<PAGE>
----------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
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) December 26, 1996
ANTARES RESOURCES CORPORATION
-----------------------------
(Exact name of registrant as specified in its charter)
NEW YORK
--------
(State or other jurisdiction of incorporation)
0-3926 13-1950459
- ------------------- -----------
(Commission File Number) (IRS Employer Identification No.)
599 Lexington Avenue, 18th Floor, New York, New York 10022
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 308-8828
Exhibit Index is on page 3 of the manually executed copy.
Page 1 of 4 pages
<PAGE>
Item 1. Change in Control of Registrant.
- ------- --------------------------------
Item 2. Acquisition or Disposition of Assets.
- ------- -------------------------------------
On December 26, 1996, Antares Resources Corporation (the "Registrant")
consummated a transaction, whereby the Registrant acquired all of the issued
and outstanding shares of United Kina Brewing Group Limited, a Bermuda
corporation ("United Kina") in exchange for the issuance by the Registrant of
33,500,000 post-split shares of restricted common stock to Kina shareholders
pursuant to the Agreement and Plan of Reorganization, as amended (the
"Agreement"), dated as of December 26, 1996, by and between the Registrant
and United Kina (the "Closing").
United Kina is a holding company of seven joint ventures in which it
holds a controlling interest. Each of the joint ventures is a brewing
company and is engaged in the manufacturing, distributing and marketing of
beer in the People's Republic of China.
Under the relevant terms of the Agreement, the Registrant undertook a
reverse split of its common stock, whereby 1 share of common stock was issued
in exchange for 10 shares of common stock. Immediately prior to the share
exchange, there were approximately 2,500,000 post-reverse split shares of
the Registrant's common stock issued and outstanding (including shares
reserved for issuance applicable to issued and outstanding common stock
purchase warrants). As a result of the acquisition, there are approximately
36,000,000 shares of Common Stock issued and outstanding.
Upon the Closing, the present officers and directors of the Registrant
resigned their respective positions, and were replaced with the designees of
United Kina. The new officers and directors of the Registrant are: Victoria
Lam, Chairperson of the Board of Directors, Jun Lin, President and director,
Scott G. Schiller, Senior Executive Vice President and Flemming With-Seidelin,
Chief Operating Officer and director.
The name of each person known to the Registrant to own more than 5% of
the securities of the Registrant, entities issued shares pursuant to the
Agreement, the current directors and executive officers of the Registrant and
the percentage of the total issued and outstanding Common Stock (the only
voting securities) of the Registrant owned by such persons is as follows:
Amount of
Name and Beneficial Percent of
Address Ownership(1) Class
- ------- ------------ -------
Common Stock
Prime Force (Asia) Ltd. (2) 29,379,214 81.6%
Victoria Lam(2) (3) 871,286 2.4%
Chariperson of the Board
of Directors
Jun Lin(2) 0 0%
President and Director
Scott G. Schiller (5)
Senior Executive Vice President 0 0%
Flemming With-Seidelin(2) 0 0%
Chief Operating Officer
and Director 0 0%
- --------------------------
All Directors and Officers as a Group 871,286 2.4%
(4 persons)
2
<PAGE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or share
investment power with respect to a security (i.e., the power to dispose of,
or to direct the disposition of a security).
(2) The address of this person is Suite 2101-2, Central Plaza, 18 Harbour
Road, Wanchai, Hong Kong.
(3) Prime Force (Asia) Limited is owned by Asia Business Development Trust,
a Cayman Islands trust.
(4) The 871,286 shares of common stock of the Registrant are held by
Harrington Worldwide Holdings, Ltd., a British Virgin Islands corporation
in which Ms. Lam holds an indirect interest.
(5) The address of this person is 599 Lexington Avenue, 18th Floor,
New York, NY 10022.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
- ------- ----------------------------------------------------
On December 26, 1996, the registrant closed an offshore private
placement of $1,000,000 of 10% Convertible Debentures Due December 31, 1998
(the "Closing Date"). The Debentures were sold to a certain offshore
accredited investor. The offshore placement was made pursuant to Regulation
S and Section 4(2) of the securities Act of 1933, as amended. The placement
has been made through the efforts of the director of the Registrant.
The principal amount of the Debentures may be converted, at the option
of the holder thereof, at any time after 60 days commencing from the Closing
Date, at a conversion price equal to the lower of 70% of the average closing
bid price of common stock for 5 business days immediately preceding the
conversion date or $3.50 per share.
In addition to the Debentures, the offshore investor received a warrant
to purchase 180,000 shares of common stock of the Registrant at an exercise
price equal to the lesser of $4.25 per share or 60% of the closing bid price
of common stock at the date of exercise. The warrant can be exercised at any
time, subject to the restrictive period imposed by Regulation S.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ------- -------------------------------------------------------------------
(a)(b) The required financial statements and pro forma financial
information are unavailable as of the date hereof and will be filed by the
Registrant pursuant to the requirements of the Securities Exchange Act and
the rules and regulations promulgated thereunder within 75 days of the date
of the event reported herein.
(c) Exhibits
2. Agreement and Plan of Reorganization
2.1. Agreement and Plan of Reorganization dated as of
September 30, 1996, between the Registrant and United Kina Breing Group
Limited.
2.2. Amendment No. 1 to Agreement and Plan of Reorganization
dated as of October 7, 1996, between the Registrant and United Kina Brewing
Group Limited.
2.3. Amendment No. 2 to Agreement and Plan of Reorganization
dated as of November 6, 1996, between the Registrant and United Kina Brewing
Group Limited.
2.4. Amendment No. 3 to Agreement and Plan of Reorganization
dated as of December 26, 1996, between the Registrant and United Kina Brewing
Group Limited.
10. Material Contracts
10.1 Form of Offshore Securities S Subscription Agreement.
10.2 Form of Convertible Debenture
10.3 Form of Warrant
3
<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 by the
undersigned thereunto duly authorized.
Dated: January 10, 1997 ANTARES RESOURCES CORPORATION
By:/s/ Scott G. Schiller
-----------------------------
Scott G. Schiller
Senior Executive Vice President
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
by and among
ANTARES RESOURCES CORPORATION
a New York corporation
and
UNITED KINA BREWING GROUP, LTD.
a Bermuda corporation
effective as of September 30, 1996
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into
this 30th day of September 1996, by and between ANTARES RESOURCES
CORPORATION, a New York corporation with its principal place of
business located at 2345 Friendly Road, Fernandina Beach, Florida
32034 ("ARC") and UNITED KINA BREWING GROUP, LTD., a Bermuda
corporation with its principal place of business located at 21st
Floor, Central Plaza, Wanchai, Hong Kong ("Kina"), who hereby agree as
follow:
Premises
A. This Agreement provides for the reorganization of Kina with
and into ARC, with Kina becoming a wholly-owned subsidiary of ARC, and
in connection therewith, the exchange of the outstanding common stock
of Kina into shares of common voting stock of ARC, all for the purpose
of effecting a tax-free reorganization pursuant to sections 354 and
368(a) of the Internal Revenue Code of 1986, as amended.
B. The boards of directors of Kina and ARC have determined,
subject to the terms and conditions set forth in this Agreement, that
the exchange contemplated hereby, as a result of which Kina would
become a wholly owned subsidiary of ARC is desirable and in the best
interests of their stockholders. This Agreement is being entered into
for the purpose of setting forth the terms and conditions of the
proposed exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter set
forth and the mutual benefits to the parties to be derived herefrom,
it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF KINA
As an inducement to and to obtain the reliance of ARC, Kina
represents and warrants as follows:
Section 1.1 Organization. Kina is a corporation duly organized,
validly existing, and in good standing under the laws of Bermuda and
has the corporate power and is duly authorized, qualified, franchised
and licensed under all applicable laws, regulations, ordinances and
1
<PAGE>
orders of public authorities to own all of its properties and assets
and to carry on its business in all material respects as it is now
being conducted, including qualification to do business as a foreign
corporation in the jurisdiction in which the character and location of
the assets owned by it or the nature of the business transacted by it
requires qualification. Included in the Kina Schedules (as
hereinafter defined) are complete and correct copies of the articles
of incorporation, bylaws and amendments thereto of Kina as in effect
on the date hereof. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not violate any
provision of Kina's articles of incorporation or bylaws. Kina has
full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
Section 1.2 Capitalization. The authorized capitalization of
Kina consists of 1,200,000 Common Shares, $0.01 par value per share
(the "Kina Common Shares"). As of the date of this Agreement, all of
the authorized common shares are issued and outstanding. All issued
and outstanding shares are legally issued, fully paid and
nonassessable and are not issued in violation of the preemptive or
other rights of any person. Kina has no other securities, warrants or
options authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except
as otherwise set forth in the Kina Schedules, Kina does not have any
other subsidiaries and does not own, beneficially or of record, any
shares of any other corporation. For purposes herein, all references
to Kina shall include Kina and all of its subsidiaries.
Section 1.4 Financial Statements. Included in the Kina
Schedules are draft unaudited financial statement prepared by Deloitte
Touche in accordance with international accounting standards (IAS) for
the three (3) years ended December 31, 1995 and interim unaudited
financial statements prepared by Kina for the period ended June 30,
1996. Relevant thereto:
(a) the Kina balance sheet presents fairly as of its date the
financial condition of Kina. Kina does not have, as of the date of
such balance sheet, except as noted and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto and all assets reflected therein are properly reported and
present fairly the value of the assets of Kina, in accordance with
international accounting principles;
2
<PAGE>
(b) Kina has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) Kina has filed all state, federal and local income tax
returns required to be filed by it from inception to the date hereof,
if any;
(d) The books and records, financial and others, of Kina are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) except as and to the extent disclosed in the most recent Kina
balance sheet and the Kina Schedules, Kina has no material contingent
liabilities, direct or indirect, matured or unmatured.
Section 1.5 Information. The information concerning Kina set
forth in this Agreement and in the Kina Schedules is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which
they were made, not misleading.
Section 1.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which Kina
is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as set
forth in this Agreement, the Kina Schedules, or as otherwise disclosed
to ARC, since June 30, 1996:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Kina; or (ii)
any damage, destruction or loss to Kina (whether or not covered by
insurance) materially and adversely affecting the business,
operations, properties, assets or condition of Kina;
3
<PAGE>
(b) Kina has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Kina; (iv) made any material change in its
method of management, operation or accounting other than in its
ordinary course of business; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee; (vii)
increased the rate of compensation; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees.
(c) Kina has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Kina balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted
any amendment or termination of any contract, agreement or license to
which it is a party if such amendment or termination is material,
considering the business of Kina; or (vi) issued, delivered or agreed
to issue or deliver any stock, bonds or other corporate securities,
including debentures (whether authorized and unissued or held as
treasury stock); and
(d) to the best knowledge of Kina, it has not become subject to
any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of Kina.
Section 1.8 Title and Related Matters. Except as provided
herein or in the Kina Schedules, Kina has good and marketable title to
and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal
including technical information, copyrights, trademarks, service marks
and tradenames (collectively, the "Assets") which are reflected in the
most recent Kina unaudited balance sheet and the Kina Schedules or
acquired after that date (except properties, interests in properties
and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges,
charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not
4
<PAGE>
and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such
properties; and (c) as described in the Kina Schedules. Except as set
forth in the Kina Schedules, Kina owns free and clear of any liens,
claims, encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data,
and all procedures, techniques, marketing plans, business plans,
methods of management or other information utilized in connection with
Kina's business. Except as set forth in the Kina Schedules, no third
party has any right to, and Kina has not received any notice of
infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or
copyrights which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially
adverse affect on the business, operations, financial conditions or
income of Kina or any material portion of its properties, assets or
rights.
Section 1.9 Litigation and Proceedings. To the best of Kina's
knowledge and belief, there are no actions, suits, proceedings or
investigations pending or threatened by or against Kina or affecting
Kina or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before
any arbitrator of any kind that would have a material adverse affect
on the business, operations, financial condition or income of Kina.
Kina does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator or governmental agency or
instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Kina Schedules, there
are no material contracts, agreements, franchises, license agreements
or other commitments to which Kina is a party or by which it or any of
its assets, products, technology or properties are bound;
5
<PAGE>
(b) Except as included or described in the Kina Schedules or
reflected in the most recent Kina balance sheet, Kina is not a party
to any oral or written: (i) contract for the employment of any
officer or employee which is not terminable on thirty (30) days or
less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement
or arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which Kina is a primary obligor, for collection and
other guaranties of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of $10,000 in
the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of Kina; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the aggregate; and
(c) To Kina's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which Kina is a party or
by which its properties are bound and which are material to the
operations of Kina taken as a whole, are valid and enforceable by Kina
in all respects, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
Section 1.11 Material Contract Defaults. Except as set forth in
the Kina Schedules, to the best of Kina's knowledge and belief, Kina
is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or condition
of Kina, and there is no event of default in any material respect
under any such contract, agreement, lease or other commitment in
respect of which Kina has not taken adequate steps to prevent such a
default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution
of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any
material indenture, mortgage, deed of trust or other material
contract, agreement or instrument to which Kina is a party or to which
any of its properties or operations are subject.
6
<PAGE>
Section 1.13 Governmental Authorizations. To the best of Kina's
knowledge and except as provided herein or in the Kina Schedules, Kina
has all licenses, franchises, permits or other governmental authoriza-
tions legally required to enable Kina to conduct its business in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and
delivery by Kina of this Agreement and the consummation by Kina of the
transactions contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the best
of Kina's knowledge, except as disclosed in the Kina Schedules, Kina
has complied with all applicable statutes and regulations of any
federal, state or other governmental entity or agency thereof, except
to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of
Kina or would not result in Kina's incurring any material liability.
Section 1.15 Insurance. All of the insurable properties of Kina
are insured for Kina's benefit in accordance with the insurance
policies disclosed in the Kina Schedules under valid and enforceable
policies issued by insurers of recognized responsibility. Such policy
or policies containing substantially equivalent coverage will be
outstanding and in full force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors of
Kina has authorized the execution and delivery of this Agreement by
Kina, has approved the transactions contemplated hereby and approved
the submission of this Agreement and the transactions contemplated
hereby to the stockholders of Kina for their unanimous approval, which
approval has been provided.
Section 1.17 Material Transactions or Affiliations. Except as
disclosed herein and in the Kina Schedules, there exists no material
contract, agreement or arrangement between Kina and any predecessor
and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known
by Kina to own beneficially, ten percent (10%) or more of the issued
and outstanding Kina Common Shares and which is to be performed in
whole or in part after the date hereof. In all of such transactions,
the amount paid or received, whether in cash, in services or in kind,
has been during the full term thereof, and is required to be during
the unexpired portion of the term thereof, no less favorable to Kina
than terms available from otherwise unrelated parties in arms length
transactions. There are no commitments by Kina, whether written or
oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
7
<PAGE>
Section 1.18 Labor Relations. Kina has never had a work
stoppage resulting from labor problems. To the best knowledge of
Kina, no union or other collective bargaining organization is
organizing or attempting to organize any employee of Kina.
Section 1.19 Previous Sales of Securities. Since inception,
Kina has issued Kina Common Shares in reliance upon applicable
exemptions from the registration requirements under the laws of the
jurisdiction of Bermuda. All such sales (the "Sales") were made in
accordance with the laws of Bermuda and no sales were made to any
resident of the United States.
Section 1.20 Kina Schedules. Upon execution hereof, Kina will
deliver to ARC the following schedules, which are collectively eferred
to as the "Kina Schedules" and which consist of separate schedules
dated as of the date of this Agreement and instruments and data as of
such date, all certified by the chief executive officer of Kina as
complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of Kina;
(b) the financial statements of Kina referenced hereinabove in
Section 1.4;
(c) a list indicating the name and address of the stockholders
of Kina, together with the number of shares owned by them;
(d) the Kina Information Statement which includes, among other
matters, information concerning all of Kina's material licenses,
permits and other governmental authorizations, requests or
applications therefor, pursuant to which Kina carries on or proposes
to carry on its business (except those which in the aggregate, are
immaterial to the present or proposed business of Kina), as well as a
description of any material adverse change in the business operations,
property, inventory, assets or condition of Kina since the most recent
Kina balance sheet required to be provided pursuant to Section 1.7;
and
Kina shall cause the Kina Schedules and the instruments and data
delivered to ARC hereunder to be updated after the date hereof up to
and including the Closing Date, as hereinafter defined.
8
<PAGE>
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF ARC
As an inducement to, and to obtain the reliance of Kina, ARC
represents and warrants as follows:
Section 2.1 Organization. ARC is a corporation duly organized,
validly existing and in good standing under the laws of the state of
New York and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of
its properties and assets and to carry on its business in all material
respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states in which the character
and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the ARC
Schedules (as hereinafter defined) are complete and correct copies of
the articles of incorporation, amended articles of incorporation
(collectively, hereinafter referred to as the "articles of
incorporation") and bylaws of ARC as in effect on the date hereof.
The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of
ARC's articles of incorporation or bylaws. ARC has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
ARC has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, bylaws or otherwise to
consummate the transactions herein contemplate.
Section 2.2 Capitalization. The authorized capitalization of
ARC consists of 200,000,000 shares of Common Stock, par value $0.001
per share and 5,000,000 shares of Preferred Stock, par value $0.01
per share. Simultaneous with the Closing of this Agreement, the Board
of Directors of ARC shall authorize and approve undertake a reverse
split of the ARC issued and outstanding Common Stock, whereby 1 share
of Common Stock shall be issued in exchange for every 10 shares of
Common Stock presently issued and outstanding, which reverse split
shall have an effective date of September 30, 1996. As a result and
on Closing Date, as defined herein, there will be no more than
2,500,000 common shares issued and outstanding and reserved for
issuance (including shares reserved for issuance applicable to issued
and outstanding Common Stock Purchase Warrants) (the "ARC Common
Shares"), except that said number of ARC Common Shares may be
increased by no more than 5% and 126,000 shares of Series B
Convertible Preferred Stock issued and outstanding (the "ARC Preferred
Shares"), convertible upon receipt by ARC of notice of the same into
an aggregate 25,200 shares of common stock (post reverse split), held
by the then existing securities holders of ARC. All issued and
outstanding ARC Common Shares and Preferred Shares have been legally
issued, fully paid and are nonassessable.
9
<PAGE>
In addition, ARC has adopted three (3) separate Stock Plans (the
"ARC Stock Plans"), copies of which have been provided to Kina. At
the Closing Date, ARC shall have outstanding an aggregate of 15,500
stock options issued pursuant to said Plans, exercisable to purchase
an aggregate 15,500 shares of ARC Common Stock. The applicable
exercise price of each of these options is included on Schedule 2.2
herein.
Section 2.3 Subsidiaries. ARC has three (3) wholly owned
subsidiaries, including Empire Energy, Inc., Southern Trailer
Manufacturing, Inc. and Cherokee Sun Corp. Simultaneous with the
transaction proposed herein, ARC shall undertake all action necessary
in order to sell or otherwise assign all of the capital stock of these
subsidiaries. ARC does not own, beneficially or of record, any other
corporation. At the Closing, other than as disclosed herein, ARC
shall own no securities or have any interest in any corporation,
partnership, or other form of business organization, including its
current subsidiaries.
Section 2.4 Financial Statements.
(a) Included in the ARC Schedules are the audited consolidated
balance sheet of ARC for the years ended September 30, 1995 and 1994
and the unaudited financial statements for the nine month period ended
June 30, 1996 and the related statements of operations, stockholders'
equity and cash flows for the years and nine month period then ended,
which are included in the schedules identified in Section 2.20(c).
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. The ARC balance sheets
presents fairly as of their respective dates the financial condition
of ARC. ARC did not have as of the date of any of such ARC balance
sheets, any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto prepared
in accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of ARC, in accordance with generally accepted
accounting principles. The statements of operations, stockholders'
equity and changes in financial position reflect fairly the
information required to be set forth therein by generally accepted
accounting principles;
10
<PAGE>
(c) The books and records, financial and others, of ARC are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices;
(d) ARC has no liabilities with respect to the payment of any
federal, state, county, local or other taxes, current or accrued
(including any deficiencies, interest or penalties);
(e) As of the Closing Date, as defined herein the ARC balance
sheet and the notes thereto, shall reflect that ARC has: (i) no
receivables; (ii) no accounts payable; (iii) except as stated herein
or in the ARC Schedules, no liabilities, whether absolute, accrued,
known or unknown, contingent or otherwise, whether due or to become
due, including, without limitation, liabilities as guarantor under any
guaranty or other governmental charges; (iv) 400,000 shares of
Preferred Stock of JJFN Services, Inc.; and (v) $100,000 in cash;
(f) ARC is party to certain equipment and automobile leases, as
well as guarantor of a certain office lease and mortgages applicable
to the purchase of automobiles. ARC represents that it has requested
releases from the applicable lessors. At Closing, these leases and
mortgages shall be assigned to and assumed by those existing ARC
subsidiary companies. As part of the material terms of this
Agreement, the interest in and to the stock of these subsidiaries is
to be disposed of in accordance with Section 2.3 herein. In the event
a release of ARC from each applicable lease and mortgage is not
obtained, each applicable subsidiary company and appropriate current
officers and "inside" directors of ARC shall provide ARC with an
indemnification and hold harmless agreement relevant to the leases and
mortgage obligations referenced herein.
11
<PAGE>
Section 2.5 Information. The information concerning ARC as set
forth in this Agreement and in the ARC Schedules is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required
to make the statements made, in light of the circumstances under which
they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as
described herein or in the ARC Schedules, since June 30, 1996:
(a) ARC has not: (i) amended its articles of incorporation or
bylaws; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of ARC; (iii) made
any material change in its method of management, operation or
accounting; or (iv) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(b) Except as disclosed to Kina or as included in the ARC
Schedules, ARC has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or
other right has not been cancelled as of the Closing Date; (ii)
borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; and
(c) to the best knowledge of ARC, it has not become subject to
any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of ARC.
(d) in the event ARC is bound by or otherwise liable for any
contract, lease or other agreement or any other liability at the date
of Closing, ARC's existing "inside" officers and directors shall
execute and deliver a binding Indemnification and Hold Harmless
Agreement at Closing relevant to such obligations.
Section 2.7 Title and Related Matters. As of the Closing Date,
ARC will own no real, personal or intangible property, other than as
disclosed herein.
12
<PAGE>
Section 2.8 Litigation and Proceedings. There are no actions,
suits or proceedings pending or, to the best of ARC's knowledge and
belief, threatened by or against or affecting ARC, at law or in
equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any
kind that would have a material adverse effect on the business,
operations, financial condition, income or business prospects of ARC.
ARC does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule
or regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 2.9 Contracts. On the Closing Date and other than as
disclosed herein in Schedule 2.9 or otherwise:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which ARC is a party or by
which it or any of its properties are bound;
(b) ARC is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as ARC
can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of ARC; and
(c) ARC is not a party to any material oral or written: (i)
contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as
amended; (iii) agreement, contract or indenture relating to the
borrowing of money; (iv) guaranty of any obligation for the borrowing
of money or otherwise, excluding endorsements made for collection and
other guaranties of obligations, which, in the aggregate exceeds
$1,000; (v) consulting or other similar contract with an unexpired
term of more than one year or providing for payments in excess of
$10,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of ARC; or
(viii) contract, agreement, or other commitment involving payments by
it of more than $10,000 in the aggregate.
13
<PAGE>
Section 2.10 No Conflict With Other Instruments. The execution
of this Agreement and the consummation of the transactions
contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any
material indenture, mortgage, deed of trust or other material
contract, agreement or instrument to which ARC is a party or to which
any of its properties or operations are subject.
Section 2.11 Material Contract Defaults. To the best of ARC's
knowledge and belief, ARC is not in default in any material respect
under the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations, properties,
assets or condition of ARC, and there is no event of default in any
material respect under any such contract, agreement, lease or other
commitment in respect of which ARC has not taken adequate steps to
prevent such a default from occurring.
Section 2.12 Governmental Authorizations. To the best of ARC's
knowledge, ARC has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to
conduct its business operations in all material respects as conducted
on the date hereof. Except for compliance with federal and state
securities or corporation laws, no authorization, approval, consent or
order of, or registration, declaration or filing with, any court or
other governmental body is required in connection with the execution
and delivery by ARC of the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best
of ARC's knowledge and belief, ARC has complied with all applicable
statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations,
properties, assets or condition of ARC or would not result in ARC's
incurring any material liability.
Section 2.14 Insurance. ARC has no insurable properties and no
insurance policies will be in effect at the Closing Date, as
hereinafter defined.
Section 2.15 Approval of Agreement. The board of directors of
ARC has authorized the execution and delivery of this Agreement by ARC
and has approved the transactions contemplated hereby. The approval of
this Agreement by ARC's shareholders is not required.
Section 2.16 Material Transactions or Affiliations. Except as
stated herein or in the ARC Schedules, as of the Closing Date there
will exist no material contract, agreement or arrangement between ARC
and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known
by ARC to own beneficially, ten percent (10%) or more of the issued
and outstanding common stock of ARC and which is to be performed in
whole or in part after the date hereof. ARC has no commitment,
whether written or oral, to lend any funds to, borrow any money from
or enter into any other material transactions with, any such
affiliated person.
14
<PAGE>
Section 2.17 Labor Relations. ARC has never had a work stoppage
resulting from labor problems. ARC has no employees other than its
officers and directors.
Section 2.18 Taxes. (a) ARC has timely filed (within the
applicable extension periods) with the appropriate governmental
agencies all governmental tax returns, information returns, tax
reports and declarations which are monetary liabilities. All
governmental tax returns, information returns, tax reports and
declarations filed by ARC for years for which the statute of
limitations has not run (the "Tax Returns") are correct in all
material respects. ARC has timely paid (or has collected and paid
over in the case of sales, use or similar taxes) all taxes, additions
to tax, penalties, interest, assessments, deposits, and other
governmental charges imposed by law upon it or any of its properties,
tangible or intangible assets, income, receipts, payrolls,
transactions, capital, net worth and franchises, or upon the sale, use
or delivery of any item sold by the Company, other than as may be
disclosed in the Schedule of Taxes. Except as set forth in the
Schedule of Taxes, no tax returns have been examined by the Internal
Revenue Service or any other governmental authority. Except as may be
disclosed in the Schedule of Taxes or in any document delivered to ARC
therewith, ARC (i) is not currently being audited with respect to any
tax, assessment or other governmental charge; (ii) has not received
formal or informal notice from any governmental agency that an audit
or investigation with respect to any tax, assessment or other
governmental charge is to be initiated; (iii) is not formally or
informally discussing material pending ruling requests or other
material tax or assessment issues with the Internal Revenue Service or
any other governmental taxing authority in connection with any matter
concerning any member of ARC's group; or (iv) has not been formally or
informally notified of any potential tax or assessment issue which the
Internal Revenue Service or any other governmental taxing authority
intends to raise in connection with any matter concerning any member
of ARC's group. Except (i) as may be disclosed in the Schedule of
Taxes, or (ii) in connection with any pending audit or investigation,
ARC has not granted or proposed any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment or collection of, or any offer in compromise of any
governmental tax. The accruals and reserves for taxes reflected in
the financial statements are adequate to cover substantially all taxes
(including additions to tax, interest, penalties, and other charges or
assessments, if any) which become due and payable or accruable by
reason of the business conducted by ARC through the Closing Date
herein. ARC is not now or has it ever been a corporation which meets
the tests of Section 542(b)(2) of the Internal Revenue Code. ARC has
not participated in, or is required to participate in, for any period
prior to the date of this Agreement the filing of any consolidated tax
return other than (i) as set forth in the Schedule of Taxes, or (ii)
as a member of an affiliated group of which ARC is the common parent.
15
<PAGE>
(b) Management of ARC hereby represents and confirms that Empire
Energy, Inc., a wholly owned subsidiary of ARC, is presently engaged
in an IRS audit. Relevant thereto, any tax liabilites which may be
deemed to be due and owing by Empire shall remain an obligation of
Empire subsequent to the Closing Date herein. To the best knowledge
of present management of ARC, this audit does not involve any matter
applicable to ARC.
Section 2.19 Reporting Act Documents. Except as set forth in
ARC's Schedules, ARC has, in all reporting act documents, complied in
all material respects with the reporting and proxy requirements of the
Exchange Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. The information contained
in each reporting act document of ARC is true and correct in all
material respects as of the date thereof, and no reporting act
document contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading as of the date thereof. To
the best knowledge of current management of ARC, there is no
outstanding negative matters which are outstanding concerning Exchange
Act reports filed by ARC prior to the Closing hereof or with the
Nasdaq.
Section 2.20 ARC Schedules. Upon execution hereof, ARC shall
deliver to Kina the following schedules, which are collectively
referred to as the "ARC Schedules" which are dated the date of this
Agreement, all certified by an officer of ARC to be complete, true and
accurate:
(a) complete and correct copies of the articles of incorporation
and bylaws of ARC as in effect as of the date of this Agreement;
(b) copies of all financial statements of ARC identified in
Section 2.4(a);
16
<PAGE>
(c) the description of any material adverse change in the
business, operations, property, assets, or condition of ARC since June
30, 1996 required to be provided pursuant to Section 2.6; and
(d) any other information deemed relevant by ARC.
ARC shall cause the ARC Schedules and the instruments to be
delivered to Kina hereunder to be updated after the date hereof up to
and including the Closing Date.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Delivery of Kina Securities. On the Closing Date,
the holders of the Kina Common Shares shall deliver to ARC (i)
certificates or other documents evidencing all of the issued and
outstanding Kina Common Shares, duly endorsed in blank or with
executed stock power attached thereto in transferrable form and (ii)
investment letters, the form of which is attached hereto as Exhibit
"F".
Section 3.2 Issuance of ARC Common Shares. (a) In exchange for
all of the Kina Common Share tendered pursuant to Section 3.1, ARC
shall instruct its Transfer Agent to issue an aggregate of 33,500,000
(post reverse split) "restricted" ARC Common Shares to the Kina
shareholders on a pro rata basis.
(b) No fractional ARC Common Shares shall be issued pursuant to
this Section 3.2. In lieu of such fractional shares, all shares to be
issued shall be rounded up or down to the nearest whole share.
(c) The 33,500,000 shares to be issued to the Kina shareholders
by ARC (the "Kina Shares") are not being registered under the
Securities Act of 1933, as amended (the "Securities Act") on the
ground that the offer and sale of Kina Shares are exempt from the
registration provisions of Section 5 of the Securities Act pursuant to
Regulation S promulgated thereunder for offers and sales of securities
that occur outside the United States, and that the Kina Shares may not
be offered or sold in any transaction subject to Section 5 of the
Securities Act unless registered or an exemption from registration is
available for such offer or sale, and that the certificates
representing the Kina Shares will bear a legend to that effect,
substantially in the form set forth in Schedule 3.2, as follows:
17
<PAGE>
"TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
PROHIBITED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE SECURITIES
ACT OF 1933 (THE "ACT"). THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE ACT AND MAY NOT BE OFFERED OR SOLD
IN ANY TRANSACTION SUBJECT TO REGISTRATION REQUIREMENTS OF THE ACT
UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE ACT OF AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE."
Section 3.3 Undertakings.
(a) Upon execution hereof or as soon thereafter as practical,
management of ARC and Kina shall execute, acknowledge and deliver (or
shall cause to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement
to be so delivered, together with such other items as may be
reasonably requested by the parties hereto and their respective legal
counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
(b) Kina hereby undertakes and provides assurances to ARC that
it will file a current report on Form 8-K within 15 days of the
Closing in compliance with the Exchange Act, with the audited
financial statements of Kina and the pro forma statements required by
the Exchange Act and by Regulation S-K by amendment of the Form 8-K
within the time parameters established by the Exchange Act, and will
otherwise comply with the reporting requirements of the Exchange Act
and all material requirements of NASDAQ following the Closing.
Additionally, Kina shall cause to be issued a press release within 48
hours after the Closing advising of such Closing. Kina and its
officers and directors hereby indemnify and hold harmless ARC's
present officers and directors from any and all liabilities which may
arise out of Kina's failure to comply with the undertakings described
herein.
Section 3.4 Closing. The closing ("Closing") of the
transactions contemplated by this Agreement shall be as of the date in
which all of the shareholders of Kina have approved the terms of this
Agreement ("Closing Date"), all conditions to Closing referenced in
Section 6.6 below and elsewhere in this Agreement have been satisfied
or waived by Kina and all documentation referenced herein is delivered
to the respective party herein, unless a different date is mutually
agreed to in writing by the parties hereto.
18
<PAGE>
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of directors
of either ARC or Kina at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or
any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and which,
in the judgment of such board of directors, made in good faith and
based on the advice of its legal counsel, makes it inadvisable to
proceed with the exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved
by any regulatory authority whose approval is required to consummate
such transactions; or
(iii) the conditions described in Section 6.6 below have not been
satisfied in full; or
(iv) the Closing does not take place by the close of business on
or before September 30, 1996, this Agreement shall be cancelled and
void, unless the Closing date is extended by the mutual consent of the
parties hereto in writing.
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of ARC if Kina shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the
representations or warranties of Kina contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days' written notice thereof is given to Kina.
If this Agreement is terminated pursuant to this paragraph (b) of this
Section 3.5, this Agreement shall be of no further force or effect and
no obligation, right or liability shall arise hereunder; and
19
<PAGE>
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Kina if ARC shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the
representations or warranties of ARC contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days written notice thereof is given to ARC. If
this Agreement is terminated pursuant to this paragraph (c) of Section
3.5, this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder.
Section 3.6 Directors of ARC. Upon the Closing, the present
members of ARC's Board of Directors shall tender their resignations
seriatim so that the following persons are appointed directors of ARC
in accordance with procedures set forth in the ARC bylaws: Victoria
Lam (who shall be appointed Chairman of the Board of Directors),
Flemming With-Seidelin, Jun Lin and Qiangfu He. Each director shall
hold office until his successor shall have been duly elected and shall
have qualified or until his or her earlier death, resignation or
removal.
Section 3.7 Officers of ARC. Upon the Closing, the present
officers of ARC shall tender their resignations and provide ARC with
applicable releases concerning their respective employment agreements.
Simultaneous therewith, the following persons shall be elected as
officers of ARC in accordance with procedures set forth in the ARC
bylaws:
NAME OFFICE
---- ------
Victoria Lam Chairman of the Board,
Chief Executive Officer, President
Jun Lin Secretary
Section 3.8 Effective Date. The parties hereto hereby agree
that the Effective Date of the transaction proposed herein shall be
11:50 P.M. Eastern Time on September 30, 1996, unless the parties
agree otherwise, in writing.
20
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. ARC and Kina will
each afford to the officers and authorized representatives of the
other full access to the properties, books and records of ARC and
Kina, as the case may be, in order that each may have full opportunity
to make such reasonable investigation as it shall desire to make of
the affairs of the other and each will furnish the other with such
additional financial and operating data and other information as to
the business and properties of ARC and Kina, as the case may be, as
the other shall from time to time prior to Closing reasonably request.
In addition, ARC shall provide to Kina subsequent to Closing all
information necessary to allow Kina to properly prepare and file all
reports required to be filed pursuant to the Exchange Act, including
all information concerning ARC's subsidiaries which existed prior to
Closing.
Section 4.2 Information for ARC Public Reports. Kina will
furnish ARC with all information concerning Kina and the Kina
Stockholders, including all financial statements, required for
inclusion in any public report to be filed by ARC pursuant to the
Securities Act, the Exchange Act, or any other applicable federal or
state law. Kina covenants that all information so furnished to ARC,
including the financial statements described in Section 1.4, shall be
true and correct in all material respects without omission of any
material fact required to make the information stated not misleading.
Similarly, ARC will provide all information concerning its history and
operations reasonably requested by Kina.
Section 4.3 Special Covenants and Representations Regarding the
ARC Common Shares to be Issued in the Exchange. The consummation of
this Agreement, including the issuance of the ARC Common Shares to the
stockholders of Kina as contemplated hereby, constitutes the offer and
sale of securities under the Securities Act, and applicable state
statutes. Such transaction shall be consummated in reliance on
exemptions from the registration and prospectus delivery requirements
of such statutes which depend, inter alia, upon the circumstances
under which the Kina stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and
prospectus delivery requirements for such transactions, at the
Closing, Kina shall cause to be delivered, and the Kina stockholders
shall deliver to ARC, the investment letter referenced in Section 3.1.
Section 4.4 Third Party Consents. ARC and Kina agree to
cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein contemplated.
21
<PAGE>
Section 4.5 Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the ARC or Kina Schedules or as
permitted or contemplated by this Agreement, Kina will each use its
best efforts to:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization intact, to
retain its key employees and to maintain its relationship with its
material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and
all rules, regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither ARC nor Kina will, without the prior consent of the
other party:
(i) except as otherwise specifically set forth herein, make any
change in their respective certificates or articles of incorporation
or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers;
22
<PAGE>
(iv) issue any shares of its capital stock except pursuant to an
offering or offerings of ARC Common Shares, or conversion of
debentures to Common Shares, each at a per share price of at least
$3.50;
(v) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire any
shares of its capital stock; or
(vi) purchase or redeem any shares of its capital stock, except
as disclosed herein.
Section 4.6 Indemnification.
(a) Kina hereby agrees to indemnify ARC and each of the
officers, agents and directors of ARC as of the date of execution of
this Agreement against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made in this Agreement.
The indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months; and
(b) ARC and its officers and directors hereby agree to indemnify
Kina and each of the officers, agents, directors and current
shareholders of Kina as of the Closing Date against any loss,
liability, claim, damage or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened
or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section 2.4(b).
The indemnification provided for in this Section shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months.
23
<PAGE>
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF ARC
The obligations of ARC under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
Section 5.1 Accuracy of Representations. The representations
and warranties made by Kina in this Agreement were true when made and
shall be true at the Closing Date with the same force and effect as if
such representations and warranties were made at the Closing Date
(except for changes therein permitted by this Agreement), and Kina
shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Kina
prior to or at the Closing. ARC shall be furnished with a
certificate, signed by a duly authorized officer of Kina and dated the
Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of Kina
shall have unanimously approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
Section 5.3 Officer's Certificate. ARC shall have been
furnished with a certificate dated the Closing Date and signed by a
duly authorized officer of Kina to the effect that no litigation,
proceeding, investigation or inquiry is pending or, to the best
knowledge of Kina, threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the Kina Schedules,
by or against Kina which might result in any material adverse change
in any of the assets, properties, business or operations of Kina.
Section 5.4 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in the
financial condition, business or operations of nor shall any event
have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial
condition, business or operations of Kina.
Section 5.5 Opinion of Counsel to Kina. ARC shall receive an
opinion dated the Closing Date, counsel to Kina, in substantially the
following form:
(a) Kina is a corporation duly organized, validly existing, and
in good standing under the laws of Bermuda and has the corporate power
to carry on the business set out in its Memorandum of Association
outside of Bermuda from a place of business in Bermuda;
24
<PAGE>
(b) To the best knowledge of such legal counsel, the execution
and delivery by Kina of this Agreement and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in the breach of any
term or provision of Kina's articles of incorporation or bylaws or
violate any court order, writ, injunction or decree applicable to
Kina, or its properties or assets;
(c) The authorized capitalization of Kina consists of 1,200,000
Common Shares, $0.01 par value per share. As of the Closing Date, all
of the authorized common shares will be issued and outstanding. All
issued and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive rights of
any person. Except as set forth in the Kina Schedules, to the best
knowledge of such legal counsel, there are no outstanding
subscriptions, options, rights, warrants, convertible securities or
other agreements or commitments obligating Kina to issue any
additional shares of any class of its capital stock.
(d) This Agreement has been duly and validly authorized,
executed and delivered by Kina;
(e) To the best knowledge of such legal counsel, except as set
forth in the Kina Schedules, there are no actions, suits or
proceedings pending or threatened by or against or affecting Kina or
its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before
any arbitrator of any kind;
(f) Kina has taken all actions required by the applicable laws
of Bermuda to permit the transfer of the Kina Common Shares to ARC.
Section 5.6 Other Items. ARC shall have received such further
documents, certificates or instruments relating to the transactions
contemplated hereby as ARC may reasonably request.
25
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF KINA
The obligations of Kina under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise
indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The representations
and warranties made by ARC in this Agreement were true when made and
shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing
Date, and ARC shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with
by ARC prior to or at the Closing. Kina shall have been furnished
with a certificate, signed by a duly authorized executive officer of
ARC and dated the Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. Kina shall be furnished with
a certificate dated the Closing Date and signed by a duly authorized
officer of ARC to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of ARC,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to
the extent not disclosed in the ARC Schedules, by or against ARC which
might result in any material adverse change in any of the assets,
properties, business or operations of ARC.
Section 6.3 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in the
financial condition, business or operations of nor shall any event
have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial
condition, business or operations of ARC.
Section 6.4 Opinion of Counsel to ARC. Kina shall receive an
opinion dated the Closing Date of Andrew I. Telsey, P.C., counsel to
ARC, in substantially the following form:
(a) ARC is a corporation duly organized, validly existing, and
in good standing under the laws of the state of New York and has the
corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances and orders
of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the states in which the character and location of the
assets owned by it or the nature of the business transacted by it
requires qualification;
(b) To the best knowledge of such legal counsel, the execution
and delivery by ARC of this Agreement and the consummation of the
transactions contemplated by this Agreement in accordance with the
terms hereof will not conflict with or result in the breach of any
term or provision of ARC's articles of incorporation or bylaws or
constitute a default or give rise to a right of termination,
cancellation or acceleration under any material mortgage, indenture,
deed of trust, license agreement or other obligation or violate any
court order, writ, injunction or decree applicable to ARC or its
properties or assets;
(c) The authorized capitalization of ARC consists of 200,000,000
shares of Common Stock, par value $0.001 per share and 5,000,000
shares of Preferred Stock, par value $0.01 per share. As of the
Closing Date, there will be no more than 2,500,000 (post reverse
split) common shares issued and outstanding and reserved for issuance
(except that said number of common shares may be increased by no more
than 5%) and 126,000 shares of Series B Convertible Preferred Stock
issued and outstanding, convertible upon receipt by ARC of notice of
the same into an aggregate 25,200 shares of common stock (post reverse
split), held by the then existing securities holders of ARC. All
issued and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive rights of
any person.
(d) The ARC Common Shares to be issued to the Kina stockholders
pursuant to the terms of this Agreement will be, when issued in accor-
dance with the terms hereof, legally issued, fully paid and non-
assessable;
(e) This Agreement has been duly and validly authorized,
executed, and delivered and constitutes the legal and binding
obligation of ARC, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally;
(f) To the best knowledge of such counsel, except as set forth
in the ARC Schedules, there are no actions, suits or proceedings
pending or threatened by or against ARC or affecting ARC's properties,
at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of any
kind; and
(g) ARC has taken all actions required by the applicable laws of
the state of New York to permit the issuance of the ARC Common Shares
to the Kina stockholders.
27
<PAGE>
Section 6.5 Additional Equity Infusion Into Kina. At the
Closing, Kina shall have received at least $5,000,000 in net proceeds
from the debt or equity financing under the terms and conditions
acceptable to Kina. The proceeds of such financing shall be deposited
in the designated escrow account and released to Kina upon the Closing
of the transaction contemplated hereby.
Section 6.6 Compliance with Reporting Requirements. As of the
Closing Date, ARC shall be current in, and in compliance with all
requirements of, all filings required to be tendered to the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended.
Section 6.7 Other Items. Kina shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Kina may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in
Schedule 7.1, each party hereto hereby represents and warrants that it
is under no obligation, express or implied, to pay certain finders in
connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement. The
parties each agree to indemnify the other against any claim by any
third person not listed in Schedule 7.1 for any commission, brokerage
or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or
understanding between the indemnifying party and such third person,
whether express or implied from the actions of the indemnifying party.
Section 7.2 Law. Forum and Jurisdiction. This Agreement shall
be construed and interpreted in accordance with the laws of the State
of New York, except as the corporate law of Bermuda applies to Kina
and as federal law may be applicable.
Section 7.3 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or certified
mail, postage prepaid, or by prepaid telegram addressed as follows:
If to ARC: William W. Perry III
2345 Friendly Road
Fernandina Beach, FL 32034
28
<PAGE>
With copies to: Andrew I. Telsey, Esq.
2851 S. Parker Rd., Suite 720
Aurora, CO 80014
If to Kina: Ms. Victoria Lam
United Kina Brewing Group, Ltd.
21st Floor, Central Plaza
Wanchai, Hong Kong
With copies to: Iwona Alami, Esq.
30251 Golden Lantern, Suite E
Laguna Niguel, CA 92677
or such other addresses as shall be furnished in writing by any party
in the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given as of the date so
delivered, mailed, or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to secure
relief from any default hereunder or breach hereof, the breaching
party or parties shall reimburse the non-breaching party or parties
for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the
other parties that, unless and until the reorganization contemplated
by this Agreement has been consummated, they and their representatives
will hold in strict confidence all data and information obtained with
respect to another party or any subsidiary thereof from any
representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall
not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or
is required by law to be published; and (ii) to the extent that such
data or information must be used or disclosed in order to consummate
the transactions contemplated by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to
have full knowledge of all information set forth in the other party's
schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is solely
between ARC and Kina and, except for the Kina shareholders or as
otherwise specifically provided herein, no director, officer, stock-
holder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agree-
ment.
29
<PAGE>
Section 7.8 Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter
hereof. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There
are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by a
written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive the
Closing Date and the consummation of the transactions herein
contemplated for three years.
Section 7.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and
all of which taken together shall be but a single instrument.
Section 7.11 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and remedy,
whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the
same or any other default then, theretofore, or thereafter occurring
or existing. At any time prior to the Closing Date, this Agreement
may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of
this Agreement may be waived or the time for performance hereof may be
extended by a writing signed by the party or parties for whose benefit
the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals
hereof are incorporated by this reference and are made a part hereof
as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all of
their respective costs and expenses incurred in connection with the
negotiation of this Agreement and in the consummation of the
transactions provided for herein and the preparation therefor.
Section 7.14 Headings; Context. The headings of the sections
and paragraphs contained in this Agreement are for convenience of
reference only and do not form a part hereof and in no way modify,
interpret or construe the meaning of this Agreement.
30
<PAGE>
Section 7.15 Benefit. This Agreement shall be binding upon and
shall insure only to the benefit of the parties hereto, and their
permitted assigns hereunder. This Agreement shall not be assigned by
any party without the prior written consent of the other party.
Section 7.16 Public Announcements. Except as may be required by
law, neither party shall make any public announcement or filing with
respect to the transactions provided for herein without the prior
consent of the other party hereto.
Section 7.17 Severability. In the event that any particular
provision or provisions of this Agreement or the other agreements
contained herein shall for any reason hereafter be determined to be
unenforceable, or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not affect the
remaining provisions of such agreements, which shall continue in full
force and effect and be binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the event
any of the conditions specified in this Agreement shall not be
fulfilled on or before the Closing Date, either of the parties have
the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement without liability to
any other party. The election to proceed shall not affect the right
of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
Section 7.19 No Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair meaning
and intendment, and not strictly for or against either party hereto,
regardless of who drafted or was principally responsible for drafting
the Agreement or terms or conditions hereof.
Section 7.20 Execution Knowing and Voluntary. In executing this
Agreement, the parties severally acknowledge and represent that each:
(a) has fully and carefully read and considered this Agreement; (b)
has been or has had the opportunity to be fully apprised of its
attorneys of the legal effect and meaning of this document and all
terms and conditions hereof; and (c) is executing this Agreement
voluntarily, free from any influence, coercion or duress of any kind.
Section 7.21 Joint Preparation. This Agreement is to be deemed
to have been prepared jointly by the parties hereto and any
uncertainty or ambiguity existing herein, if any, shall not be
interpreted against any party, but shall be interpreted according to
the application of the rules of interpretation for arm's length
agreements.
31
<PAGE>
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly
authorized, and entered into as of the date first above written.
ANTARES RESOURCES CORPORATION
ATTEST:
By:/s/ William W. Perry
- -------------------------- ----------------------------
Secretary or William W. Perry, President
Assistant Secretary
ATTEST: UNITED KINA BREWING GROUP, LTD.
By: /s/ Victoria Lam
- --------------------------- -----------------------------------
Secretary or Victoria Lam, President
Assistant Secretary
33
<PAGE>
EXHIBIT "A"
-----------
LIST OF KINA SHAREHOLDERS
-------------------------
34
<PAGE>
List of Kina Shareholders
# of Kina Shares # of ARC Shares
Name to be Exchanged to be Issued
- ---- --------------- ---------------
Richland Asia Limited 57,600 1,608,000
Harrington Worldwide
Holdings Ltd. 27,876 871,286
Inter-Asia Investments
Ltd. 58,800 1,641,500
Prime Force (Asia)
Limited 1,055,724 29,379,214
-------------- -------------
TOTAL 1,200,000 33,500,000
35
<PAGE>
EXHIBIT "B"
-----------
TERMS OF ARC SERIES B PREFERRED STOCK
--------------------------------------
36
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES,
LIMITATIONS AND RELATIVE RIGHTS OF
SERIES B 9% CONVERTIBLE PREFERRED STOCK
OF
ANTARES RESOURCES CORPORATION
ANTARES RESOURCES CORPORATION, a corporation organized and
existing under the laws of the State of New York (the "Company" or
"Corporation")
DOES HEREBY CERTIFY THAT, pursuant to the authority contained in
the Certificate of Incorporation, as amended, and in accordance with
the laws of the State of New York, the Company's Board of Directors
has duly adopted the following resolution creating a series of the
class of its authorized preferred stock, designated as "Series B 9%
Convertible Preferred Stock" effective as of March 23, 1995:
RESOLVED THAT:
WHEREAS, pursuant to the Company's Certificate of Incorporation, as
amended, the Board of Directors of the Company has the authority to
divide and issue the Company's authorized preferred stock in series,
to designate the same to distinguish it from the shares of all other
series, to divide the class of preferred shares into series and to fix
and determine the relative rights and preferences of the shares of any
such series so established to the fullest extent permitted by said
Certificate of Incorporation, as amended, and the laws of the State of
New York, and hereby wishes to do so,
NOW, THEREFORE, BE IT
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the
Certificate of Incorporation of the Corporation, as amended, the Board
of Directors hereby creates a series of Preferred Stock of the
Corporation to consist initially of 400,000 shares, and hereby fixes
the designations, powers, conversion privileges, preferences and other
special rights, and the qualifications, limitations or restrictions of
the shares of such Series (in addition to the designations, powers,
preferences and other special rights, and the qualifications,
limitations or restrictions thereof set forth in the Certificate of
Incorporation, as amended, which are applicable to the Preferred Stock
of all series) as follows:
37
<PAGE>
1. Designation of Series and Number of Shares.
-------------------------------------------
The designation of the series of Preferred Stock created by this
Resolution shall be "Series B 9% Convertible Preferred Stock"
(hereinafter in this Resolution referred to as "This Series"), and the
number of shares that shall constitute This Series shall be 400,000,
which number of shares may be decreased (but not below the number of
shares thereof then outstanding) from time to time by the Board of
Directors. Shares of This Series shall be issued and become
outstanding as determined by the Board of Directors
2. Effective Date.
---------------
The effective date of This Series shall be March 23, 1995.
3. Dividends.
----------
The holders of This Series shall be entitled to receive a nine percent
(9%) per annum cumulative dividend out of the assets of the Company
which are legally available therefore from and after the effective
date.
4. Voting Powers.
--------------
The designation, preferences and rights of This Series shall not be
amended without the approval of a majority of the outstanding shares
of This Series, voting separately as a class. Other than the
foregoing, the holders of shares of This Series shall have no voting
rights with regard to the affairs of the Corporation; provided,
however, that the foregoing limitation on the voting rights of This
Series shall not impair any contractual rights of any kind granted by
the Corporation to the holders of This Series.
5. Redemption.
-----------
The shares of This Series shall not be subject to redemption.
38
<PAGE>
6. Conversion of This Series into Common Stock.
--------------------------------------------
a. The shares of This Series shall be convertible, at the option of
the respective owners of record thereof, at any time commencing
thirteen months from the effective date of This Series or upon the
effectiveness of the Company's proposed registration statement,
whichever event occurs earlier, except that the Board of Directors
may, in its sole discretion, by resolution, authorize conversion prior
thereto, into fully paid and non-assessable shares of Common Stock of
the Company in the ratio of one (1) share of Common Stock for each
share of This Series in accordance with and subject to the following
terms and conditions:
(1) Such shares shall be convertible at the office of the
Transfer Agent for the Corporation's Common Stock (or at such other
place or places as may be designated by the Corporation with notice to
the holders of record of This Series) into fully paid and non-
assessable shares of Common Stock at the rate of one (1) share of
Common Stock for each share of This Series, subject to adjustment as
provided herein.
(2) In order to convert shares of This Series into Common Stock,
the holder thereof shall surrender the certificate or certificates for
shares of This Series, duly endorsed to the Corporation or in blank,
or accompanied by proper instruments of transfer to the Corporation or
in blank (or, in the case of a lost or destroyed certificate, proof of
loss or destruction and indemnity as required by the Corporation), at
the office of the Transfer Agent, and shall give written notice to the
Corporation that he elects to convert the same and shall state therein
the name or names in which he wishes the certificates or certificates
for Common Stock to be issued. If the certificates for Common Stock
are to be issued in a name or names other than that in which such
shares of This Series was registered, the holder of the certificates
being surrendered shall, with such written notice, pay to the Transfer
Agent a sum to cover any tax which may be payable in respect of any
transfer involved in such issuance, or shall establish to the
satisfaction of the Transfer Agent that such tax has been paid or is
not due and payable. The Transfer Agent will, as soon as practicable
thereafter, deliver at such office to such holder, or to his nominee
or nominees, a certificate or certificates for the number of full
shares of Common Stock to which he shall be entitled as aforesaid,
subject to any adjustment, as provided in Paragraph 8. Shares of This
Series shall be deemed to have been converted as of the date of the
surrender of such shares for conversion as provided above, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holders of such shares of Common Stock on such date.
39
<PAGE>
(3) The conversion rate provided in clause (1) above shall be
subject to adjustment as set forth in Paragraph 8. Upon each
adjustment of the conversion rate, a written instrument signed by an
officer of the Corporation setting forth the adjustment and
accompanied by an opinion of an independent public accountant or
accountants (who may be the independent public accountant or
accountants then acting as auditor or auditors for the Corporation)
setting forth the computation of the adjustment and a summary of the
facts upon which it is based, together with a copy of the resolutions,
if any, of the Board of Directors passed in connection therewith,
shall forthwith be filed with the Transfer Agent for the shares of
This Series and transmitted to the holders of This Series, and any
adjustment so evidenced, made in good faith, shall be binding upon all
stockholders and the Corporation.
(4) All shares of This Series which shall have been converted
into Common Stock as provided in this Paragraph 6 shall not be
reissued as shares of This Series but shall have the status of
authorized and unissued shares of Preferred Stock undesignated as to
series.
b. Fractional shares of Common Stock shall not be issued upon the
conversion of This Series but shall be addressed by the Corporation
through the rounding of such fraction upon to the nearest whole share
of Common Stock.
40
<PAGE>
7. Liquidation or Dissolution.
---------------------------
In the event of any liquidation, dissolution, or winding up of the
affairs of the Company, whether voluntary or involuntary, after
payment or provision for payment of the debts or liabilities of the
Corporation, the holders of shares of This Series shall be preferred
over all other holders of stock of the Company, to the amount of $2.50
per share. Neither the merger or consolidation of the Corporation,
nor the sale, lease or conveyance of all or a part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning hereof.
8. Adjustment of Conversion Rate.
------------------------------
The rate at which each share of This Series may be converted into
Common Stock (hereinafter called the "conversion rate") shall be
subject to the following adjustments:
a. While any such share of This Series shall be outstanding, in case
this Corporation shall subdivide the outstanding shares of Common
Stock into a greater number of shares of Common Stock, the conversion
rate in effect immediately prior to such subdivision, shall be
proportionately increased, such increase to become effective
immediately after the opening of business on the date following the
day upon which such subdivision becomes effective.
b. Any dividend to holders of Common Stock in shares of Common Stock
shall be considered a subdivision of the outstanding shares of Common
Stock and an adjustment in the conversion rate shall be made in
accordance with the provisions of Paragraph 8a, with respect to the
subdivision of outstanding shares of Common Stock.
c. No adjustment of the conversion rate shall be made by reason of
the issuance of Common Stock to non-shareholders of the Corporation in
exchange for cash, property or services, provided that if the
Corporation shall offer to the holders of the Corporation's Common
Stock any rights to subscribe for any securities of the Corporation,
then the holders of This Series shall be entitled to subscribe for the
purchase of the same number of securities on identical terms as they
would have been entitled had they held that number of shares of Common
Stock into which the shares of This Series was convertible on such
date.
41
<PAGE>
d. In case the Corporation shall be reorganized or recapitalized or
shall be consolidated with or merged into another corporation, or
shall sell or transfer its property and assets as, or substantially
as, an entirety, proper provisions shall be made as part of the terms
of such reorganization, recapitalization, consolidation, merger, sale
or transfer whereby the holder of any shares of This Series
outstanding immediately prior to such event shall thereafter be
entitled to such conversion rights with respect to securities of the
corporation resulting from such reorganization, recapitalization,
consolidation or merger, or to which such sale or transfer shall be
made, as shall be substantially equivalent to the conversion rights
provided for herein with respect to such shares of This Series.
9. Other Rights.
-------------
Except as provided by law, the shares of This Series shall not have
any designation, preferences, or relative, participating, optional or
other special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein and in the Certificate of
Incorporation, as amended, of the Corporation.
IN WITNESS WHEREOF, Antares Resources Corporation has caused this
Certificate to be signed by its duly authorized officers.
Dated: , 1996.
ANTARES RESOURCES CORPORATION
By:-------------------------------
President or Vice President
ATTEST:
By:-------------------------------
Secretary or Assistant Secretary
42
<PAGE>
EXHIBIT "C"
-----------
FORM OF INVESTMENT LETTER
---------------------------
44
<PAGE>
INVESTMENT LETTER
September 30, 1996
Antares Resources Corporation
2345 Friendly Road
Fernandina Beach, FL 32034
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common
stock of United Kina Brewing Group, Ltd., a Bermuda corporation,
("Kina"), as described below (endorsed, or having executed stock
powers attached) in acceptance of and subject to the terms and
conditions of that certain Agreement and Plan of Reorganization (the
"Agreement"), between Kina and Antares Resources Corporation ("ARC" or
the "Company"), dated September , 1996, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of ARC (the
"Exchange Shares"). If any condition precedent to the Agreement is
not satisfied within the relevant time parameters established in the
Agreement (or any extension thereof), the certificate(s) are to be
returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees
with you that, in connection with the undersigned's acceptance of the
Exchange Shares and as of the date of this letter:
1. The undersigned is aware that his, her or its acceptance of
the Exchange Shares is irrevocable, absent an extension of the
Expiration Date of any material change to any of the terms and
conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares
referred to above and that ARC will acquire a good and unencumbered
title thereto.
3. The undersigned has full power and authority to enter into
this agreement and that this agreement constitutes a valid and legally
binding obligation of the undersigned.
45
<PAGE>
4. By execution hereof, the undersigned hereby confirms that the
ARC common stock to be received in exchange for Kina common stock (the
"Securities"), will be acquired for investment for the undersigned's
own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that the undersigned
has no present intention of selling, granting any particiaption in, or
otherwise distributing the same. By execution hereof, the undersigned
further represents the undersigned does not have any contract,
undertaking, agreement or arrangement with any third party, with
respect to any of the Securities.
5. The undersigned understands that the Securities are being
issued pursuant to available exemption thereto and have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under any state securities laws. The undersigned
understands that no registration statement has been filed with the
United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as me by an impartial review of such
a registration statement by the Securities and Exchange Commission or
other regulatory authority will not be forthcoming. the undersigned
understands that he/she/it cannot sell the Securities unless such sale
is registered under the 1933 Act and applicable state securities laws
or exemptions from such registration become available. In this
connection the undersigned understands that the Company has advised
the Transfer Agent for the Common Shares that the Securities are
"restricted securities" under the 1933 Act and that they may not be
transferred by the undersigned to any person without the prior consent
of the Company, which consent of the Company will require an opinion
of my counsel to the effect that, in the event the Securities are not
registered under the 1933 Act, any transfer as may be proposed by the
provisions of the 1933 Act. To this end, the undersigned acknowledges
that a legend to the following effect will be placed upon the
certificate representing the Securities and that the Transfer Agent
has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERD UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF WHICH MUST
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on the
undersigned's certificate for the Common Shares limits their value,
including their value as collateral.
46
<PAGE>
6. The undersigned represents that it is experienced in
evaluation and investing in securities of companies and acknowledges
that he/she/it is able to fend for itself, can bear the economic risk
of this investment and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and
risks of the investment in Securities.
In Witness Whereof, the undersigned has duly executed this
Investment Letter as of the date indicated hereon.
Dated: , 1996
Very truly yours,
- ----------------------
(signature)
- ----------------------
(print name in full)
- ----------------------
(street address)
- ----------------------
(city, state, zip)
- ----------------------
(social security number or
employer identification no.)---------------------------
47
Antares Resources Corporation
September , 1996
Page 50
<PAGE>
AMENDMENT TO PLAN OF REORGANIZATION
THIS AMENDMENT to that certain Agreement and Plan of Reorganization made
and entered into on the 30th day of September 1996 (the "Agreement"), by and
between ANTARES RESOURCES CORPORATION, a New York corporation with its
principal place of business located at 2345 Friendly Road, Fernandina Beach,
Florida 32034 ("ARC") and UNITED KINA BREWING GROUP, LTD., a Bermuda
corporation with its principal place of business located at 21st Floor,
Central Plaza, Wanchai, Hong Kong ("Kina"), who hereby agree to amend the
specific provisions of the Agreement included herein below as follow:
Section 2.2 of the Agreement is hereby amended to read as follows:
Section 2.2 Capitalization. The authorized capitalization of ARC consists
of 200,000,000 shares of Common Stock, par value $0.001 per share and
5,000,000 shares of Preferred Stock, par value $0.01 per share.
Simultaneous with the Closing of this Agreement, the Board of Directors of
ARC shall authorize and approve a reverse split of the ARC issued and
outstanding Common Stock, whereby 1 share of Common Stock shall be issued in
exchange for every 10 shares of Common Stock presently issued and
outstanding, which reverse split shall have an effective date simultaneous
with the Effective Date of this Agreement. As a result and on Closing Date,
as defined herein, there will be no more than 2,500,000 common shares issued
and outstanding and reserved for issuance (including shares reserved for
issuance applicable to issued and outstanding Common Stock Purchase Warrants)
(the "ARC Common Shares"), except that said number of ARC Common Shares may
be increased by no more than 5% and 126,000 shares of Series B Convertible
Preferred Stock issued and outstanding (the "ARC Preferred Shares"),
convertible upon receipt by ARC of notice of the same into an aggregate
25,200 shares of common stock (post reverse split), held by the then existing
securities holders of ARC. All issued and outstanding ARC Common Shares and
Preferred Shares have been legally issued, fully paid and are nonassessable.
The balance of Section 2.2 of the Agreement shall remain as stated.
Section 3.5 (a)(iv) is hereby amended to read as follows:
(iv) the Closing does not take place by the close of business on or before
November 6, 1996, this Agreement shall be canceled and void, unless the Closing
date is extended by the mutual consent of the parties hereto in writing.
Section 3.8 is hereby amended to read as follows:
Section 3.8 Effective Date. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 5:00 P.M. Pacific
Time on November 6, 1996, unless the parties agree otherwise, in writing.
DATED this 7th day of October, 1996.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Amendment to the Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first above written.
ANTARES RESOURCES CORPORATION
ATTEST:
- ------------------------- By:----------------------------
Secretary or William W. Perry, President
Assistant Secretary
ATTEST: UNITED KINA BREWING GROUP, LTD.
- ------------------------- By: ----------------------------
Secretary or Victoria Lam, President
Assistant Secretary
<PAGE>
AMENDMENT NO. 2 TO PLAN OF REORGANIZATION
THIS AMENDMENT to that certain Agreement and Plan of Reorganization made
and entered into on the 6th day of November 1996 (the "Agreement"), by and
between ANTARES RESOURCES CORPORATION, a New York corporation with its
principal place of business located at 2345 Friendly Road, Fernandina Beach,
Florida 32034 ("ARC") and UNITED KINA BREWING GROUP, LTD., a Bermuda
corporation with its principal place of business located at 21st Floor,
Central Plaza, Wanchai, Hong Kong ("Kina"), who hereby agree to amend the
specific provisions of the Agreement included hereinbelow as follow:
Section 3.5 (a)(iv), as amended, is hereby again amended to read as
follows:
(iv) the Closing does not take place by the close of business on or
before November 27, 1996, this Agreement shall be cancelled and void, unless
the Closing date is extended by the mutual consent of the parties hereto in
writing.
Section 3.8, as amended, is hereby again amended to read as follows:
Section 3.8 Effective Date. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 5:00 P.M. Pacific
Time on November 27, 1996, unless the parties agree otherwise, in writing.
DATED this 6th day of November, 1996.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Amendment to the Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first above written.
ANTARES RESOURCES CORPORATION
ATTEST:
By: /s/ William W. Perry
- --------------------------- ------------------------
Secretary or William W. Perry, President
Assistant Secretary
ATTEST: UNITED KINA BREWING GROUP, LTD.
By: /s/ Victoria Lam
- ---------------------------- ----------------------------
Secretary or Victoria Lam, President
Assistant Secretary
<PAGE>
AMENDMENT NO. 3 TO PLAN OF REORGANIZATION
THIS AMENDMENT to that certain Agreement and Plan of Reorganization made
and entered into on the 26th day of December 1996 (the "Agreement"), by and
between ANTARES RESOURCES CORPORATION, a New York corporation with its
principal place of business located at 2345 Friendly Road, Fernandina Beach,
Florida 32034 ("ARC") and UNITED KINA BREWING GROUP, LTD., a Bermuda
corporation with its principal place of business located at 21st Floor,
Central Plaza, Wanchai, Hong Kong ("Kina"), who hereby agree to amend the
specific provisions of the Agreement included hereinbelow as follow:
1. Section 2.2 is hereby amended to read as follows:
"Section 2.2 Capitalization. The authorized capitalization of ARC
consists of 200,000,000 shares of Common Stock, par value $0.001 per share and
5,000,000 shares of Preferred Stock, par value $0.01 per share. Simultaneous
with the Closing of this Agreement, the Board of Directors of ARC shall
authorize and approve undertake a reverse split of the ARC issued and
outstanding Common Stock, whereby 1 share of Common Stock shall be issued in
exchange for every 10 shares of Common Stock presently issued and outstanding,
which reverse split shall have an effective date as of the Closing Date, as
defined herein. As a result and on Closing Date, as defined herein, there will
be no more than 2,500,000 common shares issued and outstanding and reserved for
issuance (including shares reserved for issuance applicable to issued and
outstanding Common Stock Purchase Warrants) (the "ARC Common Shares"), except
that said number of ARC Common Shares may be increased by no more than 5% and
126,000 shares of Series B Convertible Preferred Stock issued and outstanding
(the "ARC Preferred Shares"), convertible upon receipt by ARC of notice of the
same into an aggregate 25,200 shares of common stock (post reverse split), held
by the then existing securities holders of ARC. The aforesaid figures do not
include those shares of ARC Common Stock to be issued to Kina herein.
Additionally however, the number of shares of ARC Common Shares issued and
outstanding may increase or decrease by 100,000 common shares pursuant to the
terms of that certain Agreement dated even date herewith, by and between Kina
and certain current shareholders of ARC, a copy of which is attached hereto and
incorporated herein as Exhibit A. All issued and outstanding ARC Common
Shares and Preferred Shares have been legally issued, fully paid and are
nonassessable."
The balance of this section shall remain as stated.
2. Section 2.3 is hereby amended to read as follows:
"Section 2.3 Subsidiaries. As of the Closing Date, ARC shall have two
(2) wholly owned subsidiaries, including Empire Energy, Inc. and Southern
Trailer Manufacturing, Inc. ARC will not own, beneficially or of record, any
other corporation. At the Closing, other than as disclosed herein or in the
ARC Schedules, ARC shall own no securities or have any interest in any
corporation, partnership, or other form of business organization other than
as disclosed herein."
3. Section 2.4, as amended, is hereby again amended to read as follows:
Section 2.4 Financial Statements.
"(a) Included in the ARC Schedules are the audited consolidated balance
sheet of ARC for the years ended September 30, 1996 and 1995 and the related
statements of operations, stockholders' equity and cash flows for said years,
which are included in the schedules identified in Section 2.20(c)."
Subparagraphs (b) and (c) included in this section shall remain as stated. The
following subparagraph of Section 2.4 is hereby amended to read as follows:
"(d) Other than as included in the ARC Schedules, ARC has no liabilities
with respect to the payment of any federal, state, county, local or other
taxes, current or accrued (including any deficiencies, interest or penalties);"
Subparagraphs (e) and (f) of Section 2.4 are hereby deleted in their entirety.
4. Section 2.6 is hereby amended to read as follows:
"Section 2.6 Absence of Certain Changes or Events. Except as described
herein or in the ARC Schedules, since September 30, 1996:"
The balance of Section 2.6 shall remain as stated.
5. Subsection 2.20 (c) is hereby amended to read as follows:
"(c) the description of any material adverse change in the business,
operations, property, assets, or condition of ARC since September, 1996
required to be provided pursuant to Section 2.6; and"
6. Section 3.4 is hereby amended to read as follows:
"Section 3.4 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date this Amendment is
executed by the parties hereto, provided that the shareholders of Kina have
approved the terms of this Agreement ("Closing Date"), and all documentation
referenced herein is delivered to the respective party herein, unless a
different date is mutually agreed to in writing by the parties hereto."
7. Section 3.8 is hereby deleted in its entirety.
8. Subsection 6.5(c) is hereby amended to read as follows:
"(c) The authorized capitalization of ARC consists of 200,000,000 shares
of Common Stock, par value $0.001 per share and 5,000,000 shares of Preferred
Stock, par value $0.01 per share. As of the Closing Date, there will be no
more than 2,500,000 (post reverse split) common shares issued and outstanding
and reserved for issuance (except that said number of common shares may be
increased by no more than 5%) and 126,000 shares of Series B Convertible
Preferred Stock issued and outstanding, convertible upon receipt by ARC of
notice of the same into an aggregate 25,200 shares of common stock (post
reverse split), held by the then existing securities holders of ARC, except
as provided by Exhibit --- of the Agreement. All issued and outstanding
shares are legally issued, fully paid and nonassessable and not issued in
violation of the preemptive rights of any person."
9. Section 6.6 is hereby deleted in its entirety.
<PAGE>
DATED this 26th day of December, 1996.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Amendment to the Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first above written.
ANTARES RESOURCES CORPORATION
ATTEST:
By: /s/ William W. Perry
- ---------------------------- --------------------------------
Secretary or William W. Perry, President
Assistant Secretary
ATTEST: UNITED KINA BREWING GROUP, LTD.
By:/s/ Victoria Lam
- ---------------------------- --------------------------------
Secretary or Victoria Lam, President
Assistant Secretary
<PAGE>
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
------------------------------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT"), AND MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S OF THE 1933 ACT)
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN
REGULATION S OF THE 1933 ACT) EXCEPT PURSUANT TO REGISTRATION UNDER OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN MAKING AN
INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT dated as of December 26,
1996 (the "Agreement"), is executed in reliance upon the exemption from
registration afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933,
as amended. Capitalized terms used herein and not defined shall have the
meanings given to them in Regulation S.
United Kina Brewing Group Limited ("KINA"), a Bermuda corporation, and a
holding company with interests in seven joint venture brewing companies, and
Antares Resources Corporation, a New York corporation ("ARC"), have executed
a Agreement and Plan of Reorganization as of December 26, 1996, pursuant to
which all of the common stock of KINA shall be acquired by ARC in exchange
for common stock of ARC (the "Acquisition") subject to fulfillment of certain
conditions. All references to the Seller or the Company in this Agreement
refer to the combined entity of KINA and ARC as if the Acquisition had taken
place. Simultaneous with the closing of the Acquisition, ARC shall undertake
a reverse split of the ARC issued and outstanding common stock, whereby 1
share of common stock will be issued in exchange for every 10 shares of
common stock then issued and outstanding.
KINA is engaged in the business of manufacturing, distributing and
marketing of beer in the People's Republic of China.
This Agreement has been executed by the undersigned "Buyer" in
connection with the private placement of 10% Convertible Debentures due
December 31, 1998. Buyer hereby represents and warrants to, and agrees with
Seller:
1. Agreement To Subscribe; Purchase Price.
(a) Subscription. The undersigned Buyer hereby subscribes for and
agrees to purchase the Seller's 10% Convertible Debentures due December 31,
1998 substantially in the form of the Debentures attached as Exhibit A hereto
and incorporated herein by reference, and having an aggregate original
principal amount of up to U.S. $2,000,000 (singularly, a "Debenture," and
plurally, the "Debentures"), at an aggregate purchase price as set forth in
subsection (b) herein.
(b) Payment. The Purchase Price for the Buyer's portion of the
Debentures shall be one million United States Dollars (U.S. $1,000,000) (the
"Purchase Price"), which shall be payable at the Closing, as defined below,
pursuant to paragraph (C) herein by delivering immediately available funds in
United States Dollars by wire transfer to the designated attorney trust
account as Escrow Agent ("Escrow Agent") for closing by delivery of
securities versus payment.
1
<PAGE>
(c) Closing. (i) The closing of the purchase and sale of the
Debentures pursuant to paragraph (a) hereof shall take place subject to the
satisfaction of the conditions set forth in Sections 7 and 8 hereof, on or
before December 26, 1996 (the "Closing Date") after the Company has delivered
to the offices of the Escrow Agent $1,000,000.00 of Debentures in
denominations of not less than $50,000 and registered in the names provided
by the Buyer.
(ii) The Company and the Buyer agree that they shall instruct the
Escrow Agent as follows:
A. On the Closing Date, for each Debenture subscribed for and delivered
to the Escrow Agent pursuant to the paragraph (b) above, the Escrow Agent
shall has wired payment of the Purchase Price for the Debentures (less any
fees Company has authorized Escrow Agent to deduct) in immediately available
funds to the Company's account as provided in the escrow instructions to the
Escrow Agent and release the Debentures described in paragraph (a) above to
the Buyer.
B. The Escrow Agent will make delivery of the number of Debentures set
forth in clause (a) above in accordance with the instructions of the Buyer
subject to customary settlement procedures upon confirmation of the wiring of
funds to the Company as described in clause (b)(i) above, except that all
such Debentures shall be delivered to a location outside the United States
and none of the Debentures shall be delivered to a U.S. Person (as defined
in Regulation S).
2. Buyer Representations and Covenants; Access to Information.
Offshore Transaction. In connection with the purchase and sale of the
Debentures, Buyer represents and warrants to, and covenants and agrees with
Seller as follows:
(i) Buyer is not a natural person and is not organized under the laws
of any jurisdiction within the United States, was not formed by a U.S.
Person (as defined in Section 902(o) of Regulation S) for the purpose of
investing in Regulation S securities and is not otherwise a U.S. Person.
Buyer is not, and on the Closing Date will not be, an affiliate of Seller.
To enable the Company to avoid withholding interest paid, the Buyer certifies
under penalty of perjury that it is neither a citizen nor a resident of the
United States and that its address set forth in the Escrow Agreement is
correct;
(ii) At the time the buy order was originated, Buyer was outside the
United States and is outside of the United States as of the date of the
execution and delivery of this Agreement and will be outside the United
States on the Closing Date;
(iii) No offer to purchase the Debentures or the common stock of Seller
issuable upon conversion of the Debentures (collectively, the "Securities"),
was made while Buyer was present in the United States;
(iv) Buyer is purchasing the Securities for its own account and not (i)
with a view to or for sale in connection with, any distribution thereof or
(ii) for the account or on behalf of any U.S. Person, and Buyer is qualified
to purchase the Securities under the laws of its jurisdiction of residence,
and the offer and sale of the Securities will not violate the securities or
other laws of such jurisdiction;
(v) All offers and sales of any of the Securities by Buyer prior to the
end of the Restricted Period (as hereinafter defined) shall be made in
compliance with any applicable securities laws of any applicable jurisdiction
and in accordance with Rule 903 and 904, as applicable, of Regulation S or
pursuant to registration of securities under the 1933 Act or pursuant to an
exemption from registration. In any case, none of the Securities have been
and will be offered or sold by Buyer to, or for the account or benefit of, a
U.S. Person or within the United States until after the end of the forty (40)
day period commencing on the date of closing of the offering of the
Securities (the "Restricted Period"), as certified by Buyer to Seller, and
thereafter only pursuant to a Registration Statement or an applicable
exemption therefrom;
2
<PAGE>
(vi) The transactions contemplated by this Agreement (a) have not been
and will not be pre-arranged by Buyer with a purchaser located in the United
States or a purchaser which is a U.S. Person, and (b) are not and will not be
part of a plan or scheme by Buyer, to evade the registration provisions of
the 1933 Act;
(vii) Buyer understands that the Securities are not registered under
the 1933 Act and are being offered and sold to it in reliance on specific
exclusions from the registration requirements of Federal and State securities
laws, and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of Buyer set forth herein in order to determine the applicability of such
exclusions and the suitability of Buyer and any purchaser from Buyer to
acquire the Securities;
(viii) The Buyer has agreed, and to the best knowledge of the Buyer,
each distributor, if any, participating in the offering of the Securities,
has agreed that all offers and sales of the Securities prior to the
expiration of a period commencing on the closing of the offering of the
Debentures and ending forty days thereafter shall not be made to U.S. persons
or for the account or benefit of U.S. persons and shall otherwise be made in
compliance with the provisions of Regulation S. Buyer is not a distributor
or dealer. Buyer and its controlling persons agree to indemnify the Company
for any misrepresentation of Buyer contained herein;
(ix) Buyer has not conducted and shall not conduct any "directed
selling efforts" as that term is defined in Rule 902(b) of Regulation S; nor
has Buyer conducted any general solicitation relating to the offer and sale
of any of the Securities in the United States or elsewhere;
(x) This Agreement has been duly authorized, validly executed and
delivered on behalf of Buyer and is a valid and binding agreement in
accordance with its terms, subject to general principals of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally;
(xi) The execution and delivery of this Agreement and the consummation
of the purchase of the Securities, and the transactions contemplated by this
Agreement do not and will not conflict with or result in a breach by Buyer of
any of the terms or provisions of, or constitute a default under, the
articles of incorporation or by-laws (or similar constitutive documents) of
Buyer or any indenture, mortgage, deed of trust, or other material agreement
or instrument to which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation of the United States or any State thereof or any applicable
decree, judgment or order of any Federal or State court, Federal or State
regulatory body, administrative agency or other United States governmental
body having jurisdiction over Buyer or any of its properties or assets;
(xii) All invitations, offers and sales of or in respect of, any of the
Securities, by Buyer and any distribution by Buyer of any documents relating
to any offer by it of any of the Securities will be in compliance with
applicable laws and regulations and will be made in such a manner that no
prospectus need be filed and no other filing need be made by Seller with any
regulatory authority or stock exchange in any country or any political sub-
division of any country;
3
<PAGE>
(xiii) Buyer will not make any offer or sale of the Securities by any
means which would not comply with the laws and regulations of the territory
in which such offer or sale takes place or to which such offer or sale is
subject or which would in connection with any such offer or sale impose upon
Seller any obligation to satisfy any public filing or registration
requirement or provide or publish any information of any kind whatsoever or
otherwise undertake or become obligated to do any act; and
(xiv) Neither the Buyer nor any of its affiliates has entered, has the
intention of entering, or will during the Restricted Period enter into any
put option, short position or other similar instrument or position with
respect to any of the Securities or securities of the same class as the
Securities.
(xv) the Buyer (or others for whom it is contracting hereunder) has
been advised to consult its own legal and tax advisors with respect to
applicable resale restrictions and applicable tax considerations and it (or
others for whom it is contracting hereunder) is solely responsible (and the
Seller is not in any way responsible) for compliance with applicable resale
restrictions and applicable tax legislation.
(xvi) No Government Recommendation or Approval. Buyer understands that
no Federal or State or foreign government agency has passed on or made any
recommendation or endorsement of the Securities.
(xvii) Current Public Information. Buyer has received and carefully
reviewed the accompanying Disclosure Documents, as defined herein. Buyer, in
electing to subscribe for the Securities hereunder, has relied upon an
independent investigation made by it and its representatives and advisors, if
any, and has, prior to the date hereof, been given access to and the
opportunity to examine all books and records of the Company, and all material
contracts and documents of the Company. Buyer has been given no oral or
written representations or assurances from the Company or any representation
of the Company other than as set forth in this Agreement or in a document
executed by a duly authorized representative of the Company making reference
to this Agreement. The Buyer has such experience in business and financial
matters that it is capable of evaluating the risk of its investment and
determining the suitability of its investment. Buyer understands that all
financial information set forth in the Disclosure Documents is subject to the
qualifications set forth therein.
(xviii) No Legal Advice from Company. Buyer acknowledges that Buyer
has had the opportunity to review this Agreement and the transactions
contemplated herein with Buyer's own legal counsel. Buyer is relying solely
on such counsel and not on any statements or representations of the Company
for legal advice with respect to this investment, except for the
representations, warranties and covenants set forth herein.
(xix) No Public Solicitation. Buyer knows of no public solicitation or
advertisement of an offer in connection with the proposed issuance and sale
of the Securities.
(xx) Buyer's Sophistication. Buyer acknowledges that the purchase of
the Securities involves a high degree of risk, including the total loss of
Buyer's investment. Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
purchasing the Securities.
(xxi) Tax Status. Buyer is not a "10-percent Shareholder" (as defined
in Section 871(h)(3)(B) of the U.S. Internal Revenue Code) of Seller.
4
<PAGE>
3. Seller Representations and Covenants.
(a) Reporting Company Status. Seller is a "Reporting Issuer" as defined by
Rule 902 of Regulation S. Seller has registered its Common Stock, $0.001 par
value per share (the "Common Stock"), pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Common Stock is listed and trades on NASDAQ Small Cap Market. Seller has
filed all material required to be filed pursuant to all reporting obligations
under either Section 13(a) or 15(d) of the Exchange Act for a period of at
least twelve (12) months immediately preceding the offer or sale of the
Securities (or for such shorter period that Seller has been required to file
such material).
(b) Current Public Information. The Company has provided the Buyer with
true and correct copies of the Information Statement of United Kina Brewing
Group Limited, draft of the audited pro-forma financial statements of the
predecessors of the joint ventures in which KINA now holds interest, for the
fiscal years ending December 31, 1993, 1994 and 1995, report on Form 10-KSB
for fiscal year ending September 30, 1995 of ARC, the most recent report on
Form 10-QSB of ARC for the period ending June 30, 1996 and Proxy Statement of
ARC, and such other publicly available documents as requested by Buyer
(collectively, the "Disclosure Documents").
(c) Offshore Transaction. Seller has not offered any of the Securities to
any person in the United States, any identifiable groups of U.S. citizens
abroad, or to any U.S. Person, as such terms are used in Regulation S.
(i) Based upon the truth and accuracy of representations and warranties
of Buyer, at the time the buy order was originated, Seller and/or its agents
reasonably believe the Buyer was outside of the United States and was not a
U.S. person.
(ii) Based upon the truth and accuracy of representations and
warranties of Buyer, Seller and/or its agents reasonably believe that the
transaction has not been pre-arranged with a buyer in the United States.
(iii) No offer to buy or sell the Securities was or will be made by
Seller to any person in the United States.
(iv) The sale of the Securities by Seller pursuant to this Agreement
will (based in part upon the representations and warranties of the Buyer
contained herein) be made in accordance with the provisions and requirements
of Regulation S provided that the representations and warranties of Buyer in
Section 2(a) hereof are true and correct.
(v) The transactions contemplated by this Agreement (a) have not been
and will not be pre-arranged by Seller with a purchaser located in the United
States or a purchaser which is a U.S. Person, and (b) are not and will not be
part of a plan or scheme by Seller to evade the registration provisions of
the 1933 Act.
(d) No Directed Selling Efforts. In regard to this transaction, to the best
knowledge of the Seller, Seller has not conducted any "directed selling
efforts" as that term is defined in Rule 902 of Regulation S nor has Seller
conducted any general solicitation relating to the offer and sale of any of
the Securities in the United States or elsewhere.
(e) Concerning the Securities. The issuance, sale and delivery of the
Debentures have been duly authorized by all required corporate action on the
part of Seller, and when issued, sold and delivered in accordance with the
terms hereof and thereof for the consideration expressed herein and therein,
will be duly and validly issued, fully paid and non-assessable. The Common
Stock issuable upon conversion of the Debenture has been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Debentures, shall be duly and validly issued, fully paid, and non-assessable
and will not subject the holders thereof, if such persons are non-U.S.
persons, to personal liability by reason of being such holders. There are no
pre-emptive rights of any shareholder of Seller.
5
<PAGE>
(f) Subscription Agreement. This Agreement has been duly authorized,
validly executed and delivered on behalf of Seller and is a valid and binding
agreement in accordance with its terms, subject to general principals of
equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
(g) Non-contravention. The execution and delivery of this Agreement and the
consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in
a breach by Seller of any of the terms or provisions of, or constitute a
default under, the articles of incorporation or by-laws of Seller, or any
indenture, mortgage, deed of trust, or other material agreement or instrument
to which Seller is a party or by which it or any of its properties or assets
are bound, or any existing applicable law, rule or regulation of the United
States or any State thereof or any applicable decree, judgment or order of
any Federal or State court, Federal or State regulatory body, administrative
agency or other United States governmental body having jurisdiction over
Seller or any of its properties or assets.
(h) Approvals. Seller is not aware of any authorization, approval or
consent of any governmental body which is legally required for the issuance
and sale of the Debentures and the Common Stock issuable upon conversion
thereof to persons who are non-U.S. Persons, as contemplated by this
Agreement.
4. Exemption; Reliance on Representations. Buyer understands that the offer
and sale of the Securities are not being registered under the 1933 Act.
Seller and Buyer are relying on the rules governing offers and sales made
outside the United States pursuant to Regulation S.
5. Transfer Agent Instructions.
(a) Debentures. The certificates representing the Securities and the Shares
issued during the Restricted Period, shall bear the following legend (the
"Legend"):
"The securities represented hereby have been issued pursuant to Regulation S
promulgated under the Securities Act of 1933, as amended (the "1933 Act"),
and have not been registered under the 1933 Act. Such securities may not be
transferred, offered or sold prior to the end of the forty (40) day period
(the "Restricted Period") commencing on_____________, 1996 unless such
transfer, offer or sale is made in an "offshore transaction" and not to or
for the account of or benefit of a "U.S. Person" (as such terms are defined
in Regulation S) and is otherwise in accordance with the requirements of
Regulation S. Following expiration of the Restricted Period, the securities
represented hereby may not be offered, sold or otherwise transferred in the
United States or to a U.S. Person unless the securities are registered under
the 1933 Act and applicable state securities laws, or such offers, sales and
transfers are made pursuant to an available exemption from the registration
requirements of those laws."
Upon the conversion of the Debentures, the holder thereof shall submit such
Debenture with a notice of conversion to the Seller and the Seller shall
instruct Seller's transfer agent to issue one or more Certificates
representing that number of shares of Common Stock into which the Debenture
or Debentures are convertible in accordance with the provisions regarding
conversion set forth in the Form of Debenture attached hereto as Exhibit A.
The Seller or its designees shall act as Debenture Registrar and shall
maintain an appropriate ledger containing the necessary information with
respect to each Debenture.
(b) Common Stock to be Issued Without Restrictive Legend. Upon the
conversion of any Debenture by a person who is a non-U.S. Person, Seller
shall instruct Seller's transfer agent to issue Stock Certificates without
restrictive legend in the name of Buyer (or its nominee (being a non-U.S.
Person) or such non-U.S. Persons as may be designated by Buyer prior to the
closing) and in such denominations to be specified at conversion representing
the number of shares of Common Stock issuable upon such conversion, as
applicable, if the Buyer holding such Securities or any other person in whose
name such certificates have been or are to be issued shall have delivered a
certificate (a "Removed Certificate") to the Company to the following effect.
6
<PAGE>
"The undersigned acknowledges that the securities to which this certificate
relates have not been registered under Securities Act of 1933, as amended
(the "1933 Act") and that offers, sales or other transfer of such securities
must be made in compliance with Regulation S promulgated under the 1933 Act,
pursuant to an effective registration statement under the 1933 Act or
pursuant to an available exemption from registration, and the undersigned
certifies that the undersigned has not made, nor will the undersigned make or
cause to be made, any offer, sale or other transfer of such securities, in
violation of the 1933 Act, other applicable securities laws or the rules and
regulations of the Securities and Exchange Commission."
Seller warrants that no instructions other than these instructions and
instructions to impose a "stop transfer" instruction with respect to the
certificates until the end of the Restricted Period have been given or will
be given to the transfer agent and that the Common Stock shall otherwise be
freely transferable on the books and records of Seller. Nothing in this
Section 5, however, shall affect in any way Buyer's or such nominee=s
obligations and agreements to comply with all applicable securities laws upon
resale of the Securities. Notwithstanding the provisions of this section
5(c), if with respect to the Company's receipt of a Removal Certificate from
any person, prior to any removal of the Legend, there shall have been after
the date hereof any amendment to the 1933 Act or Regulation S or any no
action letter, interpretative release or other advice from the Securities and
Exchange Commission after the date hereof which disallows the removal of the
Legend under the circumstances in which the request that it be removed is
being made, then the Company shall have no obligation to remove or to
instruct its transfer agent to remove the Legend, unless the Company shall
have received from the person requesting such removal a written letter of
counsel to such person reasonably acceptable to the Company and its counsel
confirming that the Legend may be so removed or share certificates may be so
issued without the Legend without violation of the 1933 Act. If the person
requesting a removal of the Legend is unable to supply the legal opinion
referred to above then the Company shall, upon demand of such person, be
obligated to register the Common Stock for resale pursuant to section 6
herein.
6. Registration.
(a) Conditions to Registration Requirement. The Company's obligation
hereunder to register the shares of common stock issuable upon conversion of
the Debentures ("Underlying Shares") shall arise in the event that Company
receives a written opinion of counsel for the Buyer (which counsel shall be
of a law firm experienced in United States securities matters) indicating
that there has been an amendment or change to the Securities Act or
Regulation S after the date hereof, or the promulgation by the Commission of
an interpretative release or other statement after the date hereof, which
prohibits or restricts Buyer from reselling Underlying Shares without
registration under the Securities Act (a "Registration Trigger Event").
Notwithstanding the foregoing, it will not be deemed a "Registration Trigger
Event" to the extent that Buyer desires to engage in a distribution of the
Underlying Shares which otherwise requires registration under the Securities
Act or in activity which otherwise deems Buyer to be a statutory underwriter
under Section 5 of the Securities Act. In the event that a Registration
Trigger Event has occurred, then Buyer shall be entitled to require the
Company to register all of Buyer's Underlying Shares in accordance with this
Section 6.
(b) Request for Registration. Upon the occurrence of a Registration Trigger
Event, if the Company shall receive from a Buyer a written request that the
Company effect any registration with respect to any Underlying Shares, the
Company shall use its commercially reasonable efforts to effect, at its
expense, such registration (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Underlying Shares as are
specified in such request in the states specified in such request.
Notwithstanding the foregoing, the Company shall not be obligated hereunder
to effect such registration unless the proposed public offering price of the
securities to be included in such registration (i) shall be at least $500,000
(before deducting underwriting discounts and commissions) and (ii) such
notice requesting that the Company effect a registration pursuant to this
Section 6 shall have been received by the Company after the Company has filed
its Annual Report on Form 10-K for the fiscal year ending September 30, 1996
containing three-year audited financial statements. The Company and the Buyer
shall cooperate in good faith in connection with the furnishing of
information required for such registration and the taking of such other
actions as may be legally or commercially necessary in order to effect such
registration. The Company shall file a registration statement within 45 days
of Buyer's demand therefor and shall use its commercially reasonable efforts
to cause such registration statement to become effective as soon as
practicable thereafter. Such best efforts shall include, but not be limited
to, promptly responding to all comments received from the staff of the
Securities and Exchange Commission, providing Buyer's counsel with a
contemporaneous copy of all written communications from and to the staff of
the Securities and Exchange Commission with respect to such registration
statement and promptly preparing and filing amendments to such registration
statement which are responsive to the comments received from the staff of the
Securities and Exchange Commission. Once declared effective by the
Securities and Exchange Commission, the Company shall cause such registration
statement to remain effective until the earlier of (i) the sale by the Buyer
of all Underlying Shares registered or (ii) 120 days after the effective date
of such registration statement. The foregoing shall not in any way limit
Buyer's rights in connection with the Common Stock pursuant to Regulation S.
7
<PAGE>
7. Delivery Instructions. The Debentures being purchased hereunder shall be
delivered to the Buyer at such time and place as shall be mutually agreed by
Seller and Buyer.
8. Conditions To Seller's Obligation To Sell. Seller's obligation to sell
the Debentures is conditioned upon:
(a) The receipt and acceptance by Buyer of this Agreement as evidenced by
execution of this Agreement by Buyer.
(b) Delivery into the closing depository of good funds by Buyer as payment
in full of the purchase price of the Debentures.
9. Conditions To Buyer's Obligation To Purchase. Buyer's obligation to
purchase the Debentures is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement as evidenced by
execution of this Agreement by the duly authorized officer of Seller.
(b) Delivery of the Debentures as described herein.
10. Offering Materials. All offering materials and documents used in
connection with offers and sales of the Securities prior to the expiration of
the Restricted Period referred to in Section 2(v) hereof shall include
statements to the effect that the Securities have not been registered under
the 1933 Act or applicable state securities laws, and that neither Buyer, nor
any direct or indirect purchaser of the Securities from Buyer, may directly
or indirectly offer or sell the Securities in the United States or to U.S.
Persons (other than distributors) unless that Securities are registered under
the 1933 Act any applicable state securities laws, or any exemption from the
registration requirements of the 1933 Act or such state securities laws is
available. Such statements shall appear (1) on the cover of any prospectus
or offering circular used in connection with the offer or sale of the
Securities, (2) in the underwriting section of any prospectus or offering
circular used in connection with the offer or sale of the Securities, and (3)
in any advertisement made or issued by Seller, Buyer, any other distributor,
any of their respective affiliates, or any person acting on behalf of any of
the foregoing.
11. No Shareholder Approval. Seller hereby agrees that from the Closing
Date until the issuance of Common Stock upon the conversion of the
Debentures, Seller will not take any action which would require Seller to
seek shareholder approval of such issuance unless such shareholder approval
is required by law or regulatory body (including but not limited to the
NASDAQ Stock Market, Inc.) as a result of the issuance of the Securities
hereunder.
8
12. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement constitutes the
entire contract between the parties, and neither party shall be liable or
bound to the other in any manner by any warranties, representations or
covenants except as specifically set forth herein. Any previous agreement
among the parties related to the transactions described herein is superseded
hereby. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their respective successors, and no other person shall
have any right or obligation hereunder. This Agreement shall not be
assignable by either party without the prior written consent of the other,
and any assignment in violation hereof shall be void. Notwithstanding the
foregoing, the Buyer may assign its rights in this Agreement to, and the
provisions of this Agreement shall inure to the benefit of, and be
enforceable by, any transferee of any of the Securities or Shares. This
Agreement together with the Form of Debenture constitutes the entire
agreement of the parties with respect to the subject matter hereof. Nothing
in this Agreement, express or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
(b) Buyer is an independent contractor, and is not the agent of Seller.
Buyer is not authorized to bind Seller, or to make any representations or
warranties on behalf of Seller.
(c) Seller makes no additional representations or warranty with respect to
Seller, its finances, assets, business prospects or otherwise, except as
disclosed in the Disclosure Documents incorporated herein by reference.
Buyer will advise each purchaser, if any, and potential purchaser of the
Securities, of the foregoing sentence, and that such purchaser is relying on
its own investigation with respect to all such matters, and that such
purchaser will be given access to any and all documents, including without
limitations the Disclosure Documents which have been provided to the Buyer
and his advisors, and Seller personnel as it may reasonably request for such
investigation.
(d) All representations and warranties contained in this Agreement by Seller
and Buyer shall survive the closing of the transactions contemplated by this
Agreement.
(e) This Agreement shall be construed in accordance with the laws of
California and shall be binding upon the successors and assigns of each party
hereto. This Agreement may be executed in counterparts, and the facsimile
transmission of an executed counterpart to this Agreement shall be effective
as an original.
(f) Buyer agrees to indemnify and hold Seller harmless from any and all
claims, damages and liabilities arising from Buyer=s breach of its
representations and/or covenants set forth herein.
9
<PAGE>
The undersigned hereby subscribes for ___________________ in principal amount
of Debentures and pays herewith funds in the amount of ____________________
Dollars ($___________ U.S.) (Sales of Debentures are made only in $50,000
increments).
The undersigned acknowledges that this subscription shall not be effective
unless accepted by the Company as indicated below.
Dated this ____ day of December, 1996.
_______________________________________
(Name) (Please Print)
_______________________________________
(Signature)
_______________________________________
(Mailing Address)
_______________________________________
(Country of Execution)
_______________________________________
(Registration instructions)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE _____ DAY OF ________
1996.
ANTARES RESOURCES CORPORATION
By: _____________________________________
Its: ___________________________
UNITED KINA BREWING GROUP LIMITED
By: _____________________________________
Its: ___________________________
17
<PAGE>
FORM OF DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S
UNDER THE ACT) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES
LAWS.
No. _______ US
$__________
ANTARES RESOURCES CORPORATION / UNITED KINA BREWING GROUP LIMITED
10% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 1998
THIS DEBENTURE is one of a duly authorized issue of Debentures of Antares
Resources Corporation / United Kina Brewing Group Limited, a corporation duly
organized and existing under the laws of New York (the "Company") designated
as its 10% Convertible Debenture Due December 31, 1998, in an aggregate
principal amount not exceeding Two Million Dollars (U.S. $2,000,000).
FOR VALUE RECEIVED, the Company promises to pay to ______________________ the
registered holder hereof and its successors and assigns (the AHolder@), the
principal sum of ______________________ Dollars (US $_________) on December
31, 1998 (the "Maturity Date"), and to pay interest on the principal sum
outstanding, at the rate of 10% per annum commencing from the date of
issuance due and payable semi-annually in arrears on the first day of each
December and June (the "Interest Payment Dates"). Accrual of interest shall
commence on the date hereof and shall continue until payment in full of the
outstanding principal sum has been made or duly provided for. The interest
so payable will be paid at the option of the Company, either in cash or in
shares of common stock at the then applicable conversion price (computed as
described in paragraph 4 below) will be paid to the person in whose name this
Debenture (or one or more predecessor Debentures) is registered on the
records of the Company regarding registration and transfers of the Debentures
(the "Debenture Register"); provided, however, that the Company's obligation
to a transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Offshore Securities Subscription Agreement dated as of December___, 1996
between the Company and ______________________________________ (the
"Subscription Agreement"). The principal of, and interest on, this Debenture
are payable in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company
will pay the outstanding principal of and all accrued and unpaid interest due
upon this Debenture on the Maturity Date, less any amounts required by law to
be deducted or withheld, to the record Holder of this Debenture as of the
tenth (10th) day prior to the Maturity Date and addressed to such record
Holder at the last address appearing on the Debenture Register. The
forwarding of such check shall constitute a payment of outstanding principal
and interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum represented
by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same but not less
than U.S. $50,000. No service charge will be made for such registration or
transfer or exchange.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax or other applicable
laws at the time of such payments. Holder agrees to provide Company a Form
W-8, a Certification under penalty of perjury, or a certificate from a
financial institution described in Section 871(h)(4)(B) of the Internal
Revenue Code of 1986 demonstrating that the Holder is not a United States
person.
1
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged in the U.S.
only in compliance with the Securities Act of 1933, as amended (the AAct@)
and applicable state securities laws. Prior to due presentment for transfer
of this Debenture, the Company and any agent of the Company may treat the
person in whose name this Debenture is duly registered on the Company's
Debenture Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Debenture
be overdue, and neither the Company nor any such agent shall be affected or
bound by notice to the contrary. Any holder of this Debenture, electing to
exercise the right of conversion set forth in Section 4(a) hereof, in
addition to the requirements set forth in Section 4(a), is also required to
give the Company (i) written confirmation that it is not a U.S. Person and
the Debenture is not being converted on behalf of a U.S. Person ("Notice of
Conversion") or (ii) an opinion of U.S. counsel to the effect that the
Debenture and shares of common stock issuable upon conversion thereof have
been registered under the 1933 Act or are exempt from such registration. In
the event a Notice of Conversion or opinion of counsel is not provided the
Holder hereof will not be entitled to exercise the right to convert the
Debentures pursuant to Section 4(a) herein.
4. The Holder of this Debenture is entitled, at its option, at any time
commencing 60 days after issue hereof to convert any or all of the original
principal amount of this Debenture into shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock"), at a conversion price
for each share or Common Stock equal to the lower of (a) 70% of the average
closing bid price of the Common Stock for the five (5) business days
immediately preceding the conversion date or (b) $3.50 per share of Common
Stock, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") (the "Conversion Price"). For purposes
of this Section, the closing bid price of the common stock shall be the
closing bid price as reported by NASDAQ Small Cap Market, or the closing bid
price in the over-the-counter market or, in the event the common stock is
listed on a stock exchange, the closing bid price on such exchange as
reported in the Wall Street Journal. Such conversion shall be effectuated by
surrendering the Debentures to be converted to the Company, with the form of
conversion notice attached to the Debenture as Exhibit A, executed by the
Holder of the Debenture evidencing such Holder's intention to convert this
Debenture, and accompanied, if required by the Company, by proper assignment
in blank. Interest accrued or accruing from the date of issuance to the date
of conversion on the amount so converted shall be paid in cash or at
Company's option, in shares of common stock of the Company, calculated at the
same conversion price (as determined above), as would apply on the conversion
date of the principal amount being converted but using the discount
percentage applicable as of such date and shall constitute payment in full of
any such interest on the same terms as would otherwise apply to the
conversion of the principal amount hereof. No fractional shares no scrip
representing fractions of Shares will be issued on conversion, but the number
of Shares issuable shall be rounded up to the nearest whole share. The date
on which notice of conversion is given ("Conversion Date") shall be deemed to
be the date on which the Holder has delivered this Debenture, with the
Conversion Notice, as defined below, duly executed, to the Company or, if
earlier, the date set forth in such Conversion Notice if the Debenture is
received by the Company within five(5) business days thereafter. Any
unconverted principal amount and accrued interest thereon shall at maturity
date be paid, at the option of the Holder, in either (a) cash or (b) shares
of common stock valued at a price equal to the average closing bid price for
the five trading days immediately preceding the maturity date.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
currency, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.
2
<PAGE>
7. If one or more of the "Events of Default" as described in paragraph 8
shall occur, the Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by Holder in collecting any
amount due under the Debenture.
8. If one or more of the following described "Events of Default" shall
occur:
(a) The Company shall default in the payment of principal or interest on
this Debenture; or
(b) Any of the representations or warranties made by the Company herein, in
the Subscription Agreement, or in any certificate or financial or other
written statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Debenture or
the Subscription Agreement shall be false or misleading in any material
respect at the time made; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of
the Company under this Debenture and such failure shall continue uncured for
a period of thirty (30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; or
(4) apply for or consent to the appointment of a trustee, liquidator or
receiver for its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or
for a substantial part of its property or business without its consent and
shall not be discharged within sixty (60) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or similar process in
excess of Three Hundred Thousand ($300,000) Dollars in the aggregate shall be
entered or filed against the Company or any of its properties or other assets
and shall remain unpaid, unvacated, unbonded or unstayed for a period of
thirty (30) days or in any event later than five (5) days prior to the date
of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed within sixty (60) days
after such instruction of the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any such
proceeding; or
(i) The Company shall have its Common Stock delisted from an exchange or
over-the-counter market.
3
<PAGE>
Then, or at any time thereafter, and in each and every such case, as long as
such Event of Default is continuing unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be
a waiver of any subsequent default) at the option of the Holder and in the
Holder's sole discretion, the Holder may consider this Debenture immediately
due and payable, without presentment, demand, protest or notice of any kinds,
all of which are hereby expressly waived, anything herein or in any note or
other instruments contained to the contrary notwithstanding, and the Holder
may immediately, and without expiration of any period of grace, enforce any
and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a general unsecured obligation of the Company.
No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
10. The Holder of this Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon exercise thereof except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky law or
similar laws relating to the sale of securities.
11. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it
is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any
way be affected or impaired thereby.
12. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the
Company and the Holder with respect to the subject hereof. Neither this
Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
13. This Debenture shall be governed by and construed in accordance with the
laws of California.
14. As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within five business days after the Holder has fulfilled
all conditions and submitted all necessary documents duly executed and in
proper form required for conversion (the "Deadline"), to the Holder or any
party receiving a Debenture by transfer from the Holder (together, a
"Holder"), at the address of the Holder on the books of the Company, a
certificate or certificates for the number of Shares of Common Stock to which
the Holder shall be entitled. The Company understands that a delay in the
issuance of the Shares of Common Stock beyond the Deadline could result in
economic loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay liquidated damages to the Holder for late issuance
of Shares upon conversion in accordance with the following schedule (where
"No. Business Days Late" is defined as the number of business days beyond
seven (7) business days from the date of receipt by the Company of a Notice
of Conversion and the transfer agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Debenture to be converted, all in accordance with the Debenture, Subscription
Agreement and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
- ---------------------- ------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
10 $1,000 + $100 each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under this
Section by check upon the earlier to occur of (i) issuance of the Shares to
the Holder or (ii) each monthly anniversary of the receipt of the Company of
such Holder's Notice of Conversion. Nothing herein shall limit the Holder=s
right to pursue actual damages for the Company's failure to issue and deliver
shares of Common Stock to the Subscriber in accordance with the terms of the
Debenture.
The Holder may, subject to compliance with the Offshore Securities
Subscription Agreement and the provisions of Regulation S, without notice,
transfer or assign this Debenture or any interest herein in integral
multiples of $50,000 or the entire outstanding balance (other than to a U.S.
Person or on behalf of a U.S. Person) and may mortgage, encumber or transfer
any of its rights or interest in and to this Debenture or any part hereof
and, without limitation, each assignee, transferee and mortgagee (which may
include any affiliate of the Holder) shall have the right to transfer or
assign its interest. Each such assignee, transferee and mortgagee shall have
all of the rights of the Holder under this Debenture. The Company may
condition registrations of transfers on the receipt of an IRS Form W-8 or an
equivalent certification under penalty of perjury in compliance with Section
871(h)(4)(B) of the Internal Revenue Code of 1986.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated:-------------------
ANTARES RESOURCES CORPORATION
By:---------------------------
Title:------------------------
UNITED KINA BREWING GROUP LIMITED
By:---------------------------
Title:------------------------
Buyer certifies under the penalty of perjury that Buyer is neither a citizen
nor a resident of the United States and that Buyer's full name and address
are set out below.
______________________________________
______________________________________
6
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $______________ of the
above Debenture No. ___ into Shares of Common Stock of Antares Resources
Corporation / United Kina Brewing Group Limited (the "Company") according to
the conditions set forth in such Debenture, as of the date written below.
The undersigned represents and warrants that (i) it is not a U.S. Person as
defined in Regulation S promulgated under the Securities Act of 1933, as
amended, and is not converting the Debenture on behalf of any U.S. Person and
the representations contained in the Subscription Agreement are true, (ii)
all of the requirements of Regulation S promulgated under the Securities Act
of 1933, as amended (the "Act") applicable to the undersigned have been
complied with by the undersigned, and (iii) the undersigned has not engaged
in any transaction or series of transactions that is a part of or a plan or
scheme to evade the registration requirements of the Act.
Date of Conversion*-----------------------------------------------
Applicable Conversion Price---------------------------------------
[Specify discount if more than one discount percentage is available].
Signature---------------------------------------------------------
[Name]
Address:----------------------------------------------------------
----------------------------------------------------------
* This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.
7
10
<PAGE>
ANTARES RESOURCES CORPORATION/
UNITED KINA BREWING GROUP LIMITED
COMMON STOCK PURCHASE WARRANT
To Purchase One Hundred Eighty Thousand (180,000) Shares
Warrant No. 1996-1
FOR CONSIDERATION, the sufficiency and receipt of which is hereby
acknowledged by Antares Resources Corporation/United Kina Brewing Group
Limited, a New York corporation (the "Company"),__________________________
(the "Holder"), is hereby granted a warrant (the "Warrant") to purchase, at
any time from the date hereof until 5:00 p.m., Los Angeles time, on December
24, 1999 (the "Expiration Date"), the number of shares of fully paid and non-
assessable shares (the "Shares") of common stock of the Company set forth
above.
The Shares shall be available for purchase at a price per Share equal to the
lesser of $4.25 or 60% of the closing bid price on the date of exercise (the
"Purchase Price"). The Purchase Price shall be payable in cash, by certified
or official bank check or postal or express money order, in U.S. Dollars,
subject to adjustment as provided for herein. Upon surrender of this Warrant
with the Subscription Form attached to this Warrant duly executed, together
with payment of the Purchase Price times the number of Shares purchased, at
the Company's offices, the Holder shall be entitled to receive certificates
for the number of the Shares purchased.
The purchase rights represented by this Warrant are exercisable at the option
of the Holder, in whole at any time, or in part from time to time (but not as
to a fractional Share), from the date hereof but not later than 5:00 p.m.,
Los Angeles time on the Expiration Date. This Warrant shall automatically
terminate, without any further action by the Company, after such time on the
Expiration Date. In the case of the purchase of less than all of the Shares
purchasable hereunder upon surrender of this Warrant for cancellation,
together with the duly executed subscription form and funds sufficient to pay
any transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant evidencing the
right of the Holder to purchase the number of Shares purchasable hereunder as
to which this Warrant has not been exercised. The issuance of certificates
for the Shares upon the exercise of this Warrant shall be made without charge
to the Holder for such certificates or for any tax in respect of the issuance
of such certificates, and such certificates shall (subject to the provisions
of the following paragraph of this Warrant) be issued in the name of, or in
such names as may be directed by, the Holder; provided, however that the
Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance of any such certificate in a name
other than that of the registered Holder, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
1
<PAGE>
The Holder, by acceptance hereof, represents, warrants, covenants and agrees
that: (i) the Holder has knowledge of the business and affairs of the
Company; (ii) the Holder has received information regarding the Company that
he or she considers necessary or appropriate for his or her investment
decision; and (iii) this Warrant and the Shares issuable upon the exercise of
this Warrant are being acquired pursuant to an exemption from registration
provided by Regulation S promulgated under the Securities Act of 1933. THIS
WARRANT AND THE SHARES RECEIVABLE UPON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT") AND THIS
WARRANT CANNOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS THE
SHARES HAVE BEEN REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. EACH PERSON EXERCISING THIS WARRANT IS EITHER
REQUIRED TO GIVE A WRITTEN CERTIFICATION, AS SET FORTH ON THE SUBSCRIPTION
FORM, THAT HE IS NOT A U.S. PERSON AND THAT THE WARRANT IS NOT BEING
EXERCISED ON BEHALF OF A U.S. PERSON, OR TO TAKE THE SHARES AS "RESTRICTED
SECURITIES" AS SUCH TERM IS DEFINED UNDER RULE 144 PROMULGATED UNDER THE ACT.
Subject to the terms hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its principal office referred to above by the Holder in
person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. Upon any partial transfer,
the Company will issue and deliver to the Holder a new warrant or warrants of
like tenor with respect to the Shares not so transferred. Each Holder, by
taking or holding this Warrant, consents and agrees that the Holder may be
treated by the Company and all other persons dealing with this Warrant, as
the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, or to the transfer hereof on the
books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, Company may treat the Holder as the owner for
all purposes.
In case the Company shall at any time subdivide or combine the outstanding
shares of common stock, the Purchase Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case of combination.
Upon each adjustment of the Purchase Price pursuant to the provisions of
this paragraph, the number of Shares issuable upon the exercise of each
Warrant shall be adjusted to the nearest full Share by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number
of Shares issuable upon exercise of the Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Purchase
Price. In cash of any reclassification of common stock (other than a change
in par value or as a result of a subdivision or combination), or in the case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of common stock, except
a change as a result of a subdivision or combination
(continued on reverse)
ANTARES RESOURCES CORPORATION
Dated: December __, 1996 By:
Its: _________________________________________
UNITED KINA BREWING GROUP LIMITED
By:
Its: _________________________________________
2
<PAGE>
of such shares or a change in par value, as aforesaid), or in the case of a
sale or conveyance to another corporation of the property of the Company as
an entirety, the Holder of this Warrant shall thereafter have the right to
purchase the kind and number of Shares and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a Holder of the number of Shares which the Holder of such
Warrant would have had the right to purchase immediately prior to the record
date for such reclassification, change, consolidation, merger, sale or
conveyance, at a price equal to the product of (Y) the number of Shares
issuable upon exercise of this Warrant, and (Z) the Purchase Price in effect
immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance. No adjustment of the Purchase
Price or number of Shares shall be made upon the issuance or sale of shares
of common stock, options, rights or warrants, conversion or exchange of con-
vertible or exchangeable securities or the occurrence of any event other than
as set forth in this paragraph.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and, in case of such
loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated,
the Company will make and deliver a new warrant of like tenor, in lieu of
this Warrant. The Company shall not be required to issue certificates repre-
senting fractions of Shares, nor shall it be required to issue scrip or pay
cash in lieu of fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated. The Company shall at all times
reserve and keep available out of its authorized common stock, solely for the
purpose of issuance upon the exercise of the Warrant, such number of shares
of common stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that, upon exercise of this Warrant and payment of the
Purchase Price therefor, all shares of common stock issuable upon such
exercise shall be duly and validly issued, fully paid and non-assessable.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder the right to vote or consent to or receive notice as a shareholder in
respect of any meetings of shareholders for the election of directors or any
other matter, or as having any rights whatsoever as a shareholder of the
Company. If, however, at any time prior to the expiration of the Warrant or
its exercise, any of the following events shall occur: (a) the Company
shall take a record of the holders of its common stock for the purpose of
entitling the Holders to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable otherwise than out
of current or retained earnings, as indicated by the accounting treatment of
such dividend or distribution on the books of the Company; or (b) the
Company shall offer to all the holders of its common stock any additional
shares of stock of the Company or securities convertible into or exchangeable
for shares of common stock of the Company, or any option, right or warrant to
subscribe therefore; or (c) a dissolution, liquidation or winding-up of the
Company (other than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events, the
Company shall give written notice of such events at least ten (10) days prior
to the date fixed as a record date or the date of closing the transfer books
for the determination of the shareholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription rights,
or entitled to vote on such proposed dissolution, liquidation, winding-up or
sale. Such notice shall specify such record date or the date of closing the
transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in
connection with the declaration of payment of any such dividend, or the issu-
ance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding-up or
sale.
3
<PAGE>
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or
three (3) days after posting if mailed by registered or certified mail,
return receipt requested if to the registered Holder, to the address of such
Holder as shown on the books of the Company; or if to the Company,
to____________________________________, or to such other address as may be
specified by the Holder or the Company in accordance with the foregoing
provisions. All the covenants, agreements, representations and warranties
contained in this Warrant shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors and assigns. This
Warrant is delivered in the State of California and shall be construed and
enforced in accordance with, and governed by, the laws of the State of
California.
--------------------
ASSIGNMENT FORM
---------------------
FOR VALUE RECEIVED,-------------------------------------hereby sells,
assigns, and transfers unto:
Name-------------------------------------
(Please type or print in block letters)
Address:----------------------------------
- ------------------------------------------
the right to purchase the Shares represented by this Warrant to the extent of
- ------------Shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint----------------------------------
attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Dated:-----------------------
Signature:
---------------------
4
<PAGE>
---------------------
SUBSCRIPTION FORM
---------------------
(To be Executed by the Registered Holder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the right to purchase
- ----------- Shares covered by this Warrant No. ___________________ according
to the conditions hereof and herewith makes payment of the Purchase Price of
such Shares in full.
The undersigned represents that he is not a U.S. Person as defined below and
is not exercising this Warrant on behalf of any U. S. Person.
------------------------------
Signature
------------------------------
Name
Address:
------------------------------
------------------------------
Date:---------------------
A U.S. Person is any of the following:
(a) Any natural person resident in the United States;
(b) Any partnership or corporation organized or incorporated under the laws
of the United States;
(c) Any estate of which any executor or administrator is a U.S. person;
(d) Any trust of which any trustee is a U.S. person;
(e) Any agency or branch of a foreign entity located in the United States;
(f) Any non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. person;
(g) Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and
(h) Any partnership or corporation if (A) organized or incorporated under the
laws of any foreign jurisdiction; and (B) formed by a U.S. person principally
for the purpose of investing in securities not registered under the
Securities Act of 1933, unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of Regulation D) who are not
natural persons, estates or trusts.
Notwithstanding the above, the following are not "U.S. Persons:
(i) Any discretionary account or similar account (other than an estate or
trust) held for the benefit or account of a non-U.S. person by a dealer or
other professional fiduciary organized, incorporated, or (if an individual)
resident in the United States;
(j) Any estate of which any professional fiduciary acting as executor or
administrator is a U.S. person if an executor or administrator of the estate
who is not a U.S. person has sole or shared investment discretion with
respect to the assets of the estate, and the estate is governed by foreign
law;
(k) Any trust of which any professional fiduciary acting as trustee is a U.S.
person, if another of the trustees is a non-U.S. person with sole or shared
investment discretion with respect to the trust assets, and no beneficiary of
the trust (and no settlor if the trust is revocable) is a U.S. person;
(l) An employee benefit plan established and administered in accordance with
the law of a country other than the United States and customary practices and
documentation of such country;
(m) Any agency or branch of a U.S. person located outside the United States
if the agency or branch operates for valid business reasons; and the agency
or branch is engaged in the business of insurance or banking and is subject
to substantive insurance or banking regulation, respectively, in the
jurisdiction where located.
(n) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the
Asian Development Bank, the African Development Bank, the United Nations, and
their agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension plans;
"United States" means the United States of America, its territories and
possessions, any State of the United States, and the District of Columbia.
8
