As filed with the Securities and Exchange Commission on January __, 1996
File No. 33- Commission file number:
I-9418
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The Canton Industrial Corporation
(Exact name of registrant as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
268 West 400 South, Suite 300, Salt Lake City, Utah 84101
(Address of principal executive offices) (Zip code)
1996 Stock Option Plan of the Canton Industrial Corporation
(Full title of the plan)
Michael Golightly, 268 West 400 South, Suite 300, Salt Lake
City, Utah 84101 (Name, address, including zip
code, of agent for service)
Telephone number, including area code, of agent for service: (801) 575-8073
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================= --------------- ------------------------ ------------------------- =================
Title of Securities to be Amounts to be Proposed Maximum Proposed Maximum Amount of
Registered Registered Offering Price Per Aggregate Offering Price Registration Fee
Share(1)
================================= --------------- ------------------------ ------------------------- =================
<S> <C> <C> <C> <C>
Options, each entitling the 1,000,000 $-0- $-0- $-0-
holder to purchase one share of
Common Stock
================================= =============== ======================== ========================= =================
Common Stock, issuable upon 1,000,000 $1.531 $1,531,000 $527.93
exercise of Options
================================= =============== ======================== ========================= =================
</TABLE>
(1) Bona Fide estimate of maximum offering price solely for calculating the
registration fee pursuant to Rule 457(h) of the Securities Act of 1933, based on
the average bid and asked price of the registrant's common stock as of January
18, 1996, a date within five business days prior to the date of filing of this
registration statement.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the Plan described herein.
<PAGE>
1996 STOCK OPTION PLAN OF THE CANTON INDUSTRIAL CORPORATION
CROSS-REFERENCE SHEET PURSUANT TO RULE 404(A)
Cross-reference between items of Part I of Form S-8 and the Section 10(a)
Prospectus that will be delivered to each employee, consultant, or director who
participates in the Plan.
REGISTRATION STATEMENT ITEM NUMBERS AND HEADINGS PROSPECTUS HEADING
1. Plan Information Section 10(a) Prospectus
2. Registrant Information and Section 10(a) Prospectus
Employee Plan Annual Information
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by The Canton Industrial Corporation, a
Nevada corporation, (the "Company") with the Securities and Exchange Commission
(the "Commission") are hereby incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994.
2. All reports filed by the Company with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the fiscal year ended December 31, 1994.
3. The description and specimen certificate of the Common Stock
contained in the Company's Form S-18 Registration Statement filed on
January 21, 1986 under the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
Prior to the filing, if any, of a post-effective amendment that
indicates that all securities covered by this Registration Statement have been
sold or that de-registers all such securities then remaining unsold, all reports
and other documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents.
Item 4. Description of Securities
The common stock of the Company being registered pursuant to this
registration statement is part of a class of securities registered under section
12 of the Exchange Act. A description of such securities is contained in the
Company's initial Form S-18 Registration Statement filed with the Commission on
January 21, 1986, and is incorporated herein by reference. (See "Item 3.
Incorporation of Documents by Reference.")
Item 5. Interests of Named Experts and Counsel
The Company's vice-president, Kevin S. Woltjen, prepared a substantial
part of this registration statement and is included in the reoffer prospectus
attached hereto as a selling shareholder. For more information on this subject,
see Exhibit B - Reoffer Prospectus, Selling Security Holders." No other expert
is named as preparing or certifying all or part of the registration statement to
which this prospectus pertains, and no counsel for the Company who is named in
this prospectus as having given an opinion on the validity of the securities
being offered hereby was hired on a contingent basis or has or is to receive, in
connection with this offering, a substantial interest, direct or indirect, in
the Company.
Item 6. Indemnification of Directors and Officers
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to members of
the board of directors, officers, employees, or persons controlling the Company
pursuant to the immediately subsequent provisions, the Company has been informed
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
The Company's Restated Articles of Incorporation, specifically Article
Nine, however, eliminate the personal liability of the officers and directors to
shareholders or the corporation for money damages to the extent permitted by
Nevada Revised Statutes ("NRS") Section 78.037. NRS Section 78.037 provides that
a corporation may limit or eliminate officers' and directors' personal liability
for breach of fiduciary duty so long as liability is not eliminated or limited
for acts or omissions involving intentional misconduct, fraud or a knowing
violation of law or the payment of unlawful distributions.
Section nine of Article VI of the Corporation's Bylaws provides that
the Corporation shall indemnify its officers and directors for any liability,
including reasonable costs of defense, arising out of any act or omission of any
officer or director on behalf of the Corporation to the fullest extent allowed
by the laws of the State of Nevada.
In actions, proceedings and suits involving an officer or director
because of their being or having been an officer or director, other than actions
by or in the right of the corporation, NRS Section 78.751 (the "Nevada Statute")
permits a corporation to indemnify directors or officers against actual and
reasonable expenses, including attorneys fees, judgments, fines and amounts paid
in settlement. The Nevada Statute applies to actions, proceedings or suits
whether civil, criminal, administrative or arbitrative in nature. However,
unless a court directs otherwise, indemnification is permissible only if the
officer or director meets the applicable standard of conduct and indemnification
is proper under the circumstances. In civil cases, the standard of conduct
requires the officer or director to act in good faith and in a manner he or she
reasonably believes to be in or not opposed to the best interests of the
corporation. In criminal cases, an officer or director meets the standard of
conduct if they had no reasonable cause to believe his or her conduct was
unlawful. The board of directors acting through a quorum of disinterested
directors, independent legal counsel designated by the board of directors, or
the shareholders shall determine whether indemnification is proper under the
circumstances. Termination of proceedings by judgment, order, settlement,
conviction or plea of no contest or its equivalent, does not of itself establish
a presumption that the officer or director did not meet the applicable standard
of conduct.
In actions by or in the right of the corporation, the corporation may
indemnify an officer or director against expenses provided he or she satisfies
the applicable standard of conduct. However, a corporation cannot indemnify an
officer or director adjudged liable to the corporation on any claim, issue or
matter unless, and to the extent, the court determines that despite the
adjudication of liability, and in light of all the circumstances, the officer or
director is fairly and reasonably entitled to indemnity for expenses.
In all proceedings, whether by or in the right of the corporation or
otherwise, the Nevada Statute requires indemnification to the extent the officer
or director is successful on the merits or otherwise in defense of the
proceeding or in defense of any claim, issue or matter therein. A Nevada
corporation may provide, either in its articles, bylaws or agreements, that the
corporation shall pay the expenses on behalf of a director or officer prior to
the final disposition of the action upon receipt of an undertaking by or on
behalf of the director or officer to repay those advancements if it is
ultimately determined that the officer or director is not entitled to
indemnification. The Nevada Statute does not exclude other indemnification
rights to which a director or officer may be entitled under the articles of
incorporation, the bylaws, an agreement, a vote of shareholders or disinterested
directors, or otherwise; provided that those rights would not indemnify an
officer or director against a judgment or other final adjudication adverse to
the officer or director that establishes the officer's or director's acts or
omissions involved intentional misconduct, fraud or known violation of the law
and were material to the cause of action.
The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to the NRS
Section 78.751, Article Nine, Section VI of the Corporation's Bylaws, as
amended, and Article Nine of the Company's Restated Articles of Incorporation.
Item 7. Exemption from Registration Claimed
Although no restricted securities are being reoffered or resold
pursuant to this registration statement, certain control securities are being
reoffered, specifically pursuant to the Reoffer Prospectus attached hereto as
Exhibit B.
Item 8. Exhibits.
The exhibits are attached to this Registration Statement and are listed in
the Exhibit Index, which is found on page 7.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement 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. (2) To treat,
for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment as 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.
(b) The undersigned registrant hereby undertakes 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake City, State of Utah, on January 19, 1996.
The Canton Industrial Corporation
By /s/ Steven A. Christensen
Steven A. Christensen, as President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steve A. Christensen, with power of
substitution, as his attorney-in-fact for him, in all capacities, to sign any
amendments to this registration statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitutes may do or cause to be done by virtue hereof.
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 date indicated.
Signature Title Date
/s/ Steven A. Christensen President January 19, 1996
Steven a.. Christensen
/s/ Susan S. Waldrop Chief Financial January 19, 1996
Susan S. Waldrop Officer, Secretary,
Treasurer
/s/ Richard D. Surber Chief Executive January 19, 1996
Richard D. Surber Officer, Director
/s/ Lorin Pace Director January 19, 1996
Lorin Pace
/s/ Philip Lamb Director January 19, 1996
Philip Lamb
<PAGE>
As filed with the Securities and Exchange Commission on January __, 1996
File No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The Canton Industrial Corporation
(A Nevada corporation)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibits SEC Ref. No. Description of Exhibit Numbered Pages
A 2 Reoffer Prospectus
B 4 1996 Stock Option Plan of the Company
C 5, 23(b) Opinion and consent of Counsel with
respect to the legality of the issuance
of securities being issued
D 23(a) Consent of Accountant
REOFFER PROSPECTUS
THE CANTON INDUSTRIAL CORPORATION
1,000,000 Shares of
Common Stock, $0.001 Par Value
The shares of common stock, $0.001 par value (the "Common Stock"),
included herein (the "Shares"), have been or will be acquired from The Canton
Industrial Corporation, a Nevada corporation (the "Company"), pursuant to the
1996 Stock Option Plan and are to be sold by the persons named herein as
"Selling Stockholders." The Company will receive an exercise price for Option
Shares equal to ninety percent (90%) of the bid price on the day of exercise.
Selling Shareholders may offer some or all of the Shares for sale from time to
time at prices and terms negotiated in individual transactions, in brokers
transactions negotiated immediately prior to sale, or in a combination of the
foregoing. The Selling Stockholders and any broker-dealers who participate in
selling the Shares may be deemed "underwriters" as defined by the Securities Act
of 1933, as amended (the "Securities Act"). Commissions paid or discounts or
concessions allowed such broker-dealers, as well as any profit received on
resale of the Shares by broker-dealers purchasing for their own accounts may be
deemed to be underwriting discounts and commissions. The Selling Shareholders or
purchasers of the Shares will pay all discounts, commissions and fees related to
the sale of the Shares. The Company has paid the costs of filing this
registration statement and reoffer prospectus (this "Prospectus") with the
Securities and Exchange Commission (the "Commission") and will pay the costs of
registering or qualifying the Shares under the securities laws of any
jurisdiction where such registration or qualification is necessary.
The Common Stock is listed on the Boston Stock Exchange under the
symbol "CND." The Common Stock is also traded on the OTC Bulletin Board under
the symbol "CICP." On January 18, 1996, the closing sale price for the Common
Stock as reported by the Boston Stock Exchange was $1.50 by $1.562.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE PURCHASE OF THESE SECURITIES INVOLVES SUBSTANTIAL RISK. SEE "RISK
FACTORS."
No person has been authorized in connection with any offering made
hereby to give any information or to make any representation not contained in
this Prospectus. If any such information is given or any such representation
made, the information or representation should not be relied upon as having been
authorized by the Company. This Prospectus is not an offer to sell or a
solicitation of an offer to buy any securities other than the Shares offered by
this Prospectus, nor is it an offer to sell or a solicitation of an offer to buy
any of the Shares offered hereby in any jurisdiction where it is unlawful to
make such an offer or solicitation. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances imply that the information in
this Prospectus is correct any time subsequent to January 18, 1996, the date of
this Prospectus.
AVAILABLE INFORMATION
The Company is subject to the informational requirement of the
Securities Exchange Act of 1934 as amended (the "Exchange Act") and in
accordance therewith files reports and other information with the Securities and
Exchange Commission. The Company has filed in a timely manner all reports
required of it for at least the twelve months preceding this filing. Such
reports, proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission (the "Commission") in Washington D.C. at 450
Fifth Street, N.W., 20549, and at the following regional offices located at 26
Federal Plaza, Room 1100, New York, New York 10278; 219 Dearborn Street, Room
1228, Chicago, Illinois, 60604; and at 410 Seventeenth Street, Suite 700,
Denver, Colorado 80202. Copies of these materials can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
The Common Stock is listed on the Boston Stock Exchange. Reports, proxy
and information statements, and other information about the Company can be
inspected at the offices of the Boston Stock Exchange at One Boston Plaza,
Boston, Massachusetts, 02108.
The Company will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, upon the oral or written request of such
person, a copy of any and all information incorporated by reference into this
Prospectus. Requests for such information may be directed to the Company's
president, Steven A. Christensen at 268 West 400 South, Suite 300, Salt Lake
City, Utah 84101. The Company intends to furnish to its stockholders annual
reports, which will contain financial statements audited by independent
accountants, and such other reports as it may determine to furnish or as may be
required by law.
TABLE OF CONTENTS
RISK FACTORS...................................................................3
SELLING SECURITY HOLDERS.......................................................5
USE OF PROCEEDS REALIZED BY THE COMPANY........................................5
PLAN OF DISTRIBUTION...........................................................5
INTERESTS OF NAMED EXPERTS AND COUNSEL.........................................6
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..............................6
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITY......................................................................6
SIGNATURES.....................................................................9
The Company was incorporated in Ohio on July 10, 1984 as The Canton
Corporation. The Company changed its name to The Canton Industrial Corporation
in May 1991. In March 1993, the Company changed its domicile to Nevada by
merging with a Nevada corporation that the Company formed for the sole purpose
of redomiciling. Unless the context indicates otherwise, the term the "Company"
includes The Canton Industrial Corporation and its consolidated subsidiaries.
The Company's principle executive offices are at 268 West 400 South, Suite 300,
Salt Lake City, Utah 84101. The Company's telephone number is (801) 575-8073.
RISK FACTORS
The Shares offered hereby are speculative and involve a high degree of
risk. Accordingly, in analyzing this offering, prospective investors should
carefully consider the following factors, among others, relating to the Company:
Shares Eligible for Future Resale. On the 11th day of January 1996,
2,520,534 shares of the currently outstanding shares of Common Stock, excluding
the Shares offered hereby, are restricted securities or held by affiliates of
the Company, or both. Consequently, these shares may be sold without
registration only upon compliance with Rule 144 promulgated under the Securities
Act. In general, Rule 144 provides that a person who has held restricted
securities for two years may sell limited amounts of those securities under
certain conditions. During any three month period, such persons may sell an
amount of securities not exceeding the greater of one percent of the outstanding
Common Stock or the average weekly trading volume during the four weeks prior to
the sale. Persons who are not affiliates of the Company and have held restricted
securities for three years are not subject to these volume limitations. Sales of
substantial amounts of Common Stock by security holders under Rule 144, or
otherwise, or even the potential for such sales, might depress the price for
Common Stock and could impair the Company's ability to raise capital through the
sale of its equity securities.
Dependence on Management. The Company has been largely dependent upon
the efforts of its management including, Richard D. Surber, the Company's Chief
Executive Officer and a consultant to the Company, Allen Wolfson. Allen Wolfson
has control of the Company. See "Control by Management." No assurances can be
given that Mr. Surber or Mr. Wolfson will continue to be able to serve the
Company with the same levels of commitment or in the same capacities as the are
now serving. If the Company were to lose the services of any of these key
persons, its business could be adversely affected. The Company has from time to
time relied on Mr. Wolfson and Mr. Surber, or entities under their control, to
provide working capital when the Company has experienced cash shortages. No
assurances can be given that Mr. Wolfson or Mr. Surber will continue to assist
the funding of the Company.
Actual or Potential Conflicts of Interest. There may be actual or
potential conflicts of interest between the Company and its affiliates,
including management with respect to: management and consulting agreements;
appropriation of corporate opportunities; sales or exchanges of assets; and debt
conversion and settlement agreements. See "Item 12 - Certain Relationships and
Related Transactions" in the Company's annual report on Form 10-KSB for the year
ended December 31, 1994, and Note 9 to the Consolidated Financial Statements
included in that annual report. The Company's annual report on Form 10-KSB for
the year ended December 31, 1994 is hereby incorporated by this reference into
this Prospectus.
Control by Management. Irrespective of this offering's completion, the
Company will still be controlled by Richard D. Surber and Allen Wolfson. Richard
D. Surber is the sole shareholder, director and officer of Investment Sanctuary
Corporation, which has an option to purchase a quantity of shares equal to 25%
of the Company's then-existing number of issued and outstanding shares of common
stock. Allen Z. Wolfson is the sole shareholder of A-Z Professional Consultants,
Inc., which has an option to purchase a quantity of shares equal to 26% of the
Company's then-existing number of issued and outstanding shares of common stock.
Richard Surber is the sole officer and director of A-Z Professional Consultants
and also is the nephew of Allen Wolfson. See the Form 8-K filed with the SEC by
the Company on January 3, 1996, for more information relating to these stock
option agreements. Richard Surber and Allen Wolfson therefore possess the power
to direct or cause the direction of the Company's policies and management. See
"Selling Stockholders."
Limited Offering History; Operating Losses. The Company's operating
history in its present lines of business is limited. From approximately 1984 to
1991 the Company was engaged in the steel fabrication business and manufacturing
industrial parts and components for equipment manufacturers and end users in the
public and private sectors. From November 1992 to October 1993 the Company
unsuccessfully attempted to enter the tire recycling business. The Company's
present business consists of providing financial consulting services and
investing in undervalued real estate. The Company has recognized operating
profits in only one of the past three years. Although management is optimistic
about the future, there can be no assurances that the Company will become
profitable. In 1994 and 1993 the Company had net losses from operations of
$629,107, and $1,468,865, respectively. For the nine months ended September 30,
1995, the Company had a net loss of $79,946.
Nature of the Company's Business. The nature of the Company's business
is inherently risky. The Company is an international holding company that
provides financial consulting services and invests in real estate through its
subsidiaries. The Company intentionally seeks properties, businesses or markets
that are undervalued, troubled or currently out of favor. The Company's
financial consulting clients are often financially troubled or start-up
ventures. Therefore, the Company negotiates its fees on an individual basis and
permits clients to pay in securities of the client company, cash or a
combination of securities and cash. Properties that the Company owns or seeks to
invest in are often undervalued, subject to substantial liabilities, including
contingent liabilities, and/or generate low or marginal cash flow. Because of
these risks, no assurances can be given that the Company will be able to operate
at profitable level.
Litigation and Contingent Liabilities. The Company has been sued by
Xeta Corporation, an Oklahoma corporation, for recovery of consulting fees that
ATC II, Inc. paid to the Company. The Company is also contingently liable for
environmental hazards that exist or may exist on real properties owned by, or
formerly owned by, the Company or its consolidated subsidiaries. These potential
liabilities could, if realized, have a materially adverse effect on the
Company's financial condition and its ability to conduct business. See "Item 3 -
Legal Proceedings" in the Company's annual report on Form 10-KSB for the year
ended December 31, 1994 and Note 13 to the Consolidated Financial Statements
included in that annual report. The Company is also involved in other litigation
in various parts of the United States as both plaintiff and defendant.
No Dividends. The Company has not paid dividends on its common stock
since its inception and does not intend to pay any dividends to stockholders in
the foreseeable future. Management intends to reinvest future profits, if any,
to develop and expand the business.
Possible Need for Additional Funding. To date the Company has financed
operations and expansion primarily from operating cash flows, private placements
of the Common Stock and loans from affiliates. Management believes these sources
will cover operating expenses and the Company's anticipated obligations during
the next 12 months. Thereafter, the Company may require additional financing.
The Company can give no assurances that it will be able to obtain external
financing on favorable terms, or at all. If the Company is unable to obtain
additional financing, management's ability to meet its goals could be affected
in a material adverse manner.
SELLING SECURITY HOLDERS
For the purposes of this Prospectus, the "Selling Security Holders"
refer to Steven A. Christensen1, Susan S. Waldrop2, and Kevin S. Woltjen3. Aside
from 2900 restricted shares of Common Stock owned by Ms. Waldrop, that were
given to her by the Company in April 1995 as a performance bonus, the Selling
Security Holders currently own no shares of the Company's stock. Ms. Waldrop is
not including the 2900 restricted shares in this Prospectus. This Prospectus is
being filed as part of an initial Form S-8 Registration Statement for the
Selling Security Holders who will be acquiring, reoffering and reselling shares
of the Common Stock. The Selling Security Holders will acquire shares pursuant
to options granted under the 1996 Stock Option Plan of The Canton Industrial
Corporation. Pursuant to General Instruction C(3)(a) of Form S-8 of the
Securities Act, as amended, this prospectus on refers to the Selling Security
Holders in a generic manner; however, later, as the amounts of securities to be
reoffered become known, the Company will supplement this Prospectus with that
information pursuant to Rule 424(b) (ss.230.424(b)).
USE OF PROCEEDS REALIZED BY THE COMPANY
The Company will receive proceeds from the reoffer and resale of the
securities included herein. All Employees of the Company who receive options
must pay the Company an exercise price equal to ninety percent (90%) of the bid
price on the day of exercise. The Company intends to use proceeds realized from
the exercise price payments to reduce its outstanding liabilities.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Shares from time to time in the
over-the-counter market, or otherwise, at prices and terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
The Selling Stockholders expect to employ brokers or dealers in order to sell
the Shares. Brokers or dealers engaged by the Selling Stockholders may arrange
for other brokers or dealers to participate in effecting sales. Brokers or
dealers will receive commissions or discounts from the Selling Stockholders or
from purchasers in amounts to be negotiated immediately prior to the sale, but
which are not expected to deviate from usual and customary brokers' commissions.
There is no assurance that any of the Selling Stockholders will offer
for sale or sell any or all of the Shares registered pursuant to this
Prospectus.
Neither the Company nor Selling Stockholders expect to compensate any
finders to assist in the sales of the Shares.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The Company's vice-president, Kevin S. Woltjen, prepared a substantial
part of this registration statement and is included herein as a selling
shareholder. For more information on this subject, see "Selling Security
Holders." No other expert is named as preparing or certifying all or part of the
registration statement to which this prospectus pertains, and no counsel for the
Company who is named in this prospectus as having given an opinion on the
validity of the securities being offered hereby was hired on a contingent basis
or has or is to receive, in connection with this offering, a substantial
interest, direct or indirect, in the Company.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents that the Company filed with the Commission are
hereby incorporated by reference into this Prospectus:
1. The Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 1994, which contains financial statements of the Company for that
fiscal year;
2. The Company's quarterly reports on Form 10-QSB for the quarters
ended September 30, 1994, December 31, 1994, March 31, 1995, June 30, 1995, and
September 30, 1995; and
3. The description and specimen certificate of the Common Stock
contained in the Company's Form S-18 Registration Statement filed on January 21,
1986 under the Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents that the Company subsequently files with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of the offering of the Shares, shall be deemed to be incorporated by
reference into this Prospectus.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITY
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to members of
the board of directors, officers, employees, or persons controlling the Company
pursuant to the immediately subsequent 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 the Securities Act and
is, therefore, unenforceable.
Article Eighth of the Company's Restated Articles of Incorporation
provides that no officer or director shall be personally liable to the
corporation or its shareholders for money damages except as provided by Section
78.037 of the Nevada Revised Statutes. Section 78.037 provides that:
"The articles of incorporation may contain: [a] provision eliminating
or limiting the personal liability of a director or officer to the
corporation or its stockholders for damages for breach of fiduciary
duty as a director or officer, but such a provision must not eliminate
or limit the liability of a director or officer for: (a) [a]cts or
omissions which involve intentional misconduct, fraud or a knowing
violation of law; or (b) [t]he payment of distributions in violation of
NRS 78.300.
Article VI, Section 9 of the Company's By-Laws provide that the Company
shall indemnify its officers and directors for any lability, including
reasonable costs of defense, arising out of any act or omission on behalf of the
corporation, to the fullest extent permitted by Nevada law.
Under Nevada Revised Statutes ("N.R.S.") Section 78.751(3), Nevada
corporations must indemnify directors, officers, employees or agents who are
parties to legal actions by reason of their positions with the corporation to
the extent they are successful in defense of any claim, issue or matter therein.
This mandatory indemnification applies to expenses actually and reasonably
incurred defending the action, including attorneys' fees.
Nevada law permits corporations to indemnify a director, officer,
employee or agent in situations where indemnification is not mandatory, provided
the officer or director satisfies certain statutory standards of conduct and
indemnification is proper under the circumstances. The standard of conduct
required and level of indemnification permitted depend on whether the action,
proceeding or suit is civil or criminal and whether it is maintained by or in
the right of the corporation. In actions other than those by or in the right of
the corporation, N.R.S. Section 78.751(1) permits a corporation to indemnify
directors or officers against actual and reasonable expenses, including
attorneys fees, judgments, fines and settlement payments. In civil cases, the
officer or director meets the applicable standard of conduct if he or she acted
in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation. In criminal cases, an officer
or director meets the standard of conduct if he or she had no reasonable cause
to believe his or her conduct was unlawful.
In actions by or in the right of the corporation, N.R.S. Section
78.751(2) provides that a corporation may indemnify an officer or director
against actual and reasonable expenses, including attorneys' fees and settlement
payments, provided the officer or director acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation and indemnification is proper under the circumstances. A Nevada
corporation cannot indemnify a director, officer, employee or agent adjudged
liable to the corporation on any claim, issue or matter unless, and to the
extent, the court determines that despite the adjudication of liability, and in
light of all the circumstances, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
In all cases, except those in which a court orders indemnification or
the Company advances expenses pursuant to N.R.S. Section 78.751(5), the
determination of whether indemnification is proper under the circumstances must
be made by the stockholders, by a quorum of disinterested directors, or, in
certain situations, by independent legal counsel.
Under N.R.S. Section 78.715(5), a Nevada corporation may provide,
either in its articles, bylaws or agreements, that the corporation will pay
officers' and directors' defense expenses as they are incurred and prior to a
final disposition. Such provisions must make advancement contingent upon the
corporation's receipt of an undertaking by or on behalf of the director or
officer to repay advancements if a court of competent jurisdiction ultimately
determines that the officer or director is not entitled to indemnification.
Section 78.715(5) does not affect advancement rights to which corporate
personnel other than directors and officers may be entitled under contract or
otherwise by law.
Nevada law does not exclude other indemnification or advancement rights
to which a person may be entitled under the articles of incorporation, the
bylaws, an agreement, a vote of shareholders or disinterested directors, or
otherwise. However, unless ordered to do so by a court of competent
jurisdiction, a corporation cannot indemnify an officer or director or advance
payment to or behalf of an officer or director (except pursuant to Section
78.715(5)) if a final adjudication establishes the officer's or director's acts
or omissions involved intentional misconduct, fraud or known violation of the
law and were material to the cause of action.
The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to Nevada
Revised Statutes Section 78.751 (1993), Article Nine, Section VI of the
Corporation's By-Laws, as amended, and Article Eighth of the Company's Restated
Articles of Incorporation.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to the board of directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
[THIS SPACE LEFT INTENTIONALLY BLANK]
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Salt Lake City, State of Utah, on this 19 day of January 1996.
The Canton Industrial Corporation
By /s/ Steven A. Christensen
Steven A. Christensen, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard D. Surber, with power of
substitution, as his attorney-in-fact for him, in all capacities, to sign any
amendments to this registration statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
/s/ Steven A. Christensen President January 19, 1996
Steven A. Christensen
/s/ Susan S. Waldrop Chief Financial Officer January 19, 1996
Susan S. Waldrop Secretary, Treasurer
/s/ Richard D. Surber Chief Executive Officer, January 19, 1996
Richard D. Surber Director
/s/ Philip Lamb Director January 19, 1996
Philip Lamb
/s/ Lorin Pace Director January 19, 1996
Lorin Pace
1 Steven A. Christensen is the Company's President and was appointed to this
position on August 17, 1995. Mr. Christensen has been employed in the Company's
compliance department since January 1995.
2 Susan S. Waldrop is the Company's Chief Financial Officer and its
Secretary/Treasurer and was appointed to these positions on October 24, 1995.
Ms. Waldrop has been employed in the Company's accounting department since June
1994.
3 Kevin S. Woltjen is the Company's Vice-President and was appointed to this
position on August 17, 1995. Mr. Woltjen has been employed in the Company's
compliance department since December 1994.
THE 1996 STOCK OPTION PLAN
OF THE
CANTON INDUSTRIAL CORPORATION
<PAGE>
THE 1996 STOCK OPTION PLAN OF THE CANTON INDUSTRIAL CORPORATION
The Canton Industrial Corporation, a Nevada corporation (the
"Company"), hereby adopts The 1996 Stock Option Plan of The Canton Industrial
Corporation (the "Plan"), this 18th day of January 1996. Under this Plan, the
Company may grant options to acquire common stock of the Company, par value
$0.001 (the "Stock"), from time to time to employees of the Company or its
subsidiaries, all on the terms and conditions set forth herein ("Options"). In
addition, at the discretion of the Board of Directors, options to acquire stock
of the Company may from time to time be granted under this Plan to other
individuals, including consultants or advisors, who contribute to the success of
the Company or its subsidiaries and are not employees of the Company or its
subsidiaries, provided that bona fide services shall be rendered by consultants
and advisors and such services must not be in connection with the offer or sale
of securities in a capital-raising transaction.
1. Purpose of this Plan. This Plan is intended to aid the Company in maintaining
and developing a management team, attracting qualified officers and employees
capable of assuring the future success of the Company, and rewarding those
individuals who have contributed to the success of the Company. The Company has
designed this Plan to aid it in retaining the services of executives and
employees and in attracting new personnel when needed for future operations and
growth and to provide such personnel with an incentive to remain employees of
the Company, to use their best efforts to promote the success of the Company's
business, and to provide them with an opportunity to obtain or increase a
proprietary interest in the Company. It is also designed to permit the Company
to reward those individuals who are not employees of the Company but who
management perceives to have contributed to the success of the Company or who
are important to the continued business and operations of the Company. The above
goals will be achieved through the granting of Options.
2. Administration of this Plan. Administration of this Plan shall be determined
by the Company's Board of Directors (the "Board"). Subject to compliance with
applicable provisions of the governing law, the Board may delegate
administration of this Plan or specific administrative duties with respect to
this Plan on such terms and to such committees of the Board as it deems proper
(hereinafter the Board or its authorized committee shall be referred to as "Plan
Administrators"). The interpretation and construction of the terms of this Plan
by the Plan Administrators thereof shall be final and binding on all
participants in this Plan absent a showing of demonstrable error. No member of
the Plan Administrators shall be liable for any action taken or determination
made in good faith with respect to this Plan. Any Option approved by a majority
vote of those Plan Administrators attending a duly and properly held meeting
shall be valid. Any Option approved by the Plan Administrators shall be approved
as specified by the Board at the time of delegation.
3. Shares of Stock Subject to this Plan. A total of one million (1,000,000)
shares of Stock may be subject to, or issued pursuant to, Options granted under
this Plan. If any right to acquire Stock granted under this Plan is exercised by
the delivery of shares of Stock or the relinquishment of rights to shares of
Stock, only the net shares of Stock issued (the shares of stock issued less the
shares of Stock surrendered) shall count against the total number of shares
reserved for issuance under the terms of this Plan.
4. Reservation of Stock on Granting of Option. At the time any Option is granted
under the terms of this Plan, the Company will reserve for issuance the number
of shares of Stock subject to such Option until it is exercised or expires. The
Company may reserve either authorized but unissued shares or issued shares
reacquired by the Company. 5. Eligibility. The Plan Administrators may grant
Options to employees, officers, and directors of the Company and its
subsidiaries, as may be existing from time to time, and to other individuals who
are not employees of the Company or its subsidiaries, including consultants and
advisors, provide that such consultants and advisors render bona fide services
to the Company or its subsidiaries and such services are not rendered in
connection with the offer or sale of securities in a capital-raising
transaction. In any case, the Plan Administrators shall determine, based on the
foregoing limitations and the Company's best interests, which employees,
officers, directors, consultants and advisors are eligible to participate in
this Plan. Options shall be in the amounts, and shall have the rights and be
subject to the restrictions, as may be determined by the Plan Administrators,
all as may be within the provisions of this Plan.
6. Term of Options and Certain Limitations on Right to Exercise.
a. Each Option shall have its term established by the Plan
Administrators at the time the Option is granted but in no event may
such term exceed one (1) year.
b. The term of the Option, once it is granted, may be reduced only as
provided for in this Plan and under the express written provisions of
the Option.
c. Unless otherwise specifically provided by the written provisions of
the Option or required by applicable disclosure or other legal
requirements promulgated by the Securities and Exchange Commission
("SEC"), no participant of this Plan or his or her legal
representative, legatee, or distributee will be, or shall be deemed to
be, a holder of any shares subject to an Option unless and until such
participant exercises his or her right to acquire all or a portion of
the Stock subject to the Option and delivers the required consideration
to the Company in accordance with the terms of this Plan and then only
as to the number of shares of Stock acquired. Except as specifically
provided in this Plan or as otherwise specifically provided by the
written provisions of the Option, no adjustment to the exercise price
or the number of shares of Stock subject to the Option shall be made
for dividends or other rights for which the record date is prior to the
date on which the Stock subject to the Option is acquired by the
holder.
d. Options shall vest and become exercisable at such time or times and
on such terms as the Plan Administrators may determine at the time of
the grant of the Option, but in no event longer than one (1) year after
such grant.
e. Options may contain such other provisions, including further lawful
restrictions on the vesting and exercise of the Options as the Plan
Administrators may deem advisable.
f. In no event may an Option be exercised after the expiration of its
term.
g. Options shall be non-transferable, except by the laws of descent and
distribution.
7. Exercise Price. The exercise price payable to the Company for shares to be
obtained pursuant to Options shall be ninety percent (90%) of the bid price on
the day of exercise (excluding the exercise of other options, conversion rights,
or similar rights granted by the Company), unless otherwise established by the
Board.
<PAGE>
8. Payment of Exercise Price. The exercise of any Option shall be contingent
on receipt by the Company of the exercise price paid in either cash, certified
or personal check payable to the Company.
9. Withholding. If the grant or exercise of an Option is subject to withholding
or other trust fund payment requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), or applicable state or local laws, the Company will
initially pay the Optionee's liability and will be reimbursed by Optionee no
later than six months after such liability arises and Optionee hereby agrees to
such reimbursement terms.
10. Dilution or Other Adjustment. The shares of Common Stock subject to this
Plan and the exercise price of outstanding Options are subject to proportionate
adjustment in the event of a stock dividend on the Common Stock or a change in
the number of issued and outstanding shares of Common Stock as a result of a
stock split, consolidation, or other recapitalization. The Company, at its
option, may adjust the Options, issue replacements, or declare Options void.
11. Options to Foreign Nationals. The Plan Administrators may, in order to
fulfill the purpose of this Plan and without amending this Plan, grant Options
to foreign nationals or individuals residing in foreign countries that contain
provisions, restrictions, and limitations different from those set forth in this
Plan and the Options made to United States residents in order to recognize
differences among the countries in law, tax policy, and custom. Such grants
shall be made in an attempt to give such individuals essentially the same
benefits as contemplated by a grant to United States residents under the terms
of this Plan.
12. Listing and Registration of Shares. Each Option shall be subject to the
requirement that if at any time the Plan Administrators shall determine, in its
sole discretion, that it is necessary or desirable to list, register, or qualify
the shares covered thereby on any securities exchange or under any state or
federal law, or obtain the consent or approval of any governmental agency or
regulatory body as a condition of, or in connection with, the granting of such
Option or the issuance or purchase of shares thereunder, such Option may not be
exercised in whole or in part unless and until such listing, registration,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Plan Administrators.
13. Expiration and Termination of this Plan. This Plan may be abandoned or
terminated at any time by the Plan Administrators except with respect to any
Options then outstanding under this Plan. This Plan shall otherwise terminate on
the earlier of the date that is five years from the date first appearing in this
Plan or the date on which the one-millionth share is issued hereunder.
14. Amendment of this Plan. This Plan may not be amended more than once during
any six month period, other than to comport with changes in the Code or the
Employee Retirement Income Security Act or the rules and regulations promulgated
thereunder. The Plan Administrators may modify and amend this Plan in any
respect; provided, however, that to the extent such amendment or modification
would cause this Plan to no longer comply with the applicable provisions of the
Code governing incentive stock options as they may be amended from time to time,
such amendment or modification shall also be approved by the shareholders of the
Company.
ATTEST:
/s/ Susan S. Waldrop
Susan S. Waldrop, Secretary
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
(To be signed only upon exercise of Option)
TO: The Canton Industrial Corporation
The undersigned, the owner of the attached Option, hereby irrevocably
elects to exercise the rights to purchase thereunder ______________ shares of
Common Stock of The Canton Industrial Corporation and herewith pays for the
shares in the manner specified in the Option. The undersigned requests that the
certificates for such shares be delivered to them according to instructions
indicated below. If such shares are not all of the shares purchasable under the
Option, the undersigned further requests that a new option certificate be issued
and delivered to the undersigned for the remaining shares purchasable under the
Option.
DATED this ________ day of ______________, 199__.
By:_____________________________
Instructions for delivery:
LAW OFFICES OF FRANK FEIGENBAUM
1709 1/2 East 87th St., Suite 166
CHICAGO, IL 60617-2741
TELEPHONE & FAX:(312)667-2403
ADMITTED TO PRACTICE IN CALIFORNIA, MICHIGAN AND THE DISTRICT OF COLUMBIA
January 10, 1995
The Canton Industrial Corporation
268 West 400 South, Suite 300
Salt Lake City, UT 84101
Attn: The Board of Directors
Dear Sirs:
I have examined the Registration Statement on Form S-8 to be filed by the Canton
Industrial Corporation (the "Company") with the Securities and Exchange
Commission on or about January 12, 1996 (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 1,000,000 shares of your Common Stock (the "Shares"), par value $0.001,
reserved for issuance under The Canton Industrial Corporation 1996 Stock Option
Plan (the "Plan").
In that connection, I have examined originals, or copies certified, or otherwise
identified to my satisfaction, of such documents, corporate records and other
instruments as I have deemed necessary for the purpose of this opinion. In my
examination, I have assumed the genuineness of all signatures on, and the
authenticity of, all documents and instruments submitted to me as originals, and
the conformity to original documents of all documents submitted to me as copies.
I have also examined the proceedings heretofore taken, and I am familiar with
the proceedings proposed to be taken, by the Company in connection with the
authorization, reservation, issuance and sale of the Shares and, in reliance
thereon, I assume for the purposes of this opinion, that the Company will not
grant any award under the Plan pursuant to which Shares could be issued for
consideration that is not adequate in form or amount to support the issuance of
fully paid stock under applicable state law.
Based upon the foregoing, I am of the opinion that:
1. The Company is a validly existing corporation in good standing under
the laws of the State of Nevada.
2. The issuance and sale of the Shares have been duly authorized and,
when issued, delivered and paid for upon the exercise of options granted under
the Plan in accordance with the provisions of the Plan, the Shares will be
validly issued, fully paid and nonassessable. I am admitted to the Bars of the
State of California, Michigan and the District of Columbia and I express no
opinion as to the laws of any other jurisdiction other than, to the extent set
forth below, the general corporation laws of the State of Nevada. To the extent
that matters of Nevada corporate laws are involved in the opinions set forth
above, you should be aware that I am not admitted to the Bar of the State of
Nevada and am not an expert in the law of such jurisdiction. Accordingly, such
<PAGE>
opinions concerning Nevada corporate law are based upon my reasonable(although
not necessarily complete) familiarity with the Nevada General Corporation Law as
a result of my prior involvement in transactions involving such law.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of my name under the caption "Interest
of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
/s/ Frank Feigenbaum
Frank Feigenbaum
SMITH & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: CRANDALL BUILDING SUITE 700
AMERICAN INSTUTUTE OF 10 WEST 100 SOUTH
CERTIFIED PUBLIC ACCOUNTANTS SALT LAKE CITY, UTAH 84101
UTAH ASSSOCIATION OF TELEPHONE: (801) 575-8297
CERTIFIED PUBLIC ACCOUNTANTS FACSIMILE: (801) 575-8306
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants for The Canton Industrial
Corporation, we hereby consent to the use of our report included in the annual
report of such Company on Form 10-KSB for the year ended December 31, 1994, in
the Company's Form S-8 registration statement.
Date: December 14, 1995
/s/ Smith & Company
SMITH & COMPANY