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Gold/Mining/Energy : Markatech - MKD (VSE) -- Ignore unavailable to you. Want to Upgrade?

To: Luisa G. who wrote (308)	10/5/1998 8:41:00 PM
From: BlueIce	Read Replies (1) \| Respond to of 416

NEWS RELEASE Markatech Industries Corporation VSE TRADING SYMBOL: MKD October 5, 1998 The Board of Directors of Markatech Industries Corporation (the "Company") is pleased to confirm the particular details with respect to its proposed acquisition of Markatech Compact Disc Inc. ("MCDI") and the progress of MCDI in developing the business opportunity. The Company previously disclosed the intended major acquisition of 60% of MCDI. MCDI is engaged in the business of manufacturing and replicating pre-recorded formats including CD-Audio, CD ROM and CD DVD. On October 1, 1998 MCDI confirmed that it had executed an Equipment Lease Agreement with Fairchild Technologies USA Inc. (Fairchild) valued at approximately $1,000,000, to provide MCDI with compact disc high speed replicating equipment. Under the agreement, MCDI paid an advanced equipment and technical training fee of $27,000 and Fairchild committed to a targeted 30 days equipment delivery and installation time table. MCDI's Equipment Lease Agreement with Fairchild, a company which is listed on the New York Stock Exchange, is unique in that Fairchild is sharing the CD replication market risk with MCDI by providing the equipment lease based on favourable pay-as-you-sell CDs payment terms. This form of corporate joint venture substantially reduces the start up and on going business risk of MCDI CD manufacturing business. The MCDI acquisition, as proposed, will be completed as follows, subject to regulatory approval: 1. The acquisition is a major acquisition of 60% of the issued and outstanding shares of MCDI for a total of 1,500,000 voting escrowed common shares of the Company. MCDI principals will retain a 4% gross royalty on sales. 2. The escrowed shares shall be released on the basis of ten shares released for every Cdn.$1.50 in cumulative aggregate net cash flow from operations. 3. MCDI will complete a private offering of non-voting preference shares to raise in aggregate $500,000. The preferred shares will carry a fixed dividend entitlement of 12% and a bonus dividend payable as an aggregate 5% royalty on gross sales of MCDI. The bonus dividend shall be paid pro rata to all preferred equity holders. Additionally, the preferred shares shall be convertible, at the option of the shareholder, into common voting shares of the Company over a five year period. A total of 2,000,000 shares shall be issued on completion of conversion at a deemed price of $0.25 per share. Conversion may not occur prior to the expiration of one year from the date of the subscription. The Company also re-announces a Private Placement in the aggregate sum of Cdn.$300,000, which will be used to provide for the initial down payment on the CD packaging equipment lease as to Cdn.$75,000; to provide for additional Autonet product development; and to provide for ongoing working capital. The Private Placement is priced $0.15 per share and provides a warrant exercisable at $0.15 and $0.18 respectively, in years one and two. The Company also re-announces the setting of employee and director share purchase options, in aggregate of 950,000 shares at the price of $0.15 per share. All of the foregoing is subject to prior regulatory approval. ON BEHALF OF THE BOARD OF DIRECTORS R. Douglas McLean Director The Vancouver Stock Exchange has neither approved nor disapproved the information contained herein.