As filed with the Securities and Exchange Commission on September 22, 1997
Registration No. ______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
CASMYN CORP.
(Exact name of Registrant as specified in its charter)
Colorado 84-0987840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1335 Greg Street
Unit #104
Sparks, Nevada 89431
(702) 331-5524
(Address, including Zip Code, and Telephone Number, Including
Area Code of Registrant's Principal Executive Offices)
_________________________
Amyn Dahya
President
1335 Greg Street
Unit # 104
Sparks, Nevada 89431
(702) 331-5524
(Name, Address, including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
_________________________
Copy to:
David L. Ficksman, Esq.
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
(213) 688-3698
_________________________
<PAGE>
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, 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
================================================================================
TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
Common Stock,
$.04 par
value per share 4,863,539 $5.34 $ 25,971,298 $7,869
================================================================================
(1) Includes the registration for resale of the following: (i) all shares
of Common Stock issuable upon conversion of 533,885 shares of the
Registrant's 8% Convertible Preferred Stock issued on a private placement
on September 2, 1997 (the "September Convertible Preferred Stock");
(ii) all shares of Common Stock issuable upon conversion of 56,725
shares of the September Convertible Preferred Stock issuable
upon the exercise of warrants issued in connection with the foregoing
private placement; (iii) all such currently indeterminate number of shares
of Common Stock issuable upon conversion of 11,686 shares of Convertible
Preferred Stock issued in connnection with obligations under a
Preferred Stock Investment Agreements pursuant to which certain shares of
Convertible Preferred Stock were issued in April 1997; (iv) all
<PAGE>
shares of Common Stock issuable upon conversion of shares of Registrant's
September Convertible Preferred Stock issuable as dividends in respect of
shares of the September Convertible Preferred Stock; and (v)
450,000 shares of Common Stock (subject to adjustment) issuable upon
exercise of presently outstanding options and warrants. For purpose of
calculating the number of shares of Common Stock included in this
Registration Statement, the Company calculated 130% of the number of
shares of Common Stock issuable in connection with the Conversion of the
September Convertible Preferred Stock based on a market price of $5.34
per share of Common Stock (the last reported sales price reported by
NASDAQ on September 16, 1997). In addition to the estimated number of
shares set forth in the table, the amount to be registered includes a
presently indeterminate number of shares issuable upon conversion of or
otherwise in respect of Registrant's September Convertible Preferred
Stock as such number may be adjusted as a result of stock splits, stock
dividends and antidilution provisions (including floating rate
conversion prices) in accordance with Rule 416.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457(c) using the last reported sale price reported
on the Nasdaq SmallCap Market for the Registrant's Common Stock on
September 16, 1997.
_________________________
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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE. 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.
<PAGE>
Subject to Completion Dated September 22, 1997
PROSPECTUS
CASMYN CORP.
4,863,539 SHARES OF COMMON STOCK*
All of the shares ("Shares") of Common Stock, par value $.04 per
share ("Common Stock") of Casmyn Corp., a Colorado corporation ("Casmyn" or
the "Company"), are being offered by certain securityholders of the Company
(the "Selling Shareholders"). The Company will not receive any of the
proceeds from the sale of the Shares offered hereby. All expenses of this
offering will be paid for by the Company except for commissions, fees and
discounts of any underwriters, brokers, dealers or agents retained by the
Selling Shareholders. See "Selling Shareholders" and "Plan of Distribution"
for information relating to the Selling Shareholders and this offering. The
Common Stock Company is traded on the NASDAQ SmallCap Market under the symbol
"CMYN." On September 16, 1997, the last reported sale price of the Common
Stock, as reported on the NASDAQ SmallCap Market, was $5.34 per share.
*The Shares offered hereby for resale are: (i) all such currently
indeterminate number of shares of Common Stock issuable upon conversion of
533,885 shares of the Company's Convertible Preferred Stock, par value $.10 and
liquidation preference $25 per share (the "September Convertible Preferred
Stock:) issued in a private placement completed in September 1997 (the
"September Private Placement"); (ii) all such currently indeterminate
number of shares of Common Stock issuable upon conversion of 56,725
shares of the September Convertible Preferred Stock issuable upon the
exercise of warrants (the "September Convertible Preferred Stock Warrants")
issued in connection with the September Private Placement; (iii) all such
currently indeterminate number of shares of Common Stock issuable upon
conversion of 11,686 shares of Convertible Preferred Stock issued in
connection with obligations under Preferred Stock Investment Agreement
pursuant to which 834,667 shares of Convertible Preferred Stock were issued
in April 1997 (the "Obligation Shares"); (iv) all such currently indeterminate
number of shares of Common Stock issuable upon conversion of the September
Convertible Preferred Stock issuable as dividends in respect of the September
Convertible Preferred Stock and the September Convertible Preferred Stock
Warrants; and (v) 450,000 shares of Common Stock (subject to adjustment)
issuable upon exercise of presently outstanding options and warrants. The
number of shares of Common Stock issuable in connection with the transactions
referred to above and offered for resale hereby is an estimate based
upon the market price of the Common Stock set forth above, is subject to
adjustment and could be materially less or more than such estimated amount
depending upon factors which cannot be predicted by the Company at this time,
including, among others, the future market price of the Common Stock and the
decision by the holders of the September Convertible Preferred Stock as to
when to convert such shares. If, however, such market price of the Common
Stock were
<PAGE>
used to determine the number of shares issuable as of the first dates on which
all the September Convertible Preferred Stock may be converted, the Company
would be obligated to issue a total of approximately 4,413,539 shares of
Common Stock if all shares of the September Convertible Preferred Stock
outstanding or issuable upon the exercise of the September Convertible
Preferred Stock Warrants were converted on such dates. This presentation is
not intended to constitute a prediction as to the future market price of
the Common Stock or as to when holders will elect to convert shares of
September Convertible Preferred Stock into shares of Common Stock. See "Risk
Factors - Effect of Conversion of Convertible Preferred Stock, Potential
Common Stock Adjustment" and "Description of Capital Stock."
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. THESE SECURITIES SHOULD BE PURCHASED ONLY BY THOSE PERSONS WHO CAN
AFFORD A LOSS OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" ON PAGE 4)
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 _____________, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The reports, proxy statements and other information can be inspected and
copied at the public reference facilities that the Commission maintains at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of these materials can be obtained at prescribed rates
from the Public Reference Section of the Commission at the principal offices
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. These
reports, proxy statements and other information may also be obtained from the
Web site that the Commission maintains at http:\\www.sec.gov.
The Company has filed with the Commission a registration statement
on Form S-3 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act of 1933 (the
"Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
____________________________
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K/A for the year ended
September 30, 1996; and
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1996 and March 31, 1997 and on Form 10-Q/A
for the quarter ended June 30, 1997; and
3. The Company's reports on Form 8-K dated October 1, 1996; and
4. The Company's reports on Form 8-K dated October 15, 1996.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
<PAGE>
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing such documents.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any or all of the documents that are incorporated by
reference, other than exhibits to such documents not specifically incorporated
by reference. Requests for such copies should be directed to Mr. Dennis
Welling, Casmyn Corp., 1800-1500 West Georgia Street, Vancouver, British
Columbia V6G 2Z6
Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
RISK FACTORS
IN EVALUATING AN INVESTMENT IN SHARES OF COMMON STOCK OF THE
COMPANY, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, AMONG OTHER THINGS,
THE FOLLOWING RISK FACTORS.
LIMITED OPERATING HISTORY UNDER CURRENT MANAGEMENT
The Company has only been operating under its current management
since March 1994. Since that time, it has engaged in limited business
operations and is still in the process of acquiring and developing mineral
properties and technologies for its business, and it has been operating with
losses. There is no assurance that the Company will be able to generate the
revenues necessary to be profitable or that it will be successful if forced to
seek additional funds for further development of its current mining properties
and technologies.
RELIANCE ON OUTSIDE FINANCING
The Company's management believes that in the long term it will be
able to generate revenues sufficient to fund its operations and continue with
its proposed business plans. However, to complete current projects under
development and should the Company expand its operations and/or make
acquisitions that would require substantial sums of money, it will have to
seek additional debt or equity financing. Since inception, the Company's
operations have been financed in substantial part through private sales of the
Company's securities and private loans. There can be no assurance that such
financing would be available on terms acceptable to the Company, as and when
needed. The ability of the Company to obtain financing will depend on, among
<PAGE>
other factors, political stability in those countries in which the Company
does business, the price (and trends of prices) of minerals and the market
perception of mining stocks.
RELIANCE UPON OFFICERS AND DIRECTORS
The Company is wholly dependent, at present, upon the personal
efforts and abilities of its officers and directors. The loss of one or more
of its officers or directors could have a material adverse effect on the
Company's operating results. The Company does not maintain key-man life
insurance on its officers and directors. While the Company will solicit
business through its officers and directors, there can be no assurance as to
the volume of business, if any, which the Company may obtain, or that its
operations will prove to be as profitable as presently anticipated.
CONFLICTS OF INTEREST
The Company has in the past obtained and anticipates obtaining
certain of its services and has shared and anticipates sharing management and
facilities from companies of which certain of its officers, directors and
principal shareholders are officers, directors and/or principal shareholders.
All such services and facilities will be obtained by the Company at terms
which the Company believes are competitive in the marketplace and at least as
favorable to the Company as would be obtained by a third party. The Company
has also advanced, and anticipates that it will continue to advance over the
near term, funds to WaterPur International Inc. ("WPUR"), formerly Vector
Environmental Technologies, Inc., in which the Company owns 31.2% of the
outstanding equity. As of August 31, 1997, WPUR was indebted to the Company
in the approximate amount of $4,250,000.
UNPROFITABILITY
Despite the business experience of the officers, directors and
principal shareholders of the Company, the Company has been operating at a
loss and has not been profitable since 1994, when Mr. Amyn Dahya, the
Company's President, acquired majority ownership. The Company had net income
of $47,060 for the fiscal year ended September 30, 1994 and net losses of
$3,042,428, $8,321,326 and $3,320,388 for the fiscal years ended September 30,
1995 and 1996 and the nine months ended June 30, 1997 respectively. There can
be no assurance the Company will be profitable in the future, or that such
profitability, if attained, will be sufficient to permit the Company to be
successful in the future or to expand or continue to operate.
<PAGE>
COMPETITION
Competition includes large established mining companies having
substantial capabilities and greater financial and technical resources than
the Company. Therefore, the Company may be unable to acquire future potential
mining properties on terms it considers acceptable. The Company also competes
with other mining companies in the recruitment and retention of qualified
employees.
GOVERNMENTAL APPROVAL/REGULATIONS
The mining operations of the Company, through its wholly-owned
subsidiaries Casmyn Mining Corporation and Casmyn Mining Zimbabwe [Private]
Limited, are conducted primarily through its offices located in South Africa
and Zimbabwe. Casmyn Mining Corporation is qualified to do business in South
Africa which include permits to allow the Company to conduct exploration
activities on optioned properties and, as such, is subject to the laws of that
country. Casmyn Mining Zimbabwe [Private] Ltd. received approval from the
Zimbabwe Investment Centre to carry out exploration and mining activities and
from the Zimbabwe Reserve Bank to purchase 100% of the shares of a group of
five (5) private mining companies in Zimbabwe (See "The Company").
COMPLIANCE WITH ENVIRONMENTAL LAWS
The mining operations of the Company in South Africa are directed at
determining the presence of economically viable mineral deposits on properties
under option. It is the Company's intention, once such mineral deposits are
discovered, to identify a joint venture partner to develop and operate the
mining properties. Under the South Africa Minerals Act, 1991, the Company
and/or its joint venture partner are responsible for development of an
environmental impact assessment and an environmental management program for
the proposed mining venture which must be approved prior to the start of
exploration and/or mining operations. On January 31, 1996, the Company
acquired various gold mining properties and processing facilities in Zimbabwe
and has begun mining and processing gold at those facilities. The Company is
also engaged in an exploration program in Zambia that consists mainly of
geophysics, soil sampling and core drilling. The Company believes that it is
in compliance with the environmental laws of the countries in which it
operates.
RISK OF DEVELOPMENT AND POSSIBILITY OF INADEQUATE INSUARNCE COVERAGE,
CONSTRUCTION AND MINING OPERATIONS
In connection with the development of a mineral resource property,
the ability to meet cost estimates and construction and production time
estimates cannot be assured. Technical considerations, delay in obtaining
governmental approvals, inability to obtain financing or other factors could
cause delays in developing mineral resource properties. Additionally, the
business of mineral mining is subject to a variety of risks and hazards,
<PAGE>
including environmental hazards, industrial accidents, flooding and the
discharge of toxic chemicals. The Company has obtained insurance in amounts
it considers to be adequate to protect itself against certain of these risks
of mining and processing. However, the Company may become subject to
liability for certain hazards for which it cannot obtain insurance or which it
may elect not to obtain insurance against because of premium cost or other
reasons.
EXPLORATION PROGRAMS - CERTAIN PROPERTIES LACK PROVEN COMMERCIALLY VIABLE
MINERAL DEPOSITS
A major part of the Company's business is the exploration of its
existing properties and the evaluation and pursuit of potential new prospects
at the exploration stage. Substantial expenditures may be incurred in an
attempt to establish the economic feasibility of mining operations by
identifying mineral deposits and establishing reserves through drilling and
other techniques, designing facilities and planning mining operations. The
economic feasibility of a project depends on numerous factors, including the
cost of mining and production facilities required to extract the desired
minerals, the total mineral deposits that can be mined using a given facility
and the market price of the minerals at the time of sale. There is no
assurance that existing or future exploration programs or acquisitions will
result in the identification of deposits that can be mined profitably. The
Company generally acquires the rights to explore for mineral resources on
various parcels of land through option agreements negotiated with the property
owner. The agreements generally have a term of one year with the right to
extend on a year to year basis. The Company is in the process of determining
the potential for economically viable mineral resources on properties under
option and will either renew or cancel options based upon this determination.
To date, the Company's properties and exploration programs in South
Africa and Zambia have not indicated the presence of proven commercially
viable mineral deposits.
UNCERTAINITY OF RESERVE ESTIMATE CALCULATIONS AND UNCERTAINTY OF ABILITY TO
REPLACE EXISTING RESERVES
Uncertainty exists in the determination of proven and probable gold
reserves due to assumptions made as to cost of production and world gold
prices. Additionally, while the Company continues its exploration program at
its Zimbabwe properties to identify new reserves to replace those currently
being depleted, there is no assurance that the Company will be able to find
such new reserves.
MARKET FACTORS AND VOLATILITY
<PAGE>
Active international markets have historically existed for gold.
There has been an active market for diamonds, copper, cobalt and uranium which
are of a commodity nature. As such, the Company anticipates no barriers to
the sale of these minerals. Prices of certain minerals have fluctuated
widely, particularly in recent years, and are affected by numerous factors
beyond the control of the Company. Future mineral prices cannot be accurately
<PAGE>
predicted. A significant decline in the price of gold being produced or
expected to be produced by the Company could have a material adverse effect on
the Company. However, the Company will attempt to reduce its exposure to
losses from such price decreases through hedging.
NO CASH DIVIDENDS
The Company has never paid and has no present plans to pay any cash
dividends on its common stock. The Company currently intends to retain its
earnings to finance the growth and development of its business.
CERTAIN TAX CONSIDERATIONS
The Company is predominantly invested in foreign subsidiaries.
Those subsidiaries are subjected to tax imposed on them in the foreign
jurisdictions in which they operate and in which they are organized. Further,
their income is subject to US federal and state income taxes when distributed,
deemed distributed or otherwise attributed to, the Company, which is a US
corporation. Complex US tax rules apply for purposes of determining the
calculation of those US taxes, the availability of a credit for any foreign
taxes imposed on the foreign subsidiaries or the Company and the timing of the
imposition of US tax.
Normally, all foreign income earned by a US multinational eventually
will be subject to US tax. Income earned by a foreign branch of a US company
is taxable currently in the United States, and income earned by a foreign
subsidiary could be subject to US tax either in the year distributed to the US
as a dividend or in the year earned by means of Subpart F, foreign personal
holding company or other federal tax rules requiring current recognition of
certain income earned by foreign subsidiaries.
Income earned in foreign countries often is subject to foreign
income taxes. In order to relieve double taxation, the US federal tax law
generally allows US corporations a credit against their US tax liability in
the year the foreign earnings become subject to US tax in the amount of the
foreign taxes paid on those earnings. The credit is limited, however, under
complex limitation rules, to, in general, the US (pre-credit) tax imposed on
the US corporation's foreign source income. Further, complex rules exist for
allocating and apportioning interest, research and development expenses and
certain other expense deductions between US and foreign sources. Limiting
provisions of the source rules decrease the amount of foreign source income
many US multinationals can generate. Reduced foreign source income results in
<PAGE>
a smaller foreign tax credit limitation, as the limitation is based on the
ratio of foreign source net income to total net income.
These rules can prevent US multinationals from crediting all of the
foreign taxes they pay. To the extent that foreign taxes are not creditable,
foreign source income bears a tax burden higher than the US tax rate.
GENERAL POLITICAL RISKS AND RISK OF CURRENCY EXCHANGE RATE FLUCTUATIONS
The Company is actively engaged in exploration and production
activities in Zimbabwe, Zambia and South Africa. These countries may be
subject to a substantially greater degree of social, political and economic
instability than is the case in the United States and Western European
countries. Such instability may result from, among other things, the
following: (i) popular unrest associated with demands for improved political,
economic and social conditions; and (ii) ethnic, religious and racial
disaffection. Such social, political and economic instability could
significantly disrupt the Company's business. In addition, there may be the
possibility of nationalization, asset expropriations or future confiscatory
levels of taxation affecting the Company. In the event of nationalization,
expropriation or other confiscation, the Company may not be fairly compensated
for its loss and could lose its entire investment in the country involved.
The economies of individual countries in which the Company does
business may differ favorably or unfavorably and significantly from the U.S.
economy in such respects as the rate of growth of GDP or gross national
product, rate of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency, structural unemployment and balance of payments
position.
Governments in certain foreign countries in which the Company does
business participate to a significant degree, through ownership interests or
regulation, in their respective economies. Action by these governments could
have a significant adverse effect on the Company's business.
The Company is actively engaged in business activities in Vietnam
through its investment in WaterPur International, Inc. The
political situation in Vietnam involves certain risks. The government of
Vietnam exercises control over licensing, importing and exporting, which may
impact on the Company's ability to carry out its business. The legal climate
remains unsettled with many ambiguous regulations. The financial system
remains underdeveloped, and relies on high interest rates to attract deposits,
though a great deal of wealth is held in nonfinancial assets. The role of the
state in the economy is significant and is likely to remain so.
The value of the assets of the Company as measured in dollars also
may be affected favorably or unfavorably by fluctuations in currency rates and
<PAGE>
exchange control regulations. Some of the currencies of countries in which
the Company does business have experienced devaluations relative to the
dollar, and major adjustments have been made periodically in certain of such
currencies. Also, certain of these countries face serious exchange
constraints. Further, the Company may incur costs in connection with
conversions between various currencies. Foreign exchange dealers realize a
profit based on the difference between the prices at which they are buying and
selling various currencies. Thus, a dealer normally will offer to sell a
foreign currency to the Company at one rate, while offering a lesser rate of
exchange should the Company desire immediately to resell that currency to the
dealer. The Company conducts its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through entering into forward, futures or options
contracts to purchase or sell foreign currencies or through entering into
currency swap transactions. If the foreign currency hedging engaged in by the
Company does not protect the Company against adverse changes in exchange
rates, the Company's net assets (including accrued income and realized capital
gains) and distributions would be affected by fluctuations in the value of the
local currency. The Company does not currently have any foreign exchange
hedge contracts in place.
DILUTIVE EFFECT OF OPTIONS AND WARRANTS; SHARES AVAILABLE FOR FUTURE SALE.
As of September 16, 1997, the Company had granted options to purchase
an aggregate of approximately 2,466,000 shares at exercise prices ranging
from $.04 to $21.00 per share, and warrants to purchase an aggregate of
approximately 1,314,000 shares of Common Stock at exercise prices ranging
from approximately $5.25 per share to $13.00 per share. Additionally, there
are outstanding 110,000 Placement Agent Warrants to purchase shares of the
Company's Convertible Preferred Stock at a price of $25.00 per share issued in
a private placement of Convertible Preferred Stock in April 1997. In the
event that all such options and warrants are exercised for cash, the aggregate
proceeds to the Company would be approximately $33,033,000. To the extent
that the stock options and warrants are exercised, material dilution of the
ownership interest of the Company's present shareholders will occur. The
Company also expects that in the ordinary course of its business it will issue
additional warrants and grant additional stock options including, but not
limited to, options granted pursuant to its Employee and Director's Stock
Option Plans. Investors should note that the recent trading prices of the
Common Stock significantly exceeds the Company's book value per share for
financial accounting purposes. In addition, this prospectus covers the resale
of an estimated 4,863,539 shares of Common Stock pertaining to shares of
Common Stock issuable upon the exercise of presently outstanding warrants and
options and the conversion of the September Convertible Preferred Stock and
the Obligation Shares (subject to the assumptions set forth on the cover
page of this Prospectus related to future market prices of the Common Stock
and conversion elections made by holders of the Convertible Preferred
Stock). During the effectiveness of this registration statement, such shares
will be eligible for resale in the public market without restriction under
the Securities Act. Sales of substantial amounts of Common Stock by
shareholders, or the perception that such sales could occur, could
adversely affect the market price for the Common Stock. See "-- Effect
<PAGE>
of Conversion of Convertible Preferred Stock; Potential Common Stock
Adjustment," "Description of Capital Stock" and "Shares Available for Future
Sale."
EFFECT OF CONVERSION OF CONVERTIBLE PREFERRED STOCK; POTENTIAL COMMON STOCK
ADJUSTMENT.
In April 1997, the Company completed a private placement (the "April
Private Placement") of 834,667 shares of the same series of Preferred Stock as
the September Convertible Preferred Stock (the "April Convertible Preferred
Stock"). The April Convertible Preferred Stock and the September Convertible
Preferred Stock (collectively, the "Convertible Preferred Stock") entitles the
holders thereof to convert such shares into shares of Common Stock. The exact
number of shares of Common Stock issuable upon conversion of all of the
Convertible Preferred Stock cannot currently be estimated but, the
amount of such issuances of Common Stock will vary inversely with the market
price of the Common Stock. The holders of Common Stock will be materially
diluted by conversion of the Convertible Preferred Stock which dilution will
depend on, among other things, the future market price of the Common Stock and
the decisions by holders of shares of Convertible Preferred Stock as to when
to convert such shares which will affect, among other things, the number of
shares of Convertible Preferred Stock issuable as dividends (and ultimately
the number of shares of Common Stock). On September 16, 1997, the last reported
sales price of the Common Stock on the NASDAQ SmallCap Market was $5.34 per
share. If such market price were used to determine the number of shares of
Common Stock issuable as of the first date on which all of the outstanding
shares of Convertible Preferred Stock may be converted, the Company would
issue a total of approximately 4,414,000 shares of Common Stock from the
September Private Placement and the Obligation Shares and approximately
5,436,000 shares of Common Stock from the April Private Placement if all such
shares, including shares of all Convertible Preferred Stock issuable upon
the exercise of the outstanding Convertible Preferred Stock Warrants
issued in the April Private Placement and September Private Placement were
converted at such time. To the extent the market price per share of the
Common Stock is lower or higher than $5.34 as of any date on which outstanding
shares of Convertible Preferred Stock are converted, the Company would issue
more or less shares of Common Stock than reflected in such estimate, and such
difference could be material. The number of shares of Common Stock issuable
upon conversion of the Convertible Preferred Stock will increase as the market
price of the Common Stock decreases (and decrease as such market price
increases). The number of shares of Common Stock may also increase should
holders of Convertible Preferred Stock continue to hold such shares, thereby
causing the discount to market price applicable upon conversion of such shares
to increase and the number of shares of Convertible Preferred Stock issued as
dividends to increase. The holders of the outstanding shares of Convertible
Preferred Stock also possess certain registration rights, including the right
to include all of the shares of Common Stock that such holders may desire to
sell in certain underwritten public offerings by the Company. The terms of
the Convertible Preferred Stock do not provide for any limit on the number of
shares of Common Stock which the Company may be required to issue in respect
thereof. Stock market volatility, whether related to the stock market
generally or the Company specifically, and if coincident in time with
conversions of Convertible Preferred Stock, will impact directly the number of
shares of Common Stock issuable upon conversion thereof. Additionally, if the
Company issues Common Stock or securities convertible into or exercisable for
Common Stock or other convertible securities at an effective price per share
which is lower than the conversion price of the shares of Convertible
<PAGE>
Preferred Stock at that time, the Company is required to issue upon conversion
of the shares of Convertible Preferred Stock an additional number of shares of
Common Stock necessary to reduce the effective conversion price to such lower
issue price (subject to certain exceptions pertaining to shareholder approved
option plans).
RESTRICTIONS ON TRANSFER.
Following conversion of the Convertible Preferred Stock into shares
of Common Stock, the holders of such shares of Common Stock will be limited on
resales of such shares to the greatest of: (i) 10% of the average daily
trading volume of the Common Stock for the five trading days preceding any
such sale date; (ii) 25,000 shares; and (iii) 10% of the trading volume for
the Common Stock on the date of any such sale. Such limitations on transfer
would limit the ability of an investor to sell shares of Common Stock received
upon conversion of the Convertible Preferred Stock in excess of such levels in
one transaction and delay the time over which an investor could sell their
entire holdings of such shares of Common Stock. See "Description of Capital
Stock -- Preferred Stock."
POSSIBLE ISSUANCE OF ADDITIONAL SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER
APPROVAL.
The Company's Articles of Incorporation authorizes the issuance of
"blank check" Preferred Stock with such designations, rights and preferences
as may be determined from time-to-time by the Company's Board of Directors.
Accordingly, the Board is empowered, without approval by holders of the Common
Stock, to issue additional shares of Preferred Stock with dividend,
liquidations, redemption, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of the Common
Stock. It was pursuant to this authority that the shares of the September
Convertible Preferred Stock were issued. In the event of issuance, Preferred
Stock could be used, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. The Company
may issue additional shares of Preferred Stock in the future to raise
capital. See "Description of Capital Stock."
THE COMPANY
The business activities of the Company center around mineral
resource development. The primary focus to date has been the acquisition and
exploration of mineral resource properties in Zimbabwe, Zambia and South
Africa. The Company has acquired certain mineral properties in South Africa,
a prospecting license in Zambia and is presently conducting mining operations
on its Zimbabwe mining properties. In addition, the Company has positioned
itself in the environmental industry through an equity investment in WPUR.
<PAGE>
WPUR is currently focused primarily on the development, manufacture, sales and
management of water treatment equipment and facilities, principally in Vietnam
and North America.
On January 31, 1996, the Company acquired 100% of the shares of a
group of five (5) private mining companies (the "Acquired Companies")
controlled by the Muir Family in Zimbabwe: E.W.B. Properties (Private)
Limited: Matabeleland Minerals (Private) Limited, Greenhorn Mines (Private)
Limited, Morven Mining (Private) Limited, Motapa Minerals (Private) Limited
and Turk Mines (Private) Limited. The Acquired Companies own mining claims
controlling gold and silver mineral rights on properties that lie within the
Bubi Greenstone Belt, which is one of the largest greenstone formations in
Zimbabwe and include numerous shafts, mining equipment and mineral processing
mills with a total capacity of 1,000 tonnes per day. Also, on January 31,
1996, the Company purchased the assets of the Dawn Mine property in Zimbabwe.
The group of mines making up the Dawn Mine property had produced over 340,000
ounces of gold at an average grade of 0.48 ounces of gold per tonne. The Dawn
Mine is located in close proximity to the Turk mine and mill and will be
operated under a mine plan which includes the Turk mine and other mining
properties in the area owned by the Company. Through the acquisition of the
Acquired Companies, the Company owns a 100% interest in 18 past producing gold
mines that have produced in excess of 1,000,000 ounces of gold since mining
commenced in the early 1900's. The Company believes that, through the
modernization of the physical plant and implementation of advanced mining
technologies, significant increases in gold recovery can be realized. In
addition, the Company is expanding its gold reserves through the application
of advanced exploration techniques. Mr. P. Bekker, Consulting Geologist, an
independent consultant has calculated that the Company has in excess of
1,020,000 ounces of proven and probable gold reserves for the mines owned by
the Company. As of September 16, 1997, the Company was operating three (the
Turk,Dawn and Lonely mines) of the 18 mines acquired.
RECENT DEVELOPMENTS
On September 2, 1997, the Company completed a private placement
offering of 533,885 shares of the Company's Convertible Preferred Stock and
received aggregate net proceeds therefrom of approximately $12,650,000
(including accrued interest at 8% per annumn from April 14, 1997 to the date
of closing and after cash fees to the placement agents and estimated
transaction expenses). The Company will use the net proceeds as follows:
<TABLE>
<CAPTION>
<S> <C>
Repayment of short term loans $ 5,000,000
Zimbabwe Mine Expansion & Explorations 7,650,000
-----------
Total $12,650,000
===========
</TABLE>
On April 14, 1997, the Company completed a private placement
offering of 834,667 shares of the Company's newly established Convertible
Preferred Stock (the "April Private Placement") and received aggregate net
<PAGE>
proceeds therefrom of approximately $16,700,000 (after cash fees to the
placement agent and the Company's financial advisor and estimated transaction
expenses but without giving effect to the conversion of approximately
$2,087,000 principal amount of Convertible Debentures into Convertible
Preferred Stock). In connection with the private placement of the
Convertible Preferred Stock, the holder of the Company's $5,000,000
Convertible Debentures converted $2,086,675 principal amount of such
Debentures into 83,467 shares of the Convertible Preferred Stock and the
remaining $2,913,325 principal amount into 594,856 shares of the Company's
Common Stock.
All of the shares of the Convertible Preferred Stock have a
liquidation preference of $25.00 per share, are non-voting and are entitled
to quarterly dividends of 8% per annum. The first dividend was paid in
additional shares of Convertible Preferred Stock valued at $25.00 pershare
on July 31, 1997. Subsequent dividends are payable on September 30, December
31, March 31 and June 30 of each year, when and as declared by the Company's
Board of Directors. Commencing on July 15, 1997, 10% (or such larger percentage
as is determined by the Company in its sole discretion) of the shares of the
Convertible Preferred Stock held by each holder were convertible, and
thereafter on the successive monthly anniversaries an equal number of shares of
Convertible Preferred Stock held by such holder are or will become
convertible (on a cumulative basis). The Convertible Preferred Stock will be
convertible at a discount to the Common Stock ranging from 8.5% to 39%,
depending upon the date on which such shares are converted. The September
Convertible Preferred Stock is convertible on the same schedule as the
Preferred Stock issued in the April Private Placement. This discount is
considered to be an additional preferred stock dividend. For the fiscal
year ending September 30, 1997, the Company will record a charge to its
retained earnings and a corresponding credit to preferred stock of
approximately $3,826,000 as the initial discount assuming no conversion of
the September Convertible Preferred Stock to Common Stock prior to
September 30, 1997. The amount of the additional discount to be recorded
will be measured at the percentage discount in effect at the balance sheet
date and will vary depending upon the number of shares converted to Common
Stock over the period. As the discount rate increases, the additional
discount will be recognized as a further charge to retained earnings and a
credit to preferred stock. Assuming no conversion of the September
Convertible Preferred Stock to Common Stock during the fiscal year ending
September 30, 1998, the Company estimates that the charge to retained
earnings and corresponding credit to preferred stock would be approximately
$18,438,000 for the fiscal year ending September 30,1998. These amounts are
recognized as a return to the Preferred Stockholders and a reduction of income
available to Common Stockholders.
The exact number of shares of Common Stock issuable upon conversion
of the Convertible Preferred Stock cannot be determined and will depend upon,
among other things, the future market price of the Common Stock at the date of
conversion and the decisions by holders of shares of Convertible Preferred
Stock as to when to convert such shares. The placement agent in the September
Private Placement was issued five-year warrants to purchase an aggregate of
56,725 shares of Convertible Preferred Stock at $25.00 per share and received
7.5% of the gross proceeds from the issuance and sale of the September
<PAGE>
Convertible Preferred Stock as cash consideration for such services.
See "Risk Factors -- Effect of Conversion of Convertible Preferred Stock;
Potential Common Stock Adjustment" and "Description of Capital Stock."
SHARES AVAILABLE FOR FUTURE SALE
In general, Rule 144 under the Securities Act, as recently amended
by the Commission ("Rule 144"), provides that a person who is an affiliate of
the Company or who has beneficially owned shares that were issued and sold in
reliance upon exemptions from registration under the Securities Act
("Restricted Shares") for at least one year is entitled to sell within any
three-month period a number of shares that does not exceed the greater of
(1%) percent of the then outstanding shares of Common Stock or the average
weekly trading volume. Sales under Rule 144 are also subject to certain
manner-of-sale provisions, notice requirements and the availability of current
public information about the Company. However, a person who is not deemed to
have been an "affiliate" of the Company at any time during the three months
preceding a sale, and who has beneficially owned Restricted Shares for at
least two years, is entitled to sell such shares under Rule 144(k) without
regard to volume limitations, manner-of-sale provisions, notice requirements
or the availability of current public information about the Company.
Of the approximately 26,515,000 shares of Common Stock estimated to
be outstanding (on a fully diluted basis including shares issuable upon the
exercise of outstanding warrants and options) upon completion of this offering
(subject to the assumptions set forth or referred to on the cover page of this
Prospectus related to future market prices of the Common Stock and conversion
elections made by holders of the Convertible Preferred Stock), approximately
21,989,000 shares (including for this purpose an estimated 9,2513,737 shares of
Common Stock issuable upon conversion of the Convertible Preferred Stock and
Convertible Preferred Stock Warrants) will have been registered under
Securities Act and/or otherwise freely tradeable and approximately 2,204,444
shares are saleable subject to compliance with the requirements of Rule 144
except for the holding period. Approximately 596,132 shares of
Common Stock will be tradeable subject to the one year holding period
restrictions under, and compliance with the other requirements of, Rule 144
discussed above. Additionally, 450,000 shares of Commons Stock issuable upon
the exercise of presently outstanding options and warrants are being registered
herein. Aproximately 1,275,000 shares of common stock issuable upon
the exercise of presently outstanding options have not been registered.
Each of Amyn Dahya, the Company's Chief Executive Officer and
President, and Dahya Holdings, Inc., a corporation in which Mr. Dahya is an
officer, a director and minority shareholder, has agreed for the 13-month
period following the issuance of the September Convertible Preferred Stock not
to sell, and not to permit any of their affiliates to sell, more than 25,000
<PAGE>
shares of Common Stock without the prior consent of the placement agent
of the September Convertible Preferred Stock.
No predictions can be made as to the effect that sales of Common
Stock under Rule 144, pursuant to a registration statement or otherwise, or
the availability of shares of Common Stock for sale, will have on the market
price prevailing from time to time. Nevertheless, sales of substantial
amounts of Common Stock in the public market, or the perception that such
sales could occur, could adversely affect prevailing market prices and could
impair the Company's future ability to raise capital through an offering of
its equity securities. Further, certain of the share amounts set forth above
under the caption "Shares Available for Future Sale" are estimates only based
on recent market prices, are subject to adjustment, and could be materially
less or more than such estimated amounts depending upon factors which cannot
be predicted at this time, including, among others, the future market price
per share of the Common Stock and conversion elections made by holders of the
Convertible Preferred Stock. See "Risk Factors -- Dilutive Effect of Options
and Warrants; Shares Available for Future Sale," and "-- Effect of Conversion
of Convertible Preferred Stock; Potential Common Stock Adjustment."
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Shares to be offered hereby as of
September 16, 1997, and as adjusted to reflect the sale of the Shares offered
hereby, by the Selling Shareholders. The information in the table concerning
the Selling Shareholders who may offer Common Shares hereunder from time to
time is based on information provided to the Company by such securityholders,
except for the assumed conversion ratio of shares of the September
Convertible Preferred Stock into Common Stock, which is based solely on the
assumption discussed or referenced in footnote (1) to the table.
Information concerning such Selling Shareholders may change from time to
time and any changes of which the Company is advised will be set forth
in a Prospectus Supplement to the extent required. See "Plan of Distribution."
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES
BENEFICIALLY COMMON SHARES TO BENEFICIALLY
OWNED PRIOR TO BE SOLD IN THE OWNED AFTER
THE OFFERING(1) OFFERING(1) THE OFFERING
NAME OF
SELLING
SHAREHOLDER NUMBER PERCENT NUMBER PERCENT
- ----------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
SIL Nominees Ltd.
(2) 85,736 * 85,736 0 *
Trust Company
of America FBO
Perspective
Advisory Co. (3) 141,904 1.0% 141,904 0 *
<PAGE>
ProFutures
Special
Equities Fund
LP (4) 141,904 1.0% 141,904 0 *
Shepherd
Investments
International
Ltd. 293,114 2.1% 293,114 0 *
Stark
International 293,114 2.1% 293,114 0 *
Nelson Partners 395,704 2.9% 395,704 0 *
Olympus
Securities, Ltd. 483,639 3.5% 483,639 0 *
Elliot
Associates,
L.P. (5) 586,228 4.2% 586,228 0 *
CC Investments,
LDC (6) 586,228 4.2% 586,228 0 *
NY-DBL Diamond
Group (7) 133,228 * 133,228 0 *
Edmond O'Donnell
(8) 28,380 * 28,380 0 *
Barry Meisel 7,328 * 7,328 0 *
Cristostomo B.
Garcia, Trustee
(9) 29,311 * 29,311 0 *
Gerard Cappello
(10) 139,361 1.0% 139,361 0 *
Linda Cappello
(11) 201,707 1.5% 201,707 0 *
Omicron Partners,
L.P. 70,949 * 70,949 0 *
Alfred Romano 14,656 * 14,656 0 *
Jerry Kaplan 14,656 * 14,656 0 *
Lawrence Kaplan 14,656 * 14,656 0 *
Stanley Kaplan 14,656 * 14,656 0 *
Leslie D.
Michelson 13,923 * 13,923 0 *
Kenneth L.
Staub, Trustee 14,656 * 14,656 0 *
Jeffrey C.
Ullman, Trustee 73,278 * 73,278 0 *
RGC International
Investors, LDC
(12) 549,589 3.9% 549,589 0 *
Swarthmore S.A.
(13) 375,000 2.7% 375,000 0 *
Art Beroff (14) 75,000 * 75,000 0 *
<PAGE>
Others (15) 85,634 * 85,634 0 *
Total 4,863,539
</TABLE>
- ------------
*Represents less than 1% of the outstanding Common Stock.
(1) Except as specifically indicated in the footnotes, such beneficial
ownership represents an estimate of the number of shares of Common Stock
issuable upon the conversion of shares of the September Convertible
Preferred Stock beneficially owned by such person (either directly or
through the exercise of the September Convertible Preferred Stock
Warrants), assuming the last reported sales price of $5.34 per share of
Common Stock on September 16, 1997 was used to determine the number of
shares of Common Stock issuable as of the first dates on which the
September Convertible Preferred Stock may be converted and that all
dividends on shares of the September Convertible Preferred Stock are
paid in additional shares of Convertible Preferred Stock. The actual
number of Shares offered hereby is subject to adjustment and could be
materially less or more than the estimated amount indicated depending
upon factors which cannot be predicted by the Company at this time,
including, among others, application of the conversion provisions based
on market prices prevailing at the actual date of conversion and the
number of shares of September Convertible Preferred Stock (and ultimately
the number of shares of Common Stock) issuable as dividends on the
September Convertible Preferred Stock.
The actual number of shares of Common Stock offered hereby and included
in the Registration Statement of which this Prospectus is a part, includes
such additional number of shares of Common Stock as may be issued or
issuable upon conversion of the September Convertible Preferred Stock by
reason of the floating rate conversion price mechanism or other adjustment
mechanisms described therein, or by reason of any stock split, stock
dividend or similar transaction involving the Common Stock, in order to
prevent dilution, in accordance with Rule 416 under the Securities Act.
This presentation is not intended to constitute a prediction as to the
future market price of the Common Stock or as to when holders will
elect to convert shares of September Convertible Preferred Stock into
shares of Common Stock. The shares of September Convertible Preferred
Stock (other than the shares of Convertible Preferred Stock issued as
dividends) and the September Convertible Preferred Stock Warrants were
issued in the September Private Placement. See "Risk Factors--Effect of
Conversion of Convertible Preferred Stock" and "Description of Capital
Stock."
(2) Excludes 204,860 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
<PAGE>
(3) Exclude 98,333 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(4) Excludes 143,402 shares issuable upon converstion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(5) Excludes 614,580 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(6) Excludes 204,860 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(7) Includes 79,936 shares issuable upon the conversion of 14,181 September
Placement Agent Warrants.
(8) Excludes 20,486 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(9) Excludees 61,458 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649).
(10) Excludes 184,374 shares issuable for conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649) and includes 95,927
shares issuable upon the conversion of 17,018 September Placement Agent
Warrants.
(11) Excludes 274,000 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649) and includes 143,885
shares issuable upon the conversion of 25,526 September Placement Agent
Warrants.
(12) Excludes 307,290 shares issuable upon conversion of the April Convertible
Preferred Stock previously registered for resale with the Securities and
Exchange Commission (Registration No. 333-27649), 35,391 of the shares
were issued upon a conversion occuring on September 8, 1997.
(13) Represents 375,000 shares issuable upon the exercise of options which
vest in the future.
(14) Represents shares issuable upon exercise of 50,000 currently exercisable
warrants and 25,000 warrants which vest in the future.
<PAGE>
(15) Represents shares issuable in connection with obligations under a
Preferred Stock Investment Agreements pursuant to which shares of the
April Convertible Preferred Stock were issued.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation, as amended, authorizes the
issuance of shares of capital stock, of which 300,000,000 shares are
designated as Common Stock, par value $0.04 per share, and 20,000,000 shares
are designated as Preferred Stock, par value $0.10 per shares, of which
2,500,000 have been designated as shares of First Convertible Preferred Stock.
On April 14, 1997, 834,667 shares of Convertible Preferred Stock were issued
in the April Private Placement. Additionally, on September 2, 1997, 533,885
shares of Convertible Preferred Stock were issued in the September Private
Placement.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of
Common Stock on all matters submitted to a vote of shareholders. There are no
cumulative voting rights. The rights, privileges and preferences of the
holders of Common Stock are subject to the rights of the holders of the
Convertible Preferred Stock and of any shares of Preferred Stock that may be
designated and issued by the Company in the future. Subject to the
restrictions contained in Preferred Stock issued by the Company, holders of
Common Stock are entitled to received dividends when and if declared by the
Board of Directors out of legally available funds. Upon any liquidation,
dissolution or winding up of the Company, subject to the rights of holders of
shares of Preferred Stock, holders of Common Stock are entitled to share pro
rata in any distribution to the shareholders. Holders of Common Stock do not
have preemptive or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock.
The Company has warrants outstanding to purchase 357,143 shares of
Common Stock at a price of $8.50 which expire on October 1, 1997.
Additionally, the Company has warrants outstanding to purchase 950,046 shares
of Common Stock at prices ranging from $5.25 to $13.00 per share expiring on
dates ranging from March 29, 1998 to May 12, 1999.
PREFERRED STOCK
The Company's Board of Directors, without the approval of the
holders of the Common Stock, is authorized to designate for issuance up to
20,000,000 shares of Preferred Stock, in such series and with such rights,
privileges and preferences as the Board of Directors may from time to time
determine. As of the date of this Prospectus, 2,500,000 of such shares have
been designated as First Series Preferred Stock, 1,446,672 of which are issued
and outstanding as of the date of this Prospectus; 166,725 of which are
subject to Convertible Preferred Stock Warrants, none of which had been
exercised as of the date of this Prospectus; and 11,686 of which are issuable in
connection with obligations under Preferred Stock Investment Agreeements
pursuant to which the shares of the April Convertible Preferred Stock were
issued.
<PAGE>
The Convertible Preferred Stock Warrants to purchase a total of
166,725 shares of Convertible Preferrred Stock are exercisable at a price of
$25.00 per share, 110,000 of which expire on April 15, 2002 and 56,725 expire
on September 3, 2002.
CONVERTIBLE PREFERRED STOCK
Except for the first dividend, which was paid on July 31, 1997, each
share of Convertible Preferred Stock is entitled to receive dividends, payable
quarterly on September 30, December 31, March 31 and June 30 of each year, when
and as declared by the Company's Board of Directors, at the rate of 8% per
annum in preference to any payment made on any shares of Common Stock or any
other class or series of capital stock of the Company ranking junior to the
Convertible Preferred Stock. Any dividend payable after the date of
issuance of the Convertible Preferred Stock shall be paid, in additional
shares of Convertible Preferred Stock valued at $25.00 per share. Each share
of Convertible Preferred Stock is also entitled to a liquidation preference
("Liquidation Preference") of $25.00 per share, plus any accrued but unpaid
dividends, in preference to any other class or series of capital stock of the
Company, other than the Convertible Preferred Stock and any other class or
series of capital stock which is entitled to priority over the Convertible
Preferred Stock. A consolidation or merger of the Company with or into any
other corporation, or sale of all or substantially all of the assets of the
Company, will, at the option of the holders of the Convertible Preferred
Stock, be deemed a liquidation if the shares of stock of the Company (along
with all derivative securities) outstanding immediately prior to such
transaction represent immediately after such transaction less than a majority
of the voting power of the surviving corporation (or the acquiror of the
Company's assets in the case of a sale of assets). If the option is
exercised, the holders of the Convertible Preferred Stock will be entitled to
receive, in cash, immediately upon the occurrence of such transaction, an
amount per share equal to the liquidation preference divided by the difference
between 100% and the Applicable Percentage (as defined below).
At any time, the Company may require a portion of the shares of the
Convertible Preferred to be converted into Common Stock ("Required
Conversion") upon notice (the "Notice"), provided that not more than one
Notice may be given in any period of thirty days. A Notice may not be given
unless (A) the low trading price of Common Stock on each of the ten trading
days preceding the Notice date has been equal to or greater than $14.00 per
share (subject to adjustment for stock split, stock dividends and like capital
adjustments), and (B) the shares of Common Stock issuable upon conversion are
registered under the Securities Act, such stock is listed and traded on NASDAQ
or on a national securities exchange, and there is available for delivery upon
resale of such shares a prospectus meeting the requirements of the Securities
Act. The number of Convertible Preferred Shares which the Company may require
to be converted may not exceed the quotient obtained by dividing the average
dollar volume for the twenty trading days immediately prior to the date of
Notice by 25. The conversion price upon Required Conversion is 61% of the
lowest trading price during the Look Back Period (as defined below) in effect
<PAGE>
as of the date of the Notice, but not more than the Conversion Cap (as defined
below) if the Conversion Cap has then been determined.
Except as otherwise provided by applicable law, holders of shares of
Convertible Preferred Stock have no voting rights.
Commencing the earlier of (i) 91 days after the date of issuance and
(ii) the date that a registration statement registering the shares of Common
Stock issuable upon conversion of the Convertible Preferred Stock (including
such shares issuable upon exercise of the Convertible Preferred Stock
Warrants) is declared effective by the Securities and Exchange Commission, 10%
(or such larger percentage as is determined by the Company in its sole
discretion) of the number of shares of Convertible Preferred Stock held of
record by each holder on such day will become convertible into shares of
Common Stock, and thereafter on the successive monthly anniversaries of such
day an equal number of such shares of Convertible Preferred stock will become
convertible (on a cumulative basis). The number of shares of Common Stock
issuable upon conversion of shares of Convertible Preferred Stock will equal
the Liquidation Preference of the shares being converted divided by the
then-effective conversion price applicable to the Common Stock (the
"Conversion Price"). Notwithstanding the foregoing, all the Convertible
Preferred Shares will be fully convertible upon the happening of certain
events and conditions, including a change of control transaction; the filing
of bankruptcy; the failure of the Company to timely file its Form 10-K or Form
10-Q; the failure or unwillingness of the Company's independent auditors to
express a customary opinion on the Company's financial statements within 90
days after the end of the Company's fiscal year or shall express a "going
concern" qualification; the Common Stock shall cease to be listed on either
NASDAQ or National Securities Exchange; or there shall occur a material breach
by the Company of any of its obligations under the Preferred Stock Investment
Agreements pursuant to which the Convertible Preferred Stock was originally
issued.
The Conversion Price as of any Conversion Date will be the lowest
trading price of the Common Stock for the consecutive trading days in the
Lookback Period, reduced by the Applicable Percentage. The "Lookback Period"
represents the number of consecutive trading days changing from 15 days
through the last day of the third month after the date of issuance of the
Convertible Preferred Stock increasing by 3 consecutive trading days following
the last day of the seventeenth month after the issuance of the Convertible
Preferred Stock. The "Applicable Percentage" is dependent upon the amount of
time which has passed from original issuance to the date of measurement, being
8.5% through the fourth month and from the fifth month through the end of the
eighteenth month being 9.5%, 11%, 12%, 13.5%, 15%, 16.5%, 18%, 19.5%, 22%,
24.5%, 28.5%, 32.5%, 36.5% and 39%, respectively. At any date more than
eighteen months after the date of issuance, the Conversion Price will be the
lesser of (a) 61% of the average closing price of the Common Stock for all the
trading days during the 18th month (the "Conversion Cap") or (b) 61% of the
Conversion Price determined as aforesaid. The Conversion Price is at all
times also subject to adjustment for customary anti-dilution events such as
<PAGE>
stock splits, stock dividends and reorganizations. Additionally, if the
Company issues Common Stock or securities convertible into or exercisable for
Common Stock or other convertible securities at an effective price per share
which is lower than the conversion price of the shares of Convertible
Preferred Stock at that time, the Company is required to issue upon conversion
of the shares of Convertible Preferred Stock an additional number of shares of
Common Stock necessary to reduce the effective conversion price to such lower
issue price (subject to certain exceptions pertaining to shareholder approved
option plans). Notwithstanding the foregoing, no holder of Convertible
Preferred Stock will be entitled to convert any share of Convertible Preferred
Stock into shares of Common Stock if, following such conversion, the holder
and its affiliates (within the meaning of the Securities Exchange Act of 1934)
will be beneficial owners (as defined in Rule 13d-3 thereunder) of 10% or more
of the outstanding shares of Common Stock.
Notwithstanding the foregoing, if and so long as Depressed Price
Condition (as hereinafter defined) exists, (i) the number of consecutive
trading days in the Lookback Period will be three days, (ii) the conversion
price will be the average of the low trading prices for the consecutive
trading days in the Lookback Period reduced by the Applicable Percentage and
(iii) the Company may at its option, exercised by written notice (the "Cash
Conversion Notice") given to the holders of the Convertible Preferred Stock
five days prior to the effective date specified in such Notice (the "Effective
Date") require that any shares of Convertible Preferred Stock converted on the
Effective Date, or thereafter while such Cash Conversion Notice remains in
effect, will receive in lieu of Common Stock cash in an amount per share equal
to the Liquidation Preference divided by the difference between 100% and the
Applicable Percentage in effect on the Conversion Date (the "Cash Conversion
Price"). The Cash Conversion Notice may specify a price range within which
such Notice shall be effective. The upper limit of the range so specified may
not exceed $6.00. The Cash Conversion Notice will cease to be effective (i)
if the Depressed Price Condition ceases to exist, (ii) 30 days after its
Effective Date, or (iii) if the Company fails to make payment of the Cash
Conversion Price to any holder entitled thereto. A "Depressed Price
Condition" shall be deemed to exist on any date if during the twenty
consecutive trading days immediately prior to such date the average closing
price of the Common Stock is less than $6 per share (adjusted for stock
splits, stock dividends and like capital adjustments).
In addition, following conversion of the Convertible Preferred Stock
into shares of Common Stock, the holders of such shares of Common Stock will
be limited on resales of such shares to the greatest of: (i) 10% of the
average daily trading volume of the Common Stock for the five trading days
preceding any such sale date; (ii) 25,000 shares; and (iii) 10% of the trading
volume for the Common Stock on the date of any such sale.
The exact number of shares issuable upon conversion of all of the
Convertible Preferred Stock and offered hereby cannot currently be estimated
but, generally, such issuances of Common Stock will vary inversely with the
market price of the Common Stock. The holders of Common Stock ownership
<PAGE>
interest will be materially diluted by conversion of the Convertible Preferred
Stock, which dilution will depend on, among other things, the future market
price of the Common Stock and the conversion elections made by holders of the
Convertible Preferred Stock. Investors should review carefully the material
under "Risk Factors -- Effect of Conversion of Convertible Preferred Stock;
Potential Common Stock Adjustment" as well as the other information contained
or incorporated by reference in this Prospectus.
GENERAL
Under applicable Colorado law and the Company's Articles of
Incorporation, the Company's Board of Directors has the authority, without
further action by the shareholders, to issue additional shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any series of unissued preferred stock
and to fix the number of shares constituting any series and the designation of
such series, without any further vote or action by the shareholders. Issuance
of additional shares of preferred stock may adversely affect the rights,
privileges and preferences afforded the holders of Common Stock, including a
decrease in the amount available for distribution to holders of the Common
Stock in the event of a liquidation or payment of preferred dividends. The
issuance of additional shares of preferred stock, and shares of Common Stock
into which such preferred stock may be converted, may, among other things,
have the effect of delaying, deferring or preventing a change in control of
the Company, discouraging tender offers for the Company and inhibiting certain
equity issuances until substantially all such shares are converted or
redeemed. The Company currently has no plans to designate and/or issue any
additional shares of preferred stock, except those issuable pursuant to the
April Convertible Preferred Stock Warrants and the September Convertible
Preferred Stock Warrants.
COLORADO LAW AND LIMITATIONS ON CHANGES IN CONTROL
Under Section 7-106-205 of the Colorado Business Corporation Act
(the "Act"), a corporation may create and issue rights, options, warrants or
convertible securities entitling the holders thereof to purchase, receive or
acquire shares of the corporation or assets or debts or other obligations of
the corporation (collectively, "Rights"). The Board of Directors is
authorized to determine the terms upon which the Rights are issued, their form
and content, and the consideration, if any, for which shares, assets, or debts
or other obligations of the corporation are to be issued pursuant to the
Rights. In the absence of fraud in the transaction, the judgment of the Board
of Directors as to adequacy of consideration received for such Rights is
conclusive. The terms determined by the Board of Directors under this Section
for Rights issued to any shareholders, by way of distribution or otherwise,
may, without limitation: (a) preclude or limit any significant shareholder
from exercising, converting, transferring or receiving Rights; (b) impose
conditions upon the exercise, conversion, transfer or receipt of Rights by any
significant shareholder that differ from those imposed on other holders of the
same class of Rights; or (c) provide that, upon exercise or conversion, any
significant shareholder shall be entitled to receive securities, obligations,
<PAGE>
or assets, the terms and nature of which may differ from the securities,
obligations, or assets to be received by the other holders of the same class
of Rights. The Section defines "significant shareholder" as any person
owning, or offering to acquire, directly or indirectly, a number or
percentage, as specified by the Board of Directors, of the outstanding voting
shares of the corporation, or any transferee of such person.
The Company's bylaws require advance notice of any action (including
nomination of directors) to be proposed at any annual or special meeting of
shareholders and set forth other specific procedures that a shareholder must
follow to properly bring any business in front of such a meeting. In
addition, the bylaws provide that a special meeting of the Company's
shareholders may only be called by the Chairman of the Board, the President, a
Vice President of the Company or by shareholders representing 10% of the
outstanding shares entitled to vote at the meeting. A director may be removed
from office at any time, with or without cause by shareholders, but only by
the affirmative vote of the holders of at least a majority of the shares then
entitled to vote at an election of directors. Any amendment of the bylaws may
be made by the Board of Directors. Amendments to the Articles requires the
affirmative vote of the shareholders.
These bylaw provisions, the provisions authorizing the Board of
Directors to issue preferred stock without shareholder approval and the
provisions of Section 7-106-205 of the Act could have the effect of delaying,
deferring or preventing a change in control of the Company or the removal of
existing management.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Articles of Incorporation provides that the Board of
Directors shall have the power to:
(a) Indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action (other than
an action by or in the right of the Company) by reason of fact that he is or
was a director, officer, employee or agent of the Company or is or was serving
at the request of Company as a director, officer, employee or agent of another
entity against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action if he
acted in good faith and in a manner he reasonably believed to be in the best
interests of the Company and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful.
(b) Indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of the Company against expenses actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in the best interests of the Company, but not indemnification
<PAGE>
shall be made in respect of any claim if such individual has been adjudged to
be liable for negligence or misconduct in the performance of his duty to the
Company except and only to the extent that the court in which such action or
suit was brought determines upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnification for such expenses which such court
deems proper.
(c) Indemnify a director, officer, employee or agent of the
Company to the extent such person has been successful on the merits in the
defense of any action, suit or proceeding referred to in subparagraph (a) or
subparagraph (b) above or in defense of any claim, issue or matter therein,
against expenses actually and reasonably incurred by him in connection
therewith.
(d) Authorize indemnification under Subparagraphs (a) or (b)
above (unless ordered by a court) in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct such
set forth in subparagraphs (a) or (b).
(e) Authorize payment of expenses incurred in defending a civil
or criminal action, suit or proceeding advance of the final disposition of
such action, suit or proceeding as authorized in subparagraph (d) above, upon
receipt of an undertaking by or on behalf of the director, officer, employee
or agent to repay such amount unless it is ultimately determined that he is
entitled to be indemnified by the Company as authorized above.
(f) Purchase or maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of Company or who is or was
serving at the request of the Company as a director, officer, employee or
agent of another entity against any liability asserted against him or incurred
by him in any such capacity or arising out of the status of such.
The foregoing indemnification is not deemed to be exclusive of any
other rights to which those indemnified may be entitled.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock and the
Convertible Preferred Stock is American Securities Transfer, Denver, Colorado.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that the sale or
distribution of the Common Stock may be effected directly to purchasers by the
Selling Shareholders or by pledgees, donees, transferees or other successors
in interest, as principals or through one or more underwriters, brokers,
dealers or agents from time to time in one or more transactions (which may
involve crosses or block transactions) (i) on any stock exchange, in the
Nasdaq SmallCap Market, or in the over the counter market, (ii) in
transactions otherwise than on any stock exchange or in the over-the-counter
market, or (iii) through the writing of option (whether such options are
listed on an options exchange or otherwise) on, or settlement of short sales
of, the Common Stock. The shares may also be sold pursuant to Rule 144. Any
of such transactions may be effected at a market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case
as determined by the Selling Shareholder or by agreement between the Selling
Shareholder and underwriters, brokers, dealers or agents, or purchasers. If
the Selling Shareholders effect such transactions by selling Common Stock to
or through underwriters, brokers, dealers or agent, such underwriters,
brokers, dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders or commissions from
purchaser of Common Stock for whom they may act as agent (which discounts,
concessions or commissions as to particular underwriters, brokers, dealers or
agents may be in excess of those customary in the types of transactions
involved). The Selling Shareholders and any brokers, dealers or agents that
participate in the distribution of the Common Stock may be deemed to be
underwriters, and any profit on the sale of Common Stock by them and any
discounts, concessions or commissions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
Under the securities laws of certain states, the Common Stock, may
be sold in such states only through registered or licensed brokers or dealers.
In addition, in certain states the Common Stock may not be sold unless the
Common Stock has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
The Company will pay all the expenses incident to the registration,
offering and sale of the Common Stock to the public hereunder other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
The Company has agreed to indemnify the Selling Shareholders and their
controlling persons against certain liabilities, including liabilities under
the Securities Act. The Company estimates that the expenses of the offering
to be borne by it will be approximately $63,000. The Company will not receive
any proceeds from the sale of any of the Common Stock by the Selling
Shareholders.
<PAGE>
Cappello Capital Corp. acted as placement agent in
connection with the placement of the September Convertible Preferred Stock
which has been or will be converted into the Common Stock offered hereby, and
said firm received a fee and warrants from the Company in connection therewith.
Griffin Capital acted as the Company's financial advisor and received a fee
for its services.
The Company has informed the Selling Shareholders that the
anti-manipulation provisions of Regulation M under the Exchange Act may apply
to purchases and sales of Common Stock by the Selling Shareholders, and that
there are restrictions on market-making activities by persons engaged in the
distribution of the Common Stock. The Company has also advised the Selling
Shareholders that if a particular offer of Common Stock is to be made on terms
constituting a material change from the information set forth above with
respect to the Plan of Distribution, then to the extent required, a Prospectus
Supplement must be distributed setting forth such terms and related
information as required.
USE OF PROCEEDS
This Prospectus relates to Shares of Common Stock that may be
offered and sold from time to time by the Selling Shareholders. See "Plan of
Distribution." There will be no proceeds to the Company from previously
completed private placements of common stock and from the conversion of the
Convertible Preferred Stock. The Company would receive approximately
$4,393,000 in proceeds (net of approximately $63,000 which is the estimated
cost of this offering) from the exercise of warrants and options previously
issued and the September Convertible Preferred Stock Warrants. Such proceeds
are expected to be used for mineral property development, general corporate
purposes, advances and/or investment in WPUR and purchase of the Company's
Common Stock.
FORWARD LOOKING STATEMENTS
Statements contained in this Prospectus (including certain of the
documents incorporated by reference herein) that are not based on historical
facts are forward-looking statements subject to uncertainties and risks
including, but not limited to, product demand and acceptance, economic
conditions, government intervention, the impact of competition and pricing,
results of financing efforts, and other risks described in this Prospectus
(including certain of the documents incorporated by reference herein).
LEGAL MATTERS
<PAGE>
The validity of the Common Stock offered hereby has been passed upon
for the Company by Loeb & Loeb LLP, 1000 Wilshire Boulevard, Suite 1800, Los
Angeles, California 90017.
EXPERTS
The consolidated financial statements of the Company and Vector
Environmental Technologies, Inc. incorporated in this prospectus by reference
from the Company's Annual Report on Form 10-K/A for the year ended September
30, 1996 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
The independent consultant who has calculated the Company's gold
reserves is Mr. Pierre Gerard van Ginkel Bekker, B Sc Geology, Consulting
Geologist.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
<TABLE>
<CAPTION>
________________________________
TABLE OF CONTENTS
<S> <C>
Available Information 3
Incorporation of Certain Information by Reference 3
Risk Factors 4
The Company 12
Recent Developments 13
Shares Available for Future Sale 15
Selling Shareholders 16
Description of Capital Stock 20
Plan of Distribution 27
Use of Proceeds 28
Forward Looking Statements 28
Legal Matters 28
Experts 29
</TABLE>
4,863,539 SHARES
CASMYN CORP.
COMMON STOCK
_______________________
PROSPECTUS
_______________________
______________, 1997
________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the registrant in connection with
the registration, issuance and distribution of the Common Stock offered hereby
are as follows:
SEC Registration Fee $ 7,869
Legal Fees and Expenses 30,000
Accounting Fees and Expenses 20,000
Miscellaneous Expenses 5,000
Total $62,869
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the By-Laws of the Company, the Company has agreed to
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his/her position, if he/she acted in good
faith and in a manner he/she reasonably believed to be in the best interest of
the corporation and, in certain cases, may advance expenses incurred in
defending any such proceeding. To the extent that the officer or director is
successful on the merits in any such proceeding as to which such person is to
be indemnified, the Company must indemnify him/her against all expenses
incurred, including attorney's fees. With respect to a derivative action,
indemnity may be made only for expenses actually and reasonably incurred in
defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by Colorado law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to officers, directors or
persons controlling the Company, pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in said
Act and is, therefore, unenforceable.
<PAGE>
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS
Exhibit No. Description
----------- ---------------------------------------------
<S> <C> <C>
+4.1 Form of Certificate for 8% Convertible Preferred Stock
+4.2 Articles of Amendment to the Articles of Incorporation
of the Company
++4.3 Form of Preferred Stock Investment Agreement dated
September 2, 1997
+4.4 Form of Stock Purchase Warrant
++5.1 Opinion of Loeb & Loeb LLP
++23.1 Consent of Deloitte & Touche LLP
++23.2 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
++23.3 Consent of PG v G Bekker, Consulting Geologist
</TABLE>
_____________
+ Incorporated by reference from the Company's Registration Statement on Form
S-3 (No. 333-27649) declared effectie on July 29, 1997
++ Filed herewith
ITEM 17. UNDERTAKINGS
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:
(a) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(b) 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; and
<PAGE>
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
3 To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of 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 Securities Act of 1933 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 proceedings) 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 Securities Act of 1933 and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Sparks,
State of Nevada, on the 19th day of September, 1997.
CASMYN CORP.
By /s/ Amyn S. Dahya
--------------------------------
Amyn S. Dahya
President and
Chief Executive Officer
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>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/ Amyn S. Dahya President, Chief Executive September 22, 1997
- ------------------------------ Officer and Director
Amyn S. Dahya
/s/ Douglas C. Washburn Vice President, Secretary, September 22, 1997
- ------------------------------ Treasurer
Douglas C. Washburn (Principal Financial Officer)
/s/ Hanif S. Dahya Director September 22, 1997
- ------------------------------
Hanif S. Dahya
/s/ Sandro Kunzle Director September 22, 1997
- ------------------------------
Sandro Kunzle
/s/ Dennis E. Welling Controller (Principal September 22, 1997
- ------------------------------ Accounting Officer)
Dennis E. Welling
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
Sequential
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- ----------
+4.1 Form of Certificate for 8% Convertible Preferred Stock
+4.2 Articles of Amendment to the Articles of Incorporation
of the Company
++4.3 Form of Preferred Stock Investment Agreement
dated September 2, 1997
+4.4 Form of Stock Purchase Warrant
++5.1 Opinion of Loeb & Loeb LLP
++23.1 Consent of Deloitte & Touche LLP
++23.2 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
++23.3 Consent of P G v G Bekker, Consulting Geologist
____________
+ Incorporated by reference from the Company's Registration Statement on Form
S-3 (No.333-27649) declared effective on July 29, 1997
++ Filed herewith
</TABLE>
<PAGE>
PREFERRED STOCK INVESTMENT AGREEMENT
AGREEMENT dated as of September 2, 1997 between Casmyn Corp. (the
"Company") and the investor whose name is set forth at the foot of this
Agreement (the "Investor").
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Preferred Stock
------------------------------------
Section 1.1 Purchase and Sale of Preferred Stock. Upon the following
terms and conditions, the Company shall issue and sell to the Investor shares
of the Company's First Convertible Preferred Stock (the "Shares") having the
rights, designations and preferences set forth in Schedule I hereto, and the
Investor shall purchase from the Company the number of Shares designated on
the signature page hereof.
Section 1.2 Purchase Price. The purchase price for the Shares (the
"Purchase Price") shall be $25.65 per share plus accrued dividends at 8% from
August 1, 1997 to the Closing Date.
Section 1.3 The Closing.
(a) The closing of the purchase and sale of the Shares (the
"Closing"), shall take place at the offices of the Company, at 10:00 a.m.,
local time on the later of the following: (i) the date on which the last to be
fulfilled or waived of the conditions set forth in Article IV hereof and
applicable to the Closing shall be fulfilled or waived in accordance herewith,
or (ii) such other time and place and/or on such other date as the Investor
and the Company may agree. The date on which the Closing occurs is referred
to herein as the "Closing Date."
(b) On the Closing Date, the Company shall deliver to the
Investor certificates representing the number of Shares being purchased by the
Investor, registered in the name of the Investor, or deposit such Shares into
accounts designated by the Investor, and the Investor shall deliver to the
Company the Purchase Price for such Shares by cashier's check or wire transfer
in immediately available funds to such account as shall be designated in
writing by the Company. In addition, each party shall deliver all documents,
instruments and writings required to be delivered by such party pursuant to
this Agreement at or prior to the Closing.
<PAGE>
Section 1.4 Covenant to Register.
----------------------
(a) For purposes of this Section, the following definitions shall
apply:
(i) The terms "register," "registered," and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act"), effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the stock
issued or issuable upon conversion of the Shares, or otherwise issued or
issuable pursuant to this Agreement or the provisions of Schedule I hereto,
and any securities of the Company or securities of any successor corporation
issued as, or issuable upon the conversion or exercise of any warrant, right
or other security that is issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of the Shares, which (i) have
not been resold pursuant to an effective registration statement or pursuant to
Rule 144 under the Act and (ii) may not be resold pursuant to Rule 144(k)
under the Act. For purposes of this Agreement, securities will be considered
ineligible for resale pursuant to Rule 144(k) under the Act unless the
Company's transfer agent has accepted an instruction from the Company
specifying that such securities are eligible for sale pursuant to Rule 144(k).
(iii) The term "holder of Registrable Securities" includes
any person who holds Shares which are convertible into Registrable Securities.
(b) (i) The Company shall, as expeditiously as possible
following the Closing, file a registration statement on Form S-3, or if Form
S-3 is not then available, another appropriate form, covering all the
Registrable Securities and sales thereof under Rule 415, and shall use its
best efforts to cause such registration statement to become effective by the
90th calendar day after the Closing Date (the "Initial Registration"). In the
event such registration is not so declared effective or does not include all
Registrable Securities, a holder of Registrable Securities shall have the
right to require by notice in writing that the Company register all or any
part of the Registrable Securities held by such holder (a "Demand
Registration") and the Company shall thereupon effect such registration in
accordance herewith (which may include adding such shares to an existing shelf
registration). The parties agree that if the holder of Registrable Securities
demands registration of less than all of the Registrable Securities, the
Company, at its option, may nevertheless file a registration statement
covering all of the Registrable Securities. If such registration statement is
declared effective with respect to all Registrable Securities, then so long as
the Company is in compliance with its obligations under Subsection (d)(i)
through (v) hereof, the demand registration rights granted pursuant to this
<PAGE>
Subsection (b) (i) shall not be applicable. If such registration statement is
not declared effective with respect to all Registrable Securities, or if the
Company is not in compliance with said obligations, the demand registration
rights described herein shall remain in effect. The Company shall provide
holders of Registrable Securities reasonable opportunity to review any such
registration statement or amendment or supplement thereto prior to the filing
thereof. If the Registrable Securities are registered initially on a form
other than Form S-3, the Company shall register the Registrable Securities on
Form S-3 as soon as use of such form is permissible.
(ii) The Company shall not be obligated to effect Demand
Registration under Subsection (b)(i) if all of the Registrable Securities held
by the holder of Registrable Securities which are demanded to be covered by
the Demand Registration are, at the time of such demand, included in an
effective registration statement and the Company is in compliance with its
obligations under Subsection (d) (i) through (v) hereof.
(iii) The Company may suspend the effectiveness of any
such registration effected pursuant to this Subsection (b) in the event, and
for such period of time as, such a suspension is required by the rules
and regulations of the Securities and Exchange Commission ("SEC"), and may
suspend use of the prospectus included in the Registration Statement
if such prospectus ceases to meet the requirements of Section 10 of the
Act. The Company will immediately advise the holders of the registered
securities of any such suspension, and will use its best efforts to cause such
suspension to terminate at the earliest possible date.
(iv) If the registration statement covering all Registrable
Securities is not effective by the 90th calendar day after the Closing Date,
then the Company shall pay the Investor in cash an amount equal to 3% of the
total Purchase Price of the Shares purchased by the Investor for each 30 day
period thereafter until such registration statement is effective (pro-rata as
to a period of less than 30 days); provided, however, that such payment, with
respect to the first 60 days (but not thereafter), may be made in Shares
valued at the Purchase Price. An amount equal to 3% of the total Purchase
Price of Shares and any Registrable Securities then held by Investor shall
also be paid to the Investor in cash during any period in excess of 30 days
that (i) the effectiveness of the Registration Statement or use of the
prospectus is suspended as set forth in Section 1.4 (b)(iii) or the prospectus
is otherwise unavailable for use by sellers of Registrable Securities, or if
the Registrable Securities are not listed and traded on NASDAQ or on a
national securities exchange. Any payment hereunder shall be made not later
than five business days after the end of the 30-day period with respect to
which such payment is due and if not so paid the Shares shall be redeemable at
the option of the holder thereof at their liquidation preference divided by
100% less the Applicable Percentage set forth in Schedule I hereto. The
"Purchase Price" of Registrable Securities shall be (i) in the case of
<PAGE>
Registrable Securities derived from conversion or substitution of Shares, the
Purchase Price of such Shares, and (ii) in the case of Registrable Securities
derived from dividend payments, the original dollar amount of such dividends.
This subsection is in addition to the provisions of Section 7.2(a) hereof.
(c) If the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Investor) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form
S-4, Form S-8 or other limited purpose form) and all Registrable Securities
have not theretofore been included in a registration statement under
Subsection (b) which remains effective, the Company shall, at such time,
promptly give all holders of Registrable Securities written notice of such
registration. Upon the written request of any holder of Registrable
Securities given within twenty (20) days after receipt of such notice by the
holder of Registrable Securities, the Company shall use its list efforts to
cause to be registered under the Act all Registrable Securities that such
holder of Registrable Securities requests to be registered. However, the
<PAGE>
Company shall have no obligation under this Subsection (c) to the extent that,
with respect to a public offering registration, the managing underwriter of
such public offering reasonably notifies such holder(s) in writing of its
determination that the Registrable Securities or a portion thereof should be
excluded therefrom.
(d) Whenever required under this Section to effect the
registration of any Registrable Securities, including, without limitation, the
Initial Registration, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration to become effective as provided in Section 1.4(b)(i), and
keep such registration statement effective for so long as any holder of
Registrable Securities desires to dispose of the securities covered by such
registration statement, or, if earlier, until such Registrable Securities may
be sold under Rule 144(k) (provided that the Company's transfer agent has
accepted an instruction from the Company to such effect).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement and notify the holders of the filing
and effectiveness of such Registration Statement and any amendments or
supplements.
(iii) Furnish to each holder of Registrable Securities such
numbers of copies of a current prospectus conforming with the requirements of
the Act, copies of the registration statement, any amendment or supplement
thereto and any documents incorporated by reference therein and such other
<PAGE>
documents as such holder of Registrable Securities may reasonably require in
order to facilitate the disposition of Registrable Securities owned by such
holder of Registrable Securities.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or "Blue Sky" laws of such jurisdictions as shall be reasonably requested by a
holder of Registrable Securities and keep such registration or qualification
effective as long as required to permit sale of Registrable Securities
thereunder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(v) Notify each holder of Registrable Securities
immediately of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
(vi) Furnish, at the request of any holder of Registrable
Securities, (1) an opinion of counsel of the Company, dated the effective date
of the registration statement, in form and substance reasonably satisfactory
to the holder and its counsel and covering, without limitation, such matters
as the due authorization and issuance of the securities being registered and
compliance with securities laws by the Company in connection with the
authorization, issuance and registration thereof and (2) a letter or letters
of the Company's independent public accountants in form and substance
reasonably satisfactory to the holder and its counsel.
(vii) Use its best efforts to list the Registrable
Securities covered by such registration statement with any national market or
securities exchange on which the Common Stock is then listed, and make
generally available on a timely basis such statements of earnings as are
required to comply with Section lla of the Act.
(viii) Make available for inspection by the holder of
Registrable Securities, upon request, all SEC Documents (as defined below)
filed subsequent to the Closing and require the Company's officers, directors
and employees to supply all information reasonably requested by any holder of
Registrable Securities in connection with such registration statement.
(e) Each holder of Registrable Securities will furnish to the
Company in connection with any registration under this Section such
information regarding itself, the Registrable Securities and other securities
<PAGE>
of the Company held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Registrable Securities held by such holder of Registrable Securities. The
Investor shall provide such data as of closing. The intended method of
disposition (Plan of Distribution) of such securities as so provided by
Investor shall be included without alteration in the Registration Statement
covering the Registrable Securities and shall not be changed without written
consent of the Investor.
(f) (i) The Company shall indemnify, defend and hold
harmless each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of Subsections (b) or (c)
(each, a "Selling Shareholder") and each of its officers, directors,
employees, agents, partners or controlling persons (within the meaning of the
Act) (each, an "indemnified party") from and against, and shall reimburse such
indemnified party with respect to, any and all claims, suits, demands, causes
of action, losses, damages, liabilities, costs or expenses ("Liabilities") to
which such indemnified party may become subject under the Act or otherwise,
arising from or relating to (A) any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or (B)
the omission or alleged omission to state therein 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; provided, however, that
the Company shall not be liable in any such case to the extent that any such
Liability arises out of or is based upon an untrue statement or omission so
made in strict conformity with information furnished by such indemnified party
in writing specifically for use in the registration statement; provided
further, that the Company shall not be liable in any such case to the extent
that any such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (i) a Selling Shareholder under an obligation to
send or deliver a copy of the prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Securities to the person
asserting such Liability who purchased such Registrable Securities which are
the subject thereof from such Selling Shareholder failed to do so and (ii) the
prospectus would have completely corrected such untrue statement or omission;
and provided further, that the Company shall not be liable in any such case to
the extent that any Liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in the
prospectus, if such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the prospectuses so amended or supplemented and having
been obligated to deliver such prospectuses, the Selling Shareholder
thereafter failed to deliver such prospectus as so amended or supplemented,
prior to or concurrently with the sale of Registrable Securities to the person
asserting such Liability who purchased such Registrable Securities which are
the subject thereof from such Selling Shareholder.
<PAGE>
(ii) In the event of any registration under the Act of
Registrable Securities pursuant to Subsections (b) or (c), each holder of such
Registrable Securities hereby severally agrees to indemnify, defend and hold
harmless the Company, and its officers, directors, employees, agents,
partners, or controlling persons (within the meaning of the Act) (each, an
"indemnified party") from and against, and shall reimburse such indemnified
party with respect to, any and all Liabilities to which such indemnified party
may become subject under the Act or otherwise, arising from or relating to (A)
any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or (B) the omission or alleged omission
to state therein 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; provided, that such holders will be liable in any such
case to the extent, and only to the extent, that any such Liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, prospectus
or amendment or supplement thereto in reliance upon and in strict conformity
with written information furnished in an instrument duly executed by such
holder specifically for use in the registration statement.
(iii) Promptly after receipt by any indemnified party of
notice of the commencement of any action, or after actual knowledge of any
claim, such indemnified party shall, if a claim in respect thereof is to be
made against another party (the "indemnifying party") hereunder, notify such
party in writing thereof, but the omission so to notify shall not relieve the
indemnifying party from any Liability which it may have to the indemnified
party other than under this section and shall only relieve it from any
liability which it may have to the indemnified party under this section if and
to the extent it is actually prejudiced by such omission. In case any such
action shall be brought against any indemnified party and such indemnified
party shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to the indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
the indemnified party under this section for any legal expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so
selected, provided, however, that if the defendants in any such action include
both the indemnifying party and such indemnified party and the indemnified
party shall have reasonably concluded that there may be reasonable defenses
available to it which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the reasonable expenses and fees of such separate counsel and
other reasonable expenses related to such participation to be reimbursed by
the indemnifying party as incurred. In clarification of the foregoing, if the
<PAGE>
Company is the indemnifying party it shall pay the reasonable expenses and
fees of one separate counsel whose selection is approved by the largest group
of similarly situated indemnified parties as measured by the aggregate par
value of such Registrable Securities owned by such group. Any indemnified
party who chooses not to be represented by the foregoing separate counsel
shall be entitled, at its own expense to be represented by counsel of its own
selection. An indemnifying party shall not be bound by or have liability in
respect of any settlement entered into without its consent.
(g) (i) With respect to the inclusion of Registrable
Securities in a registration statement pursuant to Subsections (b) or (c), all
fees, costs and expenses of and incidental to such registration, inclusion and
public offering shall be borne by the Company; provided, however, that any
Selling Shareholders participating in such registration shall bear their
pro-rata share of the underwriting discounts and commissions, if any, incurred
by them in connection with such registration.
(ii) The fees, costs and expenses of registration to be
borne by the Company as provided in this Subsection (g) shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities
or Blue Sky laws of any jurisdiction or jurisdictions in which securities to
be offered are to be registered and qualified. Subject to appropriate
agreements as to confidentiality, the Company shall make available to counsel
for the holders of Registrable Securities its documents and personnel for due
diligence purposes, and shall pay the reasonable fees and disbursements of one
law firm (but not more than one) acting as counsel for a majority of such
holders. Except as otherwise provided herein, fees and disbursements of
counsel and accountants for the Selling Shareholders shall be borne by the
respective Selling Shareholders.
(h) The rights to cause the Company to register all or any
portion of Registrable Securities pursuant to this Section may be assigned by
Investor to a transferee or assignee of 20% or more, in the aggregate, of its
Shares or the Registrable Securities derived from such Shares. Any transferee
asserting registration rights hereunder shall be bound by the applicable
provisions of this Agreement.
(i) From and after the date of this Agreement, the Company shall
not agree to allow the holders of any securities of the Company to include any
of their securities in any registration statement filed by the Company
pursuant to Subsection (b) unless such inclusion will not reduce the amount of
the Registrable Securities included therein.
<PAGE>
ARTICLE II
Representations and Warranties
------------------------------
Section 2.1 Representations and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Investor:
(a) Organization and Qualification. The Company is a
corporation duly incorporated and existing in good standing under the laws of
Colorado and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company does not have any
direct or indirect subsidiaries except as listed in Exhibit A hereto or in the
SEC Documents (as hereinafter defined). The Company and each such subsidiary,
if any, 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 or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Effect. "Material Adverse Effect" means any adverse effect on the
<PAGE>
business, operations, properties, prospects, or financial condition of the
entity with respect to which such term is used and which is material to such
entity and other entities controlling or controlled by such entity taken as a
whole, or any adverse effect on the Company's performance of its obligations
under this Agreement or any other agreement or document contemplated hereby.
(b) Authorization: Enforcement. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement and to issue the Shares in accordance with the terms hereof, (ii)
the execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company, and (iv) this Agreement constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application. The Company's
executive officers and directors have studied and fully understand the nature
of the securities being sold hereunder, and recognize that they have a
potential dilutive effect.
Capitalization. The authorized capital stock of the Company
consists of 300,000,000 shares of Common Stock and 20,000,000 shares of
preferred stock; there are 13,493,167 shares of Common Stock issued and
outstanding; and, upon issuance of the Shares in accordance with the terms
hereof and pursuant to similar agreements of like tenor, there will be
13,493,167 shares of Common Stock and approximately 1,234,667 shares of First
<PAGE>
Convertible Preferred Stock issued and outstanding. All of the outstanding
shares of the Company's Common Stock have been validly issued and are fully
paid and nonassessable. Except as set forth in Exhibit A hereto and as
described in the SEC Documents, no shares of Common Stock are entitled to
preemptive rights or registration rights and 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 contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company or options, warrants, scrip, rights to
subscribe to, or commitments to purchase or acquire, any shares, or securities
or rights convertible into shares, of capital stock of the Company. The
Company has furnished or made available to the Investor true and correct
copies of the Company's Articles of Incorporation as in effect on the date
hereof (the "Charter"), and the Company's By-Laws, as in effect on the date
hereof (the "By-Laws").
(d) Issuance of Shares. The issuance of the Shares has been
duly authorized and, when paid for or issued in accordance with the terms
hereof, the Shares shall be validly issued, fully paid and non-assessable and
entitled to the rights and preferences set forth in Schedule I hereto. The
Common Stock issuable upon conversion of the Shares will be duly authorized
and reserved for issuance and, upon conversion in accordance with the
Certificate of Designation to be filed by the Company to establish the rights
and preferences of the Shares, will be validly issued, fully paid and
non-assessable and not subject to any preemptive rights or adverse claims, and
the holders shall be entitled to all rights and preferences accorded to a
holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) result in a violation
of the Company's Charter 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 agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party, or result in a
violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) 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 for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not individually or in
the aggregate, have a Material Adverse Effect); provided that, for purposes of
such representation as to Federal, state, local or foreign law, rule or
regulation, no representation is made herein with respect to any of the same
applicable solely to the Investor and not to the Company. The business of the
Company is not being conducted in violation of any law, ordinance or
regulations of any governmental entity, except for violations which either
<PAGE>
singly or in the aggregate do not and will not have a Material Adverse Effect.
The Company is not required under Federal, state or local law, rule or
regulation in the United States to obtain any consent, authorization or order
of, or make any filing (other than the filing of a Certificate setting forth
the terms of the Shares with the Colorado Secretary of State) or registration
with, any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or issue and sell the
Shares in accordance with the terms hereof (other than any SEC, NASD or state
securities filings which may be required to be made by the Company and any
registration statement which may be filed pursuant hereto); provided that, for
purposes of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and agreements
of the Investor herein.
(f) SEC Documents, Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d), in addition to
one or more registration statements and amendments thereto heretofore filed by
the Company with the SEC (all of the foregoing including filings incorporated
by reference therein being referred to herein as the "SEC Documents"). The
Company has delivered or made available to the Investor true and complete
copies of the quarterly and annual (including, without limitation, proxy
information and solicitation materials) SEC Documents filed with the SEC since
December 31, 1995. The Company has not provided to the Investor any
information which, according to applicable law, rule or regulation, should
have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder except as set forth on Exhibit A
and other federal, state and local laws, rules and regulations applicable to
such SEC Documents, and none of the SEC Documents 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. The
financial statements of the Company included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis 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 not
include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
<PAGE>
the dates thereof and the results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) No Material Adverse Change. Since the date through which
the most recent quarterly report of the Company on Form 10-Q has been prepared
and filed with the SEC, a copy of which is included in the SEC Documents, no
event which would have a Material Adverse Effect has occurred or exists with
respect to the Company or its subsidiaries, except as otherwise disclosed or
reflected in other SEC Documents prepared through or as of a date subsequent
thereto, and the Company has not received any communication from the SEC or
the NASD regarding any possible de-listing of the Company's Common Stock.
(h) No Undisclosed Liabilities or Litigation. The Company and
its subsidiaries have no liabilities or obligations not disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's
or its subsidiaries' respective businesses which, individually or in the
aggregate, do not or would not have a Material Adverse Effect on the Company
or its subsidiaries. All material litigation to which the Company or its
subsidiaries are parties is disclosed in the SEC documents or in Exhibit A
hereto.
(i) No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects, operations
or financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed.
(j) No General Solicitation. Neither the Company, nor any of
its affiliates, or, to its knowledge, any person acting on its or their behalf
(including Cappello Capital Corp. (the "Placement Agent")), has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Act) in connection with the offer or sale of the
Shares.
(k) 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
Shares under the Act.
(l) Approval Commitments. The Company has received binding
assurance from its executive officers and directors and all stockholders who
own more than 5% of the outstanding stock of the Company, to the effect that
such persons will vote all their shares in favor of such approval of the
<PAGE>
transactions contemplated hereby as may be necessary to comply with any rule
or regulation of the NASD or any other regulatory agency.
Section 2.2 Representations and Warranties of the Investor. The
Investor hereby makes the following representations and warranties to the
Company:
(a) Authorization, Enforcement. (i) Such Investor has the
requisite power and authority to enter into and perform this Agreement and to
purchase the Shares being sold hereunder, (ii) the execution and delivery of
this Agreement by the Investor and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
partnership action, and (iii) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application.
(b) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by the Investor of the transactions
contemplated hereby do not and will not (i) result in a violation of the
Investor's charter documents or By-Laws or (ii) conflict with any agreement,
indenture or instrument to which Investor is a party, or (iii) result in a
violation of any law, rule, or regulation, or any order, judgment or decree of
any court or governmental agency applicable to Investor. The business of the
Investor is not being conducted in violation of any law or regulation of any
governmental entity, except for possible violations which either singly or in
the aggregate do not and will not have a Material Adverse Effect. The
Investor is not required to obtain any consent or authorization of any
governmental agency in order for it to perform its obligations under this
Agreement. The data to be provided by the Investor in connection with
registering the Registrable Securities under the Act will be true and correct
in all material respects.
(c) Investment Representation. The Investor is purchasing the
Shares for its own account for investment and not with a view to distribution
otherwise than in compliance with the Act. Investor has no present intention
to sell the Shares and Investor has no present arrangement (whether or not
legally binding) to sell the Shares to or through any person or entity;
provided, however, that by making the representations herein, the Investor
does not agree to hold the Shares for any minimum or other specific term and
reserves the right to dispose of the Shares at any time in accordance with
Federal and state securities laws applicable to such disposition.
(d) Accredited Investor. The Investor is an accredited investor
as defined in Rule 501 promulgated under the Act. The Investor has such
knowledge and experience in financial and business matters in general, and
<PAGE>
investments in particular, so that the Investor is able to evaluate the merits
and risks of an investment in the Shares and to protect its own interests in
connection with such investment. In addition (but without limiting the effect
of the Company's representations and warranties contained herein), the
Investor has received such information as it considers necessary or
appropriate for deciding whether to purchase the Shares pursuant hereto. The
Investor acknowledges that no representation or warranty is made by the
Placement Agent or any persons representing the Placement Agent with respect
to the Company or sale of the Shares.
(e) Rule 144. The Investor understands that there is no public
trading market for the Shares, that none is expected to develop, and that the
Shares must be held indefinitely unless such Shares or securities into which
the Shares are converted are registered under the Act or an exemption from
registration is available. The Investor has been advised or is aware of the
provisions of Rule 144 promulgated under the Act.
ARTICLE III
Covenants
---------
Section 3.1 Securities Compliance.
(a) The Company shall notify the SEC and NASD, in accordance
with their requirements, of the transactions contemplated by this Agreement,
and shall take all other necessary action and proceedings as may be required
and permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Shares and Common Stock issuable upon conversion thereof to
the Investor or subsequent holder.
(b) The Investor understands that the Shares are being offered
and sold in reliance on a transactional exemption from the registration
requirements of Federal and state securities laws and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Investor set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Investor to acquire the Shares.
Section 3.2 Registration and Listing. Until three (3) years after
all Shares have been converted into Common Stock, the Company will cause its
Common Stock (or other securities into which the Shares are convertible) to
continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under
said act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement and will not take any action or
file any document (whether or not permitted by the Act or the Exchange Act or
the rules thereunder) to terminate or suspend such registration or to
<PAGE>
terminate or suspend its reporting and filing obligations under said Acts,
except as permitted herein. Until three (3) years after all Shares have been
converted into Common Stock the Company will take all action within its power
to continue the listing or trading of its Common Stock on any stock exchange
on which such stock is traded and on the Nasdaq National Market or the Nasdaq
Small Cap Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the NASD and Nasdaq.
Section 3.3 Stockholder Approval. The Company will use its best
efforts to promptly notice and hold a stockholders meeting if, as and when
necessary to obtain any stockholder approvals required by the Company
(including those required by all applicable agreements between the Company and
the NASD or Nasdaq) to allow for issuance of Common Stock upon conversion of
the Shares.
Section 3.4 Sale Restrictions. Following conversion of the Shares
into Common Stock of the Company, Investor will not on any trading day offer
or sell publicly on NASDAQ or on the principal exchange on which the Common
Stock is traded, on a net basis more than the following number of such shares
of Common Stock: the greatest of (i) 10% of the average daily trading volume
of the Common Stock for the five trading days preceding such sale as reported
by NASDAQ or by such principal exchange, (ii) 25,000 shares, and (iii) 10% of
the trading volume for the Common Stock on such day.
Section 3.5 Conversion Rights. Investor shall not be entitled to
convert any Share into Common Stock of the Company if following conversion of
such Share the Investor and its affiliates (within the meaning of the Exchange
Act) shall be the beneficial owners (as defined in Rule 13d-3 under the
Exchange Act) of 10% or more of the Common Stock of the Company, or if a
lesser percentage is set forth after the name of the Investor on the signature
page hereof, such lesser percentage. The provisions of this Section cannot be
amended.
Section 3.6 Short Sale Restrictions. Investor agrees not to sell
Common Stock of the Company "short" except for (i) sales of shares issuable to
Investor upon conversion, made within 72 hours prior to the time notice of
conversion is given, (ii) sales against shares of Common Stock owned the day
the short position is established, or (iii) more than 12 months after the
Closing, sales against shares issuable upon conversion of the Shares whether
or not notice of conversion has been given. This Section shall not apply to
sales in which Investor has no beneficial interest made on behalf of
third-party clients who are not holders of Shares.
Section 3.7 Notice of Conversion Cap. No later than the 15 days
after the end of the 18th month after the Closing Date, the Company will
<PAGE>
deliver notice to the Investor specifying the amount of the Conversion Cap (as
defined in Schedule I hereto) and the calculation thereof.
Section 3.8 Most Favored Nation Clause. If the Company issues Common
Stock or securities convertible into or exercisable for Common Stock or other
convertible securities at a time when any of the Shares remain outstanding, at
an effective price per share of Common Stock which is lower than the
conversion price of the shares at that time, then the Company shall issue upon
conversion of the Shares an additional number of shares of Common Stock
necessary to reduce the effective conversion price to such lower issue price.
This Section shall not be applicable to issuances of Common Stock, or options
granted at market price, pursuant to any shareholder approved option plan
covering not more than 8% of the Company's outstanding stock.
ARTICLE IV
Conditions
----------
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to issue and/or sell
the Shares to the Investor is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below. These conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion.
(a) Accuracy of the Investor's Representations and Warranties.
The representations and warranties of the Investor shall be true and correct
in all material respects.
(b) Performance by the Investor. The Investor shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Investor at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Investor to
Purchase the Shares. The obligation hereunder of the Investor to acquire and
pay for the Shares is subject to the satisfaction, at or before the Closing,
of each of the conditions set forth below. These conditions are for the
Investor's sole benefit and may be waived by the Investor at any time in its
sole discretion.
<PAGE>
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company 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 particular date).
(b) Performance by the Company. The Company shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Company at or prior to the Closing.
(c) Nasdaq. The Company's Common Stock shall have been listed
and admitted to trading on the Nasdaq National Market or the Nasdaq Small Cap
Market. Thereafter, and prior to the Closing Date, trading in the Company's
Common Stock shall not have been suspended by the SEC or Nasdaq and trading in
securities generally as reported by Nasdaq shall not have been suspended or
<PAGE>
limited or minimum prices shall not have been established on securities whose
trades are reported by Nasdaq.
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(e) Opinion of Counsel, Etc. At the Closing the Investor shall
have received an opinion of counsel to the Company in the form attached hereto
and such other certificates and documents as the Investor or its counsel shall
reasonably require incident to the Closing.
ARTICLE V
Legend on Stock
---------------
Each certificate representing the Shares and, if appropriate, securities
issued upon conversion thereof, shall be stamped or otherwise imprinted with a
legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT
<PAGE>
AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
The Company agrees to reissue certificates representing the Shares or, if
applicable, the securities issued upon conversion thereof without the legend
set forth above at such time as (i) the holder thereof is permitted to dispose
of such Shares (or securities issued upon conversion thereof) pursuant to Rule
144 under the Act, (ii) the securities are sold to a purchaser or purchasers
who (in the opinion of counsel to such purchasers, in form and substance
reasonably satisfactory to the Company and its counsel) are able to dispose of
such shares publicly without registration under the Act, or (iii) such
securities are included in an effective registration statement under the Act.
ARTICLE VI
Termination
-----------
Section 6.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of
the Company and the Investor.
Section 6.2 Other Termination. This Agreement may be terminated by
action of the Board of Directors or other governing body of the Investor or
the Company at any time if the Closing shall not have been consummated by the
fifth business day following the date of this Agreement.
Section 6.3 Automatic Termination. This Agreement shall
automatically terminate without any further action of either party hereto if
the Closing shall not have occurred by the tenth business day following the
date of this Agreement.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Fees and Expenses. Except as otherwise set forth in Section
1.4 hereof, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement,
provided that the Company shall pay, at the Closing, all due diligence fees and
attorneys' fees and expenses incurred by the Investor and the Placement
<PAGE>
Agent, up to the maximums stated in the final letter agreement dated
December 18, 1996 as amended February 20, 1997 between the Company and
Cappello Capital Corp., in connection with the preparation, negotiation,
execution and delivery of this Agreement and the transactions contemplated
hereunder. The Company shall compensate the Placement Agent and shall
indemnify it as set forth in said letter agreement. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of
the Shares pursuant hereto. The Placement Agent's compensation includes a
cash payment in an amount equal to 7.5% of the Purchase Price of Shares sold
by the Company, and the issuance of warrants to the Placement Agent to purchase
that number of Shares equal to 10% of the number of Shares sold.
Section 7.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which either
of them may be entitled by law or equity.
(b) Each of the Company and the Investor (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other
courts of the United States sitting in California for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement and
(ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. Each
of the Company and the Investor consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this paragraph shall affect or limit any right to serve
process in any other manner permitted by law.
Section 7.3 Entire Agreement: Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Investor 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 a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
<PAGE>
Section 7.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
to the Company: Casmyn Corp.
Amyn Dahya, Chairman and
President
1800-1500 W. Georgia St.
Vancouver, British Columbia
Canada V6G 2Z6
Fax: (604) 601-5220
with a copy to: Al-Karim Haji
Managing Director-Finance
1800-1500 W. Georgia St.
Vancouver, British Columbia
Canada V6G 2Z6
Fax: (604) 601-5220
to the Investor: At the address set forth at the foot of
this Agreement, with copies to Investor's
counsel as set forth at the foot of this
Agreement or as specified in writing by
Investor
with a copy to: Gerard K. Cappello
Cappello Capital Corp.
1299 Ocean Avenue, Suite 306
Santa Monica, California 90401
Fax: (310) 393-4838
Any party hereto may from time to time change its address for notices by
giving at least 10 days' written notice of such changed address to the other
party hereto.
Section 7.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
<PAGE>
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 7.6 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.7 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. The parties hereto may amend this
Agreement without notice to or the consent of any third party.
Section 7.8 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.
Section 7.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of California
without regard to such state's principles of conflict of laws.
Section 7.10 Survival. The representations and warranties of the
Company and the Investor contained in Article II and the agreements and
covenants set forth in Articles I, III, V and VII shall survive the Closing.
Section 7.11 Execution. This Agreement may be executed in two or
more 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, it being understood that both parties need
not sign the same counterpart. In the event any signature is delivered by
facsimile transmission, the party using such means of delivery shall cause the
manually executed signature page(s) to be physically delivered to the other
party within five days of the execution hereof.
Section 7.12 Equal Treatment of Shareholders. The Company will deal
on an equal basis, ratably, with all holders of the Shares and will not
provide any economic benefit or opportunity to any holder of Shares unless
such benefit or opportunity is made available on equal terms to all holders of
Shares.
<PAGE>
Section 7.13 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Investor without its consent unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date
hereof.
CASMYN CORP.
By: ______________________________
Name: Amyn Dahya
Its: Chairman and President
Number of Shares THE INVESTOR
________________ By: ______________________________
Name:
Its:
Dollar Amount at Investor's address:
$25.65 per share
$_______________ Percentage limitation, if desired ___
Name and address of Investor's
counsel:
Accrued Dividend
at $0._____ per share
Total Purchase Price
$________________
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
CASMYN CORP.
<S> <C> <C> <C>
CONVERSION CONVERSION
DATE ISSUED DESCRIPTION SHARES PRICE
- ----------- ----------- ---------- ----------
WARRANTS:
- ---------
9/95 Private Placement (Reg D) 357,143 $8.50
3/96 Private Placement (Reg S) 375,000 13.00
9/96 Private Placement (Reg S) 204,546 11.00
11/96 Private Placement (Reg S) 77,500 10.00
Total Warrants 1,014,189
STOCK OPTIONS:
- --------------
QUALIFIED
NON-QUALIFIED PLAN PLANS TOTAL
------------------ --------- -----
Options Granted 246,000 2,465,000 2,711,000
Options Exercised ( 128,000) (87,000) (215,000)
Cancelled - (192,500) (192,500)
Options Outstanding 118,000 2,185,500 2,303,500
Options Vested 118,000 1,073,000 1,191,000
Total Authorized 250,000 2,850,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Fully Diluted Share Calculation:
Total Shares Outstanding 8/20/97 13,483,167
Total Shares from conversion of Common Stock Warrants 1,014,189
Total Shares from exercise of vested options 1,191,000
Total Shares from conversion of convertible preferred stock
and convertible preferred stock warrants 4,838,198
Fully Diluted Shares 20,536,554
</TABLE>
<PAGE>
213-688-3698
September 22, 1997
Board of Directors
Casmyn Corp.
1500 West Georgia Street, 18th Floor
Vancouver, B.C. V6G 2Z6
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Casmyn Corp., Inc., a Colorado corporation
("Company"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"), of the Company's registration statement on Form S-3
(together with all amendments, the "Registration Statement"). The Registration
Statement relates to the registration under the Act of 4,863,539 shares of the
Company's common stock ("Common Stock").
In rendering this opinion, we have reviewed the Registration Statement,
as well as a copy of the Company's Articles of Incorporation and Bylaws, each
as amended to date. We have also reviewed such documents and such statutes,
rules and judicial precedents as we have deemed necessary for the opinions
expressed herein.
In rendering this opinion, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of documents
submitted to us as originals, the conformity to original documents of documents
submitted to us as certified or photostatic copies, and the authenticity of
originals of such photostatic copies.
Based upon and in reliance upon the foregoing, and subject to the
qualifications and limitations herein set forth, we are of the opinion that
the shares of Common Stock have been duly and validly authorized and, when
sold, will be legally issued, fully paid and nonassessable.
Exhibit 5.1
<PAGE>
Board of Directors
Casmyn Corp.
September 22, 1997
Page 2
This opinion is limited to the corporate law of Colorado, and we
express no opinion with respect to the laws of any other jurisdiction.
We consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement.
This opinion may not be used, circulated, quoted or otherwise
referred to for any purpose without our prior written consent and may not be
relied upon by any person or entity other than the Company and its successors
and assigns. This opinion is based upon our knowledge of law and facts as of
its date. We assume no duty to communicate to you with respect to any matter
which comes to our attention hereafter.
Sincerely,
LOEB & LOEB LLP
By /s/ David L. Ficksman
A Partner of the Firm
INDEPENDENT CONSULTANTS' CONSENT
I consent to the use of my name under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ P G van G Bekker
Pretoria, South Africa
September 22, 1997
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Casmyn Corp. on Form S-3 of our reports on the consolidated financial statements
of Casmyn Corp. and Vector Environmental Technologies, Inc. dated December 21,
1996, appearing in the Annual Report on Form 10-K/A of Casmyn Corp. for the year
ended September 30, 1996 and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Reno, Nevada
September 22, 1997
