SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 19, 1996
NORTH AMERICAN ENERGY OF DELAWARE, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-85818 95-3111611
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
555 MADISON AVENUE
22ND FLOOR
NEW YORK, NEW YORK, 10022
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 980-5050
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(Former name or former address, if changed since last report)
Exhibit Index on Page 5
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On August 19, 1996, the registrant filed a voluntary petition under
Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court"). The matter has been
assigned to Bankruptcy Judge Gallet and bears docket number 96B44434. The
existing directors and officers remain in possession, subject to the supervision
and orders of the Bankruptcy Court. The registrant anticipates filing a plan of
reorganization in the near future, as contemplated in the Letter of Intent
referred to under Item 5 hereof.
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ITEM 5. OTHER EVENTS.
On August 19, 1996, the registrant entered into a non-binding letter
of intent ("Letter of Intent") with Alliance Research Corporation, a California
corporation ("Alliance"), pursuant to which the registrant and Alliance
indicated their intent to merge. Prior to the merger, Alliance proposes to
reincorporate in Delaware under the name "ORA Electronics, Inc." ("ORA"), which
would be the surviving corporation in the merger. A copy of the Letter of Intent
is attached hereto as Exhibit A. Such merger would be part of registrant's plan
of reorganization referred to under Item 3 hereof and, as such, subject to
approval by the Bankruptcy Court.
The Letter of Intent contemplates that the existing stockholders of
ORA will hold 5,000,000 shares of the Common Stock, $.001 per share, of ORA
("ORA Common") after the merger and that not less than 350,000 shares of ORA
Common will be issued to creditors and holders of stock interests in the
registrant. Of the latter shares, it is currently estimated that 107,500 shares
of ORA Common would be issued to creditors and that the balance would be issued
in exchange for outstanding stock interests. In addition, the Letter of Intent
contemplates that Warrants would be issued to creditors and holders of stock
interests in the registrant, entitling the holders thereof to purchase ORA
Common at the following exercise prices per share and during the following
periods after a reorganization plan becomes effective:
AGGREGATE EXERCISE EXERCISE
WARRANTS NUMBER PRICE PERIOD
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Class 400,000 $ 5.00 180 days
Class 600,000 10.00 18 months
Class 500,000 15.00 36 months
Class 700,000 20.00 60 months
All numbers of shares and Warrants to be issued would be rounded up to the next
higher of multiple of 100 shares or the right to purchase 100 shares, with the
shares and warrants necessary to accomplish such rounding being in addition to
those otherwise issuable as provided in the Letter of Intent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTH AMERICAN ENERGY OF DELAWARE,
INC.
Date: August 20, 1996 By: /S/ R. L. BURKE
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Raymond L. Burke
President
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EXHIBIT INDEX
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Exhibit Description Page
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A Letter of Intent 6
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EXHIBIT A
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ALLIANCE RESEARCH CORPORATION
9410 Owensmouth Avenue
Chatsworth, California 91313
(818) 772-2700
(818) 718-8626 (Fax)
August 16, 1996
VIA TELECOPIER
Mr. Raymond L. Burke
President
North American Energy of Delaware, Inc.
300 Fairfield Road
Fairfield, New Jersey 07004-1932
Dear Ray:
This letter set forth our preliminary understanding with respect to this
terms of the proposed merger of North American Energy of Delaware, Inc. ("North
American") into ORA Electronics, Inc., a Delaware corporation ("ORA"), the
successor in interest to Alliance Research Corporation, a California corporation
("Alliance"). Based upon our prior informal discussions, we at Alliance believe
that this letter will serve as a basis for the terms of a transaction (the
"Transaction").
1. The basic terms of our Transaction are as follows:
(a) At the earliest possible date North American will file
a voluntary petition pursuant to Chapter 11 of the United
States Bankruptcy Code ("Bankruptcy Code") in an
appropriate jurisdiction.
(b) All expenses incurred by North American and all expenses
of the bankruptcy case will be borne by North American's
existing shareholders and directors. If the Transaction is
completed, each such person shall be entitled to options to
purchase from the Reorganized Debtor (as hereinafter
defined) after the effective date ("Effective Date") of the
Plan of Reorganization ("Plan"), for $3.50 per share, one
share of the common stock (as hereinafter defined) for
reach $3.50 of expenses so paid prior to the Effective Date.
The options issued pursuant to his provisions will be for a
maximum of 2,200 shares of Common Stock.
(c) Immediately prior to the Effective Date, Alliance will
effect its reincorporation in Delaware by a merger into
ORA. ORA will the surviving corporation of such merger
and will succeed to all of Alliance's assets and liabilities
pursuant thereto and will conduct Alliance's business.
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Mr. Raymond L. Burke
August 16, 1996
Page 2
(d) On the Effective Date, North American will merge into
ORA (the "Reorganized Debtor"). The present management of
Alliance will continue as management of the Reorganized
Debtor.
(e) The authorized stock of the Reorganized Debtor will be 30
million shares of common stock, $.001 par value
("Common Stock") and 5 million shares of preferred stock,
$.001 par value (with such rights, preferences and
privileges as designated by the Board of Directors).
(f) D.L.S. Financial Services ("D.L.S.") will be entitled,
subject to approval of the Bankruptcy Court, to an
approved administrative claim for services composed of
100,000 shares of the Common Stock as well as 8,000
Class A Warrants, 12,000 Class B Warrants, 10,000 Class
C Warrants and 14,000 Class D Warrants. Counsel for
North American will prepare and file all required
documents to employ D.L.S. as a professional in the
bankruptcy case or will include such provisions in the Plan
ad deemed necessary to accomplish this Plan provision or
allowed administrative claim.
(g) The Plan will permit 250,000 shares of the Common Stock
to be distributed to creditors and other paries in interest in
North American. IN addition to the Common Stock, such
persons will also receive 392,000 Class A Warrants,
588,000 Class B Warrants, 490,000 Class C Warrants, and
686,000 Class D Warrants. The Plan will contain specific
provisions to reserve the shares underlying all classes of
warrant so as to make them free trading under Section 1145
of the Bankruptcy Code upon the exercise of such warrants
by the holder.
(h) All classes of securities contemplated for distribution to
creditors and other parties in interest in the Plan will be
distributed pro-rata to each class of claimant as specified
under the Plan. The Plan will contain a specific provision
that provides that the holders of the Common Stock and
Warrants of the initial holders shall be rounded to the next
higher round lot. Shares to be issued to accomplish such
roundings shall be in addition to 250,000 shares of
Common Stock referred to in subparagraph (g) above. By
way of example should be the pro-rata distribution result in
a holder being allocated 51 shares then such holder shall be
entitled to receive an additional 49 shares thereby making
his initial holdings of the Common Stock equal to 100
shares.
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Mr. Raymond L. Burke
August 16, 1996
Page 3
(i) The current shareholder of Alliance will hold 5 million
shares of Common Stock with certain registration rights.
Immediately following the Effective Date, the Reorganized
Debtor will issue approximately 835,000 shares of the
Common Stock for payment in full of approximately
$4,154,079 in principal and accrued interest outstanding
under three (3) promissory notes held by an unaffiliated
third party. ORA intends to adopt a stock option plan for
its employees, consultants and directors in the near future
which plan will continue under the Reorganized Debtor. In
addition, prior to or simultaneously with the Effective
Date, ORA may distribute, in the form of debt and/or cash,
its S Corporation earnings, if any, to its sole shareholder.
(j) It is contemplated that all shares, warrants and shares
reserved for issuance pursuant to the Warrants will be
issued pursuant to the exemption from registration in
Section 1145 of the Bankruptcy Code and will be free
trading to the extent provided therein, subject to applicable
Blue Sky Laws.
2. The obligation of the parties to effect the Transaction will be
subject to the definitive documentation, including, but not limited
to a Disclosure Statement, Plan of Reorganization, Merger Agreement,
etc. in a form and in substance acceptable to the parties, and
subject to the approval of the Bankruptcy Court.
3. All parties agree that they will maintain in confidence pursuant the
Confidentiality Agreement previously executed, all confidential
information disclosed to on another during the course of negotiations
and as the Transaction progresses.
4. The timing and text of any announcement or statement pertaining to the
subject matter of this letter shall be mutually agreed to by North
American and Alliance.
5. Except as otherwise provided above, each party shall bear its own
out-of-pocket expenses incurred in connection herewith including,
without limitation, all legal, accounting, printing, investing
banking, travel and other similar fees and expenses. Such expenses
of North American shall have been paid prior to the Effective Date.
6. Except for OLS, each party represents that it has not engaged any
broker, finder or similar agent that would be entitled to any
commission or other fee in connection with the Transaction. Exempt
as to OLD, each party shall indemnify and hold harmless the other
from any and all brokerage commission, finder's fee or similar payment
in respect to the Transaction.
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Mr. Raymond L. Burke
August 16, 1996
Page 4
7. This letter is not intended to be, and shall not constitute, a
binding or enforceable agreement between the parties hereto.
Instead, it merely sets forth our present intentions with respect to
the terms proposed, which terms may or may not become part of a
definitive agreement, as a basis for future negotiations. It is not
based on any existing Agreement between the parties, and is not
intended to impose any obligation whatsoever on either party. Except
for the provisions of paragraphs 3, 4, 5 and this paragraph (which
are intended to be binding agreements of this parties), no legal or
equitable rights, responsibilities or duties are created hereby.
Neither party may reasonably rely on any promise inconsistent with
this paragraph.
If this letter or intent is satisfactory to you as a basis for
proceeding toward a Transaction, please sign and return the enclosed copy of
this letter.
We look forward to working with you.
Very truly yours,
/s/ Gershon N. Cooper
Gershon N. Cooper,
President
Alliance Research Corporation
AGREED AND ACCEPTED TO THIS
19th August
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NORTH AMERICAN ENERGY OF DELAWARE, INC.
By: /s/ R. L. Burke
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Its: Pres.
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