EXHIBIT 4.3
PREFERRED STOCK INVESTMENT AGREEMENT
AGREEMENT dated as of April 11, 1997 between Casmyn Corp. (the
"Company") and the investor whose name is set forth at the foot of this
Agreement (the "Investor").
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Preferred Stock
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Section 1.1 Purchase and Sale of Preferred Stock. Upon the following
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terms and conditions, the Company shall issue and sell to the Investor shares of
the Company's First Convertible Preferred Stock (the "Shares") having the
rights, designations and preferences set forth in Schedule I hereto, and the
Investor shall purchase from the Company the number of Shares designated on the
signature page hereof.
Section 1.2 Purchase Price. The purchase price for the Shares (the
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"Purchase Price") shall be $25 per share.
Section 1.3 The Closing.
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(a) The closing of the purchase and sale of the Shares (the
"Closing"), shall take place at the offices of the Company, at 10:00 a.m., local
time on the later of the following: (i) the date on which the last to be
fulfilled or waived of the conditions set forth in Article IV hereof and
applicable to the Closing shall be fulfilled or waived in accordance herewith,
or (ii) such other time and place and/or on such other date as the Investor and
the Company may agree. The date on which the Closing occurs is referred to
herein as the "Closing Date."
(b) On the Closing Date, the Company shall deliver to the
Investor certificates representing the number of Shares being purchased by the
Investor, registered in the name of the Investor, or deposit such Shares into
accounts designated by the Investor, and the Investor shall deliver to the
Company the Purchase Price for such Shares by cashier's check or wire transfer
in immediately available funds to such account as shall be designated in writing
by the Company. In addition, each party shall deliver all documents, instruments
and writings required to be delivered by such party pursuant to this Agreement
at or prior to the Closing.
Section 1.4 Covenant to Register.
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(a) For purposes of this Section, the following definitions
shall apply:
(i) The terms "register," "registered," and
"registration" refer to a registration under the Securities Act of 1933, as
amended (the "Act"), effected by preparing and filing a registration statement
in compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the stock
issued or issuable upon conversion of the Shares, or otherwise issued or
issuable pursuant to this Agreement or the provisions of Schedule I hereto, and
any securities of the Company or securities of any successor corporation issued
as, or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of the Shares, which (i) have not been resold
pursuant to an effective registration statement or pursuant to Rule 144 under
the Act and (ii) may not be resold pursuant to Rule 144(k) under the Act. For
purposes of this Agreement, securities will be considered ineligible for resale
pursuant to Rule 144(k) under the Act unless the Company's transfer agent has
accepted an instruction from the Company specifying that such securities are
eligible for sale pursuant to Rule 144(k).
(iii) The term "holder of Registrable Securities"
includes any person who holds Shares which are convertible into Registrable
Securities.
(b) (i) The Company shall, as expeditiously as possible
following the Closing, file a registration statement on Form S-3, or if Form S-3
is not then available, another appropriate form, covering all the Registrable
Securities and sales thereof under Rule 415, and shall use its best efforts to
cause such registration statement to become effective by the 90th calendar day
after the Closing Date (the "Initial Registration"). In the event such
registration is not so declared effective or does not include all Registrable
Securities, a holder of Registrable Securities shall have the right to require
by notice in writing that the Company register all or any part of the
Registrable Securities held by such holder (a "Demand Registration") and the
Company shall thereupon effect such registration in accordance herewith (which
may include adding such shares to an existing shelf registration). The parties
agree that if the holder of Registrable Securities demands registration of less
than all of the Registrable Securities, the Company, at its option, may
nevertheless file a registration statement covering all of the Registrable
Securities. If such registration statement is declared effective with respect to
all Registrable Securities, then so long as the Company is in compliance with
its obligations under Subsection (d)(i) through (v) hereof, the demand
registration rights granted pursuant to this Subsection (b) (i) shall not be
applicable. If such registration statement is not
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declared effective with respect to all Registrable Securities, or if the Company
is not in compliance with said obligations, the demand registration rights
described herein shall remain in effect. The Company shall provide holders of
Registrable Securities reasonable opportunity to review any such registration
statement or amendment or supplement thereto prior to the filing thereof. If
the Registrable Securities are registered initially on a form other than Form S-
3, the Company shall register the Registrable Securities on Form S-3 as soon as
use of such form is permissible.
(ii) The Company shall not be obligated to effect Demand
Registration under Subsection (b)(i) if all of the Registrable Securities held
by the holder of Registrable Securities which are demanded to be covered by the
Demand Registration are, at the time of such demand, included in an effective
registration statement and the Company is in compliance with its obligations
under Subsection (d) (i) through (v) hereof.
(iii) The Company may suspend the effectiveness of any
such registration effected pursuant to this Subsection (b) in the event, and for
such period of time as, such a suspension is required by the rules and
regulations of the Securities and Exchange Commission ("SEC"), and may suspend
use of the prospectus included in the Registration Statement if such prospectus
ceases to meet the requirements of Section 10 of the Act. The Company will
immediately advise the holders of the registered securities of any such
suspension, and will use its best efforts to cause such suspension to terminate
at the earliest possible date.
(iv) If the registration statement covering all
Registrable Securities is not effective by the 90th calendar day after the
Closing Date, then the Company shall pay the Investor in cash an amount equal to
3% of the total Purchase Price of the Shares purchased by the Investor for each
30 day period thereafter until such registration statement is effective (pro-
rata as to a period of less than 30 days); provided, however, that such payment,
with respect to the first 60 days (but not thereafter), may be made in Shares
valued at the Purchase Price. An amount equal to 3% of the total Purchase Price
of Shares and any Registrable Securities then held by Investor shall also be
paid to the Investor in cash during any period in excess of 30 days that (i) the
effectiveness of the Registration Statement or use of the prospectus is
suspended as set forth in Section 1.4 (b)(iii) or the prospectus is otherwise
unavailable for use by sellers of Registrable Securities, or if the Registrable
Securities are not listed and traded on NASDAQ or on a national securities
exchange. Any payment hereunder shall be made not later than five business days
after the end of the 30-day period with respect to which such payment is due and
if not so paid the Shares shall be redeemable at the option of the holder
thereof at their liquidation preference divided by 100% less the Applicable
Percentage set forth in Schedule I hereto. The "Purchase Price" of Registrable
Securities shall be (i) in the case of Registrable Securities derived from
conversion or substitution of Shares, the Purchase Price of such Shares, and
(ii) in the case of Registrable Securities
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derived from dividend payments, the original dollar amount of such dividends.
This subsection is in addition to the provisions of Section 7.2(a) hereof.
(c) If the Company proposes to register (including for
this purpose a registration effected by the Company for shareholders other than
the Investor) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form S-
4, Form S-8 or other limited purpose form) and all Registrable Securities have
not theretofore been included in a registration statement under Subsection (b)
which remains effective, the Company shall, at such time, promptly give all
holders of Registrable Securities written notice of such registration. Upon the
written request of any holder of Registrable Securities given within twenty (20)
days after receipt of such notice by the holder of Registrable Securities, the
Company shall use its list efforts to cause to be registered under the Act all
Registrable Securities that such holder of Registrable Securities requests to be
registered. However, the Company shall have no obligation under this Subsection
(c) to the extent that, with respect to a public offering registration, the
managing underwriter of such public offering reasonably notifies such holder(s)
in writing of its determination that the Registrable Securities or a portion
thereof should be excluded therefrom.
(d) Whenever required under this Section to effect the
registration of any Registrable Securities, including, without limitation, the
Initial Registration, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration to become effective as provided in Section 1.4(b)(i),
and keep such registration statement effective for so long as any holder of
Registrable Securities desires to dispose of the securities covered by such
registration statement, or, if earlier, until such Registrable Securities may be
sold under Rule 144(k) (provided that the Company's transfer agent has accepted
an instruction from the Company to such effect).
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement and notify the holders of the filing and
effectiveness of such Registration Statement and any amendments or supplements.
(iii) Furnish to each holder of Registrable
Securities such numbers of copies of a current prospectus conforming with the
requirements of the Act, copies of the registration statement, any amendment or
supplement thereto and any documents incorporated by reference therein and such
other documents as such holder of
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Registrable Securities may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such holder of Registrable
Securities.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"Blue Sky" laws of such jurisdictions as shall be reasonably requested by a
holder of Registrable Securities and keep such registration or qualification
effective as long as required to permit sale of Registrable Securities
thereunder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(v) Notify each holder of Registrable Securities
immediately of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and use its best efforts to promptly
update and/or correct such prospectus.
(vi) Furnish, at the request of any holder of
Registrable Securities, (1) an opinion of counsel of the Company, dated the
effective date of the registration statement, in form and substance reasonably
satisfactory to the holder and its counsel and covering, without limitation,
such matters as the due authorization and issuance of the securities being
registered and compliance with securities laws by the Company in connection with
the authorization, issuance and registration thereof and (2) a letter or letters
of the Company's independent public accountants in form and substance reasonably
satisfactory to the holder and its counsel.
(vii) Use its best efforts to list the Registrable
Securities covered by such registration statement with any national market or
securities exchange on which the Common Stock is then listed, and make generally
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available on a timely basis such statements of earnings as are required to
comply with Section lla of the Act.
(viii) Make available for inspection by the holder of
Registrable Securities, upon request, all SEC Documents (as defined below) filed
subsequent to the Closing and require the Company's officers, directors and
employees to supply all information reasonably requested by any holder of
Registrable Securities in connection with such registration statement.
(e) Each holder of Registrable Securities will furnish to
the Company in connection with any registration under this Section such
information regarding itself, the Registrable Securities and other securities of
the Company held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Registrable Securities held by such holder of
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Registrable Securities. The Investor shall provide such data as of closing.
The intended method of disposition (Plan of Distribution) of such securities as
so provided by Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of the Investor.
(f) (i) The Company shall indemnify, defend and hold
harmless each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of Subsections (b) or (c)
(each, a "Selling Shareholder") and each of its officers, directors, employees,
agents, partners or controlling persons (within the meaning of the Act) (each,
an "indemnified party") from and against, and shall reimburse such indemnified
party with respect to, any and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses ("Liabilities") to which such
indemnified party may become subject under the Act or otherwise, arising from or
relating to (A) any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that the Company shall not be liable in
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any such case to the extent that any such Liability arises out of or is based
upon an untrue statement or omission so made in strict conformity with
information furnished by such indemnified party in writing specifically for use
in the registration statement; provided further, that the Company shall not be
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liable in any such case to the extent that any such Liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) a Selling Shareholder
under an obligation to send or deliver a copy of the prospectus with or prior to
the delivery of written confirmation of the sale of Registrable Securities to
the person asserting such Liability who purchased such Registrable Securities
which are the subject thereof from such Selling Shareholder failed to do so and
(ii) the prospectus would have completely corrected such untrue statement or
omission; and provided further, that the Company shall not be liable in any such
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case to the extent that any Liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in the
prospectus, if such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the prospectuses so amended or supplemented and having
been obligated to deliver such prospectuses, the Selling Shareholder thereafter
failed to deliver such prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registrable Securities to the person asserting
such Liability who purchased such Registrable Securities which are the subject
thereof from such Selling Shareholder.
(ii) In the event of any registration under the Act
of Registrable Securities pursuant to Subsections (b) or (c), each holder of
such Registrable
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Securities hereby severally agrees to indemnify, defend and hold harmless the
Company, and its officers, directors, employees, agents, partners, or
controlling persons (within the meaning of the Act) (each, an "indemnified
party") from and against, and shall reimburse such indemnified party with
respect to, any and all Liabilities to which such indemnified party may become
subject under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or (B) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, that such holders will be liable in any such case to the extent, and
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only to the extent, that any such Liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, prospectus or amendment or supplement
thereto in reliance upon and in strict conformity with written information
furnished in an instrument duly executed by such holder specifically for use in
the registration statement.
(iii) Promptly after receipt by any indemnified party
of notice of the commencement of any action, or after actual knowledge of any
claim, such indemnified party shall, if a claim in respect thereof is to be made
against another party (the "indemnifying party") hereunder, notify such party in
writing thereof, but the omission so to notify shall not relieve the
indemnifying party from any Liability which it may have to the indemnified party
other than under this section and shall only relieve it from any liability which
it may have to the indemnified party under this section if and to the extent it
is actually prejudiced by such omission. In case any such action shall be
brought against any indemnified party and such indemnified party shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party to the
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to the indemnified party
under this section for any legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
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however, that if the defendants in any such action include both the indemnifying
party and such indemnified party and the indemnified party shall have
reasonably concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the indemnifying party or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other reasonable expenses related
to such participation to be reimbursed by the indemnifying party as incurred.
In clarification of the foregoing,
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if the Company is the indemnifying party it shall pay the reasonable expenses
and fees of one separate counsel whose selection is approved by the largest
group of similarly situated indemnified parties as measured by the aggregate par
value of such Registrable Securities owned by such group. Any indemnified party
who chooses not to be represented by the foregoing separate counsel shall be
entitled, at its own expense to be represented by counsel of its own selection.
An indemnifying party shall not be bound by or have liability in respect of any
settlement entered into without its consent.
(g) (i) With respect to the inclusion of Registrable
Securities in a registration statement pursuant to Subsections (b) or (c), all
fees, costs and expenses of and incidental to such registration, inclusion and
public offering shall be borne by the Company; provided, however, that any
Selling Shareholders participating in such registration shall bear their pro-
rata share of the underwriting discounts and commissions, if any, incurred by
them in connection with such registration.
(ii) The fees, costs and expenses of registration to
be borne by the Company as provided in this Subsection (g) shall include,
without limitation, all registration, filing and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities or
Blue Sky laws of any jurisdiction or jurisdictions in which securities to be
offered are to be registered and qualified. Subject to appropriate agreements as
to confidentiality, the Company shall make available to counsel for the holders
of Registrable Securities its documents and personnel for due diligence
purposes, and shall pay the reasonable fees and disbursements of one law firm
(but not more than one) acting as counsel for a majority of such holders. Except
as otherwise provided herein, fees and disbursements of counsel and accountants
for the Selling Shareholders shall be borne by the respective Selling
Shareholders.
(h) The rights to cause the Company to register all or
any portion of Registrable Securities pursuant to this Section may be assigned
by Investor to a transferee or assignee of 20% or more, in the aggregate, of its
Shares or the Registrable Securities derived from such Shares. Any transferee
asserting registration rights hereunder shall be bound by the applicable
provisions of this Agreement.
(i) From and after the date of this Agreement, the
Company shall not agree to allow the holders of any securities of the Company to
include any of their securities in any registration statement filed by the
Company pursuant to Subsection (b) unless such inclusion will not reduce the
amount of the Registrable Securities included therein.
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ARTICLE II
Representations and Warranties
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Section 2.1 Representations and Warranties of the Company. The
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Company hereby makes the following representations and warranties to the
Investor:
(a) Organization and Qualification. The Company is a corporation duly
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incorporated and existing in good standing under the laws of Colorado and has
the requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company does not have any direct or indirect
subsidiaries except as listed in Exhibit A hereto or in the SEC Documents (as
hereinafter defined). The Company and each such subsidiary, if any, is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in which the
failure so to qualify would not have a Material Adverse Effect. "Material
Adverse Effect" means any adverse effect on the business, operations,
properties, prospects, or financial condition of the entity with respect to
which such term is used and which is material to such entity and other entities
controlling or controlled by such entity taken as a whole, or any adverse effect
on the Company's performance of its obligations under this Agreement or any
other agreement or document contemplated hereby.
(b) Authorization: Enforcement. (i) The Company has the requisite
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corporate power and authority to enter into and perform this Agreement and to
issue the Shares in accordance with the terms hereof, (ii) the execution and
delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or stockholders is required, (iii) this Agreement has been
duly executed and delivered by the Company, and (iv) this Agreement constitutes
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
The Company's executive officers and directors have studied and fully understand
the nature of the securities being sold hereunder, and recognize that they have
a potential dilutive effect.
(c) Capitalization. The authorized capital stock of the Company
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consists of 300,000,000 shares of Common Stock and 20,000,000 shares of
preferred stock; there are 12,752,633 shares of Common Stock issued and
outstanding; and, upon issuance of the Shares in accordance with the terms
hereof and pursuant to similar
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agreements of like tenor, there will be 12,752,033 shares of Common Stock and
approximately 800,000 shares of preferred stock issued and outstanding. All of
the outstanding shares of the Company's Common Stock have been validly issued
and are fully paid and nonassessable. Except as set forth in Exhibit A hereto
and as described in the SEC Documents, no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company, or contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company or options, warrants, scrip, rights to
subscribe to, or commitments to purchase or acquire, any shares, or securities
or rights convertible into shares, of capital stock of the Company. The Company
has furnished or made available to the Investor true and correct copies of the
Company's Articles of Incorporation as in effect on the date hereof (the
"Charter"), and the Company's By-Laws, as in effect on the date hereof (the "By-
Laws").
(d) Issuance of Shares. The issuance of the Shares has been duly
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authorized and, when paid for or issued in accordance with the terms hereof, the
Shares shall be validly issued, fully paid and non-assessable and entitled to
the rights and preferences set forth in Schedule I hereto. The Common Stock
issuable upon conversion of the Shares will be duly authorized and reserved for
issuance and, upon conversion in accordance with the Certificate of Designation
to be filed by the Company to establish the rights and preferences of the
Shares, will be validly issued, fully paid and non-assessable and not subject to
any preemptive rights or adverse claims, and the holders shall be entitled to
all rights and preferences accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of this
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Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not (i) result in a violation of the
Company's Charter or By-Laws or (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any federal,
state, local or foreign law, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not individually or in the aggregate, have a Material
Adverse Effect); provided that, for purposes of such representation as to
Federal, state, local or foreign law, rule or regulation, no representation is
made herein with respect to any of the same applicable solely to the Investor
and not to the Company. The business of the Company is not being conducted in
violation of any law, ordinance or regulations of any governmental entity,
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except for violations which either singly or in the aggregate do not and will
not have a Material Adverse Effect. The Company is not required under Federal,
state or local law, rule or regulation in the United States to obtain any
consent, authorization or order of, or make any filing (other than the filing of
a Certificate setting forth the terms of the Shares with the Colorado Secretary
of State) or registration with, any court or governmental agency in order for it
to execute, deliver or perform any of its obligations under this Agreement or
issue and sell the Shares in accordance with the terms hereof (other than any
SEC, NASD or state securities filings which may be required to be made by the
Company and any registration statement which may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investor herein.
(f) SEC Documents, Financial Statements. The Common Stock of the
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Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Exchange Act, including
material filed pursuant to Section 13(a) or 15(d), in addition to one or more
registration statements and amendments thereto heretofore filed by the Company
with the SEC (all of the foregoing including filings incorporated by reference
therein being referred to herein as the "SEC Documents"). The Company has
delivered or made available to the Investor true and complete copies of the
quarterly and annual (including, without limitation, proxy information and
solicitation materials) SEC Documents filed with the SEC since December 31,
1995. The Company has not provided to the Investor any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder except as set forth on Exhibit A and other federal, state
and local laws, rules and regulations applicable to such SEC Documents, and none
of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates
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thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) No Material Adverse Change. Since the date through which the most
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recent quarterly report of the Company on Form 10-Q has been prepared and filed
with the SEC, a copy of which is included in the SEC Documents, no event which
would have a Material Adverse Effect has occurred or exists with respect to the
Company or its subsidiaries, except as otherwise disclosed or reflected in other
SEC Documents prepared through or as of a date subsequent thereto, and the
Company has not received any communication from the SEC or the NASD regarding
any possible de-listing of the Company's Common Stock.
(h) No Undisclosed Liabilities or Litigation. The Company and its
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subsidiaries have no liabilities or obligations not disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company's or
its subsidiaries' respective businesses which, individually or in the aggregate,
do not or would not have a Material Adverse Effect on the Company or its
subsidiaries. All material litigation to which the Company or its subsidiaries
are parties is disclosed in the SEC documents or in Exhibit A hereto.
(i) No Undisclosed Events or Circumstances. No event or circumstance
--------------------------------------
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
(j) No General Solicitation. Neither the Company, nor any of its
-----------------------
affiliates, or, to its knowledge, any person acting on its or their behalf
(including Cappello Capital Corp. (the "Placement Agent")), has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Act) in connection with the offer or sale of the Shares.
(k) No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Shares under the Act.
(l) Standoff Commitments. The Company has received binding Assurances
--------------------
from Amyn Dahya and Dahya Holdings, Inc. that neither of them or their
affiliates will sell more than 25,000 shares of Common Stock during the thirteen
months following the Closing Date without the approval of the Placement Agent.
12
(m) Approval Commitments. The Company has received binding assurance
--------------------
from its executive officers and directors and all stockholders who own more than
5% of the outstanding stock of the Company, to the effect that such persons will
vote all their shares in favor of such approval of the transactions contemplated
hereby as may be necessary to comply with any rule or regulation of the NASD or
any other regulatory agency.
Section 2.2 Representations and Warranties of the Investor. The
----------------------------------------------
Investor hereby makes the following representations and warranties to the
Company:
(a) Authorization, Enforcement. (i) Such Investor has the requisite
--------------------------
power and authority to enter into and perform this Agreement and to purchase the
Shares being sold hereunder, (ii) the execution and delivery of this Agreement
by the Investor and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate or partnership
action, and (iii) this Agreement constitutes a valid and binding obligation of
the Investor enforceable against the Investor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(b) No Conflicts. The execution, delivery and performance of this
------------
Agreement and the consummation by the Investor of the transactions contemplated
hereby do not and will not (i) result in a violation of the Investor's charter
documents or By-Laws or (ii) conflict with any agreement, indenture or
instrument to which Investor is a party, or (iii) result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to Investor. The business of the Investor is not
being conducted in violation of any law or regulation of any governmental
entity, except for possible violations which either singly or in the aggregate
do not and will not have a Material Adverse Effect. The Investor is not
required to obtain any consent or authorization of any governmental agency in
order for it to perform its obligations under this Agreement. The data to be
provided by the Investor in connection with registering the Registrable
Securities under the Act will be true and correct in all material respects.
(c) Investment Representation. The Investor is purchasing the Shares
-------------------------
for its own account for investment and not with a view to distribution otherwise
than in compliance with the Act. Investor has no present intention to sell the
Shares and Investor has no present arrangement (whether or not legally binding)
to sell the Shares to or through any person or entity; provided, however, that
by making the representations herein, the Investor does not agree to hold the
Shares for any minimum or other specific term and reserves the right to dispose
of the Shares at any time in accordance with Federal and state securities laws
applicable to such disposition.
13
(d) Accredited Investor. The Investor is an accredited investor as
-------------------
defined in Rule 501 promulgated under the Act. The Investor has such knowledge
and experience in financial and business matters in general, and investments in
particular, so that the Investor is able to evaluate the merits and risks of an
investment in the Shares and to protect its own interests in connection with
such investment. In addition (but without limiting the effect of the Company's
representations and warranties contained herein), the Investor has received such
information as it considers necessary or appropriate for deciding whether to
purchase the Shares pursuant hereto. The Investor acknowledges that no
representation or warranty is made by the Placement Agent or any persons
representing the Placement Agent with respect to the Company or sale of the
Shares.
(e) Rule 144. The Investor understands that there is no public
--------
trading market for the Shares, that none is expected to develop, and that the
Shares must be held indefinitely unless such Shares or securities into which the
Shares are converted are registered under the Act or an exemption from
registration is available. The Investor has been advised or is aware of the
provisions of Rule 144 promulgated under the Act.
ARTICLE III
Covenants
---------
Section 3.1 Securities Compliance.
---------------------
(a) The Company shall notify the SEC and NASD, in accordance with
their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Shares and Common Stock issuable upon conversion thereof to the
Investor or subsequent holder.
(b) The Investor understands that the Shares are being offered and
sold in reliance on a transactional exemption from the registration requirements
of Federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the applicability of such exemptions and the suitability of the
Investor to acquire the Shares.
Section 3.2 Registration and Listing. Until three (3) years after
------------------------
all Shares have been converted into Common Stock, the Company will cause its
Common Stock (or other securities into which the Shares are convertible) to
continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under said
act, will comply with all requirements
14
related to any registration statement filed pursuant to this Agreement and will
not take any action or file any document (whether or not permitted by the Act or
the Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Acts, except as permitted herein. Until three (3) years after all
Shares have been converted into Common Stock the Company will take all action
within its power to continue the listing or trading of its Common Stock on any
stock exchange on which such stock is traded and on the Nasdaq National Market
or the Nasdaq Small Cap Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and Nasdaq.
Section 3.3 Stockholder Approval. The Company will use its best
--------------------
efforts to promptly notice and hold a stockholders meeting if, as and when
necessary to obtain any stockholder approvals required by the Company (including
those required by all applicable agreements between the Company and the NASD or
Nasdaq) to allow for issuance of Common Stock upon conversion of the Shares.
Section 3.4 Sale Restrictions. Following conversion of the Shares
-----------------
into Common Stock of the Company, Investor will not on any trading day offer or
sell publicly on NASDAQ or on the principal exchange on which the Common Stock
is traded, on a net basis more than the following number of such shares of
Common Stock: the greatest of (i) 10% of the average daily trading volume of the
Common Stock for the five trading days preceding such sale as reported by NASDAQ
or by such principal exchange, (ii) 25,000 shares, and (iii) 10% of the trading
volume for the Common Stock on such day.
Section 3.5 Conversion Rights. Investor shall not be entitled to
-----------------
convert any Share into Common Stock of the Company if following conversion of
such Share the Investor and its affiliates (within the meaning of the Exchange
Act) shall be the beneficial owners (as defined in Rule 13d-3 under the Exchange
Act) of 10% or more of the Common Stock of the Company, or if a lesser
percentage is set forth after the name of the Investor on the signature page
hereof, such lesser percentage. The provisions of this Section cannot be
amended.
Section 3.6 Short Sale Restrictions. Investor agrees not to sell
-----------------------
Common Stock of the Company "short" except for (i) sales of shares issuable to
Investor upon conversion, made within 72 hours prior to the time notice of
conversion is given, (ii) sales against shares of Common Stock owned the day the
short position is established, or (iii) more than 12 months after the Closing,
sales against shares issuable upon conversion of the Shares whether or not
notice of conversion has been given. This Section shall not apply to sales in
which Investor has no beneficial interest made on behalf of third-party clients
who are not holders of Shares.
15
Section 3.7 Notice of Conversion Car. No later than the 15 days
------------------------
after the end of the 18th month after the Closing Date, the Company will deliver
notice to the Investor specifying the amount of the Conversion Cap (as defined
in Schedule I hereto) and the calculation thereof.
Section 3.8 Most Favored Nation Clause. If the Company issues Common
--------------------------
Stock or securities convertible into or exercisable for Common Stock or other
convertible securities at a time when any of the Shares remain outstanding, at
an effective price per share of Common Stock which is lower than the conversion
price of the shares at that time, then the Company shall issue upon conversion
of the Shares an additional number of shares of Common Stock necessary to reduce
the effective conversion price to such lower issue price. This Section shall
not be applicable to issuances of Common Stock, or options granted at market
price, pursuant to any shareholder approved option plan covering not more than
8% of the Company's outstanding stock.
ARTICLE IV
Conditions
----------
Section 4.1 Conditions Precedent to the Obligation of the Company to
--------------------------------------------------------
Sell the Shares. The obligation hereunder of the Company to issue and/or sell
- ---------------
the Shares to the Investor is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below. These conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion.
(a) Accuracy of the Investor's Representations and Warranties. The
---------------------------------------------------------
representations and warranties of the Investor shall be true and correct in all
material respects.
(b) Performance by the Investor. The Investor shall have performed
---------------------------
all agreements and satisfied all conditions required to be performed or
satisfied by the Investor at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Investor to
---------------------------------------------------------
Purchase the Shares. The obligation hereunder of the Investor to acquire and
- -------------------
pay for the Shares is subject to the satisfaction, at or before the Closing, of
each of the conditions set
16
forth below. These conditions are for the Investor's sole benefit and may be
waived by the Investor at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
--------------------------------------------------------
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall have performed all
--------------------------
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing.
(c) Nasdaq. The Company's Common Stock shall have been listed and
------
admitted to trading on the Nasdaq National Market or the Nasdaq Small Cap
Market. Thereafter, and prior to the Closing Date, trading in the Company's
Common Stock shall not have been suspended by the SEC or Nasdaq and trading in
securities generally as reported by Nasdaq shall not have been suspended or
limited or minimum prices shall not have been established on securities whose
trades are reported by Nasdaq.
(d) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) Opinion of Counsel, Etc. At the Closing the Investor shall have
------------------------
received an opinion of counsel to the Company in the form attached hereto and
such other certificates and documents as the Investor or its counsel shall
reasonably require incident to the Closing.
ARTICLE V
Legend on Stock
---------------
Each certificate representing the Shares and, if appropriate,
securities issued upon conversion thereof, shall be stamped or otherwise
imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED
FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES
17
LAW OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
The Company agrees to reissue certificates representing the Shares or,
if applicable, the securities issued upon conversion thereof without the legend
set forth above at such time as (i) the holder thereof is permitted to dispose
of such Shares (or securities issued upon conversion thereof) pursuant to Rule
144 under the Act, (ii) the securities are sold to a purchaser or purchasers who
(in the opinion of counsel to such purchasers, in form and substance reasonably
satisfactory to the Company and its counsel) are able to dispose of such shares
publicly without registration under the Act, or (iii) such securities are
included in an effective registration statement under the Act.
ARTICLE VII
Termination
-----------
Section 6.1 Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Investor.
Section 6.2 Other Termination. This Agreement may be terminated by
-----------------
action of the Board of Directors or other governing body of the Investor or the
Company at any time if the Closing shall not have been consummated by the fifth
business day following the date of this Agreement.
Section 6.3 Automatic Termination. This Agreement shall
---------------------
automatically terminate without any further action of either party hereto if the
Closing shall not have occurred by the tenth business day following the date of
this Agreement.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Fees and Expenses. Except as otherwise set forth in
-----------------
Section 1.4 hereof, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, provided that the Company shall pay, at the
Closing, all due diligence fees and attorneys' fees and expenses incurred by the
Investor and the Placement Agent, up to the maximums stated in the final letter
agreement dated December 18, 1996 as amended February 20, 1997 between the
Company and Cappello & Laffer Capital Corp., in connection with the
18
preparation, negotiation, execution and delivery of this Agreement and the
transactions contemplated hereunder. The Company shall compensate the Placement
Agent and shall indemnify it as set forth in said letter agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Shares pursuant hereto. The Placement Agent's compensation
includes a cash payment in an amount equal to 7.5% of the Purchase Price of
Shares sold by the Company, and the issuance of warrants to the Placement Agent
to purchase that number of Shares equal to 10.625% of the number of Shares sold.
Section 7.2 Specific Enforcement, Consent to Jurisdiction.
---------------------------------------------
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) Each of the Company and the Investor (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts
of the United States sitting in California for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Each of the Company and
the Investor consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
paragraph shall affect or limit any right to serve process in any other manner
permitted by law.
Section 7.3 Entire Agreement: Amendment. This Agreement contains the
---------------------------
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or
amended other than by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
Section 7.4 Notices. Any notice or other communication required or
-------
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile
19
at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be:
to the Company: Casmyn Corp.
Amyn Dahya, Chairman and
President
1800-1500 W. Georgia St.
Vancouver, British Columbia
Canada V6G 2Z6
Fax: (604) 601-5220
with a copy to: Al-Kamin Haji
Managing Director-Finance
1800-1500 W. Georgia St.
Vancouver, British Columbia
Canada V6G 2Z6
Fax: (604) 601-5220
to the Investor: At the address set forth at the foot of this Agreement,
with copies to Investor's counsel as set forth at the foot
of this Agreement or as specified in writing by Investor
with a copy to: Gerard K. Cappello
Cappello & Laffer Capital Corp.
1299 Ocean Avenue, Suite 306
Santa Monica, California 90401
Fax: (310) 393-4838
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other party
hereto.
Section 7.5 Waivers. No waiver by either party of any default with
-------
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
20
Section 7.6 Headings. The headings herein are for convenience only,
--------
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.7 Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. The parties hereto may amend this
Agreement without notice to or the consent of any third party.
Section 7.8 No Third Party Beneficiaries. This Agreement is intended
----------------------------
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 7.9 Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the internal laws of California
without regard to such state's principles of conflict of laws.
Section 7.10 Survival. The representations and warranties of the
--------
Company and the Investor contained in Article II and the agreements and
covenants set forth in Articles I, III, V and VII shall survive the Closing.
Section 7.11 Execution. This Agreement may be executed in two or
---------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed signature page(s) to be physically delivered to the other party within
five days of the execution hereof.
Section 7.12 Equal Treatment of Shareholders. The Company will deal
-------------------------------
on an equal basis, ratably, with all holders of the Shares and will not provide
any economic benefit or opportunity to any holder of Shares unless such benefit
or opportunity is made available on equal terms to all holders of Shares.
Section 7.13 Publicity. The Company agrees that it will not
---------
disclose, and will not include in any public announcement, the name of the
Investor without its consent
21
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
CASMYN CORP.
By: ______________________________
Name: Amyn Dahya
Its: Chairman and President
Number of Shares THE INVESTOR
________________ By: ______________________________
Name:
Its:
Dollar Amount at Investor's address:
$25 per share
$_______________ Percentage limitation, if desired ____
Name and address of Investor's counsel:
22