-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UkytaQaXalXwL+qAYHYCbnhZKawa8Zd+xcN3dKAdONpu2wwF6yHphmO604++LIja QkY8tzV4Sva+EGkfmnrS+A== 0001005477-97-002166.txt : 19970828 0001005477-97-002166.hdr.sgml : 19970828 ACCESSION NUMBER: 0001005477-97-002166 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970827 EFFECTIVENESS DATE: 19970827 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INTERNATIONAL PETROLEUM CORP /NV/ CENTRAL INDEX KEY: 0000799119 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 133130236 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-34431 FILM NUMBER: 97670588 BUSINESS ADDRESS: STREET 1: 444 MADISON AVE STE 3203 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129563333 MAIL ADDRESS: STREET 1: 444 MADISON AVE STE 3203 CITY: NEW YORK STATE: NY ZIP: 10022 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on August 27, 1997 Registration No. 333- -------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT Under the Securities Act of 1933 AMERICAN INTERNATIONAL PETROLEUM CORPORATION (Exact Name of Registrant as Specified in its Charter) Nevada 13-3130236 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 444 Madison Avenue, Suite 3203, New York, NY 10022 (Address of principal executive offices) (zip code) 1995 STOCK OPTION PLAN (Full Title of the Plan) Dr. George N. Faris, Chief Executive Officer AMERICAN INTERNATIONAL PETROLEUM CORPORATION 444 Madison Avenue, Suite 3203 New York, New York 10022 (212) 688-3333 (Name, Address and telephone number including area code, of agent for service) A copy of all communications, including communications sent to the agent for service, should be sent to: Charles Snow, Esq. Snow Becker Krauss P.C. 605 Third Avenue New York, N.Y. 10158-0125 (212) 687-3860 Approximate date of commencement of proposed sale to the public: Upon filing of this registration statement CALCULATION OF REGISTRATION FEE ================================================================================
Proposed Proposed Title of Maximum Maximum Amount of Securities to Amount to be Offering Price Aggregate Registration be Registered Registered Per Share Offering Price Fee - -------------- -------------------- -------------- -------------- ------------ Stock Options 1,902,500(1) $ .50(2) $ 951,250 $ 288.26 Stock Options 1,597,500 $1.05(2) $1,677,375 $ 508.30 Common Stock, $.08 par value 1,015,000 shs.(3) $2.00 $2,030,000 $ 615.15 Common Stock, $.08 par value 1,902,500 shs.(5)(6) -- -- -- (7) Common Stock, $.08 par value 1,597,500 shs.(5)(8) -- -- -- (7) TOTAL: $4,658,625 $1,411.71 ========== =========
- ----------------------------- (1) Represents options granted or to be granted pursuant to the 1995 Stock Option Plan (the "Plan") of American International Petroleum Corporation (the "Registrant"). (2) Calculated solely for the purpose of determining the registration fee pursuant to Rule 457(h)(1) based upon the average exercise price. (i) (3) Shares issued to employees in consideration for services. (4) Calculated solely for the purpose of determining the registration fee pursuant to Rule 457(c) based upon the average of the last bid and asked prices for the Common Stock quoted on the Nasdaq National Market on August 19, 1997. (5) Pursuant to Rule 416, includes an indeterminable number of shares of Common Stock which may become issuable pursuant to the anti-dilution provisions of the Plan and the Options. (6) Shares issuable upon exercise of options granted under the Plan. (7) No registration fee is required pursuant to Rule 457(h)(3). (8) Shares issuable upon exercise of options available for grant under the Plan. (ii) PROSPECTUS AMERICAN INTERNATIONAL PETROLEUM CORPORATION 3,500,000 Options 4,515,000 Shares Common Stock, Par Value $.08 This Prospectus has been prepared by American International Petroleum Corporation, a Nevada Corporation (the "Company), for use upon resale of shares of the Company's common stock, par value $.08 per share (the "Common Stock"), by certain "affiliates" (as defined in Rule 405 under the Securities Act of 1933, as amended, the "Securities Act") of the Company and certain other shareholders (collectively, the "Selling Shareholders") who have acquired or may acquire Common Stock upon exercise of an aggregate of 3,500,000 options ("Options") granted or to be granted under the American International Petroleum Corporation 1995 Stock Option Plan (the "Plan") and 1,015,000 shares issued as compensation in connection with services rendered to the Company. The maximum number of shares which may be offered or sold hereunder is subject to adjustment in the event of stock splits or dividends, recapitalization and other similar changes affecting the Common Stock. The Common Stock is listed on the Nasdaq National Market, and it is anticipated that the Selling Shareholders will offer shares of Common Stock for resale at prevailing prices on the Nasdaq National Market (or other over the counter market, if the Common Stock is then trading thereon) on the date of sale. See "Plan of Distribution." The Company will receive none of the proceeds from the sale of the Common Stock offered hereby, but it will receive the exercise price upon exercise of Options. All selling and other expenses incurred by individual Selling Shareholders will be borne by such Selling Shareholders. SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE COMMON STOCK. ----------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION; NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------------- No person is authorized to give any information or to make any representations other than those contained in this Prospectus in connection with any offer to sell or sale of the securities to which this Prospectus relates and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, imply that there has been no change in the facts herein set forth since the date hereof. This Prospectus does not constitute an offer to sell to or a solicitation of any offer to buy from any person in any state in which any such offer or solicitation would be unlawful. ----------------------- The date of this Prospectus is August 27, 1997. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the Commission at Seven World Trade Center, New York, New York 10048 and at 500 West Madison Street, Chicago, Illinois 60611. Copies can be obtained from the Commission at prescribed rates by writing to the Commission at 450 Fifth Street N.W., Washington, D.C. 20549. The Commission maintains an internet site on the Worldwide Web at www.sec.gov. that contains reports, proxy and information statements and other information regarding the Company and other registrants that file electronically with the Commission. DOCUMENTS INCORPORATED BY REFERENCE The Company hereby incorporates by reference the documents listed below: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 ("Form 10-K"); (b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1997 ("Form 10-Q"); (c) The Company's Current Reports on Form 8-K for January 10, 1997, January 28, 1997, February 25, 1997 and March 12, 1997. (d) The description of the Common Stock contained in the Company's Registration Statement on Form 8-A (File No. 0-14905) filed pursuant to Section 12(g) of the Exchange Act, including any amendment or report filed for the purpose of updating such information. All documents subsequently filed by the Company after the date of this Prospectus pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a previously filed document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement herein modifies or supersedes such statement; and any statement contained herein shall be deemed to be modified or superseded to the extent that a statement in any document subsequently filed, which is incorporated by reference herein, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the information that has been incorporated by reference in this Prospectus (not including exhibits to such information, unless such exhibits are specifically incorporated by reference into the information which this Prospectus incorporates). Requests for copies of such information should be directed to the Company at 444 Madison Avenue, Suite 3203, New York, New York 10022; Attention: Corporate Secretary. SUMMARY INFORMATION American International Petroleum Corporation (the "Company"), was organized on April 1, 1929 under the laws of the State of Nevada under the name Pioneer Mines Operating Company. The Company's name was changed to its current name in 1982. The Company plans to implement the production of asphalt, vacuum gas oil and other products from its Lake Charles, Louisiana refinery in late 1997 by using low-cost, low gravity, high sulphur crudes from Venezuela or Mexico and has recently entered into an agreement to purchase a 70% working interest in a 20,000 square kilometer exploration block in Kazakstan. ii The term "Company" or "AIPC" includes AIPC, AIRI and AIPK, unless the context otherwise requires. Recent Developments Oil and Gas Exploration and Production Kazakstan Agreement On May 12, 1997, the Company, through its newly organized wholly-owned subsidiary, American International Petroleum Kazakstan ("AIPK"), entered into an agreement with MED Shipping and Trading S.A. ("MED"), a Liberian corporation with offices in Frankfurt, Germany, to buy from MED in exchange for a combination of cash and stock a 70% working interest in a Kazakstan Concession. The Concession is located in about 125 miles from Chevron's multi-billion-barrel Tengiz Oil field near the Caspian Sea, and is bordered to the west by both Oryx/Exxon and Amoco licenses and to the south by an ELF Acquitane license. Preliminary, independent, evaluation indicates potential recoverable reserves from 7 structures in the Concession area could be as much as 1.1 billion barrels from Jurassic Age sandstones, and 9 additional structures have been identified but have not been evaluated. The cost of the acquisition to the Company was approximately $450,000 in cash, 1,450,000 shares of common stock; 1.5 million shares of common stock to be issued if and when the market value of the stock reaches $5.00 per share for 5 consecutive trading days and five-year warrants to purchase 500,000 shares of the Company's common stock at $2.00 per share. The five-year minimum work program required by the License calls for the Company to acquire and process 3,000 kilometers of new seismic data, reprocess 500 kilometers of existing seismic data, and drill 6,000 linear meters at an approximate estimated cost of $13.5 million. In addition, the Company assumed an obligation to pay the Kazakstan Government three annual payments of $200,000 each beginning July 1998 for the purchase of existing seismic and geological data on the License Area. Sale of South American Oil and Gas Operations On February 25, 1997, the Company sold all of the issued and outstanding shares of common stock of its wholly-owned oil exploration and production subsidiaries, American International Petroleum Corporation of Colombia and Pan American International Petroleum Corporation, in an arms length transaction (the "MIP Transaction") to Mercantile International Petroleum Inc. ("MIP"). Refinery Operations The Company's wholly-owned subsidiary, American International Refinery, Inc. ("AIRI") is the owner of a refinery in Lake Charles, Louisiana (the "Refinery"). A certain portion of the Refinery, a 30,000 barrel-per-day crude distillation tower (the "Crude Unit") was leased by AIRI to Gold Line Refining Ltd. ("Gold Line"), an independent refiner, from 1990 to March 20, 1997 under a lease agreement (the "Lease Agreement") between AIRI and Gold Line. However, the Lease Agreement has recently been terminated because Gold Line was in default under the terms of the Lease Agreement. The Company filed suit for damages and received a judgment in its favor of $1.5 million. However, on August 8, 1997, Gold Line filed for protection under Chapter 11 of the Bankruptcy Code; therefore the collectability of this judgment is uncertain at this time. With the recent termination of the Lease Agreement on March 20, 1997, the Company now intends to staff and operate the Refinery with its own employees and all operations are to be under the direct control of its management to produce conventional and polymerized asphalt, vacuum gal oil ("VGO"), diesel, and other products. Although the Company's primary focus at the Refinery will be the production of asphalt and VGO, it will also produce smaller quantities of light- end products such as naphtha, diesel and jet kerosene. In addition to the manufacturing and sale of asphalt, VGO, diesel, and other products, the Company anticipates utilizing its facility as a toll processing terminal to provide a service to blend and polymerize asphalt for iii other companies. The Company's VGO would be sold to other refiners nearby as a feedstock for their catalytic cracking units. There is a strong demand for VGO, and the Company recently has had numerous inquiries from local and out-of-state refiners interested in purchasing VGO from the Refinery. The Company expects to implement asphalt marketing operations in September or October 1997 after the first phase of its expansion program is completed. The production and sale of its own asphalt is expected to be implemented at the beginning of the asphalt season sometime in March or April of 1998. iv RISK FACTORS In addition to considering the other information set forth in, or incorporated by reference into, this Prospectus, prospective investors should carefully consider the following factors in evaluating an investment in the Company. Statements in this Prospectus include forward looking statements that involve a number of risks and uncertainties. These include the Company's lack of profitability, lack of liquidity, need for additional financing, outstanding debt, the speculative nature of the oil and gas industry and the other risks detailed from time to time in the Company's SEC Reports. General Risks Associated with the Offering: Possible Volatility of Securities Prices. The market price for the Company's securities following the date hereof may be highly volatile. Factors such as the Company's financial results, financing efforts and various factors affecting the oil and gas industry generally may have a significant impact on the market price of the Company's securities. Additionally, in the last several years, the stock market has experienced a high level of price and volume volatility, and market prices for many companies, particularly small and emerging growth companies, the common stock of which trade in the over-the-counter market, have experienced wide price fluctuations and volatility which have not necessarily been related to the operating performance of such companies themselves. Any such fluctuations, or general economic and market trends, could adversely affect the price of the Company's securities. Due to all of the foregoing factors, it is likely that in some future quarter the Company's operating results will be below the expectations of public market analysts and investors. In that event, the price of the Company's securities would likely be materially adversely affected. Inability to Sell Stock or Exercise Options. The Company intends to qualify the sale of the shares offered hereby under the securities ("blue sky") laws of a limited number of states. The Company may decide not to seek or may not be able to obtain qualifications of the sale of such shares of Common Stock in all of the states in which the ultimate purchasers of the Options and underlying Common Stock. Further, a current prospectus covering the shares of Common Stock issuable upon exercise of the Options must be in effect at all times that the Company may accept exercises and before Selling Shareholders may sell any Common Stock. There can be no assurance that the Company will be able to have a prospectus in effect when these holders desire to exercise or sell their securities. Risks Associated with the Company: Historical Continuing Losses and Lack of Liquidity; Going Concern Opinion. The Company has not generated a net profit during its last five fiscal years, and no assurance can be given that the Company will generate a profit for any subsequent fiscal year. No assurance can be given that the Company will generate sufficient net profits, if any, to repay outstanding indebtedness. In connection with the audit of the Company's financial statements as of December 31, 1995, the Company received a report from Price Waterhouse LLP, certified public accountants, which included a "going concern" comment in its opinion, however, no such comment was included in the opinion of Hein + Associates, Certified Public Accountants, for the financial statements as of December 31, 1996. Political Risks in Kazakstan. Although the current political situation in Kazakstan appears to be stable, the Company's operations could be adversely affected by political instability and civil unrest there. Political instability could also change the current operating environment for the Company in Kazakstan through the imposition of restriction of funds, adverse environmental laws and regulations, adverse labor laws, and the like. Any such changes could adversely impact the ability of the Company to conduct business in Kazakstan. Outstanding Senior Debt. The Company's senior debt outstanding as of August 15, 1997, is set forth in the following table:
Amount No. of Shares Oustanding Interest Due Conversion Issuable Upon Debentures at July 18, 1997 Rate Date Price Conversion - ---------- ---------------- -------- ----------- ------------------------- -------------
v
Series G Debentures $ 75,000 8% May 1999 75% of the Market Price (1) at conversion date. 8% Convertible $6,400,000 8% August 1999 50% convertible after (1) Debentures October 6, 1997 and 50% after November 6, 1997 at 85% of market price on date of conversion. Series T $ 292,000 8% October N/A N/A Debentures 1997 Total Debentures: $6,767,000 ---------- Notes payable to MGTF pursuant to loan agreement dated December 4, 1990 $2,108,000 Prime + 1% ---------- -- Total: $8,875,000 ==========
- ---------- (1) Depends upon market price of the Common Stock at date of conversion. At August 15, 1997, the number of shares of Common Stock that holders would have obtained upon the conversion of all convertible Debentures was approximately 3,273,657. As part of certain negotiations related to the MIP Transaction, the Company agreed to change the due date of the unpaid balance of a loan agreement with MG Trade finance ("MGTF") (the "Loan Agreement") of $2,108,000 to September 30, 1997 from March 31, 1998. In addition, the Company pledged 1,000,000 shares of MIP common stock (partial consideration the Company received in the MIP Transaction) as additional collateral for the Loan Agreement. The Company expects to pay the balance due on the Loan Agreement and other debt on or before the revised due date with the principal and interest from $3 million two-year exchangeable debenture it received in the MIP transaction, or with conventional financing. Control by Present Management; MGTF's Right to Designate Nominees to Board of Directors and Executive Committee. As of August 15, 1997, Officers and Directors of the Company beneficially owned in the aggregate approximately 12.2% of the total number of shares of Common Stock outstanding. The Company has entered into an agreement with MGTF pursuant to which such company has the right to designate two nominees to the Company's Board of Directors and one of such nominees to the Executive Committee of the Board of Directors. The current members of the Company's Board of Directors have agreed, provided MGTF's nominees are reasonably acceptable, to vote for the election of such nominees. MGTF has not designated any nominees to the Board of Directors as of the date hereof. If MGTF designated such directors to the Board of Directors, it would currently control approximately 33% of the Company's Board of Directors. The maximum number of members of the Board of Directors provided by the By-Laws of the Company is ten. The Board of Directors can at any time appoint additional Directors up to the maximum authorized without shareholder approval to serve until the next meeting of shareholders. Blank Check Preferred Stock and Control of the Company. The Company's Certificate of Incorporation authorizes the issuance of Preferred Stock with such designations, rights and preferences as may be determined from time to time by the Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue Preferred Stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of the Common Stock. Although there are no present plans, agreements, commitments or undertakings with respect to the Company's issuance of any shares of Preferred Stock, any such issuances may be deemed to be an anti-takeover device which could be utilized as a method of discouraging, delaying or preventing a change in control of the Company or to dilute the public ownership of the Company and give clear control of the Company to current Management, and there can be no assurance that the Company will not issue such shares. Adverse Effect of Potential Future Sales of Common Stock Under Rule 144 or this Registration Statement. Of the Company's 43,218,111 issued and outstanding shares of Common Stock as of August 15, 1997, approximately 4,103,712 shares are "restricted securities" (not including the shares being registered hereby) as that term is defined under Rule 144 under the Securities Act. In addition, vi 4,015,000 are being registered hereby for resale under the Securities Act. The Company is unable to predict the effect that sales made pursuant to this Registration Statement, Rule 144 or otherwise may have on the then existing market price of the Company's securities. The possibility exists that the sale of any of these Securities, or even the potential of such sales, may have a depressive effect on the price of the Company's securities in any public trading market. This could impair the Company's ability to raise additional equity capital. See "Voting Securities" in the Company's 1996 Proxy Statement. Shares Outstanding; Shares Eligible for Future Sale. The Company has 100,000,000 authorized shares of Common Stock, of which 43,218,111 were issued and outstanding as of August 15, 1997. In the event all of the issued and outstanding options and warrants are exercised and all outstanding convertible debentures are converted pursuant to their terms based on the price of the Common Stock at August 15, 1997 approximately 59,738,050 shares of Common Stock would be outstanding as of that date. Management will have broad discretion with respect to the issuance of the remaining authorized but unissued shares, including discretion to issue such shares in compensatory and acquisition transactions. In the event that the Company seeks to procure additional financing through the sale and issuance of its securities, or in the event that current warrantholders, optionholders or debentureholders exercise or convert their securities into shares of Common Stock, the then current shareholders of the Company may suffer immediate and substantial dilution in their percentage ownership of shares of the Common Stock. In addition, the future issuance of shares below the then current market price of the Common Stock may have a depressive effect in the future market price of the Common Stock, although such market price is subject to numerous factors, many of which are beyond the Company's control, including general economic business conditions and the then current economic condition of the oil and gas industry. Procurement and Retention of Key Personnel; Dependence on Key Personnel. The success of the Company is dependent upon the efforts, abilities and expertise of its Chief Executive Officer, George N. Faris, as well the Company's Chief Financial Officer, Denis J. Fitzpatrick. The Company has entered into an employment agreement with Dr. Faris. Each of these officers intends to devote substantially all of his business time to the Company's affairs. The Company's future success is also dependent, in part, on the ability of the Company to attract and retain qualified personnel. No assurance can be given, however, that the Company will be able to attract qualified individuals, and if hired, that the Company would be able to retain such persons in its employ. As compared to other publicly traded oil and gas companies, the Company has fewer resources to attract and/or retain key personnel, and the Company does not have the depth of managerial employees to rely upon in the event of the loss of any single employee. Accordingly, the loss of any key employee could have a material adverse affect on the operation of the Company's business and may have greater adverse consequences to the Company than to other publicly traded oil and gas companies. The Company maintains a $1,000,000 key man life insurance policy on the life of its Chief Executive Officer, Dr. George N. Faris. Continued Listing Requirements for NASDAQ Securities. The Company's securities are traded on the Nasdaq National Market System, but there can be no assurance that the Company will meet the maintenance criteria for the continued listing of its securities on Nasdaq. The National Association of Securities Dealers, Inc. (the "NASD"), which administers The Nasdaq Stock Market, Inc., has established the following criteria, among others, for continued Nasdaq eligibility. In order to continue to be included in Nasdaq, a company must maintain $2,000,000 in total assets, a $200,000 market value of the public float and $1,000,000 in total capital and surplus. In addition, continued inclusion requires two market-makers and a minimum bid price of $1.00 per share; provided, however, that if a company falls below such minimum bid price, it will remain eligible for continued inclusion on Nasdaq if the market value of the public float is at least $1,000,000 and the Company has $2,000,000 in capital and surplus. In addition, to satisfy the conditions for continued listing on Nasdaq National Market, a company must have at least 200,000 shares publicly held; the market value of publicly held shares must be at least $1,000,000; the company must have either net tangible assets of at least (a) $1,000,000, (b) $2,000,000 vii if the company had net losses for two of its three most recent fiscal years, or (c) $4,000,000 if the company had net losses for three of its four most recent fiscal years; 400 shareholders or 300 shareholders of round lots; and a minimum bid price of $1.00 per share, or a market value of the public float of $3,000,000 and $4,000,000 of net tangible assets. Although no assurance can be given as to future compliance, the Company currently satisfies the foregoing conditions for continued Nasdaq inclusion as of the date hereof. The Board of Directors of Nasdaq, however, has proposed new rules regarding listing criteria that the Company does not now meet, based on the Company's current stock price. If these rules are adopted, the Company could be delisted from Nasdaq. In such an event, the Company would consider various changes in its capital structure to permit it to be listed again. There is no assurance that the Company would be able to maintain its listing or be re-listed on Nasdaq. If the Company became unable to meet the continued or amended listing criteria of Nasdaq and became delisted therefrom, trading, if any, in the Company's securities would thereafter have to be conducted in the OTC "Bulletin Board." As a result, an investor might find it more difficult to dispose of the Common Stock due to the reduced visibility of the Company on the market. Disclosure Relating to Low-Priced Stocks; Restrictions on Resales of Low-Priced Stocks and Restrictions on Broker-Dealer Sales. The Commission has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on Nasdaq, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules, particularly Rule 15g-9, require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. Bid and offer quotations, and the broker dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. If the Common Stock were no longer traded on Nasdaq, the Common Stock, depending on its market price, would be subject to the penny stock rules. If the Company's securities become subject to the penny stock rules, investors in this offering may find it more difficult to sell the Company's securities. At present, the Company's securities do not come within the definitional scope of these regulations. Speculative Nature of Options and Warrants. As of August 15, 1997, the Company had outstanding an aggregate of 9,725,304 Warrants, of which 7,008,065 are exercisable until March 1, 1997 at $4.00 per share, and 2,717,239 are exercisable from March 31, 1998 to June 6, 2002 at an average price of $1.65 per share. The Company also had outstanding options to purchase an aggregate of 3,477,500 shares of Common Stock exercisable for up to four years ending in 2000, at an average exercise price of $.75 per share. Options and warrants are generally more speculative than Common the exercise thereof. During the term of the options and warrants, the holders thereof are given the opportunity to profit from a rise in the market price of the Company's Common Stock, subject, in certain cases, to the Company's right of redemption. Historically, the percentage increase or decrease in the market price of an option or warrant has tended to be greater than the percentage increase or decrease in the market price of the underlying common shares. The holders of options and warrants would be most likely to exercise them and purchase the Company's Common Stock at a time when the Company could obtain capital by a new offering of securities on terms viii more favorable than those provided by the options and warrants. Consequently, the terms on which the Company could obtain additional capital during such period may be adversely affected. IRS Excise Tax Claim. In May 1992, AIRI was advised by the Internal Revenue Service ("IRS") that the IRS was considering an assessment of excise taxes, penalties and interest of approximately $3,500,000 related to the sale of fuel products during 1989. The IRS claims that AIRI failed to comply with an administrative procedure that required sellers and buyers in tax-free transactions to obtain certification from the IRS. The Company believes that AIRI complied with the substance of the existing requirements and that such sales were either tax-free or such excise taxes were paid by the end-users of such products. AIRI has offered to negotiate a settlement of this matter with IRS Appeals since early 1993. Such negotiations included face-to-face meetings, numerous phone calls and written transmittals and several offers of settlement by both the Company and the IRS. During these negotiations, the IRS Appeals officers offered to waive all of the penalties and 75% of the amount of the proposed tax liability. However, AIRI rejected this offer and requested the IRS' National Office to provide technical advice to its Appeals officers. After numerous conferences and discussions with the National Office in 1995, the National Office issued an adverse Technical Advice Memorandum ("TAM") to its Appeals Office in Dallas, Texas, to the effect that AIRI should be liable for the tax on the sale of diesel fuel for the first three quarters of 1989. However, even in light of the findings of the TAM, the IRS Appeals officer has indicated to AIRI that the IRS still wants to negotiate a settlement. As a result, AIRI is having ongoing discussions with the IRS regarding the situation. Depending upon the results of these discussions, the Company will decide whether to litigate or settle this situation. Regardless of whether the Company decides to litigate or settle, it believes it will incur some form of liability, either in legal expenses or payments to the IRS, or some combination of both. Consequently, it has provided an allowance of $1,100,000 for this potential incurrence of expenditures, although at this time, the Company is unable to determine exactly what liability may arise from this assessment. Risks Associated with the Oil and Gas Industry: Risk of Capital Losses Due to Speculative Nature of Oil and Gas Industry. Oil and gas exploration is extremely speculative, involving a high degree of risk. Even if reserves are found as a result of drilling, profitable production from reserves cannot be assured. No assurance can be given that any wells the Company may drill will recover oil or gas reserves, or in the event reserves are found, that favorable market conditions would exist to recover the costs of drilling or to realize profits. There can also be no assurance that the drilling of any new prospects actually will occur or will be profitable or that wells will produce oil or gas in sufficient amounts to yield profits or even to return the Company's drilling costs. Exposure to Losses From Drilling and Other Hazards. Unusual or unexpected formation pressures, down-hole fires or other hazardous conditions may be encountered in drilling oil and gas wells and in the refining of oil. If such hazards are encountered, completion of wells may be substantially delayed and the costs significantly increased. Even though a well is completed and is found to be productive, water or other deleterious substances may be encountered, which may impair or prevent production of oil or gas, and which may adversely affect the Company's operations. In addition, floods and adverse weather conditions hinder or delay feedstock and product movements at the Refinery and drilling and production operations, as can labor disputes, work stoppages, shortages of equipment and materials or the unavailability of oil barges and drilling rigs. Environmental Hazards. The Company's operations are subject to all of the environmental risks normally incident to oil and gas exploratory, drilling, and refining activities, including, but not limited to, blowouts, pollution and fires. Any of these occurrences could result in environmental damage or destruction, including the discharge of hazardous materials into the environment. Although the Company maintains comprehensive and general liability coverage as is customary in the oil and gas industry, and coverage against certain risks, the Company is not fully covered for damages incurred as a consequence of environmental mishaps. Furthermore, to the extent covered, no assurance can be ix given that any such coverage would be adequate protection in the event of an environmental problem. Accordingly, no assurance can be given that the Company's operations would not be severely impeded in the event of an environmental mishap or problem. Potential Cost Increases and Delays Due to Possible Shortages of Personnel and Drilling Equipment. It is possible that field personnel, drilling rigs, pipes, casing, or other tubular goods will not be available when needed for the drilling, completion or operation of the Company's prospects and wells. This possibility could result in drilling or completion delays and, in some instances, result in additional costs beyond normal drilling and completion costs, which could have a material adverse effect on the Company. Intense Competition and Uncertain Markets. The oil and gas industry, including petroleum refining and asphalt manufacturing, is highly competitive. Many companies, most of which have greater experience and financial resources than the Company, are likely to compete with the Company for producing properties and with the Refinery for needed oil supplies. There can be no assurance that a market will be available for all the oil and gas produced by wells in which the Company owns an interest, for oil refined by the Company at the Refinery or asphalt and other products produced from the VDU. The Company's success is dependent not only on the productivity of the producing properties and the ultimate sale of said production, but also on (i) the market prices for oil and gas, which are highly unstable, (ii) operating costs incurred in producing the oil and/or gas, (iii) transportation costs, (iv) the cost of crude oil feedstocks, (v) the market demand for asphalt and vacuum gas oil, and (iv) other factors which may be beyond the control of the Company. Energy Market Subject to Fluctuation. Revenues generated by the Company's oil and gas operations and the carrying value of its oil and gas properties are highly dependent on the prices for oil and natural gas. The price which the Company receives for its oil is dependent upon numerous factors beyond the control of the Company's Management, the exact effect of which cannot be predicted. These factors include, but are not limited to, (i) the quantity and quality of the oil or gas produced, (ii) the overall supply of domestic and foreign oil or gas from currently producing and subsequently discovered fields, (iii) the extent of importation of foreign oil or gas, (iv) the marketing and competitive position of other fuels, including alternative fuels, as well as other sources of energy, (v) the proximity, capacity and cost of oil or gas pipelines and other facilities for the transportation of oil or gas, (vi) the regulation of allowable production by governmental authorities, (vii) the regulations of the Federal Energy Regulatory Commission governing the transportation and marketing of oil and gas, and (viii) international political developments, including nationalization of oil wells and political unrest or upheaval the various areas of the world in which the Company has an interest or plans to conduct operations. All of the aforementioned factors, coupled with the Company's ability or inability to engage in effective marketing strategies, may affect the supply or demand for the Company's oil or gas and, thus, the price attainable therefor. In addition, the foregoing factors may affect the price of refined products that the Company's Refinery may produce, and accordingly, may affect the profitability of the Refinery. Federal and State Legislation May Limit Revenues or Increase Costs. The oil and gas industry is subject to Federal, state, and local governmental regulations. These jurisdictions are empowered to enact legislation or regulations to limit the rates at which oil and gas are produced and to impose taxes on oil and gas when sold. Since energy policies are uncertain, no prediction can be made as to the ultimate effect of any such governmental policies and controls upon the Company. Inability of the Company to Fully Insure Potential Casualty Losses or Possible Liabilities to Others. The Company has general liability insurance, property insurance, and workmen's compensation insurance. Under the terms of such policies, the Company is insured against covered casualty damages to its property and liabilities to others for negligence and other matters. There is a risk, however, that the Company may not be insured against all losses or x liabilities which arise from the hazards inherent in the oil and gas industry, either because insurance protecting against such losses or liabilities is unavailable or because damages may exceed the amount of coverage obtained, or because the Company has elected not to purchase such coverage. In the event the Company incurs uninsured losses or liabilities, the Company will have to bear fully such losses directly, and its properties and assets may be exposed to forfeiture. USE OF PROCEEDS The Company will receive only the proceeds from the exercise of the Options. Such proceeds, which could amount to approximately $2,608,125 if all of the Options were exercised, will be added to working capital to be used for general corporate purposes. SELLING SHAREHOLDERS The shares of Common Stock to which this Prospectus relates are being registered for reoffers and resales by Selling Shareholders of the Company who have acquired or may acquire such shares pursuant to the exercise of Options or pursuant to agreements with the Company outside of the Plan in connection with services rendered to the Company. The Selling Shareholders named below may resell all, a portion or none of such shares from time to time. Participants under the Plans who are deemed to be "affiliates" of the Company who acquire Common Stock under the Plan or other employee benefit plan may be added to the Selling Shareholders listed below from time to time by use of a prospectus supplement filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"). An "affiliate" is defined in Rule 405 under the Securities Act as a "person that directly, or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with", the Company. Non-affiliates who hold restricted securities (as defined in Rule 144(a)(3) under the Securities Act) purchased under the Plan or other employee benefit plan and who are not named below may use this Prospectus for offer or sale of their Common Stock if they hold 1,000 shares or less. The table below sets forth with respect to each Selling Shareholder, based upon information available to the Company as of July 18, 1997, the number of shares of Common Stock beneficially owned before and after the sale of the shares offered hereby; the number of shares to be sold; and the percent of the outstanding shares of Common Stock owned before and after the sale of the Common Stock offered hereby. Each Selling Shareholder's relationship to the Company is set forth in a footnote to the table.
Amount and Shares Percent of Class(1)(2) Nature of Shares Beneficially ---------------------- Beneficial to be Owned After Before After Name Ownership Sold(1) Offering Offering Offering ---- --------- ------- -------- -------- -------- George N. Faris(3) 4,552,925(4) 2,877,500 2,013,025 10.4% 4.7% Daniel Y. Kim(3) 213,500(5) 205,500 8,000 * * Donald G. Rynne(3) 317,944(6) 210,000 107,944 1.8% * William R. Smart(3) 275,000(7) 267,000 8,000 * * Denis J. Fitzpatrick(9) 275,000(8) 275,000 -0- * * William Tracy(9) 151,000(10) 176,000 -0- * * Lorrie Olivier(9) 246,500(11) 271,500 -0- * * John Munk(9) 130,000(12) 130,000 -0- * * Joseph Chamberlain(9) 125,000(13) 125,000 -0- * * - ---------------------- ------------- --------- --------- -------- -------- TOTAL 6,286,869 4,537,500 2,136,969
* Less than 1% xi (1) Does not constitute a commitment to sell any or all of the stated number of shares of Common Stock. The number of Shares offered hereby shall be determined from time to time by each Selling Shareholder at his/her sole discretion. (2) Based on 43,218,111 shares outstanding as of August 15, 1997. (3) This person's address is c/o the Company, 444 Madison Avenue, Suite 3203, New York, New York 10022. (4) Includes 29,800 shares of Common Stock owned by Mrs. Claudette Faris, Dr. Faris' wife, and 1,613,169 shares of Common Stock issuable upon exercise of options and warrants held by Dr. Faris. Also includes 7,600 shares of Common Stock issuable upon exercise of warrants held by Mrs. Faris. Also includes 625,000 shares of Common Stock underlying options which are not currently exercisable and 37,400 shares of Common Stock beneficially owned by Mrs. Claudette Faris, Dr. Faris' wife, as to which shares Dr. Faris disclaims beneficial ownership. (5) Includes 80,500 shares of Common Stock issuable upon exercise of a like number of options owned by Dr. Kim. Also includes 125,000 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (6) Includes 174,260 shares of Common Stock issuable upon exercise of a like number of and warrants owned by Mr. Rynne. Also includes 125,000 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (7) Includes 136,986 shares of Common Stock issuable upon exercise of a like number of options and warrants owned by Mr. Smart. Also includes 150,000 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (8) Includes 95,000 shares of Common Stock issuable upon exercise of options owned by Mr. Fitzpatrick. Also includes 150,000 shares of Common Stock underlying options which are not currently exercisable. (9) This person's address is c/o the Company, 55 Waugh Drive, Suite 606, Houston, Texas 77007. (10) Includes 38,500 shares of Common Stock issuable upon exercise of options owned by Mr. Tracy. Also includes 87,500 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (11) Includes 134,005 shares of Common Stock issuable upon exercise of options owned by Mr. Olivier. Also includes 87,500 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (12) Includes 25,000 shares of Common Stock issuable upon exercise of options owned by Mr. Munk. Also includes 100,000 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. (13) Includes 37,500 shares of Common Stock issuable upon exercise of options owned by Mr. Chamberlain. Also includes 87,500 shares of Common Stock underlying options which are not currently exercisable and which are subject to certain conditions. PLAN OF DISTRIBUTION The Options and/or shares of Common Stock (together, the "Securities") are being sold by the Selling Shareholders for their own accounts. Non- affiliates who hold restricted securities (as defined in Rule 144(a)(3) under the Securities Act) purchased under the Plan or other employee benefit plan and who are not named in the Selling Shareholder table may use this Prospectus for offer or sale of their Common Stock if they hold 1,000 shares or less. In such a case, they will be considered "Selling Shareholders" for purposes of the discussion below. The Securities may be sold or transferred for value by the Selling Shareholders, or by pledgees, donees, transferees or other successors in interest to the Selling Shareholders, in one or more transactions on Nasdaq (or any successor stock exchange), in negotiated transactions or in a combination of such methods of sale, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices otherwise negotiated. The Selling Shareholders may effect such transactions by selling the Securities to or through brokers-dealers, and such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Shareholders and/or the purchasers of the Securities for whom such broker-dealers may act as agent (which compensation may be less than or in excess of customary commissions). The Selling Shareholders and any broker-dealers that participate in the distribution of the Securities may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and any profit on the resale of the Securities sold by them may be deemed to be underwriting discounts and commissions under the Securities Act. All xii selling and other expenses incurred by individual Selling Shareholders will be borne by such Selling Shareholders. There can be no assurance that any of the Selling Shareholders will sell any or all of the Shares of Common Stock offered by them hereunder. DESCRIPTION OF SECURITIES Authorized Stock The authorized capital stock of the Company consists of 7,000,000 shares of Preferred Stock, $3.00 par value per share, and 100,000,000 shares of Common Stock, $.08 par value per share. Each share of Common Stock is entitled to one vote per outstanding share held on each matter submitted to a vote at a meeting of shareholders. Each shareholder may exercise such vote either in person or by proxy. Shareholders are not entitled to cumulate their votes for the election of Directors. There are no preemptive or other preferential rights to purchase additional shares of Common Stock. Upon liquidation, dissolution or winding-up of the Company, the holders of Common Stock are entitled to receive, pro rata, the assets of the Company which are legally available for distribution to shareholders subject to the prior rights on liquidation of creditors and the holders of shares of Preferred Stock, if any. All of the issued and outstanding shares of Common Stock are fully paid and non-assessable. The Company's Articles of Incorporation, as amended, provide in accordance with Nevada law that the officers and Directors of the Company shall not be personally liable to the Company or its shareholders for damages for brech of a fiduciary duty as a Director or Officer. It is the position of the staff of the Securities and Exchange Commission that the limitation on personal liability does not apply to violations of Federal securities laws. Moreover, such limitation is unapplicable to acts or omissions which involve intentional misconduct, fraud, knowing violations of the law, or unlawful payment of dividends prohibited by the Nevada Revised Statutes. In addition, the Company's Articles of Incorporation, as amended, do not limit the availability of non-monetary relief. Preferred Stock There are no shares of Preferred Stock currently outstanding. Transfer Agent The Company's transfer agent for its shares of Common Stock is Oxford Registrar & Transfer Agency Inc. ("Oxford"), 317 S.W. Alder, Suite 1120, Portland, Oregon 97204. Dividends The Company has not paid any cash dividends on its Common Stock. The present policy of the Board of Directors is to retain earnings to finance the operations and development of the Company's business. Accordingly, it is anticipated that no cash dividends will be paid in the foreseeable future. LEGAL MATTERS The validity of the shares of Common Stock offered hereby has been passed upon for the Company by Snow Becker Krauss P.C., 605 Third Avenue, New York, New York 10158. Snow Becker Krauss P.C. holds 589,205 shares of Common Stock, all of which was issued to it in exchange for legal fees and disbursements. EXPERTS xiii The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of American International Petroleum Corporation for the year ended December 31, 1996, have been so incorporated in reliance upon the report of Hein & Associates LLP, independent certified public accountants, given upon the authority of said firm as experts in accounting and auditing for the year. The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of American International Petroleum Corporation for the two years ending December 31, 1996, have been so incorporated in reliance upon the report (which contains an explanatory paragraph relating to the Company's ability to continue as a going concern as described in Notes 2 and 11 to the financial statements) of Price Waterhouse LLP, independent certified public accountants, given upon the authority of said firm as experts in accounting and auditing for the year. COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. xiv PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents By Reference The following documents filed with the Securities and Exchange Commission (the "Commission") by the registrant, American International Petroleum Corporation, a Nevada corporation (the "Company"), pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated by reference in this registration statement. (1) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. (2) The Company's Quarterly Report on Form 10-Q ("Form 10-Q") for the fiscal quarter ended June 30, 1997. (3) The Company's Current Reports on Form 8-K for January 10, 1997, January 28, 1997, February 25, 1997 and March 12, 1997. (4) The description of the Company's common stock, par value $.08 per share (the "Common Stock"), contained in the Company's Registration Statement on Form 8-A (File No. 0-14905) pursuant to Section 12(g) of the Exchange Act, including any amendment or report filed for the purpose of updating such information. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of 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 herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained herein or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement. Item 4. Description of Securities. Not applicable. Item 5. Interests of Named Experts and Counsel. Snow Becker Krauss P.C., counsel to the Company, holds 589,205 shares of Common Stock, all of which was issued to it in exchange for legal fees and disbursements. Snow Becker Krauss P.C. is rendering an opinion upon the validity of the securities being registered hereby. Item 6. Indemnification of Directors and Officers. Under Section 78.751 of the Nevada Corporation Law ("NCL"), directors and officers may be indemnified against judgments, fines and amounts paid in settlement and reasonable expenses (including attorneys' fees), actually and reasonably incurred as a result of specified actions or proceedings (including appeals), whether civil or criminal (other than an action by or in the right of the corporation--a "derivative action") if they acted in good faith and for a purpose which they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard of care is applicable in the case of derivative actions, except that indemnification only extends to amounts paid in settlement and reasonable expenses (including attorneys' fees) actually and reasonably incurred by them in connection with the defense or settlement of such an action (including appeals), II-1 except in respect of a claim, issue or matter as to which such person shall have been finally adjudged to be liable to the corporation, unless and only to the extent a court of competent jurisdiction deems proper. In accordance with Section 78.037(1) of the NCL, Article VIII of the Company's Certificate of Incorporation, as amended, eliminates the personal liability of the Company's directors to the Company or its shareholders for monetary damages for breach of their fiduciary duties as directors, with certain limited exceptions set forth in said Article VIII and Section 78.037(1). Article VII of the Company's Bylaws provides for indemnification of directors, officers and others as follows: "On the terms, to the extent, and subject to the condition prescribed by statute and by such rules and regulations, not inconsistent with statute, as the Board of Directors may in its discretion impose in general or particular cases or classes of cases, (a) the Corporation shall indemnify any person made, or threatened to be made, a party to an action or proceeding, civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise which any director or officer of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees of any such action or proceeding, or any appeal therein, and (b) the Corporation may pay, in advance of final disposition of any such action or proceeding, expenses incurred by such person in defending such action or proceeding. On the terms, to the extent, and subject to the conditions prescribed by statute and by such rules and regulations, not inconsistent with statute, as the Board of Directors may in its discretion impose in general or particular cases or classes of cases, (a) the Corporation shall indemnify any person made a party to an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation, against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, or in connection with an appeal therein, and (b) the Corporation may pay, in advance of final disposition of any such action, expenses incurred by such person in defending such action or proceeding." The Company maintains insurance, at its expense, to reimburse itself and directors and officers of the Company and of its direct and indirect subsidiaries against any expense, liability or loss arising out of indemnification claims against directors and officers and to the extent otherwise permitted under the NCL. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Item 7. Exemption From Registration Claimed. With respect to the shares of Common Stock that will be reoffered or resold pursuant to this Registration Statement, exemption was claimed as follows. 1. George Faris received 900,000 shares of Common Stock, pursuant to Section 4(2) of the Securities Act, in exchange for the cancellation of certain II-2 rights under his employment agreement, as described in the Company's Annual Report on Form 10-K. The shareholders of the Company ratified the issuance of such shares to Dr. Faris at the Company's 1996 Annual Meeting. 2. Each of Denis J. Fitzpatrick and John Munk received 5,000 shares of stock, pursuant to Section 4(2) of the Securities Act, as a signing bonus upon becoming employed by the Company. 3. The Company issued 25,000 shares of its common stock to each of George N. Faris, Denis J. Fitzpatrick, William L. Tracy, and Lorrie T. Olivier as supplemtal compensation in May 1997, pursuant to Section 4(2) of the Securities Act. Item 8. Exhibits. Exhibit No. Description of Exhibit - ----------- ---------------------- 4.1 1995 Stock Option Plan (the "Plan").(*) 4.2 Form of Stock Option Agreement under the Plan between the Registrant and the holders of non-qualified stock options.(*) 4.3 Form of Stock Option Agreement under the Plan between the Registrant and the holders of incentive stock options.(*) 4.4 Amendment No. 1 to Employment Agreement between the Registrant and Dr. George N. Faris dated October 13, 1995.(*) 5.1 Opinion of Snow Becker Krauss P.C. 23.1 Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1 hereto). 23.2 Consent of Price Waterhouse LLP. 23.3 Consent of Hein & Associates LLP. 24.1 Powers of Attorney (included on the signature page of this Registration Statement). - ------------------- (*) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Item 9. Required Undertakings. The undersigned Registrant hereby undertakes: (a)(l) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the II-3 offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in 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. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the Registrant pursuant to any arrangement, provision or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that 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 Securities Act of 1933 and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on August 22, 1997. AMERICAN INTERNATIONAL PETROLEUM CORPORATION By: /s/ Dr. George N. Faris --------------------------------- Dr. George N. Faris Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints George N. Faris or Denis J. Fitzpatrick, his true and lawful attorney-in-fact and agent, with power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying all that said attorney-in-fact and agent or his substitute or substitutes, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on August 22, 1997. Signature Title --------- ----- /s/ George N. Faris - ---------------------------- George N. Faris Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) /s/ Denis J. Fitzpatrick - ---------------------------- Denis J. Fitzpatrick Vice President, Chief Financial Officer and Secretary (principal financial and accounting officer) /s/ Donald G. Rynne - ---------------------------- Donald G. Rynne Director /s/ Daniel Y. Kim Director - ---------------------------- Daniel Y. Kim /s/ William R. Smart Director - ---------------------------- William R. Smart II-5 EX-5.1 2 OPINION OF SNOW BECKER KRAUSS P.C. Exhibit 5.1 SNOW BECKER KRAUSS P.C. 605 Third Avenue New York, NY 10158 (212) 687-3860 August 22, 1997 Board of Directors American International Petroleum Corporation 444 Madison Avenue, Suite 3203 New York, New York 10022 Re: Registration Statement on Form S-8 Relating to 3,500,000 Options and 4,515,000 Shares of Common Stock, Par Value $.08, of American International Petroleum Corporation Issued or Issuable Under the Company's 1995 Stock Option Plan or Issued to Certain Employees Ladies and Gentlemen: We are acting as counsel to American International Petroleum Corporation, a Nevada corporation (the "Company"), in connection with the filing by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Securities Act"), of a registration statement on Form S-8 (the "Registration Statement") relating to (a) the exercise of options granted or to be granted under the 1995 Stock Option Plan (the "Plan") of the Company to purchase an aggregate of 3,500,000 shares of the Company's common stock, par value $.08 per share (the "Common Stock"), and (b) the sale of 4,515,000 shares (the "Shares") of Common Stock, consisting of (i) 3,500,000 Shares issuable upon the exercise of options granted or to be granted under the Plan; (ii) 900,000 Shares issued to Dr. George N. Faris, Chief Executive Officer of the Company, pursuant to an agreement dated October 13, 1995 with the Company (the "Employment Agreement"); (iii) 5,000 Shares issued to Denis J. Fitzpatrick, Kenneth Durham and John Munk as a signing bonus; and (iv) 25,000 Shares issued to each of George N. Faris, Dennis Fitzpatrick, William L. Tracy, and Lorrie T. Oliver as supplemental compensation for an aggregate of 100,000 Shares. We have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of the Certificate of Incorporation and By-Laws of the Company, as each is currently in effect, the Registration Statement, the related prospectus and reoffer prospectus, the Plan, the Employment Agreement, the corporate proceedings in connection with the issuance and registration of the Shares and such other corporate proceedings, documents and records and other certificates, and we have made such investigations of law, as we have deemed necessary or appropriate in order to render the opinions hereinafter set forth. In our examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. Based upon and subject to the foregoing, we are of the opinion that all of the Shares have been duly and validly authorized; the Shares already issued are duly and validly issued, fully paid and non-assessable; the Shares issuable upon exercise of options, when delivered upon payment of the exercise price therefor as specified in the option agreements executed in accordance with the terms of the Plan, will be duly and validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the heading "Legal Matters" in the Prospectus accompanying the Registration Statement for resale of the Shares by certain selling shareholders. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /S/SNOW BECKER KRAUSS P.C. SNOW BECKER KRAUSS P.C. II- EX-23.2 3 CONSENT OF PRICE WATERHOUSE LLP. Exhibit 23.2 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of American International Petroleum Corporation of our report dated April 9, 1996 appearing on page F-1 of the Annual Report on Form 10- K for the year ended December 31, 1995. /S/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Houston, Texas August 19, 1997 II- EX-23.3 4 CONSENT OF HEIN & ASSOCIATES LLP. Exhibit 23.3 Independent Auditor's Consent The Board of Directors American International Petroleum Corporation: We hereby consent to the incorporation by reference in this Registration Statement on Form S-8, and the accompanying Prospectus, of our report dated April 9, 1997, appearing on page F-1 of American International Petroleum Corporation's Annual Report on Form 10-K for the year ended December 31, 1996. We also consent to the reference to us under the heading "Experts" in the Prospectus filed herewith. /S/HEIN & ASSOCIATES LLP HEIN & ASSOCIATES LLP Houston, Texas August 19, 1997 II- -----END PRIVACY-ENHANCED MESSAGE-----