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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES EXCHANGE ACT OF 1933
CITYVIEW ENERGY CORPORATION LIMITED
(Exact Name of Registrant as Specified in Its Charter)
WESTERN AUSTRALIA, AUSTRALIA NOT APPLICABLE
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
19 WALTERS DRIVE, HERDSMAN, WESTERN AUSTRALIA 6017 - (61-8) 9445 3199
(Address and Telephone Number of Registrant's Principal Executive Offices)
Gary B. Wolff, P.C.
Legal Counsel
Attorney and Counsellor at Law
747 Third Avenue
New York, New York 10017
(212) 644-6446
(Name, Address and Telephone Number of Agent For Service)
Approximate date of commencement of proposed sale to the public: At
the discretion of the Converting Debenture holders after the Effective Date of
this Registration Statement.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box. [ X ]
If this form is filed to register additional securities for an
offering pursuant to Rule 462 (b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title Of Each Class Of Amount To Be Offering Price Aggregate Offering Amount Of Registration
Securities To Be Registered (1) Per Share (2) Price Fee
Registered
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Ordinary Fully Paid 1,777,778 $1.125 $2,000,000 $590.00
Shares
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(1) Consists of 1,777,778 shares which are reserved for issuance pursuant to
currently issued and outstanding Convertible Debentures which will be offered
for resale by certain Selling Holders under this Registration Statement and
which Debentures require reservation of 150% of shares underlying Convertible
Debentures. If and to the extent that all of such reserved shares are not
required upon conclusion of all conversions, a post effective amendment will be
filed deregistering such shares. Also registered hereunder is such indeterminate
number of ordinary shares (hereinafter "Ordinary Shares" or "Shares") of the
Company as may be issuable on conversion of the Debentures, including such
additional Shares as may be issuable as a result of adjustments to the
conversion price as well as such additional Shares as may become issuable
pursuant to (i) any Shares issuable in exchange for interest earned under
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Convertible Debentures and (ii) any anti-dilution provisions as may be contained
in the aforesaid Convertible Debentures and related Registration Rights
Agreements. All of such additional Shares will, if issued, be issued for no
additional consideration and therefore no registration fee is required and
includes, in accordance with Rule 416, any Shares to be issued as a result of
stock dividends, stock splits or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933. In accordance
with Rule 457(c) of Regulation C, the estimated price for the Securities was
based on the average of the high and low reported prices on the Nasdaq SmallCap
Market on September 8, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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PART I
INFORMATION REQUIRED IN THE PROSPECTUS
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Item 1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.
Item 2. Inside Front Cover Page and Outside Back
Cover Pages of Prospectus.
Item 3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.
Item 4: Use of Proceeds
Item 5: Determination of Offering Price
Item 6: Dilution
Item 7: Selling Security Holders
Item 8; Plan of Distribution
Item 9. Description of Securities to be Registered.
Item 10. Interests of Named Experts and Counsel.
Item 11. Material Changes.
Item 12. Incorporation of Certain Information by
Reference.
Item 13. Disclosure of Commission Position on
Indemnification For Securities Act Liabilities.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Item 15. Indemnification of Directors and Officers.
Item 16. Exhibits
Item 17. Undertakings
Signatures
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INDEX TO EXHIBITS
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Exhibit No. Description
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5.1 Opinion of Gary B. Wolff, P.C., counsel to the Registrant *
10.1 Form of Securities Purchase Agreement dated June 3, 1998
10.2 Form of Registration Rights Agreement dated June 3, 1998
10.3 Form of Placement Agency Agreement dated June 3, 1998
10.4 Form of 2 Year Convertible Debenture dated June 3, 1998
23.1 Consent of Grant Thornton
23.2 Consent of Gary B. Wolff, P.C. (included in Exhibit 5.1) *
* To be filed by amendment.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
Up to 1,777,778 Ordinary Fully Paid Shares
CITYVIEW ENERGY CORPORATION LIMITED
This prospectus ("Prospectus") relates to the offer and sale of up
to 1,777,778 Ordinary Fully Paid Shares ("Shares"), of CityView Energy
Corporation Limited, an Australian corporation ("CityView Energy Corporation
Limited" or the "Company"), which Shares consist of up to 1,777,778 Shares which
are issuable to certain persons (the "Selling Holders") upon conversion of
convertible debentures, issued in June 1998, (the "Convertible Debentures") and
which Shares are being registered hereby pursuant to Registration Rights
Agreements between the Company and the Selling Holders named in this Prospectus.
The Ordinary Fully Paid Shares Covered by this Prospectus are for
purposes of conversion of up to $1,000,000 of 2 Year Convertible Debentures
bearing interest at 6% per annum issued in multiples of $500,000 each by the
Company in June 1998. The Debentures are convertible into Ordinary Fully Paid
Shares of the Company at any time after ninety (90) days after the date of
receipt of the funds by the Company for these Convertible Debentures (and before
June 3, 2000) at the Conversion Price equal to 75% of the average closing bid
price for ordinary fully paid shares in the Company on either the National
Association of Securities Dealers ("NASDAQ") Small Capital Market stock exchange
or the Australian Stock Exchange Limited ("ASX") for the five (5) trading days
immediately preceding the conversion date. Interest accrues from the date of
receipt of the funds by the Company up to the date of conversion into ordinary
fully paid shares, or June 3, 2000 if no conversion has taken place. The accrued
interest at the date of conversion may be converted into ordinary fully paid
shares of the Company on the same basis as the Convertible Debenture principal
amount or may be paid in cash at the Company's option. Each holder of
Convertible Debentures on June 3, 2000, has the right to demand, by written
payment notice to the Company that payment of all principal and accrued interest
on balance of unconverted Debentures be paid to such holder in cash in US
dollars on June 3, 2000. Each outstanding Convertible Debenture for which no
written payment notice is received by the Company in a timely manner
automatically shall be converted into ordinary fully paid shares of the Company
on the same basis described above.
The Shares may be offered and sold from time to time by the
Selling Holders named herein (or by their transferees, pledgees, donees or their
successors pursuant to the Prospectus)
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in transactions on the NASDAQ SmallCap Market, in negotiated transactions or
otherwise at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Securities may be
sold by the Selling Holders from time to time directly to purchasers or through
agents, underwriters or dealers who may receive compensation in the form of
discounts, concessions or commissions from the Selling Holders or the purchasers
of the Securities for whom such agents, underwriters or dealers may act. See
"Selling Holders and Plan of Distribution." If required, the names of any such
agents or underwriters involved in the sale of the Securities and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in an accompanying supplement to this Prospectus. The Company
will not receive any of the proceeds from the sale of the Securities by the
Selling Holders.
The Ordinary Fully Paid Shares of the Company are listed for
trading on the Nasdaq Small Capital Market under the symbol "CVCLF" and on the
Australian Stock Exchange Limited ("ASX") under the symbol "CVI." On September
8, 1998, the last reported sale price on the Nasdaq Small Capital market was
US$1.125 per share.
The Selling Holders will receive all of the net proceeds from the
sale of the Securities and will pay all underwriting discounts and selling
commissions, if any, applicable to any such sale. The Company is responsible for
payment of all other expenses incident to the offer and sale of the Securities.
The Selling Holders and any broker-dealers, agents or underwriters that
participate in the distribution of the Securities may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Act"), and any profit on the sale of the Securities by the Selling Holders and
any commissions received by any such underwriters may be deemed to be
underwriting commissions or discounts under the Act. See "Selling Holders and
Plan of Distribution".
The enforcement by investors of civil liabilities under the federal
securities laws may be affected adversely by the fact that the Company is
incorporated or organized under the laws of Australia, that its officers and
directors may not be residents of the United States and that all of the
Company's assets may be located outside the United States.
All references herein to the "Company" refer to CityView Energy
Corporation Limited and its subsidiaries. The executive offices of the Company
are located at 19 Walters Drive, Herdsman, Western Australia 6017. The telephone
number is (61-8) 9445 3199 and the fax number is (61-8) 9445 3947.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE
AND INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1998.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act"), as applicable to foreign
private issuers, and in accordance therewith files reports and other information
with the Securities and Exchange Commission (the "Commission"). The Company has
filed with the Commission a Registration Statement (the "Registration
Statement"), of which this Prospectus is a part, on Form F-3 under the 1934 Act
with respect to the Ordinary Fully Paid Shares offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement,
certain items of which are contained in exhibits to the Registration Statement
as permitted by the Rules and Regulations of the Commission. For further
information with respect to the Company and the Ordinary Fully Paid Shares
offered by this Prospectus, reference is made to such Registration Statement
including the exhibits thereto and the financial statements and notes thereto
filed or incorporated by reference as a part thereof. Statements contained
herein concerning the provisions or contents of such documents referred to
herein are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. Such information, and the reports and other
information filed with the Commission by the Company can be inspected and copied
at the Commission's public reference facilities located at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following
Regional Offices: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661- 2511; and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials may also be obtained from the Commission at
prescribed rates by mailing a request to the Public Reference Section of the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a Web site on the Internet that
contains reports and other information regarding registrants that file
electronically with the Commission, such as the Company. The address of such
site is: http://www.sec.gov. In addition, the Company furnishes its shareholders
with annual reports containing consolidated financial statements certified by an
independent chartered accounting firm. The financial statements included in such
reports are prepared in accordance with Australian generally accepted accounting
principles ("GAAP") and include a reconciliation of such information with U.S.
GAAP.
The Ordinary Fully Paid Shares of the Company may be traded on
the NASDAQ Small Capital Market under the symbol "CVCLF" and on the Australian
Stock Exchange Limited under the symbol "CVI".
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Securities
and Exchange Commission pursuant to the Exchange Act are hereby incorporated by
reference into this Prospectus.
(1) Annual Report on Form 20-F of the Company for the fiscal year ended
December 31, 1997; and
(2) All other reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the Company since
December 31, 1997.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 12(a), 12(c) and 15(d) of the 1934 Act prior to
the termination of the offering, shall be deemed to be incorporated by
reference into this Prospectus.
With respect to any document incorporated by reference in this
Prospectus but not delivered herewith the Company undertakes to provide without
charge to each persons, including a beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person a copy of any and all of
the information that has been incorporated by reference herein (not including
exhibits to such information unless such exhibits are specifically incorporated
by reference into such information). Such requests may be addressed to CityView
Energy Corporation Limited, 19 Walters Drive, Herdsman, Western Australia 6017,
Attention Alan Peter Woods, Secretary.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein, in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein, modifies or replaces such
statement. The modifying or superseding statement need not state that is has
modified or superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The making of a modifying
or superseding statement shall not be deemed an admission that the modified or
superseded statement, when made, constituted a misrepresentation of any untrue
statement of a material fact or an omission of a material fact required to be
stated or necessary to make a statement not misleading in light of the
circumstances in which it was made. Any statement so modified or superseded
shall not be deemed except as so modified or superseded to constitute a part of
this Prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAW
The Company is an Australian incorporated public company. Certain
of the directors and executive officers of the Company and certain experts named
herein are not residents of the United States and all of the assets of the
Company are located outside of the United States. As a result, it may be
difficult or impossible for shareholders of the Company to effect service of
process upon such persons within the United States with respect to matters
arising under the
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United States federal securities laws or to enforce against them in United
States courts judgments of such courts predicated upon the civil liability
provisions of the United States federal securities laws or otherwise.
Shareholders of the Company should be aware that there is some doubt as to the
enforceability in Australia in original actions, or in actions for enforcement
of judgments of United States courts, of civil liabilities predicated upon the
United States federal securities laws. In addition, awards of punitive damages
and actions brought in the United States or elsewhere may be unenforceable in
Australia.
THE OFFERING
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Common Stock Offered (1) Up to 1,777,778 Shares
Common Stock Outstanding
Before the Offering(2)(3) 13,657,068
Common Stock Outstanding
After the Offering(4)
Use of Proceeds The Company will not receive any of the proceeds from
the sale of any of the Securities.
Risk Factors The Securities offered hereby involve a high degree
of risk. See "Risk Factors".
Nasdaq SmallCap Market Symbol CVCLF
Australian Stock Exchange Symbol CVI
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(1) Consists of an aggregate of up to 1,777,778 Shares reserved for issuance
upon the conversion of the Convertible Debentures. See "Selling Holders and Plan
of Distribution" and "Description of Capital Stock" and based upon 150$% of
those Shares currently anticipated to be needed for conversion purposes in
accordance with requirements contained in underlying Debentures and Registration
Rights Agreements.
(2) Does not include up to 1,777,778 Shares to be issued to holders of
Convertible Debentures issued by the Company in June 1998 upon conversion of
Convertible Debentures assuming conversion based on a 25% discount to the
closing price on the Nasdaq SmallCap Market on September 8, 1998 and further
based upon reservation and registration of 150% of those Shares required as
indicated in footnote 1 above,. Also, does not include any other shares which
may be reserved for issuance upon any other form of option and/or warrant
heretofore or hereafter granted.
(3) As of the close of business on September 8, 1998 there were 13,657,068
shares issued and outstanding.
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(4) Since the Common Stock registered hereunder is being offered on a delayed or
continuous basis pursuant to Rule 415 under the Act, the Company cannot include
herein information about the Common Stock outstanding after the Offering.
No dealer, sales representative, or any other person has been
authorised to give any information or to make any representations in connection
with this offering other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorised by the Company, the Selling Agents or any Underwriter. This
Prospectus does not constitute an offer to sell, or solicitation of an offer to
buy, any securities other than the registered securities to which it relates or
an offer to, or solicitation of, any person in any jurisdiction where such an
offer or solicitation would be unlawful. Neither the delivery or this Prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
time subsequent to the date hereof.
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial information incorporated by reference herein
or appearing elsewhere in this Prospectus. This Prospectus contains certain
forward-looking statements not based on historical facts within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Exchange Act. When used in this Prospectus, the words
"believes," "expects," "intends," "anticipates" and similar expressions or the
negative thereof or other variations thereon are intended to identify
forward-looking statements. Such statements reflect the Company's reasonable
judgement with respect to future events and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected. Such risks and uncertainties include the actions of the Company's
competitors, changes in business conditions and changes in regulations and laws
as well as those risks discussed herein under the caption "Risk Factors".
THE COMPANY
The Company was incorporated as CityView Investments Limited on May
3, 1987, was listed on the Second Board of the Perth Stock Exchange on October
20, 1987 and was transferred to the Main Board of the Australian Stock Exchange
on January 2, 1992. The Company changed its name to CityView Corporation Limited
on August 9, 1996 and subsequently to CityView Energy Corporation Limited on May
19, 1997. The Company is engaged in the acquisition and development of proven
oil and gas reserves. It conducts such operations through separate wholly owned
subsidiaries. Prior to engaging in the foregoing the Company was an investment
company acquiring shares in publicly listed and private companies and investing
in real estate land developments through its wholly owned subsidiary corporation
Starview Pty Ltd ("Starview"). On June 28, 1996, the Company sold its interest
in Starview and ceased investing in securities and real estate. The Company's
decision to dispose of Starview followed the Company's rationalisation of its
business interests to concentrate its efforts on the acquisition and development
of proven oil and gas reserves. The Company also owns certain gold exploration
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interests which it intends to dispose of.
The ordinary fully paid shares of the Company are traded on the
NASDAQ Small Capital Market under the symbol "CVCLF" and on the ASX under the
symbol "CVI".
The Company has its principal executive office located at 19 Walters
Drive, Herdsman, Western Australia 6017 (telephone number (618) 9445-3199). The
Company has an operating office for it subsidiary company operations in
Indonesia located at Plaza CityView, JL Kemang Timur No. 22, Pejatan Barat,
Jakarta Selatan, Indonesia (telephone number 6221 718 1959). The Company has a
United States appointed Attorney and agent, Gary B. Wolff, P.C., located at 747
Third Avenue, New York, New York 10017 (telephone number (212) 644-6446).
The Company is building a broad based energy corporation capitalizing
on the gap emanating from rising regional demand for energy combined with the
deregulation of the industry. A niche exists for alternative style operators
capable of merging broad technical competencies with specialist ability to
structure long-term supply contracts and operations relevant to the region. The
recent meltdown in Asia has opened up some excellent opportunities for the
Company. More realistic conditions now prevail and the Company aims to
capitalise on this by acquiring production on very commercial terms.
The Company is an associate of Malaysia Mining Corporation Berhad
("MMC") its principal stockholder which has provided the initial equity capital
and also a loan facility for the Company's working capital requirements. MMC is
experienced in downstream operations having been involved in major oil and gas
development projects in Malaysia and through its operatorship of the natural gas
distribution system for Peninsular Malaysia. The strategic alliance between the
Company and MMC provides the support for the Company to expand its oil and gas
operations and to undertake downstream projects such as gas plant services.
The Company, through its wholly owned subsidiary Western Resources NL
("Western") identified Indonesia for its focus for acquisitions and development
of oil and gas reserves. Indonesia was selected after considering prospectivity
for oil and gas, demand for the produced product, availability of supportive
infrastructure, foreign company participation terms and conditions and sovereign
risk. Western is not affiliated in any manner with Western Resources, Inc., a
U.S. corporation.
Following are details of the Company's exploration and development
interests.
The Company's current focus is primarily on gas rather than oil
because returns are generally higher for gas. The Company's three gas projects
are Madura, Simenggaris and Timoforo. Each has a ready market waiting to be
supplied. The local market in Madura has to import LPG gas from East Java.
Simenggaris is near to the methanol plant on Bunyu Island which is suffering
from feedstock shortages. Timoforo gas would be sold to the adjacent Tangguh LNG
project.
In addition to the Company's gas projects, the Company also has
Technical Assistance Contracts ("TAC") for two oilfields in South Sumatra -
Tanjung Miring Timur presently
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producing up to 750 BOPD rising to a level of 900-1500 BOPD later this year and
Tuba Obi East with estimated recoverable reserves of 8 MMBO. The principal
purpose for the Company taking up these two fields is to participate in the
development of the downstream operations of South Sumatra. A third TAC held by
the Company is for Sangkimah in east Kalimantan which was acquired to gain entry
to the adjacent Sangatta oil field, producing approximately 2,400 BOPD.
Discussions with Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") for the proposed joint operations for Sangatta have commenced.
The Company is managed by an experienced team of local and expatriate
professionals. By combining low overhead costs with technical and corporate
strength the Company is maximising its competitive edge. Through its strong
financial backing and effective business network the Company is well positioned
to realise its corporate goals within the next few years.
The Company's gas projects may be summarized as follows:
A. MADURA BLOCK - ONSHORE MADURA ISLAND PSC-JOB, WESTERN MADURA PTY LTD
("WESTERN MADURA")
On 28 January 1997 the President Director of Pertamina signed the
authorization for the Company's wholly owned subsidiary Western Madura to
commence operations on the Madura Block prior to the formal signing of the
PSC-JOB agreement. The signing of the contract took place on 15 May 1997,
awarding the 2728km squared Madura Block to Western Madura for an exploration
term of 10 years and production term of 20 years.
HISTORY
Oil and gas exploration began on Madura Island in the late 1800's to
1910 with over 100 shallow (less than 500m) wells drilled on oil seeps and
surface features. Production was marginal with a cumulative total of less than
1.0MMBO. Exploration was limited on the block until the 1970's when it was held
in succession by Indonesia Cities Services, Pertamina and Shell. Several
generations of seismic data were acquired in the 1980's and 1990's but only 6
wells have been drilled on the Island since 1910.
REGIONAL SETTING
The Madura Block lies in the prolific oil and gas region of East
Java. A number of large fields have been discovered in this area and it is these
same producing trends which are to be examined on Madura. There is an E-W
terrain running across the block that underwent inversion in the
Plio-Pleistocene. Within that band a number of structures have been identified
at, due to the inversion, fairly shallow levels. These relatively shallow
features are the principal target for the Western Madura program.
PROSPECTS
The 1998 work program for the Madura Block is to drill 4 shallow
(1000-1500m) wells to test both gas and oil prospects in the central inversion
zone. The two primary prospects are:
KARASAN: The Karasan prospect is a 2000-3000 acre structure at the Prupuh
limestone level located on the western side of the block. Seismic data gives
strong indications that the feature is
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probably a reef buildup. This feature is analogous to the Mudi reef discovery in
East Java (40MMBO). Down dip wells encountered gas in a non-reef facies. Karasan
will be gas bearing and has anticipated recoverable reserves of at least 300BCF.
If the reef facies is confirmed, Karasan has a POS of 50%. A 1200m well will be
drilled to test the prospect.
SEBAYA: The Sebaya prospect is a large, faulted anticlinal feature located on
the eastern side of Madura. The prospect actually underlies the old Kertegeneh
Field discovered in 1900. Oil production from Kertegeneh confirms that Sebaya is
an oil play. Most of the prospective Tawun and Tuban section has not been tested
by the older shallow wells. Anticipated recoverable reserves on the prospect are
30MMBO with a POS of 25%. A 800m well will be drilled to test the prospect.
PANDEAN: Another possible Prupuh reef structure located to the north of Karasan.
A 1200m well will be drilled contingent on the result of the Karasan-1 well.
TAMBUKU: A prospect located to the north of Sebaya with mean reserves of 15MMBO.
A 800m well will be drilled to test the prospect.
MARKET
Western Madura has discussed with the local Madura government
downstream projects which include a small refinery, LPG plant and a power plant
to supply the local market and displace imports from East Java.
B. SIMENGGARIS BLOCK - ONSHORE NE KALIMANTAN PSC-JOB, GENINDO WESTERN
PETROLEUM PTY LTD ("GENINDO")
On 28 September 1997 the President Director of Pertamina signed the
authorisation for Genindo to commence operations on the Simenggaris Block prior
to the formal signing of the PSC-JOB agreement. The signing of the Contract took
place on 24 February 1998 awarding the 2734km squared Simenggaris Block to
Genindo which is owned 85% by CityView. The contract term is 10 years for
exploration and 20 years for production.
HISTORY
The Simenggaris Block is adjacent to some of the earliest oil
production in Indonesia with exploration dating back to the 1890's. The nearby
giant Pamusian field was discovered in 1905 and the Bunyu field in 1920.
Exploration was limited on the block until the late 1960's when portions of the
block were held in succession by Japex, ARCO, Deminex and Pertamina. Several
generations of seismic data were acquired and 15 wells were drilled within the
Block leading to four discoveries: Sembakung oil field (40MMBO), Bangkudulis oil
field, Sesayap-1 and S.Sembakung-1. The former two are producing fields excluded
from the contract area and the latter two are undeveloped gas-condensate
discoveries.
REGIONAL SETTING
The Simenggaris Block lies in the prolific oil and gas Tarakan Basin
region, with proven reserves of up to 500MMBOE. The Tarakan Basin stratigraphy
consists of a classic prograding deltaic sequence from upper Miocene through
Pliocene time. The majority of the reserves are
11
<PAGE> 14
found along the Kalimantan coast in Pliocene age deltaic reservoirs. Further
inland gas and oil are found in upper Miocene age, paleogeographic equivalent,
deltaic reservoirs. The upper Miocene age reservoirs are underexplored and will
be the focus of the Genindo work program.
PROSPECTS
The 1998-99 work program for the Simenggaris Block is to drill 2
wells to test the Sesayap gas- condensate prospect. Additional studies will need
to be carried out to fully delineate all the prospects on the block. At present
the two primary prospects are:
SESAYAP: The Sesayap prospect is a fault-closed 4000 acre structure located on
the western side of the Block. ARCO drilled the Sesayap-A1 and A2 wells in the
late 1970's. The A1 well tested 25MMCFGPD and 65 BOPD from highly porous upper
Miocene sandstones; the A2 well was a successful sidetrack. The prospect has
probable and possible reserves of 200BCF with upside potential of 335BCF. The
prospect is relatively low risk with a POS of 60%. Two 1500m wells will be
drilled in 1998-99 to test the prospect.
S. SEMBAKUNG: The South Sembakung-1 well tested 10MMCFGPD and 110BOPD from upper
Miocene age sandstone reservoirs. The structure needs to be re-mapped using
newly re-processed seismic data before reserves can be determined. It is
probable however that the accumulation is similar to the better-defined Sesayap
prospect.
OTHER: Numerous additional leads are present on the Block. These leads are
currently being analyzed and the prospect portfolio upgraded.
MARKET
Several gas markets have been identified for the Simenggaris Block
with gas prices of US$2.20 per MCF expected, based on current pricing levels.
These markets include a future fertiliser plant and also a methanol plant on
Bunyu Island.
C. TIMOFORO BLOCK - BINTUNI BASIN, ONSHORE IRIAN JAYA PSC-JOB, WESTERN
WISESA PETROLEUM PTY LTD ("WISESA")
Saptapetra Wisesa is engaged in a technical joint study with
Pertamina for the Timoforo Block. On 17 December 1997 CityView's wholly owned
subsidiary Western Resources NL entered into an agreement with Saptapetra Wisesa
to form Wisesa to operate the 6575 km squared Timoforo Block. Wisesa is owned
85% by CityView.
HISTORY
The Timoforo Block lies in the Bintuni Basin in Western Irian Jaya.
Exploration on the Timoforo Block itself has been limited because Pertamina has
held the acreage since the 1960's. Historically, drilling efforts in the basin
have concentrated on the Tertiary carbonate oil play. Only recently have a
number of discoveries proven the prolific gas potential of the Pre-Tertiary. No
wells have been drilled on the Timoforo Block. British Gas drilled the Mogoi-1
well along the Timoforo-Muturi block boundary in 1996 and tested 40MMCFGPD from
Triassic age sandstone reservoirs. The gas column in the well exceeded 300m.
12
<PAGE> 15
POST-1993, THE LNG STORY
Since 1994, several major gas discoveries have been made in areas
adjacent to the Timoforo Block: Wiriagar (1994), Mogoi (1996), Vorwata (1997)
and Ubadari (1997). Total proven and probable gas reserves exceed 15TCF for
these fields. Both ARCO and British Gas are currently conducting aggressive
exploration and delineation programs just south of the Timoforo Block. Plans
have been approved for the ARCO and Pertamina consortium to develop the
"Tangguh" LNG facility near Bintuni Bay with LNG sales scheduled for 2003. The
Tangguh LNG facility has supplanted the Natuna development and will also
compensate for expected production declines from the Arun LNG facility.
REGIONAL SETTING
The Timoforo Block lies north of ARCO's giant gas discoveries in the
Bintuni Basin. The Bintuni Basin is a north-south oriented Tertiary age foreland
basin that overlies a northwest-southeast oriented Paleo- Mesozoic basin. The
Mesozoic stratigraphy is equivalent to the stratigraphy of the Northwest Shelf
(Australia) producing areas. The primary reservoirs are the Triassic (Mogoi),
the Jurassic (Wiriagar, Vorwata) and the Paleocene (Wiriagar) age sandstones.
The Permian age shales and coals provide world class source rock for this
prolific basin. Since the play trend is relatively unexplored, significant new
reserves will be added to those recently discovered.
PROSPECTS
The proposed 1998-1999 work program for the Timoforo Block is to
drill one well to test the Timoforo anticline and if successful, drill two
delineation wells. The primary prospects are:
TIMOFORO: The Timoforo prospect is a robust surface anticline with closure of
8-20000 acres. The anticline is well defined by radar and aerial photographs and
the structure has been confirmed by ground mapping. The structure lies
immediately updip of the Mogoi-1 gas discovery. Both the Triassic and Paleocene
are primary objectives in the prospect. Anticipated recoverable reserves are
1.5TCF, with a 25% POS. A 2200m well will be drilled to test the prospect.
JAGIRO, TOMO AND MOGOI: These prospects all straddle the Timoforo-Muturi block
boundary and will have to be developed in conjunction with British Gas. The
prospects are all well-defined anticlines that have good seismic coverage. The
primary objective is the Triassic reservoir section that was tested in the
Mogoi- 1well. A future work program will be determined after discussions with
British Gas.
OTHER: Numerous additional leads have been mapped with surface geology. After
the Contract is signed these leads will be analyzed and the prospect portfolio
upgraded.
MARKET
The Timoforo Block lies in close proximity to the future Tangguh LNG
facility. Capital costs for a pipeline to the LNG plant have been included in
the economic evaluation. Sales from the plant will not occur before 2003. Since
Pertamina is an equity partner in the Timoforo Block, via the PSC-JOB, gas
produced in the Block should be well placed for sales to the Tangguh LNG
facility.
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<PAGE> 16
The Company's oil projects may be summarized as follows:
A. TUBA OBI EAST ("TOE") - ONSHORE SOUTH SUMATRA TAC, WESTERN AKAR
PETROLEUM PTY LTD ("AKAR")
In June 1994, Pt Akar Golindo (PTAG) was invited by Pertamina to bid
on the Tuba Obi East Block in Sumatra. On 1 August 1996 CityView signed an MOU
with PTAG to form a joint company Akar to operate and develop TOE. Akar (in
which CityView has a 90% interest) then signed a TAC for Tuba Obi East on 15 May
1997. The block is 55km squared in size.
HISTORY
One discovery well has been drilled on Tuba Obi East, the TOE-1. This
well was drilled by the Jambi Oil Development Company in 1986. The well was
located on what was then the Jambi Block. An extensive testing program was
carried out on the block with 7 DST's run over 6 zones. The tests confirmed
three gas condensate zones and two oil zones. Pertamina attempted to open the
well for a flow test at the end of 1986 and tested 154BOPD of oil. The well was
suspended in September 1987.
REGIONAL SETTING
The TOE field is located on the northern flank of the Jambi Sub-basin
of the South Sumatra Basin. The TOE structure lies within the Berembang
Depression which formed as a localised low in the Pre-Tertiary basement. It is
bounded by the Tembesi High to the northwest and the Sengegeti High to the
southeast. The Tuba Obi structure itself was formed during the Plio-Pleistocene
Barisan orogenic event.
The stratigraphic column in the TOE area shows a general
transgressive sequence in the lower units. The fresh water clastic and volcanic
section of the Lahat Formation and Talang Akar Formation ("TAF") was succeeded
by units of an increasingly marine environment until the thick marine shales of
the Gumai Formation were deposited. It should be noted that TOE-1 encountered
two oil bearing sands in the upper TAF. The TAF is one of the most prolific
units in the South Sumatra Basin.
PROSPECTS
Based on the potential from the TOE-1, the primary prospect
on TOE is the TOE anticline. The first well shows a structural closure of
approximately 20km squared. There is some debate as to whether the TOE field is
a structural or stratigraphic trap. Certainly it has been historically mapped as
a structural trap. Recent seismic stratigraphy work indicated the potential for
a much higher degree of stratigraphic control on the trapping mechanism. The TAF
Sands are channel sands, deposited in a meandering stream environment. Sand
thickness in such an environment is likely to be quite variable. A seis-strat
model has been developed to model the sands and to predict where their maximum
thickness occurs. If the model can be confirmed, when the next well is drilled
the drilling program will be modified to optimize sand and pay counts. Since
both the structural and stratigraphic models point to the same location for
TOE-2, there is no urgency to choose the preferred one. The estimated
recoverable reserves from the TOE structure are 8.00MMBO.
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<PAGE> 17
Some additional potential is seen on the block, especially in the
shallower gas sands. Additional work will need to be done to confirm the
remaining potential.
MARKET
There is a good market for indigenously produced oil in Sumatra. A
40km long 6" pipeline would be laid from TOE to the selling point in Setiti. The
pipe would follow a government road.
B. TANJUNG MIRING TIMUR ("TMT") - ONSHORE SOUTH SUMATRA TAC, WESTERN
NUSANTARA ENERGI PTY LTD ("NUSANTARA")
On 17 December 1996 Nusantara signed a TAC to take over the
operations of TMT oilfield. Nusantara is owned 80% by CityView.
HISTORY
The TMT oilfield is located approximately 90km southwest from
Palembang in southeastern Sumatra. The field has been on production since 1976
and a total of 43 wells have been drilled.
PRODUCTION GEOLOGY
There are eight oil and gas-bearing sandstone reservoirs, including
seven from the Talang Akar formation and one from the overlying Batu Raja
formation of lower Miocene age. The average thickness of individual sandstones
is approximately 2m. Generally the average porosity is 15-20% with
permeabilities up to 50 millidarcies. Some laminae are more permeable however.
1997
Nusantara has been active in the field since the second half of 1997.
These activities included: upgrading the facilities and infrastructure,
establishing a G&G database, renegotiating the NSO with Pertamina and working
over five wells. The field is producing a cumulative average of 750BOPD but the
stage has been set for significant production gains.
PLANNED ACTIVITIES
Among the activities planned for 1998 are: compressor repairs, gas
lift optimisation, bean pump optimisation, the conversion of some gas lift wells
to bean pumps and reviewing the exploration upside on the block (possible Batu
Raja reef prospects). The end result of the above upcoming work program will be
to establish benchmark production levels of 900-1500BOPD. In addition any
remaining untested exploration potential will be fully defined.
C. SANGATTA SANGKIMAH - EAST KALIMANTAN TAC, WESTERN SANGKIMAH NL
("WESTERN")
On 8 December 1995 CityView's wholly owned subsidiary Western was
assigned an 87.5% interest in a TAC for the Sangkimah oilfield which lies within
a Pertamina concession area known as Sangatta.
15
<PAGE> 18
To comply with Pertamina's work program a workover of well No. SS-1
was carried out in December 1997 which confirmed a minimum production rate of
30BOPD. Operations on Well No. SS-1 were then suspended. An exploratory well No.
SST-1 then drilled to a depth of 1550m to test the "Q" sands : after
encountering only minor oil content the well was plugged.
Discussions with Pertamina are in progress for proposed joint
study/operations on the Sangatta oilfield which is currently producing
approximately 2400BOPD.
Additional projects may be summarized as follows:
BLOCK GSEC74 - OFFSHORE WESTERN PHILIPPINES PSC, MMC EXPLORATION & PRODUCTION
(PHILIPPINES) PTE LTD
ARCO Philippines Inc Preussag Energies GMBH, MMC Exploration &
Production (Philippines) Pte Ltd (CityView has a 49% interest) and a consortium
of fifteen Filipino resource companies hold Block GSEC74 in the Sandakan Basin
adjacent to the border with Sadah East Malaysia. GSEC74 includes an area of
about 12000km squared (3 million acres) on which ARCO has acquired 3600km of
seismic data with simultaneous gravity and magnetic surveys. The Sandakan basin
is filled mainly with Mio-Pliocene age fluvio-deltaic sedimentary rocks that are
analogous in many ways to the prolific Baram and Mahakam deltas also adjacent to
Borneo.
ARCO has mapped several large prospects in the undrilled distal
portion of the delta complex. Seismic amplitude anomalies and flat spots that
conform to these structures indicate that hydrocarbon generation, migration and
entrapment have occurred. Twelve prospects of potential have been identified in
GSEC74 including the Hippo prospect which was drilled in February 1998.
Geographical evaluation of this well is in progress.
MARKET
A ready market exists in the Philippines for any hydrocarbons
produced. Oil is easier to produce and market as it would simply be produced
from an FPSU and then delivered anywhere in the country. Gas is more difficult
to monetize as it will require a pipeline to get the gas to market. Marketing
opportunities in nearby Sabah would be examined.
MINERALS : WESTERN AUSTRALIA
RAESIDE GOLD PROJECT
CityView's wholly owned subsidiary Copperwell Pty. Ltd has a 10%
interest in the Raeside Gold Project, located approximately 10km east of Leonora
in Western Australia covering an area of 168km squared. The remaining 90% is
held by the operator Triton Resources Limited in which CityView holds 5,142,500
shares representing 8.67% of the issued capital. A complete review of all
previous work on the Raeside Gold Project has been undertaken by the operator.
This assessment confirms the potential of the Raeside Gold Project and
particularly the Leonardo orebody at depth. The structure which contains
Leonardo is a minimum of 2km long with gold ore grade mineralised intersections
along its length. On the extremities of the Raeside
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<PAGE> 19
Gold Project area lies the Moses Well joint venture tenements in which North
Mining Limited is progressively earning a participating interest of 70% for
total expenditure of $4.2 million.
CityView's wholly owned subsidiary Artane Minerals NL has a 97%
interest in the Golden Spinifex and some adjoining tenements at Duketon which
have been joint ventured to Johnson's Well Mining NL.
Factors relating to competition and certain governmental regulations
are briefly summarized as follows:
COMPETITION
The oil and gas industry is highly competitive. The Company
competitors and potential competitors include major oil companies and
independent producers of varying sizes of which are engaged in the acquisition
of producing properties and the exploration and development of prospects. Many
of the Company's competitors have greater financial, personnel and other
resources than does the Company and therefore have a greater leverage to use in
acquiring prospects, hiring personnel and marketing oil and gas. Accordingly, a
high degree of competition in these areas is expected to continue.
INDONESIAN GOVERNMENT REGULATION
The Company may either sell its production on the international
market or opt to sell it domestically. There is a commitment to sell a minimal
portion of any oil production domestically (called Domestic Market Obligation)
at 15% of the crude price. The commitment is imposed in the terms of all PSC's,
to sell a minimum portion of any of Western's, or its subsidiary's, oil
production to the Republic of Indonesia, via Pertamina, at 15% of the price the
crude is sold at. This only becomes effective after the first 60 months of
production and represents a minimal portion of the total production. There are
no constraints on production other than those imposed in conforming with what is
deemed "good oilfield practice." Indonesia has no exchange controls; therefore,
foreigners are able to move funds freely in and out of the country through
accounts denominated in local foreign currency.
AUSTRALIAN GOVERNMENT REGULATION
The Australian Corporations and Securities Legislation ("ACSL") is
the main body of law governing companies in Australia, such as the Company. The
Australian Securities Commission is an Australian government instrumentality
that administratively enforces the ACSL. The ACSL covers matters such as
directors' duties and responsibilities, preparation of accounts, auditor
control, issue and transfer of shares, control of shareholders; meetings, rights
of minority interest, amendments to capital structure, preparation and filing of
public documents such as annual reports, changes in directors and changes in
capital.
The Australian Stock Exchange Limited imposes listing rules on all
listed companies, such as the Company. The rules cover such issues as immediate
notification to the market of relevant information, periodic financial reporting
and the prior approval of shareholder reports by the Australian Stock Exchange
Limited.
The Company believes that it is in compliance with the foregoing
Australian laws and
17
<PAGE> 20
regulations.
RECENT DEVELOPMENTS
On June 3, 1998 the Company issued $1,000,000 2 Year Convertible
Debentures with interest at 6% per annum which are convertible into Ordinary
Fully Paid Shares of the Company at any time after ninety (90) days after the
date of receipt of the funds by the Company for the Convertible Debentures and
before June 3, 2000 at a conversion price of 75% of the average closing bid
price for ordinary fully paid shares in the Company on either the NASDAQ Small
Capital Market stock exchange or the ASX for the five trading days immediately
preceding the conversion date. For further information reference is made to page
2 of this Prospectus.
Reference is made to the Company's Annual Report on Form 20-F for the
fiscal year ended December 31, 1997 for further information on changes in the
affairs of the Company since the end of the fiscal year ended December 31, 1997.
The Generally Accepted Accounting Principles (GAAP) reconciliation in the
preceding 20-F was based upon an exchange rate of A$1.00 = US$0.6515. This
exchange rate has fluctuated and is presently A$1.00 = $US$0.5805 as at
September 1, 1998, resulting in a change in the Total Shareholders Equity as
follows: -
<TABLE>
<CAPTION>
<S> <C> <C>
A$ US$ as at December 31, 1997 US$ as at December 31, 1997
As per Form 20-F, at at exchange rate of A$1.00
exchange rate of A$1.00 to to US$0.5805
US$0.6515
($4,909,173) ($3,198,326) ($2,849,775)
</TABLE>
RISK FACTORS
There are certain risks involved in an investment in the Ordinary
Fully Paid Shares of the Company. Accordingly, prospective purchasers of the
Ordinary Fully Paid Shares of the Company should consider carefully the factors
set forth below as well as the other information contained in this Prospectus.
Certain statements in this Prospectus and documents incorporated herein by
reference are forward-looking and are identified by the use of forward-looking
words or phrases such as "intended," "will be positioned," "expects," is or are
"expected," "anticipates" and "anticipated." These forward-looking statements
are based on the Company's current expectations. To the extent any of the
information contained in this Prospectus constitutes a "forward-looking
statement" as defined in Section 27A (i) (1) of the 1933 Act the future
profitability and viability of the Company's operations and activities will
depend on a number of risks, including but not limited to the following risk
factors:
1. Commodity prices and in particular the price of oil, gas, gold and
other minerals;
2. Currency exchange rate fluctuations;
3. The strength of the equity markets at the time of any capital raising
by the Company;
4. Judicial decisions and legislative amendments and in particular
uncertainties created in Australia in the area of Aboriginal land
rights by the decision of the High Court of
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<PAGE> 21
Australia in the Mabo case and the Native Title Act 1993 of the
Commonwealth of Australia;
5. Environmental management issues with which the Company may from time to
time have to comply;
6. General economic conditions in Australia and Indonesia and its major
trading partners and in particular inflation rates, commodity supply
and demand factors and industrial disruption;
7. Risks inherent in exploration and mining including, amongst other
things, successful exploration, identification, development and
exploitation of use of resources and reserves, satisfactory performance
of exploration and mining operations and competent management;
8. The Company is acquiring assets and will continue to do so as a matter
of normal business practice within the Republic of Indonesia. Some of
the interests of the Company in Indonesia are by way of contract
between a subsidiary of the Company and bodies which are wholly owned
arms of the Government of the Republic of Indonesia. These contracts
are subject to controls and regulations by the contracting parties and
by the Government of the Republic of Indonesia;
9. Political stability of Indonesia and compliance by the Indonesian
Government with the current International Monetary Fund ("IMF")
program;
10. The Company's ability to raise sufficient capital to fund its
exploration and development program.
Further financing and/or market related risk factors include the
following:
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FINANCING
There can be no assurance that the Company will not be required to
seek additional equity or debt capital to finance its operations in the future.
In addition, there can be no assurance that any such financings, if needed, will
be available to the Company or that adequate funds for the Company's operations,
whether from the Company's revenues, financial markets, collaborative or other
arrangements with corporate partners or from other sources, will be available
when needed or on terms attractive to the Company. The inability to obtain
sufficient funds may require the Company to delay, scale back or eliminate
certain of its operations that the Company might otherwise engage in.
DILUTION; EFFECT OF OUTSTANDING CONVERTIBLE DEBENTURES ON CERTAIN SHARES
The Company has outstanding convertible debentures to purchase Shares
at prices that are below the per Share price to purchasers of the Company's
Shares in the open market. The exercise of such Convertible Debentures may have
a dilutive effect on the investment of a holder of the Company's Shares. The
market price of the Company's Shares may also be adversely affected by sales of
substantial amounts of Shares in the public market, including sales of Shares
under Rule 144 or after the expiration of any other applicable holding period
(by contract and/or statute). The sale of such stock could also adversely affect
the ability of the Company to sell Shares for its own account. See "Selling
Holders and Plan of Distribution" and "Description of Capital Stock."
19
<PAGE> 22
LIMITED PUBLIC MARKET; LIQUIDITY; POSSIBLE VOLATILITY OF STOCK PRICE
The Shares are quoted on both the Nasdaq SmallCap Market System under
the symbol "CVCLF" and the Australian Stock Market Limited under the symbol
"CVI". There can be no assurance that an active public market for the Shares can
be sustained. The market price of the Shares could fluctuate significantly as a
result of the Company's financial results or business operations (as well as
debenture conversion in the manner described herein).
RECENTLY ADOPTED LISTING STANDARDS FOR NASDAQ SECURITIES
The Nasdaq Stock Market recently adopted certain changes to the
standards for issuers with securities listed on Nasdaq. One of the changes
included increasing the quantitative maintenance requirements for continued
listing in the Nasdaq SmallCap Market, on which the Company's Ordinary Fully
Paid Shares are currently listed. While the Company currently is in compliance
with the new qualitative maintenance requirements, it could cease to be in
compliance in the future if it were to incur substantial losses from operations.
In order to maintain continued listing on Nasdaq the Company's Ordinary Fully
Paid Shares are required to maintain a closing bid price at least equal to $1.00
per share. In the event that the Company fails to maintain compliance with any
listing requirement, the Company's Shares could be delisted from the Nasdaq
SmallCap Market in the event that compliance is not subsequently achieved within
the applicable time periods allotted therefore by Nasdaq.
USE OF PROCEEDS
The Company will not receive any proceeds from the offer and sale of
Ordinary Fully Paid Shares by selling security holders pursuant to this
Prospectus. All of the proceeds will be received by the selling security
holders.
DETERMINATION OF OFFERING PRICE
Since the Ordinary Fully Paid Shares registered hereunder are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), the Company cannot include
herein information about the price to the public of the Common Stock.
SELLING HOLDERS AND PLAN OF DISTRIBUTION
The Ordinary Fully Paid Shares (hereinafter "Shares" or "Securities")
offered hereby may be sold from time to time to purchasers directly by the
Selling Holders (which term includes their transferees, pledgees, donees or
their successors). Any such transferee, pledgee, donee or their successors may
not offer the Securities pursuant to this Prospectus until such holder is
included as a Selling Holder in a supplement to this Prospectus. The Securities
consist of Shares which are issuable to Selling Holders upon conversion of the
Convertible Debentures. The Company has agreed to register the public offering
of the Securities by the Selling Holders under
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<PAGE> 23
the Securities Act. The Company will not receive any of the proceeds from the
sale of the shares by the Selling Holders.
The following table sets forth as of September 8, 1998, certain
information with respect to the Selling Holders, including the number of Shares
that may be offered by them. The number of Shares which may actually be sold by
the Selling Holders will be determined from time to time by them and will depend
upon a number of factors, including, with respect to the Shares underlying the
Convertible Debentures, the price of the Company's Shares from time to time.
Because the Selling Holders may offer all or none of the Securities that they
hold and because the offering contemplated by the Prospectus is not being
underwritten, no estimate can be given as to the number of Securities that will
be held by the Selling Holders upon termination of such offering. None of the
Selling Holders have had any material relationship with the Company other than
as purchasers of Convertible Debentures.
<TABLE>
<CAPTION>
IDENTITY OF SELLING HOLDER SHARES(1) % OF CLASS(2)
- -------------------------- --------- -------------
<S> <C> <C>
Investor A 592,593 4.16%
Investor B 592,593 4.16%
</TABLE>
(1) Assumes conversion of the Convertible Debentures held by such Selling
Holders based on the reported closing prices on the NASDAQ SmallCap Market on
September 8, 1998 at a 25% discount but does not include additional shares which
may be issued for interest (at 6% per annum) earned from date of closing to date
of conversion.
(2) Based upon an aggregate of 14,249,661 shares arrived at by adding the
aggregate of those shares indicated in column designated "Shares" to those
shares issued and outstanding as of September 8, 1998.
The Selling Holders of the Securities identified above may have sold,
transferred or otherwise disposed of, in transactions exempt from the
registration requirements of the Securities Act, all or a portion of the
Convertible Debentures or Securities since the date on which the information in
the preceding table is presented. Information concerning the Selling Holders may
change from time to time and any such changed information will be set forth in
supplements to this Prospectus if and when necessary.
The sale of the Securities by the Selling Holders may be effected
from time to time in transactions on the NASDAQ SmallCap Market System, the
Australian Stock Exchange Limited, in the over-the-counter market, in negotiated
transactions, or through a combination of such methods of sale (a) at fixed
prices, which may be changed, (b) at market prices prevailing at the time of
sale, (c) at prices related to such prevailing market prices or (d) at
negotiated prices. The Selling Holders may effect such transactions by selling
the Securities directly to purchasers or to or through broker-dealers. Such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Holders and/or the purchasers of the Securities for
whom such broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer may be in excess of
customary commissions). The Selling Holders and any broker-dealers who act in
connection with the sale of
21
<PAGE> 24
the Securities hereunder may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by them and
profit on any resale of the Securities as principals might be deemed to be
underwriting discounts and commissions under the Securities Act.
At the time a particular offering of the Securities is made, a
Prospectus Supplement, if required, will be distributed, which will set forth
the aggregate amount and type of Securities being offered and the terms of the
offering, including the name or names of any underwriters, broker/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any exemption from
registration or qualification is available and is complied with. The Company has
not taken any action to register or qualify the Securities for offer and sale
under the securities or "blue sky" laws of any state of the United States.
However, pursuant to the Registration Rights Agreements among the Company and
the Selling Holders (the "Registration Rights Agreements"), the Company will use
reasonable efforts to (i) register and qualify the Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as the Selling Holders who hold a majority in interest of the
Securities being offered reasonably request and in which significant volumes of
Shares are traded, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times until the earliest (the "Registration Period") of (A) the date that is two
years after the Closing Date, (B) the date when the Selling Holders may sell all
Securities under Rule 144 or (C) the date the Selling Holders no longer own any
of the Securities, (iii) take such other actions as may be necessary to maintain
such registrations and qualification in effect at all times during the
Registration Period and (iv) take all other actions reasonably necessary or
advisable to qualify the Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (A) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify, (B) subject itself to general
taxation in any such jurisdiction, (C) file a general consent to service of
process in any such jurisdiction, (D) provide any undertakings that cause more
than nominal expense or burden to the Company or (E) make any change in its
articles of incorporation or by-laws or any then existing contracts, which in
each case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its stockholders. Unless and until such times
as offers and sales of the Securities by Selling Holders are registered or
qualified under applicable state securities or "blue sky" laws, or are otherwise
entitled to an exemption therefrom, initial resales by Selling Holders will be
materially restricted. Selling Holders are advised to consult with their
respective legal counsel prior to offering or selling any of their Securities.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of
22
<PAGE> 25
any of the Securities by the Selling Holders. The foregoing may affect the
marketability of the Securities.
Pursuant to the Registration Rights Agreements between the Company
and each of the Selling Holders all expenses of the registration of the
Securities will be paid by the Company, including, without limitation,
Commission filing fees and expenses of compliance with state securities or "blue
sky" laws; provided, however, that the Selling Holders will pay all underwriting
discounts and selling commissions, if any. The Selling Holders will be
indemnified by the Company against certain civil liabilities, including certain
liabilities under the Securities Act or will be entitled to contribution in
connection therewith.
REGISTRATION RIGHTS
The Convertible Debentures
The Company issued $1,000,000 aggregate principal amount of
Convertible Debentures in June of 1998. One Hundred percent of the face amount
of such Convertible Debentures is convertible into Shares of the Company at the
earlier of the effective date of a Registration Statement covering the
underlying Shares or 90 days from closing at a conversion price equal to 75% of
the average closing bid price for the five trading days preceding the date of
conversion on either the Nasdaq SmallCap Market Exchange or the Australian Stock
Exchange Limited. Any Convertible Debentures not so converted are subject to
mandatory conversion by the Company on the 24th monthly anniversary of the date
of issuance of the Convertible Debentures unless timely demand is made by the
holder of the Convertible Debentures for repayment of both principal and
interest in cash. Other than on the date of such mandatory conversion provision,
the Selling Holder shall not be entitled to convert any amount of Convertible
Debentures in excess of that amount upon conversion of which the sum of (i) the
number of Shares beneficially owned by the Selling Holder and its affiliates
(other than the unconverted Convertible Debentures) and (ii) the number of
Shares issuable upon conversion of the Convertible Debentures would result in
beneficial ownership by the Selling Holder and its affiliates of more than 4.9%
of the outstanding Shares of the Company.
If at any time the number of Shares into which the Convertible
Debentures may be converted exceeds the aggregate number of Shares then
registered, the Company shall, within ten (10) business days after receipt of
written notice from any investor, either (i) amend the Registration Statement
filed by the Company, if such Registration Statement has not been declared
effective by the SEC at that time, to register all Shares into which the
Debenture may be converted, or (ii) if such Registration Statement has been
declared effective by the Securities and Exchange Commission (the "SEC") at that
time, file with the SEC an additional Registration Statement on Form F-3 (or
such other Form as may be applicable) to register the Shares into which the
Convertible Debentures may be converted that exceed the aggregate number of
Shares already registered. Pursuant to the terms and provisions of the Debenture
and related Registration Rights Agreement, the Company was required to and
herewith is registering the number of Shares equal to 150% of those Shares
currently deemed necessary to meet conversion requirements. To the extent that
all or any portion of such shares are not utilized for the purposes set forth
herein, the Company will deregister same at the appropriate time.
23
<PAGE> 26
Pursuant to the Registration Rights Agreements between the Company
and the Selling Holders, the Company is required to file with the SEC, a
Registration Statement covering a sufficient number of Shares (the 150% referred
to above) for the Selling Holders so as to enable them to convert 100% of the
Convertible Debentures. Consequently, the Company is filing with the Commission
this Registration Statement on Form F-3 (the "Registration Statement"), of which
this Prospectus is a part, to cover the sale of the Shares issuable to the
Selling Holders upon conversion of the Convertible Debentures. The Registration
Rights Agreements provide that the Company shall keep the Registration Statement
effective at all times until the earliest (the "Registration Period") of (i) the
date that is two years after the Closing Date, (ii) the date when the Investors
may sell all Securities under Rule 144 or (iii) the date the Investors no longer
own any of the Securities.
Failure to timely file the Registration Statement (required by the
terms of the Convertible Debenture and Registration Rights Agreement) or failure
to obtain effectiveness of same within the time period allotted therefore (to
wit: 90 days subsequent to the closing date) subjects the Company to certain
penalty provisions as set forth in the Registration Rights Agreement to which
reference is herewith made. Such penalty provisions require the Company to
increase the conversion rate discount of 25% as provided for in the Debenture in
increments of 3% for each 30 day delay up to a discount of 31%. Notwithstanding
the foregoing, the penalty provisions heretofore referred to are inapplicable to
the extent any delay in the effectiveness of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by the Selling
Holders or their respective counsel.
Failure to timely effectuate conversion or issue and deliver
underlying Shares similarly subjects the Company to certain monetary penalty
provisions as indicated in the Debenture to which reference is herewith made.
The Securities Purchase Agreement, Debenture and Registration Rights
Agreement are on file with the Securities and Exchange Commission as part of
this Registration Statement as exhibits hereto.
The number of Shares issuable upon conversion of the Convertible
Debentures depends on several factors, including the conversion ratio and the
date on which such Shares are converted. As of September 8, 1998 if all of the
Convertible Debentures (issued in June 1998) were converted based on a 25%
discount to the reported closing price on the NASDAQ SmallCap Market on
September 8, 1998, the Company would be required to issue approximately
1,185,186 Shares exclusive of Shares which may be issued in exchange for
interest earned (at the rate of 6% per annum) from the date of closing through
date of conversion and exclusive of any shares which may have to be issued in
the event conversion discount rate is increased as a result of penalty
provisions referred to above.
Except for the total number of Shares to which this Prospectus
relates as set forth above, references in this Prospectus to the "number of
Shares covered by this Prospectus," or similar statements, and information in
this Prospectus regarding the number of Shares issuable to or held by the
Selling Holders and percentage information relating to the Securities of the
outstanding
24
<PAGE> 27
Ordinary Fully Paid Shares of the Company, are based, with respect to the
Convertible Debentures, upon the fixed conversion ratio set forth in the
instruments establishing the rights of the Convertible Debenture holders and
assumes that a total of approximately 1,185,186 Shares are issued upon
conversion of all Convertible Debentures. See "Selling Holders and Plan of
Distribution" and "Description of Capital Stock."
The Securities are being offered on a continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"). No
underwriting discounts, commissions or expenses are payable or applicable in
connection with the sale of the Securities by the Selling Holders. The Shares of
the Company are quoted on the NASDAQ SmallCap Market ("NASDAQ") under the symbol
"CVCLF" and the Australian Stock Exchange Limited ("ASX") under the symbol
"CVI". The Securities offered hereby will be sold from time to time at the then
prevailing market prices, at prices relating to prevailing market prices or at
negotiated prices. On September 8, 1998, the last reported sale price of the
Common Stock on NASDAQ was $1.125 per share. This Prospectus may be used by the
Selling Holders or any broker-dealer who may participate in sales of the
Securities covered hereby.
COMMON STOCK RESERVED
The Company is required to reserve and keep available out of its
authorized but unissued Shares such number of Shares as shall from time to time
be sufficient to effect conversion of all of the then outstanding Convertible
Debentures. Pursuant to the terms of the Registration Rights Agreement, the
Company is required to register a number of Shares equal to 150% of those Shares
currently anticipated to be needed for conversion purposes.
DESCRIPTION OF CAPITAL STOCK
ORDINARY SHARES
The authorized Ordinary Shares of the Company consists of 20,000,000
Ordinary Shares. All shares have equal voting rights and are not assessable.
Voting rights are not cumulative and, therefore, the holders of more than 50% of
the Ordinary Shares could, if they chose to do so, elect all of the directors of
the Company.
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be distributed pro
rata to the holders of the Ordinary Shares. The holders of the Ordinary Shares
do not have preemptive rights to subscribe for any securities of the Company and
have no right to require the Company to redeem or purchase their shares. The
Ordinary Shares presently outstanding are fully paid and nonassessable.
DIVIDENDS
Holders of the Ordinary Shares are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the Company, out
of funds legally available therefore. No dividend has been paid on the Ordinary
Shares since inception, and none is contemplated in the foreseeable future.
25
<PAGE> 28
REGISTRAR
The Registrar (Australian) and Registrar (United States) for the
Company are as follows:
REGISTRAR (AUSTRALIA)
Corporate Registry Services Pty Ltd
Level 29
Central Park
152-158 St George's Terrace
Perth, Western Australia 6000
REGISTRAR (UNITED STATES)
American Securities Transfer and Trust, Inc.
1825 Lawrence Street
Suite 444, Denver
Colorado 80202-1817
LEGAL MATTERS
The valid issuance of the Ordinary Fully paid Shares offered hereby
will be passed upon for the Company by Gary B. Wolff, P.C., 747 Third Avenue,
New York, New York 10017.
EXPERTS
The consolidated balance sheets and accompanying notes and Statement
by Directors of the Company for the financial years ended December 31, 1997,
June 30, 1996 and June 30, 1995 and six months ended December 31, 1996; and the
profit and loss accounts, statements of cash flows and accompanying notes for
the financial years ended December 31, 1997, June 30, 1996 and June 30, 1995 and
six months ended December 31, 1996 and December 31, 1995 have been examined by
Grant Thornton chartered, accountants. Such financial statements have been
incorporated by reference herein and in the Registration Statement in reliance
upon the reports with respect thereto of Grant Thornton and upon the authority
of said firm as experts in accounting and auditing.
26
<PAGE> 29
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are hereby incorporated by reference into
this Prospectus.
(1) Annual Report on Form 20-F of the Company for the fiscal year ended
December 31, 1997; and
(2) All other reports filed pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the Company since
December 31, 1997.
All documents subsequently filed by the Company with the
Commission pursuant to Sections 12(a), 12(c) and 15(d) of the
1934 Act prior to the termination of the offering, shall be
deemed to be incorporated by reference into this Prospectus.
27
<PAGE> 30
INDEX TO FORM F-3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
FORM F-3......................................................... 1
PROSPECTUS....................................................... 2
ADDITIONAL INFORMATION........................................... 5
INCORPORATION OF DOCUMENTS BY REFERENCE.......................... 6
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES
FEDERAL SECURITIES LAW........................................... 6
PROSPECTUS SUMMARY............................................... 8
RISK FACTORS..................................................... 18
USE OF PROCEEDS.................................................. 20
DETERMINATION OF OFFERING PRICE.................................. 20
SELLING SECURITY HOLDERS; PLAN OF DISTRIBUTION................... 20
LEGAL MATTERS.................................................... 26
EXPERTS.......................................................... 26
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE................ 27
</TABLE>
28
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
<S> <C>
SECURITIES AND EXCHANGE COMMISSION REGISTRATION FEE $ *
PRINTING EXPENSES *
ACCOUNTING FEES AND EXPENSES *
LEGAL FEES AND EXPENSES *
TRANSFER AGENT AND REGISTRATION FEES *
BLUE SKY FEES AND EXPENSES *
MISCELLANEOUS EXPENSES *
------
Total $ *
------
</TABLE>
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subject to the limitations of the Australian Corporations Law with
respect to indemnities in respect to derivative actions, the Company shall fully
indemnify a present or former director of the Company or a person who acts or
acted at the Company's request as a director of another corporation of which the
Company is or was a shareholder or creditor, and his heirs and legal
representatives, against any liability which the director may incur by reason of
his being or having at any time been an employee or officer of the Company or in
carrying out the business or exercising the powers of the Company.
Without limitation to the foregoing and to the extent permitted by
law the Company indemnifies and will keep the directors fully indemnified
against any liability i) to a person other than the Company or a related body
corporate of the Company which the directors may incur by reason of the
directors being or having been an employee or officer of the Company or in
carrying out the business or exercising the powers of the Company unless the
liability arises out of conduct on the part of the directors which involves a
lack of good faith; and ii) for costs and expenses incurred by the directors in
the capacity of an employee or officer of the Company in defending any
proceedings, whether civil or criminal, in which judgement is given in favour of
the director or in which the director is acquitted; or in connection with an
application in relation to those proceedings, in which the Court grants relief
to the director under the Corporations Law.
29
<PAGE> 32
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS.
<S> <C>
5.1 Opinion of Gary B. Wolff, P.C., counsel to the Registrant *
10.1 Form of Securities Purchase Agreement dated June 3, 1998
10.5 Form of Registration Rights Agreement dated June 3, 1998
10.6 Form of Placement Agency Agreement dated June 3, 1998
10.7 Form of 2 Year Convertible Debenture dated June 3, 1998
23.1 Consent of Grant Thornton
23.2 Consent of Gary B. Wolff, P.C. (included in Exhibit 5.1) *
* To be filed by amendment.
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10 (a) (3) or the 1933 Act; (ii) to reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement; (iii) to include any material information in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that clauses (a) (1) (i) and (a) (1)
(ii) do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the 1934 Act that are incorporated
by reference in the Registration Statement; (2) that, for the purpose of
determining any liability under the 1933 Act, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and (3) to remove from
registration by means of post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing
30
<PAGE> 33
provisions, or otherwise, the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
31
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable ground to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorised, in the City of Perth, and the State of Western Australia, Australia
on this 17th day of September, 1998.
CITYVIEW ENERGY CORPORATION LIMITED
/s/ Peter Mark Smyth
------------------------------
By: Peter Mark Smyth
Chief Executive and Member of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- Chairman and a Director Dated: Sept. , 1998
Tan Sri Ibrahim Menudin
/s /Peter Mark Smyth Chief Executive Officer Dated: Sept. 14, 1998
- ---------------------------------- and a Director
Peter Mark Smyth
/s/ Haji Ab. Sukor Shahar Director Dated: Sept. 17, 1998
- ----------------------------------
Haji Ab. Sukor Shahar
- ---------------------------------- Director Dated: Sept. , 1998
Leong Kim Phan
/s/ Peter John Augustin Remta Director Dated: Sept. 14, 1998
- ----------------------------------
Peter John Augustin Remta
/s/ Alan Peter Woods Secretary and Chief Financial Dated: Sept. , 1998
- ---------------------------------- Officer
Alan Peter Woods
- ---------------------------------- Joint Vice-Chairman and Chief Dated: Sept. , 1998
Lutfi Heyder Executive Office of Western
Resources N.L.
</TABLE>
32
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
5.1 Opinion of Gary B. Wolff, P.C., counsel to the Registrant *
10.1 Form of Securities Purchase Agreement dated June 3, 1998
10.8 Form of Registration Rights Agreement dated June 3, 1998
10.9 Form of Placement Agency Agreement dated June 3, 1998
10.10 Form of 2 Year Convertible Debenture dated June 3, 1998
23.3 Consent of Grant Thornton
23.4 Consent of Gary B. Wolff, P.C. (included in Exhibit 5.1) *
* To be filed by amendment.
</TABLE>
33
<PAGE> 1
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 3,
1998, by and among CityView Energy Corporation Limited, an Australian
corporation, with headquarters located at 19 Walters Drive, Herdsman Western
Australia WA 6017 (the "COMPANY"), and the investor listed on the Schedule of
Buyers attached hereto (individually, a "BUYER" or collectively "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Australian Securities laws, Section 4(2) and/or Regulation D of the
Securities Act of 1933, as amended (the "1933 ACT"),
B. The Company is offering for sale to the Buyer 6% Convertible
Debentures (the "Debentures") of the Company, due on June 3, 2000, up to an
aggregate principal amount of $5,000,000. The terms of the Debentures, including
the terms on which the Debentures may be converted into the ordinary shares of
the Company (the "Conversion Shares" or "Common Stock") are set forth in the
Debenture, in substantially the form attached as Exhibit "A" hereto.
C. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate principal amount of up to $5,000,000 of
Debentures in the respective amounts set forth opposite each Buyer's name on the
Schedule of Buyers;
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit "B" (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws; and
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES.
a. Purchase of Debentures. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the
Company shall issue and sell to the Buyers and the Buyers shall
purchase from the Company an aggregate principal amount of U.S.
$1,000,000 Debentures, in the respective amounts set forth opposite
each Buyer's name on the Schedule of Buyers (the "CLOSING").
b. Closing Date. The date and time of the Closing (the
"Closing Date") shall be 10:00 a.m. Eastern Standard Time, within
five (5) business days following the date hereof, subject to
notification of satisfaction (or waiver) of the conditions to the
Closing set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the
<PAGE> 2
Buyer). The Closing shall occur on the Closing Date at the offices of
AIBC Investment Services Corporation, Suite 4047, One World Trade
Center, New York, New York 10048.
c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay the Purchase Price to the Company for the Debentures to be issued
and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written
wire instructions, and (ii) the Company shall deliver to each Buyer,
certificates representing such Debentures which such Buyer is then
purchasing (as indicated opposite such Buyer's name on the Schedule
of Buyers), duly executed on behalf of the Company and registered in
the name of such Buyer or its designee (the "CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer represents and warrants with respect to only
itself that:
a. Investment Purpose. Such Buyer is acquiring the
Debentures, and upon conversion of the Debentures will acquire the
Conversion Shares then issuable, for its own account for investment
only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by
making the representations herein, such Buyer does not agree to hold
any Debentures or Conversion Shares for any minimum or other specific
term and reserves the right to dispose of Debentures or Conversion
Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D
("Regulation D") as promulgated by the United States Securities and
Exchange Commission (the "SEC"). Buyer is not a resident of Australia
and the offering of Debentures is not made in Australia.
c. Reliance on Exemptions. Such Buyer understands that the
Debentures and the Conversion Shares are being offered and sold to it
in reliance on specific exemptions from the registration requirements
of the United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in
order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire such securities.
d. Information. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and
sale of the Debentures and the Conversion Shares, which have been
requested by such Buyer. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to
rely on the Company's representations and
2
<PAGE> 3
warranties contained in Section 3 below. Such Buyer understands that
its investment in the Debentures and the Conversion Shares involves a
high degree of risk. Such Buyer has sought such accounting, legal and
tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Debentures
and the Conversion Shares.
e. No Governmental Review. Such Buyer understands that no
Australian or United States federal or state agency or any other
government or governmental agency has passed on or made any
recommendation or endorsement of the Debentures and the Conversion
Shares, or the fairness or suitability of the investment in the
Debentures and the Conversion Shares, nor have such authorities
passed upon or endorsed the merits of the offering of the Debentures
and the Conversion Shares.
f. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Debentures and
the Conversion Shares have not been and are not being registered
under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (a)
subsequently registered thereunder, (b) such Buyer shall have
delivered to the Company an opinion of counsel, in a legally
acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (c) such Buyer provides
the Company with reasonable assurance that such securities can be
sold, assigned or transferred pursuant to Rule 144 promulgated under
the 1933 Act (or a successor rule thereto); (ii) any sale of such
securities made in reliance on Rule 144 promulgated under the 1933
Act (or a successor rule thereto) ("RULE 144") may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in
which the seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the 1933 Act)
may require compliance with some other exemption under the 1933 Act
or the rules and regulations of the SEC thereunder; and (iii) neither
the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the certificates or
other instruments representing the Debentures and, until such time as
the sale of the Conversion Shares have been registered under the 1933
Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares shall bear a
restrictive legend in substantially the following form (and a
stoptransfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD,
3
<PAGE> 4
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A LEGALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE COMMON STOCK INTO WHICH THE SECURITIES
EVIDENCED IN THIS CERTIFICATE ARE CONVERTIBLE ARE ALSO
SUBJECT TO A REGISTRATION RIGHTS AGREEMENT.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the
Debentures and the Conversion Shares, upon which it is stamped, if,
unless otherwise required by state securities laws, (i) the sale of
the Conversion Shares is registered under the 1933 Act, (ii) in
connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Debentures
and the Conversion Shares may be made without registration under the
1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Debentures and the Conversion Shares can be sold
pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be
immediately sold.
h. Authorization, Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable
in accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
i. Residency. Such Buyer, if a natural person, is a resident
of that state and country specified in its address on the Schedule of
Buyers. Buyer is not a resident of Australia and the offering of
Debentures is not made in Australia.
3 . REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. The
Company is a public limited Company possessing perpetual corporate
existence and the capacity to sue or
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<PAGE> 5
be sued in its own name. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.
b. Authorization, Enforcement, Compliance with Other
Instruments. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Debenture,
the Registration Rights Agreement and any related agreements, and to
issue the Debentures and the Conversion Shares in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this
Agreement, the Registration Rights Agreement and any related
agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without
limitation the issuance of the Debentures and the reservation for
issuance and the issuance of the Conversion Shares issuable upon
conversion or exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization
is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Debenture, and the
Registration Rights Agreement and any related agreements have been
duly executed and delivered by the Company, and (iv) this Agreement,
the Debenture, the Registration Rights Agreement and any related
agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors' rights and
remedies.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 20,000,000 ordinary shares
of which, as of the date hereof, of which 12,607,068 shares were
issued and outstanding, and no preference shares or other classes of
stock were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. Except
as disclosed in Schedule 3(c), no shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company.
Except as disclosed in Schedule 3(c), as of the effective date of
this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company or any of its subsidiaries, (ii) there are no outstanding
debt securities and (iii) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement). There are no securities
or instruments containing anti-dilution or similar provisions that
will
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<PAGE> 6
be triggered by the issuance of the Debentures or the Conversion
Shares as described in this Agreement. The Company has furnished to
the Buyer true and correct copies of the Company's Articles of
Association, as amended and as in effect on the date hereof (the
"Articles of Association"), and the Company's By-laws, as in effect
on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Debentures are duly authorized
and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and nonassessable, are free from all
taxes, liens and charges with respect to the issue thereof and are
entitled to the rights and preferences set forth in the Debentures.
The Conversion Shares issuable upon conversion of the Debentures have
been duly authorized and reserved for issuance. Upon conversion or
exercise in accordance with the Debentures, the Conversion Shares
will be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of
Common Stock.
e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Articles of
Association or By-laws or (ii) conflict with or constitute a default
(or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including Australian or United
States federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which
the Common Stock is traded or listed) applicable to the Company or
any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Except as
disclosed in Schedule 3(e), neither the Company nor its subsidiaries
is in violation of any term of or in default under its Articles of
Association or Bylaws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not
being conducted, and shall not be conducted in violation of any law,
ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the
1933 Act and any applicable United States securities laws, the
Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement or the
Registration Rights Agreement in accordance with the terms hereof or
thereof. Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date
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<PAGE> 7
hereof. The Company and its subsidiaries are unaware that any facts
or circumstances have occurred or exist which might reasonably be
expected to give rise to any of the foregoing.
f. SEC Documents: Financial Statements. Since December
1996, the Company had filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC as a
foreign private issuer pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of
the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter
referred to as the "SEC DOCUMENTS"). As of their respective dates,
the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Buyer which is not included in the SEC Documents,
including, without limitation information referred to in Section 2(d)
of this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they
are or were made, not misleading.
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g) and in the SEC documents, since January 1, 1996, there
has been no material adverse change and no material adverse
development in the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to
any bankruptcy law nor does the Company or its subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company, the Common
Stock or any of the Company's subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect
on the transactions contemplated hereby (ii) adversely affect the
validity or
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<PAGE> 8
enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein or (iii), except as expressly set forth in the
SEC Documents or in Schedule 3(h), have a material adverse effect on
the business, operations, properties, financial condition or results
of operation of the Company and its subsidiaries taken as a whole.
i. Acknowledgment Regarding Buyer's Purchase of Debentures.
The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby
and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Buyer's
purchase of the Debentures or the Conversion Shares. The Company
further represents to the Buyer that the Company's decision to enter
into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. No known event, liability, development or circumstance
has occurred or exists, or is contemplated to occur, with respect to
the Company or its subsidiaries or their respective business,
properties, prospects, operations or financial condition, which could
be material but which has not been publicly announced or disclosed in
writing to the Buyer.
k. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection
with the offer or sale of the Debentures or the Conversion Shares.
l. No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Debentures or the Conversion Shares
under the 1933 Act or cause this offering of Debentures or the
Conversion Shares to be integrated with prior offerings by the
Company for purposes of the 1933 Act or any applicable stockholder
approval provisions.
m. Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge
of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company's or its subsidiaries' employees is a
member of a union and the Company and its subsidiaries believe that
their relations with their employees are good.
n. Intellectual Property Rights. To the best of the Company's
knowledge, the Company and its subsidiaries own or possess adequate
rights or licenses to use all trademarks,
8
<PAGE> 9
trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights
necessary to conduct their respective businesses as now conducted.
Except as set forth on Schedule 3(n), none of the Company's
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are
expected to expire or terminate in the near future. The Company and
its subsidiaries do not have any knowledge of any infringement by the
Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, trade secret or other
similar rights of others, and except as set forth on Schedule 3(n),
there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service
marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.
The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of
their intellectual properties.
o. Environmental Laws. The Company and its subsidiaries are
(i) in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval.
p. Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except
such as are described in Schedule 3(p) or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries. Any real property and facilities held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries.
q. Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the
Company believes to be prudent and customary in the businesses in
which the Company and its subsidiaries are engaged. Neither the
Company nor any such subsidiary has been refused any insurance
coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to
renew its existing
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<PAGE> 10
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Company and its subsidiaries,
taken as a whole.
r. Regulatory Permits. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the
Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
s. Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
t. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's officers has or is
expected in the future to have a material adverse effect on the
business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Neither
the Company nor any of its subsidiaries is a party to any contract or
agreement which in the judgment of the Company's officers has or is
expected to have a material adverse effect on the business,
properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.
u. Tax Status. Except as set forth on Schedule 3(u), the
Company and each of its subsidiaries has made or filed all federal
and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and only
to the extent that the Company and each of its subsidiaries has set
aside on its books provisions reasonably adequate for the payment of
all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for
any such claim.
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v. Certain Transactions. Except as set forth on Schedule 3(v)
and in the SEC Documents and except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course
of business upon terms no less favorable than the Company could
obtain from third parties and other than the grant of stock options
disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with
the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner.
w. Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the
Debentures will increase in certain circumstances. The Company
further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Debentures in accordance with this Agreement
and the Debentures is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
x. Fees and Rights of First Refusal. The Company is not
obligated to offer the securities offered hereunder on a right of
first refusal basis or otherwise to any third parties including, but
not limited to, current or former shareholders of the Company,
underwriters, brokers, agents, or other third parties.
y. NASD Listing. The Company has not received any notice from
the National Association of Securities Dealers, Inc. (the "NASD")
indicating that the Company's shares of Common Stock will or may be
eligible for delisting from the NASDAQ SmallCap Market.
z. Since January 1, 1997, the Company raised $0 in Regulation
D and Regulation S transactions of which none remains unconverted.
aa. In the event the Company does not issue its Common Stock
after receipt of a Notice of Conversion because of the NASD 20% Rule,
or any Australian stock exchange rules, then in such event the
Company shall pay to the Buyer 133% of the principal balance
remaining on the Debentures plus all accrued interest. Said amount
shall be paid to the Buyer within five (5) business days of the
receipt of the faxed Notice of Conversion from Buyer.
4. COVENANTS.
a. Best Efforts. Each party shall use its best reasonable
efforts timely to satisfy each of the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement.
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<PAGE> 12
b. Form D. The Company agrees to file a Form D with respect
to the Debentures and the Conversion Shares as required under
Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is
necessary to qualify the Debentures and the Conversion Shares for, or
obtain exemption for the Debentures and the Conversion Shares for,
sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company agrees to timely
provide information or filings requested or required to be filed from
time to time by the Australian Stock Exchange ("ASX") arising from or
relating to this transaction, including, but not limited to, the
immediate listing of the Conversion Shares with the ASX if the Buyer
determined to sell the Conversion Shares on the ASX. Copies of any
such filings to be made shall be sent to the Buyer in advance by
telecopy for its review and prior approval.
c. Reporting Status. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Registration
Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act
(or successor thereto), or (ii) the date on which (A) the Investors
shall have sold all the Conversion Shares and (B) none of the
Debentures is outstanding (the "Registration Period"), the Company
shall file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would otherwise permit
such termination.
d. Use of Proceeds. The Company will use the proceeds from
the sale of the Debentures for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send the
following to each Buyer who still holds Debentures or Conversion
Shares during the Registration Period: (i) within five (5) days after
the filing thereof with the SEC, a copy of its Annual Reports on Form
20-F, its Reports on Form 6-K, and any registration statements or
amendments filed pursuant to the 1933 Act; (ii) within one (1) day
after release thereof, copies of all press releases issued by the
Company or any of its subsidiaries and (ii) copies of the same
notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.
f. [LEFT INTENTIONALLY BLANK]
g. Listings. The Company shall promptly secure the listing of
the Conversion Shares upon the ASX, the NASDAQ SmallCap Market, and
each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other
shares of
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<PAGE> 13
Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable under the terms of this Agreement
and the Registration Rights Agreement. The Company shall use its best
reasonable efforts to maintain the Common Stock's authorization for
quotation in the NASDAQ SmallCap Market and Australian Stock
Exchange. The Company shall promptly provide to each Buyer copies of
any notices it receives regarding the continued eligibility of the
Common Stock for trading on the NASDAQ Small Cap Market, the ASX, and
or any trading market.
h. Expenses. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of
this Agreement and the Registration Rights Agreement. The costs and
expenses of AIBC Investment Services Corp. and its counsel shall be
paid for by the Company at Closing.
i. Authorized Shares of Common Stock, Reservation of Shares.
The Company shall at all times, so long as any of the Debentures are
outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the
conversion of the Debentures, such number of shares of Common Stock
equal to or greater than 150% of the number of shares of Common Stock
for which are issuable upon conversion of all of the then outstanding
Debentures which are then outstanding or which could be issued at any
time under this Agreement or the Debentures.
j. Corporate Existence. So long as any Debentures remain
outstanding, the Company shall not directly or indirectly consummate
any merger, reorganization, restructuring, consolidation, sale of all
or substantially all of the Company's assets or any similar
transaction or related transactions (each such transaction, a "Sale
of the Company") except if the surviving or successor entity in such
transaction (i) expressly assumes, in writing, the Company's
obligations hereunder and under the Registration Rights Agreement,
the Debentures and any other agreements and instruments entered into
or delivered by the Company in connection herewith and (ii) is a
publicly traded corporation whose Common Stock is listed for trading
on the Australian Stock Exchange or the NASDAQ SmallCap Market or
electric bulletin board.
k. Transactions With Affiliates. So long as any Debentures
are outstanding, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or
permit any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or
any subsidiary's officers, directors, persons who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or affiliates or
with any individual related by blood, marriage, or adoption to any
such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a"RELATED
PARTY"), except for (a) customary employment arrangements and benefit
programs on reasonable terms, (b) any agreement, transaction,
commitment, or arrangement on an arms-length basis on terms no less
favorable than terms which would have been obtainable
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<PAGE> 14
from a person other than such Related Party, (c) any agreement
transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes
hereof, any director who is also an officer of the Company or any
subsidiary of the Company shall not be a disinterested director with
respect to any such agreement, transaction, commitment, or
arrangement. "Affiliate" for purposes hereof means, with respect to
any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or
entity, (ii) has 5% or more common ownership with that person or
entity, (iii) controls that person or entity, or (iv) shares common
control with that person or entity. "Control" or "controls" for
purposes hereof means that a person or entity has the power, direct
or indirect, to conduct or govern the policies of another person or
entity.
l. Shareholder Approval. The Company's shareholders have
approved at its Annual General Shareholders Meeting on May 6, 1998, a
proposal for ratification and/or approval of the issuance of the
Debentures and the Conversion Shares, as required by the rules of the
NASD, ASX, and other laws, rules, and regulations applicable to the
transaction.
m. Buyer covenants to resell Debentures and Conversion Shares
in compliance with applicable securities laws.
n. The Company agrees immediately upon request from any Buyer
who has elected to receive Conversion Shares tradeable on the ASX to
instruct its Australian transfer agent (currently Corporate Registry
Services Pty. Ltd.) to instruct the U.S. transfer agent to issue a
letter of instructions to cause the U.S. Transfer Agent (currently
American Securities Transfer & Trust, Inc.) to, within five (5)
business days of such request by the Buyer, issue ordinary shares to
such Buyer in an equivalent number subject to the restrictive legend
limitation contained in the Irrevocable Transfer Agent Instructions
described in Section 5 below. In the event that the U.S. transfer
agent does not make delivery of certificates within five (5) business
days of such Buyer's request, then the Company shall pay the Buyer an
amount equal to the penalties calculated in accordance with Section
4(e) of the Debenture.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to each of
its transfer agents, Corporate Registry Services Pty. Ltd. and American
Securities Transfer and Trust, Inc. to issue certificates, registered in the
name of the Buyer or its respective nominee(s), for the Conversion Shares in
such amounts as specified from time to time by the Buyer to the Company upon
conversion of the Debentures (the "Irrevocable Transfer Agent Instructions").
Upon conversion, at the option of the Buyer, the Conversion Shares may be resold
on the Australian Stock Exchange, the NASD SmallCap Market or as otherwise
determined by the Buyer. Prior to registration of the Conversion Shares under
the 1933 Act, all such certificates issued in the U.S. shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of
14
<PAGE> 15
such shares under the 1933 Act) will be given by the Company to its transfer
agent and that the Debentures and the Conversion Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Debentures or
Conversion Shares. If the Buyer provides the Company with an opinion of counsel,
reasonably satisfactory in form, and substance to the Company, that registration
of a resale by the Buyer of any of the Debentures or Conversion Shares is not
required under the 1933 Act in the case of Conversion Shares to be sold in the
United States, or that registration of a resale by the Buyer of any of the
Debentures or Conversion Shares is not required by the ASX, the Company shall
permit the transfer, and, in the case of the Conversion Shares, promptly
instruct its transfer agents to issue one or more certificates in such name and
in such denominations as specified by the Buyer without a restrictive legend.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyer shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Debentures to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
b. The Buyer shall have delivered to the Company the
Purchase Price for the Debentures being purchased by the Buyer at the
Closing by wire transfer of immediately available funds pursuant to
the wire instructions provided by the Company.
c. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the Buyer at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the
Debentures at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided
15
<PAGE> 16
that these conditions are for the Buyer's sole benefit and may be waived by the
Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.
b. The Common Stock shall be authorized for quotation on
the ASX and the NASDAQ SmallCap Market, trading in the Common Stock
shall not have been suspended for any reason.
c. The representations and warranties of the Company shall
be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified
as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer including,
without limitation an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. The Buyer shall have received the opinion of the
Company's Australian and United States counsel dated as of the
Closing Date, in form, scope and substance reasonably satisfactory to
the Buyer and in substantially the form of Exhibit "D" attached
hereto.
e. The Company shall have executed and delivered to the
Buyer the Certificates (in such denominations as the Buyer shall
request) for the Debentures being purchased by the Buyer at the
Closing.
f. The Board of Directors of the Company shall have adopted
the resolutions in substantially the form of Exhibit "E" attached
hereto.
g. As of the Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Debentures, such number of
shares of Common Stock equal to or greater than 150% of the number of
shares of Common Stock for which are issuable upon conversion of all
of the Debentures which could be issued (based upon a conversion
effective as of the day before the Closing Date) under this Agreement
or the Debentures.
16
<PAGE> 17
h. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by each of the Company's transfer agents.
i The Company is eligible to utilize Form F-3 to cover the
resale of the Conversion Shares issued upon conversion of the
Debentures in the United States.
j. The Company shall have obtained an irrevocable voting
proxy from Malaysia Mining Corporation, the controlling shareholder
of the Company voting in favor of the issuance of the Debentures and
the Conversion Shares pursuant to Australian Stock Exchange Listing
Rule 7.1 and related transactions contemplated thereby in the Form of
Exhibit "F" attached hereto.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of
this Agreement and acquiring the Debentures and the Conversion Shares hereunder
and in addition to all of the Company's other obligations under this Agreement,
the Company shall defend, protect, indemnify and hold harmless the Buyer and
each other holder of the Debentures and the Conversion Shares and all of their
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, the
Debentures or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement,
the Debentures or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Indemnitee by any third party
which arises out of or results from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Debentures or the status of the Buyer or holder of the
Debentures or the Conversion Shares, as an investor in the Company. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
17
<PAGE> 18
9. GOVERNING LAW: MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. Any dispute or
controversy between the parties arising in connection with this
agreement or the subject matter contemplated by this agreement shall
be resolved by arbitration before a three-member panel of the
American Arbitration Association in accordance with the commercial
arbitration rules of said forum and the Federal Arbitration Act, 9
U.S.C. 1, et seq., with the resulting award being final and
conclusive. Said arbitrators shall be empowered to award all forms of
relief and damages claimed, including, but not limited to, attorney's
fees, expenses of litigation and arbitration, exemplary damages, and
prejudgment interest. Notwithstanding the foregoing, Holder may at
any time and at its option, whether or not an arbitration action is
then pending, initiate a civil action for temporary and permanent
injunctive and other equitable relief against Company. Company
acknowledges that upon any breach of Holder's conversion rights
hereunder, Holder's resulting injury may not be adequately
compensated by a remedy at law. Accordingly, upon such breach,
Holder, at its election and without limitation of its other remedies,
shall be entitled to pursue a claim for specific performance of this
Agreement, and Company hereby waives the right to assert any defense
thereto that Holder has an adequate remedy at law. The parties
further agree that any arbitration action between them shall be heard
in New York, New York, and expressly consent to the jurisdiction and
venue of the Supreme Court of New York County, New York, and the
United States District Court for the Southern District of New York
for the adjudication of any civil action asserted pursuant to this
Paragraph.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. In the
event any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery
hereof.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement, Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein,
18
<PAGE> 19
neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument
in writing signed by the party to be charged with enforcement.
f. Notices. Any notices consents, waivers or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
CityView Energy Corporation Limited
19 Walters Drive
Herdsman Western Australia WA 6017
Attn: President
Telephone: (011) (61-8) 9445-3199
Facsimile: (011) (61-8) 9445-3947
With a copy to:
Simon Watson LL.B
17 Ord Street
West Perth, 6005
Western Australia
Telephone: (011) (61-8) 93226855
Facsimile: (011) (61-8) 93226197
If to the Transfer Agents:
American Securities Transfer & Trust
938 Quail Street, Suite 101
Lakewood, Colorado 80215-5513
Attn: Tammy Davis
Telephone: (303) 234-5300
Facsimile: (303) 234-5340
19
<PAGE> 20
Corporate Registry Services Pty. Ltd
152-158 Sk George Terrace
Perth, Western Australia 6000
Telephone: (618) 9324 1199
Facsimile: (618) 9324 2499
If to the Buyer, to its address and facsimile number on the Schedule
of Buyers, with copies to the Buyer's counsel as set forth on the
Schedule of Buyers. Each party shall provide five (5) days' prior
written notice to the other party of any change in address or
facsimile number.
g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written
consent of the Buyer. The Buyer may assign its rights hereunder
without the consent of the Company, provided, however, that any such
assignment shall not release the Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and
the Buyer contained in Sections 2 and 3, the agreements and covenants
set forth in Sections 4, 5 and 9, the indemnification provisions set
forth in Section 8, shall survive the Closing. The Buyer shall be
responsible only for its own representations, warranties, agreements
and covenants hereunder.
j. Publicity. The Company and the Buyer shall have the
right to approve before issuance any press releases or any other
public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or
other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall
be consulted by the Company in connection with any such press release
or other public disclosure prior to its release and shall be provided
with a copy thereof).
k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
20
<PAGE> 21
1. Termination. In the event that the Closing shall not
have occurred with respect to the Buyer on or before five (5)
business days from the date hereof due to the Company's or the
Buyer's failure to satisfy the conditions set forth in Sections 6 and
7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any
party to any other party - provided, however, that if this Agreement
is terminated pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the Buyer for the expenses described in
Section 4(h) above.
m. Finder. The Company acknowledges that it has not engaged a
Finder in connection with the sale of the Debentures, which placement
agent may have formally or informally engaged other agents on its
behalf. The Company shall be responsible for the payment of any
Finder's fees (which includes cash and warrants to purchase Common
Stock) relating to or arising out of the transactions contemplated
hereby.
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
21
<PAGE> 22
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
CITYVIEW ENERGY CORPORATION LIMITED
By:
------------------------------------------
Name: Mark Smyth
Its: Chief Executive Officer
"BUYER"
HRH PRINCESS MONIRAH BINT SULTAN BIN ABDULAZIZ
AL SAUD
By:
------------------------------------------
Name: HRH Princess Monirah Bint Sultan Bin
Abdulaziz Al Saud
Title:
---------------------------------------
"BUYER"
HRH PRINCE KHALID BIN FAISAL BIN FAHAD BIN
ABDULAZIZ
By:
------------------------------------------
Name: HRH Prince Khalid Bin Faisal Bin Fahad
Bin Abdulaziz
Title:
---------------------------------------
22
<PAGE> 23
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BUYER'S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER FACE AMOUNT OF DEBENTURES
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HRH Princess Monirah Bint Sultan Bin Abdulaziz Al Saud c/o Ms. Najla Abu Nayyan $500,000
P. O. Box 94657
Riyadh 11614
Kingdom of Saudi Arabia
Facsimile: 01196612130861
- -------------------------------------------------------------------------------------------------------------------------------
HRH Prince Khalid Bin Faisal Bin Fahad Bin Abdulaziz c/o Ms. Najla Abu Nayyan $500,000
P. O. Box 94657
Riyadh 11614
Kingdom of Saudi Arabia
Facsimile: 01196612130861
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
SCHEDULE 3(c)
CAPITALIZATION
a) 50,000 options exercisable at A $2.25 at any time on or before
January 31, 1999, and
2) 50,000 options exercisable at A $2.25 at any time on or before
January 31, 2000.
<PAGE> 25
SCHEDULE 3(e)
CONFLICTS
None.
<PAGE> 26
SCHEDULE 3(h)
LITIGATION
None.
<PAGE> 27
SCHEDULE 3(n)
INTELLECTUAL PROPERTY
Not Applicable.
<PAGE> 28
SCHEDULE 3(p)
LIENS
No liens on property.
<PAGE> 29
SCHEDULE 3(u)
TAX STATUS
None.
<PAGE> 30
SCHEDULE 3(v)
CERTAIN TRANSACTIONS
None.
<PAGE> 31
SCHEDULE 4(d)
USE OF PROCEEDS
Working capital and acquisition of contracts.
<PAGE> 1
EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 3,
1998, by and among CityView Energy Corporation Limited, a corporation duly
organized and existing under the laws of Australia, with headquarters at 19
Walters Drive, Herdsman Western Australia WA 6017 (the "COMPANY"), and the
undersigned buyer (the "BUYER" ).
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, (i) to issue and sell to the Buyer"s shares of
the Company's 6% Convertible Debenture (the "DEBENTURES"), the principal and
interest of which will be convertible into shares of the Company's ordinary
shares (the "COMMON STOCK") (as converted, the "CONVERSION SHARES") in
accordance with the terms of the Debentures; and
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyers hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
a. "INVESTOR" means the Buyer and any transferee or assignee
thereof to whom the Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9.
b. "PERSON" means a corporation, a limited liability company,
an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("RULE 415"), and the declaration or
ordering of effectiveness of
<PAGE> 2
such Registration Statement(s) by the United States Securities and
Exchange Commission (the "SEC").
d. REGISTRABLE SECURITIES" means the Conversion Shares issued
or issuable upon conversion of the Debentures and any shares of capital
stock issued or issuable with respect to the Conversion Shares or the
Debentures as a result of any stock split, stock dividend,
recapitalization, exchange, or similar event.
e."REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, on
or prior to thirty (30) days after the date of issuance of any
Debentures, file with the SEC a Registration Statement or Registration
Statements (as is necessary) on Form F-3 (or, if such form is
unavailable for such a registration, on such other form as is available
for such a registration, subject to the consent of each Buyer and the
provisions of Section 2(e), which consent will not be unreasonably
withheld), covering exclusively the resale of all of the Registrable
Securities, which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such
Registration Statement(s) also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon
conversion of the Debentures (i) to prevent dilution resulting from
stock splits, stock dividends or similar transactions and (ii) by
reason of changes in the Conversion Price or Conversion Rate of the
Debentures in accordance with the terms thereof Such Registration
Statement shall initially register for resale at least 1,100,000 shares
of Common Stock, subject to adjustment as provided in Section 3(b), and
such registered shares of Common Stock shall be allocated among the
Investors pro rata based on the total number of Registrable Securities
issued or issuable as of each date that a Registration Statement, as
amended, relating to the resale of the Registrable Securities is
declared effective by the SEC. The Company shall use its best
reasonable efforts to have the Registration Statement declared
effective by the SEC within ninety (90) days after the issuance of the
Debentures (the "Registration Deadline"). The Company shall permit the
registration statement to become effective within five (5) business
days after receipt of a "no review" notice from the SEC. In the event
that the Registration Statement is not declared effective by the SEC by
the Registration Deadline then the Applicable Discount to be used in
determining the Conversion Price (as defined in the Debenture) shall be
increased by (i) an additional 3% if the Registration
<PAGE> 3
Statement is not declared effective by the SEC within thirty (30) days
following the Registration Deadline (to 72%), or (ii) an additional 6%
if the Registration Statement is not declared effective by the SEC
within ninety (90) days of the Registration Deadline (to 69%).
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) involves an
underwritten offering, the Buyers shall have the right to select one
legal counsel and an investment banker or bankers and manager or
managers to administer their interest in the offering, which investment
banker or bankers or manager or managers shall be reasonably
satisfactory to the Company.
c. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the
Company proposes to file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the
1933 Act of any of its securities, the Company shall promptly send to
each Investor who is entitled to registration rights under this Section
2(c) written notice of the Company's intention to file a Registration
Statement and of such Investor's rights under this Section 2(c) and, if
within twenty (20) days after receipt of such notice, such Investor
shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities
such Investor requests to be registered, subject to the priorities set
forth in Section 2(d) below. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a). The obligations of the
Company under this Section 2(c) may be waived by Investors holding a
majority of the Registrable Securities. If an offering in connection
with which an Investor is entitled to registration under this Section
2(c) is an underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the
same terms and conditions as other shares of Common Stock included in
such underwritten offering.
d. Priority in Piggy-Back Registration Rights in connection
with Registrations or Company Account. If the registration referred to
in Section 2(c) is to be an underwritten public offering for the
account of the Company and the managing underwriter(s) advise the
Company in writing, that in their reasonable good faith opinion,
marketing or other factors dictate that a limitation on the number of
shares of Common Stock which may be included in the Registration
Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall
-3-
<PAGE> 4
include in such registration: (1) first, all securities the Company
proposes to sell for its own account, (2) second, up to the full number
of securities proposed to be registered for the account of the holders
of securities entitled to inclusion of their securities in the
Registration Statement by reason of demand registration rights, and (3)
third, the securities requested to be registered by the Investors and
other holders of securities entitled to participate in the
registration, drawn from them pro rata based on the number each has
requested to be included in such registration.
e. Eligibility for Form F-3. The Company represents, warrants,
and covenants that it has filed and shall file all reports required to
be filed by the Company with the SEC in a timely manner so as to obtain
and maintain potential eligibility for the use of Form F-3. In the
event that Form F-3 is not available for sale by the Investors of the
Registrable Securities, then (i) the Company, with the consent of each
Investor pursuant to Section 2(a), shall register the sale of the
Registrable Securities on another appropriate form and (ii) the Company
shall undertake to register the Registrable Securities on Form F-3 as
soon as such form is available.
f. In the event that following the Registration Deadline, the
Registration Statement has not been declared effective by the SEC, the
Investor shall have the right to require the Company to immediately
register the Registrable Securities for quotation with the Australian
Stock Exchange to the extent that such registration is required in
order to sell such shares on the Australian Stock Exchange without
restriction. The costs of such registration shall be borne by the
Company.
3. RELATED OBLIGATIONS.
Whenever an Investor has requested that any Registrable Securities be
registered pursuant to Section 2(c) or at such time as the Company is obligated
to file a Registration Statement with the SEC pursuant to Section 2(a), the
Company will use its best reasonable efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on
or prior to thirtieth (30th) day following the date of issuance of any
Debentures, for the registration of Registrable Securities pursuant to
Section 2(a)) and use its best reasonable efforts to cause such
Registration Statement(s) relating to Registrable Securities to become
effective as soon as possible after such filing (by the
-4-
<PAGE> 5
ninetieth (90th) day following the issuance of the relevant Debentures
for the registration of Registrable Securities pursuant to Section
2(a), and keep the Registration Statement(s) effective pursuant to Rule
415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto) or (ii) the date on which (A) the Investors shall
have sold all the Registrable Securities and (B) none of the Debentures
is outstanding (the "REGISTRATION PERIOD"), which Registration
Statement(s) (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection
with the Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep the Registration Statement(s) effective at all times
during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement(s). In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is
insufficient to cover all of the Registrable Securities, the Company
shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities, in each case,
as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common
Stock and other relevant factors on which the Company reasonably elects
to rely). The Company shall use its best reasonable efforts to cause
such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a
Registration Statement shall be deemed "insufficient to cover all of
the Registrable Securities" if at any time the number of Registrable
Securities issued or issuable upon conversion of the Debentures is
greater than the quotient determined by dividing (i) the number of
shares of Common Stock available for resale under such Registration
Statement by (ii) 1.5;
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provided that in the case of the initial registration of the
Registrable Securities pursuant to Section 2(a), the Company shall be
required to register at least 1,100,000 shares of Common Stock for
resale. For purposes of the calculation set forth in the foregoing
sentence, any restrictions on the convertibility of the Debentures
shall be disregarded and such calculation shall assume that the
Debentures are then convertible into shares of Common Stock at the then
prevailing Conversion Rate (as defined in the Debentures).
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement(s)
and its legal counsel without charge (i) promptly after the same is
prepared and filed with the SEC at least one copy of the Registration
Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits, the prospectus(es) included in such Registration Statement(s)
(including each preliminary prospectus ) and, with regards to the
Registration Statement, any correspondence by or on behalf of the
Company to the SEC or the staff of the SEC and any correspondence from
the SEC or the staff of the SEC to the Company or its representatives,
(ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration
Statement(s) under such other securities or "blue sky" laws of such
jurisdictions in the United States as any Investor reasonably requests,
(ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in
any such jurisdiction, or (c) file a general consent to service of
process in any such
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<PAGE> 7
jurisdiction. The Company shall promptly notify each Investor who holds
Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the
securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
e. In the event Investors who hold a majority of the
Registrable Securities being offered in the offering select
underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering.
f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the
happening of any event, of which the Company has knowledge, as a result
of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement
or amendment to each Investor (or such other number of copies as such
Investor may reasonably request). The Company shall also promptly
notify each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness and by
overnight mail) (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
g. The Company shall use its best reasonable efforts to
prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain
the withdrawal of such order or suspension at the earliest possible
moment and to notify each Investor who holds Registrable Securities
being sold (and, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.
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<PAGE> 8
h. The Company shall permit each Investor a single firm of
counsel or such other counsel as thereafter designated as selling
stockholders' counsel by the Investors who hold a majority of the
Registrable Securities being sold, to review and comment upon the
Registration Statement(s) and all amendments and supplements thereto at
least seven (7) days prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects. The
Company shall not submit a request for acceleration of the
effectiveness of a Registration Statement(s) or any amendment or
supplement thereto without the prior approval of such counsel, which
consent shall not be unreasonably withheld.
i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall use their best
reasonable efforts to furnish, on the date that Registrable Securities
are delivered to an underwriter, if any, for sale in connection with
the Registration Statement if required by (i) an underwriter, a letter,
dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, and (ii)
an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering,
addressed to the underwriters and the Investors.
j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys and
one firm of accountants or other agents retained by the Investors, and
(iv) one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") all pertinent financial and other
records, and pertinent corporate documents and properties of the
Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence provided,
however, that each Inspector shall hold in strict confidence and shall
not make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is mutually
determined to be necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required under
the 1933 Act, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body
of competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential.
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<PAGE> 9
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of
such information is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this
or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
l. The Company shall use its best reasonable efforts either to
(i) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, (ii) if at any time during
the Registration Period the Company is able to satisfy the relevant
listing criteria, secure designation and quotation of all the
Registrable Securities covered by the Registration Statement on the
Nasdaq National Market System, (iii) if, despite the Company's best
reasonable efforts to satisfy the preceding clause (i) or (ii), the
Company is unsuccessful in satisfying the preceding clause (i) or (ii),
if at any time during the Registration Period the Company is able to
satisfy the relevant listing criteria, to secure the inclusion for
quotation on the Nasdaq SmallCap Market for such Registrable Securities
or, (iv) if, despite the Company's best reasonable efforts to satisfy
the preceding clause (iii), the Company is unsuccessful in satisfying
the preceding clause (iii), to secure the inclusion for quotation on
the over-the-counter market for such Registrable Securities, and,
without limiting the generality of the foregoing, in the case of clause
(iii) or (iv), to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such Registrable Securities. The Company shall pay
all fees and expenses in connection with satisfying its obligation
under this Section 3(l).
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any
managing underwriter or underwriters, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant
to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or, if there is no managing
underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters,
if any, or the Investors may request. Not later than the date on which
any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its
transfer agent instructions, accompanied by any reasonably required
opinion of counsel, that permit sales of unlegended securities in
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<PAGE> 10
a timely fashion that complies with then mandated securities settlement
procedures for regular way market transactions.
n. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a Registration Statement.
o. The Company shall provide a transfer agent and registrar to
administer in such capacity all such Registrable Securities not later
than the effective date of such Registration Statement.
p. If requested by the managing underwriters or an Investor,
the Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters
and the Investors agree should be included therein relating to the sale
and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other terms
of the underwritten (or best reasonable efforts underwritten) offering
of the Registrable Securities to be sold in such offering; make all
required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and supplement or
make amendments to any Registration Statement if requested by a
shareholder or any underwriter of such Registrable Securities.
q. The Company shall use its best reasonable efforts to cause
the Registrable Securities covered by the applicable Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
r. The Company shall otherwise use its best reasonable efforts
to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.
4. OBLIGATIONS OF THE INVESTORS.
a. At least fourteen (14) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify
each Investor in writing of the information the Company requires from
each such Investor if such Investor elects to have any or all of such
Investor's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that
such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable
Securities
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<PAGE> 11
and shall execute such documents in connection with such registration
as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation
and filing of the Registration Statement(s) hereunder, unless such
Investor has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from
the Registration Statement.
c. In the event Investors holding a majority of the
Registrable Securities being registered determine to engage the
services of an underwriter, each Investor agrees to enter into and
perform such Investor's obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Securities, unless such Investor notifies the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f), such Investor will
immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence
of 3(f) and, if so directed by the Company, such Investor shall deliver
to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder
to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions.
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<PAGE> 12
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company and fees and disbursements of
one counsel for the Investors, shall be borne by the Company.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor who
holds such Registrable Securities, the directors, officers, partners,
employees, agents and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 ACT"), and any underwriter (as defined in
the 1933 Act) for the Investors, and the directors and officers of, and
each Person, if any, who controls, any such underwriter within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, attorneys' fees, amounts paid in
settlement or expenses, joint or several, (collectively, "CLAIMS")
incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the
statements therein were made, not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities
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<PAGE> 13
pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject
to the restrictions set forth in Section 6(d) with respect to the
number of legal counsel, the Company shall reimburse the Investors and
each such underwriter or controlling person, promptly as such expenses
are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating
or defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified
Person or underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c); (ii)
with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary
prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the
Company pursuant to Section 3(c), and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a violation and such Indemnified Person,
notwithstanding such advice, used it; (iii) shall not be available to
the extent such Claim is based on a failure of the Investor to deliver
or to cause to be delivered the prospectus made available by the
Company (i) and (iv) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by
the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and
not jointly indemnify, hold harmless and defend, to the same extent and
in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (collectively and together with
an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim or
Indemnified Damages to which any of them may become subject, under the
1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in
each case to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section
6(d), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and Section 7 shall not apply
to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which
consent shall not be unreasonably
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<PAGE> 14
withheld; provided, further, however, that the Investor shall be liable
under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same
extent as provided above, with respect to information such persons so
furnished in writing expressly for inclusion in the Registration
Statement.
d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action or proceeding (including any governmental action or
proceeding) involving a Claim such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may
be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in
such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall
be selected by the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to which
the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person
which relates to such action or claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its
written consent, provided, however, that the indemnifying party shall
not unreasonably withhold,
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<PAGE> 15
delay or condition its consent. No indemnifying party shall, without
the consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified
Party or Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent
that the indemnifying party is prejudiced in its ability to defend such
action.
e. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the indemnifying party or others,
and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
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<PAGE> 16
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
so long as the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the filing
of such reports and other documents is required for the applicable
provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as
may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant
to this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement; (vi) such transferee shall be an "ACCREDITED INVESTOR" as that term
is defined in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii)
in the event the assignment occurs subsequent to the date of effectiveness of
the Registration Statement required to be filed pursuant to Section 2(a), the
transferee agrees to pay all reasonable expenses of amending or supplementing
such Registration Statement to reflect such assignment.
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<PAGE> 17
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds of the Registrable Securities. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities
with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile, provided a copy is mailed by U.S. certified mail, return
receipt requested; (iii) three (3) days after being sent by U.S.
certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company: CityView Energy Corporation Limited
19 Walters Drive
Herdsman Western Australia 6017
Facsimile: (011) (61-8) 9445-3947
With a copy to: Simon Watson LL.B
17 Ord Street
West Perth, 6005
Western Australia
Facsimile: (011) (61-8) 93226197
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
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<PAGE> 18
d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. This Agreement and the Securities Purchase Agreement
constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein and therein. This Agreement and the Securities
Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit and of and be binding upon the permitted
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
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<PAGE> 19
COMPANY: BUYERS:
CITYVIEW ENERGY HRH PRINCESS MONIRAH BINT SULTAN BIN
CORPORATION LIMITED ABDULAZIZ AL SAUD
By: _____________________________ By: _______________________________
Name: Mark Smyth Name: _____________________________
Its: Chief Executive Officer Its:
HRH PRINCE KHALID BIN FAISAL BIN FAHAD BIN
ABDULAZIZ
By: _______________________________
Name: _____________________________
<PAGE> 20
SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
BUYER"S NAME ADDRESS AND FACSIMILE NUMBER OF BUYER FACE AMOUNT OF DEBENTURES
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
<S> <C> <C>
HRH Princess Monirah Bint Sultan Bin Abdulaziz Al Saud c/o Ms. Najla Abu Nayyan $500,000
P. O. Box 94657
Riyadh 11614
Kingdom of Saudi Arabia
Facsimile: 01196612130861
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
HRH Prince Khalid Bin Faisal Bin Fahad Bin Abdulaziz c/o Ms. Najla Abu Nayyan $500,000
P. O. Box 94657
Riyadh 11614
Kingdom of Saudi Arabia
Facsimile: 01196612130861
- --------------------------------------------------------- ---------------------------------------- ---------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.9
PLACEMENT AGENCY AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 3RD day of June, 1998, by
and between CityView Energy Corporation Limited, an Australian corporation
("Company"), and AIBC Investment Services Corporation., a Florida corporation
(the "Agent").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell Convertible Debentures
(the "Securities") which shall be convertible into the Company's ordinary shares
("Common Stock") resulting in gross proceeds to the Company of a minimum of
$2,000,000 and up to a maximum of $30,000,000 (the "Offerings") not involving a
public offering without registration under the Securities Act of 1933, as
amended (the "Act"), pursuant to exemptions from the registration requirements
of the Act under Regulation D promulgated under the Act ("Regulation D"), as
described below; and
WHEREAS, the Agent has offered to assist the Company in placing the
Securities on a "best efforts basis" with respect to sales of Securities
thereafter up to the Maximum Shares (as defined below), and the Company desires
to secure the services of the Agent on the terms and conditions hereinafter set
forth;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
1. Engagement of Agent. The Company hereby appoints the Agent as its
exclusive placement agent for the Offering, to sell a minimum of $2,000,000 of
Securities (the "Minimum Shares") and up to $30,000,000 of Securities (the
"Maximum Shares") in a series of closings as shall be mutually agreed to on a
"best efforts basis," resulting in gross proceeds to the Company of a minimum of
$2,000,000 and a maximum of up to $30,000,000. The Agent proposes initially to
sell up to $2,000,000 of Securities for the initial closing (the "Initial
Offering"). The Agent, on the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, accepts
such appointment and agrees to use its best efforts to find purchasers for the
Securities. This appointment shall be irrevocable for the period commencing as
of the date hereof and ending on December 31, 1998, subject to Section 5.1
herein, which period maybe extended by the consent of the Company and the Agent
(the "Offering Period").
2. Representations and Warranties of the Company. In order to induce
the Agent to enter into this Agreement, the Company hereby represents and
warrants to and agrees with the Agent as follows:
2.1 Offering Documents. The Company and the Placement Agent have
prepared a Subscription Agreement, certain exhibits thereto, Registration Rights
Agreement, and the Convertible Debentures regarding the Securities, which
documents have been or will be sent to proposed investors. In addition, proposed
investors have received or will receive prior to closing copies of the Company's
Audited Financials for the periods ended December 31, 1996, material agreements
entered into by the Company and possibly other documents that are to be filed
with the SEC ("SEC Documents"). The SEC Documents were prepared in conformity
with the requirements (to the extent applicable) of the Securities and Exchange
Act of 1934, as amended (the "Act") and the rules and regulations ("Rules and
Regulations") of the Commission promulgated thereunder. Since December 1996, the
Company has filed all reports, schedules, forms, statements, and other documents
required to be filed by it with the SEC as a foreign private issuer and is
eligible to utilize Form F-3 as a resale registration statement for the Common
Stock. As used in this Agreement, the term "Offering Documents" refers to and
means the SEC
<PAGE> 2
Documents, the Subscription Agreement and all amendments, exhibits and
supplements thereto, together with any other documents which are provided to the
Agent by, or approved for Agent's use by, the Company for the purpose of this
Offering.
2.2 Provision of Offering Documents. The Company shall deliver to the
Agent, without charge, as many copies of the Offering Documents as the Agent may
reasonably require for the purposes contemplated by this Agreement. The Company
authorizes the Agent, in connection with the Offering of the Securities, to use
the Offering Documents as from time to time amended or supplemented in
connection with the offering and sale of the Securities and in accordance with
the applicable provisions of the Act and Regulation D and applicable Australian
law. The Company consents to the Agent's distribution of the Offering Documents
to prospective subscribers as a disclosure document about the Company, its
business, prospects, financial condition and other matters.
2.3 Accuracy of Offering Documents. The Offering Documents, at the time
of delivery to subscribers for the Securities, conformed in all material
respects with the requirements, to the extent applicable, of the Act and the
applicable Rules and Regulations and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. On each Closing Date (as hereinafter
defined), the Offering Documents will contain all statements which are required
to be stated therein in accordance with the Act and the Rules and Regulations
for the purposes of the proposed Offering, and all statements of material fact
contained in the Offering Documents will be true and correct, and the Offering
Documents will not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Company does not make any
representations or warranties as to the information contained in or omitted from
the Offering Documents in reliance upon written information furnished on behalf
of the Agent with the Agent's written consent specifically for use therein.
2.4 Duty to Amend. If during such period of time as in the opinion of
the Agent or its counsel any Offering Documents relating to this offering are
required to be delivered under the Act, any event occurs or any event known to
the Company relating to or affecting the Company shall occur as a result of
which the Offering Documents as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time after
the date hereof to amend or supplement the Offering Documents to comply with the
Act or the applicable Rules and Regulations, the Company shall forthwith notify
the Agent thereof and shall prepare such further amendment or supplement to the
Offering Documents as may be required and shall furnish and deliver to the Agent
and to others, whose names and addresses are designated by the Agent, all at the
cost of the Company, a reasonable number of copies of the amendment or
supplement or of the amended or supplemented Offering Documents which, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the Offering
Documents not misleading in the light of the circumstances when it is delivered
to a purchaser or prospective purchaser, and which will comply in all respects
with the requirements (to the extent applicable) of the Act and the applicable
Rules and Regulations.
2.5 Corporation Condition. The Company's condition is as described in
its Offering Documents, except for changes in the ordinary course of business
and normal year-end adjustments that are not in the aggregate materially adverse
to the Company. The Offering Documents, taken as a whole, present fairly the
business and financial position of the Company as of each Closing Date.
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<PAGE> 3
2.6 No Material Adverse Change. Except as may be reflected in or
contemplated by the Offering Documents, subsequent to the dates as of which
information is given in the Offering Documents, and prior to each Closing Date,
there shall not have been any material adverse change in the condition,
financial or otherwise, or in the results of operations of the Company or in its
business taken as a whole.
2.7 No Defaults. Except as disclosed in the Offering Documents or in
writing to the Agent, the Company is not in default in any material respect in
the performance of any obligation, agreement or condition contained in any
material debenture, note or other evidence of indebtedness or any material
indenture or loan agreement of the Company. The execution and delivery of this
Agreement, and the consummation of the transactions herein contemplated, and
compliance with the terms of this Agreement will not conflict with or result in
a breach of any of the terms, conditions or provisions of, or constitute a
default under, the Articles of Incorporation or By-Laws of the Company (in any
respect that is material to the Company), any material note, indenture,
mortgage, deed of trust, or other agreement or instrument to which the Company
is a party or by which the Company or any property of the Company is bound, or
to the Company's knowledge, any existing law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality, agency or
body, arbitration tribunal or court, domestic or foreign, having jurisdiction
over the Company or any property of the Company. The consent, approval,
authorization or order of any court or governmental instrumentality, agency or
body is not required for the consummation of the transactions herein
contemplated except such as may be required under the Act or under the Blue Sky
or securities laws of any state or jurisdiction.
2.8 Incorporation and Standing. The Company is, and at each Closing
Date will be, duly formed and validly existing in good standing as a corporation
under the laws of Australia and with full power and authority (corporate and
other) to own its properties and conduct its business, present and proposed, as
described in the Offering Documents; the Company, has full power and authority
to enter into this Agreement; and the Company is duly qualified and in good
standing as a foreign entity in each jurisdiction in which the failure to so
qualify would have a material adverse effect on the Company or its properties.
The Common Stock is listed for trading on the Australian Stock Exchange and with
the NASDAQ SmallCap over-the-counter market.
2.9 Legality of Outstanding Securities. Prior to each Closing Date, the
outstanding securities of the Company have been duly and validly authorized and
issued, fully paid and nonassessable and conform in all material respects to the
statements with regard thereto contained in the Offering Documents.
2.10 Legality of Securities. The Securities, when sold and delivered,
will constitute legal, valid and binding obligations of the Company, enforceable
in accordance with the terms thereof, and shall be duly and validly issued and
outstanding, fully paid and nonassessable. The Common Stock into which the
Securities are convertible, when converted in accordance with the Company's
Articles of Incorporation shall be duly and validly issued and outstanding,
fully paid and non-assessable.
2.11 Litigation. Except as set forth in the Offering Documents, there
is now, and at each Closing Date there will be, no action, suit or proceeding
before any court or governmental agency, authority or body pending or, to the
knowledge of the Company, threatened, which might result in judgements against
the Company not adequately covered by insurance or which collectively might
result in any material adverse change in the condition (financial or otherwise)
or business of the Company or which would materially adversely affect the
properties or assets of the Company.
-3-
<PAGE> 4
2.12 Finders. The Company does not know of any outstanding claims for
services in the nature of a finder's fee or origination fees with respect to the
sale of the Securities hereunder for which the Agent may be responsible, and the
Company will indemnify the Agent from any liability for such fees by any party
who has a claim for such compensation from the Company and for which person the
Agent is not legally responsible.
2.13 Tax Returns. The Company has filed all Australian and United
States federal and state tax returns which are required to be filed, and has
paid all taxes shown on such returns and on all assessments received by it to
the extent such taxes have become due. All taxes with respect to which the
Company is obligated have been paid or adequate accruals have been set up to
cover any such unpaid taxes.
2.14 Authority. The execution and delivery by the Company of this
Agreement have been duly authorized by all necessary action, and this Agreement
is the valid, binding and legally enforceable obligation of the Company subject
to standard qualifications as to the availability of equitable remedies, the
effect of bankruptcy and other laws relating to the protection of debtors and
public policy opinions promulgated by the Commission with respect to
indemnification against liabilities under the Act.
2.15 Actions by the Company. The Company will not take any action which
will impair the effectiveness of the transactions contemplated by this
Agreement.
3. Issue, Sale and Delivery of the Securities.
3.1 Deliveries of Securities. Certificates in such form that, subject
to applicable transfer restrictions as described in the Subscription Agreement,
they can be negotiated by the purchasers thereof (issued in such denominations
and in such names as the Agent may direct the Company to issue) for the
Securities, and warrants representing the Agent's warrant compensation described
in Section 3.6 below ("Warrants"), shall be delivered by the Company to the
Escrow Agent, with copies made available to the Agent for checking at least one
(1) full business day prior to each Closing Date, it being understood that the
directions from the Agent to the Company shall be given at least two (2) full
business days prior to each Closing Date. The certificates for the Securities
and the Warrants shall be delivered at the Initial Closing and at each
Subsequent Closing (as defined hereinafter).
3.2 Escrow of Funds. Pursuant to the Escrow Agreement, a copy of which
is attached hereto as Exhibit "A" (the "Escrow Agreement"), executed by the
Company, the Agent and the escrow agent (the "Escrow Agent"), the subscribers
shall place all funds for purchase of Securities for each Closing in an escrow
account set up by the Company. The Company shall have the right to approve or
object the subscriptions of each subscriber, as described in the Subscription
Agreement. At such time as subscribers subscribing for the Minimum Shares
delivered to the Escrow Agent their signed subscription documents, those
subscribers have been approved by the Company and all other Closing conditions
have been met, Escrow Agent shall release the subscription funds and signed
documents to the Company and release the certificates representing the
Securities to the subscribers (the "Closing"). In the event that the Initial
Closing shall be for an amount of Securities less than the Maximum Amount, the
Offering may be continued, and additional Closings may be held (each a
"Subsequent Closing") throughout the Offering Period. In addition, the Agent
shall have the right to act as agent for the sale of additional Securities or
other equity or debt of the Company as set forth in Section 5 herein.
3.3 Closing Date. The Initial Closing and any Subsequent Closing shall
take place at the offices of AIBC Investment Services Corporation, Suite 4047,
One World Trade Center, New York, New York 10048 at such time and date ("Closing
Date") as will be fixed either orally or in writing by notice to be given by the
Agent to the Company after consultation with the Company, such Closing Date to
be not less than one (1)
-4-
<PAGE> 5
full business day after the date on which such notice shall have been given and
not less than one (1)) and not more than ten (10) full business days after the
date on which the Escrow Agent shall have given written notice to the Company
and the Agent that funds deposited with the Escrow Agent total at least the
Minimum Proceeds. Each Closing Date may be changed by mutual agreement of the
Agent and the Company.
3.4 Agent's Compensation. The Company shall pay the Agent a commission
of ten percent (10%) of the gross subscription proceeds of the first five
million U.S. dollars of proceeds raised in the Offerings and six percent (6%) of
the gross subscription proceeds in excess of five million U.S. dollars.
3.5 Payment of Fees. The Escrow Agent shall be instructed to pay all
fees (including, but not limited to Agent's legal fees) and cost reimbursements
pursuant to section 3.4 of this Agreement, directly to the Agent from the
proceeds of the Initial Closing and all Subsequent Closings, simultaneous with
the transfer of proceeds to the Company.
4. Offering of the Securities on Behalf of the Company.
4.1 In offering the Securities for sale, the Agent shall offer them
solely as an agent for the Company, and such offer shall be made upon the terms
and subject to the conditions set forth in the Offering Documents. The Agent
shall commence making such offer as an agent for the Company as soon as possible
following delivery of the Offering Documents.
4.2 The Agent will not make offers to sell the Securities to, or
solicit offers to subscribe for any Securities from, persons or entities that
are not "accredited investors" as defined in Regulation D.
5. Right of First Refusal. The Company hereby grants Agent rights of
first refusal as follows:
5.1 The Agent has the right of first refusal to act as placement agent
for any future private financings of the Company, whether equity securities,
convertible debt securities, or securities or instruments convertible into or
exchangeable for debt or equity securities of the Company, mergers,
acquisitions, or similar transactions. The duration of the Agent's right of
first refusal under this Section 5.2 shall be for a period of one (1) year
following the Final Closing of this Offering and shall be limited to offers and
sales of the ordinary shares and other debt or equity securities of the Company
in or through the United States and/or the NASDAQ SmallCap Market.
5.2 In the event that the Company wishes to undertake a transaction
described in this Section 5, the Company must send Agent a written notice of the
proposed transaction (whether the transaction is initiated by the Company or is
offered to the Company by a third party), in sufficient specificity to allow the
Agent to understand the proposed transaction clearly. This notice must be
delivered to Agent at least twenty days prior to the proposed closing of the
transaction. The Agent shall have ten days from receipt of that notice to
determine whether or not it wishes to exercise its right of first refusal with
respect to that transaction. The Agent shall notify the Company in writing of
its decision to exercise its right of first refusal with respect to the
transaction described in the notice. If the Agent does not timely exercise its
right of first refusal, the Company may proceed with that transaction; provided,
however, that if the terms of the transaction are changed in any material way
from the terms set forth in the notice to the Agent, the Agent's right of first
refusal shall commence again. Agent's waiver of its rights of first refusal with
respect to any specific transaction shall not act as a waiver of its rights with
respect to future transactions within the applicable time period.
-5-
<PAGE> 6
5.3 The Company agrees to maintain the confidentiality of the Agent's
clients, except as required by applicable law. Such clients shall be those
entities which invest or have been offered an opportunity to invest by the Agent
in the Offering (the "Clients"). The Company will not solicit or enter into any
financing transaction with the clients without the written consent of Agent and
without payment to Agent no less than the compensation to be paid to Agent
hereunder for raising a like amount.
5.4 In the event that Company breaches Section 5.1, 5.2, or 5.3 of this
Agreement, Agent shall be entitled to receive compensation in the same
proportion to the financing done without Agent's participation as the
compensation to Agent under this Agreement bears to the financing raised in this
Offering.
6. Covenants of the Company. The Company covenants and agrees with the
Agent that:
6.1 After the date hereof, the Company will not at any time, prepare
and distribute any amendment or supplement to the Offering Documents, of which
amendment or supplement the Agent shall not previously have been advised and the
Agent and its counsel furnished with a copy within a reasonable time period
prior to the proposed adoption thereof, or to which the Agent shall have
reasonable objected in writing on the ground that it is not in compliance with
the Act or the Rules and Regulations (if applicable).
6.2 The Company will pay, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming effective
or is terminated, all costs and expenses incident to the performance of its
obligations under this Agreement, including all expenses incident to the
authorization of the Securities and their issue and delivery to the Agent, any
original issue taxes in connection therewith, all transfer taxes, if any,
incident to the initial sale of the Securities, the fees and expenses of the
Company's counsel (except as provided below) and accountants, the cost of
reproduction and furnishing to the Agent copies of the Offering Documents.
6.3 As a condition precedent to the Initial Closing and each subsequent
closing, the Company will deliver to the Agent a true and correct copy of the
Articles of Incorporation of the Company, and all amendments and certificates of
designation of preferences of preferred stock, if any.
6.4 Prior to each Closing Date, the Company will cooperate with the
Agent in such investigation as it may make or cause to be made of all of the
properties, business and operations of the Company in connection with the
Offering of the Securities. The Company will make available to it in connection
therewith such information in its possession as the Agent may reasonably request
and will make available to such persons as the Agent shall deem reasonably
necessary and appropriate in order to verify or substantiate any such
information so supplied.
6.5 The Company shall be responsible for making any and all filings
required by the Blue Sky authorities and filings required by the laws of the
jurisdictions in which the subscribers who are accepted for purchase of
Securities are located, if any. Agent shall assist Company in this respect, but
such filings shall be the responsibility of Company.
6.6 Corporation Condition. The Company's condition is as described in
its Offering Documents, except for changes in the ordinary course of business
and normal year-end adjustments that are not individually or in the aggregate
materially adverse to the Company. The Offering Documents, taken as a whole,
will present fairly the business and financial position of the Company as of
each Closing Date.
-6-
<PAGE> 7
6.7 No Material Adverse Change. Except as may be reflected in or
contemplated by the Offering Documents, subsequent to the dates as of which
information is given in the Offering Documents, and prior to each Closing Date,
there shall not have been any material adverse change in the condition,
financial, or otherwise, or in the results of operations of the Company or in
its business taken as a whole.
7. Indemnification.
7.1 The Company agrees to indemnify and hold harmless the Agent, each
person who controls the Agent within the meaning of Section 15 of the Act and
the Agent's employees, accountants, attorneys and agents (the "Agent's
Indemnitees") against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act or any
other statute or at common law for any legal or other expenses (including the
costs of any investigation and preparation) incurred by them in connection with
any litigation, whether or not resulting in any liability, but only insofar as
such losses, claims, damages, liabilities and litigation arise out of or are
based upon any untrue statement of material fact contained in the Offering
Documents or any amendment or supplement thereto or any application or other
document filed in any state or jurisdiction in order to qualify the Securities
under the Blue Sky or securities laws thereof, or the omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, under the circumstances under which they were made, not
misleading, all as of the date of the Offering Documents or of such amendment as
the case may be; provided, however, that the indemnity agreement contained in
this Section 7.1 shall not apply to amount paid in settlement of any such
litigation, if such settlements are made without the consent of the Company, nor
shall it apply to the Agent's Indemnitees in respect to any such losses, claims,
damages or liabilities arising out of or based upon any such untrue statement or
alleged untrue statement or any such omission or alleged omission, if such
statement or omission was made in reliance upon information furnished in writing
to the Company by the Agent specifically for use in connection with the
preparation of the Offering Documents or any such amendment or supplement
thereto or any application or other document filed in any state or jurisdiction
in order to qualify the Securities under the Blue Sky or securities law thereof.
This indemnity agreement is in addition to any other liability which the Company
may otherwise have to the Agent's Indemnitees. The Agent's Indemnitees agree,
within ten (10) days after the receipt by them of written notice of the
commencement of any action against them in respect to which indemnity may be
sought from the Company under this Section 7.1, to notify the Company in
writing of the commencement of such action; provided, however, that the failure
of the Agent's Indemnitees to notify the Company of any such action shall not
relieve the Company from any liability which it may have to the Agent's
Indemnitees on account of the indemnity agreement contained in this Section 7.1,
and further shall not relieve the Company from any other liability which it may
have to the Agent's Indemnitees, and if the Agent's Indemnitees shall notify the
Company of the commencement thereof, the Company shall be entitled to
participate in (and, to the extent that the Company shall wish, to direct) the
defense thereof at its own expense, but such defense shall be conducted by
counsel of recognized standing and reasonably satisfactory to the Agent's
Indemnitees, defendant or defendants, in such litigation. The Company agrees to
notify the Agent's Indemnitees promptly of the commencement of any litigation or
proceedings against the Company or any of the Company's officers or directors of
which the Company may be advised in connection with the issue and sale of any of
the Securities and to furnish to the Agent's Indemnitees, at their request, to
provide copies of all pleadings therein and to permit the Company's Indemnitees
to be observers therein and apprise the Agent's Indemnitees of all developments
therein, all at the Company's expense.
7.2 The Agent agrees, in the same manner and to the same extent as set
forth in Section 7.1 above, to indemnify and hold harmless the Company, and the
Company's and Company's employees, accountants, attorneys and agents (the
"Company's Indemnitees") with respect to (i) any statement in or omission from
the Offering Documents or any amendment or supplement thereto or any application
or other document filed in any
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<PAGE> 8
state or jurisdiction in order to qualify the Securities under the Blue Sky or
securities laws thereof, or any information furnished pursuant to Section 3.4
hereof, if such statement or omission was made in reliance upon information
furnished in writing to the Company by the Agent on its behalf specifically for
use in connection with the preparation thereof or supplement thereto, or (ii)
any untrue statement of a material fact made by the Agent or its agents not
based on statements in the Offering Documents or authorized in writing by the
Company, or with respect to any misleading statement made by the Agent or its
agents resulting from the omission of material facts which misleading statement
is not based upon the Offering Documents, or information furnished in writing by
the Company or, (iii) any breach of any representation, warranty or covenant
made by the Agent in this Agreement. The Agent's liability hereunder shall be
limited to the amount received by it for acting as Agent in connection with the
Offerings. The Agent shall not be liable for amounts paid in settlement of any
such litigation if such settlement was effected without its consent. In case of
the commencement of any action in respect of which indemnity may be sought from
the Agent, the Company's Indemnitees shall have the same obligation to give
notice as set forth in Section 7.1 above, subject to the same loss of indemnity
in the event such notice is not given, and the Agent shall have the same right
to participate in (and, to the extent that it shall wish, to direct) the defense
of such action at its own expense, but such defense shall be conducted by
counsel of recognized standing reasonably satisfactory to the Company. The Agent
agrees to notify the Company's Indemnitees and, at their request, to provide
copies of all pleadings therein and to permit the Company's Indemnitees to be
observers therein and apprise them of all the developments therein, all at the
Agent's expense.
8. Effectiveness of Agreement. This Agreement shall become effective
(i) at 9:00 A.M., New York City time, on the date hereof or (ii) upon release by
the Agent of the Securities for offering after the date hereof, whichever shall
last occur. The Agent agrees to notify the Company immediately after the Agent
shall have taken any action by such release or otherwise wherein this Agreement
shall have become effective. This Agreement shall, nevertheless, become
effective at such time earlier than the time specified above after the date
hereof as the Agent may determine by notice to the Company.
9. Conditions of the Agent's Obligations. The Agent's obligations to
act as agent of the Company hereunder and to find purchasers for the Securities
shall be subject to the accuracy, as of each Closing Date, of the
representations and warranties on the part of the Company herein contained, to
the fulfillment of or compliance by the Company with all covenants and
conditions hereof, and to the following additional conditions:
9.1 Counsel to the Agent shall not have objected in writing or shall
not have failed to give his consent to the Offering Documents (which objection
or failure to give consent shall not have been done unreasonably).
9.2 The Agent shall not have disclosed to the Company that the Offering
Documents, or any amendment thereof or supplement thereto, contains an untrue
statement of fact, which, in the opinion of counsel to the Agent, is material,
or omits to state a fact, which, in the opinion of such counsel, is material and
is required to be stated therein, or is necessary to make the statements
therein, under the circumstances in which they were made, not misleading.
9.3 Between the date hereof and each Closing Date, the Company shall
not have sustained any loss on account of fire, explosion, flood, accident,
calamity or any other cause of such character as would materially adversely
affect its business or property considered as an entire entity, whether or not
such loss is covered by insurance.
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<PAGE> 9
9.4 Between the date hereof and each Closing Date, there shall be no
litigation instituted or threatened against the Company, and there shall be no
proceeding instituted or threatened against the Company before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises, license,
permits, operations or financial condition or income of the Company considered
as an entity.
9.5 Except as contemplated herein or as set forth in the Offering
Documents, during the period subsequent to the most recent financial statements
contained in the Offering Documents, if any, and prior to each Closing Date, the
Company (i) shall have conducted its business in the usual and ordinary manner
as the same is being conducted as of the date hereof and (ii) except in the
ordinary course of business, the Company shall not have incurred any liabilities
or obligations (direct or contingent) or disposed of any assets, or entered into
any material transaction or suffered or experienced any substantially adverse
change in its condition, financial or otherwise. At each Closing Date, the
equity account of the Company shall be substantially the same or better as
reflected in the most recent balance sheet contained in the Offering Documents
without considering the proceeds from the sale of the Securities other than as
may be set forth in the Offering Documents.
9.6 The authorization of the Securities by the Company and all
proceedings and other legal matters incident thereto and to this Agreement shall
be reasonably satisfactory in all respects to counsel to the Agent, who shall
have furnished the Agent on each Closing Date with such favorable opinion with
respect to the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement as the Agent may reasonably require, and the Company
shall have furnished such counsel such documents as he may have requested to
enable him to pass upon the matters referred to in this subparagraph.
9.7 The Company shall have furnished to the Agent the opinion, dated
each Closing Date, addressed to the Agent, from Australian and United States
counsel to the Company, as required by the Subscription Agreement.
9.8 The Company shall have furnished to the Agent a certificate of the
Chief Executive Officer and the Chief Financial Officer of the Company, dated as
of the Closing Date, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as of
the Closing Date (other than representations and warranties which by
their terms are specifically limited to a date other than the Closing
Date), and the Company has complied with all the agreements and has
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date; and
(ii) the respective signers have each carefully examined the
Offering Documents, and any amendments and supplements thereto, and, to
the best of their knowledge, in the Offering memorandum, and any
amendments and supplements thereto, all statements contained in the
Offering Documents are true and correct, and neither the Offering
Documents, nor any amendment or supplement thereto, includes any untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein under
the circumstances in which they were made not misleading, and since the
date hereof, there has occurred no event required to be set forth in an
amended or supplemented Offering Documents, which has not been set
forth; except as set forth in the Offering Documents, since the
respective dates as of which or the periods for which the information
is given in the Offering Documents and prior to the date of such
certificate, (a) there has not been any substantially
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<PAGE> 10
adverse change, financial and otherwise, in the affairs of condition in
the Company, and (b) the Company has not incurred any material
liabilities, direct or contingent, or entered into any material
transactions, otherwise than in the ordinary course of business.
10. Termination.
10.1 This Agreement may be terminated by the Agent by notice to the
Company in the event that the Company shall have failed or been unable to comply
with any of the terms, conditions or provisions of this Agreement on the part of
the Company to be performed, complied with or fulfilled within the respective
times, if any, herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by the Agent in
writing.
10.2 This Agreement may be terminated by the Company by notice to the
Agent in the event that (i) the Agent shall have failed or been unable to comply
with any of the terms, conditions or provisions of this Agreement on the part of
the Agent to be performed, complied with or fulfilled within the respective
times, if any, herein provided for, or (ii) in the event that the Agent is
unsuccessful in raising at least $2,000,000 for the Company in the form of
convertible debentures by June 30, 1998, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by the
Company in writing.
10.3 This Agreement may be terminated by the Agent by notice to the
Company at any time, if, in the reasonable, good faith judgment of the Agent,
payment for and delivery of the Securities is rendered impracticable or
inadvisable because: (i) additional material governmental restrictions not in
force and effect on the date hereof shall have been imposed upon trading in
securities generally; (ii) a war or other national calamity shall have occurred;
or (iii) the condition of the market (either generally or with reference to the
sale of the Securities to be offered hereby) or the condition of any matter
affecting the Company or any other circumstance is such that it would be
undesirable, impracticable or inadvisable, in the judgment of the Agent, to
proceed with this Agreement or with the Offering. If subsection (iii) is
utilized by the Agent then the right of first refusal and exclusivity as
described herein shall terminate.
10.4 Any termination of this Agreement pursuant to this Section shall
be without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that the Company shall remain obligated to pay the costs and expenses
provided to be paid by it specified in Sections 3, 5, and 6; and the Company and
the Agent shall be obligated to pay, respectively, all losses, claims, damages
or liabilities, joint or several, under Section 7.1 in the case of the Company
and Section 7.2 in the case of the Agent.
11. Agent's Representations, Warranties, and Covenants. The Agent
represents and warrants to and agrees with the Company that:
11.1 Agent is a corporation duly incorporated and existing under the
laws of the state of Florida. Agent is registered with the Securities Exchange
Commission and the NASD.
11.2 There is not now pending or threatened against the Agent any
action or proceeding of which the Agent has been advised, either in any court of
competent jurisdiction, before the Commission or before any state securities
commission or the NASD, concerning the Agent's activities which would impair the
ability of the Agent to conduct the Offering as contemplated by this Agreement.
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<PAGE> 11
11.3 In the event any action or proceeding of the type referred to in
Section 11.2 above shall be instituted or threatened against the Agent at any
time prior to each Closing Date or, in the event there shall be filed by or
against the Agent in any court, pursuant to any federal, state, local or
municipal statute, a petition in bankruptcy or insolvency or for reorganization
or for the appointment of a receiver or trustee of its assets or if the Agent
makes an assignment for the benefit of creditors, the Company shall have the
right, on three (3) days' written notice to the Agent, to terminate this
Agreement without any liability to the Agent of any kind, except for the payment
of all expenses provided herein.
11.4 Agent understands and acknowledges that the Securities are not
being registered under the Act, and that the Offering is to be conducted
pursuant to Regulation D. Accordingly, in conducting its activities under this
Agreement:
(a) Agent shall offer Securities only to "accredited
investors," as defined in Regulation D. The Investors are not and will not be
residents of Australia and the Offering will not be made in Australia.
11.5 Neither the Agent nor any of its Affiliates will take any action
which will impair the effectiveness of the transactions contemplated by this
Agreement.
11.6 All corporate actions by Agent required for the execution,
delivery and performance of this Agreement have been taken. The execution and
delivery of this Agreement by the Agent, the observance and performance thereof,
and the consummation of the transactions contemplated herein or in the Offering
Documents do not and will not constitute a material breach of, or a material
default under, any instrument or agreement by which the Agent is bound, and does
not and will not, to the best of the Agent's knowledge, contravene any existing
law, decree or order applicable to it. This Agreement constitutes a valid and
binding agreement of Agent, enforceable in accordance with its terms.
11.7 Agent understands that the Company is relying upon Agent's
representations and warranties in connection with the Offering and the sale of
the Securities contemplated by this Agreement.
11.8 Agent's representations and warranties under this Section shall be
true and correct as of the Closing, and shall survive the Closing for a period
of six months.
12. Notices. Except as otherwise expressly provided in this Agreement:
12.1 Whenever notice is required by the provisions of this Agreement to
be given to the Company, such notice shall be in writing, addressed to the
Company, at:
If to Company: CityView Energy Corporation Limited
19 Walters Drive
Herdsman Western Australia WA 6017
with a copy to: Simon Watson LL.B
17 Ord Street
West Perth, 6005
Western Australia
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<PAGE> 12
12.2 Whenever notice is required by the provisions of this Agreement to
be given to the Agent, such notice shall be given in writing, addressed to the
Agent, at:
If to the Agent: AIBC Investment Services Corporation
Suite 4047
One World Trade Center
New York, NY 10048
Attn: Younis Zubchevich
with a copy to: Raymond L. Moss, Esq.
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
12.3 Any notice instructing the Escrow Agent to distribute monies or
Securities held in Escrow must be signed by authorized agents of both the
Company and the Agent in order to be valid.
13. Miscellaneous.
13.1 Benefit. This Agreement is made solely for the benefit of the
Agent and the Company, their respective officers and directors and any
controlling person referred to in Section 15 of the Act and their respective
successors and assigns, and no other person may acquire or have any right under
or by virtue of this Agreement, including, without limitation, the holders of
any Securities. The term "successor" or the term "successors and assigns" as
used in this Agreement shall not include any purchasers, as such, of any of the
Securities.
13.2 Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Company and the Agent, or the
officers, directors or controlling persons of the Company and the Agent as set
forth in or made pursuant to this Agreement and the indemnity agreements of the
Company and the Agent contained in Section 7 hereof shall survive and remain in
full force and effect, regardless of (i) any investigation made by or on behalf
of the Company or the Agent or any such officer, director or controlling person
of the Company or of the Agent; (ii) delivery of or payment for the Securities;
or (iii) each Closing Date, and any successor of the Company or the Agent or any
controlling person, officer or director thereof, as the case may be, shall be
entitled to the benefits hereof.
13.3 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York without regard to the
principles of conflict of laws. Any dispute or controversy between the parties
arising in connection with this agreement or the subject matter contemplated by
this agreement shall be resolved by arbitration before a three-member panel of
the American Arbitration Association in accordance with the commercial
arbitration rules of said forum and the Federal Arbitration Act, 9 U.S.C. 1 et
seq., with the resulting award being final and conclusive. Said arbitrators
shall be empowered to award all forms of relief and damages claimed, including,
but not limited to, attorney's fees, expenses of litigation and arbitration,
exemplary damages, and prejudgment interest. Notwithstanding the foregoing,
Buyer may at any time and at its option, whether or not an arbitration action is
then pending, initiate a civil action for temporary and permanent injunctive and
other equitable relief against Company. Company acknowledges that upon any
breach of Buyer's conversion rights hereunder, Buyer's resulting injury may not
be adequately compensated by a remedy at law.
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<PAGE> 13
Accordingly, upon such breach, Buyer, at its election and without limitation of
its other remedies, shall be entitled to pursue a claim for specific performance
of this Agreement, and Company hereby waives the right to assert any defense
thereto that Purchaser has an adequate remedy at law. The parties further agree
that any arbitration action between them shall be heard in New York, New York
and expressly consent to the jurisdiction and venue of the Supreme Court of New
York County, New York, and the United States District Court for the Southern
District of New York for the adjudication of any civil action asserted pursuant
to this Paragraph.
13.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
13.5 Confidential Information. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct of
such transactions, and be otherwise held in strict confidence.
13.6 Public Announcements. Prior to each Closing Date, neither party
hereto will issue any public announcement concerning the within transactions
without the approval of the other party.
13.7 Finders. The parties acknowledge that no person has acted as a
finder in connection with the transactions contemplated herein and each will
agree to indemnify the other with respect to any other claim for a finder's fee
in connection with the offering.
13.8 Recitals. The recitals to this Agreement are a material part
hereof, and each recital is incorporated into this Agreement by reference and
made a part of this Agreement.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the day and year first above written.
"THE COMPANY"
CITYVIEW ENERGY CORPORATION LIMITED
By:_____________________________________
Mark Smyth
Chairman and Chief Executive Officer
"THE AGENT"
AIBC INVESTMENT SERVICES CORPORATION
By:______________________________________
Younis Zubchevich
Executive Vice President
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<PAGE> 1
EXHIBIT 10.10
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE AUSTRALIAN STOCK EXCHANGE,
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER
ANY STATE SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION D ("REGULATION") PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR
SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND THOSE LAWS.
THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No.____ U.S. $500,000
CITYVIEW ENERGY CORPORATION LIMITED
6% CONVERTIBLE DEBENTURE DUE JUNE 3, 2000
THIS DEBENTURE is one of a duly authorized issue of Debentures of
CityView Energy Corporation Limited, a corporation duly organized and existing
under the laws of Australia (the "Company"), designated as its 6% Convertible
Debentures Due June 3, 2000, in an aggregate principal amount not exceeding U.S.
$5,000,000 (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to _________________
______________________________, the registered holder hereof (the "Holder"), the
principal sum of Five Hundred Thousand Dollars (U.S. $500,000), on or prior to
June 3, 2000, (the "Maturity Date"), and to pay interest on the principal sum
outstanding from time to time in arrears on the Maturity Date, at the rate of 6%
per annum. Accrual of interest on this
(continued on reverse)
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized.
CITYVIEW ENERGY CORPORATION LIMITED
Dated: June 3, 1998
By:
Mark Smyth
Chief Executive Officer
<PAGE> 2
Debenture shall commence on the date that, in connection with the consummation
of the initial purchase of this Debenture from the Company, the escrow agent
first had in its possession funds representing full payment for this Debenture,
and interest shall continue to accrue until payment in full of the principal sum
has been made or duly provided for. The interest so payable will be paid on the
Maturity Date 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") at the
Company's option in either cash or ordinary shares ("Common Stock"). All accrued
and unpaid interest shall bear interest at the same rate of 6% per annum from
the Maturity Date until the date of payment. 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 at the address of the Holder last appearing on
the Debenture Register of the Company as designated in writing by the Holder
from time to time or pursuant to the conversion terms as set forth in Section 4
hereof. The Debenture Register shall represent the record of ownership and right
to receive principal and interest on this Debenture. Interest and principal
shall be payable only to the registered Holder as reflected in the Debenture
Register. The right to receive principal and interest under this Debenture shall
be transferable only through an appropriate entry in the Debenture Register as
provided herein. The forwarding of such payment shall constitute a payment of
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
payment.
This Debenture is subject to the following additional provisions:
1. Debentures. The Debentures are issuable in denominations of Five Hundred
Thousand Dollars (U.S. $500,000). 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 shall not be issuable in
denominations less than integral multiples of One Hundred Thousand Dollars (U.S.
$100,000). No service charge or other charges of any kind will be made for such
registration of transfer or exchange.
2. Withholdings. 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 Australian and United States
income tax laws or other applicable laws at the time of such payments. The
Company shall pay any other taxes, charges, or levies in connection with the
issuance or transfer thereof.
3. Transfer. This Debenture is issued subject to investment representations of
the original Holder hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), including
Regulation D, if applicable, promulgated under the Act. Any Holder of this
Debenture, by acceptance hereof, agrees to the representations, warranties and
covenants herein. Prior to due presentment to the Company 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
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<PAGE> 3
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 by notice to the contrary.
4. Conversion. The record Holder of this Debenture shall have conversion rights
as follows (the "Conversion Rights"):
(a) Right to Convert. The record Holder of this Debenture shall be
entitled, at the option of the Holder to convert 100% of the aggregate principal
amount of Debentures held by such Holder, at any time beginning on September 4,
1998, at the office of the Company into that number of fully-paid and
non-assessable shares of Common Stock of the Company calculated in accordance
with the following formula:
Number of shares issued upon conversion = (Principal + Accrued Interest on the
Principal amount being converted)/Conversion Price, where
- Principal = The principal amount of the Debenture(s) to be
converted,
- Interest = Principal x (N/365) x .06, where N = the number of
days between (i) the date of issuance of this Debenture, and
(ii) the applicable date of conversion for the Debenture for
which conversion is being elected, and
- Conversion Price = 75% (the "Applicable Discount") of the
average Closing Bid Price for the Company's Common Stock for
the five (5) trading days immediately preceding the Date of
Conversion, as defined below. For purposes hereof, the term
"Closing Bid Price" shall mean (i) in the case where the
Holder elects to convert into Common Stock to be resold
outside of Australia the closing bid price of Company's Common
Stock as reported by NASDAQ (or, if not reported by NASDAQ, as
reported by such other exchange or market where traded) and
(ii) in the case where the Holder elects to convert into
Common Stock to be sold on the Australian Stock Exchange the
closing bid price of the Company's Common Stock as reported by
the Australia Stock Exchange.
(b) Mechanics of Conversion. No fractional shares of Common Stock shall
be issued upon conversion of this Debenture. In lieu of any fractional share to
which the Holder would otherwise be entitled, the Company shall pay cash to such
Holder in an amount equal to such fraction multiplied by the Conversion Price
then in effect. In the case of a dispute as to the calculation of the Conversion
Rate, the Company's calculation shall be deemed conclusive absent manifest
error. In order to convert Debentures into full shares of Common Stock, the
Holder shall surrender the certificate or certificates therefor, duly endorsed,
by either overnight courier or 2-day courier, to the office of the Company or of
any transfer agent for the Debentures, and shall give written notice to the
Company (the "Notice of Conversion") at such office that he elects to convert
the same, the number and principal amount of Debentures so converted and a
calculation of the Conversion Rate (with an advance copy of the certificate(s)
and the notice by facsimile); provided, however, that the Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
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<PAGE> 4
upon such conversion unless either the certificates evidencing such Debentures
are delivered to the Company or its transfer agents as provided above, or the
Holder notifies the Company or its transfer agents that such certificates have
been lost, stolen or destroyed and executes an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
such certificates.
The Company shall use reasonable efforts to issue and deliver within
three (3) business days after delivery to the Company of such certificates, or
after such agreement and indemnification, to such Holder of Debentures 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
as aforesaid. The date on which notice of conversion is given (the "Date of
Conversion") shall be deemed to be the date the Holder faxes a Notice of
Conversion to the Company provided that the original Debentures to be converted
are received by the transfer agent or the Company within five (5) business days
thereafter and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date. If the
original Debentures to be converted are not received by the transfer agents or
the Company within five business days after the Date of Conversion, the notice
of conversion shall become null and void.
Following conversion of a Debenture, or a portion thereof, the
principal and interest owed on that Debenture or portion of the Debenture so
converted will be deemed paid in full and satisfied, and such Debenture or
portion thereof will no longer be outstanding.
(c) Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
Debentures (as defined in the Securities Purchase Agreement), no less than 150%
of the number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all then outstanding Debentures; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding Debentures,
the Company will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose such as calling a shareholder's meeting to
approve such conversion and issuance.
(d) Nothing contained in this Debenture or paragraph 4(e) hereof, shall
be deemed to establish or require the payment of interest to the Holder at a
rate in excess of the maximum rate permitted by governing law. In the event that
the rate of interest required to be paid under the Debenture exceeds the maximum
rate permitted by governing law, the rate of interest required to be paid
thereunder shall be automatically reduced to the maximum rate permitted under
the governing law and any amounts selected in excess of the permissible amount
shall be deemed a payment of principal. To the extent that such excess amount
exceeds the aggregate principal amount of this Debenture, such excess shall be
returned with reasonable promptness by the Holder to the Company.
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<PAGE> 5
(e) In the event the Company does not make delivery of the certificates
of Common Stock, as instructed by Holder, within five (5) business days after
the Date of Conversion, then in such event the Company shall pay to the Holder
an amount, in immediately available funds in accordance with the following
schedule, wherein "No. Business Days Late" is defined as the number of business
days beyond the five (5) business days delivery period.
<TABLE>
<CAPTION>
LATE PAYMENT FOR EACH
PRINCIPAL AMOUNT BEING $10,000 OF DEBENTURE
NO. BUSINESS DAYS LATE CONVERTED (U.S. $)
<S> <C>
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
11 $1,000 + $200 for each
Business Days Late Beyond 10 days
</TABLE>
To the extent that the failure of the Company to issue the certificates
of Common Stock pursuant to this Section 4(e) is due to the unavailability of
authorized but unissued shares of Common Stock, the provisions of this Section
4(e) shall not apply but instead the provisions of Section 4(f) shall apply. The
Company shall pay any payments incurred under this Section 4(e) in immediately
available funds within five (5) business days from the date of issuance of the
certificates of applicable Common Stock. Nothing herein shall limit a Holder's
right to pursue actual damages for the Company's failure to issue and deliver
Common Stock to the Holder within three (3) business days after the Date of
Conversion.
(f) If, at any time, a Holder submits a Notice of Conversion and the
Company does not have sufficient authorized but unissued shares of Common Stock
available to effect, in full, a conversion of the Debentures (a "Conversion
Default," the date of such default being referred to herein as the "Conversion
Default Date"), the Company shall issue to the Holder a certificate representing
all of the shares of Common Stock which are available, and the Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted Debentures") shall become null and void. The Company shall provide
notice of such Conversion Default ("Notice of Conversion Default" to all
existing Holders of outstanding Debentures, by facsimile, within one (1)
business day of such default (with the original delivered by overnight or two
day courier). No Holder may submit a Notice of Conversion after receipt of
Notice of Conversion Default until the date additional shares of Common Stock
are authorized by the Company. The Company agrees to pay to all Holders of
outstanding Debentures payments for a Conversion Default ("Conversion
-5-
<PAGE> 6
Default Payments") in the amount of (N/365 x (.24) x the initial issuance price
of the outstanding Debentures held by each Holder where N = the number of days
from the Conversion Default Date to the date (the "Authorization Date") that the
Company authorizes a sufficient number of shares of Common Stock to affect
conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Holder's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in immediately available funds, or shall be
convertible into Common Stock at the Conversion Rate, at the Holder's option,
payable as follows: (i) in the event Holder elects to take such payment in
immediately available funds, payments shall be made to such Holder of
outstanding Debentures by the fifth day of the following calendar month, or (ii)
in the event Holder elects to take such payment in stock, the Holder may convert
such payment amount into Common Stock at the Conversion Rate at anytime after
the 5th day of the calendar month following the month in which the Authorization
Notice was received, until the expiration of the Mandatory Conversion Date (as
defined herein).
Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to maintain a sufficient number of authorized
shares of common stock.
(g) Mandatory Payment or Conversion on Maturity Date. Each Holder of a
Debenture outstanding on June 3, 2000, shall have the right to demand, by
written notice to the Company which is received by the Company no later than
June 3, 2000, (the "Payment Notice"), that payment of all principal and accrued
interest on this Debenture be paid to such Holder in cash in U.S. dollars or in
immediately available funds on June 3, 2000. Each outstanding Debenture for
which a Payment Notice is not timely received by the Company on or before June
3, 2000, automatically shall be converted into Common Stock on June 3, 2000, at
the Conversion Price for each share of Common Stock calculated in accordance
with the formula in Section 4(a) above, and June 3, 2000, shall be deemed the
Date of Conversion with respect to such conversion. The Company shall not be
entitled to require conversion of the Debentures.
(h) Adjustment to Fixed Conversion Price.
(i) If, prior to the conversion of all of the Debentures, the
number of outstanding shares of Common Stock is increased by a stock
split, stock dividend, or other similar event, the Fixed Conversion
Price shall be proportionately reduced, or if the number of outstanding
shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Fixed
Conversion Price shall be proportionately increased.
(ii) If, prior to the conversion of all Debentures, there
shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result
of which shares of Common Stock of the Company shall be changed into
the same or a different number of shares of the same or another class
or classes of stock or securities of the Company or another entity,
then the Holders of Debentures shall thereafter have the right to
purchase and receive upon conversion of Debentures, upon the basis and
upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore issuable upon
conversion, such shares of stock and/or securities as may be issued
-6-
<PAGE> 7
or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore purchasable and receivable upon
the conversion of Debentures held by such Holders had such merger,
consolidation, exchange of shares, recapitalization or reorganization
not taken place, and in any such case appropriate provisions shall be
made with respect to the rights and interests of the Holders of the
Debentures to the end that the provisions hereof shall thereafter be
applicable, as nearly as may be practicable in relation to any shares
of stock or securities thereafter deliverable upon the exercise hereof.
The Company shall not effect any transaction described in this
subsection 4(h) unless the resulting successor or acquiring entity (if
not the Company) assumes by written instrument the obligation to
deliver to the Holders of the Debentures such shares of stock and/or
securities as, in accordance with the foregoing provisions, the Holders
of the Debentures may be entitled to purchase.
(iii) If any adjustment under this Section 4(h) would create a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon conversion shall be
the next higher number of shares.
(i) Nothing contained herein shall require the Company to issue upon
receipt of a Notice of Conversion in excess of 20% of its issued and outstanding
Common Stock as provided in NASDAQ Marketplace Rule 4320 (e) (21) (H) (the "NASD
20% Rule") unless and until the Shareholder Approval (as defined herein) has
been obtained by the Company. In the event the Company does not issue its Common
Stock after receipt of a Notice of Conversion because of the NASD 20% Rule, or
any Australian stock exchange rules, then in such event the Company shall pay to
the Holder 133% of the principal balance remaining on the Debentures plus all
accrued interest. Said amount shall be paid to the Holder within five (5)
business days of the receipt of the faxed Notice of Conversion from Holder.
5. No Prepayment. The Company shall have no right to prepay this Debenture, in
whole or in part, prior to the Maturity Date.
6. The following shall constitute an "Event of Default":
(a) The Company shall default in the payment of Principal or Interest on
this Debenture; or
(b) Any of the representations, warranties, or covenants made by the
Company herein, in the Securities Purchase Agreement, Registration Rights
Agreement, Escrow Agreement, or any other related agreements, or in any
certificate or financial or other written statements heretofore or hereafter
furnished by the Company in connection with the execution and delivery of this
Debenture or the Security Purchase 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,
-7-
<PAGE> 8
the Registration Rights Agreement, the Escrow Agreement, or any other related
agreement and such failure shall continue uncured for a period of ten (10)
business days after written notice from the Holder of such failure; or
(d) The Company shall (1) admit in writing its inability to pay its
debts generally as they mature; (2) make an assignment for the benefit of
creditors or commence proceedings for its dissolution; or (3) 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 judgement, writ or warrant of attachment, or similar
process in excess of U.S. One Hundred Thousand ($100,000) 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 sixty (60) days or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency 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, 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 suspended or delisted from
trading on the NASDAQ SmallCap market or the Australian Stock Exchange. Then, or
any time thereafter, and in each and every such case, 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 enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.
(j) The ordinary shareholders of the Company have not, by May 6, 1998,
and/or ratified the issuance of the Debentures and the Common Stock at the
Annual General Meeting, as required by the rules of the Australian Stock
Exchange, the National Association of Securities Dealers, Inc. and any other
laws, rules, and regulations applicable to the transactions (the "Shareholder
Approval").
(k) The failure of the Company to honor Notices of Conversion.
-8-
<PAGE> 9
7. No Impairment. Except as expressly provided herein, 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 or currency, herein prescribed. This
Debenture and all other Debentures now or hereafter issued in similar terms are
direct obligations of the Company.
8. Termination. After this Debenture shall have been surrendered for conversion
as herein provided or notice of conversion shall have been given by the Company
pursuant to Section 4(g) herein, this Debenture shall no longer be deemed to be
outstanding and all rights with respect to this Debenture, including, without
limitation, the right to receive interest hereon and the principal hereof, shall
forthwith terminate as of the Date of Conversion, except only the right of the
Holder hereof to receive shares of Common Stock in exchange herefor.
9. Protective Provisions. So long as Debentures are outstanding, the Company
shall not without first obtaining the approval (by vote or written consent, as
provided by law) of the Holders of at least a majority of principal amount of
the then outstanding Debentures (i) alter or change the rights, preferences or
privileges of the Debentures so as to affect adversely the Debentures or (ii)
incur indebtedness which is senior to the Debentures.
10. No Voting Rights. This Debenture shall not entitle the Holder hereof to any
of the rights of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive any
notice of, or to attend, meetings of stockholders or any other proceedings of
the Company.
11. Lost or Destroyed Debenture. If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership thereof, and indemnity, if requested,
all reasonably satisfactory to the Company.
12. Sales in Compliance with Applicable Law. Any Holder of this Debenture, by
acceptance hereof, agrees 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, including Regulation D, if applicable, promulgated under the Act, or any
applicable state, Blue Sky law or similar laws relating to the sale of
securities and the Holder agrees to provide the Company with the documentation
required by the Security Purchase Agreement executed by the original Holder
hereof to demonstrate that such offer, sale or disposition complies with
applicable securities laws.
13. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. Any dispute or controversy between the parties
arising in connection with this agreement or the subject matter
-9-
<PAGE> 10
contemplated by this agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1, et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. Notwithstanding the
foregoing, Holder may at any time and at its option, whether or not an
arbitration action is then pending, initiate a civil action for temporary and
permanent injunctive and other equitable relief against Company. Company
acknowledges that upon any breach of Holder's conversion rights hereunder,
Holder's resulting injury may not be adequately compensated by a remedy at law.
Accordingly, upon such breach, Holder, at its election and without limitation of
its other remedies, shall be entitled to pursue a claim for specific performance
of this Agreement, and Company hereby waives the right to assert any defense
thereto that Holder has an adequate remedy at law. The parties further agree
that any arbitration action between them shall be heard in New York, New York,
and expressly consent to the jurisdiction and venue of the Supreme Court of New
York County, New York, and the United States District Court for the Southern
District of New York for the adjudication of any civil action asserted pursuant
to this Paragraph.
14. Business Day Definition. For purposes hereof, the term "business day" shall
mean any day on which banks are generally open for business in the State of New
York, USA and excluding any Saturday and Sunday.
15. Notices. Any notice, demand or request required or permitted to be given by
either the Company or the Subscriber pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally, or by
facsimile (with a hard copy to follow by two day courier), addressed to the
Company at 19 Walters Drive, Herdsman Western Australia WA 6017, Telecopy No.
00161894453199 and with respect to the Holder as disclosed in the Securities
Purchase Agreement or such other addresses as a party may request by notifying
the other in writing.
16. Waiver. Any waiver by the Company or the Holder hereof of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder hereof to insist upon
strict adherence to any term of this Debenture on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Debenture.
Any waiver must be in writing.
17. Unenforceable Provisions. If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
-10-
<PAGE> 11
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert the above Debenture
No(s).___________ into ordinary shares (the "Common Stock"), of Cityview Energy
Corporation Limited (the "Company") according to the conditions hereof, as of
the date written below. If shares are to be issued in the name of a person other
than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates, opinions, and
signature guarantee as reasonably requested by the Company or its Transfer
Agent. No fee will be charged to the Holder for any conversion.
The undersigned represents and warrants that all offers and sales in the U.S. by
the undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Debenture shall be made only pursuant to (i) registration of
the Common Stock under the Securities Act of 1933, as amended (the "Act") or
(ii) advice of counsel that such sale is exempt from registration required by
Section 5 under the Act.
Check appropriate box:
/ / Conversion through the Australian stock register into
ordinary shares tradable on Australian Stock Exchange
(conversion from U.S. Dollars to Australian Dollars
based on exchange rate on date of Conversion will be
required)
/ / Conversion through American Stock Transfer & Trust
Company into ordinary shares tradeable on NASDAQ
Conversion calculations:
________________________________ Signature:__________________________________
Date of Conversion Print Name:_________________________________
Address:____________________________________
________________________________ ___________________________________________
Applicable Conversion Price ___________________________________________
<PAGE> 1
EXHIBIT 23.3
(Grant Thornton letterhead)
9 September 1998
The Directors
Cityview Energy Corporation Limited
19 Walters Drive
HERDSMAN WA 6017
Gentlemen
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form F-3 of our report dated 9 April 1998 which appears in CityView
Energy Corporation Limited's Annual Report on Form 20-F for the year ended
December 31, 1997. We consent to the incorporation by reference in the
Registration Statement and Prospectus of the aforementoned report and to the use
of our name as it appears under the caption "Experts".
/s/ Grant Thornton
- ----------------------
Grant Thornton
Chartered Accountants
Perth, Australia
34
