ITEM 15 - 3
Agreement and Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") effective as of the
12th day of February, 1998 by and among The PowerSource Corporation,
("PowerSource Corporation"), a Nevada corporation with offices and principal
place of business at Suite 634, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ and American Gas Corporation, ("AGC"), A Nevada corporation with offices
and principal place of business at Suite 654 -Interchange Tower, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and all of the persons and entities
set forth in the AGC's Schedule of Shareholders, appended hereto as Exhibit B
(collectively "Shareholder" or "Shareholders"), of all of the AGC shareholders
who are to receive stock in PowerSource Corporation and in what amounts, and;
A. AGC and its Shareholders are the owners of oil and gas pipelines, reserves,
and other rights with which and through they conduct business as a gas
production and transmission company.
B. AGC and its Shareholders have deliberated and deemed it in their best
interests to become part of PowerSource Corporation in order that AGC may fully
maximize its business potential.
C. This Agreement constitutes a plan of reorganization within the meaning of
Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as amended.
PowerSource Corporation shall acquire pursuant to the terms herein set forth,
all of the outstanding AGC shares (the AGC shares of stock is listed in the
Company books as shown in Exhibit B, but no stock certificates have ever been
issues), in exchange for PowerSource Corporation common stock.
NOW, THEREFORE, the parties hereto agree as follows:
1.ACQUISITION
1.1. AGC shares. Upon the terms and conditions set forth herein, AGC hereby
agrees to transfer and assign to PowerSource Corporation 1,084,800 shares of AGC
common stock representing eighty (80%) percent of all of the issued and
outstanding AGC Shares and shall receive in exchange therefore 200,000
PowerSource Corporation shares. Kensington International Holding Corporation has
owned 100% of AGC, or 1,356,000 shares of stock in AGC, since September of 1992.
Upon completion of the transaction, AGC shall become an 80% subsidiary (must be
80% or more) of PowerSource Corporation. PowerSource also herein agrees to
transfer to ACC 10,023 shares of it's Preferred Series A shares, ($100.00 per
share par value,) Convertible in 5 years @ $10.00 per share. PowerSource agree
to provide AGC with a Certificate of Determination, which declares the rights
and privileges of PowerSource Series A Class of shares.
1.2. Title to shares. Concurrent herewith, AGC shall convey to PowerSource
Corporation good and marketable title to AGC's shares, effective as of the date
hereof, free and clear of any debts, liabilities, obligations, liens, claims,
restrictions or encumbrances of any kind except such restrictions or liabilities
have been disclosed to PowerSource Corporation or as are imposed by federal or
state securities laws and such debts, liabilities, or restrictions created, if
any, by PowerSource Corporation. The execution of this document by AGC
constitute a certification that no AGC stock certificates have ever been issued
to its shareholders and that Exhibit B represents a true, current, and correct
list of AGC shareholders and what they own.
2. EXCHANGE.
2.1. As consideration for the acquisition of the AGC shares, PowerSource
Corporation shall issue to and for the benefit of AGC Shareholders, effective as
of the date hereof 200,000 shares ("PowerSource Corporation Shares")of
PowerSource Corporation's duly authorized, fully paid and nonassessable common
stock, $.00l par value, at the ratio of 1 PowerSource Corporation Share for 5.43
AGC Shares, to each of the persons and entities whose name appears on the
appended AGC Schedule of Shareholders (Exhibit B).
2.2. (a) AGC Shareholders shall have good and marketable title to
PowerSource Corporation shares, free and clear of any debts, liabilities,
obligations, liens, claims, restrictions or encumbrances of any kind, except
such restrictions as are imposed by federal or state securities laws.
Concurrently herewith, PowerSource Corporation shall deliver to AGC or its
designees, a letter directed to PowerSource Corporation's transfer agent,
authorizing the issuance of certificates representing PowerSource Corporation
Shares. Each Shareholder shall execute and deliver an investment certificate or
subscription agreement to PowerSource Corporation in the form of Exhibit C.
(b) Except for such shares which may be registered pursuant to a registration
statement to be filed with the SEC, the PowerSource Corporation Shares shall be
restricted from sale to the public on Security Exchange and shall retain their
restricted nature for a period of one year from the Closing Date. Each
certificate shall bear an appropriate legend describing the transfer
restriction.
2.3. Legend. Each stock certificate representing PowerSource Corporation
shares shall bear the following legend:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 (111933 Act") nor under any
applicable state securities act and may not be offered or sold except pursuant
to (i) an effective registration statement relating to such stock under the 1933
Act and any applicable state securities act, (ii) to the extent applicable, Rule
144 under the 1933 Act (or any similar rule under such act or acts relating to
the disposition of securities), or (iii) an opinion of counsel satisfactory to
the Corporation that an exemption from registration under such Act or Acts is
available.
The right to transfer the Shares represented by this certificate are
restricted by the terms and provisions contained in an Agreement and plan of
Reorganization dated January 30, 1998.
2.4 PowerSource Corporation Obligations to AGC & its Shareholders. In
further consideration and as a condition precedent of the acquisition of AGC
shares, PowerSource Corporation shall provide commercial ▇▇▇▇▇▇▇▇ in excess of
$100,000 per month and shall capitalize the company for a minimum of an
additional $100,000, via subscription agreements, and shall commence a
multi-level, wholesale, and retail level plan of marketing energy. PowerSource
represents that it is licensed to sell energy in California (License #1237) and
plans to also market on a national basis. PowerSource shall also pay Kensington
International Holding Corporation a facilitation fee of $5,000, with $2,500 due
at closing and $2,500 due 60 days after closing. Kensington shall also be
allowed one member on the surviving company's Board of Directors. Kensington
also Warrants herein that Kensington will cause AGC to be trading on the
Bulletin Board Exchange within 90 days from the Date of this Agreement or prior
to closing whichever comes first.
3. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
AGC represents and warrants to PowerSource Corporation that:
3.1 Corporate Status. AGC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and authorized to
conduct business in the State of Nevada. AGC corporation has all requisite power
and authority to own, hold, lease or operate properties and assets and to carry
on business as it is now being conducted and to enter into this Agreement. AGC
has no other subsidiaries or direct or indirect interest (by way of stock
ownership or otherwise) in any firm, corporation, partnership, association or
other business. True and complete copies of both AGC Articles of Incorporation
and By-Laws are attached hereto as Exhibits D and E.
3.2 AGC Stock. The authorized capital stock of AGC consists of fifty
million (50,000) shares of common stock, $.001 par value. There are l,356,,000
shares of common stock outstanding all of which are duly authorized, and fully
paid, nonassessable and validly issued to Kensington International Holding
Corporation, AGC's only stockholder. The offer, issuance and sale of such
outstanding shares were exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended ("Act"), exempt from the
registration or qualification requirements of all applicable state securities
laws and issued in compliance with all federal and applicable state securities
laws, rules and regulations. Except as set forth in paragraphs 2.4 supra, AGC
has no outstanding commitments, subscriptions, options, warrants, call demands,
convertible securities or other instruments, arrangements or agreements of any
character or nature (either firm or conditional) under which AGC is or may be
obligated to issue, redeem or repurchase any equity securities of any kind or
any securities or obligations convertible into or exchangeable for any equity
securities. The Shareholders are the legal and beneficial owners of all the
issued and outstanding AGC stock of and no other party has any right to assert
an interest, inchoate or otherwise, in any AGC shares of capital stock or in the
ownership of AGC or of any of its assets. There are no outstanding preemptive
rights, rights of first refusal or similar rights relating to the AGC capital
stock.
3.3 Financial Documents. Attached hereto as Exhibit F are the audited
financial statements for AGC for 1991 and 1992 and the audited financial
statements of Kensington International Holding Corporation for 1994, 1995,1996
and for 1997. Subject to limitations set forth in the audits, AGC and its
shareholder, believes that the same are true, complete and correct, are in
accordance with AGC's books and records and present fairly the results of
operations and changes in financial position for the periods indicated. The
books of account fully and fairly reflect all of AGC's transactions for the
period indicated.
3.4. Undisclosed Liabilities. AGC is free and clear of any liabilities, has
no liability or obligation (whether accrued, absolute, contingent, liquidated or
otherwise; known or unknown; or due or to become due) arising out of any
transaction entered into at or prior hereof, or statement of facts existing at
or prior to the date hereof, including taxes with respect to or based upon
transactions or events occurring at or prior to the date hereof, including but
not limited to, unfunded past service liabilities under any pension, profit
sharing or similar plan other than (a) those reflected in its financial
statement and not paid or discharged after the date thereof, (b) those arising
under agreements or commitments listed or described in any of the schedules and
exhibits attached hereto and (c) those incurred since the date of its financial
statement in the ordinary course of its business and which are immaterial in
amount.
3.5. Compliance with Law or other Covenants. To the best of AGC's knowledge
and that of each individual Shareholder AGC's business and operations have been
and are being conducted in accordance with all applicable federal, state and
local laws, rules and regulations and all restrictive covenants applicable
thereto, including but not limited to, laws and regulations with respect to
health and welfare conditions and civil rights. AGC possesses all registrations,
licenses, and permits, required by it to operate its current business. All such
registrations, licenses or permits have been lawfully and validly issued and are
in full force and effect. None of these registrations, licenses or permits is
subject to any outstanding order, decree, judgment, stipulation, investigation
or proceeding. Neither AGC nor its Shareholders have any reason to believe such
registrations, licenses or permits will be revoked, suspended, canceled or
withdrawn or be or become subject to such order, decree, judgment, stipulation,
investigation or proceeding.
3.6. Taxes. All income, sales, use, unemployment insurance, disability
insurance, employer withholding, FICA and other tax returns and reports required
by law to be filed by AGC prior to the date hereof, have been timely filed and
were accurately prepared and are true, complete and correct and AGC has withheld
or collected from each payment made to each of its employees the amount of all
such sums required to be withheld or collected therefrom and has paid or will
pay all such sums to the proper government authority. AGC is not and has not
been delinquent in the payment of any tax, assessment or governmental charge and
has paid all such taxes, assessments and other governmental charges assessed or
assessable against it as of the date hereof. AGC has never had any tax
deficiency proposed or assessed against it. The reserves for taxes, assessments
and governmental charges in the company's financial statement are and will be
sufficient for payment of all such taxes, assessments, fees, penalties, interest
and other governmental charges which were, are or may become, payable with
respect to the Company for the period indicated in its financial statement.
Since the date of its financial statement, AGC has made adequate provisions on
its books and records for all taxes, assessments and governmental charges with
respect to its business, properties, and operations that have accrued but are
not yet due and payable for such period. There is no pending or threatened claim
against AGC for nonpayment of such taxes for any period prior to the date of
this Agreement. None of AGC's federal or state income tax returns has ever been
audited by governmental authorities. AGC has not executed any currently-in-force
(a) waiver of any statute of limitations against assessments of such taxes; or
(b) a consent pursuant to Section 341(f) of the Internal Revenue Code.
3.7. Disputes and Litigation. AGC does not have any claim or dispute
against or with any firm or other person and there is no litigation, proceeding,
arbitration, or governmental investigation pending or threatened against or
affecting its business, properties or assets or against its directors or
officers in connection with its affairs, except as disclosed. Neither AGC nor
individual Shareholders are aware of any facts which would lead a reasonable
person to conclude that such a dispute is likely to arise. AGC is not subject to
any judgment, order, writ, injunction or decree of any court of governmental
agency in which relief is sought against it.
3.8. Change in Business. To the best of its knowledge, AGC has not, through
today's date, (a) experienced any occurrence or event which has had or might
reasonably be expected to have a material adverse effect on its net income,
financial condition, results of operations, prospects, properties, assets or
business; (b) incurred any material debts, obligations or liabilities,
(absolute, accrued, contingent or otherwise1 whether due or to become due)
except in the ordinary course of their business; (c) sold, transferred or leased
any of its assets except in the ordinary course of its business; or (d) suffered
any material physical damage, destruction or loss (not covered by insurance)
adversely affecting AGC's properties, business or prospects.
3.9. No Defaults. Neither the execution of this Agreement nor the
consummation of the transactions contemplated herein (a) violates or contravenes
any provision of law, any rule or regulation or any agency, government (domestic
or foreign), or private regulatory body, or any order, writ, judgment,
injunction1 decree, determination or award or any provision of AGC1s Articles of
Incorporation or By-Laws; (b) constitutes a breach (with or without notice or
lapse of time) or conflicts with any term or provision of any contract,
commitment, including but not limited to, any indenture, loan or credit
agreement, deed of trust, mortgage, lease or other agreement or instrument to
which AGC is a party or by which AGC or any of their properties, assets or
rights are bound or affected or does or will result in the creation or
imposition of any lien, encumbrance, charge, equity or restriction of any nature
whatsoever in favor of any third party upon any AGC assets provided that written
consents under certain leases and licenses to which AGC is a party are required
upon a change of control of the company.
3.10. Authorization. Upon execution, this Agreement shall constitute a
legal and valid obligation of each individual Shareholder and AGC and
enforceable against them, in accordance with its terms except insofar as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally. No authorization or
approval of or exemption from or filing or registration with any court,
governmental agency, commission, board, bureau, instrumentality of government,
or private regulatory body is necessary to authorize the execution or
consummation of this Agreement by the Shareholders or AGC except for such
exemptions from securities registration requirements. All corporate or other
acts and proceedings required for the authorization, execution and delivery of
this Agreement have been lawfully and validly taken.
3.11. Marketable Title. AGC has good and marketable title to all of its
properties and assets, free and clear of any imperfection of title, security
interest, lien, claim or encumbrance of any kind.
3.12. Contracts and Commitments. There are no material, oral or written,
contracts or commitments presently in effect, to which AGC is a party of by
which it may be bound, including but not limited to, each contract or commitment
involving the purchase or sale of capital assets, equipment, supplies, products
or services except in the ordinary course of business; all contracts with or
commitments to present or former shareholders, directors, officers, employees or
consultants; all agreements with any labor union; contracts or commitments with
Shareholders of any officer, director, an "affiliate" or '1associate" (as
defined in Rule 405 of the Securities Act of 1933, as amended) of any such
entities or individuals; all non-competition covenants or other restriction on
AGC's or its officers and directors ability to conduct a business or engage in
any other activity; all indentures, mortgages, trust deeds, promissory notes,
security agreements, contracts or commitments relating to or evidencing loans or
subjecting any assets or AGC's property to any lien or encumbrance; purchases of
receivables or other financing; all contracts or commitments for sharing of
fees; all bonus, pension, profit sharing, retirement, stock purchase, stock
option, medical, hospitalization or insurance plans; lease or agreement under
which AGC is lessee of or holds or operates any property (real or personal)
under which payments by AGC exceed $10,000 per annum; agreement granting any
preemptive right, right of first refusal or similar right; agreement to register
AGC securities; agreement, commitment or other arrangement which includes an
expenditure or receipt by AGC in excess of $10,000; guaranty of any obligation;
indemnification agreement and all other AGC contracts and commitments. To the
best knowledge of the Shareholders and AGC, all of said contracts and
commitments are valid, binding and fully enforceable in accordance with their
respective terms and no defaults (with or without notice or lapse of time) exist
thereunder. To the best of the Shareholder's knowledge, AGC is not in violation
of, or (with or without notice or lapse of time or both) in default under any
term or provision of its Articles of Incorporation or the Company' 5 By-Laws or
of any indenture, loan or credit agreement, deed of trust, mortgage, or other
agreement, lease or other instrument, commitment or arrangement to which AGC is
a party or by which any of the its properties, assets or rights is bound or
affected. AGC and the Shareholders are not subject to any restriction of any
kind or character which materially or adversely affects in any way their
business, properties, assets or prospects or which prohibits the Company or the
Shareholders from entering into this Agreement or would prevent or make
burdensome their performance of or compliance with all or any part of this
Agreement or the AGC's Articles of Incorporation or the consummation of the
transactions contemplated hereby or thereby.
3.13. Retirement Plans. AGC does not maintain or contribute to any employee
pension benefit plan, as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA").
3.14. Insurance Policies. AGC has no insurance policy, fidelity, surety or
other bond.
3.15. Insolvency. Neither AGC nor any individual Shareholder is bankrupt
and there is no pending or threatened insolvency or bankruptcy proceeding of any
kind affecting AGC or any individual Shareholder or any of their assets,
properties or business.
3.16.Minute Books. AGC's Minute Book as delivered to counsel to PowerSource
Corporation contains complete and accurate records of all meetings and other
corporate actions of the Board of Directors (including any committee established
by the Board) and its shareholders.
3.17. Disclosure. After a complete and thorough investigation by AGC
management and the Shareholders, there is no fact of which AGC or any individual
Shareholder is aware that they have not disclosed to PowerSource Corporation in
writing which materially and adversely affects nor, insofar as any individual
Shareholder or AGC can now foresee, will materially and adversely affect, the
properties, business, prospects, results of operations or condition, financial
or other, of AGC or the ability of the Shareholders or AGC to perform their
obligations under this Agreement. No representation or warranty made by AGC or
individual Shareholders herein and no exhibit, certificate or document furnished
or to be furnished to PowerSource Corporation pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statement
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
3.18. Shareholder's Investment Intent. Each individual Shareholder is
acquiring the shares of PowerSource Corporation common stock for investment
only, for their own accounts and not with a view to, or for, the resale,
distribution or subdivision thereof. Each Shareholder for himself acknowledges
that the PowerSource Corporation shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act11), or registered under the
securities laws of any state or other jurisdiction.
3.19.Title. AGC has good and marketable title to the interest in the
Intangibles. The Intangibles are free of restrictions on or conditions to
transfer or assignment, and are free and clear of all liens, encumbrances and
claims.
3.20. Financial Condition. AGC and a majority of the Shareholders warrant
and represent that as of the date of Closing, AGC's financial condition will be
substantially as reflected in its financial statement and there shall have been
no material changes in the company's business since the date of the financial
statement.
3.21. Survival. The Memorandum of Understanding and each representation and
warranty by AGC and its majority the Shareholders shall survive for a period of
two (2) year from the date hereof and shall survive any audit or investigation
by PowerSource Corporation.
4. REPRESENTATIONS AND WARRANTIES OF POWERSOURCE CORPORATION
PowerSource Corporation represents and warrants to each Shareholder and AGC
that:
4.1. Corporate Status. PowerSource Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California the state of its incorporation, has all requisite power and authority
and to own, hold, lease or operate its properties and assets and to carry on its
business as it is now being conducted and to enter into this Agreement, and is
duly qualified and in good standing in each jurisdiction in which the nature of
its properties, assets or business requires such qualification. PowerSource
Corporation has no subsidiaries. It has no other subsidiaries or direct or
indirect interest (by way of stock ownership or otherwise) in any firm,
corporation, partnership, association or other business. True and complete
copies of the PowerSource Corporation's Articles of Incorporation, as amended
and By-Laws are attached hereto as Exhibits G and H, respectively.
4.2.Stock. PowerSource Corporation's authorized capital stock is 1,000,000
shares of Common stock, $.001 par value. Currently PowerSource Corporation has
outstanding as of the date hereof 800,000 Common shares of Common Stock which
are duly authorized, validly issued, fully paid and nonassessable. Anything in
foregoing to the contrary upon the execution of this agreement, there shall be a
total of 1,000,000 Common shares of PowerSource Corporation common stock
outstanding and 100,000 Shares Of Series A Preferred shares authorized
distributed as follows: 800,000 unregistered shares of common stock to officers,
directors, and affiliates and non-affiliated persons and entities; and zero (0)
registered shares of common stock held by public shareholders; and 200,000
unregistered shares to AGC Shareholders; and 10,023 shares of Series A Preferred
shares issued and outstanding to AGC Shareholders. Upon issuance concurrently
herewith, PowerSource Corporation shares shall be duly authorized, validly
issued, fully paid and nonassessable. PowerSource Corporation has no outstanding
commitments, subscriptions, options, warrants, call demands, convertible
securities (other than hereinabove set forth) or other instruments, arrangement
or agreements of any character or nature (either firm or conditional) under
which it is or may be obligated to issue, redeem or repurchase any equity
securities of any kind or any securities or obligation convertible into or
exchangeable for any equity securities. No other party has any right to assert
an interest, inchoate or otherwise, in the ownership of PowerSource Corporation
and there are no outstanding preemptive rights, rights of first refusal or
similar rights relating to the PowerSource Corporation capital stock.
4.3.Other Interests. PowerSource Corporation does not have, directly or
indirectly, majority interest in the ownership (by way of stock ownership or
otherwise) or management of any other corporation, partnership, proprietorship,
association or other entity. PowerSource Corporation does have minority
interests in other corporations.
4.4 Financial Statements. Attached hereto as Exhibit I are PowerSource
Corporation's financial statements as of December 31, 1997 consisting of the
balance sheet and income statement, together with Schedules supporting the
balance sheet and the income statement and unaudited financial statements as of
December 31, 1997. PowerSource Corporation's financial statements are true,
complete and correct, are in accordance with PowerSource Corporation's books and
records, have been prepared in accordance with generally accepted accounting
principles applied periods, and present fairly the financial position, results
of operations and changes in PowerSource Corporation's financial position for
the periods indicated. PowerSource Corporation's books of account fully and
fairly reflect all of its transactions. 4.5. Undisclosed Liabilities. Except as
disclosed on Exhibit J attached hereto, PowerSource Corporation has no liability
or obligation (whether accrued, absolute, contingent, liquidated or otherwise;
known or unknown; or due or to become due) arising out of any transaction
entered into at or prior to the date hereof or any act or omission at or prior
to the date hereof, or statement of facts existing at or prior to the date
hereof, including taxes with respect to or based upon transactions or events
occurring at or prior to the date hereof, including but not limited to, unfunded
past service liabilities under any pension, profit sharing or similar plan other
than (a) those reflected in the PowerSource Corporation financial statements and
not paid or discharged after the date thereof, (b) those arising under
agreements or commitments listed or described in any of the schedules and
exhibits attached hereto and (c) those incurred since the date of the financial
statement in the ordinary course of its business and which are immaterial in
amount.
4.6. Compliance with Law or Other Covenants. To the best of its knowledge,
PowerSource Corporation's business and operations have been and are being
conducted in accordance with all applicable federal, state and local laws, rules
and regulations and all restrictive covenants applicable thereto, including but
not limited to, laws and regulations with respect to product safety, employment
and employment practices, terms and conditions of employment, wages and hours,
occupational safety, health and welfare conditions and civil rights. PowerSource
Corporation possesses all registrations, licenses or permits required by it to
operate its business. All such registrations, licenses or permits have been
lawfully and validly issued, and are in full force and effect. None of these
registrations, licenses or permits is subject to any outstanding order, decree,
judgment, stipulation, investigation or proceeding. PowerSource Corporation has
no reason to believe such registrations, licenses or permits will be revoked,
suspended, canceled or withdrawn or be or become subject to such order decree,
judgment, stipulation, investigation or proceeding.
4.7. Taxes. Except as disclosed on Schedule K, all income, sales, use,
unemployment insurance, disability insurance, employer withholding, FICA and
other tax returns and reports required by law to be filed by PowerSource
Corporation prior to the date hereof, have been filed and are accurately
prepared, true, complete and correct and PowerSource Corporation has withheld or
collected from each payment made to each of its employees the amount of all such
sums required to be withheld or collected therefrom and has paid or will pay all
such sums to the proper government authority. PowerSource Corporation is not and
has not been delinquent in the payment of any tax, assessment or governmental
charge and has paid all such taxes, assessments and other governmental charges
assessed or assessable against it as of the date hereof. PowerSource Corporation
has never had any tax deficiency proposed or assessed against it. The reserves
for taxes, assessments and governmental charges in the most recent PowerSource
Corporation financial statements are and will be sufficient for payment of all
such taxes, assessments, fees, penalties, interest and other governmental
charges which were, are or may become, payable with respect to PowerSource
Corporation for the period indicated in its financial statement. Since the date
of the financial statement PowerSource Corporation has made adequate provisions
on its books and records for all taxes, assessments and governmental charges
with respect to its business, properties, and operations that have accrued but
are not yet due and payable for such period. There is no pending or threatened
claim against PowerSource Corporation for nonpayment of such taxes for any
period prior to the date of this Agreement. None of PowerSource Corporation's
federal or state income tax returns has ever been audited by governmental
authorities. PowerSource Corporation has not executed any currently-in-force (a)
waiver of any statute of limitations against assessments of such taxes; (b) an
election pursuant to Section 1372 of the Internal Revenue code of 1986, as
amended (or any predecessor provision) or (c) a consent pursuant to Section
341(f) of the Internal Revenue Code.
4.8. Disputes and Litigation. Except as set forth on Exhibit L, PowerSource
Corporation does not have any claim or dispute against or with any firm or other
person and there is no unsettled litigation, proceeding, arbitration, or
governmental investigation pending or threatened against or affecting
PowerSource Corporation business, properties or assets or against PowerSource
Corporation directors or officers in connection with its affairs. PowerSource
Corporation is unaware of any facts which would lead a reasonable person to
conclude that such a dispute is likely to arise. PowerSource Corporation is not
subject to any judgment, order, writ, injunction or decree of any court of
governmental agency in which relief is sought against PowerSource Corporation.
4.9. Changes in Business. Except as set forth on Exhibit N, PowerSource
Corporation has not, since the date of its financial statement, (a) experienced
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its net income, financial condition, results of
operations, prospects, properties, assets or business; or (b) incurred any
material debts, obligations or liabilities, (absolute, accrued, contingent or
otherwise, whether due or to become due) except in the ordinary course of its
business; (c) sold, transferred or leased any of its assets except in the
ordinary course of its business; or (d) suffered any material physical damage,
destruction or loss (not covered by insurance) adversely affecting the
properties, business or prospects of PowerSource Corporation.
4.10 No Defaults. Neither the execution of the Agreement nor the
consummation of the transactions contemplated herein (a) violates or contravenes
any provision of law, any rule or regulation of any agency, government (domestic
or foreign), or private regulatory body, or any order, writ, judgment,
injunction, decree, determination or award of any provision of PowerSource
Corporation's Articles of Incorporation or By-Laws; (b) constitutes a breach
(with or without notice or lapse of time) or conflicts with any term or
provision of any contract, commitment, including but not limited to, any
indenture, loan or credit agreement, deed of trust, mortgage, lease or other
agreement or instrument to which PowerSource Corporation is a party or by which
PowerSource Corporation or any of its properties, assets or rights are bound or
affected or does or will result in the creation or imposition of any lien,
encumbrance, charge, equity or restriction of any nature whatsoever in favor of
any third party upon any PowerSource Corporation assets.
4.11.Authorization. Upon execution, this Agreement shall constitute a legal
and valid PowerSource Corporation obligation enforceable against it in
accordance with its terms except insofar as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally. No authorization or approval of or exemption from or filing
or registration with any court, governmental agency, commission, board, bureau,
instrumentality of government, or private regulatory body is necessary to
authorize the execution or consummation of this Agreement by PowerSource
Corporation. All corporate or other acts and proceedings required for the
authorization, execution and delivery of this Agreement have been lawfully and
validly taken, except for such exemptions from securities registration
requirements.
4.12.Marketable Title. PowerSource Corporation has good and marketable
title to all of its properties and assets, free and clear of any imperfection of
title, security interest, lien, claim or encumbrance of any kind except for the
lien of taxes not yet due and payable, and assets or properties held under valid
and subsisting leases which are in full force and effect and which are not in
default (with or without notice or lapse of time).
4.13. Contracts and Commitments. Except for such contracts and commitments
described or included in PowerSource Corporation's Registration Statement and
Exhibits, Exhibit N attached hereto lists all material oral or written contracts
or commitments presently in effect, true copies of which have previously been
delivered to AGC and the Shareholders, to which PowerSource Corporation is a
party or by which it may be bound, including but not limited to, each contract
or commitment involving the purchase or sale of capital assets, equipment,
supplies, products or services except in the ordinary course of business; all
contracts with or commitments to present or former shareholders, directors,
officers, employees or consultants; all agreements with any labor union;
contracts or commitments with any of the principal shareholders or any officer,
director, or any shareholder of PowerSource Corporation holding five percent
(5%) or more PowerSource Corporation common stock or any "affiliate" or
"associate" (as in Rule 405 of the Securities Act of 1933, as amended) of any
such entities or individuals; all non-competition covenants or other
restrictions on its ability to conduct a business or engage in any other
activity; all indentures, mortgages, trust deeds, promissory notes, security
agreements, contracts or commitments relating to or evidencing loans or
subjecting any assets or property of PowerSource Corporation to any lien or
encumbrance; purchases or receivables or other financing; all contracts or
commitments for sharing of fees; all bonus, pension, profit sharing, retirement,
stock purchase, stock option, medical, hospitalization or insurance plans; lease
or agreement under which PowerSource Corporation is lessee of or holds or
operates any property (real or personal) under which payments by PowerSource
Corporation exceed $10,000 per annum and all of which can be terminated upon 30
days notice; agreement granting any preemptive right, right of first refusal or
similar right; agreement to register PowerSource Corporation securities;
agreement, commitment or other arrangement which includes an expenditure or
receipt by PowerSource Corporation in excess of $10,000; guaranty of any
obligation; indemnification agreement and all other PowerSource Corporation
contracts and commitments. All of said contracts and commitments are valid,
binding and fully enforceable in accordance with their respective terms and no
defaults (with or without notice or lapse of time) exist thereunder. To the best
of its knowledge, PowerSource Corporation is not in violation of, or (with or
without notice or lapse of time or both) in default under any term or provision
of its Articles of Incorporation or By-Laws or of any indenture, loan or credit
agreement, deed of trust, mortgage, or other agreement, lease or other
instrument, commitment or arrangement to which PowerSource Corporation is a
party or by which any of PowerSource Corporation's properties, assets or rights
is bound or affected. PowerSource Corporation is not subject to any restriction
of any kind or character which materially or adversely affects in any way its
business, properties, assets or prospects or which prohibits it from entering
into this Agreement or would prevent or make burdensome its performance of or
compliance with all or any part of this Agreement or PowerSource Corporation's
Articles of Incorporation or the consummation of the transactions contemplated
hereby or thereby.
4.14. Retirement Plans. PowerSource Corporation does not maintain or
contribute to any employee pension benefit plan, as defined in Section 3(2) of
ERISA, or have any contingent liabilities, obligations, agreements with respect
to any type of deferred compensation, severance, or other similar type of
agreement.
4.15. Insurance Policies. Each PowerSource Corporation insurance policy,
fidelity, surety or other bond is set forth on Exhibit 0 and is in full force
and effect, with all premiums due thereon paid and not subject to any default.
4.16. Insolvency. PowerSource Corporation is not insolvent or bankrupt and
there is no pending or threatened insolvency or bankruptcy proceeding of any
kind affecting PowerSource Corporation or any of its assets, properties or
business.
4.17. Minute Books. The PowerSource Corporation minute book contains
complete and accurate records of all meetings and other corporate action of the
Board of Directors (including any committee established by the Board of
Directors) and the PowerSource Corporation shareholders.
4.18. Disclosure. After a complete and thorough investigation by
management, there is no fact of which PowerSource Corporation is aware that it
has not disclosed to the ACC or the Shareholders in writing which materially and
adversely affects or insofar as PowerSource Corporation can now foresee, will
materially and adversely affect, the properties, business, prospects, results of
operations or condition (financial or other) of PowerSource Corporation or the
ability of PowerSource Corporation to perform its obligations under this
Agreement. No PowerSource Corporation representation or warranty made herein and
no exhibit, certificate or document furnished or to be furnished to the
Shareholders and AGC pursuant to this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein in
light of the circumstances under which they are made, not misleading.
4.19 PowerSource Corporation's Investment Intent. PowerSource Corporation
is acquiring the AGC shares for investment only, for its own account and not
with a view to, or for, the resale, distribution or subdivision thereof.
PowerSource Corporation acknowledges that AGC's shares have not been registered
under the Securities Act of 1933, and amended (the "1933 Act"), or registered
under the securities laws of any state or other jurisdiction.
4.20. Section omitted.
4.21. Survival. Each PowerSource Corporation representation and warranty
shall survive a period of two (2) years from the date hereof and shall survive
any audit or investigation by AGC or the Shareholders.
5. CONDITIONS TO AGC OBLIGATIONS. Unless waived by AGC in writing, AGC
obligations hereunder are subject to the satisfaction on or prior to the date
hereof, of all of the following conditions:
5.1. The truth and accuracy, in all material respects, of all PowerSource
Corporation representations contained in this Agreement as of the date hereof;
and the performance by PowerSource Corporation of all agreements and conditions
required by this Agreement to be performed by PowerSource Corporation at or
prior to the date hereof.
5.2 PowerSource Corporation's concurrent delivery to AGC of all Exhibits
required to be delivered hereunder by PowerSource Corporation.
5.3 PowerSource Corporation' 5 concurrent delivery to AGC of certificates
of the Secretary of State of Minnesota, dated not later than fifteen (15) days
prior to the date hereof, listing all charter documents on file with respect to
PowerSource Corporation and stating that PowerSource Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of said state, and certificate of the appropriate authority of each state in
which PowerSource Corporation is qualified as a foreign corporation stating that
it is authorized to transact business as a foreign corporation in said state and
has paid all taxes required to be paid to date and that PowerSource Corporation
is in good standing in said state.
5.4 PowerSource Corporation's concurrent delivery to AGC of consents to the
transfer of such contracts, licenses, commitments, and PowerSource Corporation
orders as are required to consummate the transactions contemplated hereby.
5.5 Section Omitted.
5.6 PowerSource Corporation's concurrent delivery to AGC of copies of
resolutions or consents of its Board of Directors, appropriately certified by
its secretary, Authorizing the execution, and delivery of this Agreement, the
issuance to and for benefit of AGC Share-holders of 1,084,800 common shares of
PowerSource Corporation, PowerSource Corporation's concurrent delivery to the
Shareholders of the investor's certificate executed by PowerSource Corporation
in the form of Exhibit C, and the consummation of the transactions contemplated
herein.
5.7 Section Omitted
5.8. PowerSource Corporation's concurrent deliver to the Shareholders of
stock certificates representing PowerSource Corporation shares issues in such
amounts and to such individuals or entities as set forth in Section 2.1 herein.
5.9. Section Omitted
6. CONDITIONS TO POWERSOURCE CORPORATION OBLIGATIONS. Unless waived by
PowerSource Corporation in writing, the PowerSource Corporation obligations
hereunder are subject to the satisfaction on or prior to the date hereof, of all
of the following conditions:
6.1 The truth and accuracy in all material respects of all representations
by the Majority of the Shareholders and AGC contained in this Agreement and
Consents as of the date hereof; and the performance by the Share-holders and AGC
of all agreements and conditions required by this Agreement to be performed by
the Shareholders and AGC at or prior to the date hereof.
6.2 The Shareholder's subsequent delivery to PowerSource Corporation of all
Exhibits required to be delivered hereunder by the Shareholders and AGC.
6.3 The Shareholder's subsequent delivery to PowerSource Corporation of
certificates of the Secretary of State of the state of AGC's incorporation,
dated not later than thirty (30) days subsequent to the date hereof, listing all
charter documents on file with respect to the AGC attesting that AGC is a
corporation duly organized, validly existing and in good standing under the laws
of said state, and certificates of the appropriate authority of each state in
which AGC is qualified as a foreign corporation attesting that it is authorized
to transact business as a foreign corporation in said state and has paid all
taxes required to be paid to date and is in good standing.
6.4. AGC's concurrent delivery to PowerSource Corporation of consents to
the transfer of such AGC contracts, licenses, commitments and orders as are
required to consummate the transactions contemplated hereby.
6.5. AGC's concurrent delivery to PowerSource Corporation of copies of
resolutions or consents of its Board of Directors and a majority of its
Stockholders appropriately certified by its secretary, authorizing the
execution, and delivery of this Agreement and the consummation of the
transactions contemplated herein.
6.6. The certification as to Shareholder's ownership which is done
concurrent with the signing of this document as stated on Section 1.2 herein.
6.7. The Shareholder's subsequent delivery to PowerSource Corporation of
the investor's certificates executed by the Shareholders in the form of Exhibit
C.
6.8. Omitted.
6.8. Section Omitted.
7. CLOSING. The consummation of the transactions contemplated herein shall
take place either by courier mail and transfer of documents or at the offices of
PowerSource If to AGC and its Shareholders: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇.▇▇▇▇▇.
Either party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by written notice delivered
in the manner aforesaid to the other party or parties hereto.
9.3. Modifications or Amendments. No amendment, change or modification of
this document shall be valid unless in writing and signed by all of the parties
hereto.
9.4. Waiver. No reliance upon or waiver of one or more provisions of this
Agreement shall constitute a waiver of any other provisions hereof.
9.5. Successors and Assigns. All of the terms and provisions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, representatives and successors, provided,
however, that no party shall be entitled to assign its rights hereunder or
delegate its responsibilities without the prior written consent of all other
parties.
9.6. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and shall be one and the
same instrument.
9.7. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and are for convenience in reference. In the event
of a conflict between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
9.8. Exhibits and Schedules. Each fact or statement recited or contained in
any exhibit, schedule, certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated
hereby, shall be deemed a representation and a warranty hereunder.
9.9. Further Assurances. Each of the parties hereto shall execute and
deliver, if required, additional papers, documents, and other assurances, and
shall do all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent of the
parties and this agreement.
9.10. Applicable Law and Severability. In the event of controversy this
Agreement and the exhibits forming a part hereof shall be governed by the laws
of the State of California. Nothing contained herein shall be construed so as to
require the commission of any act contrary to law, and wherever there is a
conflict between any provision contained herein and any present or future
statute, law, ordinance or regulation contrary to which the parties have no
legal right of contract, the latter shall prevail but the provision of this
document which is affected shall be curtailed and limited only to the extent
necessary to comply with the requirements of the law.
9.11. Enforceability. It is agreed that the rights granted to the parties
hereunder are of a special and unique kind and character and that, in the event
of a breach by any party of any material provision of this document, the other
party or parties would not have any adequate remedy at law. It is expressly
agreed, therefore, that the rights of the parties hereunder may be enforced by
an action for specific performance and such other equitable relief as is
provided under the laws of the State of California.
9.12. Attorney's Fees and Cost. In the event any action is instituted by a
party hereto to enforce any of the terms or provisions hereof, the prevailing
party in such action shall be entitled to such reasonable attorneys' fees, costs
and expenses as may be fixed by the Court.
9.13. Entire Agreement. This document, together with any related documents
referred to in this Agreement, constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement,
and all prior agreements understandings or representations are hereby terminated
and canceled in their entirety.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the 12th day of February 1998 written.
PowerSource Corporation Kensington Intl, Holding
By: /SS/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /SS/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇,(President) ▇▇▇▇ ▇▇▇▇▇▇▇▇,(President)
American Gas Corporation:
By: /SS/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
AMENDMENT
This Amendment changes the Plan of Reorganization Agreement by and between
PowerSource, Corp. and American Gas Corporation, now known as PowerSource Corp.,
in the following manner;
1, In lieu of the 10,023 shares of preferred stock that Kensington International
Holding Corporation was to have received under the Plan of Reorganization
Agreement referred to herein, Kensington International Holding Corporation shall
receive 5,350 shares of preferred stock of American Gas Corporation, now known
as PowerSource Corp., and 150,000 Class "A" Warrants, and,
2, The 5,350 preferred shares are convertible to the common stock of PowerSource
Corp., a Nevada corporation, after five years from the date of the Plan of
Reorganization Agreement at $10 per share, and,
3, The 150,000 Class "A" Warrants expire and must be exercised on or before
March 22, 2001 at a conversion price of $.10 (ten cents) per share of
PowerSource Corporation, a Nevada corporation, common stock, and,
4, The other terms and condition of the Plan of Reorganization Agreement,
referred to herein, remains the same.
Kensington International Holding Corporation
By: /SS/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇, President
PowerSource Corp.
By: /SS/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇, Chairman
This Amendment is dated this Fifth day of May, 1998