As filed with the Securities and Exchange Commission on July 24, 1996.
File No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE CONTINENTAL ORINOCO COMPANY, INC.
(Exact name of issuer as specified in its charter)
Colorado 84-1037886
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
555 13th Street, N.W.
Suite 600E
Washington, DC 20004
(Address of principal executive offices) (Zip Code)
------------------
MANAGEMENT CONSULTING AGREEMENT
WITH CARY CIMINO
(Full title of the plan)
------------------
Christopher d'Arnaud Taylor
Chairman of the Board
555 13th Street, N.W.
Suite 600E
Washington, DC 20004
Telephone No.: (212) 242-7039
(Name and address of agent for service)
Copy to:
James M. Schneider, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, FL 33301
(954) 763-1200
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CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE(1) PRICE(1) FEE (1)
- ------------------- ------------- --------- --------- -------------
Common Stock 1,000,000
(no par value) shares $0.84 $840,000 $290.00
(1) Pursuant to Rule 457(h), the maximum offering price was calculated
based upon the average of the bid and asked prices of the Common Stock
of the Company on the OTC Bulletin Board on July 15, 1996.
2
THE CONTINENTAL ORINOCO COMPANY, INC.
CROSS REFERENCE SHEET REQUIRED BY ITEM 501(B) OF REGULATION S-K
FORM S-8 ITEM NUMBER
AND CAPTION CAPTION IN PROSPECTUS
-------------------- ---------------------
1. Forepart of Registration State- Facing Page of Registration
ment and Outside Front Cover Statement and Cover Page of
Page of Prospectus Prospectus
2. Inside Front and Outside Back Inside Cover Page of Pro-
Cover Pages of Prospectus spectus and Outside Cover
Page of Prospectus
3. Summary Information, Risk Fac- Not Applicable
tors and Ratio of Earnings to
Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Sales by Selling Security
Holder
8. Plan of Distribution Cover Page of Prospectus
and Sales by Selling
Security Holder
9. Description of Securities to be Description of Securities;
Registered Consulting Agreement
10. Interests of Named Experts and Legal Matters
Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Infor- Incorporation of Certain
mation by Reference Documents by Reference
13. Disclosure of Commission Posi- Indemnification of Direc-
tion on Indemnification for tors and Officers; Under-
Securities Act Liabilities takings
3
PROSPECTUS
THE CONTINENTAL ORINOCO COMPANY, INC.
1,000,000 SHARES OF COMMON STOCK
(NO PAR VALUE)
Issued Pursuant to the
Company's Management Consulting Agreement
with Cary Cimino
This Prospectus is part of a Registration Statement which registers an
aggregate of 1,000,000 shares of Common Stock, no par value (such shares being
referred to as the "Shares"), of The Continental Orinoco Company, Inc. (the
"Company" or "CONORCO") which have been issued, as set forth herein, to Mr. Cary
Cimino ("Cimino") pursuant to a written Management Consulting Agreement dated
July 15, 1996 (the "Cimino Consulting Agreement"), providing for the issuance of
1,000,000 Shares. Mr. Cary Cimino may sometimes hereafter be referred to as the
"Consultant." In addition, the Consultant in his capacity as a selling
shareholder may sometimes hereafter be referred to as the "Selling Security
Holder." All of the Shares are being issued to the Consultant pursuant to a
written consulting agreement. The Company has been advised by the Selling
Security Holder that he may sell all or a portion of his Shares from time to
time in the over-the-counter market, in negotiated transactions, directly or
through brokers or otherwise, and that such Shares will be sold at market prices
prevailing at the time of such sales or at negotiated prices, and the Company
will not receive any proceeds from such sales.
No person has been authorized by the Company to give any information or
to make any representation other than as contained in this Prospectus, and if
given or made, such information or representation must not be relied upon as
having been authorized by the Company. Neither the delivery of this Prospectus
nor any distribution of the Shares issuable under the terms of the Consulting
Agreement shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
The date of this Prospectus is July 24, 1996.
4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company's Common Stock is traded on the OTC Bulletin Board under the symbol
"VORI."
The Company has filed with the Commission a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), with respect to the resale of up to an aggregate of up to
1,000,000 shares of the Company's Common Stock, to be issued to the Consultant
pursuant to a written Consulting Agreement with the Company. This Prospectus,
which is Part I of the Registration Statement, omits certain information
contained in the Registration Statement. For further information with respect to
the Company and the shares of the Common Stock offered by this Prospectus,
reference is made to the Registration Statement, including the exhibits thereto.
Statements in this Prospectus as to any document are not necessarily complete,
and where any such document is an exhibit to the Registration Statement or is
incorporated by reference herein, each such statement is qualified in all
respects by the provisions of such exhibit or other document, to which reference
is hereby made, for a full statement of the provisions thereof. A copy of the
Registration Statement, with exhibits, may be obtained from the Commission's
office in Washington, D.C. (at the above address) upon payment of the fees
prescribed by the rules and regulations of the Commission, or examined there
without charge.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated herein by reference and made a part hereof:
1. The Company's Form 10-SB Registration Statement.
2. The Company's Annual Report on Form 10-KSB for the year
ended April 30, 1996.
3. The Company's Quarterly Report on Form 10-QSB for the
quarter ended July 31, 1995.
5
4. The Company's Quarterly Report on Form 10-QSB for the
quarter ended October 31, 1995.
5. The Company's Quarterly Report on Form 10-QSB for the
quarter ended January 31, 1996.
6. All reports and documents filed by the Company pursuant to
Section 13, 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective date of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, The
Continental Orinoco Company, Inc., 555 13th Street, N.W., Suite 600E,
Washington, DC 20004.
6
THE COMPANY
GENERAL
The Continental Orinoco Company, Inc., formerly known as Pontus
Industries, Inc., was originally incorporated under the name of Ince IV, Inc. in
1987 and managed as a blind pool by a group of persons unrelated to current
management. In November 1992, a subsidiary of the Company merged with a
previously unaffiliated company formed by the incumbent management of the
Company ("the Merger") and changed its name to Pontus Industries, Inc. in
January 1993. Most recently in April 1996, as a result of the restructuring of
the corporate objective, the Company changed to its current name.
On May 7, 1993, the Company entered into a purchase agreement with FAD
corporation ("FAD"), a Russian holding company, pursuant to which the Company
acquired (i) 40% of the issued and outstanding capital stock of Usst Ilimsk Ugol
("UIU"), a Russian company engaged in coal mining operations; and (ii) 20% of
the outstanding capital stock of Lesopromyshleone Upravlenie ("LPU"), a Russian
joint stock company engaged in timber operations, in exchange for the issuance
to FAD, as a nominee on behalf of individual shareholders, of 7,600,000 shares
of the Company's Common Stock. The Company also entered into exclusive marketing
agreements with UIU and LPU.
Prior to the Merger, the Company was not engaged in any business
operations. Following the Merger but prior to the acquisition of the stock of
UIU and LPU, the Company had not been engaged in any operations other than
organization activities. Since the acquisition in May 1993, the Company incurred
significant expenses in connection with the development of the businesses of UIU
and LPU. However, to date, the Company has not generated revenues from these
operations. In addition, since the acquisition, the Company has attempted to
conduct a valuation of its holdings in UIU and LPU, and while the Company has
received preliminary information as to the "Fair Market Value in Use" for both
the holdings of UIU and LPU, these findings are still subject to final review
and, therefore, no value was assigned to these investments on the Company's
balance sheet.
Current Developments
In November 1995, upon the appointment of a new Chief Executive Officer,
the Company undertook a comprehensive review of alternative strategies for
developing the Company's operations. In conjunction with this, it was determined
that while the Russian interests may represent significant potential value, such
investments require considerable evolution in terms of definition of rights and
accounting at considerable further expense before being eligible for inclusion
on the Company's balance sheet.
7
Accordingly, on March 25, 1996, the Company entered into an agreement with FAD
to divest the Russian investments on terms whereby the Company sold its stock
interests in UIU and LPU to FAD in exchange for 6,600,000 shares of the
Company's Common Stock previously issued to FAD, which are now being held in the
Company's treasury.
CONORCO will now concentrate on the Republic of Venezuela as a platform
for future development of mineral interests in Latin America. CONORCO's
strategic plan calls for acquisitions of equity and management interests in
prospective Venezuelan mineral concessions and early stage mining and energy
properties and businesses.
The initial phase of CONORCO's corporate plan is to accumulate
production and assets in aluminum and bauxite and, thereafter, gold and other
precious metals, strategic minerals and hydrocarbons. CONORCO is currently
evaluating several concession opportunities and strategic acquisitions in the
Venezuela minerals sector.
As its primary initiative in Venezuela, in January 1996, the Company
purchased 1,000,000 ordinary shares of Delta Minerals Corporation Limited
("Delta") from The Bookham Trust, as nominee for certain beneficiaries and
affiliates, ("Bookham"), in a transaction valued at $22,600,000. The Company
issued Bookham 18,000,000 shares of Common Stock of the Company valued at $0.70
per share; 1,000,000 shares of convertible redeemable preferred stock valued at
$10 million (with each share of preferred stock convertible into eight shares of
Common Stock at a conversion price of $1.25 per share); and warrants to purchase
8,000,000 shares of Common Stock at an exercise price of $0.70 per share.
CONORCO's holdings in Delta represent 28.57% of the 3,500,000 issued and
outstanding ordinary shares of the capital stock of Delta.
In connection with the purchase of the 28.57% of capital stock interest
in Delta, the Company received a Fairness Opinion issued by the investment
banking firm of Taylor Sinclair & Co. Ltd. which incorporated by reference prior
valuations of Delta by the investment banking firm of Morgan Stanley & Co.,
Incorporated ("Morgan Stanley").
The valuation studies were previously commissioned by Delta in the
expectation of attracting an aluminum industry major participant as a strategic
partner to assist in the development of the Delta Aluminum Project. Morgan
Stanley evaluated several strategy options for realizing the profit potential of
Delta's Rio Grande Concession in Venezuela. This valuation model sets forth a
range of potential valuations for Delta by discounting projected cash flows at a
range of discount rates based on variables which could impact potential returns.
The assumptions made in Morgan Stanley's valuation model have recently been
re-validated by the Venezuelan investment banking firm of Baninsa.
8
The estimated base case "enterprise valuation" of Delta's planned
four-million-ton-per-years Bauxite Mine discounting cash flows by 15% was $207
million. The valuation model's base case assumes a capital cost of $297 million,
a bauxite cost of $12.07/ton delivered CVG Puerto Ordaz on the Orinoco River,
and a bauxite sales price of $31.36/ton.
The estimated base case"enterprise valuation" of the Delta Aluminum
Project discounting cash flows at 15% was $803 million. The valuation model's
base case assumes capital costs of US $3,278 million, a bauxite cost of
$12.07/ton, a bauxite sales price of $31.36/ton, a long term trend aluminum
price of $1,800/ton, and cash operating costs of $700/ton, equivalent to
$930/ton full cost including financing costs and depreciation.
As a frame of valuation reference, over the past nine months the spot
aluminum price has exceeded $2,000 per ton, and the London Metal Exchange (LME)
forward outlook is for a 24-month aluminum price in excess of $1,800 per ton
(the valuation model's base case long term trend aluminum price). On May 15,
1996 the spot aluminum price was $1,611 per ton and the three month forward
price was $1,646 per ton.
As a result of the acquisition of its capital stock interest, CONORCO's
sole primary asset is its 28.57% shareholding in Delta for which the Company has
primary responsibility for management and arrangement of its share of corporate
finance. Delta's proposed mining program is exploratory in nature and without
proven reserves.
CONSULTING AGREEMENTS
MANAGEMENT CONSULTING AGREEMENT WITH Cary Cimino
On July 15, 1996, the Company entered into a Management Consulting
Agreement with Mr. Cary Cimino pursuant to which the Company agreed to issue to
Cimino an aggregate of 1,000,000 shares of Common Stock of the Company in
consideration for consulting services to be provided to the Company over an
anticipated twelve-month period commencing as of the date of the Cimino
Consulting Agreement. Under the terms of the Cimino Consulting Agreement, the
Consultant is to undertake for and consult with the Company concerning
management, marketing and operational planning and consulting, expansion of
operations on an international basis, strategic planning, corporate organization
and structure, examination of products and services and shareholder relations,
and shall review and advise the Company regarding its overall progress, needs
and condition. The shares of Common Stock to be issued to the Consultant will be
issued in monthly installments of 100,000 shares, but subject to acceleration in
the sole discretion of the Company.
9
In particular, the Consultant shall provide the following enumerated
services: (i) the implementation of short range and long term strategic planning
to fully develop and enhance the Company's assets, resources, products and
services; (ii) advise the Company of means to restructure its capitalization;
(iii) evaluate expanding the scope of the Company's activities and operations on
an international basis; (iv) advise the Company on means to enhance its
liquidity; (v) assist the Company in the monitoring of services provided by the
Company's advertising firm, public relations firm and other professionals to be
employed by the Company; (vi) advise the Company relative to the recruitment and
employment of key executives consistent with the expansion of operations of the
Company; (vii) advise and recommend to the Company additional services and
products sold by the Company; (viii) assist the Company in the negotiation with
lenders and other sources of capital; and (xi) assist in establishing, and
advising the Company with respect to shareholder meetings and shareholders'
relationships.
In connection with the Cimino Consulting Agreement, the Company has
agreed to issue 1,000,000 shares of Common Stock of the Company over the initial
ten-months of the twelve-month term of the agreement, subject to acceleration in
the discretion of the Company. This compensation arrangement is not being
administered by either the Board of Directors of the Company or any committee of
the Board of Directors organized for that purpose.
FEDERAL INCOME TAX EFFECTS
The following discussion applies to the Common Stock issued under the
Consulting Agreement and is based on federal income tax laws and regulations in
effect on December 31, 1995. In connection with the issuance of Common Stock as
compensation payable to the Consultant under the Consulting Agreement, the
Consultant must include in gross income the excess of the fair market value of
the property received over the amount, if any, paid for the property in the
first taxable year in which Consultant's beneficial interest in the property
either is "transferable" or is not subject to a "substantial risk of
forfeiture." A substantial risk of forfeiture exists where rights and property
that have been transferred are conditioned, directly or indirectly, upon the
future performance (or refraining from performance) of substantial services by
any person, or the occurrence of a condition related to the purpose of the
transfer, and the possibility of forfeiture is substantial if such condition is
not satisfied. Common Stock received by a person who is subject to the short
swing profit recovery rule of Section 16(b) of the Securities Exchange Act of
1934 is considered subject to a substantial risk of forfeiture so long as the
sale of such property at a profit could subject the stockholder to suit under
that section. The rights of the Consultant is treated as transferable if and
when Consultant can sell, assign, pledge or otherwise transfer any interest in
the Common Stock to any person.
10
Inasmuch as the Consultant is not expected to be subject to the short swing
profit recovery rule of Section 16(b) of the Securities Exchange Act of 1934 and
the Common Stock, upon receipt following satisfaction of condition prerequisites
to receipt, will be presently transferable and not subject to a substantial risk
of forfeiture, Consultant would be obligated to include in gross income the fair
market value of the Common Stock received once the conditions to receipt of the
Common Stock are satisfied.
RESTRICTIONS UNDER SECURITIES LAWS
The sale of any shares of Common Stock received must be made in
compliance with federal and state securities laws. Officers, directors and 10%
or greater stockholders of the Company, as well as certain other persons or
parties who may be deemed to be "affiliates" of the Company under the Federal
Securities Laws, should be aware that resales by affiliates can only be made
pursuant to an effective Registration Statement, Rule 144 or any other
applicable exemption. Officers, directors and 10% and greater stockholders are
also subject to the "short swing" profit rule of Section 16(b) of the Securities
Exchange Act of 1934. Section 16(b) of the Exchange Act generally provides that
if an officer, director or 10% and greater stockholder sold any Common Stock of
the Company he would generally be required to pay to the Company any "profits"
resulting from the sale of the stock.
SALES BY SELLING SECURITY HOLDERS
The following table sets forth the name of the Selling Security Holder,
the amount of shares of Common Stock held directly or indirectly by the Selling
Security Holder, the maximum amount of shares of Common Stock to be offered by
the Selling Security Holder, the amount of Common Stock to be owned by the
Selling Security Holder following sale of such shares of Common Stock and the
percentage of shares of Common Stock to be owned by the Selling Security Holder
following completion of such offering (based on 5,681,921 shares of Common Stock
of the Company outstanding at June 30, 1996).
PERCENTAGE
SHARES TO BE TO BE OWNED
NAME OF SELLING NUMBER OF SHARES TO OWNED AFTER AFTER
SECURITY HOLDER SHARES OWNED BE OFFERED OFFERING OFFERING
- --------------- ------------ ---------- ------------ ------------
Cary Cimino 1,000,000 1,000,000 -0- --
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 700,000,000 shares of
Common Stock, no par value per share, of which 5,681,921 shares were outstanding
as of June 30, 1996. The Company is authorized to issue up to 10,000,000 shares
of Preferred Stock, no
11
par value per share, 1,000,000 of which were outstanding as of June
30, 1996.
COMMON STOCK
Subject to the dividend rights of the holders of preferred stock,
holders of shares of Common Stock are entitled to share, on a ratable basis,
such dividends as may be declared by the Board of Directors out of funds legally
available therefor. Upon liquidation, dissolution or winding up of the Company,
after payment to creditors and holders of preferred stock that may be
outstanding, the assets of the Company will be divided pro rata on a per share
basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of Directors
can elect all of the Directors if they choose to do so, and, in such event, the
holders of the remaining shares will not be able to elect any Directors. The
ByLaws of the Company require that only a majority of the issued and outstanding
shares of Common Stock of the Company need be represented to constitute a quorum
and to transact business at a stockholders' meeting. The Common Stock has no
preemptive, subscription or conversion rights and is not redeemable by the
Company.
PREFERRED STOCK
The Board of Directors is authorized to issue the authorized and
unissued preferred stock in one or more series, to fix or alter the rights,
preferences, privileges and restrictions, including the dividend rights,
dividend rate, conversion rights, voting rights and terms of redemption,
liquidation preferences and sinking fund of any series of preferred stock which
is authorized and unissued. No shares of Preferred Stock have been issued or are
outstanding as of the date hereof.
There were 1,000,000 shares of the Series A Preferred Stock outstanding
at April 30, 1996. Shares of Series A Preferred Stock accrue cumulative stock
dividends at an annual rate of 10% of the stated value ($10.00) per share,
payable in kind annually commencing January 31, 1997. The holders of the Series
A Preferred Stock will have no right to have the Company redeem such shares, and
the Company is not obligated to redeem such shares under any circumstances,
although the Company has the right to redeem the shares at a redemption price of
$10.00 per share together with an amount equal to accrued by unpaid dividends
thereon. The holders of Series A Preferred Stock are entitled to receive, upon
the voluntary or involuntary dissolution, liquidation or winding up of the
Company, $10.00 per share plus an amount equal to all accrued and unpaid
dividends, if any.
12
At the election of the holder thereof, each Series A Preferred Stock is
convertible at any time up through and including February 1, 1998, unless
previously redeemed, at the rate of eight shares of Common Stock for each share
of Series A Preferred Stock, subject to certain adjustments. Holders of Series A
Preferred Stock do not have any rights to elect Directors of the Company or the
right to vote on any matters submitted to the holders of Common Stock of the
Company except as required by law. The affirmative vote of a majority of the
outstanding Series A Preferred Stock.
OVER-THE-COUNTER MARKET
The Company's Common Stock is traded on the OTC Bulletin Board
of the National Association of Securities Dealers, Inc. under the
symbol "VORI."
TRANSFER AGENT
The Transfer Agent for the shares of Common Stock is Standard Registrar
& Transfer Agency, P. O. Box 14411, Albuquerque, New Mexico 87191.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Atlas, Pearlman, Trop & Borkson,
P.A., Special Counsel for the Company, Fort Lauderdale, Florida.
INDEMNIFICATION
Article VII of the Company's Articles of Incorporation provides that the
Corporation may indemnify any director, officer, employee, fiduciary, or agent
of the corporation to the full extent permitted by the Colorado Corporation Code
as in effect at the time of the conduct by such person.
The By-Laws of the Company provide for indemnification of officers and
directors. The specific provision of the By-Laws related to such indemnification
is as follows:
"ARTICLE XI INDEMNIFICATION AND INSURANCE:
Section 1. (a) RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party 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
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of
13
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 a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation to the fullest extent authorized by the Delaware 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 paid or 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 a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, 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 Delaware General Corporation law
requires, the payment of such expenses incurred by a director of officer in his
or her capacity as a director of officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately by determined that such
director officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT:
If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within thirty 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 also
the expense of prosecuting such claim. It shall be a defense to any such action
14
(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 Delaware 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 Delaware 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 or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard or
conduct.
(c) Notwithstanding any limitation to the contrary contained in
sub-paragraphs (a) and (b) of this Section, the Corporation shall, to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled under any By-Law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such a person.
(d) INSURANCE:
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such 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 Delaware General Corporation Law."
Insofar as indemnification for liabilities arising under the Act 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
15
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 of the 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.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (1) through (6) below are incorporated by
reference in the Registration Statement. All documents subsequently filed by the
Registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in the Registration Statement and to be part
thereof from the date of filing of such documents.
(1) The Company's Form 10-SB Registration Statement.
(2) The Company's Annual Report on Form 10-KSB for the year
ended April 30, 1996.
(3) The Company's Quarterly Report on Form 10-QSB for the
quarter ended July 31, 1995.
(4) The Company's Quarterly Report on Form 10-QSB for the
quarter ended October 31, 1995.
(5) The Company's Quarterly Report on Form 10-QSB for the
quarter ended January 31, 1996.
(6) All reports and documents filed by the Company pursuant
to Section 13, 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective date of filing of such documents. Any statement incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute part of this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES
The class of securities to be offered hereby is registered under Section
12(g) of the Securities Exchange Act of 1934, as amended. A description of the
Company's securities is set forth in
17
the Form 10 Registration Statement incorporated as a part of this Registration
Statement.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VII of the Company's Articles of Incorporation provides that the
Corporation may indemnify any director, officer, employee, fiduciary, or agent
of the corporation to the full extent permitted by the Colorado Corporation Code
as in effect at the time of the conduct by such person.
The By-Laws of the Company provide for indemnification of officers and
directors. The specific provision of the By-Laws related to such indemnification
is as follows:
"ARTICLE XI INDEMNIFICATION AND INSURANCE:
Section 1. (a) RIGHT TO INDEMNIFICATION. Each person who was or is made
a party or is threatened to be made a party 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
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent 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 a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation to the fullest extent authorized
by the Delaware 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 paid or 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 a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b) hereof, 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
18
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 Delaware General Corporation law requires, the payment of
such expenses incurred by a director of officer in his or her capacity as a
director of officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately by determined that such director
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT:
If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within thirty 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 also
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 Delaware 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 Delaware 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 or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard or
conduct.
(c) Notwithstanding any limitation to the contrary contained in
sub-paragraphs (a) and (b) of this Section, the Corporation shall, to the
fullest extent permitted by Section 145 of the
19
General Corporation Law of the State of Delaware, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested Directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(d) INSURANCE:
The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such 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 Delaware General Corporation Law."
Insofar as indemnification for liabilities arising under the Act 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 of the 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inasmuch as the Consultant who received the Shares of the Company was
knowledgeable, sophisticated and had access to comprehensive information
relevant to the Company, such transaction was undertaken in reliance on the
exemption from registration provided by Section 4(2) of the Act. As a condition
precedent to such grant, the Consultant was required to express an investment
20
intent and consent to the imprinting of a restrictive legend on each stock
certificate to be received from the Company except upon sale of the shares of
Common Stock pursuant to a registration statement.
ITEM 8. EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
(4)(a) Management Consulting Agreement with Cary Cimino
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. relating
to the issuance of Shares of pursuant to the above
Consulting Agreement
(23.1) Consent of Atlas, Pearlman, Trop & Borkson, P.A. included
in the opinion filed as exhibit (5) hereto
(23.2) Consent of independent certified public accountants
ITEM 9. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offerings or sales are
being made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(b) That, for the purposes of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(c) 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.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
21
(3) Insofar as indemnification for liabilities arising under the Act 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Lauderdale and the State of Florida, on the
19th day of July, 1996.
THE CONTINENTAL ORINOCO COMPANY, INC.
By: /s/ CHRISTOPHER D'ARNAUD TAYLOR
--------------------------------
Christopher d'Arnaud Taylor,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ CHRISTOPHER TAYLOR Chairman of the Board and
- ----------------------------- Principal Executive Officer July 19, 1996
Christopher d'Arnaud Taylor
/s/ FRANZ SKRYANZ Treasurer, Secretary, Principal
- ----------------------------- Financial and Accounting
Franz Skryanz Officer and Director July 19, 1996
/s/ BRENDAN METCALFE Director July 19, 1996
- ----------------------------
Brendan Metcalfe
23