FORM OF DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE ACT) OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S
UNDER THE ACT) EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT OR AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES
LAWS.
No. _______ US
$__________
ANTARES RESOURCES CORPORATION / UNITED KINA BREWING GROUP LIMITED
10% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 1998
THIS DEBENTURE is one of a duly authorized issue of Debentures of Antares
Resources Corporation / United Kina Brewing Group Limited, a corporation duly
organized and existing under the laws of New York (the "Company") designated
as its 10% Convertible Debenture Due December 31, 1998, in an aggregate
principal amount not exceeding Two Million Dollars (U.S. $2,000,000).
FOR VALUE RECEIVED, the Company promises to pay to ______________________ the
registered holder hereof and its successors and assigns (the AHolder@), the
principal sum of ______________________ Dollars (US $_________) on December
31, 1998 (the "Maturity Date"), and to pay interest on the principal sum
outstanding, at the rate of 10% per annum commencing from the date of
issuance due and payable semi-annually in arrears on the first day of each
December and June (the "Interest Payment Dates"). Accrual of interest shall
commence on the date hereof and shall continue until payment in full of the
outstanding principal sum has been made or duly provided for. The interest
so payable will be paid at the option of the Company, either in cash or in
shares of common stock at the then applicable conversion price (computed as
described in paragraph 4 below) will be paid to the person in whose name this
Debenture (or one or more predecessor Debentures) is registered on the
records of the Company regarding registration and transfers of the Debentures
(the "Debenture Register"); provided, however, that the Company's obligation
to a transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Offshore Securities Subscription Agreement dated as of December___, 1996
between the Company and ______________________________________ (the
"Subscription Agreement"). The principal of, and interest on, this Debenture
are payable in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company
will pay the outstanding principal of and all accrued and unpaid interest due
upon this Debenture on the Maturity Date, less any amounts required by law to
be deducted or withheld, to the record Holder of this Debenture as of the
tenth (10th) day prior to the Maturity Date and addressed to such record
Holder at the last address appearing on the Debenture Register. The
forwarding of such check shall constitute a payment of outstanding principal
and interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum represented
by such check plus any amounts so deducted.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same but not less
than U.S. $50,000. No service charge will be made for such registration or
transfer or exchange.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax or other applicable
laws at the time of such payments. Holder agrees to provide Company a Form
W-8, a Certification under penalty of perjury, or a certificate from a
financial institution described in Section 871(h)(4)(B) of the Internal
Revenue Code of 1986 demonstrating that the Holder is not a United States
person.
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3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged in the U.S.
only in compliance with the Securities Act of 1933, as amended (the AAct@)
and applicable state securities laws. Prior to due presentment for transfer
of this Debenture, the Company and any agent of the Company may treat the
person in whose name this Debenture is duly registered on the Company's
Debenture Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Debenture
be overdue, and neither the Company nor any such agent shall be affected or
bound by notice to the contrary. Any holder of this Debenture, electing to
exercise the right of conversion set forth in Section 4(a) hereof, in
addition to the requirements set forth in Section 4(a), is also required to
give the Company (i) written confirmation that it is not a U.S. Person and
the Debenture is not being converted on behalf of a U.S. Person ("Notice of
Conversion") or (ii) an opinion of U.S. counsel to the effect that the
Debenture and shares of common stock issuable upon conversion thereof have
been registered under the 1933 Act or are exempt from such registration. In
the event a Notice of Conversion or opinion of counsel is not provided the
Holder hereof will not be entitled to exercise the right to convert the
Debentures pursuant to Section 4(a) herein.
4. The Holder of this Debenture is entitled, at its option, at any time
commencing 60 days after issue hereof to convert any or all of the original
principal amount of this Debenture into shares of common stock, $0.001 par
value per share, of the Company (the "Common Stock"), at a conversion price
for each share or Common Stock equal to the lower of (a) 70% of the average
closing bid price of the Common Stock for the five (5) business days
immediately preceding the conversion date or (b) $3.50 per share of Common
Stock, as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") (the "Conversion Price"). For purposes
of this Section, the closing bid price of the common stock shall be the
closing bid price as reported by NASDAQ Small Cap Market, or the closing bid
price in the over-the-counter market or, in the event the common stock is
listed on a stock exchange, the closing bid price on such exchange as
reported in the Wall Street Journal. Such conversion shall be effectuated by
surrendering the Debentures to be converted to the Company, with the form of
conversion notice attached to the Debenture as Exhibit A, executed by the
Holder of the Debenture evidencing such Holder's intention to convert this
Debenture, and accompanied, if required by the Company, by proper assignment
in blank. Interest accrued or accruing from the date of issuance to the date
of conversion on the amount so converted shall be paid in cash or at
Company's option, in shares of common stock of the Company, calculated at the
same conversion price (as determined above), as would apply on the conversion
date of the principal amount being converted but using the discount
percentage applicable as of such date and shall constitute payment in full of
any such interest on the same terms as would otherwise apply to the
conversion of the principal amount hereof. No fractional shares no scrip
representing fractions of Shares will be issued on conversion, but the number
of Shares issuable shall be rounded up to the nearest whole share. The date
on which notice of conversion is given ("Conversion Date") shall be deemed to
be the date on which the Holder has delivered this Debenture, with the
Conversion Notice, as defined below, duly executed, to the Company or, if
earlier, the date set forth in such Conversion Notice if the Debenture is
received by the Company within five(5) business days thereafter. Any
unconverted principal amount and accrued interest thereon shall at maturity
date be paid, at the option of the Holder, in either (a) cash or (b) shares
of common stock valued at a price equal to the average closing bid price for
the five trading days immediately preceding the maturity date.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin
currency, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice
of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder.
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7. If one or more of the "Events of Default" as described in paragraph 8
shall occur, the Company agrees to pay all costs and expenses, including
reasonable attorneys' fees, which may be incurred by Holder in collecting any
amount due under the Debenture.
8. If one or more of the following described "Events of Default" shall
occur:
(a) The Company shall default in the payment of principal or interest on
this Debenture; or
(b) Any of the representations or warranties made by the Company herein, in
the Subscription Agreement, or in any certificate or financial or other
written statements heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Debenture or
the Subscription Agreement shall be false or misleading in any material
respect at the time made; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of
the Company under this Debenture and such failure shall continue uncured for
a period of thirty (30) days after notice from the Holder of such failure; or
(d) The Company shall (1) become insolvent; (2) admit in writing its
liability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; or
(4) apply for or consent to the appointment of a trustee, liquidator or
receiver for its or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or
for a substantial part of its property or business without its consent and
shall not be discharged within sixty (60) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or warrant of attachment, or similar process in
excess of Three Hundred Thousand ($300,000) Dollars in the aggregate shall be
entered or filed against the Company or any of its properties or other assets
and shall remain unpaid, unvacated, unbonded or unstayed for a period of
thirty (30) days or in any event later than five (5) days prior to the date
of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed within sixty (60) days
after such instruction of the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any such
proceeding; or
(i) The Company shall have its Common Stock delisted from an exchange or
over-the-counter market.
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Then, or at any time thereafter, and in each and every such case, as long as
such Event of Default is continuing unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be
a waiver of any subsequent default) at the option of the Holder and in the
Holder's sole discretion, the Holder may consider this Debenture immediately
due and payable, without presentment, demand, protest or notice of any kinds,
all of which are hereby expressly waived, anything herein or in any note or
other instruments contained to the contrary notwithstanding, and the Holder
may immediately, and without expiration of any period of grace, enforce any
and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a general unsecured obligation of the Company.
No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director,
as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
10. The Holder of this Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon exercise thereof except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky law or
similar laws relating to the sale of securities.
11. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it
is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any
way be affected or impaired thereby.
12. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the
Company and the Holder with respect to the subject hereof. Neither this
Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
13. This Debenture shall be governed by and construed in accordance with the
laws of California.
14. As set forth herein, the Company shall use all reasonable efforts to
issue and deliver, within five business days after the Holder has fulfilled
all conditions and submitted all necessary documents duly executed and in
proper form required for conversion (the "Deadline"), to the Holder or any
party receiving a Debenture by transfer from the Holder (together, a
"Holder"), at the address of the Holder on the books of the Company, a
certificate or certificates for the number of Shares of Common Stock to which
the Holder shall be entitled. The Company understands that a delay in the
issuance of the Shares of Common Stock beyond the Deadline could result in
economic loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay liquidated damages to the Holder for late issuance
of Shares upon conversion in accordance with the following schedule (where
"No. Business Days Late" is defined as the number of business days beyond
seven (7) business days from the date of receipt by the Company of a Notice
of Conversion and the transfer agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Debenture to be converted, all in accordance with the Debenture, Subscription
Agreement and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
- ---------------------- ------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
10 $1,000 + $100 each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under this
Section by check upon the earlier to occur of (i) issuance of the Shares to
the Holder or (ii) each monthly anniversary of the receipt of the Company of
such Holder's Notice of Conversion. Nothing herein shall limit the Holder=s
right to pursue actual damages for the Company's failure to issue and deliver
shares of Common Stock to the Subscriber in accordance with the terms of the
Debenture.
The Holder may, subject to compliance with the Offshore Securities
Subscription Agreement and the provisions of Regulation S, without notice,
transfer or assign this Debenture or any interest herein in integral
multiples of $50,000 or the entire outstanding balance (other than to a U.S.
Person or on behalf of a U.S. Person) and may mortgage, encumber or transfer
any of its rights or interest in and to this Debenture or any part hereof
and, without limitation, each assignee, transferee and mortgagee (which may
include any affiliate of the Holder) shall have the right to transfer or
assign its interest. Each such assignee, transferee and mortgagee shall have
all of the rights of the Holder under this Debenture. The Company may
condition registrations of transfers on the receipt of an IRS Form W-8 or an
equivalent certification under penalty of perjury in compliance with Section
871(h)(4)(B) of the Internal Revenue Code of 1986.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated:-------------------
ANTARES RESOURCES CORPORATION
By:---------------------------
Title:------------------------
UNITED KINA BREWING GROUP LIMITED
By:---------------------------
Title:------------------------
Buyer certifies under the penalty of perjury that Buyer is neither a citizen
nor a resident of the United States and that Buyer's full name and address
are set out below.
______________________________________
______________________________________
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EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $______________ of the
above Debenture No. ___ into Shares of Common Stock of Antares Resources
Corporation / United Kina Brewing Group Limited (the "Company") according to
the conditions set forth in such Debenture, as of the date written below.
The undersigned represents and warrants that (i) it is not a U.S. Person as
defined in Regulation S promulgated under the Securities Act of 1933, as
amended, and is not converting the Debenture on behalf of any U.S. Person and
the representations contained in the Subscription Agreement are true, (ii)
all of the requirements of Regulation S promulgated under the Securities Act
of 1933, as amended (the "Act") applicable to the undersigned have been
complied with by the undersigned, and (iii) the undersigned has not engaged
in any transaction or series of transactions that is a part of or a plan or
scheme to evade the registration requirements of the Act.
Date of Conversion*-----------------------------------------------
Applicable Conversion Price---------------------------------------
[Specify discount if more than one discount percentage is available].
Signature---------------------------------------------------------
[Name]
Address:----------------------------------------------------------
----------------------------------------------------------
* This original Debenture and Notice of Conversion must be received by the
Company by the fifth business date following the Date of Conversion.
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