STATE OF ARKANSAS

SECURITIES DEPARTMENT

IN THE MATTER OF ORDER PROVIDING A
TRANSACTIONAL EXEMPTION
FROM REGISTRATION
SUN INDUSTRIES, INC. NO. 99-039-S

FINDINGS OF FACT

  1. On August 2, 1999, a letter was received by the Arkansas Securities Commissioner requesting that the proposed offering and sale of approximately one hundred percent (100%) of the issued and outstanding shares of the capital stock (the "Stock") of Sun Industries, Inc. (the "Company"), to JK-Ergoline, Inc., a Delaware corporation (the "Buyer"), in a series of transactions be determined to be exempt transactions pursuant to Ark. Code Ann. 23-42-504(a)(12).

  2. The Company is a corporation organized under the laws of the State of Arkansas. The Stock consists of approximately one hundred percent (100%) of the issued and outstanding shares of capital stock of the Company owned by two individual shareholders (the "Sellers").

  3. The initial transaction consists of the offer and immediate sale by the Sellers of fifty-one percent (51%) of the Stock and the offer and subsequent sale by one individual shareholder of forty-nine (49%) of the Stock pursuant to a call option granted to the Buyer.

  4. If the call option is not exercised as it is contemplated, a second transaction may occur consisting of the exercise of a put option granted to the Buyer from the Sellers and the subsequent resale by the Buyer to the Sellers pursuant to such put option of the fifty-one percent (51%) of the Stock originally purchased by the Buyer from the Sellers. The transactions described in the previous paragraph 3 and this paragraph 4 are collectively hereinafter referred to as the "Transactions."

  5. An exemption from registration has been requested pursuant to the Commissioner’s discretionary authority under Ark. Code Ann. 23-42-504(a)(12). The Sellers and the Buyer have fully and completely been involved in the negotiation of an agreement for the sale of the Stock, and they have been, or had the opportunity to be represented in these negotiations by counsel. The Sellers and the Buyer have had access to financial and other information concerning the parties as is necessary to make an informed investment decision. Based upon the foregoing, the Transactions are not the type the Arkansas Securities Act (the "Act") was designed to protect by requiring registration.

CONCLUSIONS OF LAW

  1. Under Section 23-42-504(a)(12) of the Act, the Commissioner may by order exempt certain transactions from Sections 23-42-501 and 23-42-502 of the Act as not being necessary or appropriate in the public interest for the protection of investors.

  2. It is not necessary or appropriate in the public interest for the protection of investors for the Sellers or the Buyer to be required to register the Transactions under the Act for the purposes of the contemplated offering.

  3. It is not necessary or appropriate in the public interest for the protection of investors for the Sellers or the Buyer to be required to engage the services of a registered agent for the purpose of making sales of the securities.

OPINION

    In recognition of the representations made by the Sellers, it appears registration of these Transactions is unnecessary in this instance.

    This order does not exempt the Sellers or the Buyer from the antifraud provisions of the Act.

ORDER

    IT IS THEREFORE ORDERED that securities offered or sold in Arkansas for the proposed Transaction, if offered and sold in compliance with the representations made in the letter of August 2, 1999, and in accordance with the Findings of Fact stated herein, shall be exempted from Sections 23-42-501 and 23-42-502 of the Act.

    WITNESS MY HAND AND SEAL this 2nd day of August 1999.

 

ANN MCDOUGAL
DEPUTY SECURITIES COMMISSIONER