-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LVrN+t96ZNehjby+AV69Fb0pfQYyQTuo37CRiqPawRMnZF6fR7xv0pSp/CQ4Wr0g GT6y6GqQ8R/Owq7Ty7c2VQ== 0000912057-96-016203.txt : 19960806 0000912057-96-016203.hdr.sgml : 19960806 ACCESSION NUMBER: 0000912057-96-016203 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960501 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Resignations of registrant's directors ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960805 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEVADA ENERGY COMPANY INC CENTRAL INDEX KEY: 0000712803 STANDARD INDUSTRIAL CLASSIFICATION: STEAM & AIR CONDITIONING SUPPLY [4961] IRS NUMBER: 840897771 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14873 FILM NUMBER: 96603710 BUSINESS ADDRESS: STREET 1: 401 EAST FOURTH STREET CITY: RENO STATE: NV ZIP: 89512 BUSINESS PHONE: 7027867979 8-K 1 FORM 8K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 1, 1996 ------------------------------ NEVADA ENERGY COMPANY, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-14873 84-0897771 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 401 East Fourth Street, Reno, NV 89512 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (702) 786-7979 ---------------------------- - ------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) NEVADA ENERGY COMPANY, INC. INDEX ITEM NUMBER AND CAPTION PAGE NUMBER - ----------------------- ----------- Item 1. Change in Control of Registrant . . . . . . . 1 Item 6. Resignation of Registrants Directors . . . . . 1 Item 7. Financial statements and exhibits . . . . . . . . 3 i ITEM 1. CHANGE IN CONTROL OF REGISTRANT. (a) 1. Name of the person(s) who acquired control: Golden Chance, Limited ("Golden Chance"), an Isle of Man private company limited by shares. 2. Amount and source of consideration used by such person(s): $100,000 cash payment, $4,900,000 promissory note (promissory note made and delivered by Golden Chance. The promissory note is secured by the corporate guarantee of Waterford Trust Company, Limited, an Irish corporation ("Waterford") and an escrow of the shares of registrants series A preferred shares acquired by Golden Chance. 3. The basis of the control: Pursuant to a certain letter agreement ("Letter of Intent") dated February 29, 1996, control was obtained through the resignation of registrants Board of Director's and the appointment by Golden Chance of three members of the Board of Directors. Additionally, control was obtained through Golden Chance's ownership of approximately 14% of the aggregate amount of all classes of voting stock issued by the registrant. 4. Date and description of transaction(s) which resulted in the change in control: The effective date of the transaction is May 1, 1996. The change of control was the result of the resignation of the persons listed in Item 6. from their position as directors and the appointment of nominees to the Board of Directors made by Golden Chance. Additionally, Golden Chance purchased from the registrant 1,960,795 series A preferred voting shares and 152,381 shares of the registrants Class A common stock. 5. The percentage of voting securities of the registrant now beneficially owned directly or indirectly by the person(s) 1 who acquired control: No voting securities are under the control of the replacement Board of Directors. Approximately 14% of the aggregate amount of all classes of voting stock are now under the control of Golden Chance. 6. The identity of the person(s) from whom control was assumed: Jeffrey Antisdel, Chairman Richard Cascarilla, Director Jeffrey Hartman, Director Michael Kassouff, Director Jeffrey Modesitt, Director 7. The terms of any loans or pledges obtained by the new control group for the purpose of acquiring control, including names of lenders or pledgees: Golden Chance has issued a non-interest bearing promissory note in the amount of $4.9 million dollars to the registrant. The promissory note is payable in installments. The first installment is payable July 1, 1996 in the amount of $400,000. Subsequent installments of $500,000 are payable every thirty days thereafter until paid in full. The total principal amount of the promissory note is due and payable on April 1, 1997. Waterford has guaranteed the obligation of Golden Chance. The series A preferred shares acquired by Golden Chance are held in escrow with an escrow agent for the benefit of the registrant. Upon payment of each installment under the promissory note, a portion of the series A preferred shares will convert to the registrants class A common stock pursuant to the certificate of designation of the series A preferred shares, which is on file with the Delaware Secretary of State. The converted shares will be released from escrow. 8. Describe any arrangements or understandings among members of both the former and new control groups and their 2 associates with respect to election of directors or other matters: Conditional to the sale of series A preferred shares, the former control group Chairman, Jeffrey Antisdel, and Director, Richard Cascarilla, voluntarily resigned their respective Board of Director positions, with nominee Directors, Charles Cain and Peter Cannell elected by the Board of Directors. The remaining former members of the Board subsequently resigned and John Goold has been nominated to the Board. The active size of the board has been reduced from five directorships to three directorships. Arrangements which may result in a change in control of registrant. (The arrangement for change in control is in accordance with the terms of the Letter of Intent agreement dated February 29, 1996 which is attached to this 8-K as and exhibit and is incorporated by reference into this form 8-K). Further, in accordance with the Certificate of Designation of Series B convertible preferred stock, the holders of series B shares, may, in the event of default by Golden Chance in payment of its note, elect a fourth director with power and authority to enforce all of the registrants rights and remedies under the note. Such director would serve for so long as a default existed. Item 403(c) Securities ownership of certain beneficial owners and management. - ------------------------------------------------------------------------------- (1) (2) (3) (4) Amount and nature Percent Title of Name of Beneficial of beneficial of class owner ownership class - ------------------------------------------------------------------------------- Series A Voting Preferred Golden Chance, Ltd. Direct ownership 1,960,795 shares 100% Series B Voting Direct ownership Preferred Richard A. Cascarilla 2 shares 40% 3 Series B Voting Direct ownership Preferred Jeffrey E. Modesitt 1 share 20% Series B Voting Direct ownership Preferred Jeffrey L. Hartman 1 share 20% Series B Voting Direct ownership Preferred Michael R. Kassouff 1 share 20% Class A Golden Chance Direct ownership Voting 152,381 shares 1.700% Common Class A Jeffrey E. Antisdel Direct ownership 7.720% Voting 691,741 shares Common Class A Richard A. Cascarilla Direct ownership 0.128% Voting 11,458 shares Common Class B Nevada Energy Partners Direct ownership 100.000% Voting 1, Limited Partnership 4,437,473 shares Common 4 Class B Jeffrey E. Antisdel Beneficial ownership 40.000% Voting 1,774,989 shares Common ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS. In accordance with the agreements which resulted in the change of control referenced in Item 1. above, the following directors resigned, without disagreement, effective May 1, 1996.: Mr. Jeffrey E. Antisdel, Mr. Richard A. Cascarilla, Mr. Jeffrey E. Modesitt, Mr. Michael R. Kassouff and Mr. Jeffrey L. Hartman. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) No financial statements are being filed with this Form 8-K. (b) The following exhibits are incorporated by reference into this 8-K. 1. Directors' written notices of resignation. 2. News release dated March 16, 1996 3. News release dated May 7, 1996 4. Letter of Intent dated February 29, 1996 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEVADA ENERGY COMPANY, INC. /s/ Jeffrey E. Antisdel ---------------------------------------- Jeffrey E. Antisdel, President Date May 7, 1996 ------------------------------ 5 EX-1 2 EXHIBIT 1 Exhibit 1 /S/ MAY 1, 1996 Board of Directors Nevada Energy Company, Inc. 401 E. Fourth Street Reno, NV 89512 Re: Resignation Gentlemen: Please be advised that I have decided to resign my position as a Director on the Board of Directors for Nevada Energy Company, Inc., effective /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business interests. I have enjoyed my association with the Company and wish you continued success in the future. Very truly yours, /s/ Jeffrey E. Antisdel Jeffrey E. Antisdel 4330 W. Hidden Valley Drive Reno, NV 89502 7 /S/ MAY 1, 1996 Board of Directors Nevada Energy Company, Inc. 401 E. Fourth Street Reno, NV 89512 Re: Resignation Gentlemen: Please be advised that I have decided to resign my position as a Director on the Board of Directors for Nevada Energy Company, Inc., effective /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business interests. I have enjoyed my association with the Company and wish you continued success in the future. Very truly yours, /s/ Richard A. Cascarilla Richard A. Cascarilla 1184 Holt Road Mason, MI 48854 8 MAY 1, 1996 Board of Directors Nevada Energy Company, Inc. 401 E. Fourth Street Reno, NV 89512 Re: Resignation ----------- Gentlemen: Please be advised that I have decided to resign my position as a Director on the Board of Directors for Nevada Energy Company, Inc., effective the second day following closing on /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business interests. I have enjoyed my association with the Company and wish you continued success in the future. Very truly yours, /s/ Michael R. Kassouff Michael R. Kassouff 334 E. Gaywood Houston, TX 77079 9 MAY 1, 1996 Board of Directors Nevada Energy Company, Inc. 401 E. Fourth Street Reno, NV 89512 Re: Resignation ----------- Gentlemen: Please be advised that I have decided to resign my position as a Director on the Board of Directors for Nevada Energy Company, Inc., effective the day following closing on /S/ MAY 1, 1996, at 11:59 p.m. PST, in order to more actively pursue other business interests. I have enjoyed my association with the Company and wish you continued success in the future. Very truly yours, /s/ Jeffrey Modesitt, Sr. Jeffrey Modesitt, Sr. 6037 S. Bellaire Way Littleton, CO 80201 End of Exhibit 1 10 EX-2 3 EXHIBIT 2 Exhibit 2 PRESS RELEASE NEVADA ENERGY COMPANY, INC. MARCH 15, 1996 Nevada Energy Company, Inc., NASDAQ: NNRGA, ("Company") is pleased to announce the execution of a binding agreement ("Agreement") for the sale of 1,999,995 Series A Preferred Shares ("Series A Preferred") valued at $2.50 per share with Waterford Trust Company Limited ("Waterford"). Upon execution of remaining documentation attendant to the issuance of the Series A Preferred shares, the current Board of Directors will resign their respective positions. Waterford will then assume control of the Company's Board of Directors and reduce the number of Directors to three. Two of the newly appointed Directors will be independent Directors. Further, the Company's President and Chief Executive Officer, Jeffrey Antisdel, and Vice President, Richard Cascarilla, will resign their positions as officers in the Company effective May 31, 1996. However, Messrs, Antisdel and Cascarilla will continue as advisors to the newly appointed Board of Directors pursuant to two (2) year consulting agreements with the Company. Messrs. Antisdel and Cascarilla's positions will be replaced by officers appointed by the new Board of Directors. Upon the change of control scheduled to occur on or before March 31, 1996, Waterford has advised the Company that it intends to increase the business operations of the Company through mergers and acquisitions of companies operating in various diversified businesses. Upon consummation, Waterford will control the Board of Directors and may become the controlling shareholder of the Company. The Agreement for the sale of the Series A Preferred provides for Waterford and its designees to acquire 1,999,995 Series A Preferred shares in incremental installments over a period of one year. The Certificate of Designations for the Series A Preferred shares will include terms which include, but are not limited to, provision for liquidation preference limitation equal to the actual amount of funds paid to the Company. The Series A Preferred shares will not accrue dividends and will have the right to convert to the Company's Class A Common shares. The Agreement for sale also provides that Waterford's purchase of Series A Preferred will be evidenced by a promissory note secured by a pro rata pledge of Series A Preferred shares until fully paid. As additional security of Waterford's indebtedness, the Company will cause a total of five (5) shares of Series B Preferred ("Series B Preferred") to be issued to each of the current Board of Directors, with one (1) Series B 11 Preferred share to be voted by each current Director. The Certificate of Designations for the five (5) Series B Preferred shares will specify that each be valued at $2.50 per Series B Preferred share. The Series B Preferred shares will not be entitled to any dividends, but will be entitled to a return of capital in the sum of $2.50 for each Series B Preferred Share issued and outstanding. The Series B Preferred shares will have priority to the holders of any class of common stock upon a winding up of the Company. NNRGA NEWS RELEASE (CONTINUED) MARCH 15, 1996 PAGE 2 OF 3 Additional terms for the Series B Preferred shares provides that in the event of a default by Waterford in the payment of the first $500,000 ("Default"), the holders of Series B Preferred shares shall be entitled to appoint a director (the "Fourth Director") to the Board of the Company. The Fourth Director, if appointed, will have the ability to act for and on behalf of the Board of Directors to exercise Default remedies. If the Default is cured by Waterford, the Fourth Director will immediately be deemed to have resigned. Following payment of the first $500,000 by Waterford, the holders of Series B Preferred shares will lose the right to appoint a Fourth Director, provided, however, that upon Waterford's having paid or advanced the sum of $4,999,987.50, the Company will redeem the Series B Preferred shares following the Company's payment of $2.50 for each of the five (5) Series B Preferred shares then issued and outstanding. Further, having paid or advanced to the Company the sum of $4,999,987.50, Waterford shall have the option to purchase the Series B Preferred shares from the holders thereof at a price of $2.50 per share ("Purchase Option"). Upon Waterford's exercise of the Series B Purchase Option and acquiring the Series B Preferred shares, the five (5) Series B Preferred shares will automatically be converted to five (5) Series A Preferred shares with no change in rights or privileges of the Series A Preferred shares. The Company's new Board of Directors may not amend the terms of purchase for the 1,999,995 Series A Preferred shares without the consent of a majority of the Series B Preferred shares voted by the Company's current Board of Directors of the Company, which consent may not be unreasonably withheld. The Series A Preferred shares will be entitled to one vote for each share of Series A Preferred. Waterford will have the right to vote all of the Series A Preferred shares and will therefore initially control approximately 13.1% of the voting shares of all classes of stock of the Company having voting rights. Waterford has also notified the Company of its intent to purchase from Nevada 12 Energy Partners I, Limited Partnership, ("NEP"), 4,437,473 Class B Common shares of the Company. The Company is a 60% owner and sole limited partner of NEP. All Class B Common shares are controlled and voted by Nevada Electric Power Company ("NEPC"), a Nevada corporation wholly owned by the Company's Chairman, President and Chief Executive Officer, Jeffrey Antisdel. Terms of the proposed sale of Class B Common to Waterford are to include, but not be limited to, pro rata installments of $50,000 per month over a period of twenty four (24) months to NEPC, with closing contingent upon, (i) the Company executing documentation precedent to closing the sale of Series A Preferred by the Company to Waterford, (ii) the Company releasing its NEP partnership interests and litigation interests in Case No. CV92-04609 currently pending in the Nevada Second Judicial District Court to NEPC, and (iii) and compliance with applicable securities law. Closing is anticipated to occur on or about July 1, 1996. 13 NNRGA NEWS RELEASE (CONTINUED) MARCH 15, 1996 PAGE 3 OF 3 If Waterford completes the purchase of all Class B Common shares, Waterford will control an estimated 42.2% of all classes of voting stock of the Company. The Company also announced that Waterford's directors may, in their sole discretion, elect to relocate the Company's corporate offices. Nevada Energy Company's current corporate offices have recently been relocated to 401 E. Fourth Street, Reno, Nevada 89512. These office facilities are owned by a subsidiary of the Company. FOR FURTHER INFORMATION CONTACT: JEFFREY ANTISDEL, PRESIDENT (702) 786-7979 14 EX-3 4 EXHIBIT 3 Exhibit 3 PRESS RELEASE SALE OF SERIES A PREFERRED COMPLETED RESIGNATION OF CHAIRMAN, SECRETARY AND TREASURER RENO, NEVADA, MAY 7, 1996 : Nevada Energy Company, Inc., NASDAQ: NNRGA ("the Company") is pleased to announce the completion of the transaction associated with its announcements on March 15, 1996 and April 16, 1996 respectively which related to the sale of 1,960,795 Series A Preferred shares valued at $2.50 per share to a group led by the Waterford Trust Company Limited ("Waterford"). As a direct result of this transaction, the group has initially acquired approximately 14% of all outstanding voting stock of the Company. Terms of the Company's Series A Preferred shares provide that no dividends of any kind or nature shall be paid or declared on the Series A Preferred shares. Series A Preferred shares have the right to convert to the Company's Class A Common shares. Liquidation preference rights of Series A Preferred shares are limited to the par value of $.001 per each outstanding Series A Preferred share. Voting rights for each Series A Preferred share are equal to all other classes of stock. Related to the sale of 1,960,795 Series A Preferred shares, the Company's Chairman, Jeffrey Antisdel, Secretary and Treasurer, Richard Cascarilla, have voluntarily resigned their Board of Director positions. Mr. Antisdel is expected to be succeeded as Chairman by incumbent director, Charles A. Cain. Mr. Cascarilla is expected to be succeeded by director Peter J. Cannell as Secretary and Treasurer. It is anticipated that the remaining Board of Directors will resign and be replaced by Board of Director nominee Mr. John C. Goold. The Board of Directors is expected to consist of three members. Charles Cain, MA-ACIB, age 58, is a graduate of Cambridge University and founder of the corporate and management trust firm formerly known as Charles Cain & Company Limited. Mr. Cain is an affiliate of the American Bar 15 Association, Associate of the Chartered Institute of Bankers, member of American Tax Institute in Europe, member of the International Fiscal Association, member of the International Tax Planning Association, member of the Society of Trust and Estate Practitioners and member of the Offshore Institute. Mr. Cain is also Editor of Offshore Investment, an international journal for the offshore finance industry. 16 NEWS RELEASE MAY 7, 1996 PAGE 2 OF 2 Peter Cannell, BA, age 30, is a Graduate of the University of Glasgow and an Associate of the Institute of Chartered Secretaries & Administrators. Mr. Cannell is a recipient of the Beatson Prize for Chemistry, the E.H. Stenning Prize for Biology, Duke of Edinburgh Gold Award and Manx Scholarship. Mr. Cannell has previously held the position of Project Administrator to IFG International, an Isle of Man corporation, company Secretary for Operation Mobilization, a United Kingdom corporation. John Crosbie Goold, age 54, has educational credentials which include Royal Melbourne Technical College and New York University. Mr. Goold is a private investor specializing in research and investment in energy companies, computer technology and telecommunications in Asian, European and United States capital markets. Nevada Energy Company is a non-regulated utility holding company specializing in the development, financing, construction and operation of electric power generating facilities and other non-related business enterprises. FOR FURTHER INFORMATION: JEFFREY ANTISDEL AT (702) 786-7979 17 EX-4 5 EXHIBIT 4 Exhibit 4 LETTER HEAD Affiliated Law Practices 604 682-1851 Jones, McCloy, Peterson Fax 604 682-7392 Barristers and Solicitors 1700 - Three Benthal Center 595 Burred Street Vancouver, BC V7XG4 February 29, 1996 Mr. Jeffrey Antisdel, Chairman, President and CEO Nevada Energy Company, Inc. 401 East Fourth Street Reno, Nevada, 89512 Dear Mr. Antisdel: We are the Canadian solicitors for Waterford Trust Company Limited, an Irish corporation ("Waterford"). In connection with the recent discussions between representatives of Waterford, on the one hand, and officers and other representatives of Nevada Energy Company, Inc., a Delaware corporation (the "Company"), on the other hand, we are instructed that the following terms have been generally agreed between Waterford and the Company as the principal terms and conditions upon which Waterford shall purchase from the Company an aggregate of 1,999,995 of its previously authorized but unissued Convertible Preferred shares of the Company's stock, $0.001 par value to be called "Series A Preferred Shares" (the "Preferred Stock"). 1. The Company is currently authorized to issue 2,000,000 shares of Preferred Stock, 25,000,000 shares of Class A Common Stock and 25,000,000 shares of Class B Common Stock. As of the date hereof, there are outstanding an aggregate of NIL shares of 18 Preferred Stock, 8,808,485 shares of Class B Common Stock and 4,437,473 shares of Class B Common Stock. The total outstanding Class A common shares after conversion of various warrants and options would be approximately 9,250,000 and there are no outstanding options or warrants or rights to acquire any other class of shares except certain rights to Class B Common Stock as disclosed. The company's Common Stock is listed for trading on the NASDAQ Small Cap Market System under the Symbol "NNRGA". 2. Waterford will act as designee and may in its sole discretion allocate the shares it intends to acquire to other members of its financial group. 19 3. The amounts to be paid by Waterford or its nominees as the purchase price of the 1,999,995 Preferred Shares will be determined as follows: (a) Subject to Waterford providing to the Company a due diligence information memorandum (including financial statements of Waterford at December 31, 1995, business plan including executive summary, financial condition and general terms of purchase of pending telecommunication acquisitions of Consolidated Telecom Corporation), Waterford will acquire 1,999,995 Preferred Shares (the "Shares") of the Company at $2.50 per share to be paid as follows: (i) Waterford will pay $100,000 to the Company at closing on account of the purchase price of the Shares; (ii) Waterford will issue a secured promissory note for the balance of the purchase price of the Shares in the sum of $4,899,987.50 payable as follows: (A) the sum of $400,000 shall be paid to the Company within 90 days of the Effective Date; (B) eight additional installments of $500,000 each shall be paid to the Company each 30 days thereafter; (C) one additional installment of $499,987.50 shall be paid to the Company 30 days after the payment of the last installment paid in subparagraph 3(a)(ii)(B) above: provided, however, that Waterford may prepay the whole or any part of the secured promissory note. (b) For the secured promissory note referred to in subparagraph (a)(ii) above, Waterford shall grant a security interest to the Company in the Shares, which security interest shall be released pro-rata against that number of Shares for which payments have been made to the Company; (c) The Shares shall be entitled to one vote per share. Upon issuance of the Shares at closing, Waterford or its nominee shall have the right to vote the Shares. 20 (d) The Shares will have an aggregate liquidation preference equal to the principal amount of the secured promissory note actually paid to the Company. (e) Upon closing: (i) Mr. Antisdel and Mr. Cascarilla shall resign as directors and the remainder of the board of the Company shall appoint two nominees of Waterford to the board of the Company in place thereof; (ii) the remaining directors shall deliver to Waterford irrevocable resignations as directors of the Company having effective dates in conformity with subparagraphs (f) and (g) below; (f) One day after closing, one more director of the Company shall resign and the remainder of the board of the Company shall appoint one nominee of Waterford to the board of the Company in place thereof; (9) One day after the date of the resignation of the director referred to in subparagraph (f) above the last two of the current directors shall resign. 4. The Preferred Shares shall not accrue dividends and shall have the right to convert into a number of Class A Common Shares valued at a discount of 30% to an averaged NASDAQ market bid price for the Class A Common Shares for the 10 trading days prior to each conversion. All remaining terms and conditions of the certificate of designations for the Preferred Shares, if any, shall be set forth in a definitive certificate of designations mutually agreeable in form to the Company and Waterford. 5. The Company shall create or cause to be created 5 new Series B preferred Shares (the "New Shares") having the following rights and restrictions: (a) the New Shares shall be issued for $2.50 each; (b) until the sum of $500,000 has been paid by Waterford to the Company as herein set forth, the holders of the New Shares shall be entitled to appoint a fourth director to the board of the Company (the "4th Director") forthwith upon Waterford being in default of any payment required to be made by it under the promissory note and the time for curing such default having expired; (c) the 4th Director, if appointed, shall have the ability to 21 act for and on behalf of the board to exercise the remedies under the security interest of the Company on the Shares pledged to the Company; provided, however, that upon the default being cured, the 4th director shall immediately be deemed to have resigned; (d) upon the sum of $500,000 having been paid to the Company by Waterford, the holders of the New Shares shall not have the right to appoint a 4th Director; (e) upon Waterford having paid or advanced to the Company the sum of $4,999,987.50, the Company may redeem the New Shares upon payment to the holders thereof of $2.50 per New Share; (f) the Company shall not amend the terms of the Stock Purchase Agreement, the Promissory Note or the Share Pledge Agreement without the consent of a majority of the holders of the New Shares, which consent shall not be unreasonably withheld; (g) a New Share may not be transferred by a holder without the prior written consent of Waterford, which consent may not be unreasonably withheld; (h) a New Share shall not be entitled to any dividends, but shall be entitled to a return of capital in the sum of $2.50 each in priority to the holders of any class of common shares on a winding up. 6. Upon closing, one New Share shall be issued to each current director. Upon Waterford having paid or advanced to the Company the sum of $4,999,987.50, Waterford shall have an option to Purchase the New Shares from the holders thereof at a price of $2.50 per share and upon Waterford exercising its option and acquiring the New Shares, the New Shares shall automatically be converted into Series A Preferred Shares. 7. Closing of this purchase and sale shall be deemed for all purposes to be effective February 29, 1996 (the "Effective Date"), notwithstanding that execution of all necessary documents required to complete this transaction including without limitation the Stock Purchase Agreement, the Promissory Note and the Share Pledge Agreement shall in fact be executed on a later date. References to "closing" refer to the date on which the Company delivers the Shares to Waterford and Waterford pays the $100,000 pursuant to paragraph 3(a)(i) and delivers the promissory note pursuant to paragraph 3(a)(ii). 8. It is understood and agreed that all of the Shares will be issued to and purchased by Waterford or its nominees without registration under the Securities act of 1933, as amended (the 22 "Securities Act"). However, Waterford may at its own cost register or sell under appropriate exemptions the shares at its expense. 9. During the period between the date hereof and the consummation of the transactions contemplated hereby, the Company shall give Waterford and its authorized representatives full access, during reasonable business hours, in such a manner as to not unduly disrupt normal business activities, to any and all of the Company's premises, properties, contracts, books, records and affairs, and shall cause the Company's officers to furnish any and all data and information pertaining to the Company's business that Waterford or its representatives may from time to time reasonably require. During the period between the date hereof and the consummation of the transactions contemplated hereby, the Company shall continue to conduct its operations on a basis consistent with past practices. The Company shall forthwith deliver to Waterford's agent copies of all employment contracts of all management personnel and details of all stock options held by employees and others. 10. Unless and until the transactions contemplated by this letter have been consummated, each party will hold in confidence all confidential information designated in writing as such obtained from the other, subject to the requirement to disclose such information as may be required in order for Waterford to perform its due diligence, and if the transactions contemplated hereby are not consummated will return all original documents so obtained. This obligation of confidentiality shall not extend to any information which is shown to have previously been (i) known to the party receiving it, (ii) generally known to others engaged in the trade or business of the party receiving it, (iii) part of public knowledge or literature, or (iv) lawfully received from a third party. Without limiting the generality of the foregoing, it is understood and agreed that certain information disclosed by the Company to Waterford or its representatives may constitute "material inside information" that has not previously been disclosed to the public generally. Waterford acknowledges its understanding of the restrictions on the use of such information imposed by Federal and State securities laws, agrees to comply and cause its representatives to comply with such restrictions, and agrees to jointly and severally indemnify and hold the Company and each of its directors, officers and employees free and harmless from any and all liability, cost or expense that any of them may incur or suffer by reason of any breach by Waterford or any of its 23 authorized representatives or its designee, without limitation, of any of such restrictions, or by reason of this letter, or the consummation of the transactions contemplated by this letter. In no event will Waterford purchase or sell, directly or indirectly, in the public marketplace or otherwise, any shares of the Company's Common Stock prior to the closing. 11. Consummation of the transactions contemplated hereby will be subject to the delivery of stock certificates evidencing the 1,999,995 Series A Preferred Shares referred to in paragraph 3 and the 5 Series B Preferred Shares referred to in paragraphs 5 and 6, appropriate Board resolutions and receipt of any required consents of third parties. Without limiting the generality of the foregoing, as conditions to the payment of the purchase price described in paragraph 3 hereof; i. All corporate action necessary shall have been taken as set out in subparagraphs 3(e), (f) and (g); ii. Forthwith upon payment of the second payment in the sum of $400,000 as set out in paragraph 3 above, Jeffrey Antisdel (Chairman, President and Chief Executive) and Richard Cascarilla (Vice-President, Secretary and Treasurer) shall resign in their capacities as officers of the Company. Thereupon, Messrs. Antisdel and Cascarilla shall each enter into 2 year consulting agreements with the Company at compensation consistent With their historical compensation to the time of their resignations including, without limitation, assignment of insurance policies, health and disability insurance policies or payment of benefit provisions related thereto. iii. All key personnel as may be determined by Waterford and except as set out in subparagraph (ii) above will continue as employees subject to termination for cause. Mr. Ken Bowers (Controller) and Ms. Gayle Pileggi (Office Manager), shall manage the Company's energy assets and serve in their capacities as, at will, administrative employees of the Company, with compensation arrangements consistent with their historical compensation. iv. Waterford shall be reasonably satisfied, prior to February 29, 1996, with the results of its due diligence review of the business, operations, financial condition and prospects of the Company. 24 v. There shall not have occurred after the date hereof any undisclosed material adverse change in the Company's business, operations, financial condition or prospects. vi. The Company shall maintain its NASDAQ listing throughout the term of the agreement(s). vii. The Company shall list all its liabilities and a summarized proforma cash flow for the 180 day period commencing at closing, which is attached hereto as Schedule "A". viii. The Company shall cause the officers, directors and control persons of the Company to enter into agreements not to sell any of the Company's stock within 6 months after closing except as may be agreed in writing by Waterford. ix. Accrued directors' fees of $10,000 per director will be paid to each director by the Company 90 days from the effective date of February 29, 1996. x. Waterford shall not be in default of any payment or any other matter to be performed unless the same shall have continued for 15 days after the due date thereof. In the event a default is not cured within such time, a standstill injunction will be issued pursuant to mutually agreeable terms. 12. Each party shall bear all of its own expenses incurred in connection with the transactions contemplated hereby, including without limitation the negotiation and finalization of all agreements. Waterford shall assume payment to Continental Capital Corporation of any finders fee which may be owing by the Company up to the sum of 3% of the purchase price of the Preferred Shares hereunder. 13. Following closing, Waterford agrees and shall cause the Company's print subsidiary, Combustion Energy Company, Inc. DBA Herth Printing and Business Supplies, to operate as generally constituted at the date hereof on the understanding that the Company will only sell this subsidiary in its entirety without liquidation of assets and employee layoff. 14. When countersigned below on behalf of the Company and Waterford, it is intended that this letter shall constitute an agreement in principle which shall be binding upon the parties hereto, subject to satisfaction of the conditions specified 25 above, and which shall be governed by the laws of the State of Delaware. In the event of any dispute between the parties to this letter, such dispute shall be referred to binding arbitration, which arbitration shall be conducted in accordance with the rules of the American Arbitration Association. If any action or arbitration is brought to enforce any of the provisions hereof, the prevailing party in any such action or arbitration shall be entitled to recover the costs and expenses of such action or arbitration, including without limitation, reasonable attorneys' fees and other costs and expenses incurred in connection therewith. 15. No announcements shall be made by either party with respect to the receipt or acceptance of this letter, or the transaction proposed herein, the execution of the definitive agreement, or the closing of the transactions contemplated hereby, unless required by applicable law, without the prior written consent of the other party, which consent shall not be unreasonably withheld. 16. Subject to paragraph 2 hereof, this letter may not be assigned by the Company or Waterford without the prior consent of the other. This letter may be signed by fax and in counterpart and each of which will be considered to be an original and all of which together will be considered to be one document If the foregoing accurately sets forth your understanding of the agreements, please so indicate by signing the enclosed copy hereof and returning it to the writer by no later than February 29, 1996 Our client will then proceed a~ rapidly as possible to complete the transaction. Yours very truly, JONES MCCLOY PETERSON /s/ Roderick H. McCloy - ------------------------- Roderick H. McCloy Law Corporation 26 The foregoing agreement in principle is hereby agreed to and accepted this 29th day of February, 1996: NEVADA ENERGY COMPANY, INC. By: /s/ Jeffrey Antisdel -------------------------- JEFFREY ANTISDEL Title: President WATERFORD TRUST COMPANY LIMITED By: /s/ Charles Cain -------------------------- Authorized Signatory 27 -----END PRIVACY-ENHANCED MESSAGE-----