SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
APRIL 5, 1996
Date of Report (Date of Earliest Event Reported)
MONUMENT RESOURCES, INC.
Exact Name of Registrant as Specified in its Charter
COLORADO 33-15528-D 84-1028449
State or Other Jurisdiction Commission File IRS Employer Iden-
Of Incorporation Number tification Number
11 WILCOX STREET, P.O. BOX 1450
CASTLE ROCK, COLORADO 80104
Address of Principal Executive Offices, Including Zip Code
(303) 688-3993
Registrant's Telephone Number, Including Area Code
N/A
Former Name or Former Address, if Changed Since Last Report
ITEM 1. CHANGE IN CONTROL OF REGISTRANT.
On April 5, 1996, Monument Resources, Inc. (the "Company") acquired all
of the outstanding stock of Crescent Oil & Gas Corporation ("Crescent") in
exchange for 1,000 shares of the Company's Series A Convertible Preferred
Stock (the "Preferred Stock"). The shares of Preferred Stock are convertible
into a total of up to 4,600,000 shares of the Company's Common Stock upon the
occurrence of certain events. The actual number will range from 3,000,000
shares to 4,600,000 shares depending upon whether Powerhouse fulfills certain
financial commitments and whether the Company's decides to accept or reject an
offshore oil and storage depot site in China. If all such shares of Common
Stock were to be issued upon conversion, those shares would represent
approximately 50.1% of the Company's Common Stock then outstanding.
The stock issuances were made pursuant to an Agreement and Plan of
Reorganization ("Agreement") among the Company, Crescent and Powerhouse
Resources, Inc. ("Powerhouse"), the sole shareholder of Crescent. The terms
of the Agreement were the result of negotiations between the managements of
the Company and Powerhouse. The Board of Directors did not obtain any
independent "fairness" opinion or other evaluation regarding the terms of the
Agreement due to the cost of obtaining such opinions or evaluations.
The foregoing summary of the Agreement is qualified by reference to the
complete text of the Agreement which is filed as Exhibit 10 hereto, and is
incorporated herein by this reference.
As a result of the acquisition and the issuance of the shares of the
Company's Preferred Stock referred to above, Powerhouse may be deemed to
beneficially own approximately 50.1% of the Company's Common Stock. However,
the Preferred Stock contains no voting rights and therefore Powerhouse is not
presently able to exercise voting control of the Company.
Under the terms of the Agreement, the Company has agreed to file a
registration statement under the Securities Act of 1933, as amended, covering
the shares of Common Stock issuable upon the conversion of the Preferred Stock
to enable Powerhouse to sell such shares of Common Stock or make a pro rata
distribution of such Common Stock to the shareholders of Powerhouse, which is
a publicly held company.
Pursuant to the terms of the Agreement, effective on the closing of the
acquisition the Company's Board of Directors was expanded to six (6) persons,
and the following persons are now Directors of the Company:
A. G. Foust (1)
Stewart A. Jackson (1)
John J. Womack (1)
Dennis C. Dowd (2)
Hunter G. Swanson (2)
__________________
(1) Continuing Directors of the Company.
(2) Designees of Powerhouse.
The sixth director will be selected by the five persons currently on the
Board.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As described in Item 1 of this Report, on April 5, 1996, the Company
acquired all of the outstanding stock of Crescent. Crescent, a Colorado
corporation, is an oil and gas company based in Denver, Colorado. Assets held
by Crescent include: (1) gas wells and a gas gathering system in Kansas, (2) a
potential oil waterflood unit containing 30 well sites in Knox County, Texas,
(3) a 15% interest in a major oil and gas lease totalling approximately 69,000
acres in Webb County, Texas, and (4) several oil leases in Lea County, New
Mexico. Crescent presently employs 2 persons.
As part of this transaction the Company also received an option from
Powershouse to acquire the rights to an offshore oil and storage depot site in
China.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The financial
statements required by Rule 3-05(b) of Regulation S-X are not yet available
and will be filed by amendment on or before June 19, 1996.
(b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial
information required by Article 11 of Regulation S-X is not yet available, and
will be filed by amendment on or before June 19, 1996.
(c) EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
2 Agreement and Plan of Reorganization among Monument Resources, Inc.,
Crescent Oil & Gas Corporation, and Powerhouse Resources, Inc., and
Addendum thereto
3 Articles of Amendment to Articles of Incorporation (Series A
Convertible Preferred Stock)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: April 16, 1996 MONUMENT RESOURCES, INC.
By: /s/ A.G. Foust
A. G. Foust, President
AGREEMENT AND PLAN OF REORGANIZATION
by and among
MONUMENT RESOURCES, INC.
a Colorado corporation
and
CRESCENT OIL & GAS CORPORATION
a Delaware corporation
and
POWERHOUSE RESOURCES, INC.
a Colorado corporation
Dated: February 23, 1996
TABLE OF CONTENTS
Page
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
CRESCENT AND POWERHOUSE . . . . . . . . . . . . . . . . . . . .1
Section 1.1 Organization . . . . . . . . . . . . . . . .1
Section 1.2 Capitalization . . . . . . . . . . . . . . .2
Section 1.3 Subsidiaries and Predecessor Corporations. .2
Section 1.4 Options and Warrants . . . . . . . . . . . .2
Section 1.5 Binding Obligation; No Default . . . . . . .3
Section 1.6 Compliance with Other Instruments, Etc.. . .3
Section 1.7 Consents . . . . . . . . . . . . . . . . . .3
Section 1.8 Books and Records. . . . . . . . . . . . . .3
Section 1.9 Financial Statements . . . . . . . . . . . .3
Section 1.10 No Undisclosed Liabilities . . . . . . . . .4
Section 1.11 Absence of Certain Changes . . . . . . . . .4
Section 1.12 Plant and Equipment. . . . . . . . . . . . .6
Section 1.13 Leases . . . . . . . . . . . . . . . . . . .6
Section 1.14 Tax Returns. . . . . . . . . . . . . . . . .7
Section 1.15 Transactions with Affiliates . . . . . . . .7
Section 1.16 Contracts and Commitments. . . . . . . . . .8
Section 1.17 Compliance with Contracts: Delivery of
Certain Contracts. . . . . . . . . . . . . .9
Section 1.18 Insurance. . . . . . . . . . . . . . . . . 10
Section 1.19 Labor Difficulties . . . . . . . . . . . . 10
Section 1.20 Litigation . . . . . . . . . . . . . . . . 11
Section 1.21 No Condemnation or Expropriation . . . . . 12
Section 1.22 Compliance with Law. . . . . . . . . . . . 12
Section 1.23 Environmental Compliance . . . . . . . . . 12
Section 1.24 Employee Benefits. . . . . . . . . . . . . 14
Section 1.25 Absence of Ouestionable Payments . . . . . 15
Section 1.26 Personnel. . . . . . . . . . . . . . . . . 15
Section 1.27 Real Property Holding Corporation. . . . . 15
Section 1.28 Accuracy of Information Furnished. . . . . 15
Section 1.29 Real Properties. . . . . . . . . . . . . . 16
Section 1.30 Title and Related Matters. . . . . . . . . 16
Section 1.31 Title to the Exchanged Crescent Stock. . . 16
Section 1.32 Securities Warranties. . . . . . . . . . . 16
Section 1.33 Crescent Schedules . . . . . . . . . . . . 18
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF MONUMENT. . . . . 18
Section 2.1 Organization . . . . . . . . . . . . . . . 18
Section 2.2 Capitalization . . . . . . . . . . . . . . 19
Section 2.3 Subsidiaries . . . . . . . . . . . . . . . 19
Section 2.4 Options and Warrants . . . . . . . . . . . 19
Section 2.5 Binding Obligation; No Default . . . . . . 19
Section 2.6 Compliance with Other Instruments, etc . . 19
Section 2.7 Consents . . . . . . . . . . . . . . . . . 20
Section 2.8 Books and Records. . . . . . . . . . . . . 20
Section 2.9 Financial Statements . . . . . . . . . . . 20
Section 2.10 No Undisclosed Liabilities . . . . . . . . 21
Section 2.11 Absence of Certain Changes . . . . . . . . 21
Section 2.12 Plant and Equipment. . . . . . . . . . . . 23
Section 2.13 Leases . . . . . . . . . . . . . . . . . . 23
Section 2.14 Tax Returns. . . . . . . . . . . . . . . . 24
Section 2.15 Transactions with Affiliates . . . . . . . 24
Section 2.16 Contracts and Commitments. . . . . . . . . 25
Section 2.17 Compliance with Contracts;
Delivery of Certain Contracts. . . . . . . 26
Section 2.18 Insurance. . . . . . . . . . . . . . . . . 27
Section 2.19 Labor Difficulties . . . . . . . . . . . . 27
Section 2.20 Litigation . . . . . . . . . . . . . . . . 27
Section 2.21 No Condemnation or Expropriation . . . . . 28
Section 2.22 Compliance with Law. . . . . . . . . . . . 28
Section 2.23 Environmental Compliance . . . . . . . . . 29
Section 2.24 Employee Benefits. . . . . . . . . . . . . 30
Section 2.25 Personnel. . . . . . . . . . . . . . . . . 30
Section 2.26 Real Property Holding Corporation. . . . . 30
Section 2.27 Accuracy of Information Furnished. . . . . 30
Section 2.28 Real Properties. . . . . . . . . . . . . . 31
Section 2.29 Title and Related Matters. . . . . . . . . 31
Section 2.30 Title to the Exchanged Monument Stock. . . 31
Section 2.31 Compliance With Exchange Act . . . . . . . 32
Section 2.32 Monument Schedules . . . . . . . . . . . . 32
ARTICLE III
PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . . . 32
Section 3.1 Plan of Reorganization . . . . . . . . . . 32
Section 3.2 Share Exchange . . . . . . . . . . . . . . 33
Section 3.3 Closing. . . . . . . . . . . . . . . . . . 33
Section 3.4 Closing Events . . . . . . . . . . . . . . 33
Section 3.5 Termination. . . . . . . . . . . . . . . . 34
Section 3.6 Directors of Monument and Crescent . . . . 35
ARTICLE IV
SPECIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.1 Access to Properties and Records . . . . . 35
Section 4.2 Availability of Rule 144 . . . . . . . . . 35
Section 4.3 Information for Monument Registration
Statement and Public Reports . . . . . . . 36
Section 4.4 Special Covenants and Representations
Regarding the Exchanged Monument Stock . . 36
Section 4.5 Third Party Consents . . . . . . . . . . . 36
Section 4.6 Actions Prior to Closing . . . . . . . . . 36
Section 4.7 Indemnification. . . . . . . . . . . . . . 38
Section 4.8 Intent and Binding Effect. . . . . . . . . 38
Section 4.9 Monument Recapitalization. . . . . . . . . 39
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF MONUMENT. . . . . . . . 39
Section 5.1 Accuracy of Representations. . . . . . . . 39
Section 5.2 Officer's Certificate. . . . . . . . . . . 39
Section 5.3 No Material Adverse Change . . . . . . . . 39
Section 5.4 Other Items. . . . . . . . . . . . . . . . 40
Section 5.5 Loan Repayment . . . . . . . . . . . . . . 40
Section 5.6 Allan Arnold Contract. . . . . . . . . . . 40
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CRESCENT. . . . . . . . 40
Section 6.1 Accuracy of Representations. . . . . . . . 40
Section 6.2 Officer's Certificate. . . . . . . . . . . 40
Section 6.3 No Material Adverse Change . . . . . . . . 41
Section 6.4 Other Items. . . . . . . . . . . . . . . . 41
ARTICLE VII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.1 Brokers and Finders. . . . . . . . . . . . 41
Section 7.2 Denver Registered Office . . . . . . . . . 41
Section 7.3 Registration Costs . . . . . . . . . . . . 41
Section 7.4 Law, Forum and Jurisdiction. . . . . . . . 42
Section 7.5 Notices. . . . . . . . . . . . . . . . . . 42
Section 7.6 Attorneys' Fees. . . . . . . . . . . . . . 43
Section 7.7 Confidentiality. . . . . . . . . . . . . . 43
Section 7.8 Schedules; Knowledge . . . . . . . . . . . 43
Section 7.9 Third Party Beneficiaries. . . . . . . . . 43
Section 7.10 Entire Agreement . . . . . . . . . . . . . 43
Section 7.11 Survival; Termination. . . . . . . . . . . 44
Section 7.12 Counterparts . . . . . . . . . . . . . . . 44
Section 7.13 Amendment or Waiver. . . . . . . . . . . . 44
Section 7.14 Incorporation of Recitals. . . . . . . . . 44
Section 7.15 Expenses . . . . . . . . . . . . . . . . . 44
Section 7.16 Headings; Context. . . . . . . . . . . . . 44
Section 7.17 Benefit. . . . . . . . . . . . . . . . . . 44
Section 7.18 Public Announcements . . . . . . . . . . . 45
Section 7.19 Severability . . . . . . . . . . . . . . . 45
Section 7.20 Failure of Conditions; Termination . . . . 45
Section 7.21 No Strict Construction . . . . . . . . . . 45
Section 7.22 Execution Knowing and Voluntary. . . . . . 45
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (hereinafter referred to as the
"Agreement"), is entered into as of February 23, 1996, by and among Monument
Resources, Inc. ("Monument"), a Colorado corporation, Crescent Oil & Gas
Corporation ("Crescent"), a Delaware corporation and Powerhouse Resources,
Inc.("Powerhouse"), a Colorado corporation.
PREMISES
A. This Agreement provides for the reorganization of corporate
operations of Monument and Crescent pursuant to the terms set forth in this
Agreement.
B. As part of this Agreement, Monument shall issue and exchange 1,000
shares (the "Exchanged Monument Stock") of the non-voting convertible
preferred stock, no par value, of Monument (the "Monument Common Stock") to
Powerhouse immediately prior to the closing of the transactions contemplated
by this Agreement, in exchange for 100 shares (the "Exchanged Crescent Stock")
of the common stock, $0.01 par value, of Crescent (the "Crescent Common
Stock") which constitutes 100% of the issued and outstanding common stock of
Crescent, subject to the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived here from, it is hereby agreed as
follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF CRESCENT AND POWERHOUSE
As an inducement to, and to obtain the reliance of Monument, Crescent
represents and warrants, and with respect to Sections 1.31(b) and 1.32,
Powerhouse represents and warrants, as follows:
Section 1.1 ORGANIZATION. Crescent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power and is duly authorized, qualified, franchised and
licensed under all applicable laws, regulations, ordinances and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification, except where the failure to
so qualify would not have a material adverse effect upon the assets, business,
properties or operations of Crescent. Included in the Crescent Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation and bylaws of Crescent as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of Crescent's articles of incorporation
or bylaws. Crescent has taken all action required by law, its articles of
incorporation, its bylaws or otherwise to authorize the execution and delivery
of this Agreement. Crescent has full power, authority and legal right and has
taken all action required by law, its articles of incorporation, bylaws and
otherwise to consummate the transactions herein contemplated.
Section 1.2 CAPITALIZATION. The authorized capitalization of Crescent
consists of 200,000,000 shares of common stock, $0.01 par value (the "Crescent
Common Stock"). As of the Closing Date, there are 100 shares of Crescent
Common Stock issued and outstanding. All issued and outstanding shares are
legally issued, fully paid and nonassessable, and are not issued in violation
of the preemptive or other rights of any person.
Section 1.3 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as set
forth on Schedule 1.3, Crescent does not have any subsidiaries and does not
own, beneficially or of record, any shares of any other corporation.
Section 1.4 OPTIONS AND WARRANTS. There are no outstanding (a)
securities convertible into or exchangeable for any of Crescent's capital
stock; or (b) options, warrants, calls or other rights (including rights to
demand registration or to sell in connection with any registration by Crescent
under the Securities Act of 1933, as amended (the "Securities Act") to
purchase or subscribe to capital stock of Crescent or securities convertible
into or exchangeable for capital stock of Crescent. Crescent is not a party to
any voting trust agreement or other contract, agreement, arrangement,
commitment, plan or understanding restricting or otherwise relating to voting
or dividend rights with respect to the Crescent Common Stock.
Section 1.5 BINDING OBLIGATION; NO DEFAULT. Crescent has duly taken all
action necessary to authorize the execution, delivery and performance of this
Agreement and the other instruments and agreements contemplated hereby. Such
execution, delivery and performance does not and will not, to the best of
Crescent's knowledge, constitute a default under or a violation of any
agreement, order, award, judgment, decree, statute, law, rule, regulation or
any other instrument to which Crescent is a party or by which Crescent or the
property of Crescent may be bound or may be subject. This Agreement
constitutes the legal, valid and binding obligation of Crescent, enforceable
against Crescent in accordance with its terms.
Section 1.6 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
execution and delivery of this Agreement by Crescent nor compliance by
Crescent with the terms and conditions of this Agreement will: (a) require
Crescent to obtain the consent of any governmental agency; (b) constitute a
material default under any indenture, mortgage or deed of trust to which each
of Crescent is a party or by which Crescent or its properties may be subject;
(c) cause the creation or imposition of any lien, charge or encumbrance on any
of its assets; or (d) breach any statute or regulation of any governmental
authority, domestic or foreign, or will on the Closing Date conflict with or
result in a breach or any of the terms or conditions of any judgment, order,
injunction, decree or ruling of any court or governmental authority, domestic
or foreign, to which Crescent is subject.
Section 1.7 CONSENTS. No consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority or any third party is required to be made or obtained by Crescent in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
Section 1.8 BOOKS AND RECORDS. The books of account and other financial
records of Crescent are complete and correct in all material aspects. The
minute books of Crescent, as previously made available to Monument and its
legal counsel, contain records of all meetings and accurately reflect all
other material corporate action of the stockholders, directors and any
committees of the Board of Directors of Crescent.
Section 1.9 FINANCIAL STATEMENTS. At the closing, Crescent shall
deliver to Monument true and correct copies of the audited financial
statements of Com-Tek Resources, Inc. which includes the audited accounts of
Crescent as of September 30, 1993, 1994 and for the periods then ended. The
unaudited financial statements of Crescent and/or Powerhouse as of September
30, 1995 and for the period then ended shall fairly present the financial
position of Crescent at September 30, 1995, and the results of the operations
and the changes in cash flows for the years covered by the financial
statements and shall be prepared in accordance with generally accepted
accounting principles ("GAAP"). Crescent shall also furnish unaudited
financial statements for the interim period ended December 31, 1995 (the
"Financial Statements").
Section 1.10 NO UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 1.10 hereto, Crescent does not have any material liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which
were not adequately reflected or reserved against on Crescent's Financial
Statements, except for liabilities and obligations incurred since the date
thereof in the ordinary course of Crescent business and consistent with past
practice and which, in any event, in the aggregate, would not have a Material
Adverse Effect (as defined hereinafter).
Section 1.11 ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth on Schedule 1.11 hereto or except as otherwise expressly
contemplated hereby, since the date of the Crescent Financial Statements,
Crescent has not:
(a) Suffered any material adverse change in its financial
condition, assets, liabilities (absolute, accrued, contingent or otherwise),
or reserves, and no event has occurred and no action has been taken by
Crescent or, to the best knowledge of Crescent, any other person, nor is any
such event or action contemplated or, to the best knowledge of Crescent,
threatened, which might reasonably be expected to have a material adverse
effect on the assets or the operations or condition (financial or otherwise)
of Crescent's business ("Material Adverse Effect"), except that no
representation or warranty is made as to general economic conditions or
matters affecting Crescent's industry generally;
(b) Suffered any material adverse change in its business,
operations or prospects;
(c) Experienced any shortage of raw materials or supplies;
(d) Incurred any short-term or long-term liabilities or
obligations (absolute, accrued, contingent or otherwise) except items incurred
in the ordinary course of business and consistent with past practice, none of
such short-term or long-term liabilities or obligations exceeds $2,500
individually, or $5,000 in the aggregate, (counting obligations or liabilities
arising from one transaction or a series of similar transactions, and all
periodic installments or payments under any lease or other agreement providing
for periodic installments or payments, as a single obligation or liability),
or increased or changed any assumptions underlying or method of calculating,
any bad debt, contingency or other reserves;
(e) Paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the Crescent Financial Statements or incurred in the
ordinary course of business and consistent with past practice since the date
of the Crescent Financial Statements;
(f) Permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any
kind;
(g) Written down the value of any inventory or properties in
excess of $2,500 or written down or written off as uncollectible any notes or
accounts receivable in excess of $2,500;
(h) Canceled any debts or waived any claims or rights in excess
of $2,500;
(i) Sold, transferred or otherwise disposed of any of its
properties or assets in excess of $2,500 (real, personal or mixed, tangible or
intangible);
(j) Disposed of or permitted to lapse any rights to the use of
any Patent or Trade Name necessary to permit Crescent to conduct its business
or develop its products, or disposed of or disclosed to any person, other than
representatives of Monument, any Proprietary Information or Technical
Information not theretofore a matter of public knowledge necessary to permit
Crescent to conduct its business or develop its products;
(k) Granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) other than in the ordinary course
of business and consistent with past practice, or any increase in the
compensation (including, without limitation, salary and bonus) payable or to
become payable to any officer or key employee;
(l) Made any single capital expenditure or commitment in excess
of $2,500 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of
$2,500 for additions to property, plant, equipment or intangible capital
assets;
(m) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of Crescent;
(n) Made any change in any method of accounting or accounting
practice;
(o) Paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any
"Affiliate" or "Associate" of Crescent as such terms are defined in Rule 405
promulgated by the Commission under the Securities Act, or any officer,
director or shareholder of Crescent (collectively, "Affiliates" or
individually, an "Affiliate");
(p) Made any gifts, or sold, transferred or exchanged any
property of any material value for less than the fair value thereof;
(q) Suffered any material casualty loss or damage (whether or not
covered by insurance); or
(r) Agreed, whether in writing or otherwise, to take any action
described in this Section 1.11.
Section 1.12 PLANT AND EQUIPMENT. The material plants, buildings,
fixtures, structures and equipment owned, leased or used by Crescent are in
good operating condition and repair, ordinary wear and tear excepted, are
adequate for the uses to which they are being put. Included in Schedule 1.12
hereto is an accurate and complete list of all of the fixed assets of Crescent
with a value in excess of $1,000.
Section 1.13 LEASES. Schedule 1.13 hereto is an accurate and complete
list of all leases pursuant to which Crescent leases real or any material item
of personal property. A true and correct copy of each such lease has been
delivered to Monument, and no changes have been made thereto since the date of
delivery. Except as set forth in Schedule 1.13 hereto, each such lease is
valid and in full force and effect, there are no existing material defaults by
Crescent thereunder, and, to the best knowledge of Crescent, no event has
occurred which (with notice, lapse of time or both) would constitute a default
thereunder by any party. Except as set forth on Schedule 1.13 hereto,
Crescent is presently in compliance in all material respects with all laws,
rules, regulations and ordinances relating to zoning and land use restrictions
which are applicable to any portion of the land subject to the real property
leases set forth in Schedule 1.13 hereto. Except as set forth on Schedule
1.13 hereto, no consent is required from the lessor under any lease of real or
personal property listed on Schedule 1.13 prior to the consummation of the
transactions contemplated hereby.
Section 1.14 TAX RETURNS. Schedule 1.14 hereto are true and correct
copies of Crescent's Tax Returns and Statements (as defined herein). Except
as set forth in Crescent's Tax Returns and Statements, Crescent has (i) filed
or has caused to be filed all federal, state and local and all material
foreign, territorial, franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by Crescent or on its behalf
and which were due prior to the date of this Agreement (the "Tax Returns and
Statements"), (ii) paid within the time and in the manner prescribed by law
all Taxes (as defined below), due for all periods ending on or prior to the
date of this Agreement, except with respect to Taxes which are immaterial in
amount and the failure to so pay or file would not result in material
penalties and would not have a Material Adverse Effect, and (iii) established
adequate reserves for the payment of all unpaid Taxes as of the date of the
Crescent Financial Statements. The Tax Returns and Statements are true,
complete and accurate, in all material respects. Since September 30, 1994, no
tax assessment or deficiency has been made against Crescent nor has any notice
been given of any actual or proposed assessment or deficiency which has not
been paid or for which an adequate reserve has not been set aside. Except as
set forth in such Tax Returns and Statements, the Tax Returns and Statements
are not presently, nor have they since Crescent's inception been, the subject
of any audit or other administrative or court proceeding by any federal,
territorial, state, local or foreign governmental agency. Crescent has not
received any notice that any of the Tax Returns and Statements is now being or
will be examined or audited, and no consents extending any applicable statute
of limitations have been filed. The Tax Returns referenced to above are those
of Powerhouse in which Crescent has been consolidated.
For purposes of this Agreement, "Taxes" shall mean any and all taxes,
payroll and employment related taxes, levies, assessments, charges or other
fees, together with any interest, penalties or other additions, imposed by any
governmental authority upon Crescent.
Section 1.15 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 1.15 hereto, no Affiliate of Crescent has any interest, directly or
indirectly, in any lease, lien, contract, license, encumbrance, loan or other
agreement to which Crescent is a party, or any interest in any competitor,
supplier or customer of Crescent. Except as set forth item by item on
Schedule 1.15 hereto, Crescent is not indebted, directly or indirectly, to any
Affiliate of Crescent, for any liability or obligation, whether arising by
reason of stock ownership, contract, oral or written agreement or otherwise.
No Affiliate is indebted, directly or indirectly, to Crescent. Schedule 1.15
is a complete and accurate list of all employees of Crescent owing more than
$5,000 in principal plus accrued interest, to Crescent, other than travel or
other employee advances (not exceeding $1,000 to any one person) in the
ordinary course of business, setting forth the amounts owed, the applicable
interest rates, a description of the security and the maturity dates of all
such debts.
Except as set forth on Schedule 1.15 hereto, no Affiliate (i) is a party
to any contract or arrangement with Crescent pursuant to which it directly
provides material services to Crescent, or (ii) is a party to any contract or
arrangement with a third party, to which Crescent is not a party, but under
which Crescent receives any material amount of goods or services from said
third party. Except as set forth on Schedule 1.15 hereto, all goods and
services provided to Crescent by any of its Affiliates and all goods and
services provided to any of its Affiliates by Crescent, at any time since
Crescent's inception have been charged to the recipient at a price that would
have been acceptable to an unrelated third party receiving such goods and
services in an arm's-length transaction with the provider.
Section 1.16 CONTRACTS AND COMMITMENTS. Except as set forth in
Schedule 1.16:
(a) Crescent has not entered into any outstanding agreements,
contracts or commitments or restrictions which, individually or in the
aggregate, are material to its business, operations or prospects, or which
require the making of any charitable contribution:
(b) No purchase contracts or commitments of Crescent continue for
a period of more than 30 days or are in excess of the normal, ordinary and
usual requirements of its business or, to the best knowledge of Crescent, at
any excessive price;
(c) Crescent has not entered into any contracts or commitments
pursuant to which Crescent is, as of the date hereof, required to obtain or
maintain, on behalf of itself or any of its directors, officers or employees,
any facility or personnel security clearances from the U.S. Department of
Defense or any other agency of the U.S. Government;
(d) There are no outstanding sales contracts, purchase orders,
commitments or proposals of Crescent which continue for a period of more than
30 days or will likely result in any loss to Crescent upon completion or
performance thereof;
(e) Crescent has not entered into any outstanding contracts with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives or suppliers that are not cancelable by it on notice of not
longer than 30 days and without liability, penalty or premium, or any
agreement or arrangements providing for the payment of any bonus or commission
based on sales or earnings;
(f) Crescent has not entered into any outstanding employment
agreement, or any other outstanding agreement that contains any severance or
termination pay liabilities or obligations;
(g) Crescent is not a party to any collective bargaining
agreement or other contract or agreement with any labor organization:
(h) Crescent is not restricted by agreement from carrying on its
business anywhere in the world;
(i) Crescent has not incurred any outstanding debt obligation for
borrowed money, including guarantees of or agreements to acquire any such debt
obligation of others other than as reflected on the Crescent Financial
Statements;
(j) Crescent is not a party to any contract, subcontract or
agreement with the U.S. Government or any agency or instrumentality thereof,
or with any territorial or state government or any agency or instrumentality
thereof; and
(k) Crescent has not entered into any outstanding loan with or
to any person other than (i) Monument Resources, Inc., (ii) as reflected on
the Crescent Financial Statements, and (iii) for amounts not more than $2,500
to any individual and $5,000 in the aggregate.
Section 1.17 COMPLIANCE WITH CONTRACTS: DELIVERY OF CERTAIN CONTRACTS.
Crescent is not in default under any material contract, commitment, obligation
or agreement, including, without limitation, those listed in Schedules 1.13,
1.16 and 1.28 hereto, except for those which would not have a Material Adverse
Effect, and no act or omission by Crescent has occurred which, with notice or
lapse of time or both, would constitute such a default under any term or
provision of any such contract or agreement. To the best knowledge of
Crescent, each of the agreements referred to in Schedules 1.13, 1.16 and 1.28
hereto is valid and in full force and effect. To the best knowledge of
Crescent, no party is in default under any agreement referred to in Schedules
1.13, 1.16 and 1.28 hereto, and to the best knowledge of Crescent, no act or
omission has occurred by any party which, with notice or lapse of time or
both, would constitute such a default under any term or provision thereof.
Crescent has previously delivered to Monument a true and correct copy of each
agreement, contract, commitment or restriction listed on Schedules 1.13, 1.16
and 1.28 hereto, including all amendments and modifications thereof.
Section 1.18 INSURANCE. Schedule 1.18 contains an accurate and true
description of all existing policies of fire, liability, worker's compensation
and all other forms of insurance owned or held by, or covering the business,
properties or assets of, Crescent. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date hereof have been paid, and no notice of cancellation or
termination has been received by Crescent with respect to any such policy.
Such policies will remain in full force and effect through the respective
dates set forth on Schedule 1.18 without additional premiums being paid or
properly accrued as an additional liability. Schedule 1.18 also (i) describes
all products liability claims made since Crescent's inception, and all other
claims (except medical and dental) pending or made since Crescent's inception
under such insurance policies, and (ii) identifies all types of insurable
risks which Crescent and its Board of Directors has designated as being self
insured. Except as set forth in Schedule 1.18, Crescent has not been turned
down at any time since Crescent's inception for any insurance with respect to
its assets or operations, nor has its coverage been limited by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
Section 1.19 LABOR DIFFICULTIES. Except to the extent set forth in
Schedule 1.19:
(a) To the best knowledge of Crescent, no employee of Crescent
is in violation of, or has threatened any violation of, any material term of
any employment contract or any other contract or agreement relating to the
relationship of such employee with Crescent or any other party, including any
employee handbook and/or personnel policy manual of Crescent except for
violations which would not, individually or in the aggregate, have Material
Adverse Effect;
(b) Crescent has complied in all material respects with each and
every term, provision, section and part of any written employment contract or
agreement, including any employee handbook and/or personnel policy manual,
that Crescent has or has had with any individual who has performed work for
Crescent;
(c) There is no unfair labor practice charge or similar charge,
complaint, allegation or other process or claim pending or, to the best
knowledge of Crescent, threatened against Crescent before the National Labor
Relations Board (the "NLRB") or any other federal, territorial, state or local
governmental agency or other entity;
(d) There is not pending or, to the best knowledge of Crescent,
threatened against Crescent any complaint, charge, allegation or other process
or claim whatsoever, other than those which would not, individually or in the
aggregate, have a Material Adverse Effect, (i) alleging any violation of the
Occupational Safety and Health Act or any other federal, territorial, state or
local law governing health and/or safety in the workplace; (ii) seeking
compensation, benefits and/or penalties pursuant to any Workers' Compensation
Act or similar law; (iii) seeking any compensation or benefits pursuant to any
Unemployment Insurance Act or similar law; (iv) alleging any violation of the
Immigration Reform and Control Act of 1986 or any similar law; (v) alleging
any violation of the Fair Labor Standards Act or any other federal,
territorial, state or local law governing wage and/or hour issues; (vi)
alleging any violation of any federal, territorial, state or local child labor
law; and/or (vii) alleging any other federal, territorial, state or local law
relating to or governing employment or labor matters.
Section 1.20 LITIGATION. Except as set forth in Schedule 1.20 hereto:
(a) There is no pending or, to the best knowledge of Crescent,
threatened complaint, charge, claim, action, suit or arbitration proceeding
before any federal, territorial, state, municipal, foreign or other court or
governmental or administrative body or agency, or any private arbitration
tribunal or any investigation or inquiry before any federal, territorial,
state, municipal, foreign or other court or governmental or administrative
body or agency against, relating to or affecting (i) Crescent or any director,
officer, agent or employee thereof in his or her capacity as such, (ii) the
assets, properties or business of Crescent, or (iii) the transactions
contemplated by this Agreement, nor, to the best knowledge of Crescent, is
there any basis for any such complaint, charge, claim, action, suit,
arbitration proceeding, investigation or inquiry which could have an adverse
effect on the assets, property, business or prospects of Crescent;
(b) There is not in effect any order, judgment or decree of any
court or governmental or administrative body or agency enjoining, barring,
suspending, prohibiting or otherwise limiting Crescent or, to the best
knowledge of Crescent, any officer, director, employee or agent thereof from
conducting or engaging in any aspect of the business of Crescent, or requiring
Crescent or, to the best knowledge of Crescent, any officer, director,
employee or agent thereof to take certain action with respect to any aspect of
the business of Crescent which could reasonably be anticipated to have a
Material Adverse Effect; and
(c) Crescent is not in violation of or default under any
applicable order, judgment, writ, injunction or decree of any federal,
territorial, state, municipal, foreign or other court or regulatory authority.
Section 1.21 NO CONDEMNATION OR EXPROPRIATION. Neither the whole nor
any portion of the leaseholds or any other assets of Crescent is subject to
any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or without
payment of compensation therefor, nor, to the best knowledge of Crescent, has
any such condemnation, expropriation or taking been proposed.
Section 1.22 COMPLIANCE WITH LAW. The operations of Crescent have been
conducted in accordance with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all territories,
states, municipalities and other political subdivisions and agencies thereof
having jurisdiction over Crescent, including, without limitation, all such
laws, regulations, ordinances and requirements relating to environmental,
antitrust, consumer protection, labor and employment, zoning and land use,
currency exchange, immigration, health, occupational safety, pension,
securities, defense procurement and trading with the enemy matters, except as
disclosed in Schedule 1.22 hereto and except for violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
set forth in Schedule 1.22, Crescent has not received any notification since
its inception of any asserted present or past failure by Crescent to comply
with such laws, regulations, ordinances or requirements. Crescent has all
permits, authorizations and consents necessary for the operation of its
business except for those which the failure to have would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 1.23 ENVIRONMENTAL COMPLIANCE.
A. For purposes of this Agreement, the following terms shall have the
meanings set forth below:
(a) "Premises" means any oil and gas property or facility
Crescent owns, operates or leases which relate to the business of Crescent or
which constitute any of the Crescent Assets;
(b) "Hazardous Substance" means, at any time, any substance,
material, chemical or waste the presence of which requires investigation or
remediation under, or which is or becomes regulated by, any federal, state or
local governmental authority due to its properties of being toxic, hazardous,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic, or
mutagenic, including, without limitation, any material, waste, chemical or
substance which is: (i) defined as a "hazardous," "extremely hazardous" or
"restricted hazardous" waste, material or substance under the laws of the
governmental jurisdiction where the Premises are located and/or to which the
Premises are subject; (ii) petroleum or a petroleum product, including,
without limitation, gasoline and diesel fuel; (iii) asbestos or asbestos
containing; (iv) polychlorinated biphenyl; (v) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section
1251 et seq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. Section 1317); (vi) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903); or (vii) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 et seq. ("CERCLA") (42 U.S.C. Section 9601);
(c) "Hazardous Materials Law" means any national, territorial,
state, province or local statute, ordinance, order, rule or regulation of any
type, relating to pollution or the protection of worker safety, public safety,
human health, natural resources, or the environment, including laws, statutes,
ordinances, rules or regulations relating to the emission, discharge, release
or threatened release, of pollutants, contaminants or Hazardous Substances
into ambient air, surface water, ground water or land, or remediation or
removal thereof, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or Hazardous Substances, including without limitation
those statutes and regulations referred to in Subparagraph (b) above, the
Occupational Health and Safety Act (29 U.S.C. Section 651 et seq.); and
(d) "Loss" means any and all of the following, whether the
result of any action of any governmental agency or a third party: liabilities;
penalties; forfeitures; suits; losses; damages; expenses; debts; obligations;
claims; fines or civil liability for violation of any Hazardous Materials Law;
costs (including the costs of investigation, defense, settlement and
attorneys' and other professional fees whether or not litigation is
instituted); or, costs and capital expenditures required for compliance with
Hazardous Materials Law.
B. Except as disclosed in Schedule 1.23 hereto:
(a) Crescent has obtained, and is in full compliance with, all
material permits, licenses or other authorizations which are required under
any Hazardous Materials Law for the operations of the business of Crescent;
(b) Crescent is not aware of any material past, present or future
events, conditions, circumstances, activities, practices, incidents, actions
or plans which may interfere with, or prevent continued compliance by Crescent
with, any Hazardous Materials Law, or which may give rise to Loss to Crescent
based on or related to any Hazardous Materials Law;
(c) Crescent has not entered into any agreement with any
governmental authority or agency, or with any private entity, including, but
not limited to, any prior owners of Premises, relating in any way to violation
of any Hazardous Materials Law, or to the presence, release, threat of
release, disposal, placement on, under or about any Premises of Hazardous
Substances;
(d) Crescent has not discovered or caused, and to the best of
Crescent's knowledge, no other person has discovered or caused, any discharge,
emission, disposal or release of Hazardous Substances on the Premises, on
property formerly owned, operated or leased by Crescent or on the property of
any third party;
(e) Crescent has not discovered, and to the best of Crescent's
knowledge, no other person has discovered, any occurrence or condition on the
Premises or on any real property in the vicinity of the Premises, which could
cause the Premises to be subject to any restrictions on the ownership,
occupancy, transferability or use under any Hazardous Materials Law;
(f) Crescent has not manufactured, stored or disposed of
Hazardous Substances at any location, including, without limitation, any
disposal which was in compliance with any Hazardous Materials Law;
(g) Crescent does not use or maintain any underground storage
tanks or surface impoundments on the Premises and, to the best knowledge of
Crescent, no underground storage tanks or surface impoundments are now, or
ever have been, located on the Premises; and
(h) Crescent has not received notice of any lien in favor of any
governmental authority for (i) any liability under any Hazardous Materials
Law, or (ii) damages arising from or costs incurred by such governmental
authority in response to a release of Hazardous Substances into the
environment, nor has any such lien ever been filed or attached to the
Premises.
Section 1.24 EMPLOYEE BENEFITS. Except for the plans, agreements,
arrangements and practices set forth in Schedule 1.24 hereto (collectively,
the "Employment Plans"), neither Crescent nor any Affiliate maintains or
contributes to, or is obligated or required to contribute to, any bonus,
deferred compensation, severance or termination pay, pension, profit sharing,
stock purchase, stock grant, stock option, group life insurance, health care,
hospitalization insurance, disability, retirement or any other employee
benefit or fringe benefit plan, agreement, arrangement or practice, whether
formal or informal and whether legally binding or not, which covers employees
of Crescent. Neither Crescent nor any Affiliate has any commitment, whether
formal or informal and whether legally binding or not, to create or contribute
to any additional such plan.
Section 1.25 ABSENCE OF OUESTIONABLE PAYMENTS. Neither Crescent nor,
to the best knowledge of Crescent, any of its directors, officers, agents,
employees or other persons acting on its behalf or for its benefit has used
any corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds for such purpose. Neither Crescent nor, to the
best knowledge of Crescent, any of its directors, officers, agents, employees
or other persons acting on its behalf or for its benefit has accepted or
received any unlawful contributions, payments, gifts, or expenditures.
Section 1.26 PERSONNEL. Schedule 1.26 hereto is a true and complete
list of the wage rates for all non-salaried and salaried employees of Crescent
by classification.
Section 1.27 REAL PROPERTY HOLDING CORPORATION. Crescent is not a U.S.
Real Property Holding Corporation within the meaning of Section 897(c)(2) of
the Code.
Section 1.28 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by Crescent contained in this Agreement or in respect of the
exhibits, schedules or documents delivered to Monument by Crescent and
expressly referred to herein, and no statement contained in any certificate
furnished or to be furnished by or on behalf of Crescent pursuant hereto, or
in connection with the transactions contemplated hereby, contains, or will
contain as of the date such representation or warranty is made or such
certificate is or will be furnished, and as of the Closing Date, any untrue
statement of a material fact, or omits, or will omit to state as of the date
such representation or warranty is made or such certificate is or will be
furnished, any material fact which is necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading. True and correct copies of each agreement and
other document referred to in the schedules hereto have been furnished by
Crescent to Monument.
Section 1.29 REAL PROPERTIES. Schedule 1.29 hereto is an accurate and
complete list of all real property owned by Crescent, together with a
description of every mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature whatsoever in such real
property.
Section 1.30 TITLE AND RELATED MATTERS. Crescent has good and
marketable title to and is the sole and exclusive owner of all of its material
properties, inventory, interests in properties and assets, real and personal,
Patents, copyrights, trademarks, service marks and Trade Names (collectively,
the "Crescent Assets") which are reflected in the most recent Crescent balance
sheet and the Crescent Schedules or acquired after that date (except
properties, interests in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges or encumbrances except: (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not
and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties;
and (c) as described in the Crescent Schedules.
Section 1.31 TITLE TO THE EXCHANGED CRESCENT STOCK. (a) Upon delivery
to Monument of the certificates described in Section 3.2 of this Agreement,
Monument will receive good and marketable title to the Exchanged Crescent
Stock, which shall constitute one hundred percent (100%) of the issued and
outstanding capital stock of Crescent, all of such the Exchanged Crescent
Stock shall be received by Monument as validly issued, fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances, security
interests, equities, options, claims, charges, limitations on voting rights or
rights to receive dividends, or other restrictions of any kind (other than any
generally imposed by federal, corporate or territorial securities laws or as
otherwise provided for in this Agreement). (b) From the date of this
Agreement through the Closing Date, each of the Powerhouse Stockholders agrees
that it will not sell, transfer hypothecate, pledge, assign, suffer any lien
to be incurred with respect to or otherwise dispose of any of the shares of
Exchanged Crescent Stock.
Section 1.32 SECURITIES WARRANTIES. With respect to the Exchanged
Monument Stock to be delivered by Monument pursuant to the provisions of
Section 3.2 hereof, Powerhouse hereby represents and warrants to Monument
that:
(a) The shares of Exchanged Monument Stock are being acquired for
the account of each of the Powerhouse Stockholders and not with a view to sale
in connection with any distribution of the Exchanged Monument Stock;
(b) Powerhouse is acquiring the Exchanged Monument Stock here-
under without having received any form of general solicitation or general
advertising;
(c) Powerhouse or its representative, if any, has been provided
with, or given reasonable access to, full and fair disclosure of all material
information concerning Monument;
(d) Powerhouse understands and hereby acknowledges that the
Exchanged Monument Stock will be issued pursuant to (i) an exemption from the
laws of the State of Colorado and the rules and regulations promulgated
thereunder, and (ii) an exemption from the registration requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder; that the Exchanged
Monument Stock will be restricted securities as defined in Rule 144(a)(3)
promulgated under the Securities Act; in part, Monument's reliance upon such
exemptions is based on the representations and warranties made by Powerhouse
in this Section 1.32;
(e) Powerhouse agrees that the certificates to be issued in
respect of the Exchanged Monument Stock may bear a legend in a form
satisfactory to counsel for Monument reflecting the status of the Exchanged
Monument Stock as restricted securities under Rule 144(a)(3) promulgated under
the Securities Act and acknowledges that the transfer agent or registrar for
Monument may be instructed to restrict the transfer of the Exchanged Monument
Stock in accordance with such legend and any other restrictions provided in
this Agreement;
(f) Powerhouse hereby agrees that it will not sell, transfer,
hypothecate, pledge, assign or otherwise dispose of any of the Exchanged
Monument Stock, except pursuant to the terms of this Agreement and to a
registration statement filed under the provisions of the Securities Act, a
favorable no-action or interpretive letter received from the Commission or an
opinion of counsel satisfactory to Monument that such sale, transfer,
hypothecation, pledge, assignment or other disposition is exempt from the
registration requirements of the Securities Act and in Colorado, pursuant to
an opinion of counsel satisfactory to Monument that such sale, transfer,
hypothecation, pledge, assignment or other disposition is exempt from the
registration requirements of the Securities Act and does not in any way
violate the terms of this Agreement; and
(g) Powerhouse hereby acknowledges that: (i) the shares of
Exchanged Monument Stock referred to herein are being acquired after adequate
investigation of the business plan and prospects of Monument; (ii) that
Powerhouse is not relying upon the accuracy of any predictions as to the
future prospects or developments of Monument or its business and is well
informed as to the business of Monument and has reviewed its operations and
financial statements; (iii) Powerhouse or its professional advisors have
discussed the financial condition and business operations of Monument with the
officers, directors and principal stockholders of Monument and has been
afforded the opportunity to ask questions with respect thereto; and (iv)
Powerhouse specifically acknowledges that the shares of Exchanged Monument
Stock are speculative and involve a very high degree of risk and that there
can be no assurance that Monument will achieve its business objectives or, in
particular, that it will ever have cash available for distribution to its
stockholders.
Section 1.33 CRESCENT SCHEDULES. Crescent shall cause the Crescent
Schedules and the instruments and data delivered to Monument hereunder to be
updated after the date hereof up to and including the Closing Date, as
hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF MONUMENT
As an inducement to, and to obtain the reliance of Crescent, Monument
represents and warrants as follows:
Section 2.1 ORGANIZATION. Monument is a corporation duly organized,
validly existing and in good standing under the laws of the state of Colorado
and has the corporate power and is duly authorized, qualified, franchised and
licensed under all applicable laws, regulations, ordinances and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification, except where the failure to
so qualify would not have a material adverse effect upon the assets, business,
properties or operations of Monument. Included in the Monument Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation, amended articles of incorporation (collectively, hereinafter
referred to as the "articles of incorporation") and bylaws of Monument as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any provision of
Monument's articles of incorporation or bylaws. Monument has taken all action
required by law, its articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement. Monument has full
power, authority and legal right and has taken all action required by law, its
articles of incorporation, bylaws or otherwise to consummate the transactions
herein contemplated.
Section 2.2 CAPITALIZATION. The authorized capitalization of Monument
consists of 10,000,000 shares of common stock (the "Monument Common Stock")
and 1,000,000 shares of preferred stock, no par value per share ("Preferred
Stock"). As of the Closing Date, there are 4,587,000 shares of Monument
Common Stock issued and outstanding and no shares of Preferred Stock are
issued and outstanding. All issued and outstanding shares are legally issued,
fully paid and nonassessable and not issued in violation of the preemptive
rights or other rights of any person.
Section 2.3 SUBSIDIARIES. Monument does not have any subsidiaries and
does not own, beneficially or of record, any other corporation.
Section 2.4 OPTIONS AND WARRANTS. Except as set forth on Schedule 2.4,
there are no outstanding (a) securities convertible into or exchangeable for
any of Monument's capital stock; or (b) options, warrants, calls or other
rights (including rights to demand registration or to sell in connection with
any registration by Monument under the Securities Act to purchase or subscribe
to capital stock of Monument or securities convertible into or exchangeable
for capital stock of Monument. Monument is not a party to any voting trust
agreement or other contract, agreement, arrangement, commitment, plan or
understanding restricting or otherwise relating to voting or dividend rights
with respect to the Monument Common Stock.
Section 2.5 BINDING OBLIGATION; NO DEFAULT. Monument has duly taken all
action necessary to authorize the execution, delivery and performance of this
Agreement and the other instruments and agreements contemplated hereby. Such
execution, delivery and performance does not and will not, to the best of
Monument knowledge, constitute a default under or a violation of any
agreement, order, award, judgment, decree, statute, law, rule, regulation or
any other instrument to which Monument is a party or by which Monument or the
property of Monument may be bound or may be subject. This Agreement
constitutes the legal, valid and binding obligation of Monument, enforceable
against Monument in accordance with its terms.
Section 2.6 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Except as set forth
on Schedule 2.6, neither the execution and delivery of this Agreement by
Monument nor compliance by Monument with the terms and conditions of this
Agreement will: (a) require Monument to obtain the consent of any
governmental agency; (b) constitute a material default under any indenture,
mortgage or deed of trust to which each of Monument is a party or by which
each of Monument or its properties may be subject; (c) cause the creation or
imposition of any lien, charge or encumbrance on any of its assets; or (d)
breach any statute or regulation of any governmental authority, domestic or
foreign, or will on the Closing Date conflict with or result in a breach or
any of the terms or conditions of any judgment, order, injunction, decree or
ruling of any court or governmental authority, domestic or foreign, to which
Monument is subject.
Section 2.7 CONSENTS. Except as set forth on Schedule 2.7, no consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority or any third party is required to be made
or obtained by Monument in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
Section 2.8 BOOKS AND RECORDS. The books of account and other financial
records of Monument are complete and correct in all material aspects. The
minute books of Monument, as previously made available to Crescent and its
legal counsel, contain records of all meetings and accurately reflect all
other material corporate action of the stockholders, directors and any
committees of the Board of Directors of Monument.
Section 2.9 FINANCIAL STATEMENTS. Schedule 2.9 attached hereto are true
and correct copies of Monument's audited financial statements, including
Monument's audited balance sheets as of September 30, 1994 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended September 30, 1993, 1994 and 1995 (the "Monument
Audited Financial Statements"); and true and correct copies of Monument's
unaudited balance sheets as of December 31, 1995, and the related unaudited
statements of operations and cash flows for the three (3) month periods ended
December 31, 1994 and 1995 (the "Monument Unaudited Financial Statements").
The Monument Audited Financial Statements, together with the notes thereto,
fairly present the financial position of Monument at September 30, 1995, and
the consolidated results of the operations and the changes in stockholders'
equity and cash flows for Monument for the periods covered by the Monument
Audited Financial Statements and have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied with
prior periods. The Monument Unaudited Financial Statements fairly present the
financial position of Monument at December 31, 1995, and the consolidated
results of the operations and cash flows for Monument for the periods then
ended and have been prepared in accordance with GAAP consistently applied with
prior periods. (The Monument Audited Financial Statements and Monument
Unaudited Financial Statements are collectively referred to herein as the
"Monument Financial Statements.")
Section 2.10 NO UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 2.10 hereto, Monument does not have any material liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which
were not adequately reflected or reserved against on the Monument Financial
Statements, except for liabilities and obligations incurred since the date
thereof in the ordinary course of Monument's business and consistent with past
practice and which, in any event, in the aggregate, would not have a Material
Adverse Effect.
Section 2.11 ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth on Schedule 2.11 hereto or except as otherwise expressly
contemplated hereby, since the date of the Monument Financial Statements,
Monument has not:
(a) Suffered any material adverse change in its financial
condition, assets, liabilities (absolute, accrued, contingent or otherwise),
or reserves, and no event has occurred and no action has been taken by
Monument or, to the best knowledge of Monument, any other person, nor is any
such event or action contemplated or, to the best knowledge of Monument,
threatened, which might reasonably be expected to have a material adverse
effect on the assets or the operations or condition (financial or otherwise)
of Monument's business ("Material Adverse Effect"), except that no
representation or warranty is made as to general economic conditions or
matters affecting Monument's industry generally;
(b) Suffered any material adverse change in its business,
operations or prospects;
(c) Experienced any shortage of raw materials or supplies;
(d) Incurred any short-term or long-term liabilities or
obligations (absolute, accrued, contingent or otherwise) except items incurred
in the ordinary course of business and consistent with past practice, none of
such short-term or long-term liabilities or obligations exceeds $10,000
individually, or $25,000 in the aggregate, (counting obligations or
liabilities arising from one transaction or a series of similar transactions,
and all periodic installments or payments under any lease or other agreement
providing for periodic installments or payments, as a single obligation or
liability), or increased or changed any assumptions underlying or method of
calculating, any bad debt, contingency or other reserves;
(e) Paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the Monument Financial Statements or incurred in the
ordinary course of business and consistent with past practice since the date
of the Monument Financial Statements;
(f) Permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any
kind;
(g) Written down the value of any inventory or properties in
excess of $10,000 (including write-downs by reason of shrinkage or markdown)
or written down or written off as uncollectible any notes or accounts
receivable in excess of $10,000;
(h) Canceled any debts or waived any claims or rights in excess
of $10,000;
(i) Sold, transferred or otherwise disposed of any of its
properties or assets in excess of $10,000 (real, personal or mixed, tangible
or intangible);
(j) Disposed of or permitted to lapse any rights to the use of
any Patent or Trade Name necessary to permit Monument to conduct its business
or develop its products, or disposed of or disclosed to any person, other than
representatives of Crescent, any Proprietary Information or Technical
Information not theretofore a matter of public knowledge necessary to permit
Monument to conduct its business or develop its products;
(k) Granted any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) other than in the ordinary course
of business and consistent with past practice, or any increase in the
compensation (including, without limitation, salary and bonus) payable or to
become payable to any officer or key employee;
(1) Made any single capital expenditure or commitment in excess
of $10,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of
$10,000 for additions to property, plant, equipment or intangible capital
assets;
(m) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other securities of Monument;
(n) Made any change in any method of accounting or accounting
practice;
(o) Paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any
"Affiliate" or "Associate" of Monument as such terms are defined in Rule 405
promulgated by the Commission under the Securities Act, or any officer,
director or shareholder of Monument (collectively, "Affiliates" or
individually, an "Affiliate");
(p) Made any gifts, or sold, transferred or exchanged any
property of any material value for less than the fair value thereof;
(q) Suffered any material casualty loss or damage (whether or not
covered by insurance); or
(r) Agreed, whether in writing or otherwise, to take any action
described in this Section 2.11.
Section 2.12 PLANT AND EQUIPMENT. The material plants, buildings,
fixtures, structures and equipment owned, leased or used by Monument are in
good operating condition and repair, ordinary wear and tear excepted, are
adequate for the uses to which they are being put. Included in Schedule 2.12
hereto is an accurate and complete list of all of the fixed assets of Monument
with a value in excess of $1,000.
Section 2.13 LEASES. Schedule 2.13 hereto is an accurate and complete
list of all leases pursuant to which Monument leases real or any material item
of personal property. A true and correct copy of each such lease has been
delivered to Crescent, and no changes have been made thereto since the date of
delivery. Except as set forth in Schedule 2.13 hereto, each such lease is
valid and in full force and effect, there are no existing material defaults by
Monument thereunder, and, to the best knowledge of Monument, no event has
occurred which (with notice of lapse of time or both) would constitute a
default thereunder by any party. Except as set forth on Schedule 2.13 hereto,
Monument is presently in compliance in all material respects with all laws,
rules, regulations and ordinances relating to zoning and land use restrictions
which are applicable to any portion of the land subject to the real property
leases set forth in Schedule 2.13 hereto. Except as set forth on Schedule
2.13 hereto, no consent is required from the lessor under any lease of real or
personal property listed on Schedule 2.13 prior to the consummation of the
transactions contemplated hereby.
Section 2.14 TAX RETURNS. Schedule 2.14 hereto are true and correct
copies of Monument's Tax Returns and Statements (as defined herein). Except
as set forth in Monument's Tax Returns and Statements, Monument has (i) filed
or has caused to be filed all federal, state and local and all material
foreign, territorial, franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by Monument or on its behalf
and which were due prior to the date of this Agreement (the "Tax Returns and
Statements"), (ii) paid within the time and in the manner prescribed by law
all Taxes (as defined below), due for all periods ending on or prior to the
date of this Agreement, except with respect to Taxes which are immaterial in
amount and the failure to so pay or file would not result in material
penalties and would not have a Material Adverse Effect, and (iii) established
adequate reserves for the payment of all unpaid Taxes as of the date of the
Monument Financial Statements. The Tax Returns and Statements are true,
complete and accurate, in all material respects. Since September 30, 1989, no
tax assessment or deficiency has been made against Monument nor has any notice
been given of any actual or proposed assessment or deficiency which has not
been paid or for which an adequate reserve has not been set aside. Except as
set forth in such Tax Returns and Statements, the Tax Returns and Statements
are not presently, nor have they since Monument's inception been, the subject
of any audit or other administrative or court proceeding by any federal,
territorial, state, local or foreign governmental agency. Monument has not
received any notice that any of the Tax Returns and Statements is now being or
will be examined or audited, and no consents extending any applicable statute
of limitations have been filed.
For purposes of this Agreement, "Taxes" shall mean any and all taxes,
payroll and employment related taxes, levies, assessments, charges or other
fees, together with any interest, penalties or other additions, imposed by any
governmental authority upon Monument.
Section 2.15 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Schedule 2.15 hereto, no Affiliate of Monument has any interest, directly or
indirectly, in any lease, lien, contract, license, encumbrance, loan or other
agreement to which Monument is a party, or any interest in any competitor,
supplier or customer of Monument. Except as set forth item by item on
Schedule 2.15 hereto, Monument is not indebted, directly or indirectly, to any
Affiliate of Monument, for any liability or obligation, whether arising by
reason of stock ownership, contract, oral or written agreement or otherwise.
No Affiliate is indebted, directly or indirectly, to Monument. Schedule 2.15
is a complete and accurate list of all employees of Monument owing more than
$5,000 in principal (provided that the aggregate principal amount owed by
employees to Monument not set forth on Schedule 2.15 shall not exceed $25,000)
plus accrued interest, to Monument, other than travel or other employee
advances (not exceeding $1,000 to any one person) in the ordinary course of
business, setting forth the amounts owed, the applicable interest rates, a
description of the security and the maturity dates of all such debts.
Except as set forth on Schedule 2.15 hereto, no Affiliate (i) is a party
to any contract or arrangement with Monument pursuant to which it directly
provides material services to Monument, or (ii) is a party to any contract or
arrangement with a third party, to which Monument is not a party, but under
which Monument receives any material amount of goods or services from said
third party. Except as set forth on Schedule 2.15 hereto, all goods and
services provided to Monument by any of its Affiliates and all goods and
services provided to any of its Affiliates by Monument, at any time since
Monument's inception have been charged to the recipient at a price that would
have been acceptable to an unrelated third party receiving such goods and
services in an arm's-length transaction with the provider.
Section 2.16 CONTRACTS AND COMMITMENTS. Except as set forth on Schedule
2.16:
(a) Monument has not entered into any outstanding agreements,
contracts or commitments or restrictions which, individually or in the
aggregate, are material to its business, operations or prospects, or which
require the making of any charitable contribution;
(b) No purchase contracts or commitments of Monument continue for
a period of more than 30 days or are in excess of the normal, ordinary and
usual requirements of its business or, to the best knowledge of Monument, at
any excessive price;
(c) Monument has not entered into any contracts or commitments
pursuant to which Monument is, as of the date hereof, required to obtain or
maintain, on behalf of itself or any of its directors, officers or employees,
any facility or personnel security clearances from the U.S. Department of
Defense or any other agency of the U.S. Government;
(d) There are no outstanding sales contracts, purchase orders,
commitments or proposals of Monument which continue for a period of more than
30 days or will likely result in any loss to Monument upon completion or
performance thereof;
(e) Monument has not entered into any outstanding contracts with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives or suppliers that are not cancelable by it on notice of not
longer than 30 days and without liability, penalty or premium, or any
agreement or arrangements providing for the payment of any bonus or commission
based on sales or earnings;
(f) Monument has not entered into any outstanding employment
agreement, or any other outstanding agreement that contains any severance or
termination pay liabilities or obligations;
(g) Monument is not a party to any collective bargaining
agreement or other contract or agreement with any labor organization;
(h) Monument is not restricted by agreement from carrying on its
business anywhere in the world;
(i) Monument has not incurred any outstanding debt obligation for
borrowed money, including guarantees of or agreements to acquire any such debt
obligation of others other than as reflected on the Monument's Financial
Statements;
(j) Monument is not a party to any contract, subcontract or
agreement with the U.S. Government or any agency or instrumentality thereof,
or with any territorial or state government or any agency or instrumentality
thereof; and
(k) Monument has not entered into any outstanding loan with or
to any person other than (i) Crescent, (ii) as reflected on the Monument's
Financial Statements, and (iii) for amounts not more than $5,000 to any
individual and $25,000 in the aggregate.
Section 2.17 COMPLIANCE WITH CONTRACTS; DELIVERY OF CERTAIN CONTRACTS.
Monument is not in default under any material contract, commitment, obligation
or agreement, including, without limitation, those listed in Schedules 2.13,
2.16 and 2.30 hereto, except for those which would not have a Material Adverse
Effect, and no act or omission by Monument has occurred which, with notice or
lapse of time or both, would constitute such a default under any term or
provision of any such contract or agreement. Each of the agreements referred
to in Schedules 2.13, 2.16 and 2.30 hereto is valid and in full force and
effect. To the best knowledge of Monument, no party is in default under any
agreement referred to in Schedules 2.13, 2.16 and 2.30 hereto, and to the best
knowledge of Monument, no act or omission has occurred by any party which,
with notice or lapse of time or both, would constitute such a default under
any term or provision thereof. Monument has previously delivered to Crescent
a true and correct copy of each agreement, contract, commitment or restriction
listed on Schedules 2.13, 2.16 and 2.30 hereto, including all amendments and
modifications thereof.
Section 2.18 INSURANCE. Schedule 2.18 contains an accurate and true
description of all existing policies of fire, liability, worker's compensation
and all other forms of insurance owned or held by, or covering the business,
properties or assets of, Monument. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date hereof have been paid, and no notice of cancellation or
termination has been received by Monument with respect to any such policy.
Such policies will remain in full force and effect through the respective
dates set forth on Schedule 2.18 without additional premiums being paid or
properly accrued as an additional liability. Schedule 2.18 also (i) describes
all products liability claims made since Monument's inception, and all other
claims (except medical and dental) pending or made since Monument's inception
under such insurance policies and (ii) identifies all types of insurable risks
which Monument and its Board of Directors has designated as being self
insured. Except as set forth in Schedule 2.18, Monument has not been turned
down at any time since Monument's inception for any insurance with respect to
its assets or operations, nor has its coverage been limited by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
Section 2.19 LABOR DIFFICULTIES. Except to the extent set forth in
Schedule 2.19:
(a) To the best knowledge of Monument, no employee of Monument
is in violation of, or has threatened any violation of, any material term of
any employment contract or any other contract or agreement relating to the
relationship of such employee with Monument or any other party, including any
employee handbook and/or personnel policy manual of Monument except for
violations which would not, individually or in the aggregate, have Material
Adverse Effect; and
(b) Monument has complied in all material respects with each and
every term, provision, section and part of any written employment contract or
agreement, including any employee handbook and/or personnel policy manual,
that Monument has or has had with any individual who has performed work for
Monument;
Section 2.20 LITIGATION. Except as set forth in Schedule 2.20 hereto:
(a) There is no pending or, to the best knowledge of Monument,
threatened complaint, charge, claim, action, suit or arbitration proceeding
before any federal, territorial, state, municipal, foreign or other court or
governmental or administrative body or agency, or any private arbitration
tribunal or any investigation or inquiry before any federal, territorial,
state, municipal, foreign or other court or governmental or administrative
body or agency against, relating to or affecting (i) Monument or any director,
officer, agent or employee thereof in his or her capacity as such, (ii) the
assets, properties or business of Monument, or (iii) the transactions
contemplated by this Agreement, nor, to the best knowledge of Monument, is
there any basis for any such complaint, charge, claim, action, suit,
arbitration proceeding, investigation or inquiry which could have an adverse
effect on the assets, property, business or prospects of Monument;
(b) There is not in effect any order, judgment or decree of any
court or governmental or administrative body or agency enjoining, barring,
suspending, prohibiting or otherwise limiting Monument or, to the best
knowledge of Monument, any officer, director, employee or agent thereof from
conducting or engaging in any aspect of the business of Monument, or requiring
Monument or, to the best knowledge of Monument, any officer, director,
employee or agent thereof to take certain action with respect to any aspect of
the business of Monument which could reasonably be anticipated to have a
Material Adverse Effect; and
(c) Monument is not in violation of or default under any
applicable order, judgment, writ, injunction or decree of any federal,
territorial, state, municipal, foreign or other court or regulatory authority.
Section 2.21 NO CONDEMNATION OR EXPROPRIATION. Neither the whole nor
any portion of the leaseholds or any other assets of Monument is subject to
any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or without
payment of compensation therefor, nor, to the best knowledge of Monument, has
any such condemnation, expropriation or taking been proposed.
Section 2.22 COMPLIANCE WITH LAW. The operations of Monument have been
conducted in accordance with all applicable laws, regulations and other
requirements of all national governmental authorities, and of all territories,
states, municipalities and other political subdivisions and agencies thereof
having jurisdiction over Monument, including, without limitation, all such
laws, regulations, ordinances and requirements relating to environmental,
antitrust, consumer protection, labor and employment, zoning and land use,
currency exchange, immigration, health, occupational safety, pension,
securities, defense procurement and trading with the enemy matters, except as
disclosed in Schedule 2.22 hereto and except for violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
set forth in Schedule 2.22, Monument has not received any notification since
its inception of any asserted present or past failure by Monument to comply
with such laws, regulations, ordinances or requirements. Monument has all
permits, authorizations and consents necessary for the operation of its
business except for those which the failure to have would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 2.23 ENVIRONMENTAL COMPLIANCE.
Except as disclosed in Schedule 2.23 hereto:
(a) Monument has obtained, and is in full compliance with, all
material permits, licenses or other authorizations which are required under
any Hazardous Materials Law for the operations of the business of Monument;
(b) Monument is not aware of any material past, present or future
events, conditions, circumstances, activities, practices, incidents, actions
or plans which may interfere with, or prevent continued compliance by Monument
with, any Hazardous Materials Law, or which may give rise to Loss to Monument
based on or related to any Hazardous Materials Law;
(c) Monument has not entered into any agreement with any
governmental authority or agency, or with any private entity, including, but
not limited to, any prior owners of Premises, relating in any way to violation
of any Hazardous Materials Law, or to the presence, release, threat of
release, disposal, placement on, under or about any Premises of Hazardous
Substances;
(d) Monument has not discovered or caused, and to the best of
Monument's knowledge, no other person has discovered or caused, any discharge,
emission, disposal or release of Hazardous Substances on the Premises, on
property formerly owned, operated or leased by Monument or on the property of
any third party;
(e) Monument has not discovered, and to the best of Monument's
knowledge, no other person has discovered, any occurrence or condition on the
Premises or on any real property in the vicinity of the Premises, which could
cause the Premises to be subject to any restrictions on the ownership,
occupancy, transferability or use under any Hazardous Materials Law;
(f) Monument has not manufactured, stored or disposed of
Hazardous Substances at any location, including, without limitation, any
disposal which was in compliance with any Hazardous Materials Law;
(g) Monument does not use or maintain any underground storage
tanks or surface impoundments on the Premises and, to the best knowledge of
Monument, no underground storage tanks or surface impoundments are now, or
ever have been, located on the Premises; and
(h) Monument has not received notice of any lien in favor of any
governmental authority for (i) any liability under any Hazardous Materials
Law, or (ii) damages arising from or costs incurred by such governmental
authority in response to a release of Hazardous Substances into the
environment, nor has any such lien ever been filed or attached to the
Premises.
Section 2.24 EMPLOYEE BENEFITS. Except as set forth in Schedule 2.24
hereto (collectively, the "Employment Plans"), neither Monument nor any
Affiliate maintains or contributes to, or is obligated or required to
contribute to, any bonus, deferred compensation, severance or termination pay,
pension, profit sharing, stock purchase, stock grant, stock option, group life
insurance, health care, hospitalization insurance, disability, retirement or
any other employee benefit or fringe benefit plan, agreement, arrangement or
practice, whether formal or informal and whether legally binding or not, which
covers employees of Monument. Neither Monument nor any Affiliate has any
commitment, whether formal or informal and whether legally binding or not, to
create or contribute to any additional such plan.
Section 2.25 PERSONNEL. Schedule 2.25 hereto is a true and complete
list of the wage rates for all non-salaried and salaried employees of Monument
by classification.
Section 2.26 REAL PROPERTY HOLDING CORPORATION. Monument is not a U.S.
Real Property Holding Corporation within the meaning of Section 897(c)(2) of
the Code.
Section 2.27 ACCURACY OF INFORMATION FURNISHED. No representation or
warranty by Monument contained in this Agreement or in respect of the
exhibits, schedules or documents delivered to Crescent by Monument and
expressly referred to herein, and no statement contained in any certificate
furnished or to be furnished by or on behalf of Monument pursuant hereto, or
in connection with the transactions contemplated hereby, contains, or will
contain as of the date such representation or warranty is made or such
certificate is or will be furnished, and as of the Closing Date, any untrue
statement of a material fact, or omits, or will omit to state as of the date
such representation or warranty is made or such certificate is or will be
furnished, any material fact which is necessary to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading. True and correct copies of each agreement and
other document referred to in the schedules hereto have been furnished by
Monument to Crescent.
Section 2.28 REAL PROPERTIES. Schedule 2.28 hereto is an accurate and
complete list of all real property owned by Monument, together with a
description of every mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature whatsoever in such real
property.
Section 2.29 TITLE AND RELATED MATTERS. Monument has good and
marketable title to and is the sole and exclusive owner of all of its material
properties, inventory, interests in properties and assets, real and personal,
Patents copyrights, trademarks, service marks and Trade Names (collectively,
the "Monument Assets") which are reflected in the most recent Monument balance
sheet and the Monument Schedules or acquired after that date (except
properties, interests in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges or encumbrances except: (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not
and will not, materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties;
and (c) as described in the Monument Schedules. Except as set forth in the
Monument Schedules, Monument owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or limitations of any
nature whatsoever, and all procedures, techniques, marketing plans, business
plans, methods of management or other information utilized in connection with
Monument's business. Except as set forth in the Monument Schedules, no third
party has any right to, and Monument has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a materially adverse affect on the business, operations or financial
condition of Monument or any material portion of its properties, assets or
rights.
Section 2.30 TITLE TO THE EXCHANGED MONUMENT STOCK. Upon delivery to the
Crescent Stockholders of the certificates described in Section 3.2 of this
Agreement, the Crescent Stockholders will receive good and marketable title to
the Exchanged Monument Stock, all of the Exchanged Monument Stock shall be
received by the Crescent Stockholders as validly issued, fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances, security
interests, equities, options, claims, charges, limitations on voting rights or
rights to receive dividends, or other restrictions of any kind (other than any
generally imposed by federal, corporate or territorial securities laws or as
otherwise provided for in this Agreement).
Section 2.31 COMPLIANCE WITH EXCHANGE ACT. As of the Closing, Monument
shall be current in all filings required to be tendered to the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Crescent has heretofore been
furnished with true, complete and correct copies of the following: (a)
Monument's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1995, as filed with the Commission, (b) Monument's Quarterly Report on
Form 10-QSB for the fiscal quarter ended December 31, 1995, as filed with the
Commission, and (c) all other reports or registration statements filed by
Monument with the Commission since December 31, 1995 (collectively, the
"Commission Filings"). Since December 31, 1995, Monument has filed all
reports, registration statements and other documents required to be filed by
it under the Exchange Act. The Commission Filings were prepared in accordance
and complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act, as the case may be. None of such forms,
reports and statements, including, without limitation, any financial
statements, exhibits and schedules included therein and documents incorporated
therein by reference, at the time filed, or declared or it became effective,
as the case may be, contained, or now contains, and at the Closing Date will
contain, an untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 2.32 MONUMENT SCHEDULES. Monument shall cause the Monument
Schedules and the instruments to be delivered to Crescent hereunder to be
updated after the date hereof up to and including the Closing Date.
ARTICLE III
PLAN OF REORGANIZATION
Section 3.1 PLAN OF REORGANIZATION. As a result of and immediately upon
the completion of the transactions contemplated by this Agreement: (a)
Powerhouse shall own 1,000 shares of Exchanged Monument Stock, and (b)
Monument shall own 100 shares of Exchanged Crescent Stock, which shall
constitute 100% of the issued and outstanding Crescent Common Stock. The
transactions contemplated by this Agreement are intended to qualify as a tax
free corporate reorganization as described in Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended.
Section 3.2 SHARE EXCHANGE. The 100 issued and outstanding shares of
Crescent Common Stock (the "Exchanged Crescent Stock") shall be exchanged into
1,000 shares of Monument Convertible Non-Voting Preferred Stock (the
"Exchanged Monument Stock"), as follows:
(a) On the Closing Date, Monument shall issue and deliver 1,000
shares of Exchanged Monument Stock to Powerhouse in accordance with the terms
and conditions of the Escrow Agreement attached as Schedule 3.2(a) attached
hereto, in exchange for 100 shares of Exchanged Crescent Stock, which
constitute one hundred percent (100%) of the issued and outstanding common
stock of Crescent. Monument shall not issue or exchange any fractional shares
or interests in the Exchanged Monument Stock in connection with the foregoing
exchange;
(b) The shares of nonvoting Preferred Stock of Monument shall be
automatically convertible into up to 5,500,000 shares of Monument's no par
value Common Stock simultaneously with the effectiveness of a registration
statement on Form S-1 to be filed with the United States Securities and
Exchange Commission. The number "up to 5,500,000 shares" is based on a
preliminary valuation of the assets of Crescent as of January 1, 1996 are set
forth on Schedule 3.2 attached hereto, and if subsequent due diligence
indicates a different value, then the number of shares will be adjusted
accordingly in accordance with the percentage ratios set forth on Schedule 3.2
hereto; and
(c) Powerhouse shall provide for the full cooperation of
Powerhouse and its Board of Directors to effectuate both the Closing and the
subsequent transactions referred to immediately above in (b).
Section 3.3 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of March 15, 1996 ("Closing Date"),
unless a different date is mutually agreed to in writing by the parties
hereto.
Section 3.4 CLOSING EVENTS. At the Closing, each of the respective
parties hereto shall execute, acknowledge and deliver (or shall cause to be
executed, acknowledged and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. However, in no event shall the
Closing occur without the satisfaction or waiver of the conditions set forth
in Sections 6 and 7 of this Agreement.
Section 3.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors
of either Monument or Crescent at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or
proceeding before any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement and which, in the judgment of such board of directors, made in good
faith and based on the advice of its legal counsel, makes it inadvisable to
proceed with the merger and consolidation contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is required to
consummate such transactions or in the judgment of such board of directors,
made in good faith and based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will be obtained
only on a condition or conditions which would be unduly burdensome, making it
inadvisable to proceed with the merger and consolidation.
In the event of termination pursuant to this paragraph (a) of Section 3.5, no
obligation, right or liability shall arise hereunder, and each party shall
bear all of the expenses incurred by it in connection with the negotiation,
drafting and execution of this Agreement and the transactions herein
contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Monument if Crescent shall
fail to comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties of
Crescent contained herein shall be inaccurate in any material respect. If
this Agreement is terminated pursuant to this paragraph (b) of Section 3.5,
this Agreement shall be of no further force or effect, and no obligation,
right or liability shall arise hereunder; and
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Crescent if Monument shall
fail to comply in any material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations or warranties of
Monument contained herein shall be inaccurate in any material respect. If
this Agreement is terminated pursuant to this paragraph (c) of Section 3.5,
this Agreement shall be of no further force or effect and no obligation, right
or liability shall arise hereunder.
Section 3.6 DIRECTORS OF MONUMENT AND CRESCENT. Each of the boards of
directors of Monument and Crescent shall consist of five (5) directors and
four (4) directors, respectively. Each of the directors shall hold office
until his or her successors shall have been duly elected and shall have
qualified or until his or her earlier death, resignation or removal. The
names of these directors shall be as follows:
Monument Crescent
Directors Directors
A. G. Foust A. G. Foust
D. C. Dowd D. C. Dowd
H. Swanson H. Swanson
J. Womack J. Womack
S. Jackson
(sixth Director to be appointed by
reconstructed Board)
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 ACCESS TO PROPERTIES AND RECORDS. Monument and Crescent
will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of Monument and Crescent, as
the case may be, in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the
other, and each will furnish the other with such additional financial and
operating data and other information as to the business and properties of
Monument and Crescent, as the case may be, as the other shall from time to
time reasonably request.
Section 4.2 AVAILABILITY OF RULE 144. Each of the parties acknowledge
that the stock of Monument to be issued pursuant to this Agreement will be
"restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act. Monument is under no obligation, except as
set forth herein, to register such shares under the Securities Act.
Notwithstanding the foregoing, however, Monument will use its best efforts to:
(a) make publicly available on a regular basis not less than annually,
business and financial information regarding Monument so as to make available
to the stockholders of Monument the provisions of Rule 144 pursuant to
subparagraph (c)(l) thereof; and (b) within ten (10) days of any written
request of any stockholder of Monument, Monument will provide to such
stockholder written confirmation of compliance with such of the foregoing
subparagraph as may then be applicable. The stockholders of Monument holding
restricted securities of Monument as of the date of this Agreement, and their
respective heirs, administrators, personal representatives, successors and
assigns, are intended third party beneficiaries of the provisions set forth
herein. The covenants set forth in this Section 4.2 shall survive the Closing
and the consummation of the transactions herein contemplated.
Section 4.3 INFORMATION FOR MONUMENT REGISTRATION STATEMENT AND PUBLIC
REPORTS. Crescent and Powerhouse will furnish Monument with all information
concerning Crescent and Powerhouse, including all financial statements,
required for inclusion in any registration statement or public report required
to be filed by Monument pursuant to the Securities Act, the Exchange Act or
any other applicable federal or state law. Crescent represents and warrants
to Monument that, to the best of its knowledge and belief, all information so
furnished for either such registration statement or other public release by
Monument, including the financial statements described in Section 1.9, shall
be true and correct in all material respects without omission of any material
fact required to make the information stated not misleading.
Section 4.4 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE
EXCHANGED MONUMENT STOCK. The consummation of this Agreement and the
transactions herein contemplated, including the issuance of the Exchanged
Monument Stock to the Crescent Stockholders as contemplated hereby,
constitutes the offer and sale of securities under the Securities Act, and
applicable state statutes. Such transaction shall be consummated in reliance
on exemptions from the registration and prospectus delivery requirements of
such statutes which depend, inter alia, upon the circumstances under which
Powerhouse acquires such securities.
Section 4.5 THIRD PARTY CONSENTS. Monument, Crescent and Powerhouse
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein
contemplated.
Section 4.6 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the Monument or Crescent Schedules or as
permitted or contemplated by this Agreement, Monument and Crescent,
respectively, will each:
(i) carry on its business in substantially the same manner as
it has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or affecting its
assets, properties and business;
(v) use its reasonable commercial efforts to maintain and
preserve its business organization intact, to retain its key employees and to
maintain its relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and all
rules, regulations and orders imposed by federal or state governmental
authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither Monument nor Crescent will:
(i) except as otherwise specifically set forth herein, make
any change in their respective certificates or articles of incorporation or
bylaws;
(ii) take any action described in Section 1.11 in the case of
Crescent, or in Section 2.11, in the case of Monument (all except as permitted
therein or as disclosed in the applicable party's schedules); or
(iii) enter into or amend any contract, agreement or other
instrument of any of the types described in such party's schedules, except
that a party may enter into or amend any contract, agreement or other
instrument in the ordinary course of business involving the sale of goods or
services.
Section 4.7 INDEMNIFICATION.
(a) Crescent hereby agrees to indemnify Monument and each of the
officers and directors of Monument as of the date of execution of this
Agreement and as of the Closing Date against any loss, liability, claim,
damage or expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement. The indemnification
provided for in this paragraph shall survive the Closing and consummation of
the transactions contemplated hereby and termination of this Agreement; and
(b) Monument hereby agrees to indemnify Crescent and each of the
officers and directors of Crescent as of the date of execution of this
Agreement and as of the Closing Date against any loss, liability, claim,
damage or expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement. The indemnification
provided for in this Paragraph shall survive the Closing and consummation of
the transactions contemplated hereby and termination of this Agreement.
Section 4.8 INTENT AND BINDING EFFECT. It is the bonafide intent of the
parties hereto that the transaction be effectuated as soon as possible and
that the events to occur after the Transaction also be effectuated as soon as
reasonable practicable thereafter. In particular, the intent of the parties
is to distribute, on a prorata basis, to the shareholders of Powerhouse who
reside either in the United States or in the United Kingdom, or elsewhere,
their share of the Common Stock of Monument based on the equivalent number of
shares to be received upon conversion of Monument's Preferred Stock to Common
Stock. By execution hereof, the Chairman of Powerhouse represents that the
Powerhouse Board of Directors has agreed to the prorata distribution of
Monument Common Stock subject only to registration of such securities with the
appropriate authorities. In that regard, Powerhouse, by signing below, agrees
to use its best efforts to assist in completing the Agreement and in closing
such Agreement and in the activities to be contemplated in the Agreement
regarding the spinoff of Monument Common Stock. Powerhouse shall not solicit
nor shall it entertain any offers with respect to Crescent or its assets or
its operations pending completion of this Agreement.
Section 4.9 MONUMENT RECAPITALIZATION. When reasonably practicable
after the Closing Date, Monument will undertake to obtain additional
authorized capital sufficient to enable it to convert its Preferred Stock to
Common Stock as contemplated hereunder or, in the alternative, it will cause a
reverse split of its Common Stock in a ratio that will result in sufficient
authorized capitalization to effect the transaction contemplated hereunder.
In the latter event the consideration to be issued by Monument hereunder shall
be proportionately adjusted.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF MONUMENT
The obligations of Monument under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Crescent in this Agreement were true when made and shall be
true at the Closing Date with the same force and effect as if such
representations and warranties were made as of the date of this Agreement
(except for changes therein permitted by this Agreement), and Crescent shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Crescent prior to or at the
Closing. Monument shall be furnished with a certificate, signed by a duly
authorized officer of Crescent and dated the Closing Date, to the foregoing
effect.
Section 5.2 OFFICER'S CERTIFICATE. Monument shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of Crescent to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of Crescent,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Crescent Schedules, by or against Crescent which
might result in any material adverse change in any of the assets, properties,
business or operations of Crescent.
Section 5.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business or operations of
Crescent.
Section 5.4 OTHER ITEMS. Monument shall have received such further
documents, certificates or instruments relating to the transactions
contemplated hereby as Monument may reasonably request.
Section 5.5 LOAN REPAYMENT. Prior to the Closing Date but not later
than March 15, 1996, Powerhouse shall have paid all loans and accrued interest
(approximately $300,000) due to Monument.
Section 5.6 ALLAN ARNOLD CONTRACT. At Closing, Powerhouse will have
satisfied the Allan Arnold Employment Agreement and obtained a general release
and waiver from Mr. Arnold. In addition, Powerhouse shall have paid as of the
Closing Date all of Crescent's accrued expenses which are estimated not to
exceed $50,000.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CRESCENT
The obligations of Crescent under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Monument in this Agreement were true when made and shall be
true as of the Closing Date (except for changes therein permitted by this
Agreement) with the same force and effect as if such representations and
warranties were made at and as of the date of this Agreement, and Monument
shall have performed and complied with all covenants and conditions required
by this Agreement to be performed or complied with by Monument prior to or at
the Closing. Crescent shall have been furnished with a certificate, signed by
a duly authorized executive officer of Monument and dated the Closing Date, to
the foregoing effect.
Section 6.2 OFFICER'S CERTIFICATE. Crescent shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of Monument to the effect that no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of Monument,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the Monument Schedules, by or against Monument which
might result in any material adverse change in any of the assets, properties,
business or operations of Monument.
Section 6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business or operations of
Monument.
Section 6.4 OTHER ITEMS. Crescent shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Crescent may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 BROKERS AND FINDERS. Neither Monument, nor Crescent, nor
any of their respective officers, directors, agents or employees has employed
any investment banker, broker or finder, or incurred any liability on behalf
of Monument or Crescent, as the case may be, for any investment banking fees,
brokerage fees, commissions or finder's fees, in connection with the
transactions contemplated by this Agreement. The parties each agree to
indemnify the other against any other claim by any third person for any
commission, brokerage or finder's fee or other payment with respect to this
Agreement or the transactions contemplated hereby based on any alleged
agreement or understanding between the indemnifying party and such third
person, whether express or implied from the actions of the indemnifying party.
Section 7.2 DENVER REGISTERED OFFICE. After Closing, Powerhouse agrees
to pay Monument/Crescent the sum of $1,000 per month for office rent,
telephone, postage and other miscellaneous costs which will be necessary to
maintain a registered office and registered agent within the State of Colorado
as required by Colorado law and to maintain a Colorado and United States
office and agent for NASD, NASDAQ and other regulatory purposes.
Section 7.3 REGISTRATION COSTS. The costs of filing registration,
qualification, listing and other filings with United States and United Kingdom
regulatory authorities to effect the "spin-off" contemplated hereunder shall
be shared by Monument and Powerhouse on an equal basis. Such costs are
estimated to be those set forth on Schedule 7.3 hereto. Should Powerhouse
fail to pay its share of the expenses contemplated herein, or provide adequate
assurance to Monument with respect to such expenses within 30 days after
receipt of estimates of such from all professionals involved, the number of
shares of Monument Preferred Stock shall be reduced by 10%.
Section 7.4 LAW, FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
Colorado. The parties agree that any dispute arising under this Agreement,
whether during the term of the Agreement or at any subsequent time, shall be
resolved exclusively in the courts of the State of Colorado and the parties
hereby submit to the jurisdiction of such courts for all purposes provided
herein and appoint the Secretary of State of the State of Colorado as agent
for service of process for all purposes provided herein.
Section 7.5 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to its
or sent by overnight mail, registered mail or certified mail, postage prepaid,
or by prepaid telegram, or when telecopied and followed by confirmation copy
hand-delivered or sent by first class mail, addressed as follows:
If to Monument:
Monument Resources, Inc.
513 Wilcox Street
Post Office Box 1450
Castle Rock, Colorado 80104
Attention: Anton G. Foust
If to Crescent:
Crescent Oil & Gas Corporation, Inc.
1624 Market Street, Suite 303
Denver, Colorado 80202
Attention: Dennis C. Dowd
If to Powerhouse:
Powerhouse Resources, Inc.
21 Knightsbridge
London SW1X 7LY
Attention: Malcolm Stone
and
Powerhouse Resources, Inc.
1624 Market Street, Suite 303
Denver, Colorado 80202
Attention: Dennis C. Dowd
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed or
telegraphed.
Section 7.6 ATTORNEYS' FEES. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.7 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the merger contemplated by this Agreement has
been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.8 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules
delivered pursuant to this Agreement.
Section 7.9 THIRD PARTY BENEFICIARIES. This contract is solely among
Monument and Crescent and, as otherwise as specifically provided, no director,
officer, stockholder, employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.10 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.11 SURVIVAL; TERMINATION. The representations, warranties and
covenants of the respective parties shall survive the Closing Date of the
merger and the consummation of the transactions herein contemplated.
Section 7.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.13 AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation by
the other shall be construed as a waiver of the same or any other default
then, theretofore, or thereafter occurring or existing. At any time prior to
the Closing Date, this Agreement may be amended by a writing signed by all
parties hereto, with respect to any of the terms contained herein, and any
term or condition of this Agreement may be waived or the time for performance
hereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
Section 7.14 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth
at length herein.
Section 7.15 EXPENSES. Each of the parties to this Agreement shall bear
all of its own expenses incurred by it in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
Section 7.16 HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only
and do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.17 BENEFIT. This Agreement shall be binding upon and shall
insure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the
prior written consent of the other party.
Section 7.18 PUBLIC ANNOUNCEMENTS. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.19 SEVERABILITY. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
Section 7.20 FAILURE OF CONDITIONS; TERMINATION. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, either of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not
affect the right of such electing party reasonably to require the other party
to continue to use its efforts to fulfill the unmet conditions.
Section 7.21 NO STRICT CONSTRUCTION. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment,
and not strictly for or against either party hereto, regardless of who drafted
or was principally responsible for drafting the Agreement or terms or
conditions hereof.
Section 7.22 EXECUTION KNOWING AND VOLUNTARY. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has
had the opportunity to be fully apprised of its attorneys of the legal effect
and meaning of this document and all terms and conditions hereof; (c) has been
afforded the opportunity to negotiate as to any and all terms hereof; and (d)
is executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly
authorized, and entered into and closed as of the date first above written at
Denver, Colorado.
("Monument")
MONUMENT RESOURCES, INC.
By: /s/ Anton G. Foust
Anton G. Foust, President
("Crescent")
CRESCENT OIL & GAS CORPORATION
By: /s/ Dennis C. Dowd
Dennis C. Dowd, Vice President
and Director
("Powerhouse")
POWERHOUSE RESOURCES, INC.
By: /s/ Malcolm Stone
Malcolm Stone, Chairman
LIST OF OMITTED SCHEDULES
The following Schedules to the Agreement and Plan of Reorganization have
been omitted. The Registrant agrees to furnish supplementally a copy of such
Schedules to the Commission upon request.
SCHEDULE NUMBER DESCRIPTION
- --------------- ------------------------------------------------------------
1.1 Articles of Incorporation and Bylaws of Crescent
1.3 Articles of Incorporation of C.O.G. Transmission Corp., a
subsidiary of Crescent
1.5 Promissory Note of Crescent/Monument and Collateral Note
1.9 Financial Statements of Powerhouse
1.10 Liabilities Not Included in Financial Statements
1.11 Material Changes of Crescent
1.12 Fixed Assets of Crescent
1.13 Leases of Crescent
1.14 Tax Returns of Crescent
1.15 Transactions with Affiliates of Crescent
1.16 Contracts and Commitments of Crescent
1.17 Compliance with Contracts of Crescent
1.18 Insurance Policies of Crescent
1.19 Labor Difficulties of Crescent
1.20 Litigation Involving Crescent
1.22 Compliance with Laws by Crescent
1.23 Environmental Compliance by Crescent
1.24 Employee Benefits of Crescent
1.29 Real Properties Held by Crescent
2.1 Articles of Incorporation and Bylaws of Monument
2.4 Outstanding Options and Warrants for Monument
2.9 Financial Statements
2.11 Certain Changes of Monument
2.12 Plant and Equipment of Monument
2.13 Leases of Monument
2.14 Tax Returns of Monument
2.25 Personnel of Monument
2.28 Real Properties of Monument
3.2 Valuation of Crescent's and Monument's Assets
7.3 Registration Costs
Note: Additional Schedules referred to in the Agreement and Plan of
Reorganization contain the word "none" or were not provided.
ADDENDUM TO
AGREEMENT AND PLAN OF REORGANIZATION
THIS ADDENDUM TO AGREEMENT AND PLAN OF REORGANIZATION is made and
entered into this 22nd day of March, 1996, by and among Monument Resources,
Inc. ("Monument"), a Colorado corporation, Crescent Oil & Gas Corporation
("Crescent"), a Delaware corporation and Powerhouse Resources, Inc.
("Powerhouse"), a Colorado corporation.
WHEREAS, an Agreement and Plan of Reorganization dated February 23, 1996
has heretofore been executed by the parties; and
WHEREAS, the parties wish to make certain changes in the terms and
conditions set forth therein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein set forth and the mutual benefits of the parties to be
derived here from, it is hereby agreed as follows:
1. Section 3.3 of the Agreement and Plan of Reorganization is hereby
amended to delete the date March 15, 1996 and to substitute therefore the date
March 22, 1996. The dates will also be changed accordingly in other sections
of the Agreement and Plan of Reorganization, and in particular Section 5.5
thereof, which date shall also be changed in said section to March 22, 1996;
provided however that closing shall be into escrow and the shares to be
exchanged will only be released from such escrow if the loan described in
Section 5.5 is repaid by April 5, 1996. Failure to pay such loan by such date
will terminate the escrow and the Agreement and Plan of Reorganization.
2. The Suimork Oil Depot ("Suimork") property is to be deleted from
Schedule 3.2 appended to the referenced Agreement and Plan of Reorganization.
Suimork is to be listed on Schedule 3.2A and valued at 600,000 shares of
Common Stock to be represented by a proportionate number of the shares of
Preferred Stock to be issued hereunder. The Board of Directors of Monument
shall have three months to conduct due diligence investigations of the Suimork
project and during such three month period may in its sole discretion accept
or reject such opportunity. If rejected, Suimork shall remain the property of
Powerhouse. If accepted, the 600,000 equivalent shares of Common Stock shall
be treated the same as the initial 3,000,000 shares described below.
3. Section 3.2(b) of the Agreement and Plan of Reorganization shall
be amended to provide that the shares of non-voting Preferred Stock of
Monument shall be automatically convertible into 3,000,000 shares of
Monument's no par value Common Stock simultaneously with the earlier of (i)
sale of such shares or (ii) the effectiveness of a Registration Statement on
Form S-1 filed with the United States Securities & Exchange Commission. In
addition, shares of Monument's non-voting Preferred Stock representing
1,000,000 shares of Monument Common Stock shall be issued, as of the Closing
Date, into escrow to be held by such escrow agent until the sale of the shares
or the effective date of the Registration Statement referred to in the
preceding sentence. If at such date of sale or upon such effective date
Powerhouse has paid, if necessary, one-half of its share of registration costs
provided in Section 7.3 of the Agreement and Plan of Reorganization or as
called for in paragraph 4 below (valued at $50,000), and/or if it has paid or
otherwise provided for the obligation to Alan Arnold (valued at $100,000) as
set forth in Section 5.6, and/or if it has paid or otherwise satisfied
liabilities associated with the Kansas oil properties (assumed to be $50,000),
then such shares shall be released to Powerhouse and will be treated the same
as the initial 3,000,000 shares described above. If any one or two or three
of the foregoing obligations are not met, the number of shares to be
distributed to Powerhouse will be reduced accordingly based on the ratio that
the particular item involved bears to the total of the three items (i.e.,
$200,000). In connection herewith, Sections 5.6 and 7.3 of the Agreement and
Plan of Reorganization are hereby deleted and replaced with the potential
reduction in shares payable to Powerhouse as described above in this
paragraph.
4. All shares of non-voting Preferred Stock issued or issuable under
the Agreement and Plan of Reorganization as modified by this Addendum shall be
held in Trust by a Trust Committee consisting of Malcolm Stone, Dennis C. Dowd
and Hunter S. Swanson. The Board of Monument shall determine succession to
the Trust Committee necessitated for any reason including, but not limited to,
resignation, infirmity or death. Majority vote of the Trustees shall be
required for all decisions of the Trust. The Trustees shall use their best
efforts during the one year period from April 5, 1996 to sell the shares of
Common Stock into which such shares of Preferred Stock are convertible (i) in
a manner designed not to disrupt, either in the short term or long term, an
orderly market in Monument's trading securities; (ii) conduct such sales in
the United Kingdom with and in compliance with its laws and the securities
laws of the United States or in any other jurisdiction if such sale is in
accordance with applicable law; and (iii) failing the above, will cause such
shares to be distributed on a pro rata basis to Powerhouse shareholders as
soon as reasonably practicable after such one year period (or its extension),
or before if it is deemed necessary to qualify such shares of Common Stock for
NASDAQ SmallCap trading; provided however, if at April 4, 1997 fewer than 25%
of the common shares issued pursuant to the Agreement and Plan of
Reorganization are still held by the Trust, the Trustees may extend their
right to manage and sell such shares for an additional year through April 5,
1998. Finally, Monument shall have a three-day right of first refusal to
purchase such shares at the price offered by any bona-fide purchaser and
Monument shall have an absolute right, at any time such shares are held by the
Trust to purchase any or all of such shares at a price of $0.50 (U.S.) per
share.
5. If a prorated distribution to shareholders occurs, Monument shall
not be required to issue fractional shares nor shares in less than one round
lot (i.e., 100 shares) unless, in the sole discretion of this Board of
Directors of Monument, it deems it prudent to issue shares in amounts of fewer
than one round lot (i.e., 100 shares).
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Addendum to Agreement and Plan of Reorganization to be executed by their
respective officers, hereunto duly authorized.
("Monument")
MONUMENT RESOURCES, INC.
By: /s/ Anton G. Foust
Anton G. Foust, President
("Crescent")
CRESCENT OIL & GAS CORPORATION
By: /s/ Dennis C. Cowd
Dennis C. Dowd, Vice President
and Director
("Powerhouse")
POWERHOUSE RESOURCES, INC.
By: /s/ Malcolm Stone
Malcolm Stone, Chairman
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF
MONUMENT RESOURCES, INC.
(SERIES A CONVERTIBLE PREFERRED STOCK)
Pursuant to the requirements of Section 7-106-102 of the Colorado
Business Corporation Act, the undersigned Corporation submits the following
Articles of Amendment to Articles of Incorporation.
FIRST: The name of the Corporation is Monument Resources, Inc.
SECOND: The Articles of Incorporation of the Corporation are hereby
amended as follows:
"There is hereby established a series of Preferred Stock of the
Corporation designated "Series A Convertible Preferred Stock." The number of
shares of this series of Convertible Preferred Stock shall be 1,000 shares.
The powers, designations, preferences and relative, participating, optional or
other special rights of the shares of this series of Convertible Preferred
Stock and the qualifications, limitations and restrictions of such preferences
and rights shall be as follows:
1. DIVIDEND PROVISIONS. The holders of the Series A Convertible
Preferred Stock are not entitled to receive any dividends.
2. LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
the shares of Series A Convertible Preferred Stock shall not be entitled to
receive any payment or distribution.
3. CONVERSION. The Series A Convertible Preferred Stock may be
converted into shares of the Corporation's Common Stock on the following terms
and conditions (the "Conversion Rights"):
(a) REQUIREMENTS FOR CONVERSION. At any time, and from time to
time, following the satisfaction of the requirements specified below (the
"Conditions to Conversion"), some or all of the outstanding shares of Series A
Convertible Preferred Stock, as indicated in subparagraphs 2(a)(i) through
(iii) below, shall be automatically converted into shares of Common Stock in
accordance with paragraph 2(b) below:
(i) 652.173913 shares of Series A Convertible Preferred
Stock shall be converted in Common Stock on the earlier of:
A. The date on which the Securities and Exchange
Commission declares effective a registration statement on Form S-1 which the
Corporation files for the purpose of registering the distribution of the
shares underlying the Series A Convertible Preferred Stock; or
B. The sale of all or any portion of the shares of
Common Stock underlying the Series A Convertible Preferred Stock. Such sales
must be made in accordance with the provisions of paragraph 4 of the Addendum
to Agreement and Plan of Reorganization among the Corporation, Crescent Oil &
Gas Corporation and Powerhouse Resources, Inc. dated March 22, 1996 (the
"Addendum"). Only those shares sold pursuant to this subparagraph shall be
released and they shall be released from time to time as they are sold.
(ii) 217.3913043 shares of Series A Convertible Preferred
Stock shall be converted into Common Stock according to the same terms as
paragraph 3(a)(i) above; provided that in addition the requirements of
paragraph 3 of the Addendum shall have been satisfied before the conversion of
such shares shall be allowed.
(iii) 130.4347826 shares of Series A Convertible Preferred
Stock shall be converted in accordance with the provisions of subparagraph
3(a)(i) above provided that the Corporation has accepted the Suimork Oil Depot
property in accordance with the provisions of paragraph 2 of the Addendum. If
the Corporation has rejected the Suimork Oil Depot property, then the
130.4347826 shares of Series A Convertible Preferred Stock shall be cancelled.
(b) MECHANICS OF CONVERSION. Upon the satisfaction of the
respective Conditions to Conversion, the holder of the shares of Series A
Convertible Preferred Stock which are converted shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or any authorized transfer agent for such stock together with a
written statement that he elects to convert his preferred stock to common
stock. The Corporation or the transfer agent shall promptly issue and deliver
at such office to such holder of Series A Convertible Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which
such holder is thereby entitled. The effective date of such conversion shall
be a date not later than 30 days after the date upon which the holder provides
written notice of his election to convert to the Corporation or transfer
agent.
(c) CONVERSION RATIO. Each share of Series A Convertible
Preferred Stock may be converted into four thousand six hundred (4,600) fully
paid and nonassessable shares of Common Stock (except as adjusted pursuant to
paragraph 3(d) below). In the event that upon conversion of shares of Series
A Convertible Preferred Stock a holder shall be entitled to a fraction of a
share of Common Stock, no fractional share shall be issued and in lieu thereof
the Corporation shall pay to the holder cash equal to the fair value of such
fraction of a share.
(d) ADJUSTMENT OF CONVERSION RATE. If the Corporation shall at
any time, or from time to time, after the effective date hereof effect a
subdivision of the outstanding Common Stock and not effect a corresponding
subdivision of the Series A Convertible Preferred Stock, or if the Corporation
at any time or from time to time after the effective date hereof shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the number of shares of
Common Stock issuable upon conversion of the Series A Convertible Preferred
Stock shall be proportionately increased as of the time of such issuance or,
in the event such a record date shall have been fixed, as of the close of
business on such record date.
(e) NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all of the
provisions of this Section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Convertible Preferred Stock against impairment.
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Convertible Preferred
Stock, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Convertible Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the
conversion of all outstanding shares of Series A Convertible Preferred Stock,
the Corporation will take such corporate action as is necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
4. STATUS OF CONVERTED OR REACQUIRED STOCK. In case any shares of
Series A Convertible Preferred Stock shall be converted pursuant to Section 3
hereof, the shares so converted shall cease to be a part of the authorized
capital stock of the Corporation.
5. VOTING RIGHTS. The shares of Series A Convertible Preferred Stock
shall not have any voting rights.
6. REDEMPTION PROVISIONS. The shares of Series A Convertible
Preferred Stock are not redeemable.
7. NOTICES. Any notice required to be given to holders of shares of
Series A Convertible Preferred Stock shall be deemed given upon deposit in the
United States mail, postage prepaid, addressed to such holder of record at his
address appearing on the books of the Corporation, or upon personal delivery
of the aforementioned address."
THIRD: Such Amendment was duly adopted by the Board of Directors of the
Corporation on the 21st day of March 1996.
IN TESTIMONY WHEREOF, the undersigned Corporation has caused these
Articles of Amendment to the Articles of Incorporation to be signed by a duly
authorized officer and duly attested by another such officer, to be hereunto
affixed this 22nd day of March 1996.
MONUMENT RESOURCES, INC.
By /s/ A.G. Foust
A. G. Foust, President
ATTEST:
/s/ Dru Campbell
Campbell, Secretary
(PS338.aoa)
