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 Xxxxx Family Spendthrift Trust, a Florida trust
(the "CFST"), Colmena and the CFST 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 CFST, 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 CFST 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
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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 CFST 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 CFST 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.
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(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
63
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 CFST 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
CFST 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 CFST 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 CFST 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 CFST 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 CFST, that all of the shares issuable to
the CFST 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 CFST, shall be
increased by the issuance of additional shares of Colmena common stock to
the CFST, 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 CFST will receive a quantity of
shares of Colmena common stock equal to the number of shares of
Colmena common stock issued to the CFST 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 CFST: ____
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 CFST.
(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 CFST; 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 CFST 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 CFST, 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 CFST, 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 CFST, 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 CFST: ____
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 CFST represents, warrants and covenants to Colmena, as
follows:
(1) The CFST 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 CFST 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 CFST 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 CFST understands that the offer and issuance of Colmena
Stock is being made in reliance on the CFST's representation that it has
reviewed the Colmena Exchange Act Reports, including that contained in
exhibits filed with such reports.
(b) The CFST 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 CFST 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 CFST: ____
Conversion Agreement Page 6
(5) The CFST 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 CFST 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 CFST 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 CFST 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 CFST or to
realization of capital gains by the CFST 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 CFST may have to hold such common stock and may
not be able to liquidate, pledge, hypothecate, assign or transfer
it;
(8) The CFST 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
CFST 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 CFST'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 CFST 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 CFST'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 CFST the irrevocable right to rescind the transactions
reflected herein should that venture not be successfully
concluded.
(F) Notwithstanding any other provision in this Agreement, the
common stock issuable to the CFST under this Agreement shall be
issued as Colmena's Class A Non-Voting, Convertible Preferred
Stock, in accordance with
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 7 the terms of an "Exchange Agreement"
between the Parties dated June 5, 2002, which is incorporated
herein by reference.
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 CFST:
The Xxxxx Family Spendthrift Trust
0000 Xxxxxxxxx 00xx Xxxxxxx, Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Trustee
Telephone (000)000-0000, Fax (000) 000-0000; and, e-mail XxxxxXxxxx@xxxxxxx.xxx
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 8
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.
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.
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Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 9
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.
(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
CFST 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 CFST 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.
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Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 10
(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.
In Witness Whereof, Colmena and the CFST 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
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 11
The Xxxxx Family Spendthrift Trust
_________________________________ (a Florida trust)
_________________________________ By: _____________________________
Xxxxx X. Xxxxx, Trustee
Dated: December 23, 2002
State of Florida }
County of Xxxxxx } ss.:
On this 23rd day of December, 2002, before me, a notary
public in and for the county and state aforesaid, personally
appeared Xxxxx X. Xxxxx, to me known, and known to me to be
the trustee of The Xxxxx 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 Xxxxx 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 CFST: ____
Conversion Agreement Page 12
Exhibit 2(A)
The Class A Bond Conversion Shares
The CFST is entitled to 52,019,977 shares of common
stock, which is being issued as 520,200 shares of Class A
Non-Voting, Convertible Preferred Stock, pursuant to the
terms of the Class A Bonds and Article 2 (F) of the above
Agreement.
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 13
Exhibit 2 (B)
The Colmena Debt
The debt owed to the CFST from Colmena is $193,815.49,
which is being converted into 193,815 shares of Class A
Non-Voting, Convertible Preferred Stock, which is the
equivalent of 19,381,549 shares of Common Stock based on a
contemporaneous sale price for Colmena's Common Stock of
$0.01 per share.
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 14
Exhibit 3(D)(6)
The CFST'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 Madam:
I hereby certify and warrant that the Xxxxx 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 CFST
by Colmena, Corp., a Delaware corporation ("Colmena"), in
consideration for the issuance to the CFST of 193,815 shares
of Class A Non-Voting Convertible Preferred Stock (which is
the equivalent 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 CFST 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 CFST
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 CFST behalf, am sophisticated in
financial affairs, or have relied on the advice of someone
sophisticated in financial affairs, and the CFST is able to
bear the economic risks of this investment and I do not have
any reason to anticipate any change in the CFST's
circumstances, financial or otherwise, nor any other
particular occasion or event which should cause the CFST to
sell or distribute, or necessitate or require its sale or
distribution of the Colmena Stock. No one other than the
CFST and its stockholders has any beneficial interest in the
Colmena Stock.
I further certify that I have consulted with the CFST's
legal counsel who, after having been apprised by me of all
the material facts surrounding this transaction, opined to
the CFST, for the benefit of Colmena, that this transaction
was being effected in full compliance with the applicable
securities laws of the CFST'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 CFST 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 CFST'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 CFST 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 CFST.
In connection with the foregoing, the CFST consents to
Colmena legending the CFST's certificates representing the
Colmena Stock to indicate its investment intent and the
restriction on transfer contemplated hereby and to Colmena's
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 15
Xxxxxxx X. Xxxxx
December 23, 2002
Page 2
placing a "stop transfer" order against the Colmena Stock in
Colmena' securities transfer books until the conditions set
forth herein shall have been met.
I acknowledge by my execution hereof that the CFST 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 CFST'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 CFST's domicile is located at the
address set forth in the Agreement.
Very truly yours,
The Xxxxx Family Spendthrift Trust
Xxxxx X. Xxxxx
Trustee
_____________________________________________________________________
Please Initial: Colmena: ____ The CFST: ____
Conversion Agreement Page 16
