SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _____ to ______
Commission File No. 0-17874
XPLORER, S.A.
(Name of small business issuer as specified in its charter)
Nevada 88-0199674
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4750 Kelso Creek Road, Weldon, California 93238
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (619) 378-3936
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001
par value.
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES [ ] NO [ X ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Revenues for the fiscal year ended December 31, 1996 totaled -0-.
As of December 31, 1996, the aggregate market value of the voting stock held by
non-affiliates of the registrant (based upon the average of the closing bid and
asked prices on such date) was approximately $-0-. (Not Trading.)
As of May 30, 1997, the registrant had outstanding 18,782,445 shares of
Common Stock.
Transitional Small Business Disclosure Format: [ ] Yes [ X ] No
Exhibit index page number: 22-23
Total sequentially numbered pages in this document: 24
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
The Registrant was incorporated under the laws of the State of Nevada on May 2,
1984. Effective December 18, 1992, the Registrant changed its name from L.A.
Entertainment, Inc. to Gerant Industries, Inc. On March 1, 1994, Gerant
Industries, Inc. filed a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
Central District of California. The Registrant operated as a
debtor-in-possession until the United States Bankruptcy Court entered an order
confirming the Registrant's Third Amended Plan of Reorganization (the "Plan") on
July 24, 1996, and the Plan became effective August 5, 1996. In accordance with
the Plan, Restated Articles of Incorporation were filed with the Secretary of
State of Nevada in August, 1996, changing the Registrant's name from Gerant
Industries, Inc. to XPLORER, S.A. ("XPLORER" or the "Company").
Pursuant to the Plan, certain holders of Units of Beneficial Interest ("UBI's")
in the Atlantic Pacific Trust, LLC, formerly Atlantic Pacific Trust ("APT")
exchanged 417,240 UBI's on August 5, 1996, the effective date of the Plan, for
1,043,000 shares of Preferred Stock of XPLORER. APT had provided the necessary
capital and arranged loans for the successful completion of the Plan. The
Managers of APT are also officers and directors of the Company. See "Conflicts
of Interest."
Additionally, APT holders of approximately $29,278,000 face value of XPLORER
Debtor Notes converted their XPLORER Debtor Notes into approximately 14,639,750
shares of XPLORER Common Stock. Furthermore, holders of securities in the Debtor
shared pro rata in a distribution of 400,000 Units consisting of one (1) share
of XPLORER's Common Stock and one (1) Class A Warrant entitling the holder to
purchase one (1) share of XPLORER's Common Stock one year from the August 6,
1996 effective date of the Plan, at 70% of the market asking price. Such Warrant
must be exercised within 30 days of August 5, 1997. Pursuant to Section 1143 of
the United States Bankruptcy Code, interest holders must surrender their
certificates representing the securities of the Debtor within one (1) year of
the Confirmation Date of the Plan as a condition to receiving the securities
pursuant to the Plan. Certain other classes of creditors were given the right to
elect common shares of XPLORER in lieu of cash in satisfaction of their claims.
In November, 1996, the Company acquired an additional 189,960 UBI's of APT in
exchange for 237,550 shares of its Preferred Stock. Currently, XPLORER owns
59.16% of APT.
The Company's principal executive offices are located at 4750 Kelso Creek Road,
Weldon, California 93282, and its telephone number is (619) 378-3936.
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CAUTIONARY "SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
With the exception of historical matters, the matters discussed in this report
are forward- looking statements that involve risks and uncertainties that could
cause actual results to differ materially from targeted or projected results.
Such forward-looking statements include statements regarding targets for gold
production, cash operating costs and certain significant expenses, schedules for
completion of detailed feasibility studies and initial feasibility studies,
potential increases in reserves and production, the timing and scope of future
drilling and other exploration activities, expectations regarding receipt of
permits and commencement of mining or production, anticipated recovery rates and
potential acquisitions or increases in property interests. Factors that could
cause actual results to differ materially include, among others, changes in gold
and other mineral prices, unanticipated grade, geological, metallurgical,
processing, access, transportation of supplies or other problems, results of
current exploration activities, results of pending and future feasibility
studies, changes in project parameters as plans continue to be refined,
political, economic and operational risks of foreign operations, availability of
materials and equipment, the timing of receipt of governmental permits, force
majeure events, the failure of plant, equipment or processes to operate in
accordance with specifications or expectations, accidents, labor relations,
delays in start-up dates, environmental costs and risks, the outcome of
acquisition negotiations and general domestic and international economic and
political conditions, as well as other factors described herein or in the
Company's filings with the U.S. Securities and Exchange Commission. Many of
these factors are beyond the Company's ability to predict or control. Readers
are cautioned not to put undue reliance on forward-looking statements. See "Risk
Factors" for items which could affect forward-looking statements.
General Business
Glossary
The following terms are described to aid in understanding the Company's Form
10-KSB.
Core Drilling (or Drill Hole)--Drilling with a hollow diamond-studded bit to cut
out a solid rock core. A column of rock is extracted from inside the drill rod
for geological examination and assay.
Grade--The metal content of ore. With precious metals, grade is expressed as
troy ounces per ton of ore.
Kilo (Kilogram)--A measure of weight equal to 32.15 troy ounces.
Ore Body--A mineral deposit that can be mined at a profit under existing
economic conditions.
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Ore Reserves--The tonnage and grade of an economically and legally extractable
ore body.
Ounce--Throughout this report, the term "ounce" is used as an abbreviation for
the troy ounce measure of weight. The troy ounce has been used exclusively as a
previous metals measurement, probably since the 16th Century.
Proven Ore Reserves--"Proven ore" or "measured ore" means that material which
tonnage is computed from dimensions revealed in outcrops or trenches or
underground workings or drill holes and for which the grade is computed from the
results of adequate sampling, and for which sites for inspection, sampling and
measurement are so spaced and the geological character so well defined that the
size, shape and mineral content are established, and for which the computed
tonnage and grade are judged to be accurate within limits which shall be stated.
Probable Ore Reserves--"Probable ore" or "indicated ore" means that material for
which tonnage and grade are computed partly from specific measurements, samples
or production data, and partly from projection for a reasonable distance on
geological evidence, and for which the sites available for inspection,
measurement and sampling are too widely or otherwise inappropriately spaced to
outline the material completely or to establish its grade throughout.
Ton--The short ton is used in this report. It is a unit of weight equal to 2,000
pounds, or 907.2 kilograms.
The Company is a development stage company. Through its majority-owned
subsidiary, APT, the Company is engaged in the acquisition, exploration and
development, which will lead to operation and production of mineral properties.
Except where otherwise noted, the "Company" includes its majority-owned
subsidiary, APT.
As a result of a series of transactions, between 1993 and 1995, APT acquired
eight unpatented mineral claims located on Piute Mountain, Kern County,
California. This group of claims is commonly known as the Evening Star Mine. APT
also leases approximately 95.45 acres of adjacent property containing three
patented mining claims and the Weldon Research Center. See "Item 2. Description
of Property."
APT does, and continues to, finance its exploration and development of the
Evening Star Mine through the sale and issuance of its securities in private
transactions and through the sale in Germany and Austria of Convertible Gold
Bonds, 9% Investment Certificates and gold certificates. See "Item 1. Business
Financing."
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To date, no gold or other precious metals have been mined commercially from the
Evening Star Mine. There has been extensive development work conducted in the
past, including underground and surface sampling. The Evening Star Mine has a
nine-foot wide and ten-foot tall tunnel. This tunnel cross cuts several small
veins and ore bodies. The tunnel system is approximately 1,650 feet in length
and is approximately 380 feet below the surface.
The Evening Star Mine tunnel provides access to the area where the ore has been
blocked out ("Proven Ore Reserves"). Proven Ore Reserves are determined from
exposure in outcroppings, cuts, pits, shafts, mine workings, drill holes or
otherwise where measurements are so closely spaced that the computed tonnage and
grades of ore will have a high degree of accuracy. Underground tunnel samples
were taken every five feet. The results of the sampling indicated that the mine
contained approximately 435,000 ounces of gold. The Company has downgraded the
classification of this ore from Proven to Probable Ore Reserves.
Upon the completion of the Pilot Plant, feasibility studies and additional
drilling and sampling, the Company will then upgrade the reserves from Probable
to Proven Ore Reserves. The 1996 ore reserves have been estimated by an
independent company, Precious Metals Exploration. The reserves were estimated by
an independent geological engineering consultant, Christopher L. Pratt,
President of Precious Metals Exploration.
Proposed Operations
In July, 1995, APT entered into an Operating Agreement (the "Agreement") with
EMTEC, L.L.C. ("Emtec") principally owned by officers and directors of the
Company and Managers of APT. See "Item 12. Certain Relationships and Related
Transactions." In accordance with the Agreement, Emtec will provide a full turn
key mining and refining operation for the Evening Star Mine. APT will pay Emtec
all of its costs and expenses plus 18% of same. Costs are defined as all costs
directly and indirectly related to Emtec performing its duties in the
exploration, development, production and support facilities of the Evening Star
Mine. Through March 31, 1997, APT has paid Emtec $548,318 for its developmental
work in the Evening Star Mine.
The Registrant intends to develop its mining properties in two phases.
Phase I.
The Registrant will continue drilling and sampling to block out Proven and
Probable Ore Reserves. A core drilling rig will be used in order to produce
approximately 1,000 feet of drill hole weekly. Due to seasonal conditions,
drilling will only be conducted for approximately 36 weeks annually.
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The Registrant will also construct a pilot ore processing plant ("Pilot
Refinery") capable of processing up to two tons of ore per hour. Included with
the Pilot Refinery will be the construction of all support facilities, including
laboratory, repair shops and storage bins.
All engineering and permits necessary for the operation of the Pilot Refinery
and for its expansion are planned to be completed during Phase I. APT estimates
that Phase I will cost between $2.8 to $3.4 million and will take between nine
and 12 months to complete. There is no assurance that the Company will be able
to raise the required capital to complete Phase I.
Phase II
After the Pilot Refinery is operational and gold and other minerals are
successfully and cost effectively being processed, a larger ore processing plant
("Main Refinery") will be built. Current plans provide for a Main Refinery to
process anywhere from 125 to 250 tons of ore per day. The size and cost of such
Main Refinery is dependent upon several factors, including a) test results from
the Pilot Refinery, b) present and future Proven and Probable Ore Reserves that
have been blocked-out, and c) completion of a feasibility report.
Phase II development is estimated to cost between $6.8 to $10 million and will
take between 14 to 18 months after Phase I to complete.
There is no assurance that the Registrant will be able to raise the capital to
complete Phase I or, if Phase I is completed, to proceed with Phase II. To date,
the Registrant's primary funds for operations have come from the sale of bonds
and gold contracts in Germany and Austria. See "Item 1. Business - Financing."
The Registrant intends to continue to sell bonds in Germany and Austria. There
is no assurance that sales of bonds will continue in amounts necessary to fund
any of the Registrant's planned operations, including completion of Phase II.
Transportation
The Evening Star Mine is located in the Piute Mountains of Kern County at an
elevation of 7,800 feet MSL. Site access is provided via paved, all season
highways (State Route 178 and Kelso Valley Road) terminating in approximately 17
miles of graded dirt and gravel road. This dirt road is well maintained and snow
removal by the Company for 17 miles during the winter provides year-round access
to the project site. The Piute Mountains experience only moderate snowfall
during the winter, and it is estimated that snow removal would be limited to an
average of six episodes per year clearing approximate four to twelve miles of
roadway.
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Power
An existing Company-owned diesel power plant, producing approximately 400kW of
power, provides electricity necessary for the operation of the mine. Maintenance
of the access roadways will provide for timely truck delivery of fuels for the
power plant. The existing storage facility will be expanded to approximately
6,000 gallons, or one week of fuel supply. Typical operation will include
semi-weekly fuel deliveries.
Water Supply and Waste Disposal
Water for mining, dust control, and domestic use will be provided by water wells
proximate to the project site. Domestic and process demand is estimated to be
15,000 gallons per day (10.4gpm). Storage tanks will allow for constant well
pumping rates and fluctuating demands.
Domestic wastewater disposal will be via standard septic tank and leach field
systems located adjacent to their respective sources. Process wastewater will be
recycled and reused in the process, with the only process discharge comprising
the moisture contained within the spent ore, estimated at 4,400 gallons per day.
Financing
Between February 1, 1996 and August 6, 1996, APT sold $196,000 of Industrial
Revenue Bonds ("Bonds"). The Bonds were sold in Germany and Austria by Senator
Securities Corporation, Dusseldorf, Germany ("Senator"). The Bonds are zero
discount bonds issued in denominations of $12,500 with maturity dates between
one to five years. Upon maturity, APT must pay $12,500 U.S., plus interest at
9% per annum, or deliver One Kilo of Internationally Hallmarked 99.99 Fine Gold
Bullion (32.15 Troy Ounces). As of March 31, 1997, APT owed $337,500 on these
Bonds of which $112,500 is due on or before December 31, 1997.
Between June 1, 1996 and January 15, 1997, APT sold $735,000 of 9% Investment
Certificates ("Certificates"). The Certificates were sold in Germany and Austria
by Senator and by Atlantic Pacific Finanzprodukte, GmbH ("APF"), the
Registrant's wholly-owned subsidiary. The Certificates provide for interest at
9% per annum payable with principal at maturity. The Certificates mature between
one and five years from date of purchase. As of March 31, 1997, APT owed
$1,130,200 on these Certificates of which $529,500 is due on or before December
31, 1997.
Between September, 1995 and September, 1996, APT sold $444,000 of Gold Ore
Contracts ("Contracts") in One Kilo Units. Each Unit was sold for $9,645. There
are 32.15 troy ounces in one kilo. All contracts were sold in Germany and
Austria by Senator. All Contracts are due within one year of purchase. As of
March 31, 1997, there were $273,000 Contracts owing by APT, all of which are due
and payable on or before December 31, 1997.
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On November 1, 1996, APT began selling, through APF, 9% Bond
Certificate/Convertible to Gold (the "9% Bond"). The total face amount offering
is 45,000,000 Deutsche Marks. At an exchange rate of 1.5 DEM (one and one-half
Deutsche Marks) to 1 (one) U.S.Dollar, the total face amount in U.S. Dollars is
$30,000,000. From this offering, the total net capital to APT, assuming the
entire offering was sold out, and assuming a 1.5 to 1 exchange rate, would be
DEM35,009,280, or U.S.$23,339,540. The 9% Bond is non-interest bearing, but is
issued to an interest-bearing account, in which the difference between the
issuing price and face value meets an effective yield of 9% per annum. The 9%
Bonds are issuable only as fully registered bonds in denominations of 600
Deutsche Marks ("DM600") and may be increased by denominations of DM600. The 9%
Bonds mature between one and five years from date of purchase. The Bearer of the
9% Bond shall, within 60 days prior to the maturity date of the 9% Bond, notify
APT of the Bearer's election of either (A) payment in cash in the Principal
Amount of the 9% Bond paid in Deutsche Marks, or (B) receive payment in the form
of one ounce of gold bullion issued to Bearer at the rate of one ounce for every
DM600 owed to Bearer by AT, or (C) Bearer shall receive payment in cash in the
amount of the market value of the gold bullion at the maturity date, with the
cash payment being in Deutsche Marks. The 9% Bonds are being issued and are
subject to a Trust Resolution dated October 1, 1996 and a Prospectus dated
October 28, 1996. Both the Trust Resolution and the Prospectus were prepared by
attorneys for the German selling agents. The 9% Bonds are only being offered for
sale in Germany and Austria. Through March 31, 1997, $316,611 9% Bonds were sold
of which $37,968 is due within one year.
Assignment of Assets
In connection with the sale by APT of Bonds, Certificates, Contracts and 9%
Bonds (the "Securities"), APT has assigned its eight mineral claims, known as
the Evening Star Mine, to Benjamin C. Rice, Esq. ("Trustee"), a director of the
Company, to be held in trust for a term of ten years or until all obligations
owed on the Securities are fully satisfied. The Trustee will allow APT to remove
and process gold ore from the Evening Star Mine for delivery and payment of
Securities as they mature. APT may also remove additional gold ore to cover
expenses only but may not remove any gold ore for any other purpose until all
the Securities have been fully paid. Upon default, the Trustee may cause the
gold ore to be refined by a third party refiner or he may sell the claims to pay
all indebtedness evidenced by the Securities.
Regulation
The Company's operations are subject to comprehensive regulation with respect to
operational, environmental, safety and similar matters by federal agencies
including the U.S. Department of the Interior, the U.S. Department of
Agriculture (U.S. Forest Service), the U.S. Environmental Protection Agency
("EPA"), the U.S. Mine Safety and Health Administration ("MSHA") and similar
state and local agencies. Failure to comply with applicable laws, regulations
and permits can result in injunctive actions, damages and civil and criminal
penalties. If the Company expands or changes its existing operations or proposes
any new operations, it may be required to obtain additional or amended permits
or authorizations. The Company intends to spend substantial time, effort and
funds in planning, constructing and operating its proposed facilities to ensure
compliance with U.S. environmental and other regulatory requirements. Such
efforts and expenditures are common throughout the U.S. mining industry and
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generally should not have a material adverse effect on the Company's competitive
position.
Legislation to change the general mining laws applicable to operations on
federal lands has been introduced into the 105th Congress, which convened in
January 1997, and additional introductions are expected. The result of such
proposals is speculative.
Risk Factors
Mining and Processing
The Company's business operations are subject to risks and hazards inherent in
the mining industry, including but not limited to unanticipated variations in
grade and other geological problems, water conditions, surface or underground
conditions, metallurgical and other processing problems, mechanical equipment
performance problems, the unavailability of materials and equipment, accidents,
labor force and force majeure factors, unanticipated transportation costs and
weather conditions, any of which can materially and adversely affect, among
other things, the development of properties, production quantities and rates,
costs and expenditures and production commencement dates.
In the case of development projects, including new pits or underground mines at
currently operated properties or expansions of existing mines, although the
Company utilizes the operating history of its existing mines to derive estimates
of future operating costs and capital requirements, such estimates may differ
materially from actual operating results. The economic feasibility of any
individual project is based upon, among other things, the interpretation of
geological data obtained from drill holes and other sampling techniques,
feasibility studies (which derive estimates of cash operating costs based upon
anticipated tonnage and grades of ore to be mined and processed), the
configuration of the ore body, expected recovery rates of metals from the ore,
comparable facility and equipment costs, anticipated climatic conditions,
estimates of labor productivity and other factors. Such development projects
also are subject to the successful completion of final feasibility studies,
issuance of necessary permits and receipt of adequate financing.
As a result of the foregoing risks, among other things, expenditures on any and
all projects, actual production quantities and rates, and cash costs may be
materially and adversely affected and may differ materially from anticipated
expenditures, production quantities and rates, and costs, just as estimated
production dates may be delayed materially, in each case especially to the
extent development projects are involved. Any such events can materially and
adversely affect the Company's business, financial condition, results of
operations and cash flows.
Uncertainty of Reserve and Other Mineralization Estimates
There are numerous uncertainties in estimating proven and probable reserves and
other mineralization, including many factors beyond the control of the
Registrant. The estimation of reserves and other mineralization involves
subjective judgments about many relevant factors, and the accuracy of any such
estimate is a function of the quality of available data and of engineering and
geological interpretation and judgment. Results of drilling, testing and
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production subsequent to the date of an estimate may justify revision of such
estimate. Assumptions about prices are subject to great uncertainty and gold and
silver prices have fluctuated widely in recent years. See "Gold and Silver Price
Volatility." No assurance can be given that the volume and grade of reserves
mined and processed and recovery rates will not be less than anticipated.
Declines in the market price of gold and related precious metals also may render
reserves or other mineralization containing relatively lower grades of
mineralization uneconomic to exploit. If the price realized by the Registrant
for its gold or silver bullion were to decline substantially below the price at
which ore reserves were calculated for a sustained period of time, the
Registrant potentially could experience reductions in reserves and asset
write-downs. Under certain circumstances, the Registrant may discontinue the
development of a project or mining at one or more of its properties. Further,
changes in operating and capital costs and other factors, including but not
limited to short-term operating factors such as the need for sequential
development of ore bodies and the processing of new or different ore grades and
ore types, may materially and adversely affect reserves.
Gold and Silver Price Volatility
The profitability of the Registrant's current operations is directly related and
sensitive to the market price of gold and silver. Gold and silver prices
fluctuate widely and are affected by numerous factors beyond the Registrant's
control, including expectations with respect to the rate of inflation, the
exchange rates of the dollar and other currencies, interest rates, forward
selling by producers, central bank sales and purchases of gold and silver,
production and cost levels in major gold-producing regions such as South Africa
and the former Soviet Union, global or regional political, economic or financial
situations and a number of other factors.
The current demand for, and supply of, gold and silver affect the prices of such
minerals, but not necessarily in the same manner as current demand and supply
affect the prices of other commodities. The potential supply of gold consists of
new mine production plus existing stocks of bullion and fabricated gold held by
governments, financial institutions, industrial organizations and individuals.
Since mine production in any single year constitutes a very small portion of the
total potential supply of gold, normal variations in current production do not
necessarily have a significant effect on the supply of gold or on its price. If
gold or silver prices should decline below the Registrant's cash costs of
production and remain at such levels for any sustained period, the Registrant
could determine that it is not economically feasible to continue commercial
production at any or all of its mines. Although the Registrant has a hedging
program in place to reduce the risk associated with gold and silver price
volatility, there is no assurance that the Company's hedging strategies will be
successful.
Exploration and Development
Exploration for gold and related precious metals is highly speculative in
nature, involves many risks and frequently is unsuccessful. There can be no
assurance that the Registrant's exploration efforts will result in the discovery
of significant gold or silver mineralization or that any mineralization
discovered will result in an increase of the Company's Proven or Probable Ore
Reserves. If Proven or Probable Ore Reserves are developed, it may take a number
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of years and substantial expenditures from the initial phases of drilling until
production is possible, during which time the economic feasibility of production
may change. No assurance can be given that the Registrant's exploration programs
will result in new reserves or that the Registrant's development program will be
able to extend the life of the Registrant's existing mines.
Insurance and Mining Risks
The business of gold and silver mining is generally subject to a number of risks
and hazards, including environmental conditions, industrial accidents, labor
disputes, encountering unusual or unexpected geological conditions, ground or
slope failures, cave-ins, changes in the regulatory environment and natural
phenomena such as inclement weather conditions, floods, blizzards and
earthquakes. Such occurrences could result in damage to, or destruction of,
mineral properties or production facilities, personal injury or death,
environmental damage to properties or the properties of others, delays in
mining, monetary losses and possible legal liability. The Registrant's mine
operator, Emtec, maintains insurance against certain risks that are typical in
the gold mining industry and in amounts that the Registrant believes to be
reasonable, but which may not provide adequate coverage in certain unforeseen
circumstances. However, insurance against certain risks (including certain
liabilities for environmental pollution or other hazards as a result of
exploration and production) is not generally available to the Registrant or to
other companies within the industry on acceptable terms.
Competition
The Company operates in an industry that is characterized by intense competition
for resources, equipment and personnel. Some of the Company's principal
competitors are substantially larger, have substantially greater resources, and
expend considerably larger sums of capital than the Company for exploration,
rehabilitation and development.
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ITEM 2. DESCRIPTION OF PROPERTY
The Registrant's executive offices are located in rented premises of
approximately 12,960 square feet at 4750 Kelso Creek Road, Weldon, California
93238. The leased facilities are known as the Weldon Research Center. They
include approximately 37.5 acres of chainlink fenced land, 12,960 square feet of
buildings, including a scale house, guardhouse, a 300' x 12" water well,
lab/shop, refinery buildings and domestic power. The Registrant has a five-year
lease on the premises at $3,000 per month rental renewable for like terms. The
Registrant considers the facilities adequate for current needs.
Evening Star Mine Group
Registrant owns eight unpatented mining claims located on Piute Mountain, Kern
County, California. Unpatented mining claims only give the Registrant possessory
title. Because title to unpatented mining claims is subject to inherent
uncertainties, it is difficult to determine conclusively ownership of such
claims. Since a substantial portion of all mineral exploration, development and
mining in the United States now occurs on unpatented mining claims, this
uncertainty is inherent in the mining industry. In addition, in order to retain
title to an unpatented mining claim, a claim holder must have met annual
assessment work requirements through September 1, 1992 and must have complied
with stringent state and federal regulations pertaining to the filing of
assessment work affidavits. Moreover, after September 1, 1992, the right to
locate or maintain a claim generally is conditional upon payment to the United
States of a maintenance fee of $100 per claim per year for each assessment year.
State law may, in some instances, still require performance of assessment work.
The present status of the Company's properties as unpatented mining claims
located on public lands of the U.S. allows the claimant the exclusive right to
mine and remove valuable minerals, such as precious and base metals and
industrial minerals, found therein, and also to use the surface of the land
solely for purposes related to mining and processing the mineral-bearing ores.
However, legal ownership of the land remains with the U.S. Accordingly, with an
unpatented claim, the U.S. retains many of the incidents of ownership of land,
the U.S. regulates use of the surface, and the Company remains at risk that the
claims may be forfeited either to the U.S. or to rival private claimants due to
failure to comply with statutory requirements as to location and maintenance of
the claims. If there exists a valuable deposit of locatable minerals (which is
the requirement for the unpatented claim to be valid in the first place), and
provided certain levels of work and improvements have been performed on an
unpatented mining claim, the Mining Law of 1872 authorizes claimants to then
seek to purchase the full title to the claim, thereby causing the claim to
become the private property of the claimant. Such full ownership expands the
claimant's permissible uses of the property (to any use authorized for private
property) and eliminates the need to comply with maintenance and reporting
requirements necessary to protect rights in an unpatented claim.
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For the last several Congressional sessions, bills have been repeatedly
introduced in the U.S. Congress which would supplant or radically alter the
provisions of the Mining Law of 1872. As of December 31, 1995, no such bills
have passed, although a number of differing and sometimes conflicting bills are
now pending. If enacted, such legislation could substantially increase the cost
of holding unpatented mining claims and could impair the ability of companies to
develop mineral resources on unpatented mining claims. Under the terms of
certain proposed legislation, the ability of companies to obtain a patent on
unpatented mining claims would be nullified or substantially impaired. Moreover,
certain forms of such proposed legislation contain provisions for the payment of
royalties to the federal government in respect of production from unpatented
mining claims, which could adversely affect the potential for development of
such claims and the economics of operating existing mines on federal unpatented
mining claims. The Company's financial performance could therefore be affected
adversely by passage of such legislation. It is impossible to predict at this
point what any legislated royalties might be, but a potential three to four
percent gross royalty, assuming a gold price of $400 per ounce, would have an
approximated $12 to $16 per ounce impact on the Company's costs of production
from unpatented mining claims.
APT entered into a lease in July, 1995, with Sequoia Trust, which is controlled
by some of the officers and directors of the Registrant. See "Item 12. Certain
Relationships and Related Transactions." The lease terminates in July, 2000,
unless renewed by mutual consent of the parties, so long as minerals are being
mined, processed or marketed from the property on a continuous basis with no
cessation of operations for more than 120 consecutive days. APT is required to
pay $3,000 per month, plus a 12% royalty of the "gross value of metals and other
leased substances recovered from the refining of ores" from the property.
The leased properties consist of 57 acres and include three patented mining
claims. The Company plans to construct its main refinery and support buildings
on this land upon the successful completion of Phase I. One of the patented
mines was preliminarily explored by drilling eight 45-degree holes approximately
200 feet apart and to a depth of 700 feet. A commercial grade ore body was
encountered and estimated to be 17 to 36 feet wide. The Company intends to
redrill this area in order to reconfirm and more precisely estimate the size and
quantity of such ore body.
Also in July, 1995, APT leased from Sequoia Trust property in Weldon,
California, known as the Weldon Research Center, for $3,000 per month. William
M. Moreland, Chief Operating Officer of the Company, is a Trustee for Sequoia
Trust. The lease terminates in July, 2000, unless renewed under like terms by
mutual consent of the parties. The property consists of 12,960 square feet of
mill buildings, a laboratory, office, shops and refinery buildings,
approximately 37.5 acres of fenced land. The property also contains a 300-foot
water well, scale house, guardhouse and domestic power.
12
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to shareholders during the fourth quarter of the
fiscal year ended December 31, 1996.
13
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The Company's Common Stock was inactive for from June 23, 1984 until March,
1997, when it began trading. The trading market is limited and sporadic and
should not be deemed to constitute an "established trading market".
The following table sets forth the range of bid prices for the Common Stock
during the periods indicated, and represents inter-dealer prices, which do not
include retail mark-ups and mark-downs, or any commission to the broker-dealer,
and may not necessarily represent actual transactions.
1997 Bid Asked
Quarter ending 3/31/97 $5.00 $5.25
Quarter to May 30, 1997 6.50 7.00
(a) Holders:
The approximate number of holders of record of Common Shares, as of
March 31, 1997, was 743.
(b) Dividends:
The Company has not paid cash dividends on its common stock since its
inception. At the present time, the Company's anticipated working
capital requirements are such that it intends to follow a policy of
retaining any earnings in order to finance the development of its
business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
The following discussion and analysis should be read together with the financial
statements and notes thereto included elsewhere herein.
I. Gerant emerged from its Chapter 11 proceeding in August 1996. Prior to
that date, the reorganization with Xplorer, S.A., Gerant had no significant
operations, cash flows, or changes in financial condition, and was inactive
since January 1, 1994. Legal fees incurred during the bankruptcy period are
presently being paid by the Company.
14
<PAGE>
II. Plan of Operation
The Registrant is preparing for the construction of a Pilot Plant to
process both new and existing ore of the Evening Star Mine (the "Mine")
location. Upon the receipt of the capital, the Pilot Plant will commence
simultaneously with the Filing of the Form 10-KSB for the year ended December
31, 1996. The Pilot Plant will demonstrate the feasibility of extraction of the
precious metals contained within the ore.
The Pilot Plant should be in operation continually until the full
operating plant is completed and in operation.
III. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Registrant is a development stage enterprise and, as such, is
incurring expenses related to the development of the Mine and the preparation
for the beginning of the Pilot Plant. Funds for these purposes have been raised
through the sale of Forward Gold Contracts, sale of Industrial Bonds in Europe,
and the strategic placement of equity securities. These activities are necessary
to assure the funding of anticipated operating costs and the satisfaction of the
$1.2 million negative working capital.
It is not anticipated that income from the Pilot Plant will commence
before the end of the summer of 1997. As a result, it is essential for
management to continue its fund raising activities until this income source
commences and continuing afterwards until the full operation is in progress.
Registrant continues its efforts towards achieving a profitable
operation and, although management is confident of achieving that goal,
Registrant cannot assure its shareholders that it will be successful in
operating a profitable business.
ITEM 7. FINANCIAL STATEMENTS
The following financial statements are included as a separate section following
the signature page to this Form 10-KSB and are incorporated herein by reference:
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Auditor......................... F-1
Consolidated Balance Sheet............................ F-2
15
<PAGE>
Consolidated Statement of Operations for the year
ended December 31, 1996....................... F-3
Consolidated Statement of Shareholders' Equity for the
year ended December 31, 1996.................. F-4
Consolidated Statement of Cash Flows for the year
ended December 31, 1996....................... F-5
Notes to Financial Statements.................... F-6
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
16
<PAGE>
XPLORER, S.A.
DECEMBER 31, 1996
<PAGE>
XPLORER, S.A.
DECEMBER 31, 1996
Table of Contents
Page
Independent Auditors' Report F-1
Consolidated Balance Sheet F-2
Consolidated Statement of Operations F-3
Consolidated Statement of Stockholder's Equity F-4
Consolidated Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6
<PAGE>
JAY J. SHAPIRO, C.P.A.
A Professional Corporation
16501 Ventura Boulevard
Suite 650
Encino, California 91436
Tel. (818) 990-4878 Fax (818) 990-4944
INDEPENDENT AUDITORS' REPORT
The Board of Directors of XPLORER, S.A.:
We have audited the accompanying consolidated balance sheet of XPLORER,
S.A. (the "Company"), a development stage enterprise, as of December 31, 1996,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the period from August 1, 1996 (Inception) to December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1996, and the results of its operations and its cash flows
for the period August 15, 1996 (Inception) to December 31, 1996, in conformity
with generally accepted accounting principles.
As of December 31, 1996, the Company has significant negative working capital
and exposure to financial uncertainties (See Notes 1 and 2).
April 30, 1997
JAY J. SHAPIRO, C.P.A.
a professional corporation
F-1
<PAGE>
XPLORER, S.A.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEET
As of December 31, 1996
Assets
Current Assets:
Cash $ 166,000
Note receivable (Note 5) 16,000
Marketable securities (Note 4) 226,400
Prepaid commissions 210,000
-----------
Total Current Assets 618,400
Property, plant & equipment - net (Notes 6, 8 & 12) 3,404,400
Other investments (Notes 7 and 11) 1,019,000
-----------
Total Assets $ 5,041,800
===========
Liabilities and Shareholders' Equity
Current Liabilities:
Gold contracts (Note 12) 273,000
Zero-coupon bonds - Current 915,000
Related party payable (Note 13) 149,000
Note payable (Notes 7 and 11) 450,000
Payroll obligations 3,200
Other accrued expenses 38,000
-----------
Total Current Liabilities 1,828,200
Accrued legal fees (Note 10) 147,000
Long-term zero-coupon bonds, 552,700
Minority interest in consolidated subsidiary (Note 8) 852,000
-----------
3,379,900
Commitments and contingencies (Notes 2, 7, 8, 9, 11, 12 & 13)
Shareholders' Equity :
Preferred stock, par value $0.001;
authorized 15,000,000 shares;
convertible beginning in 2006;
1,280,550 shares issued and
outstanding 1,300
Common stock subscribed 1,000
Common stock, $0.001 par value; authorized
60,000,000 shares; 18,554,000 shares
issued and outstanding 17,600
Capital surplus 2,546,000
Deficit accumulated during the development stage (904,000)
-----------
Total shareholders' equity 1,661,900
-----------
Total Liabilities and Shareholders' Equity $ 5,041,800
===========
The notes to the financial statements are an integral part of these statements
F-2
<PAGE>
XPLORER, S.A. (a development stage enterprise)
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
Revenue (Note 1) $ 0
----------
Expenses:
Compensation ($128,600)
Professional fees (113,500)
Commissions (450,900)
Interest (171,700)
Administrative and depreciation (207,000)
---------
Total (1,071,700)
Other income (expense):
Gain on marketable securities-net 37,000
Interest income 48,400
Loss on settlement of gold contracts (106,000)
----------
Total (20,600)
Net Loss Before Minority Interest in Loss of Company (1,092,300)
Minority Interest in Loss of Company 340,300
----------
Net Loss ($752,000)
==========
Net Loss per Share ($.05)
==========
Weighted Average Number of Shares 16,800,000
==========
The notes to the financial statements are an integral part of these statements
F-3
<PAGE>
XPLORER, S.A. (a development stage enterprise)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Notes 1, 2,3, and 8)
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Common stock Preferred Stock
($.001 par) ($.001 par) Capital Accumulated During
Shares Amount Shares Amount Surplus Development Stage Total
------ ------ ------ ------ ------- ------------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1996 52,000 (52,000) 0
Balance,
August 15, 1996
reorganization with Gerant
pursuant to the Plan
(August, 1996) 15,603,000 $15,600 1,043,000 $1,000 $1,994,600 $2,011,200
Stock issued to special
creditors pursuant to the
Plan (September, 1996) 996,000 1,000 98,600 $99,600
Preferred stock issuance
to Atlantic beneficiary
for 189,960 LLC's
(December, 1996) 237,550 300 207,300 207,600
Dividend waiver
on preferred stock
(December 1996) 1,000,000 1,000 99,000 (100,000) 0
Stock issued to employees
and consultants for
professional services
(December, 1996) 955,000 1,000 94,500 95,500
Net loss for period (752,000) (752,000)
---------- ------- --------- ------ ----------- --------- ---------
Balance, December
31, 1996 18,554,000 $18,600 1,280,550 $1,300 $2,546,000 ($904,000) $1,661,900
========== ======= ========= ====== =========== ========= =========
</TABLE>
The notes to the financial statements are an integral part of these statements
F-4
<PAGE>
XPLORER, S.A. (a development state enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period August 15, 1996 (Inception)
to December 31, 1996
Net loss ($ 752,000)
Adjustment to net cash used by operations:
Minority interest in net loss of Company (340,300)
Depreciation and amortization 181,900
Accretion of interest 160,400
Gain on marketable securities (37,000)
Accrued expenses and other liabilities 40,200
Related party payable 149,000
Accrued Gerant obligations (140,000)
Prepaid commissions (210,000)
Other (71,500)
-----------
Total adjustments (267,300)
-----------
Net cash used by operations (1,019,300)
Financing activities:
Sale of Atlantic units for cash 458,300
Proceeds from sale of investment contracts 1,375,000
Repayment of gold contracts (325,000)
Note payable 450,000
-----------
Net cash provided by financing activities 1,958,300
-----------
Investing activities:
Computer equipment purchases (8,000)
Mining property expenditures (527,000)
-----------
Acquisition of marketable securities (1,130,000)
Proceeds from marketable securities 911,000
Gerant creditor expenditures (355,000)
-----------
Net cash used by Investing Activities (1,109,000)
-----------
Decrease in cash (170,000)
Cash - August 15, 1996 (Note 3) 336,000
-----------
Cash - December 31, 1996 $ 166,000
===========
Supplemental cash flow information:
Income taxes paid 800
===========
Interest paid $ 11,300
===========
During 1996, Atlantic exchanged 110,000 LLC units for commercial properties
($500,000 value) and professional services. The Company issued 1,995,000 shares
of common stock for compensation and a preferred stock dividend.
The notes to the financial statements are an integral part of these statements
F-5
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 1 Organization and Presentation:
XPLORER, S.A., the "Company" (successor to Gerant Industries, Inc.) was
organized by adoption of amended and restated Articles of Incorporation
dated July 5, 1996 which were filed with the office of the Secretary of
State of Nevada on August 15, 1996.
Gerant Industries, Inc. ("Gerant") filed a petition for reorganization
under Chapter 11 of the United States Bankruptcy Court (the "Court")
for the Central District of California on March 1, 1994. On July 24,
1996 the Court confirmed Gerant's Third Amended Plan of Reorganization
(the "Plan"). The Plan approved the amendment of the Articles of
Incorporation and By-laws, change of corporate name, authorization of
common and preferred shares of stock, payment of claims and issuance of
stock by the successors to this debtor-in-possession, XPLORER, S.A. The
Company was to issue 16,500,000 shares of common stock and 1,043,000
shares of preferred stock which were valued in aggregate at $53 million
by the Court. The historical determinable value in accordance with
generally accepted accounting principles was $2,011,200 and the Company
accounted for the transaction as a quasi-reorganization.
The Company is a development stage enterprise and has not achieved its
intended operations or related revenue as of this date.
The Company, a development stage enterprise, anticipates obtaining
sufficient cash resources in 1997 from the sale of investment
contracts, warrant exercise, operations, or private placement of equity
securities. Such proceeds are necessary to assure the funding of
anticipated operating costs and satisfaction of $1.2 million in
negative working capital as of December 31, 1996.
Presentation:
------------
The Company intends to engage in the development of natural resource
properties. As of 12/31/96 the Company does not have any operating
properties and is a development stage enterprise owning 59% of Atlantic
Pacific Trust, L.L.C. and its wholly-owned subsidiary Atlantic-Pacific
Finanzprodukte, GmbH as of December 31, 1996. The accounts of this
entity, which made a $355,000 loan to Gerant as part of the Plan, are
included in these consolidated financial statements and all significant
inter-company transactions have been eliminated. The loan was converted
to common stock special units of the Company(Note 8).
F-6
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 1 Organization and Presentation (cont'd):
Gerant had net assets of approximately $52,000 (Note 3) and
insignificant operations from January 1, 1994 to August 15, 1996. The
quasi-reorganization of this entity resulted in retained earnings of
-0- as of January 1,1996.
Note 2 Summary of Significant Accounting Policies:
Mining Properties:
-----------------
Mining properties are reflected in property, plant, and equipment at
cost of acquisition and development. Costs include efforts to remove
ore and waste, exploration, development of new ore bodies and defining
further mineralization in existing ore bodies. These costs are deferred
and will be charged to operating costs utilizing the unit-of-production
method in the period in which commercial production occurs.
When a property is identified as having development potential, the
costs of engineering, contract labor, financing, and professional fees
related to development are capitalized as they are incurred. If a
project is determined not to be economically feasible, unrecoverable
costs are expensed in the year in which the determination is made.
Mining properties are reflected at net realizable value based on the
Company's ability to generate future value.
Revenue Recognition:
-------------------
Revenue is recognized when title to delivered gold or other precious
metals passes to the buyer.
Reporting Currency:
------------------
While the Company has significant financing transactions denominated in
German currency, its operations are located in the U.S. Accordingly,
all financial information regarding these transactions is translated
into U.S. dollars and no material transaction effect exists at December
31, 1996.
Loss Per Share:
--------------
The loss per share is calculated using the weighted average number of
shares outstanding. Warrants outstanding are anti-dilutive and are not
included.
F-7
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period Ended December 31, 1996
Note 2 Summary of Significant Accounting Policies (cont'd):
Property, Plant & Equipment and Depreciation:
--------------------------------------------
All property, plant and equipment is stated at cost and depreciated on
a straight-line basis over individual useful lives - three years
(computers), five years (mining equipment), and units-of- production
once mining property is at the operational level.
Financial Uncertainties:
------------------------
The Company is in the development stage and has experienced a net loss
of $752,000. The loss is principally due to commissions and interest
associated with the 1996 German financing. There is no assurance that
commercial quantities of mineral resources can be developed and sold in
a profitable market. Also, mining production could be delayed and
uninsurable risks could be incurred (See Note 9).
The Company's profitability is subject to change in gold prices and
exchange rates. To reduce the impact of such changes, the Company locks
in the future value of certain of these items through hedging
transactions. These transactions are accomplished through the use of
financial instruments, the value of which is derived from movements in
the underlying gold prices, the Company's actual production, or
exchange rates.
The Company intends to engage in financial instruments to reduce the
financial impact caused by fluctuations in the exchange rate of U.S.
dollars to German Duetsch Mark liabilities.
The carrying values of investment contracts involving gold settlement
are re-measured using the market value of gold at the balance sheet
date($369 per troy ounce). The price of gold has decreased as of the
report date.
Income Taxes:
------------
XPLORER, S.A. and its predecessor company have a substantial net
operating loss of an uncertain amount as of December 31, 1996. Prior
year tax returns are now being prepared.
Common Stock Issuance:
---------------------
Shares issued to Gerant special creditors, employees, consultants, and
preferred shareholder of the Company are valued at the nominal value of
$.10 per share. Common stock Units include one share of stock and a
warrant to acquire an additional share at 70% of market value.
F-8
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 2 Summary of Significant Accounting Policies (cont'd):
Use of Estimates:
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Note 3 Quasi-Reorganization:
Gerant changed its corporate name to XPLORER, S.A pursuant to an
exchange of stock and the provisions outlined in the Plan.
The Gerant's balance sheet prior to the execution of the Plan and
reorganization with newly-formed XPLORER, S.A. was:
$000's
----
Cash (Note 8) 335
Other current assets 17
-----
352
-----
Net fixed assets 3
Investments 500
-----
Total Assets $ 855
Current liabilities (298)
Pre-petition liabilities (150)
Atlantic advance (Note 8) (355)
-----
Total liabilities (803)
-----
Net Assets $ 52
=====
Under the Plan, the Company would realize the assets of Gerant and
assume the liabilities at Gerant basis, and issue common and preferred
stock in exchange for 1,005,000 units of Atlantic equity held by the
Company. Such units had a nominal book value of $1.50. These
transactions created a valuation for the Company's new common and
preferred stock issuance of $2,011,200.
F-9
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended December 31, 1996
Note 4 Marketable Securities:
The amounts disclosed below represent marketable securities of the
Company. All securities have been classified as "trading" and were sold
as of 12/31/96.
Cost Fair Value
---- ----------
Equity securities $ 211,400 $ 243,900
Options - equity securities (15,000) (17,500)
--------- ----------
$ 196,400 $ 226,400
========= ==========
At December 31, 1996, gross unrealized gains were $30,000 and realized
gains were $7,000. Most options are covered call positions thereby
limiting any market risk to the Company.
The Company does not use derivatives financial instruments for
speculative purposes. The Company enters into gold equity investments
to manage exposure to changes in gold prices. Such agreements are used
to participate in a rising gold price and the Company's undelivered
commitments.
Note 5 Note Receivable:
SYM-TEK filed Chapter 11 bankruptcy proceedings with Gerant as a
creditor. The amount of $16,000 was received on January 23, 1997 and
used to pay legal obligations of Gerant's bankruptcy proceeding.
Note 6 Property, Plant and Equipment:
Accumulated Net Book
Cost Depreciation Value
----- ------------ -----
Computer equipment $ 11,100 ($ 1,900) $ 9,200
Development costs - Evening Star 2,666,000 2,666,000
Mining equipment - Evening Star 909,200 (180,000) 729,200
---------- ----------- ----------
$3,586,300 ($ 181,900) $3,404,400
========== =========== ==========
The Company's majority-owned subsidiary (Note 8) owns eight claims
known as the Evening Star Mine located in Piute Mountain, Kern County,
California. Most of the development costs for Evening Star Mines are
from related parties (Note 13).
F-10
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 7 Other Investments:
The Company holds a $500,000 full recourse promissory note at 8%
interest per annum, payable monthly and principal due August 18, 1997.
This note is secured by 500,000 Class C Units of United Realty Group
Limited Partnership redeemable by issuer at $1.00 per unit in August
1997 and 75% tenant in common interest in the net proceeds from the
Southwood Plaza Shopping Center in Charlotte, North Carolina. The
property presently generates positive cash flow. However, the Company
has elected not to reflect a $400,000 non-recourse promissory note
secured only by 400,000 units of United Realty Group Partnership.
Interest on the $500,000 note of $3,333 has been received on a monthly
basis during 1996.
Atlantic owns 100% of the common stock of a company that has two
investments in commercial property located in Bakersfield, California.
The net realizable value of this investment is $500,000 as of December
31, 1996.
Atlantic owns 466,000 shares of XPLORER, S.A. This investment is 59%
eliminated in consolidated financial statements and reflected at a
nominal value of $.10 per share or $19,000.
Note 8 Atlantic Pacific Trust, L.L.C.:
Atlantic Pacific Trust, L.L.C. ("Atlantic"), a Nevada limited liability
company, is a natural resource company owned by XPLORER and three of
the Company's shareholders (the "Minority Interest"). Such corporation
is the successor to Atlantic Pacific Trust ("APT") and is the legal
owner of certain mining properties located in Kern County, California.
These mining properties (approximately 117 mining claims) were held by
a trust controlled by William M. Moreland ("Moreland"), and transferred
to a new entity, North Star Industries ("North"). North was 30% owned
by Moreland, 30% owned by Gardner, and 40% owned by Compania Comerciale
Atlantis, S.A., a Costa Rican entity ("CCA"). The claims were
eventually divided into four separate trusts. One of these trusts,
Nevada Trust, which owned eight claims known as the "Evening Star
Mine", was acquired at cost by APT.
APT was funded by sale of investment contracts, precious metal forward
contracts, and equity units ("LLC"). The Company owns 1.254,960 LLC
units as of December 31, 1996(59%).
F-11
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 8 Atlantic Pacific Trust, L.L.C. (cont'd):
APT made a loan to the Company for $355,000 that was converted to
Company special units (one share of common stock and one B warrant and
C warrant each exercisable within five years at $2.00 and $3.00 per
share, respectively) and paid a Gerant creditor $110,000 in exchange
for 111,667 shares of the Company's common stock These funds were used
by the Company to pay Gerant creditors according to the Plan. At
December 31, 1996, the value of 275,334 shares(59% of 466,667) has been
eliminated upon consolidation.
The Plan provided that Compania Comerciale Atlantis, S.A. would
exchange 500,000 of it's LLC units for 1,250,000 preferred shares of
the Company. However, only 417,200 units were exchanged for 1,043,000
preferred shares under this Plan. In December 1996, this company did
exchange 189,960 units for an additional 237,550 shares of preferred
stock. The preferred stock is partially convertible to ten shares of
common stock at the end of six years and had a dividend of 1.00% per
month payable in common stock at time of conversion. In December 1996,
the preferred stockholder agreed to waive all present and future
preferred dividend rights for the future issuance of 1,000,000 common
shares of the Company.
The Plan also provided that 585,560 LLC units held by Atlantic
beneficiaries be exchanged for Debtor Notes and converted to 14,639,000
shares of common stock. In addition, the former Gerant shareholders had
a reverse split to 400,000 shares which were to be exchanged pursuant
to the Plan for 400,000 common stock Units (287,000 were issued as of
12/31/96) of the Company
Note 9 Fair Market Information (Unaudited):
Atlantic Pacific Trust internal financial statements reflect a fair
market value of $110,000,000 that was accepted by the U.S. Bankruptcy
Court in the Plan. The result of these transactions with Gerant is that
the Company is controlled by beneficial holders of Atlantic.
Each year, Atlantic management estimates ore reserve and prepares a
comprehensive mining plan for the then-anticipated remaining life of
the mining property. The gold price used in estimating the Company's
ore reserves at December 31, 1996 was $369 per ounce. Other metals
could also be present in the ore reserves.
F-12
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 9 Fair Market Information (Unaudited) (cont'd):
Significant changes to the Company's plans could occur as a result of
mining experience, new ore discoveries, changes in mining process, new
investment in equipment and technology, Also, permits may not be
renewable under the same terms and conditions as originally granted,
exploration could not result in recoverable metals, and the anticipated
pilot refinery could not be completed and other factors.
The Company's management provides no assurance as to the outcome of any
of these matters and resulting adjustments could be material to the
Company's financial condition and operations.
Given the above uncertainties, Atlantic utilizes the values for its
gold resources based upon the updated report of Christopher L. Pratt,
Geologist, dated December 31, 1996, as to the proven reserves
summarized as follows:
Reserves in ounces of gold
(1.5 average ounces per ton) 435,000
Less 10% projected loss factor ( 43,500)
-------
Projected recoverable ounces 391,500
Market price of gold (per ounce)
@ 12/31/96 x $369
-----------
Projected gross revenue $144,463,000
Less projected extraction cost of
$210 per ton, times 290,000 tons (60,900,000)
----------
Net Projected Value $83,563,000
===========
The Company's projected share @ 59% $49,302,000
===========
The Company's management in compliance with applicable reporting
guidelines has downgraded the proven reserves (measured reserves) to
Probable Reserves (indicated reserves) until completion of the pilot
ore refinery, further mineralization studies, additional drilling and
sampling, and geological feasibility analyses.
Note 10 Accrued Legal Fees:
Per the Plan, Atlantic agreed to purchase an estimated $257,000 legal
fee administrative claim of the law firm, Robinson, Diamant, Brill &
Klausner (the" Firm"). Upon the purchase, Atlantic intends to exchange
the claim for 257,000 of its Xplorer, S.A. common stock special units.
During 1996, the Firm was paid $159,000 and a bonus of 100,000 shares
of Company common stock.
F-13
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 1996
Note 11 Note Payable:
In September, 1996 the Company borrowed $450,000 from Gardner
Investments. The terms of the note are 10.00% per annum payable
monthly. The principal is due and payable on September 25, 1997 and is
secured by 500,000 Class C Units of United Realty Group, L.P. The note
is convertible, at the option of the holder, at any time for 150,000
shares of common stock of the Company.
Note 12 Investment Contracts Payable:
Atlantic has issued investment contracts under German securities laws.
Such contracts are four types:
a) Contract of $9,645 per kilo received in U.S. dollars for purchase
of undelivered kilos (32.15 troy ounces) of gold bullion. All
contracts have a one year maturity. As of December 31, 1996, the
balance is $273,000. The Company has covered its gold risk on
outstanding contracts up to $369 per ounce.
b) Zero-coupon contract of $12,500 payable in U.S. dollars and bearing
interest at 9.00% per annum. Such contracts are repayable with
related interest in one to five years. As of December 31, 1996 the
balance is $337,500 and interest expense of $28,100 has been
accreted.
c) Zero-coupon contract payable in 5,000 German Duetsch Marks ("DM")
units and bearing interest at 9.00% per annum. Such contracts are
repayable with related interest in DM in one to five years. The
balance as of December 31, 1996 is $1,129,500 and interest expense
of $132,300 has been accreted.
d) Zero-coupon contract payable in DM or gold at the rate of 600 DM
principal per 1 troy ounce of gold did not result in funding to the
Company until January 1997. This is the only type of contract that
will be offered in the future.
All bonds are secured by the Company's interest in the Evening Star
mining claims per assignment to a bond trustee.
The Company paid commissions of approximately 33% and raised $1,375,000
in net funds during 1996.
F-14
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1996
Investment contracts are due as follows:
1997 $1,188,000
1998 267,000
1999 150,000
2000 45,000
2001 86,700
2002 4,000
----------
Total $1,740,700
==========
Note 13 Related Party Payable:
In 1995, Atlantic entered into agreements with Sequoia Trust, a related
party, to lease surface and mineral rights related to 57 acres of land
adjacent to Evening Star Mine and certain improved real property known
as the Weldon Research Center for total cost of $6000 per month. These
lease are renewable after a five year term and require a future minimum
annual payment of $72,000 to Sequoia Trust. Total charges capitalized
to development during 1996 were $104,000.
These properties provide the Company with the opportunity to develop
three patented mining claims with probable commercial grade ore (12%
royalty due to Sequoia Trust), construct a primary ore processing
refinery, and utilize 13,000 square feet at the Weldon Research Center
for its mineralization analyses and other testing procedures.
Atlantic also has a cancellable contract with EMTEC, Inc., a related
party, for development of the all eleven mining claims and the future
operation of the mine and refinery. The contract requires the Company
to pay EMTEC bi-monthly at invoiced cost plus 18% overhead. Total
charges capitalized to development during 1996 were $459,000.
As of December 31, 1996 the Company owes these entities $147,000 for
past services and such amount is accrued into development costs for
Evening Star Mine (See Note 6).
Note 14 New Accounting Pronouncements:
Statement of Financial Accounting Standards No 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed Of" (SFAS 121) requires
that long-lived assets be reviewed for impairment whenever changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of this statement as of December 31, 1996 had
no material effect on the consolidated financial statements.
F-15
<PAGE>
XPLORER, S.A. (a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1996
Note 14 New Accounting Pronouncements (cont'd):
Statement of Financial Accounting Standards Nos. 123, "Accounting for
Stock-Based Compensation" (SFAS 123) establishes financial accounting
and reporting standards for stock-based employee compensation plans as
well as transactions in which an entity issues its equity instruments
to acquire goods or services from non-employees. However, it also
allows an entity to continue to measure compensation cost based on APB
Opinion No. 25, "Accounting for Stock Issued to Employees". The Company
has determined that the fair value of stock transactions is similar to
the issue price at the time of granting and accordingly, has elected to
continue to apply the intrinsic value based method.
In June, 1996, Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" (SFAS No. 125), which provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities occurring after
December 31, 1996 was issued. The adopting of SFAS No. 125 is not
expected to have any impact on the financial statements of the Company.
F-16
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Name Age Position
- ---- ---- --------
Steven B. Mortensen 36 Chairman of the Board and Secretary
Thomas C. Roddy, PE. 44 Director, President and Chief
Executive Officer
William M. Moreland 48 Chief Operating Officer
and Director
Jon W. Bice 52 Director, Treasurer and Chief Financial
Officer
Joyce J. Pellet 60 Director
Benjamin C. Rice 58 Director
Steven B. Mortensen has been Chairman of the Board and Secretary since July,
1996. Mr. Mortensen majored in computer science and math at Brigham Young
University. Mr. Mortensen is also responsible for investor relations for the
Company and its subsidiaries, including overseeing its European operations. Mr.
Mortensen served as Trustee of Atlantic Pacific Trust and as Manager of Atlantic
Pacific Trust, LLC. Mr. Mortensen's experience is in real estate, mining
development, and public relations. He is also co-trustee of Rocky Mountain
Trust. In that capacity, he is solely responsible for asset management and all
investments. Previously, in 1991, Mr. Mortensen was senior vice president of the
"B" paper division of Trump Mortgage Group Inc. Mr. Mortensen's other past
positions include: President of North Star Industries, a mining, residential and
commercial contractor; President and owner of Hillcrest Development and Land, a
land and mine development company; Sales and Marketing Director of Mortensen
Construction and Lifestyle Homes, Inc.
17
<PAGE>
Thomas C. Roddy has been President, Chief Executive Officer and a director since
July, 1996. Mr. Roddy is a registered civil engineer in the State of California.
He received a B.S. in civil engineering from California State University, Fresno
in 1978. From 1978 through 1985, Mr. Roddy was a senior engineer for Boyle
Engineering Corporation, Bakersfield, California. Since 1985, Mr. Roddy has been
a consulting engineer in Bakersfield, California. His engineering background is
extensive and includes experience as project manager/engineer for various mining
projects in California and Nevada, engineering superintendent for construction
of the Almond Power Plant near Modesto, California, extensive experience in
road, sewer water, and drainage system design, and engineering services related
to Santa Fe Energy Company and Shell Western Exploration and Production Co. for
the construction of enhanced recovery facilities. Mr. Roddy is a former member
of the Kern County Air Pollution Control District Hearing Board.
William M. Moreland has been Chief Operating Officer and a director of the
Company since April, 1997, and a consultant to the company since August, 1996.
Mr. Moreland has been in the mining business since he was a child, working with
his father and grandfather on the Moreland Mines. He has been a consultant to
several mining companies on various mining projects, including platinum, silver
and gold. From 1971 through 1985, Mr. Moreland was the owner of a commercial and
residential contracting company and held a Class A General Engineering License
and Class B General Building License from the State of California. Mr. Moreland
has constructed processing mills and has designed a proposed Pilot Mill for the
Company's Evening Star Mine. Mr. Moreland is a Co-Manager of Emtec, LLC, the
mine operator of the Evening Star Mine, and he is a Trustee of the Sequoia Trust
and a Co-Manager of Atlantic Pacific Trust, LLC, a majority-owned subsidiary of
the Company. Mr. Moreland's over 40 years of experience in assay procedures,
precious metals refining, mine development and production is a valuable asset of
the Company.
Jon W. Bice has operated his own accounting and tax business since 1971. He
prepares over 600 individual tax returns, 40 corporate returns, and 15
partnership returns per year. His tax practice is national with clients in 29
states, ranging from shall, individual businesses to $100 million multi-national
corporations. Mr. Bice is licensed to practice before the Internal Revenue
Service and the United States Tax Court on tax matters, and performs an
estimated annual average of 100 to 125 tax and examination audits. Mr. Bice has
been the CFO for other corporations in the past whose sales ranged from $36
million per year to $100 million in international sales.
Joyce J. Pellet presently serves as trustee of Bedrock Trust, which owns and
manages several rental properties. She also actively serves as trustee for
Sequoia Trust and was co-trustee of Atlantic Pacific Trust. Ms. Pellet presently
serves as one of the Managers of EMTEC, LLC, which is the mine operator for
Atlantic Pacific Trust's mining properties.
Benjamin C. Rice is an attorney licensed to practice in the State of Idaho. He
received a B.S. in psychology and economics from Brigham Young University in
1964 and a juris doctor degree from Golden Gate university in 1971. He has been
engaged in the private practice of law since 1988, specializing in
constitutional law, trust, tax law, asset protection and mining law. He serves
as corporate counsel for several corporations and trusts, including Atlantic
Pacific Trust and Emtec, Inc. Mr. Rice has been a law professor at National
University and has served as general counsel for an operating mining company,
Toone-Mitchell Mining Company.
18
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Registrant. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Registrant and Exchange with copies of
all Section 26(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5 was
required for such persons, the Company believes that, other than as disclosed
below, during the fiscal year ended December 31, 1996, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
All of the officers, directors and ten percent shareholders , including Messrs.
Moreland, Roddy, Mortensen, Bice and Rice, Ms. Pellet, and Atlantic Pacific
Trust, LLC, failed to report timely on Form 3s when they had become directors,
officers and ten percent shareholders of the Registrant at the confirmation by
the Bankruptcy Court of the Third Amended Plan in August 1996. Procedures and
controls have been instituted to assure future compliance with Section 16(a) of
the Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
No executive officer of the Company earned in excess of $10,000 during the
fiscal year ended December 31, 1996. All executive officers as a group (three
persons) received cash compensation of approximately $30,000 during the fiscal
year ended December 31, 1996. Beginning January 1, 1997, the Company has agreed
to pay to Messrs. Mortensen, Roddy, Moreland and Bice an annual salary of
$60,000 for each person. Bonuses, based on sales and revenues, may be paid to
such employees at the discretion of the Board of Directors. There are no written
employment agreements with any employee of the Company.
19
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information, as of May 30, 1997,
with respect to the beneficial ownership of the Registrant's Common Stock, par
value $.001 per share, by holders of more than five percent of the Registrant's
Common Stock, by each director and executive officer of the Registrant, and by
all directors and officers of the Registrant as a group.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
- -------------------
Steven B. Mortensen 425,000 (3) 2.4
Thomas C. Roddy 50,000 *
William M. Moreland 50,000 (4) *
Jon W. Bice 70,000 *
Joyce J. Pellet 35,000 (4) *
Benjamin C. Rice 10,000 *
Compania Comercial Atlantis, S.A. 1,000,000 (5) 5.4
* Less than one percent (1%).
(1) Unless otherwise indicated, all shares are beneficially owned and the
sole voting and investment power is held by the person named in the table
above and the address for each beneficial holder is in care of the
Company.
(2) Based upon 18,782,445 shares of Common Stock outstanding.
(3) Does not include 125,000 shares in the Hughes Irrevocable Trust for the
benefit of Mr. Mortensen's wife. Mr. Mortensen disclaims any beneficial
interest in these shares.
(4) Does not include 750,000 shares held by the Sequoia Irrevocable Trust of
which Mr. Moreland's and Mrs. Pellet's adult children are the
beneficiaries. Mr. Moreland and Mrs. Pellet are the trustees of the trust
and both disclaim any beneficial interest in these shares.
(5) The address for this beneficial holder is P.O. Box 5747-1000, San Jose,
Costa Rica, C.A.
20
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On July 15, 1995, the Company's majority-owned subsidiary entered into the
following agreements:
a) A lease from Sequoia Trust of approximately 57 acres of land in Kern
County, California, containing three patented mining claims. The
Company intends to explore, develop and operate mines and extract, sell
and ship any precious metals discovered on the property. The lease
terminates on July 15, 2000, unless renewed for like terms by mutual
consent. The Company pays $3,000 per month and is obligated to pay 12%
of the gross value of metals and other substances recovered from
refining of ore from the property.
b) A lease from Sequoia Trust of the Weldon Research Center, Weldon,
California, consisting of several buildings, including a laboratory,
offices, repair shops and storage facilities. The lease terminates on
July 15, 2000, unless renewed for like terms by mutual consent. The
Company pays lease payments of $3,000 per month.
The Trustees of the Sequoia Trust are William M. Moreland, an officer and
director of the Company, and Joyce J. Pellet, a director of the Company. The
beneficiaries of the Trust are the children of Mr. Moreland and the children of
Mrs. Pellet. The children are all over 21 years old and do not live with either
Mr. Moreland or Mrs. Pellet and both Mr. Moreland and Mrs. Pellet disclaim any
beneficial interest in the Sequoia Trust.
c) The Company entered into an Operating Agreement with Emtec, LLC
("Emtec") wherein Emtec will perform all exploration, development and
production services for the Evening Star Mine. Emtec will be the
operator for all mine operations. The Company has agreed to pay to
Emtec, on a monthly basis, reimbursement of all expenses and costs of
Emtec related to the Evening Star mining operations plus 18%. From July
15, 1995 through March 31, 1997, the Company has paid Emtec $462,143.
Mr. Moreland, an officer and director of the Company, and Mrs. Pellet, a
director of the Company, are the Co-Managers of Emtec, LLC. Both Mr. Moreland
and Mrs. Pellet disclaim any beneficial ownership in Emtec, LLC.
In each of the transactions described in the preceding paragraphs in which the
Company purchased goods or services from an affiliate, the Company believes that
the terms of the transaction were no less favorable to it than those that could
have been obtained in a comparable transaction with an unrelated party. Any
future transactions between the Company and its officers, directors and
affiliated parties will be subject to approval by a majority of the directors of
the Company, including a majority of the disinterested directors.
21
<PAGE>
Pursuant to the Company's Third Amended Plan of Reorganization filed with the
Bankruptcy Court in July, 1996 (the "Plan"), Compania Comercial Atlantis, S.A.
("Compania") exchanged 417,200 APT Units owned by Compania for 1,043,000 shares
of the Company's Series A Convertible Preferred Stock (the "Preferred Stock").
In December, 1996, the Company exchanged an additional 237,550 shares of its
Preferred Stock for 189,960 APT Units. The Preferred Stock is convertible,
commencing October 1, 2002, into ten shares of the Company's Common Stock for
each share of Preferred Stock. Dividends are payable quarterly at a monthly rate
of one percent of the Preferred Stock held. The dividends are payable in Common
Stock of the Company on the basis of ten shares of Common Stock for each share
of Preferred Stock. In addition, the holder of the Preferred Stock could, upon
written notice, have any dividends due payable in additional Preferred Stock
instead of Common Stock.
On December 11, 1996, the Company agreed to issue 1,000,000 shares of its Common
Stock to Compania and Compania waived its right to receive any dividends, past,
present or future, associated with the Preferred Stock. As of December 11, 1996,
no dividends had been paid to Compania.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
a. Listing of Exhibits
2.1 (1) Disclosure Statement For Debtor's Third Amended Plan of
Reorganization.
2.2 (1) Order Confirming Debtor's Third Amended Plan of Reorganization.
2.3 Agreement and Plan of Reorganization between Atlantic Pacific Trust
and its Beneficiaries and Atlantic Pacific Trust, LLC dated December
26, 1996.
3.1(a) Articles of Incorporation and Amendments thereto of Registrant.
3.1(b) Articles of Organization of Atlantic Pacific Trust, LLC and Amendment
thereto.
3.2 By-Laws of Registrant.
4.1 Certificate of Designation of Series A Convertible Preferred Stock of
Registrant.
4.1(a) Waiver of Preferred Stockholder between Registrant and Compania
Comercial Atlantis, S.A. dated December 11, 1996.
22
<PAGE>
4.2 $450,000 10% Subordinated Convertible Note dated September 25, 1996
between Registrant and Gardner Investments, Inc. (lender).
4.3 Warrant Certificate for Common Stock issued to shareholders of the
Registrant pursuant to Third Amended Plan of Reorganization approved
by the United States Bankruptcy Court on August 5, 1996.
4.4 "B" Warrant Agreement between Registrant and Atlantic Pacific Trust
dated August 5, 1996.
4.5 "C" Warrant Agreement between Registrant and Atlantic Pacific Trust
dated August 5, 1996.
10.1 Lease Agreement between Sequoia Trust and Atlantic Pacific Trust dated
July 15, 1995.
10.2 Lease Agreement between Sequoia Trust and Atlantic Pacific Trust dated
July 15, 1995.
10.3 Operating Agreement between Atlantic Pacific Trust and Emtec, LLC
dated July 25, 1995.
10.4 Assignment of Assets by Atlantic Pacific Trust to Benjamin C. Rice,
Trustee dated October 25, 1995.
10.5 Bill of Sale between Sequoia Trust and Atlantic Pacific Trust dated
July 15, 1995.
10.6 Regulation "S" Stock Purchase Agreement between Stonehill Investments,
Ltd. and Registrant.
10.7 Security Agreement between Plaza Realty One Limited Partnership and
Registrant dated August 19, 1994, and $400,000 Promissory Note between
Plaza Realty One Limited Partnership and Registrant dated August 19,
1994.
- -------------------------------
(1) Files as exhibits to Registrant's Form 8-K which was filed with the
Commission on September 12, 1996, and incorporated herein by this
reference.
b. Reports on Form 8-K
A report on Form 8-K was filed by the registrant on November 15, 1996.
23
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
XPLORER, S.A.
Date: June, 1997 By:/s/ Thomas C. Roddy
-------------------
Thomas C. Roddy
President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- -------------------------- ----------------
/s/ Steven B. Mortensen Chairman of the Board June, 1997
- ----------------------- and Secretary
Steven B. Mortensen
/s/ Thomas C. Roddy President, Chief Executive June, 1997
- ----------------------- Officer and Director
Thomas C. Roddy
/s/ William M. Moreland Chief Operating Officer June, 1997
- ----------------------- and Director
William M. Moreland
/s/ Jon W. Bice Treasurer, Chief Financial June, 1997
- ----------------------- Officer and Director
Jon W. Bice
/s/ Joyce J. Pellet Director June, 1997
- -----------------------
Joyce J. Pellet
/s/ Benjamin C. Rice Director June, 1997
- -----------------------
Benjamin C. Rice
24
Exhibit 2.3
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of December 26, 1996, among
Atlantic Pacific Trust (hereinafter called "Trust") and Atlantic Pacific Trust,
LLC, a Nevada Limited Liability Company (hereinafter called "LLC"), and Xplorer,
S.A., Stonehill Investments, Ltd., and Compana Commercial Atlantis, S.A.
(hereinafter called the "Beneficiaries").
1. PLAN OF REORGANIZATION. The Beneficiaries are the owners of all of the
issued and outstanding Units of Beneficial Interest ("UBI's") of the
Trust, which consist of 2,121,260 UBI's. It is the intention of the
parties hereto that all of the issued and outstanding UBI's of the
Trust shall be acquired by LLC in exchange solely for its units of
Interests ("Interests").
2. EXCHANGE OF UBI'S FOR INTERESTS. The Trust and the Beneficiaries agree
that all of the 2,121,260 UBI's of the Trust shall be exchanged with
LLC for 2,121,260 Interests of the LLC. The following numbers of LLC
Interests will, on the closing date, as hereinafter defined, be
delivered to the individual Beneficiaries in exchange for their Trust
UBI's as hereinafter set forth:
No of LLC
No. of UBI's Interests to
Beneficiary of the Trust be Issued
----------- ------------ ------------
Xplorer, S.A 1,254,960 1,254,960
Stonehill Investments, Ltd. 20,000 20,000
Compana Commercial
Atlantis, S.A 846,300 846,300
--------- ---------
2,121,260 2,121,260
Such Interests shall be issued in certificates of such denominations, amounts,
and names as may be requested by the respective Beneficiaries. The Beneficiaries
represent and warrant that they will hold such Interests of LLC for investment.
3. DELIVERY OF UBI'S AND INTERESTS. On the closing date, the
Beneficiaries will deliver Certificates for the UBI's of the Trust
duly endorsed with signatures so as to make LLC the sole owner
thereof, free and clear of all claims and encumbrances; and on such
closing date delivery of the LLC Interests will be made to the
Beneficiaries as above set forth. Delivery will be made at such place
in or about Weldon, California, as may be determined by the parties.
Time is of essence.
4. REPRESENTATIONS OF BENEFICIARIES. The Beneficiaries represent and
warrant as follows:
a) As of the closing date they will be the sole owners of the UBI's
Exhibit 2.3
<PAGE>
appearing of record in their names; such UBI's will be free from
claims, liens, or other encumbrances; and they will have the
unqualified right to transfer such UBI's.
b) The UBI's constitute validly issued UBI's of the Trust, fully
paid and nonassessable.
c) The Beneficiaries, by the signing of this Agreement, hereby
waive notice of a special meeting of the Trustees and Beneficiaries of
the Trust regarding this reorganization with LLC and hereby approve
such reorganization with LLC.
d) The unaudited financial statements of the Trust, as of September
30, 1996, which will be delivered to LLC prior to the closing date,
are true and complete statements of the financial condition of the
Trust as of that date; there are no substantial liabilities, either
fixed or contingent, not reflected in such financial statements other
than contracts or obligations in the usual course of business; and no
such contracts or obligations in the usual course of business are
liens or other liabilities which, if disclosed, would alter
substantially the financial condition of the Trust as reflected in
such financial statements.
e) Since September 30, 1996, there have not been, and prior to the
closing date there will not be, any material changes in the financial
position of the Trust, except changes arising in the ordinary course
of business.
f) The Trust is not involved in any pending litigation or
governmental investigation or proceeding not reflected in such
financial statements or otherwise disclosed in writing to LLC and, to
the knowledge of the Trust or the Beneficiaries, no litigation or
governmental investigation or proceeding is threatened against the
Trust.
g) As of the closing date, the Trust will be in good standing as a
bona fide Trust Organization.
5. REPRESENTATION OF ACQUIRING LLC. LLC represents and warrants as
follows:
a) As of the closing date, the LLC Interests to be delivered to the
Beneficiaries will constitute the valid and legally issued Interests
of LLC, fully paid and nonassessable, and will be legally equivalent
in all respects to the Interests of LLC issued and outstanding as of
the date hereof.
b) the managers of LLC are duly authorized to execute this
Agreement pursuant to authorization of its Interest holders.
c) Since November 5, 1996, there have not been, and prior to the
closing date there will not be, any material changes in the financial
position of LLC, except changes arising in the ordinary course of
business.
Exhibit 2.3
<PAGE>
d) LCC is not involved in any pending litigation or governmental
investigations or proceeding not reflected in such financial
statements or otherwise disclosed in writing to the Beneficiaries.
e) As of the closing date, LLC will be in good standing as a Nevada
Limited Liability Company.
6. CONDITIONS OF CLOSING. The closing date herein referred to shall be
December 27, 1996, or such other date as the parties hereto may
mutually agree upon. All representations and covenants herein made
shall survive the closing. At the closing the Beneficiaries hereby
designate, nominate, constitute, and appoint William M. Moreland and
Steven B. Mortensen, and each of them, as their agents and attorneys
in fact to accept delivery to the certificates of LLC Interests to be
issued in their respective names, and to give a good and sufficient
receipt and acquittance for the same, and in connection therewith to
make delivery of their UBI's in the Trust to LLC.
7. PROHIBITED ACTS. The Trust agrees not to don any of the following
things prior to the closing date, and the Beneficiaries agree that
prior to the closing date they will not request or permit the Trust to
do any of the following things:
a) Declare or pay any dividends, interest or other distributions on
its UBI's or purchase or redeem any of its UBI's;
b) Issue any UBI's or other securities, including any right or
option to purchase or otherwise acquire any of its UBI's, or issue any
notes or other evidences of indebtedness not in the usual course of
business;
c) Make capital expenditures in excess of an aggregate of $25,000
except with the consent of LLC.
8. DELIVERY OF RECORDS. The Beneficiaries agree that on or before the
closing date they will cause to be delivered to LLC such Trust records
or other documents of the Trust as LLC may request.
9. NOTICES. Any notice which any of the parties hereto may desire to
serve upon any of the other parties hereto shall be in writing and
shall be conclusively deemed to have been received by the party to
whom addressed, if mailed, postage prepaid, United States Registered
Mail, to the following addresses:
Atlantic Pacific Trust, LLC
4750 Kelso Creek Road
Weldon, California 93283
Attention: Steven B. Mortensen, Manager
Beneficiaries, c/o William M. Moreland
Atlantic Pacific Trust
4750 Kelso Creek Road
Weldon, California 93283
Exhibit 2.3
<PAGE>
10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the heirs, personal representatives, successors, and
assigns of the parties.
Executed in multiple counterparts, each of which shall be deemed a
duplicate original, as of the date first above written.
LLC Atlantic Pacific Trust, LCC
By: /s/ Steven B. Mortensen
-------------------------
Manager
Trust Atlantic Pacific Trust
By: /s/ William M. Moreland
------------------------
Trustee
Beneficiaries /s/ Thomas C. Roddy
--------------------------
Xplorer, S.A.
--------------------------
Stonehill Investments, Ltd.
---------------------------
Compana Commercial Atlantis, S.A.
Exhibit 2.3
<PAGE>
Executed in multiple counterparts, each of which shall be deemed a
duplicate original, as of the date first above written.
LLC Atlantic Pacific Trust, LCC
By:
-------------------------
Manager
Trust Atlantic Pacific Trust
By:
-----------------------
Trustee
Beneficiaries
---------------------------
Xplorer, S.A.
/s/
---------------------------
Stonehill Investments, Ltd.
---------------------------
Compana Commercial Atlantis, S.A.
Exhibit 2.3
Exhibit 3.1(a)
(Filing stamp of the
Secretary of State for
Nevada, dated Aug. 15, 1996)
RESTATED
ARTICLES OF INCORPORATION
Gerant Industries, Inc. (the "Corporation"), a
corporation organized and existing under the laws of the
State of Nevada, does hereby certify:
1. The name of the Corporation is Gerant Industries, Inc. The
Corporation was originally incorporated under the name SUPER-VIDEO, INC.
and the original Articles of Incorporation were filed with the Secretary
of State of the State of Nevada on May 02, 1984. The name and address of
the original incorporator's signing the original Articles of
Incorporation are:
Daniel Lezak 1098 Lucerne Way, P.O. Box 7202
Incline Village, Nevada 89450
Fred Sproule P.O. Box 7960
Incline Village, Nevada 89450
Ray R. Cummings 4208 Minnecota Drive
Thousand Oaks, CA 91360
2. The Corporation is subject, pursuant to Chapter 11 of the
United States Bankruptcy Code, to the jurisdiction of the United States
Bankruptcy Court, in the proceeding entitled "In Re Gerant Industries,
Inc., a Nevada corporation, Debtor," Chapter 11 Case No. LA 94-17852-AA.
3. That pursuant to an Order of the Bankruptcy Court, dated
July 17, 1996, confirming the Corporation's Third Amended Plan of
Reorganization, and pursuant to the General Corporation Law of the State
of Nevada, this Restated Articles of Incorporation has been approved, and
restates, integrates and further amends the provisions of the Articles of
Incorporation of the Corporation, and the undersigned officers of the
Corporation have been authorized to execute this Restated Articles of
Incorporation and to cause it to be filed with the Secretary of the State
of Nevada.
4. The text of the Restated Articles of Incorporation as
heretofore amended or supplemented is hereby restated and further amended
to read in its entirety as follows:
FIRST: The name of the corporation is XPLORER, S.A. (
the "Corporation").
SECOND: The address of the Corporation's registered office in
the state of Nevada is 1098 Lucerne Way, P.O. Box 7202, Incline Village,
Nevada 89450. The name of the Corporation's registered agent at such
address is CD Management, Inc.
Exhibit 3.1(a)
<PAGE>
THIRD: The purpose of the corporation is to engage in
any lawful act or activity for which corporations may be organized under
the General Corporation Law of the State of Nevada (the "Law").
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is Seventy-Five
Million, Sixty Million of which shares are of a class designated as
"Common Stock" having a par value of $.001 per share and Fifteen Million
of which shares are of a class designated as "Preferred Stock" having a
par value of $.001 per share. As of the date hereof, there are no shares
of Preferred Stock issued or outstanding.
FIFTH: The limitations and relative rights of the
Common Stock are as follows:
5.1 VOTING RIGHTS. Except as otherwise required by
law or expressly provided herein, each share of Common Stock shall
entitle the holder thereof to one vote on each matter submitted to a vote
of the stockholders of the Corporation. No cumulative voting is
permitted in the election of directors.
5.2 DIVIDEND RIGHTS. Subject to provisions of law and
of this Articles of Incorporation, the holders of Common Stock shall be
entitled to receive dividends at such times and in such amounts as may be
determined by the Board of Directors of the Corporation.
5.3 NONASSESSABLITY. Except as otherwise required by
law, the Common Stock issued hereunder shall not be subject to any
assessments whatsoever.
5.4 PREEMPTIVE RIGHTS. Except as otherwise required by
law, the Common Stock issued hereunder shall not be entitled to
Preemptive Rights.
5.5 LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary (sometimes referred to herein as liquidation), after payment
or provision for payment to the debts and other liabilities of the
Corporation and the preferential amounts (if any) to which holders of any
outstanding Preferred Stock now or hereafter authorized shall be entitled
upon liquidation, the holders of Common Stock shall be entitled to share
ratably on a per share basis, together and on an equal basis with the
holders of Preferred Stock, in the remaining assets of the Corporation.
SIXTH: The Board of Directors is authorized, subject to
limitations prescribed by law and the provisions of Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and
by filing a certificate pursuant to the applicable law of the State of
Nevada, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and
qualifications, limitations or restrictions thereof.
Exhibit 3.1(a)
<PAGE>
6.1 SPECIFIC AUTHORITY. The authority of the
Board with respect to each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting
that series and the distinctive designation of that series;
(b) The dividend or interest rate to be paid on the
shares of that series, whether dividends shall be cumulative, and, if so,
from which date or dates, the relative rights of priority, if any, of the
payment of dividends on shares of that series, and whether
dividend/interest payments may be paid with Common Stock as well as cash.
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in such amounts
as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
(f) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, and the relative rights of priority, if any, of
payment to shares of that series;
(g) Any other relative rights, preferences and/or
limitations of that series.
6.2 DIVIDEND RIGHTS. Dividends on outstanding shares
of Preferred Stock shall be paid or declared and set apart for payment
before any dividends shall be paid or declared and set apart for payment
on the shares of Common Stock with respect to the same dividend period.
6.3 LIQUIDATION RIGHTS. If upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation,
the assets available for distribution to holders of shares of Preferred
Stock of all series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
Exhibit 3.1(a)
<PAGE>
SEVENTH: In furtherance and not in limitation of the
powers conferred by statute and unless otherwise provided herein, the
Board of Directors is, by action of the Board of Directors, expressly
authorized to make, alter or repeal the by-laws of the Corporation. The
number of directors may from time to time be increased as specified in
the by-laws of the Corporation, provided, however, that the number of
directors shall not be less than one.
EIGHTH: Meetings of the stockholders may be held within or
outside of the State of Nevada, as the by-laws of the Corporation may
provide. The books of the Corporation may be kept outside the State of
Nevada at such place or places as may be designated from time to time by
the Board of Directors of the Corporation or in the by-laws of the
Corporation. Election of the directors need not be by written ballot
unless the by-laws of the Corporation so provide.
NINTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
breach of his fiduciary duty as a director; provided, however, that this
provision shall not eliminate or limit the liability of a director (1)
for any breach of the director's duty of loyalty to the Corporation or
its stockholders, (2) for any acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
under the General Corporation Law of the State of Nevada, or (4) for any
transaction from which the director derived an improper personal benefit.
TENTH: The Corporation shall indemnify, in accordance with
and to the full extent now or hereafter permitted by law, 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 (including, without limitation, an action
by or in the right of the Corporation), by reason of his acting as a
director or officer of the Corporation (and the Corporation, in the
descretion of the Board of Directors, may so indemnify a person by reason
of the fact that he is or was an employee of the Corporation or is or was
serving at the request of the Corporation in any other capacity for or on
behalf of the Corporation) against any liability or expense actually and
reasonably incurred by such person in respect thereof. Such
indemnification is not exclusive of any other right to indemnification
provided by law or otherwise. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of
such action, suit, or proceeding upon receipt of an undertaking by or on
behalf of such officer or director to repay such amount if it shall
ultimately be determined that such officer or director is not entitled to
be indemnified. The right to indemnification and advancement of expenses
on the condition specified herein conferred by this Article shall be
deemed to be a contract between the Corporation and each person referred
to herein.
ELEVENTH: No amendment to or repeal of Article
NINTH OR TENTH of this Articles of Incorporation shall apply
to or have any effect on the rights of any individual
Exhibit 3.1(a)
<PAGE>
referred to in Article NINTH OR TENTH for or with
respect to acts or omissions of such individual occurring
prior to such amendment or repeal.
TWELFTH: The Articles of Incorporation of the Corporation, as
herein amended, shall constitute a restatement of and shall supersede the
Articles of Incorporation of the Corporation, as previously amended.
IN WITNESS WHEREOF, the Corporation has caused this restated
Articles of Incorporation to be signed by it authorized Director and
Secretary, hereunto duly authorized, this 30th day of July, 1996.
Gerant Industries, Inc.
By:_________________________
Jerry L. Burdick,
Director
ATTEST:
____________________________
Jerry L. Burdick, Secretary
Exhibit 3.1(a)
<PAGE>
THIS FORM SHOULD ACCOMPANY RESTATED ARTICLES
OF INCORPORATION FOR A NEVADA CORPORATION
(PURSUANT TO NRS 78.403)
1. Name of corporation: Gerant industries, inc.
2. Date of adoption of amended and Restated Articles: 5th day of July 1996
3. If the articles were amended, please indicate what changes have been made:
(a) Was there a name change? Yes [ x ] No [ ]
If yes, what is the new name?
EXPLORER, SA.
(b) Did you change the resident agent? Yes [ x ] No [ ].
If yes, please indicate the new resident agent and address.
CD Management, Inc.
1048 Lucerne Way
P.O. Box 7202
Incline Village, NV 89452
Please attach the resident agent acceptance certificate
(c) Did you change the purposes Yes [ ] No[ x ] Did you add Banking? [ ]
Gaming?[ ] Insurance [ ] None of these? [ ]
(d) Did you change the capital stock Yes [ x ] No [ ] If yes, what is the
new capital stock?
75,000,000 Shares; 60,000,000 Shares Common Stock, 15,000,000 shares
preferred stock.
(e) Did you change the directors? Yes [ x ] No [ ].
If yes, indicate the change:
See Attached Copies of Officers and Directors
(f) Did you add the director's liability provision? Yes [ x ] No [ ].
(g) Did you change the period of existence? Yes [ ] No [ x ]
If yes, what is the new existence?
(h) If none of the above apply, and you have mended or modified the articles
how have you amended the articles?
/s/ Thomas C. Roddy
President, August 9, 1996
(Notary Seal and signature)
(Stamp of the Secretary of State for Nevada,
dated Aug. 15, 1996)
Exhibit 3.1(a)
Exhibit 3.1(b)
(Filing stamp of the Secretary
of State for Nevada, Nov. 7, 1996)
STATE OF NEVADA
AMENDMENT
TO
ARTICLES OF ORGANIZATION
(Limited-Liability Company)
Pursuant to NRS 86.221
Secretary of State File No.: 2. Secretary of State File Date:
LLC15162-96 November 6, 1996
Name of Limited-Liability Company:
American Pacific Trust, LLC
The Articles of Organization of the Limited-Liability Company are amended
follows: (Complete appropriate sub-section(s)):
A. The Limited-Liability Company name is changed to:
Atlantic Pacific Trust, LLC
B: Other:
C: The following member(s)___, manager(s)___, managing member(s),
___ have withdrawn:
D: The following member(s)___, manager(s)___, managing member(s)
___, have been added:
The latest date upon which the Limited-Liability Company is to dissolve has been
changed to :______________________________
Other matters included in the Articles of Organization of the Limited-Liability
Company are amended as indicated on the attached page(s). Number of pages
attached:___.
We, the undersigned, verify that we are the persons who executed this amendment
to the identified Limited-Liability Company, which execution is our act and
deed.
/s/ Thomas C. Roddy
- ------------------------------------
Signature of manager or member Date
/s/ Steven B. Mortensen
- ------------------------------------
Signature of manager or member Date
/s/
(Notary seal) --------------------------------
Signature of notary officer
(Stamp of the Secretary
of State for Nevada, dated Nov. 7, 1996)
Exhibit 3.1(b)
<PAGE>
Secretary of State
(Nevada)
LIMITED-LIABILITY COMPANY CHARTER
I, DEAN HELLER, the Nevada Secretary of State, do hereby certify that
AMERICAN PACIFIC TRUST, LLC did on November 5, 1996, file in this office the
Articles of Organization for a Limited-Liability Company, that said Articles are
now on file and of record in the office of the Nevada Secretary of State, and
further, that said Articles contain the provisions required by the laws
governing Limited- Liability Companies in the State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the Great Seal of State, at
my office in Carson City, Nevada, on
November 5, 1996.
/s/ Secretary of State
/s/ Certification Clerk
(Seal of the State of Nevada)
Exhibit 3.1(b)
<PAGE>
(Filing stamp of the
Secretary of State for
Nevada, dated Nov. 5, 1996)
Articles of Organization
Limited-Liability Company
(PURSUANT TO NRS 86)
STATE OF NEVADA
Secretary of State
Name of Limited Liability Company: American Pacific Trust, LLC
Dissolution Date (latest date upon which the company is to dissolve):
December 31, 2020
Resident Agent: (designated resident agent and the STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: PARACORP Incorporated
Street Address: 318 North Carson Street, Suite 208, Carson City, NV 89701
Mailing Address (if different):
Right of remaining members of the company to continue the business on the death,
retirement, resignation, expulsion, bankruptcy or dissolution of a member or
occurrence of any other event which terminates the continued membership of a
member in the company:
[ X ] YES [ ] NO
Management: The company shall be managed by [X] manager(s) OR __________members
Names and addresses of manager(s) or members: (attached additional pages if
necessary)
1. Thomas C. Roddy, P.E., 4750 Kelso Creek Road, Weldon, CA 93283
2. Steven B. Mortensen, 10400 Overland Road, #103, Boise, Idaho 83709
If managed by members, members may contract debts on behalf of the company
____ YES ____ NO.
Other matters: This form includes the minimal statutory requirements to organize
under NRS 86. Please attach any other information deemed appropriate. Number of
pages attached -0-.
Signature of organizer(s): The name(s) and address(es) of the organizer(s)
executing the articles:
Nancy Gaches
Name (print)
Exhibit 3.1(b)
<PAGE>
Carson Street, Suite 208
Carson City, Nevada, 89701
/s/ Nancy Gaches
This instrument was acknowledged
before me on October 24, 1996, by
Nancy Gaches
Name of Person
as organizer
of American Pacific Trust, LLC
(name of party on behalf of whom
instrument was executed)
(Notary stamp and seal)
/s/ Ginny Evans
Public Notary
Certificate of acceptance of appointment of resident agent: I, Paracorp
Incorporated hereby accept appointment as resident agent for the above named
limited-liability company.
/s/ Nancy Gaches
for Paracorp Incorporated 10/24/96
Signature of resident agent Date
(Stamp of the Secretary of State
for Nevada, dated Nov. 5, 1996)
Exhibit 3.1(b)
Exhibit 3.2
SUPER-VIDEO, INC.
(A NEVADA CORPORATION)
* * * *
BY-LAWS
* * * *
ARTICLE I
OFFICES
Section 1. The principal office shall be in the City of Incline
Village, Nevada.
Section 2. The corporation may also have offices at such other
places both within and without the State of Nevada as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETING OF THE STOCKHOLDERS
Section 1. All annual meetings of the stockholders shall be held in
Los Angeles, California. Special meetings of the stockholders may be held at
such time and place within or without the State of Nevada as shall be stated in
the notice of the meeting, or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the
year 1985, shall be held on the first day of October, if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 10:00 A.M. at
which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by
the president or a vice president, or the secretary, or an assistant secretary,
or by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when, and the place, which may be within or without the state, where it is to be
held. A copy of such notice shall be either delivered personally to or shall be
Exhibit 3.2
<PAGE>
mailed, postage prepaid, to each stockholder of record entitled to vote at such
meeting not less than ten nor more than sixty days before such meeting. If
mailed it shall be directed to a stockholder at his address as it appears upon
the records of the corporation and upon such mailing of any such notice, the
service thereof shall be complete, and the time of the notice shall being to run
from the date upon which such notice is deposited in the mail for transmission
to such stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In the
event of the transfer of stock after delivery or mailing of the notice of and
prior to the holding of the meeting it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
Section 5. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be presented or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present or represented at any meeting,
the vote of the holders of a majority of the stock having voting power, present
in person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one which by express provision of the statutes
or of the articles of incorporation a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 8. Every stockholder of record of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation.
Section 9. At any meeting of the stockholders, any stockholder may
be represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide no such
proxy shall be valid after the expiration of six months from the date of it
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution. Subject to
the above, any proxy duly executed is not revoked and continues in full force
and effect unless an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Exhibit 3.2
<PAGE>
Section 10. Any action, except election of directors, which may be
taken by the vote of the stockholders at a meeting, may be taken without a
meeting if authorized by the written consent of stockholders holding at least a
majority of the voting power, unless the provisions of the statutes or of the
articles of incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of written consents
shall be required.
ARTICLE III
DIRECTORS
Section 1. The number of director which shall constitute the whole
board shall be three (3), all of whom shall be of full age and at least one of
whom shall be a citizen of the United States. The directors shall be elected at
the annual meeting of the stockholders, and except as provided in Section 2 of
this article, each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies, including those caused by an increased in the
number of directors, may be filed by a majority of the remaining directors
though less than a quorum. When one or more directors shall give notice of his
or their resignation to the board, effective at a future date, the board shall
power to fill such vacancy or vacancies to take effect when such resignation or
resignations shall become effective, each director so appointed to hold office
during the remainder of the term of office of the resigning director or
directors.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Nevada.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and placed as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Exhibit 3.2
<PAGE>
Section 6. Regular meetings of the board of directors may be held
without notice at such time and place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board of directors may be called
by the president or secretary on the written request of two directors (unless
there is only one director and if so, upon his request). Written notice of
special meetings of the board of directors shall be given to each director at
least one (1) day before the date of the meeting.
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
COMMITTEE OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board when required.
COMPENSATION OF DIRECTORS
Section 11. The directors may be paid by their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books on the corporation. Notice by mail shall
Exhibit 3.2
<PAGE>
be deemed to be given at the time when the name shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meeting
shall be as valid as if had at a meeting regularly called and noticed, at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meetings; and such consent or approval of stockholders
may be proxy or attorney, but all such proxies and powers of attorney must be in
writing.
Section 3. Whenever any notice whatsoever, is required to be given
under the provisions of the statutes, of the articles of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The offices of the corporation shall be chosen by the
board of directors and shall be president, a secretary, and a treasurer. Any
person may hold two or more offices.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a secretary and a
treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint vice presidents, and
assistant secretaries and assistant treasurers and such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
Exhibit 3.2
<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the stockholders and the board
of directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENT
Section 8. A vice president shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president and
shall perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall keep in safe custody
the seal of the corporation and, when authorized by the board of directors,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the treasurer or an assistant
secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and secure accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other value effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
Exhibit 3.2
<PAGE>
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a
certificate, signed by the president, or a vice president and the treasurer or
an assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
When the corporation is authorized to issue shares of more than one class or
more than one series of any class, there shall be set forth upon the face or
back of the certificate, or the certificate shall have a statement that the
corporation will furnish to any stockholders upon request and without charge, a
full or summary statement of the designations, preferences and relative,
participating, optional or other special rights of the various classes of stock
or series thereof and the qualifications, limitations or restrictions of such
rights, and, if the corporation shall be authorized to issue only special stock,
such certificate shall set forth in full or summarize the rights of the holders
of such stock.
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificates or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be the officer or officers of such corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificates of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against claim that
may be made against the corporation with respect to the certificate alleged to
have been lost or destroyed.
Exhibit 3.2
<PAGE>
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty
days prior to any meeting of the stockholders during which no transfer of stock
on the books of the corporation may be made, or may fix a day not more than
sixty days prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Nevada.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the articles of incorporation, if any, may be
declared by the board of directors at any regular or special meeting pursuant to
law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for Dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing Dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify, or abolish such reserves in the
manner in which it was created.
Exhibit 3.2
<PAGE>
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designated.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its incorporation and the words "Corporate Seal,
Nevada."
ARTICLE VII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if not ice of such
alteration or repeal be contained in the notice of such special meeting.
Exhibit 3.2
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting Secretary of Super-Video, Inc., a
Nevada corporation; and
(2) That the foregoing Bylaws, comprising ten (10) pages, constitute the
Bylaws of such corporation as duly adopted by action of the Board of Directors
of the corporation duly taken on June 26, 1984.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal
of such corporation this 26th day of June, 1984.
/s/ Daniel Lezak
----------------------
DANIEL LEZAK, Secretary
Exhibit 3.2
Exhibit 4.1
(Stamp of the Secretary of State,
filed Nov. 18, 1996)
CERTIFICATE OF DESIGNATION
OF
Series A Convertible Preferred Stock
OF
XPLORER, S.A.
Xplorer, S.A., a corporation organized and existing under the laws of the
State of Nevada (the "Corporation") , does hereby certify that, pursuant to the
authority conferred on the Board of Directors of the Corporation by the Articles
of incorporation, the Board of Directors of the Corporation adopted the
following resolution establishing a series of 1,280,550 shares of Preferred
Stock of the Corporation designated as
SERIES A CONVERTIBLE PREFERRED STOCK
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Articles of Incorporation, a
series of Preferred Stock, $.001 par value per share, of the
Corporation be and hereby is established and created, and that the
designation and number of shares thereof and the voting and other
powers, preferences and relative, participating, optional or other
rights of the shares of such series and qualifications, limitations
and restrictions thereof are as follows:
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
designated as "Series A Convertible Preferred Stock", and the number of shares
constituting such series shall be 1,280,550. Such series is referred to herein
as the "Series A Preferred Stock".
2. PAR VALUE. The par value for each share of Series A Preferred Stock shall
be $.001.
3. RANK. All shares of Preferred Stock shall rank prior to all of the
Corporation's common stock, $.001 par value (the "Common Stock"), now or
hereafter issued, both as to payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary.
4. DIVIDENDS. The holders of Series A Preferred Stock are entitled to receive,
when and as declared by the Board of Directors of the Company, dividends at a
monthly rate of one percent (1%) of Series A Preferred Stock held, payable
quarterly. The dividends will be paid in common stock of the Corporation on the
basis of ten (10) shares of common stock for each share of Series A Preferred
Stock. The holder of the Series A Preferred Stock may, upon written notice, have
any dividends due, payable in additional Series A Preferred Stock instead of
Common Stock. Dividends will be cumulative from the date of issuance of the
Series A Preferred stock and will be payable quarterly to holders of record on
Exhibit 4.1
<PAGE>
the stock records of the Company on such record dates as shall be fixed by the
Board of Directors of the Company. The Company plans to establish record dates
of March 31, June 30, September 30 and December 31 with payment dates 15 days
thereafter. Initial dividends will be prorated to the date of issuance of the
Series A Preferred Stock starting September 30, 1996.
Shares redeemed or converted after the record date for a dividend and
before the payment date will be entitled to the dividend but no adjustment will
be made on account of dividends with respect to the period after the last record
date before the redemption or conversion, as the case may be.
Unless all annual cumulative dividends on the Series A Preferred Stock have
been paid, no dividends or other distributions may be paid or declared and set
apart for payment on the Common Stock or any other capital stock of the Company
ranking junior to the Series A Preferred Stock as to dividends.
Nevada law provides that a corporation may pay dividends in cash or shares
of its stock. Such dividends may be paid from either surplus or net profits for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year, provided, however, that if the capital of the corporation shall have been
diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the outstanding stock of all classes having a preference upon the
distribution of assets, the directors of such corporation shall not declare and
pay out. of such net profits any dividends upon any shares of any classes of its
capital stock until the deficiency in the amount of capital represented by the
outstanding stock of all classes having a preference upon the distribution of
assets shall have been repaired. Surplus is defined as the excess of the net
assets of the Company over the amount determined to be capital. The capital of
the Company will be the aggregate of the par values of the shares of Common
Stock and Series A Preferred Stock issued. Net assets means the amount by which
total assets exceed total liabilities. Neither capital nor surplus are
liabilities for this purpose. Thus, the amount by which the net proceeds
received by the Company as a part of this offering exceeds the par value of the
Common Stock and the par value of Series A Preferred Stock issued is included in
surplus from which dividends may be paid.
5. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or winding
up of the Company, holders of the Series A Preferred Stock are entitled to any
unpaid dividends out of assets available for distribution to shareholders, prior
to any distribution to holders of Common Stock or any other stock ranking junior
to the Series A Preferred Stock. After payment of any dividends due and owing to
which they are entitled, the holders of shares of Series A Preferred Stock will
not be entitled to any further participation in any distribution of assets by
the Company.
A consolidation or merger of the Company with or into any other corporation
or a sale of all or any part of the assets of the Company (which shall not in
fact result in the liquidation of the Company and the distribution of assets to
stockholders) shall not be deemed to be a liquidation, dissolution or winding up
of the company.
6. REDEMPTION. The Series A Preferred Stock may be redeemed upon 30 days'
written notice at a redemption price of ten (10) shares of Common Stock for each
Exhibit 4.1
<PAGE>
share of Series A Preferred stock per share commencing on October 1, 2002 as
follows: After October 1, 2002, fifteen percent (15%) of the outstanding Series
A Preferred Stock; after October 1, 2003, twenty-five percent (25%) of the
outstanding Series A Preferred Stock; after October 1, 2004, thirty percent
(30%) of the outstanding Series A Preferred Stock; and after October 1, 2005,
the balance of the thirty percent (30%) of the outstanding Series A Preferred
Stock. Series A Preferred Stock shareholders shall have the right to convert
into Common Stock during this 30-day period. The redemption price shall be
payable together with accumulated and unpaid dividends to the date fixed for
redemption. If full cumulative dividends on the Series A Preferred Stock through
the most recent dividend payment date have not been paid, the Series A Preferred
Stock may not be redeemed in part unless approved by the holders of a majority
of shares of the Series A Preferred Stock then outstanding and the Company may
not purchase or acquire any share of Series A Preferred Stock other than
pursuant to a purchase or exchange offer made on the same terms to all holders
of the Series A Preferred Stock. If less than all the outstanding shares of
Series A Preferred Stock are to be redeemed, the Company will select those to be
redeemed by lot or a substantially equivalent method.
The shares of Series A Preferred Stock are not subject to any sinking fund
or any other similar provision.
7. CONVERSION RIGHTS. Holders of the Series A Preferred Stock will have the
right, at their option. to convert such shares into shares of Common Stock at
any time at the conversion rate then in effect, provided that, if any of the
series A, Preferred stock is redeemed, the conversion rights pertaining thereto
will terminate on the third business day preceding the redemption date.
Each share of Series A Preferred Stock will be convertible into ten (10)
shares of Common Stock of the Company. No fractional share or scrip representing
a fractional share will be issued upon conversion of the Series A Preferred
Stock. Cash will be paid in lieu of fractional shares.
The time of conversion and the amount allowed to be converted shall be as
follows:
Commencing October 1, 2002 - fifteen percent (15%) of the outstanding
Series A Preferred Stock; after October 1, 2003, twenty-five percent
(25%) of the outstanding Series A Preferred Stock; after October 1,
2004, thirty percent (30%) of the outstanding series A Preferred
Stock; and after October 1, 2005, the balance of thirty percent (30%)
of the outstanding Series A Preferred Stock.
The conversion rate will be appropriately adjusted it the Company (a) pays
a dividend or makes a distribution on its shares of Common Stock (but not the
Series A Preferred Stock) which is paid or made in shares of Common Stock, (b)
subdivides or reclassifies its outstanding shares of Common Stock, (c) its
outstanding shares of Common Stock into a smaller of shares of Common Stock, (d)
issues shares of Common Stock, or issues rights or warrants to all holders of
its Common Stock entitling them to subscribe for a purchase shares of Common
Stock (or securities convertible into Common Stock) , at a price per share less
than the conversion price in effect immediately prior to the issuance thereof,
or (e) distributes to all holders of its Common Stock evidences of its
Exhibit 4.1
<PAGE>
indebtedness or assets (excluding any dividend paid in cash out of legally
available funds) subject to the limitation that adjustments by reason of any of
the foregoing need not be made until they result in a cumulative change in the
conversion rate of at least five percent (5%). The conversion rate will not be
adjusted upon the conversion of shares of Series A Preferred Stock or presently
outstanding stock options or warrants. For the purpose of making the above
adjustments, the market price of a share of Common Stock shall be the average of
the closing bid and asked prices for the Common Stock on the Over-The-Counter
market.
In case of any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the surviving
corporation, or in case of any sale or conveyance to another corporation of the
property of the company as an entirety or substantially as an entirety, or in
case of any statutory exchange of securities with another corporation, there
will be no adjustment of the conversion price, but each holder of shares of
Series A Preferred Stock then outstanding will have the right thereafter to
convert such shares into the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange sale or conveyance had such
shares been converted immediately prior, to the effective date of such
consolidation , merger, statutory exchange, sale or conveyance. In the case of a
cash merger of the company into another corporation or any other cash
transaction of the type mentioned above, the effect of these provisions would be
that the conversion features of the Series A Preferred Stock would thereafter be
limited to converting the Series A Preferred Stock at the conversion price in
effect at such time into the same amount of shares (Common Stock or Series A
Preferred Stock) that such holder would have received had such holder converted
the Series A Preferred Stock immediately prior to the effective date of such
cash merger or transaction. Depending upon the terms of such cash merger or
transaction, the aggregate amount of cash so received in conversion could be
more or less than the liquidation preference of the Series A Preferred Stock.
Series A Preferred Stock may be converted upon surrender of the stock
certificate at least three (3) days prior to the redemption date at the offices
of the Corporation at: 4750 Kelso Creek Road, Weldon, California 93283 with the
form of "Election to Convert" on the reverse side of the stock certificate
completed and executed as indicated. Shares of Common Stock issued upon
conversion will be fully paid and non-assessable.
8. VOTING RIGHTS. Except as herein or by law expressly provided, the Series A
Preferred Stock shall have no right or power to vote on any question or in any
proceeding or to be represented at or to receive notice of any meeting of the
stockholders. If however, and whenever, at any time or times, dividends payable
on the Series A Preferred Stock shall be in default in an aggregate amount
equivalent to six full quarterly dividends, the outstanding Series A Preferred
Stock shall have the exclusive right, voting separately as a class, to elect a
majority of the directors of the Corporation, and the remaining directors shall
be elected by the other class or classes of stock entitled to vote therefor, at
each meeting of the stockholders held for the purpose of electing directors,
until such time as all dividends accumulated on the series A Preferred Stock
shall have been paid in full, at which time the right of the Series A Preferred
Stock to vote and to be represented at and to receive notice of meetings shall
Exhibit 4.1
<PAGE>
terminate, except as herein or by law expressly provided, subject to revesting
in the event of each and every subsequent default of the character above
mentioned.
At any time when such voting power shall be vested in the Series A
Preferred Stock as herein provided, a proper officer of the Corporation shall,
upon the written request of the holders of record of at least 10% in amount of
the Series A Preferred Stock then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of the Series A Preferred Stock and of any
other class or classes having voting power with respect thereto, for the purpose
of electing directors. Such meeting shall be held at the earliest practicable
date at the place for the holding of annual meetings of stockholders of the
Corporation. If such meeting shall not be called by the proper officer of the
Corporation within 20 days after personal service of the said written request
upon the Secretary of the Corporation or within 20 days after mailing the same
within the United States of America by registered mail addressed to the
Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of at least 10% in amount of the Series A Preferred Stock then
outstanding, may designate in writing one of their number to call such meeting,
and such meeting may be called by such person so designated upon the notice
required for annual meetings of stockholders and shall be held at the place for
the holding of annual meetings of stockholders of the Corporation. Any holder of
Series A Preferred Stock so designated shall have access to the stock books of
the Corporation for the purpose of causing a meeting of stockholders to be
called pursuant to these provisions.
At any meeting so called, and at any other meeting of stockholders held for
the purpose of electing directors at which the Series A Preferred Stock shall
have the right, voting separately as a class, to elect directors as aforesaid,
the presence in person or by proxy of one-third of the outstanding shares of
Series A Preferred Stock shall be required to constitute a quorum of such class
for the election of any director by the Series A Preferred Stock as a class.
At any such meeting or adjournment thereof, (a) the absence of a quorum of
the Series A Preferred Stock shall not prevent. the election of the directors to
be elected by the holders of stock other than the Series A Preferred Stock and
the absence of a quorum of stock other than the Series A Preferred Stock shall
not prevent the election of the directors to be elected by the holders of the
Series A Preferred Stock, and (b) in the absence of such quorum either of the
Series A Preferred Stock or of stock other than the Series A Preferred Stock, a
majority of the holders, present in person or by proxy, of the stock which lacks
a quorum shall have power to adjourn the meeting for the election of the
directors which they are entitled to elect, from time to time, without notice
other than announcement at the meeting, until a quorum shall be present.
The term of office of all directors in office at any time when voting
power, shall, as aforesaid, be vested in the Series A Preferred Stock shall
terminate upon the election of any new directors at any meeting of stockholders
called for the purpose of electing directors. Upon any termination of the right
of the Series A Preferred Stock to vote for directors as herein provided, the
term of office of all directors then in office shall terminate upon the election
of new directors at a meeting of the other class or classes of stock of the
Exhibit 4.1
<PAGE>
Corporation then entitled to vote for directors, which may be held at any time
after such termination of voting right in the Series A Preferred Stock, upon
notice as above provided, and shall be called by the Secretary of the
Corporation upon written request of the holders of record of 10% of the
aggregate number of outstanding shares of such other class or classes of stock
then entitled to vote for directors.
9. TWO-THIRDS VOTE TO CHANGE RIGHTS, PREFERENCE, AND POWERS. So long as any
shares of Series A Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote at a meeting (the notice of which shall state the
general character of the matters to be submitted thereat), or the written
consent with or without a meeting of the holders of at least 66-2/3% of the then
outstanding shares of Series A Preferred Stock:
(a) increase the authorized amount of Series A Preferred Stock; or
authorize or create, or increase the authorized amount of, any additional class
of stock ranking prior to or on a parity with the Series A Preferred Stock as to
dividends or assets; or authorize or create, or increase the authorized amount
of, any class of stock or obligations convertible into or evidencing the right
to purchase any class of stock ranking prior to or on a parity with the Series A
Preferred Stock as to dividends or, assets; or
(b) amend, alter or repeal any of the provisions of the rights, preferences
or powers of the outstanding Series A Preferred Stock fixed herein or determined
by the Board of Directors as herein authorized; so as adversely to affect the
rights, preferences or powers of the Series A, Preferred Stock or its holders.
10. STATUS OF ACQUIRED SHARES. Shares of Series A Preferred Stock redeemed by
the Company or received upon conversion pursuant to Section 7 or otherwise
acquired by the Company will be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to class, and may
thereafter be issued, but not as shares of Series A Preferred Stock.
11. PREEMPTIVE RIGHTS. The Series A Preferred Stock in not entitled to any
preemptive or subscription rights in respect of any securities of the Company.
12. SEVERABILITY OF PROVISIONS. Whenever possible, each provision hereof shall
be interpreted in a manner as to be effective and valid under applicable law,
but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or, invalidity, without invalidating or otherwise adversely
affecting the remaining provisions hereof. If a court of competent jurisdiction
should determine that a provision hereof would be valid or enforceable if a
period of time were extended or shortened or a particular percentage were
increased or decreased, then such court may make such change as shall be
necessary to render the provision in question effective and valid under
applicable law.
Exhibit 4.1
<PAGE>
Dated: November 11, 1996
XPLORER, S.A.
BY: /s/ Thomas C. Roddy
-------------------------------
Thomas C. Roddy, President
By: /s/ Steven B. Mortensen
------------------------------
Steven B. Mortensen, Secretary
STATE OF IDAHO )
) ss.
County of ADA )
On this 14th day of November, 1996, before me, the undersigned, a Notary
Public in and for said State, personally appeared Thomas C. Roddy, and Steven B.
Mortensen, known to me to be the President and Secretary of the Corporation that
executed the foregoing instrument or the persons who executed the foregoing
instrument on behalf of the said Corporation, and acknowledged to me that such
Corporation or authorized persons executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
By: /s/
NOTARY PUBLIC FOR: IDAHO
My Commission Expires: 8-17-2001
(Stamp of the Secretary of State
for Nevada, dated Nov. 18, 1996)
Exhibit 4.1
Exhibit 4.1(a)
WAIVER OF PREFERRED STOCKHOLDER
The undersigned, Compania Comercial Atlantis, S.A., being the holder of
1,280,550 shares of Series A Convertible Preferred Stock (the "Preferred Stock)
of Xplorer, S.A., does hereby waive all right, title, interest and privileges to
dividends in said Preferred Stock, including all accumulated, present and future
dividends attaching thereto (the "Dividends"), all Dividends as set forth in the
Certificate of Designation of said Preferred Stock as filed in the Office of the
Secretary of State of the State of Nevada on November 18, 1996, a copy of which
is attached hereto and made a part hereof, in exchange for the issuance and
delivery to Compania Comercial Atlantis, S.A. of 1,000,000 shares of the Common
Stock of Xplorer, S.A.
Dated: December 11, 1996
PREFERRED STOCKHOLDER:
COMPANIA COMERCIAL ATLANTIS, S.A.
By: /s/
----------------------------------
Exhibit 4.1(a)
Exhibit 4.2
XPLORER, S.A.
(A Nevada Corporation)
10% SUBORDINATED CONVERTIBLE NOTE
$450,000.00 PRINCIPAL AMOUNT
DUE SEPTEMBER 25, 1997
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF AS
PROVIDED HEREIN HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION. TRANSFER OF THIS
NOTE AND SUCH SECURITIES IS RESTRICTED PURSUANT TO SUCH LAWS.
Weldon, California
$450,000.00 September 25, 1996
1. Note.
1.1 Xplorer, S.A., a Nevada corporation (the "Company" or the
"Borrower"), hereby promises to pay to the order of Gardner Investments, Inc.
(the "Holder") the amount of $450,000.00 by September 25, 1997 ("Due Date") and
to pay interest at ten percent (10%) per annum on the outstanding principal.
Payments shall be made to the Holder in lawful money of the United States at
P.O. Box 8652 Incline Village, Nevada 89452, or at such other place as the
Holder may specify in writing. Interest shall be paid monthly on the first day
of each month commencing November 1, 1996, until payments of the principal sum
have been made.
1.2 In the event the Company does not make, when due, any payment of
principal or interest required to be made hereunder, the company will pay, on
demand, interest on the amount of any overdue payment of principal or interest
for the period following the Due Date of such payment, at a rate of eleven
percent (11%) per annum.
2. Default.
In the event an occurrence of any event of default specified below, the
principal and all accrued interest on the Note shall become immediately due and
payable without notice, except as specified below. The occurrence of any of the
following events shall constitute an event of default under this Note:
2.1 The company fails to make any payment hereunder when due, which
failure has not been cured within fifteen (15) days following such failure.
2.2 If the Borrower shall file a petition to take advantage of any
insolvency act; make an assignment for the benefit of its creditors; commence a
Exhibit 4.2
<PAGE>
proceeding for the appointment of a receiver, trustee, liquidator or conservator
of itself of a whole or any substantial part of its property; file a petition or
answer seeking reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state; or
2.3 If a court of competent jurisdiction shall enter an order, judgment
or decree appointing a custodian receiver, trustee, liquidator or conservator of
the Borrower or of the whole (or any substantial part of its properties, or
approve a petition filed against the Borrower seeking reorganization or
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of American or any state; or if,
under the provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of the Borrower or of
the whole or any substantial part of its properties; or if there is commenced
against the Borrower any proceeding for any of the foregoing relief and such
proceeding or petition remains undismissed for a period of 30 days; or if the
Borrower by any act indicates its consent to or approval of any such proceeding
or petition; or
2.4 If (i) any judgment, remaining unpaid, unstayed or undismissed for a
period of 60 days is rendered against the Borrower which by itself or together
with all other such judgments rendered against this Borrower remaining unpaid,
unstayed or undismissed for a period of 60 days, is in excess of $200,000, or
(ii) there is any attachment or execution against the Borrower's properties
remaining unstayed or undismissed for a period of 60 days which by itself or
together with all other attachments and executions against the Borrower's
properties remaining unstayed or undismissed for a period of 60 days is for an
amount in excess of $200,000.
3. Conversion.
3.1 CONVERSION RIGHTS. The Holder will have the right, at its option, to
convert the Note into Shares of Common Stock of the Company (the "Shares") at
any time before the close of business on September 23, 1997 at the conversion
rate then in effect.
The initial conversion rate is 333.333 Shares of Common Stock per $1,000
principal amount at maturity of the Note, or a total of 150,000 Shares, subject
to adjustments In certain events. No fractional Share or scrip representing a
fractional Share will be issued upon conversion of the Notes. Cash will be paid
in lieu of any fractional Shares equal to the then current market value of such
fractional Share. A Holder may convert a portion of the Notes provided that the
portion is $1,000 principal amount at maturity or an integral multiple thereof.
The conversion rate will be appropriately adjusted if the Company (a)
pays a dividend or makes a distribution on its Shares of Common Stock which is
paid or made in Shares of Common Stock, (b) subdivides or reclassifies its
outstanding Shares of Common Stock, (c) combines its outstanding Shares of
Common Stock into a smaller number of Shares of Common Stock, (d) issues Shares
of Common Stock, or issues rights or warrants to all Holders of its Common Stock
entitling them to subscribe for or purchase Shares of Common Stock (or
securities convertible into Common Stock), at a price per Share less than $3.00
per Share, or (e) distributes to all Holders of its Common Stock evidences of
Exhibit 4.2
<PAGE>
its indebtedness or assets (excluding any dividend paid in cash out of legally
available funds) subject to the limitation that adjustments by reason of any of
the foregoing need not be made until they result in a cumulative change in the
conversion rate of at least five percent (5%). The conversion rate will not be
adjusted upon the conversion of presently outstanding stock options or warrants.
In case of any consolidation or merger to which the company is a party
other than a merger or consolidation in which the Company is the surviving
corporation, or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, or in
case of any Statutory exchange of securities with another corporation, there
will be no adjustment of the conversion price, but each Holder of the Notes then
outstanding will have the right thereafter to convert such Notes into the kind
and amount of securities, cash or other property which he would have owned or
have been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance had such Notes been converted immediately
prior to the effective date of such consolidation, merger, statutory exchange,
sale or conveyance. In the case of a cash merger of the Company into another
Corporation or any other cash transaction of the type mentioned above, the
effect of these provisions would be that the conversion features of the Notes
would thereafter be limited to converting the Notes at the conversion price in
effect at such time into the same amount of cash per Share that such Holder
would have received had such Holder converted the notes into Common Stock
immediately prior to the effective date of such cash merger or transaction.
3.2 Mechanics of Conversion
The Note may be converted upon surrender of the Note at any time prior to
the close of business on September 25, 1997 at the offices of the Company, 4750
Kelso Creek Road, Weldon, California, with the form of "Notice of Conversion"
duly completed and executed as indicated. Shares of Common Stock issued upon
conversion will be fully paid and non-assessable.
4. PREPAYMENT. Borrower may prepay any or all amounts due under this
Note at any time without penalty; provided, however, that Borrower, as a
condition to prepayment of some or all of the balance hereof, shall deliver
written notice of its intention to prepay at least 15 calendar days prior to the
date of such prepayment ("Prepayment Date") and cooperate with Holder in
Holder's exercise of Holder's convertibility rights, as set forth in Paragraph
3, above, if Holder elects to exercise such rights prior to prepayment.
5. SUBORDINATION. The indebtedness evidenced by this Note shall be
subordinated in right of payment to the prior payment in full of all existing
and future Senior Indebtedness of the Company. Senior Indebtedness is defined as
the principal of (and premium, if any,) and unpaid interest (including
post-petition interest) or accrued original issue discount on and other amounts
due on or in connection with any debt incurred, assumed or guaranteed by the
Company, whether outstanding on the date of the issuance of this Note or
thereafter incurred, assumed or guaranteed, and all renewals, extensions and
refundings of any such debt; provided, however, that the following will not
constitute Senior Indebtedness (i) any debt as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is expressly provided that such debt is subordinate in right of payment to all
Exhibit 4.2
<PAGE>
other debt of the Company not expressly subordinated to such debt; (ii) any debt
which by its terms refers explicitly to this Note and states that such debt
shall not be senior in right of payment thereto; and (iii) any debt of the
Company to any subsidiary of the Company.
6. SECURITIES LAW COMPLIANCE. The Holder understands that the right of
conversion of this Note is subject to full compliance with the provisions of all
applicable securities laws and the availability thereunder upon any conversion
of any exemption from registration thereunder for such conversion, and that the
certificate or certificates evidencing such Note and Shares will bear a legend
to the following effect:
"THE SECURITIES EVIDENCED HEREBY MAY NOT BE TRANSFERRED
WITHOUT (i) THE OPINION OF COUNSEL SATISFACTORY TO THIS
CORPORATION THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, OR (ii) SUCH REGISTRATION."
7. NOTICES. Any notice herein required or permitted to be given shall
be in writing and may be personally served, sent by United States Mail,
certified, or by overnight delivery service. For the purposes hereof, the
address of the Holder and the address of the Company shall be as reflected in
this Promissory Note. Both the Holder and the Company may change the address for
service by written notice to the other as herein provided.
8. NO WAIVER: RIGHTS AND REMEDIES CUMULATIVE. No failure on the part of
the Holder to exercise, and no delay in exercising any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Holder of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies herein provided are
cumulative and not exclusive of any remedies or rights provided by law or by any
other agreement between the Borrower and the Holder.
9. AMENDMENTS. No amendment, modification or waiver of any provision of
this Note nor consent to any departure by the Holder therefrom shall be
effective unless the same shall be in writing and signed by the Holder and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
10. SUCCESSORS AND ASSIGNS. This Note shall be binding upon the
Borrower and its successors and assigns and the terms hereof shall inure to the
benefit of the Holder and its successors and assigns, including subsequent
holders hereof.
11. SEVERABILITY. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
12. WAIVER OF NOTICE. The Borrower hereby waives presentment, demand
for payment, notice of protest and all other demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note.
Exhibit 4.2
<PAGE>
13. GOVERNING LAW. This Note has been executed in and shall be
governed by the laws of the State of California.
14. NOTE HOLDER IS NOT A SHAREHOLDER. No Holder of this Note, solely by
virtue of the ownership of this Note, shall be considered a shareholder of the
Company for any purpose, nor shall anything in this Note be construed to confer
on any Holder of this Note any rights of a shareholder of the Company including,
without limitation, any right to vote, give or withhold consent to any corporate
action, receive notice of meetings of shareholders or receive dividends.
15. EXCHANGE AND REPLACEMENT OF NOTE. Upon surrender of this Note to
the Borrower, the Borrower shall execute and deliver, at its expense, one or
more new Notes of such denominations and in such names, as requested by the
holder of the surrendered Note. Upon receipt of evidence satisfactory to the
Company of the loss, theft, mutilation, or destruction of any Note, the Borrower
will make and deliver a new Note, of like tenor, at the request of the holder of
such Note.
IN WITNESS WHEREOF, the Company has caused this Note to be signed by
its authorized officers as of the 25th day of September, 1996.
ATTEST: EXPLORER, S.A.
By: /s/ STEVEN B. MORTENSEN By: /s/ THOMAS C. RODDY
------------------------ ------------------------
STEVEN B. MORTENSEN THOMAS C. RODDY
Secretary President and CEO
Exhibit 4.2
Exhibit 4.3
[Specimen Certificate]
Certificate Number of
Number Warrants
Xplorer, S.A.
Warrant for Common Stock
This Certifies That
is the Registered Owner of _________________________ Warrants
FOR VALUE RECEIVED, the Registered owner of its assigns, subject to all the
terms and conditions hereof, is entitled to purchase one fully paid and
non-assessable share of the common stock, par value 8.001 per share of XPLORER,
S.A., successor in name to Gerant Industries, Inc., the Reorganized Debtor Under
the Third Amended Plan of Reorganization (as modified) of Gerant Industries,
Inc. (the Plan) Case No. LA 94-17852-AA for each Warrant represented herein, one
year from August 5, 1996 and to receive a certificate or certificates for the
Common Stock so purchased, upon the presentation and surrender to the Company of
this Warrant Certificate, with the form of subscription duly executed and
accompanied by payment of the price of each share purchased either in cash or by
certified check or bank cashier's check payable to the order of XPLORER, S.A.
The Warrant Price shall be seventy percent (70%) of the market asking price on
August 5, 1997. The Warrant must be exercised within thirty (30) days after
August 5, 1997. If not exercised in writing within such thirty day period, the
Warrant shall expire and become null and void.
The Warrants represented hereby are subject to all of the terms and conditions
set forth on the reverse side of this certificate and as set forth in the Plan.
WITNESS the Seal of EXPLORER. S.A. and the facsimile signature of
its duly authorized officers. ___________________________
Issue Date
OTR, Inc., 317 S.W. Alder
Suite 1120, Portland, OR 97204
This certificate is not valid until countersigned by the Transfer Agent.
by Countersigned
and Registered
/s/ /s/
Authorized Signature Secretary President
Exhibit 4.3
<PAGE>
(Reverse)
1. Each Warrant shall entitle the Registered owner to purchase one share
of Common Stock for cash or by certified check or by bank cashier's
check at seventy percent (70%) of the market price on August 5, 1997.
The purchase price referred to herein is the "Warrant Price".
2. The Expiration date shall be the thirty first day after August 5, 1997.
If not exercised in writing by such date, the Warrant shall expire and
become null and void. The expiration Date may, however, be extended in
the sole and absolute discretion of the Board of Directors of XPLORER,
S.A. (the "Company"). Any such extension shall be noticed to Registered
Warrant holders on or before the Expiration date.
3. Any share of Common Stock acquired through exercise of a Warrant shall
be validly issued and outstanding, fully paid and non-assessable. The
number of Warrants represented by this Warrant Certificate, the Warrant
Price, and the number of shares of Common Stock purchasable upon
exercise of this Warrant Certificate shall not be subject to adjustment
except as described herein and in the Plan.
4. The holder of this Warrant Certificate shall not, by reason thereof,
have any rights to vote at or to receive notice of any meeting of
shareholders of the Company, nor shall any consent be required with
respect to any action or proceeding of the Company, nor shall such
holder have any right of reason of ownership or possession of this
Warrant Certificate to receive any cash dividends, stock certificates,
allotments or right of other distributions paid, allotted or
distributed to the holders of Common Stock, for which this certificate
may be exercised.
5. The Company shall not be required to issue fractional shares of Common
Stock upon exercise of these Warrants.
6. This Warrant Certificate and the Warrants represented hereby are
transferable only by the Registered Owner hereof in person or by a duly
authorized attorney on the books of the Company upon surrender of this
Warrant Certificate, properly endorsed, to the Company. The Company may
deem and treat the Registered Owner of this Warrant Certificate at any
time as the true and lawful absolute owner for any and all purposes and
shall not be affected by any notice to the contrary.
7. Any Warrants not exercised before the Expiration Date set forth on the
face of this Warrant Certificate shall become null and void, and any
and all rights hereunder shall cease.
EXERCISE
(Form of Exercise to be executed by
Warrant Holder at time of exercise)
To: XPLORER, S.A.
The undersigned, holder of the Warrants represented hereby (1) exercise holders
rights to purchase _________ shares of Common Stock $.001 per value, which the
undersigned is entitled to purchase under the terms and conditions of the within
Exhibit 4.3
<PAGE>
Warrant Certificate, and (2) makes payment in full for the number of shares so
purchased by payment of $_______________________ which payment equals the number
of shares of Common Stock being purchased multiplied by the Warrant Price per
share as set forth on the face of this Warrant Certificate.
Please issue the Common Stock Certificate as follows:
___________________________________________________________
Print or type name
___________________________________________________________
Social Security or other Identifying Number
___________________________________________________________
Street Address
___________________________________________________________
City State Zip Code
and deliver it to the about address unless a different address is
specified below.
Date _______________ ________________________________________
Signature
(Signature must conform in all
respect to name of holder as specified
on the face of this Warrant Certificate)
to be used for special instructions for delivery. Deliver to:
___________________________________________________________
Print or type name
___________________________________________________________
Social Security or other Identifying Number
___________________________________________________________
Street Address
___________________________________________________________
City State Zip Code
ASSIGNMENT
(Form of Assignment to be executed by
Warrant Holder at time of Assignment)
FOR VALUE RECEIVED ____________________________________________
Assignor
Exhibit 4.3
<PAGE>
hereby sells,
assigns and
transfers unto
___________________________________________________________
Print or type name
___________________________________________________________
Social Security or other Identifying Number
___________________________________________________________
Street Address
___________________________________________________________
City State Zip Code
the rights represented by the within Warrant Certificate to purchase shares of
Common Stock, computed as provided in the within Warrant, to which the within
Warrant Certificate relates, hereby appoints ____________________ attorney to
transfer such rights on the books of the Company with full power of substitution
in such rights as are represented by this Warrant Certificate.
Date ____________ ____________________________________________
Signature
(Signature must conform in all
respect to name of holder as specified
on the face of this Warrant Certificate)
Exhibit 4.3
Exhibit 4.4
"B" WARRANT AGREEMENT
to Purchase Common Stock of
XPLORER, S.A.
Expiring August 4, 2001
August 5, 1996
Atlantic Pacific Trust
No. 2 First Street
McGill, Nevada 89318
Gentlemen:
Xplorer, S.A. (the "Company") confirms its agreement with you, Atlantic
Pacific Trust (the "Warrantholder"), with respect to the sale by the Company,
and the purchase by you, of a Common Stock "B" Purchase Warrant (hereinafter
referred to as the "Warrant") entitling the holder(s) to purchase 355,000 shares
of the Company's Common Stock, $.001 par value (the "Warrant Stock"), at the
purchase price of $2.00 per share (hereinafter called the "Purchase Price"),
subject to adjustment as to the number of shares of Common Stock, and to
exercise the other appurtenant rights, powers and privileges, all on the terms
and conditions hereinafter provided. The Warrant Stock may be exercised at any
time after August 5, 1997 (hereinafter called the "Commencement Date") and not
later than 5:00 P.M., Los Angeles Time, on August 4, 2001 (hereinafter called
the "Expiration Date").
Section 1. CERTAIN DEFINITIONS. For all purposes of this Warrant, unless
the context otherwise requires:
A. "Commission" shall mean the Securities and Exchange Commission, or any
other Federal agency then administering the Securities Act.
B. "Common Stock" shall mean and include the Company's authorized Common
Stock as the same existed on August 5, 1996.
C. "Company" shall mean said Xplorer, S.A. and any other corporation
assuming the obligations under the Warrant.
D. "Warrantholder" shall mean the person(s) to whom this Warrant or the
Warrant Stock is originally issued or is transferred in accordance with Section
4.
Exhibit 4.4
<PAGE>
E. "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
F. "Seller," as used in Section 4, shall mean each holder of securities of
the Company for which the Company shall be required to file a registration
statement, or which shall be registered under the Securities Act at the request
of such holder, pursuant to any of the provisions of Section 4.
G. "Transfer," as used in Section 4, shall include any disposition of this
Warrant or the Warrant Stock, or of any interest in either thereof, which would
constitute a sale thereof within the meaning of the Securities Act.
H. "Warrant" shall mean this Common Stock "B" Purchase Warrant evidencing
the rights to purchase 355,000 shares of Common Stock.
I. "Warrant Stock" and/or "Shares" shall mean the shares of Common Stock
purchasable or purchased by the holder of this Warrant upon the exercise thereof
pursuant to Section 2.
Section 2. EXERCISE OF WARRANT.
A. The holder of this Warrant may, at any time after the Commencement Date
and not later than 5:00 P.M. Los Angeles Time, on the Expiration Date, exercise
this Warrant in whole or in part (but not as to a fractional share of Common
Stock) at any time for the purchase of the 355,000 shares of Common Stock at the
Purchase Price. In order to exercise this Warrant, the holder hereof shall
deliver to the Company (i) a written notice of such holder's election to
exercise this Warrant, which notice shall be in substantially the form of the
Purchase Form appearing at the end of the Warrant Certificate attached to this
Warrant as Exhibit A, and (ii) shall make payment of the aggregate purchase
price of the shares of Common Stock being purchased, such payment to be made by
the delivery to the Company of a certified check or checks payable to the
Company in an amount equal to such Purchase Price. The Company shall, as
promptly as practicable, and in any event within 30 days thereafter, execute and
deliver or cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock as relate to the Warrant Stock so purchased upon the exercise of
this Warrant. The stock certificate or certificates so delivered shall be
registered in the name of such holder or in such other name as shall be
designated in such notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date said notice is received by the Company as aforesaid.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section.
All shares of Common Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable.
B. The Company shall not be required upon any exercise of this Warrant to
issue a certificate representing any fraction of a share of Common Stock, but,
in lieu thereof, shall pay to the holder of this Warrant cash in an amount equal
Exhibit 4.4
<PAGE>
to a fraction corresponding to the fraction of a share involved (calculated to
the nearest 1/100 of a share) of the current market price of one share of Common
Stock as of the date of receipt by the Company of notice of exercise of this
Warrant.
Section 3. TRANSFER, DIVISION AND COMBINATION. This Warrant and all rights
hereunder are transferable. Any such permitted transfer shall be entered on the
books of the Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of the Company, together with a written
assignment of this Warrant duly executed by the holder hereof or his agent or
attorney and funds sufficient to pay any stock transfer taxes payable upon the
making of such transfer. Upon such surrender and payment the Company shall
execute and deliver a new Warrant or Warrants, dated as of the date of issuance
thereof, in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and this Warrant shall promptly be
cancelled.
The Company shall pay all expenses, taxes (other than stock transfer
taxes) and other charges payable in connection with the preparation, issue and
delivery of Warrants under this Section.
The Company agrees to maintain at it principal office books for the
registration and transfer of the Warrants.
Section 4. COMPLIANCE WITH SECURITIES ACT; REGISTRATION THEREUNDER.
A. NO TRANSFER IN VIOLATION OF SECURITIES ACT. The holder of the Warrant
agrees not to transfer the related Warrant Stock in any manner which would
result in a violation of the registration provisions of the Securities Act, and
the Company shall not be required to take any action hereunder which would
result in a violation of such provisions.
B. REPRESENTATIONS AND COVENANTS OF THE HOLDER. The Holder represents and
warrants to the Company that the Warrant and the Warrant Stock will be acquired
by the Holder for its own account for investment and not with a view to the
distribution thereof, except that this sentence shall not be deemed to prohibit
or restrict transactions not in violation of this Agreement. As a condition to
transfer of the Warrant or exercise of it the Holder will be required to
acknowledge that this Warrant and the Warrant Stock are being issued by the
Company without registration under the Securities Act, and may not be offered or
sold unless registered or exempt from registration under the Securities Act. The
Holder will be required to covenant and agree that no Warrants or Warrant Stock
will be offered or sold by or for the account of the Holder except (i) pursuant
to an exemption from registration under the Securities Act (which exemption is
confirmed in a written opinion of the Holder's counsel addressed to the Company
and satisfactory in form and substance to the Company's counsel) or (ii)
pursuant to an effective registration statement under the Securities Act. Each
certificate representing shares shall bear a legend making appropriate reference
to the foregoing restrictions.
(1) Unless and until removed as provided below, each Warrant Certificate
and the certificates evidencing Warrant Stock shall bear a legend in
substantially the following form:
Exhibit 4.4
<PAGE>
"The Securities have not been registered under the Securities Act of
1933, as amended, and may not be sold, pledged or otherwise
transferred unless (A) covered by an effective registration statement
under the Securities Act of 1933, as amended, (B) in compliance with
Rule 144 under such Act, or (C) the Company has been furnished with
an opinion of counsel reasonably acceptable to the Company to the
effect that no registration is required by such transfer."
(2) The Company shall issue a new certificate which does not contain such
legend if (i) the shares represented by such certificate are sold
pursuant to a registration statement (including a current Prospectus)
which has become and is effective under the Securities Act, or (ii)
the staff of the Securities and Exchange Commission (or any other
Federal agency at the time administering the Securities Act) (the
"Commission") shall have issued a "no action" letter, reasonably
satisfactory to counsel for the Company, to the effect that such
shares may be freely sold and thereafter traded publicly without
registration under the Securities Act, or (iii) counsel acceptable to
the Company shall have rendered an opinion satisfactory to the
Company to the effect that such shares may be freely sold and
thereafter traded publicly without registration under the Securities
Act.
C. "PIGGYBACK" REGISTRATION. If the Company, at any time after the
Commencement Date and prior to the Expiration Date, decides to file a
registration statement under the Securities Act relating to any shares of
Xplorer, S.A. Common Stock to be offered and sold by the Company pursuant to an
underwriting, (except with respect to registration statements filed with respect
to the issuance of Securities under employee benefit plans), the Company shall
give written notice to the Holder as promptly as possible for the proposed
filing of such registration statement and will use all reasonable efforts to
cause such number of Warrants or Warrant Stock as the Holder shall request in
writing, within fifteen days after the giving of such notice, to be included in
such registration statement for offering and sale upon the same terms and in the
same manner as the Company proposes to offer and to sell such shares of its
Common Stock pursuant thereto; provided, that (a) the Company shall not be
required to include any Warrant or Warrant Stock in any such registration
statement if the Company is advised by its investment banking firm that the
inclusion of such shares may, in such firm's opinion, interfere with the orderly
sale and distribution of the shares of Xplorer, S.A. Common Stock to be offered
and sold by the Company; and (b) the Company, at its sole discretion, and
without the consent of the Holder, may decide not to file or to withdraw such
registration statement and may abandon the proposed offering at any time.
(1) In connection with any registration of its shares by the Company
hereunder, the Company shall:
(a) furnish to sellers and the managing underwriters such number of
copies of any prospectus (including any preliminary prospectus)
as the Holder may reasonably request in order to effect the
offering and sale of the shares to be offered and sold, but only
as long as the Company is required under the provisions hereof
to cause the registration statement to remain current;
Exhibit 4.4
<PAGE>
(b) use its best efforts to qualify such shares for offering under
such applicable state "blue sky" laws as the sellers may
reasonably request; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation to do
business under the laws of any jurisdiction in which it is not
then so qualified or to file any general consent to service of
process;
(c) instruct the transfer agent to reissue to the Holder
certificates without legends representing the shares being sold
in such numbers and denominations as the sellers shall
reasonably request;
(d) instruct the transfer agent (or agents) and the registrar (or
registrars) of the Warrant Stock to release any "stop transfer"
order with respect to the shares being sold.
(2) The Company, at its option, may require that the number of Warrants
or Warrant Stock offered for sale pursuant to a request for
registration under Section 4.C hereof be decreased if, in the opinion
of the Company's investment banking firm, such reduction is desirable
in order to permit the orderly distribution and sale of the
securities being offered thereunder. If the Company shall require
such a reduction, the Holder shall have the right to withdraw from
the offering.
(3) In connection with any registration statement in which Warrants or
the Warrant Stock are included pursuant to Section 4.C hereof, the
Company will pay all Commission and "blue sky" registration and other
necessary filing fees, underwriting discounts, commissions and
expenses, printing expenses, fees and disbursements of legal counsel
for the Company and "blue sky" counsel, transfer agents' and
registrars' fees, fees and disbursements of experts used by the
Company in connection with such registration, and expenses incidental
to any post-effective amendment to such registration statement. The
Holder/Seller shall pay all other expenses attributable to inclusion
in the offering of Warrants or the Warrant Stock, including, without
limitation, Commission and "blue sky" registration and other
necessary filing fees and underwriting discounts, commissions and
expenses attributable thereto and fees and disbursements of the
Holder/Seller's counsel, accountants and experts, if any.
(4) In the case of each registration of shares effected by the Company
pursuant to Section 4.C hereof, the Company will agree to indemnify
and hold harmless each Seller of Warrants or of Warrant Stock and its
controlling persons against any and all losses, claims, damages or
liabilities to which they or any of them may become subject under the
Securities Act or any other statute or common law (including any
amount paid in settlement of any litigation, commenced or threatened,
if such settlement is effected with the written consent of Xplorer,
S.A., and to reimburse them for any legal or other expenses incurred
by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or
actions arise out of or are based upon (a) any untrue statement or
Exhibit 4.4
<PAGE>
alleged untrue statement of a material fact contained in the
registration statement relating to such Securities, or any
post-effective amendment thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (b) any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus relating to such Securities,
if sued prior to the effective date of such registration statement,
or contained in the final prospectus relating to such Securities (as
amended or supplement if the Company shall have filed with the
Commission any amendment thereof or supplement thereto); provided,
however, that the indemnification agreement contained in this Section
4.C shall not (a) apply to any losses, claims, damages, liabilities
or actions arising out of, or based upon, any such untrue statement
or alleged untrue statement, or any such omission or alleged
omission, which was made in reliance upon and in conformity with
information furnished to the Company by the seller or such
underwriter for used in connection with the registration statement,
any preliminary prospectus or final prospectus contained in such
registration statement, or any amendment or supplement thereto, or
(b) inure to the benefit of any underwriter or any person controlling
such underwriter, if such underwriter failed to send or give a copy
of the final prospectus to the person asserting the claim at or prior
to the written confirmation of the sale of such securities to such
person and if the untrue statement or omission, or alleged untrue
statement or omission, in question was corrected in such final
prospectus.
(5) In case of each registration of shares effected by the Company
pursuant to Section 4.C hereof, the Seller and each underwriter of
shares will agree, in the same manner and to the same extent as set
forth in Section 4.C above, to indemnify and hold harmless the
Company, each person (if any) who controls the Company within the
meaning of Section 15 of the Securities Act, the directors of the
Company and those officers of the Company who shall have signed any
such registration statement, with respect to any untrue statement or
alleged untrue statement in, or omission or alleged omission from,
such registration statement or any post-effective amendment thereto
or any preliminary prospectus or final prospectus (as amended or
supplemented, if amended or supplemented) contained in such
registration statement, which was made in reliance upon and in
conformity with information furnished to the Company by the Seller or
any underwriter for use in connection with the registration
statement, any preliminary prospectus or final prospectus contained
in such registration statement, or any amendment or supplement
thereto.
(6) Each indemnified party under Section 4.C(4) or Section 4.C(5) hereof
will, with reasonable promptness after its receipt of written notice
of the commencement of any action against such indemnified party in
respect of which indemnity may be sought from an indemnifying party
on account of an indemnity agreement contained in Section 4.C(4) or
4.C(5) hereof, notify the indemnifying party in writing of the
commencement thereof, the indemnifying party will be entitled to
Exhibit 4.4
<PAGE>
participate therein and to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under Section 4.C(4) or
4.C(5) hereof for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. The indemnity
agreements in Sections 4.C(4) and 4.C(5) hereof shall be in addition
to any liabilities which the indemnifying parties may have pursuant
to law.
(7) In addition to the rights above-provided, the Company will cooperate
with the then Holders of the Securities in preparing and signing any
registration statement in addition to the registration statement
discussed above, required in order to sell or transfer the Securities
and will supply all information required therefore, but such
additional registration statement shall be at the then Holders'
expense, unless the Company elects to register or qualify additional
shares of the Company's Common Stock, in which case the cost and
expense of such registration statement will be pro-rated between the
Company and the Holders of the Securities to the aggregate sales
price of all the securities being issued.
Section 5. ADJUSTMENTS. The number of shares of Warrant Stock shall be
subject to adjustment from time to time as follows:
A. ADJUSTMENT OF EXERCISE PRICE IN THE EVENT OF STOCK DIVIDENDS, STOCK
SPLITS AND REVERSE STOCK SPLITS. Anything in this Section to the contrary
notwithstanding, in case the Company shall at any time issue Common Stock or
Convertible Securities by way of dividend or other distribution on any stock of
the Company or effect a stock split or reverse stock split of the outstanding
shares of Common Stock, the Exercise Price shall be proportionately decreased in
the case of such stock split or increased in the case of such reversed stock
split (on the date that such stock split or reverse stock split shall become
effective), by multiplying the Exercise Price in effect immediately prior to the
stock dividend, stock split or reverse stock split by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately prior
to such stock dividend, stock split or reverse stock split, and the denominator
of which is the number of shares of Common Stock outstanding immediately after
such stock dividend, stock split or reverse stock split.
B. NO ADJUSTMENT FOR SMALL AMOUNTS. Anything in this Section to the
contrary notwithstanding, the Company shall not be required to give effect to
any adjustment in the Exercise Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required a change of
the Exercise Price by at least ten cents ($.10), but when the cumulative net
effect of more than one adjustment so determined shall be to change the actual
Exercise Price by at least ten cents ($0.10), such change in the Exercise Price
shall thereupon be given effect.
Exhibit 4.4
<PAGE>
C. NUMBER OF SHARES ADJUSTED. Upon any adjustment of the Exercise Price,
the Holder shall thereafter (until another such adjustment) be entitled to
purchase, at the new Exercise Price, the number of shares, calculated to the
nearest full share, obtained by multiplying the number of shares of Warrant
Stock initially issuable upon exercise of any of the Warrants by the Exercise
Price in effect on the date hereof and dividing the product so obtained by the
new Exercise Price.
D. STATEMENT ON WARRANTS. Irrespective of any adjustments in the Exercise
Price or the number of kind of shares purchasable upon the exercise of the
Warrants, the Warrant Certificates theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 6. OFFICER'S CERTIFICATE
Whenever the Exercise Price shall be adjusted as required by the provision
of Section 5 hereof, the Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment. Each
such officer's certificate shall be made available at all reasonable times for
inspection by the Holders and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to each of the Holders. Such
certificate shall be conclusive as to the correctness of such adjustment.
Section 7. NOTICES TO WARRANTHOLDERS
So long as any Warrant shall be outstanding and unexercised (a) if the
Company shall pay any dividend or make any distribution upon the Common Stock or
(b) if the Company shall offer to the holders of Common Stock for subscription
or purchase by them any shares of stock of any class or any other rights or (c)
if any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to the
Holders, at least 30 days prior to the date specified in (i) or (ii) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (i) a record is to be taken for the purpose of
such dividend, distribution or rights, or (ii) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any, as of which the
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
Exhibit 4.4
<PAGE>
Section 8. CLOSING OF TRANSFER BOOKS. The Company will not at any time
(except on dissolution, liquidation or winding up of the Company) close its
transfer books against the transfer of any shares of Common Stock issued or
issuable upon exercise of the Warrant in any manner which interferes with the
timely exercise of the Warrant.
Section 9. TRANSFER OF WARRANT; WARRANT LEDGER.
A. Subject to the provisions of this Agreement, the Warrant and all rights
hereunder are transferable, in whole or in part (but not as to a fractional
share of Common Stock), by written assignment with appropriate notice to the
Company of any such transfer.
B. The Company shall at all times maintain a ledger indicating the
ownership of the Warrant and the number of shares of Common Stock as to which
the Warrant has been exercised and the date of such exercise (the "Warrant
Ledger"). Upon any transfer of any interest in the Warrant by the Holder or by a
transferee of the Holder as provided in this Section 9, the Company shall (i)
note such transfer on the Warrant Ledger, (ii) issue and deliver a new Warrant
Certificate (substantially in the form of Exhibit A with the blanks
appropriately completed) evidencing such transferee's interest in the Warrant
and (iii) if the Warrant Certificate surrendered in connection with such
transfer evidenced the right to acquire a greater number of shares of Common
Stock than the interest which was transferred, issue a new Warrant Certificate
(substantially in the form of Exhibit A with the blanks appropriately completed)
evidencing the right to acquire shares of Common Stock which was not
transferred.
Section 10. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the shares of Warrant
Stock upon the exercise of Warrants; provided, however, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of the Warrant Certificates or the
certificates for the shares of Warrant Stock in a name other than that of the
registered Warrantholder in respect of which such Warrants or shares of Warrant
Stock are issued.
Section 11. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company shall, at
the request of the holder of such certificate, issue and deliver, in exchange
and substitution for and upon cancellation of the mutilated certificate or
certificates, or in lieu of a substitution for the certificate or certificates
lost, stolen or destroyed, a new Warrant Certificate or Certificates of like
tenor and representing an equivalent right or interest; but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant Certificate or Certificates, and indemnity, if requested, also
satisfactory (as to form and amount) to the Company. An application for such a
substitute Warrant Certificate or Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
Exhibit 4.4
<PAGE>
Section 12. RESERVATION OF SHARES OF WARRANT STOCK. There has been
reserved, and the Company shall at all times keep reserved so long as any of the
Warrants remain outstanding, out of its authorized Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrants. The transfer agent for the
Common Stock and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all times to reserve
such number of authorized as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with the transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Company will supply such transfer
agent with duly executed stock certificates for such purpose and will provide or
otherwise make available any cash which may be payable as provided in Section 13
hereof. All Warrant Certificates surrendered in exercise of the rights thereby
evidenced shall be cancelled by the Company.
Section 13. FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrants. With respect to any fraction of a
share called for upon the exercise of any Warrant, the Company shall pay to the
Warrantholder an amount in cash equal to such fraction multiplied by the current
market value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange, the current
value shall be the last reported sale price of the Common Stock on such
exchange on the last business day prior to the date of exercise of the
Warrant or if no such sale is made on such day, the average closing bid
and asked prices for such day on such exchange; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Association or
Securities Dealers Quotation System ("NASDAQ"), (or, if not so quoted by
NASDAQ, by the National Quotation Bureau, Inc.) on the last business day
prior to the date of the exercise of the Warrant; or
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than the book value, determined
in such reasonable manner as may be prescribed by the board of directors
of the Company, such determination to be final and binding on the
Warrantholder.
Section 14. APPLICABLE LAW.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be construed in accordance with the laws of said state.
Exhibit 4.4
<PAGE>
Section 15. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Holder any legal or equitable right,
remedy or claim under this Agreement and this Agreement shall be for the sole
and exclusive benefit of such persons, the Company and the Holder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above-written.
(CORPORATE SEAL)
XPLORER, S.A.
ATTEST:
By:
- ------------------------------ ------------------------------
Steven B. Mortensen, Secretary Thomas C. Roddy, President
and Chief Executive Officer
ATLANTIC PACIFIC TRUST
By:
------------------------------
Warrantholder
Exhibit 4.4
Exhibit 4.5
"C" WARRANT AGREEMENT
to Purchase Common Stock of
XPLORER, S.A.
Expiring August 4, 2001
August 5, 1996
Atlantic Pacific Trust
No. 2 First Street
McGill, Nevada 89318
Gentlemen:
Xplorer, S.A. (the "Company") confirms its agreement with you, Atlantic
Pacific Trust (the "Warrantholder"), with respect to the sale by the Company,
and the purchase by you, of a Common Stock "C" Purchase Warrant (hereinafter
referred to as the "Warrant") entitling the holder(s) to purchase 355,000 shares
of the Company's Common Stock, $.001 par value (the "Warrant Stock"), at the
purchase price of $3.00 per share (hereinafter called the "Purchase Price"),
subject to adjustment as to the number of shares of Common Stock, and to
exercise the other appurtenant rights, powers and privileges, all on the terms
and conditions hereinafter provided. The Warrant Stock may be exercised at any
time after August 5, 1997 (hereinafter called the "Commencement Date") and not
later than 5:00 P.M., Los Angeles Time, on August 4, 2001 (hereinafter called
the "Expiration Date").
Section 1. CERTAIN DEFINITIONS. For all purposes of this Warrant, unless
the context otherwise requires:
A. "Commission" shall mean the Securities and Exchange Commission, or any
other Federal agency then administering the Securities Act.
B. "Common Stock" shall mean and include the Company's authorized Common
Stock as the same existed on August 5, 1996.
C. "Company" shall mean said Xplorer, S.A. and any other corporation
assuming the obligations under the Warrant.
D. "Warrantholder" shall mean the person(s) to whom this Warrant or the
Warrant Stock is originally issued or is transferred in accordance with Section
4.
E. "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
F. "Seller," as used in Section 4, shall mean each holder of securities of
Exhibit 4.5
<PAGE>
the Company for which the Company shall be required to file a registration
statement, or which shall be registered under the Securities Act at the request
of such holder, pursuant to any of the provisions of Section 4.
G. "Transfer," as used in Section 4, shall include any disposition of this
Warrant or the Warrant Stock, or of any interest in either thereof, which would
constitute a sale thereof within the meaning of the Securities Act.
H. "Warrant" shall mean this Common Stock "C" Purchase Warrant evidencing
the rights to purchase 355,000 shares of Common Stock.
I. "Warrant Stock" and/or "Shares" shall mean the shares of Common Stock
purchasable or purchased by the holder of this Warrant upon the exercise thereof
pursuant to Section 2.
Section 2. EXERCISE OF WARRANT.
A. The holder of this Warrant may, at any time after the Commencement Date
and not later than 5:00 P.M. Los Angeles Time, on the Expiration Date, exercise
this Warrant in whole or in part (but not as to a fractional share of Common
Stock) at any time for the purchase of the 355,000 shares of Common Stock at the
Purchase Price. In order to exercise this Warrant, the holder hereof shall
deliver to the Company (i) a written notice of such holder's election to
exercise this Warrant, which notice shall be in substantially the form of the
Purchase Form appearing at the end of the Warrant Certificate attached to this
Warrant as Exhibit A, and (ii) shall make payment of the aggregate purchase
price of the shares of Common Stock being purchased, such payment to be made by
the delivery to the Company of a certified check or checks payable to the
Company in an amount equal to such Purchase Price. The Company shall, as
promptly as practicable, and in any event within 30 days thereafter, execute and
deliver or cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock as relate to the Warrant Stock so purchased upon the exercise of
this Warrant. The stock certificate or certificates so delivered shall be
registered in the name of such holder or in such other name as shall be
designated in such notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date said notice is received by the Company as aforesaid.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section.
All shares of Common Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and nonassessable.
B. The Company shall not be required upon any exercise of this Warrant to
issue a certificate representing any fraction of a share of Common Stock, but,
in lieu thereof, shall pay to the holder of this Warrant cash in an amount equal
to a fraction corresponding to the fraction of a share involved (calculated to
the nearest 1/100 of a share) of the current market price of one share of Common
Stock as of the date of receipt by the Company of notice of exercise of this
Warrant.
Exhibit 4.5
<PAGE>
Section 3. TRANSFER, DIVISION AND COMBINATION. This Warrant and all rights
hereunder are transferable. Any such permitted transfer shall be entered on the
books of the Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of the Company, together with a written
assignment of this Warrant duly executed by the holder hereof or his agent or
attorney and funds sufficient to pay any stock transfer taxes payable upon the
making of such transfer. Upon such surrender and payment the Company shall
execute and deliver a new Warrant or Warrants, dated as of the date of issuance
thereof, in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and this Warrant shall promptly be
cancelled.
The Company shall pay all expenses, taxes (other than stock transfer taxes)
and other charges payable in connection with the preparation, issue and delivery
of Warrants under this Section.
The Company agrees to maintain at it principal office books for the
registration and transfer of the Warrants.
Section 4. COMPLIANCE WITH SECURITIES ACT; REGISTRATION THEREUNDER.
A. No Transfer in Violation of Securities Act. The holder of the Warrant
agrees not to transfer the related Warrant Stock in any manner which would
result in a violation of the registration provisions of the Securities Act, and
the Company shall not be required to take any action hereunder which would
result in a violation of such provisions.
B. REPRESENTATIONS AND COVENANTS OF THE HOLDER. The Holder represents and
warrants to the Company that the Warrant and the Warrant Stock will be acquired
by the Holder for its own account for investment and not with a view to the
distribution thereof, except that this sentence shall not be deemed to prohibit
or restrict transactions not in violation of this Agreement. As a condition to
transfer of the Warrant or exercise of it the Holder will be required to
acknowledge that this Warrant and the Warrant Stock are being issued by the
Company without registration under the Securities Act, and may not be offered or
sold unless registered or exempt from registration under the Securities Act. The
Holder will be required to covenant and agree that no Warrants or Warrant Stock
will be offered or sold by or for the account of the Holder except (i) pursuant
to an exemption from registration under the Securities Act (which exemption is
confirmed in a written opinion of the Holder's counsel addressed to the Company
and satisfactory in form and substance to the Company's counsel) or (ii)
pursuant to an effective registration statement under the Securities Act. Each
certificate representing shares shall bear a legend making appropriate reference
to the foregoing restrictions.
(1) Unless and until removed as provided below, each Warrant Certificate
and the certificates evidencing Warrant Stock shall bear a legend in
substantially the following form:
"The Securities have not been registered under the Securities Act of
1933, as amended, and may not be sold, pledged or otherwise
transferred unless (A) covered by an effective registration statement
under the Securities Act of 1933, as amended, (B) in compliance with
Exhibit 4.5
<PAGE>
Rule 144 under such Act, or (C) the Company has been furnished with an
opinion of counsel reasonably acceptable to the Company to the effect
that no registration is required by such transfer."
(2) The Company shall issue a new certificate which does not contain such
legend if (i) the shares represented by such certificate are sold
pursuant to a registration statement (including a current Prospectus)
which has become and is effective under the Securities Act, or (ii)
the staff of the Securities and Exchange Commission (or any other
Federal agency at the time administering the Securities Act) (the
"Commission") shall have issued a "no action" letter, reasonably
satisfactory to counsel for the Company, to the effect that such
shares may be freely sold and thereafter traded publicly without
registration under the Securities Act, or (iii) counsel acceptable to
the Company shall have rendered an opinion satisfactory to the Company
to the effect that such shares may be freely sold and thereafter
traded publicly without registration under the Securities Act.
C. "PIGGYBACK" REGISTRATION. If the Company, at any time after the
Commencement Date and prior to the Expiration Date, decides to file a
registration statement under the Securities Act relating to any shares of
Xplorer, S.A. Common Stock to be offered and sold by the Company pursuant to an
underwriting, (except with respect to registration statements filed with respect
to the issuance of Securities under employee benefit plans), the Company shall
give written notice to the Holder as promptly as possible for the proposed
filing of such registration statement and will use all reasonable efforts to
cause such number of Warrants or Warrant Stock as the Holder shall request in
writing, within fifteen days after the giving of such notice, to be included in
such registration statement for offering and sale upon the same terms and in the
same manner as the Company proposes to offer and to sell such shares of its
Common Stock pursuant thereto; provided, that (a) the Company shall not be
required to include any Warrant or Warrant Stock in any such registration
statement if the Company is advised by its investment banking firm that the
inclusion of such shares may, in such firm's opinion, interfere with the orderly
sale and distribution of the shares of Xplorer, S.A. Common Stock to be offered
and sold by the Company; and (b) the Company, at its sole discretion, and
without the consent of the Holder, may decide not to file or to withdraw such
registration statement and may abandon the proposed offering at any time.
(1) In connection with any registration of its shares by the Company
hereunder, the Company shall:
(a) furnish to sellers and the managing underwriters such number of
copies of any prospectus (including any preliminary prospectus)
as the Holder may reasonably request in order to effect the
offering and sale of the shares to be offered and sold, but only
as long as the Company is required under the provisions hereof to
cause the registration statement to remain current;
(b) use its best efforts to qualify such shares for offering under
such applicable state "blue sky" laws as the sellers may
reasonably request; provided, however, that the Company shall not
be obligated to qualify as a foreign corporation to do business
Exhibit 4.5
<PAGE>
under the laws of any jurisdiction in which it is not then so
qualified or to file any general consent to service of process;
(c) instruct the transfer agent to reissue to the Holder certificates
without legends representing the shares being sold in such
numbers and denominations as the sellers shall reasonably
request;
(d) instruct the transfer agent (or agents) and the registrar (or
registrars) of the Warrant Stock to release any "stop transfer"
order with respect to the shares being sold.
(2) The Company, at its option, may require that the number of Warrants or
Warrant Stock offered for sale pursuant to a request for registration
under Section 4.C hereof be decreased if, in the opinion of the
Company's investment banking firm, such reduction is desirable in
order to permit the orderly distribution and sale of the securities
being offered thereunder. If the Company shall require such a
reduction, the Holder shall have the right to withdraw from the
offering.
(3) In connection with any registration statement in which Warrants or the
Warrant Stock are included pursuant to Section 4.C hereof, the Company
will pay all Commission and "blue sky" registration and other
necessary filing fees, underwriting discounts, commissions and
expenses, printing expenses, fees and disbursements of legal counsel
for the Company and "blue sky" counsel, transfer agents' and
registrars' fees, fees and disbursements of experts used by the
Company in connection with such registration, and expenses incidental
to any post- effective amendment to such registration statement. The
Holder/Seller shall pay all other expenses attributable to inclusion
in the offering of Warrants or the Warrant Stock, including, without
limitation, Commission and "blue sky" registration and other necessary
filing fees and underwriting discounts, commissions and expenses
attributable thereto and fees and disbursements of the Holder/Seller's
counsel, accountants and experts, if any.
(4) In the case of each registration of shares effected by the Company
pursuant to Section 4.C hereof, the Company will agree to indemnify
and hold harmless each Seller of Warrants or of Warrant Stock and its
controlling persons against any and all losses, claims, damages or
liabilities to which they or any of them may become subject under
the Securities Act or any other statute or common law (including any
amount paid in settlement of any litigation, commenced or threatened,
if such settlement is effected with the written consent of Xplorer,
S.A., and to reimburse them for any legal or other expenses incurred
by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or
actions arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in the
registration statement relating to such Securities, or any
post-effective amendment thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (b) any
Exhibit 4.5
<PAGE>
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus relating to such Securities,
if sued prior to the effective date of such registration statement, or
contained in the final prospectus relating to such Securities (as
amended or supplement if the Company shall have filed with the
Commission any amendment thereof or supplement thereto); provided,
however, that the indemnification agreement contained in this Section
4.C shall not (a) apply to any losses, claims, damages, liabilities or
actions arising out of, or based upon, any such untrue statement or
alleged untrue statement, or any such omission or alleged omission,
which was made in reliance upon and in conformity with information
furnished to the Company by the seller or such underwriter for used in
connection with the registration statement, any preliminary prospectus
or final prospectus contained in such registration statement, or any
amendment or supplement thereto, or (b) inure to the benefit of any
underwriter or any person controlling such underwriter, if such
underwriter failed to send or give a copy of the final prospectus to
the person asserting the claim at or prior to the written confirmation
of the sale of such securities to such person and if the untrue
statement or omission, or alleged untrue statement or omission, in
question was corrected in such final prospectus.
(5) In case of each registration of shares effected by the Company
pursuant to Section 4.C hereof, the Seller and each underwriter of
shares will agree, in the same manner and to the same extent as set
forth in Section 4.C above, to indemnify and hold harmless the
Company, each person (if any) who controls the Company within the
meaning of Section 15 of the Securities Act, the directors of the
Company and those officers of the Company who shall have signed any
such registration statement, with respect to any untrue statement or
alleged untrue statement in, or omission or alleged omission from,
such registration statement or any post-effective amendment thereto or
any preliminary prospectus or final prospectus (as amended or
supplemented, if amended or supplemented) contained in such
registration statement, which was made in reliance upon and in
conformity with information furnished to the Company by the Seller or
any underwriter for use in connection with the registration statement,
any preliminary prospectus or final prospectus contained in such
registration statement, or any amendment or supplement thereto.
(6) Each indemnified party under Section 4.C(4) or Section 4.C(5) hereof
will, with reasonable promptness after its receipt of written notice
of the commencement of any action against such indemnified party in
respect of which indemnity may be sought from an indemnifying party on
account of an indemnity agreement contained in Section 4.C(4) or
4.C(5) hereof, notify the indemnifying party in writing of the
commencement thereof, the indemnifying party will be entitled to
participate therein and to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under Section 4.C(4) or 4.C(5)
hereof for any legal or other expenses subsequently incurred by such
Exhibit 4.5
<PAGE>
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnity agreements in
Sections 4.C(4) and 4.C(5) hereof shall be in addition to any
liabilities which the indemnifying parties may have pursuant to law.
(7) In addition to the rights above-provided, the Company will cooperate
with the then Holders of the Securities in preparing and signing any
registration statement in addition to the registration statement
discussed above, required in order to sell or transfer the Securities
and will supply all information required therefore, but such
additional registration statement shall be at the then Holders'
expense, unless the Company elects to register or qualify additional
shares of the Company's Common Stock, in which case the cost and
expense of such registration statement will be pro-rated between the
Company and the Holders of the Securities to the aggregate sales price
of all the securities being issued.
Section 5. ADJUSTMENTS. The number of shares of Warrant Stock shall be
subject to adjustment from time to time as follows:
A. ADJUSTMENT OF EXERCISE PRICE IN THE EVENT OF STOCK DIVIDENDS, STOCK
SPLITS AND REVERSE STOCK SPLITS. Anything in this Section to the contrary
notwithstanding, in case the Company shall at any time issue Common Stock or
Convertible Securities by way of dividend or other distribution on any stock of
the Company or effect a stock split or reverse stock split of the outstanding
shares of Common Stock, the Exercise Price shall be proportionately decreased in
the case of such stock split or increased in the case of such reversed stock
split (on the date that such stock split or reverse stock split shall become
effective), by multiplying the Exercise Price in effect immediately prior to the
stock dividend, stock split or reverse stock split by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately prior
to such stock dividend, stock split or reverse stock split, and the denominator
of which is the number of shares of Common Stock outstanding immediately after
such stock dividend, stock split or reverse stock split.
B. NO ADJUSTMENT FOR SMALL AMOUNTS. Anything in this Section to the
contrary notwithstanding, the Company shall not be required to give effect to
any adjustment in the Exercise Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required a change of
the Exercise Price by at least ten cents ($.10), but when the cumulative net
effect of more than one adjustment so determined shall be to change the actual
Exercise Price by at least ten cents ($0.10), such change in the Exercise Price
shall thereupon be given effect.
C. NUMBER OF SHARES ADJUSTED. Upon any adjustment of the Exercise Price,
the Holder shall thereafter (until another such adjustment) be entitled to
purchase, at the new Exercise Price, the number of shares, calculated to the
nearest full share, obtained by multiplying the number of shares of Warrant
Stock initially issuable upon exercise of any of the Warrants by the Exercise
Price in effect on the date hereof and dividing the product so obtained by the
new Exercise Price.
Exhibit 4.5
<PAGE>
D. STATEMENT ON WARRANTS. Irrespective of any adjustments in the Exercise
Price or the number of kind of shares purchasable upon the exercise of the
Warrants, the Warrant Certificates theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 6. OFFICER'S CERTIFICATE
Whenever the Exercise Price shall be adjusted as required by the provision
of Section 5 hereof, the Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and setting forth in reasonable detail the facts requiring such adjustment. Each
such officer's certificate shall be made available at all reasonable times for
inspection by the Holders and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to each of the Holders. Such
certificate shall be conclusive as to the correctness of such adjustment.
Section 7. NOTICES TO WARRANTHOLDERS
So long as any Warrant shall be outstanding and unexercised (a) if the
Company shall pay any dividend or make any distribution upon the Common Stock or
(b) if the Company shall offer to the holders of Common Stock for subscription
or purchase by them any shares of stock of any class or any other rights or (c)
if any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to the
Holders, at least 30 days prior to the date specified in (i) or (ii) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (i) a record is to be taken for the purpose of
such dividend, distribution or rights, or (ii) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any, as of which the
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
Section 8. CLOSING OF TRANSFER BOOKS. The Company will not at any time
(except on dissolution, liquidation or winding up of the Company) close its
transfer books against the transfer of any shares of Common Stock issued or
issuable upon exercise of the Warrant in any manner which interferes with the
timely exercise of the Warrant.
Section 9. TRANSFER OF WARRANT; WARRANT LEDGER.
A. Subject to the provisions of this Agreement, the Warrant and all rights
Exhibit 4.5
<PAGE>
hereunder are transferable, in whole or in part (but not as to a fractional
share of Common Stock), by written assignment with appropriate notice to the
Company of any such transfer.
B. The Company shall at all times maintain a ledger indicating the
ownership of the Warrant and the number of shares of Common Stock as to which
the Warrant has been exercised and the date of such exercise (the "Warrant
Ledger"). Upon any transfer of any interest in the Warrant by the Holder or by a
transferee of the Holder as provided in this Section 9, the Company shall (i)
note such transfer on the Warrant Ledger, (ii) issue and deliver a new Warrant
Certificate (substantially in the form of Exhibit A with the blanks
appropriately completed) evidencing such transferee's interest in the Warrant
and (iii) if the Warrant Certificate surrendered in connection with such
transfer evidenced the right to acquire a greater number of shares of Common
Stock than the interest which was transferred, issue a new Warrant Certificate
(substantially in the form of Exhibit A with the blanks appropriately completed)
evidencing the right to acquire shares of Common Stock which was not
transferred.
Section 10. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the shares of Warrant
Stock upon the exercise of Warrants; provided, however, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of the Warrant Certificates or the
certificates for the shares of Warrant Stock in a name other than that of the
registered Warrantholder in respect of which such Warrants or shares of Warrant
Stock are issued.
Section 11. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company shall, at
the request of the holder of such certificate, issue and deliver, in exchange
and substitution for and upon cancellation of the mutilated certificate or
certificates, or in lieu of a substitution for the certificate or certificates
lost, stolen or destroyed, a new Warrant Certificate or Certificates of like
tenor and representing an equivalent right or interest; but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant Certificate or Certificates, and indemnity, if requested, also
satisfactory (as to form and amount) to the Company. An application for such a
substitute Warrant Certificate or Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
Section 12. RESERVATION OF SHARES OF WARRANT STOCK. There has been
reserved, and the Company shall at all times keep reserved so long as any of the
Warrants remain outstanding, out of its authorized Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrants. The transfer agent for the
Common Stock and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all times to reserve
such number of authorized as shall be requisite for such purpose. The Company
Exhibit 4.5
<PAGE>
will keep a copy of this Agreement on file with the transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Company will supply such transfer
agent with duly executed stock certificates for such purpose and will provide or
otherwise make available any cash which may be payable as provided in Section 13
hereof. All Warrant Certificates surrendered in exercise of the rights thereby
evidenced shall be cancelled by the Company.
Section 13. FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of the Warrants. With respect to any fraction of a
share called for upon the exercise of any Warrant, the Company shall pay to the
Warrantholder an amount in cash equal to such fraction multiplied by the current
market value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sale price of the Common Stock on such exchange
on the last business day prior to the date of exercise of the Warrant or if
no such sale is made on such day, the average closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Association or
Securities Dealers Quotation System ("NASDAQ"), (or, if not so quoted by
NASDAQ, by the National Quotation Bureau, Inc.) on the last business day
prior to the date of the exercise of the Warrant; or
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than the book value, determined
in such reasonable manner as may be prescribed by the board of directors of
the Company, such determination to be final and binding on the
Warrantholder.
Section 14. APPLICABLE LAW.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be construed in accordance with the laws of said state.
Section 15. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Holder any legal or equitable right,
remedy or claim under this Agreement and this Agreement shall be for the sole
and exclusive benefit of such persons, the Company and the Holder.
Exhibit 4.5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above-written.
(CORPORATE SEAL)
XPLORER, S.A.
ATTEST:
By:
- ------------------------------ ---------------------------
Steven B. Mortensen, Secretary Thomas C. Roddy, President
and Chief Executive Officer
ATLANTIC PACIFIC TRUST
By:
------------------------
Warrantholder
Exhibit 4.5
Exhibit 10.1
LEASE AGREEMENT
THIS LEASE is made and entered into this 15th day of July, 1995, by and
between SEQUOIA TRUST, a Nevada trust, hereinafter called "Lessor" and ATLANTIC
PACIFIC TRUST, a Nevada Trust, hereinafter called "Lessee".
Lessor, for and in consideration of the covenants and agreements contained
in this Lease, hereby leases to Lessee for the term and purposes hereinafter set
forth, all that certain property sometimes hereinafter referred to as "said
property" in the County of Kern, State of California, more particularly
described in Exhibit "A", attached hereto and made a part hereof, and Lessor and
Lessee agree as follows:
Lessor reserves the right to use said property for any and all other
purposes consistent with Lessee's use of said property for the purposes herein
leased.
1. This Lease is made for the sole purpose of exploration, development
and operation of mines, and extraction, reducing, extraction, selling and
shipping any and all precious metals and other commercially valuable substances,
whether similar or dissimilar, hereinafter referred to as "leased substances",
contained therein, subject to the exceptions, reservations, covenants and
conditions in this lease. Lessee shall have the exclusive right to mine for the
leased substances.
2. The term of this Lease shall be from July 15, 1995 to July 15, 2000,
and may be renewed for like terms by mutual consent by Lessee and Lessor, so
long thereafter as leased substances are being mined, processed or marketed from
said property on a continuous basis with no cessation of operations for more
than one hundred twenty (120) consecutive days. Lessee shall pay monthly, to
Lessor, a Lease payment of three thousand ($3,000.00) per month during the term
of this Lease, to paid on the 15th of the month. Additionally, Lessee shall pay
to Lessor an actual royalty payment of twelve percent (12%) of the gross value
of metals and other leased substances recovered from the refining of ores from
said properties on the 1st and the 15th of each month. Actual royalty payments
on other leased substances shall be paid to Lessor in kind or in cash from the
sale of other leased substances.
Lessee shall, within ten (10) days after the expiration of each and every
pay period during the term hereof, pay the additional actual royalties to Lessor
and furnish Lessor full and complete copies of all documents, including
settlement for any ore, mineral, metal or other leased substances disposed of
and also full and complete reports of any reduction works or mill where the ore
may be reduced or treated, for the preceding pay period including but not
limited to the following information:
(a) The disposition made of all ore or minerals mined, together with the
date of shipments, names and addresses of consignees and weights.
(B) The kind, quantity and value of all leased substances extracted and
sold or otherwise disposed of.
Exhibit 10.1
<PAGE>
(c) Monthly work progress report indicating all work performed each month.
(d) Lessee shall make available to Lessor, its agents and representatives
copies of all assay reports, drill hole logs and all other data
assembled as an aid in determining the location, quantity and quality
of all mineral deposits (i.e. deposits of leased substances on said
property.)
3. Lessee shall work said property in a manner consistent with good,
prudent economical mining practices, to mine the greatest amount of ore
possible, with due regard to the development and preservation of said property
as a workable mine. Lessee shall perform continuously and diligently in good
faith, in an active and substantial way, exploration and mining work upon said
leased property directed toward the discovery and production of said leased
substances.
4. The obligations of Lessee under this Lease shall be suspended only
while Lessees' compliance is prevented by the elements, accidents, strikes,
lockouts, riots, delays in transportation, inability to secure materials in the
open market, or by any other causes beyond the reasonable control of Lessee
whether similar or dissimilar to the causes specifically mentioned except
government intervention and receiverships caused by government intervention or
bankruptcy. Lessee shall give Lessor prompt written notice of the commencement
and cessation of any such event.
5. Lessee shall keep a full set of accounts, records, and maps showing
location of working places and shall allow Lessor, or its agents or employees,
to examine them from time to time. Lessee shall allow Lessor to enter upon said
property and into any working, mills or reduction works thereon, or wherever
mineral or metal bearing materials from said property may be worked or leased
substances reduced, for the purpose of inspections to ascertain whether the
terms and conditions of this lease are being properly performed, and to take
samples and to make tests and measurements and to affix notices.
6. Lessee shall do any and all work necessary to safeguard against
accidents and to properly conserve said property and leased substances, in a
first-class manner, compatible with safe and economical mining practices, and
Lessee shall keep all workings in which ore is exposed, clear of all loose rock,
earth and rubbish and shall keep all surface openings securely covered or fenced
against livestock and wildlife.
7. In the operation and development of said property, Lessee shall comply
with and observe all applicable laws and governmental rules and regulations
including, but not limited to, Employer's Liability, Workers Compensation,
Worker's Unemployment Insurance and all environmental laws, rules and
regulations. Lessee shall indemnify and hold harmless Lessor from and against
the payment of all damages, claims, costs and expenses due to the existence of
such laws, rules and regulations, and of all claims, costs and expenses in
connection therewith under any claim of subrogation or otherwise. Lessor shall
indemnify and hold harmless Lessee from and against the payment of all damages,
claims, cost and expenses due to any acts or conduct of Lessor or any person
claiming through Lessor, occurring prior to the date the term of this Lease
commences including, but not limited to, any violation of any environmental law,
rule or regulation and in addition, by reason of the existence, as of the date
Exhibit 10.1
<PAGE>
of this Lease, of any hazardous or toxic waste on the property.
8. Lessee shall not divert or obstruct any stream of water on said
property, cannot divert any water from said property, except that Lessee may,
subject to existing rights and statutes and regulations, use any unappropriated
water reasonably required for such mining operation. Lessee shall not interfere
with, destroy or remove any fences or on enclosing said property, not leave
gates open, nor interfere with livestock grazing within such enclosures. Lessee
shall no do or suffer to be done in or upon said property any act or thing which
is or may be a nuisance and Lessee shall not use or permit others to use said
property, or any part hereof, for any unlawful or immoral purposes.
9. Lessee may construct, maintain and use such roads, ditches, buildings,
fixtures and machinery on, through and upon Said property as may be necessary or
convenient in carrying on exploration, milling and or mining operation.
10. Lessor may post and maintain upon said property notices of
non-responsibility as provided by law. Lessee shall pay in full all persons who
perform labor or services on, furnish materials joined or affixed to, or provide
equipment for said property, or for the construction, reconstruction, repair or
replacement of any structure or improvement on said property, at Lessee's
instance or request. Lessee shall not permit or suffer liens of any kind of
nature to be enforces against said property for such labor, services, materials
or equipment. Lessor may pay such amount as may be required to release any such
lien or liens, to defend any action brought thereon, or to satisfy a judgment
entered therein. Lessee shall reimburse Lessor for all costs, damages,
reasonable attorney fees and amount paid by Lessor in defending such actions,
releasing said liens or satisfying judgments thereon.
11. Lessee shall pay, prior to delinquency, all tax and assessments levied
and assessed on the mineral and mining rights hereby leased, and on all of
Lessee's personal property and improvements on said property which become a lien
on said property during the term of this Lease, and any and all production or
severance taxes computed or based upon production from said property except
Lessor shall pay all taxes due and payable up on the royalty portion. If Lessee
pays taxes on the royalty portion, Lessee may reimburse itself for such taxes
from the royalties. If not said so paid by Lessee, Lessor may, at its option,
pay such taxes and assessments which are liens on said property, or on the
mineral and mining rights, and any penalties and interest thereon, and Lessee
shall reimburse Lessor on demand in the full amount of such payments. Lessee
shall pay, as and when the same become due and payable, and save and indemnify
Lessor from and against, all taxes and assessments which are assessed and levied
on said property or portion thereof, on all minerals and ores produced therefrom
pursuant to the provisions hereof or on all property or improvements that may be
placed or installed thereon by or under Lessee, during the period this lease
shall remain in effect. In the event that this lease is terminated in whole or
in part prior to the date when taxes and assessments on the said property become
due and payable, Lessee shall, on such termination, pay to Lessor a sum
equivalent to the taxes levies upon the part of said property so terminated for
the first fiscal tax year immediately preceding the current fiscal tax year,
prorated to the date of such termination. Lessee shall not permit or suffer said
property or any part thereof, of any mineral and ores mined therefrom, or any
improvements or personal property thereon, to be sold at any time for such
taxes. Notwithstanding the above provisions, Lessees shall not be liable for any
Exhibit 10.1
<PAGE>
taxes and assessments levies upon the rights reserved hereunder by Lessor, its
successors and assigns.
12. Lessor shall not be liable, from any cause whatsoever, for any injury
to or death of any officer, agent or employee of Lessee, or any other person
whomsoever, while upon or in proximity to said property in connection with the
business of Lessee, or for loss or destruction of or damage to any property
owned by or in the custody or control of Lessee or any other person or persons
whomsoever, brought, stored or places upon or in proximity to said property in
connection with the business of Lessee. Lessee hereby releases and discharges
and shall indemnify and save harmless, Lessor from and against any an all
claims, liability, demands, causes of action , costs and expenses for injuries
to or deaths of all persons and loss or destruction of or damage to all
property, caused by or arising out of the exercise of their rights hereunder.
13. Lessor represents to Lessee that the property covered by this Lease is
encumbered by a senior first Trust Deed in the amount of $60,000.00 (sixty
thousand dollars). Lessor agrees to indemnify, save and hold harmless Lessee
from any damage, loss or expense or whatever kind or nature by reason of any
such senior encumbrance, it being understood and agreed that Lessee shall have
no obligation thereof and Lessor covenants to fully and timely perform all
obligations secured thereby.
14. Upon breach by Lessee of any of the terms, covenants conditions of
this Lease and Lessee's failure to remedy the default within thirty (30) days
after written notice from Lessor to do so, then at the option of Lessor, notice
of the exercise of which shall be given to Lessee in writing, this Lease shall
forthwith cease and terminate and all rights of Lessee in and to said property
shall be at an end, whereupon Lessee shall vacate said property and peaceably
surrender possession thereof to Lessor. The waiver by Lessor of any breach of
any covenant or condition thereof shall not be deemed a waiver of any other or
subsequent breach hereof not of any other covenant or condition hereof. The
acceptance of payments hereunder by Lessor shall not be deemed to be a waiver of
any preceding breach by Lessee or any covenant or condition hereof, other than
the failure of Lessee to pay such particular payment so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
payment.
15. If Lessee is adjudicated as bankrupt, or shall make an assignment for
the benefit of creditors, or file a voluntary petition under any law having for
its purpose the adjudication of Lessee a bankrupt, or the extension of time of
payment, composition, adjustment, modification, settlement or satisfaction of
liabilities of Lessee, or a receiver be appointed for the property of Lessee by
reason of the insolvency of Lessee, notwithstanding anything to the contrary
elsewhere in this Lease, or any stoppage by governmental agencies, or
non-operation on a continuous basis over one hundred-twenty (120) days or any
other government agency taking receivership. Lessor shall have the immediate
right to terminate this Lease and to take exclusive possession of the leased
premises. The acceptance of royalty or other payments hereunder shall not
constitute a waiver of Lessor's right to terminate this Lease as above set
forth.
16. If suit or action is brought to interpret or enforce this Lease, the
prevailing party shall be entitled to be awarded reasonable attorney fees in
Exhibit 10.1
<PAGE>
addition to other costs and disbursements allowed by law, including the same
with respect to an appeal.
17. Lessee shall pay to Lessor interest at the rate of two percent (2%)
per month upon any and all amounts whatsoever due under this Lease to Lessor
from the date payment of each such amount is due and owing to Lessor or form the
date of each breach by Lessee of an obligation hereunder, as the case may be, to
the date of receipt by Lessor of each payment of said amounts, unless such
payment is tendered or paid to Lessor within thirty (30) days after the date a
payment is due and owing hereunder to Lessor or the date of such breach, as the
case may be.
18. Any demand, notice or statement herein requested or required to be
given by one party to the other shall be in writing. Delivery of such written
demand, deposited in the United States Mail, with postage thereon fully prepaid,
certified, return receipt requested and addressed to Lessor at 4750 Kelso Creek
Road, Weldon, CA, 93283, and the payments by Lessee to Lessor hereunder shall be
made at the above address. Delivery of such demand, notice or statement to
Lessee shall be conclusively deemed sufficient when deposited in the United
States Mail, with postage thereon fully prepaid, certified, return receipt
requested and addressed to Lessee at 4750 Kelso Creek Road, Weldon, Calf. 93283.
Any party may change by written notice as above provided, the address to which
such demands, notices or statements to such party may be sent and Lessor may
change the address at which payments shall be made by written notice to Lessee.
19. Lessee may at any time surrender- and terminate this Lease, in whole
as to any one or more patented mining claims, upon giving ninety (90) day notice
in writing to Lessor to that effect and paying all royalties and any other sums
due on the property to the date of surrender or termination.
20. Upon termination of this lease in any manner, Lessee shall surrender
and deliver unto Lessor the quiet and peaceful possession of said property in
neat, clean, and safe condition and shall quitclaim to Lessor all of the right,
title and interest of Lessee in said property. Lessee shall provide with each
quitclaim, upon demand by Lessor, a title report issued by a responsible title
company covering the property so quit claimed as of the date of recordation of
the quitclaim. If such title report discloses any encumbrances or liens
affection title to said property done, made or suffered by Lessee, or anyone
claiming under Lessee, Lessee shall take such steps as may be necessary to
extinguish such encumbrances or lien, failing in which Lessor may do so at
Lessee's cost and expense, including reasonable attorney fees, which cost and
expense Lessee shall pay to lessor upon Lease demand. Upon termination of this
Lease, Lessee may remove all machinery, tools appliances and all personal
property placed upon said premises by Lessee, provided no default shall at such
time exist in respect of any payments, or in respect of any covenants,
agreements or conditions to be kept and performed by Lessee; and provided
further that all timbering supports, track, pipe, electrical and paneling within
mines shall be left in good condition when the Lessee may vacate the premises,
or this Lease be terminated; also provided that all machinery, tools,
appliances, and all personal property remaining on said premises thirty (30)
days after the termination (by notice or otherwise) of this Lease, shall become
the property of Lessor and shall not be removed therefrom by Lessee. All
Exhibit 10.1
<PAGE>
permanent structures and buildings shall not be removed by Lessee and shall
become the sole property of the Lessor.
21. If there is more than one person named as Lessee, the Lessee's
obligations shall be joint and several and the term "Lessee" wherever used in
this Lease shall, unless otherwise specified, include the plural as well as
singular.
22. This instrument is intended as, and is, a lease. Lessor shall not be
called upon or be required to make any repairs, or .incur any expenses of any
kind or nature upon or in connection with said property for and during the term
of this Lease, but all such expenses shall be borne by Lessee.
23. Lessor shall deliver to Lessee all maps, assay reports, engineering
reports, geological reports and all other documents and information pertaining
to said property within fifteen (15) days after execution of this lease
agreement.
24. Time and specific performance are of the essence of this Lease.
27. Lessee shall not assign this Lease, or any interest therein, without
the prior written consent of Lessor and any attempted assignment without such
consent shall be null and void. The consent to one assignment by Lessor shall
not be deemed to be a consent to subsequent assignment. This Lease shall not,
nor shall any interest therein, be assignable, as the interest of the Lessee, by
operation of law, without the prior consent of Lessor. However, Lessee may
contract with third parties to perform Lessee's obligations under this Lease on
such terms determined by Lessee, without the prior consent of lessor, providing
the third party contractor abides by all of the terms and conditions of this
Lease and that the Lessor is notified in writing of the third party contractor.
28. The provisions contained in this Lease shall inure to the benefit of
and be binding upon the respective heirs, administrators, executors, personal
representatives, successors and assigns of the parties.
IN WITNESS WHEREOF, the parties have executed this Lease agreement as of
the date first herein written.
LESSOR: SEQUOIA TRUST
/s/ Joyce J. Pellet
- -------------------------------------
Joyce J. Pellet, Trustee in Trust
Sequoia Trust
LESSEE: ATLANTIC PACIFIC TRUST
/s/ Steven B. Mortensen
- ------------------------------------
Steven B. Mortensen, Trustee in Trust
Atlantic Pacific Trust
Exhibit 10.1
<PAGE>
RECORDING REQUESTED BY James Maple, Assessor-Recorder
CHICAGO TITLE COMPANY Kern County Official Records Pages:1
AND WHEN RECORDED MAIL THIS 5/31/1996
DEED AND , UNLESS OTHERWISE DOCUMENT #:0196069954 8:01:00
SHOWN BELOW, MAIL TAX STATEMENT
TO:
NAME:WILLIAM M. MORELAND & JOYCE
JANE PELLETT, TRUSTEES IN TRUST
OF SEQUOIA TRUST
STREET ADDRESS: 4750 KELSO CREEK ROAD
CITY & STATE: WELDON, CA 93283
ZIP: Fees....7.00
Taxes...
Other...
Title Order No. B647146 Total Paid...7.00
Grant Deed
------------------------------------------------------------
THE UNDERSIGNED GRANTOR(S) DECLARE(S) DEED TO A TRUST NOT
PURSUANT TO A SALE AND IS
DOCUMENTARY TRANSFER TAX IS $ EXEMPT.
[X] unincorporated area [ ] City of______________
Parcel No. 095-270-03-00
[X] computed on full value of interest or property
conveyed, or
[ ] computed on full value less value of liens
or encumbrances remaining at time of sale, and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
JOYCE PELLETT, A SINGLE WOMAN,
hereby GRANT(S) to
WILLIAM M. MORELAND AND JOYCE JANE PELLETT, AS TRUSTEES IN TRUST OF THE
SEQUOIA TRUST, BY TRUST INDENTURE DATED JANUARY 10, 1991
the following described real property in the
county of KERN , state of California:
LOT 39 IN SECTIONS 17 AND 18, (FORMERLY SURVEYED AS IN SECTIONS 7 AND 8 ),
TOWNSHIP 28 SOUTH, RANGE 34 EAST, MOUNT DIABLO MERIDIAN, ALSO KNOWN AS THE
PIUTE QUARTZ MINING CLAIM.
Dated May 30, 1996 /s/ Joyce Pellett
-------------
STATE OF CALIFORNIA
COUNTY OF Kern }S.S.
On May 30, 1996 before me,
Marilyn Hoffman
a Notary Public in and for said County and State,
personally appeared Joyce Pellett
WITNESS my hand and official seal (Notary Seal)
/s/ Marilyn Hoffman
Exhibit 10.1
<PAGE>
RECORDING REQUESTED BY James Maple, Assessor-Recorder
CHICAGO TITLE COMPANY Kern County Official Records Pages:1
AND WHEN RECORDED MAIL THIS 5/31/1996
DEED AND , UNLESS OTHERWISE DOCUMENT #:0196069953 8:01:00
SHOWN BELOW, MAIL TAX STATEMENT
TO:
NAME:WILLIAM M. MORELAND & JOYCE
JANE PELLETT, TRUSTEES IN TRUST
OF SEQUOIA TRUST
STREET ADDRESS: 4750 KELSO CREEK ROAD
CITY & STATE: WELDON, CA 93283
ZIP: Fees.... 7.00
Taxes...
Other...
Title Order No. B647146 Total Paid... 7.00
Grant Deed
------------------------------------------------------------
THE UNDERSIGNED GRANTOR(S) DECLARE(S) DEED TO A TRUST NOT
PURSUANT TO A SALE AND IS
DOCUMENTARY TRANSFER TAX IS $ EXEMPT.
[X] unincorporated area [ ] City of______________
Parcel No. 095-270-03-00
[X] computed on full value of interest or property
conveyed, or
[ ] computed on full value less value of liens
or encumbrances remaining at time of sale, and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
JOYCE PELLETT, A SINGLE WOMAN,
hereby GRANT(S) to
WILLIAM M. MORELAND AND JOYCE JANE PELLETT, AS TRUSTEES IN TRUST OF THE
SEQUOIA TRUST, BY TRUST INDENTURE DATED JANUARY 10, 1991
the following described real property in the
county of KERN , state of California:
LOT 38 IN SECTIONS 18, (FORMERLY SURVEYED AS IN SECTIONS 7), TOWNSHIP 28
SOUTH, RANGE 34 EAST, MOUNT DIABLO MERIDIAN, ALSO KNOWN AS THE OPHIR QUARTZ
MINING CLAIM.
Dated May 30, 1996 /s/ Joyce Pellett
-------------
STATE OF CALIFORNIA
COUNTY OF Kern }S.S.
On May 30, 1996 before me,
Marilyn Hoffman
a Notary Public in and for said County and State,
personally appeared Joyce Pellett
WITNESS my hand and official seal (Notary Seal)
/s/ Marilyn Hoffman
Exhibit 10.1
<PAGE>
RECORDING REQUESTED BY James Maple, Assessor-Recorder
CHICAGO TITLE COMPANY Kern County Official Records Pages:1
AND WHEN RECORDED MAIL THIS 5/31/1996
DEED AND , UNLESS OTHERWISE DOCUMENT #:0196069952 8:01:00
SHOWN BELOW, MAIL TAX STATEMENT
TO:
NAME:WILLIAM M. MORELAND & JOYCE
JANE PELLETT, TRUSTEES IN TRUST
OF SEQUOIA TRUST
STREET ADDRESS: 4750 KELSO CREEK ROAD
CITY & STATE: WELDON, CA 93283
ZIP: Fees.... 7.00
Taxes...
Other...
Title Order No. B647146 Total Paid... 7.00
Grant Deed
------------------------------------------------------------
THE UNDERSIGNED GRANTOR(S) DECLARE(S) DEED TO A TRUST NOT
PURSUANT TO A SALE AND IS
DOCUMENTARY TRANSFER TAX IS $ EXEMPT.
[X] unincorporated area [ ] City of______________
Parcel No. 095-270-03-00
[X] computed on full value of interest or property
conveyed, or
[ ] computed on full value less value of liens
or encumbrances remaining at time of sale, and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
JOYCE PELLETT, A SINGLE WOMAN, INDIVIDUALLY AND JOYCE J. PELLETT, AS
TRUSTEE OF BEDROCK TRUST.
hereby GRANT(S) to
WILLIAM M. MORELAND AND JOYCE JANE PELLETT, AS TRUSTEES IN TRUST OF THE
SEQUOIA TRUST, BY TRUST INDENTURE DATED JANUARY 10, 1991
the following described real property in the
county of KERN , state of California:
LOT 37 IN SECTIONS 18, (FORMERLY SURVEYED AS IN SECTIONS 7), TOWNSHIP 28
SOUTH, RANGE 34 EAST, MOUNT DIABLO MERIDIAN, ALSO KNOWN AS THE BLUMENBERG
QUARTZ MINING CLAIM.
Dated May 30, 1996 /s/ Joyce Pellett
-------------
STATE OF CALIFORNIA
COUNTY OF Kern }S.S.
On May 30, 1996 before me,
Marilyn Hoffman
a Notary Public in and for said County and State,
personally appeared Joyce Pellett
WITNESS my hand and official seal (Notary Seal)
/s/ Marilyn Hoffman
Exhibit 10.1
Exhibit 10.2
LEASE AGREEMENT
THIS LEASE is made and entered into this 15th day of July, 1995, by and
between SEQUOIA TRUST, a Nevada trust, hereinafter called "Lessor" and ATLANTIC
PACIFIC TRUST, a Nevada Trust, hereinafter called "Lessee."
Lessor, for and in consideration of the covenants and agreements
contained in this Lease, hereby leases to Lessee for the term and purposes
hereinafter set forth, all that certain property sometimes hereinafter referred
to as "said property" in the County of Kern, State of California, more
particularly described AS THE Weldon Research Center, 4750 Kelso Creek Road,
Weldon, California, 93283.
Lessor and Lessee agree as follows:
Lessor reserves the right to use said property for any and all other
purposes consistent with Lessee's use of said property for the purposes herein
leased.
1. The term of this Lease shall be from July 15, 1995 to July 15, 2000,
and may be renewed for like terms by mutual consent by Lessee and Lessor. Lessee
shall pay monthly, to Lessor, a Lease payment of three thousand ($3,000.00) per
month during the term of this Lease, to paid on the 15th of each month.
2. Lessee shall do any and all work necessary to safeguard against
accidents and to properly conserve said property, in a first-class manner,
compatible with safe and economical practices, and Lessee shall keep all
premises, clear of all rubbish and shall keep all surface areas fenced or closed
against livestock and wildlife.
3. In the operation and development of said property, Lessee shall
comply with and observe all applicable laws and governmental rules and
regulations including, but not limited to, Employer's Liability, Workers
compensation, Worker's Unemployment Insurance and all environmental laws, rules
and regulations. Lessee shall indemnify and hold harmless Lessor from and
against the payment of all damages, claims, costs and expenses due to the
existence of such laws, rules and regulations, and of all claims, costs and
expenses in connection therewith under any claim of subrogation or otherwise.
Lessor shall indemnify and hold harmless Lessee from and against the payment of
all damages, claims, cost and expenses due to any acts or conduct of Lessor or
any person claiming through Lessor, occurring prior to the date the term of this
Lease commences including, but not limited to, any violation of any
environmental law, rule or regulation and in addition, by reason of the
existence, as of the date of this Lease, of any hazardous or toxic waste on the
property.
4. Lessee shall not divert or obstruct any drainage or damage said
property, except that Lessee may, subject to existing rights and statutes and
regulations, use any unappropriated water reasonably required for such
operation. Lessee shall not interfere with, destroy or remove any fences or on
enclosing said property, not leave gates open. Lessee shall not do or suffer to
be done in or upon said property any act or thing which is or may be a nuisance
Exhibit 10.2
<PAGE>
and Lessee shall not use or permit others to use said property, or any part
hereof, for any unlawful or immoral purposes.
5. Lessee may construct, maintain and use such roads, ditches,
buildings, fixtures and machinery on, through and upon said property as may be
necessary or convenient in carrying on lessees operations.
6. Lessor may post and maintain upon said property notices of
non-responsibility as provided by law. Lessee shall pay in full all persons who
perform labor or services on, furnish materials joined or affixed to, or provide
equipment for said property, or for the construction, reconstruction, repair or
replacement of any structure or improvement on said property, at Lessees's
instance or request. Lessee shall not permit or suffer liens of any kind of
nature to be enforces against said property for such labor, services, materials
or equipment. Lessor may pay such amount as may be required to release any such
lien or liens, to defend any action brought thereon, or to satisfy a judgment
entered therein. Lessee shall reimburse Lessor for all costs, damages,
reasonable attorney fees and amount paid by Lessor in defending such actions,
releasing said liens or satisfying judgments thereon.
7. Lessee shall pay, prior to delinquency, all tax and assessments
levied and assessed on said property hereby leased, and on all of Lessee's
personal property and improvements on said property which become a lien on said
property during the term of this Lease. Lessee shall pay, as and when the same
become due and payable, and save and indemnify Lessor from and against, all
taxes and assessments which are assessed and levied on said property or portion
thereof, on all property or improvements that may be placed or installed thereon
by or under Lessee, during the period this lease shall remain in effect. In the
event that this lease is terminated prior to the date when taxes and assessments
on the said property become due and payable, Lessee shall, on such termination,
pay to Lessor a sum equivalent to the taxers levies upon the part of said
property so terminated for the first fiscal tax year immediately preceding the
current fiscal tax year, prorated to the date of such termination. Lessee shall
not permit or suffer said property or any part thereof, or any improvements or
personal property thereon, to be sold at any time for such taxes.
Notwithstanding the above provisions, Lessees shall not be liable for any taxes
and assessments levies upon the rights reserved hereunder by Lessor, its
successors and assigns.
8. Lessee shall perform all reporting required on the mill site claims
leased, i.e. said property, and record in the County Record and with the Bureau
of Land Management thirty (30) days prior to the first (1st) day of September of
each and every year and deliver the originals of said proofs of intent to hold
millsites. Lessee shall pay all recording fees, BLM fees, and if any royalties
or other fees imposed by the BLM or any other governmental agency.
9. Lessor shall not be liable, from any cause whatsoever, for any
injury to or death of any officer, agent or employee of Lessee, or any other
person whomsoever, while upon or in proximity to said property in connection
with the business of Lessee, or for loss or destruction of or damage to any
property owned by or in the custody or. control of Lessee or any other person or
persons whomsoever, brought, stored or places upon or in proximity to said
property in connection with the business of Lessee. Lessee hereby releases and
discharges and shall indemnify and save harmless, Lessor from and against any an
Exhibit 10.2
<PAGE>
all claims, liability, demands, causes of action, costs and expenses for
injuries to or deaths of all persons and loss or destruction of or damage to all
property, caused by or arising out of the exercise of their rights hereunder.
10. Lessor agrees to indemnify, save and hold harmless Lessee from any
damage, loss or expense or whatever kind or nature by reason of any such senior
encumbrance, if any, it being understood and agreed that Lessee shall have no
obligation thereof and Lessor covenants to fully and timely perform all
obligations secured thereby.
11. Upon breach by Lessee of any of the terms, covenants conditions of
this Lease and Lessee's failure to remedy the default within thirty (30) days
after written notice from Lessor to do so, then at the option of Lessor, notice
of the exercise of which shall be given to Lessee in writing, this Lease shall
forthwith cease and terminate and all rights of Lessee in and to said property
shall be at an end, whereupon Lessee shall vacate said property and peaceably
surrender possession thereof to Lessor. The waiver by Lessor of any breach of
any covenant or condition thereof shall not be deemed a waiver of any other or
subsequent breach hereof not of any other covenant or condition hereof. The
acceptance of payments hereunder by Lessor shall not be deemed to be a waiver of
any preceding breach by Lessee or any covenant or condition hereof, other than
the failure of Lessee to pay such particular payment so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
payment.
12. If Lessee is adjudicated as bankrupt, or shall make an assignment
for the benefit of creditors, or file a voluntary petition under any law having
for its purpose the adjudication of Lessee a bankrupt, or the extension of time
of payment, composition, adjustment, modification, settlement or satisfaction of
liabilities of Lessee, or a receiver be appointed for the property of Lessee by
reason of the insolvency of Lessee, notwithstanding anything to the contrary
elsewhere in this Lease, or any stoppage by governmental agencies, or any other
government agency taking receivership. Lessor shall have the immediate right to
terminate this Lease and to take exclusive possession of the leased premises.
The acceptance of royalty or other payments hereunder shall not constitute a
waiver of Lessor's right to terminate this Lease as above set forth.
13. If suit or action is brought to interpret or enforce this Lease,
the prevailing party shall be entitled to be awarded reasonable attorney fees in
addition to other costs and disbursements allowed by law, including the same
with respect to an appeal.
14. Lessee shall pay to Lessor interest at the rate of two percent (2%)
per month upon any and all amounts whatsoever due under this Lease to Lessor
from the date payment of each such amount is due and owing to Lessor or form the
date of each breach by Lessee of an obligation hereunder, as the case may be, to
the date of receipt by Lessor of each payment of said amounts, unless such
payment is tendered or paid to Lessor within thirty (30) days after the date a
payment is due and owing hereunder to Lessor or the date of such breach, as the
case may be.
15. Any demand, notice or statement herein requested or required to be
given by one party to the other shall be in writing. Delivery of such written
demand, deposited in the United States Mail, with postage thereon fully prepaid,
Exhibit 10.2
<PAGE>
certified, return receipt requested and addressed to Lessor at 4750 Kelso Creek
Road, Weldon, CA, 93283, and the payments by Lessee to Lessor hereunder shall be
made at the above address. Delivery of such demand, notice or statement to
Lessee shall be conclusively deemed sufficient when deposited in the United
States Mail, with postage thereon fully prepaid, certified, return receipt
requested and addressed to Lessee at 4750 Kelso Creek Road, Weldon, Calf. 93283.
Any party may change by written notice as above provided, the address to which
such demands, notices or statements to such party may be sent and Lessor may
change the address at which payments shall be made by written notice to Lessee.
16. Lessee may at any time surrender and terminate this Lease, in.
whole upon giving ninety (90) day notice in writing to Lessor to that effect and
paying all sums due on the property to the date of surrender or termination.
17. Upon termination of this lease in any manner, Lessee shall
surrender and deliver unto Lessor the quiet and peaceful possession of said
property in neat, clean, and safe condition and shall quitclaim to Lessor all of
the right, title and interest of Lessee in said property. Lessee shall provide
with each quitclaim, upon demand by Lessor, a title report issued by a
responsible title company covering the property so quit claimed as of the date
of recordation of the quitclaim. If such title report discloses any encumbrances
or liens affection title to said property done, made or suffered by Lessee, or
anyone claiming under Lessee, Lessee shall take such steps as may be necessary
to extinguish such encumbrances or lien, failing in which Lessor may do so at
Lessee's cost and expense, including reasonable attorney fees, which cost and
expense Lessee shall pay to lessor upon Lease demand. Upon termination of this
Lease, Lessee may remove all machinery, tools appliances and all personal
property placed upon said premises by Lessee, provided no default shall at such
time exist in respect of any payments, or in respect of any covenants,
agreements or conditions to be kept and performed by Lessee, or this Lease be
terminated; also provided that all machinery, tools, appliances, and all
personal property remaining on said premises thirty (30) days after the
termination (by notice or otherwise) of this Lease shall become the property of
Lessor and shall not be removed therefrom by Lessee. All permanent structures
and buildings shall not be removed by Lessee and shall become the sole property
of the Lessor.
18. If there is more than one person named as Lessee, the Lessee's
obligations shall be joint and several and the term "Lessee" wherever used in
this Lease shall, unless otherwise specified, include the plural as well as
singular.
19. This instrument is intended as, and is, a lease. Lessor shall not
be called upon or be required to make any repairs, or incur any expenses of any
kind or nature upon or in connection with said property for and during the term
of this Lease, but all such expenses shall be borne by Lessee.
20. Time and specific performance are of the essence of this Lease.
27. Lessee shall not assign this Lease, or any interest therein,
without the prior written consent of Lessor and any attempted assignment without
such consent shall be null and void. The consent to one assignment by Lessor
shall not be deemed to be a consent to subsequent assignments This Lease shall
not, nor shall any interest therein, be assignable, as the interest of the
Exhibit 10.2
<PAGE>
Lessee, by operation of law, without the prior consent of Lessor. However,
Lessee may contract with third parties to perform Lessee's obligations under
this Lease on such terms determined by Lessee, without the prior consent of
lessor, providing the third party contractor abides by all of the terms and
conditions of this Lease and that the Lessor is notified in writing of the third
party contractor.
28. The provisions contained in this Lease shall inure to the benefit
of and be binding upon the respective heirs, administrators, executors, personal
representatives, successors and assigns of the parties.
IN WITNESS WHEREOF, the parties have executed this Lease agreement as
of the date first herein written.
LESSOR: SEQUOIA TRUST
/s/ Joyce J. Pellet
- ----------------------------------
Joyce J. Pellet, Trustee in Trust
Sequoia Trust
LESSEE: ATLANTIC PACIFIC TRUST
/s/ Steven B. Mortensen
- ----------------------------------
Steven B. Mortensen, Trustee in trust
ATLANTIC PACIFIC TRUST
Exhibit 10.2
EXHIBIT 10.3
OPERATING AGREEMENT
This operating agreement is entered into and becomes this 15th day of July,
1995, and is by and between ATLANTIC PACIFIC TRUST, hereinafter referred to as
"ATLANTIC," and EMTEC, Inc., a Nevada corporation, hereinafter referred to as
"EMTEC."
RECITALS
WHEREAS, ATLANTIC owns eight (8) mineral claims and leases on three (3) patented
mining claims located on Piute Mountain, Kern County; and leases on the Weldon
Research Center, located in Weldon, Kern County, California.
WHEREAS, ATLANTIC wishes to employ EMTEC to do conduct all necessary work to put
the mineral properties in to full production on a turn-key basis.
WHEREAS, EMTEC wishes to do all the necessary work providing a full turn-key
mining and refining operation for ATLANTIC on a cost plus basis.
NOW THEREFORE, in consideration of mutual covenants and promises contained
herein the parties do hereby agree as follows:
AGREEMENT
1. ATLANTIC will reimburse EMTEC for all expenses and costs at the rate of
cost plus 18%. An invoice must be presented to ATLANTIC on the 1st and 15th
of each month. ATLANTIC will make payment to EMTEC within 5 days of receipt
of invoice. Costs shall be defined as all costs directly and indirectly
related to EMTEC performing its duties in the exploration, development,
production and support facilities of the Evening Star Mine and other duties
requested by ATLANTIC.
2. EMTEC shall perform all exploration, development, and production of the
Evening Star Mine and its ores. EMTEC will proceed with developments in
phases.
Phase I: Determination of ore reserves to be refined.
Phase II: Develop a working pilot plant of one ton per hour or more to
determine the extraction parameters for a larger refinery.
Phase III: The construction and operation of a large production refinery
and development of a turn-key mining and milling operation including all
support operations and facilities.
3. EMTEC shall be the operator for all operations. All permits will be in the
name of EMTEC. EMTEC will obtain all permits necessary before start of
operations.
EXHIBIT 10.3
<PAGE>
4. EMTEC will work in an environmentally safe manner. EMTEC will hold ATLANTIC
harmless for any and all environmental violations, accidents, or deaths
which may occur.
5. EMTEC will carry all the necessary insurances required by law, and carry
liability insurance of $5,000,000 for Auto, Trust, Theft and Fire on items
built or acquired by EMTEC.
6. EMTEC will be responsible for all security, and guarding against theft of
equipment, refined precious metals, and for public safety.
7. EMTEC will deliver to ATLANTIC all precious metals. EMTEC may sell other
base metals and mined substances upon per written approval from ATLANTIC.
All proceeds form the sale of other minerals or equipment will be paid
directly to ATLANTIC.
8. EMTEC will be solely responsible and hold harmless ATLANTIC against any
hazardous waste discharges, whether the discharges are tailing from the
refinery operation or by direct spills of oils, fuels, human waste,
garbage, or any substance identified by any regulatory body as "Hazardous
Waste."
9. EMTEC will provide all necessary reclamation bonding and be solely
responsible for all reclamation required by the controlling regulatory
agency.
10. EMTEC will provide total and unrestricted access to all books and records
of EMTEC for ATLANTIC auditors or representatives at any time without
notice. If in the event ATLANTIC's auditors discover any abuse or over
expensing of items ATLANTIC shall immediately deliver to EMTEC a report and
documentation of such abuse and over expensing along with a demand notice
to reconcile the accounts and for repayment of any overpayments made by
ATLANTIC due to said abuse. If in the event EMTEC does not immediately pay
to ATLANTIC any overages or if EMTEC does not correct the abuse within five
(5) days then ATLANTIC shall immediately terminate this Agreement and
assume possession of all facilities and operations and EMTEC hereby agrees
to vacate all facilities and operations without protest. EMTEC will still
be liable to pay to ATLANTIC all of the overages due to abuse or over
expensing.
11. In the event of a default, termination of this Agreement, or if any
unforeseen event causes a cessation of operation for 60 (sixty) days or
more, then in such event of cessation all equipment, support building,
machinery, nuts, bolts, office supplies and equipment, reports, permits, or
more particularly any thing acquired by EMTEC during its employment with
ATLANTIC that ATLANTIC has reimbursed EMTEC for, will automatically, on the
61 day after cessation of operation, or sooner if agreed to, become the
sole and absolute property of ATLANTIC. However, if the cessation of
operations is due to an act of God, then ATLANTIC will have the sole right
to determine whether this Agreement is in default. If ATLANTIC does declare
a default then it must do so in writing to EMTEC stating its declaration of
default.
EXHIBIT 10.3
<PAGE>
12. ATLANTIC will have the right to examine and EMTEC will provide during
regular business hours, all books, records, maps, assays, reports,
engineering or otherwise or anything else which the personnel of Atlantic
wish to inspect, and further shall be allowed to make copies of any
information that is requested. Failure to do so will result in the
termination of this Agreement.
13. EMTEC will allow representative of ATLANTIC free and unhindered access to
all operations under the management of EMTEC or its associates. EMTEC will
allow and ATLANTIC will have the right to have a representative at the
refinery 24 hours a day for added security. The ATLANTIC representative
will have full access to all refining assays, books, records, and all
mining areas. The ATLANTIC representative will request from time to time
control assays to be performed and other tests and means by which to
determine the accuracy of the recovery of the precious metals.
14. EMTEC will turn over all precious metals to the ATLANTIC representative
daily and the ATLANTIC representative will deliver to EMTEC a receipt for
the precious metals received.
15. In the event of a default under this Agreement ATLANTIC will deliver to
EMTEC a written statement of default by certified United States Mail. EMTEC
will have up to 30 days to cure said default. If in the event EMTEC does
not cure said default within the 30-day time period than this Agreement
will be in default and the remedies listed in Section 10- shall e
initiated. In the event of an uncured default EMTEC is to vacate all
premises without protest.
15. NOTICES: Any notices, communication, request, approval or consent that may
be given or that is required to be given under the terms of this Agreement
shall be in writing, and shall be sent certified mail, return receipt
requested or by overnight courier, to the address for each party as
follows:
TO ATLANTIC: Steven B. Mortensen, Trustee, 4750 Kelso Creek Road, Weldon,
CO 92383
TO EMTEC: William M. Moreland, CEO, 4750 Kelso Creek Road, Weldon, CA 93283
16. GOVERNING LAW: This Agreement shall be governed in its enforcement
construction and interpretation by the laws of State of Nevada.
17. INVALIDITY OF PROVISIONS: The unenforceability, for any reason, of any
term, condition, covenant or provision of this agreement shall neither
limit nor impair the operation, enforceability or validity of any other
terms, conditions, provisions or covenants of the Agreement so long as the
remaining provisions still fulfill the original intent of the parties.
18. CAPTIONS: The captions of this Agreement are for convenience and reference
only and in no way define, describe, extent or limit the scope or intent of
this agreement or the intent of any provisions in it.
19. ENTIRE AGREEMENT: This Agreement constitutes the entire agreement of the
parties and may not be amended or modified except in a writing signed by
both parties. All other agreements, drafts, notes, tapes, whether verbal or
written, shall have no force or effect on this Agreement. All prior
EXHIBIT 10.3
<PAGE>
understanding and agreements between the parties are merged in this
Agreement, which alone fully and completely expresses their understanding.
20. Successors: This Agreement shall be binding on and inure to the benefit of
the parties and their respective successors, assigned and personal
representatives.
21. Survival of Representations, Warranties, Et Cetera: The representations,
warranties, covenants, and agreements of the parties contained herein shall
survive this Agreement.
IN WITNESS WHEREOF, the parties have executed this Operating Agreement on the
date first above stated.
ATLANTIC PACIFIC TRUST EMTEC, INC.
/s/ Steven B. Mortensen /s/ William M. Moreland
- ----------------------- ------------------------
Steven B. Mortensen, William M. Moreland
Trustee in Trust of CEO of EMTEC, INC.
Atlantic Pacific Trust
EXHIBIT 10.3
Exhibit 10.4
ASSIGNMENT OF ASSETS
This Assignment of Assets is entered into and is made by and becomes
effective this 25th day of October, 1995, by Atlantic Pacific Trust whose
address is 4750 Kelso Creek Road, City Of Weldon, County of Kern, State of
California, 93283, United States of America, hereinafter referred to as
"ATLANTIC", which does hereby and herewith assign eight (8) mineral claims (See
Exhibit ",V attached hereto and made a part hereof by reference) with Proven
Gold Ore Reserves containing 435,000 ounces of gold valued at $165,000,000.00
U.S. Dollars (value based on $380 an ounce gold price) (See Exhibit "B" attached
hereto and made a part hereof by reference);
to wit;
Exhibit "A" attached hereto and made a part hereof by reference, (Exhibit "A"
includes eight (8) mineral claims)
to;
Benjamin C. Rice, Attorney at Law
2645 North Cole Road, Suite D
Boise, Idaho 83704
Tel/Fax 208-323-1401,
hereinafter referred to as "TRUSTEE";
to be held in trust under the following terms and conditions:
1. Said Claims will be held by TRUSTEE for a term of ten (10) years or until
all obligations against said claims, i.e., Gold Notes or Gold Ore Contracts,
are fully satisfied by ATLANTIC, and;
2. ATLANTIC will deliver to TRUSTEE, when issued, a copy of all Gold Notes and
Gold Ore Contracts as evidence of indentures against said claims held by
TRUSTEE. Total indebtedness will not exceed $60,000,000 U.S. Dollars. (Sixty
Million U.S. Dollars), and;
3. TRUSTEE shall allow ATLANTIC to remove and process gold ore from said claims
for the delivery and payment of indentures incurred by ATLANTIC against said
claims;
A. ATLANTIC may remove additional gold ore to cover expenses only, and;
B. ATLANTIC is not to remove any gold ore for any other purposes than stated
above, and;
ASSIGNMENT OF ATLANTIC PACIFIC TRUST ASSETS TO TRUSTEE BENJAMIN C. RICE - Page
1 of 2
Exhibit 10.4
<PAGE>
MEETING OF THE BOARD OF TRUSTEES AND BENEFICIARIES
OF
ATLANTIC PACIFIC TRUST
The undersigned, on this 20th day of October, 1995, being all of the Trustees
of Atlantic Pacific (the "Trust"), hereby waives notice of the time and place of
the meeting of the Board of Trustees and hereby consents to and takes the
following actions by their unanimous written consent. In attendance were William
M. Moreland and Steven B. Mortensen representing 100% of the Beneficiaries and
1001% of the Trustees.
WHEREAS, the Trust desires to sell Gold Notes and Gold Ore Contracts
through its contract employee broker Senator Securities,. and;
WHEREAS, Atlantic Pacific Trust has agreed to allow Senator
Securities to sell Gold Ore Contract and Gold Notes backed by the
assets of Atlantic Pacific Trust, said assets being the eight mineral
claims in Kern County California, and;
WHEREAS, Senator Securities, Inc., to collateralize said Gold Notes
and Gold Ore Contracts requests that Atlantic Pacific Trust to have
said assets held in trust, by an Attorney to secure and collateralize
said Gold Notes and Gold Ore Contracts, the Trustees of Atlantic
Pacific Trust to satisfy the collateral requirements of Senator
Securities does hereby resolve the following:
NOW THEREFORE,
"IT IS RESOLVED, that Atlantic Pacific Trust enter into an
Assignment of Assets agreement that will become effective the 25th
day of October 1995. Atlantic Pacific Trust, whose address is 4750
Kelso Creek Road, City of Weldon, County of Kern, State of
California, 93283, United States of America, hereinafter referred
to as "ATLANTIC", will thereby assign eight (8) mineral claims
containing Proven Gold Ore Reserves of 435,000 ounces of gold
valued at $165,000,000 U.S.Dollars (value based on $380 an ounce
gold price); to wit; Exhibit "A" attached hereto and made a part
hereof by reference. (Exhibit "A" includes eight (8) mineral
claims); to; Benjamin C. Rice, Attorney at Law, 2645 North Cole
Road, Suite D, Boise, Idaho 83704, Tel/Fax 208-323-1401,
hereinafter referred to as "TRUSTEE"; to be held in trust under
the following terms and conditions:
1.) Said Claims will be held by TRUSTEE for a term of ten(10)
years or until all obligations against said claims, i.e., Gold
Notes or Gold Ore Contracts, are fully satisfied by ATLANTIC, and;
2.) ATLANTIC will deliver to TRUSTEE, when issued, a copy of all
Gold Notes and Gold Ore Contracts as evidence of indentures
against said claims held by TRUSTEE. Total indebtedness will not
exceed $60,000,000 U.S. Dollars. (Sixty Million U.S.Dollars), and;
Meeting of the Board of Trustees and Beneficiaries of Atlantic Pacific Trust-
October 20, 1995 - Page 1 of 2
Exhibit 10.4
<PAGE>
3.) TRUSTEE shall allow ATLANTIC to remove and process gold ore
from said claims for the delivery and payment of indentures
incurred by ATLANTIC against said claims;
A. ATLANTIC may remove additional gold ore to cover expenses
only, and;
B. ATLANTIC is not to remove any gold ore for any other
purposes than stated above, and;
4.) If ATLANTIC defaults on any Gold Notes or Gold Ore Contracts
the TRUSTEE will without recourse from ATLANTIC initiate his
choice of the following remedies;
A. Cause the Gold Ore to be refined by any third party refiner
and then pay all indebtedness incurred by ATLANTIC, or;
B. Sell said claims to pay all indebtedness incurred by
ATLANTIC,
i. Said sale of claims may be for stock or cash or both;
The Assignment of Assents Agreement will be made in accordance
with this Trust Resolution dated October 20, 1995, which
grants full powers to the Trustees of Atlantic Pacific, Trust,
William M. Moreland and Steven B. Mortensen, to bind
ATLANTIC's assets as described above."
Dated October 20, 1995 /s/ William M. Moreland
------------------------------------------------------
William M. Moreland, Trustee of Atlantic Pacific Trust
(Seal)
/s/ Steven B. Mortensen
------------------------------------------------------
Steven B. Mortensen, Trustee of Atlantic Pacific Trust
Meeting of the Board of Trustees and Beneficiaries of Atlantic Pacific Trust-
October 20, 1995 - Page 2 of 2
Exhibit 10.4
<PAGE>
RICE LAW OFF ICE
Benjamin C. Rice
Attorney At Law
2645 N. Cole Road - Suite D
Boise, Idaho 93704
Tel/Fax: (208) 323-1401
October 25, 1995
William M. Moreland, Trustee
Steven B. Mortensen, Trustee
Atlantic Pacific Trust
4750 Kelso Creek Road
Weldon, California, 93283, U.S.A.
Re: ACCEPTANCE AS TRUSTEE AND ASSIGNMENT OF ASSETS
To The Trustees of Atlantic Pacific Trust:
I, Benjamin C. Rice, acting as a fiduciary Trustee do hereby and herewith accept
the assignment of assets from Atlantic Pacific Trust this 25th day of October,
1995.
As Trustee I will hold In Trust the eight (8) mineral claims containing 435,000
ounces of gold within Proven Gold Ore Reserves valued at $165,000,000
U.S.Dollars until all Gold Notes and Gold Ore Contracts are satisfied by
Atlantic Pacific Trust.
In the event I am notified of a default I will cause the gold ore to be mined
and refined or I will sell said eight (8) mineral claims to retire and satisfy
Atlantic Pacific Trust's incurred indebtedness against said assets.
Dated: October 25, 1995
Accepted By:
/s/ Benjamin Rice
- ---------------------------------------------------
Benjamin Rice, Attorney At Law and
as Trustee in Trust of the Eight Mineral Claims
Exhibit 10.4
<PAGE>
4. If ATLANTIC defaults on any Gold Notes or Gold Ore Contracts the TRUSTEE
will without recourse from ATLANTIC initiate his choice of the following
remedies;
A. Cause the Gold Ore to be refined by any third party refiner and
then pay all indebtedness incurred by ATLANTIC, or;
B. Sell said claims and pay all indebtedness incurred by ATLANTIC,
i. Said sale of claims may be for stock or cash or both;
The above Assignment of Assets is made in accordance with a Trust Resolution
date October 20, 1995, granting full powers to the undersigned Trustees to bind
the assets of Atlantic Pacific Trust as defined above.
ATLANTIC PACIFIC TRUST ATLANTIC PACIFIC TRUST
/s/ William M. Moreland /s/ Steven B. Mortensen
- ------------------------------------- ----------------------------------
Approved by: Approved by:
William M. Moreland, Trustee in Trust Steven B. Mortensen, Trustee in Trust
BENJAMIN C. RICE, TRUSTEE (seal)
/s/ Benjamin C. Rice
- ----------------------------------
Trusteeship accepted by:
Benjamin C. Rice, Attorney at Law
ASSIGNMENT OF ATLANTIC PACIFIC TRUST ASSETS TO TRUSTEE BENJAMIN C. RICE-
Page 2 of 2
Exhibit 10.4
<PAGE>
EXHIBIT "A"
to
the Assignment of Assets agreement
dated October 25, 1995,
assigned by
Atlantic Pacific Trust
The following eight (8) mineral claim comprises a group of contiguous claims in
the County of Kern, State of California, U.S.A. and are assigned by Atlantic
Pacific Trust as defined in the attached Assignment of Assets agreement, to wit;
CLAIM Section/Township/Range CAMC Kern County
NAME Mount Diablo Base No Recording Date
Meridian No.
- ---------------------- ------------------------ ------ ------ ------
Evening Star Mine No.1 Sec 17,T28S,R34E.M.D.B.M 263942 130246 9-1-94
Evening Star Mine No.2 Sec 17,T28S.R34E,M.D.B.M 263943 130247 9-1-94
Evening Star Mine No.3 Sec 17,T28S,R34E,M.D.B.M 263944 130248 9-1-94
Evening Star Mine No.4 Sec 17,T28S,R34E,M.D.B.M 263945 130249 9-1-94
Evening Star Mine No.5 Sec 17,T28S,R34E,M.D.B.M 263946 130250 9-1-94
Evening Star Mine No.6 Sec 17,T28S,R34E,M.D.B.M 263947 130251 9-1-94
Evening Star Mine No.7 Sec 17,T28S,R34E,M.D.B.M 263948 130252 9-1-94
Evening Star Mine No.8 Sec 17,T28S,R34E,M.D.B.M 263949 130253 9-1-94
The undersigned hereby testifies that on July 8, 1995 all monuments required by
law were in place and all notices required by law were posted upon the above
listed claims, and at said date each corner monument bore or contained markings
sufficient to appropriately designate the corner of the claim to which it
pertained and the name of the claim.
We, the Trustees of Atlantic Pacific Trust, hereby certify under penalty of
perjury under the laws of the State of California that the foregoing statements
are true and correct.
Date: October 25, 1995
/s/ William M. Moreland /s/ Steven B. Mortensen
- ------------------------------------- -------------------------------------
Steven B. Mortensen, Trustee in Trust William M. Moreland, Trustee in Trust
Atlantic Pacific Trust Atlantic Pacific Trust
Exhibit 10.4
<PAGE>
PRECIOUS METALS
EXPLORATION
- --------------------------------------------------------------------------------
P.O. BOX 5251 GEOLOGICAL CONSULTANTS
ELKO, NEVADA 89802 (702) 753-9447
William M. Moreland
Trustee in Trust
of Atlantic Pacific Trust
4750 Kelso Creek Road
Weldon, CA 93283 August 22, 1995
Dear Mr. Moreland,
As per your request, I am summarizing our findings reported in the geological
report of December 9, 1989. That report outlines the proven and probable
reserves of the Evening Star Mine Group.
Proven Gold Ore Reserves
- ------------------------
Gold ore in stockpile
outside the Evening Star mine portal;
30,000 tons of blended ore with average
grade 1.50 ounces of gold per ton 45,000 ounces of gold
Gold ore blocked out in place at the Evening
Star mine;
260,000 tons of blended ore with average
grade 1.50 ounces of gold per ton 390,000 ounces of gold
Total Proven gold ore reserves of
290,000 tons;
Total contained ounces of gold
within proven reserves 435,000 ounces of gold
Estimated Gross Value of the Proven gold
ore reserves (Based on a ten year
average gold price reported by Merrill
Lynch) At $380.00 per ounce of gold $165,000,000 U.S.
Probable Gold Reserves
- ----------------------
Total estimated Probable gold reserves
of the Evening Star group; 1,600,000
tons of gold ore containing an average
grade of 1.4375 ounces of gold per ton
of ore 2,300,000 ounces of gold
Exhibit 10.4
<PAGE>
Estimated Gross Value of the Probable
gold ore reserves (Based on a ten year
average gold price reported by Merrill
Lynch) At $380.00 per ounce of gold $874,000,000 U.S.
Total ounces of gold contained within
the Proven and Probable gold ore reserves of
the Evening Star Mine Group 2,735,000 ounces of gold
Total Gross Value of the Proven and
Probable gold ore reserves (Based on a
ten year average gold price reported by
Merrill Lynch) At $380.00 per ounce of
gold $1,039,300,000 U.S.
The gold content of the ores sampled by us was reconfirmed in the report on
"The Reconnaissance Investigation of the Evening Star Mine", prepared by The
Institute of Mineralogy, Geochemistry, and Crystal Chemistry of Rare Elements;
Moscow, Russia, 1994.
This report stated "The deposit is represented by at least three promising
ore types, formed during processes of repeated recirculation of ore-forming
fluids. It was demonstrated by the previous investigations and proved by ours,
that each ore type has high grade "Bonanzas" containing no less than 1.50 ounces
per ton of gold."
I hereby Certify that the above findings are true and correct to the best
of my Knowledge.
Certified this 22nd day of August, 1995.
Precious Metals Exploration
/s/ Christopher L. Pratt
--------------------------------
Christopher L. Pratt
Geologist and President
State of Nevada }
} ss.
County of Elko }
IN WITNESS WHEREOF, I have hereunto set my hand and official seal on this, the
22 day of August, 1995.
/s/ Joan E. Ross
JOAN E. ROSS ------------------------
Notary Public notary Public in and for
State of Nevada said County and State
Elko County Nevada
My appointment expires February 1, 1997
My commission expires: 2/1/97 (SEAL)
Exhibit 10.4
<PAGE>
DEFINITIONS OF ORE CLASSIFICATIONS
PROVEN ORE RESERVES:
PROVEN ore reserves are measured blocked out ore. The blocking out of
PROVEN reserves are determined from exposures in outcroppings, cuts, pits,
shafts, mine workings, drill holes or otherwise where measurements are so
closely spaced that the computed tonnage and grades of ore will have a high
degree of accuracy.
PROBABLE ORE RESERVES:
PROBABLE ore reserves are computed upon observable data which is projected
for a reasonable distance on the basis of geological evidence and/or drill hole
data. The tonnage and grade of ore computed is assured but not absolute.
POSSIBLE ORE RESERVES:
POSSIBLE ore reserves are computed largely on a broad knowledge of the
geological environment and the characteristics of the mineralization. Few
measurements are available. The computed tonnage and grade of ore is a
reasonable estimate rather than a quantitative amount.
Exhibit 10.4
<PAGE>
Resume of: P.O. Box 5251
Christopher L. Pratt Elko, Nevada 89802
August 21, 1995 Phone: (702) 753-9447
Experience:
June 1992 - Present Western State Minerals Corp.
Senior Exploration Geologist at the Northumberland mine in central Nevada.
Western States Minerals Corp. owns the Northumberland mine, a large,
structurally controlled, sediment hosted gold deposit with over 3 million ounce
resource base. Responsibilities included directing a successful exploration
program over 100 square mile claim block for gold mineralization, and
supervising six field geologists. Developed the structural model for district,
and designed and permitted drilling programs. Have also assisted in preparing
computer database for the project. Was transferred to the Elko, Nevada office
after two years at Northumberland.
Senior Exploration Geologist at the Elko, Nevada office. Responsibilities
include the 26 Ranch Project, a privately owned ranch that extends from Battle
Mountain to north of Elko, and covers a portion of the Carlin Trend. The Carlin
Trend is the largest gold producing province in North America, with proven
reserves of over 100 million ounces of gold. Have developed two targets that are
currently being evaluated. Have prepared computer databases for several
exploration projects.
May 1990 - June 1992 Consolidated Nevada Goldfields, Inc.
Project Geologist at the Aurora mining district in western Nevada.
Consolidated Nevada Goldfields, Inc. has developed a small gold and silver mine
in the district. The mine consists of two underground operations developed along
veins, and four small open pits on veins and related stockwork mineralization.
Was directly responsible for planning, development, and grade control of the
underground portion of the mine. As project geologist, was also responsible for
geologic reconnaissance within the district, and supervising portions of
developmental drilling and assessment of new mineral resources within the
district. An additional two years reserves for the underground mining operations
and five years of open pit reserves were the direct result of this work, with
additional indicated economic gold mineralization that is still being evaluated.
Have used Surpac mine software extensively on the project to model deposits.
January 1983 - May 1990 Precious Metals Exploration, Inc.
Consulting project geologist working with several clients on gold
properties, and directing their respective programs. Have been directly Involved
in managing precious metal exploration and acquisition programs as well as
developing budgets and cost projections. Developed geologic targets for the
clients, and directed staff drilling, mining, and sampling on a variety of
properties. Have worked extensively in central and western Nevada as well as
other parts of the western United States, Canada and northern Mexico.
Exhibit 10.4
<PAGE>
April 1981 - January 1983 Nassau Limited
Senior Geologist responsible for delineating gold targets in the western
United States and directing the development of the properties. Involved in
initial geologic evaluation, budgets and engineering aspects of developing the
properties. This includes site preparation and directing drilling programs.
Prepared detailed reports on the various projects.
July 1980 - March 1981 Seremin, Inc.
Geologist responsible for exploration program in the rugged Calico
mountains of San Bernardino County, California. After completion of mapping the
district, managed a six month drilling program on properties for silver targets
similar to several silver deposits already known in the area.
May, 1979 - June 1980 Houston International Minerals, Inc.
Worked at the Borealis mine supervising the exploration and early
development of the mine. Organized a detailed drilling program, and was
responsible for developing ore reserves at the mine. Developed groundwater
resources for the mine. Coordinated and allocated heavy equipment use at the
mine. Was involved in an extensive rock and soil geochemical sampling program.
Negotiated contracts with suppliers and contractors, as well as prepared project
budgets. The Borealis mine has currently produced over 600,000 ounces of gold.
Education:
1975 - 1976 Hastings College; Hastings, Nebraska
1976 - 1979 University of Nebraska; Lincoln, Nebraska
Degree:
Bachelor of Science in Geology
Expenses:
Earned approximately 50%
Have strong background in geochemistry, remote sensing, hydrology
geophysics, in addition to background in business and economics. Have a GPA of
3.6.
Affiliations: Member, Society of Mining Engineers, A.I.M.E. Member,
Society of Economic Geologists
Personal Data: Height: 5" 10" Weight: 185 lbs.
Family: wife, 4 children Health: Good
Birthdate: March 21, 1957
<PAGE>
ALLIANCE APPRAISAL COMPANY
CALIFORNIA TRIANGLE BUILDING
5201 CALIFORNIA AVENUE, SUITE 320
BAKERSFIELD, CALIFORNIA 93309
(800) 658-6951
THARRELL D. MING, PRESIDENT J.H. MACNAIR
ARA, SRA MAI, SRPA, ARA
CHERYL A. LOVAN L.E. RICHARD, ARA
MICHAEL WILDHALM ROBERT HUGIE
May 16, 1994
Mr. Bill Ashton
Touchstone Promotions
11230 - 100 Avenue
Edmonton, Alberta, Canada TSK 0119
Dear Mr. Ashton:
In response to your request, I have inspected 165.28 acres of gold mine
properties identified as Evening Star Mine Nos. 1 through 8, located in Kern
County, hereinafter described, for the purpose of providing an estimate of
market value, as of April 20, 1994.
Market value as herein used is defined as the most probable price in terms of
money which the property should bring in a competitive and open market under all
conditions requisite to a fair sale, buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus.
As a result of the investigation, it is my opinion that the market value of the
subject property, assuming a marketing period of two years, as of April 20,
1994, is the sum of FIFTY-SIX MILLION THREE HUNDRED EIGHTY-THREE THOUSAND
DOLLARS ($56,383,000), subject to construction of improvements in a workmanlike
manner and operation of the Mining Plan as proposed.
Your attention is invited to the attached appraisal report and addenda material
from which, in part, the above valuations were derived.
Very truly yours,
ALLIANCE APPRAISAL COMPANY
/s/ J.H. Macnair
J.H. Macnair, MAI
Attachments
P.0. BOX 632, BAKERSFIELD, CA 93302-0632
PHONE (805) 325-8655, FAX (805) 325-1357
Exhibit 10.4
<PAGE>
(Specimen)
ATLANTIC PACIFIC TRUST
9% INVESTMENT CERTIFICATE
DATE ISSUED MATURITY DATE
xxxxxxxxxxxx xxxxxxxxxxxx
CERTIFICATE OWNER REGISTRATION
NUMBER
BEARER
PRINCIPAL AMOUNT: _________________________________________D-MARK
Atlantic Pacific Trust (THE "ISSUER"), a trust duly existing under the laws of
the State of Nevada, United States of America, for value received, hereby
promises to pay the bearer (the "BEARER") of this investment Certificate ("the
CERTIFICATE"), (BEARER shall mean the holder of this Certificate) on the
Maturity Date specified above, the Principal Amount specified above plus nine
percent (9%) interest per year on said Principal Amount until the Maturity Date
specified above. Upon maturity of this Certificate, the Principal Amount plus
any interest shall be due and payable to BEARER, and upon presentation of this
Certificate to ISSUER, payment to BEARER shall be made and ISSUER shall
immediately issue to BEARER certified funds in lawful money of the Republic of
Germany equal to the Principal Amount plus any interest due, or immediately wire
transfer said funds to an account designated by BEARER.
REFERENCE IS HEREBY MADE TO THE FURTHER-PROVISIONS SET FORTH ON THE REVERSE
HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
IF SET FORTH HERE.
It is hereby certified that all of the things, conditions and acts required to
exist, to have happened or to have been performed precedent to and in the
issuance of this Certificate do exist, have happened or have been performed in
due and regular time, form and manner as required by the laws of the Republic of
Germany.
This certificate shall not be entitled to any benefit under the indenture or
become valid or obligatory for any purpose until the "Trustee's Certificate of
Authentication" hereon endorsed shall have been manually signed by the Trustee
of Atlantic Trust and that good funds have been received by ISSUER.
IN WITNESS WHEREOF, Atlantic Pacific Trust has caused this Certificate to be
executed by its Trustee and its seal to be manually produced hereon and attested
to by the signatures of its trustees.
TRUSTEE'S CERTIFICATE TRUSTEE'S CERTIFICATE
OF AUTHENTICATION OF AUTHENTICATION
Attest: Atlantic Pacific Trust Attest: Atlantic Pacific Trust
Dated: as Trustee Dated: as Trustee
By: By:
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
Exhibit 10.4
<PAGE>
(Reverse)
ATLANTIC PACIFIC TRUST
9% INVESTMENT CERTIFICATE
This Certificate is based on a duly authorized issue of Atlantic Pacific
Trust Industry Revenue Bonds, (the "BONDS") of an aggregate principal amount of
Thirty-One Million Two-Hundred Fifty Thousand U.S. Dollars ($31,250,000), all of
like tenor and date (except for such variation, if any, as may be required to
designate varying certificate numbers, registration numbers, maturities,
discount rates or redemption provisions) and all issued pursuant to the
provisions of a Trust Resolution dated October 20, 1995, and the INVESTMENT
CERTIFICATE's and BONDS are issued and are subject to all provisions of the
Private Placement Memorandum.
References are hereby made to the Trust Resolution and Private Placement
Memorandum (copies of which are on file with Senator Securities Corporation,
Dusseldorf, Germany).
The BONDS have been issued by ISSUER to provide funds to be used by the
Trust in connection with exploration, development and production of precious
metals from properties owned or controlled by Atlantic Pacific Trust, (the
"ISSUER") for other business See ventures and for the funding of a reserve
account, as well as payment of the costs of issuing the BONDS and the INVESTMENT
CERTIFICATE.
Notice of redemption must be mailed by the holder of this Certificate not
less than thirty (30) days nor more than sixty (60) days prior to the Maturity
Date, but neither failure to mail or receive such notice nor any defect in the
notice so mailed shall affect the sufficiency of the proceedings for redemption.
The BONDS are issuable only as fully registered Bonds, without coupons, in
denominations of $12,500 U.S. Dollars and shall not be issued in any multiples
thereof.
This Certificate is issuable at a minimum of 5,000 DM, and may be increased
by denominations of 1,000 DM.
The ISSUER may treat the holder of this Certificate as the absolute owner
hereof for all purposes and the ISSUER shall not be affected by any notice to
the contrary.
LEGAL OPINION
I hereby certify that the following is a correct copy of the signed legal
opinion of Benjamin C. Rice, Attorney at Law, addressed to Atlantic Pacific
Trust and on file in the office of the Trust.
Attest
/s/ Steven B. Mortensen
Trustee
Exhibit 10.4
<PAGE>
(Reverse Cont'd)
Benjamin C. Rice
Attorney at Law
Law Office
2645 N. Cole Road - Suite D
Re: $31,250,000 Atlantic Pacific Trust
Industrial Revenue Bond
I have acted as bond counsel to the Trust in connection with the issuance
by the Trust of $31,250,000 aggregate principal amount pursuant to the Trust
resolution dated October 20, 1995. I have examined the law and such certified
proceedings and other certificates necessary to render this opinion.
As to questions of fact material to my opinion, I have relied upon
representation of the Trust contained in the Trust Resolution and Private
Placement Memorandum furnished to me without undertaking to verify such facts by
independent investigation. Based upon the foregoing, I am of the opinion, under
existing law, as follows:
1. The Trust (ISSUER) is duly created and validly existing as a trust under
the Laws of the State of Nevada, United States of America, with Trustee's having
full powers to enter into the indenture, perform the agreements on its part
contained therein and issue the BONDS.
2. The indenture has been duly approved by the Trust and constitutes a
valid and binding obligation of the Trust enforceable upon the Trust.
3. Pursuant to the Law, the indenture creates a valid lien on the assets
pledged by the Trust for the security of the Bonds on a parity with other bonds
issued or to be issued by the Trust, subject to no prior lien granted under the
law.
4. The BONDS have been duly authorized by the Trust and are valid and
binding special obligations of the trust, payable from stated assets.
5. Capital gains on the BONDS may be taxable by various governmental
agencies. It is the responsibility of the bond holder to determine his or her
individual tax liabilities.
The rights of the owners of the Bonds and the enforceability of the Bonds
and the indenture may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights heretofore or
hereafter enacted and may also be subject to the exercise of judicial discretion
in appropriate cases.
Respectfully submitted,
/s/ Benjamin C. Rice,
Attorney at Law
Exhibit 10.4
<PAGE>
(Specimen)
NON-NEGOTIABLE
REGISTRATION NUMBER ATLANTIC PACIFIC TRUST NUMBER
INDUSTRIAL REVENUE BOND
Registration Number Number
DATE ISSUED: MATURITY DATE:
XXXXXXXXXXXXX XXXXXXXXXXXXXXXXX
Atlantic Pacific Trust (the "ISSUER"), a trust duly existing under the laws of
the State of Nevada, United States of America, for value received, hereby
promises to pay to the bearer of this Bond (the "BEARER"), (BEARER shall mean
the holder of this BOND instrument) on the Maturity Date specified above, the
Principal Amount specified above in lawful money of the United States of America
or if BEARER so chooses, BEARER shall receive instead, One Kilo of
Internationally Hallmarked 9999 Fine Gold Bullion. This Bond is a single premium
Bond and shall not bear interest at any time. Upon presentation of this Bond to
ISSUER, BEARER shall immediately elect to receive from ISSUER either; a.) cash
in the Principal Amount as specified above, or, b.) One Kilo of 9999 Fine Gold
Bullion (32.15 Troy Ounces). Upon presentation and the election of BEARER to
receive cash in the Principal Amount, Issuer shall immediately issue to BEARER
certified funds or immediately wire transfer funds to an account designated by
BEARER, however, if BEARER elects payment in gold then ISSUER shall immediately
deliver to BEARER One Kilo of 9999 Fine Gold Bullion. Purchaser is buying this
Bond for his own account.
REVERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS SET FORTH ON THE REVERSE SIDE
HEREOF, WHICH FURTHER PROVISIONS SHALL, FOR ALL PURPOSES, HAVE THE SAME EFFECT
AS IF SET FORTH HERE.
It is hereby Certified that all of the things, conditions and acts required to
exist, to have happened or to have been performed precedent to and in the
issuance of this Bond to exist have happened or have been performed in due and
regular time, form and manner as required by the laws of Germany, and is not in
excess of the amount of Bonds permitted to be issued under the indenture. This
Bond shall not be entitled to any benefit under the indenture or become valid or
obligatory for any purpose until the "Trustee's Certificate of Authentication"
hereon endorsed shall have been manually signed by the Trustees of Atlantic
Pacific Trust and that good funds have been received by ISSUER.
IN WITNESS WHEREOF, Atlantic Pacific Trust has caused this Bond to be executed
by its Trustees and its seal to be manually produced hereon and attested to by
the signatures of its Trustees.
Exhibit 10.4
<PAGE>
TRUSTEE'S CERTIFICATE OF TRUSTEE'S CERTIFICATE OF
AUTHENTICATION AUTHENTICATION
Dated: Attest: Atlantic Dated: Attest: Atlantic
Pacific Trust Pacific Trust
as Trustee as Trustee
By: By:
AUTHORIZED SIGNATORY AUTHORIZED SIGNATORY
(Seal)
Exhibit 10.4
<PAGE>
(Reverse)
ATLANTIC PACIFIC TRUST
INDUSTRIAL REVENUE BOND
This Bond is one of a duly authorized issue of bonds of Atlantic Pacific
Trust designated "Atlantic Pacific Trust, Industrial Revenue Bond", (the
"BONDS") of an aggregate principal amount of Thirty-One Million Two-Hundred
Fifty Thousand U.S. Dollars ($31,250,000), all of like tenor and date (except
for such variation, if any, as may be required to designate varying certificate
numbers, registration numbers, maturities, discount rates of redemption
provisions) and all issued pursuant to the provisions of a Trust Resolution
dated October 20, 1995, and the BONDS are issued and are subject to all
provisions of the Private Placement Memorandum.
References are hereby made to the Trust Resolution and Private Placement
Memorandum (copies of which are on file with Senator Securities Corporation,
Dusseldorf, Germany).
The BONDS have been issued by ISSUER to provide funds to be used by the
Trust in connection with exploration, development and production of precious
metals from properties owned or controlled by Atlantic Pacific Trust, (the
"ISSUER") for other business ventures and for the funding of a reserve account,
as well as payment of the costs of issuing the BONDS.
Notice of redemption must be mailed by the Bond holder to ISSUER not less
than thirty (30) days nor more than sixty (60) days prior to the redemption
date, but neither failure to mail or receive such notice nor any defect in the
notice so mailed shall affect the sufficiency of the proceedings for redemption.
The BONDS are issuable only as fully registered Bonds without coupons, in
denominations of $12,500 U.S. Dollars and shall not be issued in any multiples
thereof.
The ISSUER and Trustee's may treat the holder of this Bond as the absolute
owner hereof for all purposes and the ISSUER shall not be affected by any notice
to the contrary.
LEGAL OPINION
I hereby certify that the following is a correct copy of the signed legal
opinion of Benjamin C. Rice, Attorney at Law, addressed to Atlantic Pacific
Trust and on file in the office of the Trust.
Attest
/s/ Steven B. Mortensen
Trustee
Benjamin C. Rice
Attorney at Law
Law Office
2645 N. Cole Road - Suite D
Re: $31,250,000 Atlantic Pacific Trust
Industrial Revenue Bond
I have acted as bond counsel to the Trust in connection with the issuance
by the Trust of $31,250,000 aggregate principal amount pursuant to the Trust
resolution dated October 20, 1995. I have examined the law and such certified
proceedings and other certificates necessary to render this opinion.
Exhibit 10.4
<PAGE>
As to questions of fact material to my opinion, I have relied upon
representation of the Trust contained in the Trust Resolution and Private
Placement Memorandum furnished to me without undertaking to verify such facts by
independent investigation. Based upon the foregoing, I am of the opinion, under
existing law, as follows:
1. The Trust (ISSUER) is duly created and validly existing as a trust under
the Laws of the State of Nevada, United States of America, with Trustee's having
full powers to enter into the indenture, perform the agreements on its part
contained therein and issue the BONDS.
2. The indenture has been duly approved by the Trust and constitutes a
valid and binding obligation of the Trust enforceable upon the Trust.
3. Pursuant to the Law, the indenture creates a valid lien on the assets
pledged by the Trust for the security of the Bonds on a parity with other bonds
issued or to be issued by the Trust, subject to no prior lien granted under the
law.
4. The BONDS have been duly authorized by the Trust and are valid and
binding special obligations of the trust, payable from stated assets.
5. Capital gains on the BONDS may be taxable by various
governmental agencies. It is the responsibility of the bond
holder to determine his or her individual tax liabilities.
The rights of the owners of the Bonds and the enforceability of the Bonds
and the indenture may be subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights heretofore or
hereafter enacted and may also be subject to the exercise of judicial discretion
in appropriate cases.
Respectfully submitted,
/s/ Benjamin C. Rice,
Attorney at Law
Exhibit 10.4
Exhibit 10.5
BILL OF SALE
THIS BILL OF SALE is made this 15th day of July, 1995, and is by and
between Joyce J. Pellett, as Trustee in Trust of SEQUOIA TRUST, a Nevada Trust
("Grantor"), and Steven B. Mortensen, as Trustee in Trust of ATLANTIC PACIFIC
TRUST, a Nevada Trust ("Grantee"):
W I T N E S S E T H:
Grantor does hereby assign, transfer, grant, bargain, sell and by this
presents does convey and confirm unto Grantee and does forever set over
unto the Grantee all of Grantor's right, title and interest in and to the
following goods and chattels as fully described in Exhibit "A", attached
hereto and made a part hereof by reference, and;
Grantee does hereby agree to deliver to Grantor good and valuable
consideration, in the form of Eighteen Thousand One Hundred Eighty Four
(18,184) Units, $50/Unit, of Beneficial Interest of Atlantic Pacific Trust,
a Nevada Trust, to be delivered to Grantor upon the execution of this Bills
of Sale, and;
Grantee does hereby acknowledge that all property described in Exhibit "A",
herein is sold in an "as is where is" condition, and;
Grantor does hereby represent, warrant, covenant to and with said Grantee,
and successors and assigns of Grantee, as follows:
(a) That Grantor is the owner of the said described property as described
in Exhibit "A", attached hereto and made a part hereof by reference;
(b) That the Grantor has the full, exclusive and unrestricted right to
sell the said described property described in Exhibit "A", herein and
all rights associated therewith;
(c) That Grantor has not previously sold, conveyed, transferred or
otherwise disposed of any interest in or rights to said described
property;
(d) That there exists no liens, claims or encumbrances of any kind or
nature created by Grantor against the said described property, nor has
Grantor entered into any contract to create any such liens, claims or
encumbrances.
IN WITNESS WHEREOF, the Grantor and Grantee have executed this instrument
the day and year first above written.
Grantor: Grantee:
SEQUOIA TRUST ATLANTIC PACIFIC TRUST
/s/ Joyce J. Pellet /s/ Steven B. Mortensen
- --------------------------- -------------------------------
Joyce J. Pellet, as Trustee Steven B. Mortensen, as Trustee
in Trust of Sequoia Trust in Trust of Atlantic Pacific Trust
Exhibit 10.5
<PAGE>
Exhibit "A"
To Bill of Sale dated July 15, 1995
Between Sequoia Trust and Atlantic Pacific Trust
WELDON RESEARCH CENTER
MACHINE & FAB SHOP
Item
No. Quantity Description Sale Value
- -------------------------------------------------------------------------------
1 1 Cadillac, Model 22336, 14" x 42" Engine lathe
w/ turret type toll post, steady rest, coolant
pump and misc tooling. S/N 91002 $9,500
2 1 Rong Fu, Model RF-20 Drilling and milling
machine, S/N 858801 incl 3" mill vice, T-slop
clamping bolt set, hold downs and misc
tooling 2,000
3 1 6" milling machine vice w/ 380 indexing 200
4 1 Lincoln Ideal Arc 250 AMP AC/DC Welder
S/N AC-618682 w/leads & stinger 600
5 1 Beldor 6" tool grinder, S/N 53905 75
6 1 4" Wilton combination beach vice 25
7 1 Rexon Model 814, 1 3/8 Hp. Pedestal Drill
Press, S/N 3524, 14" capacity 300
8 Lot 1", 1 3/8, 1 1/2, & 2" EMT elect conduit 350
9 1 Flex conduit x 8 ft. w/connections 80
10 Lot PVC conduit and fittings 300
11 10 1 1/2" dia shafting @ 20' each 150
12 1 2 1/2" dia shafting @ 12' each 40
- -------------------------------------------------------------------------
MACHINE AND FAB SHOP TOTAL $13,620
===========
Exhibit 10.5
Page 1 of 21
<PAGE>
OFFICE EQUIPMENT AND SUPPLIES
Item
No. Quantity Description Sale Value
- -------------------------------------------------------------------------------
1 1 Secretary's desk w/return, wood $100
2 1 Secretary's swivel chair 35
3 1 Brothers Correctomatic typewriter Model
CE503L, S/N H53485435 100
4 2 Casio electric calculators 50
5 2 Two drawer, lateral files, legal size 150
6 1 Executives desk, 32" x 65" 100
7 1 Executive swivel chair w/arms 124
8 1 Wood corner cabinet 40
9 1 Koehler, 6 unit helmet lamp charger 1,000
10 1 Koehler, 12 unit helmet lamp charger 1,800
11 10 Battery with lamps 1,200
12 6 Rescuer packs 500
13 1 Unimag 11 EG&G Geometrics model GB46 2,000
14 Lot Misc office supplies & desk items 250
15 1 Tecnicom EK-616PFT complete telephone
system including Rotary pak, 4 mod B-846
instruments and installation 2,000
- --------------------------------------------------------------------------------
OFFICE EQUIPMENT AND SUPPLIES TOTAL $9,449
==========
Exhibit 10.5
Page 2 of 21
<PAGE>
LAB EQUIPMENT & SUPPLIES
Item
No. Quantity Description Sale Value
- -------------------------------------------------------------------------------
1 1 Perkins Elmer/Hitachi #170-3 Atomic Absorption
Machine, S/N 68023-3 $4,500
2 1 Electro Spectragraph - Spectrex Model 7,
S/N 1701, Hitachi Camera model
CCTY S/N 5035477 and Hitachi
Video Monitor model
DGNSHI S/N 5080013 3,500
3 1 Genie Scientific Inc., air compressor
Model ESM300 AA oil-less 250
4 1 William Ainsworth & Sons, Inc. Type SCN
scale S/N 55278 w/ Steel table stand 1,500
5 1 Ohaus Model 310G Dial-a-gram Balance scale 125
6 2 Ohaus Model 2810G Balance scales 200
7 1 Swift Instrument International 30X
Microscope 300
8 1 Beckman Model 96 Universal ph Meter S/N 177484 300
9 1 Beckman Expandomatic ph meter Cat # 123506,
S/N 0600108 300
10 1 Maser Mechanics, Oxygen\Propane torch set 90
11 8 Type AA Cathode Ray lamps for Atomic
Absorption machine 1,500
12 4 Solution Standards for Atomic Absorption
Mach. 400
13 1 HBS Equipment Corp. D/C Power Supply
Model M2009, S/N 322321 1,500
14 2 Lorton Rotary Tumblers Model QT-68 75
15 1 Kress Model C100-6 Electric Furnace, S/N 8611 200
16 1 Four burner stainless steel lab stove 300
- --------------------------------------------------------------------------------
LAB EQUIPMENT & SUPPLIES Sub-TOTAL 15,040
==========
Exhibit 10.5
Page 3 of 21
<PAGE>
LAB EQUIPMENT & SUPPLIES (Continued...)
Item
No. Quantity Description Sale Value
- -------------------------------------------------------------------------------
17 1 Sunroc model 1, size 10, S/N U9414038
Drinking Fountain 50
18 1 32" x 60" metal desk 100
19 1 4 drawer metal legal size file 35
20 1 2 ft x 2 ft Vacuum table w/ 5 hp pump and
motor 1,250
21 1 36" x 72" steel cabinet 60
22 Lot Lab supplies in north-east wall cupboard 125
23 Lot Lab supplies in north-east wall cupboard 400
24 Lot Lab supplies, glassware, in south-east
wall cupboard 6,000
25 Lots Misc Lab supplies in Lab 400
26 1 32" x 12 ft. roll around work table
w/cupboards underneath 1,500
- -----------------------------------------------------------------
LAB EQUIPMENT & SUPPLIES Sub-Total $9,920
----------
Sub-Total of Page Two $9,920
Sub-Total of Page One $15,040
----------
LAB EQUIPMENT & SUPPLIES TOTAL $24,960
==========
Exhibit 10.5
Page 4 of 21
<PAGE>
SMELTING AND REFINING LAB
Item
No. Quantity Description Sale Value
- -------------------------------------------------------------------------------
1 2 Model 165 Smelting Furnaces for Size
600 crucibles $15,000
2 1 Model 150 Smelting Furnace for size
450 crucibles, w/ jib and 1/2 ton electric
hoist 7,500
3 3 Model 102 assay furnace for size 30 crucible 3,500
4 2 Vcella model 16 electric Kilns S/Ns
1743 & 1744 1,000
5 1 Two Burner lab stove 350
6 2 9" cone smelting molds (medium) 160
7 3 Roll-around all steel work tables 400
8 1 4 ft. x 6 ft. shelf steel cupboard and
contents including - testing sieves, bar,
and ingot molds, lead coils, tungsten, carbon
rods, 1 qt. Morter and Pestle, hand tools and
smelting safety equipment 4,000
9 1 Chemical work bench and contents including
Hot plate, Ohais Dial-a-gram and model
2610G balance scales, chemicals, etc. 2,000
- ------------------------------------------------------------------------
SMELTING AND REFINING LAB TOTAL $33,910
=======
Exhibit 10.5
Page 5 of 21
<PAGE>
PILOT MILL EQUIPMENT
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
1 1 Mill-Spec concentrator $1,000
- -----------------------------------------------------------------------
PILOT MILL EQUIPMENT TOTAL $1,000
=======
Exhibit 10.5
Page 6 of 21
<PAGE>
VEHICLES, TRAILERS AND MISC EQUIPMENT
Item
No. Quantity Description Sale Value
- ------------------------------------------------------------------------
1 1 1966 Ford 350, 4x4, 1 ton flat bed truck
w/duals on rear, steel bed w/steel side
racks, pental hitch, 18,000 mi. Lic#
2S90244, ID# 1FOKF38L4G2A50288 $4,000
2 1 1955 Dodge Power Wagon, 4x4, Engine
#T306-38977, fair cond. 500
3 1 Sterling 6 x 6 dump truck Model DV5150
chassis #150DDS664, fair cond. 500
4 1 Dodge Mil 2 ton 6 x 6 cab and chassis
w/2115 gal water tank, powered by a 454 cu.
inch. Chev V-8 engine, ID# G2742-8358535 500
5 1 New welding truck body for 1 1/2 ton truck 3,500
6 1 40 ft. tandem axle semi trailer ID# XP8602,
fair cond. 1,500
7 1 2 axle 32 ft. pull trailer 1,000
8 1 1969 Dodge 5 ton power wagon flat bed &
side racks, winch on front, 30,000 mi. 2,500
9 1 1969 dodge 5 ton power wagon w/ 12 ft. end
dump body, winch on front 5,000
10 1 Tandem axle 16 ft. flat bed trailer 1,000
11 1 Michigan Model 175 Loader w/Waukeshaw
engine (Diesel), S/N 175AT911114591 3,000
12 1 I-R Airtrack Drill, 450 drifter, type
GM2 Crawler S/N 19884 2,750
13 1 Cat D-e Dozer (1970) S/N 4251 Model
D4-7U40A151 w/angle dozer and DIE Hyster
winch and rope (parts) 1,500
14 1 Baker York Model UT60 (6,000) fork lift
(towable) S/N 403767 4,500
- -----------------------------------------------------------------------
VEHICLES, TRAILERS AND MISC EQUIPMENT
Page 1 Sub-Total $ 31,750
========
Exhibit 10.5
Page 7 of 21
<PAGE>
VEHICLES, TRAILERS AND MISC EQUIPMENT (Continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
15 1 GMC 552 "Mustang" S/N 510771 w/fork lift,
Model 360 "V" hydraulic hammer and Brandon
13MD backhoe 5,000
16 1 Pipe dolly (single code) for hauling pipe
into mine. ID# MM-T42 450
17 1 290 gal portable fuel tank 200
18 1 Trailer (?) (?) Light Plant, 10KW S/N 10703 500
19 1 16 ft. 5th wheel type utility three (?)
trailer, No. TR-650-155 w/ 10 ft. chassis
and load binders 4,500
20 1 Single axle 600 gal water trailer w/electric
bell & gossic pump 450
21 1 Bay City Model 18-TS0 crane on a crane
Mobile carrier model 6KTKR S/N 4059 w/50 ft.
boom and 10 ft. jib Lic# VK6643 4,500
22 1 Boom trailer for Bay City Crane 500
23 1 Fork Lift w/pneumatic tires and V-8 Ford
Engine 1,750
24 1 International TD15 Crawler w/4 in 1
bucket/dozer & 3rd valve, ROPS, new rebuilt
engine, trans & (?), S/N 1175BP6194 (parts) 5,000
25 1 4' x 6' single axle utility trailer,
S/N MM 99 175
- -----------------------------------------------------------------------
VEHICLES, TRAILERS AND MISC EQUIPMENT
Page 1 Sub-Total $ 23,025
--------
VEHICLES, TRAILERS AND MISC EQUIPMENT
Page 2 Sub-Total $ 23,025
Page 1 Sub-Total $ 31,750
--------
TOTAL $54,775
========
Exhibit 10.5
Page 8 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT
Item
No. Quantity Description Sale Value
- ---------------------------------------------------------------------
1 6 Fagergren 36 x 9" Floating Machines
S/N 214, 215, 217, 218, 219,
Unitized on common frame $10,000
2 1 Tyler Bulldog, cone crusher S/N MM22,
w/ drive pulley, skid mounted 6,500
3 1 Cyco, 2 deck screen, 48" x 120" HD,
S/N MM33 2,500
4 1 4' x 6' single axle utility trailer,
S/N MM99 175
5 1 200 Amp 24 volt "associated equipment"
Battery charger, S/N L153345 50
6 3 Waste dumpster, 48" x 48" x 48" 300
7 1 110 volt AC hot plate, lab type 50
9 1 Hydraulic power unit and gear box for
cable winch 175
10 1 5 ft die x 8 ft cone bottom stainless
steel tank 1,250
11 1 36" set of crusher rolls, frame and bull
wheels (parts only) 2,000
12 1 6 5/8" 13 bowl water well pump w/40 hp
motor 5,500
13 1 2 yard drag line bucket 1,000
14 1 Denver floatation tank - parts only 150
15 6 Electric motor starter panels in rain tight
enclosures, (3) size 2, (2) size 4,
(1) size 5. 1,200
16 1 28" 1/2 yard clam bucket 1,400
17 1 1,000 gallon propane tank 750
18 15 1/2 to 5 hp electric motor controllers in
rain tight enclosures 1,200
19 1 18" x 40 ft. rail type conveyor w/5 hp.
motor and shaft mounted gear box 1,400
- ----------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 1 Sub-Total $35,600
-------
Exhibit 10.5
Page 9 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- ---------------------------------------------------------------------
20 1 32" x 60" all metal desk 25
21 16 20 ft. lengths of 6" PVC for mine claim post 250
22 3 3,500 gallon diesel fuel tanks w/gravity
flow fueling system, concrete slab 6,000
23 1 500 gallon fuel tank, hose and nozzle
mounted on a stand 750
24 1 Set of crusher rollers, 16" x 12"
S/N MM167 3,000
25 1 200 Gallon portable fuel tank 275
26 1 35 ton "Tru-Lift" hydraulic arbor press 750
27 2 2 1/4 tone "Tru-Lift" hydraulic floor jacks 150
28 1 Hobert 300 amp AC/DC arc welder model TR-300
S/N 12RT-63907 w/leads and stinger 750
29 1 Bronco model BG-650 1/2 hp bench grinder 65
30 1 Makita portable disc cut-off saw Model 2474,
S/N 42000E 150
31 1 3/8" electric drill motor 30
32 1 1" HD G-d air impact wrench 175
33 1 Allied 1" drive socket set 21 pcs.,
1 5/8" to 3 1/8" 200
34 1 Astroline 12 ton hydraulic jack 40
35 8 Heavy Duty jack stands 80
36 1 3 reel lobster(?) 125
37 1 Makita 100MM high speed disc grinder/buffer 40
38 1 Roll-around engine stand 75
39 1 Pneumatic jack hammer 250
- ---------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 2 Sub-Total $13,180
-------
Exhibit 10.5
Page 10 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
40 1 (?) std - 26 parts washing machine 175
41 1 Portable flood light on roll-around stand 200
42 1 Portable 2 ton gantry crane assembly w/
1 ton Budget Electric chain hoist 2,500
43 1 Stomberg time card time clock & card rack 150
44 1 Automotive valve grinder 250
45 1 Westinghouse W11D water fountain S/N
WC 10334 65
46 4 Misc coffing type chain hoist 60
47 1 GE water fountain 60
48 1 Bico Pulverizer w/(?) 5 hp electric motor
S/N 847379F-2 2,000
49 1 Bico jaw crusher S/N 66808 w/3 hp electric
motor S/N 2997251 1,400
50 1 All steel work table for Bico Crusher and
pulverizer 500
51 1 Datecto platform scale, 125 lb capacity,
1/10th lb. incremental dial readout 550
52 1 Rockwell/Delta combination disc and belt
sanding machine 250
53 1 Sears Craftsman 10 drawer chest and 5
drawer roll-away Cat #9GT43746N, including
hand tools 1,950
54 1 Sears Craftsman 6 drawer chest and 5
drawer roll-away Cat #9G143914N, including
tools 550
55 1 Sears Craftsman 10 drawer work bench
Cat # (GT65572N 100
56 1 M/P 1/2" drive air wrench Model MP121SD
S/N 77893 30
57 1 Milwaukee Model 122SP 3/8" drive pneumatic
ratchet wrench S/N 148007 25
- -----------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 3 Sub-Total $10,815
-------
Exhibit 10.5
Page 11 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
58 1 Chicago Industrial 1/2" electric drill motor,
S/N GGL286 30
59 1 Brake fluid purging pump 30
60 1 Transmission jack 200
61 4 6' x 20' panels of X-H floor grating 1,600
62 1 1,000 gallon diesel storage tank & stand 1,000
63 1 Blake type jaw crusher 6" x 8"
S/N 2841 w/5 hp motor 2,000
64 1 Link belt 2 deck screen, 36" x 98"
w/ t hp TEFC motor 3,000
65 1 Holmes Hammer Mills crusher model 40LXL
S/N 41098-18, w/20 hp motor 2,000
66 1 Formost Machine, Inc. Shredder/Hammer mill
Type 3C2, S/N 5297 2,000
67 1 Formost Machine, Inc. Shredder/Hammer mill
Type # C2, S/N 5367 2,000
68 1 Fairbanks-Marse & Co. 50 hp 100KW series
"Y" generator sets, S/N P135821, and PL3563L,
Diesel powered, air start 1,500
69 1 12' x 16' 30 ton grizzly and (?) ore
body hopper 5,000
70 1 3' x 8' Draper type "Link Belt" apron
feeder 3,600
71 1 12" x 20" Roller bearing jaw crusher
w/50 hp motor, S/N HU-596 12,000
72 1 18" x 60" belt conveyor with integral
walkway hand railing 3,600
73 1 12" x 36" set of roll crushers with (2)
30 hp motors 5,000
74 1 16" x 60' belt conveyor with integral
walkway and hand railing, gear motor with
backstop 5,400
- -----------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 4 Sub-Total $49,980
-------
Exhibit 10.5
Page 12 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
(In US$)
75 1 175 to ore bin including support
stand and one feeder with weighing 9,600
machine capabilities
76 1 18 gallons a minute hydraulic pumps
& tanks 2,400
77 1 24" Stutenroth impact mill 1,500
78 1 18" x 48" Syntron vibrating feeder 2,000
79 1 6' x 6' x 6' 10 grizzly hopper 2,500
80 5 5' x 5' tanks 1,000
81 3 Propane tanks - 750 gal, 200 gal, 175 gal 1,125
82 1 20 pipe (?) burning trailer 1,000
83 1 24' 3 axle equipment trailer 2,500
84 1 4,000 gal propane tank 4,000
85 1 42" x 48" Tyler jaw crusher 36,000
86 1 8' x 4' Hartsge conical No. 2 belt mill/
skid mounted 20,000
87 1 8' x 4' Hadzl No. 2 belt mill/skid mounted 10,000
88 1 5 ton of mill balls 3,000
89 1 11' x 14' (?) ore bin 3,000
90 1 8' x 8" wheeler jaw crusher 2,000
91 1 4' x 8" utility trailer - Lic #1EB7745 600
92 1 16' car trailer Lic #1CV9547 1,000
93 1 10' Dual axle trailer Lic# 1F82911 1,000
94 7 Waldon Air Diaphragm pumps 3,500
95 11 1 1/2" to 2" electric centrifugal pumps 2,200
- ------------------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 5 Sub-Total $109,925
-------
Exhibit 10.5
Page 13 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
96 4 100 hp electric starters 16,000
97 84 84 electric boxes, starters from Nana 1
to Nana 5 8,400
98 1 4" inch valve 800
99 1 14' x 6' utility trailer Lic #ICR7411 450
100 1 8' x 8' utility trailer - no Lic. 450
101 1 1988 Toyota 4x4 pickup white
Lic #3M70615 4,500
102 1 30' end dump bed 2,500
103 1 1988 Toyota 4x4 Gray 3,000
104 1 1988 Nomad 28' trailer 3,000
105 1 Snow plow 1,500
106 1 3,500 gallon GI water truck 4,000
107 1 International TD 14 track loader
S/N D3016 3,500
108 1 Ford 5,000 gallon water truck 1,500
109 31 4' x 14" dust cyclones 3,100
110 6 Gardner-Denver float cells 10,000
111 2 46" x 8" fans w/60 hp electric motors 3,000
112 1 35" drum filter 1,500
113 1 200 CFM Nash vacuum pump w/40 hp pump 6,500
114 4 440 volts to 110 volts Transformers 2,000
115 21 Electric motors 1 hp to 60 hp 11,000
116 1 Test Roaster 1,100
117 1 6" blower and motor 700
118 7 8" x 24" flood lights 700
- ------------------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 6 Sub-Total $89,200
-------
Exhibit 10.5
Page 14 of 21
<PAGE>
SURPLUS SUPPLIES AND EQUIPMENT (continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
119 1 8' x 5' steel work table with rollers 800
120 1 100 hp electric motor 1,100
121 1 125 hp electric motor 1,500
122 3 1" air pressure reduction valves 300
123 1 16" x 6" Moreland mill with 10 hp electric
motor - roller stand mounted 11,000
124 1 Great Western Skidster loader 3,500
125 1 36" x 30" stainless steel vat 1,000
126 1 24" x 4' x 5' Fumes hood and fan 5,000
127 9 Oxygen bottles 900
128 6 Acetylene bottles 600
129 2 500 gall waste oil storage tanks 1,000
130 1 10 hp air compressor 700
131 1 Medical Kit & Back Board 800
132 Misc. All miscellaneous items including nuts,
bolts, washers, filters, grease, paint,
paint supplies, drills, jacks, tools, pipe
filters, V belts, lights, welding rods,
Acetylene Torches, welding carts and other
light items, located in building and upon
the grounds at the 38 acre Weldon Mill
site less any personal items 31,625
133 Misc. Steel, fabrication steel, pipes of all
sizes, tanks, stands, truck beds, old
vehicles, scrap steel, will be considered
scrap @ $80 per ton. Estimated tonnage:
380 tons 22,800
- -----------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT - Page 7 Sub-Total $82,425
-------
SURPLUS SUPPLIES AND EQUIPMENT - Page 6 Sub-Total $89,200
SURPLUS SUPPLIES AND EQUIPMENT - Page 5 Sub-Total $109,925
SURPLUS SUPPLIES AND EQUIPMENT - Page 4 Sub-Total $40,960
SURPLUS SUPPLIES AND EQUIPMENT - Page 3 Sub-Total $10,815
SURPLUS SUPPLIES AND EQUIPMENT - Page 2 Sub-Total $13,180
SURPLUS SUPPLIES AND EQUIPMENT - Page 1 Sub-Total $35,600
- -----------------------------------------------------------------------
SURPLUS SUPPLIES AND EQUIPMENT TOTAL $391,185
========
Exhibit 10.5
Page 15 of 21
<PAGE>
MINE SITE INVENTORY AND MISC TOOLS AND EQUIPMENT
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
1 1 IMCO 13 - 3 Cu. Yd. Underground loader 35,000
2 1 IR 450 Air Track w/12' boom, 50' drill
steel, bits and drill parts 11,500
3 1 200' of 4" air hose and fittings 1,600
4 4 IMCO 24", 40 hp dual mine fans
20,000 CFM 38,000
5 1 1,400 foot, 4" air line, and couplings
installed at mine 7,000
6 1 1,400 feet of 1" water line installed
at mine 1,400
7 1 1,400 feet of 440 V power line in conduit
with 2 panel stations and 110 transformers
and 1,400 feet of light line with light
stations every 10 feet 46,500
8 1 Mine phone & line 3,500
9 1 Tandem (?) 16 ft. flat bed trailer 1,000
10 1 1,000 gallon high pressure water tank
& fittings 2,500
11 1 1,200' 18" aluminum corrugated culvert
pipe, couplings, reducers and hangers 19,200
12 1 Gardner bit grinder 2,600
13 1 20,000 gallon glass lined water storage
tank 10,000
14 1 Gardner-Denver 600 CFM, 150 hp electric
compressor 2,000
15 1 TD 15 Dozer, S/N 21444, w/90% UC 3 shank
ripper, w/hydraulic angle tilt doser blands,
ROPS 22,500
16 Misc All items in mine tunnel: 4 tarps, 4 x 8
steel table, 600 cap blasting machine,
picks, shovels 2,600
17 3 Gardner-Denver model 85 Jack lag drills 3,000
18 8 6" drill steel 320
- -----------------------------------------------------------------------
MINE SITE INVENTORY AND MISC TOOLS $210,220
AND EQUIPMENT-Page 1 Sub-Total ========
Exhibit 10.5
Page 16 of 21
<PAGE>
MINE SITE INVENTORY AND MISC TOOLS AND EQUIPMENT (Continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
19 1 200 feet of 2" air hose 800
20 1 200 feet of 1" air hose 400
21 1 200 feet of 1/2' water hose 200
22 Misc Steel, equipment, fabricating materials,
old equipment, scrap steel, nuts, bolts.
Anything and everything not listed and
located at the Evening Star and Lone Star
Mining groups as scrap metal. Estimated
value $60/ton. Approx. 300 tons 18,000
23 1 3,000 gallon water tank and 24' tandem
(?) pull trailer 3,500
24 1 Adams motor grader 3,000
25 1 EMCO 12 - 2 Cu. Yd. Underground loader 5,000
26 1 16' - 1,000 gallon fire suppression trailer
w/200 foot hose and fire box 3,000
27 4 16' gates and locks 3,200
28 1 200 feet of 4" pipe, couplings, and gaskets 1,250
29 1 4 ft x 8 ft steel work bench w/4" combination
and (?) rigid pipe vice 1,500
30 1 100 foot of 2" galv T & C pipe 100
31 2 24' over seas shipping containers and
covered building 12,000
32 2 Dayton Model SC411, 5 hp duct fans 800
33 1 I-R model 85 Air Drill 850
34 1 Gardner-Denver model 65 Air Drill 800
35 1 120 foot, 24" duct bag 1,250
36 1 Explosives magazine 4 cu. ft. 200
37 1 Day box powder magazine 1,000
- ----------------------------------------------------------------------
MINE SITE INVENTORY AND MISC TOOLS $58,850
AND EQUIPMENT-Page 2 Sub-Total =======
Exhibit 10.5
Page 17 of 21
<PAGE>
MINE SITE INVENTORY AND MISC TOOLS AND EQUIPMENT (Continued...)
Item
No. Quantity Description Sale Value
- ---------------------------------------------------------------------
38 1 Gardner-Denver jack hammer 250
39 1 1,000 feet of 1" air hose w/couplings 1,800
40 1 1,500 feet of 1/2" air hose w/couplings 1,650
41 1 50 foot air track drill stem 600
42 1 drill bit and stricking bar 75
43 Misc Drill stem 2', 4', 6', 8' lengths -
total 188 ft. 5,000
44 120 Rock bolt plates & 6 ft rock bolts 3,500
45 1 Air filter element for G/D screw compressor 90
46 2 Prell guns 200
47 1 Prell pot and powder jumbo 1,200
48 1 Gap magazine 1,500
49 1 Drill Jumbo w/oiler, (6) - 6 foot drills,
1 driver and 200 feet of 1" hose w/couplings 1,500
50 20 6 foot steel fence stakes 40
51 5 (?) of misc lube oils and gear oils 150
52 1 16 ft aluminum extension ladder 80
53 5 sets of steel racks for pipe & steel 1,200
54 1 110 gallon fuel tank 300
55 1 1,000 gallon vertical air receiver tank 2,500
56 1 Acetylene/Oxygen torch set on pneumatic-
tired, heavy duty cart, 100 foot of hoses,
bottles 1,000
57 1 K & E Surveyors Transit and Tripod 250
58 1 Rigid model 65R pipe threading set,
1" to 2" 125
- ---------------------------------------------------------------------
MINE SITE INVENTORY AND MISC TOOLS $23,010
AND EQUIPMENT-Page 3 Sub-Total =======
Exhibit 10.5
Page 18 of 21
<PAGE>
MINE SITE INVENTORY AND MISC TOOLS AND EQUIPMENT (Continued...)
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
59 Lot Misc supplies, air drill parts, etc. for
mining operation in west shipping container 8,500
60 2 500 gallon fuel tanks and stands 1,200
61 1 300 feet of 1" air hoses w/couplings 175
62 Misc Scrap metal at mine site: steel, bins, pins,
rollers, scrap steel, nuts, bolts, etc.
Estimated value $25/ton, Approx 600 tons. 15,000
63 1 Gardner-Denver Type SKQ-VD screw compressor
Model ESTBE/1, S/N 638275, 200 hp 10,000
64 1 350 KW light plant powered by DDA12V71
diesel engine S/N SKF6220-2Z w/400 amp
breaker and control panel 28,000
65 1 Sullivan air operated underground mucker,
S/N 13680 1,500
- ------------------------------------------------------------------------
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP-Page 4 Sub-Total $64,375
--------
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP-Page 1 Sub-Total $210,220
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP-Page 2 Sub-Total $ 58,850
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP-Page 3 Sub-Total $ 23,010
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP-Page 4 Sub-Total $ 64,375
- ------------------------------------------------------------------------
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP TOTAL $354,456
========
Exhibit 10.5
Page 19 of 21
<PAGE>
WHAREHOUSE INVENTORY
Item
No. Quantity Description Sale Value
- -----------------------------------------------------------------------
1 2 Carousel type bold gondolas
and contents 2,400
2 Lot North wall shelves, shop area paint,
hydraulic hose 700
3 Lot Shelf "A" and contents 600
4 Lot Shelf "B" and contents 200
5 Lot Shelf "C" and contents 750
6 Lot Shelf "D" and contents 1,200
7 Lot Shelves "E/F" and contents 1,600
8 Lot Shelf "G" and contents 500
9 Lot Shelves on each wall down stairs
and contents 3,000
10 Lot Weatherhead hose & tubing
fittings and spec. cabinet 1,600
11 1 20 gallon bladder tank 60
12 1 Heavy duty air drill motor 800
13 1 Hand geared hoist (winch) 150
14 Lot East wall shelves and contents 750
15 Lot Shelves "H/I" and contents 200
16 Lot Shelves "J/K" and contents 2,500
17 Lot Shelves "L/M" and contents 200
18 Lot Shevles "N/O" and contents 500
19 Lot Shelves "P/Q" and contents 2,000
20 Lot Shelves "R/S" and contents 4,000
21 Lot Electrical fittings, plugs,
tune up kits and wire, in
special steel cabinet 2,000
22 1 Brake actuator 200
- -----------------------------------------------------------------------
WAREHOUSE INVENTORY TOTAL $25,910
=======
Exhibit 10.5
Page 20 of 21
<PAGE>
TOTALS
For all categories
MACHINE AND FAB SHOP $ 13,620
OFFICE EQUIPMENT AND SUPPLIES 9,448
LAB EQUIPMENT AND SUPPLIES 24,960
SMELTING AND REFINING LAB 33,910
PILOT MILL EQUIPMENT 1,000
VEHICLES, TRAILERS AND MISC EQUIPMENT 54,775
SURPLUS SUPPLIES AND EQUIPMENT 391,105
MINE SITE INVENTORY AND MISC TOOLS AND EQUIP 354,465
WAREHOUSE INVENTORY 25,910
- -------------------------------------------------------------
GRAND TOTAL $909,184
- -------------------------------------------------------------
Exhibit 10.5
Page 21 of 21
Exhibit 10.6
REGULATION "S" STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is made this 28th day of November, 1996, by
and between Stonehill Investments, Ltd., a corporation organized under the laws
of Ireland ("BUYER"), and Xplorer, S.A., a Nevada corporation ("COMPANY").
WHEREAS, the COMPANY desires to sell SEVEN HUNDRED AND FIFTY THOUSAND
(750,000) SHARES of the COMPANY'S Common Stock ("SHARES") pursuant to Regulation
"S" as promulgated under the United States ("U.S.") Securities Act of 1933, as
amended (the "1933 Act"), at a value of U.S. Four Dollars (US$4.00) per share,
and
WHEREAS, the BUYER desires to purchase the Shares from the COMPANY in
exchange for 60,000 Units of Beneficial Interests ("UBI's") of Atlantic Pacific
Trust valued in excess of US$3,000,000 in accordance with the terms and
conditions of this Agreement, and
WHEREAS, the COMPANY desires to facilitate the purchase and
sale of the SHARES provided for herein;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements of the parties contained herein, the parties, intending to be legally
bound hereby, agree as follows:
1. SALE OF SHARES. The COMPANY shall sell and deliver to the BUYER and
the BUYER shall purchase and receive, at the Purchase Price, SEVEN HUNDRED AND
FIFTY THOUSAND (750,000) SHARES of the COMPANY'S Common Stock at such Purchase
Price as set forth herein.
2. CLOSING DATE. This transaction shall be, closed pursuant to the terms
and conditions hereon within thirty (30) days after the execution of this
Agreement at 5:00 P.M. (local time) at the offices of the COMPANY, or its
designee. The Date of Execution of this transaction is herein called the
"Closing Date." The actions outlined in Section 3, which are to take place on
the Closing Date, are herein called the "Closing."
3. CLOSING. At Closing, the parties shall take the following actions:
3.1 TRANSFER OF SHARES. The Company shall sell, transfer, assign,
and deliver to the BUYER, the SHARES, all of which shall be issued and
outstanding as of the Closing Date, upon the terms and subject to the conditions
set forth in this Agreement. The COMPANY shall deliver to the BUYER, free and
clear of all claims and encumbrances, certificate(s) for the SHARES which the
COMPANY is selling, without a restrictive legend of any kind, registered in the
name of the BUYER or, if not so registered, then to its assignee, designee or
nominee, so long as such assignee, designee or nominee is not a U.S. person as
defined by Regulation "S" under the Act.
3.2 TRANSFER AGENT INSTRUCTIONS. The COMPANY will instruct its
transfer agent to issue one or more share certificates representing the SHARES
Exhibit 10.6
<PAGE>
pursuant to this Agreement without restrictive legend in the name of Stonehill
Investments, Ltd. or its non U.S.A. resident assignee, designee or nominee. The
BUYER agrees and acknowledges that the COMPANY shall issue stop transfer
instructions to its transfer agent prohibiting the transfer of the SHARES
delivered under this Agreement for a period of forty (40) calendar days after
the Closing Date.
3.3 PURCHASE PRICE. The Purchase Price shall be 60,000 UBI's,
properly endorsed, transferred and delivered to SELLER at the Closing.
3.4 The BUYER may purchase all or part of the, 750,000 shares prior
to the Closing Date. Upon the receipt of properly endorsed UBI's the Company
will instruct the transfer agent to issue the stock that has been paid for to
BUYER or a nominee. It is understood that the Forty (40) Calendar Days holding
period shall commence after the Closing Date as more fully set forth in
paragraph 4(e).
4. SECURITIES ACT OF 1933 AND HOLDING PERIOD. The BUYER covenants and
agrees as follows:
a) The BUYER understands that the SHARES acquired pursuant to this
Agreement have not been registered under the 1933 Act with the
Securities and Exchange Commission in reliance upon the exemption
from such registration requirements afforded by Regulation "S" under
the 1933 Act, governing the offer and sale of securities that occur
outside the U.S., nor with any state securities commission.
b) The BUYER hereby represents and warrants that: it is a corporation
organized and subject to the jurisdiction of Ireland and whose
principal address is Rue des Bains 35, 205 Geneve, Switzerland and it
is not a U.S. person, within the meaning of Rule 902(o) of Regulation
"S."
c) The BUYER hereby represents and warrants that it is the sole owner
of the 60,000 UBI's to be transferred to the COMPANY and that it has
the power and authority to transfer such UBI's without any further
corporate or government consent or approval. Furthermore, BUYER
represents that there are no liens or obligations against such UBI's
and that they are free and clear of any liabilities.
d) The BUYER agrees that the SHARES acquired by the BUYER pursuant to
this Agreement shall not be voluntarily sold, transferred or
otherwise disposed of for a minimum period of FORTY (40) CALENDAR
DAYS from the Closing Date.
e) In connection with the transaction which is the subject of this
Agreement, BUYER acknowledges that offers respecting the sale of
Common Stock directed to it by the COMPANY were received outside of
the U.S. and that BUYER did not engage in or direct any unsolicited
offers to buy SHARES of Common Stock of the COMPANY into the U.S.
Exhibit 10.6
<PAGE>
f) The BUYER understands that any disposition of the SHARES in
violation of this Agreement, as well as Section 4.1, 4.3, or this
Section 4.4, shall be null and void. No transfer of the SHARES shall
be made by the COMPANY'S registrar or transfer agent upon the
COMPANY'S stock transfer books or records unless there has been
compliance with the terms of this Agreement. The COMPANY shall issue
stop transfer instructions to its registrar or transfer agent to the
effect that the certificate(s) evidencing the SHARES may not be
transferred for a period of FORTY (40) CALENDAR DAYS after the
Closing Date and shall be transferred immediately thereafter except
as provided in 3.1 hereof.
g) BUYER agrees that any disposition of the SHARES in the U.S. shall
be in conformity with Regulation "S" pursuant to an opinion of
counsel for the holder of such SHARES, that such SHARES are exempt
from registration under the 1933 Act and such opinion shall be
acceptable to COMPANY.
5. CONDITIONS OF BUYER'S AND COMPANY'S OBLIGATIONS TO CLOSE. The
following shall be conditions of the BUYER'S and the COMPANY'S obligation to
close hereunder, which either the BUYER or the COMPANY, in the sole discretion
of each, may waive in whole or in part:
5.1 REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE COMPANY.
Representations and Warranties made by the BUYER, and the Company, in this
Agreement shall be true and correct as of the Closing Date.
5.2 NO DEFAULT - COVENANTS AND AGREEMENTS. Neither the BUYER nor
the COMPANY shall be in material default with respect to any obligation under
this Agreement and both shall have performed or complied with all covenants,
agreements and conditions to be performed or complied with prior to, or at, the
Closing.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The COMPANY represents
and warrants to the BUYER that the statements contained in Sections 6.1 through
6.7 are true and correct on the date hereof.
6.1 CORPORATE STANDING. The COMPANY is a corporation duly
ORGANIZED, validly existing, and in good standing under the laws of the State of
Nevada and it has full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The execution and delivery of
this Agreement by the COMPANY does not, and the consummation of the transactions
contemplated hereby will not, violate or result in a breach of any provisions of
COMPANY's Charter or Bylaws.
6.2 CAPITAL STOCK. As of September 30, 1996, the authorized capital
stock of the COMPANY consists of SIXTY MILLION (60,000,000) SHARES of Common
Stock of par value $.001, of which amount FIFTEEN MILLION NINE HUNDRED AND FIFTY
FOUR THOUSAND (15,954,000) SHARES of Common Stock have been validly issued and
are outstanding, fully paid and nonassessable and FIFTEEN MILLION (15,000,000)
SHARES of Preferred Stock, of which amount ONE MILLION FORTY THREE THOUSAND ONE
HUNDRED (1,043,100) SHARES have been validly issued and are outstanding, fully
paid and nonassessable.
Exhibit 10.6
<PAGE>
6.3 AUTHORITY. The COMPANY has full power and authority to enter
into this Agreement and has taken all action or will use its best efforts to
take all action, corporate and otherwise, necessary to authorize the execution,
delivery and performance of this Agreement, the completion of the transactions
contemplated hereby and the execution and delivery on behalf of the COMPANY of
any and all Instruments necessary or appropriate in order to effectuate fully
the terms and conditions of this Agreement. Upon delivery of the SHARES and
payment of the purchase price, good and clear title to the SHARES will pass,
free and clear of all restrictions on transfer, liens, encumbrances, security
interest and claims whatsoever, to the BUYER, subject, however, to the
provisions of Sections 2, 3, and 4 inclusive.
No consent or approval of any court, governmental agency or other public
authority, or of any other person, corporation or entity with any actual or
alleged interest in the COMPANY is required as a condition to (a) the validity
or enforceability of this Agreement or any other instruments to be executed by
the COMPANY to effectuate this Agreement, or (b) the completion or validity of
any of the transactions contemplated by this Agreement. This Agreement has been
properly executed and delivered by the duly authorized officers of the COMPANY,
and constitutes the valid and legally binding agreement of the COMPANY and is
enforceable against the COMPANY in accordance with its terms.
6.4 FINANCIAL STATEMENTS. The COMPANY furnished, or made available,
to the BUYER financial statements contained in the COMPANY'S Form 8-K dated
August 5, 1996 ("Financial Statements"). There has been no material adverse
change in, material loss or destruction of, or material amount of damage to the
financial condition or business of the COMPANY since the filing of the Form 8-K,
whether or not arising from transactions in the ordinary course of business. The
regular books of account of the COMPANY fairly and accurately reflect all
transactions since the filing of the Form 8-K, are true, correct and complete,
and are maintained and kept in accordance with generally accepted accounting
principles consistently applied. The COMPANY does not have any liabilities or
obligations, whether accrued, absolute, contingent or otherwise, which would
materially and adversely affect the condition (financial and otherwise) of the
COMPANY, except and to the extent reflected or reserved against in the balance
sheets included in the Financial Statements. No dividends are due or unpaid by
the COMPANY.
6.5 TAXES. The COMPANY knows of no outstanding claims against the
COMPANY for taxes which constitute a lien on the SHARES being sold hereunder.
6.6 ADVERSE CIRCUMSTANCES. To the best knowledge of the COMPANY,
there are no facts, developments or circumstances, existing or threatened, of a
special or unusual nature that may be materially adverse to the assets,
business, financial condition or future prospects of the COMPANY.
6.7 LIABILITIES. The COMPANY does not have any material liabilities
of any nature, whether accrued, absolute, contingent or otherwise, existing, or
which may hereafter arise out of any transaction entered into prior to the
Closing Date or out of any act or failure to act on the part of the COMPANY or
ARC or any of its employees or agents prior to the Closing Date, except (i) as
and to the extent and in the amounts reflected or reserved against in the
Financial Statements, and (ii) current liabilities incurred in the ordinary
course of business since its filing of the COMPANY'S Form 8-K.
Exhibit 10.6
<PAGE>
7. COVENANTS AND AGREEMENTS OF THE BUYER. The BUYER hereby Covenants and
agrees as follows:
a) IMPAIRMENT - REPRESENTATIONS AND WARRANTIES. The BUYER shall not
take any action or fail to take any action, without the prior written
approval of the COMPANY, which would or might cause any
representation or warranty of the COMPANY made herein not to be true
on the Closing Date, or impair the COMPANY'S ability to carry out its
obligations under this agreement.
b) DUE DILIGENCE. The BUYER, or its agents, have had a full
opportunity to conduct its due diligence of the COMPANY, in
connection with this Agreement to its complete satisfaction. The
BUYER is familiar with the COMPANY, its financial condition, business
and prospects, has been provided with such information concerning the
COMPANY'S financial and other affairs as the BUYER deems necessary to
enter into and perform this Agreement, has had sufficient opportunity
to ask questions and receive answers to verify the accuracy of such
information, and is not in any way relying upon any information,
representation or warranty (without implying that the supplying of
any such information or the making of any such representation or
warranty has occurred) that the COMPANY or its officers, directors,
employees, agents and attorneys have provided, or have failed to
provide, to the BUYER in entering into or performing this Agreement.
c) Buyer is not a U.S. person as that term is defined in Regulation
"S" under the Act.
d) At the time the buy order was originated BUYER was outside the
United States and is outside the United States as of the date of its
execution and delivery of this Agreement.
e) BUYER is purchasing the SHARES for its own account and not on
behalf of any U.S. persons; the sale has not been pre-arranged with a
purchaser in the United States; and all offers and resales of the
securities shall only be made in compliance with the provisions of
Regulation S.
f) This transaction is made in compliance with all laws of the
country of Germany and the customary practices and documentation of
such jurisdiction.
g) BUYER is not an entity organized under foreign law by a U.S.
person, as defined in Regulation "S," Rule 902(o), for the purpose of
investing in unregistered securities, unless the BUYER was organized
and is owned by accredited investors. as defined in Regulation D,
Rule 501(a), who are not natural persons, estates or trusts.
8. CONDITIONS OF THE COMPANY'S OBLIGATION TO CLOSE. The obligations of
the COMPANY to close this transaction and transfer and deliver to the BUYER the
SHARES as set forth in Section 4.1 hereof, and to perform its obligations
pursuant to the terms and conditions of this Agreement, are subject to the
fulfillment as of the Closing Date of each of the following conditions
precedent, any or all of which may be waived in writing by the COMPANY:
Exhibit 10.6
<PAGE>
a) PAYMENT OF PURCHASING PRICE. The BUYER shall be ready, willing
and able to pay the Purchase Price; provided, however, that this
condition precedent shall not be interpreted to permit the COMPANY to
refuse to perform its obligations in accordance with Sections 2 and
3, except upon termination of this Agreement pursuant to Section II.
9. DELIVERY OF DOCUMENTS BY THE COMPANY. At the Closing, and in addition
to all other documents and instruments which the COMPANY is required to deliver
pursuant to this Agreement, the COMPANY shall deliver to the BUYER the following
documents duly executed by the COMPANY or the directors, officers, or employees
of or counsel to the COMPANY, or appropriate governmental officials, in form and
substance satisfactory to the BUYER and its counsel.
a) GOOD STANDING CERTIFICATE. If requested by the BUYER a CERTIFICATE
from the State of Nevada dated not more than THIRTY (30) DAYS prior
to the Closing Date, as to the good standing of the COMPANY.
b) OTHER DOCUMENTS. Such other documents, certificates and
instruments relating to the transactions contemplated by this
Agreement as the BUYER or its counsel may reasonably request or deem
necessary.
10. TERMINATION OF AGREEMENT. This Agreement and the transaction
contemplated hereby may be terminated by the BUYER without liability of any kind
to the COMPANY by written instrument signed by the BUYER and delivered at any
time on or prior to the Closing Date, giving notice of termination if:
a) There has been a material misrepresentation or material breach of
warranty on the part of the COMPANY, in the representations and
warranties set forth herein or in any certificate delivered pursuant
hereto, or the COMPANY shall have failed to perform or comply with,
in any material respect, any covenant, agreement or condition to be
performed or complied with prior to, or at Closing, due to the
nonfulfillment of any condition set forth herein;
b) In the reasonable judgment of the BUYER the transactions
contemplated by this Agreement have become inadvisable or
impracticable by reason of (i) the enactment of new federal, state or
local legislation since the date of this Agreement, or (ii) the
announcement of the institution by federal, state or local
authorities of an investigation of or litigation or proceedings
against the COMPANY which may have a material and adverse effect on
the Company or the transactions contemplated hereby, or (iii) the
institution since the date of this Agreement by any other person,
corporation or entity of litigation or proceedings against or in
regard to the COMPANY, which may have a material and adverse effect
upon the authority or ability of the COMPANY to consummate the
transactions contemplated hereby; or
c) The business, assets, results of operations, financial condition
or future prospects of the COMPANY have been significantly and
Exhibit 10.6
<PAGE>
adversely affected by reason of changes or developments in
operations, other than in the ordinary course of business, since the
filing of the COMPANY'S most recent Form 8-K.
11. EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated in accordance with the provisions of the Agreement, then all further
obligations, if any, of the BUYER to the COMPANY under this Agreement shall
terminate without further liability.
12. EXPENSES. All legal, accounting and other costs and fees incurred by
the BUYER, or the COMPANY, in connection with the transactions contemplated by
this Agreement shall be borne and paid for by the party incurring same.
13. MISCELLANEOUS PROVISIONS.
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
respective representations, warranties, covenants and agreements made in this
Agreement by the BUYER or the COMPANY, shall survive the Closing. The
representations and warranties of each contained herein or in any certificates
delivered pursuant hereto shall not he deemed to be waived or otherwise affected
by an investigation or audit made by any other, or by any action taken by any
other, at the request of any other hereto.
13.2 ASSIGNMENT. This Agreement and all rights and obligations
hereunder may not be assigned by the BUYER, in whole or in part, without the
prior knowledge, and/or written consent of the COMPANY.
13.3 NOTICES. Any notice, request, instruction or other document or
communication required or permitted to be given upon delivery in person or upon
being deposited in the mail, postage prepaid, for mailing by certified or
registered mail as follows:
If to the COMPANY, delivered or mailed to:
Xplorer, S.A.
4750 Kelso Creek Road
Weldon, California 93283
Attention: Thomas C. Roddy, P.E., President
If to the BUYER, delivered or mailed to:
Stonehill Investments, Ltd.
Rue des Bains 35
205 Geneva, Switzerland
13.4 SECTION HEADINGS. Section headings are for convenience only and
shall not limit or otherwise affect any of the provisions of this Agreement.
13.5 ENTIRE AGREEMENT. This Agreement and any Exhibits thereto
constitute the entire agreement and understanding of the parties hereto with
respect to the matters herein set forth, and all prior negotiations, writings
and understands relating to the subject matter of this Agreement are merged
herein and are superseded and canceled by this Agreement.
Exhibit 10.6
<PAGE>
13.6 WAIVERS - AMENDMENTS. Any of the terms or conditions of this
Agreement may be waived, but only in writing by the party which is entitled to
the benefit thereof, and this Agreement may be amended, or modified in whole or
in part, only by an agreement in writing, executed by all the parties to this
Agreement.
13.7 LITIGATION. If, for any reason, it becomes necessary for the
BUYER, its assignees, nominees or transferees, including any and all third party
beneficiaries, the BUYER, its nominee, assignee or third party beneficiary, to
enforce all, or any portion, of this Agreement through the courts, arbitration,
or litigation, it shall be entitled to recover reasonable attorney fees and
costs.
13.8 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of California without regard to conflicts
of law.
13.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, as well as by
facsimile, but all of which together shall constitute one and the same
instrument.
BUYER: STONEHILL INVESTMENTS, LTD.
/s/ Date: November 28, 1996
- ------------------------------------
By:
COMPANY: XPLORER, S.A.
/s/ Thomas C. Roddy Date: November 28, 1996
- ------------------------------------
By: Thomas C. Roddy, P.E., President
Exhibit 10.6
Exhibit 10.7
PRO
SECURITY AGREEMENT
(PLEDGE)
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, PLAZA REALTY ONE LIMITED PARTNERSHIP, a Texas limited partnership,
whose address is 12221 Merit Drive, Suite 1030, Dallas, Texas 75251 ("Debtor" or
"PRO"), grants to GERANT INDUSTRIES, INC., a Nevada corporation, whose address
is 1875 Century Park East, Suite 2130, Los Angeles, Los Angeles County,
California 90067 ("Secured Party"), the security interests (and the pledges and
assignments as applicable) hereinafter set forth and agrees with Secured Party
as follows ("Agreement"):
1. OBLIGATIONS SECURED. The security interests and pledges and
assignments as applicable granted hereby are to secure the punctual payment and
performance of the following obligations and indebtedness of Debtor to Secured
Party:
The non-recourse Promissory Note dated August 19, 1994, executed and
payable by Debtor to Secured Party in the original principal sum of FOUR HUNDRED
THOUSAND AND NO/100 DOLLARS ($400,000.00) ("Note"); and
any and all extensions, renewals, modifications and rearrangements thereof (all
of which together with the Note are herein collectively referred to as the
"Obligations").
2. DESCRIPTION OF COLLATERAL. Debtor hereby grants to Secured Party
security interests (and hereby pledges and assigns as applicable) and agrees
that Secured Party shall continue to have security interests in (and a pledge
and assignment of as applicable) the Collateral as hereinafter defined.
The term "Collateral" as used in this Agreement shall mean and
include, and the security interests (and pledges and assignments as applicable)
shall cover the following:
400,000 units of limited partnership interest ("Units") in United
Realty Group, L.P., a Delaware limited partnership ("Partnership"), acquired by
Debtor from Secured Party contemporaneously herewith pursuant to the Exchange
Agreement, dated June 20, 1994, between Debtor and Secured Party, being a
portion of the 900,000 Units issued to Secured Party by the Partnership in
consideration of contributions by Secured Party to the capital of the
Partnership pursuant to Redemption Agreement, dated July 1, 1993 between Debtor
and Secured Party; together with any distributions in cash, other securities or
property or other proceeds with respect to the Units.
3. DELIVERY OF COLLATERAL AND PROCEEDS. The Collateral has
contemporaneously been delivered into the possession of Secured Party by
delivery of certificates evidencing the Units accompanied by assignment of
the Units separate from certificates, duly executed in blank. Subject to
the restrictions on sale or transfer of any of the Collateral as provided
in this Agreement and the Exchange Agreement, Debtor shall promptly pay
Exhibit 10.7
<PAGE>
over and deliver, or cause to be directly paid and delivered, to Secured
Party any and all distributions or proceeds of sale with respect to the
Units, all of which proceeds shall be paid to Secured Party and applied
upon the Obligations. Any credit to be given to Debtor upon the Obligations
shall be first applied to any accrued interest and then to the principal
amount thereof.
4. PARTIAL RELEASES. Secured Party shall release to Debtor one Unit held
as Collateral for each $1.00 principal amount of the Note paid, prepaid or
credited as provided in the Note in increments of 25,000 Units for
principal reductions aggregating $25,000 or more. Upon receiving cumulative
principal payments aggregating $25,000 or more, Secured Party shall release
one Unit held as Collateral for each $1.00 of principal payments.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor
represents and warrants to and covenants and agrees with Secured Party as
follows:
(a) Ownership of Collateral. Debtor owns the Collateral and has the
right and authority to transfer the Collateral to Secured Party, free and clear
of all liens, encumbrances and claims of others, except for the security
interest granted by this Agreement (collectively, "Permitted Encumbrances").
Debtor's security interest in the Collateral shall be a first priority.
(b) No Transfer or Encumbrance. Debtor has not and shall not, without
the prior written consent of Secured Party, sell, assign, pledge, transfer,
dispose of or deal with the Collateral, or create or permit any lien, security
interest, charge or other encumbrance thereon, by or through Debtor, except for
the Permitted Encumbrances, on any portion of the Collateral.
(c) No Financing Statements. There is no financing statement or
similar filing now on file in any public office covering any part of the
Collateral, by or through Debtor, except those filed in connection with the
Permitted Encumbrances, and Debtor will not execute, and there will not be on
file in any public office, any financing statement or similar filing, by or
through Debtor, except the financing statements filed or to filed in favor of
Secured Party pursuant to this Agreement.
(d) Authority. Debtor has full right and authority to execute and
perform this Agreement and to create the security interest (and pledges and
assignment as applicable) created by this Agreement. The making and performance
by Debtor of this Agreement will not violate any certificate or articles of
incorporation, bylaws or similar document respecting Debtor, any provision of
law, any order of court or governmental agency, or any indenture or other
agreement to which Debtor is a party, or by which Debtor or any of Debtor's
property is bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under any such indenture or
other agreement, or result in the creation or imposition of any charge, lien,
security interest, claim or encumbrance of any and every nature whatsoever upon
the Collateral, by or through Debtor, except as contemplated by this Agreement.
(e) Addresses. The address of Debtor designated at the beginning of
this Agreement is Debtor's chief executive office. Debtor agrees not to change
Exhibit 10.7
<PAGE>
such address without advance written notice to Secured Party.
(f) Assessments. Debtor shall promptly pay when due all taxes,
assessments, license fees, registration fees, and governmental charges levied or
assessed against Debtor or with respect to the Collateral or any part thereof.
(g) No Encumbrances. Except for the Permitted Encumbrances, Debtor
agrees not to suffer or permit any charge, lien, security interest, adverse
claim or encumbrance of any and every nature whatsoever against the Collateral
or any part thereof, by or through Debtor.
(h) No Transfer. Debtor shall not, without the prior written consent
of Secured Party, sell, assign, pledge, transfer, encumber, hypothecate or
dispose of the Collateral, or any part thereof, or interest therein, or offer to
do any of the foregoing.
(i) Notices and Reports. Debtor shall promptly notify Secured Party
in writing of any change in the name, identity or structure of Debtor, any
charge, lien, security interest, claim or encumbrance asserted against the
Collateral, any litigation against Debtor or the Collateral, any theft, loss,
injury or similar incident involving the Collateral, and any other material
matter adversely affecting Debtor or the Collateral. Debtor shall furnish such
other reports, information and data regarding Debtor's financial condition and
operations, the Collateral and such other matters as Secured Party may request
from time to time.
(j) Additional Filings. Debtor agrees to execute and deliver such
financing statement or statements, or amendments thereof or supplements thereto,
or other documents as Secured Party may from time to time require in order to
confirm and perfect the security interest in the Collateral hereby granted and
to comply with the California uniform commercial Code (or other applicable state
law of the jurisdiction where any of the Collateral is located) and to preserve
and protect the Secured Party's rights to the Collateral.
(k) Protection of Collateral. Secured Party's duty with respect to
the Collateral shall be solely to use reasonable care in the custody and
preservation of the Collateral in the possession of Secured Party. Secured
Party, at its option, whether before or after default, but without any
obligation whatsoever to do so, may (i) discharge taxes, claims, charges, liens,
security interests, assessments or other encumbrances of any and every nature
whatsoever at any time levied, placed upon or asserted against the Collateral,
(ii) place and pay for insurance on the Collateral, including insurance that
only protects Secured Party's interest, (iii) pay for the preservation of the
Collateral, (iv) pay any filing, recording, registration, licensing or
certification fees or other fees and charges related to the Collateral, or (v)
take any other action to preserve and protect the Collateral and Secured Party's
rights and remedies under this Agreement as Secured Party may deem necessary or
appropriate. Debtor agrees that Secured Party shall have no duty or obligation
whatsoever to take any of the foregoing action, except for payment or discharge
of any liens or encumbrances affecting the Collateral by or through Secured
Party. Debtor agrees to promptly reimburse Secured Party upon demand for any
payment made or any expense incurred by the Secured Party pursuant to this
authorization. These payments and expenditures, together with interest thereon
Exhibit 10.7
<PAGE>
from date incurred until paid by Debtor at the maximum contract rate allowed
under applicable laws, which Debtor agrees to pay, shall constitute additional
Obligations and shall be secured by and entitled to the benefits of this
Agreement. Secured Party shall not be responsible in any way for any
depreciation in value of the Collateral, or to preserve rights against prior
parties or to enforce collection of the Collateral by legal proceedings or
otherwise. The sole duty of Secured Party with respect to proceeds of the
Collateral shall be to receive collections, remittances and payments on such
Collateral as and when made and as received by Secured Party, and at the option
of Secured Party, in its sole discretion, to apply the amount or amounts so
received, after deduction of any collection costs incurred, as payment upon the
Note to the extent of payments then due and payable or upon the Obligations, or
to hold the same for the account and order of Debtor.
(l) Inspection. Debtor shall at all reasonable times allow Secured
Party by or through any of its officers, agents, attorneys or accountants, to
examine the Collateral, wherever located, and to examine and make extracts
from Debtor's books and records with respect to all entries or matters
pertaining to the Collateral.
(m) Further Assurances. Debtor shall do, make, procure, execute and
deliver all such and further acts, things, deeds, interests, assurances,
documents and instruments as Secured Party may require from time to time to
protect, assure and enforce Secured Party's. rights and remedies.
6. EVENTS OF DEFAULT. Debtor shall be in default hereunder upon the
happening of any of the following events or conditions ("Events of Default"):
(i) failure to pay when due (whether by acceleration of maturity or otherwise)
any payment of principal, interest or other amount due on any Obligation; (ii)
the dissolution, liquidation, termination of existence, insolvency, business
failure or winding-up of Debtor; (iii) the commission of any act of bankruptcy
by, or the application for appointment of a receiver or any other legal
custodian for any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceedings under any bankruptcy,
arrangement, reorganization, insolvency, or similar laws for the relief of
debtors by or against, the Debtor or any maker, endorser, guarantor, surety or
other party primarily or secondarily liable for any of the Obligations; (iv) the
filing of any levy, attachment, execution, garnishment or other process against
the Debtor with respect to any of the Collateral; (v) the breach of any
representation, warranty or covenant by Debtor; (vi) the breach by the Debtor of
any of the terms or conditions of the Exchange Agreement or any of the
agreements incorporated by reference into the Exchange Agreement, except for
defaults in payment of the "Distribution Obligation" as defined in Article I
(ii) of the United Security Agreement; or (vii) a breach by the Partnership of
its Redemption obligations as defined in the United Security Agreement.
7. REMEDIES. Upon the occurrence of an Event of Default, Secured Party,
at its option, shall be entitled to proceed in accordance with the following:
(a) Non-Recourse Obligations. Anything contained in this Agreement to
the contrary notwithstanding, Debtor (which term for purposes of this paragraph
shall include Debtor, any party holding by, through or under Debtor, any partner
of Debtor, any party acting for Debtor, and any successors or assigns of Debtor)
Exhibit 10.7
<PAGE>
shall not be personally liable for payment of any amounts payable under the
terms of the Note or under this Agreement securing the payment thereof, and in
the event of default under the terms of the Note or under this Agreement, the
sole and exclusive remedy of Secured Party shall be, and Secured Party shall
rely solely upon, foreclosure of the security interest against the Collateral
securing payment of the Note and all Obligations of Debtor to Secured Party to
satisfy the Obligations of Debtor to Secured Party under the Note and under
Agreement, and no deficiency or other money judgment shall ever be sought or
obtained against Debtor with respect to any Obligations of Debtor to Secured
Party, except in the case of a material breach by PRO of any representation or
warranty contained in this Agreement.
(b) Remedies. Subject to paragraph (a) of this Section, Secured Party
shall have all of the rights and remedies provided for in this Agreement and in
the Note, the rights and remedies of the Uniform Commercial Code of California,
and any and all of the rights and remedies at law and in equity, all of which
shall be deemed cumulative, with respect to foreclosure against the Collateral.
Without limiting the foregoing, Debtor agrees that Secured Party shall have the
right to: (i) accelerate and declare the entire remaining principal balance,
together with accrued interest, on the Note and all other obligations under the
obligations to be immediately due and payable, (ii) require Debtor to assemble
the Collateral and make it available to Secured Party at a place designated by
Secured Party that is reasonably convenient to both parties, which Debtor agrees
to do; (iii) peaceably take possession of the Collateral and remove same, with
or without judicial process; (iv) sell, or otherwise dispose of the Collateral,
at one or more locations, by public or private proceedings for cash or credit,
without assumption of credit risk; and/or (v) whether before or after default,
collect and receipt for, compound, compromise, and settle, and give releases,
discharges and acquittance with respect to any and all amounts owed by any
person or entity with respect to the Collateral. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Secured Party will send Debtor reasonable notice of
the time and place of any public sale or of the time after which any private
sale or other disposition will be made. Any requirement of reasonable notice to
Debtor shall be met is such notice is mailed, postage paid, to Debtor at the
address of Debtor designated at the beginning of this Agreement, at least five
(5) days before the day of any public sale or least five (5) days before the
time after which any private sale or other disposition will be made.
(c) Transfer Restrictions. in connection with any proposed
foreclosure or sale of the Collateral to a purchaser or transferee (whether
purchased by Secured Party or a third party) or retention of the Collateral by
Secured Party (any such purchaser, transferee or, holder being collectively
herein referred to as "purchaser"), the purchaser shall be required to
acknowledge in writing to and for the benefit of Debtor and the Partnership with
respect to the Units that (i) the Units have not been registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities law and
that no transfer of the securities may be made unless the securities are
registered under the Act and any applicable state securities law or an exemption
from such registration is available; (ii) the purchaser, either alone or with
such purchaser's attorneys, accountants or other advisors, possesses the
requisite business and investment knowledge and experience to effectively
evaluate the potential risks and merits of the investment in the Units; (iii)
the purchaser has sufficient financial ability and net worth to bear the
Exhibit 10.7
<PAGE>
economic risk of the investment in the Units for an indefinite period of time
and to withstand a total loss of the purchaser's investment in the units; (iv)
the purchaser is acquiring the Units for investment purposes, solely for
purchaser's own account and not with a view to the distribution or resale
thereof; and (v) the purchaser will not resell the Units, except pursuant to an
effective registration statement under the act and any applicable state
securities laws or pursuant to an available exemption therefrom.
(d) Expenses. Debtor shall not be liable for the expenses incurred by
Secured Party in enforcing its rights and remedies, in retaking, holding,
testing, improving, selling, leasing or disposing of the Collateral, or like
expenses, including, without limitation, attorneys' fees and legal expenses
incurred by Secured Party.
(e) Proceeds; Surplus; Deficiencies. Proceeds received by Secured
Party from disposition of the Collateral shall be applied toward Secured Party's
expenses and other Obligations in such order or manner as Secured Party may
elect. Debtor shall be entitled to any surplus if one results after lawful
application of the proceeds. Debtor shall not be liable for any deficiency,
except as stated in Section 7(a) of this Agreement.
(f) , Possessory Remedies. Secured Party may at any time after
default transfer the Collateral to itself or its nominee, receive income,
including money, thereon and hold the income as Collateral or apply the income
to the Obligations of Debtor to Secured Party, the manner and distribution of
the application to be in the sole discretion of Secured Party. Secured Party may
at any time after default demand, sue for, collect or make any compromise or
settlement with reference to the Collateral as Secured Party, in its sole
discretion, chooses. Secured Party may delay exercising or omit to exercise any
right or remedy under this Security Agreement without waiving that or any other
past, present or future right or remedy, except in writing signed by Secured
Party.
(g) Remedies Cumulative. The rights and remedies of Secured Party
with respect to foreclosure against the Collateral after default are cumulative
and the exercise of any one or more of the rights or remedies shall not be
deemed an election of rights or remedies or a waive of any other right or
remedy. Secured Party may remedy any default and may waive any default without
waiving the default remedied and without waiving any other prior or subsequent
default.
8. OTHER AGREEMENTS.
(a) Savings Clause. Notwithstanding any provision to the contrary
herein, or in any of the documents evidencing the Obligations or otherwise
relating thereto, no such provision shall require the payment or permit the
collection of interest in excess of the maximum permitted by applicable usury
laws. If any such excessive interest is so provided for, then in such event (i)
the provisions of this paragraph shall govern and control, (ii) neither the
Debtor nor its successors or assigns or any other party liable for the payment
thereof, shall be obligated to pay the amount of such interest to the extent
that is in excess of the maximum amount permitted by law, (iii) any such excess
interest that may have been collected shall be, at the option of the holder of
the instrument evidencing the Obligation, either applied as a credit against the
Exhibit 10.7
<PAGE>
then unpaid principal amount thereon or refunded to the maker thereof, and (iv)
the effective rate of interest shall be automatically reduced to the maximum
lawful rate under the applicable usury laws as now or hereafter construed by the
courts having jurisdiction.
(b) Waivers. Except as expressly provided herein, Debtor hereby
waives demand, notice of intention to accelerate, notice of acceleration, notice
of non-payment, presentment, protest, notice of dishonor and any other similar
notice whatsoever.
(c) Severability. Any provision hereof found to be invalid by courts
having jurisdiction shall be invalid only with respect to such provision (and
then only to the extent necessary to avoid such invalidity). The offending
provision shall be modified to the maximum extent possible to confer upon
Secured Party the benefits intended thereby. Such provision as modified and the
remaining provisions hereof shall be construed and enforced to the same effect
as if such offending provision (or portion thereof) had not been contained
herein, to the maximum extent possible.
(d) Use of Copies. Any carbon, photographic or other reproduction of
any financing statement signed by Debtor is sufficient as a financing statement
for all purposes, including without limitation, filing in any state as may be
permitted by the provisions of the Uniform Commercial Code of such state.
(e) Relationship to Other Agreements. This Security Agreement and the
security interests (and pledges and assignments as applicable) herein granted
are in addition to (and not in substitution, novation or discharge of) any and
all prior or contemporaneous security agreements, security interests, pledges,
assignments, liens, rights, titles or other interests in favor of Secured Party
or assigned to Secured Party by others in connection with the Obligations. All
rights and remedies of Secured Party in all such agreements are cumulative, but
in the event of actual conflict in terms and conditions, the terms and
conditions of the latest security agreement shall govern and control.
(f) Notices. Any notice or demand given by Secured Party to Debtor in
connection with this Agreement, the Collateral or the obligations, shall be
deemed given when received by the Debtor at the address of Debtor designated at
the beginning of this Agreement. Actual notice to Debtor shall always be
effective no matter how given or received.
(g) Headings and Gender. Paragraph headings in this Agreement are for
convenience only and shall be given no meaning or significance in interpreting
this Agreement. All words used herein shall be construed to be of such gender or
number as the circumstances require.
(h) Amendments. Neither this Agreement nor any of its provisions may
be changed, amended, modified, waived or discharged orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, amendment, modification, waiver or discharge is sought.
(i) Continuing Agreement. The security interest (and pledges and
assignments as applicable) hereby granted and all of the terms and provisions in
this Agreement shall be deemed a continuing agreement and shall continue in full
force and effect until terminated in writing. Any such revocation or termination
Exhibit 10.7
<PAGE>
shall only be effective if explicitly confirmed in a signed writing issued by
Secured Party to such effect and shall in no way impair or affect any
transactions entered into or rights created or Obligations incurred or arising
prior to such revocation or termination, as to which this Agreement shall be
fully operative until same are. repaid and discharged in full. Unless otherwise
required by applicable law, Secured Party shall be under no obligation to issue
a termination statement or similar documents unless Debtor requests same in
writing and, provided further, that all Obligations have been repaid and
discharged in full and there are no commitments to make advances, incur any
Obligations or otherwise give value.
(j) Binding Effect. The provisions of this Security Agreement shall
be binding upon the successors and assigns of Debtor and the rights, powers and
remedies of Secured Party hereunder shall inure to the benefit of the successors
and assigns of Secured Party.
(k) Assignment. This Security Agreement, Secured Party's rights,
hereunder or the indebtedness hereby secured may be assigned by Secured Party
conditioned on the agreement by Secured Party that Secured Party shall not
assign this security Agreement (Pledge) unless the assignee and transferee of
Secured Party shall expressly agree to be bound by the terms and conditions of
the Note and this Security Agreement (Pledge).
(l) Attorneys' Fees. In the event that legal action is instituted to
enforce or interpret the provisions of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees plus all reasonable expenses and
costs of such action.
(m) Government Law. This Security Agreement shall be governed and
interpreted in accordance with the laws of the State of California.
EXECUTED this 19 day of August, 1994.
PLAZA REALTY ONE LIMITED PARTNERSHIP GERANT INDUSTRIES, INC.
BY: COMMERCE PROFESSIONAL GROUP, INC.
By: /s/ Alfred J. Moran
-----------------------
By: /s/ Jimmy E. Nix Alfred J. Moran
------------------------------ President
Jimmy E. Nix, President
By: /s/ Richard F. Watkins
------------------------------
Richard F. Watkins
Vice President
"Debtor" "Secured Party"
Exhibit 10.7
<PAGE>
PLAZA REALTY ONE LIMITED PARTNERSHIP
PROMISSORY NOTE
$400,000.00 Dallas, Texas August 19, 1994
FOR VALUE RECEIVED, Plaza Realty one Limited Partnership, a Texas
limited partnership, of Dallas, Texas, (herein called "Maker"), promises to pay,
without recourse, to Gerant Industries, Inc., a Nevada corporation of Los
Angeles, California (herein called "Payee") the sum of Four Hundred Thousand and
No/100 DOLLARS ($400,000.00) in lawful money of the United States of America,
together with interest accruing from date hereof on the principal amount from
time to time remaining unpaid at the rate of eight percent (8%) per annum. All
past due principal hereof and interest thereon shall bear interest from the
maturity of such principal and interest at the maximum rate of interest from
time to time permitted by the applicable laws of the State of California. Except
as otherwise provided herein, all payments of both principal and interest shall
be payable to Payee at 1875 Century Park East, Suite 2130, Los Angeles, Los
Angeles County, California 90067, or such other place in the State of California
as Payee may designate to Maker in writing.
This note shall mature and the entire principal balance hereof,
together with all accrued interest thereon, shall be due and payable August 18,
1999. Maker may otherwise prepay in whole, or from time to time in part, and
without any premium or penalty therefor, any portion of the principal amount
hereof then remaining unpaid together with all accrued but unpaid interest on
this note, (i) in cash or (ii) by credit for any Conversion Premium as
hereinafter defined from the date such Conversion Premium is determined.
Interest shall cease to run on such part of the principal amount hereof as shall
be so prepaid from the date of such prepayment. All payments made hereunder and
any prepayment made hereunder shall be applied first to accrued but unpaid
interest on this note and the balance to principal.
The principal of this note shall be reduced, credited and prepaid by
the amount of any Conversion Premium (hereinafter defined) realized by Payee at
any time and from time to time from disposition, sale, or otherwise from common
units of limited partnership ("Units") of United Realty Group, L.P., a Delaware
limited partnership ("Partnership") acquired by Payee by virtue of its
conversion of Class C Units of the Partnership into units ("Conversion Units").
It is intended that the Conversion Premium shall mean the cumulative difference
between the Per Unit Selling Price from each Conversion Unit, either by
disposition or valuation as below noted, less the $1.00 unit par value of the
Class C Units. Accordingly by way of definition:
(a) For any Conversion Units sold by Payee but not sold in a bona fide,
third-party sale within an established public market, through a securities
dealer licensed by the National Association of Securities Dealers or an
equivalent body ("Outside Sale"), then the term "Per Unit Selling Price" means
the price of a Unit as of any date of sale, (i) if the Units are listed or
admitted to trading on one or more exchanges registered under Section 6(a) of
the Securities Exchange Act of 1934, as amended ("National Exchanges"), the
average of the last reported sales prices per Unit regular way or, in case no
Exhibit 10.7
<PAGE>
such reported sale has taken place on any such day, the average of the last
reported bid and asked prices per Unit regular way, in either case on the
principal National Exchange on which the Units are listed or admitted to
trading, for the four (4) trading days immediately preceding the date of sale;
(ii) if the units are not listed or admitted to trading on a National Exchange
but are quoted by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the closing bid price per Unit for
the four (4) trading days immediately preceding such date of sale, as furnished
by the National Quotation Bureau Incorporated or such other nationally
recognized quotation service as may be selected by Maker for such purpose if
said Bureau is not at the time furnishing quotations; or (iii) if the Units are
not listed for trading on a National Exchange or quoted by NASDAQ, Per Unit
Selling Price shall be calculated as an amount equal to the net book value of a
Unit as of such date of sale. The Per Unit Selling Price as determined in (i),
(ii), or (iii) above as applicable less $1.00 shall be the "Per Unit Premium."
The cumulative Per Unit Premium for all Conversion Units sold in this manner is
the "Outside Sale Premium."
(b) In the event that Conversion Units are sold by Payee in a bona
fide, third party sale, within an established public market, through a
securities dealer licensed by the National Association of Securities Dealers or
an equivalent body ("Market Sale"), then "Per Unit Selling Price" shall mean the
per Unit net proceeds received by Payee from such sale. The cumulative Per Unit
Selling Price less $1.00 for each Conversion Unit sold in this manner shall be
called the "Per Unit Premium." The cumulative Per Unit Premium for all
Conversion Units sold in this manner is the "Market Sale Premium."
(c) In the event that as of a determination date, Payee holds
conversion units which have not been sold as noted in the instances above, the
"Per Unit Selling Price" means sixty percent (60%) of the price of a conversion
Unit held as of a determination date with the price being (i) if the Units are
listed or admitted to trading on a National Exchange, the average of the last
sales price per Unit regular way or, in case no such reported sale has taken
place on any such day, the average of the last reported bid and asked prices per
Unit regular way, in either case on the principal National Exchange on which the
Units are listed or admitted to trading, for the four (4) trading days
immediately preceding the determination date; (ii) if the Units are not listed
or admitted to trading on a National Exchange but are quoted by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
average of the closing bid price per Unit for the four (4) trading days
immediately preceding such date of determination, as furnished by the National
Quotation Bureau Incorporated or such other nationally recognized quotation
service as may be selected by Maker for such purpose if said Bureau is not at
the time furnishing quotations; or (iii) if the Units are not listed for trading
on a National Exchange or quoted by NASDAQ, an amount equal to the net book
value of a Unit as of such date of determination. The Per Unit Selling Price as
determined in (i), (ii) or (iii) above as applicable less $1.00 shall be the
"Per Unit Premium." The cumulative Per Unit Premium multiplied by the number of
Conversion Units held as of a determination date shall mean the "Shares Held
Premium."
As of any determination date, "Conversion Premium" shall mean the
cumulative sum of the Outside Sale Premium, Market Sale Premium and Shares Held
Premium as of that date, cumulating only positive sums. For purposes of
Exhibit 10.7
<PAGE>
computation of the Conversion Premium, where the Outside Sale Premium, Market
Sale Premium or Shares Held Premium is represented by a negative number, it
shall not be utilized in the computation.
This note is secured by security interest created by Security Agreement
of even date herewith ("PRO Security Agreement") from Maker to Payee covering
400,000 Units ("Collateral"), and all proceeds thereof and therefrom whatsoever,
reference being here made to said Pro Security Agreement for a more particular
description of the Collateral and for all other relevant purposes.
It is the intention of the parties hereto to comply with the usury laws
of the State of California; accordingly, notwithstanding any provisions to the
contrary of this note, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this note or such documents require
the payment or permit the collection of interest in excess of the maximum amount
permitted by such laws. If any such excess of interest is contracted for,
charged or received under this note or under the terms of any of the documents
securing payment hereof or otherwise relating hereto, or in the event the
maturity of the indebtedness evidenced by this note is accelerated in whole or
in part, or in the event that all or part of the principal or interest of this
note shall be prepaid, so that under any of such circumstances the amount of
interest contracted for, charged or received under this note or under any of the
instruments securing payment hereof or otherwise relating hereto, on the amount
of principal actually outstanding from time to time under this note shall exceed
the maximum amount of interest permitted by the usury laws of the State of
California, then in any such event (a) the provisions of this paragraph shall
govern and control, (b) neither Maker, nor any other person or entity now or
hereafter liable for the payment hereof, shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount of
interest permitted by the usury laws of the State of California, (c) any such
excess which may have been collected shall be either applied as a credit against
the then unpaid principal amount hereof or refunded to Maker, at Payee's option,
and (d) the effective rate of interest shall be automatically reduced to the
maximum lawful contract rate allowed under the usury laws of the State of
California as now or hereafter construed by the courts having jurisdiction
thereof. Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged or received under this note or under such other
documents which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent permitted
by the laws of the State of California, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the
indebtedness evidenced hereby, all interest at any time contracted for, charged
or received from Maker or otherwise by Payee in connection with such
indebtedness.
Execution of this note by Maker is expressly conditioned on the
agreement by Payee that Payee shall not assign or transfer this note unless the
assignee or transferee of Payee shall expressly agree to be bound by the terms
and conditions of this Note and the PRO Security Agreement.
Anything contained herein to the contrary notwithstanding, Maker (which
term for purposes of this paragraph shall include Maker, any party holding by,
through or under Maker, any partner of Maker, any party acting for Maker, and
any successors or assigns of Maker) shall not be personally liable for payment
of any amounts payable under the terms of this note or under the above described
Exhibit 10.7
<PAGE>
PRO Security Agreement securing the payment hereof, and in the event of default
under the terms hereof or under said PRO Security Agreement, Payee shall rely
solely upon foreclosure of the security interest securing payment of this note
to satisfy the obligation of Maker hereunder and under said Security Agreement.
This Note shall be interpreted and enforced in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, Maker has caused this promissory note to be duly
executed and delivered to Payee by its authorized officers on and as of August
19, 1994.
PLAZA REALTY ONE LIMITED PARTNERSHIP
BY: COMMERCE PROFESSIONAL GROUP, INC.
By: /s/ Jimmy E. Nix
------------------------------------
Jimmy E. Nix,
President
By: /s/ Richard F. Watkins
------------------------------------
Richard F. Watkins,
Vice President
Exhibit 10.7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 166,000
<SECURITIES> 226,400
<RECEIVABLES> 16,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 618,400
<PP&E> 3,586,300
<DEPRECIATION> (181,900)
<TOTAL-ASSETS> 5,041,800
<CURRENT-LIABILITIES> 1,828,200
<BONDS> 0
0
1,300
<COMMON> 17,600
<OTHER-SE> 1,642,000
<TOTAL-LIABILITY-AND-EQUITY> 5,041,800
<SALES> 0
<TOTAL-REVENUES> 85,400
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,006,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 171,700
<INCOME-PRETAX> (1,092,300)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,092,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 340,300
<NET-INCOME> (752,000)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
