Conversion Agreement
This Conversion Agreement (the "Agreement") is made and
entered into by and among Colmena Corp., a Delaware corporation
with a class of securities registered under Section 12(g) of the
Exchange Act ("Colmena") and, The Xxxxxx Family Spendthrift
Trust, a Florida trust (the "TFST"), Colmena and the TFST being
sometimes hereinafter collectively referred to as the "Parties"
or generically as a "Party".
Preamble:
WHEREAS, in order for Colmena to arrange for a
reorganization of its operations designed to permit it to acquire
one or more promising operating companies, it needs to reduce all
of its current indebtedness and in conjunction therewith, on
December 11, 2002, its board of directors requested that the
TFST, one of its principal creditors and the holder of 50% of its
Class A Bonds, agree to accelerated exercise of conversion rights
under its Class A Bonds and thereafter convert all of its current
debts into shares of Colmena's common stock; and
Whereas, the TFST is agreeable to the proposal by Colmena, subject to being
granted 24 month best price and anti-dilution guarantees, on the terms and
subject to the conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the Parties,
intending to be legally bound, hereby agree as follows:
Witnesseth:
Article I
Definitions
The following terms or phrases, as used in this Agreement, shall have the
following meanings:
(A) Accredited Investor: An investor that meets the
requirements for treatment as an accredited investor, as defined
in Rule 501(a) of Commission Regulation D, which provides as
follows:
Accredited investor. "Accredited investor" shall mean any person who comes
within any of the following categories, or who the issuer reasonably believes
comes within any of the following categories, at the time of the sale of the
securities to that person:
(1) Any bank as defined in section 3(a)(2) of the Act, or
any savings and loan association or other institution as defined
in section 3(a)(5)(A) of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer registered pursuant
to section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Company Act of
1940 or a business development company as defined in section
2(a)(48) of that Act; Small Business Investment Company licensed
by the U.S. Small Business Administration under section 301(C))
or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; employee benefit
plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or if the employee.
______________________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
benefit plan has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are accredited
investors;
(2) Any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(C))(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;
(4) Any director, executive officer, or general partner of
the issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general
partner of that issuer;
(5) Any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(6) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as
described in ss.230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are
accredited investors.
(B) Class A Bonds: The only currently authorized Colmena bonds, as more
particularly described in Colmena's Exchange Act Reports.
(C) Colmena Debt: All funds owed by Colmena to the TFST as of the date of this
Agreement, as reflected in exhibit 1 (C), but not including the Class A Bonds.
(D) Commission: The United States Securities and Exchange Commission.
(E) Common Stock: For the purpose of this Agreement, the term "common stock"
shall mean (I) the class of stock designated as common stock in the Certificate
of Incorporation filed by Colmena with the Delaware Department of State, or (ii)
any other class of stock resulting from successive changes or reclassifications
of such common stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value.
(F) Covered Shares: The shares of Colmena common stock to be issued to the TFST
pursuant to conversion of the Colmena Debt and the Class A Bonds.
(G) Exchange Act: The Securities Exchange Act of 1934, as amended.
(H) Exchange Act Reports: The reports on Commission Forms 10-SB, 10-KSB, 10-QSB
and 8-K and Commission Schedules 14A and 14C, that Colmena is required to file
pursuant to Sections 13, 14, 15(d) and 12(g) of the Exchange Act.
_______________________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement
(I) Florida Act: The Florida Securities and Investor
Protection Act
(J) Florida Rule: Florida Rule 3E-500.005, which provides as follows: Disclosure
requirements of Section 517.061(11)(a)3., Florida Statutes.
(1) Transactions by an issuer which do not satisfy all of
the conditions of this rule shall not raise any presumption that
the exemptions provided by Section 517.061(11), Florida Statutes
is not available for such transactions. Attempted compliance with
this rule does not act as an election; the issuer can also claim
the availability of Section 517.061(11), Florida Statutes,
outside this rule.
(2) The determination as to whether sales of securities are
part of a larger offering (i.e., are deemed to be integrated)
depends on the particular facts and circumstances. In determining
whether sales should be regarded as part of a larger offering and
thus should be integrated, the facts described in Rule 3E-500.01
should be considered.
(3) Although sales made pursuant to Section 517.061(11),
Florida Statutes, and in compliance with this rule, are exempt
from the registration provisions of this Act, such exemption does
not avoid the antifraud provisions of Sections 517.301 and
517.311, Florida Statutes.
(4) The provisions of this rule shall apply only to
transactions which are consummated with persons in the State of
Florida.
(5) The requirements of Sections 517.061(11)(a)(3), Florida
Statutes, that each purchaser, or his representative be provided
with or given reasonable access to full and fair disclosure of
all material information shall be deemed to be satisfied if
either paragraphs (5)(a) or (5)(b) are complied with:
(a) Access to or Furnishing of Information. Reasonable
access to, or the furnishing of, material information shall be
deemed to have been satisfied if prior to the sale a purchaser is
given access to the following information:
1. All material books and records of the issuer; and
2. All material contracts and documents relating to the proposed transaction;
and
3. An opportunity to question the appropriate executive officers or partners.
.....
(6) In the case of an issuer that is subject to the
reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the provisions of paragraph (5)(b) of this
rule shall be deemed satisfied by providing the following:
(a) The information contained in the annual report required to be filed under
the Securities Exchange Act of 1934 or a registration
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 3
statement on Form S-1 under the Securities Act of 1933,
whichever filing is the most recent required to be filed, and the
information contained in any definitive proxy statement required
to be filed pursuant to Section 14 of the Securities Exchange Act
of 1934 and in any reports or documents required to be filed by
the issuer pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, since the filing of such annual report or
registration statement; and
(b) A brief description of the securities being offered, the use of the proceeds
from the offering, and any material changes in the issuer's affairs which are
not disclosed in the documents furnished.
(K) Rule 144: Rule 144 of the general rules and regulations
promulgated under the Securities Act.
(L) Securities Act: The Securities Act of 1933, as amended.
Article II
Conversion
(A) Subject to the best price guarantees and
anti-dilutive rights set forth below, the TFST hereby agrees
to immediately convert all of its Class A Bonds into shares
of Colmena's Common Stock, in accordance with their terms,
which Colmena hereby represents will result in the issuance
to the TFST of the number of shares of Colmena's common
stock set forth in Exhibit 2 (A) annexed hereto and made a
part hereof, the conversion being effected without
registration under the Securities Act or the Florida Act,
based on the exemption from registration provided by Section
4(6) of the Securities Act and Section 517.061(11) of the
Florida Act.
(B) Subject to the best price guarantees and
anti-dilutive rights set forth below, the TFST hereby
converts the Colmena Debt into shares of Colmena Common
Stock, at a conversion price of $0.01 per share, as set
forth below on Exhibit 2 (B), the transaction being effected
without registration under the Securities Act or the Florida
Act, based on the exemption from registration provided by
Section 4(6) of the Securities Act and Section 517.061(11)
of the Florida Act.
(C) In consideration for the agreement by the TFST to
accelerated conversion of the Class A Bonds and to the
conversion of the Colmena Debt to Colmena common stock,
which will result in the issuance of a materially smaller
quantity of Colmena common stock to the TFST than would have
otherwise been issuable based on current Colmena business
plans, Colmena hereby irrevocably covenants and agrees, as a
material inducement to the entry into this Agreement by the
TFST, that all of the shares issuable to the TFST pursuant
to the terms of this Agreement, including, without
limitation, the shares to be issued in exchange for
conversion of the Colmena Debt and to be issued on
conversion of the Class A Bonds (the "Covered Shares"),
whether or not then still owned by the TFST, shall be
increased by the issuance of additional shares of Colmena
common stock to the TFST, to reflect the issuance of any
common stock or common stock purchase rights at a price of
less than $0.01 per share (in cash or in the net tangible
book value in accordance with GAAP of any assets or services
paid therefor) during the 730 days following the execution
of this Agreement, as follows:
(1) Best price guarantee: For every share issued by Colmena at a net tangible
book value of less than $0.01 per share, adjusted to reflect any stock splits or
stock dividends (the "Trigger Shares"):
(a) Initial transaction: The TFST will receive a
quantity of shares of Colmena common stock equal to the
number of shares of Colmena common stock issued to the TFST
as a result of conversion of the Colmena Debt and exercise
of the Class A Bonds (the "Base Shares"),
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 4
multiplied by a fraction, the numerator of which will initially be $0.01 (the
"Original Denominator") and the denominator of which will be the net tangible
book value paid for the Trigger Shares (the "Adjustment Denominator"), such
product being referred to as the "Adjustment Product", from which will be
subtracted a number equal to the Base Shares (the "Adjustment Shares"); e.g.,
for purposes of illustration, if the Base Shares equaled 100 and new shares were
issued by Colmena at $0.005 per share, after adjustments for stock splits and
stock dividends, then the formula would be 100 x $0.01/$0.005 = 200 - 100 = 100,
thus 100 additional shares of Colmena common stock would be issued to the TFST.
(b) Subsequent transactions: For every subsequent
transaction the formula shall be triggered only by issuance
of Colmena common stock, as adjusted for any stock splits or
stock dividends, at a price below the immediately preceding
lowest net tangible book value paid for Colmena common stock
issued subsequent to this Agreement (the "Subsequent Trigger
Price"); and the formula shall be modified as follows: the
Base Shares shall be increased by the aggregate of
Adjustment Shares theretofore issued to the TFST; the
Adjustment Numerator shall be the immediately preceding
Trigger Price and the Adjustment Denominator shall be the
Subsequent Trigger Price.
(c) All shares issuable pursuant to this best price
guarantee shall be issued and tendered to the TFST
concurrently with the issuance of the Trigger Shares;
provided that, if they are not so tendered then they shall
bear interest payable in additional shares at the rate of
one percent per month until so tendered.
(2) Anti-dilutive provisions. In addition to the foregoing best price guarantee,
the Covered Shares shall be subject to anti-dilutive provisions, as follows:
(a) In the event that Colmena shall after the date
hereof issue securities with greater or superior voting
rights than the shares of common stock outstanding as of the
date hereof, the TFST, at its option, may receive a like
number of such securities with greater or superior voting
rights.
(b) Whenever the additional shares may be issuable to
the TFST, as herein provided:
1) Colmena shall promptly file with the Transfer Agent for the Covered Shares a
certificate of the treasurer of Colmena setting forth the basis for the required
adjustments and showing in reasonable detail the facts upon which such
adjustment is based, including a statement of the consideration received or to
be received by Colmena for any shares of common stock issued or deemed to have
been issued; and
2) A notice stating that the quantity of Covered Shares has been adjusted and
setting forth the adjustment shall forthwith be required, and as soon as
practicable after it is required, such additional notice shall be deemed to be
required pursuant to this Section as of the opening of business on the tenth day
after such mailing and shall set forth the adjustment at such opening of
business, and upon the mailing of such additional notice no other notice need be
given of any adjustment occurring at or prior to such opening of business and
after the time that the next preceding notice given by mailing became required.
(c) In each of the following instances Colmena shall
cause to be filed with the Transfer Agent and shall cause to
be mailed, first class postage prepaid, to the TFST, at
least 10 days prior to the applicable record date
hereinafter specified, a notice stating the date on which a
record is to be taken for the purpose of such distribution
or rights, or, if a record is not to be taken,
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 5
the date as of which the holders of common stock of record to be entitled to
such distribution or rights are to be determined, or the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of common stock of record shall be entitled to
exchange their common stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up:
1) If Colmena shall authorize the distribution to all
holders of its common stock of evidences of its indebtedness
or assets (other than dividends or other distributions paid
out of earned surplus); or
2) If Colmena shall authorize the granting to the
holders of its common stock of rights to subscribe for or
purchase any shares of capital stock of any class or of any
other rights; or
3) In the event of any reclassification of the common
stock (other than a subdivision or combination of its
outstanding shares of common stock), or of any consolidation
or merger to which Colmena is a party and for which approval
of any stockholders of Colmena is required, or of the sale
or transfer of all or substantially all of the assets of
Colmena; or
4) In the event of any reclassification of the
voluntary or involuntary dissolution, liquidation or winding
up of Colmena.
(D) The TFST represents, warrants and covenants to Colmena, as follows:
(1) The TFST is familiar with the requirements for
treatment as an "accredited investor" under Regulation D and
Section 4(6) of the Securities Act and meets one or more of
the definitions of an "accredited investor" contained in
Rule 501(a) promulgated under authority of Securities Act
and has, alone or together with its advisors or
representatives, if any, such knowledge and experience in
financial matters that the TFST is capable of evaluating the
relative risks and merits of this subscription, the text of
Rule 501(a) being set forth, in full, above;
(2) The TFST acknowledges that it has, based on its own
substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks
thereof in general and the suitability of the transaction
for it in particular;
(3) (a) The TFST understands that the offer and
issuance of Colmena Stock is being made in reliance on the
TFST's representation that it has reviewed the Colmena
Exchange Act Reports, including that contained in exhibits
filed with such reports.
(b) The TFST is fully aware of the material risks associated with becoming
an investor in Colmena and confirms that it was previously informed that
all documents, records and books pertaining to this investment have been
available from Colmena and that all documents, records and books pertaining
to this transaction requested by it have been made available to it;
(4) The TFST has had an opportunity to ask questions of
and receive answers from the officers of Colmena concerning
the terms and conditions of this Agreement and the
transactions contemplated hereby, as well as the affairs of
Colmena and related matters;
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 6
(5) The TFST has had an opportunity to obtain
additional information necessary to verify the accuracy of
the information referred to in subparagraphs (a), (b), (c)
and (d) hereof, as well as to supplement the information in
the Exchange Act Reports.
(6) The TFST has represented to Colmena that it has the
general ability to bear the risks of the subject transaction
and that it is a suitable investor for a private offering
and the TFST hereby affirms the correctness of such
information to Colmena, including, without limitation, the
representations in the form of the investment letter annexed
hereto and made a part hereof as exhibit 3(D)(6);
(7) The TFST acknowledges and is aware that:
(a) The Colmena Stock is a speculative investment with
no assurance that Colmena will be successful, or if
successful, that such success will result in payments to the
TFST or to realization of capital gains by the TFST on
disposition of the Colmena Stock; and
(b) The Colmena Stock to be issued to it has not been
registered under the Securities Act or under any state
securities laws; accordingly the TFST may have to hold such
common stock and may not be able to liquidate, pledge,
hypothecate, assign or transfer it;
(8) The TFST has obtained its own opinion from its legal counsel to the
effect that after an examination of the transactions associated herewith
and the applicable law, no action needs to be taken by either the TFST or
Colmena in conjunction with this Agreement and the issuance of the Colmena
Stock in conjunction therewith, other than such actions as have already
been taken in order to comply with the securities law requirements of the
TFST's state of domicile, including the safe harbor provided in conjunction
with compliance with the Florida Rule; and
(9) (a) The certificates for the Colmena Stock will bear restrictive
legends and Colmena's transfer agent will be instructed not to transfer the
subject securities unless they have been registered pursuant to Section 6
of the Securities Act or an opinion of counsel to the TFST satisfactory to
legal counsel to Colmena and Colmena's president has been provided, to the
effect that the proposed transaction is exempt from registration
requirements imposed by the Securities Act, the Exchange Act and any
applicable state or foreign laws.
(b) The legend shall read as follows: "The securities
represented by this certificate were issued without
registration under the Securities Act of 1933, as amended,
or comparable state laws in reliance on the provisions of
Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged
or hypothecated unless they are first registered under
applicable federal, state or foreign laws, or the
transaction is demonstrated to be exempt from such
requirements to Colmena's satisfaction."
(10) Notwithstanding the foregoing, the Parties agree that pursuant to
the provisions of Rule 144(d)(3)(ii), the holding period under Rule
144 for the Covered Shares commenced on the date that the underlying
funds in payment for the Colmena Debt and the Class A Bonds were
received by or for the benefit of Colmena.
(E) The Parties acknowledge that the TFST's acceptance
of the Colmena proposals reflected in this Agreement is
based on representations by Colmena concerning a pending
project involving a publishing, television and Internet
venture geared towards the "baby boomer" health and
longevity market and Colmena hereby grants the TFST the
irrevocable right to rescind the transactions reflected
herein should that venture not be successfully concluded.
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 7
Article III
General Provisions
3.1 Interpretation.
(A) When a reference is made in this Agreement to
Schedules or Exhibits, such reference shall be to a Schedule
or Exhibit to this Agreement unless otherwise indicated.
(B) The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed
by the words "without limitation."
(C) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(D) The captions in this Agreement are for convenience
and reference only and in no way define, describe, extend or
limit the scope of this Agreement or the intent of any
provisions hereof.
(E) All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the Party or Parties, or their
personal representatives, successors and assigns may
require.
(F) The Parties agree that they have been represented
by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be
construed against the party drafting such agreement or
document.
3.2 Notice.
(A) All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have
been duly given on the first business day after mailing by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(1) To Colmena:
Colmena Corp.
Crystal Corporate Center; 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000-X; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000
e-mail xxxxxxxxxxxxxx@xxxxxxxxxxx.xxx;
(2) the TFST:
The Xxxxxx Family Spendthrift Trust
Crystal Corporate Center; 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000-X; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx Xxxxxx, Trustee
Telephone (000) 000-0000, Fax (000) 000-0000
e-mail xxxxx@xxxxxxxxxxxxxxx.xxx
In each case with a copy to
Office of the General Counsel
Colmena Corp.
0000 Xxxxxxxxx 00xx Xxxxxx; Xxxxx, Xxxxxxx 00000
Telephone (000) 000-0000, Fax (000) 000-0000
e-mail, xxxxx@xxxxxxxxxxxxxxx.xxx.
_____________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 8
or such other address or to such other person as any Party shall
designate to the other for such purpose in the manner hereinafter set
forth.
(B) At the request of any Party, notice will also be
provided by overnight delivery, facsimile transmission or
e-mail, provided that a transmission receipt is retained.
3.3 Merger of All Prior Agreements Herein.
(A) This instrument, together with the instruments
referred to herein, contains all of the understandings and
agreements of the Parties with respect to the subject matter
discussed herein.
(B) All prior agreements dealing with the subject
matter of this Agreement, whether written or oral, are
merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be
effective regardless of any investigation that may have been made or
may be made by or on behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement,
other than one of the conditions precedent or subsequent, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining
portions of such provision and the remaining provisions of this
Agreement or the application of such provision or portion of such
provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or
unenforceable, shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the substantive
and procedural laws of the State of Florida (other than those
regulating Taxation and choice of law).
3.7 Indemnification.
(A) Each Party hereby irrevocably agrees to indemnify
and hold the other Party harmless from any and all
liabilities and damages (including legal or other expenses
incidental thereto), contingent, current, or inchoate to
which they or any one of them may become subject as a
direct, indirect or incidental consequence of any action by
the indemnifying Party or as a consequence of the failure of
the indemnifying Party to act, whether pursuant to
requirements of this Agreement or otherwise.
(B) In the event it becomes necessary to enforce this
indemnity through an attorney, with or without litigation,
the successful Party shall be entitled to recover from the
indemnifying Party, all costs incurred including reasonable
attorneys' fees throughout any negotiations, trials or
appeals, whether or not any suit is instituted.
3.8 Dispute Resolution.
(A) In any action between the Parties to enforce any of
the terms of this Agreement or any other matter arising from
this Agreement any proceedings pertaining directly or
indirectly to the rights or obligations of the Parties
hereunder shall, to the extent legally permitted, be held in
Xxxxxx County, Florida, and the prevailing Party shall be
entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all
negotiations, trials and appeals, whether or not any formal
proceedings are initiated.
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 9
(B) In the event of any dispute arising under this
Agreement, or the negotiation thereof or inducements to
enter into the Agreement, the dispute shall, at the request
of any Party, be exclusively resolved through the following
procedures:
(1) (a) First, the issue shall be submitted to mediation before a
mediation service in Xxxxxx County, Florida to be selected by lot from
four alternatives to be provided, two by the TFST and two by Colmena.
(b) The mediation efforts shall be concluded within ten
business days after their initiation unless the Parties
unanimously agree to an extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall submit the
dispute to binding arbitration before an arbitration service located
in Xxxxxx County, Florida to be selected by lot, from four
alternatives to be provided, two by the TFST and two by Colmena.
(3) (a) Expenses of mediation shall be borne equally by the Parties,
if successful.
(b) Expenses of mediation, if unsuccessful and of
arbitration shall be borne by the Party or Parties against
whom the arbitration decision is rendered.
(c) If the terms of the arbitral award do not establish
a prevailing Party, then the expenses of unsuccessful
mediation and arbitration shall be borne equally by the
Parties involved.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties, their successors, assigns,
personal representatives, estate, heirs and legatees but are not
intended to confer upon any other person any rights or remedies
hereunder.
3.10 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered and to perform all such
acts and deliver all such deeds, assignments, transfers, conveyances,
powers of attorney, assurances, stock certificates and other
documents, as may, from time to time, be required herein to effect the
intent and purpose of this Agreement.
3.11 Counterparts.
(A) This Agreement may be executed in any number of
counterparts.
(B) All executed counterparts shall constitute one
Agreement notwithstanding that all signatories are not
signatories to the original or the same counterpart.
(C) Execution by exchange of facsimile transmission
shall be deemed legally sufficient to bind the signatory;
however, the Parties shall, for aesthetic purposes, prepare
a fully executed original version of this Agreement which
shall be the document filed with the Commission in under the
Exchange Act.
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Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 10
In Witness Whereof, Colmena and the TFST have caused this Agreement to
be executed by themselves or their duly authorized respective
officers, all as of the last date set forth below:
Signed, sealed and delivered
In Our Presence:
Colmena Corp.
_________________________________ (A Delaware corporation)
_________________________________ By: _____________________________
Xxxxxxx X. Xxxxx, President
(Corporate Seal)
Attest: _____________________________
Xxxxxxx X. Xxxxxxx, Secretary
Dated: December 23, 2002
State of Florida }
County of Palm Beach } ss.:
On this 23rd day of December, 2002, before me, a notary public in and for
the county and state aforesaid, personally appeared Xxxxxxx X. Xxxxx and Xxxxxxx
X. Xxxxxxx, to me known, and known to me to be the president and secretary of
Colmena Corp., the above-described corporation, and to me known to be the
persons who executed the foregoing instrument, and acknowledged the execution
thereof to be their free act and deed, and the free act and deed of Colmena
Corp., for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the ___day of ______________, ____.
{Seal}
________________________________
Notary Public
The Xxxxxx Family Spendthrift Trust
_________________________________ (a Florida trust)
_________________________________ By: _____________________________
Xxxxxxx Xxxxx Xxxxxx, Trustee
Dated: December 23, 2002
State of Florida }
County of Palm Beach } ss.:
On this 23rd day of December, 2002, before me, a notary public in and for
the county and state aforesaid, personally appeared Xxxxxxx Xxxxx Xxxxxx, to me
known, and known to me to be the trustee of The Xxxxxx Family Spendthrift Trust,
the above-described corporation, and to me known to be the person who executed
the foregoing instrument, and acknowledged the execution thereof to be his free
act and deed, and the free act and deed of The Xxxxxx Family Spendthrift Trust,
for the uses and purposes therein mentioned.
In witness whereof, I have hereunto set my hand and affixed my notarial
seal the day and year in this certificate first above written. My commission
expires the ___day of _______________, ____.
(seal) ____________________________
Notary Public
_______________________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 11
Exhibit 2(A)
The Class A Bond Conversion Shares
The TFST is entitled to 52,019,977 shares of Common Stock pursuant to
the terms of the Class A Bonds.
_______________________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 12
Exhibit 2 (B)
The Colmena Debt
The debt owed to the TFST from Colmena is $193,815.49, which is being
converted into 19,381,549 shares of Common Stock, based on a
contemporaneous sale price of $0.01 per share.
______________________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 13
Exhibit 3(D)(6)
The TFST's Investment Letter
December 23, 2002
Xxxxxxx X. Xxxxx
President
Colmena Corp.
Crystal Corporate Center
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X
Xxxx Xxxxx, Xxxxxxx 00000
Re.: Conversion of Colmena's Obligations for Colmena's Securities
Dear Sir:
I hereby certify and warrant that the Xxxxxx Family Spendthrift Trust, a
Florida trust for which I serve as trustee, is relinquishing all rights to
repayment of $193,815.49, together with accrued interest owed to the TFST by
Colmena, Corp., a Delaware corporation ("Colmena"), in consideration for the
issuance to the TFST of 19,381,549 shares of Colmena Common Stock (the "Colmena
Stock").
I hereby certify under penalty of perjury that upon receipt of the Colmena
Stock, the TFST will be acquiring it for its own account for investment purposes
without any intention of selling or distributing all or any part thereof, except
in the form of permissible distributions to its beneficiaries. I represent and
warrant that the TFST qualifies as an accredited investor (as that term is
defined in rule 501(a) of Regulation D promulgated under authority of the
Securities Act of 1933, as amended [the "Securities Act"]) and that I, on the
TFST behalf, am sophisticated in financial affairs, or have relied on the advice
of someone sophisticated in financial affairs, and the TFST is able to bear the
economic risks of this investment and I do not have any reason to anticipate any
change in the TFST's circumstances, financial or otherwise, nor any other
particular occasion or event which should cause the TFST to sell or distribute,
or necessitate or require its sale or distribution of the Colmena Stock. No one
other than the TFST and its stockholders has any beneficial interest in the
Colmena Stock.
I further certify that I have consulted with the TFST's legal counsel who,
after having been apprised by me of all the material facts surrounding this
transaction, opined to the TFST, for the benefit of Colmena, that this
transaction was being effected in full compliance with the applicable securities
laws of the TFST's state of domicile, based on the exemption provided by Rule
3E-500.005 promulgated under authority of Section 517.061(11) of the Securities
Act of Florida.
I agree that the TFST will in no event sell or distribute any of the
Colmena Stock unless in the opinion of Colmena's counsel (based on an opinion of
the TFST's legal counsel) the Colmena Stock may be legally sold without
registration under the Securities Act, and/or registration and/or other
qualification under then-applicable State and/or Federal statutes, or the
Colmena Stock shall have been so registered and/or qualified and an appropriate
prospectus, shall then be in effect.
I am fully aware that the Colmena Stock is being offered and issued by
Colmena to the TFST in reliance on the exemption provided by Section 4(6) or the
Securities Act which exempts the sale of securities by an issuer solely to
accredited investors, based on my certifications and warranties on behalf of the
TFST.
In connection with the foregoing, the TFST consents to Colmena legending
the TFST's certificates representing the Colmena Stock to indicate its
investment intent and the restriction on transfer contemplated hereby and to
Colmena's placing a "stop transfer" order against the Colmena Stock in Colmena'
securities transfer books until the conditions set forth herein shall have been
met.
_____________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 14
Xxxxxxx X. Xxxxx
December 23, 2002
Page 2
I acknowledge by my execution hereof that the TFST has had access to
Colmena's Exchange Act Reports, books, records and properties, and have
inspected the same to my full and complete satisfaction prior to the TFST's
acquisition of the Colmena Stock. I represent and warrant that because of my
experience in business and investments, I am competent to make an informed
investment decision with respect thereto on the basis of my inspection of
Colmena's records and my questioning of Colmena's officers.
I further certify that the TFST's domicile is located at the address set
forth in the Agreement.
Very truly yours,
The Xxxxxx Family Spendthrift Trust
Xxxxxxx Xxxxx Xxxxxx
Trustee
_____________________________________________________________________
Please Initial: Colmena: ____ The TFST: ____
Conversion Agreement Page 15
