As filed with the Securities and Exchange Commission on May 1, 1997
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ARXA INTERNATIONAL ENERGY, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3784149
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
1331 Lamar, Suite 1375 William J. Bippus
Houston, Texas 77010 1331 Lamar, Suite 1375
(713) 652-2792 Houston, Texas 77010
(Address, including zip code, and (713) 652-2792
telephone number, including (Name, address, including zip code,
area code, of registrant's and telephone number, including
principal executive offices) area code, of agent for service)
CONSULTING AGREEMENT
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(Full Title of the Plan)
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COPY TO:
Andrew Telsey, Esq.
2851 S. Parker Road, Suite 720
Aurora, Colorado 80014
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Phone (303)671-8920
Fax (303)750-5544
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CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
TITLE OF Amount Maximum Aggregate Amount of
SECURITIES TO BE Being Offering Price Offering Registration
REGISTERED Registered(1) Per Share(2) Price(2) Fee
Common Stock, par value
$.001 per share......... 250,000 $1.94 $485,000 $169.00
TOTAL $169.00
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the
number of shares of the issuer's Common Stock registered hereunder will be
adjusted in the event of stock splits, stock dividends or similar
transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h), on the basis of the average of
the bid and asked price of the Common Stock as reported by the OTC
Bulletin Board on April 23, 1997.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by ARXA International Energy, Inc.
("Company" or "Registrant") with the Securities and Exchange Commission are
incorporated herein by reference:
1. The Company's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
or, either (i) the Company's latest prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933, as amended ("Securities Act") that contains
audited financial statements for the Company's latest fiscal year for which such
statements have been filed, or (ii) the Company's effective Registration
Statement on Form 10 or Form 10-SB filed under the Exchange Act containing
audited financial statements for the Company's latest fiscal year.
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document referred
to in (1) above.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to the Registration Statement which indicates that all
shares of common stock offered have been sold or which deregisters all of such
shares then remaining unsold, shall be deemed to be incorporated by reference in
the Registration Statement and to be a part thereof from the date of filing of
such documents.
ITEM 4. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, $.001 par value per share. In addition, the Company is
authorized to issue 2,000,000 shares of Preferred Stock, $1.00 par value per
share, in such series and upon such terms as the Board of Directors may from
time to time determine. As of April 22, 1997, there were 5,304,164 shares of
Common Stock and 426,943 shares of Preferred Stock issued and outstanding. In
addition, 1,874,891 shares of Common Stock have been reserved for issuance upon
exercise of outstanding warrants, and 426,943 shares of Common Stock have been
reserved for issuance upon conversion of outstanding shares of Class A Preferred
Stock.
COMMON STOCK
The holders of the Common Stock are entitled to one vote per share,
voting with the holders of any other class of stock entitled to vote, without
regard to class, on all matters to be voted on by the stockholders of the
Company, including the election of directors. There is no cumulative voting with
respect to the election of directors. Subject to the prior rights of any series
of Preferred Stock which may from time to time be outstanding, if any, holders
of the Common Stock are entitled to receive ratably dividends when, as and if
declared by the Board of Directors from funds legally available therefor. Upon
the liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities and payment of accrued dividends and liquidation preferences on the
Preferred Stock, if any. Other than the preemptive rights granted to William J.
Bippus, the President and Chief Executive Officer of the Company, pursuant to
his employment agreement, holders of the Common Stock have no preemptive rights
and have no rights to convert their Common Stock into any other securities.
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PREFERRED STOCK
Preferred Stock may be issued in one or more series, the terms of which
may be determined at the time of issuance by the Board of Directors, without
further action by the stockholders, and may include voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and liquidation, conversion, redemption rights and sinking fund provisions. The
issuance of any shares of the Preferred Stock could adversely affect the rights
of the holders of the Common Stock, and, therefore, reduce the value of the
Common Stock.
CLASS A PREFERRED STOCK. The Class A Preferred Stock is senior to all
other classes of stock of the Company, whether common or preferred, and is
entitled to receive cumulative dividends at the rate of five percent per annum,
payable quarterly. So long as any shares of the Class A Preferred Stock are
outstanding, the Company shall not pay or declare any dividends whatsoever,
whether in cash, stock or otherwise, or make any distribution on the shares of
the Common Stock or any other class of stock ranking junior to the Class A
Preferred Stock in respect of dividends or distribution of assets upon
liquidation, or purchase or retire or otherwise acquire for consideration any
shares of stock ranking junior to the Class A Preferred Stock in respect of
dividends or assets, unless all dividends on the Class A Preferred Stock for all
past quarter yearly dividend periods shall have been paid or declared and a sum
sufficient for the payment thereof set apart, and the full dividends thereon for
the then current quarter yearly dividend period shall have been paid or
declared.
The Company may redeem the Class A Preferred Stock, at any time by
paying the sum of $1.00 per share, together, in each case, with an amount equal
to accrued and unpaid dividends thereon.
So long as any shares of any series of the Class A Preferred Stock are
outstanding (a) the Company shall not, without the consent of the holders of at
least a majority of the number of shares of the Class A Preferred Stock at the
time outstanding, given in person or by proxy, either in writing or by vote at a
special meeting called for the purpose, amend, alter or repeal any of the
provisions of Article Four of the Certificate of Incorporation of the Company so
as to affect adversely the rights, powers or preferences of the Class A
Preferred Stock, and shall not, without the consent of the holders of at least a
majority of the number of shares of the Class A Preferred Stock at the time
outstanding, given in person or by proxy, either in writing or by a vote at a
special meeting called for the purpose, amend, alter or repeal any of the
provisions of Article Four of the Certificate of Incorporation of the Company or
of any resolution or resolutions relating exclusively to the shares of the Class
A Preferred Stock, so as to affect adversely the rights, powers or preferences
of the Class A Preferred Stock; (b) the Company shall not, without the consent
of the holders of at least a majority of the number of shares of the Class A
Preferred Stock at the time outstanding, given in person or by proxy, either in
writing or by vote at a special meeting called for that purpose, create or
authorize any additional class of stock ranking prior to the Class A Preferred
Stock in respect of dividends or distribution of assets on liquidation or
increase the authorized amount of any additional class of stock ranking prior to
the Class A Preferred Stock in respect of dividends or distribution of assets on
liquidation, or create or authorize any obligation or security convertible into
or evidencing the right to purchase shares of stock of any additional class
ranking prior to the Class A Preferred Stock in respect of dividends or
distribution of assets on liquidation; and (c) the Company shall not, without
the consent of the holders of at least a majority of the number of shares of the
Class A Preferred Stock at the time outstanding, given in person or by proxy,
either in writing or by vote at a special meeting called for the purpose, create
or authorize any class of stock ranking on a parity with the Class A Preferred
Stock in respect of dividends or distributions of assets on liquidation, or
increase the authorized amount of the Class A Preferred Stock or of any class of
stock ranking on a parity with the Class A Preferred Stock in respect of
dividends or distribution of assets on liquidation, or create or authorize any
obligation or security convertible into or evidencing the right to purchase
shares of stock of any class ranking on a parity requiring the consent of the
holders of at least a specified proportion of the number of shares of the Class
A Preferred Stock at the time outstanding or represented at a meeting may be
taken with such consent and with such additional vote or consent, if any, of the
stockholders as may be from time to time required by the Certificate of
Incorporation of the Company, as amended from time to time, or by law. Except as
otherwise provided above or by law, the Class A Preferred Stock shall have no
voting rights.
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Each share of Class A Preferred Stock shall be convertible at any time
into one share of Common Stock. At any time after two years from the date of
issue of any share of the Class A Preferred Stock, the holder of any such share
may require the Company to purchase any such share of the Class A Preferred
Stock at a price of $1.50 per share, plus any accrued but unpaid dividends.
WARRANTS
As of March 1, 1996, the Company has issued and outstanding warrants to
purchase an aggregate of 1,874,891 shares of Common Stock. These warrants are
exercisable at a price of $2.00 per share and expire on August 9, 2000.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 4.25 through 4.28 of the Bylaws of the Company ("Bylaws")
provide for indemnification of Directors and Officers as follows:
4.25 LIABILITY AND INDEMNIFICATION. Except as may be otherwise provided
herein, any director, officer, employee, or agent of the Company, or any of
their Affiliates shall not be liable for the return of the Capital Contributions
of the stockholders or any portion thereof or interest thereon. Further, any
director, officer, employee, or agent of the Company, or any of their Affiliates
shall not be liable, responsible or accountable in damages or otherwise to the
Company or the stockholders for any mistake of fact or judgment in operating the
business of the Company which results in any loss to the Company or its
stockholders or for any acts performed (or omitted to be performed) by any
director, officer, employee, or agent of the Company, or any of their Affiliates
as fiduciaries in good faith (including, without limitation, pursuant to advice
of legal counsel) and within the scope of these Bylaws, if all of the following
conditions are met:
(a) Any such director, officer, employee, or agent of the Company,
or any of their Affiliates has determined, in good faith, that the
course of conduct which caused the loss or liability was in the best
interests of the Company;
(b) Any such director, officer, employee, or agent of the Company,
or any of their Affiliates was acting on behalf of or performing
services for the Company;
(c) Such liability or loss was not the result of negligence or
misconduct by any such director, officer, employee, or agent of the
Company, or any of their Affiliates; and
(d) Payments arising from such indemnification or agreement to
hold harmless are recoverable only out of the tangible net assets of
the Company.
4.26 INDEMNIFICATION FOR SECURITIES LAWS VIOLATIONS. Notwithstanding
anything to the contrary contained in Paragraph 4.25, any such director,
officer, employee, or agent of the Company, or any of their Affiliates, and any
person acting as a broker-dealer shall not be indemnified for any losses,
liabilities, or expenses arising from or out of an alleged violation of federal
or state securities laws by such party unless the following conditions are met:
(a) There has been successful adjudication on the merits of each
count involving alleged securities law violations as to the particular
indemnities;
(b) Such claims have been dismissed with prejudice on the merits
by a court of competent jurisdiction as to the particular indemnities;
or
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(c) A court of competent jurisdiction approves a settlement of the
claims against a particular indemnities and finds that indemnification
of the settlement and the related costs should be made, and the court
considering the request for indemnification has been advised of the
position of the Securities and Exchange Commission and of the position
of any state securities regulatory authority in which securities of the
Company were offered or sold as to indemnification for violations of
securities laws; provided, however the court need only be advised of
the positions of the securities regulatory authorities of those states
(i) which are specifically set forth in any offering documents; and
(ii) in which the plaintiffs claim they were offered or sold shares.
4.27 LIABILITY INSURANCE. The Company may not incur the cost of that
portion of liability insurance which insures any such director, officer,
employee, or agent of the Company, or any of their Affiliates for any liability
as to which any such person is prohibited from being indemnified under these
Bylaws or by law; provided however, that these Bylaws shall not preclude the
Company from purchasing and paying for such types of insurance, including
extended coverage liability, casualty and workers' compensation, as is customary
in the oil and gas industry.
4.28 ADVANCE OF LEGAL EXPENSES. The advancement of the Company's funds
to any such director, officer, employee, or agent of the Company, or any of
their Affiliates for legal expenses and other costs incurred as a result of any
legal action for which indemnification is being sought is permissible only if
the Company has adequate funds available and the following conditions are
satisfied:
(a) The legal action relates to acts or omissions with respect to
the performance of duties or services on behalf of the Company;
(b) The legal action is initiated by a third party who is not a
stockholder, or the legal action is initiated by a stockholder and a
court of competent jurisdiction specifically approves such advancement;
and
(c) Any such director, officer, employee, or agent of the Company,
or any of their Affiliates undertakes to repay the advanced funds to
the Company, together with the applicable legal rate of interest
thereon, in cases in which such party is found not to be entitled to
indemnification.
Section 145 of the Delaware General Corporation Law provides for
indemnification of officers, directors, agents and employees of the Company as
follows:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
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joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by a corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
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references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
The foregoing discussion of the Company's Bylaws and of the Delaware
General Corporation Law is not intended to be exhaustive and is qualified in its
entirety by reference to such Bylaws and statutes, respectively.
ITEM 8. EXHIBITS
The following exhibits are filed as part of this Registration
Statement:
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
5.1(1) Opinion Regarding Legality
10.1(1) Form of Consulting Agreement
23.1(1) Consent of Counsel (included in Exhibit 5.1)
23.2(1) onsent of McManus & Co., P.C.
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(1) Filed herewith.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
i. To include any prospectus required by Section
10(a)(3) of the Securities Act;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement; and
iii. To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (ii)
do not apply if the registration statement is on Form
S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with
or furnished to the Commission by the
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registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 6 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 1st day of May,
1997.
ARXA INTERNATIONAL ENERGY, INC.
By //S// WILLIAM J. BIPPUS
WILLIAM J. BIPPUS,
President and Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
//S// WILLIAM J. BIPPUS President, Chief Executive Offi May 1, 1997
WILLIAM J. BIPPUS and Director (Principal Executive
Officer)
//S// RICHARD R. ROYALL Chief Financial Officer May 1, 1997
RICHARD R. ROYALL (Principal Financial and
Accounting Officer)
//S// SAMMY FLESCHLER Secretary, Treasurer May 1, 1997
SAMMY FLESCHLER and Director
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April 30, 1997
Mr. William Bippus, President
ARXA International Energy, Inc.
1331 Lamar, Suite 1375
Houston, TX 77010
RE: ARXA INTERNATIONAL ENERGY, INC.
Dear Mr. Bippus:
In connection with the 250,000 shares of Common Stock, par value $0.001 per
share (the "Shares"), of ARXA International Energy, Inc. (hereinafter called the
"Company"), included in the Company's 1997 Non-Qualified Stock Option Plan (the
"Plan"), which Shares are proposed to be registered on Form S-8 under the
Securities Act of 1933, as amended, we have examined the following instruments
and documents:
1. Articles of Incorporation of the Company, as amended;
2. Bylaws of the Company, as amended to date;
3. Copies of certain resolutions adopted by the Board of Directors of the
Company adopting the Plan and authorizing the reservation for issuance of up to
250,000 shares of the Company's Common Stock (the "Shares"), underlying the
various options to be issued pursuant to the Plan.
We have examined such other instruments, documents and records and made such
further investigations as we have deemed necessary for the purposes of rendering
the following opinion.
Based on the foregoing, it is our opinion that:
(i) The Company is a corporation which has validly filed
its Articles of Incorporation under the laws of the State of
Delaware;
(ii) The Plan and the Shares included in the Plan have been duly and
validly authorized by all necessary action on the part of the Company; the
Shares issuable pursuant to the Plan and upon exercise of the stock options
authorized pursuant to the Plan have been duly and validly authorized and, upon
payment therefor in accordance with the terms of such issuance and stock
option(s), will be validly issued, fully paid and nonassessable by the Company;
(iii) The rights attendant to the Plan and the Shares
reserved for issuance thereunder conform to the description
<PAGE>
Mr. William Bippus, President
ARXA International Energy, Inc.
April 30, 1997
Page 2
thereof contained in the Prospectus;
(iv) No authorization, approval, consent or license of any regulatory body
or authority (other than under the Act and the securities or Blue Sky laws of
the various states), is required for the valid authorization, issuance, sale and
delivery of the stock options and Shares reserved for issuance thereunder, or if
so required, all such authorizations, approvals, consents and licenses have been
obtained and are in full force and effect;
(v) The Registration Statement and the Prospectus (except for the
financial statements and other financial data included therein, as to which such
counsel need express no opinion), comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations thereunder;
(vi) Such counsel have participated in the preparation of the Registration
Statement and Prospectus and no facts have come to the attention of such counsel
to lead them to believe that either the Registration Statement or the Prospectus
(except for the financial statements and other financial data included therein,
as to which such counsel need express no opinion), contained any untrue
statement of a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(vii) Such counsel does not know of any material statutes or regulations
or legal or governmental proceedings required to be described in the Prospectus
which are not correctly described in all material respects as required, nor of
any material contracts or documents of a character required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
We hereby consent to the use of this opinion in the said Registration Statement
being filed with the Securities and Exchange Commission and further consent to
the reference to this firm in the Prospectus.
Very truly yours,
/s/ANDREW I. TELSEY, P.C.
ANDREW I. TELSEY, P.C.
CONSULTING AGREEMENT
This Agreement, entered into as of April 28,1997, acknowledges and confirms the
terms of our corporate finance agreement (the "Agreement") as follows:
1. ARXA International Energy Inc., with its principal place of business
located at1331 Lamar, Suite 1375, Houston, TX 77010 (the "Company"), hereby
engages Meersbrook LTD., P.O. Box 566, Charlestown, Nevis, a Westindies
corporation (the "Consultant") and Consultant hereby agrees to render services
to the Company as its corporate finance consultant.
2. During this term of this Agreement:
(a) Consultant shall provide advice to, and consult with, the
Company concerning financial planning, corporate organization and structure,
private and public equity and debt financing, and shall review and advise the
Company regarding its overall progress, needs and financial condition. Said
advise and consultation shall be provided by Consultant to the Company in such
form, manner and place as the Company reasonably requests except that Consultant
shall provide such services from its principle places of business during such
hours as may be determined by Consultant.
(b) The services of Consultant are non-exclusive and subject to
paragraph 5 hereof, Consultant nay render services of the same or similar
nature, as herein described, to an entity whose business is in competition with
the Company, directly or indirectly.
3. The Company shall pay to Consultant for its consulting services
hereunder the sum of 112,500 shares of Common Stock to be registered pursuant to
an S-8 filing. In lieu of the cash consideration.
4. The term of this Agreement shall be for two (2) years commencing on the
Closing (the "Term").
5. Consultant will not disclose to any other person, firm, or corporation,
nor use of its own benefits, during or after the term of this Agreement, any
trade secrets or other information designated as confidential by the Company
which is acquired by Consultant in the course of performing services hereunder.
(A trade secret is information not generally known to the trade which gives the
Company an advantage over its competitors. Trade secrets can include, by way of
example, products or services under development, production methods and
processes, sources of supply, customer lists, marketing plans and information
concerning the filing or pendency of patent applications).
6. The Company agrees to indemnify and hold Consultant, its affiliates,
control persons, officers, employees and agents (collectively, the "Indemnified
Persons") harmless from and against all losses, claims, damages, liabilities,
costs or expenses (including reasonable attorneys' and accountants' fees) joint
and several arising out of the performance of this Agreement, whether or not
Consultant is a party to such dispute. This indemnity shall not apply, however,
where a court of competent jurisdiction has made a final determination that
Consultant engaged in gross recklessness and willful misconduct in the
performance of its services hereunder which gave rise to the loss, claim,
damage, liability, cost or expense sought to be recovered hereunder ( but
pending any such final determination, the indemnification and reimbursement
provision of this Agreement shall apply the Company shall perform its
obligations hereunder to reimburse Consultant for its expenses).
The provisions of this paragraph (6) shall survive the termination and
expiration of this Agreement.
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7. This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes and cancels any prior
communications, understandings, and agreements between the parties. This
Agreement cannot be modified or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties.
8. This Agreement shall be governed by the laws of the State of Delaware.
Any dispute arising out of this Agreement shall be adjudicated in the courts of
the State of Delaware or in the federal court in the State of Delaware, and the
Company hereby agrees that service of process upon it by registered mail at the
address shown in this Agreement shall be deemed adequate and lawful.
9. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
____________, 1997.
MEERSBROOK LTD
By:____________________________
Title: ___________________________
ACCEPTED AND AGREED to this
_______ day of __________, 1997
ARXA INTERNATIONAL ENERGY INC.
By: ________________________
Name: William Bippus
Title: President
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion in this Registration Statement of our
report dated April 29, 1996 on our audit for the financial statements of ARXA
Inernational Energy, Inc. We also consent to the reference to our firm under the
captions "selected Financial Data" and "Experts".
//s// McManus & Co. P.C.
McManus & Co., P.C.
Certified Public Accountants
Morris Plains, New Jersey
April 28, 1997
Members: American Institute of Certified Public Accountants and New Jersey
Society of Certified Public Accountants
