U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 2)
SUMMA METALS CORP.
(Name of Small Business issuer in its Charter)
Nevada 1041 88-0315984
(State or Jurisdiction of (Primary Standard Industrial I.R.S. Employer
Incorporation or organization Classification Code No. Identification No.
28281 Crown Valley Parkway, Ste 225, Laguna Niguel, CA, 92677-1461
(949) 348-9749
(Address and Telephone Number of Principal Executive Offices )
28281 Crown Valley Parkway, Ste. 225, Laguna Niguel, CA. 92677-1461
(949) 348-9749
(Address of principal place of business or intended principal place of
Business)
Michael M. Chaffee
28281 Crown Valley Parkway, Ste 225,
Laguna Niguel, CA, 92677-1461
(949) 348-9749
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
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, 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(d) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box |_| ___________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
<S> <C> <C> <C> <C>
Title of Amount to Proposed Proposed Amount of
each Class be Maximum Maximum Registration
of Registered Offering Aggregate Fee
Securities Price Per Offering
to be Unit (1) Price (1)
Registered
- ----------------------------------------------------------------------------------------------------------------------------
Common $927.27
Stock
- ----------------------------------------------------------------------------------------------------------------------------
Minimum 130,000 $6.00 $ 780,000
- ----------------------------------------------------------------------------------------------------------------------------
Maximum 510,000 $6.00 $3,060,000
============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
Pursuant to Rule 457.
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.
<PAGE>
SUMMA METALS CORP.
Cross-Reference Sheet pursuant to Item 501(b) of Regulation S-K between
Registration Statement (Form SB-2) and Form of Prospectus.
Item Number and Caption Caption in Prospectus
1. Front of Registration Statement Cover Page-Inside Front
and Outside Front Cover Page Cover page-Back Cover
of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus Back Cover page
3. Summary Information and Risk Summary of Prospectus
Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Description of Shares
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Cover Page; Inside Cover Page;
Offering
9. Legal Proceedings Litigation
10. Directors, Executive Officers Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Shareholders
Beneficial Owners and Management
12. Description of Securities Offering; Description of Shares
13. Interest of Named Experts and Legal Matters
Counsel
14. Disclosure of Commission Position Indemnification
on Indemnification for Securities
Act
15. Organization Within Last Five Certain Transactions
Years
16. Description of Business Business of the Company
17. Management's Discussion and Business of the Company
Analysis of Plan of Operation
18. Description of Property Business of the Company
19. Certain Relationships and Certain Transactions
Related Transactions
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20. Market for Common Equity and Risk Factors
Related Stockholder Matters
21. Executive Compensation Management-Remuneration
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
With Accountants on Accounting
and Financial Disclosures
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SUMMA METALS CORP.
(A Nevada Corporation)
Minimum 130,000 Units
Maximum 510,000 Units
---------------------
Offering Price $6.00 Per Unit
-----------------------------
Summa Metals Corp. (the "Company") hereby offers a minimum of 130,000 and a
maximum of 510,000 Units ("Units") each Unit consisting of one share of the
Company's common stock (the "Common Stock" or "Shares") and two redeemable
common stock purchase warrants ("Warrants"), designated "A Warrants" and "B
Warrants". Each of the A Warrants entitles the registered holder hereof to
purchase one share of the Common Stock at a price of $8.00, subject to
adjustment in certain circumstances at any time after the Warrants become
separately tradeable, until 12 months from the date of this Prospectus. Each of
the B Warrants entitles the registered holder therof to purchase one share of
the Common Stock at a price of $7.00, subject to adjustment in certain
circumstances, at any time after the exercise of the A Warrant related to the
Units until 24 months from the date of this Prospectus. The Common Stock and the
Warrants included in the Units will not be separately transferable until 90 days
after the date of this Prospectus or such earlier date as the Company may
determine. See "Description of Securities".
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
DILUTION TO THE POTENTIAL INVESTORS AND SHOULD BE PURCHASED ONLY BY PERSONS WHO
CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" AND "DILUTION.")
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE SHARES OF
THE COMPANY, AND THERE CAN BE NO ASSURANCE THAT A PUBLIC MARKET WILL RESULT
FOLLOWING THE SALE OF THE SHARES OFFERED HEREBY OR THAT THE SHARES CAN BE SOLD
AT OR NEAR THE OFFERING PRICE, OR AT ALL. THE INITIAL PUBLIC OFFERING PRICE HAS
BEEN ARBITRARILY DETERMINED BY THE COMPANY BASED UPON WHAT IT BELIEVES
PURCHASERS OF SUCH SPECULATIVE ISSUES WOULD BE WILLING TO PAY FOR THE SECURITIES
OF THE COMPANY AND BEARS NO RELATIONSHIP WHATSOEVER TO ASSETS, EARNINGS, BOOK
VALUE OR ANY OTHER ESTABLISHED CRITERIA OF VALUE.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES DIVISION OF ANY STATE, NOR HAS THE
COMMISSION OR ANY STATE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES AND WARRANTS ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE,
ACCEPTANCE OF THE SUBSCRIPTIONS BY THE COMPANY AND APPROVAL OF CERTAIN LEGAL
MATTERS BY COUNSEL TO THE COMPANY.
OFFEREES AND SUBSCRIBERS ARE URGED TO READ THIS PROSPECTUS CAREFULLY AND
THOROUGHLY.
- --------------------------------------------------------------------------------
Underwriter Proceeds to the
Price (1) Commissions Company (2)(3)
- --------------------------------------------------------------------------------
Price Per Unit $ 6.00 $ .60 $ 5.40
Aggregate
Subscription:
(130,000 Units
Minimum) $ 780,000 $ 78,000 $ 702,000
(510,000 Units
Maximum) $3,060,000 $ 306,000 $2,754,000
- --------------------------------------------------------------------------------
The date of this Prospectus is August , 1998.
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1. The offering price of $6.00 per Unit has been arbitrarily determined by
the Company. The price per Unit was selected because the Company believes it can
sell the Units at that price. The price has no relation to the value of the
Company or its assets, or any other established criteria of value. The Units are
offered for cash or check only and must be accompanied by a properly completed
and executed subscription agreement. (See "OFFERING.")
A minimum of 130,000 Units are being offered on a "best efforts,
all-or-none" basis and an additional 380,000 Units are being offered on a
"best-efforts" basis by the Company on the terms described herein under the
caption "Offering". There is no assurance that any or all of the Units will be
sold. The Offering will commence on the effective date of this Prospectus and
continue for a period of 90 days, unless extended by the Company for an
additional 90 days, or until completion of the Offering, whichever occurs
sooner. All funds received in this Offering will be held in escrow by American
Securities Transfer and Trust, Inc. at Union Bank & Trust, 100 Broadway, Denver,
Colorado until a minimum of $780,000 has been received, at which time such sum
will be paid to the Company. Thereafter, all funds received by the escrow agent
will be immediately paid to the Company until a maximum of $3,060,000 has been
received or the Offering period expires, whichever first occurs. If a minimum of
$780,000 is not received by the expiration of the offering period, all funds
will promptly be returned to subscribers without interest or deduction. (See
"OFFERING" and "UNDERWRITING.")
2. The Company has engaged the services of Boe & Company, 3668 So. Jasper
St., Aurora, CO 80013, an Underwriter who is a member of the National
Association of Securities Dealers, Inc. (NASD) as its agent to sell the Units to
the public, and will agree to pay sales commissions equal to 10% of the gross
sales price of the Units to said broker-dealer for any Units they may sell. No
sales commissions will be paid unless a minimum of 130,000 Units have been
subscribed and paid for. For purposes of estimating net proceeds, it is assumed
the full 10% commission will be paid on all 510,000 Units.
3. Before deduction for filing, printing and miscellaneous expenses
relating to this Offering, estimated at $5,000.00; legal and accounting fees,
estimated at $35,000.00; a possible nonaccountable expense allowance, payable to
the Underwriter in an amount equal to 3% of the sales price per Unit, or an
aggregate total of $131,800.00, to be paid by the Company out of the proceeds of
this Offering.
THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO SELL ANY SECURITIES TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THE COMPANY HAS THE RIGHT, IN ITS SOLE DISCRETION TO ACCEPT OR REJECT
SUBSCRIPTIONS IN WHOLE OR IN PART, FOR ANY REASON OR FOR NO REASON.
THE COMPANY HAS TAKEN NO STEPS TO CREATE AN AFTERMARKET FOR THE COMMON
STOCK OFFERED HEREBY AND HAS MADE NO ARRANGEMENTS WITH BROKERS OR OTHERS TO
TRADE OR MAKE A MARKET IN THE COMMON STOCK. AT SOME TIME IN THE FUTURE, THE
COMPANY MAY ATTEMPT TO ARRANGE FOR INTERESTED BROKERS TO TRADE OR MAKE A
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MARKET IN THE COMMON STOCK AND TO QUOTE THE COMMON STOCK IN A PUBLISHED
QUOTATION MEDIUM. HOWEVER, NO SUCH ARRANGEMENTS HAVE BEEN COMMENCED AND THERE IS
NO ASSURANCE THAT ANY BROKERS WILL EVER HAVE SUCH AN INTEREST IN THE COMMON
STOCK OR THAT THERE EVER WILL BE A MARKET THEREFOR.
THE COMPANY WILL PROVIDE AUDITED FINANCIAL STATEMENTS TO ITS SHAREHOLDERS
ON AN ANNUAL BASIS AND WILL PROVIDE UNAUDITED FINANCIAL STATEMENTS ON A
QUARTERLY BASIS.
UNTIL_____________________, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
SUBSEQUENT TO THE COMPLETION OF THIS OFFERING, THE COMPANY WILL BECOME
SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, AND IN ACCORDANCE THEREWITH, WILL BE REQUIRED TO FILE REPORTS AND OTHER
INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH REPORTS AND
INFORMATION CAN BE INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES
MAINTAINED BY THE COMMISSION AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549
AND COPIES OF SUCH MATERIAL CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF
THE COMMISSION, 450 FIFTH STREET, N.W. WASHINGTON, D.C. 20549 AT PRESCRIBED
RATES. THE COMPANY INTENDS TO FURNISH ITS SHAREHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS AND WITH ADDITIONAL INFORMATION
CONCERNING THE BUSINESS AFFAIRS OF THE COMPANY WHEREVER DEEMED APPROPRIATE BY
ITS BOARD OF DIRECTORS.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE LITIGATION REFORM ACT OF 1995:
THIS DOCUMENT SPECIFIES FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF THE COMPANY,
INCLUDING REVENUE PROJECTIONS. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS, ARE NOT BASED ON HISTORICAL FACT AND
ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY
THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY", "WILL", "EXPECT",
"SHOULD", "ESTIMATE", "ANTICIPATE", "POSSIBLE", "PROBABLE", "CONTINUE, OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS, OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS DOCUMENT HAVE BEEN COMPILED BY
MANAGEMENT OF THE COMPANY ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. FUTURE OPERATING RESULTS OF THE
COMPANY, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR
WARRANTY IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS. THEREFORE,
PURCHASERS OF THE ISSUER'S SECURITIES ARE URGED TO CONSULT WITH THEIR ADVISORS
(THE OPINIONS OF WHICH MAY DIFFER FROM THOSE SPECIFIED IN THOSE FORWARD-LOOKING
STATEMENTS) WITH RESPECT TO THOSE ASSUMPTIONS OR HYPOTHESES.
THE ASSUMPTIONS USED FOR PURPOSED OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THIS DOCUMENT, INCLUDING THOSE REVENUE PROJECTIONS, REPRESENT ESTIMATES OF
FUTURE EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC,
LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION
AND INTERPRETATION OF DATA AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND
SELECTING ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE
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EXERCISE OF JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE
OUTCOME MAY VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED RESULTS, AND,
ACCORDINGLY, NO OPINION IS EXPRESSED ON THE ACHIEVABILITY OF THOSE
FORWARD-LOOKING STATEMENTS, INCLUDING THOSE REVENUE PROJECTIONS.
IN ADDITION, THOSE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE REVENUE
PROJECTIONS, HAVE BEEN COMPILED AS OF THE DATE OF THIS DOCUMENT AND SHOULD BE
EVALUATED WITH CONSIDERATION OF ANY CHANGES OCCURRING AFTER THE DATE OF THIS
DOCUMENT. NO ASSURANCE CAN BE GIVEN THAT ANY OF THE ASSUMPTIONS RELATING TO THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS DOCUMENT, INCLUDING THOSE REVENUE
PROJECTIONS, ARE ACCURATE OR THAT THEY WILL BE APPLICABLE TO A PARTICULAR
PURCHASER OF THE ISSUER'S SECURITIES. IT IS THE RESPONSIBILITY OF THOSE PERSONS
REVIEWING THIS DOCUMENT AND THEIR ADVISORS TO REVIEW THOSE FORWARD-LOOKING
STATEMENTS, INCLUDING THOSE REVENUE PROJECTIONS, TO CONSIDER THE ASSUMPTIONS ON
WHICH THOSE FORWARD-LOOKING STATEMENTS ARE BASED AND TO ASCERTAIN THEIR
REASONABLENESS.
vii
<PAGE>
TABLE OF CONTENTS
----------------- PAGE NO.
-------
SUMMARY OF PROSPECTUS 1
The Company 1
The Offering 1
RISK FACTORS 2
Start-up Company 2
No Known Ore Reserves and Uncertainty in Attaining Successful
Exploration Results in the Company's Properties 2
Uncertainty in Attaining Environmental Permits 2
Speculative Nature of the Mineral Exploration Industry 3
High Risk 3
Reliance On Outside Financing 3
Dependence on Additional Financing; Risk of Unavailability 4
Reliance Upon Officers and Directors 4
Dependence on Key Employees 4
Conflicts of Interest 4
Certain Transactions 4
Control of the Company 4
Benefit to Present Shareholders 5
Dilution; Excessive Burden of Risk 5
Sale of Shares at Substantial Discount 5
Possible Rule 144 Sales 5
Markets Uncertain 6
Industry Conditions 6
Sensitivity to Economic Conditions 6
Competition 6
Supply Factors 7
Insurance; Indemnification 7
No Cash Dividends Paid 7
Arbitrary Determination of Offering Price 7
No Present Market for Securities 7
Compliance with "Penny Stock" Rules 8
Issuance of Additional Shares 8
No Commitments to Purchase Shares 8
Government Regulations 9
MANAGEMENT OVERVIEW 9
USE OF PROCEEDS 10
DILUTION 11
CAPITALIZATION 13
SUMMARY FINANCIAL INFORMATION 14
OFFERING 14
Engagement of the Services of an Underwriter 14
Offering Period and Expiration Date 15
Procedures for Subscribing 15
Determination of Offering Price 15
Escrow 15
Right to Reject 16
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TABLE OF CONTENTS, Continued
---------------------------- PAGE NO.
-------
UNDERWRITING 16
Proposed Underwriting Agreement 16
Proposed Underwriter Compensation 16
BUSINESS OF THE COMPANY 17
General 17
Environmental Regulations and Cyclical Metal Prices 17
The Exploration Stage 18
Description of Property 19
Government Regulations 25
Employees 25
Management's Discussion and Analysis of Financial
Condition and Results of Operations 25
MANAGEMENT 26
Officers and Directors 26
Background Information 26
Executive Compensation 27
Indemnification 28
Office Facilities 29
PRINCIPAL SHAREHOLDERS 29
Future Sales by Present Shareholders 30
DESCRIPTION OF SECURITIES 30
Common Stock 30
Units 31
Non-Cumulative Voting 32
Dividends 32
Reports to Shareholders 32
Transfer Agent 32
CERTAIN TRANSACTIONS 33
CONFLICTS OF INTEREST 34
LITIGATION 34
ADDITIONAL INFORMATION 34
EXPERTS 35
LEGAL MATTERS 35
FINANCIAL STATEMENTS 35
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SUMMARY OF PROSPECTUS
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS, ALL
OF WHICH SHOULD BE READ CAREFULLY AND THOROUGHLY.
The Company
Summa Metals Corp., a Nevada corporation, (the "Company") was formed on
March 8, 1994. The Company currently maintains its principal offices at 28281
Crown Valley Parkway, Ste. 225, Laguna Niguel, CA, 92677-1461, and its
registered agent's office at 1025 Ridgeview Drive, Suite 400, Reno, Nevada
89509. The Company is engaged in the business of mineral processing, exploration
and mining. (See "BUSINESS OF THE COMPANY.")
The Company has a limited operating history. There is no assurance that the
Company will be successful in raising the capital or in developing the
properties. (See "MANAGEMENT" and "BUSINESS OF THE COMPANY"). The proceeds from
the sale of Shares offered hereby will enable the Company to continue its
exploration on the properties, assess and acquire new properties, and generally
develop and expand its business. (See "BUSINESS OF THE COMPANY", "CERTAIN
TRANSACTIONS", "RISK FACTORS" and "USE OF PROCEEDS.")
Messrs. Chaffee, Baptista and Popkoff, the Company's current officers,
directors and principal shareholders, may be deemed to be "parents" and
"promoters" of the Company. (See "MANAGEMENT" and "PRINCIPAL SHAREHOLDERS.")
The Offering
Securities Offered: A minimum of 130,000 and a maximum of 510,000 Units of
Common Stock, par value $.001. (See "OFFERING.")
Offering Price per Unit: $6.00 (See "OFFERING.")
Offering: The Units are being offered for a period not to exceed 90 days. Such
period may be extended by the Board of Directors for an additional 90 days. (See
"OFFERING.")
Net Proceeds: Approximately $638,000 (Minimum) $2,622,000 (Maximum) (See "USE OF
PROCEEDS.")
Use of Proceeds: To be used for offering expenses, exploration, drilling and
working capital. (See "USE OF PROCEEDS.")
Number of Shares: Outstanding
Before the Offering: 4,555,000
After the Offering: 4,685,000 (Minimum)
5,065,000 (Maximum)
(See "OFFERING" and "DESCRIPTION OF SHARES.")
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RISK FACTORS
------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES AN EXCEPTIONALLY
HIGH DEGREE OF RISK AND IS EXTREMELY SPECULATIVE IN NATURE. IN ADDITION TO THE
OTHER INFORMATION REGARDING THE COMPANY CONTAINED IN THIS PROSPECTUS, INVESTORS
SHOULD CONSIDER MANY IMPORTANT FACTORS IN DETERMINING WHETHER TO PURCHASE THE
SECURITIES OFFERED HEREBY. THE FOLLOWING RISK FACTORS ARE NOT EXHAUSTIVE, BUT
ARE MERELY ILLUSTRATIVE, OF THE SUBSTANTIAL RISKS INVOLVED IN AN INVESTMENT OF
THIS NATURE.
1. Start-up Company.
The Company has only been in business for a short period of time and has
engaged in limited business since its inception. There is no assurance that the
Company will be successful in raising the funds or, if the funds are raised,
there is no assurance that the Company will be able to develop the properties,
or that the properties will be profitable if and when developed. The Company
anticipates being able to sustain operations for a period of at least twelve
months after receipt of the minimum proceeds ( and twenty-four months after
receipt of the maximum proceeds) of this Offering, without being compelled to
seek additional funds to continue exploration of its current properties. (See
"MANAGEMENT","CERTAIN TRANSACTIONS" and "BUSINESS OF THE COMPANY").
2. No Known Ore Reserves and Uncertainty in Attaining Successful Exploration
Results in the Company's Properties.
A portion of the proceeds of this Offering will be used to explore
properties which the Company reasonably believes have potential mineral
deposits. The properties which the Company has targeted are in the exploration
stages. In general, the exploration work has included research of historical
data, geological mapping, geological sampling, geophysical surveys and minor
excavation and repairs. During the exploration stage, the Company seeks to
determine if any mineral resources do, in fact, exist and then will further
determine if the Company can economically develop the same. Although Management
believes there is a sufficient basis to engage in exploration on the properties
that it has targeted for exploration, there is absolutely no assurance that such
exploration will result in the discovery of known ore deposits. The Company does
not claim that known ore deposits exist on any of the properties which it is
going to explore. No ore bodies have yet been located and/or identified, and
there can be no assurance that any will be discovered. Further, there can be no
assurance that, in the event the Company is able to prove such deposits in the
future, it will have the financial resources to extract, concentrate, or deliver
for sale, any significant amounts of gold, silver, copper, or any other
commercially viable deposits. The shares offered herein have a real value only
in the event significant bodies of commercial ore are proven. (See "BUSINESS OF
THE COMPANY".)
3. Uncertainty in Obtaining Environmental Permits.
The Company does not currently have any permits that may be required by the
various federal, state and local mining and environmental agencies to begin work
on any of its properties. While the Company has had preliminary conversations
with certain controlling agencies, and has been given general support for its
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concepts in developing the properties, there can be no assurance that the
Company will be successful in obtaining such permits. (See "BUSINESS OF THE
COMPANY".)
4. Speculative Nature of the Mineral Exploration Industry.
Gold, silver and strategic metals exploration is highly speculative in
nature, involving many risks which even a combination of scientific knowledge
and experience frequently cannot overcome, often resulting in unproductive
efforts. Further, the market price of gold, silver and strategic metals is quite
volatile and beyond the control of the Company. If the price of any of these
precious metals drops dramatically, the Company's exploration efforts, which
have been limited and have not, to date, been profitable, could be further
reduced or continue to be rendered uneconomical. The degree of speculation is
further magnified when a company is in the exploration stages and is operating
at a loss, as has been the case with the Company. While Management believes the
funds from this Offering will be sufficient to reach its exploration and
development objectives, there can be no assurance that it will be successful,
that any production will be obtained, or that production, if obtained, will be
profitable. In any such event, any investment in the Shares of this Offering
would be extremely risky and, where, as here, the mining exploration is poorly
financed, the risks become even higher and the most common result would be a
loss of the shareholder's entire investment. (See "BUSINESS OF THE COMPANY",
"MANAGEMENT" and "FINANCIAL STATEMENTS".)
5. High Risk.
An investment in the shares offered hereunder involves an extremely high
degree of risk. A prospective investor should, therefore, be aware that in the
event the Company's exploration is not successful, any investment in the
Company's Common Stock may be entirely lost and the Company may be faced with
the possibility of liquidation. In the event of liquidation, the existing
shareholders would, to the extent that assets would be available for
distribution, receive a disproportionately greater share of the assets in
relation to their cash investment in the Company than would the public
shareholders, in that holders of Common Stock are entitled to share on a pro
rata basis in the assets, if any, of the Company that would be available for
distribution. (See "BUSINESS OF THE COMPANY", "DILUTION" and "PRINCIPAL
SHAREHOLDERS".)
6. Reliance on Outside Financing.
The Company believes that the minimum proceeds of this Offering will
provide sufficient cash to fund its operations and current obligations for the
next twelve months. Should the Company expand its operations and/or make
acquisitions that would require funds in addition to the funds received in this
Offering, it may have to seek additional debt or equity financing. There can be
no assurance that such financing would be available on terms acceptable to the
Company, as and when needed. Since its inception, the Company's operations have
been financed, in part, through private sales of the Company's securities, and
the balance of financing was obtained through a loan. (See "CERTAIN
TRANSACTIONS".)
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7. Dependence On Additional Financing/Risk of Unavailability.
The continued operation of the Company will be dependent upon its ability
to generate revenues from its current operations/properties and/or obtain
further financing, if and when needed, through borrowing from banks or other
lenders or equity funding. There is no assurance that sufficient revenues can be
generated or that additional financing will be available, if and when required,
or on terms favorable to the Company. (See "USE OF PROCEEDS.")
8. Reliance Upon Officers and Directors.
The Company is wholly dependent, at present, upon the personal efforts and
abilities of 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 profitable. Of the three officers and directors of the Company, Mr.
Chaffee and Mr. Baptista will devote full time to the Company's business. (See
"MANAGEMENT" and "CERTAIN TRANSACTIONS.")
9. Dependence on Key employees.
The success of the Company is dependent, in large part, on the active
participation of Messrs. Chaffee and Baptista, its officers and directors, who
are also its key employees. The loss of their services would materially
adversely affect the Company's business and future success. The Company does not
have any employment agreements with either Mr. Chaffee or Mr. Baptista nor does
it have any key-man life insurance in effect at the present time; however, it is
seeking information and quotations regarding the same and may obtain such
coverage, if the cost thereof is reasonable. (See "MANAGEMENT.")
10. Conflicts of Interest.
The Company anticipates obtaining certain of its products and services from
companies of which a former officer, director and principal shareholder is an
officer, director and/or principal shareholder. All such products and services
will be obtained by the Company at rates and on conditions competitive in the
marketplace and favorable to the Company. (See "CERTAIN TRANSACTIONS.")
11. Certain Transactions.
The Company has previously engaged, and will continue to engage in certain
transactions with a former officer, director and principal shareholder, and will
endeavor to insure that such transactions will be as favorable to the Company as
comparable arm's-length transactions would be. (See PRINCIPAL SHAREHOLDERS",
"CERTAIN TRANSACTIONS" and "FINANCIAL STATEMENTS.")
12. Control of the Company.
Upon the sale of all the Shares offered hereby, the present shareholders of
the Company will continue to control the Company and will be able to elect a
majority of the Board of Directors and, thereby, control the business operations
and policies of the Company. (See "PRINCIPAL SHAREHOLDERS" AND "DILUTION.")
4
<PAGE>
13. Benefit to Present Shareholders.
Following the successful completion of this Offering, the present
shareholders of the Company will own approximately 97% (minimum) or 90%
(maximum) of the outstanding Common Stock. The majority of the present
shareholders purchased their shares at prices substantially below the price at
which Shares are offered hereunder. Therefore, the present shareholders will
experience an immediate increase in the net tangible book value of their
securities, while the purchasers of Shares in this Offering will experience an
immediate dilution in the value of their securities. (See "PRINCIPAL
SHAREHOLDERS" and "DILUTION.")
14. Dilution: Excessive Burden of Risk.
The present shareholders of the Company acquired their shares at a cost
less than that which the purchasers hereunder will pay for their Shares.
Accordingly, an investment in the Common Stock of the Company by the Subscribers
will result in the immediate dilution of the net tangible book value of their
Shares. Subscribers purchasing Shares hereunder will bear a risk of loss, while
control of the Company will effectively remain in the hands of the present
shareholders. (See "DILUTION" and "PRINCIPAL SHAREHOLDERS.")
15. Sale of Shares at Substantial Discount.
Based on the serious financial condition of the Company and its compelling
need to raise money to continue its business operations and remain viable until
approval of this Registration Statement and sale of the Units being sold herein,
the Company was compelled to sell a large number of its shares of restricted
Common Stock for a small amount of money in order to continue its existence.
(See "PRINCIPAL SHAREHOLDERS", "DILUTION" and "CERTAIN TRANSACTIONS.")
16. Possible Rule 144 Sales.
A total of 4,555,000 shares of the Company's Common Stock have been issued
by the Company prior to this Offering and 1,260,000 of those shares are held by
persons who are, or were, officers, directors and control persons, who hold such
shares as "restricted securities", as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act"). These
securities may only be sold in compliance with Rule 144, which provides, in
essence, that a person (or persons whose shares are aggregated) beneficially
owning restricted securities for a period of two years may sell, every three
months, in brokerage transactions, a number of shares equal to the greater of
one percent of the total number of the Company's then outstanding shares of
Common Stock or the average weekly trading volume in the Company's Common Stock
during the preceding four calendar weeks. 2,275,000 of the shares presently
outstanding were issued between March and June, 1994; 2,280,000 of the shares
presently outstanding were issued in March, 1995. The possible sale of these
restricted shares under Rule 144, may, in the future, have a depressive effect
on the price of the Company's Common Stock in the over-the-counter market,
assuming there is such a market, of which there can be no assurance.
5
<PAGE>
Furthermore, persons holding restricted securities for three years who are not
"affiliates" of the Company, as that term is defined in Rule 144, may sell their
securities pursuant to Rule 144 without any limitations on the number of shares
sold. Notwithstanding the foregoing, shareholders holding 4,300,000 Shares
(constituting 94.4% of the Company's issued and outstanding stock) have executed
"Lock-up" Agreements with the Underwriter and the Company, agreeing not to sell
or otherwise transfer any of their Shares for a period of twelve (12) months
from the effective date of the Offering. (See "PRINCIPAL SHAREHOLDERS -FUTURE
SALES BY PRESENT SHAREHOLDERS" and "DILUTION RESTRICTED SHARES ELIGIBLE FOR
FUTURE SALE.")
17. Markets Uncertain.
Despite the business experience of the officers, directors and principal
shareholders of the Company, there can be no assurance that the mining
properties acquired by the Company will be productive and/or profitable, or that
such production and/or profitability will be sufficient to permit the Company to
be successful in the future or to expand or continue to operate. The mineral
exploration and development business is directly linked to the price of and
market for precious metals and, if there were a drastic reduction in such prices
and/or market, the Company's business could be significantly impacted. (See
"MANAGEMENT" and " BUSINESS OF THE COMPANY.")
18. Industry Conditions.
The mineral exploration, processing and mining industry is directly linked
to the price and sale of precious metals and is, therefore, highly subject to
change. Assuming there were a drastic reduction or increase in the price and or
sale of precious metals, the Company's business could be significantly impacted.
There can be no assurance that the volume of production and/or sales that the
Company projects will be established, continue or grow in the future. The
Company's limited operating history and limited financial resources could result
in its being unable to respond quickly to market changes which may have an
adverse effect on the Company's revenues and earnings. (See "BUSINESS OF THE
COMPANY.")
19. Sensitivity to Economic Conditions.
The continued existence of the Company is highly dependent upon the
condition of the mineral exploration and development industry. The economic
viability of that market, in turn, is highly dependent on, among many other
factors, including political issues and general economic conditions. During
periods of economic downturn or slow economic growth, coupled with eroding
consumer confidence or rising inflation, the price and/or sale of precious
metals could be severely impacted. Such factors would likely have an immediate
effect on the Company's operations. (See "BUSINESS OF THE COMPANY.")
20. Competition.
There is intense competition in the mineral exploration and development
industry in which the Company operates. Many of the Company's competitors have
greater financial and other resources, better distribution networks or greater
name recognition than the Company. There can be no assurance that the Company
will be able to successfully compete in this industry. (See "BUSINESS OF THE
COMPANY.")
6
<PAGE>
21. Supply Factors.
Competition and unforeseen limited sources of supplies in the industry
could result in occasional spot shortages of supplies of certain products which
the Company may use in its operations. There can be no assurance the Company
will be able to obtain certain products and materials which it requires, without
interruption, or on terms favorable to the Company. (See "BUSINESS OF THE
COMPANY.")
22. Insurance; Indemnification.
The Company has limited capital and, therefore, does not currently have a
policy of insurance against liabilities arising out of the negligence of its
officers and directors and/or deficiencies in any of its business operations.
Even assuming it obtained insurance, there is no assurance that such insurance
coverage would be adequate to satisfy any potential claims made against the
Company, its officers and directors, or its business operations or products. Any
such liability which might arise could be substantial and may exceed the assets
of the Company. However, the Articles of Incorporation and By-Laws of the
Company provide for indemnification of officers and directors to the fullest
extent permitted under Nevada law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons, it is the opinion of the Securities and Exchange
Commission that such indemnification is against public policy, as expressed in
the Act, and is therefore, unenforceable. (See "FINANCIAL STATEMENTS" and
"BUSINESS OF THE COMPANY.")
23. No Cash Dividends Paid.
No cash dividends have been paid on the shares of the Company to date, nor
is it anticipated that any such dividends will be paid to shareholders in the
foreseeable future. Any income received from operations will be reinvested and
devoted to the Company's future operations and/or to expansion. (See
"DESCRIPTION OF SECURITIES.")
24. Arbitrary Determination of Offering Price.
The offering price of the Units being offered hereunder was determined
arbitrarily by the Company. Such offering price should not be considered an
indication of, nor was it based upon, the actual value of the Company and the
offering price may bear no direct relationship to the book value, assets or
earnings of the Company, or any other recognized criteria of value. (See
"OFFERING.")
25. No Present Market for Securities.
There is presently no market for the Company's securities and there can be
no assurance that any such market will develop. In the event a public trading
market does develop, there is no assurance it will continue. Therefore, any
investment in the Company's Common Stock may be highly liquid and without a
market value. (See "OFFERING.")
7
<PAGE>
26. Compliance with "Penny Stock" Rules.
Rule 3a51-1 of the Exchange Act defines a "penny stock" as an equity
security that is not, among other things: a) a reported security (i.e., listed
on certain national securities exchanges); b) a security registered or approved
for registration and traded on a national securities exchange that meets certain
guidelines, where the trade is effected through the facilities of that national
exchange; c) a security listed on NASDAQ; d) a security of an issuer that meets
certain minimum financial requirements, i.e., "net tangible assets" in excess of
$2,000,000 (if the issuer has been continuously operating for less than three
years) or $5,000,000 (if the issuer has been continuously operating for more
than three years), or "average revenue" of at least $6,000,000 for the last
three years); or e) a security with a price of at least $5.00 per share for the
transaction in question or that has a bid quotation (as defined in the Rule) of
at least $5.00 per share. Under Rule 3a51-1, if the Company's Common Stock sells
below $5.00 per share, the Company's Common Stock will fall within the
definition of "penny stock."
If the Company's Common Stock is deemed to be a penny stock, trading
therein will be subject to the requirements of Rule 15g-9 and Section 15(g)
under the Exchange Act. Rule 15g-9 imposes additional sales practice
requirements on broker-dealers who sell non-exempt securities to persons other
than established customers. For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Pursuant to Section 15(g) and related Rules, brokers and/or dealers, prior
to effecting a transaction in penny stock, will be required to provide investors
with written disclosure documents containing information concerning various
aspects involved in the market for penny stocks as well as specific information
about the penny stock and the transaction involving the purchase and sale of
that stock, e.g., price quotes and broker-dealer and associated person
compensation. Subsequent to the transaction, the broker will be required to
deliver monthly or quarterly statements containing specific information about
the penny stock. The foregoing requirements will most likely negatively affect
the ability of purchasers herein to sell their shares in the secondary market.
27. Issuance of Additional Shares.
Assuming sale of all Units offered hereby, there will still be 19,945,000
shares (assuming a minimum subscription) or 19,445,000 shares (assuming a
maximum subscription) of Common Stock which the Board of Directors will have
authority to issue. The issuance of any such shares to persons other than the
public investors herein will reduce the amount of control held by the public
investors following this Offering and may result in a dilution of the book value
per share. There are presently no commitments, contracts or intentions to issue
any additional shares to any persons other than as set forth herein. (See
"DILUTION.")
28. No Commitments to Purchase Units.
There is no commitment of any kind on the part of anyone to purchase all or
any part of the 510,000 Units being offered hereby; consequently, the Company
can give no assurance that all or any part of the Units will be sold. However,
the escrow arrangements provide that unless 130,000 Units are sold
8
<PAGE>
and $780,000 is raised within 90 days from the date of this Prospectus, unless
extended at the discretion of the Company for an additional 90 days, the
proceeds will be returned in full to the subscribers, without any interest
thereon or deductions therefrom. Thus, an investor could invest money in the
Company for as long as 180 days, through the subscription for Units hereunder,
and have the money returned without interest.
29. Government Regulations.
The Company will be subject to all governmental rules, laws and regulations
relating to the mining industry, both in the U.S. and Mexico, where its current
properties are located, and fully intends to comply therewith. However, there is
no assurance the governmental agencies having jurisdiction over the Company, its
operations and properties, may enact laws, rules and/or regulations in the
future which may have an adverse impact on the Company. (See "BUSINESS OF THE
COMPANY.")
MANAGEMENT OVERVIEW
-------------------
All of the Company's current activities are in the exploration stage. The
Company seeks to identify properties that demonstrate the presence of
economically viable mineral deposits. The Company will concentrate on properties
that it believes may contain commercially recoverable values of Silver, Copper,
Cobalt and Gold in both the United States and Mexico. If any such property is
identified, the Company will initiate the exploration process. (See "BUSINESS OF
THE COMPANY")
The first business operations of the Company will consist of performing a
preliminary evaluation on each property to provide the Company with sufficient
information to determine the merits, if any, of each property. This first phase
of evaluation will consist of gathering information relative to the perceived
economic value of each property, the anticipated costs to develop the property
(including permitting and environmental costs), and the estimated amount of time
which will be needed to reach a positive cash flow status for each property. In
the event any of the properties appear to warrant further consideration, the
Company must then prioritize each proposed site development plan (Plan of
Operations) and allocate the funds necessary to execute the same, including a
substantial contingency reserve. The Company must then submit the Plan of
Operations to the appropriate environmental agencies for approval, of which
there can be no assurance. (See "RISK FACTORS-Uncertainty in Attaining
Environmental Permits", "RISK FACTORS-Government Regulations" and "BUSINESS OF
THE COMPANY".)
The first project the Company intends to develop will be the Deep Gold Mine
located in Inyo County, California, assuming, of course, that viable deposits
are identified during the exploration process on the property and that the
Company is able to meet federal, state and local mining and environmental
requirements for the property, of which there can be no assurance. (See RISK
FACTORS-Uncertainty in Attaining Environmental Permits", "RISK
FACTORS-Government Regulations" and "BUSINESS OF THE COMPANY".) The Company has
determined that, if viable deposits are identified at the Deep Gold Mine, and
assuming favorable regulatory reviews, the materials would be easy to access and
process using existing technology and equipment. Depending on the results of the
exploration process at the Deep Gold Mine, the Company may, at that time,
postpone the exploration of its other properties to insure sufficient
9
<PAGE>
financial resources are available to complete development of the Deep Gold Mine.
USE OF PROCEEDS
---------------
As set forth below, the Company estimates the net proceeds from this
Offering will be approximately $638,600, assuming a minimum subscription, or
$2,622,000, assuming a maximum subscription, after deducting $78,000, assuming a
minimum subscription, or $306,000, assuming a maximum subscription, for sales
commissions and $40,000 for estimated offering expenses, including legal and
accounting fees. The proceeds from this Offering are expected to be disbursed,
in the priority set forth below, during the first 12 months after completion of
this Offering; however, not having completed the Phase I property evaluations on
any property, the Company reserves the right to amend, in its discretion, the
proposed Use of Proceeds pending the results of such evaluations.
The following projections assume that viable deposits will be located on
properties which the Company has targeted for exploration, that it will be
economically feasible to process the materials, and that the mineralization is
of the type that will lend itself to the Company's proposed extraction
techniques. None of these assumptions have been proven, however, and there can
be no assurance that they will be proven on any property until the Phase I
property evaluations have been completed.
<TABLE>
<CAPTION>
Minimum Maximum
Description Subscription Subscription
- ----------- ------------ ------------
<S> <C> <C>
Total Proceeds $780,000 $3,060,000
Offering Expenses:
Sales Commissions (1) 78,000 306,000
Non-Accountable Expense
Allowance (2) 23,400 91,800
Legal and Accounting Fees
and Offering Expenses (3) 40,000 40,000
-------- ---------
Net Proceeds $638,600 $2,622,200
Exploration $ 50,000 $ 360,000
Administrative and Salaries 220,000 220,000
Indirect Expenses:
Insurance 14,000 28,000
Bonding 10,000 20,000
Repay Loans (4) 30,000 30,000
Working Capital(5) 314,600 1,964,200
- --------------- --------- ---------
Total Net Proceeds $638,600 $2,622,200
</TABLE>
(1) Assumes that an underwriters' commission of 10% will be paid on all Shares
sold. (See "UNDERWRITING" and "OFFERING.")
(2) Assumes that a non-accountable expense allowance may be paid to the
underwriter equal to $23,400 in the event of a minimum subscription or $91,800
or in the event of a maximum subscription.
10
<PAGE>
(3) The organizational and offering expenses, including accounting, legal,
printing, clerical and other expenses, and registration and filing fees, are
estimated to total $40,000.
(4) On March 7, 1995, the Company entered into a Loan Agreement with C.W. and
Neva B. Lewis, unrelated third parties, wherein the Lewis' advanced $20,000 in
cash to the Company. In consideration for the loan, the Company agreed to pay
the Lewis' $50,000 from the proceeds of this Offering. In addition, the Company
sold them 30,000 shares of restricted Common Stock of the Company at par value
for a total consideration of $30. The $20,000 loan was used as partial payment
for the contract deposit of the Big Mike property. Subsequent to December 31,
1997, $20,000 was paid to Lewis, reducing the balance due from the proceeds of
the offering to $30,000. (See "CERTAIN TRANSACTIONS.")
While the Company currently intends to utilize the proceeds of this Offering
substantially in the manner set forth above, the Company reserves the right to
reassess and reassign such use if, in the judgement of the Board of Directors,
such changes are necessary or advisable in the circumstances. At present, no
material changes are contemplated, however, working capital could be used to
acquire other mining properties or interests therein. The Company does not know
of any such properties nor is there any assurance that any such properties could
be acquired with the limited funds in working capital it will have available.
Should there be any material changes in the Company's use of proceeds in
connection with this Offering, it will issue a post effective amendment to its
Registration Statement to reflect such change.
Until used, the working capital proceeds will be invested in certificates
of deposit or U.S. Treasury Notes.
DILUTION
--------
"Dilution" represents the difference between the offering price and the net
tangible book value per share immediately after the completion of this Offering.
"Net tangible book value" is the amount that results from subtracting the total
liabilities and intangible assets from the Company's total assets. Dilution
arises mainly from the arbitrary decision by the Company to establish the
offering price of the Shares offered hereunder based on market factors rather
than book value considerations
In addition, it is important to note that the present shareholders of the
Company's Common Stock acquired their shares at a price substantially lower than
the Offering price due to the Company's need to acquire working capital during
the past two years. The present shareholders, therefore, will incur an immediate
substantial increase in the price which they paid for their shares and the
purchasers of shares in the Offering will incur an immediate substantial
dilution in the price which they pay for their shares.
11
<PAGE>
As of October 31, 1997, the net tangible book value of the shares of the
Company (total assets, excluding intangible assets, less total liabilities,
excluding contingent liabilities) was ($180,642) or ($.04) per share based upon
4,555,000 shares outstanding at that time.
Upon completion of this Offering, but without taking into account any
change in such net tangible book value after completion of this Offering, other
than that resulting from the sale of the Shares offered hereby, the net
tangible book value of the 4,685,000 shares, based upon a minimum subscription
(or 5,065,000 shares, based upon a maximum subscription) to be outstanding will
be approximately $599,358, based upon a minimum subscription (or $2,879,358,
based upon a maximum subscription), or approximately $.13 per Share, based upon
a minimum subscription (or $.57 per Share, based upon a maximum subscription).
Accordingly, the net tangible book value of the Shares held by the present
shareholders of the Company (i.e., 4,555,000 Shares) will be increased by $.17
per Share, based upon a minimum subscription (or increased by $.61 per Share,
based upon a maximum subscription), without any additional investment on their
part and the purchasers of the Shares offered hereby will incur immediate
dilution (a reduction in net tangible book value per Share from the offering
price of $6.00 per Unit) of approximately $5.83 per Share, based upon a minimum
subscription (or $5.43 per Share, based upon a maximum subscription).
After completion of this Offering, the purchasers of the Shares offered
hereby will own approximately 3% (10%) of the total number of shares then
outstanding, for which they will have made a cash investment of $780,000, based
upon a minimum subscription (or $3,060,000, based upon a maximum subscription),
or $6.00 per share. The current shareholders of the Company will own
approximately 97% (90%) of the total number of shares then outstanding, for
which they have made actual cash contributions of $4,555, or $.001 per share.
The following table sets forth a comparison of the respective investments of
the current shareholders and the public investors, assuming both a minimum and
maximum subscription.
PRESENT SHAREHOLDERS
--------------------
Minimum Subscription Maximum Subscription
-------------------- --------------------
Price Per Share $ .001 $ .001
Net Tangible Book
Value per Share $ (.04) $ (.04)
before Offering
Net Tangible Book
value per Share $ .13 $ .57
after Offering
Increase to present
Shareholders in
net tangible book
value per share due
to Offering $ .17 $ .61
Capital
contributions $ 4,555 $ 4,555
Number of Shares
outstanding
before Offering 4,555,000 4,555,000
12
<PAGE>
Number of Shares
outstanding
After Offering 4,555,000 4,555,000
Percentage of ownership
after the Offering 97% 10%
PUBLIC INVESTORS
----------------
Minimum Subscription Maximum Subscription
-------------------- --------------------
Price per Share $ 6.00 $ 6.00
Dilution per Share $ 5.87 $ 5.43
Capital contributions $ 780,000 $3,060,000
Number of Shares after
the Offering held by the
Public Investors 130,000 510,000
Percentage of ownership
after the Offering 3% 10%
All 4,555,000 of the Company's currently outstanding shares of Common Stock
are "restricted securities" which, in the future, may be sold pursuant to Rule
144 under the Securities Act of 1933, as amended, if available. Rule 144
currently provides, in essence, that persons holding restricted securities for a
period of one year may each sell, every three months, in brokerage transactions,
a number of shares equal to one percent of the aggregate number of the Company's
outstanding shares, and after two years, persons other than "affiliates" of the
Company, may sell shares without any volume restrictions. However, holders of
4,300,000 shares of the Company's currently outstanding shares (constituting
94.4% of such shares) have executed "Lock-up" Agreements with the Underwriter
and the Company, agreeing not to sell or otherwise transfer any of their shares
for a period of twelve (12) months from the effective date of this Offering.
Sales of shares (a) held by present shareholders, after applicable
restrictions expire; and (b) offered in this Offering, which would be
immediately resalable, may have a depressing effect on the price of the
Company's shares in any market that may develop. (See "DILUTION.")
CAPITALIZATION
--------------
The following table sets forth the capitalization of the Company as of
October 31, 1997, and as adjusted to reflect the sale of the minimum (maximum)
Shares offered hereby and the application of the net proceeds therefrom. (See
"FINANCIAL STATEMENTS.")
13
<PAGE>
Present As Adjusted
------- ------------------------
(Minimum) (Maximum)
Common Stock:
25,000,000 Shares
authorized, par value
$.001; 4,555,000
issued and outstanding $ 4,555 $ 4,685 $ 5,065
Shareholders' Equity: ($ 180,642) $ 457,828 $2,441,428
SUMMARY FINANCIAL INFORMATION
BALANCE SHEET DATA: June 30, 1998
Current Assets $ 139,690
Current Liabilities $ 523,118
Total Assets $ 236,723
Shareholders' Equity $(286,395)
(See "FINANCIAL STATEMENTS)
OFFERING
--------
Engagement of the Services of an Underwriter:
The Company has engaged the services of an underwriter who is a member of
the National Association of Securities Dealers, Inc. ("NASD") to offer its Units
directly to prospective investors on a "best-efforts, all-or none" basis as to a
minimum of 130,000 Units and on a "best-efforts" basis as to an additional
380,000 Units.
The Company has agreed to pay a sales commissions equal to 10% of the gross
sales price of the Units to such underwriter for any Units it may sell, plus a
nonaccountable expense allowance of 3% of the gross proceeds and Warrants equal
to 10% of the shares sold to the public. However, no sales commissions or
expense allowance will be paid unless a total of 130,000 Units have been
subscribed and paid for.
The Units will be offered by the Company subject to prior sale and subject
to approval of certain legal matters by the Company's legal counsel. The Company
reserves the right to reject any subscription in whole or in part, for any
reason or for no reason.
A total of 2,050,000 shares of the Company's Common Stock were issued to
two persons who were officers, directors and control persons of the Company, in
14
<PAGE>
April, 1994 and a total of 2,505,000 shares were issued to unrelated third
parties in March, 1994 and March, 1995. Such shares are all "restricted
securities" as that term is defined in Rule 144, promulgated under the
Securities Act of 1933, as amended, and under such Rule, may not be sold for a
period of at least two years from acquisition thereof. However, as indicated
above, holders of 4,300,000 shares (constituting 94.4% of the Company's
outstanding shares) have executed "Lock-up" Agreements with the Underwriter and
the Company, agreeing not to sell or otherwise transfer any of their shares for
a period of twelve (12) months from the effective date of the Offering. (See
"CERTAIN TRANSACTIONS.")
Prior to this Offering, there has been no market for the Company's Shares.
Consequently, the offering price has been determined arbitrarily by the Company
and should not be considered an indication of the actual value of the Company's
Shares. There can be no assurance that the Common Stock offered hereby can be
resold at the offering price, or at all. Nor can there be any assurance that any
public market for the Company's Common Stock will develop. It is anticipated
that the Shares will trade in the over-the counter market.
Offering Period and Expiration Date
This Offering will commence on the date of this Prospectus and continue for
a period of ninety (90) days, unless extended, by the Company for an additional
ninety (90) days, or unless this Offering is completed or otherwise terminated
by the Company (the "Expiration Date").
Procedures for Subscribing
Each investor subscribing for any of the Shares offered hereby will be
required to execute a Subscription Agreement and tender it, to the Underwriter,
together with a check or certified funds payable to the Escrow Agent, for
acceptance or rejection of their subscription.
Determination of Offering Price
The public offering price of the Shares has been determined arbitrarily by
the Company. The price does not bear any relationship to the Company's assets,
book value, earnings, or other established criteria for valuing a privately held
company. In determining the number of Shares of Common Stock to be offered and
the offering price, the Company's capital structure, financial condition,
prospects for the Company and the industry in general, and the general condition
of the securities market were considered by the Company. Accordingly, the
offering price should not be considered an indication of the actual value of the
Company's securities.
Escrow
Proceeds from the subscription for Units will be transmitted by noon of the
next business day after receipt by the Underwriter to be deposited in a special
account at Union Bank & Trust, 100 Broadway, Denver, Colorado, until a minimum
15
<PAGE>
of 130,000 Units have been sold, at which time the proceeds will be paid to the
Company by the Underwriter from time to time as received. Thereafter, proceeds
will be paid directly to the Company until a maximum of 510,000 Units have
been sold or the offering period expires, whichever first occurs. If 130,000
Units are not sold by the Expiration Date, or any extension thereof, or if this
Offering is terminated sooner, all funds which have been received will be
promptly returned to the subscribers without interest or deduction.
All checks for subscriptions should be made payable to American Securities
Transfer & Trust, Inc./Summa Metals Corp. Escrow Account.
Right to Reject
The Company shall have the right to accept or reject subscriptions in whole
or in part, for any reason or for no reason. All monies from rejected
subscriptions shall be returned immediately to the investors without interest or
deduction. Subscriptions for securities shall be accepted or rejected within 48
hours after receipt thereof by the Company.
UNDERWRITING
------------
Proposed Underwriting Agreement
The Company has entered into an Underwriting Agreement (the "Underwriting
Agreement") with Boe & Company, a member of the National Association of
Securities Dealers ("NASD") as its agent to publicly offer and sell a minimum of
130,000 Units on a "best-efforts, all-or-none basis" up to a maximum of 510,000
Units on a "best-efforts basis" at a public offering price of $6.00 per Unit,
for a total maximum offering of $3,060,000. If a total of 130,000 Units is not
sold within 90 days from the commencement of the Offering, which period may be
extended for an additional period of up to 90 days upon the mutual consent of
the Company and the Underwriter, all proceeds received would be promptly
refunded to subscribers in full, without interest or deductions for commissions
or expenses. All proceeds from the sale of the Units will be payable to American
Securities Transfer & Trust, Inc./Summa Metals Corp. Escrow Account, and will
be deposited in an escrow account maintained at Union Bank & Trust by American
Securities Transfer & Trust, Inc. as Escrow Agent (the "Escrow Agent"), pursuant
to an Escrow Agreement among the Company, the Underwriter and the Escrow Agent.
Proposed Underwriter Compensation
The Underwriting Agreement further provides that, subject to the sale of a
minimum of 130,000 up to a maximum of 510,000 Units offered hereby, the
Underwriter will receive (a) a cash commission of 10% of the gross price of each
Unit it sells (i.e. $.60 per Unit, or a total of $78,000.00, assuming a minimum
subscription, or $306,000.00, assuming a maximum subscription) and (b) a
non-accountable expense allowance of 3%, and warrants to purchase additional
shares (without underlying warrants) in the amount of 10% of the number of Units
sold to the Public by the Underwriter. (SEE "UNDERWRITERS AGREEMENT") Any
unexpended portion of the non-accountable expense allowance may be retained by
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the underwriter and may be deemed additional underwriting compensation for the
purposes of the Securities Act of 1933, as amended.
The foregoing is a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
said proposed Underwriting Agreement which is on file as Exhibit 28(c) to the
Registration Statement of which this Prospectus is a part.
BUSINESS OF THE COMPANY
Summa Metals Corp., a Nevada corporation, was incorporated on March 8,
1994. The Company maintains its statutory registered agent's office at 1025
Ridgeview Drive, Suite 400, Reno, Nevada 89509. The Company presently maintains
its business offices at 28281 Crown Valley Parkway, Ste. 225, Laguna Niguel, CA,
92677-1461. (See "OFFICE FACILITIES" in this section.)
General
The Company is an exploration stage company engaged in the acquisition, and
exploration of properties with an uncertain mineral potential. The Company
acquired certain mining and tailing properties from Mr. Chaffee, an officer,
director and principal shareholder and from Dr. Pray, a former officer, director
and principal shareholder, in exchange for the issuance of an aggregate of
2,050,000 shares of the Company's restricted Common Stock (See "CERTAIN
TRANSACTIONS"), and is attempting to raise the capital required for exploration,
and if warranted by the results of the Phase 1 evaluation, the development of
these properties. The Company will also explore other properties that the
Company reasonably believes have the potential for future development of mineral
deposits. The Company will make appropriate announcements to its shareholders in
the event it becomes aware of other properties suitable for exploration for
future development of mineral deposits. There is no assurance, however, that the
Company will be successful in raising the capital necessary to complete any
exploration program, or that it will have the financial resources to develop any
properties regardless of the outcome of the exploration process. There are no
preliminary agreements or understandings with respect to any other properties,
than those described herein. (See "MANAGEMENT" and "BUSINESS OF THE COMPANY").
Environmental Regulations and Cyclical Metal Prices
Environmental laws and regulations relating to federal lands are expected
to be tightly enforced by the U.S. Bureau of Land Management and U.S. Forest
Service. The Company, however, feels that as long as Forest Service regulations
are fully complied with, there should be no serious economic problems
encountered because of wilderness laws or any other federal, state or local
environmental protection laws. The Company anticipates no discharge of water
into any active stream, creek, river, lake or any other body of water regulated
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<PAGE>
by environmental laws or regulations and that no significant endangered species
will be disturbed by its operations. Recontouring and revegitation of disturbed
surface areas will be completed pursuant to federal, state and local
requirements. Any portals, adits or shafts will be sealed upon abandonment of a
property. It is difficult to estimate the cost effects of compliance with
environmental laws inasmuch as the methods and procedures of exploration within
federal lands or U.S. Bureau of Land Management and Forest Service lands are
similar to those methods and procedures adopted by the Company as a matter of
Company policy and procedure.
The Company intends to operate its properties in strict compliance with all
environmental regulations applicable to the mineral processing and mining
industry. While the Company considers itself to be pro-active with respect to
environmental considerations and has a history of working with the federal,
state and local agencies in the mining industry, there can be no assurance that
the Company will be able to procure the necessary permits to operate any of its
properties. In addition, it is possible that certain regulatory agencies could,
in fact, make it impossible for the Company to even explore its properties
and/or prohibit the Company from performing the work necessary for the Company
to complete its "economic" evaluations. (See "BUSINESS OF THE COMPANY-The
Exploration Stage" and "MANAGEMENT".)
Prior to the Company being able to perform any work on any property, the
Company will be required to submit, and have approved, a Plan of Operations
specific to each particular property with each appropriate regulatory agency.
This approval process is often time consuming and expensive and the outcome is
always uncertain. Even assuming the Company is successful in obtaining a permit
to explore or operate any property, the financial responsibilities placed upon
the Company as a condition for the issuance of such approvals may render a
property uneconomically viable for development and the Plans of Operation may,
at that time, be abandoned.
Other factors which could have a material impact upon the Company's future
financial performance include such considerations as the cyclical nature of the
mining industry, which may have an effect on the Company's potential
profitability. However, it is difficult to determine whether the cyclical price
of precious metals and other minerals explored for by the Company will increase
or decrease. Thus, management feels that the inherent risk of a decrease in the
price of minerals is balanced by the possibility of an increase in the price of
minerals. In general, the costs of mining today are much greater than in
previous years due to both inflation and the added costs of complying with the
variety of environmental laws and safety regulations which govern the mining
industry.
The Exploration Stage
The exploration process in general is divided into three (3) phases. Phase
1 begins with a thorough search of the available geologic literature, personal
interviews with geologists, mining engineers and others familiar with the
properties. This initial work is then augmented with geological mapping
and testing and geophysical testing.
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The second phase of the exploration process involves an initial examination
of the underground characteristics of the vein structure that was identified by
Phase 1 of exploration. Phase 2 is aimed at identifying a deposit of potential
economic importance. While the exact exploration process is site specific, the
general methods of exploration may include trenching, advanced geophysical work
and core drilling to aid in the determination of subsurface characteristics of
the structure. The geophysical work is designed to give a general understanding
of the location and extent of mineralization at depths that are unreachable by
surface excavations, and provide a target for more extensive trenching and core
drilling. After a thorough analysis of the data collected in Phase 2, a
determination is made as to whether or not the property warrants a Phase 3
study.
Phase 3 is aimed at precisely defining the depth, the width, the length,
the tonnage and the value per ton of the mineral deposits so that it can be
considered a proven ore body within stringent industry standards. This is
accomplished through extensive surface trenching and extensive core drilling. A
mineral deposit is not a proven ore body until it has been technically,
economically and legally proven.
At the completion of the exploration stage, and assuming that an
economically viable deposit has been discovered, the Company will then
prioritize development based upon the financial resources available at that
time.
A more detailed description of the proposed exploration process for each of
the Company's properties is contained in the "Description of Properties" section
which follows.
Description of Property
The Company has acquired rights and interests in and to certain mining
properties, as listed below. Most of these properties consists of unpatented
mining claims. The validity of unpatented mining claims depends, to an extent,
upon numerous circumstances and factual matters, many of which are discoverable
of record or by other available means, and is subject to many uncertainties of
existing law and its applications. One of the requirements of initiating a valid
mining claim is that the claim must be staked on a mineralized area. Further
exploration and mineral assessments will be performed during Phase l of the
exploration process to determine if sufficient mineralization exists to develop
the properties. The Company intends to continue to perform annual assessment
work on its property, as well as comply with state and federal regulations
regarding the claims, until Phase 1 results can be assessed. (See "CERTAIN
TRANSACTIONS" and "CONFLICTS OF INTEREST.")
The Deep Gold Mine
The Deep Gold Mine, consisting of one unpatented placer claim is located on
approximately 80 acres in Marble Canyon, Inyo County, California, approximately
40 miles north of Barstow, California. The claim was located amidst some old
1930's mining claims. Dr. Ralph E. Pray, a former officer, director and
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principal shareholder of the Company located one of the claims in 1981 and over
the course of several years, acquired the other three (3) claims from their
respective locators. In 1981, a new road was built into the property, a new
headframe was placed over the 150-ft. deep shaft and the workings were cleaned
out. The property was subleased to the Company for $100.00 per year for twenty
years, with the right to extend the lease for an additional twenty years. In
addition, Dr. Pray received shares of Common Stock of the Company as
consideration for the sublease. It is a requirement of the federal Bureau of
Land Management ("BLM") that a mining property owner perform required minimum
assessment work in order to maintain title to the property. The property owner
is required to file annual reports with the BLM confirming that such assessment
work has been performed. After Dr. Pray resigned as an officer and director of
the Company, in order to insure that the Company will be timely notified by the
BLM of any changes in Federal law affecting the property, the Company caused
title to the property to be transferred to Michael Chaffee, Raymond Baptista,
Brian Jackowitz and Bruce Cooper, all of whom are shareholders of the Company.
Such transfer was accomplished by Dr. Pray disclaiming ownership to such
property on March 10, 1998, and Messrs. Chaffee, Baptista, Jackowitz and Cooper
filing a claim to the property. On April 6, 1998, Messrs. Chaffee, Baptista,
Jackowitz and Cooper subleased the property to the Company on the same terms as
the original sublease with Dr. Pray. During the term of the sublease, the
Company will have all of the sublessors' right, title and interest in and to the
property, and any revenues derived therefrom.
During 1994, the Company maintained the required permits for the mine,
reviewed geophysical data establishing a probable channel and mapped three drill
sites for early exploration. The volume of placer material available on the Deep
Gold claims has been estimated using the channel width and thickness values
reported in the California Division of Mines Report XXXIV for Lewis and Iron
Nugget claim groups, now included in the Deep Gold group. The average width of
the channel is 57 feet and the average thickness is reported to be 6 feet.
The Deep Gold Mine is not located in a Wilderness Study area and is not,
therefore, subject to the federal rules and regulations regarding such an area.
Assuming that the Phase 1 evaluation of the Gold Spur Mine is positive, the
Company intends to mine the property in the following manner. The channel at the
shaft elevation, near the north bank, will be delineated by reverse circulation
hammer drilling. The compacted, lightly cemented sand and gravel will be drilled
and blasted. Large rock fragments will be left behind in high, underground
fence-wire enclosures.
When removal of the material closest to Entry No. 2 has been completed, the
treatment plant will be moved down slope to the collar of Entry No. 3 and
material in the lower 500 feet of the drift will reach the surface through Entry
No. 3.
Broken sand/gravel placer materials from the channel will be dumped
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directly onto a heavy vibrating screen. Oversize will go to waste. Minus 1/2
inch will be screened at 20 mesh. Fine concentrate will be treated to remove
magnetics and all concentrates, if any are found to exist, will be further
processed, examined, weighed and prepared for shipment. The mine will have three
drill roads cut from the main road to the geophysical anomalies found recently
during a magnetometer survey by Dr. Pray. A contract driller will be employed to
rotary drill three holes to depths of about 150 feet, where bedrock will be
encountered. Once the channel has been located, if one is found to exist, it
will be delineated by rapid drilling on 10 or 20 foot centers. A shallow decline
will be driven to the channel, and the material will be processed on site to a
heavy concentrate for delivery to the Monrovia laboratory.
Allocation of Proceeds - Deep Gold Mine
The Company has allocated $10,000, assuming receipt of the minimum proceeds
of this Offering to complete its Phase 1 evaluation, and $135,000, assuming
receipt of the maximum proceeds of this Offering, to the exploration, and if
warranted by the results of the Phase 1 evaluation, the development of the Deep
Gold Mine. The Company estimates that the evaluation process on this property
will take approximately 30 days to complete. The balance of the funds allocated
will be expended at the discretion of the Company based upon the results of the
Phase 1 exploration process and the status of the Company's financial
commitments to other projects being explored and/or developed at the time.
The Gold Spur Mine
The Gold Spur Mine, an underground gold mine located on nine lode claims
and one mill site in Coyote Canyon County, on the southwest flank of the
Panamints, in Inyo County, California, is located directly between mines
operated by Canyon Resources and Keystone, a prolific gold producer during the
1980's. The Gold Spur Mine originally operated between 1907 and 1940 and
consists of 11 Lode Claims and 1 mill site on approximately 80 acres. Dr. Ralph
E. Pray, a former officer, director and principal shareholder of the Company,
re-filed the claims in 1973 and again in 1979 as sole owner and subleased the
property to the Company for $100.00 per year for twenty years, with the right to
extend the lease for an additional twenty years. In addition, Dr. Pray received
shares of Common Stock of the Company as consideration for the sublease. It is a
requirement of the federal Bureau of Land Management ("BLM") that a mining
property owner perform required minimum assessment work in order to maintain
title to the property. The property owner is required to file annual reports
with the BLM confirming that such assessment work has been performed. After Dr.
Pray resigned as an officer and director of the Company, in order to insure that
the Company will be timely notified by the BLM of any changes in Federal law
affecting the property, the Company caused title to the property to be
transferred to Michael Chaffee. Such transfer was accomplished by Dr. Pray
disclaiming ownership to such property on March 10, 1998, and Mr. Chaffee filing
a claim to the property. On April 6, 1998, Mr. Chaffee subleased the property to
the Company on the same terms as the original sublease with Dr. Pray. During the
term of the sublease, the Company will have all of the sublessors' right, title
and interest in and to the property, and any revenues derived therefrom.
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In 1994, the Company performed extensive repairs on a two-mile mine road,
using a rented 6-yard loader; rebuilt the aerial tramway mid-point cable tower;
re-timbered the 50-ton main ore bin floor; repaired the stationary aerial
tramway engine; and rebuilt the facilities operating the freshwater well on the
property. About 3,000 lbs. of heavy timber was delivered to the mine, most of
which was obtained from freeway repair crews following the Northridge,
California earthquake. The total cost expended on this work by the Company was
approximately $14,500.00.
Approximately 200 tons of material was drilled and stockpiled by the
Predecessor Company in 1991. This material lies in the mine awaiting transport
to either a millsite established by the Company or to a nearby milling operation
for extraction and treatment. The camp is at the base of the mountain, 600 feet
below. A small mine and mill operation could be fabricated immediately,
utilizing existing facilities.
The property is already equipped with a fresh water well and tanks, basic
housing facilities, an improved access road, septic system, buried utilities for
gas and water, main ore bins, a cable-type ore delivery system from the main
portal, structural timbers, a 225 CFM air compressor and security dates at the
main access road.
The Gold Spur mine was at one time considered part of a Wilderness Study
area, but was removed from the same in 1994 and is, therefore, no longer subject
to the federal rules and regulations regarding such an area.
The validity of unpatented mining claims, depends, to an extent upon
numerous circumstances and factual matters, many of which are discoverable of
record or by other available means, and is subject to many uncertainties of
existing law and its applications. One of the requirements of initiating a valid
mining claim is that the claim be staked on a mineralized area. The Gold Spur
Mine was, in the opinion of the Company, mineralized to an extent sufficient to
meet government requirements and common mining industry practice. However,
further Company exploration and mineral assessments performed by government
agencies may indicate that these claims are not sufficiently mineralized and may
later be abandoned or determined to be invalid because of insufficient
mineralization. The Company intends to perform the annual assessment work, as
well as comply with state and federal regulations regarding this claim, until
full exploration of potential mineralization can be assessed.
Upon completion of this Offering, the Company intends to continue with its
exploratory work in the upper workings of the mine using the newly repaired
aerial tramway system. The Company also intends to start the repair of the
surface mine rail system, utilizing the timbers delivered to the mine in 1994.
Mine product, assuming any valuable minerals exist, will be stockpiled during
the exploration of the present underground workings. The purpose of this
exploratory effort will be to establish that there is a sufficient amount and
grade of minerals to warrant placing the mine into production. The existing
exposed veins will be explored, measured, tested and assayed during this
exploration process.
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From the results of the exploration process, the Company intends to prepare
a complete economic evaluation for presentation to the Company's Board of
Directors who will make the final decision whether to expand mining activities
on the property. There is no assurance the Company will be able to locate any
valuable minerals at the Gold Spur Mine, or if any are found, that they will be
able to be successfully removed and/or sold profitably, or at all.
Allocation of Proceeds - Gold Spur
In the event only the minimum received from the offering, the Company will
delay expending funds for evaluation of the Gold Spur until such time as it has
completed its evaluation of the other properties in its portfolio. The Company
has allocated $100,000, assuming receipt of the maximum proceeds of this
Offering, to the exploration of the Gold Spur Mine, subject to completion of the
Phase 1 evaluation process. The Company estimates that the cost for the
evaluation process on this property will be approximately $10,000 and should
take approximately 30 days to complete. The balance of the funds allocated will
be expended at the discretion of the Company based upon the results of the Phase
1 exploration process and the status of the Company's financial commitments to
other projects being explored and/or developed at the time.
Promontorio
The Promontorio property is designated as the "La Campana" and is located
35 miles northwest of the City of Durango in the municipality of El Oro, Mexico,
at Latitude 25.13 North and Longitude 105.09 West. The actual property is 13
kilometers north of the mining city of Promontorio and consists of approximately
135 acres of mill tailings.
On January 8, 1992, Dr. Ralph E. Pray, a former officer, director and
principal shareholder of the Company, entered into an Agreement with Jose A.
Echenique, an unrelated third party, whereby Dr. Pray acquired the rights to
treat and/or remove the mill tailings at the Promontorio. Dr. Pray has no
possessory rights to the property; merely the tailings on the property. The term
of the Agreement is for a period of ten years and provides for a royalty payment
to Mr. Echenique of 5% of any gross revenues derived from the tailings. Mr.
Echenique retains full ownership in the land and improvements thereon, but the
same is fully available to Dr. Pray during the term of the Agreement. The
Company subleases the rights to the mill tailings from Dr. Pray for the sum of
$100.00 U.S. per year. As additional consideration, Dr. Pray received shares of
Common Stock of the Company in exchange for the sublease. During the term of the
sublease, which extends from 1992 to 2002, the Company will have all of Dr.
Pray's right, title and interest in and to the mill tailings and any revenues
derived therefrom.
The mill tailings lie behind the Promontorio Dam, built in 1890, and were
washed in behind the dam by repeated rainfall across upstream Promontorio silver
cyanide mill tailings. This fill material reaches within one foot of the stone
structure top of the dam. In 1994, while under lease to Dr. Pray, a crew of six
men removed 700 lbs. of samples from the 1880-1915 tailing deposit and delivered
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them to the Mineral Research Laboratory, owned by Dr. Pray since 1967. Tests
were conducted at the lab to establish the feasibility of upgrading the material
by gravity before chemical processing as previous efforts to extract the silver
contained in the Promontorio tailings by unrelated third parties had proven not
to be economically viable. It is the Company's opinion that the low recovery
rates using standard cyanide extraction have been the result of a lack of
understanding of the presence of manganese within the mineral structure. The
manganese effectively blocks the action of the cyanide. The Company believes
that the solution is to first separate the manganese and then use conventional
cyanide techniques to extract the silver materials. Due to lack of finances,
however, the Company has only performed laboratory tests to substantiate its
theories relative to the presence and actions of the manganese.
Although Dr. Pray has held the lease to the Promontorio since January 1992,
and has performed extensive laboratory testing and sampling of the Promontorio,
he has never attempted to fully explore or develop the property and extract any
minerals due to a lack of funding. The proceeds from this Offering will afford
the Company an opportunity to determine the economic potential of this property.
Access to the property is via an existing mining and logging 17 kilometer
road from the village at the base of the mountain to the dam. While this access
road is currently passable, some improvements will have to be made in order for
the Company to be able to transport the equipment and machinery necessary to
conduct its extraction operations. The Company has estimated the cost to improve
the road for the pilot plant to be approximately $30,000.00. The Company is
hopeful that some of these costs will be shared with the local logging
companies; however, there is no assurance that this will be the case and the
Company is, therefore, prepared to pay the entire amount. The Federal Government
in Mexico has offered to supervise the repairs. Upon completion of the repairs
to the access road, the Company intends to set up a pilot plant to run 24 hours
per day at the Monrovia laboratory facility owned and operated by Dr. Pray to
enable proper tank size determination, utilizing the 700 lbs. of samples
remaining at the lab. The Company intends to utilize portable power generation
equipment for its extraction operation at this site.
The Company is also researching whether the extracted manganese may have
commercial value as a byproduct of the proposed process and intends to fully
explore such possibility as a means of generating additional revenues.
Allocation of Proceeds - Promontorio
In the event only the minimum proceeds are raised in this Offering,
exploration and development of the Promontorio will be abandoned until further
funds are generated by the Company, either by revenues from other properties, or
from additional financing.
In the event the maximum proceeds are received in this Offering, the
Company has allocated $125,000 to the exploration of the Promontorio, subject to
completion of the Phase 1 evaluation process. The Company estimates that
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the cost for the evaluation process on this property will be approximately
$10,000 and should take approximately 30 days to complete. The balance of the
funds allocated will be expended at the discretion of the Company based upon the
results of the Phase 1 exploration process and the status of the Company's
financial commitments to other projects being explored and/or developed at the
time.
Government Regulations
Any mineral exploration program undertaken by the Company will be subject
to extensive federal, state and local laws, rules and regulations both in
existence now and future legislation. Such laws, rules and regulations could
cause additional expenses, capital expenditures, restrictions and/or delays in
the proposed exploration and/or the Company's properties.
Most of the Company's properties are under the jurisdiction of the Federal
Bureau of Land Management (the "BLM"). The BLM presently requires that a plan of
operation, which must include tailing disposal information and reclamation
policies for a property, be filed and approved prior to the commencement of any
mining or milling operations. In addition, in some instances, regulatory filings
and approvals must be obtained from other agencies such as the State Mining
Inspectors Office, the Federal Mining Inspectors Office, MSDHA and/or OSHA. The
Company's properties outside the U.S. are no less sensitive to environmental
compliance. The Company fully intends to comply with all laws, rules and
regulations specific to any country, state and/or municipality in which it will
conduct its mining and milling operations. Compliance with such regulations
increases the costs of mining operations.
The Company will also be subject to the U.S. Occupational Safety and Health
Act and various California statutes dealing with working conditions at its mines
and mill sites. The Company intends to fully comply with all such environmental,
health and safety laws, rules, regulations and statutes.
At this time, no specific environmental plans have been disclosed in the
plans of operation filed and/or approved by the Company on any of its properties
and, therefore, no specific environmental concerns have been addressed herein.
Employees
The Company intends to use the services of subcontractors for all drilling,
exploration and site construction. The only direct employees of the Company will
be its officers and directors.
Management's Discussion and Analysis of Financial Condition and Results of
Operation
During the next 12 months of operation, the Company will concentrate on
the completion of the Phase 1 evaluation process on the Deep Gold, the Gold Spur
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and Promontorio (See "MANAGEMENT OVERVIEW"). The Company will also review other
sites which it believes may have potential for Phase 1 evaluation. Upon receipt
of the minimum proceeds from this offering, the Company will have sufficient
capital to operate for the next 12 month period. The Company will not perform
any product research and development during such period. The Company anticipates
no purchase of any major equipment nor any significant changes in the number of
employees during such 12 month period.
MANAGEMENT
----------
Officers and Directors
Each director of the Company is elected to a term of one year and serves
until his/her successor is elected and qualified. Each officer of the Company is
elected by the Board of Directors to a term of one year and serves until his/her
successor is duly elected and qualified or until he/she is removed. The Board of
Directors has no nominating, auditing or compensation committees.
The officers and directors of the Company, and further biographical information
concerning them are as follows:
Name and Address Age Position
- ---------------- --- --------
Michael M. Chaffee 55 Chairman of the Board
1588 Sea Lancer Dr.
Lake Havasu City, Arizona
86403
Raymond Baptista 56 Executive V.P. and Chief
5405 Miracopa Drive Financial Officer and
Simi Valley, CA. 94671 Director
Eric A. Popkoff 43 Vice President Investor
1750 East 23rd Street Relations and Director
Brooklyn, NY 11229
Background Information
Michael M. Chaffee - Mr. Chaffee has been the President and Chairman of the
Board of Directors of the Company since inception. From January 1989 to April 1,
1994, Mr. Chaffee was the President and Chief Executive Officer of Summa Metals
Corp., a Colorado corporation engaged in the extraction and processing of metals
and other elements from previously discarded natural mineral deposits. He
recently retired as President, Chief Executive Officer and Chairman of the Board
of Applied Biomedical Sciences, a public company engaged in the business of
developing proprietary products to improve wound care management and a variety
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of drug delivery systems. Prior to forming Applied Biomedical Sciences, he held
senior positions as Executive Vice President and Chief Operating Officer of
several large corporations. Mr. Chaffee graduated from the Northrop Institute of
Technology in 1964 with a B.S. Degree in Electronic Engineering and completed
additional graduate work at the University of Southern California in Business
and Biomedical Engineering. He is devoting full time to the business of the
Company.
Raymond Baptista - Mr. Baptista has been the Chief Financial Officer and a
Director of the Company since inception. He will be responsible for all finance,
corporate strategies and business policies. From 1986 to 1994, Mr. Baptista was
the Senior Vice President and Chief Financial Officer for Applied Biomedical
Sciences, a public company engaged in the research and development of
collagen-based biomedical products. Applied Biomedical Sciences was founded by
Michael M. Chaffee, another officer, director and principal shareholder of the
Company. Mr. Baptista has over 25 years experience in the banking industry, both
nationally and internationally. He is a graduate of St. Stanislaus College,
Georgetown, Guyana and the Graduate School of Banking, Pacific Coast Banking
School, University of Washington, Seattle, Washington. He is devoting full time
to the business of the Company.
Eric A. Popkoff - From 1989 to 1994 Mr. Popkoff was a teacher of social studies
and accounting and business practices at various sites in the New York City
Public School system. He is currently an adjunct lecturer in economics at
Brooklyn College, City University of New York. Since 1994 he has been the
President and Chief Executive Officer of Undiscovered Equities Research Corp.,
an information services company located in Brooklyn, New York, which provides
research on request from securities brokers and broker dealers, and distributes
from time to time a written review of selected securities. Mr. Popkoff holds an
MBA in Management and an MBA in International Business from Baruch College,
CUNY.
Executive Compensation
None of the officers and/or directors of the Company are party to any
standard arrangements or contracts regarding compensation for their services. No
officer and/or director has received any compensation for his services to the
Company since the Company's inception on March 8, 1994. From time to time, Mr.
Chaffee has been reimbursed for expenses advanced by him on behalf of the
Company. There are presently no plans to provide any of the officers and/or
directors of the Company with any pension plan, stock option, annuity, bonus,
insurance, profit-sharing or similar benefit plans, except for the option
granted to Eric A. Popkoff to purchase 900,000 shares upon commencement of his
employment. (See "PRINCIPAL SHAREHOLDERS") Each of the officers and/or directors
will, however, be reimbursed for any out-of-pocket expenses incurred on behalf
of the Company.
Upon completion of the minimum Offering the following salaries will be paid
to the officers and directors of the Company:
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Name Capacities Served Annual Compensation
---- ----------------- -------------------
Michael M. Chaffee President and Chairman $ 80,000.00
of the Board
Raymond Baptista Chief Financial Officer $ 70,000.00
and Director
Eric A. Popkoff Vice-President-Corporate $ 62,000.00
Relations, Director
These salaries will not be retroactive and will only commence upon
completion of the minimum Offering.
There is a proposed two year employment contract between the Company and
Mr. Popkoff, effective upon the Closing of the minimum offering, which provides
for an annual salary of $62,000 the first year of the contract and $70,000 the
second year of the contract. Thereafter, Mr. Popkoff will serve at the will of
the Board. There are no proposed employment contracts between the Company and
Messrs. Chaffee & Baptista, who both serve at the will of the Board. There are
no proposed terminations of employment or change - in - control arrangements
between the Company and any of its officers and/or directors.
No Option/SAR Grants or long-term Incentive Plans-Awards have been granted
or awarded to any officers or directors of the Company and there are presently
no plans to implement any such benefits, except as provided in the employment
contract of Mr. Popkoff, which grants him, upon commencement of his employment
by the Company, the option to purchase up to 900,000 shares of the Company's
restricted common stock at a price of $.001 per share.
Indemnification
Pursuant to the By-Laws of the corporation, the Company has agreed to
indemnify an officer or director who is made a party to any proceeding,
including a law suit, 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 Nevada 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.
28
<PAGE>
Office Facilities
The Company's principal offices are located at 28281 Crown Valley Pkwy, Ste
225 Laguna Niguel, California. on a rent-free basis. Upon completion of sale of
the minimum number of Units pursuant to this Offering, the Company intends to
remain on these premises, and will be charged approximately $735 per month for
rent pursuant to a month-to-month verbal lease.
The Company also maintains a small field office in Lake Havasu City,
Arizona, on a month-to-month verbal lease and pays $180.00 per month and
utilizes office space at the Mineral Research Laboratory in Monrovia California
on an "as needed" basis.
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth certain information regarding ownership of
the Company's Common Stock as of the date of this Memorandum, and as adjusted to
reflect the sale of the Shares offered hereby, by each officer and director, all
officers and directors as a group, and by all other shareholders who own 5% or
more of the Company's Common Stock.
No. Percent Ownership Percent Ownership
of Before Offering After Offering
Shares Minimum Maximum
------ ------- -------
Michael M. Chaffee 1,050,000 23% 22.4% 20.7%
Raymond C. Baptista 200,000 4.4 4.3 3.9
Anchor Holdings Corp. 727,500 16 15.5 14.4
Bruce Cooper 500,000 11 10.7 9.9
All Officers and
Directors as a 1,250,000 27.4% 26.7 24.7
Group (1)(2)
_________________________
(1) Does not include 900,000 shares which Eric A. Popkoff has an option to
purchase upon commencement of his employment.
(2) Assumes that all of the Units offered hereby are sold, of which there can be
no assurance, and that the present shareholders do not purchase any Units in
this Offering. In either of such events, their percentage ownership would
increase accordingly. (See "RISK FACTORS-CONTROL OF THE COMPANY", "DILUTION" and
"OFFERING.")
29
<PAGE>
Future Sales by Present Shareholders
The aggregate of 4,555,000 shares of Common Stock held by the present
shareholders are deemed "restricted securities, as that term is defined in Rule
144 of the Rules and Regulations of the SEC promulgated under the Act ("Rule
144"). Under Rule 144, such shares can be publicly sold, subject to volume
restrictions and certain restrictions on the manner of sale, commencing two
years after their acquisition. Sales of shares by "affiliates" are also subject
to volume restrictions and certain other restrictions pertaining to the manner
of sale, all pursuant to Rule 144. Notwithstanding the foregoing, shareholders
holding 4,300,000 shares (constituting 94.4% of the Company's issued and
outstanding stock) have executed Lock-up Agreements with the Underwriter and the
Company, agreeing not to sell or otherwise transfer any of their Shares for a
period of twelve (12) months from the effective date of the Offering.
The 130,000 (510,000) Shares offered hereby are not "restricted securities"
under Rule 144 and can be publicly sold without compliance with Rule 144,
assuming there is a market therefor, of which there can be no assurance.
DESCRIPTION OF SECURITIES
-------------------------
Common Stock
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.001 per share. The holders of Common Stock (i) have
equal ratable rights to dividends from funds legally available therefor, when,
as and if declared by the Board of Directors, of the Company; (ii) are entitled
to share ratably all of the assets of the Company available for distribution to
holders of Common Stock upon liquidation, dissolution or winding up of the
affairs of the Company; (iii) do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions or rights
applicable thereto; and (iv) are entitled to one non-cumulative vote per share
on all matters on which stockholders may vote. All shares of Common Stock now
outstanding are fully paid for and non-assessable and all shares of Common Stock
which are the subject of this Offering, when issued, will be fully paid for and
nonassessable.
The Board of Directors is authorized to issue additional Common Stock within
the limits authorized by the Company's Articles of Incorporation and Bylaws.
The foregoing description concerning the Common Stock of the Company does
not purport to be complete. Reference is made to the Company's Articles of
Incorporation and Bylaws, as well as the applicable statutes of the State of
Nevada, for a more complete description of the rights and liabilities of
shareholders.
30
<PAGE>
Units
The Company is offering a minimum of 130,000 and a maximum of 510,000 Units
of Common Stock, par value $.001, pursuant to this Prospectus, at a price of
$6.00 per Unit. No fractional Units may be purchased. Each Unit consists of one
Share of Common Stock (the "Common Stock" or "Shares") and two redeemable common
stock purchase warrants ("Warrants"), designated "A Warrants" and "B Warrants".
Each of the A Warrants entitles the registered holder hereof to purchase one
share of the Common Stock at a price of $8.00, subject to adjustment in certain
circumstances at any time after the Warrants become separately tradeable, until
12 months from the date of this Prospectus. Each of the B Warrants entitles the
registered holder therof to purchase one share of the Common Stock at a price of
$7.00, subject to adjustment in certain circumstances, at any time after the
exercise of the A Warrant related to the Units until 24 months from the date of
this Prospectus. The Common Stock and the Warrants included in the Units will
not be separately transferable until 90 days after the date of this Prospectus
or such earlier date as the Company may determine.
Each of the 510,000 A Warrants sold in this offering will entitle the
registered holders thereof to purchase one share of the Common Stock at an
aggregate price of $8.00, subject to adjustment in certain circumstances, at any
time after the Warrant becomes separately tradeable, until 12 months from the
date of this Prospectus. Each of the 510,000 B Warrants will entitle the
registered holders thereof to purchase one share of Common Stock at a price of
$7.00, subject to adjustment in certain circumstances, at any time after
exercising the A Warrant related to the Units, until 24 months from the date of
this Prospectus or such earlier date as the Company may determine. The shares of
Common Stock underlying the Warrants when issued upon the exercise thereof and
payment of the purchase price, will be fully paid and nonassessable.
The Warrants may be exercised upon the surrender of the Warrant Certificate
on or prior to the expiration of the exercise period, with the form of election
to purchase included on the Warrant Certificate properly complete and executed,
together with payment of the exercise price to the Warrant Agent. No fractional
shares will be issued upon the exercise of the Warrants. The Warrants do not
confer upon the holders thereof any voting rights or any other rights as
shareholders of the Company. Upon notice to the Warrant holders, the Company has
the right to reduce the exercise price or extend the expiration date of the
Warrants. The exercise price and number of shares of Common Stock issuable upon
the exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, including stock splits, combinations and reclassification.
The exercise price of the Warrants is arbitrary and there can be no
assurance that the value of the Common Stock will ever rise to a level where
exercise of the Warrants would be of any economic benefit to the Warrant holder.
In order for the holder to exercise the Warrants, there must be a current
registration statement on file with the Securities and Exchange Commission and
31
<PAGE>
and various state securities commissions to continue registration of the shares
of Common Stock underlying the Warrants. The Company intends to file an
amendment to this Registration Statement covering the Warrants at a time when
the market price of the Common Stock is higher than the exercise price of the
Warrants. The filing of an amendment to this Registration Statement could result
in substantial expense to the Company, and there can be no assurance that the
Company will be able to file an amendment to this Registration Statement. The
Company will make reasonable efforts and believes that is will be able to
qualify the shares of Common Stock underlying the Warrants for sale in those
states where the Units are offered. The Warrants may be deprived of any value if
a current prospectus covering the Shares issuable upon exercise thereof is not
kept effective, if the underlying Shares are not qualified in states in which
the Warrant holder resides, or if the holder is unable to sell the Warrants.
Warrant holders who move to states in which the Warrants are not qualified for
sale may not be able to exercise their Warrants. The Warrants will be issued
subject to the terms and conditions of a Warrant Agency Agreement between the
Company and American Securities Transfer, Inc. of Denver, as Warrant Agent.
Non-Cumulative Voting
The holders of shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. After this
Offering is completed, the present shareholders will own 97% (90%) of the
outstanding shares. (See "PRINCIPAL SHAREHOLDERS.")
Dividends
As of the date of this Prospectus, the Company has not paid any cash
dividends to shareholders nor does it anticipate payment of any such cash
dividends in the foreseeable future. The declaration of any future cash
dividends will be at the discretion of the Board of Directors and will depend
upon earnings, if any, capital requirements and the financial position of the
Company, general economic conditions, and other pertinent actors.
Reports to Shareholders
The Company will furnish annual reports to shareholders containing audited
financial statements of the Company, and will also furnish unaudited quarterly
financial statements.
Transfer Agent
The Company has appointed American Securities Transfer & Trust, Inc.,
Denver, Colorado, as the transfer agent for its Common Stock.
32
<PAGE>
CERTAIN TRANSACTIONS
In April, 1994, the Company issued 1,050,000 shares of restricted Common
Stock to Michael M. Chaffee, an officer, director and principal shareholder of
the Company and 1,000,000 shares of restricted Common Stock to Dr. Ralph E.
Pray, who at that time was an officer, director and principal shareholder, in
exchange for assets (mining properties) owned by Messrs. Chaffee and Pray prior
to becoming officers, directors and principal shareholders of the Company. Since
no Phase 1 evaluation had been done, and accordingly, no value was assigned to
such property, the number of shares issued to Messrs. Chaffee and Pray were
arbitrarily determined by Messrs. Chaffee and Pray, the principal shareholders
of the Company. (See "BUSINESS OF THE COMPANY", "PRINCIPAL SHAREHOLDERS",
"MANAGEMENT" and "FINANCIAL STATEMENTS.")
In a private sale of securities in March, 1994, the Company issued 225,000
shares of restricted Common Stock to Amyn Dahya, an unrelated third party, as
additional consideration for a loan in the amount of $100,000.00, a portion of
which was used to acquire some of the current properties owned by the Company.
Mr. Dayha does not have registration rights with respect to any of the shares
purchased. The loan was due and payable on March 29, 1995 and accrues interest
at the rate of 12% per annum ($1,000 per month) until paid in full. The payment
date was subsequently extended and the note is now due on February 15, 1999. No
principal payments have been made on such note, and as of June 30, 1998 accrued
interest amounts to $51,000 and will continue to accrue at the rate of $1,000
per month. No proceeds of the offering will be applied toward repayment of the
note. (See "PRINCIPAL SHAREHOLDERS" and "FINANCIAL STATEMENTS.")
In a private sale of securities in March, 1995, the Company issued
2,200,000 shares of restricted Common Stock to Anchor Holdings, Inc., an
unrelated third party, in exchange for $2,200.00 in cash. Anchor Holdings, Inc.
does not have registration rights with respect to any of the shares purchased.
(See "PRINCIPAL SHAREHOLDERS" and "FINANCIAL STATEMENTS.")
On March 7, 1995, the Company entered into a Loan Agreement with C.W. and
Neva B. Lewis ("Lewis"), unrelated third parties, wherein Lewis advanced
$20,000.00 to the Company. The proceeds of such loan were utilized for partial
payment of the contract deposit for the Big Mike Mine property. In consideration
for the loan, the Company will pay Lewis the sum of $50,000 from the proceeds of
this Offering. In addition, the Company sold 30,000 shares of its restricted
Common Stock to Lewis at par value for a total consideration of $30. Lewis does
not have registration rights with respect to any of the shares purchased.
Subsequent to December 31, 1997, $20,000 was repaid to Lewis, reducing the
balance due from the proceeds of the offering to $30,000. (See "USE OF
PROCEEDS.")
On March 10, 1995, the Company entered into a Purchase Agreement with Big
Mike Limited Partnership to acquire all right, title and interest in and to
certain unpatented mining claims in Pershing County, Nevada. The purchase price
for the property was $125,000.00, and 150,000 shares of the Company's common
stock upon Closing of the transaction. The purchase price was to be paid as
follows: $25,000 upon signing the contract; the balance of $100,000 and the
150,000 shares upon closing of the transaction. Because of the currently reduced
33
<PAGE>
price of copper, the Company has elected not to complete the purchase, and has
forfeited the $25,000 down payment. The Company has no further liability
pursuant to the contract.
The Company anticipates using the services of Mineral Research Laboratory
for all of its primary geological sampling, testing and ore certification.
Mineral Research Laboratory is wholly owned by Dr. Ralph Pray, a former officer,
director and principal shareholder of the Company. Dr. Pray may be required to
hire additional personnel to work directly on the Company's projects and the
salaries of all such personnel would be reimbursed by the Company for the hours
devoted to the business of the Company. The Company estimates that the amount
expended to Mineral Research Laboratory could be between $2,000 and $3,000 per
month, depending on the work load and number of additional employees required.
Any such services obtained from the Mineral Research Laboratory and/or Dr. Pray
will be obtained at rates and on conditions competitive in the marketplace and
favorable to the Company. (See "MANAGEMENT", "BUSINESS OF THE COMPANY" and
"CONFLICTS OF INTEREST".)
CONFLICTS OF INTEREST
---------------------
Certain conflicts of interest presently exist from the standpoint that one
of the former Officers of the Company is directly involved in and owns another
business which will be utilized by the Company and for which he will receive
compensation from the Company. Dr. Ralph E. Pray, a former officer, director and
principal shareholder of the Company, is an officer, director and principal
shareholder of Mineral Research Laboratory in Monrovia, California, a facility
which will act as the Company's primary geological sampling, testing and
certification center. (See "RISK FACTORS - CONFLICTS OF INTEREST", "CERTAIN
TRANSACTIONS", "MANAGEMENT", "USE OF PROCEEDS" and "PRINCIPAL SHAREHOLDERS.")
The foregoing arrangement with Dr. Pray was made by the Company and did not
result from arm's-length negotiations. Accordingly, this arrangement could be
deemed as a conflict of interest, not only from the standpoint that Dr. Pray
will be paid from proceeds of this Offering, but also to the extent that he will
be devoting his time and energy to other companies and projects which may
compete with the Company. (See "RISK FACTORS - CONFLICTS OF INTEREST", "CERTAIN
TRANSACTIONS", "MANAGEMENT", "USE OF PROCEEDS" and "PRINCIPAL SHAREHOLDERS.")
LITIGATION
----------
The Company is not a part to any pending litigation and, to the best of its
knowledge, none is contemplated or threatened.
ADDITIONAL INFORMATION
----------------------
The Company has filed with the Securities and Exchange Commission
("Commission"), 450 Fifth Street N.W., Washington, D.C. 20549, an SB-2
Registration Statement under the Securities Act of 1933, as amended, with
respect to the securities offered by this Prospectus. This Prospectus omits
34
<PAGE>
certain information contained in the Registration Statement. For further
information, reference is made to the Registration Statement and the Exhibits
and Schedules filed therewith. Statements contained in this Prospectus as to the
contents of any document referred to are not necessarily complete, and where
such document is an Exhibit to the Registration Statement, each such statement
is deemed to be qualified and amplified in all respects by the provisions of the
Exhibit. Copies of the complete Registration Statement, including Exhibits, may
be examined at the Securities and Exchange Commission offices in Washington,
D.C. Copies of the Registration Statement may be obtained upon payment of the
usual fees prescribed by the Commission for reproduction and handling.
EXPERTS
-------
The audited financial statements of the Company as of December 31, 1994,
1995, 1996, 1997, and June 30, 1998, included in this Prospectus, have been
examined by Luxenberg & Associates, Certified Public Accountants, 22431 Antonio
Parkway, #B160-457, Rancho Santa Margarita, California 92688.
LEGAL MATTERS
-------------
The law office of Steven L. Siskind, 645 Fifth Avenue, Suite 403, New York,
New York 10022, Telephone (212) 750-2002, has acted as legal counsel for the
Company regarding the validity of the securities offered hereby.
FINANCIAL STATEMENTS
--------------------
The Company's fiscal year ends December 31. The audited financial
statements for the Company for the period ended June 30, 1998 and December 31,
1997, 1996, 1995 and 1994 follow immediately.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
Item 22. Indemnification of Directors and Officers.
The only statute, charter provision, bylaw, contract, or other arrangement
under which any controlling person, director or officer of the Registrant is
insured or indemnified in any manner against any liability which he may incur in
his capacity as such, is as follows:
(1) Article XII of the Articles of Incorporation of the Company, filed as
Exhibit 3.1 to the Registration Statement.
(2) Article XI of the By-Laws of the Company, filed as Exhibit 3.2 to the
Registration Statement.
(3) Nevada Revised Statutes, Chapter 78.
35
<PAGE>
The general effect of the foregoing is to indemnify a control person,
officer or director from liability, thereby making the Company responsible for
any expenses or damages incurred by such control person, officer or director in
any action brought against them based on their conduct in such capacity,
provided they did not engage in fraud or criminal activity.
Item 23. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering (assuming all Shares are sold), all
of which are to be paid by the Registrant, are as follows:
SEC Registration Fee $ 930.00
National Association of
Securities Dealers, Inc.
Filing Fees 800.00
Printing Expenses 500.00
Accounting Fees and Expenses 5,000.00
Legal Fees and Expenses 30,000.00
Blue Sky Fees/Expenses 1,000.00
Transfer Agent Fees 500.00
Miscellaneous Expenses 1,270.00
----------
TOTAL $40,000.00
Item 24. Recent Sales of Unregistered Securities.
During the past three years, the Registrant sold securities, all of which
were shares of Common Stock which were not registered under the Securities Act
of 1933, as amended, pursuant to an exemption under Section 4(2) of that Act, as
follows:
Name and Address Date Shares Consideration
- ---------------- ---- ------ -------------
Anchor Holdings, Inc. 3-24-95 2,200,000 raise capital
5277 Cameron Street #130
Las Vegas, NV 89118
C.W. & Neva B. Lewis 3-7-95 30,000 additional consideration
P.O. Box 1160 for $20,000 loan
Powell, Wyoming 82435
In 1994, the Registrant sold securities, all of which were shares of Common
Stock which were not registered under the Securities Act of 1933, as amended,
pursuant to an exemption under Section 4(2) of that Act, as follows:
36
<PAGE>
Name and Address Date Shares Consideration
- ---------------- ---- ------ -------------
Michael M. Chaffee 3-8-94 1,050,000 Assets/Leasehold Rights
1588 Sea Lancer Dr. (see "Financial Statements")
Lake Havasu City, AZ 86403
Dr. Ralph E. Pray 3-8-94 1,000,000 Assets/leasehold Rights
805 S. Shamrock Avenue (see "Financial Statements")
Monrovia, CA 91091
Amyn Dahya 4-8-94 225,000 $100,000 Loan 3/25/94
1335 Greg Street (see "Financial Statements")
Sparks, NY 89431
Glen Dobbs 6-28-94 4,000 Repay $10,000 Loan dated
1536 W. Pacific 10/3/92
Coast Highway
Long Beach, CA 90810
Robert Kay 6-28-94 10,000 Services
611 W. 6th Street #2610
Los Angeles, CA 92262
Oline Higginbothem 6-28-94 10,000 Repay two Loans $15,000 each
722 N. Calle Rolph dated 3/12/91 & 8/1/91
Palm Springs, CA 92262
William Palmertree 6-28-94 5,000 Repay $15,000 Loan
13766 Star Hill Lane dated 3/2/93
La Punte, CA 91764
Maria Cammelo 6-28-94 10,000 Repay two Loans $15,000 each
Berth 202 dated 3/12/91 & 8/1/91
Long Beach, CA 90744
Coy Green 6-28-94 1,000 Repay $2,000 Loan dated
12480 Cedar Street 6/2/92
Chino, CA 91709
John Adams 6-28-94 1,000 Repay $2,000 Loan dated
c/o Newmarks Center 1/15/93
Berth 204
Wilmington, CA 90744
37
<PAGE>
Jospeh Granitelli 6-28-94 8,000 Repay $24,000 Loan
1260 Calle Suerte dated 1/23/92
Camerio, CA 93012
Tom Gibson 6-28-94 1,000 Repay $1,000 Loan
6821 Masquito Rd. dated 8/2/93
Placerville, CA 95667
All purchasers of the Registrant's Common Stock acknowledged in writing
that they were obtaining "restricted securities", as defined in Rule 144 under
the Act; that such shares cannot be transferred without appropriate registration
or exemption therefrom; that they must bear the economic risk of the investment
for an indefinite period of time; that they would not sell the securities
without registration or exemption therefrom; and that the Registrant would
restrict the transfer of the securities in accordance with such representations.
Each purchaser agreed that any certificate representing such shares would be
stamped with the usual legend restricting the transfer of such shares.
No underwriters were used in the sale and issuance of the foregoing shares
and none of the shares were offered publicly.
All of the foregoing shares were issued in transactions between the Company
and third parties not involving any public offering. The purchasers were all
friends and/or associates of the Company's officers and directors, some of whom
were "accredited investors", as that term is defined in Regulation D, Rule 501.
In addition, each of the sales was effected without the benefit of advertising
or any general solicitation and each purchaser represented that he/she had such
knowledge and experience in financial and business matters such that he/she is
capable of evaluating the merits and risks of the prospective investment and
purchased the shares for their personal account without any view toward resale
or future distribution of whatsoever nature.
The shares issued to repay loans were issued to purchasers who fell within
the scope of the paragraph set forth above. The loans were advanced to the
Company on verbal agreements with the lenders and the funds were used in the
organizational phase of the Company.
The services provided by Robert Kay were for assistance in financial
consulting and structuring of the Company and its plan of distribution for this
Offering.
Item 27. Exhibits.
The following Exhibits are filed as part of this Registration Statement,
pursuant to Item 601 of Regulation K. All Exhibits have been previously filed
unless otherwise noted.
38
<PAGE>
Exhibit No. Title
- ----------- -----
1 Underwriting Agreement
1.1 Selected Dealers Agreement *
3 Articles of Incorporation *
3.1 Bylaws *
4.1 Subscription Agreement *
5 Opinion of Steven L. Siskind, Esq. regarding the legality of
the Securities being registered
10.1 Promissory Note payable to Amyn Dahya *
10.2 Extension Agreement with Amyn Dahya *
10.3 Agreement with Jose Echenique re: Promontorio Mine Tailings *
10.4 Relinquishment of Gold Spur Mining Claim by Ralph E. Pray *
10.5 Relinquishment of Deep Gold Mining Claim by Ralph E.Pray
and others *
10.6 Deep Gold Mining Claim Location Notice by Michael M. Chaffee
and others *
10.7 Gold Spur Lode Mining Claim Location Notice by Michael M. Chaffee *
10.8 Gold Spur Mine Lease between M. Chaffee & Summa Metals Corp. *
10.9 Deep Gold Mine Lease between M. Chaffee & Summa Metals Corp. *
10.10 Loan Agreement with C.W. & Neva Lewis *
10.11 Proceeds Escrow Agreement *
10.12 Employment Agreement with Eric Popkoff *
10.13 Form of Shareholders Lock-up Agreement *
23 Consent of Steven L. Siskind, Esq. (See Exhibit 5) *
23.1 Consent of Luxenberg & Associates, CPA *
* Filed herewith
Item 28. Undertakings. 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.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
39
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
change to such information 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.
THIS PAGE INTENTIONALLY LEFT BLANK
40
<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 SB-2 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized in Laguna Niguel, California on the 6th day of August,
1998.
SUMMA METALS CORP.
By: /s/ Michael M. Chaffee, President
-------------------------------------
Michael M. Chaffee, President
Pursuant to the requirements of the Securities At of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Date
/s/ Michael M. Chaffee August 6, 1998
------------------------------------------
Michael M. Chaffee
President and Director
/s/ Kathy A. Folkers August 6, 1998
------------------------------------------
Kathy A. Folkers, Secretary
/s/ Raymond Baptista August 6, 1998
------------------------------------------
Raymond Baptista, Director,
Treasurer and Chief Financial Officer
/s/ Eric A. Popkoff August 6, 1998
------------------------------------------
Eric A. Popkoff, Vice-President
Corporate Relations, Director
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
The Stockholders
Summa Metals Corp.
Laguna Niguel, California
I have compiled the accompanying balance sheet of Summa Metals Corp., as of June
30, 1998, and the related statements of operations, stockholders' equity, and
cash flows for the six months then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting, in the form of financial statements,
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
The aforementioned financial statements have been prepared assuming that the
Company will continue as a going concern.
As discussed in Note 5 to the financial statements, the Company has been in the
exploration stage since its inception on March 8, 1994. The Company has no
present source of income and will require financial assistance to pursue its
objectives and meet obligations as they become due, which raises substantial
doubt about its ability to continue as a going concern. Realization of a major
portion of the assets is dependent upon Management's ability to meet its future
financing objectives, as well as the Company's success of its future operations,
the outcome of which cannot be determined at this time. The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
July 17, 1998
Rancho Santa Margarita, California
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Balance Sheet
June 30, 1998
ASSETS
CURRENT ASSETS
Cash $ 93,890
Prepaid expenses 45,800
-----------
TOTAL CURRENT ASSETS 139,690
Leasehold deposit - Notes 2 and 4 5,000
Due from stockholders 2,050
Other assets 1,042
Syndication costs 88,941
-----------
TOTAL ASSETS $ 236,723
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payables - Note 3 $ 463,000
Accounts payable 6,118
Accrued interest payable - Note 3 54,000
-----------
TOTAL LIABILITIES - all current 523,118
-----------
COMMITMENTS AND CONTINGENCIES - Note 4
STOCKHOLDERS' EQUITY
Common stock - 25,000,000 shares
authorized, par value $.001,
2,325,000 and 4,555,000 issued
and outstanding - Note 2 4,555
Accumulated deficit (290,950)
-----------
TOTAL STOCKHOLDERS' EQUITY (286,395)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 236,723
-----------
Compiled. See accompanying accountant's report.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statement of Operations
For the Six Months Ended June 30, 1998
Interest income $ 236
-----------
Expenses
On-site operating expenses -
General and administrative 68,518
Interest 7,000
-----------
Total expenses 75,518
Net loss $ (75,282)
===========
Basic earnings per share $ (0.017)
===========
Diluted earnings per share $ (0.017)
===========
Compiled. See accompanying accountant's report.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statement of Stockholders' Equity
For the Six Months Ended June 30, 1998
Common Stock
Par Value $.001 Accumulated
Shares Amount Deficit
--------- ------ -----------
Balance - December 31, 1997 4,555,000 $4,555 $ (215,668)
Net loss _________ ______ (75,282)
Balance - June 30, 1998 4,555,000 $4,555 $ (290,950)
Compiled. See accompanying accountant's report.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statement of Cash Flows
For the Six Months Ended June 30, 1998
Cash Flows From Operating Activities:
Net loss $ (75,282)
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in prepaid expenses (45,800)
Increase in accounts payable 1,364
Increase in interest payable 9,000
-----------
Cash consumed by operating activities (110,718)
-----------
Cash Flows From Investing Activities:
Other assets (1,042)
-----------
Cash consumed by investing activities (1,042)
-----------
Cash Flows From Financing Activities:
Syndication costs (49,588)
Proceeds from notes payable 243,000
-----------
Cash provided from financing activities 193,412
-----------
Increase in cash and cash equivalents 81,652
Cash balance - beginning 12,238
-----------
Cash balance - ending $ 93,890
===========
Cash paid for interest and income taxes are as follows:
Interest $ -
===========
Income taxes $ -
===========
Compiled. See accompanying accountant's report.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Notes to Financial Statements
For the Six Months Ended June 30, 1998
THE COMPANY
Summa Metals Corp. (the Company) was incorporated on March 8, 1994, in the
state of Nevada, for the purpose of drilling and exploration of precious
metals on land that it currently has rights to and future properties it
intends to obtain. The Company has been in the development and exploration
stage since its formation.
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The following is a summary of the accounting policies and practices of the
Company:
Accounting method - The Company utilizes the accrual method of accounting
for financial statement reporting and income tax filing purposes.
Accounting for investments - Investments are accounted for using the cost
method of accounting.
NOTE 2 - INVESTMENT IN LEASEHOLD
The investment in leasehold consists of subleased rights to mine four
separate parcels of real property. One of the leasehold investments
consists of the subleased rights to certain mill tailings, primarily of
gold and silver, located in Durango, Mexico. The second and third
investments are the subleased rights to explore and mine properties located
in Northern California. The fourth investment is the subleased rights to
mine a currently non-operating, unpatented load and placer mining claim
located in Pershing County, Nevada.
During April 1994, the Company acquired the first three investments from
two of its stockholders. The Company issued 2,050,000 shares of its common
stock in exchange for the investment. The investment has been recorded at
the cost basis of the stockholders in accordance with generally accepted
accounting principles. Since the costs incurred by the stockholders would
have been operating expenses if the Company had incurred them, the cost
basis for these rights is zero and has been recorded at zero on the
Company's balance sheet.
NOTE 3 - NOTES PAYABLE
The notes payable consist of notes to fourteen different individuals. The
first note, in the amount of $100,000, bears interest at an annual rate of
twelve percent (12%). The entire amount of principal and interest is due at
maturity of the note, February 15, 1999. As of June 30, 1998, $51,000 of
interest has been accrued on the note payable.
The second stockholder note is in the amount of $20,000. In connection with
the issuance of this note payable, the Company sold the maker 30,000 shares
of common stock at par, for a total sales price of $30. The terms of the
note require a lump sum repayment of $50,000 upon receipt of funds from the
<PAGE>
public offering of the Company. As of June 30, 1998, this note has been
reduced by a payment of $20,000.
The third stockholder note is in the amount of $50,000. The terms of the
note include the accrual of interest at an annual rate of ten and one-half
percent (10.5%) with all principal and interest due on August 31, 1999.
The remaining stockholder notes, in the aggregate amount of $283,000, are
payable to eleven separate individuals. The notes bear interest at annual
rates ranging from ten (10%) to sixteen percent (16%) with all principal
and interest due upon maturity. All eleven of these notes mature in the
second half of 1998 or the first half of 1999.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company has entered into an agreement with an individual whereby the
Company offered the position of Vice President of Corporate and Investor
relations. The terms of the agreement call for the individual to begin his
employment upon the completion of the initial public offering minimum
capitalization. The term of the agreement is for two years, to begin when
employment commences. In connection with the commencement of employment,
the employee will be given the option to acquire 900,000 shares of Company
stock, at an issuance price of $.001 per share. The option will allow the
employee to purchase the stock at any time within the two year period
beginning with the commencement of employment. The difference between the
exercise price of the option and the market value of the shares shall be
reported as deferred compensation and amortized over the two year life of
the contract, beginning with the commencement of employment.
NOTE 5 - GOING CONCERN
The Company is still in the development state of its evolution. As of
February 28, 1998, the Company does not have any revenue or other source of
income. Management recognizes the need to obtain additional sources of cash
to continue its development and operations. In this regard, Management has
obtained working capital loans from existing and new shareholders where
appropriate. Currently, Management is in the process of preparing an
initial public offering to obtain the necessary capital to continue its
development.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
The Stockholders
Summa Metals Corp.
Laguna Niguel, California
I have audited the accompanying balance sheet of Summa Metals Corp. as of
December 31, 1997, 1996, 1995 and 1994 and the related statements of operations,
changes in stockholders equity and cash flows for the years ended December 31,
1997, 1996 and 1995, and for the period March 8, 1994 (inception) through
December 31, 1994. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overal financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of Summa Metals Corp. as of
December 31, 1997, 1996, 1995 and 1994, and the results of its operations,
changes in stockholders equity and its cash flows for the years ended December
31, 1997, 1996, and 1995, as well as for the period March 8, 1994 (inception)
through December 31, 1994, in conformity with generally accepted accounting
principles.
The aforementioned financial statements have been prepared assuming that the
Company will continue as a going concern.
As discussed in Note 5 to the financial statements, the Company has been in the
exploration stage since its inception on March 8, 1994. The Company has no
present source of income and will require financial assistance to pursue its
objectives and meet obligations as they become due, which raises substantial
doubt about its ability to continue as a going concern. Realization of a major
portion of the assets is dependent upon Management's ability to meet its future
financing objectives, as well as the Company's success of its future operations,
the outcome of which cannot be determined at this time. The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
June 6, 1998
Rancho Santa Margarita, California
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
December 31,
1994 1995 1996 1997
-------- -------- -------- --------
ASSETS
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash $ 28,490 $ 17 $ 1,694 $ 12,238
-------- -------- -------- --------
TOTAL CURRENT ASSETS 28,490 17 1,694 12,238
Leasehold deposit - Notes 2 and 4 2,050 25,000 30,000 5,000
Due from stockholders - 2,050 2,050 2,050
Syndication costs - - 19,000 39,353
Investments in leasehold - Notes 2 and 3 - - - -
-------- -------- -------- --------
TOTAL ASSETS $ 30,540 $ 27,067 $ 52,744 $ 58,641
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payables - stockholders - Note 3 $100,000 $122,500 $175,200 $220,000
Accounts payable - 2,500 3,595 4,754
Accrued interest payable - Note 3 9,000 21,000 33,000 45,000
-------- -------- -------- --------
TOTAL LIABILITIES - all current 109,000 146,000 211,795 269,754
-------- -------- -------- --------
COMMITMENTS AND CONTINGENCIES - Note 4
STOCKHOLDERS' EQUITY
Common stock - 25,000,000 shares
authorized, par value $.001,
2,325,000 and 4,555,000 issued
and outstanding - Note 2 2,325 4,555 4,555 4,555
Accumulated deficit (80,785) (123,488) (163,606) (215,668)
-------- -------- -------- --------
TOTAL STOCKHOLDERS' EQUITY (78,460) (118,933) (159,051) (211,113)
-------- -------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 30,540 $ 27,067 $ 52,744 $ 58,641
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
For The Period For The Year For The Year For the Year
Mar. 8, 1994 to Ended Ended Ended
Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997
--------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income $ 788 $ 99 $ - $ -
-------- -------- -------- --------
Expenses
On-site operating expenses 13,911 12,000 12,720 28,890
General and administrative 58,662 18,802 14,398 11,172
Interest 9,000 12,000 12,000 12,000
-------- -------- -------- --------
Total expenses 81,573 42,802 40,118 52,062
-------- -------- -------- --------
Net loss $(80,785) $(42,703) $(40,118) $(52,062)
======== ======== ======== ========
Basic earnings per share $ (0.035) $ (0.009) $ (0.009) $ (0.011)
======== ======== ======== ========
Diluted earnings per share $ (0.035) $ (0.009) $ (0.009) $ (0.011)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statements of Changes in Stockholders' Equity
For The Period March 8, 1994 (inception)
through December 31, 1994, and for the
Years Ended December 31, 1995, 1996 and 1997
Common Stock
Par Value $.001 Accumulated
Shares Amount Deficit
--------- -------- -----------
Original issuance of common stock
(March 1994) 2,050,000 $ 2,050 $ -
Issuance of common stock
(April 1994 - issuance of note
payable) - Note 3 225,000 225 -
Issuance of common stock
(June 1994) 50,000 50 -
Net loss - - (80,785)
--------- -------- ----------
Balance - December 31, 1994 2,325,000 2,325 (80,785)
Issuance of common stock
(March 1995 - cash) 2,200,000 2,200 -
Issuance of common stock
(March 1995 - note payable)
Note 3 30,000 30 -
Net loss - - (42,703)
--------- -------- ----------
Balance - December 31, 1995 4,555,000 4,555 (123,488)
Net loss - (40,118)
--------- -------- ----------
Balance - December 31, 1996 4,555,000 4,555 (163,606)
Net loss - - (52,062)
--------- -------- ----------
Balance - December 31, 1997 4,555,000 $ 4,555 $ (215,668)
========= ======== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
For The Period For The Year For The Year For The Year
Mar. 8, 1994 to Ended Ended Ended
Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997
------------- ------------- -------------- ---------------
Cash Flows From Operating Activities:
<S> <C> <C> <C> <C>
Net loss $ (80,785) $ (42,703) $ (40,118) $ (52,062)
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in accounts payable - 2,500 1,095 1,159
Increase in interest payable 9,000 12,000 12,000 12,000
----------- ----------- ----------- ------------
Cash consumed by operating activities (71,785) (28,203) (27,023) (38,903)
----------- ----------- ----------- ------------
Cash Flows From Investing Activities:
Leasehold deposit - (25,000) (5,000) 25,000
----------- ----------- ----------- ------------
Cash consumed by investing activities - (25,000) (5,000) 25,000
----------- ----------- ----------- ------------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock 275 2,230 - -
Syndication costs - - (19,000) (20,353)
Proceeds from notes payable - stockholders 100,000 22,500 52,700 44,800
----------- ----------- ----------- ------------
Cash provided from financing activities 100,275 24,730 33,700 24,447
----------- ----------- ----------- ------------
Increase in cash and cash equivalents 28,490 (28,473) 1,677 10,544
Cash balance - beginning - 28,490 17 1,694
----------- ----------- ----------- ------------
Cash balance - ending $ 28,490 $ 17 $ 1,694 $ 12,238
=========== =========== =========== ============
Cash paid for interest and income taxes are as follows:
Interest $ - $ - $ - $ -
=========== =========== =========== ============
Income taxes $ - $ - $ - $ -
=========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUMMA METALS CORP.
(an Development Stage Company)
Notes to Financial Statements
For The Period March 8, 1994 (inception) through
December 31, 1994, and for the Years Ended
December 31, 1995, 1996 and 1997
THE COMPANY
Summa Metals Corp. (the Company) was incorporated on March 8, 1994, in the
state of Nevada, for the purpose of drilling and exploration of precious
metals on land that it currently has rights to and future properties it
intends to obtain. The Company has been in the development and exploration
stage since its formation.
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
The following is a summary of the accounting policies and practices of the
Company:
Accounting method - The Company utilizes the accrual method of accounting
for financial statement reporting and income tax filing purposes.
Accounting for investments - Investments are accounted for using the cost
method of accounting.
NOTE 2 - INVESTMENT IN LEASEHOLD
The investment in leasehold consists of subleased rights to mine four
separate parcels of real property. One of the leasehold investments
consists of the subleased rights to certain mill tailings, primarily of
gold and silver, located in Durango, Mexico. The second and third
investments are the subleased rights to explore and mine properties located
in Northern California. The fourth investment is the subleased rights to
mine a currently non-operating, unpatented load and placer mining claim
located in Pershing County, Nevada.
During April 1994, the Company acquired the first three investments from
two of its stockholders. The Company issued 2,050,000 shares of its common
stock in exchange for the investment. The investment has been recorded at
the cost basis of the stockholders in accordance with generally accepted
accounting principles. Since the costs incurred by the stockholders would
have been operating expenses if the Company had incurred them, the cost
basis for these rights is zero and has been recorded at zero on the
Company's balance sheet.
The fourth investment was purchased in March 1995 for total consideration
of $125,000 (cash of $25,000 plus a note payable of $100,000, see note 3" )
plus an agreement on behalf of the Company to issue 150,000 shares of
restricted stock upon the payment of the note payable. If the note payment
is not paid when due, the seller has the option to terminate the agreement
and keep the $25,000 down payment. The terms of the agreement require that
in the event of termination, the Company will not issue the 150,000 shares
of stock. As of September 1997, the Company notified the seller that it was
not going to complete the transaction and forfeited the $25,000 deposit.
<PAGE>
NOTE 3 - NOTES PAYABLE - STOCKHOLDERS
The notes payable - stockholders consists eight notes to different
stockholders. The first note, in the amount of $100,000, bears interest at
an annual rate of twelve percent (12%). The entire amount of principal and
interest is due at maturity of the note, February 15, 1999. As of December
31, 1997, $45,000 of interest has been accrued on the note payable.
The second stockholder note is in the amount of $20,000. In connection with
the issuance of this note payable, the Company sold the maker 30,000 shares
of common stock at par, for a total sales price of $30. The terms of the
note require a lump sum repayment of $50,000 upon receipt of funds from the
public offering of the Company. As of December 31, 1997, no interest has
been accrued on this note.
The third stockholder note is in the amount of $50,000. The terms of the
note include the accrual of interest at an annual rate of ten and one-half
percent (10.5%) with all principal and interest due on August 31, 1999.
The remaining stockholder notes, in the aggregate amount of $50,000, are
payable to five separate stockholders. The notes bear interest at annual
rates ranging from fourteen (14%) to sixteen percent (16%) with all
principal and interest due upon maturity. All five of these notes mature in
the second half of 1998.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company has entered into an agreement to acquire a leasehold interest
in a mining claim located in Pershing County, Nevada (See note 2). The
terms of the agreement require that the Company make a payment of $100,000
to complete the acquisition. As of September 30, 1995, the Company has made
a non-refundable deposit of $25,000 for the option to acquire the mine. In
September 1997, the Company notified the seller that it was not going to
complete the transaction.
The Company has entered into an agreement with an individual whereby the
Company offered the position of Vice President of Corporate and Investor
relations. The terms of the agreement call for the individual to begin his
employment upon the completion of the initial public offering minimum
capitalization. The term of the agreement is for two years, to begin when
employment commences. In connection with the commencement of employment,
the employee will be given the option to acquire 900,000 shares of Company
stock, at an issuance price of $.001 per share. The option will allow the
employee to purchase the stock at any time within the two year period
beginning with the commencement of employment. The difference between the
exercise price of the option and the market value of the shares shall be
reported as deferred compensation and amortized over the two year life of
the contract, beginning with the commencement of employment.
NOTE 5 - GOING CONCERN
The Company is still in the development state of its evolution. As of
December 31, 1997, the Company does not have any revenue or other source of
income. Management recognizes the need to obtain additional sources of cash
to continue its development and operations. In this regard, Management has
obtained working capital loans from existing and new shareholders where
appropriate. Currently, Management is in the process of preparing an
initial public offering to obtain the necessary capital to continue its
development.
Exhibit 1.1
PROPOSED SELECTED DEALER AGREEMENT
Dear Sirs:
Subject to the terms and conditions of the Underwriting Agreement with _______
we have been employed to find purchasers for an aggregate of 510,000 Units of
Common Stock of Summa Metals Corp., (the "Company") (on a best efforts, 130,000
Units or none basis as to the minimum offering, and on a best efforts basis
thereafter up to 510,000 Units), as more fully described in and subject to the
conditions set forth in the Prospectus contained in the Registration Statement
on Form SB-2 under the Securities Act of 1933 with respect to the which is
effective. The public offering price is $6.00 per Unit.
As Underwriters, we are offering to certain selected dealers who are members in
good standing of the National Association of Securities Dealers Inc. ("NASD")
(herein collectively called the "Selected Dealers") the right as set forth
herein to subscribe to a portion of the Shares at the public offering price of
$6.00 per Unit, less a concession as set forth below and on the following terms
and conditions; provided, however, that no NASD member may re-allow commissions
to any non-member broker-dealer.
1. Terms and Allotments. We expressly reserve the right to accept or reject in
our discretion, either in whole, or in part, and to allot and over-allot. In the
case of over-allotment, we agree to accept subscriptions, up to the amount of a
Selected dealer's Allotment, in the order of their receipt by us. If the
above-described offering is over allotted, we agree to notify you as soon as
practicable if we may not be able to fill orders for the entire number of Shares
indicated on your acceptance hereof.
2. Concessions. Except as may otherwise expressly be agreed, we agree to allow a
concession of $___ per Share on all Shares confirmed by us. We reserve the right
to modify or change, but not decrease, the foregoing concessions, and shall be
under no obligation to allow the same concession to all Selected Dealers. We
reserve the right not to pay such concession on Shares purchased by members from
us and repurchased by us at or below the public offering price prior to
termination of this Agreement.
Subscribers will be permitted to purchase only whole number of Units in round
lots as the Company will issue no fractional Units.
3. Delivery and Payment. You will notify us in writing when you have obtained
subscriptions to the Shares allotted to you and have received the purchase price
therefor. All checks received in payment for the Shares shall be payable to "
Summa Metals Corp./Escrow Account". You agree and covenant to transmit such
subscriptions (if any) without deduction for concessions promptly upon the
receipt thereof, (but in any event by noon of the business day following
receipt) to American Transfer & Trust, Inc. for deposit in Union Bank & Trust
Company, 100 Broadway, Denver, Colorado 80209 (the "Depository"), where they
will be held until paid to the Company on the closing date, hereinafter
specified or until returned to the respective subscribers. Each transmittal of
funds to the escrow account must be accompanied by a transmittal letter
specifying the total amount transmitted and the name, address, tax I.D. number
and number of Units purchased for each subscriber whose funds are being
transmitted. A copy of such letter must be sent to us at ____. In the event that
subscriptions for a minimum of 130,000 Units are obtained, you will receive a
notice from us to that effect specifying a closing date on which delivery will
be made to you of Units purchased by you pursuant hereto against payment
therefor at the public offering price. The closing shall be held at the offices
of ____ on such closing date. In the event that a minimum of 130,000 units are
not sold prior to _____ 1998, (90 days form the Effective Date) or the date 90
days thereafter if we have notified you of such extension, your will be so
notified, and you covenant and
<PAGE>
agree, in such event, that all subscriptions received by you (other than those
subscriptions returned directly by the Escrow Agent) shall be returned promptly
upon receipt of notice from us. Delivery of certificates for Units subscribed
for by you and confirmed by us hereunder will take place at the closing or as
soon thereafter as practicable. Certificates delivered will be in customer's
names where practicable and the balance in street name and, in denominations of
1,000 units. Settlement for concessions payable will be made as promptly as
practicable after an accepted subscription as above provided. We may, in
addition to any other remedies provided by law, cancel such subscription by
letter, telephone or telegraph notice to you.
4. Offering. Selected Dealers may immediately offer Units for sale and take
orders therefor, but only subject to confirmation. We, in turn, are prepared to
receive subscriptions and orders, subject, as set forth above, to acceptance and
allotment by us in whole or in part. Orders transmitted to us by telephone
should be confirmed by you by letter or telegram.
You agree to make a bona fide public offering of said Units, but you will not
offer or sell any of such Units below the public offering price before the
termination of this Agreement.
You also agree to abide by all applicable provisions of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, and the Rules and
Regulations under such Acts.
You agree, upon our request, at any time or times prior to the termination of
this Agreement to report to us as to the number of Units purchased by you
pursuant to the provisions hereof which then remain unsold and sell to us, for
our account, such portion of such unsold Units as we may designate, at the
public offering price less an amount to be determined by us not in excess of
the concession allowed to you.
No expenses shall be charged to Selected Dealers; however, you shall pay any
transfer tax on sales of the Units by you and you shall pay your proportionate
share of any transfer tax or other tax in the event that any such tax shall from
time to time be assessed against you and other Selected Dealers as a group or
otherwise.
You further agree not to sell any of the Units offered hereunder to any officer,
director, controlling stockholder, partner, employee or agent of your
organization, or member of the immediate family of any such person, except as
permitted under the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and the interpretations thereof.
5. Blue Sky. You agree to limit your offers and sales of the to the following
state in which you are qualified to act as a broker or dealer in securities:
6. Termination. This Agreement shall terminate 90 days from the Effective Date
unless the offering is extended for an additional 90 days or unless sooner
terminated by us by notice to you for any reason.
You understand that the offering is being made on a 130,000 Units or none best
efforts basis, as to the minimum of 130,000 Units by the Underwriter in
accordance with the terms of the Underwriting Agreement and will be terminated
in the event 130,000 Units' are not sold in accordance with the terms thereof.
In such event, none of the Units to be sold hereunder shall be issued or sold;
and you agree that in such case you will promptly return all funds received by
you and that you may be holding on account of proposed purchases of the Units to
the persons who tendered the same, without deduction. In the event of any
termination, the Underwriter shall have no responsibility to you.
<PAGE>
Notwithstanding such termination, you may remain liable to the extent provided
by law for your proportionate amount of any claim, demand or liability which may
be asserted against you alone or against you together with other Selected
Dealers and/or us, based upon the claim that the Selected Dealers or any of them
and/or we constitute an association, an unincorporated business, or any other
separate entity.
7. Use of Prospectus. Neither you nor any other person is authorized by the
Company or by us to give any information or make any representation other than
those contained in the Prospectus in connection with the sale of the Units and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or us. You also agree to deliver a copy of
the Prospectus to each prospective purchaser as required by the Securities Act
and by the Rules and Regulations thereunder. Additional copies of the Prospectus
will be supplied in reasonable quantity upon request.
You are not authorized to act as our agent or as agent for the Company in
offering the Units to the public or otherwise. Nothing contained herein or
otherwise shall constitute Selected Dealers partners with us or with one
another.
8. Underwriter's Authority. We shall have authority to take such action as we
deem advisable in respect of all matters pertaining to the Offering or arising
hereunder. We and our agents shall be under no liability to you for or in
respect of the authorization, issue, full payment, non-accessibility or validity
of the Shares or the component securities thereof; for or in respect of the form
of, or the statements contained in or omitted from the Prospectus, the
Underwriting Agreement, or other instruments executed by the Company or by
others; for or in respect of the delivery of the Shares or the performance by
the Company or by others of any agreement on its or their part; for or in
respect of the qualifications of the Shares for sale under the laws of any
jurisdiction; or for or in respect of any other matter connected with this
Agreement, except agreements expressly assumed by us herein and for lack of good
faith. No obligations not expressly assumed herein shall be implied; provided
that nothing herein contained shall be deemed to deny, exclude or impair any
liability imposed upon us or our agents as an underwriter by state or federal
securities law.
9. Applicable Securities Laws. By accepting this offer to become a Selected
Dealer, you represent to the Underwriter that you are qualified under the
Securities Exchange Act of 1934 and the Blue Sky laws of any State in which you
offer the Shares, as a dealer or broker in securities, and that you are a member
in good standing of the National Association of Securities Dealers, Inc.;
provided, however, that no NASD member may reallocate commission to any
non-member broker-dealer. Alternatively, this offer may be accepted by a foreign
dealer not eligible for membership in the NASD who agrees not to re-offer,
resell or deliver the Shares in the United States or to persons to whom it has
reason to believe are citizens or residents of the United States and, in making
sales, to comply with NASD's Interpretation with Respect to Free-Riding and
Withholding and Sections 8, 24 and 36 of Articles III of the NASD's Rules of
Fair Practice as if such foreign dealer were an NASD member and Section 25 of
such Article III as it applies to a nonmember broker or dealer in a foreign
country.
10. Communications. All communications from you to us should be addressed to
______. All communications from us and/or the Company to you shall be deemed to
have been duly given if mailed, telegraphed or telephoned to you at the address
to which this letter is mailed, unless written notification shall be received
from you of a change in address.
If you desire to become a Selected Dealer, please advise us immediately by
signing and returning to us the form of acceptance attached hereto.
Very truly yours,
By Dated
<PAGE>
Dear Sirs:
We agree to become a Selected Dealer with respect to the offering of Units of
Common Stock of Summa Metals Corp. at the public offering price of $6.00 per
Unit as outlined in this Agreement, and we acknowledge receipt of the
Prospectus, dated _____, 1998.
We agree to subscribe on the terms set forth in this Agreement for
________________ Units of Common Stock of Summa Metals Corp,, as described in
the Prospectus, and to make payment for such securities within (10) days of the
date of the confirmation from you of our order, provided that funds received
from our customers on subscription for Shares shall be transmitted to American
Securities Transfer & Trust, Inc. for deposit in Summa Metals Corp./Escrow
Account in Union Bank & Trust Co. in accordance with Rule 15c2-4.
We confirm that we are a member in good standing of the National Association of
Securities Dealers, inc., and we agree to abide by the "Rules of Fair Practice"
of the National Association of Securities Dealers, Inc., and the interpretations
thereof.
DATED
Signature of Selected Dealer
Address:
Phone:
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
SUMMA METALS CORP.
The undersigned, to form a Nevada corporation, CERTIFIES THAT:
I. NAME: The name of the corporation is:
SUMMA METALS CORP.
II. REGISTERED OFFICE; RESIDENT AGENT: The location of the registered office of
this corporation within the State of Nevada is 1025 Ridgeview Drive, Suite #400,
Reno, Nevada 89509; this corporation may maintain an office or offices in such
other place within or without the State of Nevada as may be from time to time
designated by the Board of Directors or by the By-Laws of the corporation; and
this corporation may conduct all corporation business of every kind or nature,
including the holding of any meetings of Directors or Stockholders, within the
State of Nevada, as well as without the State of Nevada.
The Resident Agent for the corporation shall be Michael J. Morrison, Esq., 1025
Ridgeview Drive, Suite #400, Reno, Nevada 89509.
III. PURPOSE: The purpose for which this corporation is formed is: To engage in
any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized capital
stock of the corporation shall be TWENTY FIVE THOUSAND DOLLARS ($25,000.00),
consisting of TWENTY FIVE MILLION (25,000,000) shares of Common Stock with a par
value of $.001 per share.
V. INCORPORATOR: The name and post office address of the incorporator signing
these Articles of Incorporation is as follows:
NAME
---------------
Rita S. Dickson
POST OFFICE ADDRESS
------------------------------------------
1025 Ridgeview Dr. #400 Reno, Nevada 89509
IV. DIRECTORS: The governing board of this corporation shall be known as
directors, and the first board shall be one in number. The corporation shall
have only one shareholder at present. The number of directors may, pursuant to
the By-Laws, be increased or decreased by a duly adopted amendment to these
Articles of Incorporation, or in such manner as provided in the By-Laws of this
corporation.
The name and post office address of the director constituting the first Board of
Directors is as follows:
NAME POST OFFICE ADDRESS
------------------ --------------------------------
Michael M. Chaffee 28281 Crown Valley Parkway
Laguna Niguel, California 92677
<PAGE>
VII. STOCK NON-ASSESSABLE: The capital stock or the holders thereof, after the
amount of the subscription price has been paid in, shall not be subject to any
assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall have perpetual existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in the election
of directors.
X. PREEMPTIVE RIGHTS: Stockholders shall not be entitled to preemptive rights.
XI. LIMITED LIABILITY: NO officer or director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as an officer or director, except for liability (i)
for any breach of the officer or director's duty of loyalty to the Corporation
or its Stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which the officer or director derived any improper personal
benefit. If the Nevada General Corporation Law is amended after the date of
incorporation to authorize corporate action further eliminating or limiting the
personal liability of officers or directors, then the liability of an officer or
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada General Corporation Law, or amendments thereto. No
repeal of modification of this paragraph shall adversely affect any right or
protection of an officer or director of the Corporation existing at the time of
such repeal or modification.
XII. INDEMNIFICATION: Each person who was or is made a party or is threatened to
be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person for whom he or she is the
legal representative; is or was an officer or director of the Corporation or is
or was serving at the request of the corporation as an officer or director of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans whether the
basis of such proceeding is alleged action in an official capacity as an officer
or director or in any other capacity while serving as an officer or director
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Nevada General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) , against all expense , liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be an officer or director and shall inure to the benefit of his or
her heirs , executors and administrators; provided, however, that except as
provided herein with respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided however, that, if the Nevada General
<PAGE>
Corporation Law requires the payment of such expenses incurred by an officer or
director in his or her capacity as an officer or director (and not in any other
capacity in which service was or is rendered by such person while an officer or
director, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, payment shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf of such
officer or director, to repay all amounts so advanced if it shall ultimately be
determined that such officer or director is not entitled to be indemnified under
this Section or otherwise.
If a claim hereunder is not paid in full by the Corporation within ninety days
after a written claim has been received by the Corporation, the claimant may, at
any time thereafter, bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful, in whole or in part, the claimant shall
be entitled to be paid the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Nevada General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, Independent Legal Counsel, or its
Stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Nevada General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, Independent Legal Counsel, or its
Stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
The right to indemnification and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in this Section shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
By-Law, Agreement, vote of Stockholders or Disinterested Directors or otherwise.
The Corporation may maintain insurance, at its expense, to protect itself and
any officer, director, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Nevada General Corporation Law.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification to any employee or agent of the
Corporation to the fullest extent of the provisions of this section with respect
to the indemnification and advancement of expenses of officers and directors of
the Corporation or individuals serving at the request of the Corporation as an
officer, director, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise.
THE UNDERSIGNED, being the incorporator hereinbefore named for the purpose of
forming a corporation pursuant to the General Corporation Law of the State of
Nevada, does make and file these Articles of Incorporation, hereby declaring and
certifying the facts herein stated are true, and, accordingly, has hereunto set
her hand this 7th day of MARCH, 1994.
/s/ Rita S. Dickson
---------------
Rita S. Dickson
<PAGE>
STATE OF NEVADA
COUNTY OF WASHOE
On this 7th day of MARCH, 1994 before me, a Notary Public, personally appeared
Rita S. Dickson, who acknowledged she executed the above instrument.
/s/ Willet Y. Smith
--------------------------------
Willet Y. Smith - Notary Public
<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT
In the matter of SUMMA METALS CORP. I, Michael J. Morrison, with the address of
1025 Ridgeview Drive, Suite 400 Reno, Nevada 89509, hereby accept the
appointment as Resident Agent of the above-entitled corporation in accordance
with NRS 78.090.
Furthermore, that the mailing address for the above registered office is 1025
Ridgeview Drive, Suite #400, Reno, Nevada 89509
IN WITNESS WHEREOF, we hereunto. set our hand this 7th day of March, 1994.
BY:
/s/ Michael J Morrison
-----------------------------------
Michael J. Morrison, Resident Agent
Exhibit 3.1
BYLAWS
OF
SUMMA METALS CORP.
ARTICLE 1
OFFICES
1.1 Business Office
The principal business office of the corporation shall be located at any place
either within or without of the State of Nevada as designated in the
corporation's most current Annual Report filed with the Nevada Secretary of
State. The corporation may have such other offices, either within or without the
State of Nevada as the Board of Directors may designate or as the business of
the corporation may require from time to time. The corporation shall maintain at
its principal office a copy of certain records as specified in section 2.14 of
Article 2.
1.2 Registered Office
The registered office of the corporation shall be located within Nevada and may
be, but need not be, identical with the principal office, provided the principal
office is located within Nevada. The address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE 2.
SHAREHOLDERS
2.1 Annual Shareholder Meeting
The annual meeting of the shareholders shall be held on the 1st day of February
each year, beginning with the year 1995, at the hour of 10:00 A.M. or at such
other time on such other day within such month as shall be fixed by the Board of
Directors for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of Nevada such meeting shall be
held on the next succeeding business day.
If the election of directors shall not be held on the day designated herein for
any annual meeting of the shareholders, or at any subsequent continuation after
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as convenient.
2.2 Special Shareholder Meetings.
Special meetings of the shareholders, for any purpose or purposes described in
the notice of meeting, may be called by the president, or by the Board of
Directors, and shall be called by the president at the request of the holders of
not less than one-tenth of all outstanding shares of the corporation entitled to
vote on any issue at the meeting.
2.3 Place of Shareholder Meetings
The Board of Directors may designate any place, either within or without the
State of Nevada, as the place for any annual or any special meeting of the
shareholders, unless by written consent, which may be in the form of waivers of
notice or otherwise, all shareholders entitled to vote at the meeting designate
a different place, either within or without the State of Nevada, as the place
for the holding of such meeting. If no designation is made by either the Board
of Directors or unanimous action of the voting shareholders, the place of
meeting shall be the principal office of the corporation in the State of Nevada.
<PAGE>
2.4 Notice of Shareholder Meeting
(a) Required Notice. Written notice stating the place, day and hour of any
annual or special shareholder meeting shall be delivered not less than 10 nor
more than 60 days before the date of the meeting, either personally or by mail,
by or at the direction of the president, the Board of Directors, or other
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting and to any other shareholder entitled by the laws of the State of
Nevada governing corporations (the "Act" ) or the Articles of Incorporation to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (1) when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid; (2) on the date shown on the return
receipt if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee; (3) when received; or
(4) 5 days after deposit in the United States mail, if mailed postpaid and
correctly addressed to an address, provided in writing by the shareholder, which
is different from that shown in the corporation's current record of
shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a different
date, time, or place, notice need not be given of the new date, time, and place
if the new date, time, and place is announced at the meeting before adjournment.
But if a new record date for the adjourned meeting is, or must be fixed (see
Section 2.5 of this Article 2) then notice must be given pursuant to the
requirements of paragraph (a) of this Section 2.4, to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of the meeting (or any
notice required by the Act, Articles of Incorporation, or Bylaws), by a writing
signed by the shareholder entitled to the notice, which is delivered to the
corporation (either before or after the date and time stated in the notice) for
inclusion in the minutes of filing with the corporate records.
A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting unless
the shareholder, at the beginning of the meeting, objects to holding the meeting
or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice, unless
the shareholder objects to consideration of the matter when it is presented.
(d) Contents of Notice. The notice of each special shareholder meeting shall
include a description of the purpose or purposes for which the meeting is
called. Except as provided in this Section 2.4(d), or as provided in the
corporation's articles, or otherwise in the Act, the notice of an annual
shareholder meeting need not include a description of the purpose or purposes
for which the meeting is called.
If a purpose of any shareholder meeting is to consider either: (1) a proposed
amendment to the Articles of Incorporation (including any restated articles
requiring shareholder approval); (2) a plan of merger or share exchange; (3) the
sale, lease, exchange or other disposition of all, or substantially all of the
corporation's property; (4) the dissolution of the corporation; or (5) the
removal of a director, the notice must so state and be accompanied by,
respectively, a copy or summary of the: (a) articles of amendment; (b) plan of
<PAGE>
merger or share exchange; and (c) transaction for disposition of all, or
substantially all, of the corporation' s property. If the proposed corporate
action creates dissenters' rights, as provided in the Act, the notice must state
that shareholders are, or may be entitled to assert dissenters' rights, and must
be accompanied by a copy of relevant provisions of the Act. If the corporation
issues, or authorizes the issuance of shares for promissory notes or for
promises to render services in the future, the corporation shall report in
writing to all the shareholders the number of shares authorized or issued, and
the consideration received with or before the notice of the next shareholder
meeting. Likewise, if the corporation indemnifies or advances expenses to an
officer or a director, this shall be reported to all the shareholders with or
before notice of the next shareholder meeting.
2.5 Fixing of Record Date
For the purpose of determining shareholders of any voting group entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any distribution or dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
not be more than 70 days prior to the date on which the particular action
requiring such determination of shareholders entitled to notice of, or to vote
at a meeting of shareholders, or shareholders entitled to receive a share
dividend or distribution. The record date for determination of such shareholders
shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special shareholder
meeting called by the Board of Directors or any person specifically authorized
by the Board of Directors or these Bylaws to call a meeting the day before the
first notice is given to the shareholders:
(b). With respect to a special shareholder meeting demanded by the shareholders,
the date the first shareholder signs the demand;
(c). With respect to the payment of a share dividend, the date the Board of
Directors authorizes the share dividend;
(d). With respect to actions taken in writing without a meeting (pursuant to
Article 2, Section 2.12), the first date any shareholder signs a consent; and
(e). With respect to a distribution to shareholders, (other than one involving a
repurchase or reacquisition of shares), the date the Board of Directors
authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made, as provided in this section, such determination
shall apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
If no record date has been fixed, the record date shall be the date the written
notice of the meeting is given to shareholders.
2.6 Shareholder List
The officer or agent having charge of the stock transfer books for shares of the
corporation shall, at least ten (10) days before each meeting of shareholders,
make a complete record of the shareholders entitled to vote at each meeting of
shareholders, arranged in alphabetical order, with the address of and the number
<PAGE>
of shares held by each. The list must be arranged by class or series of shares.
The shareholder list must be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing through the meeting. The list shall be
available at the corporation's principal office or at a place in the city where
the meeting is to be held, as set forth in the notice of meeting. A shareholder,
his agent, or attorney is entitled, on written demand, to inspect and, subject
to the requirements of Section 2.14 of this Article 2, to copy the list during
regular business hours and at his expense, during the period it is available for
inspection. The corporation shall maintain the shareholder list in written form
or in another form capable of conversion into written form within a reasonable
time.
2.7 Shareholder Quorum and Voting Requirements
A majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders . If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Once a share is represented for any purpose at a meeting, it is deemed present
for quorum purposes for the remainder of the meeting and for any adjournment of
that meeting, unless a new record date is or must be set for that adjourned
meeting.
If a quorum exists, a majority vote of those shares present and voting at a duly
organized meeting shall suffice to defeat or enact any proposal unless the
Statutes of the State of Nevada, the Articles of Incorporation or these Bylaws
require a greater-than-majority vote, in which event the higher vote shall be
required for the action to constitute the action of the corporation.
2.8 Increasing Either Quorum or Voting Requirements
For purposes of this Section 2.8, a "supermajority" quorum is a requirement that
more than a majority of the votes of the voting group be present to constitute a
quorum; and a "supermajority" voting requirement is any requirement that
requires the vote of more than a majority of the affirmative votes of a voting
group at a meeting.
The shareholders, but only if specifically authorized to do so by the Articles
of Incorporation, may adopt, amend, or delete a Bylaw which fixes a
"supermajority" quorum or "supermajority" voting requirement.
The adoption or amendment of a Bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet the same
quorum requirement and be adopted by the same vote required to take action under
the quorum and voting requirement then if effect or proposed to be adopted,
whichever is greater.
A Bylaw that fixes a supermajority quorum or voting requirement for shareholders
may not be adopted, amended, or repealed by the Board of Directors.
<PAGE>
2.9 Proxies
At all meetings of shareholders, a shareholder may vote in person, or vote by
written proxy executed in writing by the shareholder or executed by his duly
authorized attorney-in fact. Such proxy shall be filed with the secretary of the
corporation or other person authorized to tabulate votes before or at the time
of the meeting. No proxy shall be valid after eleven (11) months from the date
of its execution unless otherwise specifically provided in the proxy or coupled
with an interest.
2.10 Voting of Shares
Unless otherwise provided in the articles, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without the transfer of such shares into
his name. Shares standing in the name of a trustee may be voted by him, either
in person or by proxy, but no trustee shall be entitled to vote shares held by
him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained in
an appropriate order of the Court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares are transferred into the name of the pledgee, and thereafter,
the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Redeemable shares are not entitled to vote after notice of redemption is mailed
to the holders and a sum sufficient to redeem the shares has been deposited with
a bank, trust company, or other financial institution under an irrevocable
obligation to pay the holders the redemption price on surrender of the shares.
2.11 Corporation's Acceptance of Votes
(a) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does not
correspond to the name of its shareholder, the corporation if acting in good
faith, is nevertheless entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder if:
(1) the shareholder is an entity, as defined in the Act, and the name signed
purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator, executor, guardian
or conservator representing the shareholder and, if the corporation requests,
evidence of fiduciary status acceptable to the corporation has been presented
with respect to the vote, consent, waiver, or proxy appointment;
<PAGE>
(3) the name signed purports to be that of a receiver or trustee in bankruptcy
of the shareholder and, if the corporation requests, evidence of this status
acceptable to the corporation has been presented with respect to the vote,
consent, waiver or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent, waiver, or
proxy appointment; or
(5) the shares are held in the name of two or more persons as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all the
co-owners.
(c) The corporation is entitled to reject a vote , consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
(d) The corporation and its officer or agent who accepts Or rejects a vote,
consent, waiver, or proxy appointment in good faith and in accordance with the
standards of this Section 2.11 are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(e) Corporation action based on the acceptance or rejection of a vote, consent,
waiver, or proxy appointment under this section is valid unless a court of
competent jurisdiction determines otherwise.
2.12 Informal Action by Shareholders
Any action required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if one or more written consents, setting forth
the action so taken, shall be signed by shareholders holding a majority of the
shares entitled to vote with respect to the subject matter thereof, unless a
"supermajority" vote is required by these Bylaws, in which case a
"supermajority" vote will be required. Such consent shall be delivered to the
corporation secretary for inclusion in the minute book. A consent signed under
this Section has the effect of a vote at a meeting and may be described as such
in any document.
2.13 Voting for Directors
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
2.14 Shareholders' Rights to Inspect Corporate Records
Shareholders shall have the following rights regarding inspection of corporate
records:
(a) Minutes and Accounting Records. The corporation shall keep, as permanent
records, minutes of all meetings of its shareholders and Board of Directors, a
record of all actions taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of the Board of
Directors in place of the Board of Directors on behalf of the corporation. The
corporation shall maintain appropriate accounting records.
<PAGE>
(b) Absolute Inspection Rights of Records Required at Principal Office. If a
shareholder gives the corporation written notice of his demand at least five
business days before the date on which he wishes to inspect and copy, he, or his
agent or attorney, has the right to inspect and copy, during regular business
hours, any of the following records, all of which the corporation is required to
keep at its principal office:
(1) its Articles or restated Articles of Incorporation and all amendments to
them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to them currently in
effect;
(3) resolutions adopted by its Board of Directors creating one or more classes
or series of shares, and fixing their relative rights, preferences and
limitations, if shares issued pursuant to those resolutions are outstanding;
(4) the minutes of all shareholders' meetings, and records of all action taken
by shareholders without a meeting, for the past three years;
(5) all written communications to shareholders within the past three years,
including the financial statements furnished for the past three years to the
shareholders;
(6) a list of the names and business addresses of its current directors and
officers; and
(7) its most recent annual report delivered to the Nevada Secretary of State.
(c) Conditional Inspection Right. In addition, if a shareholder gives the
corporation a written demand, made in good faith and for a proper purpose, at
least five business days before the date on which he wishes to inspect and copy,
describes with reasonable particularity his purpose and the records he desires
to inspect, and the records are directly connected to his purpose, a shareholder
of a corporation, or his duly authorized agent or attorney, is entitled to
inspect and copy, during regular business hours at a reasonable location
specified by the corporation, any of the following records of the corporation:
(1) excerpts from minutes of any meeting of the Board of Directors; records of
any action of a committee of the Board of Directors on behalf of the
corporation; minutes of any meeting of the shareholders; and records of action
taken by the shareholders or Board of Directors without a meeting, to the extent
not subject to inspection under paragraph (a) of this Section 2.14;
(2) accounting records of the corporation; and
(3) the record of shareholders (compiled no earlier than the date of the
shareholder's demand)
(d) Copy Costs - The right to copy records includes, if reasonable, the right to
receive copies made by photographic, xerographic, or other means. The
corporation may impose a reasonable charge, to be paid by the shareholder on
terms set by the corporation, covering the costs of labor and material incurred
in making copies of any documents provided to the shareholder.
(e) "Shareholder" Includes Beneficial Owner. For purposes of this Section 2.14,
the term "shareholder" shall include a beneficial owner whose shares are held in
a voting trust or by a nominee on his behalf.
<PAGE>
2.15 Financial Statements Shall Be Furnished to the Shareholders.
The corporation shall furnish its shareholders annual financial statements,
which may be consolidated or combined statements of the corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
changes in shareholders' equity for the year, unless that information appears
elsewhere in the financial statements. If financial statements are prepared for
the corporation on the basis of generally accepted accounting principles, the
annual financial statements for the shareholders must also be prepared on that
basis.
(b) If the annual financial statements are reported upon by a public accountant,
his report must accompany them. If not, the statements must be accompanied by a
statement of the president or the person responsible for the corporation's
accounting records:
(1) stating his reasonable belief that the statements were prepared on the basis
of generally accepted accounting principles and, if not, describing the basis of
preparation: and
(2) describing any respects in which the statements were not prepared on a basis
of accounting consistent with the statements prepared for the preceding year.
(c) A corporation shall mail the annual financial statements to each shareholder
within 120 days after the close of each fiscal year. Thereafter, on written
request from a shareholder who was not mailed the statements, the corporation
shall mail him the latest financial statements.
2.16 Dissenters' Rights.
Each shareholder shall have the right to dissent from and obtain payment for his
shares when so authorized by the Act, Articles of Incorporation, these Bylaws,
or a resolution of the Board of Directors.
2.17 Order of Business.
The following order of business shall be observed at all meetings of the
shareholders, as applicable and so far as practicable:
(a) Calling the roll of officers and directors present and determining
shareholder quorum requirements;
(b) Reading, correcting and approving of minutes of previous meeting; (c)
Reports of officers; (d) Reports of Committees; (e) Election of Directors; (f)
Unfinished business; (g) New business; and (h) Adjournment.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers
Unless the Articles of Incorporation have dispensed with or limited the
authority of the Board of Directors by describing who will perform some or all
of the duties of a Board of Directors, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of the Board of Directors.
<PAGE>
3.2 Number, Tenure and Qualification of Directors.
Unless otherwise provided in the Articles of Incorporation, the authorized
number of directors shall be not less than 1 (minimum number) nor more than 9
(maximum number). The initial number of directors was established in the
original Articles of Incorporation. The number of directors shall always be
within the limits specified above , and as determined by resolution adopted by
the Board of Directors. After any shares of this corporation are issued, neither
the maximum nor minimum number of directors can be changed, nor can a fixed
number be substituted for the maximum and minimum numbers, except by a duly
adopted amendment to the Articles of Incorporation duly approved by a majority
of the outstanding shares entitled to vote. Each director shall hold office
until the next annual meeting of shareholders or until removed. However, if his
term expires, he shall continue to serve until his successor shall have been
elected and qualified, or until there is a decrease in the number of directors.
Unless required by the Articles of Incorporation, directors do not need to be
residents of Nevada or shareholders of the corporation.
3.3 Regular Meetings of the Board of Directors.
A regular meeting of the Board of Directors shall be held without other notice
than this Bylaw immediately after, and at the same place as, the annual meeting
of shareholders. The Board of Directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice than
such resolution. (If permitted by Section 3.7,any regular meeting may be held by
telephone)
3.4 Special Meeting of the Board of Directors.
Special meetings of the Board of Directors may be called by or at the request of
the president or any one director. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Nevada, as the place for holding any special meeting of the
Board of Directors or, if permitted by Section 3.7, any special meeting may be
held by telephone.
3.5 Notice of, and Waiver of Notice of, Special Meetings of the Board of
Directors.
Unless the Articles of Incorporation provide for a longer or shorter period,
notice of any special meeting of the Board of Directors shall be given at least
two days prior thereto, either orally or in writing. If mailed, notice of any
director meeting shall be deemed to be effective at the earlier of: (1) when
received; (2) five days after deposited in the United States mail, addressed to
the director's business office, with postage thereon prepaid; or (3) the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the director.
Notice may also be given by facsimile and, in such event, notice shall be deemed
effective upon transmittal thereof to a facsimile number of a compatible
facsimile machine at the director's business office. Any director may waive
notice of any meeting. Except as otherwise provided herein, the waiver must be
in writing, signed by the director entitled to the notice, and filed with the
minutes or corporate records. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
and at the beginning of the meeting, or promptly upon his arrival, objects to
holding the meeting or transacting business at the meeting, and does not
thereafter vote for or assent to action taken at the meeting. Unless required by
the Articles of Incorporation or the Act , neither the business to be transacted
at, nor the purpose of, any special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
<PAGE>
3.6 Director Quorum.
A majority of the number of directors fixed, pursuant to Section 3.2 of this
Article 3, shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, unless the Articles of Incorporation or the
Act require a greater number for a quorum.
Any amendment to this quorum requirement is subject to the provisions of Section
3.8 of this Article 3.
Once a quorum has been established at a duly organized meeting, the Board of
Directors may continue to transact corporate business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
3.7 Actions By Directors.
The act of the majority of the directors present at a meeting at which a quorum
is present when the vote is taken shall be the act of the Board of Directors,
unless the Articles of Incorporation or the Act require a greater percentage.
Any amendment which changes the number of directors needed to take action is
subject to the provisions of Section 3.8 of this Article 3.
Unless the Articles of Incorporation provide otherwise, any or all directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. Minutes of any such meeting
shall be prepared and entered into the records of the corporation. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
A director who is present at a meeting of the Board of Directors or a committee
of the Board of Directors when corporate action is taken is deemed to have
assented to the action taken unless: (1) he objects at the beginning of the
meeting, or promptly upon his arrival, to holding it or transacting business at
the meeting; or (2) his dissent or abstention from the action taken is entered
in the minutes of the meeting; or (3) he delivers written notice of his dissent
or abstention to the presiding officer of the meeting before its adjournment or
to the corporation within 24 hours after adjournment of the meeting. The right
of dissent or abstention is not available to a director who votes in favor of
the action taken.
3.8 Establishing a "Supermaioritv" Quorum or Voting Requirement for the Board of
Directors.
For purposes of this Section 3.8, a "supermajority" quorum is a requirement that
more than a majority of the directors in office constitute a quorum: and a
"supermajority" voting requirement is one which requires the vote of more than a
majority of those directors present at a meeting at which a quorum is present to
be the act of the directors.
A Bylaw that fixes a supermajority quorum or supermajority voting requirement
may be amended or repealed:
(1) if originally adopted by the shareholders, only by the shareholders (unless
otherwise provided by the shareholders); or
(2) if originally adopted by the Board of Directors, either by the shareholders
or by the Board of Directors.
<PAGE>
A Bylaw adopted or amended by the shareholders that fixes a supermajority quorum
or supermajority voting requirement for the Board of Directors may provide that
it may be amended or repealed only by a specified vote of either the
shareholders or the Board of Directors.
Subject to the provisions of the preceding paragraph, action by the Board of
Directors to adopt, amend, or repeal a Bylaw that changes the quorum or voting
requirement for the Board of Directors must meet the same quorum requirement and
be adopted by the same vote required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.
3.9 Director Action Without a Meeting.
Unless the Articles of Incorporation provide otherwise, any action required or
permitted to be taken by the Board of Directors at a meeting may be taken
without a meeting if all the directors sign a written consent describing the
action taken. Such consents shall be filed with the records of the corporation.
Action taken by consent is effective when the last director signs the consent,
unless the consent specifies a different effective date. A signed consent has
the effect of a vote at a duly noticed and conducted meeting of the Board of
Directors and may be described as such in any document.
3.10 Removal of Directors.
The shareholders may remove one or more directors at a meeting called for that
purpose if notice has been given that a purpose of the meeting is such removal.
The removal may be with or without cause unless the Articles of Incorporation
provide that directors may only be removed for cause. If cumulative voting is
not authorized, a director may be removed only if the number of votes cast in
favor of removal exceeds the number of votes cast against removal.
3.11 Board of Director Vacancies.
Unless the Articles of Incorporation provide otherwise , if a vacancy occurs on
the Board of Directors, excluding a vacancy resulting from an increase in the
number of directors, the director(s) remaining in office shall fill the vacancy.
If the directors remaining in office constitute fewer than a quorum of the Board
of Directors, they may fill the vacancy by the affirmative vote of a majority of
all the directors remaining in office.
If a vacancy results from an increase in the number of directors, only the
shareholders may fill the vacancy.
A vacancy that will occur at a specific later date (by reason of a resignation
effective at a later date) may be filled by the Board of Directors before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his term
expires, he shall continue to serve until his successor is elected and qualifies
or until there is a decrease in the number of directors.
3.12 Director Compensation.
Unless otherwise provided in the Articles of Incorporation, by resolution of the
Board of Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting of the Board of
Directors, or both. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
<PAGE>
3.13 Director Committees.
(a) Creation of Committees. Unless the Articles of Incorporation provide
otherwise, the Board of Directors may create one or more committees and appoint
members of the Board of Directors to serve on them. Each committee must have two
or more members, who serve at the pleasure of the Board of Directors.
(b) Selection of Members. The creation of a committee and appointment of members
to it must be approved by the greater of (1) a majority of all the directors in
office when the action is taken, or (2) the number of directors required by the
Articles of Incorporation to take such action.
(c) Required Procedures. Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this
Article 3 apply to committees and their members.
(d) Authority . Unless limited by the Articles of Incorporation or the Act, each
committee may exercise those aspects of the authority of the Board of Directors
which the Board of Directors confers upon such committee in the resolution
creating the committee. Provided, however, a committee may not
(1) authorize distributions to shareholders;
(2) approve or propose to shareholders any action that the Act requires be
approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its committees;
(4) amend the Articles of Incorporation;
(5) adopt, amend, or repeal Bylaws;
(6) approve a plan of merger not requiring shareholder approval;
(7) authorize or approve reacquisition of shares , except according to ao
formula or method prescribed by the Board of Directors; or
(8) authorize or approve the issuance or sale, or contract for sale of shares,
or determine the designation and relative rights, preferences, and limitations
of a class or series of shares ; except that the Board of Directors may
authorize a committee to do so within limits specifically prescribed by the
Board of Directors.
ARTICLE 4. OFFICERS
4.1 Designation of Officers.
The officers of the corporation shall be a president, a secretary, and a
treasurer, each of whom shall be appointed by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary, including any
vice-presidents, may be appointed by the Board of Directors. The same individual
may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office.
The officers of the corporation shall be appointed by the Board of Directors for
a term as determined by the Board of Directors. If no term is specified, they
shall hold office until the first meeting of the directors held after the next
annual meeting of shareholders. If the appointment of officers is not made at
<PAGE>
such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor has been duly
appointed and qualified, until his death, or until he resigns or has been
removed in the manner provided in section 4.3 of this Article 4.
The designation of a specified term does not grant to the officer any contract
rights, and the Board of Directors can remove the officer at any time prior to
the termination of such term.
Appointment of an officer shall not of itself create any contract rights.
4.3 Removal of Officers,
Any officer may be removed by the Board of Directors at any time, with or
without cause. Such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
4.4 President.
The president shall be the principal executive officer of the corporation and,
subject to the control of the Board of Directors, shall generally supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the shareholders. He may sign, with the
secretary or any other proper officer of the corporation thereunto duly
authorized by the Board of Directors, certificates for shares of the corporation
and deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed. The president shall
generally perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time.
4.5 Vice-President.
If appointed, in the absence of the president or in the event of the president's
death, inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice-presidents in the order designated at the
time of their election, or in the absence of any designation, then in the order
of their appointment) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the president. If there is no vice-president, then the treasurer shall perform
such duties of the president. Any vice-president may sign, with the secretary or
an assistant secretary, certificates for shares of the corporation the issuance
of which have been authorized by resolution of the Board of Directors. A
vice-president shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
4.6 Secretary.
The secretary shall (a) keep the minutes of the proceedings of the shareholders
and of the Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (c) be custodian of the corporate records
and of any seal of the corporation and, if there is a seal of the corporation,
see that it is affixed to all documents, the execution of which on behalf of the
corporation under its seal is duly authorized; (d) when requested or required,
authenticate any records of the corporation; (e) keep a register of the post
office address of each shareholder, as provided to the secretary by the
shareholders; (f) sign with the president, or a vice-resident, certificates for
shares of the corporation, the issuance of which has been authorized by
resolution of the Board of Directors; (g) have general charge of the stock
transfer books of the corporation; and (h) generally perform all duties incident
to the office of secretary and such other duties as from time to time may be
assigned to him by the president or by the Board of Directors.
<PAGE>
4.7 Treasurer.
The treasurer shall (a) have charge and custody of and be responsible for all
funds and securities of the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies, or other depositaries as may be selected by the Board of Directors;
and (c) generally perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the
president or by the Board of Directors.
If required by the Board of Directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the Board of Directors shall determine,
4.8 Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of Directors, may sign
with the president, or a vice-president, certificates for shares of the
corporation, the issuance of which has been authorized by a resolution of the
Board of Directors. The assistant treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine . The
assistant secretaries and a ssistant treasurers, generally, shall perform such
duties as may be assigned to them by the secretary or the treasurer,
respectively, or by the president or the Board of Directors.
4.9 Salaries.
The salaries of the officers, if any, shall be fixed from time to time by the
Board of Directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Officers, Directors, Employees and Agents.
Unless otherwise provided in the Articles of Incorporation, the corporation
shall indemnify any individual made a party to a proceeding because he is or was
an officer, director, employee or agent of the corporation against liability
incurred in the proceeding, all pursuant to and consistent with the provisions
of NRS 78.751, as amended from time to time.
5.2 Advance Expenses for Officers and Directors.
The expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final disposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of the
officer or director on terms set by the Board of Directors to repay the expenses
advanced if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation.
5.3 Scope of Indemnification.
The indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments thereto.
<PAGE>
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 (a) Certificates for Shares, Content
Certificates representing shares of the corporation shall at minimum, state on
their face the name of the issuing corporation; that the corporation is formed
under the laws of the State of Nevada; the name of the person to whom issued;
the certificate number; class and par value of shares; and the designation of
the series, if any, the certificate represents. The form of the certificate
shall be as determined by the Board of Directors. Such certificates shall be
signed (either manually or by facsimile) by the president or a vice-president
and by the secretary or an assistant secretary and may be sealed with a
corporate seal or a facsimile thereof. Each certificate for shares shall be
consecutively numbered or otherwise identified.
(b) Legend as to Class or Series
If the corporation is authorized to issue different classes of shares or
different series within a class, the designations relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the Board of Directors to determine variations for future series) must be
summarized on the front or back of the certificate indicating that the
corporation will furnish the shareholder this information on request in writing
and without charge.
(c) Shareholder List
The name and address of the person to whom the shares are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation.
(d) Transferring Shares
All certificates surrendered to the corporation for transfer shall be canceled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed, or mutilated certificate, a new one may be issued therefor
upon such terms as the Board of Directors may prescribe, including
indemnification of the corporation and bond requirements.
6.2 Registration of the Transfer of Shares.
Registration of the transfer of shares of the corporation shall be made only on
the stock transfer books of the corporation. In order to register a transfer,
the record owner shall surrender the share certificate to the corporation for
cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective. Unless
the corporation has established a procedure by which a beneficial owner of
shares held by a nominee is to be recognized by the corporation as the owner,
the person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes.
6.3 Restrictions on Transfer of Shares Permitted.
The Board of Directors may impose restrictions on the transfer or registration
of transfer of shares, including any security convertible into, or carrying a
right to subscribe for or acquire shares. A restriction does not affect shares
issued before the restriction was adopted unless the holders of the shares are
parties to the restriction agreement or voted in favor of the restriction.
A restriction on the transfer or registration of transfer of shares may be
authorized:
(1) to maintain the corporation's status when it is dependent on the number or
identity of its shareholders;
(2) to preserve exemptions under federal or state securities law; or
(3) for any other reasonable purpose.
<PAGE>
A restriction on the transfer or registration of transfer of shares may:
(1) obligate the shareholder first to offer the corporation or other persons
(separately, consecutively, or simultaneously) an opportunity to acquire the
restricted shares;
(2) obligate the corporation or other persons (separately, consecutively, or
simultaneously) to acquire the restricted shares;
(3) require the corporation, the holders or any class of its shares, or another
person to approve the transfer of the restricted shares, if the requirement is
not manifestly unreasonable; or
(4) prohibit the transfer of the restricted shares to designated persons or
classes of persons, if the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is valid and
enforceable against the holder or a transferee of the holder if the restriction
is authorized by this Section 6.3 and its existence is noted conspicuously on
the front or back of the certificate . Unless so noted , a restriction is not
enforceable against a person without knowledge of the restriction.
6.4 Acquisition of Shares.
The corporation may acquire its own shares and unless otherwise provided in the
Articles of Incorporation, the shares so acquired constitute authorized but
unissued shares.
If the Articles of Incorporation prohibit the reissue of shares acquired by the
corporation, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the Articles of Incorporation, which
amendment shall be adopted by the shareholders, or the Board of Directors
without shareholder action (if permitted by the Act) . The amendment must be
delivered to the Secretary of State and must set forth:
(1) the name of the corporation;
(2) the reduction in the number of authorized shares, itemized by class and
series; and
(3) the total number of authorized shares, itemized by class and series,
remaining after reduction of the shares.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions
The Board of Directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the manner and
upon the terms and conditions provided by law.
8.1
Corporate Seal.
ARTICLE 8. CORPORATE SEAL
The Board of Directors may adopt a corporate seal which may be circular in form
and have inscribed thereon any designation, including the name of the
corporation, Nevada as the state of incorporation, and the words "Corporate
Seal."
<PAGE>
ARTICLE 9. EMERGENCY BYLAWS
9.1 Emergency Bylaws.
Unless the Articles of Incorporation provide otherwise, the following provisions
shall be effective during an emergency, which is defined as a time when a quorum
of the corporation's directors cannot be readily assembled because of some
catastrophic event. During such emergency:
(a) Notice of Board Meetings
Any one member of the Board of Directors or any one of the following officers:
president, any vice-president, secretary, or treasurer, may call a meeting of
the Board of Directors. Notice of such meeting need be given only to those
directors whom it is practicable to reach, and may be given in any practical
manner, including by publication and radio. Such notice shall be given at least
six hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum
One or more officers of the corporation present at the emergency board meeting,
as is necessary to achieve a quorum, shall be considered to be directors for the
meeting, and shall so serve in order of rank, and within the same rank, in order
of seniority. In the event that less than a quorum (as determined by Section 3.6
of Article 3) of the directors are present (including any officers who are to
serve as directors for the meeting) those directors present (including the
officers serving as directors) shall constitute a quorum.
(c) Actions Permitted To Be Taken
The Board of Directors, as constituted in paragraph (b), and after notice as set
forth in paragraph (a), may:
(1) Officers' Powers.
Prescribe emergency corporation powers to any officer of the Corporation;
(2) Delegation of Any Power.
Delegate to any officer or director, any of the powers of the Board of
Directors;
(3) Lines of Succession.
Designate lines of succession of officers and agents, in the event that any of
them are unable to discharge their duties;
(4) Relocate Principal Place of Business.
Relocate the principal place of business, or designate successive or
simultaneous principal places of business;
(5) All Other Action.
Take any other action which is convenient, helpful, or necessary to carry on the
business of the corporation.
<PAGE>
AMENDMENTS
ARTICLE 10. AMENDMENTS
10.1
The Board of Directors may amend or repeal the corporation's Bylaws unless:
(1) the Articles of Incorporation or the Act reserve this power exclusively to
the shareholders, in whole or part; or
(2) the shareholders, in adopting, amending, or repealing a particular Bylaw,
provide expressly that the Board of Directors may not amend or repeal that
Bylaw; or
(3) the Bylaw either establishes, amends or deletes a "supermajority"
shareholder quorum or voting requirement, as defined in section 2.8 of Article
2.
Any amendment which changes the voting or quorum requirement for the Board of
Directors must comply with Section 3.8 of Article 3, and for the shareholders,
must comply with Section 2.8 of Article 2.
The corporation 's shareholders may also amend or repeal the corporation's
Bylaws at any meeting held pursuant to Article 2.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of SUMMA METALS CORP. and that the
foregoing Bylaws, consisting of twenty-three (23) pages, constitutes the Code of
SUMMA METALS CORP. as duly adopted by the Board of Directors of the corporation
on this 23 day of March 1994.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 24th day of March,
1994.
/s/ Michael M. Chaffee
------------------------------
Michael M. Chaffee - Secretary
Exhibit 4.1
SUBSCRIPTION AGREEMENT
SUMMA METALS CORP.
28281 Crown Valley Parkway Suite 225 Laguna Nigel, CA 92677-1461
Dear Sirs:
Concurrent with execution of this Agreement, the undersigned (the "Purchaser")
is purchasing ________________ Units of Common Stock of Summa Metals Corp. (the
"Company") at a price of $6.00 per Unit (the "Subscription Price")
Purchaser hereby confirms the subscription for and purchase of said number of
Units and hereby agrees to pay herewith the Subscription Price for such Units.
MAKE CHECK PAYABLE TO: "Steven L. Siskind, Escrow Agent for Summa Metals Corp."
Executed this day of , 1998 at
Street Address
Signature of Purchaser
Printed Name of Purchaser
City State Zip Code
Social Security Number/Tax I.D. Number of Shares Purchased
SUMMA METALS CORP.
BY:
PROMISSORY NOTE Dated 4-8-94
$ 100,000.00 Reno, Nevada
The undersigned corporation, SUMMA METALS, INC., a Nevada corporation,
hereinafter referred to as 'Maker", promises to pay to the order of AMYN S.
DAHYA, an individual, and/or assigns ("Holder"), the sum of One Hundred Thousand
Dollars ($100,000.00), payable as follows:
The entire balance, plus accrued interest at the rate of 12% per annum,
commencing on the date hereof, shall be due and payable in full one year from
the date hereof.
Maker reserves the right to prepay all or any portion of the indebtedness
evidenced by this Note at any time, without penalty.
The Holder shall not by any act of omission or commission be deemed to
waive any rights or remedies hereunder unless such waiver be in writing signed
by the Holder, and then only to the extent set forth therein.
Maker agrees to pay all costs and expenses included in enforcing collection
of any portion of this Note by suit or otherwise, including a reasonable
attorney's fee, if an attorney is used in such collection, regardless of whether
a suit is instituted for collection. If a suit is instituted for collection, the
Court shall adjudge the attorney's fee allowed. If a suit is not instituted, but
an attorney is retained, maker shall pay the actual attorney's fee incurred.
Presentment, notice of dishonor and protest are hereby waived by maker.
This Note shall be the uncontestable obligation of Maker. Such liability shall
continue in the event any extension of time for repayment is given.
Maker hereby expressly represents and warrants that, until the total amount
of principal and interest due and payable hereunder has been paid to Holder,
Maker will not in any way encumber any of its assets, which consist of valuable
mineral properties, together with any other assets which it may acquire at any
time during the term hereof,
The Holder of this Note may accelerate this Note, that is, declare the
entire unpaid balance due and payable, upon (1) failure of Maker to stay current
with its State corporation and regulatory filings and/or state and federal
securities laws, rules and regulations; (2) any attempt to encumber any of
Maker's assets during the term of this Note: and (3) the insolvency of maker, or
any guarantor, if any, of this Note. Protest is waived.
Upon any default hereunder, the undersigned agrees to pay all costs of
collection and attorney's fees incurred by Holder in collecting this Note, or in
exercising any judicial or nonjudicial remedies available to Holder.
In the event litigation is necessary to collect this Note, Maker expressly
consents to jurisdiction in Washoe county, Nevada, which shall be the exclusive
venue for such litigation,
This Note shall be guaranteed by Michael M. Chaffee, who Shall, at all times
during the term of this Note, be and remain an officer, director and principal
shareholder of Maker.
SUMMA METALS, INC., a Nevada corporation ("Maker")
By
/s/ Michael M. Chaffee
-----------------------------
Michael M. Chaffee, President
For valuable personal consideration, receipt of which is hereby
acknowledged, and as further inducement for Holder to make the loan hereunder,
the undersigned expressly and unequivocally guarantees all payments due and
payable hereunder and expressly accepts all terms and conditions of this
Promissory Note as his personal obligation.
/s/ Michael M. Chaffee
---------------------------------
Michael M. Chaffee, an individual
<PAGE>
Summa Metals, Inc.
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28281 CROWN VALLEY PKWY SUITE #225, LAGUNA NIGUEL, CA 92677-1461
TEL: (714) 348-0749 FAX: (719) 368-9747
15 October, 1997
Mr. Amyn Dahya
1335 Greg Street,
Sparks, NV, 89431
Dear Amyn,
This is to confirm our conversation of this date RE: the extension of our past
due note in the amount of $100,000.
You have given your agreement to extend said note, to be due and payable without
penalty, to September 30th, 1998.
In the event the Company is in a position to make partial payments, without
compromise to its operations prior to that date, we will make every effort to do
so.
The Company appreciates your understanding that it must use the majority of the
proceeds from its IPO to continue and expand operations for the benefit of all
its Shareholders.
We will continue to keep you informed on the progress of the Company. Please
initial below, return via Fax, and I will forward under separate cover, the
revised note.
Sincerely,
THE SUMMA METALS CORPORATION
/s/ Raymond C. Baptista
-----------------------------------
Raymond C. Baptista
Vice President, Chief Financial Officer
Amyn Dahya /s/ Amyn Dahya
---------------
ARIZONA * NEVADA * CALIFORNIA * CHIHUAHUA * BAJA CALIFORNIA
(LOGO)
Summa Metals, Inc.
28281 CROWN VALLEY PKWY SUITE #235, LAGUNA NIGUEL, CA 92667-1461
TEL: (714) 348-9749 FAX: (714) 348-9747
10 June, 1998
Mr. Amyn Dahya
Casmyn Corp.
1500 North Georgia St.
Suite 1800
Vancouver, British Columbia V6G2Z6
RE: Extension of $100,000.00 Note
Dear Mr. Dahya:
Pursuant to our conversation of this date, you have agreed to extend the time
within which the Company has to repay the $100,000.00 note (now past due), as
evidenced by said note dated March 29th, 1994.
This note has been modified to extend the payment date until Monday, February
15th, 1999. This note shall continue to bear interest during the extended period
as originally set forth.
The Company greatly appreciates your continued patience in this matter.
Sincerely,
THE SUMMA METALS CORPORATION
/s/ Michael M. Chaffee
---------------------------
Michael M. Chaffee
President
Acknowledged: /s/ Amyn Dahya
----------------------
Amyn Dahya
ARIZONA * NEVADA * CALIFORNIA * CHIHUAHUA * BAJA CALIFORNIA
A G R E E M E N T
The undersigned Jose Echenique, owner of the mill tailings at Promontorio in the
State of Durango, Mexico, hereby grants exclusive permission to Engineer Ralph
E. Pray and assignees to treat and remove from all of those tailings any
contained mineral or metal under the,following provisions:
1. The term of this agreement shall be ten years.
2. Pray shall pay Echenique a royalty of five percent (5%) of all gross revenue
derived from the tailings.
3. Echenique shall retain ownership in all land and presently existing
improvements thereon, the use of which shall be fully available to Pray during
the term of this agreement.
4. Pray shall retain at all times full and complete ownership of all machinery,
equipment and supplies obtained by Pray for use on the project.
5. Pray shall assume responsibility for all aspects of land, road and forest use
during operations.
6. Echenique shall be notified when operations begin and when they cease.
7. All processing, production, transportation and sales records shall be
available for inspection by Echenique at any time.
Jose A. Echenique Ralph E. Pray
----------------------------- -------------------------
/s/ Jose A. Echenique date /s/ Ralph E. Pray date
address address
Comfort 151 Sur 805 S. Shamrock
Toddeiond Casa Monrovia, CA 91016
27000 Mexico
<PAGE>
PROMONTORIO
The material behind the Promontorio dam, built in 1890, was washed in behind the
dam by repeated rainfall across upstream Promontorio silver cyanide mill
tailings. This fill material reaches within a foot or so of the stone structure
top, and is regarded by Mexican government officials as sand and gravel.
Alluvial sand and gravel for construction is officially valued at 1,930 pesos
per cubic meter. The dam is estimated by Mexican officials to contain 30,000
cubic meters of sand and gravel.
Pepe has an approved application to purchase the sand and gravel, which contains
all of my estimated 150,000 tons of the old silver tailings. The price is $0.34
(U.S) per ton. This amounts to $0.14. (U.S.) per ton with 150,000 tons used.
Payment for the material can be, made in three installments of $6,700 each, but
should be completed prior to any major activity on the property, such as road
building or equipment delivery.
Upon completion of the pilot plant work, which will result in obtaining the
proper scale-up tank sizes, an application to permit construction of a small
process plant will be submitted to the Durango State office of the Direccion
General de Minas. The plant products and effluent will be described in an
application for approval before the newly formed Secretaria de Ecology. A lease
will be obtained on a five acre parcel upon which to set the plant. This lease
will issue from the local resident woodcutters and cattle owners, all of whom
live primitive lives but who look upon nearby land use as part of their
business. An affidavit of this lease will be filed with the proper Department of
Agriculture office.
Water sources exist in nearby deep mines, drainages and springs. However, it
appears now that an independent water source on held ground is necessary to
assure an uninterrupted supply.
DR. RALPH PRAY
<PAGE>
PROMONTORIO
The silver mines of Durango, Mexico began production under Spanish rule 450
years ago. The Promontorio mines, in the District of El Oro, produced silver
during these historic years, until the nationalization of American and British
companies by President Cardenas in 1938. During the productive years, in 1890, a
dam was constructed across the major drainage below the mines and villages of
Promontorio. This dam, made of hand-hewn rock blocks, still stands intact, some
108 feet high and 200 feet wide. During the almost 50 years of operation prior
to 1938, sand tailings from the ore processing facilities near the mines
collected in an area on the edge of the major drainage pattern. Since that time,
fifty years of sporadic cloudbursts have transported the Promontorio sand
tailings downhill to the dam, where they now completely fill the volume behind
the giant wall.
In 1964 the Sol Naciente Mining Company, owned by Sr. Alfonso Burciaga, examined
the tailings under the supervision of Engineer Carlos Poulliott. Ownership
passed to Engineer Carlos Echenique shortly thereafter. in 1980 an agreement was
made between Echenique and Maguinara El Gorrion, S.A. (The Sparrow Machinery)
financed and operated by Guy Sparrow, lately of the NBA New York Knickerbocker
basketball team. Sparrow brought dozens of Promontorio tailings samples to
Mineral Research Laboratory for assay. His personal investment of $182,000,
during the period that silver was about $12 per ounce, was not a sufficient
amount to permit installation and start-up. Sparrow relinquished his lease, and
Echenique left the concession to his surviving widow and son, Jose Echenique,
with whom the undersigned has a ten-year lease paying five percent royalty.
The tailing tonnage has been estimated to be:
Echenique 150,000 to 300,000 tons
Sparrow over 200,000 tons
Pray 175,000 tons
The silver value of the material behind the dam is reported to be:
Echenique 7 oz/ton
Sparrow samples 10 oz/ton
Pray samples 8 oz/ton
Many attempts have been made to extract the silver from these tailings.
Re-treatment by cyanide yields a very low silver recovery. The widespread
presence of manganese dioxide, as the mineral psilomelane, in the tailings and
in the vein rock of the region, points to the reason for refractory behavior. A
portion of the silver resides within the manganese mineral structure and, since
this mineral is unaffected by cyanide, the silver within is protected from
attack. The obvious approach is to dissolve the manganese then go after the
silver, and that is precisely the practise utilized in conventional ore
treatment. in this case, the process works admirably.
RECORDING REQUESTED BY:
Ralph E. Pray
AND WHEN RECORDED MAIL TO: RECORDED IN
OFFICIAL RECORDS
Ralph E. Pray 98 MAR 16 AM 9:55
INYO COUNTY
805 South Shamrock 98 0864
Monrovia, CA 91016
RELINQUISHMENT OF MINING CLAIMS
-------------------------------
I (we) /s/ Ralph E. Pray
----------------------------------------------------------------------
hereby relinquish and abandon all right, title and interest in the following
described mining claims: in the County of Inyo, State of California.
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Description of Land, Dates of original, Volume and page
Names of Claims Township, Range and supplemental and where recorded:
Section amended locations County of
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GOLD SPUR Sec4+5T243R45E 1-1-98 98 0173
CAMC273205
DATE: 3-10-98 SIGNATURE: /s/ Ralph E. Pray
----------------------- ----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
If a corporation, so indicate. The corporate seal should be affixed. A copy of
the resolution, or equivalent, authorizing the relinquishment, should be
attached.
RECORDING REQUESTED BY:
Ralph E. Pray
AND WHEN RECORDED MAIL TO: RECORDED IN
OFFICIAL RECORDS
Ralph E. Pray 98 MAR 16 AM 9:55
INYO COUNTY
805 South Shamrock 98 0864
Monrovia, CA 91016
RELINQUISHMENT OF MINING CLAIMS
-------------------------------
I (we) Ralph E. Pray, Maxwell R. Pray, Beverly M. Pray and
----------------------------------------------------------------------
Ross E. Pray
- --------------------------------------------------------------------------------
hereby relinquish and abandon all right, title and interest in the following
described mining claims: in the County of Inyo, State of California.
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Description of Land, Dates of original, Volume and page
Names of Claims Township, Range and supplemental and where recorded:
Section amended locations County of
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DEEP GOLD Sec12 T10S, R36E MDM JAN-1-98 98 0174
CAMC273206 Sec11 T10S, R36E
DATE: 3-10-98 SIGNATURE: /s/ Ralph E. Pray
----------------------- ----------------------------------------
/s/ Beverly Pray
----------------------------------------
/s/ Ross Pray
----------------------------------------
/s/ Maxwell R. Pray
----------------------------------------
If a corporation, so indicate. The corporate seal should be affixed. A copy of
the resolution, or equivalent, authorizing the relinquishment, should be
attached.
|
|
Recording requested by, and |
when recorded return to: |
|
Summa Metals Corp. |
28281 Crown Valley Pkwy. |
Suite 225 |
Laguna Niguel, CA 92677 |
|
|
|(Above space for Recorder's use)
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LODE MINING CLAIM LOCATION NOTICE
---------------------------------
PLEASE TAKE NOTICE that:
1. On April 1, 1998, the locator named below located a lode mining claim,
named "GOLD SPUR," situated on public surveyed land, in the southwest quarter
(SW 1/4) of Section 4 and the southeast quarter (SE 1/4) of Section 5, in
Township 24 South, Range 45 East, M.D.M., in the County of Inyo, State of
California.
2. The discovery monument is a substantial white-colored wooden monument,
clearly marked.
3. The discovery site and discovery monument are situated approximately 650
feet south of the floor of Coyote Canyon, being approximately 1,460 feet north
and 500 feet east of the southwest corner of Section 4, Township 24 South, Range
45 East, M.D.M., in the County of Inyo, State of California.
4. There is claimed by this mining claim 1,500 feet along the course of the
vein or lode, being 250 feet along the course northeast of the discovery point,
and 1,250 feet along the course southwest of the discovery point, with 300 feet
width on each side of the vein center; said vein or lode has a general course in
a northeast-southwest direction; and the width of this claim is 600 feet.
5. The locator has defined the boundaries of this claim by erecting at each
corner of the claim, or at the nearest accessible point thereto, a conspicuous
and substantial monument, clearly marked and identified.
6. The locator of this lode mining claim is: Michael M. Chaffee, 28281
Crown Valley Pkwy., #225, Laguna Niguel, CA 92677.
7. Attached hereto is a map showing a sketch of the boundaries of this lode
mining claim.
Signed: /s/ Michael M. Chaffee Date: April 2, 1998
-----------------------------
MICHAEL M. CHAFFEE, Locator
|
|
Recording requested by, and |
when recorded return to: |
|
Summa Metals Corp. |
28281 Crown Valley Pkwy. |
Suite 225 |
Laguna Niguel, CA 92677 |
|
|
|(Above space for Recorder's use)
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PLACER MINING CLAIM LOCATION NOTICE
-----------------------------------
PLEASE TAKE NOTICE that on April 1, 1998, the persons named below have
located an association placer mining claim, named "DEEP GOLD," situated on
public surveyed land, in the south half of Section 11 and the south half of
Section 12, Township 10 South, Range 36 East, M.D.M., in the County of Inyo,
State of California; and the discovery point and the boundary of this claim are
marked by conspicuous and substantial monuments, clearly identified, at the at
each claim corner, as follows:
Commencing at the NE corner ("corner No. 1"), being the location monument,
situated 100 feet due east of the County Road and 4,190 feet N65E from the
SW corner of Section 12, Township 10 South, Range 26 East, M.D.M.; thence
due west 1,120 feet to "corner No. 2"; thence N77W 2,100 feet to "corner
No. 3"; thence S63W 2,320 feet to "corner No. 4"; thence N81W 2,380 feet to
"corner No. 5," being the NW corner of the claim; thence due south 440 feet
to "corner No. 6," being the SW corner of the claim; thence S81E 2,380 feet
to "corner No. 7"; thence N63 E 2,320 feet to "corner No. 8"; thence S77E
2,100 feet to "corner No. 9"; thence due east 1,120 feet to "corner No.
10," being the SE corner of the claim; and thence 440 feet due north to
"corner No. 1," the point of beginning and the point of discovery.
Each corner of this claim and the location are marked with white-colored
wooden monuments.
This placer mining claim contains eighty (80) acres.
The locators and owners of this placer mining claim are:
Michael M. Chaffee, 28281 Crown Valley Parkway #225, Laguna Niguel, CA
92677; and Bruce Cooper, 28281 Crown Valley Parkway #225, Laguna
Niguel, CA 92677; Raymond Baptista, 28281 Crown Valley Parkway #225,
Laguna Niguel, CA 92677; and Bryan Jackowitz, 28281 Crown Valley
Parkway #225, Laguna Niguel, CA 92677
Attached hereto is a map showing a sketch of the outline of this placer
mining claim.
Signed: /s/ Michael M. Chaffee Date: April 2, 1998
------------------------------
MICHAEL M. CHAFFEE, for himself
and as agent for Bruce Cooper,
Raymond Baptista and Bryan Jackowitz
M I N E L E A S E
------------------
This agreement of lease made and entered into this 6th day of April, 1998, by
and between Michael M. Chaffee whose principal address is 1588 Sea Lancer Drive,
Lake Havasu City, Arizona, 86403 (Lessor) and The Summa Metals Corporation whose
principal address is 28281 Crown Valley Parkway, Laguna Niguel, California,
92677.
Whereas: Lessor has the right and title to certain property, and;
Whereas: Lessee desires to lease said premises, and;
Therefor: the parties hereto agree as follows:
That the Lessor for and in consideration of one hundred dollars, cash in hand
paid, receipt of which is hereby acknowledged, and of the covenants and
agreements hereinafter performed, does grant, convey, demise and let exclusively
unto the said Lesee that certain tract of land situate in the Count of Inyo,
State of California, further described as follows:
CLAIM NAME CAMC NUMBER LOCATION
Gold Spur 0273703 4-1-98
for the sole purpose of exploring, operating and mining precious and other
minerals and to sell the products thereof. Lessee shall perform or have
performed a minimum of forty (40) man-hours of constructive work on the claim
per year, which may be accumulated over a period of two years to total 80
man-hours of five days each in a two year period.
The Lessee agrees to keep said premises free and clear of all costs, liens and
encumbrances done, made or suffered by permit, the Lessor to place and maintain
in a conspicuous place upon said premises as such shall be lawfully necessary to
protect the Lessor against such claims.
It is agreed that this lease shall remain in force for a term of twenty years
from this date, and may be extended for twenty years if all above conditions
have been met.
Witness our hand(s) the day and year first above written:
/s/ Michael Chaffee
-------------------------------
Michael Chaffee, Lessor
/s/ Raymond C. Baptista
-------------------------------
The Summa Metals Corporation, Lessee
Raymond Baptista,
Ex. V.P, CFO
M I N E L E A S E
------------------
This agreement of lease made and entered into this 6th day of April, 1998, by
and between Michael M. Chaffee, Bruce Cooper, Raymond Baptista and Bryan
Jackowitz whose principal address is 28281 Crown Valley Parkway, Laguna Niguel,
California, 92677 (Lessor) and The Summa Metals Corporation whose principal
address is 28281 Crown Valley Parkway, Laguna Niguel, California, 92677.
Whereas: Lessor has the right and title to certain property, and;
Whereas: Lessee desires to lease said premises, and;
Therefor: the parties hereto agree as follows:
That the Lessor for and in consideration of one hundred dollars, cash in hand
paid, receipt of which is hereby acknowledged, and of the covenants and
agreements hereinafter performed, does grant, convey, demise and let exclusively
unto the said Lesee that certain tract of land situate in the Count of Inyo,
State of California, further described as follows:
CLAIM NAME CAMC NUMBER LOCATION
Deep Gold 273074 4-1-98
for the sole purpose of exploring, operating and mining precious and other
minerals and to sell the products thereof. Lessee shall perform or have
performed a minimum of forty (40) man-hours of constructive work on the claim
per year, which may be accumulated over a period of two years to total 80
man-hours of five days each in a two year period.
The Lessee agrees to keep said premises free and clear of all costs, liens and
encumbrances done, made or suffered by permit, the Lessor to place and maintain
in a conspicuous place upon said premises as such shall be lawfully necessary to
protect the Lessor against such claims.
It is agreed that this lease shall remain in force for a term of twenty years
from this date, and may be extended for twenty years if all above conditions
have been met.
Witness our hand(s) the day and year first above written:
/s/ Michael Chaffee /s/ Raymond Baptista
------------------------------- ------------------------------------
Michael Chaffee Raymond Baptista
/s/ Brian Jackowitz /s/ Bruce Cooper
------------------------------- ------------------------------------
Brian Jackowitz Bruce Cooper
/s/ Raymond C. Baptista
-------------------------------
The Summa Metals Corporation, Lessee
Raymond Baptista,
Ex. V.P, CFO
Exhibit 10.10
Loan Agreement
This agreement is entered into by and between Summa Metals Corp., a Nevada
Corporation (Summa) having its principal offices at 1588 Sea Lancer, Lake Havasu
City, AZ, and Mr. C.W. Lewis and Mrs. Neva B. Lewis or their assigns (Lewis),
both as Individuals whose address is Box 1160 Powel, Wyoming, 82435 and
WHERE AS: Summa is a company involved in the mining of Gold in the United States
and Mexico and;
WHERE AS: Summa is in need of short term operating capital and,
WHERE AS: Lewis is wanting to provide Summa with said short term operating
capital and
THEREFORE: In consideration of the representations and warranties, covenants and
agreements hereinafter made, the parties hereto have agreed and do hereby agree
in manner and form as hereinafter set forth:
Lewis will provide $20,000, receipt of which is hereby acknowledged, as forth in
2 and 3 below.
In consideration for the $20,000 Summa will pay to Lewis the sum of $50,000 from
the proceeds of its planned public offering no later than June 1, 1995. In the
event of default by Summa, Lewis may at his sole option, extend the June 1 date
having no other effect on the obligations of Summa.
Summa will in addition to the above $50,000 will provide Lewis , or his
designee, 30,000 shares of the company's restricted capital stock. Such
notification to the company's transfer agent will be within three working days
from the date of this agreement.
Threatened of pending proceedings. Lewis and Summa warrant that no proceedings
shall have been initiated of threatened by any governmental department,
commission, bureau, board, agency of instrumentality or any other bona fide
third party seeking to enjoin or otherwise restrain or to obtain an award for
damages in connection with consummation of the transaction contemplated hereby.
Authorization. All corporate action necessary to authorize the execution,
delivery and performance by both parties of this Agreement and any other
agreements or instruments contemplated hereby to which either is a party, have
been duly and validly taken by Summa and Lewis and be furnished each to the
other with copies of all applicable resolutions certified by the Secretary of
the respective companies.
Consents. Both Summa and Lewis shall have received the approvals, consents and
authorizations of all third parties necessary to effect the validly of this
agreement.
Brokerage. Neither Lewis nor Summa has dealt with any broker or finder in
connection with the transaction contemplated herein, and each of them agrees to
indemnify and hold the other party harmless in connection with any claims for
commissions or other compensation made by any broker of finder claiming to have
been employed by it on its behalf in connection with the transactions
contemplated herein.
Expenses. Except as other wise provided herein, Lewis and Summa shall pay the
fees and expenses of their respective accountants and legal counsel incurred in
connection with the transactions contemplated by this Agreement.
<PAGE>
Notices. Any demand, notice or other communication required of permitted under
or in connection with the transactions contemplated by this Agreement shall be
in writing and shall be deemed to be effective when delivered by facsimile or in
person or deposited in the United States mail and sent by certified or
registered mail, return receipt requested, addressed a s follows:
If to Summa:
Summa Metals Corp.
28281 Crown Valley Pky, Suite 225
Laguna Niguel, CA 92677-1461
If to Lewis :
P.O. Box 1160
Powell, Wyoming 82435
Waiver. The failure of any party hereto at any time or times hereafter to
exercise any right, power, privilege or remedy hereunder or to require strict
performance by the other or another party of any of the provisions, terms or
conditions contained in this Agreement or in any other document, instrument or
agreement contemplated hereby or delivered in connection herewith shall not
waive, affect, or diminish any right, power, privilege or remedy of such party
at any time or times thereafter to demand strict performance thereof; and, no
rights of any party hereto shall be deemed to have been waived by any act of
knowledge of such party hereto on any of its rights on any one occasion shall
operate as a waiver of any other of its rights or any of its rights on a future
occasion.
Section Headings. The section headings in this agreement are for the convenience
of reference only and shall not be deemed to be a part of this Agreement or to
alter or affect any provisions, terms or conditions contained herein.
Exhibits and Schedules. Any exhibits, appendices and/or schedules referenced
herein, shall be deemed to be attached hereto and made a part hereof. All
references herein to the Agreement shall include all schedules, exhibits,
appendices and financial statements and/or other documents delivered hereunder.
Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law.
If any portion of this Agreement is declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining portions
of the Agreement which shall continue in full force and effect as if this
Agreement had been executed with the invalid portion thereof deleted.
Furthermore, the entirety of this Agreement shall continue in full force and
effect in all other jurisdiction.
Entire understanding. This Agreement contains the entire understanding between
the parties hereto with respect to the transactions contemplated hereby and such
understandings shall not be modified except in a writing signed by or on behalf
of the parties hereto.
Binding Effect. This Agreement shall be binding upon and shall inure to the
exclusive benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This Agreement is
not intended to, nor shall it create any rights in any other party.
Governing Law. This Agreement is and shall be deemed to be a contract entered
into and made pursuant to the laws of the laws of the State of California and
shall in all respects be governed , construed, applied and enforced in
accordance with the laws of said state, without reference to conflict of
principals, and any dispute arising from this Agreement shall be brought solely
within the courts of Orange County, City of Orange, the State of California.
<PAGE>
References. Each reference herein to a party hereto shall be deemed to include
such party's legal representatives, successors and assigns, all of whom shall be
bound by the provisions hereof. Each reference to a party hereto and any
pronouns referring thereto as used herein shall be construed in the masculine,
feminine, neuter, singular or plural, as the context may require.
Assignment. Each party hereto shall be able to sell, pledge, assign or otherwise
transfers rights under this Agreement, in whole or in part, only upon receiving
written consent from the other, a consent that shall not be unreasonably
withheld. For purposes hereof the transfer of the party's rights under this
Agreement shall be deemed to include a transfer of a majority of the voting
tights with respect to such party.
Counter parts. This Agreement may be signed in any number of counterparts each
of which shall be deemed to be an original and all of which together shall
constitute by one and the same instrument. .
Executed on this _7th__day of March, 1995 in the City Lake Havasu, the county of
Mohave, the state of Arizona.
By:
THE SUMMA METALS CORPORATION Lewis
/s/ Michael M. Chaffee /s/ C.W. Lewis
------------------------ -------------------------
Michael M. Chaffee C.W. Lewis, an Individual
President, Chairman, CEO
/s/ Neva Lewis
-------------------------
Neva Lewis, an Individual
Exhibit 10.11
PROCEEDS ESCROW AGREEMENT
This Proceeds Escrow Agreement (the "Agreement") is made and entered into this
day of May, 1998, by and between Summa Metals Corp., 28281 Crown Valley Parkway
Suite 225, Laguna Niguel, CA 92677, a Nevada corporation (the "Company/Issuer"),
American Securities Transfer & Trust, Inc., 1825 Lawrence St. Suite 444, Denver,
Colorado 80202, as escrow agent (the "Escrow Agent"), and Boe & Company, Inc.,
3668 So. Jasper St., Aurora, CO 80013, (the "Underwriter").
Premises
The Company proposes to offer for sale to the general public, through the
Underwriter of up to 510,000 Units on a "best efforts all or none,' basis as to
the first 130,000 Units, and a "best efforts only" basis as to the remaining
380,000 Units (the "Offering"), each Unit consisting of one (1) share of common
stock of the Company, par value $.001 per share, one (1) Class A Warrant to
purchase one share of common stock, and one (1) Class 3 Warrant to purchase one
share of common stock, pursuant to a Registration Statement on Form SB-2 (the
"Registration Statement") filed with the Securities and Exchange Commission.
Agreement
NOW, THEREFORE, the parties hereto agree as follows:
1. Commencing on the Effective Date of the Offering, and until termination
of this Agreement, all funds collected by the Underwriter from subscriptions for
the purchase of Units in the subject Offering shall be forwarded promptly to the
Escrow Agent, but in any event no later than noon of the next business day
following receipt, and the Escrow Agent shall promptly deposit such funds with
the Union Bank & Trust Company, 100 Broadway, Denver, Colorado 80209 (the
"Depository").
2. Collections. All subscription payments for Units (which payments shall
be made payable to "Summa Metals Corp. /Escrow Account") received by the
Underwriter will be transmitted to the Escrow Agent by the Underwriter by noon
of the next business day following receipt by the Underwriter, and the Escrow
Agent shall promptly deposit same with the Depository. The Underwriter shall
include a written account of sale, which shall include the Investor's name and
address, the number of Units purchased, the amount paid therefor, social
security number, taxpayer identification number, and whether the consideration
received was in the form of a check, draft or money order ("Payment").
3. The Escrow Agent shall establish the Escrow Account with the Depository
and forward all Payments received by it to the Depository for deposit into the
Escrow Account. Any Payment received that is payable to a party other than Summa
Metals Corp./Escrow Account, and any Payment returned unpaid to the Escrow Agent
shall be returned to the Underwriter. In the event the Issuer rejects an
Investor after the Investor's Payment has been deposited into the Escrow
Account, Issuer shall certify in writing to the Escrow Agent the fact of such
rejection, the name of the Investor so rejected, and the amount of Payment for
Units made by such Investor, and shall direct Escrow Agent to return to such
Investor a check in the amount of such payment, without deduction, provided,
however, that if Payment by such Investor has been forwarded for collection but
<PAGE>
funds on which have not been collected, Escrow Agent shall have no duty to make
payment pursuant to this paragraph until receipt of such collected funds by
Escrow Agent. In the event Issuer rejects an Investor before the Investor's
Payment has been deposited in the Escrow Account, Issuer shall direct Escrow
Agent to return promptly the Investor's Payment, without interest, directly to
Investor.
4. Interest. Escrow Agent shall deliver to Issuer in a single, lump sum
payment all interest earned on funds deposited in the Escrow Account. No
interest shall be earned by or payable to Investors.
5. Investments. Collected funds deposited into the Escrow Account shall be
invested only in investments permitted under rule 15c2-4 of the Securities
Exchange Act of 1935, as amended.
6. Concurrently with the transmitting funds to the Escrow Agent, the
Underwriter shall also deliver to the Escrow Agent a schedule setting forth the
name and address of each subscriber whose funds are included in such
transmittal, the number of Units subscribed for, and the dollar amount paid. All
funds so deposited shall remain the property of the subscriber until the minimum
dollar threshold of $780,000 is met pursuant to the Registration Statement.
Until the minimum threshold is reached, the subscribers' funds held by the
Escrow Agent shall not be subject to any lien or charges by the Escrow Agent, or
judgments or creditors, claims against the Company.
7. If at any time prior to the expiration of the minimum offering period,
as specified in Paragraph 8, $780,000 has been deposited pursuant to this
Agreement, the Escrow Agent shall confirm the receipt of such funds to the
Company and Underwriter, and the Escrow Agent shall promptly transmit the
balance to the Company (such event is hereafter referred to as the "Closing") by
wire transfer and deliver all documents including the Shares as required.
Thereafter, the Escrow Agent shall continue to accept deposits from the
Underwriter and transmit, upon written request of the Company the balance to the
Company until the Offering is terminated. The Company shall notify the Escrow
Agent in writing of the completion of the Offering and shall schedule a final
closing for the final disbursement and settlement of the balance of funds in the
offering.
8. If the Underwriter has not deposited a minimum of $780,000 with the
Escrow Agent on or before 1998, but in any event no later than 180 days from the
Effective Date of the Offering, the Escrow Agent shall so notify the Company and
shall promptly transmit to those Investors who subscribed for the purchase of
Units from the Company, the amount of money each such Investor so paid without
interest. The Escrow Agent shall furnish to the Company verification of refunds
to all subscribers.
9. If at any time prior to the termination of this escrow, the Escrow Agent
is advised by the Securities and Exchange Commission, or any state securities
division, that a stop order has been issued with respect to the Registration
Statement, the Escrow Agent shall thereon return all funds with interest to the
respective subscribers.
10. It is understood and agreed that the duties of the Escrow Agent are
entirely ministerial, being limited to receiving monies from the Underwriter and
holding and disbursing such monies in accordance with this Agreement.
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<PAGE>
11. The Escrow Agent is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness, or validity of any instrument
deposited with it, or with respect to the form or execution of the same, or the
identity, authority, or rights of any person executing or depositing the same.
12. The Escrow Agent shall not be bound by notice of any default by any
person or to take any action with respect to such default involving any expense
or liability, unless notice in writing is given to any officer of the Escrow
Agent of such default by the Company or the Underwriter, and unless the Escrow
Agent is indemnified in manner satisfactory to it against any expense or
liability arising therefrom.
13. The Escrow Agent shall not be liable for acting on any notice, request,
waiver, consent, receipt, or other paper or document believed by it to be
genuine, and to have been signed by the proper party or parties.
14. The Escrow Agent shall not be liable for any error of judgment or for
any act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for having anything which it may do or refrain from doing in
connection herewith, except its own willful misconduct.
15. The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the consideration of the foregoing instructions or its
duties hereunder and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such counsel.
16. In the event of any disagreement between the undersigned, or any of
them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and; or demands being made in
connection with or for any papers, money or property involved herein or affected
hereby, the Escrow Agent shall be entitled at its option to refuse to comply
with any such claim or demand so long as such disagreement shall continue and,
in so refusing, the Escrow Agent shall not be or become liable to the
undersigned or any of them or to any person named in the foregoing instructions
for the failure or refusal to comply with such conflicting or adverse demands,
and the Escrow Agent shall be entitled to continue to so refrain and refuse to
so act until:
(a) The rights of adverse claimants have been finally adjudicated in a
court assuming and having jurisdiction over the parties and the money,
papers and property involved herein or affected hereby; and/or
(b) All differences shall have been adjusted by agreement and the Escrow
Agent shall have been notified thereof in writing signed by all of the
persons interested.
17. The fee of the Escrow Agent is $5,000, payable as follows: $2,500 upon
execution of this Agreement and $2,500 upon the Closing. In addition, the Escrow
Agent shall be paid $5,000 on account of its expenses for acting as Escrow
Agent. Escrow Agent shall account to the Company for such expenses and refund
any remaining balance. The Escrow Agent shall be responsible for fees of the
Depository. The fee agreed upon for services rendered hereunder
3
<PAGE>
is intended as full compensation for the Escrow Agent's services as contemplated
by this Agreement, however, in the event that the conditions of this Agreement
are not fulfilled, or the Escrow Agent renders any material service not
contemplated by this Agreement, or there is any assignment of interest in the
subject matter of this Agreement, or any material modification thereof, or if
any material controversy arises hereunder, of the Escrow Agent is made a party
to or justifiably intervenes in any litigation pertaining to this Agreement, or
the subject matter hereof, the Escrow Agent shall be fully reimbursed for all
such extraordinary expenses, including reasonable attorney's fees, and all
extraordinary expenses shall be paid by the Company.
18. Resignation. The Escrow Agent may resign at any time and be discharged
from its duties as Escrow Agent hereunder by giving the other parties hereto at
least fifteen (15) days notice hereof. As soon as practicable after the
resignation, the Escrow Agent shall turn over to a successor escrow agent all
monies and property held hereunder (less such amount as Escrow Agent is entitled
to retain) upon presentation to Escrow Agent of the document appointing the new
escrow agent and its acceptance of such appointment. If no successor escrow
agent is appointed within a thirty (30) day period following such notice of
resignation, Escrow Agent shall deposit the monies and property with the
Superior Court of the State of Colorado in and for the County of Denver, or the
United States District Court for the Colorado District, as it deems appropriate.
19. Representations and Warranties. Issuer makes the following
representations and warranties to Escrow Agent:
(a) Issuer is a corporation duly formed and validly subsisting under the
laws of the State of Nevada, and has full power and authority to execute
and deliver this Escrow Agreement and to perform its obligations hereunder.
(b) This Escrow Agreement has been duly approved by all necessary corporate
action of the Issuer, including any necessary shareholder approval, has
been executed by duly authorized officers of the Issuer, and constitutes a
valid and binding agreement of the Issuer, enforceable in accordance with
its terms.
(c) The execution, delivery, and performance by the Issuer of this Escrow
Agreement will not violate, conflict with, or cause a default under the
articles of incorporation or By-laws of the Issuer, any applicable law or
regulation, any court order or administrative ruling or decree to which
issuer is a party or any of its property is subject, or any agreement,
contract, indenture, or other binding arrangement to which the Issuer is a
party or any of its property is subject.
(d) No party other than the parties hereto and the prospective Subscribers
have, or shall have, any lien, claim or security interest in the Escrow
Funds or any part thereof. No financing statement under the Uniform
Commercial Code is on file in any jurisdiction claiming a security interest
in or describing (whether specifically or generally) the Escrow Funds or
any part thereof.
4
<PAGE>
(e) Issuer hereby acknowledges that the status of Escrow Agent is that of
agent only for the limited purposes set forth herein, and hereby represents
and covenants that no representation or implication shall be made that the
Escrow Agent has investigated the desirability of advisability of
investment in the Shares or has approved, endorsed or passed upon the
merits of the investment therein and that the name of the Escrow Agent has
not and shall not be used in any manner in connection with the offer or
sale of the Shares other than to state that the Escrow Agent has agreed to
serve as escrow agent for the limited purposes set forth herein.
(f) All of the representations and warranties of the Issuer contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any deposit to or disbursement form the Escrow
Funds.
20. Arbitration. Except as expressly provided herein, the parties agree
that any dispute which arises under this Agreement that cannot be resolved
through good faith discussions, shall be settled by arbitration to be held in
the City of Denver, Colorado using the Standard Commercial Arbitration Rules of
the American Arbitration Association.
21. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(50 days after deposit in the United States mail, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
after delivery to any overnight courier, or when transmitted by facsimile
transmissions facilities, and addressed to the party to be notified as follows:
If to Issuer: Summa Metals Corp.
28281 Crown Valley Parkway Suite 225
Laguna Niguel, CA 92677
With a copy to: Steven L. Siskind
645 Fifth Avenue, Suite 403
New York, New York 10022
If to the Escrow Agent: American Securities Transfer & Trust, inc.
1825 Lawrence Street
Suite 444
Denver, Colorado 80202-1817
If to the Underwriter: Boe & Company
3668 So. Jasper Street
Aurora, Colorado 80013
or to such other address as each party may designate for itself by like notice.
22. Amendments or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the parties hereto. No
delay or omission by any party in exercising any right with respect thereto
5
<PAGE>
shall operate as a waiver. A waiver on any one occasion shall not be construed
as a bar to, or waiver of, any right or remedy on any future occasion.
23. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
24. Governing Law. This Escrow Agreement shall be construed and interpreted
in accordance with the internal laws of the State of Colorado without giving
effect to the principles or rules governing conflict of laws.
25. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the acceptance, collection, holding,
investment and disbursement of the Escrow Funds and sets forth in their entirety
the obligations and duties of the Escrow Agent and Depository with respect to
the Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, as of the date first
above written.
SUMMA METALS CORPORATION
By: /s/ Raymond Baptista
------------------------------------------
Raymond Baptista, Executive Vice-President
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By:
------------------------------------------
BOE & COMPANY, INC.
By: /s/ Jeffrey Boe, President
------------------------------------------
Jeffrey Boe, President
6
Exhibit 10.12
AGREEMENT made as of the day of December, 1997 by and between Summa
Metals Corp., a Nevada corporation with its principal offices at 28281 Crown
Valley Parkway, Suite 225, Laguna Niguel, CA 92677 (the "Company"), and Eric A.
Popkoff whose address is 1750 East 23rd Street, Brooklyn, New York 11229 (the
"Employee").
WITNESSETH:
WHEREAS, the Company desires to obtain the benefit of the services of
Employee, and Employee desires to render such services, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in
consideration of the premises and mutual covenants herein contained,
hereby agree as follows:
1. Upon the execution of this Agreement, all prior employment agreements,
whether written or oral, between Employee and the Company, or any of its
parents, subsidiaries, affiliates, or predecessor constituent corporations, are
terminated and are of no further force and effect.
2. Subject to the terms and conditions hereinafter set forth, the Company
hereby employs Employee, and Employee hereby enters into the employ of the
Company, or of any parent, subsidiary, or affiliate of the Company as the
Company shall from time to time select, for an employment term commencing on the
Effective Date of this Agreement as hereinafter provided, and terminating two
(2) years thereafter (the "Term of Employment").
3. This Agreement shall become effective on the date of the closing of the
minimum public offering of shares of the Company's Common stock ("the Effective
Date") , and shall continue for a period of two (2) years from such Effective
Date.
<PAGE>
4. During the Term of Employment, Employee shall render and perform such
executive and managerial services as Vice President of Corporate and Investor
Relations for the Company, as may be assigned to him by or under the authority
of the Board of Directors of the Company. During the Term of Employment,
Employee shall hold such other offices of the Company or its subsidiaries to
which he may be appointed by the Board of Directors subject to the by-laws of
the Company and the direction and action of the Board of Directors; it being
understood and agreed that all policy in connection with the operations and
conduct of the business of the Company shall be set by the Board of Directors,
whose instructions in connection therewith shall be followed by Employee.
Employee shall devote such time as shall be reasonably required to perform his
duties as such Vice President of Corporate and Investor Relations for the
Company, and the Company acknowledges that Employee has other business and
employment agreements. Employee shall serve the Company faithfully and shall use
his best efforts to promote the interests of the Company. During the Term of
Employment, Employee agrees not to engage, directly or indirectly, in any
business which is competitive with the business now or hereafter conducted by
the Company, or by any parent, subsidiary, or affiliate of the Company, in the
capacity of proprietor, partner, joint venturer, stockholder, director, officer,
lender, manager, employee, consultant, advisor, or agent, or as a person
2
<PAGE>
controlling such business; provided, however, that Employee may buy or sell
stock in any corporation which is traded on any stock exchange or over the
counter, except that Employee shall not purchase or sell more than one (1%)
percent of the outstanding stock of any corporation engaged in the same or
similar business to that of the Company or any parent, subsidiary, or affiliate
of the Company.
5. As full compensation for all services of Employee provided for herein,
including, without limiting the generality of the foregoing, all services to be
rendered by Employee as an officer or director of the company, or of any parent,
subsidiary, or affiliate of the Company, the Company will pay, or cause to be
paid to Employee, during the Term of Employment, and Employee will accept,
A.(i) for the first year of the Term of Employment, a salary at the rate of
$60,000, and;
(ii) for the second year of the Term of Employment, a salary at the rate of
$72,000.
B. Such salary will be paid in regular installments in accordance with the
Company's usual paying practices, but not less frequently than monthly. Such
payments will be subject to such deductions by the Company as the Company is
from time to time required to make pursuant to law, government regulations, or
order, or by agreement with or consent of Employee.
6. Employee shall be entitled to reimbursement by the Company for
reasonable expenses actually incurred by him on its behalf in the course of his
employment by the Company, upon the presentation by Employee, from time to time,
3
<PAGE>
of an itemized account of such expenditures, together with said vouchers and
other receipts as the Company may require.
7. Employee shall be entitled to vacations in accordance with the Company's
prevailing policy for its operating executives, provided that such vacations do
not interfere with the business operations of the Company.
8. During the Term of Employment, if Employee shall be unable, for a period
of more than two (2) consecutive months or for periods aggregating more than
eight (8) weeks in any fifty-two (52) consecutive weeks, to perform the services
provided for herein as a result of illness or incapacity or a physical, mental,
or other disability of any nature, the Company, upon not less than ten (10) days
notice, may terminate Employee's employment hereunder. Employee shall be
considered unable to perform the services provided for herein if he is unable to
attend to the normal duties required of him. The Company shall pay to Employee,
or to his legal representatives, compensation as specified in Paragraph 5 hereof
to the end of the month in which termination occurs. Upon completion of the
termination payments provided for in this paragraph, all of the Company's
obligations to pay compensation under this Agreement shall cease.
9. Employee shall be entitled to participate in all group life insurance,
medical and hospitalization plans and pension and profit sharing plans as are
presently offered by the Company or
4
<PAGE>
which may hereafter during the Term of Employment be offered by the Company
generally to its operating Executives.
10. Employee will not, at any time during or after the Term of Employment,
directly or indirectly disclose or furnish to any other person, firm, or
corporation any information relating to the Company or its parent, subsidiaries,
or affiliates with respect to technology of the Company's products, methods of
obtaining business, advertising products, obtaining customers or suppliers, or
any confidential or proprietary information acquired by employee during the
course of his employment by the Company or its parent, subsidiaries, or
affiliates.
11. As between Employee and the Company, all products, processes,
discoveries, materials, ideas, creations, inventions, and properties, whether or
not furnished by Employee or created, developed, invented or used in connection
with Employee's employment hereunder, or prior to this Agreement while employed
by the Company, which relate to the business of the Company, will be the sole
and absolute property of the Company for any and all purposes whatsoever, in
perpetuity, whether or not conceived, discovered, and/or developed during
regular working hours. Employee will not have, under this Agreement or
otherwise, any right, title or interest of any kind or nature whatsoever in or
to any such products, processes, discoveries, materials, ideas, creations,
inventions or properties.
12. The Employee represents and warrants to the Company that he is not
under any obligation of a contractual or other nature to any other party which
5
<PAGE>
obligation is inconsistent or in conflict with this Agreement or which would
prevent, limit, or impair in any way the performance by Employee of his
obligations hereunder.
13. The parties hereto recognize that irreparable damage will result to the
Company and its business and properties if Employee fails or refuses to perform
his obligations under this Agreement and that the remedy at law for any such
failure or refusal will be inadequate. Accordingly, in addition to any other
remedies and damages available, the Company shall be entitled to injunctive
relief, and Employee may be specifically restrained from violating the terms and
conditions of this Agreement.
14. Commencing on the Effective Date, Employee is herewith granted an
option to purchase 900,000 shares of the Company's Common Stock at an exercise
price of $.001 per share. Such option may be exercisable by Employee at any time
during the term of this Agreement. The shares will be restricted shares and
contain the appropriate restrictive legend
15. Employee will execute and deliver all such other further instruments
and documents as may be necessary, in the opinion of the Company, to carry out
the intents and purposes of this Agreement and the transactions contemplated
hereby, and to confirm, assign, or convey to the Company any products,
processes, discoveries, materials, ideas, creations, inventions, properties
referred to in Paragraph 11 hereof, including the execution of all patent and
copyright applications.
6
<PAGE>
16. This Agreement constitutes the entire agreement between the parties
hereto relating to the subject matter set forth herein and supersedes any prior
oral and/or written agreements, understandings, negotiations, or discussions of
the parties. There are no warranties, representations or agreements between the
parties in connection with the subject matter hereof, except as set forth or
referred to herein. No supplement, modification, waiver, or termination of this
Agreement or any provision hereof shall be binding unless executed in writing by
the parties to be bound thereby. Waiver of any of the provisions of this
Agreement shall not constitute a waiver of any other provision (whether or not
similar) , nor shall such waiver constitute a continuing waiver unless otherwise
specifically provided.
17. The failure of either party at any time to require performance by the
other of any provision hereof shall not affect in any way the full right to
require such performance at any time thereafter, nor shall the waiver by either
party of the breach of any provision hereof be taken or be held to be a waiver
of the provision itself.
18. Any notice or other communication required or permitted to be given
under or in connection with this Agreement shall be in writing, delivered in
person or by public telegram, or by mailing same, certified or registered mail,
postage prepaid, in an envelope addressed to the party to whom notice is to be
given, at the address given at the beginning of this Agreement, and shall be
effective upon receipt thereof. Each party shall be entitled to specify a
different address by giving notice as aforesaid to the other party.
7
<PAGE>
19. The invalidity or unenforceability or any paragraph, term, or provision
hereof shall in no way affect the validity or enforceability or the remaining
paragraphs, terms, or provisions hereof. In addition, in any such event, the
parties agree that it is their intention and agreement that any such paragraph,
term or provision which is held or determined to be unenforceable as written
shall nonetheless be in force and binding to the fullest extent permitted by law
as though such paragraph, term or provision had been written in such a manner
and to such an extent as to be enforceable under the circumstance. Without
limiting the foregoing, with respect to any restrictive covenant contained
herein, if it is determined that any such provision is excessive as to duration
or scope, it is intended that it nevertheless shall be enforced for such shorter
duration, or with such narrower scope, as will render it enforceable.
20. All of the terms and provisions of this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, transferees, successors, and assigns; except that
Employee shall have no right to assign any of his rights or obligations to any
other party.
21. This Agreement shall be governed and construed under the laws of the
State of Nevada. Each of the parties hereto consents to the jurisdiction of the
appropriate state and federal courts of Nevada for all purposes in connection
with this Agreement. Each of the parties hereto further consents that any
8
<PAGE>
process or notice of motion or other application of either of said Courts or a
judge thereof, or any notice in connection with any proceedings hereunder, may
be served inside or outside the State of Nevada by registered or certified mail,
return receipt requested, or by personal service, provided a reasonable time for
appearance is allowed, or in such other manner as may be permissible under the
rules of said Courts.
22. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
entered into as of the date and year hereinabove first set forth.
SUMMA METALS CORP.
By: /s/ Michael Chaffee
--------------------------------
Michael Chaffee, President
/s/ Eric A. Popkoff
--------------------------------
Eric A. Popkoff
9
LOCK-UP AGREEMENT
April 3, 1998
Boe & Company
3668 So. Jasper ST.
Aurora, CO 80013
Re: Summa Metals Corp.
Gentlemen:
The undersigned is the owner ("Record Owner") of 1,050,000 shares of the common
stock of Summa Metals Corp. (the "Company"), par value $.001 per share (the
"Shares"), which shares are evidenced by certificate Number(s) 000125. In
consideration of the Company's filing a Registration Statement on Form SB-2 with
the Securities and Exchange Commission, the undersigned hereby agrees with the
Company and Boe & Company (the "Underwriter") among the other things enumerated
below, not to sell the Shares or otherwise transfer the Shares except as
provided herein, until the expiration of the "lock-up" period described in Item
4, Below. The Undersigned further agrees that the restriction on the transfer of
the Shares relates to the certificate referenced above or the ownership of the
Shares by any transferee of the Shares who acquired same by operation of law. In
connection with the foregoing, the undersigned agrees as follows:
1. The Record Owner has full power and authority to enter into this Agreement
and to restrict the transferability and salability of the Shares, as
provided herein.
2. The Record Owner's compliance with the terms and conditions of this
Agreement will not conflict with any instrument or agreement pertaining to
such Shares, and will not conflict with, result in a breach of, or
constitute a default under any instrument to which the Record Owner is a
party.
3. The Record Owner owns the Shares free anmd clear of any and all liens and
encumbrances.
4. Neither the Record Owner nor the heirs, representatives, executors,
administrators, successors or assigns of the Record Holder, will offer,
sell, pledge or otherwise dispose of any of the Shares publicly without the
prior written consent of the Underwriter for a period of twelve months from
the effective date of the public offering of the Company's Shares.
5. The Record Owner agrees not to make any private transfer of the Shares
unless the transferee agrees in writing to be bound by the restrictions of
paragraph 4 hereof.
Sincerely,
/s/ Michael Chaffee
--------------------------
Michael Chaffee
Exhibit 23
(LOGO) Luxenberg & Associates, CPA
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
----------------------------------------
I consent to the use in this Registration Statement of my report, dated November
24, 1997, on the financial statements of Summa Metals Corporation, as of October
31, 1997 and December 31, 1996 and 1995, included herein and to the reference
made to me under the caption "Experts" in the prospectus.
/s/ Luxenberg & Associates
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Luxenberg & Associates
April 2, 1998
Rancho Santa Margarita, California
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22431 Antonio Parkway, #BI60-457, Rancho Santa Margarita, California 92688
Tel: (714) 788-0402 Fax: (714) 788-0006
Exhibit 23.1
(LOGO) Luxenberg & Associates, CPA
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
----------------------------------------
I consent to the use in this Registration Statement of my report, dated July 17,
1998, on the financial statements of Summa Metals Corporation, as of June 30,
1998, included herein and to the reference made to me under the caption
"Experts" in the prospectus.
/s/ Luxenberg & Associates
-------------------------------
Luxenberg & Associates
July 22, 1998
Rancho Santa Margarita, California
- --------------------------------------------------------------------------------
22431 Antonio Parkway, #BI60-457, Rancho Santa Margarita, California 92688
Tel: (714) 788-0402 Fax: (714) 788-0006
