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): January 29, 1999
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Colmena Corp. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation
0-27842 (Commission File Number)
54-1778587 (IRS Employer Identification No.)
25100 Detroit Road, Westlake, Ohio 44145 (Address of principal executive
offices) (Zip Code)
Registrant's telephone number, including area code: (440) 871-5000
Not applicable. (Former name or former address, if changed since last report)
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Item 1. Change in Control of Registrant
A.Yankee Companies
On or about September 15, 1998, International Telemedia Associates, Inc., a
Georgia corporation ("ITA") with which the Registrant engaged in business
through RCP Communications, Inc., a wholly owned subsidiary ("RCP"), defaulted
in its obligation to pay RCP approximately $1,800,000 for services rendered to
third parties, payment for which was collected by ITA. Thereafter, RCP and two
other corporations, Psychic Discovery Network, Inc., a Delaware corporation and
BLJ Communications, Inc., a Florida corporation, all creditors of ITA filed a
petition seeking ITA's involuntary bankruptcy. As a result of such default, all
of the Registrant's operations were materially affected in a very negative
fashion and it is likely that some or all of the Registrant's current business
operations will have to be restructured, divested or terminated.
Realizing that the Registrant would have to drastically revise its
operations, the Registrant began negotiations with the Yankee Companies, Inc., a
Florida corporation ("Yankees"), for assistance in developing and implementing
new strategic plans. Negotiations with Yankees culminated in a consulting
agreement (the "Consulting Agreement"), a copy of which is filed as an exhibit
hereto. The Consulting Agreement permits Yankees to acquire 51% of the
Registrant's common stock at a cost of $40,000, but required Yankees to recruit
additional directors and to assist the Registrant to develop and implement a new
strategic plan, assist the Registrant to negotiate with its creditors and assist
the Registrant to prepare and file required reports with the Securities and
Exchange Commission (the Registrant's independent ability to do so having been
affected by its current lack of required funds). To date, Yankees has exercised
its options as to 2,000,000 shares of the Registrant's common stock.
In conjunction with its obligations to the Registrant, Yankees recommended
that three new directors be elected (see biographies below) and recruited a new
general counsel and secretary, all of which were elected by the Registrant's
existing directors to the positions described below.
B.Biographies of New Directors and Officers
G. Richard Chamberlin, General Counsel
G. Richard Chamberlin, age 52, has been elected as the Registrant's general
counsel. From 1973 to 1974 he served as Trust Officer with Central Bank & Trust
Company, Jonesboro, Georgia. Mr. Chamberlin is a practicing attorney and is a
member of the Georgia Bar, (since 1974), and the Florida Bar, (since 1990). He
is also a member of the Bars for the Federal District Court for the Northern
District of Georgia, (since 1974) and the Federal District Court for the
Northern District of Florida (since 1995), the Court of Appeals for the State of
Georgia, (since 1974) and the Supreme Court for the State of Georgia (since
1974). Mr. Chamberlin is also a member of the Bar for the Eleventh District
Court of Appeals, (since 1982). He is a graduate of Eastern Military Academy,
Huntington, New York (College Prep Diploma, 1964); The Citadel, The Military
College of South Carolina, (B.A., political science, 1968); and the University
of Georgia School of Law, (J.D., 1971). Mr. Chamberlin earned a Certificate from
the American Bankers Association, National Trust School, (1974). Mr. Chamberlin
is a two term former member of the Georgia House of Representatives,
(1979-1983). In the State House, Mr. Chamberlin served on the following
committees: House Journal Committee, Natural Resources Committee, Special
Judiciary Committee and Labor Committee. He is a former member of the Council
for National Policy. He is the founder of the Georgia Roundtable, Inc., and
served as President from 1981 to 1986. He is the founder of the Georgia Heritage
Foundation, and served as President from 1982 to 1986. He is the former
Principal of Soul's Harbor Christian Academy, Belleview, Florida, (1990-1992).
Mr. Chamberlin served as National Music Chairman for the Religious Roundtable,
Inc. at the premier event known as the 1992 National Affairs Briefing in Dallas,
Texas, wherein President George Bush was the keynote speaker. Mr. Chamberlin has
received Resolutions of Commendation from the House of Representatives for the
Commonwealth of Kentucky, (1985) and from the House of Representatives for the
State of Georgia, (1982). He presently serves as President of the Citadel Club
of Central Florida, Inc.. Mr. Chamberlin is a former president and director for
Atrieties Development Company, Inc., a publicly held corporation involved in the
real estate industry, (1986-87), and has held licenses as a real estate agent,
(Georgia and Florida). Since November of 1998, he served as the secretary and as
a member of the Board of Directors of Equity Growth Systems, Inc., a publicly
held Delaware corporation (in which he serves as Chairman) and also as its
general counsel.
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Vanessa H. Lindsey, Secretary
Vanessa H. Lindsey, age 27, was elected as the Registrant's secretary on
January 12, 1999. From 1993 to 1995 she was employed by Accell Plumbing Systems,
Inc., an Ohio corporation, as the company's office manager and bookkeeper. From
1995 to 1997 she was employed by Diversified Corporate Consulting Group, L.L.C.,
a Delaware limited liability company, as the company's chief administrative
officer. Since 1996 she has been employed by the Southeast Companies, Inc., a
Florida corporation, as the chief administrative officer. She is also the chief
administrative officer for Southern Capital Group, Inc, a Florida corporation.
She currently holds the position of secretary of The Marion County Libertarian
Party and is the Campaign Treasurer for Cyndi Calvo for State Senate, District
8.
Penny Adams Field, Director, Audit Committee Member
Penny Adams Field, age 43, is a principal and co-founder of Executive
Concepts, a management consulting and investment banking advisory firm. Ms.
Adams Field has technical expertise in designing and implementing financial
management systems, acquisition and divestiture models, cash flow management,
information systems assessment and implementations, and operational and cost
system audits. Her background in strategic planning, performance measurement,
comprehensive business planning, and cost structure analysis add to the breadth
and depth of the Executive Concepts team skills. Ms. Adams Field is an
experienced and accredited business valuation specialist and is a member of the
Institute of Business Appraisers. She serves on numerous not-for- profit and
corporate boards. As a management consultant, Ms. Adams Field has consulted with
firms such as Monsanto, Mallinckrodt, McDonnell-Douglas, MEMC Electronic
Materials Company, Maytag, Mark Andy, CyberTel, and numerous other small firms
in the healthcare, manufacturing, construction, and service industries. Prior to
founding Executive Concepts, Ms. Adams Field was an administrator for the John
M. Olin School of Business at Washington University in St. Louis, where she
helped to establish the Executive Programs Division. Her responsibilities
included program development in the Far East. Previous to her administrative
role she served at a full-time accounting faculty instructing in financial
accounting and cost management for undergraduate and graduate programs at the
Olin School. Prior to graduate study at Washington University, Ms. Adams Field
worked in healthcare administration and banking, including positions at
Children's Hospital National Medical Center in Washington, D.C. and Harris Bank
in Chicago. After earning a B.B.A. in Accounting and Finance, Ms. Adams Field
earned her M.B.A. from the Olin School of Business at Washington University in
St. Louis. Ms. Adams Field also posted several hours of Ph.D. level course work
in accounting and finance prior to making a full-time commitment to consulting.
Mrs. Fields has, since November of 1998, served as a member of the Board of
Directors of Equity Growth Systems, Inc., a publicly held Delaware corporation.
Charles J. Champion, Jr., Director, Audit Committee Member
Charles J. Champion, Jr., age 31, graduated from Florida State University
in 1988 with a bachelor's degree in political science. Following graduation, he
joined the Champion Group of Companies, a family owned enterprise involved in
the insurance and financial industries. In 1991, while continuing his
association with the Champion Group of Companies, he became a vice president
with Sunshine Securities Corporation, a licensed broker dealer in securities and
member of the National Association of Securities Dealers, Inc., which he
purchased in 1996, at which time it became one of the Champion Group of
Companies. He then became Sunshine Securities Corporation's president and its
business capabilities were expanded to include practice as a registered
investment advisor. Mr. Champion holds a number of insurance and securities
licenses, including series 7 and series 24 securities licenses.
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Anthony Q. Joffe, Director
Anthony Q. Joffe, age 56, holds a degree in Aeronautical Engineering
Management from Boston University, Boston, Massachusetts. Subsequent to his
graduation, Mr. Joffe was employed as the Quality Control Manager for
Cognitronics Corporation, a computer manufacturer, where he was responsible for
overseeing the U.S. Air Force compliance testing program as well as normal
day-to-day management. In 1967, Mr. Joffe was employed by General Electric as a
production engineer in the insulating materials field. In 1970, Mr. Joffe was
employed by King's Electronics, a RF coaxial connector manufacturer, where he
was responsible for major accounts and guided the field sales force. In 1973,
Mr. Joffe was one of the founders and Vice-President of J.S. Love Associates,
Inc., a commodity brokerage house no longer in operation (then headquartered in
New York City). In 1976, Mr. Joffe formed and served as President and Chief
Operating Officer of London Futures, Ltd., a commodity broker with 275 employees
in nine offices. London Futures, Ltd. was closed in 1979 and Mr. Joffe moved to
Florida. From 1979 until 1986, Mr. Joffe was Vice President of Gramco Holdings,
Inc. (and its predecessor companies), a firm which owned and operated a variety
of companies. These companies included five cemeteries and funeral homes in
Broward County, Florida, a 33 acre marina, a general contracting company, a boat
title insurance underwriting firm, three restaurants, a real estate brokerage
company, a mortgage brokerage company and a leasing company. His
responsibilities involved supervision of the day-to-day operations and new
business development. From 1986 to 1991, Mr. Joffe served as consultant and/or
principal to a variety of small businesses in the South Florida area. In 1989
Mr. Joffe became President of Windy City Capital Corp., a small publicly traded,
reporting company that was originally formed as a "blind pool" for the express
purpose of finding an acquisition candidate. Eventually, a reverse merger was
consummated with a computer software company from Pennsylvania. Mr. Joffe then
took the position of President of Rare Earth Metals, Inc. (and its predecessor
companies), a small publicly traded company which purchased Spinecare, Inc., a
medical clinic in New York. Spinecare changed its name to Americare Health Group
and changed its state of domicile to Delaware. Since March of 1993, Mr. Joffe
has performed consulting services for First Commodities, Inc., an Atlanta based
commodities firm, and has been involved in fund raising for the Multiple
Sclerosis Foundation. He also assisted Digital Interactive Associates and IVDS
Partnership with financial affairs in conjunction with their successful bid to
the Federal Communications Commission for licenses in the cities of Atlanta,
Georgia, Minneapolis/St. Paul, Minnesota, and Kansas City, Missouri. Mr. Joffe
served as the interim president of Madison Sports & Entertainment Group, Inc., a
publicly held Utah corporation then headquartered in Fort Lauderdale, Florida,
from September 1, 1994, until February 16, 1994, at which time he became its
vice president and vice chairman, chief operating officer, treasurer and chief
financial officer until he resigned in 1996. Since 1996, he has founded a boat
financing company and joined NorthStar Capital ("NorthStar") as Managing
Director. NorthStar is an investment banking firm with offices in Stamford,
Connecticut and Boca Raton, Florida which specializes in assisting small to mid
size private and publicly traded companies with business and financial planning;
acquisition and divestiture; financial public relations and market position
advice; and, treasury services. Mr. Joffe has, since November of 1998, served as
a member of the Board of Directors of Equity Growth Systems, Inc., a publicly
held Delaware corporation.
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Item 2. Acquisition or Disposition of Assets
The Registrant has retained the Yankee Companies to assist it in developing
and implementing a new strategic plan. The Yankee Companies has suggested that
the Registrant's activities be divided into three different areas. First, that
the current operations be segregated in a new subsidiary group, to be presided
over by the Registrant's current president. Second, that the Registrant's
management and new directors provide consulting services to third parties that
desire to attain public trading status by assisting them in preparation of Forms
10 and 10-SB in exchange for securities to be distributed directly by the client
issuer to the Registrant's stockholders. Third, that the Registrant acquire
operating companies that could benefit from the Registrant's public trading
status and from the experience of the Registrant's directors. In addition,
Yankees has recommended that the Registrant divest itself of its currently
operating subsidiaries in order to obtain required working and development
capital and to assure that their current liabilities do not impact its future
prospects. In the event that appropriate sales cannot be arranged, Yankees has
recommended that the operating subsidiaries be spun out to the Registrant's
current stockholders as independent public companies. The Registrant's Board of
Directors is considering Yankee's recommendations.
As a result of the default described in Item 1, the Registrant has
discontinued all of its business operations, other that those of its subsidiary,
Tech-Tel Communications, Inc.
Item 4. Changes in Registrant's Certifying Accountant
On January 21, 1999, Ernst & Young LLP resigned as independent auditors for
the Registrant.
The report of Ernst & Young LLP on the Registrant's financial statements as
of September 30, 1997 and for period from June 1, 1997 (date of inception) to
September 30, 1997 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope, or accounting
principles.
In connection with the audit of the Registrant's financial statements as of
September 30, 1997 and for the period from June 1, 1997 (date of inception) to
September 30, 1997, and in the subsequent period, there were no disagreements
with Ernst & Young LLP in any matters of accounting principles or practices,
financial statement disclosure , or auditing scope or procedures which, if not
resolved to the satisfaction of Ernst & Young LLP, would have caused Ernst &
Young LLP to make reference to the matter in their report, the Registrant has
requested Ernst & Young LLP to furnish it a letter addressed to the Commission
stating whether it agrees with the above statements. A copy of that letter will
be filed as an exhibit to Form 8-Ka.
The Registrant has selected the firm of Weinberg & Company, P.A., Certified
Public Accountants, of Boca Raton, Florida to replace Ernst & Young LLP.
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Item 5.Other Events
Business Matters
On or about September 15, 1998, International Telemedia Associates, Inc., a
Georgia corporation ("ITA") with which the Registrant engaged in business
through RCP Communications, Inc., a wholly owned subsidiary ("RCP"), defaulted
in its obligation to pay RCP approximately $1,800,000 for services rendered to
third parties, payment for which was collected by ITA. Thereafter, RCP and two
other corporations, Psychic Discovery Network, Inc., a Delaware corporation and
BLJ Communications, Inc., a Florida corporation, all creditors of ITA, filed a
petition seeking ITA's involuntary bankruptcy. As a result of such default, all
of the Registrant's operations were materially affected in a very negative
fashion and it is likely that some or all of the Registrant's current business
operations will have to be restructured, divested or terminated. In addition,
the resulting shortfall in revenue has caused the Registrant to delay payments
on its own obligations, reduce personnel and operations. As a consequence of its
lack of operating revenue, the Registrant was unable to pay the expenses
associated with preparation of its annual audit on a timely basis and
consequently, failed to file its annual report on SEC Form 10-KSB on a timely
basis. The Registrant's management, together with its newly elected directors
and its strategic planning consultant, the Yankee Companies, Inc., are taking
steps to retain less costly auditors in order to promptly file the delayed
report on SEC Form 10-KSB, as well as to streamline the Registrant's operations
and seek new business opportunities.
As a result of the default described in Item 1, the Registrant has
discontinued all of its business operations, other that those of its subsidiary,
Tech-Tel Communications, Inc., and as to those, the Registrant is negotiating to
dispose of a controlling interest therein in consideration for being released
from all liabilities associated therewith.
Litigation
The Registrant recently retained Mark C. Perry, Esquire, of Fort
Lauderdale, Florida, as litigation counsel. The following information is
provided based on Mr. Perry's preliminary observations:
Current Litigation
In Madhu Sethi v. Colmena Corporation, Techtel Communications, Inc. and T2U
Co., Broward County Circuit Court, Case No: 98-21089 (Brescher), Madhu Sethi,
(hereinafter referred to as Madhu), sued the Registrant upon an alleged breach
of an employment agreement dated February 18, 1998, seeking $24,068.69 for past
wages together with future wages and attorney's fees. The Registrant has various
documents which indicate Madhu may have violated his employment agreement by
utilizing the corporate American Express card to travel to India for personal
reasons and further may have violated the non-competition provisions of the
agreement. The Registrant may also have causes of action against Madhu for fraud
with regard to sale of Business Technology Systems, Inc (hereinafter referred to
as BTS) to the Registrant and with regard to funding received by BTS from
Deutsche Financial Services Corporation (DFS). The Registrant's new management
has recently contacted Mr. Madhu and it appears possible that these mutual
claims may be resolved.
Deutsche Financial Services Corporation v. Business Technology Systems,
Inc., Richard C. Peplin, Jr., and Colmena Corporation, American Arbitration
Association, No. 531490021598 (Columbus, Ohio). This arbitration case is
scheduled for mediation on February 17, 1999 in Columbus, Ohio. A position
statement is due on February 7, 1999. There is a request for a $1,000.00 deposit
for the mediator, Samuel H. Porter, to be made on or before February l, 1999. A
request for continuance of this mediation has been made to the American
Arbitration Association. The Registrant's President is of the opinion that there
may be various defenses to this action. Madhu sold the assets of BTS to a
company created by the Registrant and which was to change the name of BTS to
Sethi Holding Company thereby allowing the newly formed entity controlled by the
Registrant to utilize the name BTS. At this time, it is unclear as to whether or
not this was accomplished. The Registrant's president believes that Sethi,
subsequent to the closing, may have continued to utilize the name BTS for
funding from DFS as well as collateral certificates sent to DFS originated from
Sethi utilizing BTS. The Registrant's newly appointed litigation counsel is
evaluating the proceeding and will make recommendations to the Board in the near
future.
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Potential Regulatory Actions:
In the matter of RCP Communications, Inc. (Attorney General, State of
Kansas, Consumer Protection Division) a Subpoena Duces Tecum pursuant to
K.S.A. 50-631 was issued and responded to by RCP. No formal complaint has
been filed.
In the matter of Louisiana Public Service Commission v. RCP Communications,
Inc., Enterprise Group, Inc., T2U Communications, and Richard C. Peplin. No
formal complaint has been filed, however, the parties have been requested to
appear, at an unspecified date, before the Louisiana Public Service Commission
by notice dated January 7, 1999.
On December 9 th and 10, 1998, the president and regulatory affairs
manager of T2U Co. (formerly RCP Communications, Inc. and sometimes doing
business as RCP Enterprise Group, Inc.), a wholly owned Delaware subsidiary
of the Registrants whose sales operations have been discontinued, were
asked to testify in a confidential, non-public hearing before staff of the
Federal Trade Commission "to determine whether various entities may be engaging
or have engaged in unfair or deceptive action, acts or practices in or
affecting commerce in violation of Section 5 of the Federal Trade Commission
Act, 15 U.S.C., Section 45, or the Commission's [FTC] Trade Regulation Rule
pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992, 16
CFR part 308."
In addition, in response to a Federal Trade Commission Civil Investigative
Demand, T2U Co. has produced a substantial number of documents. Should the
Federal Trade Commission institute proceedings against the subject subsidiary,
allegations could include, among other things, that it engaged in deceptive
and/or unfair acts or practices in violation of Section 5 of the Federal Trade
Commission Act, 15 U.S.C. 45, by selling prepaid telephone calling cards via
direct mail and billing customers through local exchange telephone companies
under circumstances whereby many consumers have complained that they never
purchased such cards or authorized the charges to their accounts. As monetary
relief for any such violations, the Federal Trade Commission could seek consumer
redress and disgorgement to the United States Treasury of up to the full amount
of money consumers have paid in connection with the prepaid calling card program
of T2U Co. (formerly RCP Communications Inc. and sometimes doing busines as RCP
Enterprises Group, Inc.),which management estimates to be in excess of$7,275,000
Moreover, the staff of the Federal Trade Commission has, pursuant to a Civil
Investigative Demand, subpoenaed a significant number of people, including some
not affiliated with T2U, requiring the production of documents and /or
testimony. While the investigation has been in progress for a significant period
of time and the staff of the Federal Trade Commission has indicated that it will
probably recommend proceedings, the Registrant is not in a position to determine
whether the FTC will institute proceedings, the defendants to be named in any
such proceedings should they be instituted, the scope of any such proceedings
should they be instituted, the likelihood of any adverse decision should
proceedings be instituted, or the extent of any penalties should they be sought
in any proceeding. Registrant's management does not believe that either it or
its subsidiary violated any of the foregoing provisions and it would vigorously
defend against any action should an action be instituted.
In Re: The People v. RCP, Communication. On March 19,1998, The State of
Illinois filed a complaint for injunctive and other relief. The Complaint
alleges that RCP has engaged in unfair and deceptive acts or practices in the
conduct of trade and commerce in violation of the Illinois Consumer Fraud and
Deceptive Business Practice Act [815 ILCS 5055/1 et seq. (1996)]. RCP is accused
of having "purportedly advertised, solicited, offered for sale, sold, and
distributed enhanced services to, among others, residents of Sangamon County,
Illinois, and billed or caused Illinois consumers to be billed for such
services." A proposed final judgment and consent decree was forwarded to the
Registrant but has not been signed. The proposed final consent decree is against
RCP Enterprises Group, Inc. d/b/a RCP Communications Group and International
Telemedia Associates, Inc. and if agreed upon requires a payment of $100,000.00
to the State as well as restitution to every Illinois consumer who was billed
for any of RCP's enhanced services.
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Litigation by the Registrant
In re: International Telemedia Associates, Inc., Debtor Chapter 7, Case No:
A98-75533-SWC, Northern District of Georgia, Atlanta Division Bankruptcy Court.
On or about September 15, 1998, International Telemedia Associates, Inc., a
Georgia corporation ("ITA") with which the Registrant engaged in business
through RCP Communications, Inc., a wholly owned subsidiary ("RCP"), defaulted
in its obligation to pay RCP approximately $1,800,000 for services rendered to
third parties, payment for which was collected by ITA. Thereafter, RCP and two
other corporations, Psychic Discovery Network, Inc., a Delaware corporation and
BLJ Communications, Inc., a Florida corporation, all creditors of ITA, filed a
petition seeking ITA's involuntary bankruptcy. As a result of such default, all
of the Registrant's operations were materially affected in a very negative
fashion and it is likely that some or all of the Registrant's current business
operations will have to be restructured, divested or terminated. Proof of Claim
should be filed in this matter. LEC's may seek to recover monies from
information providers such as RCP Communications, BW Communications, etc.
Potential Litigation by the Registrant
Strategica Service Corporation. Based on agreements between the Registrant
and Strategica Group, and its affiliates (collectively "Strategica"), Strategica
was to arrange funding required by the Registrant and the Registrant was to pay
Strategica monthly fees of $5,000.00 per month for a period of 60 months.
Subsequently the agreement was modified to require payment for May 1998 of
$5,000.00, June 1998 through May 1999 of $5,000.00 per month and June 1999
through April 2003 at $5,000.00 per month with a $100,000.00 due diligence fee
to be paid at a rate of $25,000.00 per month commencing on June 1, 1998. It was
further agreed on June 9, 1998 at time of execution to transmit to Strategica
Services Corporation an additional $40,000.00 within 2 business days. Strategica
never arranged for the promised financing and the Registrant has paid some but
not all of the fees called for under the agreements. The Registrant may seek to
recover all payments made and pursue claims for damages occasioned, in which
case it is possible Strategica would sue for the unpaid fees.
Purchase and Sale of Stock Agreement between Colmena Corp. and Luis G.
Coello. The Registrant paid approximately $300,000 in expenses as an advance to
World Long Distance, Inc., Telenet Int'l, Inc., Telecuba and/or Mr. Coello
pursuant to the Agreement. The Agreement provided that it be construed pursuant
to Florida law and that any controversy would be resolved in arbitration.
Further, in the event that the transaction did not close any funds advanced for
working capital purposes not to exceed $500,000.00 would be converted into 24
month fully amortized note at 10% interest. The Registrant believes that it has
a cause of action to recover the funds advanced.
Potential Reorganization
In light of the volume of litigation, potential litigation and regulatory
action, the Registrant's recently retained strategic consultant which has
discussed with members of the Registrant's Board of Directors, management and
legal counsel, the possibility of a reorganization under Chapter 11 of the
United States Bankruptcy Code. Such a procedure could consolidate all litigation
and, through divestiture through spin out or otherwise of subsidiaries with
potential regulatory problems (all of which are currently inactive), the
Registrant could protect its assets, recover sums owed by third parties and
proceed with new business plans. The Registrant's Board of Directors has such
course of action under consideration, but currently prefers to work out
settlements, if that course is available.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
10.1 Yankees Consulting Agreement, page
16.1 Letter re Change in Certifying Accountant, to be provided by
amendment.
99.b-1 Minutes of Directors Meeting electing new officers and directors,
dated January 12, 1999, page
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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: January 29, 1999
By: /s/ Richard C. Peplin, Jr
--------------------------------
/s/ Richard C. Peplin, Jr., President
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EXHIBIT 10.1 Yankee Consulting Agreement
Consulting Agreement
This Consulting Agreement (the "Agreement") is made and entered into by and
between Colmena Corporation, a publicly held Delaware corporation with a classes
of equity securities registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and currently trading on the over
the counter bulletin board operated by but not a part of NASDAQ ("Client"); and,
The Yankee Companies, Inc., a Florida corporation ("Yankees"; Client and Yankees
being hereinafter collectively referred to as the "Parties" and generically as a
"Party").
Preamble :
WHEREAS, Client is engaged in the business more particularly described in the
reports filed by Client with the Securities and Exchange Commission ("SEC" or
"Commission"), as disclosed in the SEC's EDGAR web site on the Internet at
"http//sec.gov/Archives/edgar/data; and
WHEREAS, Client's business has experienced material difficulties based on its
failure to obtain anticipated capital from its investment banker and from
operations, in both cases caused by a material default by a customer in its
payment obligations and by certain problems in one of its operating
subsidiaries, as a result of which its strategic plans are no longer viable; and
WHEREAS, Yankees has substantial strategic business experience, acumen and
contacts, and Client desires to avail itself of Yankees' services in conjunction
with development and implementation of alternative strategic plans and to assure
attainment of such goals by securing Yankees's assistance to recruit a new
management team, develop proper investment banking relationships, develop
ongoing access to debt and equity capital markets, and develop growth through
acquisition of complementary business operations; and
WHEREAS, Yankees is agreeable to making its services available to Client, on the
terms and subject to the conditions hereinafter set forth:
NOW, THEREFORE, in consideration for Yankees's agreement to render the
hereinafter described services as well as of the premises, the sum of TEN ($10)
DOLLARS, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:
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Witnesseth:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1Description of Services
(A)Yankees's areas of expertise include corporate structure, organization and
reorganization; mergers, acquisitions and divestitures; strategic corporate
development; corporate financial and equity analysis; market strategy planning
and implementation; corporate communication, financial public relations and
stockholder relations consulting; business plan development and implementation;
marketing sales and analysis; executive and professional recruitment;
coordination and supervision of professional services; development and
implementation of regulatory compliance procedures (the "Services").
(B)During the Initial Term of this Agreement (as hereinafter defined), Yankees
shall provide Client with the Services, on a reasonable, as required basis,
consistent with Yankees's other business activities.
(C)Yankees shall be responsible for administering the expenditure of proceeds
derived by the Client from exercise of the hereinafter described Class A Options
in order to implement the strategic plans developed by Yankees and to settle and
discharge corporate obligations of the Client, and in conjunction with such
role, shall establish and operate banking accounts for the Client, in the
Client's name or otherwise, using such signatories as Yankees may deem
appropriate, in its sole and unfettered discretion.
(D)Because of Client's status under federal securities laws, in any
circumstances where Yankees is describing the securities of Client to a third
Party, Yankees shall disclose to such person the compensation received from
Client to the extent required under any applicable laws, including, without
limitation, Section 17(b) of the Securities Act of 1933, as amended; however,
the Parties acknowledge they do not contemplate that Yankees shall be involved
in any activities on behalf of Client requiring such descriptions or
disclosures, or that the Services involve any activities subject to regulation
under federal or state securities laws other than the prohibitions of the
Foreign Corrupt Practices Act, except for the introduction of Client and its
principals to licensed broker dealers in securities, securities analysts and
appropriate corporate information and stockholder relations specialists.
1.2 Fiduciary Obligation to Client
In rendering its services, Yankees shall not disclose to any third party
any confidential non-public information furnished by Client or otherwise
obtained by it with respect to Client.
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1.3 Limitations on Services
(A)The Parties recognize that certain responsibilities and obligations are
imposed by federal and state securities laws and by the applicable rules and
regulations of stock exchanges, the National Association of Securities Dealers,
Inc. (collectively with its subsidiaries being hereinafter referred to as the
"NASD"), in-house "due diligence" or "compliance" departments of licensed
securities firms, etc.; accordingly, Yankees agrees that it will not release any
information or data about Client to any selected or limited person(s), entity,
or group if Yankees is aware that such information or data has not been
generally released or promulgated.
(B)Yankees shall restrict or cease, as directed by Client, all efforts on behalf
of Client, including all dissemination of information regarding Client,
immediately upon receipt of instructions (in writing by fax or letter) to that
effect from Client.
1.4 Yankees' Compensation:
(A)Except as described below with reference to certain of the services described
above, which are to be completed within the initial 365 days of this Agreement:
(1)Yankees will bill at its standard hourly rates for all work as to which
a prior written arrangement with different terms has not been entered into,
however, no hourly billable services will be provided except at Client's
specific request.
(2)Any documents prepared by Yankees or provided to Client's advisors, at
Client's request, on existing forms will be subject to a $50 per page initial
licensing fee augmented by the time spent in personalizing the subject form.
(B)Notwithstanding the provisions of Section 1.4(a) above, during the first 365
days of this Agreement (the "Initial Term"), Yankees will accept and Client will
pay to Yankees:
(1)Options (the "Class A Options") to purchase shares of Client's
outstanding or reserved common stock (all reserved common stock being treated as
outstanding for purposes of such calculation), on the following terms (the"Stock
Signing Fee."):
(a)The quantity of Client common stock subject to the Class A Options
shall be equal to approximately 51% of Client's outstanding or reserved common
stock, immediately following complete exercise of all the Class A Options;
(b)The Class A Option term will commence on the 10th day after
execution of this Agreement and will terminate at the close of business on the
365th day following the date of this Agreement, as evinced by the last date on
the execution page hereof;
(c)The terms of the shall be those reflected in the form of warrant
agreement annexed hereto and made a part hereof as composite exhibit 1.4(B),
which form shall constitute the basis for and terms of the Class A Options,
other than as specifically modified hereby
(d)The exercise price of the Class A Options will be based on the
number of shares outstanding at the time of exercise, pro rated in accordance
with the following formula: in the event that an aggregate of 7,750,000 shares
of capital stock are outstanding or reserved for future issuance (excluding
those reserved for the Class A Options issuable hereunder) under reasonably
definable terms (e.g. options, warrants, pending acquisitions, obligations under
employment agreements, etc.), then the number of shares purchasable would be
8,066,326 and the exercise price would be $0.005 per share, any increase or
decrease in the outstanding and reserved shares resulting in a corresponding
adjustment to the Class A Option exercise quantity and price;
(e)Yankees shall have the right to cashless exercise of the options,
as reflected in the form of warrant agreement annexed hereto and made a part
hereof as composite exhibit 1.4(B), as that concept is legally interpreted for
purposes of permitting tacking of holding periods under SEC Rule 144.
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(2)If, for any reason (other than a stock split also affecting Yankees's
shares issued as the Stock Signing Fee) Client's outstanding securities exceed
those contemplated as the basis for determining the Class A Option exercise
prices within 12 months following the end of the exercise term, then additional
shares in an amount to such difference on a pro rated basis (based on the
options exercised) shall be issued to Yankees.
(3)The foregoing compensation is in lieu of document license fees and of
required cash payments for up to an aggregate of 200 hours of Yankees's hourly
fees during the initial six month term of this Agreement (but not those of its
associated entities), and, for tax purposes, shall be valued at an aggregate of
$20,000.
(4)Client has been informed that a portion of the Stock Signing Fee will be
transferred by Yankees to third party independent consultants who will assist
Yankees in the performance of its duties hereunder.
(5)The Class A Options may be exercised, in whole or in part, there being
no minimum exercise requirements.
(C)In addition to the compensation described above with reference to services
during the Initial Term of this Agreement and whether or not the following
services are rendered during such Initial Term:
(1)In the event that Yankees arranges or provides funding for Client on
terms more beneficial than those reflected in Client's current principal
financing agreements, Yankees shall be entitled, at its election, to either:
(a)A fee equal to 25% of such savings, on a continuing basis; or
(b)If equity funding is provided though Yankees or any affiliates
thereof, a discount of 10% from the bid price for the subject equity securities,
if they are issuable as free trading securities, or, a discount of 50% from the
bid price for the subject equity securities, if they are issuable as restricted
securities (as the term restricted is used for purposes of SEC Rule 144); or
(b)If funding is provided by any person or group of persons introduced
to Client by Yankees or persons associated with Yankees, directly or indirectly,
but not is not provided by Yankees or its principals as described in the
preceding sb section, then Yankees shall be entitled to an introduction fee
equal to 5% of the aggregate proceeds so obtained; and
(2)In the event that Yankees generates business for Client, then, on any
sales resulting therefrom, Yankees shall be entitled to a commission equal to
10% of the gross income derived by Client therefrom, on a continuing basis.
(3)In the event that Yankees or any affiliate thereof arranges for an
acquisition by Client, then Yankees shall be entitled to compensation equal to
10% of the compensation paid for such acquisition, in addition to any
compensation negotiated and received from the acquired entity or its affiliates.
(D)Client will assure that its legal counsel promptly prepares all reports which
then existing holders of Client's securities (including Yankees, its affiliates
and successors in interest) are required to file with the Securities and
Exchange Commission as a result of Client's reporting status, including
Securities and Exchange Commission Forms 3, 4 and 5, Schedules 13(d) and
Schedules 13(g), and shall submit all such reports to the subject stockholders
for prompt execution and timely filing with the Securities and Exchange
Commission.
(E) (1)In addition to payment of fees, Client will be responsible for payment of
all costs and disbursements associated with Yankees's services either:
(a)Involving less than $50 per item and $200 in the aggregate during
the preceding 30 day period; or
(b)Reflected in an operating budget approved by Client; or
(c)Approved in writing by Client; provided, however, that the refusal
by Client to approve expenditures required for the proper performance of
Yankees's services will excuse performance of such services.
(2)All of Yankees's statements will be paid within 10 days after receipt.
(3)In the event additional time for payment is required, Yankees will have
the option of selling the account receivable and Client agrees to pay interest
thereon at the monthly rate of 1%.
(4)In the event collection activities are required, Client agrees to pay
all of Yankees's out of pocket costs associated therewith.
(5)There will be no change or waiver of the provisions contained herein,
unless such charge is in writing and signed by Client and Yankees.
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1.5 Client's Commitments
(A). (1)All work requiring legal review will be submitted for approval by
Client to Client's legal counsel prior to its use.
(2)Final drafts of any matters prepared for use by Yankees in conjunction
with the provision of the Services will be reviewed by Client and, if legally
required, by Client's legal counsel, to assure that:
(a)All required information has been provided;
(b)All materials are presented accurately; and,
(c)That no materials required to render information provided "not
misleading" are omitted.
(2)Only after such review and approval by Client and, if required, Client's
legal counsel, will any documents be filed with regulatory agencies or provided
to Yankees or third parties.
(3)(a)Financial data will be reviewed by competent, independent, certified
public accountants to be separately retained by Client.
(b)Such accountants will be required to review and approve all
financially related filings, prior to release to Yankees, other third parties or
submission to the appropriate regulatory authorities.
(B) (1)Client shall supply Yankees on a regular and timely basis with all
approved data and information about Client, its management, its products, and
its operations and Client shall be responsible for advising Yankees of any fact
which would affect the accuracy of any prior data and information supplied to
Yankees.
(2)Client shall use its best efforts to promptly supply Yankees with full
and complete copies of all filings with all federal and state securities
agencies; with full and complete copies of all shareholder reports and
communications whether or not prepared with Yankees's assistance, with all data
and information supplied to any analyst, broker-dealer, market maker, or other
member of the financial community; and with all product/services brochures,
sales materials, etc.
(3)Client shall promptly notify Yankees of the filing of any registration
statement for the sale of securities and/or of any other event which triggers
any restrictions on publicity.
(4)Client shall be deemed to make a continuing representation of the
accuracy of any and all material facts, material, information, and data which it
supplies to Yankees and Client acknowledges its awareness that Yankees will rely
on such continuing representation in performing its functions under this
Agreement.
(5)Yankees, in the absence of notice in writing from Client, may rely on
the continuing accuracy of material, information and data supplied by Client.
ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 Term.
This Agreement shall be for an initial term of 730 days, commencing on the
date of its complete execution by all Parties, as evinced in the execution page
hereof (the "Initial Term").
2.2 Renewals.
This Agreement shall be renewed automatically, after expiration of the
original term, on a continuing annual basis, unless the Party wishing not to
renew this Agreement provides the other Party with written notice of its
election not to renew ("Termination Election Notice") on or before the 30th day
prior to termination of the then current term.
2.3 Final Settlement.
(A)Upon termination of this Agreement and payment to Yankees of all amounts due
it hereunder, Yankees or its representative shall execute and deliver to Client
a receipt for such sums and a release of all claims, except such claims as may
have been submitted pursuant to the terms of this Agreement and which remain
unpaid, and, shall forthwith tender to Client all records, manuals and written
procedures, as may be desired by Client for the continued conduct of its
business; and
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(B)Client or its representative shall execute and deliver to Yankees a receipt
for all materials returned and a release of all claims, except such claims as
may have been submitted pursuant to the terms of this Agreement and which remain
unpaid, and, shall forthwith tender to Yankees all records, manuals and written
procedures, as may be desired by Yankees for the continued conduct of its
business.
ARTICLE THREE
YANKEES' CONFIDENTIALITY & COMPETITION COVENANTS
3.1 General Provisions.
(A)Yankees acknowledges that, in and as a result of its entry into this
Agreement, it will be making use of confidential information of special and
unique nature and value relating to such matters as Client's trade secrets,
systems, procedures, manuals, confidential reports; consequently, as material
inducement to the entry into this Agreement by Client, Yankees hereby covenants
and agrees that it shall not, at anytime during the term of this Agreement, any
renewals thereof and for two years following the terms of this Agreement,
directly or indirectly, use, divulge or disclose, for any purpose whatsoever,
any of such confidential information which has been obtained by or disclosed to
it as a result of its entry into this Agreement or provision of services
hereunder.
(B)In the event of a breach or threatened breach by Yankees of any of the
provisions of this Article Three, Client, in addition to and not in limitation
of any other rights, remedies or damages available to Client, whether at law or
in equity, shall be entitled to a permanent injunction in order to prevent or to
restrain any such breach by Yankees, or by its partners, directors, officers,
stockholders, agents, representatives, servants, employers, employees,
affiliates and/or any and all persons directly or indirectly acting for or with
it.
3.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Client and its clients as a result of a breach by Yankees of the covenants or
agreements contained in this Article Three, and in view of the lack of an
adequate remedy at law to protect Client's interests, Yankees hereby covenants
and agrees that Client shall have the following additional rights and remedies
in the event of a breach hereof:
(A)Yankees hereby consents to the issuance of a permanent injunction enjoining
it from any violations of the covenants set forth in this Article Three; and
(B)Because it is impossible to ascertain or estimate the entire or exact cost,
damage or injury which Client or its clients may sustain prior to the effective
enforcement of such injunction, Yankees hereby covenants and agrees to pay over
to Client, in the event it violates the covenants and agreements contained in
this Article Three, the greater of:
(1)Any payment or compensation of any kind received by it because of such
violation before the issuance of such injunction, or
(2)The sum of One Thousand Dollars per violation, which sum shall be
liquidated damages, and not a penalty, for the injuries suffered by Client or
its clients as a result of such violation, the Parties hereto agreeing that such
liquidated damages are not intended as the exclusive remedy available to Client
for any breach of the covenants and agreements contained in this Article Three,
prior to the issuance of such injunction, the Parties recognizing that the only
adequate remedy to protect Client and its clients from the injury caused by such
breaches would be injunctive relief.
3.3 Cumulative Remedies.
Yankees hereby irrevocably agrees that the remedies described in this
Article Three shall be in addition to, and not in limitation of, any of the
rights or remedies to which Client and its clients are or may be entitled to,
whether at law or in equity, under or pursuant to this Agreement.
3.4 Acknowledgment of Reasonableness.
(A)Yankees hereby represents, warrants and acknowledges that its members or
officers and directors have carefully read and considered the provisions of this
Article Three and, having done so, agrees that the restrictions set forth herein
are fair and reasonable and are reasonably required for the protection of the
interests of Client, its members, officers, directors, consultants, agents and
employees; consequently, in the event that any of the above-described
restrictions shall be held unenforceable by any court of competent jurisdiction,
Yankees hereby covenants, agrees and directs such court to substitute a
reasonable judicially enforceable limitation in place of any limitation deemed
unenforceable and, Yankees hereby covenants and agrees that if so modified, the
covenants contained in this Article Three shall be as fully enforceable as if
they had been set forth herein directly by the Parties.
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(B)In determining the nature of this limitation, Yankees hereby acknowledges,
covenants and agrees that it is the intent of the Parties that a court
adjudicating a dispute arising hereunder recognize that the Parties desire that
these covenants not to compete or circumvent be imposed and maintained to the
greatest extent possible.
3.5 Exclusivity.
Yankees shall not be required to devote all of its business time to the
affairs of Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
ARTICLE FOUR
Client' CONFIDENTIALITY & COMPETITION COVENANTS
4.1 General Prohibitions
(A)Client acknowledges that, in and as a result of its engagement of Yankees,
Client will be making use of confidential information of special and unique
nature and value relating to such matters as Yankees's business contacts,
professional advisors, trade secrets, systems, procedures, manuals, confidential
reports, lists of clients, potential customers and funders; consequently, as
material inducement to the entry into this Agreement by Yankees, Client hereby
covenants and agrees that it shall not, at anytime during the term of this
Agreement, any renewals thereof an for two years following the terms of this
Agreement, directly or indirectly, use, divulge or disclose, for any purpose
whatsoever, any of such confidential information which has been obtained by or
disclosed to it as a result of its employment of Yankees, or Yankees's
affiliates.
(B)In the event of a breach or threatened breach by Client of any of the
provisions of this Article Four, Yankees, in addition to and not in limitation
of any other rights, remedies or damages available to Yankees, whether at law or
in equity, shall be entitled to a permanent injunction in order to prevent or to
restrain any such breach by Client, or by Client's partners, directors,
officers, stockholders, agents, representatives, servants, employers, employees,
affiliates and/or any and all persons directly or indirectly acting for or with
it.
4.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Yankees as a result of a breach by Client of the covenants or agreements
contained in this Article Four, and in view of the lack of an adequate remedy at
law to protect Yankees's interests, Client hereby covenants and agrees that
Yankees shall have the following additional rights and remedies in the event of
a breach hereof:
(A)Client hereby consents to the issuance of a permanent injunction enjoining it
from any violations of the covenants set forth in this Article Four is and
(B)Because it is impossible to ascertain or estimate the entire or exact cost,
damage or injury which Yankees may sustain prior to the effective enforcement of
such injunction, Client hereby covenants and agrees to pay over to Yankees, in
the event it violates the covenants and agreements contained in this Article
Four, the greater of:
(1)Any payment or compensation of any kind received by it because of such
violation before the issuance of such injunction, or
(2)The sum of One Thousand Dollars per violation, which sum shall be
liquidated damages, and not a penalty, for the injuries suffered by Yankees as a
result of such violation, the Parties hereto agreeing that such liquidated
damages are not intended as the exclusive remedy available to Yankees for any
breach of the covenants and agreements contained in this Article Four, prior to
the issuance of such injunction, the Parties recognizing that the only adequate
remedy to protect Yankees from the injury caused by such breaches would be
injunctive relief.
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4.3 Cumulative Remedies.
Client hereby irrevocably agrees that the remedies described in this
Article Four shall be in addition to, and not in limitation of, any of the
rights or remedies to which Yankees is or may be entitled to, whether at law or
in equity, under or pursuant to this Agreement.
4.4 Acknowledgment of Reasonableness.
(A)Client hereby represents, warrants and acknowledges that its officers and
directors have carefully read and considered the provisions of this Article Four
and, having done so, agree that the restrictions set forth herein are fair and
reasonable and are reasonably required for the protection of the interests of
Yankees, its members, officers, directors, consultants, agents and employees;
consequently, in the event that any of the above-described restrictions shall be
held unenforceable by any court of competent jurisdiction, Client hereby
covenants, agrees and directs such court to substitute a reasonable judicially
enforceable limitation in place of any limitation deemed unenforceable and,
Client hereby covenants and agrees that if so modified, the covenants contained
in this Article Four shall be as fully enforceable as if they had been set forth
herein directly by the Parties.
(B)In determining the nature of this limitation, Client hereby acknowledges,
covenants and agrees that it is the intent of the Parties that a court
adjudicating a dispute hereunder recognize that the Parties desire that these
covenants not to compete or circumvent be imposed and maintained to the greatest
extent possible.
ARTICLE FIVE
MISCELLANEOUS
5.1 Notices.
All notices, demands or other written communications hereunder shall be in
writing, and unless otherwise provided, 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:
To Yankees:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 3418
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
1941 Southeast 51st Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Mitchem, Chief Administrative Officer
To Client:
Colmena Corporation
25100 Detroit Road; Westlake, Ohio 44145; Telephone (440) 871-5000
or at such address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: Richard C. Peplin, Jr., President & Chief Executive Officer
in each case, with copies to such other address or to such other persons as any
Party shall designate to the others for such purposes in the manner hereinabove
set forth.
5.2 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by Parties.
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5.3 Merger.
(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 whether written or oral are merged herein and shall be
of no force or effect.
5.4 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.
5.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than a conditions precedent, if any, 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.
5.6 Governing Law and Venue.
This Agreement shall be construed in accordance with the laws of the State
of Delaware (both substantive and procedural, other than choice of law
provisions) but any proceeding arising between the Parties in any matter
pertaining or related to this Agreement shall, to the extent permitted by law,
be held in Palm Beach County, Florida.
5.7 Dispute Resolution in lieu of Litigation.
(A)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 Palm Beach County, Florida to be selected by lot from six
alternatives to be provided, three by Yankees and three by Client.
(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 Palm Beach County,
Florida, to be selected by lot, from six alternatives to be provided, in the
manner set forth above for selection of a mediator;
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(3)(A)Expenses of mediation shall be borne by the Parties equally if
successful but if unsuccessful, expenses of mediation and of arbitration shall
be borne by the Party or Parties against whom the arbitration decision is
rendered.
(B)If the terms of the arbitral award do not establish a prevailing
Party, then the expenses of unsuccessful mediation and arbitration shall be
borne ½ by Client and ½ by Yankees.
(B)Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
(C)In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, 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 litigation is initiated.
5.8 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, jointly and severally, their successors, assigns,
personal representatives, estate, heirs and legatees.
5.9 Captions.
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.
5.10 Number and Gender.
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.
5.11 Further Assurances.
The Parties hereby 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.
5.12 Status.
(A)Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship.
(B)Throughout the term of this Agreement, Yankees shall serve an independent
contractor, as that term is defined by the United States Internal Revenue
Service, and in conjunction therewith, shall be responsible for all of his own
tax reporting and payment obligations.
(C)In amplification of the foregoing, Yankees shall, subject to reasonable
reimbursement on a pre-approved budgetary basis, be responsible for providing
its own office facilities and supporting personnel.
5.13 Counterparts.
(A)This Agreement may be executed in any number of counterparts delivered
through facsimile transmission.
(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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5.14 License.
(A)(1)This Agreement is the property of Yankees.
(2)The use hereof by the Parties is authorized hereby solely for purposes
of this transaction and, the use of this form of agreement or of any derivation
thereof without Yankees' prior written permission is prohibited.
(3)This Agreement shall not be construed more stringently or interpreted
less favorably against Yankees' based on authorship.
(B)Each of the Parties hereby acknowledge that Yankees is not a law firm and has
not provided it with any advice, legal or otherwise, in conjunction with this
Agreement, but rather, has suggested that it rely solely on its own experience
and advisors in evaluating or interpreting this Agreement.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
Colmena Corporation
- ----------------------------
____________________________ By: /s/ Richard C. Peplin, Jr.
----------------------------------
/s/ Richard C. Peplin, Jr., President
Dated: _____________________
Attest:/s/ Robert S. Gigliotti
---------------------------------------
/s/ Robert S. Gigliotti, Secretary
The Yankee Companies, Inc.
- ----------------------------
____________________________ By: /s/ Leonard Miles Tucker
------------------------------------------
/s/ Leonard Miles Tucker, President
Dated: _____________________
Attest:/s/ William A. Calvo, III
--------------------------------------------
/s/ William A. Calvo, III, Secretary
20
EXHIBIT 99.b-1Minutes of Directors Meeting electing new officers and
directors, dated January 12, 1999
Written Consent in Lieu
Of Special Meeting of Board of Directors
The Undersigned, being all of the members of the board of directors of
Colmena Corp., a Delaware corporation (the "Corporation"), pursuant to authority
granted under Sections 141(f) or 228 of the Delaware General Corporation Law,
and as permitted by the Corporation's constituent instruments, hereby takes the
following action and adopts the following resolution:
WITNESSETH:
WHEREAS, the Yankee Companies, Inc. ("Yankees") has, pursuant to the
performance of its duties under its current consulting agreement with the
Corporation, recommended that the Corporation fill the vacancy created by the
resignation of former director Leonard Marshall and expand its board of
directors by electing individuals with specialized knowledge and experience in
areas that the Corporation currently requires, to wit, auditing and financial
reporting, and, the telephone and communications industries; and
WHEREAS, in order to meet pressing corporate requirements, Yankees has, on
an expedited basis, located two individuals to immediately join the
Corporation's Board of Directors, to wit, Mrs. Penny L. Adams Field and Mr.
Anthony Q. Joffe, for purposes of assisting the Corporation to select new
auditors within its current ability to pay and to coordinate, with the
assistance of G. Richard Chamberlin, Esquire and Vanessa H. Lindsey, the
preparation and filing of the Corporation's delayed report on Form 10-KSB for
the 1998 fiscal year, and the development and implementation of new strategic
plans, including the reorganization of the Corporation through a series of
divestitures, consolidations and acquisitions:
NOW THEREFORE
BE IT RESOLVED:
1. That the following persons be and they are hereby elected, effective
immediately, as officers and directors of the Corporation to the offices set
forth opposite their names, to serve in such positions until, in the case of
officers, they are removed by this Corporation's Board of Directors; and, in the
case of directors, until their successors shall have been duly elected by the
Corporation's stockholders and have qualified and assumed their officers; or, in
either case, until their resignations shall have been accepted by the Board of
Directors:
Name Position
Penny L. Adams Field Director, Audit Committee Chairperson
Anthony Q. Joffe Director
Charles J. Champion, Jr. Director, Audit Committee member
G. Richard Chamberlin, Esquire General Counsel
Vanessa H. Lindsey Secretary; and be it FURTHER
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RESOLVED, that the Corporation offer each of the persons elected, as
compensation in lieu of cash salaries for the initial six months of service to
the Corporation (other than for extraordinary services requiring more than five
hours per week in average time), the opportunity to subscribe for an aggregate
of 300,000 shares of the Corporation's common stock at an exercise price of
$0.05 per share for a period of twelve months, on the terms reflected in the
warrants recently granted to Yankees, except for those provisions set forth in
this resolution as to price and duration, to be divided among them as set forth
below, except that any unexercised portion shall be allocated among the
remaining individuals, pro rata:
Name Allocation
Penny L. Adams Field 70,000 shares
Anthony Q. Joffe 70,000 shares
Charles J. Champion, Jr. 70,000 shares
G. Richard Chamberlin, Esquire 70,000 shares
Vanessa H. Lindsey 20,000 shares.
1. That all of the Corporation's officers are hereby authorized, empowered and
directed to take all actions and incur all reasonable expenses necessary to
effect the foregoing.
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed, effective as of the 12th day of January, 1999.
Colmena Corp.
A Delaware Corporation
/s/ Richard C. Peplin, Jr.
- ----------------------------------------
/s/ Richard C. Peplin, Jr.
Director
/s/ Robert Gigliotti
- -----------------------------------------
/s/ Robert S. Gigliotti
Director
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