SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities and Exchange Act of 1934
Date of Report (date of earliest event reported) August 21, 1996
ANTARES RESOURCES CORPORATION
(Exact name of Registrant as specified in Charter)
New York 0-3926 13-1950459
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
2345 Friendly Road, Fernandina Beach, FL 32034
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (904) 261-8607
<PAGE>
Item 2. Acquisition and Disposition of Assets.
On August 16, 1996, Antares Resources Corporation (the
"Company") sold all of its interests in Caribbean Breeze
International, Inc. ("CBI") and Multi-Source Labs, Inc. ("MSL") to
David M. Capps, a director of the Company. The initial purchase
price, which was established based upon CBI and MSL's net assets,
was $1,774,479. Pursuant to the terms of the applicable agreement,
the purchase price may be increased based upon an independent
valuation of CBI and MSL being undertaken by an independent
valuator retained by the Company for the stated purpose. The
effective date of the transaction was established at June 30, 1996.
The purchase price is to be paid pursuant to the terms of a non-
recourse Promissory Note payable by Mr. Capps within two years,
with interest accruing on all unpaid balances at the rate of .75%
over the prime lending rate as established by Chase Manhattan Bank,
New York. Mr. Capps secured the Note payable to the Company by
granting the Company a security interest in all of the assets of
CBI and MSL, as well as an aggregate of 2,027,976 shares of the
Company's common stock held by Mr. Capps and other grantees. The
number of shares securing the obligation is also subject to
adjustment, depending upon the final purchase price. Additionally,
on the last day of each calendar quarter during the primary term of
the Note commencing September 30, 1996, the number of common shares
providing such security may be increased or decreased. Pursuant to
the agreement, Mr. Capps may be obligated to tender additional
common shares as additional security of his obligation, or the
Company may be obligated to return to Mr. Capps any overage of the
number of shares necessary to secure the obligation, except as
limited in the agreement. Such obligations shall arise in the
event the per share market price of the Company's common stock, as
traded on Nasdaq or such other national market system, multiplied
by the number of the Company's common stock held in escrow, is less
or more, as applicable, than the final purchase price. If less,
Mr. Capps is required to provide the number of shares of the
Company's common stock necessary to insure that the full principal
balance of the Note, plus accrued interest, is secured by the
shares of common stock. If more, the Company will be obligated to
return the number of shares of the Company's common stock tendered
to Mr. Capps, except the number of shares held as such security
shall not be reduced below the original number of shares
established on the Closing Date. If and when the Company is
compensated in full (including any and all costs of liquidation
applicable thereto) at the time the Note becomes due, or if a
default occurs prior to the termination of the principal term of
the Note, any remaining shares of the Company's common stock held
in escrow will be returned to Mr. Capps.
Item 6. Resignations of Registrant's Directors
Effective August 16, 1996, David M. Capps tendered his
resignation as a director of the Company. Relevant thereto, there
was no disagreement between Mr. Capps and the Company concerning
<PAGE>
any matter relating to the Company's operations, policies or
practices.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
2.0 Stock Purchase Agreement between the Company and David M.
Capps, along with exhibits thereto.
<PAGE>
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 of the undersigned thereunto duly authorized.
Antares Resources Corporation
(Registrant)
By:/s/ William W. Perry III
William W. Perry III, President
Dated: August 21, 1996
<PAGE>
AGREEMENT
THIS AGREEMENT, dated August 16, 1996, nun pro tunc June 30,
1996, by and between Antares Resources Corporation, 2345 Friendly
Road, Fernandina Beach, FL 32034, (the "Seller") and David M.
Capps, 45 Sunset Blvd., Brunswick, Georgia 31525 (the "Purchaser"),
who hereby agree as follows:
R E C I T A L S
WHEREAS, the Seller owns 1,000 common shares of Caribbean
Breeze International, Inc., a Florida corporation ("CBI") and 1,000
shares of Multi-Source Labs, Inc., a Florida corporation ("MSL"),
each representing 100% of the issued and outstanding common shares
of the aforesaid corporations; and
WHEREAS, Purchaser hereby represents and warrants that he is
the holder, either directly or indirectly, of a minimum of 850,899
"restricted" common shares of the Seller (as that term is defined
under the Securities Act of 1933, as amended); and
WHEREAS, the Seller desires to sell and the Purchaser desires
to purchase all of the issued and outstanding common shares of both
CBI and MSL in accordance with the terms herein stated; and
WHEREAS, the parties hereto have retained Ludeking &
Associates, P.A., an independent valuation firm, for purposes of
providing the parties herein with an independent valuation of both
CBI and MSL, in order to avoid any appearances that the transaction
proposed herein has not been consummated as a result of arms length
negotiations and that the purchase price payable by the Purchaser
to Seller, as stated hereinbelow, represents the fair market value
of both CBI and MSL,
NOW, THEREFORE, the parties agree as follows:
1. Sale of Shares. The Seller shall sell and transfer to the
Purchaser, and the Purchaser shall purchase and acquire from the
Seller, 1,000 Common Shares, par value $0.001 per share, of CBI and
1,000 Common Shares, par value $0.001 per share, of MSL (the CBI
Common Shares and the MSL Common Shares hereinafter jointly
referred to as the "Shares").
2. Purchase Price. The purchase price payable by Purchaser
to Seller for all of such Shares shall be the greater of the
aggregate net tangible assets of CBI and MSL, or the valuation of
said entities as established by Ludeking & Associates, P.A. and
other good and valuable consideration. On the Closing Date,
Purchaser shall execute a Promissory Note in favor of Seller for
the full purchase price in the form attached hereto as Exhibit "A"
and incorporated herein as if set forth.
3. Security. (a) In order to provide security to the Seller,
Purchaser hereby agrees to tender into escrow those shares of
<PAGE>
common stock of Seller presently held, either directly or
indirectly, by Seller, as included in Exhibit "A". Thereafter, on
the last day of each calendar quarter during the primary term of
the Note, commencing September 30, 1996, the number of common
shares shall be increased or decreased. Purchaser shall be
obligated to tender additional common shares as additional security
of his obligation herein, or the Seller shall be obligated to
return to Purchaser any overage of the number of shares necessary
to secure the obligation, except as limited herein. Such
obligations shall arise in the event the per share market price of
the Seller's common stock, as traded on Nasdaq or such other
national market system, multiplied by the number of the Seller's
common stock held in escrow, is less or more, as applicable, than
the purchase price established in the Note. If less, Purchaser
shall provide the number of shares of the Seller's common stock
necessary to insure that the full principal balance of the Note,
plus accrued interest, is secured by the shares of common stock.
If more, the Seller shall return the number of shares of the
Seller's common stock tendered by Purchaser to Purchaser, except
the number of shares held as such security shall not be reduced
below the original number of shares established on the Closing
Date. If and when the Company is compensated in full (including
any and all costs of liquidation applicable thereto) at the time
the Note becomes due, or if a default occurs prior to the
termination of the principal term of the Note, any remaining shares
of the Seller's common stock held in escrow will be returned to
Purchaser.
(b) In addition, Purchaser shall grant to Seller a first
position security interest in all of the assets of CBI and MSL.
The terms of such security are more fully described in that
Security Agreement between the parties hereto, attached hereto as
Exhibit "B" and incorporated herein as if set forth.
4. Closing Date/Effective Date. The Closing Date for this
purchase shall take place on the date first stated hereinabove. At
the closing, the Seller or his agent shall deliver to the
Purchaser, free and clear of all encumbrances, a certificate or
certificates for the Shares and acceptable stock power and transfer
letter, as referenced in Paragraph 1, above, in negotiable form.
The Effective Date of this transaction shall be 11:59 P.M. on June
30, 1996. On the Effective Date, except for Purchaser herein, all
other present officers and directors of CBI and MSL shall resign
and be replaced by those persons designated by Purchaser herein and
all issues of control of both CBI and MSL shall vest in the new
officers and directors of CBI and MSL.
5. Default by Seller. If the Seller or his agent shall fail
or refuse to deliver any of the Shares to the Purchaser on the
Closing Date, the Purchaser may file with a court of competent
jurisdiction an action against Seller compelling the sale described
herein. Seller, by execution hereof, waives any and all defenses
<PAGE>
it may have herein except that it has performed all obligations
contained herein. If such an action is deemed necessary, Purchaser
shall be entitled to recover all costs of such action, including
but not limited to, reasonable attorney's fees.
6. Seller's Representations and Warranties. The Seller
represents and warrants to the Purchaser that:
(a) All of the Shares have been validly issued and are fully
paid and nonassessable as of the Closing Date;
(b) It is and will be on the Closing Date, the owner, free
and clear of any encumbrances, of the number of Shares
set forth in Paragraph 1 of this Agreement, above; and
(c) That the unaudited financial statements of CBI and MSL
dated June 30, 1996, provided by Seller to Purchaser are
true and accurate as of the date of this Agreement.
7. Purchaser's Representations and Warranties. The Purchaser
represents and warrants to the Seller that:
(a) He is and will, on the Closing Date, own or control, free
and clear of any encumbrances, a sufficient number of
common shares of Antares Resources Corporation to satisfy
his obligations contained herein and in the Note;
(b) He has been the President of CBI prior hereto and as a
result, is familiar with the records of CBI and MSL,
access to which has been afforded to him and which access
has preceded the closing under this Agreement;
(c) The Shares to be acquired herein are solely for
Purchasers' account and for investment and Purchaser has
no plan, intention, contract, understanding, agreement or
arrangement with any person to sell, assign, pledge,
hypothecate or otherwise transfer to any person the
Shares, or any portion thereof; and
(d) Purchaser understands that neither the Shares nor the
sale thereof to him has been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or
under any state securities laws. Purchaser further
understands that no registration statement has been filed
with the United States Securities and Exchange Commission
nor with any other regulatory authority and that, as a
result, any benefit which might normally accrue to
Purchaser by an impartial review of such a registration
statement by the Securities and Exchange Commission or
other regulatory authority will not be forthcoming.
Purchaser understands that he cannot sell the Shares
unless such sale is registered under the 1933 Act and
<PAGE>
applicable state securities laws or exemptions from such
registration become available. In this connection
Purchaser acknowledges that a legend to the following
effect will be placed upon the certificate(s)
representing the Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF
THE ACT OR IF AN EXEMPTION FROM REGISTRATION THEREUNDER
IS AVAILABLE, THE AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
Purchaser understands that the foregoing legend on his
certificate(s) for the Shares limits their value,
including their value as collateral.
8. Survival of Representations. Neither party hereto has
made any representation, warranty, or covenant not set forth herein
and this Agreement and the exhibits attached hereto constitutes the
entire Agreement between the parties. All representations and
warranties in this Agreement shall survive the Closing Date and any
examination or investigation at any time made by either of the
parties hereto.
9. Indemnification of Seller by Purchaser. In reliance upon
the representations contained herein, Purchaser hereby indemnifies
and holds harmless Seller and its officers, directors, employees,
agents and control persons (hereinafter collectively called the
"Seller's Indemnified Parties") from and against any losses,
claims, damages and liabilities, joint and several, related to any
liabilities, debts or claims of either CBI and MSL which may
hereafter be asserted against Seller and Purchaser agrees to
reimburse the Seller for all expenses, including but not limited to
reasonable attorneys' fees and costs, of defending any such claims
which may hereafter arise.
10. Indemnification of Purchaser by Seller.
(a) Seller hereby indemnifies and holds harmless Purchaser
from and against any and all losses, claims, damages and
liabilities, joint and several, related to any
liabilities, debts or claims of either CBI or MSL
heretofore not previously disclosed by Seller to
Purchaser in CBI or MSL's financial statements referenced
herein and Seller further agrees to reimburse Purchaser
for all expenses, including but not limited to reasonable
attorneys' fees and costs, of defending any applicable
claims which may hereafter arise.
(b) The indemnifications cited herein and in Paragraph 8
above shall be binding upon and inure to the benefit of
<PAGE>
the parties, their heirs, personal representatives,
successors and assigns, as applicable.
11. Benefit. This Agreement shall be binding upon, and inure
to the benefit of, the respective heirs, legal representatives,
successors and assigns of the parties.
12. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing, and shall be deemed
to have been duly given if delivered or mailed first class, postage
prepaid, to the applicable party at the address stated above
herein, or such other address as may be provided in the future, in
writing.
13. Construction/Jurisdiction. This Agreement has been
executed in the State of Florida and shall be construed in
accordance with the laws of such State.
14. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
15. Actions Necessary to Complete Transaction. Each party
hereby agrees to execute and deliver all such other documents or
instruments and to take any action as may be reasonably required in
order to effectuate the transactions contemplated by this
Agreement.
16. Waiver. Any waiver by either party of any breach of any
term or condition of this Agreement shall not be deemed a waiver of
any other breach of such term or condition, nor shall the failure
of either party to enforce such provision constitute a waiver of
such provision or any other provision, nor shall such action be
deemed a waiver or release of any other party for any claims
arising out of or connected with this Agreement.
17. Enforceability. If any provision, paragraph or
subparagraph of this Agreement is adjudged by any court to be void
or unenforceable in whole or in part, this adjudication shall not
affect the validity of the remainder of the Agreement, including
any other provision, paragraph or subparagraph. Each provision,
paragraph or subparagraph of this Agreement is separable from every
other provision, paragraph and subparagraph and constitutes a
separate and distinct covenant.
18. Disputes. If a dispute arises between the parties hereto
and such dispute can only be resolved by litigation then, in such
case, the prevailing party in such litigation shall be entitled to
recover all costs of such action, including but not limited to
reasonable attorney fees.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the date first above written.
SELLER: ANTARES RESOURCES CORPORATION
By:/s/ William W. Perry
Its:CEO/President
PURCHASER:
/s/ David M. Capps
David M. Capps
COUNTY OF NASSAU }
} ss.
STATE OF FLORIDA }
Subscribed to and sworn before me this 16th day of August,
1996 by William W. Perry III.
My commission expires May 18, 2000.
/s/ Tracy Ann Lynch
Notary Public
COUNTY OF NASSAU }
} ss.
STATE OF FLORIDA }
Subscribed to and sworn before me this 16th day of August,
1996, by David M. Capps.
My commission expires May 18, 2000.
/s/ Tracy Ann Lynch
Notary Public
<PAGE>
PROMISSORY NOTE
U.S. $1,774,479 Fernandina Beach, Florida
August 16, 1996
FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay
to the order of Antares Resources Corporation, a New York
corporation, in lawful money of the United States, the principal
sum of One Million Seven Hundred Seventy Four Thousand Four Hundred
Seventy Nine and No/100 Dollars ($1,774,479.00) with interest on
the unpaid principal balance from the date of this Note, until
paid, at a rate equal to 0.75% over the Prime Lending Rate, as
established from time to time by Chase Manhattan Bank, New York,
New York. Principal and interest shall be payable at 2345 Friendly
Road, Fernandina Beach, Florida 32034, or such other place as the
Note Holder may designate, payable on or before August 16, 1998.
This Note is secured by the Borrower pledging an aggregate of
2,027,976 shares of the Common Stock of Antares Resources
Corporation. The number of shares pledged by Borrower to Note
Holder herein may be increased or decreased in accordance with the
terms and conditions included in that certain Agreement between
Borrower and Note Holder dated even date hereof, of which this Note
is a part. Borrower shall duly execute any and all documentation
reasonably deemed necessary by Note Holder and deliver the same,
together with a certificate(s) representing 2,027,976 shares of
Antares Resources Corporation Common Stock to MacFarlane, Ferguson
& McMullen, (with any additional shares tendered by Borrower
pursuant to the terms included herein) who shall hold the same in
escrow until such time as either this Note is paid in full or
Borrower defaults in his obligations to Note Holder contained
herein, in the Agreement or Security Agreement. The balance of the
terms of such escrow are included in that certain Escrow Agreement
dated even date herewith, a copy of which is attached hereto as
Exhibit "1" and incorporated herein as if set forth.
The liability of Borrower to pay this Note is limited to the
shares held in escrow as well as the assets of Caribbean Breeze
International, Inc. and Multi-Source Labs, Inc., as provided in the
Security Agreement, both of which are described hereinabove, and in
no event shall Borrower be liable for any deficiencies resulting
form the sale fo such shares or liquidation of the aforesaid
corporations, nor shall any action or proceeding be brought against
Borrower to recover judgment against Borrower upon any unpaid
balance of this Note.
Upon the nonperformance of any of the promises contained in
this Note, or upon the nonpayment of the amount due hereunder at
maturity, full power and authority are given to the Holder to sell,
assign and deliver the whole or any part of such collateral at
EXHIBIT "A"
<PAGE>
public or private sale, or at any stock exchange or broker's board,
at such terms as it may deem best, without recourse, and without
demand, advertisement, or notice of any kind, all of which are
waived. If such collateral is sold at such sale, the Holder may
purchase the whole or any part thereof free from all right of
redemption or other right or claim on the part of the Borrower. In
the event of any such sale, the Holder, after deducting all costs
and expenses of collection, sale and delivery, shall apply the
residue of the proceeds of the sale or sales so made to pay, in
whole or in part as the case may be, the interest then due upon
this Note and the principal, and shall return the surplus, if any,
to the Borrower, and the Borrower shall be deemed released from any
further remaining liabilities to the Holder for any deficiency
arising herein.
In the event of the insolvency of the Borrower, or the
insolvency of any guarantor or indorser of this Note, or the
appointment of an assignee for the benefit of creditors or of a
receiver, trustee, or custodian for the Borrower or for any
guarantor or indorser of this Note, or in the event that a petition
under any provision of the Bankruptcy Act is filed either by or
against the Borrower or any guarantor or indorser of this Note, or
in the event that the Borrower or any guarantor or indorser of this
Note should be unable to meet their obligations as they fall due,
this Note shall, at the option of the Holder, become immediately
due without demand for payment and without notice to the Borrower
or any guarantor or indorser of this Note.
Borrower may prepay the principal amount outstanding plus
accrued interest under this Note, in whole or in part, at any time
without penalty.
Any partial prepayment shall be applied first to any accrued
interest due and the balance against the principal amount
outstanding and shall not postpone the due date of this Note.
Borrower waives presentment, demand for payment, notice of
dishonor, and protest and any and all other notices and demands in
connection with the delivery, acceptance, performance, default, or
enforcement of this Note, and consents to any and all extensions of
time, renewals, releases of liens or security interest, waiver or
modifications that may be made or granted by the Holder to any
party hereto. No delay by the Holder in exercising any power or
right shall operate as a waiver of any power or right; nor shall
any single or partial exercise of any power or right preclude other
or further exercise, or the exercise of any other power or right;
and no waiver whatever or modification of the terms of this Note
shall be valid unless in writing signed by the Holder of this Note
and then only to the extent therein set forth.
The Borrower agrees to pay to the Note Holder, when incurred,
all costs and expenses incidental to collection of the amounts due
herein, including but not limited to, reasonable attorneys fees and
<PAGE>
costs of collection, regardless of whether Note Holder elects to
commence legal action to enforce this Note.
Any notice to Borrower provided for in this Note shall be in
writing and shall be given and be effective upon (1) delivery to
Borrower, or (2) mailing such notice by certified mail, return
receipt requested, addressed to Borrower at the Borrowers' address
stated below, or to such other address as Borrower may designate by
notice to the Holder. Any notice to the Holder shall be in writing
and shall be given and be effective upon (1) delivery to Note
Holder, or (2) by mailing such notice by certified mail, return
receipt requested, to the Holder at the address stated in the first
paragraph of this Note, or to such other address as Holder may
designate by notice to Borrower.
BORROWER:
/s/ David M. Capps
David M. Capps
Borrower's Address:
45 Sunset Blvd.
Brunswick, Georgia 31525
<PAGE>
SECURITY AGREEMENT
Date: August 16, 1996
Debtors: Caribbean Breeze International, Inc.
Mult-Source Labs, Inc.
Address: 2345 Friendly Road
Fernandina Beach, Florida 32034
Secured
Party: Antares Resources Corporation
Address: 2345 Friendly Road
Fernandina Beach, FL 32034
1. Security Interest. Debtors hereby grant to Secured Party
a security interest ("Security Interest") in all of its assets,
including but not limited to all accounts receivable, inventory and
in all Proceeds and Products thereof in any form including, but not
limited to, insurance proceeds, all parts, accessories,
attachments, special tools, additions and accessions thereto and
thereof, increases and profits received therefrom, all
substitutions therefor, goods represented by, and books and records
pertaining thereto, whether any of the foregoing is now owned or
hereafter acquired (the "Collateral").
2. Indebtedness Secured. The Security Interest granted by
Debtors secure payment of any and all indebtedness and liabilities
of Debtors to Secured Party, whether now existing or hereafter
incurred, of every kind and character direct or indirect, joint or
several, absolute or contingent, due or to become due, and whether
any such indebtedness or liability is from time to time reduced and
thereafter increased or entirely extinguished and thereafter
reincurred, including, without limitation, any sums advanced by
Secured Party for taxes, assessments, insurance and other charges
and expenses as hereinafter provided.
3. Representations and Warranties of Debtor. Debtors
represent and warrant and, so long as any Indebtedness remains
unpaid, shall be deemed continuously to represent and warrant that:
(a) Debtors are the owner of the Collateral free of all security
interests, adverse claims or other encumbrances, except the
Security Interest; (b) Debtors are authorized to enter into this
Security Agreement and this Security Agreement is not in
contravention of any law or any indenture, agreement or undertaking
to which Debtor is a party or by which it is bound; (c) Debtors are
duly organized and existing under the laws of the state of Florida
and in good standing and authorized to do business in all states in
EXHIBIT "B"
<PAGE>
which Debtors are doing business; (d) Debtors are engaged in
business operations, Debtors' business is carried on, Debtors'
chief executive offices are located and Debtors' records concerning
the Collateral are kept at the address specified above and the
Collateral is located at the address specified above; (e) each
Account, Chattel Paper, Document, Instrument, General Intangible,
which is an outstanding obligation, and Contract is genuine and
enforceable in accordance with its terms against the party
obligated to pay it ("Account Debtor"); (f) any amounts represented
by Debtors to Secured Party as owing by each or any Account Debtor
is the correct amount owing not subject to any defense, offset,
claim or counterclaim against Debtor; and (g) the Collateral shall
be used exclusively for business purposes.
4. Covenants of Debtors. So long as any Indebtedness
remains unpaid, Debtors (a) will defend the Collateral against the
claims and demands of all other parties, including any Account
Debtor, will keep the Collateral free from all security interests
or other encumbrances, except the Security Interest and will not
sell, transfer, lease, or otherwise dispose of any Collateral or
any interest without the prior written consent of Secured Party,
except in the normal course of Debtors' business; (b) will notify
Secured Party promptly in writing of any change in Debtors'
address, specified above or in Debtors' name, identity or corporate
structure; (c) will notify Secured Party promptly in writing of any
change in the location of any Collateral or of the records with
respect thereto or any additional locations at which the Collateral
or records are kept, and upon reasonable notice will permit Secured
Party or its agents to inspect the Collateral; (d) will notify the
Secured Party immediately upon the acquisition of any titled
vehicle or other assets constituting collateral which may not be
perfected by the filing of a financing statement under the Uniform
Commercial Code; (e) in connection herewith, will execute and
deliver to Secured Party such financing statements, and other
documents as may be requested by Secured Party, will pay all
reasonable costs of title searches, and filing financing statements
and other documents in all public offices requested by Secured
Party, and will do such other things as Secured Party may request;
(f) if the Collateral is not a fixture, will prevent the Collateral
or any part thereof from being or becoming a fixture; (g) will
keep, in accordance with generally accepted accounting principles,
consistently applied, accurate and complete books and records
concerning the Collateral, will mark any and all such records
concerning the Collateral, at Secured Party's request to indicate
the Security Interest, and will permit Secured Party or its agents
to audit and make extracts from and copy such records or any of
Debtors' books, ledgers, reports, correspondence or other records
and will furnish Secured Party with financial statements and such
other information; (h) will not, without Secured Party's written
consent, make or agree to make any alteration, modification or
cancellation of, or substitution for, or credits, adjustments or
allowances on, any Collateral, outside of Debtors' normal course of
business; (i) will promptly notify Secured Party of any default by
any Account Debtor in payment or performance of its obligations
<PAGE>
with respect to any of the Collateral; and (j) will promptly notify
the Secured Party in the event of a materially adverse change in
business or Collateral or any other occurrences which could
materially and adversely affect the security of the Secured Party.
5. Verification of Collateral. Secured Party shall have the
right to verify all or any Collateral in any manner and through any
medium Secured Party may consider appropriate and Debtors agree to
furnish all assistance and information and perform any acts which
Secured Party may require in connection therewith.
6. Default.
(a) Any of the following events or conditions shall
constitute an event of default ("Event of Default") hereunder: (i)
nonpayment when due, whether by acceleration or otherwise, of,
principal or of interest of any Indebtedness, or failure by Debtors
to perform any obligation, term or condition of this Security
Agreement or any other agreement between Debtors and Secured Party
and such nonpayment or failure continues for a period of ten (10)
days after Secured Party gives written notice thereof to the
undersigned; (ii) nonpayment when due of any tax imposed on Debtors
or on any assets of Debtors or any other liability of Debtors for
borrowed money; (iii) if either Debtor commences a voluntary case
under any Chapter of the Bankruptcy Code as now or hereafter in
effect, takes any equivalent or similar action by filing a petition
or otherwise under any other federal or state law in effect at such
time relating to bankruptcy or insolvency, makes a general
assignment for the benefit of creditors or admits in writing an
inability to pay its debts generally as they become due; (iv) a
petition is filed against either of the Debtors under any other
federal or state law in effect at the time relating to bankruptcy
or insolvency, or a trustee, receiver, custodian or agent is
appointed under applicable law, or under contract, whose
appointment or authority is to take charge of any property of
either of the Debtors for the purpose of enforcing a lien against
such property or is for the purpose of general administration of
such property for the benefit of the creditors of the Debtors; (v)
if any certificate, statement, representation, warranty or audit
heretofore or hereafter furnished by or on behalf of Debtors
pursuant to or in connection with this Security Agreement or
otherwise (including, without limitation, representations and
warranties contained herein) or as an inducement to Secured Party
to extend any credit to or to enter into this or any other
agreement with Debtors, proves to have been false in any material
respect or to have omitted any substantial contingent or
unliquidated liability of or claim against Debtors, or if upon the
date of execution of this Security Agreement, there shall have been
any materially adverse change in any of the facts disclosed by any
such certificate, representation, statement, warranty or audit,
which change shall not have been disclosed in writing to Secured
Party at or prior to the time of such execution; and (vi) loss,
theft, destruction or substantial damage to any material portion of
the Collateral;
<PAGE>
(b) Secured Party, at its sole election, may declare all
or any part of any Indebtedness not payable on demand to be
immediately due and payable upon the happening of any Event of
Default. The provisions of this paragraph are not intended in any
way to affect any rights of Secured Party with respect to any
Indebtedness which may now or hereafter be payable on demand;
(c) Upon the happening of any Event of Default, Secured
Party's rights and remedies with respect to the Collateral shall be
those of a Secured Party under the Uniform Commercial Code and
under any other applicable law, as the same may from time to time
be in effect, in addition to those rights granted herein and in any
other agreement now or hereafter in effect between Debtors and
Secured Party;
(d) Without in any way requiring notice to be given in
the following manner, Debtors agree that any notice by Secured
Party of sale, disposition or other intended action hereunder in
connection herewith, whether required by the Uniform Commercial
Code or otherwise, shall constitute reasonable notice to Debtors if
such notice is mailed by regular or certified mail, postage
prepaid, at least five (5) days prior to such action, to Debtors'
address specified above or to any other address which Debtors have
specified in writing to Secured Party as the address to which
notices hereunder shall be given to Debtors; and
(e) Debtors agree to pay all costs and expenses incurred
by Secured Party in enforcing this Security Agreement, in
preserving, processing, selling, collecting upon or in realizing
upon any Collateral and in enforcing and collecting any
Indebtedness, including, without limitation, if Secured Party
retains counsel for any such purpose, a reasonable attorney's fee.
7. Miscellaneous.
(a) Debtors hereby authorize Secured Party, at Debtors'
expense, to file such financing statement or statements, or other
documents relating to the Collateral without Debtors' signature
thereon as Secured Party at its option may deem appropriate, and
appoints Secured Party as Debtors' attorney-in-fact without
requiring Secured Party to execute any such financing statement or
other documents in Debtors' name and to perform all other acts
which Secured Party deems appropriate to perfect and continue the
Security Interest and to protect and preserve the Collateral;
(b) After the occurrence of an Event of Default as
hereinabove describe, Secured Party may notify any or all Account
Debtors and other parties obligated to pay the Collateral of the
Security Interest granted hereby and may also direct any and all
such parties to make all payments of the Collateral to Secured
Party;
(c) (i) As further security for payment of the
Indebtedness, Debtors hereby grant to Secured Party a security
<PAGE>
interest in and lien on any and all property of Debtors which is or
may hereafter be in Secured Party's possession in any capacity,
including, without limitation, all monies owed or to be owed by
Secured Party to Debtors, and with respect to all of such property,
Secured Party shall have the same rights hereunder as it has with
respect to the Collateral;
(ii) Without limiting any other right of Secured
Party, whenever Secured Party has the right to declare any
Indebtedness to be immediately due and payable (whether or not it
has so declared), Secured Party at its sole election may set off
against the Indebtedness any and all monies then owed to Debtors by
Secured Party in any capacity, whether or not due, and Secured
Party shall be deemed to have exercised such right of set-off
immediately at the time of such election even though any charge
therefor is made or entered on Secured Party's records subsequent
thereto;
(d) Upon Debtors' failure to perform any of its duties
hereunder after applicable ten (10) day notice, Secured Party may,
but shall not be obligated to, perform any and all such duties, and
Debtors shall pay an amount equal to the expense thereof to Secured
Party forthwith upon written demand by Secured Party;
(e) Secured Party may demand, collect and sue on the
Collateral (in either Debtors' or Secured Party's name at the
latter's option) with the right to enforce, compromise, settle or
discharge the Collateral, and may indorse Debtors' name on any and
all checks, commercial paper, and any other Instruments pertaining
to or constituting the Collateral;
(f) No course of dealing and no delay or omission by
Secured Party in exercising any right or remedy hereunder with
respect to any Indebtedness shall operate as a waiver thereof or of
any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. Secured Party may remedy
any default by Debtors hereunder or with respect to any
Indebtedness in any reasonable manner without waiving the default
remedied and without waiving any other prior or subsequent default
by Debtors. All rights and remedies of Secured Party hereunder are
cumulative;
(g) Secured Party shall have no obligation to take, and
Debtors shall have the sole responsibility for taking, any and all
steps to preserve rights against any and all prior parties to any
Instrument or Chattel Paper, whether Collateral or Proceeds and
whether or not in Secured Party's possession. Debtors waive
protest of any Instrument constituting Collateral at any time held
by Secured Party on which Debtors are in any way liable;
(h) The rights and benefits of Secured Party hereunder
shall, if Secured Party so agrees, inure to any party acquiring any
interest in the Indebtedness or any part thereof;
<PAGE>
(i) No modification, rescission, waiver, release or
amendment of any provision of this Security Agreement shall be made
except by a written agreement subscribed by Debtors and by a duly
authorized officer of Secured Party;
(j) All terms herein shall have the same definitions as
set forth in the Uniform Commercial Code of the State of Florida
unless otherwise defined herein;
(k) This Security Agreement shall remain in full force
and effect until Secured Party shall give written notice of its
discontinuance to the Debtors.
8. Risk of Loss. Debtors shall at all times bear the full
risk of loss or theft of, damage to or destruction of the
Collateral.
9. Severability. If any provision of this Security
Agreement shall be held invalid under any applicable laws, such
invalidity shall not affect any other provision of this Security
Agreement that can be given effect without the invalid provision,
and, to this end, the provisions hereof are severable.
10. Governing Law. This Security Agreement and the
transactions evidenced hereby shall be construed under the internal
laws of the State of Florida without regard to principles of
conflict of law.
11. Execution by Secured Party. This Agreement shall take
effect immediately upon execution by the Debtors and the execution
hereof by the Secured Party shall not be required as a condition to
the effectiveness of this Security Agreement. The provision for
execution by the Secured Party is solely for the purpose of filing
this Security Agreement to the extent required or permitted by law.
12. Notice. Any notice under this Agreement shall be in
writing and shall be deemed delivered if sent certified return
receipt requested, to a party at the principal place of business
specified in this Agreement or such other address as may be
specified by notice given after the date hereof.
This Agreement shall have the effect of an instrument
under seal.
WITNESS: DEBTORS: CARIBBEAN BREEZE
INTERNATIONAL, INC.,
a Florida corporation
_______________________ By:/s/ David M. Capps
Its:President
<PAGE>
WITNESS: MULT-SOURCE LABS, INC.,
a Florida corporation
By:/s/ David M. Capps
Its:President
WITNESS: SECURED PARTY:
ANTARES RESOURCES CORPORATION,
a New York corporation
_______________________ By:/s/ William W. Perry III
Its:President
