Commission File No. 000-50542
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
GREEN MT. LABS., INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
n/a
(2) Aggregate number of securities to which transaction applies:
n/a
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): n/a.
(4) Proposed maximum aggregate value of transaction: n/a
(5) Total fee paid: -0-
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date filed:
PRELIMINARY COPY
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GREEN MT. LABS., INC.
19 East 200 South, Suite 1080
Salt Lake City, Utah 84111
NOTICE OF ACTION TAKEN BY WRITTEN CONSENT OF OUR MAJORITY STOCKHOLDERS
Dear Stockholders of Green Mt. Labs., Inc.:
We are writing to advise you that our two largest stockholders, controlling
approximately 83% of our outstanding shares of common stock, approved by written
consent, an amendment to our certificate of incorporation to (a) increase our
authorized capitalization to 100 million shares of common stock and 10 million
shares of preferred stock, and (b) change our corporate name to "Hydrogen Engine
Center, Inc." The majority stockholders also ratified by written consent a new
employee stock plan, the Hydrogen Engine Center, Inc. Restricted Stock Plan.
On June 3, 2005, our board of directors unanimously approved the amended
certificate of incorporation and stock plan, and on July 6, 2005, also
authorized a 3.8 shares for 1 share forward stock split of our outstanding
common stock. The board also unanimously approved the execution of an agreement
to acquire Hydrogen Engine Center, Inc., a privately held corporation based in
Algona, Iowa (referred to herein as "HECI").
To facilitate the acquisition of HECI, we will merge our newly created,
wholly owned subsidiary, Green Mt. Acquisitions, Inc., with and into HECI with
HECI being the survivor of the merger. Under the terms of the agreement, all of
HECI's outstanding capital stock will be converted into shares of Green Mt.
common stock. We anticipate that the forward split of our common stock will be
effected immediately prior to the closing of the acquisition. The acquisition
will not be effective until the articles of merger between our acquisition
subsidiary and HECI are filed with the offices of the Secretary of State for
Nevada and Iowa.
No action is required by you. The accompanying information statement is
furnished only to inform stockholders of the actions taken by written consent
described above before they take effect in accordance with Rule 14c-2
promulgated under the Securities Exchange Act of 1934.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
Completion of the acquisition of HECI will result in a change in control of
Green Mt. and the assumption of HECI's assets, liabilities and operations by
Green Mt.
Please note that the controlling stockholders of Green Mt. have voted to
approve the amended certificate of incorporation and adoption of the stock plan.
The number of votes held by the controlling stockholders is sufficient to
satisfy the stockholder vote requirement for these actions and no additional
votes will consequently be needed to approve these actions.
The accompanying information statement is for information purposes only and
explains the actions taken by written consent, the terms of the acquisition of
HECI and related transactions. Please read the accompanying information
statement carefully.
July __, 2005 Very truly yours,
/s/ Geoff Williams
---------------------------
Geoff Williams, President
GREEN MT. LABS., INC.
19 East 200 South, Suite 1080
Salt Lake City, Utah 84111
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND
REGULATION 14C THEREUNDER
This information statement is being sent by first class mail to all record
and beneficial owners of the common stock, $0.001 par value, of Green Mt. Labs.,
Inc., a Nevada corporation, which we refer to herein as "Green Mt.," "company,"
"we," "our" or "us." The mailing date of this information statement is on or
about July 15, 2005.
On June 15, 2005, the record date for determining the identity of
stockholders who are entitled to receive this information statement, 1,006,000
shares of our common stock were issued and outstanding. The common stock
constitutes the sole outstanding class of voting securities of Green Mt. Each
share of common stock entitles the holder thereof to one vote on all matters
submitted to stockholders.
NO VOTE OR OTHER CONSENT OF OUR STOCKHOLDERS IS SOLICITED IN CONNECTION
WITH THIS INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
On June 3, 2005, our two controlling stockholders who beneficially own in
the aggregate 832,180 shares, or approximately 83%, of our issued and
outstanding common stock, consented in writing to the following:
1. An amendment to our certificate of incorporation that will (a) increase
our authorized capitalization to 100 million shares of common stock and
10 million shares of "blank check" preferred stock, and (b) change our
corporate name, upon the closing of the anticipated acquisition
transaction, to "Hydrogen Engine Center, Inc."
2. Adoption of the Hydrogen Engine Center, Inc. Restricted Stock Plan for
employees, directors, and consultants of Green Mt. and HECI.
The controlling stockholders have not consented to or considered any other
corporate action.
Also on June 3, 2005, Green Mt. Labs, Inc., together with our wholly owned
subsidiary, Green Mt. Acquisitions, Inc., entered into an agreement and plan of
merger with Hydrogen Engine Center, Inc., in order to facilitate our acquisition
of HECI. We amended that agreement on July 6, 2005 to revise certain terms. All
references to the agreement herein will reflect the revised terms.
Because stockholders holding at least a majority of the voting rights of
our outstanding common stock at the record date have voted in favor of the
amendment to our certificate of incorporation and the restricted stock plan, and
have sufficient voting power to approve such proposals through their ownership
of common stock, no other stockholder consents will be solicited in connection
with this information statement. Pursuant to Rule 14c-2 under the Securities
Exchange Act of 1934 (the "Exchange Act"), the proposals will not become
effective until a date at least 20 days after the date on which this information
statement has been mailed to the stockholders. We anticipate that the actions
contemplated herein will be effected on or about the close of business on August
15, 2005. This information statement will serve as written notice to
stockholders pursuant to Section 320 of the Nevada Revised Statute.
Our board of directors have also unanimously approved a forward stock split
of our 1,006,000 issued and outstanding shares of common stock on a 3.8 shares
for 1 share basis. The split will be effected prior to the consummation of the
acquisition and will increase the number of issued and outstanding shares to
approximately 3,822,800 shares. No fractional shares will be issued pursuant to
the split, rather any fraction of a share resulting from the split will be
rounded up to the next whole number.
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TABLE OF CONTENTS
Page
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FORWARD-LOOKING STATEMENTS.................................................................................. 4
GENERAL..................................................................................................... 4
SUMMARY..................................................................................................... 5
Amended Certificate of Incorporation................................................................... 5
Hydrogen Engine Center, Inc. Restricted Stock Plan..................................................... 5
Forward Stock Split.................................................................................... 5
Parties to the Revised and Amended Agreement and Plan of Merger........................................ 5
Structure of the Acquisition of HECI................................................................... 6
Consideration.......................................................................................... 6
Reasons for the Acquisition of HECI.................................................................... 6
Costs and Expenses of the Acquisition.................................................................. 7
Appraisal Rights....................................................................................... 7
Risk Factors........................................................................................... 7
Directors and Executive Management Following the Acquisition of HECI................................... 7
CONTROLLING STOCKHOLDERS.................................................................................... 7
SECURITY OWNERSHIP OF BENEFICIAL OWNERS, MANAGEMENT AND AFFILIATES
FOLLOWING THE ACQUISITION.............................................................................. 8
RISK FACTORS................................................................................................ 8
Risks Relating to the Acquisition of HECI.............................................................. 8
Risks Relating to Our Business After Completion of the Acquisition..................................... 9
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION............................................................... 13
Change in Authorized Shares............................................................................ 13
Name Change............................................................................................ 14
HYDROGEN ENGINE CENTER, INC. RESTRICTED STOCK PLAN.......................................................... 14
Administration of the Plan............................................................................. 14
Types of Awards........................................................................................ 14
Eligibility to Receive Awards.......................................................................... 15
Stock Available for Awards............................................................................. 15
New Plan Benefits...................................................................................... 15
Adjustments............................................................................................ 15
Amendment or Termination............................................................................... 15
Federal Income Tax Consequences........................................................................ 15
REVISED AND AMENDED AGREEMENT AND PLAN OF MERGER............................................................ 15
Background of the Acquisition of HECI.................................................................. 16
Green Mt.'s Reasons for the Acquisition................................................................ 17
HECI's Reasons for Being Acquired by Green Mt.......................................................... 17
Material Terms of the Revised and Amended Agreement and Plan of Merger................................. 18
Effective Time of the Merger........................................................................... 18
Consideration.......................................................................................... 18
Representations and Warranties......................................................................... 19
Certain Covenants of the Parties....................................................................... 20
Conditions of the Revised and Amended Agreement and Plan of Merger..................................... 21
Termination............................................................................................ 21
Cost and Expenses...................................................................................... 21
Amendment.............................................................................................. 21
Extension and Waiver................................................................................... 21
CERTAIN TRANSACTIONS AND INFORMATION RELATED TO THE ACQUISITION............................................. 22
Change in Control...................................................................................... 22
Forward Stock Split.................................................................................... 22
Financing.............................................................................................. 22
Certain Federal Income Tax Considerations.............................................................. 23
Accounting Treatment of the Acquisition................................................................ 23
Appraisal Rights....................................................................................... 23
Interest of Certain Persons in the Acquisition Transaction............................................. 23
Federal Securities Law Consequences.................................................................... 24
Our Operations After the Acquisition of HECI........................................................... 24
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ANTICIPATED BUSINESS FOLLOWING THE ACQUISITION OF HECI...................................................... 24
Business of Hydrogen Engine Center, Inc................................................................ 24
Hydrogen Powered Engines............................................................................... 25
Potential Commercial Applications...................................................................... 26
Other Applications..................................................................................... 26
Competition............................................................................................ 26
Intellectual Property and Patent Protection............................................................ 26
Facilities............................................................................................. 27
Employees.............................................................................................. 27
Management............................................................................................. 27
Key Personnel.......................................................................................... 28
PRINCIPAL ACCOUNTANT FEES AND SERVICES...................................................................... 28
SELECTED HISTORICAL FINANCIAL DATA OF GREEN MT. LABS., INC.................................................. 29
EXPERTS .............................................................................................. 30
FINANCIAL INFORMATION FOR HYDROGEN ENGINE CENTER............................................................ 31
WHERE YOU CAN FIND MORE INFORMATION......................................................................... 31
Appendix A - Form of Amended Certificate of Incorporation
Appendix B - Form of Hydrogen Engine Center, Inc. Restricted Stock Plan
Appendix C - Revised and Amended Agreement and Plan of Merger
-3-
FORWARD LOOKING INFORMATION
This information statement and other reports that we file with the SEC
contain certain forward-looking statements relating to, among other things, the
closing of the acquisition transaction and our future financial performance or
future events. In some cases, you can identify forward-looking statements by
terminology such as "may," "will" "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of these terms or other comparable terminology. Such statements are
subject to numerous known and unknown risks, uncertainties, assumptions and
other factors, including those set forth in this information statement, that
could cause actual future events or results to differ materially from historical
results, or those described in the forward-looking statement. The
forward-looking statements contained herein should be considered in light of
these factors. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. You are cautioned not to place
undue reliance on these forward- looking statements, which speak only as of the
date of this information statement.
Except as required under federal securities laws and the rules and
regulations of the SEC, we and our merger subsidiary, Green Mt. Acquisitions, do
not undertake to update forward-looking information contained herein or
elsewhere to reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking information. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated in,
contemplated by or implied by such statements.
For a detailed discussion of these and other risk factors, please refer to
our filings with the SEC on Forms 10-KSB, 10-QSB and 8-K. You can obtain copies
of these reports and other filings for free at the SEC's Web site at www.sec.gov
or from commercial document retrieval services.
GENERAL
This information statement is being furnished to all of our stockholders of
record on June 15, 2005 in connection with the approval by our board of
directors and controlling stockholders of:
o an amendment to our certificate of incorporation which will (a)
increase our authorized capitalization to 100 million shares of common
stock and 10 million shares of preferred stock, and (b) change our
corporate name, upon the closing of the acquisition transaction, to
"Hydrogen Engine Center, Inc." The form of our amended certificate of
incorporation is attached to this information statement as Appendix A;
and
o the adoption of a new restricted stock plan, the form of which is
attached to this information statement as Appendix B.
Our board of directors also unanimously approved the acquisition of HECI
and the 3.8 shares for 1 share forward stock split of our issued and outstanding
common shares, effective prior to the closing of the HECI acquisition. To
facilitate the acquisition, we entered into the agreement and plan of merger
with HECI on June 3, 2005 and executed a revised and amended agreement on July
6, 2005. Pursuant to that agreement, we will, among other things, issue
16,297,200 shares of our authorized, but previously unissued common stock, to
the sole stockholder of HECI in exchange for all of the issued and outstanding
common stock of HECI. The filing of the amended certificate of incorporation and
adoption of the restricted stock plan are called for by the revised and amended
agreement and plan of merger.
-4-
Upon the closing of the acquisition, all of our existing officers and
directors will resign and five new directors and new management will be
appointed. The acquisition is expected to close on or about August 15, 2005, and
will become effective upon the filing of the Articles of Merger with the offices
of the Secretaries of the States of Nevada and Iowa. We anticipate the filings
will occur immediately after the closing.
The elimination of the need for a special meeting of stockholders to
approve the proposals set forth above is authorized by Section 320 of the Nevada
Revised Statute, referred to herein as the "NRS," which provides that any action
required or permitted to be taken at a meeting of stockholder may be taken
without a meeting if a written consent is signed by stockholders holding at
least a majority of the voting power of the corporation, except that if a
different proportion of voting power is required for such action at a meeting ,
then that proportion or written consents is required. Where an action is
authorized by written consent, no meeting of stockholders need be called nor
notice given.
Pursuant to the NRS, a majority of the outstanding shares of voting stock
entitled to vote thereon is required in order to approve the proposed actions
set forth herein. In order to eliminate the costs and management time involved
in holding a special meeting of stockholders and in order to approve the amended
certificate of incorporation and restricted stock plan, the board of directors
decided to use the written consent of the holders of a majority of our
outstanding common stock in lieu of a stockholders' meeting.
Our controlling stockholders, who beneficially own 82.7% of our outstanding
common stock entitled to vote on the amended certificate of incorporation and
adoption of the restricted stock plan, gave their written consent to the
approval of the foregoing on June 3, 2005. Accordingly, the above actions will
not be submitted to our other stockholders for a vote and this information
statement is being furnished to our stockholders only to provide the prompt
notice of the taking of such actions.
We will pay all costs associated with the distribution of this information
statement, including the costs of printing and mailing. We will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending this information statement to the
beneficial owners of our common stock.
SUMMARY
This summary highlights selected information set forth herein and may not
contain all of the information that is important to you. To understand fully the
amended certificate of incorporation, new stock plan and the acquisition of
HECI, you should read carefully this entire information statement and the
accompanying documents to which we refer. See "Where You Can Find More
Information." The amended certificate of incorporation, stock plan and revised
and amended agreement and plan of merger are attached as appendices to this
information statement. We encourage you to read these documents. We have
included page references in parentheses to direct you to a more complete
description of the topics presented in this summary.
Amended Certificate of Incorporation (Page 13)
Our board of directors and stockholders holding a majority of our
outstanding common stock have approved an amended certificate of incorporation
which will (a) increase our authorized capitalization to 100 million shares of
common stock and 10 million shares of "blank check" preferred stock, and (b)
change our corporate name upon the closing of the acquisition to "Hydrogen
Engine Center, Inc." The form of amended certificate of incorporation is
attached hereto as Appendix A.
-5-
Hydrogen Engine Center, Inc. Restricted Stock Plan (Page 17)
As a condition to the acquisition of HECI, we have adopted a restricted
stock plan that will become effective at the effective time of the merger. The
stock plan will be used to attract, retain and reward employees, officers and
directors of the highest quality and promote the well being of our company after
the acquisition of HECI.
Forward Stock Split (Page 26)
Prior to the closing of the acquisition transaction, we will effect a
forward stock split of the issued and outstanding shares of Green Mt. common
stock on a 3.8 shares for 1 share basis, the effect of which will increase the
number of issued and outstanding Green Mt. shares to approximately 3,822,800
shares. No fraction of any share Green Mt. shares will be issued, rather any
fraction resulting from the split will be rounded up to the next whole number.
Parties to the Revised and Amended Agreement and Plan of Merger (Page 18)
Green Mt. Labs., Inc.
19 East 200 South, Suite 1080
Salt Lake City, Utah 84111
We were originally organized in Idaho on July 12, 1983 to acquire and
develop mining claims. We initially acquired certain unpatented mineral claims
located in the Miller Mountain Mining District near Idaho City, but the claims
were eventually written off in 1997. Corporate records do not indicate the
extent to which the Company developed the property. Because we did not have any
available funds, we were unable to continue to pay the necessary assessment fees
related to the claims and, in 1997, the claims were abandoned and written off
because management was unable to determine the future value of the claims. In
August 2000, we changed our corporate domicile from Idaho to the State of
Nevada. In recent years, we have been actively seeking potential operating
businesses and/or business opportunities with the intent to acquire or merge
with such businesses. We are deemed a development stage company.
Green Mt. Acquisitions, Inc.
19 East 200 South, Suite 1080
Salt Lake City, Utah 84111
Green Mt. Acquisitions, Inc. is a newly formed Nevada corporation and
wholly owned subsidiary of Green Mt. that was organized for the specific purpose
of facilitating the acquisition of HECI. Green Mt. Acquisitions has not
conducted any business during any period of its existence except in furtherance
of the merger transaction.
Hydrogen Engine Center, Inc.
602 East Fair Street
Algona, Iowa 50511
Hydrogen Engine Center, Inc. is a development stage company engaged in
designing, developing and manufacturing internal combustion engines that may be
fueled either by hydrogen or gasoline for the industrial and power generation
markets. HECI has established a process for converting certain Ford internal
combustion engines to run efficiently on hydrogen fuel. Hydrogen as a fuel can
be readily extracted from water, any hydrocarbon fuel or biomass. HECI expects
to file core technology patents covering the use of hydrogen fuel in any
internal combustion engine with zero or near zero emissions. HECI management
believes that hydrogen engines ultimately developed by HECI may be initially
used for two major applications; (i) replacing existing internal combustion
engines in airport ground support applications, and (ii) combined with electric
generators for power generation systems.
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Structure of the Acquisition of HECI (Page 19)
Upon filing of a certificate of merger with the offices of the Secretaries
of the States of Nevada and Iowa, referred to herein as the "effective time of
the merger," the control of our company will change and we will carry on the
business of HECI. This change of control will be effected through the following
actions:
o Green Mt. Acquisitions, our wholly owned subsidiary, will merge with
and into HECI, the separate corporate existence of Green Mt.
Acquisitions will cease and Green Mt. will become the parent
corporation of HECI. We will then change our name from Green Mt. Labs.,
Inc. to "Hydrogen Engine Center, Inc.";
o Green Mt. will issue an aggregate of 16,297,200 shares of restricted
common stock to the sole stockholder of HECI in exchange for 100% of
the issued and outstanding shares of HECI capital stock; and
o The officers and directors (or director nominees) of HECI will replace
the officers and directors of Green Mt. and will control the business
and operations of HECI.
Consideration (Page 22)
Pursuant to the terms of the acquisition, all of the issued and outstanding
shares of HECI common stock will be converted into the right to receive shares
of Green Mt. common stock. In the aggregate, the sole stockholder of HECI
capital stock will receive 16,297,200 shares of our common stock. Fractional
shares will not be issued. After the merger, the current HECI stockholder will
no longer own a direct equity interest in HECI. In addition, our controlling
stockholders will be entitled to a one-time fee of $250,000 to be paid out of
anticipated financing of at least $3 million.
Reasons for the Acquisition of HECI (Page 20)
Our board of directors considered various factors in approving the
acquisition of HECI and believe the acquisition will be in the best interest of
our stockholders. Our board analyzed HECI's operations, prospects and managerial
resources and believes that acquiring HECI's business and growth potential by
means of a merger is the best opportunity to increase value to our stockholders.
Our board of directors did not request a fairness opinion in connection with the
transaction.
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Cost and Expenses of the Acquisition (Page 26)
The merger agreement provides that all costs and expenses in connection
with the acquisition will be paid by the party incurring these costs and
expenses, except that HECI will pay certain legal fees incurred by Green Mt.,
out of proceeds from HECI's interim financing.
Appraisal Rights (Page 28)
Under applicable Nevada law, our stockholders do not have the right to
demand appraisal of their shares in connection the actions we are taking by
written consent.
Risk Factors (Page 8)
The acquisition of HECI and related transaction, as well as the ownership
of our common stock after the merger, involves a high degree of risk. You should
carefully consider the information set forth in the section entitled "Risk
Factors," as well as the other information in this information statement.
o Upon completion of the acquisition, we will assume HECI's assets,
liabilities and plan of operation that will require substantial
additional financing to fully implement. There can be no assurance that
such financing can be obtained, or whether we will have to raise
additional capital following the acquisition in order to implement our
business plan.
o Our current stockholders will be diluted by the shares issued as part
of the acquisition transaction and may be diluted by future issuances
of shares, if necessary, to satisfy our working capital needs. We are
issuing 16,297,200 shares of our common stock as part of the
acquisition transaction, an undetermined number of shares upon the
completion of certain financing, and possibly up to an additional
675,000 shares for the conversion of certain promissory notes of HECI
upon the completion of the financing. The foregoing issuances, along
with other issuances to raise additional working capital, will reduce
the percentage ownership of our existing stockholders substantially.
Directors and Executive Management Following the Acquisition of HECI (Page 32)
Following completion of the acquisition of HECI, all of the existing
members of our board of directors will resign and new appointees designated by
HECI will comprise our board of directors.
CONTROLLING STOCKHOLDERS
On June 3, 2005, the following controlling stockholders, owning
approximately 83% of our common stock, consented in writing to approve the
amended certificate of incorporation and adoption of the restricted stock plan.
The information in the table does not reflect the acquisition of HECI and
transactions resulting therefrom or the 3.8 shares for 1 share forward stock
split.
Name and Address Number of Shares Percent(1)
- ------------------------- ---------------- ----------
H. Deworth Williams 742,180 73.8%
54 West 400 South, Suite 220
Salt Lake City, UT 84101
Edward F. Cowle 90,000 8.9%
300 Park Avenue, Suite 1712
New York, NY 10022
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Note: Unless otherwise indicated in the footnotes below, we have been
advised that each person above has sole voting and investment
power over the shares indicated above.
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(1) Based upon 1,006,000 shares of common stock outstanding on June 3,
2005.
Under Section 14(c) of the Exchange Act, the actions taken by written
consent without a meeting of stockholders cannot become effective until 20 days
after the mailing date of this information statement. We are not seeking written
consent from any stockholders other than as set forth above and our other
stockholders will not be given an opportunity to vote with respect to the
actions taken. All necessary corporate approvals have been obtained, and this
information statement is furnished solely for the purpose of advising
stockholders of the actions taken by written consent and giving stockholders
advance notice of the actions taken, as required by the Exchange Act.
Stockholders will not have dissenters' appraisal rights in conjunction with
the proposed acquisition of HECI or other corporate actions to be taken in
connection with the acquisition.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS, MANAGEMENT AND AFFILIATES
FOLLOWING THE ACQUISITION
The following table sets forth certain information with respect to the
anticipated beneficial ownership of our common stock, after giving effect to the
acquisition transaction by (i) each stockholder expected to be the beneficial
owner of more than 5% of our common stock, (ii) by each of our anticipated
directors and executive officers, and (iii) all of the anticipated directors and
executive officers as a group. The address of each person listed below, unless
otherwise indicated, is c/o Hydrogen Engine Center, Inc., 602 East Fair Street,
Algona, Iowa 50511. Unless otherwise indicated in the table footnotes, shares
will be owned of record and beneficially by the named person. For purposes of
the following table, a person is deemed to be the beneficial owner of any shares
of common stock (a) over which the person has or shares, directly or indirectly,
voting or investment power, or (b) of which the person has a right to acquire
beneficial ownership at any time within 60 days after the effective time of the
merger. "Voting power" is the power to vote or direct the voting of shares and
"investment power" includes the power to dispose or direct the disposition of
shares.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
- -------------------- -------------------- -----------
5% Beneficial Owners:
---------------------
H. Deworth Williams 2,820,284 14.0 %
54 West 400 South, Suite 220
Salt Lake City, UT 84101
Directors and Executive Officers:
Ted Hollinger 16,297,200 81.0 %
All directors and executive officers 16,297,200 81.0 %
as a group (5 persons)
RISK FACTORS
You should consider carefully the following risk factors relating to Green
Mt. and HECI, any of which could materially harm our business.
Risks Relating to the Acquisition of HECI
-9-
Our current stockholders have no opportunity to approve or disapprove the
acquisition of HECI or other actions described herein and will experience
substantial dilution in connection with the transaction.
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The acquisition of HECI has been approved by our board of directors and
will not be presented to our stockholders for approval. Also, under Nevada law,
the other actions described herein that would routinely be taken at a meeting of
stockholders, are being taken by written consent of stockholders having not less
than the minimum number of votes that would be necessary to authorize or take
the action at a meeting of stockholders. Accordingly, stockholders other than
our two controlling stockholders are not being asked to approve or disapprove
these matters. In addition, because we have no assets and a limited operating
history, in the event the acquisition of HECI is consummated as described
herein, our current stockholders will experience substantial dilution in their
ownership interest in our company.
If the acquisition of HECI does not occur, we will not benefit from
expenses we have incurred in pursuit of the transaction.
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The acquisition of HECI may not be completed. If conditions to completion
of the acquisition are not satisfied or the transaction is not otherwise
finalized, we will have incurred expenses for which no ultimate benefit will
have been received. We currently expect to incur out of pocket expenses of
approximately $30,000 for services in connection with the acquisition,
consisting of professional fees, financial printing and other related charges,
much of which may be incurred even if the acquisition is not completed. If the
acquisition is not completed, such expenses will be paid for by advances from
stockholders, which will be evidenced on our financial statements as current
liabilities.
Financing to proceed with our anticipated business activities will be
required following completion of the acquisition. There can be no assurance
that financing will be available on terms beneficial to us, or at all.
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In order to proceed with our anticipated business activities following the
acquisition of HECI, it will be necessary to obtain financing of approximately
$3 million during the next 12 months or sooner. Management anticipates that
future funding will most likely be in the form of debt and/or private equity
financing. The number of shares of our common stock to be issued pursuant to the
acquisition transaction and the aggregate number of shares to be outstanding
after completion of the acquisition, as shown elsewhere in this information
statement, does not take into account any such future financing and,
accordingly, our stockholders may be subject to additional and substantial
dilution as a result of such financing.
We anticipate that we will need funds in order to complete development of
and commence marketing HECI's engines. If we raise additional capital by selling
equity or equity-linked securities, these securities would dilute the ownership
percentage of our existing stockholders. Also, these securities could also have
rights, preferences or privileges senior to those of our common stock.
Similarly, if we raise additional capital by issuing debt securities, those
securities may contain covenants that restrict us in terms of how we operate our
business, which could also affect the value of our common stock. We may not be
able to raise capital on reasonable terms, or at all.
Purchasers of our common stock pursuant to the financing may be given the
opportunity to have their shares registered with the SEC. This would make
more shares available for trading in the public market and could have a
negative effect on our stock price.
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We expect that the anticipated private sale of common stock pursuant to the
financing will include limited registration rights for purchasers of the shares.
Accordingly, we may within the next 12 months, file a registration statement
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with the SEC to register these shares. Upon effectiveness of the registration
statement, these shares will be able to be sold freely into the public trading
market. If a significant number of these shares are placed for sale into the
market, the price of our stock could go down.
We cannot assure you that there will be an active trading market for our
common stock.
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Even though our common stock is expected to continue to be quoted on the
OTC Bulletin Board, we cannot predict the extent to which a trading market will
develop or how liquid that market might become. Also, most shares outstanding
after the acquisition of HECI, including those issued pursuant to the
acquisition, will be "restricted securities" within the meaning of Rule 144
promulgated by the SEC and will therefore be subject to certain limitations on
the ability of holders to resell such shares. Thus, holders of our common stock
may be required to retain their shares for a long period of time. None of our
outstanding common shares have been registered under federal or state securities
laws, nor will we register the shares issued pursuant to the acquisition
transaction. Accordingly, restricted shares may not be sold or otherwise
transferred without registration or reliance upon a valid exemption from
registration.
Risks Relating to Our Business After the Completion of the Acquisition
HECI has a limited operating history and has not recorded revenues or
operating profits since its inception and Green Mt. has been inactive for
several years. Continuing losses may exhaust our capital resources and
force us to discontinue operations.
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HECI was incorporated on May 19, 2003 and has a limited operating history
and incurred net losses since inception. Green Mt. has been inactive for several
years and has a net stockholders' deficit of $43,617 as of March 31, 2005. The
potential for us to generate profits following the completion of the merger
depends on many factors, including the following:
o the size and timing of future customer orders, milestone achievement,
product delivery and customer acceptance, if required;
o success in maintaining and enhancing existing strategic relationships
and developing new strategic relationships with potential customers;
o our ability to protect HECI's intellectual property;
o actions taken by competitors, including supplier of traditional
engines, hydrogen fuel cells and new product introductions and pricing
changes;
o the costs of maintaining and expanding operations; and
o our ability to attract and retain a qualified work force in a small
town.
We cannot assure you that following the acquisition of HECI we will achieve
any of the foregoing factors or realize profitability in the immediate future or
at any time.
HECI has had a significant working capital deficit, which makes it more
difficult to obtain capital necessary for its business and which may have
an adverse effect on our future business following the acquisition.
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HECI has historically had a working capital deficit and is in need of
additional funding. If after completion of the acquisition transaction, all of
HECI's current liabilities were to become due at the same time, without the
anticipated financing that we are attempting to finalize, we would not be able
to pay them in full, which most likely would have a material negative impact on
our business and future prospects.
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If HECI cannot achieve commercial application of its hydrogen engine and
related technology, we may not achieve profitability.
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The development of a market for HECI engines is dependent in part upon the
on the development of a market for hydrogen as a fuel, which may be impacted by
many factors, including:
o the cost competitiveness of hydrogen as a fuel relative to other fuels;
o the future availability of hydrogen as a fuel;
o consumer perception of the safety of hydrogen and willingness to use
engines powered by hydrogen;
o adverse regulatory developments, including the adoption of onerous
regulations regarding hydrogen use or storage;
o barriers to entry created by existing energy providers; and
o the emergence of new competitive technologies and products.
Certain government regulations concerning electrical and hydrogen
generation, delivery and storage of fuels and other related matters may
negatively impact our business following the acquisition of HECI.
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HECI's business is subject to and effected by federal, state, local and
foreign laws and regulations. These may include state and local ordinances
relating to building codes, public safety, electrical and hydrogen production,
delivery and refueling infrastructure, hydrogen storage and related matters. The
use of hydrogen inside a building will require architectural and engineering
changes in the building to allow the hydrogen to be handled safely. As HECI
engines and other new products are introduced into the market commercially,
governments may impose new regulations. We do not know the extent to which any
such regulations may impact the HECI business or the businesses of its
customers' businesses. Any new regulation may increase costs and could reduce
our potential to be profitable following completion of the merger.
The industry in which HECI operates is highly competitive and could affect
our results of operations, which would make profitability even more
difficult to achieve and sustain.
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The power generation and alternative fuel industry is highly competitive
and is marked by rapid technological growth. Other competitors and potential
competitors include Ford Power Products, H2Car Co., Cummins, Daimler Chrysler,
General Motors, Koehler and Generac. Many existing and potential competitors
have greater financial resources, larger market share, and larger production and
technology research capability, which may enable them to establish a stronger
competitive position than we have, in part through greater marketing
opportunities. The governments of the United States, Canada, Japan and certain
European countries have provided funding to promote the development and use of
fuel cells. Tax incentives have also been initiated in Japan, and have been
proposed in the United States and other countries, to stimulate the growth of
the fuel cell market by reducing the cost of these fuel cell systems to
consumers. HECI's business does not currently enjoy any such advantages and, for
that reason, may be at a competitive disadvantage to the fuel cell industry. If
we fail to address competitive developments quickly and effectively, we will not
be able to grow.
Our business could be adversely affected by any adverse economic
developments in the power generation industry and/or the economy in
general.
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HECI depends on the perceived demand for the application of its technology
and resulting products. These products are focused on reducing gas emissions and
-12-
upon the use of alternative fuels for the Ground Support Equipment (GSE)
business and for the power generation business. Therefore, our business is
susceptible to downturns in the airline industry and the genset portion of the
distributed power industry and the economy in general. Any significant downturn
in the market or in general economic conditions would likely hurt our business.
If HECI fail to keep up with changes affecting its technology and the
markets that it will ultimately service, it will become less competitive
and thus adversely affect future financial performance.
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In order to remain competitive and serve its potential effectively, HECI
must respond on a timely and cost- efficient basis to changes in technology,
industry standards and procedures and customer preferences. HECI needs to
continuously develop new technology, products and services to address new
technological developments. In some cases these changes may be significant and
the cost to comply with these changes may be substantial. We cannot assure you
that we will be able to adapt to any changes in the future or that we will have
the financial resources to keep up with changes in the marketplace. Also, the
cost of adapting HECI's technology, products and services may have a material
and adverse effect on our operating results.
Our business could be adversely affected by local, state, national,
international laws or regulations.
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HECI's future success depends in part on laws and regulations that exist,
or are expected to be enacted around the world. Should these laws or regulations
take an adverse turn, this could negatively affect our business and anticipated
revenues. HECI cannot guarantee a positive outcome in direction, timing, or
scope of laws and regulations that may be enacted which will affect the
business.
Becoming engaged in the hydrogen and power generation business may expose
us to certain safety risks and potential liability claims.
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Following completion of the merger, HECI's business will expose us to
potential product liability claims that are inherent in hydrogen and products
that use hydrogen. Hydrogen is a flammable gas and therefore a potentially
dangerous product. Any accidents involving HECI engines or other hydrogen-using
products could materially impede widespread market acceptance and demand for our
hydrogen-fueled engines. In addition, we might be held responsible for damages
beyond the scope of our insurance coverage. We also cannot predict whether we
will be able to maintain our insurance coverage on acceptable terms, or at all.
Our future success depends on retaining HECI's existing key employees and
hiring and assimilating new key employees. The loss of key employees or the
inability to attract new key employees could limit our ability to execute
our growth strategy, resulting in lost sales and a slower rate of growth.
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Our future success depends in part on our ability to retain HECI's key
employees including its executive officers and, in particular, HECI's founder
Ted Hollinger. Although following the acquisition we expect to have employment
agreements with these executives, each executive may be able to terminate his
agreement at any time. Also, we do not carry, nor do we presently anticipate
obtaining, "key man" insurance on our executives. It would be difficult for us
to replace any one of these individuals. In addition, as we grow we may need to
hire additional key personnel. We may not be able to identify and attract high
quality employees or successfully assimilate new employees into our existing
management structure.
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We may be unable to protect our intellectual property adequately or cost
effectively, which may cause us to lose market share or reduce prices.
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Our future success depends in part on HECI's ability to protect and
preserve its proprietary rights related to its technology and resulting
products. We cannot assure you that we will be able to prevent third parties
from using our intellectual property rights and technology without our
authorization. HECI does not currently own any patents, although one patent is
pending related to its technology, but anticipates making patent applications in
the immediate future. HECI also relies on trade secrets, common law trademark
rights and trademark registrations. HECI intends to protect its intellectual
property via non-disclosure agreements, contracts, and limited information
distribution, as well as confidentiality and work for hire, development,
assignment and license agreements with our employees, consultants, third party
developers, licensees and customers. However, these measures afford only limited
protection and may be flawed or inadequate. Also, enforcing intellectual
property rights could be costly and time-consuming and could distract
management's attention from operating business matters.
HECI's intellectual property may infringe on the rights of others,
resulting in costly litigation.
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In recent years, there has been significant litigation in the United States
involving patents and other intellectual property rights. In particular, there
has been an increase in the filing of suits alleging infringement of
intellectual property rights, which pressure defendants into entering settlement
arrangements quickly to dispose of such suits, regardless of their merits. Other
companies or individuals may allege that we infringe on their intellectual
property rights. Litigation, particularly in the area of intellectual property
rights, is costly and the outcome is inherently uncertain. In the event of an
adverse result, we could be liable for substantial damages and we may be forced
to discontinue our use of the subject matter in question or obtain a license to
use those rights or develop non-infringing alternatives. Any of these results
would increase our cash expenditures, adversely affecting our financial
condition.
We may not be able to manage our growth effectively, which could adversely
affect our operations and financial performance.
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The ability to manage and operate our business as we execute our
development and growth strategy will require effective planning. Significant
rapid growth could strain our management and other resources, leading to
increased cost of operations, an inability to ship enough product to meet
customers demand and other problems that could adversely affect our financial
performance. We expect that HECI's efforts to grow will place a significant
strain on personnel, management systems, infrastructure and other resources. Our
ability to manage future growth effectively will also require us to successfully
attract, train, motivate, retain and manage new employees and continue to update
and improve our operational, financial and management controls and procedures.
If we do not manage our growth effectively, our operations could be adversely
affected, resulting in slower growth and a failure to achieve or sustain
profitability.
Being a public company involves increased administrative costs, which could
result in lower net income and make it more difficult for us to attract and
retain key personnel.
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As a public company, we incur significant legal, accounting and other
expenses that HECI did not incur as a private company. In addition, the
Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the
SEC, have required changes in corporate governance practices of public
companies. We expect that these new rules and regulations will increase our
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legal and financial compliance costs and make some activities more time
consuming. For example, in connection with being a public company, we may have
to create several board committees, implement additional internal controls and
disclose controls and procedures, retain a transfer agent and financial printer,
adopt an insider trading policy and incur costs relating to preparing and
distributing periodic public reports in compliance with our obligations under
securities laws. These new rules and regulations could also make it more
difficult for us to attract and retain qualified members of our board of
directors, particularly to serve on our audit committee, and qualified executive
officers.
We do not anticipate paying dividends in the foreseeable future. This could
make our stock less attractive to potential investors.
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We anticipate that we will retain any future earnings and other cash
resources for future operation and development of our business and do not intend
to declare or pay any cash dividends in the foreseeable future. Any future
payment of cash dividends will be at the discretion of our board of directors
after taking into account many factors, including our operating results,
financial condition and capital requirements. Corporations that pay dividends
may be viewed as a better investment than corporations that do not.
Future sales or the potential for sale of a substantial number of shares of
our common stock could cause our market value to decline and could impair
our ability to raise capital through subsequent equity offerings.
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Sales of a substantial number of shares of our common stock in the public
markets, or the perception that these sales may occur, could cause the market
price of our common stock to decline and could materially impair our ability to
raise capital through the sale of additional equity securities. Once the
acquisition of HECI is completed, in addition to the 20,120,000 shares of our
common stock actually issued and outstanding, there will be another 5.025
million shares of common stock reserved for future issuance as follows:
o approximately 3.675 million shares reserved for financing and
conversion of promissory notes; and
o 1.35 million shares reserved for issuance under our new restricted
stock plan.
The authorization and issuance of blank-check preferred stock may prevent
or discourage a change in our management.
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Our amended certificate of incorporation will authorize the board of
directors to issue up to 10 million shares of preferred stock without
stockholder approval having terms, conditions, rights, preferences and
designations as the board may determine. The rights of the holders of our common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
discouraging a person from acquiring a majority of our outstanding common stock.
It may be difficult for a third party to acquire us, and this could depress
our stock price.
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Nevada corporate law includes provisions that could delay, defer or prevent
a change in control of our company or our management. These provisions could
discourage information contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. As a result,
these provisions could limit the price that investors are willing to pay in the
future for shares of our common stock. For example:
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o Without prior stockholder approval, the board of directors has the
authority to issue one or more classes of preferred stock with rights
senior to those of common stock and to determine the rights, privileges
and inference of that preferred stock;
o There is no cumulative voting in the election of directors, which would
otherwise allow less than a majority of stockholders to elect director
candidates; and
o Stockholders cannot call a special meeting of stockholders.
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
On June 3, 2005, our board of directors voted unanimously to authorize and
recommend that in connection with the acquisition of HECI, our stockholders
approve an amendment to our certificate of incorporation. This amendment was
also approved by our two controlling stockholders, acting by written consent.
Change in Authorized Shares
Upon filing of the amended certificate of incorporation, the total number
of shares that we will be authorized to issue will be changed from 50 million
shares of common stock to 100 million shares of common stock, par value $0.001
per share, and 10 million shares of preferred stock, par value $0.001 per share.
All shares of common stock have equal rights and privileges with respect to
voting, liquidation and dividend rights. Each share of common stock entitles the
holder thereof (a) to one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders; (b) to participate equally
and to receive any and all such dividends as may be declared by the board of
directors; and(C)) to participate pro rata in any distribution of assets
available for distribution upon liquidation. Holders of our common stock have no
preemptive rights to acquire additional shares of common stock or any other
securities. Our common stock is not subject to redemption and carries no
subscription or conversion rights.
The amended certificate of incorporation will provide that the board of
directors has the flexibility to set new classes, series, and other terms and
conditions of the preferred shares. Preferred shares may be issued from time to
time in one or more series in the discretion of the board of directors. The
board has the authority to establish the number of shares to be included in each
such series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations and restrictions
thereof.
Preferred shares may be issued in the future by the board without further
stockholder approval and for such purposes as the board deems in the best
interest of our company including future stock splits and split-ups, stock
dividends, equity financings and issuances for acquisitions and business
combinations. In addition, such authorized but unissued common and preferred
shares could be used by the board of directors for defensive purposes against a
hostile takeover attempt, including (by way of example) the private placement of
shares or the granting of options to purchase shares to persons or entities
sympathetic to, or contractually bound to support, management. We have no such
present arrangement or understanding with any person. Further, the common and
preferred shares may be reserved for issuance upon exercise of stock purchase
rights designed to deter hostile takeovers, commonly known as a "poison pill."
The flexibility granted to the board in specifying the rights and
preferences of various series of preferred stock could similarly be used in
designing classes of preferred stock that could act as an effective deterrent or
defensive tool in a takeover situation. One such tool might be the creation of
voting and other impediments which might frustrate persons attempting to gain
control of our company. Such uses of authorized and unissued stock might make
-16-
any takeover attempt more difficult and could deprive stockholders of the
ability to realize above present market premiums, which often accompany such
takeover attempts. There are currently no shares of preferred stock outstanding
and we do not have any present intention of issuing any such shares in the
immediate futures.
Name Change
Upon the filing of the amended certificate of incorporation with the Nevada
Secretary of State, which will occur upon the closing of the merger agreement,
our corporate name will be changed to "Hydrogen Engine Center, Inc." The new
name will reflect our change in business. On June 3, 2005, our board of
directors voted unanimously to authorize the name change and recommend that our
stockholders approve the proposal. The name change was approved by the written
consent of the controlling stockholders.
HYDROGEN ENGINE CENTER, INC. RESTRICTED STOCK PLAN
In connection with the merger agreement, we have adopted a restricted stock
plan to be put into effect at the effective time of the merger. The stock plan
has been unanimously approved by our board of directors and by the written
consent of stockholders holding a majority of our outstanding common shares. The
purpose of the plan is to encourage and enable key employees to remain with and
devote their best efforts to the business of our company, thereby advancing the
interests of our stockholders. Accordingly, we may award bonuses in the form of
our common stock subject to certain restrictions set forth in the plan.
The following is a brief summary of the stock plan, the form of which is
attached hereto as Appendix B, and is qualified in its entirety by reference to
the stock plan.
Administration of the Plan
The restricted stock plan will be administered by a committee of three or
more directors appointed by our board of directors. The committee has the sole
authority to determine the persons who are to be awarded shares of our common
stock from among those eligible and to establish the number of shares to be
awarded to each person. The committee is to take into consideration the position
held, the duties performed, the compensation received, the services expected to
be rendered by the recipient and other relevant factors. The committee is
authorized to interpret the plan and may, from time to time, adopt such rules
and regulations, not inconsistent with the provisions of the plan, as it may
deem advisable to carry out the plan. A majority of the committee will
constitute a quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the committee, will be deemed the acts of the committee. No member of the
committee will be liable for any action taken, failure to act, determination or
interpretation made in good faith with respect to the plan or any shares awarded
under the plan.
Types of Awards
The stock plan provides that an aggregate of 1.35 million shares of our
common stock is to be reserved for issuance under the terms of the plan. The
committee overseeing the plan will have the authority to award bonuses, in its
sole discretion, in the form of common stock to persons eligible to receive
awards. Shares of our common stock issued under the plan will be deemed
"restricted securities" as that term is defined by Rule 144 promulgated under
the Securities Act of 1933. All stock awarded under the plan will also be
subject to such additional restrictions, terms and conditions, if any, as may be
determined by the committee. Any certificate or certificates representing shares
of issued under the plan will bear an appropriate restrictive legend. The
Committee may also require that certificates representing stock awards be
deposited by the recipient with the company or an escrow agent until the
restrictions thereon have lapsed or have been removed.
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Eligibility to Receive Awards
The committee will determine and designate the persons to whom awards
may be made under the plan, although the committee may authorize awards only to
individuals who are key employees (including officers and directors who are also
key employees) at the time of the award. Awards may be made to the same employee
on more than one occasion.
Stock Available for Awards
Awards may be made under the stock plan for up to 1.35 million shares of
common stock, which will constitute approximately 6.7% of the total number of
shares of common stock outstanding after the merger, without giving effect to
the issuance of additional shares in connection with our anticipated financing.
New Plan Benefits
At the effective time of the merger, approximately 8 persons will be
eligible to receive awards under the stock plan, including 2 executive officers
and 6 non-employee directors of HECI, who will become officers and directors of
our company at the effective time of the merger. The granting of future awards
under the stock plan is discretionary, and we cannot presently determine the
number of shares to be granted in the future to any particular person or group.
Adjustments
We are required to make appropriate adjustments or substitutions in
connection with the stock plan and any outstanding awards to reflect stock
splits, stock dividends, recapitalizations, spin-offs and other similar changes
in capitalization to the extent the board of directors deems such adjustment or
substitution to be necessary and appropriate. The stock plan also contains
provisions addressing the consequences of a merger or consolidation in which the
company is not the surviving corporation, or sale of all or substantially all of
our assets or capital stock. In such event, any shares that have been awarded
but not yet issued, will be immediately issued without regard to any
restrictions, terms or conditions imposed by the committee and any restrictions
placed on shares that has been issued shall be released.
Amendment or Termination
Our board of directors, in its discretion, may terminate the plan at any
time with respect to any shares of stock that have not been awarded. The board
has the right to alter or amend the plan or any part thereof from time to time,
provided that no such change may be made which would impair the rights of the
recipient of awards without the consent of such recipient. Also, the board may
not make any alteration or amendment which would materially increase the
benefits accruing to participants under the plan, increase the aggregate number
of shares that may be issued under the plan, or materially modify the
requirements for participation without stockholder approval.
Federal Income Tax Consequences
Certain tax information related to the restricted stock plan will be
provided to participants in the plan. Tax consequences may vary depending upon
the terms and conditions of a specific award under the plan. Typically, the tax
consequence to us when a stock award is made is that the recipient is deemed to
have compensation income.
REVISED AND AMENDED AGREEMENT AND PLAN OF MERGER
The following is only a summary of the material provisions of the agreement
and plan of merger, dated as of June 3, 2005 and amended on July 6, 2005, by and
among HECI, Green Mt. and Green Mt. Acquisitions. The merger agreement is
attached to this information statement as Appendix C. Please read the agreement
in its entirety.
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On June 3, 2005 we entered into an agreement and plan of merger with
Hydrogen Engine Center, Inc., an Iowa corporation, which agreement was
subsequently amended on July 6, 2005. The acquisition of HECI is to be
accomplished through a merger of our newly created, wholly owned subsidiary,
Green Mt. Acquisitions, Inc., with and into HECI with HECI being the survivor of
the merger. Pursuant to the transaction, the 2 million issued and outstanding
share of HECI common stock will be converted into the right to receive
16,297,200 shares of Green Mt. common stock. As part of the acquisition of HECI,
we will also amend our certificate of incorporation to (a) increase our
authorized capitalization, and (b) change our corporate name to "Hydrogen Engine
Center, Inc." We are also adopting a new restricted stock plan.
Upon the closing of the acquisition, current sole stockholder of HECI will
own approximately 81% of our issued and outstanding common stock, and our
current stockholders will own approximately 19%. The purpose of the acquisition
is to allow us to acquire and carry on the business of HECI. It is anticipated
that becoming a publicly held reporting company will enhance HECI's business
visibility and ability to attract and use additional sources of capital.
H. Deworth Williams and Edward F. Cowle, the controlling stockholders of
Green Mt., beneficially own 832,180 of the outstanding 1,006,000 shares of
common stock, representing approximately 83% of the outstanding shares. The
controlling stockholders have, in connection with the transactions contemplated
by the merger agreement, executed a written consent to take the following
actions:
o authorize an amendment to our certificate of incorporation, which will
increase our authorized capitalization and change our corporate name to
"Hydrogen Engine Center, Inc."; and
o approve the adoption of a new restricted stock plan.
Pursuant to Nevada law and the rules and regulations of the Exchange Act,
we are hereby notifying our stockholders of the approval of the foregoing
matters and filing this information statement with the SEC, which will be mailed
to all stockholders of record as of the record date established therefore.
The terms of the acquisition and agreement are more fully described below.
Background of the Acquisition of HECI
In April 2005, Harvey Kaye of Gulf Stream Capital met the director of
development of affairs for Montreal International, a government agency, who
referred Mr. Kaye to Larry Ragle, Vice President of International Operations for
HECI. At the time, HECI was involved in a project at the Montreal International
Airport involving the installation of HECI engines into certain airport
equipment. Mr. Ragle then introduced Mr. Kaye to Ted Hollinger, President of
HECI. After several telephone discussions, a strategy was developed whereby HECI
might become a publicly traded company by merging with or being acquired by an
existing public shell company.
Mr. Kaye then introduced Mr. Hollinger to Edward F. Cowle, a principal
stockholder of Green Mt. and someone experienced in taking private companies
public. Mr. Cowle represented that he would present the HECI business plan to
Green Mt. and explore the possibility of Green Mt. acquiring HECI. Following
several discussions among the parties, a non-binding letter of intend was
entered into on May 9, 2005 that set forth the intent of Green Mt. to acquire
HECI. In approving the letter of intent, our board of directors considered the
merits of the proposed transaction and potential benefits to our stockholders.
The board also authorized Mr. Cowle to assist in the ongoing negotiations with
HECI in order to ultimately consummate the acquisition. Because negotiations
were ongoing and the letter of intent was not binding, it was determined that in
the best interest of all concerned, the proposed transaction would be kept
confidential until a definitive agreement could be drafted and executed by the
parties.
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Legal counsel for the two companies began to prepare the necessary
agreements and accompanying documents to formalize the understanding between the
parties. Also, financial statements for both companies had to be completed and
audited as necessary. Green Mt. proceeded to create in the State of Nevada,
Green Mt. Acquisitions, Inc. as a wholly owned subsidiary for the sole purpose
of facilitating the acquisition of HECI and, on June 3, 2005, the parties
completed and executed the agreement and plan of merger, which was also ratified
by our board on that date.
We then filed with the SEC on June 3, 2005 a current notice on Form 8-K
reporting the execution of the merger agreement. It was determined that we
should endeavor to finalize the acquisition by way of HECI merging with our
subsidiary, Green Mt. Acquisitions, and to complete the transactions and other
related actions set forth in the merger agreement by approximately August 15,
2005. On July 6, 2005, the parties made certain revisions to the merger
agreement and executed an amended agreement to reflect those changes. We then
proceeded to prepare and file with the SEC a preliminary copy of this
information statement and, subsequently, the definitive information statement
was prepared and mailed to stockholders on or about the date set forth herein.
Green Mt.'s Reasons for the Acquisition
In considering and approving the acquisition of HECI and revised and
amended agreement and plan of merger, our board of directors considered various
factors including:
o our current lack of assets and of business operations;
o our prospects for the future;
o HECI's promising technology, business plan and prospects for growth and
expansion; and
o anticipated increase in our stockholder values as a result of the
acquisition of HECI.
In agreeing to the acquisition agreement, our board believes that the
relinquishment of control to HECI's management and adoption of HECI's assets and
operations will eventually add value to Green Mt. Our board reached this
conclusion after analyzing HECI's operations, prospects and managerial
resources, which are described in more detail herein, and believes that
acquiring HECI's growth potential by means of an acquisition is the best
opportunity to increase value to our stockholders.
HECI's Reasons for Being Acquired by Green Mt.
In considering and voting upon the acquisition and revised and amended
agreement and plan of merger, the HECI board of directors considered the
following:
o HECI's financial condition, financial projections and the economic and
market conditions affecting HECI;
o the increased market liquidity expected to result from exchanging stock
in a private company for publicly traded securities of Green Mt.;
o the ability to use registered securities to make future acquisitions of
assets or businesses;
o increased visibility in the financial community;
o enhanced access to the capital markets;
o improved transparency of operations; and
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o perceived credibility and enhanced corporate image of being a publicly
traded company.
Neither Green Mt. nor HECI retained the services of an investment banker or
requested a fairness opinion in connection with the acquisition transaction.
The above discussion of the material factors considered by Green Mt.'s and
HECI's boards of directors is not intended to be exhaustive, but sets forth the
principal factors considered. In view of the variety of factors considered in
connection with their evaluation of the acquisition and the merger agreement,
the boards considered the factors as a whole and did not find it practicable to
and did not quantify or otherwise assign relative weight to the specific factors
considered in reaching their determinations. In addition, individual members of
the boards may have given different weight to different factors.
Material Terms of the Revised and Amended Agreement and Plan of Merger
Subject to the terms and conditions of the merger agreement, at the
effective time of the merger, our subsidiary, Green Mt. Acquisitions, will merge
with and into HECI, the separate corporate existence of Green Mt. Acquisitions
will cease and we will become the parent corporation of HECI. Also prior to the
closing of the agreement we will effect a forward stock split of our issued and
outstanding shares on a 3.8 shares for 1 share basis. At the effective time of
the merger, we will issue an aggregate of 16,297,200 shares of common stock
(post-split) to the HECI stockholders in exchange for 100% of the issued and
outstanding shares of HECI capital stock.
Immediately prior to the effective time of the merger, we will file an
amended certificate of incorporation that will change our corporate name to
"Hydrogen Engine Center, Inc." as a result of the acquisition.
At the effective time of the merger, those members of the HECI board of
directors holding office immediately prior to the effective time will remain as
the members of the board of directors of our newly acquired subsidiary, HECI, as
the surviving corporation of the merger. Also, those persons holding offices of
HECI at the effective time, will continue to hold the same offices of the
surviving corporation.
Also at the effective time, the directors of Green Mt. will nominate and
elect to the board of directors those persons designated by HECI.
Simultaneously, Green Mt. will cause all of the persons then serving as
directors and officers immediately prior to the closing of the transaction to
resign from all of their respective positions with Green Mt., effective
immediately upon the closing of the acquisition.
Effective Time of the Merger
The merger agreement provides that, subject to the approval of the HECI
stockholders and satisfaction or waiver of other conditions, the merger will be
consummated by filing a certificate of merger and any other appropriate
documents, in accordance with the relevant provisions of the NRS, with the
Secretary of State of Nevada and Iowa. We expect the merger to be consummated
promptly after fulfilling the terms and conditions of the agreement.
We anticipate that the closing will take place at a mutually agreed upon
time, but no later than five (5) days after all conditions precedent have been
met satisfied or waived and all required documents have been delivered. The
parties have agreed to use their reasonable commercial efforts to cause the
closing to occur on or before August 15, 2005.
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Consideration
Common Stock of HECI. Upon consummation of the acquisition, each share of
outstanding HECI common stock shall be converted into the right to receive
shares of Green Mt. common stock. Accordingly, following the exchange, the
2,000,000 shares of HECI common stock held by Ted Hollinger, the sole HECI
stockholder, will be converted to an aggregate of 16,297,200 shares of our
common stock.
Also, at the effective date of the merger, H. Deworth Williams and Edward
F. Cowle, our controlling stockholders, will be entitled to receive from Green
Mt. and HECI a one-time fee of $250,000. The cash fee will not be payable until
such time as Green Mt. and HECI complete financing of at least $3 million.
As a result of the transaction, the shares of HECI capital stock will no
longer be outstanding, will automatically be cancelled and retired and will
cease to exist. Mr. Hollinger, the sole HECI stockholder immediately prior to
the closing, will cease to have any rights with respect to such stock, except
the right to receive shares of the Green Mt. common stock described above.
Representations and Warranties
The merger agreement contains customary representations and warranties of
the parties. Green Mt.'s and Green Mt. Acquisitions's representations and
warranties to HECI relate to, among other things:
o organization, standing, corporate power and similar corporate matters;
o authorization, execution, deliver and enforceability of the merger
agreement;
o valid issuance of our common stock;
o capital structure;
o accuracy of financial statements and other information;
o absence of certain adverse changes;
o absence of litigation;
o absence of liabilities or claims not previously disclosed;
o timely filing of all required tax returns;
o delivery of all requested information;
o material contracts;
o status of employees or independent contractors;
o compliance with the federal securities laws, including the applicable
provisions of the Sarbanes-Oxley Act of 2002, and the accuracy of all
information filed with the SEC;
o absence of employee benefit plans;
o absence of environmental claims;
o compliance with all applicable laws; and
o absence of any untrue statement of a material fact.
HECI's representations and warranties to Green Mt. and Green Mt.
Acquisitions relate to, among other things:
o organization, standing, corporate power and similar corporate matters;
o authorization, execution, deliver and enforceability of the merger
agreement;
o valid issuance of HECI capital stock;
o capital structure;
o accuracy of financial statements and other information;
o absence of certain adverse changes;
o absence of litigation;
o absence of liabilities or claims not previously disclosed;
o timely filing of all required tax returns;
o delivery of all requested information;
o material contracts;
o compliance with all applicable laws;
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o accuracy of information provided to Green Mt. for inclusion in any
filing by us with the SEC; and
o absence of any untrue statement of a material fact.
The representations and warranties contained in the merger agreement will
survive and continue in full force and effect for a period of two years after
the effective time of the merger.
Certain Covenants of the Parties
The parties to the merger agreement have agreed to take certain actions
prior the closing, including the following:
o The parties are entitled to make such investigations of the assets,
properties, business and operations of the other party, and to examine
the books, records, tax returns, financial statements and other
materials of the other party as the investigating party deems
necessary. All information is to be kept confidential and is not to be
used in any manner inconsistent with the transactions contemplated by
the agreement. It is a condition to HECI's obligation to consummate the
transactions contemplated by the agreement that it shall have completed
its financial and legal due diligence investigation of Green Mt. with
results thereof satisfactory to HECI in its sole discretion.
o Prior to the closing, any written news releases or public disclosure by
either party pertaining to the agreement or transactions contemplated
thereby, is to be submitted to the other party for its review and
approval prior to such release or disclosure.
o We have agreed that except as contemplated by the merger agreement,
there will be no stock dividend, stock split, recapitalization, or
exchange of shares with respect to or rights issued in respect of our
common stock, and that we and Green Mt. Acquisitions will conduct no
business, prior to the closing other than in the ordinary course of
business or as may be necessary in order to consummate the transactions
contemplated by the agreement.
o We are required to give notice of and submit for action by written
consent of our stockholders:
(a) the amended certificate of incorporation that will
(i) the increase of our authorized capitalization, and
(ii) change of our corporate name;
(b) a new restricted stock plan reserving 1.35 million shares of our
common stock for issuance thereunder.
Also, as promptly as practicable, we are to prepare and file with the SEC a
preliminary information statement relating to the matters stated above and use
our reasonable best efforts to
(a) obtain and furnish the information required to be included by the
SEC in the definitive information statement and, after
consultation with HECI, respond promptly to any comments made by
the SEC with respect to the preliminary information statement and
cause the definitive information statement to be mailed to our
stockholders as promptly as practicable following clearance from
the SEC; and
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(b) obtain the necessary approval of matters stated above by our
stockholders.
o Except as required by law, we and Green Mt. Acquisitions will not
voluntarily take any action that would, or that is reasonably likely
to, result in any of the conditions to the agreement not being
satisfied.
o Our common stock will continue to be approved for quotation on the OTC
Bulletin Board, and we will continue to satisfy throughout the period
from the date of the merger agreement through the closing date:
(a) our filing requirements under Section 13 of the Exchange Act; and
(b) the requirements of Rule 15c2-11 as promulgated by the SEC under
the Exchange Act.
o Each party shall conduct its respective business only in the usual and
ordinary course and the character of such business will not be changed
nor shall any different business be undertaken;
Conditions of the Revised and Amended Agreement and Plan Merger
The respective obligations of HECI, Green Mt. and Green Mt. Acquisitions to
complete the merger are subject to the satisfaction or waiver of various
conditions, including normal and customary closing conditions such as:
o the accuracy of all representations and warranties;
o the performance and compliance with all covenants, agreements and
conditions;
o the delivery of certificates, documents and legal opinions; and
o the ability to complete the merger under applicable state laws.
In addition to the foregoing, the obligation of HECI to complete the
transaction is subject to the satisfaction or waiver of the following
conditions:
o Each stockholder of HECI shall have delivered to Green Mt. an
investment letter agreeing, among other things, that the shares of our
Green Mt. common stock to be issued pursuant to the acquisition of HECI
are, among other things, being acquired for investment purposes and not
with a view to public resale, are being acquired for the investor's own
account, that the investor is an "accredited investor" as defined under
Regulation D of the Securities Act of 1933 (the "Securities Act"), and
that the shares of our common stock are restricted and may not be
resold, except in reliance of an exemption under the Securities Act.
o The amended certificate of incorporation of Green Mt. and the new
restricted stock plan shall have been approved by the requisite vote of
our stockholders, and the amended certificate of incorporation shall
have been filed in accordance with the applicable requirements of
Nevada law.
o At the closing, all directors and officers of Green Mt. and Green Mt.
Acquisitions shall have resigned from their positions as directors and
officers of Green Mt. and Green Mt. Acquisitions, respectively,
effective upon the election and appointment of the HECI nominees to the
Green Mt. board.
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o The shares of our common stock to be issued to the HECI stockholders
will be validly issued, nonassessable and fully paid under the
applicable provisions of Nevada law and will be issued in a nonpublic
offering in compliance with all federal, state and applicable
securities laws.
o HECI shall have received all necessary and requisite approvals and
consents from all required parties and from its stockholders.
o HECI shall have completed its financial and legal due diligence
investigation of us.
The obligation of Green Mt. to complete the agreement and transactions
contemplated thereby is also subject to:
o the availability of an exemption from registration under the Securities
Act and the securities laws of the various states of residence of
HECI's stockholders for issuance of the shares of our common stock to
be issued under the terms of the agreement; and
o the receipt by Green Mt. of an investment letter from HECI's sole
stockholder.
Termination
Termination by either HECI or Green Mt. The merger agreement may be
terminated at any time prior to consummation of the merger by either HECI or
Green Mt.:
o By mutual written consent;
o If the effective time of the merger has not occurred on or before
August 31, 2005 (the "termination date"); provided, however, that the
right to terminate is not available to any party whose failure to
fulfill any obligation under the agreement has been the cause of or
resulted in, the failure of the effective time to occur on or before
the termination date;
o If any governmental entity (i) has issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the agreement, and such
order, decree, ruling or other action has become final and
nonappealable; or (ii) has failed to issue an order, decree or ruling
or to take any other action, and such denial of a request to issue such
order, decree, ruling or take such other action has become final and
nonappealable; or
o If the approvals of the respective stockholders of either Green Mt. or
HECI, if required, have not been obtained by reason of the failure to
obtain the required vote of stockholders or consent to the respective
matters as to which such approval was sought.
In addition to the foregoing, either party may terminate the agreement if
the other party has breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in the agreement, such that
the conditions to the completion of the acquisition of HECI are not capable of
being satisfied on or before the termination date.
Effect of Termination. In the event of termination of the merger agreement
by either Green Mt. or HECI, the agreement will become void and there will be no
liability or obligation on the part of any of the parties or their respective
officers or directors, except for liability arising out of a breach or failure
to perform the representations, warranties, covenants or other agreements
contained in the agreement.
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Cost and Expenses
All costs and expenses in connection with the acquisition of HECI will be
paid by the party incurring these costs and expenses. HECI has agreed to pay all
legal expenses associated with the preparation and execution of the transaction
documents and related agreements and documents contemplated thereby, including
this information statement, up to a maximum of $25,000. We have agreed to pay
all other expenses related to the preparation, printing and mailing of the
information statement and all related filing and other fees paid to the SEC in
connection with the transaction. We estimate that the total costs and expenses
that we will pay in connection with the transaction will be approximately
$10,000, which consists of professional fees, printing and mailing costs, filing
fees and other miscellaneous expenses. HECI will pay all costs and expenses it
incurs in connection with the transaction.
Amendment
The merger agreement may be amended at any time in writing signed by all
parties before or after approval of the transaction by HECI stockholders at its
special meeting but, after such approval, no amendment shall be made which will
require additional approval of HECI stockholders under any applicable law
without such approval.
Extension and Waiver
At any time before the closing, each party to the merger agreement may
extend the time for performance of any obligation or act of another party, waive
any inaccuracies in the representations and warranties or waive compliance by
the other party with any of the agreements or conditions contained in the
agreement.
CERTAIN TRANSACTIONS AND INFORMATION RELATED TO THE ACQUISITION
Change in Control
A change of control of Green Mt. will occur as a result of the acquisition,
pursuant to which the sole stockholder of HECI will become a stockholder of
Green Mt. and will own approximately 81% of the issued and outstanding shares of
our common stock.
Forward Stock Split
The merger agreement provides that prior to the closing, we will effect a
forward stock split of our issued and outstanding shares of common stock on a
3.8 shares for 1 share basis As a result of the stock split, the number of
shares of our common stock outstanding will increase to approximately 3,822,800
shares, but will not affect any stockholder's proportionate interest in Green
Mt. prior to the closing of the transaction. No fraction of any Green Mt. shares
will be issued, rather the number of shares otherwise issuable, if other than a
whole number, will be rounded up to the next whole number. The par value of our
common stock will remain unchanged. While the aggregate par value of our
outstanding common stock will be increased, our additional paid-in capital will
be decreased by a corresponding amount. Therefore, the reverse split will not
affect our total stockholders' equity.
The forward stock split has been unanimously approved by our board of
directors and is expected to be effected immediately before the closing, on or
about July __, 2005. We believe that the forward stock split is advisable
because it will increase the number of total shares that are eligible to be
traded in the public market. We further believe that the additional shares in
the trading market will increase liquidity and result in a more orderly market
for our shares.
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In addition to the 3,822,800 shares outstanding after the split, we will
issue 16,297,200 shares pursuant to the merger agreement, resulting in
approximately 20,120,000 common shares outstanding. Following the increase of
our authorized capitalization, we will have the corporate authority to issue
nearly an additional 80 million shares of authorized but unissued common stock.
Of the unissued common stock, 1.35 million shares will be reserved for
restricted stock plan and an undetermined number of shares may be issued
pursuant to the anticipated financing, if such financing is for common or
preferred shares. The remaining authorized and unissued shares, including 10
million shares of preferred stock, may be issued without stockholder approval at
any time, in the sole discretion of our board of directors. The authorized and
unissued shares may be issued for cash, to acquire property or for any other
purpose that is deemed in the best interests of our company. Any decision to
issue additional shares will reduce the percentage of our stockholders' equity
held by our current stockholders and could dilute our net tangible book value.
Financing
Interim Financing
The parties may endeavored to secure interim financing for HECI of between
$500,000 and $750,000. The merger agreement anticipates that any such interim
financing will close simultaneously with the closing of the acquisition. If the
interim financing is in the form of Green Mt. equity securities, then the
minimum price per share will be $1.00 and, if in a form of preferred stock or
other instrument convertible into common stock, the price of conversion into
common stock will be a minimum of $1.00 per share.
Subsequent Financing
The merger agreement also provides that our controlling stockholders will
use their best efforts to assist Green Mt. in arranging for a minimum of $3
million in financing for the benefit of HECI and Green Mt. Our controlling
stockholders will participate only as a finders in any prospective financing and
will not negotiate or participate in the actual sale of any securities. Green
Mt., at its sole discretion, will have the right to accept prospective financing
in any form. If the financing is in the form of equity securities, the price of
common stock used for such financing will be at a minimum of $1.00 per share. If
the financing is in the form of preferred stock or other instrument convertible
into common stock, then the minimum price per share will be $1.00 on an
as-converted basis. Upon the closing of a minimum of $3 million in financing,
the $250,000 fee payable to our controlling stockholders and/or their assigns
under the terms of the agreement will be due and payable out of the proceeds of
the financing.
We expect that the sale of our common stock pursuant to the financing will
include a provision providing the opportunity for persons purchasing the shares
to subsequently have those shares registered with the SEC. Such registration
rights will be at our discretion, but would require that we file a registration
statement to register the shares. We will bear all expenses associated with the
preparation and filing of the registration statement. Upon the effectiveness of
the registration statement, the registered shares will be able to be sold freely
into the public trading market, unless such shares are held by a control person
or affiliate of our company.
Escrow of Shares
At the closing of the merger, our controlling stockholders have agreed to
place into escrow 905,000 shares (post-split) of our common stock pursuant to a
separate escrow agreement. These shares are to remain in escrow until such time
as a minimum of $3 million in financing has been provided to Green Mt. At such
time, the 905,000 shares held in escrow will be released and delivered to the
controlling stockholders and/or their assigns. If the financing has not closed
within two years from the consummation of the acquisition of HECI, the escrowed
shares will be surrendered to Green Mt. to be cancelled.
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Conversion of Notes
The merger agreement also provides that if a minimum of $3 million in
financing is realized following the acquisition, then current holders of HECI
promissory notes, in an aggregate amount not to exceed $675,000, will be
provided the opportunity to convert their notes into shares of Green Mt. common
stock. Any such conversion will be at a price equal to the offering price in
such financing.
Certain Federal Income Tax Consequences
Because no action is being taken in connection with the current outstanding
shares of Green Mt. common stock, no gain or loss is anticipated to be
recognized by our stockholders in connection with the transaction. It is
expected that the issuance of our shares of common stock to HECI stockholders
pursuant to the transaction will be tax-free to those persons.
Accounting Treatment of the Acquisition
The acquisition of HECI is expected to be accounted for as a reverse
acquisition in which HECI is the accounting acquirer and Green Mt. is the legal
acquirer. Current management of HECI is expected to continue as the management
of Green Mt. following the closing. Because the acquisition of HECI is expected
to be accounted for as a reverse acquisition and not a business combination, no
goodwill is expected to be recorded in connection therewith and the costs
incurred in connection with the transaction are expected to be charged to
expenses.
Appraisal Rights
Under applicable Nevada law, our stockholders do not have the right to
demand appraisal of their shares in connection with the approval by written
consent of the amended certificate of incorporation and other actions that may
be contemplated in connection with the acquisition of HECI and the merger
agreement.
Interest of Certain Persons in the Acquisition Transaction
Our controlling stockholders, H. Deworth Williams and Edward F. Cowle,
and/or their assigns, are entitled to receive a $250,000 that is being paid for
services in connection with the acquisition of HECI. The services are for
bringing the parties together, negotiating the transaction and for facilitating
the acquisition of HECI. Messrs. Williams and Cowle have also agreed to use
their best efforts to assist Green Mt. in arranging for a minimum of $3 million
in financing for the benefit of HECI and Green Mt. In this regard, they will
participate only as finders in any prospective financing and will not negotiate
or participate in the actual sale of any securities. Payment of this one-time
fee is to be paid out of anticipated financing of at least $3 million. The
controlling stockholders will also own an aggregate of approximately 3,162,284
shares of Green Mt. common stock following the forward stock split, which will
represent approximately 15.7% of the total outstanding shares following the
acquisition of HECI. Messrs. Williams and Cowle have agreed to escrow 905,000 of
their Green Mt. common shares until such time as least $3 million in financing
is realized.
Federal Securities Law Consequences
The Green Mt. shares of common stock to be issued in connection with the
acquisition of HECI will not be registered under the Securities Act. It is
intended that such shares will be issued pursuant to the private placement
exemption under Section 4(2) and/or Regulation D of the Securities Act. These
shares are deemed "restricted stock" and will bear an appropriate restrictive
legend indicating that the resale of such shares may be made only pursuant to
registration under the Securities Act or pursuant to an available exemption from
such registration.
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After the acquisition is completed, we anticipate that the our common stock
will continue to be listed on the OTC Bulletin Board, and that the trading
symbol will be changed from "CTTM" to a symbol that will reflect the acquisition
of HECI and our new business. Certain outstanding shares of common stock,
including those issued pursuant to the acquisition, will be "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act.
Under the provisions of Rule 144, restricted securities may be sold into the
public market, subject to holding period, volume and other limitations set forth
under the Rule. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least one year, including any person who may be deemed to be an
"affiliate," as defined under the Securities Act, is entitled to sell, within
any three-month period, an amount of shares that does not exceed the greater of:
o the average weekly trading volume in the common stock, as reported
through the automated quotation system of a registered securities
association, during the four calendar weeks preceding such sale, or
o 1% of the shares then outstanding.
In order for a stockholder to rely on Rule 144, we must have available
adequate current public information with respect to our business and financial
status. A person who is not deemed to be an affiliate and has not been an
affiliate for the most recent three months and who has held restricted shares
for at least two years, would be entitled to sell such shares under Rule 144(k)
without regard to the various resale limitations of Rule 144.
Under Rule 144, the one-year holding period will commence as of the
effective time of the merger for the sole stockholder of HECI who receives
shares of our common stock in the transaction. Sales under Rule 144 are also
subject to manner of sale provisions and notice requirements and to the
availability of current public information about us.
Our Operations After the Acquisition of HECI
Following the acquisition of HECI, we will become engaged in HECI's current
business. At the effective time of the merger, our directors and executive
officers will resign and HECI will appoint new directors and executive officers.
We will continue to be a reporting company under the Exchange Act, continue
to file periodic reports and be subject to the proxy solicitation requirements
of the Exchange Act. We do not expect in the immediate that our common stock
will be listed on any national securities exchange or on The Nasdaq Stock
Market, but will continue to be listed on the OTC Bulletin Board, under a new
trading symbol. Our principal offices will be relocated to the same as the
principal offices of HECI located at 602 East Fair Street, Algona, Iowa 50511.
ANTICIPATED BUSINESS FOLLOWING THE ACQUISITION OF HECI
Business of Hydrogen Engine Center, Inc.
Following the acquisition of HECI, we will assume all of the business,
assets, operations and liabilities of Hydrogen Engine Center, Inc., a
development stage company. HECI's primary business is designing, developing and
manufacturing internal combustion engines capable of being fueled either by
gasoline or hydrogen with the goal of ultimately commercializing the use of
hydrogen for power generation using available technology. HECI's management
believes that hydrogen engines ultimately developed by HECI may be initially
used for two major applications
o replacing existing internal combustion engines in airport ground
support applications, and
o combined with electric generators for power generation systems.
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HECI was incorporated on May 19, 2003 by Ted Hollinger, formerly Director
of Engineering at Ford Motor Company and Vice President of the Power Conversion
Group at Ballard Power Systems, responsible for development of hydrogen engine
gensets. Operations commenced with the lease of the facilities in Algona, Iowa.
Mr. Hollinger, left Ballard with the ultimate intention of continuing the
commercialization of hydrogen engines. His employment contract with Ballard
contained a one year, non-compete clause related to internal combustion engines,
which expired on May 29, 2003.
Mr. Hollinger founded HECI with the goal of establishing a hydrogen engine
center of excellence to foster the development of the hydrogen powered engine.
Possible near-term applications for hydrogen engines include, but are not
limited to, airport vehicles, forklifts, mining vehicles and buses, as well as
green electric power generation. Long-term applications could include hybrid
buses and boats, water generation and large- scale power generation through the
parallel operation of electric generators.
Since its inception, HECI has accomplished the following:
o completed technical development and engine modifications for the
conversion of the Ford 4.9L and V10 internal combustion engine to
operate on hydrogen fuel;
o shipped first GSE (ground support equipment) engine;
o entered into a contract with Arnold Motor Supply, an engine machining
company and re-builder of engine heads, to machine and assemble
engines;
o entered into a hydrogen supply and cross-marketing and agreement with
Air Liquide Canada, an industrial gas supplier; and
o entered into an agreement with the Universite du Quebec a Trois
Rivieres to develop new electronic engine control technology.
HECI has also been able to secure certain financing in the form of loans
and grants, which are set forth below, in order to proceed with the development
of its facilities in Algona, Iowa and to commence operations.
o Received a loan of $146,124 from Algona Area Economic Development
Association (of which $135,300 is forgivable) to acquire land on which
a manufacturing facility is to be built;
o Received a $200,000 forgivable loan from the City of Algona, Iowa for
commencing the building of a 120,000 sq. ft. manufacturing building in
Algona.
o Received a $400,000 forgivable loan from the Iowa Department of
Economic Development to be used for building facilities and/or working
capital.
o Received a $1.3 million grant in the form of industrial new jobs
training certificates from Iowa Lakes Community College in Estherville,
Iowa, to be used over a 10 year period ($130,000 per year) for the
creation of new jobs and training to be provided by the College.
Hydrogen Powered Engines
HECI believes that one of the key attributes of the new hydrogen engine is
that a standard production internal combustion automobile engine can be modified
to achieve near-zero emissions. Based upon this belief, HECI has established a
process for converting certain Ford internal combustion engines to operate
efficiently with hydrogen as a fuel. The engines are the 4.9L internal
combustion engine, formerly used in the Ford F-150 and currently being used in
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over 90,000 airport ground support equipment vehicles, and the Ford V10
currently used in the Ford F-15- truck. HECI believes that this conversion
process could apply to any internal combustion engine.
HECI estimates that the efficiency of the hydrogen engine is nearly 40% and
equal to that of today's fuel cells. Using hydrogen fuel in Ford engines, HECI
has achieved near zero NOx emissions. The projected cost of a hydrogen internal
combustion engine is as much as 10 times lower than a fuel cell. A further
advantage of the hydrogen engine is that it can run on regular welding grade
hydrogen, or on mixed gases such as natural gas and hydrogen, versus the ultra
pure hydrogen, typically required for fuel cells, or on mixed gases such as
natural gas and hydrogen. Hydrogen as an alternative fuel can be readily
extracted from water, any hydrocarbon fuel or biomass. When produced renewably
it has the potential to completely eliminate carbon based emissions.
The hydrogen internal combustion engine has the benefit of being understood
by an experienced mechanic with only a few minutes of study. It can then be
serviced by these mechanics using the tools they already possess. There is no
need to change the transmission or any other part of the power train to use a
hydrogen engine. Oil changes and other servicing is the same as for gasoline
engines with few exceptions. There is no need for a catalytic converter nor is
there a danger from the exhaust fumes. Special spark plugs, engine tuning and
engine control system are required, but they appear merely as a brand change to
the service person.
When a hydrogen engine is installed in a vehicle it looks like a standard
gasoline engine. There is no need to change the motor mounts, radiator or any
other part of the vehicle infrastructure except the fuel storage and delivery
system. HECI will ultimately assist the end users in choosing the proper fueling
system. HECI will also provide training in hydrogen safety.
Hydrogen engines developed by HECI will be initially used to replace
existing internal combustion engines in ground support applications and for
power generation systems. HECI anticipates that its initial revenue will come
from the sale of 4.9 liter and 4.2 liter hydrogen engines to the airport ground
support business, from government contracts for the engines, and from federally
subsidized programs requiring hydrogen power for green demonstration vehicles
and power generation systems.
Potential Commercial Applications
Readily accessible commercial applications for the hydrogen engine exist in
ground support equipment such as aircraft tugs, baggage loaders, baggage tugs,
and de-icing equipment. These applications use the Ford F-300 (4.9L) engine,
which is no longer available from Ford. The aviation industry standardized that
engine several years ago and most of the equipment was designed around the
engine. To the best of HECI's knowledge, no engine of the same size and shape is
being offered by automotive engine manufacturers. A secondary market also exists
for military ground support equipment applications using traditional engines.
One available option is to convert these engines to use hydrogen fuel, thereby
addressing a serious emissions issue facing airports. With emissions regulations
becoming more stringent, such as banning diesel engines, hydrogen-fueled
generators (gensets) become very attractive for standby and peak-shaving
applications.
Other Applications
Any application that currently uses gasoline-fueled engines and many
applications that use diesel engines, are likely future users of HECI engines.
Management believes that locales that have strict emissions restrictions will be
receptive to HECI engines. Other applications which could be users of HECI
engines include high performance engines, boats, mining equipment, on-road
buses, wood-chippers, irrigation pumping, aircraft propulsion, farm tractors,
-31-
farm equipment, delivery vehicles, yard tractors, cranes, construction equipment
and military gensets. Although HECI believes these potential markets to be
viable, it has not established any future definitive marketing strategy or plan.
Competition
Although there are several companies developing and/or marketing hydrogen
engines, we are not aware of any significant production of such engines as of
this date. We believe that the companies targeting production of hydrogen-fueled
engines are automotive engine builders, such as Ford, GM, Honda, BMW. HECI
further believes that those engines will initially be used for automobiles and
then for industrial applications. The gasoline-fueled industrial engine market
has in the past been served by GM and Ford. HECI will enter the market with the
only industrial design in the 30 to150 horsepower range.
Fuel cells may be perceived appear to be competition to the hydrogen
engine, but in the opinion of HECI they are not at this time. Fuel cells cannot
be currently manufactured in sufficient quantity to compete with hydrogen-fueled
engines. Also, fuel cells are more costly than the hydrogen internal combustion
engine.
Intellectual Property and Patent Protection
We plan to aggressively protect HECI's intellectual property and technology
by applying for patent and/or copyright protection. We intend to establish
comprehensive intellectual property coverage in the United States and in the
most relevant foreign markets in anticipation of future commercialization
opportunities. HECI does not currently own any patents, although it doe have one
patent pending related to its engine mounts. HECI intends to file core
technology patents covering the use of hydrogen fuel in any internal combustion
engine. Future patent applications will apply to any internal combustion engine
regardless of manufacturer or application. HECI also relies on trade secrets,
common law trademark rights and trademark registrations intends to protect its
intellectual property via non-disclosure agreements, license agreements and
limited information distribution.
Facilities
HECI presently occupies a 12,000 square foot armory building in Algona,
Iowa, under a three-year lease with two possible one year extensions. It has
just completed its second year under the lease. HECI has plans for an industrial
site in Algona and is currently constructing a 140,000 square foot facility. The
initial stage will have a 26,000 square foot manufacturing building, a 3,600
square foot dynamometer building and a 3,600 square foot office building. The
site plan can be observed at HECI's Internet web site at
www.hydrogenenginecenter.com. The new manufacturing building is expected to be
completed in the fourth quarter of 2005.
Employees
HECI presently has 2 full time and 2 part time employees, but anticipates
adding employees starting in August 2005 or upon the realization of funds from
our proposed financing. HECI's employees are not members of any union, nor have
they entered into any collective bargaining agreements, nor is it anticipated in
the near future. It is believed that HECI's relationship with its employees is
good.
Management
At the effective time of the merger, our directors and executive officers
will resign and, in accordance with the provisions of the merger agreement, HECI
will appoint the following persons to serve as directors and executive officers:
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Name Age Position
---- --- --------
Theodore G. Hollinger 64 Director, President and
Chief Technology Officer
Rick Kremer 50 Director
Mike Schiltz 44 Director
Thomas Trimble 63 Director
Thomas G. Daly 57 Vice President of Marketing
and Sales
Larry Ragle 69 Vice President of International
Operations
Tapan Bose 66 Vice President of Research
and Development
Victor Cordell 62 Vice President of Military
Operations
- ---------------------------
The business experience of each of the persons listed above during the past
five years is as follows:
Theodore G. Hollinger. Ted Hollinger started his career in 1964 at
Fairchild Semiconductor as a digital integrated circuit designer. In 1969 he
joined the design team at Advanced Micro Devices where he also designed
integrated circuits. In 1973 he joined Amdahl Computer to head their computer
memory system design effort. In 1975, Mr. Hollinger retired and served as a
consultant on integrated circuit design and processing to Lockheed Missiles and
Space and Linkabit Corp. In 1978 he joined Siliconix as applications manager for
all integrated circuits and in 1979 he became the Chief VMOS Engineer.
Mr. Hollinger founded Advanced Power Technology, a power semiconductor
company in Bend, Oregon in 1984. Mr. Hollinger holds several key power device
patents now assigned to APT. In 1988, he founded Advanced Power Controls -
ONSITE as a subsidiary of Pacific Power & Light. In 1991, he moved the company
to Tennessee and incorporated it under the name APC-ONSITE. Over the course of
his career, Mr. Hollinger has been granted more that a dozen patents. Mr.
Hollinger joined Ecostar in November of 2000 as the Director of Power Conversion
Engineering, and from 2001 to 2002, he was Vice President of power conversion at
Ballard Power Systems. In 2003, Mr. Hollinger founded HECI and presently serves
as its President and Chief Technical Officer.
Rick Kremer. Mr. Kremer began selling and installing electrical equipment
in 1975 and subsequently founded two businesses, State Line Agri, Inc. and State
Line Equipment, Inc. He is currently President of State Line Agri, a production
hog facility. State Line Equipment, which was sold in 2001, was a manufacturer
and seller of agricultural equipment. In March 2001, Mr. Kremer became President
of Stateline Power Corp., an Ohio based manufacturer and distributor of standby
electric generators. Mr. Kremer attended Stark Technical College in Canton, Ohio
and Northeast Technical College in Lima, Ohio.
Mike Schiltz. Mr. Schiltz has been with The Merrill Company / Arnold Motor
Supply from 1983 to the present, initially as a certified machinist from 1983 to
2001. In 2002 he became the division manager of the cylinder head division and
has been the division manager of the engine components division since 2004.
Thomas Trimble. Mr. Trimble has worked in the industrial engine business
for 43 years while serving in various positions such as parts and service
manager, sales manager and operations general manager. For the past 42 years, he
has been with Engine Center for North Coast Ford Industrial and served as a Vice
President for the past 7 years. Mr. Trimble holds an Associates Degree in
Business Administration from Wayne State University.
-33-
Key Personnel
Thomas G. Daly. Mr. Daly was the Director of Marketing and Sales for the
Power Conversion Business Unit at Ballard Power Systems from 2001 to 2002. He
has extensive background in marketing and sales and was responsible for the
introduction of the hydrogen genset at Ballard. He was also VP Marketing & Sales
for Advanced Power Technology in its early development, and later was Director
of Industrial Marketing for Harris Semiconductor. He has a BSEE from Clarkson
University, and attended General Electric's Manager Development school at
Croton-on-Hudson.
Larry Ragle. Mr. Ragle was a founder, director, and COO of The Fox Group, a
manufacturer of blue light emitting diodes in Livermore, California. He was also
President of the Le Groupe Fox in Montreal, Quebec, also a blue light
manufacturer. He is the inventor of several semiconductor devices, including the
vertical power transistor. He introduced this device to three companies:
Siliconix (Vishay), Intersil, and Solitron Devices.
Tapan Bose. Mr. Bose received his Ph.D. in physics from the University of
Louvain, Belgium and his postdoctoral studies at the University of Brown.
Presently, he is professor of physics and director of the Hydrogen Research
Institute at the University of Quebec in Canada. He is also President of the
Canadian Hydrogen Association. Currently, he is member of the Hydrogen Technical
Advisory Group of Natural Resources Canada and member of the Board of Directors
of the National Hydrogen Association in the United States. Prof. Bose is author
and co-author of more than 140 publications, 4 books and 14 patents.
Victor Cordell. Mr. Cordell graduated from Oregon State University in 1965
with BSci in Economics. He then served as a Captain in the USMC where he was a
pilot (Huey helicopter gunships and OV-10 Bronco observation aircraft) and
served in Vietnam in 1968-69. He later served in Army National Guard as a pilot,
State Training Officer and Intelligence Officer. Mr. Cordell has done
considerable contract work for the military and for military suppliers. He was
the co-founder of Recon Technology a venture backed company in Bend, Oregon.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth fees billed to Green Mt. by our auditors
during the fiscal years ended December 31, 2004 and 2003 for:
o services rendered for the audit of our annual financial statements and
the review of our quarterly financial statements;
o services by our auditor that are reasonably related to the performance
of the audit or review of our financial statements and that are not
reported as audit fees;
o services rendered in connection with tax compliance, tax advice and tax
planning; and
o all other fees for services rendered.
Year Ended Year Ended
December 31, 2004 December 31, 2003
----------------- -----------------
Audit Fees $ 4,450 $ 5,235
Audit Related Fees -0- -0-
Tax Fees -0- -0-
All Other Fees -0- -0-
------- -------
Total Fees $ 4,450 $ 5,235
======= =======
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Audit fees consist of fees billed for professional services rendered for
the audit of our financial statements, review of the interim financial
statements included in quarterly reports, and services that are normally
provided by HJ & Associates in connection with statutory and regulatory filings
or engagements. Audit-related fees consists of fees billed for assurance and
related services that are reasonably related to the performance of the audit or
review of our financial statements, which are not reported under "Audit Fees."
Tax fees consist of fees billed for professional services for tax compliance,
tax advice and tax planning. All other fees consist of fees for products and
services other than the services reported above. Prior to our engagement of our
independent auditor, such engagement was approved by our board of directors. The
services provided under this engagement may include audit services,
audit-related services, tax services and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to the
particular service or category of services and is generally subject to a
specific budget. The independent auditors and management are required to report
to the board of directors at least quarterly regarding the extent of services
provided by the independent auditors in accordance with this pre-approval, and
the fees for the services performed to date. The board of directors may also
pre-approve particular services on a case-by-case basis. All audit-related fees,
tax fees and other fees incurred by us for the year ended December 31, 2004,
were approved by the board of directors.
SELECTED HISTORICAL FINANCIAL DATA OF GREEN MT. LABS., INC.
The following selected financial data is derived from Green Mt.'s financial
statements. This information is only a summary and does not provide all of the
information contained in such financial statements, including the related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are part of our Quarterly Report on Form 10-QSB
for the three months ended March 31, 2005 and Annual Report on Form 10-KSB for
the year ended December 31, 2004, which are incorporated herein by reference.
The statement of operations data for each of the years in the two-year period
ended December 31, 2004 and the balance sheet data at December 31, 2004 are
derived from our audited financial statements. The data as of and for the three
months ended March 31, 2005 and 2004 are derived from our unaudited financial
statements which include all adjustments, consisting only of normal recurring
adjustments and accruals, that we consider necessary for a fair presentation of
our financial position and results of operations for these periods. Interim
operating results for the three months ended March 31, 2005 are not necessarily
indicative of the results that may be expected for the entire fiscal year ending
December 31, 2005 or any future period.
Statement of operations data:
-35-
Year Ended Three Months Ended
December 31, December 31, March 31, March 31,
2004 2003 2005 2004
----------- ----------- ----------- -----------
(unaudited)
Revenues $ -- $ -- $ -- $ --
Expenses
General and administrative 18,533 14,444 4,565 4,740
----------- ----------- ----------- -----------
Loss from operations (18,533) (14,444) (4,565) (4,740)
----------- ----------- ----------- -----------
Other Expenses
Interest expense (2,340) -- (678) --
----------- ----------- ----------- -----------
Total other expenses (2,340) -- (678) --
----------- ----------- ----------- -----------
Net loss (20,873) (14,444) (5,243) (4,740)
Basic loss per share $ (0.02) $ (0.01) (0.01) (0.00)
----------- ----------- ----------- -----------
Weighted average number of
shares outstanding 1,006,000 1,006,000 1,006,000 1,006,000
=========== =========== =========== ===========
Balance Sheet Data:
March 31, December 31,
2005 2004
----------- -----------
(unaudited)
Total Assets $ -- $ --
Total Liabilities (43,617) (38,889)
Total Stockholders' Equity (Deficit) (43,617) (38,889)
As described in the above-referenced reports, we are considered a
development stage company with minimal assets or capital and with no material
operations or income. Expenses associated with the preparation and filing of our
reports have been paid for by advances from stockholders, which are evidenced on
our financial statements as current liabilities. Except for the anticipated
acquisition of HECI, we will require only nominal capital to maintain our
corporate viability and necessary funds will most likely be provided by officers
and directors in the immediate future. However, our deficit in working capital
and stockholders equity, in addition to no significant operating results to
date, raise substantial doubt about our ability to continue as a going concern.
EXPERTS
Our financial statements and related schedules incorporated in this
information statement by reference to our annual report on Form 10-KSB for the
year ended December 31, 2004, have been audited by H J & Associates, LLC,
independent auditors, as stated in their report which is also incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
We have prepared the unaudited financial statements for the period ended March
31, 2005 incorporated by reference to our report on Form 10-QSB for the quarter
ended March 31, 2005.
-30-
FINANCIAL INFORMATION FOR HYDROGEN ENGINE CENTER
Because the acquisition of HECI is not subject to stockholder approval and
no action has been or will be taken by stockholders in connection with the
acquisition, HECI financial statements are not being included with this
information statement. Upon completion of the acquisition of HECI, we intend to
file with the SEC a Form 8-K current report that will include requisite
information concerning HECI. We also intend to file audited financial statements
for HECI, that are expected to be ready for filing at the time of the closing
the merger agreement. However, if the financial statements have not been
finalized by the time we file the Form 8-K, we are required to file the
statements within 71 days after the report is required to be filed. Accordingly,
we are not including financial statements, audited or unaudited, for HECI as
part of this information statement or are we including pro forma financial
information.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, we file annual and periodic reports and other
information with the SEC. These reports and other information contain additional
information about our company. You can inspect and copy these materials at the
Securities and Exchange Commission public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on public reference rooms. Some of this information may also be
accessed on the World Wide Web through the SEC's Internet address at
"http://www.sec.gov."
Statements contained in this information statement or in any document
incorporated into this information statement by reference regarding the contents
of any contract or other document are not necessarily complete and each such
statement is qualified in its entirety by reference to such contract or other
document filed as an exhibit with the SEC.
The SEC allows us to incorporate by reference into this information
statement documents we file with the SEC, which means that we can disclose
important information by referring to those documents. The information
incorporated by reference into this information statement is considered to be a
part of this information statement, and later information that we file with the
SEC will update and supersede that information. We incorporate by reference the
documents listed:
o Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2004;
o Our Quarterly Report on Form 10-QSB for the quarter ended March 31,
2005; and
o Our Current Report on Form 8-K filed on June 9, 2005.
We will provide without charge, upon written or oral request by a
stockholder, a copy of any and all of the documents referred to above that have
been, or may be, incorporated by reference herein. Written requests should be
sent to our principal offices at 19 East 200 South, Suite 1080, Salt Lake City,
Utah 84111, attn: Geoff Williams. Oral requests may be made to our principal
offices, telephone number (801) 322-3401.
-36-
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
INTO THIS INFORMATION STATEMENT. THE DATE OF THIS INFORMATION STATEMENT IS JULY
__, 2005. WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION DIFFERENT FROM
THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT. YOU SHOULD NOT ASSUME
THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS
INFORMATION STATEMENT IS ACCURATE AS OF ANY LATER DATE THAN THE DATE OF THE
INFORMATION STATEMENT, AND THE MAILING OF THIS INFORMATION STATEMENT TO
STOCKHOLDERS WILL NOT CREATE ANY IMPLICATION TO THE CONTRARY.
BY ORDER OF THE BOARD OF DIRECTORS
July __, 2004 /s/ Geoff Williams
-----------------------------------
Geoff Williams
President
-37-
Appendix "A"
DEAN HELLER
Secretary of State
202 North Carson St.
Carson City, NV 89701-4299
(775) 684-5708 Website: secretaryofstate.biz
Certificate of Amendment
(PURSUANT TO NRS 78.385 and 78.390)
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of Corporation: Green Mt. Labs., Inc.
2. The articles have been amended as follows (provide article numbers, if
available):
Article #1 - is amended to read:
"The name of the corporation is Hydrogen Engine Center, Inc."
Article #3 - is amended by adding the following paragraph:
"SHARES: The number of shares the corporation is authorized to
issued is 100,000,000 shares of common stock, par value $0.001
per share, and 10,000,000 shares of preferred stock, par value
$0.001 per share. Preferred shares may be issued from time to
time in one or more series in the discretion of the board of
directors. The board has the authority to establish the number
of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of
each such series and the qualifications, limitations and
restrictions thereof."
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is: 832,180 shares (82.7%)
voting for (by written consent) and zero shares voting against.
4. Officer Signature (Required):
/s/ Geoff Williams
- ------------------------------------
Geoff Williams, President
* If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.
-1-
Appendix "B"
DRAFT
HYDROGEN ENGINE CENTER, INC.
RESTRICTED STOCK PLAN
SECTION I. PURPOSE
The purpose of the Hydrogen Engine Center, Inc. Restricted Stock Plan
(the "Plan") is to encourage and enable key employees of Hydrogen Engine Center,
Inc. (the "Company"), upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business, to remain with and
devote their best efforts to the business of the Company, thereby advancing the
interests of the Company and its stockholders. Accordingly, the Company may
award bonuses in the form of Common Stock of the Company, $0.001 par value per
share ("Stock") subject to the restrictions set forth in Section V ("Restricted
Stock"), as hereinafter set forth.
SECTION II. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee (the "Committee") of
three or more directors of the Company appointed by the Board of Directors. The
Committee shall have sole authority to determine the employees who are to be
awarded Restricted Stock from among those eligible hereunder, and to establish
the number of shares to be awarded to each in the form of Restricted Stock after
taking into consideration the position held, the duties performed, the
compensation received, the services expected to be rendered by such employee and
other relevant factors. The Committee is authorized to interpret the Plan, and
may from time to time adopt such rules and regulations, not inconsistent with
the provisions of the Plan, as it may deem advisable to carry out the Plan. A
majority of the Committee shall constitute a quorum and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee, shall be deemed the acts of
the Committee. All decisions made by the Committee in selecting the employees to
whom Restricted Stock shall be awarded, in establishing the number of shares
which may be awarded as Restricted Stock to employees and in construing the
provisions of the Plan shall be final. No member of the Committee shall be
liable for any action taken, failure to act, determination or interpretation
made in good faith with respect to the Plan or any Restricted Stock awarded
under the Plan.
SECTION III. SHARES SUBJECT TO THE PLAN
The aggregate number of shares of Stock awarded in the form of
Restricted Stock under this Plan shall not exceed [820,000] shares. Such shares
of Stock may consist of authorized but unissued shares of Stock or previously
issued shares of Stock reacquired by the Company. Any of such shares of Stock
which remain unissued and which have not been awarded in the form of Restricted
Stock at the termination of the Plan shall cease to be subject to the Plan.
Should any Stock previously awarded as Restricted Stock be forfeited, the shares
of Restricted Stock so forfeited will again be available for grant or award
under the Plan. The aggregate number of shares of Stock which may be issued
under the Plan shall be subject to adjustment as provided in Section VI hereof.
-1-
SECTION IV. ELIGIBILITY
The Committee shall determine and designate, at any time or from time
to time, the key employees of the Company to whom Restricted Stock is to be
awarded, but the Committee may authorize the award of Restricted Stock only to
individuals who are key employees (including officers and directors who are also
key employees) of the Company at the time the Restricted Stock is awarded.
Restricted Stock may be awarded to the same employee on more than one occasion.
SECTION V. RESTRICTED STOCK
The Committee may from time to time, in its sole discretion, award
bonuses in the form of Restricted Stock to persons eligible to receive awards of
Restricted Stock under Section IV. All Restricted Stock awarded under the Plan
shall be subject to such restrictions, terms and conditions, if any, as may be
determined by the Committee. The Committee may in its sole discretion remove,
modify or accelerate the release of restrictions on any Restricted Stock in the
event of death or disability of the recipient of such Restricted Stock, or for
such other reasons as the Committee may deem appropriate. Any certificate or
certificates representing shares of Restricted Stock shall bear a stamped or
printed notice on the face thereof to the effect that such shares have been
awarded pursuant to the terms of the Plan and may not be sold, pledged,
transferred, assigned or otherwise encumbered in any manner except as set forth
in the terms of such award. If the Committee so determines, the certificates
representing Restricted Stock shall be deposited by the recipient with the
Company or an escrow agent designated by the Company until the restrictions
thereon have lapsed or have been removed in accordance with the provisions of
this Section. Upon the lapse of the restrictions or removal thereof by the
Committee, new unrestricted certificates for the number of shares on which the
restrictions have lapsed or been removed shall, upon request by the recipient of
the Restricted Stock, be issued in exchange for such restricted certificates.
SECTION VI. ADJUSTMENTS
In the event the Company shall effect a split of the Stock or dividend
payable in Stock, or in the event the outstanding Stock shall be combined into a
smaller number of shares, the maximum number of shares of Stock as to which
Restricted Stock may be awarded under the Plan shall be increased or decreased
proportionately.
In the event of a reclassification of the Stock not covered by the
foregoing, or in the event of a liquidation or reorganization, the Board of
Directors shall make such adjustments, if any, as it may deem appropriate in the
number and kind of shares for which Restricted Stock may be awarded under the
Plan.
In the event of a merger or consolidation in which the Company is not
the surviving corporation or sale of all or substantially all of the assets or
capital stock of the Company, any shares of Restricted Stock that have been
awarded but not yet issued shall be immediately issued without regard to any
restrictions, terms or conditions imposed by the Committee pursuant to the award
and any restrictions placed on Restricted Stock that has been issued shall be
released.
The provisions of this Section shall only be applicable if, and only to
the extent that, the application thereof does not conflict with any valid
governmental statute, regulation or rule.
SECTION VII. CONTINUANCE OF EMPLOYMENT
Neither the Plan nor any agreement relating to any award of Restricted
Stock shall impose any obligation on the Company or an Affiliate to continue to
employ any employee.
-2-
SECTION VIII. WITHHOLDING
The Company shall have the right to withhold taxes, as required by law,
from any transfer of Stock to an employee under the Plan or to collect, as a
condition of such transfer, any taxes required by law to be withheld.
SECTION IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors in its discretion may terminate the Plan at any
time with respect to any shares of Stock which have not been awarded as
Restricted Stock. The Board of Directors shall have the right to alter or amend
the Plan or any part thereof from time to time; provided, that no such change
may be made which would impair the rights of the recipient of Restricted Stock
without the consent of such recipient; and provided, further, that the Board of
Directors may not make any alteration or amendment which would materially
increase the benefits accruing to participants under the Plan, increase the
aggregate number of shares of Stock which may be issued pursuant to the
provisions of the Plan, or materially modify the requirements for participation
in the Plan without the approval of the stockholders of the Company.
SECTION X. EFFECTIVENESS AND EXPIRATION OF THE PLAN
If adopted by the Board of Directors and approved by the vote of the
holders of a majority of the stock of the Company entitled to vote thereon at a
meeting of stockholders duly called and held for such purpose, or at an annual
meeting thereof, the notice of which has specified that action is to be taken on
the Plan, and the Committee shall have been advised by legal counsel for the
Company that in the opinion of such counsel all applicable requirements of law
precedent to its becoming effective have been fully met, then the Plan shall
become effective on ________ __, 2005, subject to shareholder approval, or as
soon thereafter as the aforesaid requirements have been met. The Plan shall
expire [__] years after the effective date of the Plan. If the stockholders of
the Company fail so to approve the Plan, the Plan shall thereupon terminate and
all awards of Restricted Stock under the Plan shall become void and of no
effect. With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act"), transactions under the Plan are intended to comply
with applicable conditions of Rule 16b-3 or its successors under the 1934 Act.
To the extent any provisions of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee or by the Board of Directors.
-3-
Appendix "C"
REVISED AND AMENDED
AGREEMENT AND PLAN OF MERGER
Among
GREEN MT. LABS., INC.,
GREEN MT. ACQUISITIONS, INC.
And
HYDROGEN ENGINE CENTER, INC.
-1-
REVISED AND AMENDED AGREEMENT AND PLAN OF MERGER
THIS REVISED AND AMENDED AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into as of this 6th day of July 2005 by and among GREEN MT.
LABS., INC., a Nevada Corporation ("Green Mt."), GREEN MT. ACQUISITIONS, INC., a
Nevada corporation ("Merger Sub"); H. Deworth Williams and Edward F. Cowle,
principal stockholders of Green Mt. who will make certain representations and
warranties herein ("Principal Stockholders"); and Hydrogen Engine Center, Inc.,
an Iowa corporation ("HECI"). This Agreement is intended to supplant and
supersede that certain Agreement and Plan of Merger among the foregoing parties
dated June 3, 2005.
WHEREAS, the parties hereto previously executed on June 3, 2005 that
certain Agreement and Plan of Merger and now, due to certain revisions to
previously agreed upon terms of that agreement, the parties desire to execute
this revised and amended Agreement that sets forth the revised terms and
understandings of the parties and is intended to fully supplant and supersede
the agreement of June 3, 2005, making this the definitive Agreement among the
parties hereto and the Agreement of June 3, 2005 of no further force or effect.
WHEREAS, Green Mt. desires to acquire HECI as a wholly owned subsidiary and
to issue shares of Green Mt. common stock to the security holders of HECI upon
the terms and conditions set forth herein. Merger Sub is a newly-created,
wholly-owned subsidiary corporation of Green Mt. that will be merged with and
into HECI, whereupon HECI will be the surviving corporation and will become the
wholly owned subsidiary of Green Mt. Merger Sub and HECI are sometimes
collectively hereinafter referred to herein as the "Constituent Corporations");
WHEREAS, the boards of directors of Green Mt., Merger Sub and HECI,
respectively, deem it advisable and in the best interests of such corporations
and their respective stockholders that Merger Sub merges with and into HECI
pursuant to this Agreement and the Certificate of Merger (in the form attached
hereto as Exhibit "A") and pursuant to applicable provisions of law (such
transaction is hereafter referred to as the "Merger"); and
WHEREAS, each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the transactions
contemplated herein and also to prescribe various conditions thereto.
NOW THEREFORE, in consideration of the premises, mutual covenants set out
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
SECTION 1 Acquisition of Hydrogen Engine Center, Inc. The parties to this
Agreement do hereby agree that Merger Sub will be merged with and into HECI upon
the terms and conditions set forth herein and in accordance with the provisions
of the Nevada Revised Statutes ("NRS"). It is the intention of the parties
hereto that this transaction qualifies as a tax-free reorganization under
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and
related sections thereunder.
SECTION 2 Terms of Merger. In accordance with the provisions of this
Agreement and the requirements of applicable law, Merger Sub will be merged with
and into HECI as of the Effective Time of the Merger (the terms "Closing" and
"Effective Time of the Merger" are defined in Section 6 hereof). HECI will be
the surviving corporation (hereinafter sometimes referred to as the "Surviving
Corporation") and the separate existence of Merger Sub will cease at the
Effective Time of the Merger. HECI, as the Surviving Corporation, will succeed
to and assume all the rights and obligations of Merger Sub in accordance with
the NRS, as described below. Consummation of the Merger will be upon the
following terms and subject to the conditions set forth herein:
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(a) Corporate Existence. Commencing at the Effective Time of the Merger,
the separate corporate existence of Merger Sub will cease and the
Surviving Corporation will continue its corporate existence as an Iowa
corporation; and
(i) it will thereupon and thereafter possess all rights,
privileges, powers, franchises and property (real, personal
and mixed) of each of the Constituent Corporations;
(ii) all debts due to either of the Constituent Corporations, on
whatever account, all causes in action and all other things
belonging to either of the Constituent Corporations will,
except as otherwise set forth herein, be taken and deemed to
be transferred to and will be vested in the Surviving
Corporation by virtue of the Merger without further act or
deed; and
(iii) all rights of creditors and all liens, if any, upon any
property of any of the Constituent Corporations will be
preserved unimpaired, limited in lien to the property
affected by such liens immediately prior to the Effective
Time of the Merger, and all debts, liabilities and duties of
the Constituent Corporations will thenceforth attach to the
Surviving Corporation.
(b) Effective Time of the Merger. At the Effective Time of the Merger,
(i) the Certificate of Incorporation and the Bylaws of HECI, as existing
and in effect immediately prior to the Effective Time of the Merger, will
be and remain the Certificate of Incorporation and Bylaws of the
Surviving Corporation; (ii) the members of the Board of Directors of HECI
holding office immediately prior to the Effective Time of the Merger will
remain as the members of the Board of Directors of the Surviving
Corporation until their respective successors are elected or appointed
and qualified (if on or after the Effective Time of the Merger a vacancy
exists on the Board of Directors of the Surviving Corporation, such
vacancy may thereafter be filled in a manner provided by applicable law
and the Bylaws of the Surviving Corporation); and (iii) until the Board
of Directors of the Surviving Corporation otherwise determines, all
persons who hold offices of HECI at the Effective Time of the Merger will
continue to hold the same offices of the Surviving Corporation.
(c) Conversion of Securities. At the Effective Time of the Merger and
without any action on the part of Green Mt., Merger Sub, HECI or the
holders of any of the securities of any of these corporations, each of
the following will occur:
(i) The outstanding shares of capital stock of HECI will be converted
into the right to receive an aggregate of 16,297,200 shares of
Green Mt. common stock, which shares will reflect the 3.8 shares
for 1 share forward stock split to be effected prior to the
Closing of the Merger and as depicted in Section 2(d) below.
Accordingly, the 2,000,000 shares of HECI Common Stock issued and
outstanding currently and immediately prior to the Effective Time
of the Merger will be converted into the right to receive
16,297,200 shares of Green Mt common stock, which shares will be
issued to the HECI shareholders as set forth in Attachment
2(c)(i), annexed hereto and by this reference made a part hereof.
No fraction of any share of Green Mt. common stock will be issued,
rather, the number of shares otherwise issuable, if other than a
whole number, will be rounded to the nearest whole number. The
holders of such certificates previously evidencing shares of HECI
Common Stock outstanding immediately prior to the Effective Time
of the Merger will cease to have any rights with respect to such
shares of HECI's common stock except as otherwise provided herein
or by law.
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(ii) Any shares of HECI capital stock held in the treasury of HECI
immediately prior to the Effective Time of the Merger will
automatically be canceled and extinguished without any conversion
thereof and no payment will be made with respect thereto. At the
Effective Time of the Merger, the stock transfer books of HECI
will be closed and thereafter, there will be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of any shares of capital stock of HECI which
were outstanding immediately prior to the Effective Time.
(iii) Each share of capital stock of Merger Sub issued and outstanding
immediately prior to the Effective Time of the Merger will remain
in existence as one share of common stock of the Surviving
Corporation, which will be owned by Green Mt.
(iv) The 1,006,000 shares of Green Mt. common stock issued and
outstanding immediately prior to the Merger, which shares will be
increased to approximately 3,822,800 shares as a result of the 3.8
shares for 1 share Forward Stock Split described in Section 2(d)
below, will remain issued and outstanding after the Effective Time
of the Merger.
(d) Forward Stock Split. Prior to the Closing of the Merger, Green Mt.
will take all requisite and necessary action to effect a forward stock
split (the "Forward Stock Split") of its issued and outstanding shares of
common stock on a 3.8 shares for 1 share basis, the effect of which will
increase the number of issued and outstanding shares of Green Mt. common
stock to approximately 3,822,800 shares. In connection with the Forward
Stock Split, no fraction of any share Green Mt. shares will be issued;
rather, the number of shares otherwise issuable, if other than a whole
number, will be rounded up to the next whole number.
(e) Restricted Securities.
(i) None of the shares of Green Mt. common stock to be issued
hereunder will, at the Effective Time of the Merger, be
registered under the Securities Act of 1933, as amended (the
"Securities Act") but, rather, will be deemed to have been
issued pursuant to an exemption therefrom (subject to the
satisfaction of certain other terms and conditions hereof)
and will be considered "restricted securities" within the
meaning of Rule 144 promulgated under the Securities Act. All
shares of Green Mt. common stock to be issued pursuant to
this Agreement will bear a legend worded substantially as
follows:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is
defined in Rule 144 under the Act. The shares may not
be offered for sale, sold or otherwise transferred
except pursuant to an exemption from registration under
the Act, the availability of which is to be established
to the satisfaction of the corporation."
(ii) At the Closing, Green Mt. will direct its transfer agent
to record, as soon as practicable after the Closing, the
issuance of Green Mt. common stock to the holders of HECI's
capital stock pursuant to the provisions set forth above. The
transfer agent will annotate its records to reflect the
restrictions on transfer embodied in the legend set forth
above. There will be no requirement of Green Mt. to register
under the Securities Act any shares of Green Mt. common stock
in connection with the Merger.
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(f) Other Matters.
(i) Immediately prior to the Effective Time of the Merger, HECI
will have no more than 2,000,000 shares of HECI Common Stock
issued and outstanding. Immediately prior to the Effective
Time of the Merger, Green Mt. will have no more than
3,822,800 shares of Green Mt. common stock (post split and
without taking into consideration the additional shares to be
issued due to rounding up of fractional shares resulting from
the Forward Stock Split) and no other series of capital stock
issued and outstanding.
(ii) From and after the Closing and with a view to making
available to holders of Green Mt. common stock issuable
hereunder, the benefits of Rule 144 of the Securities Act or
any other similar rule or regulation of the Securities and
Exchange Commission ("SEC"), Green Mt. will take all action
as may be required as a condition to the availability of Rule
144 under the Securities Act (or any successor exemptive rule
hereinafter in effect) with respect to Green Mt. common stock
and furnish to any holder of Green Mt. common stock
forthwith, upon request, a written statement by Green Mt. as
to its compliance with the reporting requirements of Rule
144, a copy of the most recent annual or quarterly report of
Green Mt. as filed with the SEC and such other reports and
documents as a holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a holder
to sell any such Green Mt. common stock without registration,
upon satisfaction of all applicable provisions of Rule 144.
Green Mt. agrees to facilitate and expedite transfers of the
shares of Green Mt. common stock pursuant to Rule 144 under
the Securities Act, which efforts will include timely notice
to its transfer agent to expedite such transfers of such
shares.
(iii) At the Closing, the then existing directors of Green Mt. will
nominate and elect to the Green Mt. Board of Directors Ted
Hollinger and four other nominees designated by Mr.
Hollinger, and Green Mt. will cause all of the persons then
serving as directors and officers of Green Mt. immediately
prior to the Closing to resign from all of their respective
positions with Green Mt., effective immediately upon the
Closing.
(iv) At the Closing of this Agreement, the Principal Stockholders
and/or their assigns together will be entitled to receive
from the parties hereto a one-time aggregate fee of $250,000
in consideration for certain services in connection with the
consummation of this Agreement. Green Mt. and HECI agree that
the $250,000 fee is to be paid as set forth below in Section
2(g)(ii) below.
(v) If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this
Agreement, the officers and directors of Green Mt. are hereby
fully authorized to take, and will use their reasonable
efforts to take, all such lawful and necessary action.
(g) Financing.
(i) Following the execution of this Agreement and prior to the
Closing, at the request of HECI the Principal Stockholders
will use their best efforts to assist Green Mt. in arranging
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for interim financing for HECI of between $500,000 and
$750,000, to be negotiated in good faith by the parties. The
Principal Stockholders will participate only as a finder in
any prospective financing and will not negotiate or
participate in the actual sale of any securities. Any interim
financing will close simultaneously with the Closing of this
Agreement. HECI will have the discretion to secure such
interim financing from other sources without the assistance
of the Principal Stockholders. If the interim financing is in
the form of Green Mt. equity securities, then the minimum
price per share will be $1.00 and, if in a form of preferred
stock or other instrument convertible into common stock, the
price of conversion into common stock will be a minimum of
$1.00 per share.
(ii) Following the date of this Agreement, the Principal
Stockholders will use their best efforts to arrange for a
minimum of $3 million in financing for the benefit of HECI
and Green Mt. The Principal Stockholders will participate
only as a finder in any prospective financing and will not
negotiate or participate in the actual sale of any
securities. Green Mt., at its sole discretion, will have the
right to accept prospective financing in any form. If the
financing is in the form of equity securities, the price of
common stock used for such financing will be at a minimum of
$1.00 per share. If the financing is in the form of preferred
stock or other instrument convertible into common stock, then
the minimum price per share will be $1.00 on an as-converted
basis. Upon the closing of a minimum of $3 million in
financing, the $250,000 fee payable to the Principal
Stockholders as per Section 2(f)(iv) above will be due and
payable out of the proceeds of the financing.
(iii) Following the Closing of the Agreement and the financing set
forth in Section 2 (g)(ii) above, current holders of HECI
promissory notes, in an aggregate amount not to exceed
$675,000, will be provided the opportunity to convert their
notes into shares of Green Mt. common stock at a conversion
price equal to the offering price in such financing.
(h) Escrow of Shares. Upon the Closing of this Agreement, the Principal
Stockholders agree to place 905,000 shares of Green Mt. common stock
(post-split) into escrow pursuant to a separate escrow agreement. These
shares are to remain in escrow until such time as a minimum of $3 million
in financing has been provided to Green Mt. as per Section 2(g)(ii) above
and, at such time, the 905,000 shares held in escrow will be released and
delivered to the Principal Stockholders and/or their assigns. The
Principal Stockholders will participate only as a finder in any
prospective financing and will not negotiate or participate in the actual
sale of any securities. If the financing has not closed within two years
from the consummation of the acquisition of HECI, the escrowed shares
will be surrendered to Green Mt. to be cancelled.
SECTION 3 Delivery of Shares. On or as soon as practicable after the
Effective Time of the Merger, HECI will use reasonable efforts to cause all
holders of HECI's capital stock (the "HECI Stockholders") to surrender to Green
Mt.'s transfer agent for cancellation certificates representing their shares of
HECI's capital stock, against delivery of certificates representing the shares
of Green Mt. common stock for which HECI's capital stock is to be converted in
the Merger pursuant to Section 2 hereof. Until surrendered and exchanged as
herein provided, each outstanding certificate which, prior to the Effective Time
of the Merger, represented HECI capital stock, will be deemed for all corporate
purposes to evidence ownership of the same number of shares of Green Mt. common
stock into which the shares of HECI capital stock represented by such HECI
certificate will have been so converted.
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SECTION 4 Representations of HECI. HECI hereby makes as of the date
hereof and as of the Effective Time of the Merger, the following representations
and warranties:
(a) As of the date hereof, the total number of shares of HECI Common
Stock issued and outstanding is 2,000,000 shares.
(b) HECI Common Stock constitutes duly authorized and validly issued
shares of capital stock of HECI. All shares are fully paid and
nonassessable.
(c) The audited financial statements of HECI as of and for the year ended
December 31, 2004 and unaudited interim financial statements of HECI for
the period ended March 31, 2005, which have been delivered to Green Mt.,
or will be delivered prior to the Closing (hereinafter referred to as the
"HECI Financial Statements"), fairly present the financial condition of
HECI as of the dates thereof and the results of its operations for the
periods covered thereby. Other than as set forth in any schedule or
exhibit attached hereto, and except as may otherwise be set forth or
referenced herein, there are no material liabilities or obligations,
either fixed or contingent, not disclosed or referenced in HECI Financial
Statements or in any exhibit or notes thereto other than contracts or
obligations occurring in the ordinary course of business since March 31,
2005; and no such contracts or obligations occurring in the ordinary
course of business constitute liens or other liabilities which materially
alter the financial condition of HECI as reflected in HECI Financial
Statements. HECI has, or will have at the Closing, good title to all
assets, properties or contracts shown on HECI Financial Statements
subject only to dispositions and other transactions in the ordinary
course of business, the disclosures set forth therein and liens and
encumbrances of record.
(d) Except as disclosed in writing to Green Mt., since March 31, 2005,
there has not been any material adverse changes in the financial position
of HECI except changes arising in the ordinary course of business, which
changes will not materially and adversely affect the financial position
of HECI.
(e) HECI is not a party to any material pending litigation or, to the
knowledge of its executive officers (herein, the "HECI's Knowledge"), any
governmental investigation or proceeding, not reflected in HECI Financial
Statements, and, to HECI's Knowledge, no material litigation, claims,
assessments or any governmental proceedings are threatened in writing
against HECI.
(f) Neither HECI nor any of its officers, employees or agents, nor any
other person acting on behalf of HECI, has directly or indirectly, within
the past five years, given or agreed to give any gift or similar benefit
to any person who is or may be in a position to help or hinder HECI's
business, or assist it in connection with any actual or proposed
transaction, which (i) might subject it to any material damage or penalty
in any action or which might have a material effect on HECI or its assets
and properties, (ii) if not given in the past, might have had a material
effect on HECI's business or its assets and properties, or (iii) if not
continued in the future, might have a material effect on HECI's business
or its assets and properties or subject it to suit or penalty in any
action.
(g) HECI is in good standing in its state of incorporation, and is in
good standing and duly qualified to do business in each state where
required to be so qualified, except where the failure to so qualify would
have no material adverse effect on the business, financial condition or
results of operations of HECI.
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(h) HECI has, or by the Effective Time of the Merger will have, filed all
material tax, governmental and/or related forms and reports (or
extensions thereof) due or required to be filed in the ordinary course of
business and has (or will have) paid or made adequate provisions for all
taxes or assessments which have become due as of the Effective Time of
the Merger.
(i) HECI has not materially breached any material agreement to which it
is a party. HECI has previously given Green Mt. copies of or access to
all material contracts, commitments and/or agreements to which HECI is a
party.
(j) HECI has the requisite corporate power and authority to enter into
this Agreement together with such other agreements and documents
requisite to this Agreement (the "Transaction Documents") to which it is
a party and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and other Transaction Documents
to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been, or will prior to the Closing
and the Effective Time of the Merger be, duly authorized by HECI's Board
of Directors and by HECI's stockholders (if necessary). The execution of
this Agreement and other Transaction Documents does not materially
violate or breach any material agreement or contract to which HECI is a
party, and HECI, to the extent required, has, or will have by Closing,
obtained all necessary approvals or consents required by any agreement to
which HECI is a party. The execution and performance of this Agreement
and other Transaction Documents will not violate or conflict with any
provision of HECI's Certificate of Incorporation in effect as of the date
hereof, or Bylaws of HECI.
(k) Information regarding HECI, which has been delivered by HECI to Green
Mt. for use in connection with the Merger is, to HECI's Knowledge, true
and accurate in all material respects.
(l) To HECI's Knowledge, HECI has and at the Closing will have, disclosed
in writing to Green Mt. all events, conditions and facts materially
affecting the business, financial conditions (including any liabilities,
contingent or otherwise) or results of operations of HECI.
(m) All information regarding HECI which has been provided to Green Mt.
by HECI or set forth in any document or other communication, disseminated
to any former, existing or potential HECI Stockholders, or to the public
or filed with any state or federal securities regulators or authorities
is, to HECI's Knowledge, true, complete, accurate in all material
respects.
(n) To HECI's Knowledge HECI is and has been in compliance with, and HECI
has conducted any business previously owned or operated by it in
compliance with, all applicable laws, orders, rules and regulations of
all governmental bodies and agencies, including applicable securities
laws and regulations and environmental laws and regulations, except where
such noncompliance has and will have, in the aggregate, no material
adverse effect. HECI has not received notice of any noncompliance with
the foregoing, nor is it aware of any claims or threatened claims in
connection therewith.
(o) To HECI's Knowledge without limiting the foregoing, (i) HECI and any
other person or entity for whose conduct HECI is legally held responsible
are and have been in material compliance with all applicable federal,
state, regional, local laws, statutes, ordinances, judgments, rulings and
regulations relating to any matters of pollution, protection of the
environment, health or safety, or environmental regulation or control,
-8-
and (ii) neither HECI nor any other person for whose conduct HECI is
legally held responsible has manufactured, generated, treated, stored,
handled, processed, released, transported or disposed of any hazardous
substance on, under, from or at any of HECI's properties or in connection
with HECI's operations.
(p) Except as and to the extent specifically disclosed in this Agreement
and as may be specifically disclosed or reserved against it as to amount
in the latest balance sheet contained in HECI Financial Statements, there
is no basis for any assertion against HECI of any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due, including, without
limitation, any liability for taxes (including e-commerce sales or other
taxes), interest, penalties and other charges payable with respect
thereto. Neither the execution and delivery of this Agreement or other
Transaction Documents to which it is a party, nor the consummation of the
transactions contemplated hereby or thereby will
(i) result in any payment (whether severance pay, unemployment
compensation or otherwise) becoming due from HECI to any
person or entity, including without limitation any employee,
director, officer or affiliate or former employee, director,
officer or affiliate of HECI;
(ii) increase any benefits otherwise payable to any person or
entity, including without limitation any employee, director,
officer or affiliate or former employee, director, officer or
affiliate of HECI; or
(iii) result in the acceleration of the time of payment or vesting
of any such benefits.
(q) To HECI's Knowledge, no aspect of HECI's past or present business,
operations or assets is of such a character as would restrict or
otherwise hinder or impair HECI from carrying on the business of HECI as
it is presently being conducted by HECI.
(r) Except as disclosed to Green Mt. in writing and annexed hereto as
Attachment 4(r), to HECI's Knowledge HECI has no material contracts,
commitments, arrangements, or understandings relating to its business,
operations, financial condition, prospects, or otherwise. For purposes of
this Section 4, "material" means payment or performance of a contract,
commitment, arrangement or understanding in the ordinary course of
business, which is expected to involve payments from HECI to any third
party in excess of $100,000.
(s) To HECI's Knowledge, no representation or warranty by HECI contained
in this Agreement and no statement contained in any certificate, schedule
or other communication furnished pursuant to, or in connection with, the
provisions hereof contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein not misleading. To HECI's Knowledge, there is
no current or prior event or condition of any kind or character
pertaining to HECI that may reasonably be expected to have a material
adverse effect on the business, financial condition or results of
operations of HECI. Except as specifically indicated elsewhere in this
Agreement, all documents delivered by HECI in connection herewith have
been and will be complete originals, or exact copies thereof.
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(t) To HECI's Knowledge, all information to be supplied by it in writing,
specifically for inclusion or incorporation by reference in the
definitive Information Statement to be filed with the SEC by Green Mt.
and disseminated by Green Mt. to its stockholders (the "Information
Statement"), will not, at the time the Information Statement is so
disseminated, or at any time it is amended or supplemented thereafter,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5 Representations of Green Mt. and Merger Sub. Green Mt., Merger
Sub and Principal Stockholders hereby make jointly and severally, as of the date
hereof and as of the Effective Time of the Merger, the following representations
and warranties:
(a) As of the date hereof and the Effective Time of the Merger, the
shares of Green Mt. common stock to be issued and delivered to the
security holders of HECI and in connection herewith will, when so issued
and delivered, constitute duly authorized, validly and legally issued,
fully-paid, nonassessable shares of Green Mt. capital stock, free of all
liens and encumbrances.
(b) Each of Green Mt. and Merger Sub has the requisite corporate power to
enter into this Agreement and to perform its respective obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby (i) have been or
will prior to the Closing and the Effective Time of the Merger be duly
authorized by the respective Boards of Directors of Green Mt. and Merger
Sub and by Green Mt. as the sole stockholder of Merger Sub, and (ii)
except as set forth in Section 7(e) hereof, do not have to be approved or
authorized by the stockholders of Green Mt. The execution and performance
of this Agreement will not constitute a material breach of any agreement,
indenture, mortgage, license or other instrument or document to which
Green Mt. or Merger Sub is a party or to which it is otherwise subject
and will not violate any judgment, decree, order, writ, law, rule,
statute, or regulation applicable to Green Mt., Merger Sub or their
properties. The execution and performance of this Agreement will not
violate or conflict with any provision of the respective Certificates of
Incorporation or Bylaws of either Green Mt. or Merger Sub.
(c) Green Mt. has delivered to HECI a true and complete copy of its
audited financial statements for the fiscal years ended December 31,
2004, and 2003, and unaudited financial statements for the three-month
period ended March 31, 2005 (the "Green Mt. Financial Statements"). The
Green Mt. Financial Statements are complete, accurate and fairly present
the financial condition of Green Mt. as of the dates thereof and the
results of its operations for the periods then ended. There are no
material liabilities or obligations either fixed or contingent not
reflected therein. The Green Mt. Financial Statements have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in
the notes thereto) and fairly present the financial position of Green Mt.
as of the dates thereof and the results of its operations and changes in
financial position for the periods then ended. Green Mt. agrees to
provide updated quarterly financial statements as required by the SEC.
Merger Sub has no financial statements because it was recently formed
solely for the purpose of effectuating the Merger and it has been, is and
will remain inactive except for purposes of the Merger and it has no
assets, liabilities, contracts or obligations of any kind other than as
incurred in the ordinary course in connection with its incorporation in
Nevada. Green Mt. has no subsidiaries or affiliates except for Merger Sub
and Merger Sub has no subsidiaries or affiliates.
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(d) Since March 31, 2005, there have not been any material adverse
changes in the business, financial condition or results of operation of
Green Mt. At the Closing, neither Green Mt. nor Merger Sub will have any
material assets and neither such corporation now has, nor will it have,
any liabilities of any kind other than those reflected in the most recent
balance sheet set forth in the Green Mt. Financial Statements and any
costs or liabilities incurred in connection with the Merger (which costs
and liabilities, including those liabilities reflected in the most recent
balance sheet set forth in the Green Mt. Financial Statements,
collectively will be paid in full by Green Mt. prior to the Closing so
that at Closing, Green Mt. has no outstanding liabilities).
(e) Neither Green Mt. nor Merger Sub is a party to, or the subject of,
any material pending litigation, claims, or governmental investigation or
proceeding not reflected in the Green Mt. Financial Statements, and to
the knowledge of the executive officers of Green Mt. and of the Principal
Stockholders (herein "Green Mt.'s Knowledge"), there are no material
lawsuits, claims, assessments, investigations, or similar matters,
threatened in writing against Merger Sub, Green Mt., or the management or
properties of Green Mt. or Merger Sub.
(f) Green Mt. and Merger Sub are each duly organized, validly existing
and in good standing under the laws of the jurisdiction of their
respective incorporation; each has the corporate power to own its
property and to carry on its business as now being conducted and is duly
qualified to do business in any jurisdiction where so required except
where the failure to so qualify would have no material negative impact.
Neither corporation is required to be qualified to do business in any
state other than the State of Nevada.
(g) To Green Mt.'s Knowledge, Green Mt. and Merger Sub have filed all
federal, state, county and local income, excise, property and other tax,
governmental and/or other returns, forms, filings, or reports, which are
due or required to be filed by it prior to the date hereof and have paid
or made adequate provision in the Green Mt. Financial Statements for the
payment of all taxes, fees, or assessments which have or may become due
pursuant to such returns, filings or reports or pursuant to any
assessments received. Neither Green Mt. nor Merger Sub is delinquent or
obligated for any tax, penalty, interest, delinquency or charge and there
are no tax liens or encumbrances applicable to either corporation.
Neither Green Mt. nor Merger Sub is deemed to be an "S Corporation" as
defined by Internal Revenue Code of 1986, as amended.
(h) As of the date of this Agreement, Green Mt.'s authorized capital
stock consists solely of 50,000,000 shares of Green Mt. common stock,
$0.001 par value, of which 1,006,000 shares are presently issued and
outstanding. Prior to the Closing, Green Mt. will have outstanding
1,006,000 shares of common stock (prior to the Forward Stock Split) and
no other capital stock. Prior to the Closing, Green Mt. will amend its
Certificate of Incorporation to increase its authorized capitalization to
100 million shares of common stock, par value $0.001 per share, and 10
million shares of "blank check" preferred stock, and to reflect the 3.8
shares for 1 share forward stock split to be effected prior to the
Closing. Merger Sub's capitalization consists solely of 1,000 authorized
shares of $0.001 par value common stock ("Merger Sub's Common Stock"), of
which 1,000 shares are outstanding, all of which are owned by Green Mt.,
free and clear of all liens, claims and encumbrances. All outstanding
shares of capital stock of Green Mt. and Merger Sub are, and will be at
the Closing, duly authorized, validly issued, fully paid and
nonassessable. There are no existing options, calls, claims, warrants,
preemptive rights, registration rights or commitments of any character
relating to the issued or unissued capital stock or other securities of
either Green Mt. or Merger Sub.
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(i) The financial records, minute books, and other documents and records
of Green Mt. and Merger Sub have been made available to HECI prior to the
Closing The records and documents of Green Mt. and Merger Sub that have
been delivered to HECI constitute all of the material records and
documents of Green Mt. and Merger Sub that they are aware of or that are
in their possession or in the possession of Green Mt. or Merger Sub.
(j) Neither Green Mt. nor Merger Sub has materially breached any material
agreement to which it is or has been a party. Prior to the execution of
the Agreement, Green Mt. has given to HECI copies or access to all
material contracts, commitments and/or agreements to which Green Mt. is a
party. There are no currently existing agreements with any affiliates,
related or controlling persons or entities. Green Mt. has no leasehold
interest or other ownership interest, and no obligations under any real
estate or any mining claims.
(k) Green Mt. has complied with all provisions relating to the issuance
of shares and for the registration thereof under the Securities Act and
all applicable state securities laws, or appropriate exemption from
registration therefrom. To the best of Green Mt.'s Knowledge, there are
no outstanding, pending or threatened stop orders or other actions or
investigations relating thereto involving federal and state securities
laws.
(l) Green Mt. currently has no, and for the past five years has not had,
any employees, consultants or independent contractors other than its
attorneys, accountants and transfer agent. Geoff Williams and Jim Ruzicka
are, and will be at the Closing, the sole directors and sole executive
officers of Green Mt., and Geoff Williams and Jim Ruzicka are, and will
be at the Closing the sole directors and sole executive officers of
Merger Sub.
(m) Green Mt. and Merger Sub have, and at the Closing will have,
disclosed in writing to HECI all events, conditions and facts materially
affecting the business, financial conditions, including any liabilities,
contingent or otherwise, or results of operations of either Green Mt. or
Merger Sub, since March 31, 2005.
(n) To Green Mt.'s Knowledge, Green Mt. was originally organized for the
purposes of, and with a specific plan for the ownership and operations of
mining claims. Subsequently, Green Mt. revised its business to seeking
potential operating businesses and business opportunities with the intent
to acquire or merge with such businesses.
(o) To Green Mt.'s Knowledge, all information regarding Green Mt. which
has been provided to HECI by Green Mt., or set forth in any document or
other communication, disseminated to any former, existing or potential
stockholders of Green Mt., to the public or filed with the SEC or any
state securities regulators or authorities, is true, complete, accurate
in all material respects, not misleading, and was and is in full
compliance with all securities laws and regulations. Without limiting the
generality of the foregoing, Green Mt. has filed all required reports,
schedules, forms, statements and other documents with the SEC since the
filing of its registration statement on Form 10-SB on January 8, 2004,
including all filed reports, schedules, forms, statements and other
documents whether or not required (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later filed SEC Document,
none of the SEC Documents contains any untrue statement of a material
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fact or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of HECI included in the SEC Documents are true and complete
and comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto.
(p) To Green Mt.'s Knowledge, Green Mt. is and has been in compliance
with, and Green Mt. has conducted any business owned or operated by it in
compliance with, all applicable laws, orders, rules and regulations of
all governmental bodies and agencies, including applicable securities
laws and regulations, including, but not limited to, the Sarbanes-Oxley
Act of 2002, and environmental laws and regulations, except where such
noncompliance has and will have, in the aggregate, no material adverse
effect. Green Mt. has not received notice of any noncompliance with the
foregoing, nor is it aware of any claims or threatened claims in
connection therewith. To its Knowledge, Green Mt. has never conducted any
operations or engaged in any business transactions of a material nature
other than as set forth in the reports Green Mt. has previously filed
with the SEC.
(q) The certificates of the Chief Executive Officer and Principal
Accounting Officer of Green Mt. required by Rules 13a-14 and 15d-14 of
the Exchange Act or Section 906 of the Sarbanes-Oxley Act of 2002 with
respect to the SEC Documents, as applicable, are true and correct as of
the date of this Agreement as they relate to a particular SEC Document,
as though made as of the date of this Agreement. HECI has established and
maintains disclosure controls and procedures, has conducted the
procedures in accordance with their terms and has otherwise operated in
compliance with the requirements under Rules 13a-15 and 15d-15 of the
Exchange Act.
(r) Except as and to the extent specifically disclosed in this Agreement
and as may be specifically disclosed or reserved against as to amount in
the latest balance sheet contained in the Green Mt. Financial Statements,
there is no basis for any assertion against Green Mt. of any material
liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise and whether due or to become due, including,
without limitation, any liability for taxes, including e-commerce sales
or other taxes, interest, penalties and other charges payable with
respect thereto. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
(i) result in any payment, whether severance pay, unemployment
compensation or otherwise, becoming due from Green Mt. to any
person or entity, including without limitation any employee,
director, officer;
(ii) increase any benefits otherwise payable to any person or
entity, including without limitation any employee, director,
officer or affiliate; or
(iii) result in the acceleration of the time of payment or vesting
of any such benefits.
(s) To Green Mt.'s Knowledge, no aspect of Green Mt.'s business,
operations or assets is of such a character as would restrict or
otherwise hinder or impair Green Mt. from carrying on the business of
Green Mt. as it is presently being conducted by Green Mt., and as
anticipated following consummation of the Merger.
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(t) To Green Mt.'s Knowledge, other than retention of accountants,
attorney, and transfer agent, Green Mt. has no other contracts,
commitments, arrangements, or understandings relating to its business,
operations, financial condition, prospects or otherwise.
(u) None of Green Mt., Merger Sub or any other affiliate thereof has or
maintains any employee benefit, bonus, incentive compensation,
profit-sharing, equity, stock bonus, stock option, stock appreciation
rights, restricted stock, other stock-based incentive, executive
compensation agreement, employment agreement, deferred compensation,
pension, stock purchase, employee stock ownership, savings, pension,
retirement, supplemental retirement, employment related
change-in-control, severance, salary continuation, layoff, welfare
(including, without limitation, health, medical, prescription, dental,
disability, salary continuation, life, accidental death, travel accident,
and other insurance), vacation, holiday, sick leave, fringe benefit, or
other benefit plan, program, or policy, whether qualified or nonqualified
and any trust, escrow, or other agreement related thereto, covering any
present or former employees, directors, or their respective dependents.
(v) There are no actions, proceedings or investigations pending or, to
Green Mt.'s Knowledge after making appropriate investigation, threatened
before any federal or state environmental regulatory body, or before any
federal or state court, alleging noncompliance by Green Mt. or any
predecessor in interest with the Comprehensive Environmental Response,
Compensation and Liability Act of 1990 ("CERCLA") or any other
Environmental Laws. To Green Mt.'s Knowledge after due investigation;
(i) there is no reasonable basis for the institution of any
action, proceeding or investigation against Green Mt. under
any Environmental Law;
(ii) Green Mt. is not responsible under any Environmental Law for
any release by any person at or in the vicinity of real
property of any hazardous substance (as defined by CERCLA),
caused by the spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping
or disposing of any such hazardous substance into the
environment;
(iii) Green Mt. is not responsible for any costs of any remedial
action required by virtue of any release of any toxic or
hazardous substance, pollutant or contaminant into the
environment including, without limitation, costs arising from
security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body;
(iv) Green Mt. is in material compliance with all applicable
Environmental Laws; and
(v) no real property, now or in the past, used, owned, managed or
controlled by Green Mt. contains any toxic or hazardous
substance including, without limitation, any asbestos, PCBs
or petroleum products or byproducts in any form, the
presence, location or condition of which (x) violates any
Environmental Law, or (y) cannot be cleaned by ordinary
reclamation procedures customary in the oil and gas industry.
For purposes of this Agreement, "Environmental Laws" will mean any
federal, state, local or municipal statute, ordinance or regulation, or
order, ruling or other decision of any court, administrative agency or
other governmental authority pertaining to the release of hazardous
substances (as defined in CERCLA) into the environment.
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(w) To Green Mt.'s Knowledge, no representation or warranty by Green Mt.
or Merger Sub contained in this Agreement and no statement contained in
any certificate, schedule or other communication furnished pursuant to or
in connection with the provisions hereof, contains or will contain any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading. There
is no event or condition of any kind or character pertaining to Green Mt.
that may reasonably be expected to have a material adverse effect on
Green Mt. or its subsidiaries. Except as specifically indicated elsewhere
in this Agreement, all documents delivered by Green Mt. in connection
herewith have been and will be complete originals, or exact copies
thereof.
SECTION 6 Closing. The Closing of the transactions contemplated herein
will take place on such date (the "Closing") as mutually determined by the
parties hereto, but no later than five (5) days after all conditions precedent
have been satisfied or waived and all required documents have been delivered.
The parties will use their reasonable commercial efforts to cause the Closing to
occur on or before August 1, 2005. The "Effective Time of the Merger" will be
that date and time specified in the Certificate of Merger as the date on which
the Merger will become effective.
SECTION 7 Actions Prior to Closing.
(a) Prior to the Closing, HECI on the one hand, and Green Mt. and Merger
Sub on the other hand, will be entitled to make such investigations of
the assets, properties, business and operations of the other party and to
examine the books, records, tax returns, financial statements and other
materials of the other party as such investigating party deems necessary
in connection with this Agreement and the transactions contemplated
hereby. Any such investigation and examination will be conducted at
reasonable times and under reasonable circumstances, and the parties
hereto will cooperate fully therein. The representations and warranties
contained in this Agreement will not be affected or deemed waived by
reason of the fact that either party hereto discovered or should have
discovered any representation or warranty is or might be inaccurate in
any respect. Until the Closing, the parties hereto and their respective
affiliates will keep confidential and will not use in any manner
inconsistent with the transactions contemplated by this Agreement any
information or documents obtained from the other concerning its assets,
properties, business or operations, If the Closing will not occur for any
reason (including, without limitation, pursuant to a termination of this
Agreement), the parties hereto and their respective affiliates will not
disclose, nor use for their own benefit, any such information or
documents obtained from the other, in either case, unless and to the
extent
(i) readily ascertainable from public or published information,
or trade sources;
(ii) received from a third party not under an obligation to such
HECI or Green Mt., as the case may be, to keep such
information confidential; or
(iii) required by any applicable law, rule, regulation or court
order.
If the Closing does not occur for any reason, each of the parties and
their respective affiliates will promptly return or destroy all such
confidential information and compilations thereof as is practicable, and
will certify such destruction or return to the other party.
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(b) Prior to the Closing, any written news releases or public disclosure
by either party pertaining to this Agreement will be submitted to the
other party for its review and approval prior to such release or
disclosure, provided, however, that
(i) such approval will not be unreasonably withheld, and
(ii) such review and approval will not be required of disclosures
required to comply, in the judgment of counsel, with federal
or state securities or corporate laws or policies.
(c) Prior to the Effective Time of the Merger, Green Mt. will amend its
Certificate of Incorporation to (i) increase its authorized
capitalization to 100 million shares of common stock, par value $0.001
per share, and 10 million shares of "blank check" preferred stock, and
(ii) change Green Mt.'s corporate name to Hydrogen Engine Center, Inc.
(d) Except as contemplated by this Agreement, there will be no stock
dividend, stock split, recapitalization, or exchange of shares with
respect to or rights issued in respect of Green Mt. common stock after
the date hereof and there will be no dividends or other distributions
paid on Green Mt.'s Common Stock after the date hereof, in each case
through and including the Effective Time of the Merger. Green Mt. and
Merger Sub will conduct no business activities prior to the Closing other
than in the ordinary course of business or as may be necessary in order
to consummate the transactions contemplated hereby.
(e) Green Mt., acting through its Board of Directors, will authorize the
effectuation of the 3.8 shares for 1 share Forward Stock Split and take
all requisite and necessary action to finalize the stock split and, in
accordance with applicable law, give notice of and submit for action by
written consent of its stockholders;
(i) an amendment to its Certificate of Incorporation to increase
the authorized capitalization of Green Mt. to 100 million
shares of common stock and 10 million shares of "blank check"
preferred stock;
(ii) a proposal to prepare and approve an employee / directors
incentive compensation plan and allocate 1,350,000 shares of
Green Mt. common stock to the plan (the "Hydrogen Engine
Center Incentive Compensation Plan"); and
(iii) an amendment to its Certificate of Incorporation to change
Green Mt.'s corporate name to Hydrogen Engine Center, Inc.
(f) Green Mt. will take the requisite and necessary actions to obtain the
written consent for those actions discussed in Section 7(e) above as soon
as practicable after the execution of this Agreement and, as promptly as
practicable thereafter will:
(i) prepare and file with the SEC a preliminary Information
Statement relating to the matters stated above;
(ii) take the appropriate action to obtain and furnish the
information required by the SEC to be included in the
definitive Information Statement; and
(iii) after consultation with counsel to HECI, respond promptly to
any comments made by the SEC with respect to the preliminary
Information Statement and cause the Information Statement to
be mailed to its stockholders as promptly as practicable
following clearance from the SEC.
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(g) HECI will provide to Green Mt. any information for inclusion in the
Information Statement which may be required under applicable law and
which is reasonably requested by Green Mt. Each of HECI, Green Mt. and
Merger Sub, respectively, agree promptly to correct any information
provided by any of them for use in the Information Statement if, and to
the extent that, such information will have become false or misleading in
any material respect and Green Mt. further agrees to take all necessary
steps to cause the Information Statement as so corrected to be filed with
the SEC and to be disseminated to its stockholders to the extent required
by applicable federal securities laws.
(h) Green Mt. hereby represents and warrants that the information
supplied or to be supplied by Green Mt. for inclusion or incorporation by
reference in (i) the Information Statement or (ii) the Other Filings (as
defined below) will, at the respective times filed with the SEC and, in
addition, in the case of the Information Statement, as of the date it or
any amendment or supplement thereto is mailed to stockholders, not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading. The Information Statement will comply as to
form in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder. HECI hereby
represents and warrants that the information supplied or to be supplied
by HECI for inclusion or incorporation by reference in the Information
Statement or Other Filings will, at the respective times filed with the
SEC and, in addition, in the case of the Information Statement, as of the
date it or any amendment or supplement thereto is mailed to stockholders,
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading.
(i) As soon as practicable following the date hereof and following the
Effective Time of the Merger, each of Green Mt. and HECI will properly
prepare and file any other filings required under the Exchange Act or any
other federal, state or foreign law relating to the Merger (collectively,
the "Other Filings").
(j) Except as required by law, Green Mt. and Merger Sub will not
voluntarily take any action that would, or that is reasonably likely to,
result in any of the conditions to the Merger not being satisfied.
Without limiting the generality of the foregoing Green Mt. and Merger Sub
will not take any action that would result in (i) any of its
representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue or (ii) any of such
representations and warranties that are not so qualified becoming untrue
in any material respect.
(k) Green Mt. common stock will continue to be approved for quotation on
the OTC Bulletin Board and Green Mt. will have continued to satisfy
throughout the period from the date hereof through the Closing Date (i)
its filing requirements under Section 13 of the Exchange Act and (ii) the
requirements of Rule 15c2-11 as promulgated by the SEC under the Exchange
Act.
SECTION 8 Conditions Precedent to the Obligations of HECI. All
obligations of HECI under this Agreement to effect the Merger and the other
transactions contemplated hereby are subject to the fulfillment, prior to or as
of the Closing and/or the Effective Time of the Merger, as indicated below, of
each of the following conditions:
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(a) The representations and warranties by or on behalf of Green Mt.,
Merger Sub and Principal Stockholders contained in this Agreement, or in
any certificate or document delivered pursuant to the provisions hereof
or in connection herewith, will be true at and as of the Closing and
Effective Time of the Merger as though such representations and
warranties were made at and as of such time.
(b) Green Mt. and Merger Sub will have performed and complied with, in
all material respects, all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by them prior to or at
the Closing. No preliminary or permanent injunction or other order,
decree or ruling issued by a court or other governmental authority of
competent jurisdiction nor any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority of competent
jurisdiction will be in effect which would have the effect of (i) making
the consummation of the Merger illegal, or (ii) otherwise prohibiting the
consummation of the Merger.
(c) On or before the Closing, the directors of Green Mt. and Merger Sub,
and Green Mt. as sole stockholder of Merger Sub, will have approved in
accordance with applicable provisions of the NRS the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein, and will have approved the amendment to its
Certificate of Incorporation and the Hydrogen Engine Center Incentive
Compensation Plan and submitted the same for approval by the stockholders
of Green Mt., as required.
(d) On or before the Closing, Green Mt. and Merger Sub will have
delivered certified copies of resolutions of the sole stockholder and
directors of Merger Sub and of the directors and stockholders of Green
Mt. approving and authorizing (i) the execution, delivery and performance
of this Agreement and all necessary and proper actions to enable Green
Mt. and Merger Sub to comply with the terms of this Agreement, (ii) the
election of HECI's nominees to the Board of Directors of Green Mt. and
all matters outlined or contemplated herein, (iii) the Forward Stock
Split and (iv) the submission of the amendment to the Certificate of
Incorporation and the Hydrogen Engine Center Incentive Compensation Plan
to the stockholders of Green Mt. and the filing of the amendment to the
Certificate of Incorporation upon approval thereof.
(e) Each of HECI Stockholders will have delivered to Green Mt. a letter
commonly known as an "investment letter" agreeing that the shares of
Green Mt. common stock to be issued in the Merger are, among other
things, (i) being acquired for investment purposes and not with a view to
public resale; (ii) being acquired for the investor's own account, (iii)
that the investor is an "accredited investor" as defined under Regulation
D of the Securities Act, and (iv) that the shares of Green Mt. common
stock are restricted and may not be resold, except in reliance of an
exemption under the Act.
(f) The Merger will be permitted by applicable state law and otherwise
and Green Mt. will have sufficient shares of its capital stock authorized
to complete the Merger at the Effective Time and the transactions
contemplated hereby.
(g) The amendment to the Certificate of Incorporation and Hydrogen Engine
Center Incentive Compensation Plan will have been approved by the
requisite vote of the stockholders of Green Mt., acting by written
consent in lieu of a special meeting thereof, and the amendment to the
Certificate of Incorporation will have been filed in accordance with the
applicable requirements of the NRS.
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(h) At Closing, all of the directors and officers of Green Mt. and Merger
Sub will have resigned in writing from their positions as directors and
officers of Green Mt. and Merger Sub, respectively, effective upon the
election and appointment of HECI nominees, and the directors of Green Mt.
will have taken such action as may be deemed necessary or desirable by
HECI regarding such election and appointment of HECI nominees.
(i) At the Closing, all instruments and documents delivered by Green Mt.
or Merger Sub, including to HECI Stockholders pursuant to the provisions
hereof, will be reasonably satisfactory to legal counsel for HECI.
(j) The capitalization of Green Mt. and Merger Sub will be the same as
described in Section 5(h) above and will reflect the effectiveness of the
amendment to the Certificate of Incorporation increasing Green Mt.'s
authorized capitalization.
(k) The shares of Green Mt. common stock to be issued to HECI
Stockholders at Closing will be validly issued, nonassessable and fully
paid under the applicable provisions of the NRS and will be issued in a
nonpublic offering in compliance with all federal, state and applicable
securities laws.
(l) HECI will have received all necessary and required approvals and
consents from required parties and from its stockholders.
(m) At the Closing, Green Mt. and Merger Sub will have delivered to HECI
an opinion of Green Mt.'s legal counsel dated as of the Closing to the
effect that:
(i) Each of Green Mt. and Merger Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation;
(ii) Green Mt. and Merger Sub each has the corporate power to
execute, deliver and perform its respective obligations under
this Agreement;
(iii) This Agreement has been duly authorized, executed and
delivered by Green Mt. and Merger Sub and is a valid and
binding obligation of Green Mt. and Merger Sub enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity;
(iv) Green Mt. and Merger Sub each through its Board of Directors
and/or stockholders, as required, have taken all corporate
action necessary for performance under this Agreement;
(v) The documents executed by Green Mt. and delivered to HECI and
HECI Stockholders hereunder are valid and binding in
accordance with their terms and vest in HECI Stockholders all
right, title and interest in and to the shares of Green Mt.'s
Common Stock to be issued pursuant to Section 2 hereof, and
the shares of Green Mt. common stock when issued will be duly
and validly issued, fully paid and nonassessable;
(vi) The shares of Green Mt. common stock issued pursuant to this
Agreement will be deemed "restricted securities" and may be
sold or otherwise transferred upon the satisfaction of the
provisions of Rule 144, or pursuant to any other appropriate
exemption or registration under the Securities Act;
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(vii) Green Mt. has satisfied its reporting requirements pursuant
to the Exchange Act and has fulfilled all disclosure
obligations under such Act and applicable securities laws;
and
(viii)Current stockholders of Green Mt. common stock will have no
appraisal or similar rights as a result of consummation of
this Agreement and the transactions contemplated hereby.
(n) HECI will have completed its financial and legal due diligence
investigation of Green Mt. with results thereof satisfactory to HECI in
its sole discretion.
Section 9 Conditions Precedent to the Obligations of Green Mt. and
Merger Sub. All obligations of Green Mt. and Merger Sub under this Agreement are
subject to the fulfillment, prior to or at the Closing and/or the Effective Time
of the Merger, of each of the following conditions:
(a) The representations and warranties by HECI contained in this
Agreement or in any certificate or document delivered pursuant to the
provisions hereof or in connection herewith, will be true at and as of
the Closing and the Effective Time of the Merger as though such
representations and warranties were made at and as of such times.
(b) HECI will have performed and complied with, in all material respects,
all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
(c) On or before the Closing, the directors of HECI will have approved in
accordance with applicable state corporation law the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein and will have submitted the same to the stockholders
of HECI.
(d) On or before the Closing Date, HECI will have delivered certified
copies of resolutions of the stockholders and directors of HECI approving
and authorizing the execution, delivery and performance of this Agreement
and the other Transaction Documents and authorizing all of the necessary
and proper action to enable HECI to comply with the terms of this
Agreement.
(e) The Merger will be permitted by applicable state law and otherwise.
(f) At the Closing, all instruments and documents delivered by HECI
pursuant to the provisions hereof will be reasonably satisfactory to
legal counsel for Green Mt.
(g) The capitalization of HECI will be the same as described in Section
4(a) hereof.
(h) Green Mt. will have received all necessary and requisite approvals
and consents from required parties and from its stockholders, and this
Agreement and the Merger will have been adopted and approved by the
requisite vote of HECI Stockholders.
(i) At the Closing, HECI will have delivered to Green Mt. an opinion of
HECI's legal counsel dated as of the Closing to the effect that:
(i) HECI is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation;
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(ii) This Agreement has been duly authorized, executed and
delivered by HECI and is a valid and binding obligation of
HECI enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general
principles of equity;
(iii) HECI, through its Board of Directors and stockholders has
taken all corporate action necessary for performance of its
obligations under this Agreement; and
(iv) HECI has the corporate power to execute, deliver and perform
its obligations under this Agreement.
(j) Green Mt. will have an exemption from registration under the
Securities Act and the securities laws of the state of Iowa and the
various states of residence of HECI Stockholders for issuance of the
shares of Green Mt. common stock to be issued to HECI Stockholders in the
Merger.
(k) Green Mt. will have received from HECI Stockholders the investment
letters described in Section 8(e) hereof.
SECTION 10 Survival. The representations and warranties contained in this
Agreement and any other document or certificate relating hereto will survive and
continue in full force and effect for a period of two years after the Effective
Time of the Merger.
SECTION 11 Nature of Representations. All of the parties hereto are
executing and carrying out the provisions of this Agreement in reliance solely
on the representations, warranties, covenants and agreements contained in this
Agreement and the other documents delivered at the Closing and not upon any
representation, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set forth
herein.
SECTION 12 Documents at Closing. At the Closing, the following documents
will be delivered:
(a) HECI will deliver, or will cause to be delivered, to Green Mt. the
following:
(i) a certificate executed by the President of HECI to the effect
that all representations and warranties made by HECI under
this Agreement are true and correct as of the Closing and as
of the Effective Time of the Merger, the same as though
originally given to Green Mt. or Merger Sub on said date and
that HECI has performed or complied in all material respects
with all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the
Effective Time of the Merger;
(ii) a certificate from the state of HECI's incorporation dated
within five business days of the Closing to the effect that
HECI is in good standing under the laws of said state;
(iii) such other instruments, documents and certificates, if any,
as are required to be delivered pursuant to the provisions of
this Agreement and the other Transaction Documents;
(iv) executed copy of the Certificate of Merger for filing in
Iowa;
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(v) certified copies of resolutions adopted by HECI Stockholders
and the directors of HECI approving the Merger Agreement and
other Transaction Documents and authorizing the Merger;
(vi) the opinion of HECI's counsel as described in Section 9(i)
above; and
(vii) all other items, the delivery of which is a condition
precedent to the obligations of Green Mt. and Merger Sub, as
set forth herein.
(b) Green Mt. and Merger Sub will deliver or cause to be delivered to
HECI:
(i) stock certificates representing those securities of Green Mt.
to be issued as a part of the Merger as described in Section
2 hereof;
(ii) a certificate of the President of Green Mt. and Merger Sub,
respectively, to the effect that all representations and
warranties of Green Mt. and Merger Sub made under this
Agreement are true and correct as of the Closing, the same as
though originally given to HECI on said date; and that each
of Green Mt. and Merger Sub has performed or complied in all
material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on
or prior to the Effective Time of the Merger;
(iii) certified copies of resolutions adopted by Green Mt.'s and
Merger Sub's Board of Directors and Merger Sub's sole
stockholder approving the Merger Agreement and authorizing
the Merger and all related matters; and certified copies of
resolutions adopted by the stockholders of Green Mt.
approving the matters described in Section 7(e) above.
(iv) certificates from the jurisdiction of incorporation of Green
Mt. and Merger Sub dated within five business days of the
Closing Date that each of said corporations is in good
standing under the laws of said state;
(v) executed copy of the Certificate of Merger for filing in
Nevada;
(vi) opinion of Green Mt.'s counsel as described in Section 8(m)
above;
(vii) such other instruments and documents as are required to be
delivered pursuant to the provisions of this Agreement;
(viii) written resignation of all of the officers and directors of
Green Mt. and Merger Sub; and
(ix) all other items, the delivery of which is a condition
precedent to the obligations of HECI, as set forth in Section
8 hereof.
SECTION 13 Finder's Fees. Green Mt. and Merger Sub, jointly and
severally, represent and warrant to HECI, and HECI represents and warrants to
Green Mt. and Merger Sub, that, except as otherwise set forth herein, none of
them, or any party acting on their behalf, has incurred any liabilities, either
express or implied, to any "broker" or "finder" or similar person in connection
with this Agreement or any of the transactions contemplated hereby.
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SECTION 14 Additional Covenants. Between the date hereof and the
Closing, except with prior written consent of the other party:
(a) Green Mt., Merger Sub and HECI will conduct their business only in
the usual and ordinary course and the character of such business will not
be changed nor will any different business be undertaken;
(b) No change will be made in the Certificate of Incorporation or Bylaws
of Green Mt., Merger Sub or HECI except as described herein;
(c) No change will be made in the authorized or issued shares of Green
Mt. except as set forth herein;
(d) Neither Green Mt. nor HECI will discharge or satisfy any lien or
encumbrance or obligation or liability, other than current liabilities
shown on the financial statements heretofore delivered and current
liabilities incurred since that date in the ordinary course of business;
and
(e) Green Mt. will not make any payment or distribution to its
stockholders or purchase or redeem any shares or capital stock except as
set forth herein.
SECTION 15 Post-Closing Covenants. After the Closing, HECI will cause
Green Mt. to timely file with the SEC a current report on Form 8-K to report the
Merger. In addition, for a period of 12 months following the Closing, HECI will
cause Green Mt. to use its commercially reasonable efforts to timely file all
reports and other documents required to be filed by Green Mt. under the Exchange
Act.
SECTION 16 Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, by action taken or authorized by the
Board of Directors of the terminating party or parties and, except as provided
below, whether before or after approval of the matters presented in connection
with the Merger by the stockholders of Green Mt. or HECI:
(a) By mutual written consent of Green Mt. and HECI;
(b) By either Green Mt. or HECI, if the Effective Time of the Merger will
not have occurred on or before August 31, 2005 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 16(b) will not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of or resulted in,
the failure of the Effective Time of the Merger to occur on or before the
Termination Date;
(c) By either Green Mt. or HECI if any governmental entity (i) will have
issued an order, decree or ruling or taken any other action (which the
parties will use their reasonable best efforts to resist, resolve or
lift, as applicable) permanently restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement and such
order, decree, ruling or other action will have become final and
nonappealable, or (ii) will have failed to issue an order, decree or
ruling or to take any other action and such denial of a request to issue
such order, decree, ruling or take such other action will have become
final and nonappealable (which order, decree, ruling or other action the
parties will have used their reasonable best efforts to obtain); if such
action under (i) and/or (ii) is necessary to fulfill the conditions set
forth in Sections 8 and 9, as applicable;
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(d) By either Green Mt. or HECI, if the approvals of the respective
stockholders of either Green Mt. or HECI contemplated by this Agreement
will not have been obtained by reason of the failure to obtain the
required vote of stockholders or consent to the respective matters as to
which such approval was sought;
(e) By Green Mt., if HECI will have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained
in this Agreement, such that the conditions set forth in Section 9 are
not capable of being satisfied on or before the Termination Date; or
(f) By HECI, if Green Mt. will have breached or failed to perform any of
its representations, warranties, covenants or other agreements contained
in this Agreement, such that the conditions set forth in Section 8 are
not capable of being satisfied on or before the Termination Date.
SECTION 17 Effect of Termination. In the event of termination of this
Agreement by either Green Mt. or HECI as provided in Section 16 (other than
Sections 16(e) or (f)), this Agreement will forthwith become void and there will
be no liability or obligation on the part of any of the parties or their
respective officers or directors.
SECTION 18 Miscellaneous.
(a) Further Assurances. At any time and from time to time after the
Effective Time of the Merger, each party will execute such additional
instruments and take such action as may be reasonably requested by the
other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this
Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with
any of its obligations, agreements or conditions hereunder may be waived
in writing by the party (in its sole discretion) to whom such compliance
is owed.
(c) Amendment. This Agreement may be amended only in writing as agreed to
by all parties hereto.
(d) Notices. All notices and other communications hereunder will be in
writing and will be deemed to have been given if delivered in person or
sent by prepaid first class registered or certified mail, return receipt
requested to the last known address of the noticed party.
(e) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and will not affect in any way the meaning
or interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(g) Binding Effect. This Agreement will be binding upon the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.
(h) Entire Agreement. This Agreement and the attached Exhibits, including
the Certificate of Merger, is the entire agreement of the parties
covering everything agreed upon or understood in the transaction. There
are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
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(i) Severability. If any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement will remain in full force and
effect.
(j) Responsibility and Costs. Whether the Merger is consummated or not
and except as otherwise set forth below, all fees, expenses and
out-of-pocket costs including, but not limited to, fees and disbursements
of counsel, financial advisors and accountants and expenses associated
with fulfillment of the obligations set forth herein, that are incurred
by the parties hereto will be borne solely and entirely by the party that
has incurred such costs and expenses, unless the failure to consummate
the Merger constitutes a breach of the terms hereof, in which event the
breaching party will be responsible for all costs of all parties hereto.
Notwithstanding the above, the parties agree to pay to Leonard E.
Neilson, Attorney at Law, all legal fees, expenses and costs associated
with the preparation and execution of this Agreement and all
transactions, agreements and documents contemplated hereby, from the
proceeds of the interim financing depicted in Section 2(g)(i) above or
other financing that may be secured by HECI and/or Green Mt. prior to the
Closing, which amount for such legal fees and expenses will not exceed
$25,000. No other pre-Merger fees, expenses or other costs incurred by
Green Mt. prior to the Effective Time of the Merger will be the
obligation of Green Mt. at or following the Effective Time of the Merger.
(k) Governing Law. This Agreement will be governed and construed in
accordance with the laws of the State of Nevada without regard to
principles of conflicts of law.
[Signatures on the Following Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
HYDROGEN ENGINE CENTER, INC.
By: /s/ Ted Hollinger
---------------------------------------
Ted Hollinger
Its: President
GREEN MT. LABS., INC.
By: /s/ Geoff Williams
--------------------------------------
Geoff Williams
Its: President
GREEN MT. ACQUISITIONS, INC.
By: /s/ Jim Ruzicka
--------------------------------------
Jim Ruzicka
Its: President
PRINCIPAL STOCKHOLDERS
/s/ H. Deworth Williams
-----------------------------------------
H. Deworth Williams
/s/ Edward F. Cowle
-----------------------------------------
Edward F. Cowle
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Attachment 2(c)(i)
The 16,297,200 shares of Green Mt. Labs., Inc. to be issued pursuant to
the Revised and Amended Plan of Merger dated July __, 2005 are to be issued to
the following persons and in the respective amounts.
Name Number of Shares to be Issued
---- -----------------------------
Theodore G. Hollinger 16,297,200
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