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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1996
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NEVADA ENERGY COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-14873 84-0897771
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
401 East Fourth Street, Reno, NV 89512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 786-7979
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(Former name or former address, if changed since last report.)
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NEVADA ENERGY COMPANY, INC.
INDEX
ITEM NUMBER AND CAPTION PAGE NUMBER
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Item 1. Change in Control of Registrant . . . . . . . 1
Item 6. Resignation of Registrants Directors . . . . . 1
Item 7. Financial statements and exhibits . . . . . . . . 3
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ITEM 1. CHANGE IN CONTROL OF REGISTRANT.
(a)
1. Name of the person(s) who acquired control:
Golden Chance, Limited ("Golden Chance"), an Isle of Man private
company limited by shares.
2. Amount and source of consideration used by such person(s):
$100,000 cash payment, $4,900,000 promissory note (promissory note
made and delivered by Golden Chance. The promissory note is secured
by the corporate guarantee of Waterford Trust Company, Limited, an
Irish corporation ("Waterford") and an escrow of the shares of
registrants series A preferred shares acquired by Golden Chance.
3. The basis of the control:
Pursuant to a certain letter agreement ("Letter of Intent") dated
February 29, 1996, control was obtained through the resignation of
registrants Board of Director's and the appointment by Golden Chance
of three members of the Board of Directors. Additionally, control was
obtained through Golden Chance's ownership of approximately 14% of the
aggregate amount of all classes of voting stock issued by the
registrant.
4. Date and description of transaction(s) which resulted in the change in
control:
The effective date of the transaction is May 1, 1996. The change of
control was the result of the resignation of the persons listed in
Item 6. from their position as directors and the appointment of
nominees to the Board of Directors made by Golden Chance.
Additionally, Golden Chance purchased from the registrant 1,960,795
series A preferred voting shares and 152,381 shares of the registrants
Class A common stock.
5. The percentage of voting securities of the registrant now beneficially
owned directly or indirectly by the person(s)
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who acquired control:
No voting securities are under the control of the replacement Board of
Directors.
Approximately 14% of the aggregate amount of all classes of voting
stock are now under the control of Golden Chance.
6. The identity of the person(s) from whom control was
assumed:
Jeffrey Antisdel, Chairman
Richard Cascarilla, Director
Jeffrey Hartman, Director
Michael Kassouff, Director
Jeffrey Modesitt, Director
7. The terms of any loans or pledges obtained by the new control group for
the purpose of acquiring control, including names of lenders or
pledgees:
Golden Chance has issued a non-interest bearing promissory note in the
amount of $4.9 million dollars to the registrant. The promissory note
is payable in installments. The first installment is payable July 1,
1996 in the amount of $400,000. Subsequent installments of $500,000
are payable every thirty days thereafter until paid in full. The
total principal amount of the promissory note is due and payable on
April 1, 1997. Waterford has guaranteed the obligation of Golden
Chance. The series A preferred shares acquired by Golden Chance are
held in escrow with an escrow agent for the benefit of the registrant.
Upon payment of each installment under the promissory note, a portion
of the series A preferred shares will convert to the registrants
class A common stock pursuant to the certificate of designation of the
series A preferred shares, which is on file with the Delaware
Secretary of State. The converted shares will be released from
escrow.
8. Describe any arrangements or understandings among members of both the
former and new control groups and their
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associates with respect to election of directors or other matters:
Conditional to the sale of series A preferred shares, the former
control group Chairman, Jeffrey Antisdel, and Director, Richard
Cascarilla, voluntarily resigned their respective Board of Director
positions, with nominee Directors, Charles Cain and Peter Cannell
elected by the Board of Directors. The remaining former members of
the Board subsequently resigned and John Goold has been nominated to
the Board. The active size of the board has been reduced from five
directorships to three directorships.
Arrangements which may result in a change in control of registrant.
(The arrangement for change in control is in accordance with the terms
of the Letter of Intent agreement dated February 29, 1996 which is
attached to this 8-K as and exhibit and is incorporated by reference
into this form 8-K). Further, in accordance with the Certificate of
Designation of Series B convertible preferred stock, the holders of
series B shares, may, in the event of default by Golden Chance in
payment of its note, elect a fourth director with power and authority
to enforce all of the registrants rights and remedies under the note.
Such director would serve for so long as a default existed.
Item 403(c) Securities ownership of certain beneficial owners and management.
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(1) (2) (3) (4)
Amount and nature Percent
Title of Name of Beneficial of beneficial of
class owner ownership class
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Series A
Voting
Preferred Golden Chance, Ltd. Direct ownership
1,960,795 shares 100%
Series B
Voting Direct ownership
Preferred Richard A. Cascarilla 2 shares 40%
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Series B
Voting Direct ownership
Preferred Jeffrey E. Modesitt 1 share 20%
Series B
Voting Direct ownership
Preferred Jeffrey L. Hartman 1 share 20%
Series B
Voting Direct ownership
Preferred Michael R. Kassouff 1 share 20%
Class A Golden Chance Direct ownership
Voting 152,381 shares 1.700%
Common
Class A Jeffrey E. Antisdel Direct ownership 7.720%
Voting 691,741 shares
Common
Class A Richard A. Cascarilla Direct ownership 0.128%
Voting 11,458 shares
Common
Class B Nevada Energy Partners Direct ownership 100.000%
Voting 1, Limited Partnership 4,437,473 shares
Common
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Class B Jeffrey E. Antisdel Beneficial ownership 40.000%
Voting 1,774,989 shares
Common
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
In accordance with the agreements which resulted in the change of control
referenced in Item 1. above, the following directors resigned, without
disagreement, effective May 1, 1996.: Mr. Jeffrey E. Antisdel, Mr. Richard A.
Cascarilla, Mr. Jeffrey E. Modesitt, Mr. Michael R. Kassouff and Mr. Jeffrey L.
Hartman.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) No financial statements are being filed with this
Form 8-K.
(b) The following exhibits are incorporated by reference into this 8-K.
1. Directors' written notices of resignation.
2. News release dated March 16, 1996
3. News release dated May 7, 1996
4. Letter of Intent dated February 29, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEVADA ENERGY COMPANY, INC.
/s/ Jeffrey E. Antisdel
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Jeffrey E. Antisdel, President
Date May 7, 1996
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Exhibit 1
/S/ MAY 1, 1996
Board of Directors
Nevada Energy Company, Inc.
401 E. Fourth Street
Reno, NV 89512
Re: Resignation
Gentlemen:
Please be advised that I have decided to resign my position as a Director
on the Board of Directors for Nevada Energy Company, Inc., effective /S/ MAY
1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business
interests. I have enjoyed my association with the Company and wish you
continued success in the future.
Very truly yours,
/s/ Jeffrey E. Antisdel
Jeffrey E. Antisdel
4330 W. Hidden Valley Drive
Reno, NV 89502
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/S/ MAY 1, 1996
Board of Directors
Nevada Energy Company, Inc.
401 E. Fourth Street
Reno, NV 89512
Re: Resignation
Gentlemen:
Please be advised that I have decided to resign my position as a Director
on the Board of Directors for Nevada Energy Company, Inc., effective /S/ MAY
1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business
interests. I have enjoyed my association with the Company and wish you
continued success in the future.
Very truly yours,
/s/ Richard A. Cascarilla
Richard A. Cascarilla
1184 Holt Road
Mason, MI 48854
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MAY 1, 1996
Board of Directors
Nevada Energy Company, Inc.
401 E. Fourth Street
Reno, NV 89512
Re: Resignation
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Gentlemen:
Please be advised that I have decided to resign my position as a Director
on the Board of Directors for Nevada Energy Company, Inc., effective the second
day following closing on /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more
actively pursue other business interests. I have enjoyed my association with
the Company and wish you continued success in the future.
Very truly yours,
/s/ Michael R. Kassouff
Michael R. Kassouff
334 E. Gaywood
Houston, TX 77079
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MAY 1, 1996
Board of Directors
Nevada Energy Company, Inc.
401 E. Fourth Street
Reno, NV 89512
Re: Resignation
-----------
Gentlemen:
Please be advised that I have decided to resign my position as a Director
on the Board of Directors for Nevada Energy Company, Inc., effective the day
following closing on /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more
actively pursue other business interests. I have enjoyed my association with
the Company and wish you continued success in the future.
Very truly yours,
/s/ Jeffrey Modesitt, Sr.
Jeffrey Modesitt, Sr.
6037 S. Bellaire Way
Littleton, CO 80201
End of Exhibit 1
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Exhibit 2
PRESS RELEASE
NEVADA ENERGY COMPANY, INC.
MARCH 15, 1996
Nevada Energy Company, Inc., NASDAQ: NNRGA, ("Company") is pleased to announce
the execution of a binding agreement ("Agreement") for the sale of 1,999,995
Series A Preferred Shares ("Series A Preferred") valued at $2.50 per share with
Waterford Trust Company Limited ("Waterford").
Upon execution of remaining documentation attendant to the issuance of the
Series A Preferred shares, the current Board of Directors will resign their
respective positions. Waterford will then assume control of the Company's Board
of Directors and reduce the number of Directors to three. Two of the newly
appointed Directors will be independent Directors. Further, the Company's
President and Chief Executive Officer, Jeffrey Antisdel, and Vice President,
Richard Cascarilla, will resign their positions as officers in the Company
effective May 31, 1996. However, Messrs, Antisdel and Cascarilla will continue
as advisors to the newly appointed Board of Directors pursuant to two (2) year
consulting agreements with the Company. Messrs. Antisdel and Cascarilla's
positions will be replaced by officers appointed by the new Board of Directors.
Upon the change of control scheduled to occur on or before March 31, 1996,
Waterford has advised the Company that it intends to increase the business
operations of the Company through mergers and acquisitions of companies
operating in various diversified businesses. Upon consummation, Waterford will
control the Board of Directors and may become the controlling shareholder of the
Company.
The Agreement for the sale of the Series A Preferred provides for Waterford and
its designees to acquire 1,999,995 Series A Preferred shares in incremental
installments over a period of one year. The Certificate of Designations for the
Series A Preferred shares will include terms which include, but are not limited
to, provision for liquidation preference limitation equal to the actual amount
of funds paid to the Company. The Series A Preferred shares will not accrue
dividends and will have the right to convert to the Company's Class A Common
shares. The Agreement for sale also provides that Waterford's purchase of
Series A Preferred will be evidenced by a promissory note secured by a pro rata
pledge of Series A Preferred shares until fully paid.
As additional security of Waterford's indebtedness, the Company will cause a
total of five (5) shares of Series B Preferred ("Series B Preferred") to be
issued to each of the current Board of Directors, with one (1) Series B
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Preferred share to be voted by each current Director. The Certificate of
Designations for the five (5) Series B Preferred shares will specify that each
be valued at $2.50 per Series B Preferred share. The Series B Preferred shares
will not be entitled to any dividends, but will be entitled to a return of
capital in the sum of $2.50 for each Series B Preferred Share issued and
outstanding. The Series B Preferred shares will have priority to the holders of
any class of common stock upon a winding up of the Company.
NNRGA NEWS RELEASE (CONTINUED)
MARCH 15, 1996
PAGE 2 OF 3
Additional terms for the Series B Preferred shares provides that in the event of
a default by Waterford in the payment of the first $500,000 ("Default"), the
holders of Series B Preferred shares shall be entitled to appoint a director
(the "Fourth Director") to the Board of the Company. The Fourth Director, if
appointed, will have the ability to act for and on behalf of the Board of
Directors to exercise Default remedies. If the Default is cured by Waterford,
the Fourth Director will immediately be deemed to have resigned.
Following payment of the first $500,000 by Waterford, the holders of Series B
Preferred shares will lose the right to appoint a Fourth Director, provided,
however, that upon Waterford's having paid or advanced the sum of $4,999,987.50,
the Company will redeem the Series B Preferred shares following the Company's
payment of $2.50 for each of the five (5) Series B Preferred shares then issued
and outstanding. Further, having paid or advanced to the Company the sum of
$4,999,987.50, Waterford shall have the option to purchase the Series B
Preferred shares from the holders thereof at a price of $2.50 per share
("Purchase Option"). Upon Waterford's exercise of the Series B Purchase Option
and acquiring the Series B Preferred shares, the five (5) Series B Preferred
shares will automatically be converted to five (5) Series A Preferred shares
with no change in rights or privileges of the Series A Preferred shares.
The Company's new Board of Directors may not amend the terms of purchase for the
1,999,995 Series A Preferred shares without the consent of a majority of the
Series B Preferred shares voted by the Company's current Board of Directors of
the Company, which consent may not be unreasonably withheld. The Series A
Preferred shares will be entitled to one vote for each share of Series A
Preferred. Waterford will have the right to vote all of the Series A Preferred
shares and will therefore initially control approximately 13.1% of the voting
shares of all classes of stock of the Company having voting rights.
Waterford has also notified the Company of its intent to purchase from Nevada
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Energy Partners I, Limited Partnership, ("NEP"), 4,437,473 Class B Common shares
of the Company. The Company is a 60% owner and sole limited partner of NEP.
All Class B Common shares are controlled and voted by Nevada Electric Power
Company ("NEPC"), a Nevada corporation wholly owned by the Company's Chairman,
President and Chief Executive Officer, Jeffrey Antisdel.
Terms of the proposed sale of Class B Common to Waterford are to include, but
not be limited to, pro rata installments of $50,000 per month over a period of
twenty four (24) months to NEPC, with closing contingent upon, (i) the Company
executing documentation precedent to closing the sale of Series A Preferred by
the Company to Waterford, (ii) the Company releasing its NEP partnership
interests and litigation interests in Case No. CV92-04609 currently pending in
the Nevada Second Judicial District Court to NEPC, and (iii) and compliance with
applicable securities law. Closing is anticipated to occur on or about July 1,
1996.
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NNRGA NEWS RELEASE (CONTINUED)
MARCH 15, 1996
PAGE 3 OF 3
If Waterford completes the purchase of all Class B Common shares, Waterford will
control an estimated 42.2% of all classes of voting stock of the Company.
The Company also announced that Waterford's directors may, in their sole
discretion, elect to relocate the Company's corporate offices.
Nevada Energy Company's current corporate offices have recently been relocated
to 401 E. Fourth Street, Reno, Nevada 89512. These office facilities are owned
by a subsidiary of the Company.
FOR FURTHER INFORMATION CONTACT: JEFFREY ANTISDEL, PRESIDENT
(702) 786-7979
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Exhibit 3
PRESS RELEASE
SALE OF SERIES A PREFERRED COMPLETED
RESIGNATION OF CHAIRMAN, SECRETARY AND TREASURER
RENO, NEVADA, MAY 7, 1996 : Nevada Energy Company, Inc., NASDAQ: NNRGA
("the Company") is pleased to announce the completion of the transaction
associated with its announcements on March 15, 1996 and April 16, 1996
respectively which related to the sale of 1,960,795 Series A Preferred shares
valued at $2.50 per share to a group led by the Waterford Trust Company Limited
("Waterford"). As a direct result of this transaction, the group has initially
acquired approximately 14% of all outstanding voting stock of the Company.
Terms of the Company's Series A Preferred shares provide that no dividends of
any kind or nature shall be paid or declared on the Series A Preferred shares.
Series A Preferred shares have the right to convert to the Company's Class A
Common shares. Liquidation preference rights of Series A Preferred shares are
limited to the par value of $.001 per each outstanding Series A Preferred share.
Voting rights for each Series A Preferred share are equal to all other classes
of stock.
Related to the sale of 1,960,795 Series A Preferred shares, the Company's
Chairman, Jeffrey Antisdel, Secretary and Treasurer, Richard Cascarilla, have
voluntarily resigned their Board of Director positions. Mr. Antisdel is
expected to be succeeded as Chairman by incumbent director, Charles A. Cain.
Mr. Cascarilla is expected to be succeeded by director Peter J. Cannell as
Secretary and Treasurer. It is anticipated that the remaining Board of
Directors will resign and be replaced by Board of Director nominee Mr. John C.
Goold. The Board of Directors is expected to consist of three members.
Charles Cain, MA-ACIB, age 58, is a graduate of Cambridge University and founder
of the corporate and management trust firm formerly known as Charles Cain &
Company Limited. Mr. Cain is an affiliate of the American Bar
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Association, Associate of the Chartered Institute of Bankers, member of American
Tax Institute in Europe, member of the International Fiscal Association, member
of the International Tax Planning Association, member of the Society of Trust
and Estate Practitioners and member of the Offshore Institute. Mr. Cain is also
Editor of Offshore Investment, an international journal for the offshore finance
industry.
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NEWS RELEASE
MAY 7, 1996
PAGE 2 OF 2
Peter Cannell, BA, age 30, is a Graduate of the University of Glasgow and an
Associate of the Institute of Chartered Secretaries & Administrators. Mr.
Cannell is a recipient of the Beatson Prize for Chemistry, the E.H. Stenning
Prize for Biology, Duke of Edinburgh Gold Award and Manx Scholarship. Mr.
Cannell has previously held the position of Project Administrator to IFG
International, an Isle of Man corporation, company Secretary for Operation
Mobilization, a United Kingdom corporation.
John Crosbie Goold, age 54, has educational credentials which include Royal
Melbourne Technical College and New York University. Mr. Goold is a private
investor specializing in research and investment in energy companies, computer
technology and telecommunications in Asian, European and United States capital
markets.
Nevada Energy Company is a non-regulated utility holding company specializing in
the development, financing, construction and operation of electric power
generating facilities and other non-related business enterprises.
FOR FURTHER INFORMATION: JEFFREY ANTISDEL AT (702) 786-7979
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Exhibit 4
LETTER HEAD Affiliated Law Practices 604 682-1851
Jones, McCloy, Peterson Fax 604 682-7392
Barristers and Solicitors 1700 - Three Benthal Center
595 Burred Street
Vancouver, BC V7XG4
February 29, 1996
Mr. Jeffrey Antisdel, Chairman, President and CEO
Nevada Energy Company, Inc.
401 East Fourth Street
Reno, Nevada, 89512
Dear Mr. Antisdel:
We are the Canadian solicitors for Waterford Trust Company Limited, an Irish
corporation ("Waterford").
In connection with the recent discussions between representatives of Waterford,
on the one hand, and officers and other representatives of Nevada Energy
Company, Inc., a Delaware corporation (the "Company"), on the other hand, we are
instructed that the following terms have been generally agreed between Waterford
and the Company as the principal terms and conditions upon which Waterford shall
purchase from the Company an aggregate of 1,999,995 of its previously authorized
but unissued Convertible Preferred shares of the Company's stock, $0.001 par
value to be called "Series A Preferred Shares" (the "Preferred Stock").
1. The Company is currently authorized to issue 2,000,000 shares of Preferred
Stock, 25,000,000 shares of Class A Common Stock and 25,000,000 shares of
Class B Common Stock. As of the date hereof, there are outstanding an
aggregate of NIL shares of
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Preferred Stock, 8,808,485 shares of Class B Common Stock and 4,437,473
shares of Class B Common Stock. The total outstanding Class A common shares
after conversion of various warrants and options would be approximately
9,250,000 and there are no outstanding options or warrants or rights to
acquire any other class of shares except certain rights to Class B Common
Stock as disclosed. The company's Common Stock is listed for trading on the
NASDAQ Small Cap Market System under the Symbol "NNRGA".
2. Waterford will act as designee and may in its sole discretion allocate the
shares it intends to acquire to other members of its financial group.
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3. The amounts to be paid by Waterford or its nominees as the purchase price
of the 1,999,995 Preferred Shares will be determined as follows:
(a) Subject to Waterford providing to the Company a due diligence
information memorandum (including financial statements of Waterford at
December 31, 1995, business plan including executive summary,
financial condition and general terms of purchase of pending
telecommunication acquisitions of Consolidated Telecom Corporation),
Waterford will acquire 1,999,995 Preferred Shares (the "Shares") of
the Company at $2.50 per share to be paid as follows:
(i) Waterford will pay $100,000 to the Company at closing on account of
the purchase price of the Shares;
(ii) Waterford will issue a secured promissory note for the balance of the
purchase price of the Shares in the sum of $4,899,987.50 payable as
follows:
(A) the sum of $400,000 shall be paid to the Company within 90 days
of the Effective Date;
(B) eight additional installments of $500,000 each shall be paid to
the Company each 30 days thereafter;
(C) one additional installment of $499,987.50 shall be paid to the
Company 30 days after the payment of the last installment paid in
subparagraph 3(a)(ii)(B) above:
provided, however, that Waterford may prepay the whole or any
part of the secured promissory note.
(b) For the secured promissory note referred to in subparagraph (a)(ii)
above, Waterford shall grant a security interest to the Company in the
Shares, which security interest shall be released pro-rata against
that number of Shares for which payments have been made to the
Company;
(c) The Shares shall be entitled to one vote per share. Upon issuance of
the Shares at closing, Waterford or its nominee shall have the right
to vote the Shares.
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(d) The Shares will have an aggregate liquidation preference equal to the
principal amount of the secured promissory note actually paid to the
Company.
(e) Upon closing:
(i) Mr. Antisdel and Mr. Cascarilla shall resign as directors and the
remainder of the board of the Company shall appoint two nominees
of Waterford to the board of the Company in place thereof;
(ii) the remaining directors shall deliver to Waterford irrevocable
resignations as directors of the Company having effective dates
in conformity with subparagraphs (f) and (g) below;
(f) One day after closing, one more director of the Company shall resign
and the remainder of the board of the Company shall appoint one
nominee of Waterford to the board of the Company in place thereof;
(9) One day after the date of the resignation of the director referred to
in subparagraph (f) above the last two of the current directors shall
resign.
4. The Preferred Shares shall not accrue dividends and shall have the right to
convert into a number of Class A Common Shares valued at a discount of 30%
to an averaged NASDAQ market bid price for the Class A Common Shares for
the 10 trading days prior to each conversion. All remaining terms and
conditions of the certificate of designations for the Preferred Shares, if
any, shall be set forth in a definitive certificate of designations
mutually agreeable in form to the Company and Waterford.
5. The Company shall create or cause to be created 5 new Series B preferred
Shares (the "New Shares") having the following rights and restrictions:
(a) the New Shares shall be issued for $2.50 each;
(b) until the sum of $500,000 has been paid by Waterford to the Company as
herein set forth, the holders of the New Shares shall be entitled to
appoint a fourth director to the board of the Company (the "4th
Director") forthwith upon Waterford being in default of any payment
required to be made by it under the promissory note and the time for
curing such default having expired;
(c) the 4th Director, if appointed, shall have the ability to
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act for and on behalf of the board to exercise the remedies under the
security interest of the Company on the Shares pledged to the Company;
provided, however, that upon the default being cured, the 4th director
shall immediately be deemed to have resigned;
(d) upon the sum of $500,000 having been paid to the Company by Waterford,
the holders of the New Shares shall not have the right to appoint a
4th Director;
(e) upon Waterford having paid or advanced to the Company the sum of
$4,999,987.50, the Company may redeem the New Shares upon payment to
the holders thereof of $2.50 per New Share;
(f) the Company shall not amend the terms of the Stock Purchase Agreement,
the Promissory Note or the Share Pledge Agreement without the consent
of a majority of the holders of the New Shares, which consent shall
not be unreasonably withheld;
(g) a New Share may not be transferred by a holder without the prior
written consent of Waterford, which consent may not be unreasonably
withheld;
(h) a New Share shall not be entitled to any dividends, but shall be
entitled to a return of capital in the sum of $2.50 each in priority
to the holders of any class of common shares on a winding up.
6. Upon closing, one New Share shall be issued to each current director. Upon
Waterford having paid or advanced to the Company the sum of $4,999,987.50,
Waterford shall have an option to Purchase the New Shares from the holders
thereof at a price of $2.50 per share and upon Waterford exercising its
option and acquiring the New Shares, the New Shares shall automatically be
converted into Series A Preferred Shares.
7. Closing of this purchase and sale shall be deemed for all purposes to be
effective February 29, 1996 (the "Effective Date"), notwithstanding that
execution of all necessary documents required to complete this transaction
including without limitation the Stock Purchase Agreement, the Promissory
Note and the Share Pledge Agreement shall in fact be executed on a later
date. References to "closing" refer to the date on which the Company
delivers the Shares to Waterford and Waterford pays the $100,000 pursuant
to paragraph 3(a)(i) and delivers the promissory note pursuant to paragraph
3(a)(ii).
8. It is understood and agreed that all of the Shares will be issued to and
purchased by Waterford or its nominees without registration under the
Securities act of 1933, as amended (the
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"Securities Act"). However,
Waterford may at its own cost register or sell under appropriate exemptions
the shares at its expense.
9. During the period between the date hereof and the consummation of the
transactions contemplated hereby, the Company shall give Waterford and its
authorized representatives full access, during reasonable business hours,
in such a manner as to not unduly disrupt normal business activities, to
any and all of the Company's premises, properties, contracts, books,
records and affairs, and shall cause the Company's officers to furnish any
and all data and information pertaining to the Company's business that
Waterford or its representatives may from time to time reasonably require.
During the period between the date hereof and the consummation of the
transactions contemplated hereby, the Company shall continue to conduct its
operations on a basis consistent with past practices. The Company shall
forthwith deliver to Waterford's agent copies of all employment contracts
of all management personnel and details of all stock options held by
employees and others.
10. Unless and until the transactions contemplated by this letter have been
consummated, each party will hold in confidence all confidential
information designated in writing as such obtained from the other, subject
to the requirement to disclose such information as may be required in order
for Waterford to perform its due diligence, and if the transactions
contemplated hereby are not consummated will return all original documents
so obtained. This obligation of confidentiality shall not extend to any
information which is shown to have previously been (i) known to the party
receiving it, (ii) generally known to others engaged in the trade or
business of the party receiving it, (iii) part of public knowledge or
literature, or (iv) lawfully received from a third party. Without limiting
the generality of the foregoing, it is understood and agreed that certain
information disclosed by the Company to Waterford or its representatives
may constitute "material inside information" that has not previously been
disclosed to the public generally. Waterford acknowledges its understanding
of the restrictions on the use of such information imposed by Federal and
State securities laws, agrees to comply and cause its representatives to
comply with such restrictions, and agrees to jointly and severally
indemnify and hold the Company and each of its directors, officers and
employees free and harmless from any and all liability, cost or expense
that any of them may incur or suffer by reason of any breach by Waterford
or any of its
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authorized representatives or its designee, without limitation, of any of
such restrictions, or by reason of this letter, or the consummation of the
transactions contemplated by this letter. In no event will Waterford
purchase or sell, directly or indirectly, in the public marketplace or
otherwise, any shares of the Company's Common Stock prior to the closing.
11. Consummation of the transactions contemplated hereby will be subject to the
delivery of stock certificates evidencing the 1,999,995 Series A Preferred
Shares referred to in paragraph 3 and the 5 Series B Preferred Shares
referred to in paragraphs 5 and 6, appropriate Board resolutions and
receipt of any required consents of third parties. Without limiting the
generality of the foregoing, as conditions to the payment of the purchase
price described in paragraph 3 hereof;
i. All corporate action necessary shall have been taken as set out in
subparagraphs 3(e), (f) and (g);
ii. Forthwith upon payment of the second payment in the sum of $400,000 as
set out in paragraph 3 above, Jeffrey Antisdel (Chairman, President
and Chief Executive) and Richard Cascarilla (Vice-President, Secretary
and Treasurer) shall resign in their capacities as officers of the
Company. Thereupon, Messrs. Antisdel and Cascarilla shall each enter
into 2 year consulting agreements with the Company at compensation
consistent With their historical compensation to the time of their
resignations including, without limitation, assignment of insurance
policies, health and disability insurance policies or payment of
benefit provisions related thereto.
iii. All key personnel as may be determined by Waterford and except as set
out in subparagraph (ii) above will continue as employees subject to
termination for cause. Mr. Ken Bowers (Controller) and Ms. Gayle
Pileggi (Office Manager), shall manage the Company's energy assets and
serve in their capacities as, at will, administrative employees of the
Company, with compensation arrangements consistent with their
historical compensation.
iv. Waterford shall be reasonably satisfied, prior to February 29, 1996,
with the results of its due diligence review of the business,
operations, financial condition and prospects of the Company.
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v. There shall not have occurred after the date hereof any undisclosed
material adverse change in the Company's business, operations,
financial condition or prospects.
vi. The Company shall maintain its NASDAQ listing throughout the term of
the agreement(s).
vii. The Company shall list all its liabilities and a summarized proforma
cash flow for the 180 day period commencing at closing, which is
attached hereto as Schedule "A".
viii. The Company shall cause the officers, directors and control persons of
the Company to enter into agreements not to sell any of the Company's
stock within 6 months after closing except as may be agreed in writing
by Waterford.
ix. Accrued directors' fees of $10,000 per director will be paid to each
director by the Company 90 days from the effective date of February
29, 1996.
x. Waterford shall not be in default of any payment or any other matter
to be performed unless the same shall have continued for 15 days after
the due date thereof. In the event a default is not cured within such
time, a standstill injunction will be issued pursuant to mutually
agreeable terms.
12. Each party shall bear all of its own expenses incurred in connection with
the transactions contemplated hereby, including without limitation the
negotiation and finalization of all agreements. Waterford shall assume
payment to Continental Capital Corporation of any finders fee which may be
owing by the Company up to the sum of 3% of the purchase price of the
Preferred Shares hereunder.
13. Following closing, Waterford agrees and shall cause the Company's print
subsidiary, Combustion Energy Company, Inc. DBA Herth Printing and Business
Supplies, to operate as generally constituted at the date hereof on the
understanding that the Company will only sell this subsidiary in its
entirety without liquidation of assets and employee layoff.
14. When countersigned below on behalf of the Company and Waterford, it is
intended that this letter shall constitute an agreement in principle which
shall be binding upon the parties hereto, subject to satisfaction of the
conditions specified
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above, and which shall be governed by the laws of the State of Delaware. In
the event of any dispute between the parties to this letter, such dispute
shall be referred to binding arbitration, which arbitration shall be
conducted in accordance with the rules of the American Arbitration
Association. If any action or arbitration is brought to enforce any of the
provisions hereof, the prevailing party in any such action or arbitration
shall be entitled to recover the costs and expenses of such action or
arbitration, including without limitation, reasonable attorneys' fees and
other costs and expenses incurred in connection therewith.
15. No announcements shall be made by either party with respect to the receipt
or acceptance of this letter, or the transaction proposed herein, the
execution of the definitive agreement, or the closing of the transactions
contemplated hereby, unless required by applicable law, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
16. Subject to paragraph 2 hereof, this letter may not be assigned by the
Company or Waterford without the prior consent of the other.
This letter may be signed by fax and in counterpart and each of which will be
considered to be an original and all of which together will be considered to be
one document
If the foregoing accurately sets forth your understanding of the agreements,
please so indicate by signing the enclosed copy hereof and returning it to the
writer by no later than February 29, 1996 Our client will then proceed a~
rapidly as possible to complete the transaction.
Yours very truly,
JONES MCCLOY PETERSON
/s/ Roderick H. McCloy
- -------------------------
Roderick H. McCloy Law Corporation
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The foregoing agreement in principle is hereby agreed to and accepted this 29th
day of February, 1996:
NEVADA ENERGY COMPANY, INC.
By: /s/ Jeffrey Antisdel
--------------------------
JEFFREY ANTISDEL
Title: President
WATERFORD TRUST COMPANY LIMITED
By: /s/ Charles Cain
--------------------------
Authorized Signatory
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