Articles to receive such
notice from the Company. Accidental omission to give notice of a meeting
to, or the non-receipt of notice of a meeting by, any member shall not
invalidate the proceedings at that meeting.
10.7 Waiver or Reduction of Notice. All the members of the Company
entitled to attend and vote at a general meeting may, by unanimous consent
in writing given before, during or after the meeting, or if they are present
at the meeting by a unanimous vote, waive or reduce the period of notice of
such meeting and an entry in the minute book of such waiver or reduction
shall be sufficient evidence of the due convening of the meeting.
10.8 Notice of Special Business at General Meeting. Except as otherwise
provided by the Company Act, where any special business at a general meeting
includes considering, approving, ratifying, adopting or authorizing any
document or the execution thereof or the giving of effect thereto, the
notice convening the meeting shall, with respect to such document, be
sufficient if it states that a copy of the document or proposed document is
or will be available for inspection by members at the registered office or
records office of the Company or at some other place in British Columbia
designated in the notice during the usual business hours up to the date of
such general meeting.
10.9 Postponement of Meeting following Advance Notice. Where, in
accordance with the Company Act, the Company has published in prescribed
manner an advance notice of a general meeting at which Directors are to be
elected, the Company may, notwithstanding such notice, postpone the general
meeting to a date other than that specified in such notice. In the event of
such a postponement, the Company shall publish, in the same manner
prescribed for the original notice, a notice of the postponement of the
meeting which notice shall include, if the date to which the meeting is
postponed is known, the same information as is required by the Company Act
to be included in the original notice. If the date to which the meeting is
postponed is not known, the notice of postponement need state only that the
meeting is postponed until further notice, provided however that once such
date is known, the Company shall publish a new advance notice which shall
comply with the Company Act. The date to which any such meeting is postponed
shall be deemed to be the date of the meeting for the purpose of complying
with any time limitations in respect of general meetings prescribed by the
Company Act.
PART 11
PROCEEDINGS AT GENERAL MEETINGS
11.1 Special Business. All business shall be deemed special business
which is transacted at:
(a) an extraordinary general meeting other than the conduct of and
voting at, such meeting; and
(b) an annual general meeting, with the exception of the conduct of, and
voting at, such meeting, the consideration of the financial statement
and of the respective reports of the Directors and auditor, fixing or
changing the number of Directors, approval of a motion to elect two or
more Directors by a single resolution, the election of Directors, the
appointment of the auditor, the fixing of the remuneration of the
auditor and such other business as by these Articles or the Company Act
ought to be transacted at a general meeting without prior notice thereof
being given to the members or any business which is brought under
consideration by the report of the Directors.
11.2 Requirement of Quorum. No business, other than election of the
chairman or the adjournment of the meeting, shall be transacted at any
general meeting unless a quorum of members in person or by proxy, entitled
to attend and vote, is present at the commencement of the meeting, but the
quorum need not be present throughout the meeting.
11.3 Quorum. Save as herein otherwise provided, a quorum shall be one
member, or one proxyholder representing members, holding not less than
one-twentieth of the issued shares entitled to be voted at the meeting. If
there is only one member the quorum is one person present and being, or
representing by proxy, such member. The Directors, the Secretary or, in his
absence, an Assistant Secretary, and the solicitor of the Company shall be
entitled to attend at any general meeting but no such person shall be
counted in the quorum or be entitled to vote at any general meeting unless
he shall be a member or proxyholder entitled to vote thereat.
11.4 Lack of Quorum. If within half an hour from the time appointed for a
general meeting a quorum is not present, the meeting, if convened upon the
requisition of members, shall be dissolved. In any other case it shall
stand adjourned to the same day in the next week, at the same time and
place, and, if at the adjourned meeting a quorum is not present within half
an hour from the time appointed for the meeting, the person or persons
present and being, or representing by proxy, a member or members entitled to
attend and vote at the meeting shall be a quorum.
11.5 Chairman. The Chairman of the Board, if any, or in his absence the
President of the Company or in his absence a Vice-President of the Company,
if any, shall be entitled to preside as chairman at every general meeting of
the Company. Notwithstanding the foregoing, with the consent of the
meeting, which consent may be expressed by the failure to object of any
person present and entitled to vote, the solicitor of the Company may act as
chairman of the meeting.
11.6 Alternate Chairman. If at any general meeting neither the Chairman
of the Board nor President nor a Vice-President is present within fifteen
minutes after the time appointed for holding the meeting or is willing to
act as chairman, the Directors present, shall choose someone of their
number, or the solicitor of the Company, to be chairman. If all the
Directors present, and the solicitor of the Company, decline to take the
chair or fail to so choose or if no Director be present, the persons present
and entitled to vote shall choose one of their number to be chairman.
11.7 Adjournments. The Chairman may and shall, if so directed by the
meeting, adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other than the
business left unfinished at the meeting from which the adjournment took
place. When a meeting is adjourned for 30 days or more, notice, but not the
advance notice otherwise required with respect to the election of Directors
of a reporting Company, of the adjourned meeting shall be given as in the
case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjourned meeting or of the business to be transacted
at an adjourned meeting.
11.8 Resolutions Need Not be Seconded. No motion proposed at a general
meeting need be seconded and the chairman may propose or second a motion.
11.9 Decisions by Show of Hands or Poll. Subject to the provisions of the
Company Act at any general meeting a resolution put to the vote of the
meeting shall be decided on a show of hands, unless (before or on the
declaration of the result of the show of hands) a poll is directed by the
chairman or demanded by at least one member entitled to vote who is present
in person or by proxy. The chairman shall declare to the meeting the
decision on every question in accordance with the result of the show of
hands or the poll, and such decision shall be entered in the book of
proceedings of the Company. A declaration by the chairman that a resolution
has been carried, or carried unanimously, or by a particular majority, or
lost or not carried by a particular majority and an entry to that effect in
the book of the proceedings of the Company shall be conclusive evidence of
the fact, without proof of the number or proportion of the votes recorded in
favor of, or against, that resolution.
11.10 Casting Vote. In the case of an equality of votes, whether on a
show of hands or on a poll, the chairman of the meeting at which the show of
hands takes place or at which the poll is demanded shall not be entitled to
a casting vote in addition to the vote or votes to which he may be entitled
as a member or proxyholder.
11.11 Manner of Taking Poll. No poll may be demanded on the election of a
chairman. A poll demanded on a question of adjournment shall be taken at
the meeting without adjournment. A poll demanded on any other question
shall be taken as soon as, in the opinion of the chairman, is reasonably
convenient, but in no event later than seven days after the meeting and at
such time and place and in such manner as the chairman of the meeting
directs. The result of the poll shall be deemed to be the resolution of and
passed at the meeting at which the poll was demanded. Any business other
than that upon which the poll has been demanded may be proceeded with
pending the taking of the poll. A demand for a poll may be withdrawn.
11.12 Disputed Vote. In the case of any dispute as to the admission or
rejection of a vote, whether by show of hands or on a poll, the chairman
shall determine the same, and his determination made in good faith is final
and conclusive.
11.13 Retention of Ballots Cast on a Poll. Every ballot cast upon a poll
and every proxy appointing a proxyholder who casts a ballot upon a poll
shall be retained by the Secretary for such period and be subject to such
inspection as the Company Act may provide.
11.14 Casting of Votes. On a poll a person entitled to cast more than one
vote need not, if he votes, use all his votes or cast all the votes he uses
in the same way.
11.15 Ordinary Resolution Sufficient. Unless the Company Act, the
Memorandum or these Articles otherwise provide, any action to be taken by a
resolution of the members may be taken by an ordinary resolution.
11.16 Resolutions in Counterpart. A resolution submitted to all members
entitled to vote and consented to in writing, whether by document, telegram,
telex or any method of transmitting legibly recorded messages or other
means, by all of the members entitled to vote, in the case of a special
resolution, or so consented to by members holding shares carrying 75% of the
votes entitled to be cast in the case of an ordinary resolution shall be as
valid and effectual as if it had been passed at a meeting of the members
duly called and held. Such resolution may be in two or more counterparts
which together shall be deemed to constitute one resolution in writing.
Such resolution shall be filed with the minutes of the proceedings of the
members and shall be effective on the date stated thereon or on the latest
date stated on any counterpart.
PART 12
VOTES OF MEMBERS
12.1 Number of Votes Per Share or Member. Subject to any special voting
rights or restrictions attached to any class of shares and the restrictions
on joint registered holders of shares, on a show of hands every member who
is present in person or by proxy and entitled to vote thereat shall have
one vote and on a poll every member shall have one vote for each share of
which he is the registered holder and may exercise such vote either in
person or by proxy.
12.2 Votes of Persons in Representative Capacity. Any person who is not
registered as a member but is entitled to vote at any general meeting in
respect of a share, may vote the share in the same manner as if he were a
member; but, unless the Directors have previously admitted his right to vote
at that meeting in respect of the share, he shall satisfy the Directors of
his right to vote the share before the time for holding the meeting, or
adjourned meeting, as the case may be, at which he proposes to vote.
12.3 Representative of a Corporate Member. Any corporation not being a
subsidiary which is a member of the Company may by resolution of its
Directors or other governing body authorize such person as it thinks fit to
act as its representative at any general meeting or class meeting. The
person so authorized shall be entitled to exercise in respect of and at such
meeting the same powers on behalf of the corporation which he represents as
that corporation could exercise if it were an individual member of the
Company personally present, including, without limitation, the right, unless
restricted by such resolution, to appoint a proxyholder to represent such
corporation, and shall be counted for the purpose of forming a quorum if
present at the meeting. Evidence of the resolution appointing any such
representative may be sent to the Company by written instrument, telegram,
telex or any method of transmitting legibly recorded messages.
Notwithstanding the foregoing, a corporation being a member may appoint a
proxyholder.
12.4 Votes by Joint Holders. Where there are joint members registered in
respect of any share, any one of the joint members may vote at any meeting
in person, by proxy or by authorized representative in respect of the share
as if he were solely entitled to it. If more than one of the joint members
is present at any meeting in person, by proxy or by authorized
representative, the joint member so present whose name stands first on the
register of members in respect of the share shall alone be entitled to vote
in respect of that share. For the purpose of this Article several executors
or administrators of a deceased member in whose sole name any share stands
shall be deemed joint members.
12.5 Votes by Committee for a Member. A member of unsound mind entitled
to attend and vote, in respect of whom an order has been made by any court
having jurisdiction, may vote, whether on a show of hands or on a poll, by
his committee or other person in the nature of a committee appointed by that
court, and any such committee, or other person may appoint a proxyholder.
The chairman may require such proof of such appointment as he sees fit.
12.6 Appointment of Proxyholders. A member holding more than one share in
respect of which he is entitled to vote shall be entitled to appoint one or
more (but, in the case of a non-reporting Company, not more than five)
proxyholders to attend, act and vote for him on the same occasion. If such
a member should appoint more than one proxyholder for the same occasion he
shall specify the number of shares each proxyholder shall be entitled to
vote. A member may also appoint one or more alternate proxyholders to act
in the place and stead of an absent proxyholder.
12.7 Qualification of Proxyholders. Any person, having attained the age
of majority, may act as proxyholder whether or not he is entitled on his own
behalf to be present and to vote at the meeting at which he acts as
proxyholder. The proxy may authorize the person so appointed to act as
proxyholder for the appointor for the period, at any meeting or meetings,
and to the extent permitted by the Company Act.
12.8 Execution of Form of Proxy. A proxy shall be in writing under the
hand of the appointor or of his attorney duly authorized in writing, or, if
the appointor is a corporation, either under the seal of the corporation or
under the hand of a duly authorized officer or attorney of that corporation.
12.9 Deposit of Proxy. Unless the Directors fix some other time by which
proxies must be deposited, a proxy and the power of attorney or other
authority, if any, under which it is signed, or a notarially certified copy
thereof, shall be deposited at the registered office of the Company or at
such other place as is specified for that purpose in the notice convening
the meeting, not less than 48 hours (excluding Saturdays and holidays)
before the time for holding the meeting in respect of which the person named
in the instrument is appointed.
12.10 Directors May Make Regulations Relating to Deposit of Proxies. In
addition to any other method of depositing proxies provided for in these
Articles, the Directors may by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time for
depositing the proxies. If the Company is or becomes a reporting company,
the time so fixed shall not exceed 48 hours (excluding Saturdays and
holidays) preceding the meeting or adjourned meeting specified in the notice
calling a meeting of members and providing for particulars of such proxies
to be sent to the Company or any agent of the Company in writing or by
letter, telegram, telex or any method of transmitting legibly recorded
messages so as to arrive before the commencement of the meeting or adjourned
meeting at the office of the Company or of any agent of the Company
appointed for the purpose of receiving such particulars and providing that
proxies so deposited may be acted upon as though the proxies themselves were
deposited as required by this Part and votes given in accordance with such
regulations shall be valid and shall be counted.
12.11 Form of Proxy. Unless the Company Act or any other statute or law
requires any other form of proxy, a proxy, whether for a specified meeting
or otherwise, shall be either in the form following or in any other form
that the Directors or the chairman of the meeting shall approve:
(Name of Company)
The undersigned, being a member of the above named Company, appoints
_________
_________________of _______________or failing him________________________
of _______________for the undersigned to attend, act and vote for and on
behalf of the undersigned at the general meeting of the Company to be held
on
the __day of ________and at any adjournment thereof.
Signed this ________________19__.
_______________________________
(Signature of Member).
12.12 Validity of Proxy Vote. A vote given in accordance with the terms of
a proxy is valid notwithstanding the previous death or incapacity of the
member giving the proxy or the revocation of the proxy or of the authority
under which the form of proxy was executed or the transfer of the share in
respect of which the proxy is given, provided that no notification in
writing of such death, incapacity, revocation or transfer shall have been
received at the registered office of the Company or by the chairman of the
meeting or adjourned meeting for which the proxy was given before the vote
was taken.
12.13 Revocation of Proxy. Every proxy may be revoked by an instrument in
writing:
(a) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation, by a duly
authorized officer or attorney of the corporation; and
(b) delivered either at the registered office of the Company at any
time up to and including the last business day preceding the day of the
meeting, or any adjournment thereof at which the proxy is to be used, or
to the chairman of the meeting on the day of the meeting or any
adjournment thereof before any vote in respect of which the proxy is to
be used shall have been taken;
or in any other manner provided by law.
12.14 Chairman to Determine Validity. The chairman of the meeting may
determine whether or not a proxy, deposited for use at such meeting, which
may not strictly comply with the requirements of this Part as to form,
execution, accompanying documentation, time of filing, or otherwise, shall
be valid for use at such meeting and any such determination made in good
faith shall be final, conclusive and binding upon such meeting.
PART 13
DIRECTORS
13.1 Number of Directors. The subscribers to the Memorandum of the
Company are the first Directors. The Directors to succeed the first
Directors may be appointed in writing by a majority of the subscribers or at
a meeting of the subscribers, or if not so appointed, they shall be elected
by the members entitled to vote on the election of Directors. The number of
Directors, excluding additional Directors, may be fixed or changed from time
to time by ordinary resolution, whether previous notice thereof has been
given or not, but notwithstanding anything contained in these Articles the
number of Directors shall never be less than one or, if the Company is or
becomes a reporting company, less than three.
13.2 Remuneration and Expenses of Directors. The remuneration of the
Directors may from time to time be determined by the Directors unless by
ordinary resolution the members determine that such remuneration shall be
determined by the members. Such remuneration may be in addition to any
salary or other remuneration paid to any Director in his capacity as Officer
or employee of the Company. The Directors shall be reimbursed for
reasonable traveling, hotel and other expenses they incur in and about the
business of the Company and if any Director shall perform any professional
or other services for the Company that in the opinion of the Directors are
outside the ordinary duties of a Director or shall otherwise be specially
occupied in or about the Company's business, he may be paid a remuneration
to be fixed by the Board, or, at the option of such Director, by the Company
in general meeting, and such remuneration may be either in addition to, or
in substitution for any other remuneration that he may be entitled to
receive. The Directors on behalf of the Company, unless otherwise
determined by ordinary resolution, may pay a gratuity or pension or
allowance on retirement to any Director who has held any office or position
with the Company or to his spouse or dependents and may make contributions
to any fund and pay premiums for the purchase or provision of any such
gratuity, pension or allowance.
13.3 Qualification of Directors. A Director shall not be required to hold
a share in the capital of the Company as qualification for his office but
shall be qualified as required by the Company Act to become or act as a
Director. Any Director who is not a member shall be deemed to have agreed to
be bound by the provisions of the articles to the same extent as if he were
a member of the Company.
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 Election at Annual General Meetings. At each annual general meeting
of the Company all the Directors shall retire and the members entitled to
vote thereat shall elect a Board of Directors consisting of the number of
Directors for the time being fixed pursuant to these Articles.
14.2 Eligibility of Retiring Director. A retiring Director shall be
eligible for re-election.
14.3 Continuance of Directors. Where the Company fails to hold an annual
general meeting in accordance with the Company Act, the Directors then in
office shall be deemed to have been elected or appointed as Directors on the
last day on which the annual general meeting could have been held pursuant
to these Articles and they may hold office until other Directors are
appointed or elected or until the day on which the next annual general
meeting is held.
14.4 Election of Less than Required Number of Directors. If at any
general meeting at which there should be an election of Directors the places
of any of the retiring Directors are not filled by such election, such of
the retiring Directors who are not re-elected as may be requested by the
newly-elected Directors shall, if willing to do so, continue in office to
complete the number of Directors for the time being fixed pursuant to these
Articles until further new Directors are elected at a general meeting
convened for the purpose. If any such election or continuance of Directors
does not result in the election or continuance of the number of Directors
for the time being fixed pursuant to these Articles such number shall be
fixed at the number of Directors actually elected or continued in office.
14.5 Filing a Casual Vacancy. The remaining Directors or Director shall
have the power from time to time to appoint any person as a Director to fill
any casual vacancy occurring in the Board of Directors.
14.6 Additional Directors. Between successive annual general meetings the
Directors shall have power to appoint one or more additional Directors but
the number of additional Directors shall not be more than one-third of the
number of Directors elected or appointed at the last annual general meeting.
Any Director so appointed shall hold office only until the next following
annual general meeting of the Company, but shall be eligible for election at
such meeting and, so long as he is an additional Director, the number of
Directors shall be increased accordingly.
14.7 Alternate Directors. Any Director may by instrument in writing
delivered to the Company appoint any person to be his alternate to act in
his place at meetings of the Directors at which he is not present unless the
Directors shall have reasonably disapproved the appointment of such person
as an alternate Director and shall have given notice to that effect to the
Director appointing the alternate Director within a reasonable time after
delivery of such instrument to the Company. Every such alternate shall be
entitled to notice of meetings of the Directors and to attend and vote as a
Director at a meeting at which the person appointing him is not personally
present, and, if he is a Director, to have a separate vote on behalf of the
Director he is representing in addition to his own vote. A Director may at
any time by instrument, telegram, telex or any method of transmitting
legibly recorded messages delivered to the Company revoke the appointment of
an alternate appointed by him. The remuneration payable to such an
alternate shall be payable out of the remuneration of the Director
appointing him.
14.8 Termination of Directorship. A Director ceases to hold office when
he:
(a) dies;
(b) resigns his office by notice in writing delivered to the registered
office of the Company;
(c) is convicted of an indictable offence and the other Directors shall
have resolved to remove him;
(d) ceases to be qualified to act as a Director pursuant to the Company
Act; or
(e) is removed in accordance with Article 14.10.
14.9 Resignation of Directors. Every resignation of a Director becomes
effective at the time a written resignation is delivered to the registered
office of the Company or at the time specified in the resignation, whichever
is later.
14.10 Removal of Directors. The Company may, by special resolution, remove
any Director before the expiration of his period of office and may by an
ordinary resolution appoint another person in his stead.
PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 Management of Affairs and Business. The Directors shall manage or
supervise the management of the affairs and business of the Company and
shall have the authority to exercise all such powers of the Company as are
not, by the Company Act or by the Memorandum or these Articles, required to
be exercised by the Company in general meeting.
15.2 Appointment of Attorney. The Directors may from time to time by power
of attorney or other instrument under seal appoint any person to be the
attorney of the Company for such purposes, and with such powers, authorities
and discretions (not exceeding those vested in or exercisable by the
Directors under these Articles and excepting the powers of the Directors
relating to the constitution of the Board and of any of its committees and
the appointment or removal of Officers and the power to declare dividends)
and for such period, with such remuneration and subject to such conditions
as the Directors may think fit, and any such appointment may be made in
favor of any of the Directors or any of the members of the Company or in
favor of any corporation, or of any of the members, Directors, nominees or
managers of any corporation, firm or joint venture and any such power of
attorney may contain such provisions for the protection or convenience of
persons dealing with such attorney as the Directors think fit. Any such
attorney may be authorized by the Directors to sub-delegate all or any of
the powers, authorities and discretions for the time being vested in him.
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 Disclosure of Conflicting Interest. A Director who is in any way,
directly or indirectly, interested in an existing or proposed contract or
transaction with the Company or who holds any office or possesses any
property whereby, directly or indirectly, a duty or interest might be
created to conflict with his duty or interest as a Director shall declare
the nature and extent of his interest in such contract or transaction or of
the conflict or potential conflict with his duty and interest as a Director,
as the case may be, in accordance with the provisions of the Company Act.
16.2 Voting and Quorum re Proposed. Contract. A Director shall not vote
in respect of any such contract or transaction with the Company in which he
is interested and if he shall do so his vote shall not be counted, but he
shall be counted in the quorum present at the meeting at which such vote is
taken. Subject to the provisions of the Company Act, the prohibitions
contained in this Part shall not apply to
(a) any contract or transaction relating to a loan to the Company,
the repayment of all or part of which a Director or a specified
corporation or a specified firm in which he has an interest has
guaranteed or joined in guaranteeing;
(b) any contract or transaction made, or to be made, with or for the
benefit of an affiliated corporation of which a Director is a Director
or Officer;
(c) any contract by a Director to subscribe for or underwrite shares or
debentures to be issued by the Company or a subsidiary of the Company,
or any contract, arrangement or transaction in which a Director is,
directly or indirectly, interested if all the other Directors are also,
directly or indirectly, interested in the contract, arrangement or
transaction;
(d) determining the remuneration of the Directors;
(e) purchasing and maintaining insurance to cover Directors against
liability incurred by them as Directors; or
(f) the indemnification of any Director by the Company.
These exceptions may from time to time be suspended or amended to any extent
approved by the Company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or
for any particular period.
16.3 Director May Hold Office or Position with Company. A Director may
hold any office or position with the Company, other than the office of
auditor of the Company, in conjunction with his office of Director for such
period and on such terms, as to remuneration or otherwise, as the Directors
may determine and no Director or intended Director shall be disqualified by
his office from contracting with the Company either with regard to his
tenure of any such other office or position or as vendor, purchaser or
otherwise, and, subject to compliance with the provisions of the Company
Act, no contract or transaction entered into by or on behalf of the Company
in which a Director is in any way interested shall be liable to be voided by
reason thereof.
16.4 Director Acting in Professional Capacity. Subject to compliance
with the provisions of the Company Act, a Director or his firm may act in a
professional capacity for the Company and he or his firm shall be entitled
to remuneration for professional services as if he were not a Director.
16.5 Director Receiving Remuneration from Other Interests. A Director
may be or become a director or other officer or employee of, or otherwise
interested in, any corporation or firm in which the Company may be
interested as a member or otherwise, and, subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or
firm.
PART 17
PROCEEDINGS OF DIRECTORS
17.1 Chairman and Alternate. The Chairman of the Board, if any, or in
his absence the President, shall preside as chairman at every meeting of the
Directors, or if there is no Chairman of the Board or neither the Chairman
of Board nor the President is present within fifteen minutes of the time
appointed for holding the meeting or is willing to act as chairman, or, if
the Chairman of the Board, if any, and the President have advised the
Secretary that they will not be present at the meeting, the Directors
present shall choose one of their number to be chairman of the meeting.
With the consent of the meeting, the solicitor of the Company may act as
Chairman of a meeting of the Directors.
17.2 Meetings - Procedure - Casting Vote. The Directors may meet
together for the dispatch of business, adjourn and otherwise regulate their
meetings, as they think fit. Questions arising at any meeting shall be
decided by a majority of votes. In case of an equality of votes the
chairman shall not have a second or casting vote. Meetings of the Board
held at regular intervals may be held at such place, at such time and upon
such notice (if any) as the Board may by resolution from time to time
determine.
17.3 Meetings by Conference Telephone. A Director may participate in a
meeting of the Board or of any committee of the Directors by means of
conference telephones or other communications facilities by means of which
all Directors participating in the meeting can hear each other and provided
that all such Directors agree to such participation. A Director
participating in a meeting in accordance with this Article shall be deemed
to be present at the meeting and to have so agreed and shall be counted in
the quorum therefor and be entitled to speak and vote thereat.
17.4 Notice of Meeting. A Director may, and the Secretary or an
Assistant Secretary upon request of a Director shall, call a meeting of the
Board at any time. Reasonable notice shall be given for any meeting
specifying the place, day and hour of such meeting shall be given by mail,
postage prepaid, addressed to each of the Directors and alternate Directors
at his address as it appears on the books of the Company or by leaving it at
his usual business or residential address or by telephone, telegram, telex,
or any method of transmitting legibly recorded messages. It shall not be
necessary to give notice of a meeting of Directors to any Director or
alternate Director if such meeting is to be held immediately following a
general meeting at which such Director shall have been elected or is the
meeting of Directors at which such Director is appointed. Accidental
omission to give notice of a meeting of Directors to, or by the non-receipt
of notice by, any Director shall not invalidate the proceedings at that
meeting.
17.5 Waiver of Notice of Meeting. Waiver of Notice of Meeting Any
Director of the Company may file with the Secretary a document executed by
him waiving notice of any past, present or future meeting or meetings of the
Directors being, or required to have been, sent to him and may at any time
withdraw such waiver with respect to meetings held thereafter. After the
filing of such waiver with respect to future meetings, and until such waiver
is withdrawn, no notice of any meeting of the Directors need be given to
such Director or, unless the Director otherwise requires in writing to the
Secretary, to his alternate Director, and all meetings of the Directors so
held shall be deemed not to be improperly called or constituted by reason of
notice not having been given to such Director or alternate Director.
17.6 Quorum. The quorum necessary for the transaction of the business of
the Directors may be fixed by the Directors and if not so fixed shall be a
majority of the Directors or, if the number of Directors is fixed at one,
shall be one Director.
17.7 Continuing Directors May Act During Vacancy. The Directors may
act notwithstanding any vacancy in their body, but, if and so long as their
number is reduced below the number fixed pursuant to these Articles as the
necessary quorum of Directors, the Directors may act for the purpose of
increasing the number of Directors to that number, or of summoning a general
meeting of the Company, but for no other purpose.
17.8 Validity of Acts of Directors. Subject to the provisions of the
Company Act, all acts done by any meeting of the Directors or of a committee
of Directors, or by any person acting as a Director, shall, notwithstanding
that it be afterwards discovered that there was some defect in the
qualification, election or appointment of any such Directors or of the
members of such committee or person acting as aforesaid, or that they or any
of them were disqualified, be as valid as if every such person had been duly
elected or appointed and was qualified to be a Director.
17.9 Resolutions in Writing Effective. A resolution consented to in
writing, whether by document, telegram, telex or any method of transmitting
legibly recorded messages or other means, by all of the Directors or their
alternates shall be as valid and effectual as if it had been passed at a
meeting of the Directors duly called and held. Such resolution may be in
two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of
the proceedings of the Directors and shall be effective on the date stated
thereon or on the latest date stated on any counterpart.
17.10 Resolutions Need Not be Seconded and Chairman May Move a Motion. No
resolution proposed at a meeting of Directors need be seconded, and the
chairman of any meeting is entitled to move or propose a resolution.
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 Appointment of Executive Committee. The Directors may by resolution
appoint an Executive Committee to consist of such member or members of their
body as they think fit, which Committee shall have, and may exercise during
the intervals between the meetings of the Board, all the powers vested in
the Board except the power to fill vacancies in the Board, the power to
change the membership of, or fill vacancies in, said Committee or any other
committee of the Board and such other powers, if any, as may be specified in
the resolution.
The said Committee shall keep regular minutes of its transactions and shall
cause them to be recorded in books kept for that purpose, and shall report
the same to the Board of Directors at such times as the Board of Directors
may from time to time require. The Board shall have the power at any time
to revoke or override the authority given to or acts done by the Executive
Committee, except as to acts done before such revocation or overriding, and
to terminate the appointment or change the membership of such Committee and
to fill vacancies in it. The Executive Committee may make rules for the
conduct of its business and may appoint such assistants as it may deem
necessary. A majority of the members of said Committee shall constitute a
quorum thereof.
18.2 Appointment of Committees. The Directors may by resolution appoint
one or more committees consisting of such member or members of their body as
they think fit and may delegate to any such committee between meetings of
the Board such powers of the Board (except the power to fill vacancies in
the Board and the power to change the membership of or fill vacancies in any
committee of the Board and the power to appoint or remove Officers appointed
by the Board) subject to such conditions as may be prescribed in such
resolution, and all committees so appointed shall keep regular minutes of
their transactions and shall cause them to be recorded in books kept for
that purpose, and shall report the same to the Board of Directors at such
times as the Board of Directors may from time to time require. The
Directors shall also have power at any time to revoke or override any
authority given to or acts to be done by any such committees except as to
acts done before such revocation or overriding and to terminate the
appointment or change the membership of a committee and to fill vacancies in
it. Committees may make rules for the conduct of their business and may
appoint such assistants as they may deem necessary. A majority of the
members of a committee shall constitute a quorum thereof.
18.3 Procedure at Meetings. The Executive Committee and any other
committee may meet and adjourn as it thinks proper. Questions arising at
any meeting shall be determined by a majority of votes of the members of the
committee present, and in case of an equality of votes the chairman shall
not have a second or casting vote. A resolution approved in writing by all
the members of the Executive Committee or any other committee shall be as
valid and effective as if it had been passed at a meeting of such Committee
duly called and constituted. Such resolution may be in two or more
counterparts which together shall be deemed to constitute one resolution in
writing. Such resolution shall be filed with the minutes of the proceedings
of the committee and shall be effective on the date stated thereon or on the
latest date stated in any counterpart.
PART 19
OFFICERS
19.1 President and Secretary Required. The Directors shall, from time to
time, appoint a President and a Secretary and such other Officers, if any,
as the Directors shall determine and the Directors may, at any time,
terminate any such appointment. No Officer shall be appointed unless he is
qualified in accordance with the provisions of the Company Act.
19.2 Persons Holding More Than One Office and Remuneration. One person
may hold more than one of such offices except that the offices of President
and Secretary must be held by different persons unless the Company has only
one member. Any person appointed as the Chairman of the Board, the
President or the Managing Director shall be a Director. The other Officers
need not be Directors. The remuneration of the Officers of the Company as
such and the terms and conditions of their tenure of office or employment
shall from time to time be determined by the Directors; such remuneration
may be by way of salary, fees, wages, commission or participation in profits
or any other means or all of these modes and an Officer may in addition to
such remuneration be entitled to receive after he ceases to hold such office
or leaves the employment of the Company a pension or gratuity. The
Directors may decide what functions and duties each Officer shall perform
and may entrust to and confer upon him any of the powers exercisable by them
upon such terms and conditions and with such restrictions as they think fit
and may from time to time revoke, withdraw, alter or vary all or any of such
functions, duties and powers. The Secretary shall, inter alia, perform the
functions of the Secretary specified in the Company Act.
19.3 Disclosure of Conflicting Interest. Every Officer of the Company
who holds any office or possesses any property whereby, whether directly or
indirectly, duties or interests might be created in conflict with his duties
or interests as an Officer of the Company shall, in writing, disclose to the
President the fact and the nature, character and extent of the conflict.
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
20.1 Indemnification of Directors. Subject to the provisions of the
Company Act, the Directors shall cause the Company to indemnify a Director
or former Director of the Company and the Directors may cause the Company to
indemnify a Director or former Director of a corporation of which the
Company is or was a member and the heirs and personal representatives of any
such person against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, actually and reasonably
incurred by him or them including an amount paid to settle an action or
satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is or they are made a party by reason of his being or
having been a Director of the Company or a Director of such corporation,
including any action brought by the Company or any such corporation. Each
Director of the Company on being elected or appointed shall be deemed to
have contracted with the Company on the terms of the foregoing indemnity.
20.2 Indemnification of Officers, Employees, Agents. Subject to the
provisions of the Company Act, the Directors may cause the Company to
indemnify any Officer, employee or agent of the Company or of a corporation
of which the Company is or was a member (notwithstanding that he is also a
Director) and his heirs and personal representatives against all costs,
charges and expenses whatsoever incurred by him or them and resulting from
his acting as an Officer, employee or agent of the Company or such
corporation. In addition the Company shall indemnify the Secretary or an
Assistant Secretary of the Company (if he shall not be a full time employee
of the Company and notwithstanding that he is also a Director) and his
respective heirs and legal representatives against all costs, charges and
expenses whatsoever incurred by him or them and arising out of the functions
assigned to the Secretary by the Company Act or these Articles and each such
Secretary and Assistant Secretary shall on being appointed be deemed to have
contracted with the Company on the terms of the foregoing indemnity.
20.3 Indemnification not Invalidated by noncompliance. The failure of a
Director or Officer of the Company to comply with the provisions of the
Company Act or of the Memorandum or these Articles shall not invalidate any
indemnity to which he is entitled under this Part.
20.4 Company May Purchase Insurance. The Directors may cause the Company
to purchase and maintain insurance for the benefit of any person who is or
was serving as a Director, Officer, employee or agent of the Company or as a
Director, Officer, employee or agent of any corporation of which the Company
is or was a member and his heirs or personal representatives against any
liability incurred by him as such Director, Officer, employee or agent.
PART 21
DIVIDENDS AND RESERVE
21.1 Declaration of Dividends. The Directors may from time to time
declare and authorize payment of such dividends, if any, as they may deem
advisable and need not give notice of such declaration to any member. No
dividend shall be paid otherwise than out of funds and/or assets properly
available for the payment of dividends and a declaration by the Directors as
to the amount of such funds or assets available for dividends shall be
conclusive. The Company may pay any such dividend wholly or in part by the
distribution of specific assets, and in particular by paid up shares, bonds,
debentures or other securities of the Company or any other corporation, or
in any one or more such ways as may be authorized by the Company or the
Directors, and where any difficulty arises with regard to such a
distribution the Directors may settle the same as they think expedient, and
in particular may fix the value for distribution of such specific assets or
any part thereof, and may determine that cash payments in substitution for
all or any part of the specific assets to which any members are entitled
shall be made to any members on the basis of the value so fixed to adjust
the rights of all parties, and may vest any such specific assets in
trustees for the persons entitled to the dividend as may seem expedient to
the Directors.
21.2 Declared Dividend Rate. Any dividend declared on shares of any
class by the Directors may be made payable on such date as is fixed by the
Directors.
21.3 Proportionate to Number of Shares Held. Subject to the rights of
members (if any) holding shares with specific rights as to dividends, all
dividends on shares of any class shall be declared and paid according to the
number of such shares held.
21.4 Reserves. The Directors may, before declaring any dividend, set
aside out of the funds properly available for the payment of dividends such
sums as they think proper as a reserve or reserves, which shall, at the
discretion of the Directors, be applicable for meeting contingencies, or for
equalizing dividends, or for any other purpose to which such funds of the
Company may be properly applied, and pending such application may, at the
like discretion, either be employed in the business of the Company or be
invested in such investments as the Directors may from time to time think
fit. The Directors may also, without placing the same in reserve, carry
forward such funds which they think prudent not to divide.
21.5 Receipts from Joint Holders. If several persons are registered as
joint holders of any share, any one of them may give an effective receipt
for any dividend, bonus or other moneys payable in respect of the share.
21.6 No Interest on Dividends. No dividend shall bear interest against
the Company. Where the dividend to which a member is entitled includes a
fraction of a cent, such fraction shall be disregarded in making payment
thereof and such payment shall be deemed to be payment in full.
21.7 Payment of Dividends. Any dividend, bonus or other moneys payable in
cash in respect of shares may be paid by cheque or warrant sent through the
post directed to the registered address of the holder, or in the case of
joint holders, to the registered address of that one of the joint holders
who is first named on the register, or to such person and to such address as
the holder or joint holders may direct in writing. Every such cheque or
warrant shall be made payable to the order of the person to whom it is sent.
The mailing of such cheque or warrant shall, to the extent of the sum
represented thereby (plus the amount of any tax required by law to be
deducted) discharge all liability for the dividend, unless such cheque or
warrant shall not be paid on presentation or the amount of tax so deducted
shall not be paid to the appropriate taxing authority.
21.8 Capitalization of Undistributed Surplus. Notwithstanding anything
contained in these Articles, the Directors may from time to time capitalize
any undistributed surplus on hand of the Company and may from time to time
issue as fully paid and non-assessable any unissued shares, or any bonds,
debentures or debt obligations of the Company as a dividend representing
such undistributed surplus on hand or any part thereof.
21.9 Fractional Share Dividends. Notwithstanding any other provisions of
these articles should any dividend result in any members being entitled to a
fractional part of a share of the Company, the Directors shall have the
right to pay such members in place of that fractional share, the cash
equivalent thereof calculated on the par value thereof or, in the case of
shares without par value, calculated on the price or consideration for which
such shares were or were deemed to be issued, and shall have the further
right and complete discretion to carry out such distribution and to adjust
the rights of the members with respect thereon on as practical and equitable
a basis as possible including the right to arrange through a fiscal agent or
otherwise for the sale, consolidation or other disposition of those
fractional shares on behalf of those members of the Company.
PART 22
DOCUMENTS, RECORDS AND REPORTS
22.1 Documents To Be Kept. The Company shall keep at its records office
or at such other place as the Company Act may permit, the documents, copies,
registers, minutes, and records which the Company is required by the Company
Act to keep at its records office or such other place, as the case may be.
22.2 Accounts To Be Kept. The Company shall cause to be kept proper books
of account and accounting records in respect of all financial and other
transactions of the Company to record properly the financial affairs and
condition of the Company and to comply with the Company Act.
22.3 Inspection of Accounts. Unless the Directors determine otherwise, or
unless otherwise determined by an ordinary resolution, no member of the
Company shall be entitled to inspect the accounting records of the Company.
22.4 Financial Statements and Reports for General Meetings. The Directors
shall from time to time at the expense of the Company cause to be prepared
and laid before the Company in general meeting such financial statements and
reports as are required by the Company Act.
22.5 Financial Statements and Reports for Members. Every member shall be
entitled, on demand, to be furnished with a copy of the latest financial
statement of the Company including the auditor's report on it, if any, and,
if so required by the Company Act, a copy of each annual financial statement
and interim financial statement shall be mailed to each member.
PART 23
NOTICES
23.1 Method of Giving Notice. A notice, statement, report or other
document may be given or delivered by the Company to any member either by
delivery to him personally or by sending it by mail to his address as
recorded in the register of members. Where a notice, statement, report or
other document is sent by mail, service or delivery of the notice, statement
or report shall be deemed to be effected by properly addressing, prepaying
and mailing the notice, statement or report and to have been given on the
day, Saturdays and holidays excepted, following the date of mailing. A
certificate signed by the Secretary or other Officer of the Company or of
any other corporation acting in that behalf for the Company that the letter,
envelope or wrapper containing the notice, statement, report or other
document was so addressed, prepaid and mailed shall be conclusive evidence
thereof.
23.2 Notice to Joint Holders. A notice, statement, report or other
document may be given or delivered by the Company to the joint holders of a
share by giving the notice to the joint holder first named in the register
of members in respect of the share.
23.3 Notice to Personal Representative. A notice, statement, report or
other document may be given or delivered by the Company to the persons
entitled to a share in consequence of the death, bankruptcy or incapacity of
a member by sending it by mail, prepaid, addressed to them by name or by the
title of representatives of the deceased or incapacitated person or trustee
of the bankrupt, or by any like description, at the address (if any)
supplied to the Company for the purpose by the persons claiming to be so
entitled, or (until such address has been so supplied) by giving the notice
in a manner in which the same might have been given if the death, bankruptcy
or incapacity had not occurred.
23.4 Persons to Receive Notice. Notice of every general meeting or
meeting of members holding shares of a particular class or series shall be
given in a manner herein before authorized to every member holding at the
time of the issue of the notice or the date fixed for determining the
members entitled to such notice, whichever is the earlier, shares which
confer the right to notice of and to attend and vote at any such meeting.
No other person except the auditor of the Company and the Directors of the
Company shall be entitled to receive notices of any such meeting.
PART 24
RECORD DATES
24.1 Record Date. The Directors may fix in advance a date, which shall
not be more than the maximum number of days permitted by the Company Act,
preceding the date of any meeting of members, including class and series
meetings, or of the payment of any dividend or of the proposed taking of any
other proper action requiring the determination of members, as the record
date for the determination of the members entitled to notice of, or to
attend and vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or for any other proper
purpose and, in such case, notwithstanding anything elsewhere contained in
these Articles, only members of record on the date so fixed shall be deemed
to be members for the purposes aforesaid.
24.2 No Record Date Fixed. Where no record date is so fixed for the
determination of members as provided in the preceding Article the date on
which the notice is mailed or on which the resolution declaring the dividend
is adopted, as the case may be, shall be the record date for such
determination.
PART 25
SEAL
25.1 Affixation of Seal to Documents. The Directors may provide a seal
for the Company and, if they do so, shall provide for the safe custody of
the seal which shall not be affixed to any instrument except in the presence
of the following persons, namely:
(a) any two Directors; or
(b) any one of the Chairman of the Board, the President, the Managing
Director, a Director or a Vice-President together with any one of the
Secretary, the Treasurer, the Secretary- Treasurer, an Assistant
Secretary, an Assistant Treasurer and an Assistant Secretary-Treasurer;
or
(c) if the Company shall have only one member, the President or the
Secretary; or
(d) such person or persons as the Directors may from time to time by
resolution appoint; and the said Directors, Officers, person or persons
in whose presence the seal is so affixed to an instrument shall sign
such instrument. For the purpose of certifying under seal true copies
of any document or resolution the seal may be affixed in the presence of
any one of the foregoing persons.
25.2 Reproduction of Seal. To enable the seal of the Company to be
affixed to any bonds, debentures, share certificates, or other securities of
the Company, whether in definitive or interim form, on which facsimiles of
any of the signatures of the Directors or Officers of the Company are, in
accordance with the Company Act and/or these Articles, printed or otherwise
mechanically reproduced there may be delivered to the firm or company
employed to engrave, lithograph or print such definitive or interim bonds,
debentures, share certificates or other securities one or more unmounted
dies reproducing the Company's seal and the Chairman of the Board, the
President, the Managing Director or a Vice-President and the Secretary,
Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant
Treasurer or an Assistant Secretary-Treasurer may by a document authorize
such firm or company to cause the Company's seal to be affixed to such
definitive or interim bonds, debentures, share certificates or other
securities by the use of such dies. Bonds, debentures, share certificates or
other securities to which the Company's seal has been so affixed shall for
all purposes be deemed to be under and to bear the Company's seal lawfully
affixed thereto.
25.3 Official Seal for Other Jurisdictions. The Company may have an
official seal for use in any other province, state, territory or country,
and all of the powers conferred by the Company Act with respect thereto may
be exercised by the Directors or by a duly authorized agent of the Company.
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
26.1 Instrument May Be Mechanically Signed. The signature of any Officer,
Director, registrar, branch registrar, transfer agent or branch agent of the
Company, unless otherwise required by the Company Act or by these Articles,
may, if authorized by the Directors, be printed, lithographed, engraved or
otherwise mechanically reproduced upon all instruments executed or issued by
the Company or any Officer thereof; and any instrument on which the
signature of any such person is so reproduced shall be deemed to have been
manually signed by such person whose signature is so reproduced and shall be
as valid to all intents and purposes as if such instrument had been signed
manually, and notwithstanding that the person whose signature is so
reproduced may have ceased to hold the office that he is stated on such
instrument to hold at the date of the delivery or issue of such instrument.
26.2 Definition of Instrument. The term "instrument" as used in Article
26. 1, shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, agreements,
releases, receipts and discharges for the payment of money or other
obligation, shares and share warrants of the Company, bonds, debentures and
other debt obligations of the Company, and all paper writings.
PART 27
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES
27.1 Directors' Right to Issue in One or More Series. Preferred shares
may, at any time and from time to time, be issued in one or more series.
The Directors may from time to time, by resolution passed before the issue
of any Preferred shares of any particular series, alter the Memorandum and
Articles of the Company to fix the number of Preferred shares in, to
determine the designation of the Preferred shares of that series and to
create, define and attach special rights and restrictions to the Preferred
shares of that series, including, but without in any way limiting or
restricting the generality of the foregoing:
(a) the rate, amount or method of calculation of dividends and whether
they are cumulative, partly cumulative, or non-cumulative, and whether
such rate, amount or method of calculation shall be subject to change or
adjustment in the future;
(b) the date, place, manner and currency of payments of dividends, and
that date or dates from which they accrue or become payable;
(c) any rights of redemption, retraction or purchase, the redemption,
retraction or purchase prices and the terms and conditions of
redemption, retraction or purchase, with or without provision for
purchase or similar funds;
(d) any voting rights;
(e) any conversion, exchange or reclassification rights;
(f) any rights to receive the remaining property of the Company upon
liquidation, dissolution or winding up and the amount and preference of
any such rights; and any other terms not inconsistent with these
provisions.
DATED March 20, 1997.
___/S/ WILLIAM A. RANDALL_____
Subscriber
<PAGE>
<PAGE>
Agreement
This Agreement was verbally entered into on the 22nd day of May, 1997, by and
between Australian Grazing & Pastoral Co., Pty. Ltd., (AGP), and International
Oil Lease Service Corp., (IOLS), (hereinafter collectively referred to as
"AGP"), and Australian-Canadian Oil Royalties Ltd., (hereinafter referred to
as "ACOR").
PREMISES
WHEREAS, AGP hereby acknowledges receipt of the one million six hundred
thousand (1,600,000) ACOR shares for payment (being 1,008,000 shares to AGPC
and 592,000 shares to IOLS), and ACOR acknowledges receipt of forty percent
(40%) of the overriding royalty interests as set out in Schedule "A".
WHEREAS, AGP offered for sale, for $C428,165.60 worth of restricted letter
stock in ACOR, the overriding royalties listed on Schedule "A" attached hereto
and made a part hereof for all purposes, and ACOR agreed to purchase, for
$C428,165.60, being 1,600,000 shares of ACOR stock, forty percent (40%) of
said overriding royalties. The value for the transaction was $C428,165.60,
being based on an independent third party transaction covering the same
properties listed in Schedule "A", which occurred on June 30, 1997, (see
Schedule "B"). This forty percent (40%) presently represents 464,410 net
royalty acres of overriding royalties with a net royalty acre being defined as
1/8 of the gross production or revenues from one acre of land free and clear
of drilling and exploration costs. The 13 concessions, or Authorities to
Prospect ("ATP") in Queensland, Australia are in the same general form as set
out in Schedule "C-1". The 13 assignments from the ATP Holders to AGP and
IOLS, on the Queensland properties, are essentially in the form as set out in
Schedule "C-2". The overriding royalty assignments to ACOR are essentially
the same form as shown in Schedule "C-3", attached hereto for all purposes.
The assignments in the chain of title in South Australia to the area in PEL's
5 & 6, called Patchawarra SW, are listed in Schedule "D" attached hereto for
all purposes. Furthermore, forty percent (40%) of accrued royalties on ATP 299
and ATP 267, as set out in Schedule "E", and held in escrow, are part of the
royalties transferred, and have been paid to ACOR.
WHEREAS, ACOR has purchased forty percent (40%) of the overriding royalty
interests listed on Schedule "A" under the terms and conditions set forth in
the assignments.
NOW THEREFORE, the following has been accomplished:
1. AGP sold to ACOR, forty percent (40%) of the overriding royalties
listed in Schedule "A" at a purchase price of one million six hundred thousand
(1,600,000) shares of ACOR stock, valued at $C428,165.60, that was issued to
AGP in the above set out proportions; and
2. AGP has furnished title searches to ACOR on all of the Authorities
to Prospect in Queensland, at AGP's expense; and
3. ACOR will be responsible for stamp duty, if any is required, on the
assignments it receives from AGP as set out in this Agreement. The amount of
the stamp duty will depend on the value that ACOR places on the overriding
royalties for stamp duty; and
4. All funds which were in escrow, being forty percent (40%) of the
amounts set out in Schedule "E", and forty percent (40%) of all future
revenues shall be the property of and be paid to ACOR;
5. This agreement shall be executed by each party hereto on the date
shown in the respective notary blank for each signing party; and
6. This Agreement shall be governed and construed in accordance with
the laws of the State of Texas. If any portion of this Agreement shall be held
invalid, the remainder of this Agreement shall not be affected thereby. In
the event any enforcement of any portion of this Agreement shall become
necessary, the parties hereto agree that any such action shall be taken in a
federal or state court, located in the State of Texas; and
7. The failure of a party to seek redress for violation, or to insist
on strict performance, of any term or condition of this Letter Agreement shall
not prevent a subsequent act or omission which would have constituted a
violation from having the effect of any original violation; and
8. This Agreement may be executed in one (1) or more counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument; and
9. The foregoing represents the definitive agreement between the
parties hereto and supersedes any prior written or oral agreements.
10. This agreement shall inure to the benefit of and be binding on the
successors and assigns of ACOR and AGP.
AUSTRALIAN GRAZING & PASTORAL CO., ATTEST:
PTY. LTD.
By: /s/ ROBERT KAMON, PRESIDENT /s/ KENNY MILLER, ASST. SEC.
INTERNATIONAL OIL LEASE SERVICE CORP. ATTEST:
By: /s/ ROBERT KAMON, PRESIDENT /s/ KENNY MILLER, ASST. SEC.
AUSTRALIAN-CANADIAN OIL ROYALTIES ATTEST:
LTD.
By: /s/ Ely Sakhai, President /s/ Robert Kamon, Secretary
<PAGE>
<PAGE>
Agreement
This Agreement was verbally entered into on the 19th day of May, 1997,
by and between Ely Sakhai, Mike Altamura, and Jhon Saleimani,
(hereinafter collectively referred to as "Sakhai et al"), and
Australian-Canadian Oil Royalties Ltd., (hereinafter referred to as
"ACOR").
PREMISES
WHEREAS, Sakhai, et al hereby acknowledges receipt of two million four
hundred thousand (2,400,000) ACOR shares as payment for sixty percent
(60%) of the overriding royalties interests set out in Schedule "A",
(being 1,400,000 shares to Ely Sakhai, 800,000 shares to Jhon Saleimani,
and 200,000 shares to Mike Altamura), and ACOR acknowledges receipt of
sixty percent (60%) of the overriding royalty interests as set out in
Schedule "A".
WHEREAS, Sakhai offered for sale, for $C642,248.40 worth of restricted
letter stock in ACOR, sixty percent (60%) of the overriding royalties
listed on Schedule "A" attached hereto and made a part hereof for all
purposes, and ACOR agreed to purchase, for $C642,248.40, being 2,400,000
shares of ACOR stock, sixty percent (60%) of said overriding royalties.
The value for the transaction was $C642,248.40, being based on an
independent third party transaction covering the same properties listed
in Schedule "A", which occurred on June 30, 1998, (see Schedule "B").
This sixty percent (60%) represents 696,614 net royalty acres of
overriding royalties with a net royalty acre being defined as 1/8 of the
gross production or revenues from one acre of land free and clear of
drilling and exploration costs. The 13 concessions, or Authorities to
Prospect ("ATP") in Queensland, Australia are in the same general form
as set out in Schedule "C-1". The 13 assignments from the ATP Holders
to AGP, and International Oil Lease Service Corp., (hereinafter referred
to as "IOLS"), on the Queensland properties, are essentially in the form
shown in Schedule "C-2". The assignments from AGP and International Oil
Lease Service Corp., (hereinafter referred to as "IOLS"), are
essentially in the form shown in Schedule "C-2a". The assignments to
ACOR are essentially the same form as shown in Schedule "C-3", attached
hereto for all purposes. The assignments in the chain of title in South
Australia to the area in PEL's 5 & 6, called Patchawarra SW, are listed
in Schedule "D", attached hereto for all purposes. Furthermore, sixty
percent (60%) of accrued royalties on ATP 299 and ATP 267, as set out in
Schedule "E", and held in escrow, are part of the royalties transferred,
and have been paid to ACOR.
WHEREAS, Sakhai et al has offered for sale their proportionate part,
being sixty percent (60%), of the overriding royalty interests listed on
Schedule "A" attached hereto and made a part hereof for all purposes
which ACOR agreed to purchase, under the terms and conditions set forth
in the assignments.20
NOW THEREFORE, the following has been accomplished:
1. On June 20, 1997, Sakhai et al executed assignments before a
notary, covering sixty percent (60%) of the overriding royalties listed
on Schedule "A" in return for two million four hundred thousand shares
(2,400,000) of ACOR stock that was issued to Sakhai et al on April 28,
1997; and
2. ACOR will be responsible for stamp duty, if any is required, on
the assignments it receives from Sakhai et al as set out in this
Agreement. The amount of the stamp duty will depend on the value that
ACOR places on the overriding royalties for stamp duty; and
20
3. This agreement shall be executed by each party hereto on the
date shown in the respective notary blank for each signing party; and
4. All funds which were in escrow, being sixty percent (60%) of the
amounts set out in Schedule "E", and sixty percent (60%) of all
future revenues shall be the property of and be paid to ACOR;
5. This Agreement shall be governed and construed in accordance
with the laws of the State of Texas. If any portion of this Agreement
shall be held invalid, the remainder of this Agreement shall not be
affected thereby. In the event any enforcement of any portion of this
Agreement shall become necessary, the parties hereto agree that any such
action shall be taken in a federal or state court, located in the State
of Texas; and
6. The failure of a party to seek redress for violation, or to
insist on strict performance, of any term or condition of this Letter
Agreement shall not prevent a subsequent act or omission which would
have constituted a violation from having the effect of any original
violation; and
7. This Agreement may be executed in one (1) or more counterparts,
each of which shall be deemed an original, but all of which shall
constitute one and the same instrument; and
8. The foregoing represents the definitive agreement between the
parties hereto and supersedes any prior written or oral agreements.
9. This agreement shall inure to the benefit of and be binding on
the successors and assigns of ACOR and Sakhai et al.
SELLERS:
/s/ ELY SAKHAI
/s/ JHON SOLEIMANI
/s/ MIKE ALTAMURA
BUYER:
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD. ATTEST:
/s/ ELY SAKAHI, PRESIDENT /s/ ROBERT KAMON, SEC.
<PAGE>
<PAGE>
Agreement
This Agreement was verbally entered into on the 22nd day of May, 1997, by and
between Australian Grazing & Pastoral Co., Pty. Ltd., (AGP), and International
Oil Lease Service Corp., (IOLS), (hereinafter collectively referred to as
"AGP"), and Australian-Canadian Oil Royalties Ltd., (hereinafter referred to
as "ACOR").
PREMISES
WHEREAS, AGP hereby acknowledges receipt of the one million six hundred
thousand (1,600,000) ACOR shares for payment (being 1,008,000 shares to AGPC
and 592,000 shares to IOLS), and ACOR acknowledges receipt of forty percent
(40%) of the overriding royalty interests as set out in Schedule "A".
WHEREAS, AGP offered for sale, for $C428,165.60 worth of restricted letter
stock in ACOR, the overriding royalties listed on Schedule "A" attached hereto
and made a part hereof for all purposes, and ACOR agreed to purchase, for
$C428,165.60, being 1,600,000 shares of ACOR stock, forty percent (40%) of
said overriding royalties. The value for the transaction was $C428,165.60,
being based on an independent third party transaction covering the same
properties listed in Schedule "A", which occurred on June 30, 1997, (see
Schedule "B"). This forty percent (40%) presently represents 464,410 net
royalty acres of overriding royalties with a net royalty acre being defined as
1/8 of the gross production or revenues from one acre of land free and clear
of drilling and exploration costs. The 13 concessions, or Authorities to
Prospect ("ATP") in Queensland, Australia are in the same general form as set
out in Schedule "C-1". The 13 assignments from the ATP Holders to AGP and
IOLS, on the Queensland properties, are essentially in the form as set out in
Schedule "C-2". The overriding royalty assignments to ACOR are essentially
the same form as shown in Schedule "C-3", attached hereto for all purposes.
The assignments in the chain of title in South Australia to the area in PEL's
5 & 6, called Patchawarra SW, are listed in Schedule "D" attached hereto for
all purposes. Furthermore, forty percent (40%) of accrued royalties on ATP 299
and ATP 267, as set out in Schedule "E", and held in escrow, are part of the
royalties transferred, and have been paid to ACOR.
WHEREAS, ACOR has purchased forty percent (40%) of the overriding royalty
interests listed on Schedule "A" under the terms and conditions set forth in
the assignments.
NOW THEREFORE, the following has been accomplished:
1. AGP sold to ACOR, forty percent (40%) of the overriding royalties
listed in Schedule "A" at a purchase price of one million six hundred thousand
(1,600,000) shares of ACOR stock, valued at $C428,165.60, that was issued to
AGP in the above set out proportions; and
2. AGP has furnished title searches to ACOR on all of the Authorities
to Prospect in Queensland, at AGP's expense; and
3. ACOR will be responsible for stamp duty, if any is required, on the
assignments it receives from AGP as set out in this Agreement. The amount of
the stamp duty will depend on the value that ACOR places on the overriding
royalties for stamp duty; and
4. All funds which were in escrow, being forty percent (40%) of the
amounts set out in Schedule "E", and forty percent (40%) of all future
revenues shall be the property of and be paid to ACOR;
5. This agreement shall be executed by each party hereto on the date
shown in the respective notary blank for each signing party; and
6. This Agreement shall be governed and construed in accordance with
the laws of the State of Texas. If any portion of this Agreement shall be held
invalid, the remainder of this Agreement shall not be affected thereby. In
the event any enforcement of any portion of this Agreement shall become
necessary, the parties hereto agree that any such action shall be taken in a
federal or state court, located in the State of Texas; and
7. The failure of a party to seek redress for violation, or to insist
on strict performance, of any term or condition of this Letter Agreement shall
not prevent a subsequent act or omission which would have constituted a
violation from having the effect of any original violation; and
8. This Agreement may be executed in one (1) or more counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument; and
9. The foregoing represents the definitive agreement between the
parties hereto and supersedes any prior written or oral agreements.
10. This agreement shall inure to the benefit of and be binding on the
successors and assigns of ACOR and AGP.
AUSTRALIAN GRAZING & PASTORAL CO., ATTEST:
PTY. LTD.
By: /s/ ROBERT KAMON, PRESIDENT /s/ KENNY MILLER, ASST. SEC.
INTERNATIONAL OIL LEASE SERVICE CORP. ATTEST:
By: /s/ ROBERT KAMON, PRESIDENT /s/ KENNY MILLER, ASST. SEC.
AUSTRALIAN-CANADIAN OIL ROYALTIES ATTEST:
LTD.
By: /s/ Ely Sakhai, President /s/ Robert Kamon, Secretary
<PAGE>
<PAGE>
SAMPLE LEASING AGREEMENT
September 21, 1999
Dear ______________,
Australian Grazing & Pastoral Co., Pty. Ltd. (hereinafter referred to as
First Party) agrees immediately after acceptance of this letter by
___________________________________________ (hereinafter jointly referred
to as Second Party) to negotiate in behalf of Second Party or their
nominee for V99-2 (hereinafter referred to as Concession) covering certain
lands ________________________________________________________.
Said negotiations are to be conducted by First Party or its agent or
representatives in Australia at First Party's risk and expense; provided,
however, that Second party shall at all times be kept informed as to the
progress of said negotiations and the terms and conditions involved in
obtaining said concession.
Terms and conditions of said Concession are intended to be in accordance
with the provisions of the Petroleum Act of the State of Victoria and will
be on the form issued by the State of Victoria. It is further agreed that
Second party will at its expense put up the $A__________ non-refundable
application fee to accompany the application and will complete and file
with the appropriate authorities all necessary papers and documents to
carry out the terms of this agreement. Second party will be consulted
prior to the filing of any such papers or documents and will, in any
event, be furnished with copies of all such papers and documents so filed.
First party will at its expense pay for registration costs of registering
______________________ in Australia as a foreign corporation.
It is further agreed for the purposes of this contract that if the
following terms and conditions are obtained, the Concession will be
satisfactory to Second Party and Second Party's attorneys:
(1) Period: Five (5) years from the date of issuance.
(2) Expenditures:
First Year: $A___________
Second Year: $A___________
Third Year*: $A___________
Fourth Year: $A___________
Fifth Year: $A___________
*The first three years to be guaranteed in that if the expenditures
are not made, or the area relinquished when the expenditures are
current, the Second Party will forfeit the area to the government.
(3) Oil Spill Insurance: Only after Government has made offer to
successful applicant and to be paid for by Second Party.
(4) Rentals: Second Party will pay the first year's rental when the
Government offers the concession to Second Party on the terms set out by
Second party in their application.
(5) Permit Conditions and Permit Administration: The conditions applying
to a permit granted under sections 22 (initial term) or 32 (renewal term)
of the Petroleum (Submerged Lands) Act 1967, and the continuing
administration of those conditions, will be as follows:
(a) the permittee will be required to undertake each component of the
minimum guaranteed work program in the designated year or earlier and,
unless conditions of "force majeure" apply, failure to do so will result
in cancellation of the permit. The minimum guaranteed work program will
not be reduced once the permit has been awarded. Surrender of the permit
in good standing may only be agreed prior to the beginning of the fourth
permit year if the total three year minimum guaranteed work program is
completed.
(b) no earlier than 6 months and no later than 3 months before the end of
the third year of the permit term, the permittee may submit a revised
secondary work program covering the remaining years of the permit term for
consideration by the Joint Authority and agreement on a mutually
acceptable work program. If agreement cannot be reached on a mutually
acceptable work program, the permit may be surrendered in good standing or
continue in force subject to the original secondary work program.
(c) on commencement of the fourth permit year the "secondary" program (as
revised, if agreed by the Joint Authority) becomes guaranteed on a year by
year basis and each component must be undertaken in the designated year or
earlier:
failure to do so will result in cancellation of the permit, unless
conditions of "force majeure" apply or where the permittee can provide
substantial and compelling evidence that the work program should be varied
on technical grounds prior to entry into any of the remaining years of the
secondary term (i.e. the permittee has the option to renegotiate the
secondary work program on an annual basis)
surrender of the permit in good standing may only be agreed in a permit
year if the work guaranteed for the year has been completed
(d) permittee may apply at any time for a variation of permit conditions
on the grounds of "force majeure", that is, where circumstances prevail
which are clearly beyond the control of the permittees
(e) permittees will be required to comply with the provisions of the Act,
the Regulations and Directions issued under the Act, and with any special
conditions associated with the permit area.
(f) first party has paid for the registration of ________________. Second
party will pay the cost of registering any additional companies in
Australia.
(g) Cost of making copies of seismic on area will be paid by second party.
Upon delivery of the concession, it is further agreed that Second Party
will forthwith grant and assign to First Party by an instrument in form
satisfactory to Counsel for Second Party and First Party an overriding
royalty of two percent (2%) of the total production of crude oil and
casinghead petroleum spirits and natural gas produced from the lands which
are the subject of the Concession, which overriding royalty shall be a
covenant running with the land, but which shall nevertheless cease as to
land which at any time may be surrendered or which may lapse or revert to
the government by reason of nondevelopment or any other cause. This
override shall also apply to any additions to the area of the basic
Concession, and any succession in titles, including leases and renewals.
Notwithstanding that Second Party may transfer all or part of its interest
in the Oil Concession, Second Party shall remain obligated to pay the said
overriding royalty interest to First Party until the transferee or
purchaser of the interest of Second Party in the Concession has entered
into an Agreement with First Party whereby such transferee or purchaser
agrees to pay First Party the appropriate portion of the said overriding
royalty interest.
If the Victorian Department of Natural Resources and Environment offers to
grant a concession to Second Party covering any part of the lands
represented by the Concession under different terms and conditions, and if
Second Party chooses to accept such terms and conditions, then Second
Party agrees to pay First Party $US___________, assign First Party an
overriding royalty of 2%, and abide by all other provisions of this
contract.
Should it be found that the Government fees will be higher than the total
price quoted herein, then the Second Party shall be notified and allowed
the option of going on such other terms as may be obtained, or assign all
rights and privileges of Second Party to First Party and/or its nominee
after the granting of the said Concession, and Second Party shall in this
latter event be relieved of all expenses and obligations under this
agreement and shall be obligated to pay no fees or expenses to First Party
and/or its nominee in this latter event. Second Party may exercise its
option by notifying First Party of its intention within three (3) days
from the date of receipt of such notification.
All notices to be given by and between the parties hereto shall be sent to
First Party at the address shown on this letterhead and to each Second
Party at the addresses shown on the first page hereof.
This agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto. This agreement shall be
governed by the laws of the State of Texas. If the terms and provisions
herein contained meet with your approval, please execute the duplicate
original of this instrument furnished you herewith and return to us within
five (5) days from the date hereof.
Sincerely,
Party of the First Part:
_________________________________
Parties of the Second Part:
_________________________________
<PAGE>
<PAGE>
EXHIBIT 6.5
The following Assignment from the working interest holder to Australian
Grazing & Pastoral Co., Pty. Ltd. is the form used for all the following
areas:
267, 299, 415, 542, 544, 556, 582,
615, 616, 543, 234, 560 and 538
The same form except areas 554 and 582 were assigned to International
Oil Lease Service Corp. instead of Australian Grazing & Pastoral Co.,
Pty. Ltd. by the working interest holders. The required expenditures
varied with each different authority to prospect issued, depending on
negotiations between the company and the government.
SAMPLE
ASSIGNMENT OF OVERRIDING ROYALTY
STATE OF TEXAS
COUNTY OF EASTLAND
THIS ASSIGNMENT, made and entered into by and between East Jackson Oil,
Inc., 124 Redwood Drive, Richmond, Kentucky 40475, hereinafter referred
to as Assignor, and Australian Grazing & Pastoral Co., Pty. Ltd., with
U. S. representatives' office at P. O. Box 1629, Cisco, Texas 76437,
hereinafter referred to as Assignee,
WITNESSETH:
WHEREAS, Assignor is the owner and holder of all right, title and interest in
and to Exclusive Authority to Prospect No. 616P, hereinafter referred to as
"Oil Concession", issued by the Minister for Minerals and Energy commencing
the 1st day of November, 1995, covering that part of the State of Queensland
within the boundaries of the Blocks and Sub-Blocks as defined and as shown on
Department of Minerals and Energy Block Identification Map - Series B and as
set out hereunder, but exclusive of the lands comprised in existing
Authorities to Prospect, Permits and Leases granted or issued under the
Petroleum Act of 1923:
Sixteen Blocks
Block Identification Map - Series B
COOPER CREEK
14 Blocks
2937
2938
3008 to 3010 (Both Incl.)
3080 to 3082 (Both Incl.)
3153 to 3155 (Both Incl.)
3227
3299
3371
BROKEN HILL
2 Blocks
130
131
AND WHEREAS, Assignor desires to convey to Assignee and Assignee desires to
purchase the hereinafter set forth overriding royalty interest totaling two
percent (2%) of all production of oil, gas and associated hydrocarbons under
said Oil Concession from the above described land.
Now, therefore, for and in consideration of the sum of ten dollars cash in
hand paid by Assignee unto Assignor and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
Assignor has, and by these presents does bargain, sell, grant, convey,
transfer, assign and set over unto Assignee an overriding royalty interest of
two percent (2%) of all production of oil, gas and associated hydrocarbons
from the above described land attributable to the above described Oil
Concession, and from any land added to the above described Oil Concession, and
any permits and leases issued thereafter, as a result thereof, or consequent
thereto. Said overriding royalty interest is conveyed to and shall be owned by
and accounted for and paid to Assignee as two percent (2%) of the total
production.
This Assignment is made and delivered upon and subject to the following
terms and conditions:
1. The overriding royalty interest hereby conveyed shall be computed,
accounted for and paid to Assignee on the basis of the actual sales value of
the oil, gas and associated hydrocarbons produced from said land and saved and
sold or used off the premises, free and clear of all costs and expenses
whatsoever, except that (i) the said overriding royalty interest shall bear
its proportionate part of severance, Australian Production Levy, or other
similar taxes levied on such production and (ii) whenever and wherever
transportation costs are incurred by Assignor in transporting the product to
the sales point said overriding royalty interest shall bear its proportionate
part of such costs, not to exceed, however, fair and reasonable transportation
costs common to production in the area where such substances are produced.
Said transportation costs shall only include gathering charges not to exceed
average per bbl./kilometer third party charges on the downstream production;
freight and cartage to point of sale; tariff expense in respect to the
pipeline; and unloading expense in respect to the pipeline. In no event will
any of the following be deductible for the purpose of calculation of the
royalty: consumable stores, production testing, repairs and maintenance,
production facilities and all salaries and wages, depreciation, hiring
charges, leasing, production chemicals, testing and costs, engineering
service, rent or royalty to the Queensland Government, tool replacement,
analysis and sampling. In the event any amount payable on account of said
overriding royalty is not recognized by the Australian Government as a
deductible item in the computation of Assignor's taxable net income in
computing its tax liability to Australia, the tax chargeable to Assignor on
said amount shall be charged to and deducted from sums otherwise payable to
Assignee on account of said overriding royalty. Whenever and so long as
Assignee's overriding royalty interest in production is not taken in kind by
it, Assignor agrees to account to and pay Assignee therefor in cash on or
before sixty (60) days of Assignor's receipt of payment for production.
2. Assignee shall have the right but not the obligation to receive its
overriding royalty interest in kind. Should it so elect to receive such
overriding royalty in kind, it shall at its own expense provide requisite
storage facilities and other equipment and material as may be necessary or
desirable to take such production in kind. Assignor shall cause to be
maintained true and accurate records of all oil, gas and associated
hydrocarbons produced, saved, or sold from the above described land or used
off the premises, and shall make such records, as well as logs, well data,
geophysical and all other information relevant to Assignee's Overriding
Royalty available to Assignee for its inspection at Assignor's principle place
of business during Assignor's business hours.
3. This Assignment is made without warranty of title of whatsoever nature,
except that Assignor had made no conveyance, assignment, encumbrance or
transfer which would prevent the creation of or the assignment of the herein
specified overriding royalty interest.
4. The overriding royalty interest hereby conveyed shall apply to any
extension or renewal of or addition to the above described Oil Concession, to
all petroleum leases or other right or authority issued as a result of or
derived from said Oil Concession covering the above described land, and to any
new Oil Concession, lease, or other right or authority issued to Assignor
within one year after the termination of said Oil Concession covering said
land or within one year after the expiration of any lease or permit issued
pursuant to said Oil Concession.
5. While this Assignment affects land situated in Australia, the parties
hereto specifically agree that the rights, duties and obligations hereunder
shall be determined and construed in accordance with the laws of the State of
Texas and the decisions of the courts of the State of Texas.
6. Nothing herein withstanding, this Assignment is made and executed so that
the effective date of this Assignment shall be the day after written approval
of the Minister for Minerals and Energy of Queensland is first had and
obtained. The Assignor is and hereby becomes firmly obligated and bound to
make any and all subsequent conveyances, transfers, or alienations of
whatsoever nature which it may execute covering the herein described land,
expressly subject to the overriding royalty interest herein conveyed. Assignor
covenants and agrees with Assignee that on each occasion that Assignor
transfers an interest in said Oil Concession, Assignor will have the
transferee or purchaser of such interest sign a covenant or agreement with
Assignee when such transfer is executed under which the said transferee or
purchaser agrees to be bound by the terms and conditions of this Assignment of
Overriding Royalty. Assignor will continue to pay said overriding royalty
until such time that Assignor has furnished Assignee an executed copy of the
WI holder transferree's undertaking to pay the overriding royalty to Assignee.
7. This agreement and all covenants and conditions hereof shall be binding
upon and enure to the benefit of the parties executing it and their respective
successors and assigns.
ATTEST: EAST JACKSON OIL, INC.
/s/ Christine Conley, Sec. /s/ John Conley, President
ACKNOWLEDGEMENT
STATE OF KENTUCKY
COUNTY OF MADISON
This instrument was acknowledged before me on the 15th day of December,
1985 by John Conley of East Jackson Oil, Inc. a corporation, on behalf
of said corporation.
/s/ Jerry Love, Notary Public
My Commission Expires: 12-15-97
<PAGE>
<PAGE>
OMB APPROVAL OMB Number:
3235-0379
Expires: March 31, 2000
ESTIMATED AVERAGE
BURDEN HOURS PER RESPONSE
2.0
UNIITED STATES
SECURTIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-X
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS AND UNDERTAKING
GENERAL INSTRUCTIONS
I. FORM F-X SHALL BE FILED WITH THE COMMISSION:
(a) by any issuer registering securities on Form F-8, F-9, F-10 or
F-80 under the Securities Act of 1933;
(b) by any issuer registering securities on Form 40-F under the
Securities Exchange Act of 1934 (the "Exchange Act");
(c) by any issuer filing a periodic report on Form 40-F, if it has
not previously filed a Form F-X in connection with the class of
securities in relation to which the obligation to file a report on Form
40-F arises;
(d) by any issuer or other non-U.S. person filing tender offer
documents on Schedule 13E-4F, 14D-IF or 14D-9F;
(e) by any non-U.S. person acting as trustee with respect to
securities registered on Form F-7, F-8, F-9, F-10, F-80, or SB-2; and
(f) by a Canadian issuer qualifying an offering statement pursuant to
the provisions of Regulation A, or registering securities on Form SB-2.
A Form F-X filed in conjunction with any other Commission form should not be
bound together with, or be included only as an exhibit to, such other form.
II. SIX COPIES OF THE FORM F-X, ONE OF WHICH MUST BE MANUALLY SIGNED,
SHALL BE FILED WITH THE COMMISSION AT ITS PRINCIPAL OFFICE.
A. Name of issuer or person filing ("Filer"):
Australian-Canadian Oil Royalties Ltd.
B. This is [check one]
[X] an original filing for the Filer an amended filing for the
Filer
C. Identify the filing in conjunction with which this Form is being
filed:
Name of registrant Australian-Canadian Oil Royalties Ltd. .
Form type- 10-SB
File Number (if known)
Filed by Robert Kamon
Date Filed (if filed concurrently, so indicate) May 12, 1998
D. The Filer is incorporated or organized under the laws of (Name of
the jurisdiction under whose laws the issuer is organized or
incorporated) British Columbia, Canada
and has its principal place of business at (Address in full and
telephone number) 1304 Avenue L, P. 0. Box 1629, Cisco, Texas 76437
254-442-2658 - Telephone
254-442-3843 - Fax
SEC 2288 (12-97)
E. The Filer designates and appoints (Name of United States person
serving as agent) Robert Kamon ("Agent") located at
(address in full in the United States and telephone number)
1304 Avenue L, P. 0. Box 1629, Cisco, Texas 76437 254-442-2658
as the agent of the Filer upon whom may be served any process,
pleadings, subpoenas, or other papers in
(a) any investigation or administrative proceeding conducted by
the Commission; and
(b) any civil suit or action brought against the Filer or to
which the Filer has been joined as defendant or respondent, in any
appropriate court in any place subject to the jurisdiction of any
state or of the United States or of any of its territories or
possessions or of the District of Columbia, where the investigation,
proceeding or cause of action arises out of or relates to or
concerns
(i) any offering made or purported to be made in connection with
the securities registered or qualified by the Filer on Form
(Name of form) 10-SB on (Date) May 6, 1998 or any purchases or
sales of any security in connection therewith;
(ii) the securities in relation to which the obligation to file
an annual report on Form 40-F arises, or any purchases or sales
of such securities;
(iii) any tender offer for the securities of a Canadian issuer
with respect to which filings are made by the Filer with the
Commission on Schedule 13E-4F, 14D-IF or 14D-9F; or
(iv) the securities in relation to which the Filer acts as
trustee pursuant to an exemption under Rule 4d-1 under the Trust
Indenture Act of 1939. The Filer stipulates and agrees that any
such civil suit or action or administrative proceeding may be
commenced by the service of process upon, and that service of an
administrative subpoena shall be effected by service upon such
agent for service of process, and that the service as aforesaid
shall be taken and held in all courts and administrative
tribunals to be valid and binding as if personal service thereof
had been made.
F. Each person filing this Form in connection with:
(a) the use of Form F-9, F-10, 40-F, or SB-2 or Schedule 13E-4F,
14D- IF or 14D-9F stipulates and agrees to appoint a successor agent
for service of process and file an amended Form F-X if the Filer
discharges the Agent or the Agent is unwilling or unable to accept
service on behalf of the Filer at any time until six years have
elapsed from the date the issuer of the securities to which such
Forms and Schedules relate has ceased reporting under the Exchange
Act;
(b) the use of Form F-8 or Form F-80 stipulates and agrees to
appoint a successor agent for service of process and file an amended
Form F-X if the Filer discharges the Agent or the Agent is unwilling
or unable to accept service on behalf of the Filer at any time until
six years have elapsed following the effective date of the latest
amendment to such Form F-8 or Form F-80;
(c) its status as trustee with respect to securities registered
on Form F-7, F-8, F-9, F-10, F-80, or SB-2 stipulates and agrees to
appoint a successor agent for service of process and file an amended
Form F-X if the Filer discharges the Agent or the Agent is unwilling
or unable to accept service on behalf of the Filer at any time
during which any of the securities subject to the indenture remain
outstanding; and
(d) the use of Form I -A or other Commission form for an offering
pursuant to Regulation A stipulates and agrees to appoint a
successor agent for service of process and file an amended Form F-X
if the Filer discharges the Agent or the Agent is unwilling or
unable to accept service on behalf of the Filer at any time until
six years have elapsed from the date of the last sale of securities
in reliance upon the Regulation A exemption.
Each Filer further undertakes to advise the Commission promptly of
any change to the Agent's name or address during the applicable
period by amendment of this Form, referencing the file number of the
relevant form in conjunction with which the amendment is being
filed.
G. Each person filing this Form, other than a trustee filing in
accordance with General Instruction I.(e) of this Form, undertakes to
make available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly, when
requested to do so by the Commission staff, information relating to: the
Forms, Schedules and offering statements described in General
Instructions I.(a),I.(b), I.(c), I.(d), and I.(f) of this Form, as
applicable; the securities to which such Forms, Schedules and offering
statements relate; and the transactions in such securities.
The Filer certifies that it has duly caused this power of attorney, consent,
stipulation and agreement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cisco, Texas, Country of U.S.A.
this 6th day of May , 1998.
Australian-Canadian Oil Royalties Ltd. /s/Robert Kamon,
Secretary & Director
Filer: By: (Signature and Title)
This statement has been signed by the following persons in the
capacities and on the dates indicated.
(Signature) /s/ ROBERT KAMON
(Title) Secretary & Director
(Date) May 6, 1998
Instructions
1. The power of attorney, consent, stipulation and agreement shall be
signed by the Filer and its authorized Agent in the United States.
2. The name of each person who signs Form F-X shall be typed or
printed beneath such person's signature. Any person who occupies more
than one of the specified positions shall indicate each capacity in
which such person signs Form F-X. If any name is signed pursuant to a
board resolution, a copy of the resolution shall be filed with each copy
of Form F-X. A certified copy of such resolution shall be filed with
the manually signed copy of Form F-X. If any name is signed pursuant to
a power of attorney, a copy of the power of attorney shall be filed with
each copy of Form F-X. A manually signed copy of such power of attorney
shall be filed with the manually signed copy of Form F-X.
