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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 10, 1997
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Colmena Corp.
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(Exact name of registrant as specified in its charter)
Delaware 0-27842 54-1778587
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
25100 Detroit Road, Westlake, Ohio 44145
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 871-0500
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Sports-Guard, Inc., 3212 Skipwith Road, Suite G-1, Richmond, VA 23294
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
See disclosure provided under Item 2 below.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 10, 1997, the Registrant consummated a series of transactions
which resulted in a change in its line of business as well as a change in
control of the Registrant. The transactions included a sale of a controlling
stock interest by the founder, the reverse-split of the Registrant's
outstanding common stock, the change in the name of the Registrant and the
acquisition of two operating subsidiaries.
The Registrant was originally founded in 1995 to engage in the design and
distribution of sports safety equipment. The Registrant's first product, known
as the Fielders-Guard, was a polycarbonate face guard for use primarily by
defensive players in the sports of baseball and softball. The Registrant was
unsuccessful in attaining market acceptance for the Fielders-Guard, and was
unable to generate any meaningful level of sales of the product. Concurrently
with the other acquisitions described herein, the Registrant's founder, Norman
O. Milligan, Sr. sold his controlling interest to Invest L'Inc. Partners, LLC,
a creditor and shareholder of the Registrant. Mr. Milligan also acquired
certain operating assets of the Registrant related to the Fielders Guard, and
license rights to the patent for the product (which is owned by Mr. Milligan)
were released by the Registrant.
On November 10, 1997, the Registrant filed a Certificate of Amendment of
Certificate of Incorporation in order to change its name from Sports-Guard,
Inc. to Colmena Corp. as well as to effect a one-for-ten reverse split of its
outstanding common stock. As a result of the reverse split, the outstanding
shares of common stock of the Registrant were reduced to approximately 600,000.
On November 10, 1997, the Registrant consummated the acquisition of RCP
Enterprises Group, LLC, an Ohio limited liability company ("RCP Ohio"), through
the merger of RCP-Ohio with and into RCP Enterprises Group, Inc., a Delaware
corporation ("RCP-Delaware") formed as a wholly-owned subsidiary of the
Registrant for purposes of the acquisition. In exchange for all of the
outstanding membership interests in RCP-Ohio, the members of RCP-Ohio received
an aggregate of 3,000,000 shares of the Registrant's common stock. RCP-
Delaware is a development stage entity engaged in the marketing and
distribution of long-distance telephone service calling cards. The business
was founded in 1997 by Richard C. Peplin, Jr., the new President and
controlling stockholder of the Registrant.
Also on November 10, 1997, the Registrant consummated the acquisition of Tio
Cigars, Inc., an Ohio corporation ("Tio Ohio"), through the merger of Tio-Ohio
with and into Tio Mariano Cigar Corp., a Delaware corporation ("Tio-Delaware")
formed as a wholly-owned subsidiary of the Registrant for purposes of the
acquisition. In exchange for all of the outstanding capital stock of Tio-Ohio,
the stockholders of Tio-Ohio received an aggregate of 1,310,000 shares of the
Registrant's common stock. Mr. Peplin founded and was a controlling
stockholder of Tio-Ohio. Tio-Delaware is a development stage entity engaged in
the manufacture and distribution of premium hand-rolled cigars, with a
manufacturing facility located in the Dominican Republic.
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
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The Registrant is in the process of preparing inception to September 30,
1997 financial statements for Tio and RCP. The Registrant intends to file such
statements when they are available, and in any event to file such statements no
later than sixty (60) days after the date of this report.
(b) Pro forma financial information.
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The Registrant's intends to provide pro forma combined financial information
as of and for the year ended September 30, 1997.
(c) Exhibits.
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2.1 Merger Agreement among Sports-Guard, Inc., RCP Enterprises Group,
Inc. and RCP Enterprises Group, LLC dated October 31, 1997
2.2 Merger Agreement among Sports-Guard, Inc., Tio Mariano Cigar
Corp. and Tio Cigars, Inc. dated October 31, 1997
3. Certificate of Amendment of Certificate of Incorporation filed
November 10, 1997
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ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COLMENA CORP.,
A Delaware Corporation
(Registrant)
Date: November 25, 1997 By: /s/ Richard C. Peplin
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Richard C. Peplin, Jr., President
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MERGER AGREEMENT
AMONG
SPORTS-GUARD, INC.
RCP ENTERPRISES GROUP, INC.
AND
RCP ENTERPRISES GROUP, LLC
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TABLE OF CONTENTS
Page
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1. The Merger...........................................................1
1.1. Effective Time................................................1
1.2. Conversion of Membership Interests............................2
1.3. Restricted Securities.........................................2
1.4. Certificate of Incorporation..................................3
1.5. Bylaws........................................................3
1.6. Dissenters' Rights............................................3
1.7. Directors.....................................................3
2. Representations, Warranties and Agreements of RCP and RCP Members....3
2.1. Due Organization..............................................3
2.2. Corporate Authority...........................................3
2.4. Financial Statements..........................................4
2.5. No Undisclosed Liabilities....................................4
2.6. Title To Properties...........................................4
2.7. Compliance with Laws; Litigation..............................4
2.8. Tax Returns...................................................5
2.9. Full Disclosure...............................................5
2.10. Manager Action...............................................5
2.11. Title to RCP Units...........................................5
2.12. Continuity of Business Enterprise............................5
2.13. No Intent to Sell............................................5
3. Representations, Warranties and Agreements of Parent and Merger
Subsidiary...................................................................5
3.1. Organization of Parent and Merger Subsidiary..................6
3.2. Corporate Authority...........................................6
3.3. Capitalization................................................6
3.4. No Undisclosed Liabilities....................................7
3.5. Compliance with the Laws; Litigation..........................7
3.6. Tax Returns...................................................7
3.7. Full Disclosure...............................................7
3.8. Board Action..................................................7
4. Action Prior to the Effective Time...................................7
4.1. Approval of RCP Members.......................................8
4.2. Accuracy of Representations and Warranties....................8
4.3. Closing.......................................................8
5. Conditions Precedent to Obligation of Parent and Merger Subsidiary...8
5.1. No Adverse Change; Corporate Action...........................8
5.2. No Litigation.................................................8
(i)
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5.3. Securities Laws...............................................8
6. Conditions Precedent to Obligation of RCP............................9
6.1. Accuracy of Representations and Warranties; Performance of
Obligations..................................................................9
6.2. No Litigation.................................................9
6.3. Additional Conditions.........................................9
7. Other Provisions.....................................................9
7.1. Governing Law.................................................9
7.2. Waiver........................................................9
7.3. Survival......................................................9
7.4. No Indemnification............................................9
8. Titles and Headings.................................................10
9. Notices.............................................................10
10. Assignment.........................................................10
11. Counterparts.......................................................10
12. Amendment..........................................................11
Exhibit A - RCP Member Units Ownership
(ii)
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MERGER AGREEMENT
THIS MERGER AGREEMENT, made and entered into as of this 31st day of October,
1997, by and among RCP ENTERPRISES GROUP, LLC, a limited liability company
established and governed under the laws of the State of Ohio ("RCP" or
"Target"), RCP ENTERPRISES GROUP, INC., a corporation established and governed
under the laws of the State of Delaware ("Merger Subsidiary"), Target and
Merger Subsidiary being hereinafter sometimes called the "Constituent
Companies" and Merger Subsidiary being hereinafter sometimes called the
"Surviving Company", and SPORTS-GUARD, INC., a Delaware corporation ("Parent")
(Parent joining as an additional party, not being a Constituent Company).
W I T N E S S E T H
Merger Subsidiary and Target propose to merge pursuant to this Merger
Agreement (the "Merger Agreement"), which provides for the merger of Target
with and into Merger Subsidiary, with Merger Subsidiary as the surviving
company (the "Merger"), pursuant to the applicable laws of the States of
Delaware and Ohio, at the Effective Time, as defined herein, with the intent to
qualify the transactions provided for herein as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Contemporaneously herewith, Parent has entered into a merger
agreement with Tio Cigars, Inc., an Ohio corporation ("Tio"), whereby Tio will
merge with and into a wholly-owned subsidiary of Parent, with such wholly-owned
subsidiary as the surviving corporation and in which Tio shareholders shall
receive Parent shares (the "Tio Merger"). This Merger Agreement records the
representations and warranties made by Parent, Merger Subsidiary and Target in
connection with the instant Merger, sets forth certain covenants and agreements
of the parties, provides conditions to the obligations of the parties and sets
forth other provisions relating to the Merger.
NOW, THEREFORE, Parent, Merger Subsidiary and Target in consideration of the
agreements, covenants and conditions contained herein, hereby make the
following representations and warranties, give the following covenants and
agree as follows:
A G R E E M E N T
1. THE MERGER. At the Effective Time (as hereinafter defined) of the
Merger, Target shall be merged with and into Merger Subsidiary by statutory
merger; the separate existence of Target shall cease and Merger Subsidiary
shall be the surviving corporation, and on the following terms and conditions:
1.1. EFFECTIVE TIME. The Merger shall be effective (the "Effective
Time") when this Merger Agreement and/or appropriate certificates of its
approval and adoption and acknowledgments shall have been filed with the
Secretary of State of Delaware.
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1.2. CONVERSION OF MEMBERSHIP INTERESTS. At the Effective Time, by
virtue of the Merger, and without any action on the part of the holders
thereof:
1.2.1. Each of the units of RCP membership interest ("RCP Units")
held by RCP members as described in Appendix A (the "RCP Members"), which shall
be outstanding immediately prior to the Effective Time and other than RCP Units
which are dissenting units, shall cease to be outstanding and shall be
converted into shares of common stock, $.01 par value, of Parent ("Parent
Common Stock") at a ratio of Three Thousand (3,000) shares of Parent Common
Stock for each one (1) RCP Unit. The foregoing exchange ratio includes the
effect of a proposed one-for-ten reverse split of Parent Common Stock to be
effected prior to the Effective Time (i.e., an aggregate of 3,000,000 shares of
Parent Common Stock will be issued to the RCP Members). Holders of
certificates which represent the RCP Units shall thereafter have no rights as
members of Target. Except for issuance of stock by Parent in the Tio Merger,
after the date of this Merger Agreement and prior to the Effective Time,
neither Parent nor Target shall declare or pay to its shareholders and members,
respectively, of record a stock dividend or distribution upon the Parent Common
Stock or the RCP Units, as the case may be, or subdivide, split up, reclassify
or combine the Parent Common Stock or the RCP Units, as the case may be, or
make any other distribution of securities or property in respect of the Parent
Common Stock or the RCP Units, as the case may be or otherwise effect any
capital reorganization.
1.2.2. From and after the Effective Time, each holder of a
certificate theretofore representing issued and outstanding RCP Units (but not
including RCP Units which are dissenting units within the meaning of the Ohio
Limited Liability Company Act) shall, upon the surrender of such certificates
to Parent, be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares of Parent Common Stock into
which the RCP Units theretofore represented by the certificate or certificates
so surrendered shall have been converted pursuant to subsection 1.2.2 above.
From and after the Effective Time, until so surrendered, each certificate
theretofore representing RCP Units (except for certificates representing
dissenting units) shall be deemed for all corporate purposes to evidence the
number of shares of Parent Common Stock into which such RCP Units shall have
been converted.
1.3. RESTRICTED SECURITIES. The Parent Common Stock to be issued in
exchange for the RCP Units has not been registered under the Securities Act of
1933, as amended, by reason of an exemption therefrom, and may not be
transferred or resold except pursuant to an effective registration statement or
exemption from registration and each certificate representing the Parent Common
Stock will be endorsed with the following legends and any legend required to be
placed thereon by applicable state securities laws:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SHARES,
OR AN OPINION OF THE ISSUER'S COUNSEL TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT."
1.4. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Merger Subsidiary shall continue to be the Certificate of Incorporation of the
Surviving Company immediately after the Effective Time.
1.5. BYLAWS. The Bylaws of Merger Subsidiary in effect immediately prior
to the Effective Time shall continue to be the Bylaws of the Surviving Company
immediately after the Effective Time.
1.6. DISSENTERS' RIGHTS. Parent and RCP shall take all actions mandated
by the Ohio Limited Liability Company Act to permit and satisfy the exercise of
rights of dissent and appraisal by holders of RCP Units.
1.7. DIRECTORS. The Board of Directors of the Surviving Company at and
as of the consummation of the transactions contemplated herein shall be as set
forth on Schedule 1.7 hereto.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF RCP AND RCP MEMBERS. As
an inducement to Parent and Merger Subsidiary to enter into this Merger
Agreement and to consummate the transactions contemplated herein, RCP, and the
RCP Members as to Sections 2.11 and 2.13 only, represent and warrant to Parent
and Merger Subsidiary and agree as follows:
2.1. DUE ORGANIZATION. RCP is a limited liability company duly organized
and validly existing in good standing under the laws of the State of Ohio, and
has full corporate power and authority to own or lease its properties and to
carry on its business as now conducted. RCP is duly licensed, qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which its failure to be so licensed or qualified would have a material adverse
effect on its business taken as a whole.
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2.2. CORPORATE AUTHORITY. The execution, delivery and performance by RCP
of this Merger Agreement has been duly authorized and approved by its Managers,
subject to approval of the Merger contemplated herein by its members pursuant
to section 4.1 hereof, and neither the execution and delivery of this Merger
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance with nor fulfillment of the terms and provisions herein, will:
(i) conflict with or result in a breach of the terms, conditions or provisions
of or constitute a default under the Articles of Organization or Operating
Agreement of RCP, any material agreement, instrument or judgment to which it is
a party or by which it is bound or any statute or regulatory provisions
affecting RCP; (ii) give any party to or with rights under any such agreement,
instrument or judgment the right to terminate, modify or otherwise change the
material rights or obligations of RCP under such agreement, instrument or
judgment; or (iii) require the approval, consent or authorization of any
Federal, state or local court, governmental authority or regulatory body, other
than in connection with or in compliance with the provisions of Sections
1705.36 through 1705.42 of the Ohio Limited Liability Company Act and Federal
or state securities or antitrust laws. RCP has, and will have at the Effective
Time, full corporate power and corporate authority to complete the merger with
Merger Subsidiary pursuant to this Merger Agreement and to do and perform all
acts and things required to be done by RCP under the Merger Agreement, subject
to compliance with the provisions of the Ohio Limited Liability Company Act and
Federal or state securities or antitrust laws.
2.3. SUBSIDIARIES. RCP has no subsidiaries and no ownership interest in
any other entities.
2.4. FINANCIAL STATEMENTS. RCP has furnished to Parent its balance sheet
as of July 31, 1997 and its statement of income for the seven month period
ended July 31, 1997 (collectively the "Financial Statements"). The Financial
Statements have been prepared in conformity with generally accepted accounting
principles consistently applied and are correct and complete in all material
respects and fairly present the financial position of RCP as of the date of
such balance sheet and the results of its operations for the period indicated.
The Financial Statements do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
2.5. NO UNDISCLOSED LIABILITIES. Except as set forth in the Financial
Statements, RCP has no material liabilities, fixed or contingent, other than
liabilities incurred since July 31, 1997 in the ordinary course of business or
as previously disclosed to Parent.
2.6. TITLE TO PROPERTIES. RCP has good, valid and marketable title to
all of the properties and assets reflected in the Financial Statements. Except
as set forth in the Financial Statements, all such properties and assets are
free and clear of all liens, claims, charges, security interests or other
encumbrances.
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2.7. COMPLIANCE WITH LAWS; LITIGATION. RCP is not in default in any
material respect under any material agreement, lease or other document to which
it is a party, nor has RCP received written notice of or is, to the knowledge
of any executive officer of RCP, in material violation of any law or order,
writ, injunction or decree of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
and there are no material lawsuits, proceedings, claims or governmental
investigations pending or, to the knowledge of any executive officer of RCP,
threatened against RCP or against its properties or business, nor is there any
reasonable basis known to RCP for any such action and there is no action, suit,
proceeding or investigation pending, threatened or, to the knowledge of RCP,
contemplated which questions the legality, validity or propriety of the
transactions contemplated by this Merger Agreement.
2.8. TAX RETURNS. RCP has (i) filed or has caused to be filed all
federal, state and local franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by RCP or on its behalf and
which were due prior to the date of this Merger Agreement (the "Tax Returns and
Statements") and (ii) paid within the time and in the manner prescribed by law
all taxes due prior to the date of this Merger Agreement. No tax assessment or
deficiency has been made against RCP nor has any notice been given of any
actual or proposed assessment or deficiency which has not been paid or for
which an adequate reserve has not been set aside.
2.9. FULL DISCLOSURE. No representation or warranty by RCP in this
Merger Agreement or any written information, documents or memoranda furnished
or to be furnished by RCP or any of its authorized representatives to Parent or
Merger Subsidiary or any of their representatives is false or misleading in any
material respect or omits to state a material fact required to be stated
therein or necessary in order to make any of the statements therein not
misleading.
2.10. MANAGER ACTION. The Managers of RCP, by requisite vote, determined
that the Merger is in the best interests of RCP and its members, approved the
Merger Agreement and recommended approval and adoption of the Merger Agreement
by the members of RCP.
2.11. TITLE TO RCP UNITS. Each RCP Member owns and holds title to, and
will at the Effective Time own and hold title to, respectively, the RCP Units
of Membership Interest (or units) now (and at Effective Time to be) owned by
him or her, as set forth in Exhibit A, free and clear of any lien, charge or
encumbrance of any kind.
2.12. CONTINUITY OF BUSINESS ENTERPRISE. RCP operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, within the meaning of Treasury Regulation Section
1.368-1(d) promulgated under the Internal Revenue Code.
2.13. NO INTENT TO SELL. No RCP Member has, or at the Effective Time
will have, any present plan, intention or arrangement to sell, transfer or
otherwise in any manner dispose of any of the Parent Common Stock to be issued
to such Member pursuant to the merger.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PARENT AND MERGER
SUBSIDIARY. As an inducement to RCP to enter into this Merger Agreement and to
consummate the transactions contemplated herein, Parent and Merger Subsidiary
hereby represent and warrant to RCP and its members and agree as follows:
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3.1. ORGANIZATION OF PARENT AND MERGER SUBSIDIARY. Parent is a
corporation duly incorporated and validly existing in good standing under the
laws of the State of Delaware; Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is a directly and wholly owned subsidiary of Parent; Parent and
Merger Subsidiary each has full corporate power and authority to consummate the
Merger as provided herein and Parent has full corporate power to own or lease
its properties and to carry on its business as it is currently conducted.
Parent is duly licensed, qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which its failure to be so licensed
or qualified would have a material adverse effect on its business taken as a
whole.
3.2. CORPORATE AUTHORITY. The execution, delivery and performance by
Parent and Merger Subsidiary of this Merger Agreement have been duly authorized
and approved by the Boards of Directors of Parent and Merger Subsidiary,
subject to the approval of the shareholders of Parent pursuant to section 4.1,
and neither the execution nor delivery of this Merger Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with nor
fulfillment of the terms and provisions herein, will, (i) conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under the Certificate of Incorporation or Bylaws of Parent, the
Certificate of Incorporation or Bylaws of Merger Subsidiary or any material
agreement, instrument or judgment to which Parent or Merger Subsidiary is a
party or by which either is bound or any statute or regulatory provisions
affecting Parent or Merger Subsidiary, (ii) give any party to or with rights
under any such agreement, instrument or judgment the right to terminate, modify
or otherwise change the material rights or obligations of Parent or Merger
Subsidiary under such agreement, instrument or judgment, or (iii) require the
approval, consent or authorization of any Federal, state or local court,
governmental authority or regulatory body, other than in connection with or in
compliance with the provisions of the Delaware General Corporation Law and
Federal or state securities or antitrust laws. Merger Subsidiary has, and will
have at the Effective Time, full corporate power and corporate authority to
merge with RCP pursuant to this Merger Agreement and Parent and Merger
Subsidiary will have at the Effective Time, full corporate power and corporate
authority to do and perform all acts and things required to be done by them
under this Merger Agreement, subject to compliance with the provisions of the
Delaware General Corporation Law and Federal or state securities or antitrust
laws.
3.3. CAPITALIZATION. The authorized capital stock of Parent consists of
20,000,000 shares of Parent Common Stock, $.01 par value, of which following
the Merger and the Tio Merger, up to 6,167,700 shares will be issued and
outstanding. The shares of Parent Common Stock to be issued to the members of
RCP pursuant to this Merger Agreement will, when issued and delivered in
accordance with the terms of this Merger Agreement, will be validly issued,
fully paid and non-assessable, and not subject to preemptive rights.
3.4. NO UNDISCLOSED LIABILITIES. Parent has no material undisclosed
liabilities, either fixed or contingent.
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3.5. COMPLIANCE WITH THE LAWS; LITIGATION. Neither Parent or Merger
Subsidiary is in default in any material respect under any material agreement,
lease or other document to which it is a party, or has received written notice
of or is, to the knowledge of any executive officer of Parent or Merger
Subsidiary, in material violation of any law or order, writ, injunction or
decree of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality. There are no
material lawsuits, proceedings, claims or governmental investigations pending
or, to the knowledge of any executive officer of Parent or Merger Subsidiary,
threatened against Parent or Merger Subsidiary or against its properties or
business, nor is there any reasonable basis known to Parent or Merger
Subsidiary for any such action and there is no action, suit, proceeding or
investigation pending, threatened or, to the knowledge of Parent or Merger
Subsidiary, contemplated which questions the legality, validity or propriety of
the transactions contemplated by this Merger Agreement.
3.6. TAX RETURNS. Parent has (i) filed or has caused to be filed all
federal, state and local franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by Parent or on its behalf and
which were due prior to the date of this Merger Agreement (the "Tax Returns and
Statements") and (ii) paid within the time and in the manner prescribed by law
all taxes due prior to the date of this Merger Agreement. The Tax Returns and
Statements are true, complete and accurate in all material respects. No tax
assessment or deficiency has been made against Parent nor has any notice been
given of any actual or proposed assessment or deficiency which has not been
paid or for which an adequate reserve has not been set aside.
3.7. FULL DISCLOSURE. No representation or warranty by Parent and Merger
Subsidiary to RCP under this Merger Agreement or any of the written
information, documents or memoranda furnished or to be furnished by Parent or
any of its authorized representatives to RCP or any of its representatives is
false or misleading or omits to state a material fact required to be stated
therein or necessary in order to make any of the statements therein not
misleading.
3.8. BOARD ACTION. The Board of Directors of Parent, by requisite vote,
determined that the Merger is in the best interests of Parent and approved the
Merger Agreement.
4. ACTION PRIOR TO THE EFFECTIVE TIME. The parties covenant to take the
following action between the date hereof and the Effective Time:
4.1. APPROVAL OF RCP MEMBERS. RCP will obtain the approval of its
members for the Merger on the terms and conditions set forth in this Merger
Agreement and in connection therewith will comply fully with the applicable
provisions of the Ohio Limited Liability Company Act relating to the calling
and holding of a meeting of members or the action of members without a meeting
for such purpose.
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4.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. RCP and Parent shall
refrain from taking any action which would render any representation and/or
warranty contained in paragraphs 2 and 3 of this Merger Agreement inaccurate as
of the Effective Time. Parent will promptly notify RCP of any lawsuits,
claims, proceedings or investigations that may be threatened, brought, asserted
or commenced against Parent or its subsidiary or any of their officers or
directors (i) involving in any way the Merger or (ii) which might have a
material adverse impact on the business, properties or assets of Parent, taken
as a whole. RCP will promptly notify Parent of any lawsuits, claims,
proceedings or investigations that may be threatened, brought, asserted or
commenced against RCP or its officers or directors (i) involving in any way the
Merger or (ii) which might have a material adverse impact on the business,
properties or assets of RCP, taken as a whole.
4.3. CLOSING. The transactions contemplated in this Merger Agreement
shall be closed at the offices of RCP and this Merger Agreement and Articles of
Merger shall be filed promptly following such closing.
5. CONDITIONS PRECEDENT TO OBLIGATION OF PARENT AND MERGER SUBSIDIARY.
The obligation of Parent and Merger Subsidiary to effect the Merger is subject
to the satisfaction on or prior to the Effective Time of each of the following
conditions:
5.1. NO ADVERSE CHANGE; CORPORATE ACTION. No material adverse change
shall have occurred in the assets, liabilities, business, operations,
properties, prospects or condition (financial or otherwise) of RCP. RCP shall
have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions contained
in this Merger Agreement to be performed and complied with by it at or prior to
the Effective Time.
5.2. NO LITIGATION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by this
Merger Agreement and no suit, action, investigation, inquiry or proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
5.3. SECURITIES LAWS. Parent shall have received all necessary permits
and otherwise complied with any state Blue Sky, securities, tender offer or
take-over laws applicable to the issuance of shares of Parent Common Stock in
connection with the Merger. Parent agrees to use its best efforts promptly to
accomplish the foregoing.
6. CONDITIONS PRECEDENT TO OBLIGATION OF RCP. The obligation of RCP to
effect the Merger is subject to the fulfillment at or prior to the Effective
Time each of the following conditions:
8
<PAGE>
6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS. The representations and warranties of Parent and Merger
Subsidiary contained in this Merger Agreement, or in any certificate or
document delivered pursuant to the provisions hereof shall be true and correct
on and as of the Effective Time as though such representations and warranties
were made at and as of such time. Parent shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Merger Agreement to be
performed and complied with by it at or prior to the Effective Time.
6.2. NO LITIGATION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by this
Merger Agreement and no suit, action, investigation, inquiry or proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
6.3. ADDITIONAL CONDITIONS.
(a) Parent shall have completed the Tio Merger.
(b) Parent shall have effected a one-for-ten reverse split of the
Parent Common Stock.
7. OTHER PROVISIONS.
7.1. GOVERNING LAW. This Merger Agreement shall be construed and
interpreted according to the laws of the State of Ohio, the Ohio Limited
Liability Company Act and the Ohio General Corporation Law shall be applicable
to approval of the Merger by the managers and members of RCP and to the Merger
Subsidiary and to the procedures relating to filing of the Merger Agreement and
Articles of Merger with the Secretary of State of Ohio.
7.2. WAIVER. To the extent otherwise permitted by applicable law any
party may, at its option, waive in writing any and all of the conditions herein
contained to which its obligations hereunder are subject.
7.3. SURVIVAL. The representations and warranties of RCP, Merger
Subsidiary and Parent contained herein shall survive the Effective Time.
7.4. NO INDEMNIFICATION. Except as set forth in this Merger Agreement,
there shall be no agreement, express or implied, to indemnify RCP, Merger
Subsidiary or Parent with respect to the respective covenants, representations
or warranties expressed herein.
8. TITLES AND HEADINGS. The titles and headings contained in this Merger
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
9
<PAGE>
9. NOTICES. All notices, requests, demands, and other communications
given, or required to be given pursuant to the terms of this Merger Agreement
shall be in writing and may be delivered in person (by hand, messenger, or
other confirmable form of delivery), or be sent by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows, or by
Federal Express or other nationally recognized overnight courier service,
addressed as follows, or by facsimile transmission, to the following respective
numbers, followed by a copy being delivered in person, by mail, or by overnight
courier as specified herein:
If to RCP: RCP Enterprises Group, LLC
Attention: Richard C. Peplin, Jr., Manager
25100 Detroit Road
Westlake, Ohio 44145
If to Parent or
Merger Subsidiary: Sports-Guard, Inc.
c/o Invest L'Inc. Partners, LLC
1901 N. Roselle Road, Suite 1030
Schaumburg, Illinois 60195
Either party may, by written notice to the other, specify a different address
or numbers for notice purposes. Any notice sent to the party to whom it is
addressed in accordance with this paragraph will be deemed to have been given
(i) when received, if personally delivered; (ii) if sent by registered or
certified mail, return receipt requested, upon the date of delivery shown on
the receipt card, or if no date is shown, the postmark thereon; (iii) if sent
via Federal Express or other nationally recognized overnight courier, one (1)
business day after deposit with such overnight courier; or (iv) if sent by
facsimile transmission, on the day on which it is sent, if receipt of
transmission is confirmed by telephone. If notice is received on a Saturday,
Sunday or legal holiday, it will be deemed to have been given and received on
the next following business day.
10. ASSIGNMENT. This Merger Agreement shall be binding upon and inure to
the benefit of the parties named herein and their respective successors and
assigns, provided that neither this Merger Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties hereto.
11. COUNTERPARTS. This Merger Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12. AMENDMENT. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the members of RCP, but after
any such approval by the members of RCP, no amendment shall be made without
further approval by the managers of RCP and the board of directors of Merger
Subsidiary and by the board of directors of Parent, if such amendment would
materially or adversely affect the members, would amend the certificate of
incorporation, or would affect the amount or kind of stock, securities or other
consideration to be exchanged under this Agreement.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned directors, officers and managers of the
respective parties of this Merger Agreement, pursuant to authority duly given
by their respective Board of Directors and Managers, have caused this Merger
Agreement to be duly executed.
Constituent Corporations:
RCP ENTERPRISES GROUP, LLC,
an Ohio limited liability company
By:/s/ Richard C. Peplin
--------------------------------------
Richard C. Peplin, Jr., Manager
RCP ENTERPRISES GROUP, INC.
a Delaware corporation
By:/s/ Troy D. Wiseman
--------------------------------------
Troy D. Wiseman, President
Additional Party:
SPORTS-GUARD, INC.,
a Delaware corporation
By:/s/ Troy D. Wiseman
--------------------------------------
Troy D. Wiseman, President
11
<PAGE>
IN WITNESS WHEREOF, as to Sections 2.11 and 2.13 only, the undersigned RCP
Members have duly executed this Agreement.
RCP Members:
/s/ Richard C. Peplin
- ----------------------------------------------
RICHARD C. PEPLIN, JR.
LAKEWOOD MFG. CO.
By:/s/ Richard C. Peplin
------------------------------------------
Richard C. Peplin, Jr., President
12
<PAGE>
EXHIBIT A
RCP Membership Interests Ownership
Member Number of Units
---------------------- -----------------
Richard C. Peplin, Jr. 700
Lakewood Mfg. Co. 300
13
<PAGE>
MERGER AGREEMENT
AMONG
SPORTS-GUARD, INC.
TIO MARIANO CIGAR CORP.
AND
TIO CIGARS, INC.
<PAGE>
TABLE OF CONTENTS
Page
----
1. The Merger...........................................................1
1.1. Effective Time................................................2
1.2. Conversion of Shares..........................................2
1.3. Restricted Securities.........................................2
1.4. Articles of Incorporation.....................................3
1.5. Bylaws........................................................3
1.6. Dissenters' Rights............................................3
1.7. Directors.....................................................3
2. Representations, Warranties and Agreements of Tio and Tio
Shareholders.................................................................3
2.1. Due Organization..............................................3
2.2. Corporate Authority...........................................3
2.3. Capitalization................................................4
2.4. Subsidiaries..................................................4
2.5. No Financial Statements.......................................4
2.6. No Undisclosed Liabilities....................................4
2.7. Title To Properties...........................................4
2.8. Compliance with Laws; Litigation..............................4
2.9. Tax Returns...................................................5
2.10. Full Disclosure..............................................5
2.11. Board Action.................................................5
2.12. Title to Target Shares.......................................5
2.13. Continuity of Business Enterprise............................5
2.14. No Intent to Sell............................................5
3. Representations, Warranties and Agreements of Parent and Merger
Subsidiary...................................................................5
3.1. Organization of Parent and Merger Subsidiary..................6
3.2. Corporate Authority...........................................6
3.3. Capitalization................................................6
3.4. No Undisclosed Liabilities....................................6
3.5. Compliance with the Laws; Litigation..........................7
3.6. Tax Returns...................................................7
3.7. Full Disclosure...............................................7
3.8. Board Action..................................................7
4. Action Prior to the Effective Time...................................7
4.1. Approval of Tio Shareholders..................................7
4.2. Accuracy of Representations and Warranties....................7
4.3. Closing.......................................................8
(i)
<PAGE>
5. Conditions Precedent to Obligation of Parent and Merger Subsidiary 8
5.1. No Adverse Change; Corporate Action...........................8
5.2. No Litigation.................................................8
5.3. Securities Laws...............................................8
6. Conditions Precedent to Obligation of Tio............................8
6.1. Accuracy of Representations and Warranties; Performance of
Obligations..................................................................8
6.2. No Litigation.................................................9
7. Other Provisions.....................................................9
7.1. Governing Law.................................................9
7.2. Waiver........................................................9
7.3. Survival......................................................9
7.4. No Indemnification............................................9
8. Titles and Headings..................................................9
9. Notices..............................................................9
10. Assignment.........................................................10
11. Counterparts.......................................................10
12. Amendment..........................................................10
Exhibit A - Tio Share Ownership
(ii)
<PAGE>
MERGER AGREEMENT
THIS MERGER AGREEMENT, made and entered into as of this 31st day of October,
1997, by and among TIO CIGARS, INC., a corporation established and governed
under the laws of the State of Ohio ("Tio" or "Target"), TIO MARIANO CIGAR
CORP., a corporation to be established and governed under the laws of the State
of Delaware ("Merger Subsidiary"), Tio and Merger Subsidiary being hereinafter
sometimes called the "Constituent Corporations" and Merger Subsidiary being
hereinafter sometimes called the "Surviving Corporation", and SPORTS-GUARD,
INC., a Delaware corporation ("Parent") (Parent joining as an additional party,
not being a Constituent Corporation).
W I T N E S S E T H
Merger Subsidiary and Target propose to merge pursuant to this Merger
Agreement (the "Merger Agreement"), which provides for the merger of Target
with and into Merger Subsidiary, with Merger Subsidiary as the surviving
corporation (the "Merger"), pursuant to the applicable laws of the States of
Delaware and Ohio, at the Effective Time, as defined herein, with the intent to
qualify the transactions provided for herein as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Contemporaneously herewith, Parent has entered into a merger agreement
with RCP Enterprises Group, LLC, an Ohio limited liability Company ("RCP"),
whereby RCP will merger with and into a wholly-owned subsidiary of Parent, with
such wholly-owned subsidiary as the surviving corporation and in which RCP
members shall receive Parent shares (the "RCP Merger"). This Merger Agreement
records the representations and warranties made by Parent, Merger Subsidiary
and Tio in connection with the instant Merger, sets forth certain covenants and
agreements of the parties, provides conditions to the obligations of the
parties and sets forth other provisions relating to the Merger.
NOW, THEREFORE, Parent, Merger Subsidiary and Tio in consideration of the
agreements, covenants and conditions contained herein, hereby make the
following representations and warranties, give the following covenants and
agree as follows:
A G R E E M E N T
1. THE MERGER. At the Effective Time (as hereinafter defined) of the
Merger, Tio shall be merged with and into Merger Subsidiary by statutory
merger; the separate existence of Tio shall cease and Merger Subsidiary shall
be the surviving corporation, and on the following terms and conditions:
1.1. EFFECTIVE TIME. The Merger shall be effective (the "Effective
Time") when this Merger Agreement and/or appropriate certificates of its
approval and adoption and acknowledgments shall have been filed with the
Secretary of State of Delaware.
1
<PAGE>
1.2. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holders thereof:
1.2.1. Each of the shares of Tio common stock, no par value, ("Tio
Common Stock") held by Tio Shareholders, as described in Appendix A (the "Tio
Shareholders"), which shall be outstanding immediately prior to the Effective
Time (collectively "the Shares") and other than Shares which are dissenting
shares, shall cease to be outstanding and shall be converted into shares of
common stock, $.01 par value, of Parent ("Parent Common Stock") at a ratio of
one (1) share of Parent Common Stock for each two (2) shares of Tio Common
Stock, except that fractional shares shall be rounded up to the nearest whole
share. The foregoing exchange ratio includes the effect of a proposed one-for-
ten reverse split of Parent Common Stock to be effected prior to the Effective
Time (i.e., an aggregate of 1,310,000 shares of Parent Common Stock will be
issued to the Tio Shareholders). Holders of certificates which represent the
Shares shall thereafter have no rights as shareholders of Target. Except for
issuance by Parent of stock in connection with the RCP Merger, after the date
of this Merger Agreement and prior to the Effective Time, neither Parent nor
Tio shall declare or pay to its shareholders of record a stock dividend upon
the Parent Common Stock or the Tio Common Stock, as the case may be, or
subdivide, split up, reclassify or combine the Parent Common Stock or the Tio
Common Stock, as the case may be, or make any other distribution of securities
or property in respect of the Parent Common Stock or the Tio Common Stock, as
the case may be or otherwise effect any capital reorganization.
1.2.2. From and after the Effective Time, each holder of a
certificate theretofore representing issued and outstanding Shares (but not
including Shares which are dissenting shares within the meaning of the Ohio
General Corporation Law shall, upon the surrender of such certificates to
Parent, be entitled to receive in exchange therefor a certificate or
certificates representing the number of shares of Parent Common Stock into
which the Shares theretofore represented by the certificate or certificates so
surrendered shall have been converted pursuant to subsection 1.2.1 above. From
and after the Effective Time, until so surrendered, each certificate
theretofore representing Shares (except for certificates representing
dissenting shares) shall be deemed for all corporate purposes to evidence the
number of shares of Parent Common Stock into which such Shares shall have been
converted.
1.3. RESTRICTED SECURITIES. The Parent Common Stock to be issued in
exchange for the Shares has not been registered under the Securities Act of
1933, as amended, by reason of an exemption therefrom, and may not be
transferred or resold except pursuant to an effective registration statement or
exemption from registration and each certificate representing the Shares will
be endorsed with the following legends and any legend required to be placed
thereon by applicable state securities laws:
2
<PAGE>
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
A CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION
OF THE ISSUER'S COUNSEL TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT."
1.4. ARTICLES OF INCORPORATION. The Certificate of Incorporation of
Merger Subsidiary shall continue to be the Certificate of Incorporation of the
Surviving Corporation immediately after the Effective Time.
1.5. BYLAWS. The Bylaws of Merger Subsidiary in effect immediately prior
to the Effective Time shall continue to be the Bylaws of the Surviving
Corporation immediately after the Effective Time.
1.6. DISSENTERS' RIGHTS. Parent and Tio shall take all actions mandated
by the Ohio General Corporation Law to permit and satisfy the exercise of
rights of dissent and appraisal by holders of Tio Common Stock.
1.7. DIRECTORS. The Board of Directors of the Surviving Corporation at
and as of the consummation of the transactions contemplated herein shall be as
set forth on Schedule 1.7 hereto.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF TIO AND TIO SHAREHOLDERS.
As an inducement to Parent and Merger Subsidiary to enter into this Merger
Agreement and to consummate the transactions contemplated herein, Tio, and the
Tio shareholders as to Sections 2.12 and 2.14 only, represent and warrant to
Parent and Merger Subsidiary and agree as follows:
2.1. DUE ORGANIZATION. Tio is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Ohio, and has full
corporate power and authority to own or lease its properties and to carry on
its business as now conducted. Tio is duly licensed, qualified to do business
and in good standing as a foreign corporation in each jurisdiction in which its
failure to be so licensed or qualified would have a material adverse effect on
its business taken as a whole.
3
<PAGE>
2.2. CORPORATE AUTHORITY. The execution, delivery and performance by Tio
of this Merger Agreement has been duly authorized and approved by its Board of
Directors, subject to approval of the Merger contemplated herein by its
shareholders pursuant to section 4.1 hereof, and neither the execution and
delivery of this Merger Agreement nor the consummation of the transactions
contemplated hereby, nor compliance with nor fulfillment of the terms and
provisions herein, will: (i) conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under the Articles of
Incorporation or Bylaws of Tio, any material agreement, instrument or judgment
to which it is a party or by which it is bound or any statute or regulatory
provisions affecting Tio; (ii) give any party to or with rights under any such
agreement, instrument or judgment the right to terminate, modify or otherwise
change the material rights or obligations of Tio under such agreement,
instrument or judgment; or (iii) require the approval, consent or authorization
of any Federal, state or local court, governmental authority or regulatory
body, other than in connection with or in compliance with the provisions of the
Ohio General Corporation Law and Federal or state securities or antitrust laws.
Tio has, and will have at the Effective Time, full corporate power and
corporate authority to complete the merger with Merger Subsidiary pursuant to
this Merger Agreement and to do and perform all acts and things required to be
done by Tio under the Merger Agreement, subject to compliance with the
provisions of the Ohio General Corporation Law and Federal or state securities
or antitrust laws.
2.3. CAPITALIZATION. As of the Effective Time, the authorized capital
stock of Tio shall consist of 3,000,000 shares of Tio Common Stock, no par
value, of which 2,620,000 shares shall be issued and outstanding (none of which
are owned beneficially or of record by Tio) as of the date of this Merger
Agreement. All of the issued and outstanding shares of Tio Common Stock are
duly and validly issued and are fully paid and non-assessable. Except as set
forth on Exhibit B, no other securities of Tio are outstanding, and Tio has not
issued nor taken any action toward issuance of any other options, warrants,
conversion privileges or other rights to purchase or acquire shares of Tio
Common Stock, whether upon exchange for or conversion of other securities or
otherwise, and no rescission or redemption rights exist with regard to existing
shareholders. No shares of Tio Common Stock will be issued between the date
hereof and the Effective Time.
2.4. SUBSIDIARIES. Tio has no subsidiaries and no ownership interest in
any other entities.
2.5. NO FINANCIAL STATEMENTS. Tio was incorporated on June 19, 1997 and
has had no significant operations to date.
2.6. NO UNDISCLOSED LIABILITIES. Tio has no material liabilities, fixed
or contingent.
2.7. TITLE TO PROPERTIES. Tio has good, valid and marketable title to
all of the properties and assets. All such properties and assets are free and
clear of all liens, claims, charges, security interests or other encumbrances.
2.8. COMPLIANCE WITH LAWS; LITIGATION. Tio is not in default in any
material respect under any material agreement, lease or other document to which
it is a party, nor has Tio received written notice of or is, to the knowledge
of any executive officer of Tio, in material violation of any law or order,
writ, injunction or decree of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
and there are no material lawsuits, proceedings, claims or governmental
investigations pending or, to the knowledge of any executive officer of Tio,
threatened against Tio or against its properties or business, nor is there any
reasonable basis known to Tio for any such action and there is no action, suit,
proceeding or investigation pending, threatened or, to the knowledge of Tio,
contemplated which questions the legality, validity or propriety of the
transactions contemplated by this Merger Agreement.
4
<PAGE>
2.9. TAX RETURNS. Tio has (i) filed or has caused to be filed all
federal, state and local franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by Tio or on its behalf and
which were due prior to the date of this Merger Agreement (the "Tax Returns and
Statements") and (ii) paid within the time and in the manner prescribed by law
all taxes due prior to the date of this Merger Agreement. No tax assessment or
deficiency has been made against Tio nor has any notice been given of any
actual or proposed assessment or deficiency which has not been paid or for
which an adequate reserve has not been set aside.
2.10. FULL DISCLOSURE. No representation or warranty by Tio in this
Merger Agreement or any written information, documents or memoranda furnished
or to be furnished by Tio or any of its authorized representatives to Parent or
Merger Subsidiary or any of their representatives is false or misleading in any
material respect or omits to state a material fact required to be stated
therein or necessary in order to make any of the statements therein not
misleading.
2.11. BOARD ACTION. The Board of Directors of Tio, by requisite vote,
determined that the Merger is in the best interests of Tio and its
shareholders, approved the Merger Agreement and recommended approval and
adoption of the Merger Agreement by the shareholders of Tio.
2.12. TITLE TO TARGET SHARES. Each Tio Shareholder owns and holds title
to, and will at the Effective Time own and hold title to, respectively, the Tio
Common Stock (or shares) now (and at Effective Time to be) owned by him or her,
as set forth in Exhibit A, free and clear of any lien, charge or encumbrance of
any kind.
2.13. CONTINUITY OF BUSINESS ENTERPRISE. Tio operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, within the meaning of Treasury Regulation Section
1.368-1(d) promulgated under the Internal Revenue Code.
2.14. NO INTENT TO SELL. No Tio Shareholder has, or at the Effective
Time will have, any present plan, intention or arrangement to sell, transfer or
otherwise in any manner dispose of any of the Parent Common Stock to be issued
to such Shareholder pursuant to the merger.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PARENT AND MERGER
SUBSIDIARY. As an inducement to Tio to enter into this Merger Agreement and to
consummate the transactions contemplated herein, Parent and Merger Subsidiary
hereby represent and warrant to Tio and its shareholders and agree as follows:
5
<PAGE>
3.1. ORGANIZATION OF PARENT AND MERGER SUBSIDIARY. Parent is a
corporation duly incorporated and validly existing in good standing under the
laws of the State of Delaware; Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is a directly and wholly owned subsidiary of Parent; Parent and
Merger Subsidiary each has full corporate power and authority to consummate the
Merger as provided herein and Parent has full corporate power to own or lease
its properties and to carry on its business as it is currently conducted.
Parent is duly licensed, qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which its failure to be so licensed
or qualified would have a material adverse effect on its business taken as a
whole.
3.2. CORPORATE AUTHORITY. The execution, delivery and performance by
Parent and Merger Subsidiary of this Merger Agreement have been duly authorized
and approved by the Boards of Directors of Parent and Merger Subsidiary,
subject to the approval of the shareholders of Parent pursuant to section 4.1,
and neither the execution nor delivery of this Merger Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with nor
fulfillment of the terms and provisions herein, will, (i) conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under the Articles of Incorporation or Bylaws of Parent, the Articles
of Incorporation or Bylaws of Merger Subsidiary or any material agreement,
instrument or judgment to which Parent or Merger Subsidiary is a party or by
which either is bound or any statute or regulatory provisions affecting Parent
or Merger Subsidiary, (ii) give any party to or with rights under any such
agreement, instrument or judgment the right to terminate, modify or otherwise
change the material rights or obligations of Parent or Merger Subsidiary under
such agreement, instrument or judgment, or (iii) require the approval, consent
or authorization of any Federal, state or local court, governmental authority
or regulatory body, other than in connection with or in compliance with the
provisions of the Delaware General Corporation Law and Federal or state
securities or antitrust laws. Merger Subsidiary has, and will have at the
Effective Time, full corporate power and corporate authority to merge with Tio
pursuant to this Merger Agreement and Parent and Merger Subsidiary will have at
the Effective Time, full corporate power and corporate authority to do and
perform all acts and things required to be done by them under this Merger
Agreement, subject to compliance with the provisions of the Delaware General
Corporation Law and Federal or state securities or antitrust laws.
3.3. CAPITALIZATION. The authorized capital stock of Parent consists of
20,000,000 shares of Parent Common Stock, $.01 par value, of which following
the Merger and the RCP Merger approximately 6,167,700 shares will be issued and
outstanding. The shares of Parent Common Stock to be issued to the
shareholders of Tio pursuant to this Merger Agreement, when issued and
delivered in accordance with the terms of this Merger Agreement, will be
validly issued, fully paid and non-assessable, and not subject to preemptive
rights.
3.4. NO UNDISCLOSED LIABILITIES. Parent has no material undisclosed
liabilities, either fixed or contingent.
6
<PAGE>
3.5. COMPLIANCE WITH THE LAWS; LITIGATION. Neither Parent or Merger
Subsidiary is in default in any material respect under any material agreement,
lease or other document to which it is a party, or has received written notice
of or is, to the knowledge of any executive officer of Parent or Merger
Subsidiary, in material violation of any law or order, writ, injunction or
decree of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality. There are no
material lawsuits, proceedings, claims or governmental investigations pending
or, to the knowledge of any executive officer of Parent or Merger Subsidiary,
threatened against Parent or Merger Subsidiary or against its properties or
business, nor is there any reasonable basis known to Parent or Merger
Subsidiary for any such action and there is no action, suit, proceeding or
investigation pending, threatened or, to the knowledge of Parent or Merger
Subsidiary, contemplated which questions the legality, validity or propriety of
the transactions contemplated by this Merger Agreement.
3.6. TAX RETURNS. Parent has (i) filed or has caused to be filed all
federal, state and local franchise, income, sales, gross receipts and all other
tax returns and statements required to be filed by Parent or on its behalf and
which were due prior to the date of this Merger Agreement (the "Tax Returns and
Statements") and (ii) paid within the time and in the manner prescribed by law
all taxes due prior to the date of this Merger Agreement. The Tax Returns and
Statements are true, complete and accurate in all material respects. No tax
assessment or deficiency has been made against Parent nor has any notice been
given of any actual or proposed assessment or deficiency which has not been
paid or for which an adequate reserve has not been set aside.
3.7. FULL DISCLOSURE. No representation or warranty by Parent and Merger
Subsidiary to Tio under this Merger Agreement or any of the written
information, documents or memoranda furnished or to be furnished by Parent or
any of its authorized representatives to Tio or any of its representatives is
false or misleading or omits to state a material fact required to be stated
therein or necessary in order to make any of the statements therein not
misleading.
3.8. BOARD ACTION. The Board of Directors of Parent, by requisite vote,
determined that the Merger is in the best interests of Parent and approved the
Merger Agreement.
4. ACTION PRIOR TO THE EFFECTIVE TIME. The parties covenant to take the
following action between the date hereof and the Effective Time:
4.1. APPROVAL OF TIO SHAREHOLDERS. Tio will obtain the approval of its
shareholders for the Merger on the terms and conditions set forth in this
Merger Agreement and in connection therewith will comply fully with the
applicable provisions of the Florida 1989 Business Corporation Act relating to
the calling and holding of a meeting of shareholders or the action of
shareholders without a meeting for such purpose.
7
<PAGE>
4.2. ACCURACY OF REPRESENTATIONS AND WARRANTIES. Tio and Parent shall
refrain from taking any action which would render any representation and/or
warranty contained in paragraphs 2 and 3 of this Merger Agreement inaccurate as
of the Effective Time. Parent will promptly notify Tio of any lawsuits,
claims, proceedings or investigations that may be threatened, brought, asserted
or commenced against Parent or its subsidiary or any of their officers or
directors (i) involving in any way the Merger or (ii) which might have a
material adverse impact on the business, properties or assets of Parent, taken
as a whole. Tio will promptly notify Parent of any lawsuits, claims,
proceedings or investigations that may be threatened, brought, asserted or
commenced against Tio or its officers or directors (i) involving in any way the
Merger or (ii) which might have a material adverse impact on the business,
properties or assets of Tio, taken as a whole.
4.3. CLOSING. The transactions contemplated in this Merger Agreement
shall be closed at the offices of Tio and this Merger Agreement and Articles of
Merger shall be filed promptly following such closing.
5. CONDITIONS PRECEDENT TO OBLIGATION OF PARENT AND MERGER SUBSIDIARY.
The obligation of Parent and Merger Subsidiary to effect the Merger is subject
to the satisfaction on or prior to the Effective Time of each of the following
conditions:
5.1. NO ADVERSE CHANGE; CORPORATE ACTION. No material adverse change
shall have occurred in the assets, liabilities, business, operations,
properties, prospects or condition (financial or otherwise) of Tio. Tio shall
have performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions contained
in this Merger Agreement to be performed and complied with by it at or prior to
the Effective Time.
5.2. NO LITIGATION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by this
Merger Agreement and no suit, action, investigation, inquiry or proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
5.3. SECURITIES LAWS. Parent shall have received all necessary permits
and otherwise complied with any state Blue Sky, securities, tender offer or
take-over laws applicable to the issuance of shares of Parent Common Stock in
connection with the Merger. Parent agrees to use its best efforts promptly to
accomplish the foregoing.
6. CONDITIONS PRECEDENT TO OBLIGATION OF TIO. The obligation of Tio to
effect the Merger is subject to the fulfillment at or prior to the Effective
Time of each of the following conditions:
6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS. The representations and warranties of Parent and Merger
Subsidiary contained in this Merger Agreement, or in any certificate or
document delivered pursuant to the provisions hereof shall be true and correct
on and as of the Effective Time as though such representations and warranties
were made at and as of such time. Parent shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants and conditions contained in this Merger Agreement to be
performed and complied with by it at or prior to the Effective Time.
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<PAGE>
6.2. NO LITIGATION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by this
Merger Agreement and no suit, action, investigation, inquiry or proceeding by
any governmental body or other person or legal or administrative proceeding
shall have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
7. OTHER PROVISIONS.
7.1. GOVERNING LAW. This Merger Agreement shall be construed and
interpreted according to the laws of the State of Ohio and the Ohio General
Corporation Law shall be applicable to approval of the Merger by the board of
directors and shareholders of Tio and to the procedures relating to filing of
the Merger Agreement with the Secretary of State of Ohio.
7.2. WAIVER. To the extent otherwise permitted by applicable law any
party may, at its option, waive in writing any and all of the conditions herein
contained to which its obligations hereunder are subject.
7.3. SURVIVAL. The representations and warranties of Tio, Merger
Subsidiary and Parent shall survive the Effective Time.
7.4. NO INDEMNIFICATION. Except as set forth in this Merger Agreement,
there shall be no agreement, express or implied, to indemnify Tio, Merger
Subsidiary or Parent with respect to the respective covenants, representations
or warranties expressed herein.
8. TITLES AND HEADINGS. The titles and headings contained in this Merger
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
9. NOTICES. All notices, requests, demands, and other communications
given, or required to be given pursuant to the terms of this Merger Agreement
shall be in writing and may be delivered in person (by hand, messenger, or
other confirmable form of delivery), or be sent by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows, or by
Federal Express or other nationally recognized overnight courier service,
addressed as follows, or by facsimile transmission, to the following respective
numbers, followed by a copy being delivered in person, by mail, or by overnight
courier as specified herein:
If to Tio: Tio Cigars, Inc.
Attention: Richard C. Peplin, Jr., President
25100 Detroit Road
Westlake, Ohio 44145
9
<PAGE>
If to Parent or
Merger Subsidiary: Sports-Guard, Inc.
c/o Invest L'Inc. Partners, LLC
1901 N. Roselle Road, Suite 1030
Schaumburg, Illinois 60195
Either party may, by written notice to the other, specify a different address
or numbers for notice purposes. Any notice sent to the party to whom it is
addressed in accordance with this paragraph will be deemed to have been given
(i) when received, if personally delivered; (ii) if sent by registered or
certified mail, return receipt requested, upon the date of delivery shown on
the receipt card, or if no date is shown, the postmark thereon; (iii) if sent
via Federal Express or other nationally recognized overnight courier, one (1)
business day after deposit with such overnight courier; or (iv) if sent by
facsimile transmission, on the day on which it is sent, if receipt of
transmission is confirmed by telephone. If notice is received on a Saturday,
Sunday or legal holiday, it will be deemed to have been given and received on
the next following business day.
10. ASSIGNMENT. This Merger Agreement shall be binding upon and inure to
the benefit of the parties named herein and their respective successors and
assigns, provided that neither this Merger Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties hereto.
11. COUNTERPARTS. This Merger Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12. AMENDMENT. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the shareholders of Tio and/or
Parent, but after any such approval by the shareholders of Tio or Parent, no
amendment shall be made without further approval by the board of directors of
Tio and Merger Subsidiary and by the shareholders of Tio and Parent, if such
amendment would materially or adversely affect the shareholders, would amend
the articles of incorporation, or would affect the amount or kind of stock,
securities or other consideration to be exchanged under this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned directors and officers of each of the
parties of this Merger Agreement, pursuant to authority duly given by their
respective Board of Directors, have caused this Merger Agreement to be duly
executed.
Constituent Corporations:
TIO CIGARS, INC.,
an Ohio corporation
By:/s/ Richard C. Peplin
-----------------------------------
Richard C. Peplin, Jr., President
TIO MARIANO CIGAR CORP.,
a Delaware corporation
By:/s/ Troy Wiseman
-----------------------------------
Troy D. Wiseman, President
Additional Party:
SPORTS-GUARD, INC.,
a Delaware corporation
By:/s/ Troy D. Wiseman
------------------------------------
Troy D. Wiseman, President
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IN WITNESS WHEREOF, as to Sections 2.12 and 2.14 only, the undersigned Tio
Shareholders have duly executed this Agreement.
/s/ Richard C. Peplin
- ----------------------------------
Richard C. Peplin, Jr., individually and
as Trustee for Richard C. Peplin, III,
Alexandria M. Peplin and Dustin A. Peplin,
UGTMA
LAKEWOOD MFG. CO.
By:/s/ Richard C. Peplin
-------------------------------
Richard C. Peplin, Jr., President
/s/ Beth M. Peplin
- ----------------------------------
Beth M. Peplin
/s/ Peter Accorti
- ----------------------------------
Peter Accorti
/s/ Anna Villaneuva
- ----------------------------------
Anna Villaneuva
/s/ Marty Gillespie
- ----------------------------------
Marty Gillespie
/s/ Patrick Graham
- ----------------------------------
Patrick Graham
/s/ Jeffrey Outcult
- ----------------------------------
Jeffrey Outcult
/s/ Mark Schweidle
- ----------------------------------
Mark Schweidle
/s/ Ronald Denne
- ----------------------------------
Ronald Denne
<PAGE>
EXHIBIT A
Tio Share Ownership
Shareholder Number of Shares
----------- -----------------
Richard C. Peplin, Jr. 800,000
Beth M. Peplin 800,000
Peter Accorti 37,500
Anna Villaneuva 350,000
Marty Gillespie 350,000
Patrick Graham 60,000
Lakewood Mfg. Co. 75,000
Jeffrey Outcult 22,500
Mark Schweidle 30,000
Ronald Denne 50,000
Richard C. Peplin, III 15,000
Alexandria M. Peplin 15,000
Dustin A. Peplin 15,000
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SPORTS-GUARD, INC.
SPORTS-GUARD, INC., a corporation duly organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
I. The amendment to the Corporation's Certificate of Incorporation set
forth below was duly adopted in accordance with the provisions of Section 242
and has been consented to in writing by the Joint Written Consent of the Sole
Director and Majority Stockholder of the Corporation dated October 31, 1997, in
accordance with Section 228 of the General Corporation Law of the State of
Delaware.
II. Article I of the Corporation's Certificate of Incorporation is amended
to read in its entirety as follows:
"I. The name of this corporation is Colmena Corp."
III. Article IV of the Corporation's Certificate of Incorporation is
amended to read in its entirety as follows:
"IV. The corporation shall be authorized to issue one class of shares of
stock to be designated "Common Stock;" the total number of shares which the
corporation shall have authority to issue is Twenty Million (20,000,000) and
each such share shall have $.01 par value. Each ten shares of Common Stock
outstanding on the effective date of this amendment shall be automatically
converted into one share of Common Stock and in lieu of fractional shares, each
share so converted shall be rounded up to the next highest number of full
shares of Common Stock."
IN WITNESS WHEREOF, the undersigned hereby duly executes this Certificate of
Amendment hereby declaring and certifying under penalty of perjury that this is
the act and deed of the Corporation and the facts herein stated are true, this
31st day of October, 1997.
SPORTS-GUARD, INC.
By:/s/ Troy D. Wiseman
-------------------------------------
Troy D. Wiseman, President
1
