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UNITED STATES
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): September 12, 1997
UNITED SHIELDS CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Colorado 33-11062-D 84-1049047
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
655 Eden Park Drive, Cincinnati, Ohio 45202
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(Address of principal executive offices)
Registrant's telephone number, including area code (513)241-7470
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ITEM 5. OTHER EVENTS
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On September 12, 1997, United Shields Corporation (the "Company")
signed an Agreement and Plan of Share Exchange (the "Agreement") to acquire all
of the outstanding common stock of The HeaterMeals Company ("HeaterMeals"), an
Ohio-based manufacturer and packager of electrochemical heaters and packaged
food products (the "Exchange"). The principal assets of HeaterMeals include
inventory, accounts receivable, equipment, which will continue to be used as at
present, licenses for patent rights to produce electrochemical heaters, prepaid
expenses and tax refunds and cash. The Agreement provides for payments to
HeaterMeals' shareholders of cash in the amount of $2,000,000 (the "Purchase
Price"). The Agreement requires that the Purchase Price be paid at the effective
date of the Exchange, which must occur on or before October 15, 1997, or such
later date as mutually agreed to by the parties but not later than November 15,
1997 (the "Effective Date"). The Company is considering available options to
finance the Purchase Price. In addition, the Company has paid a non-refundable
retainer in the amount of $30,000 (the "Retainer") to HeaterMeals' legal counsel
for payment of legal, consulting, audit fees and related expenses. All expenses
in excess of the Retainer will be paid by the party who incurs them. If,
however, the Company elects not to consummate the Exchange for reasons other
than failure to obtain approval of HeaterMeals shareholders, the Company has
agreed to pay HeaterMeals costs and expenses of up to $30,000 in excess of the
Retainer.
The amount of consideration was determined through arm's-length
negotiations between the parties and is based on the value of HeaterMeals'
assets and the expected revenue from the sale of the heater product and meals.
The Company's and HeaterMeals' obligations to consummate the Exchange are
contingent upon (i) approval of the Exchange by HeaterMeals' shareholders and
(ii) HeaterMeals' lender waiving any breach under its agreements and loan
documents caused by the Exchange and its rights to accelerate payment of any of
its loans to HeaterMeals as a result of the Exchange. The obligation of
HeaterMeals to consummate the Exchange is also contingent upon the Company
depositing the Purchase Price in an escrow account with HeaterMeals' counsel.
The Company has the right to terminate the Agreement at any time prior to the
Effective Date for any reason, subject to HeaterMeals' right to reimbursement of
expenses as described herein. HeaterMeals had annual revenues for 1996 of
approximately $4.8 million.
On September 22, 1997, the Company entered into a letter of intent (the
"Letter") to acquire directly, or indirectly through a subsidiary, all of the
stock of R. P. Industries, Inc. ("RPI"), a Virginia-based injection molding
company, or, to merge with RPI either directly, or indirectly through a
subsidiary (the "Transaction"). The principal assets of RPI include two
manufacturing facilities engaged in plastics injection molding and injection
molding machines. The Letter provides for payments to RPI's shareholders of
800,000 shares (the "Shares") of the Company's common stock and cash or
assumption of indebtedness in the amount of $6,100,000. The Letter requires that
(i) $100,000 of the total cash be paid upon execution of the Letter, (ii) the
Shares be issued upon execution of a definitive agreement, which is required to
occur no later than 30 days after the Letter is executed and (iii) the remaining
$6,000,000 which is to be paid in cash, by the assumption of indebtedness, or
both, be paid upon the closing date of the Transaction, which is required to
occur no later than 90 days after the Letter is executed. If a definitive
agreement is not executed within 30 days, or the closing does not occur within
90 days, from the date of the Letter (including any mutually agreed upon
extensions), through no fault or failure of RPI, then RPI may terminate the
Letter and any Shares issued or cash paid are non-refundable. The $100,000
payment upon
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execution of the Letter was provided by loans from Ramsay-Hughes, Inc.
("Ramsay-Hughes"). The total indebtedness owed by the Company to Ramsay-Hughes
with this loan as of September 24, 1997 is approximately $645,000. Ramsay-Hughes
owns beneficially approximately 16.3% of the outstanding common stock of the
Company (including approximately 2.1% which is owned individually by the
directors and executive officers of Ramsay-Hughes).
The amount of consideration provided for in the Letter is based on the
Company's estimation of the value of RPI's assets and future revenues. The
Company's obligation to consummate the Transaction shall be contingent upon (i)
the Company obtaining satisfactory employment arrangements with RPI's key
employees, (ii) completion of a due diligence investigation by the Company,
(iii) RPI obtaining all required permits and waivers required as a result of the
Transaction which are material to the operation of RPI's business, (iv) the
absence of any event or condition which would have a material adverse effect on
the business, operation or financial condition of RPI, (v) maintenance by RPI of
a net worth of at least $4,500,000 and (vi) any other conditions stated in the
definitive agreement. RPI had annual revenues for its fiscal year ended July 31,
1997 of approximately $10,700,000.
The Company is currently engaged in negotiations with six other
manufacturers of plastic containers and products to acquire at least one of
these manufacturers and possibly more, depending on the size of the acquisition.
The Company anticipates that one or more additional letters of intent may be
signed during the third quarter of fiscal 1997. Typically, the Company's letters
of intent are non-binding except for the Company's right to access the books and
records of the seller, the seller's agreement to negotiate exclusively with the
Company for a specified period, and mutual non-disclosure provisions. The
letters of intent may also provide for some non-refundable payment to the seller
upon execution of the letter which payment is intended to compensate the seller
for the exclusivity provisions and some of seller's out-of-pocket expenses in
the event the Company decides not to go forward with the acquisition. The
Company intends to continue to identify and evaluate other potential acquisition
candidates whose product or product lines could be beneficial to the operations
of the Company. The Company anticipates that such acquisition candidates would
be involved in plastics manufacturing, production, packaging, distribution
and/or production of various consumer beverage products. There can be no
assurance that the Company will be successful in consummating the acquisition of
candidates or in integrating acquired companies.
The Company previously reported in a Form 8-K dated August 7, 1997,
that the Company signed a definitive agreement to acquire all of the stock of
Master Molders, Inc. ("Master Molders"), a South Carolina-based manufacturer of
plastic industrial parts pursuant to a merger (the "Merger") of Master Molders
with and into a wholly-owned subsidiary of the Company. The Company is
evaluating alternative sources of financing for the transaction and has not yet
set a closing date. In Item 7 of the Form 8-K, the Company stated that it would
file financial statements and pro forma financial information on or before
October 21, 1997. However, since the closing of the Merger, the event giving
rise to the reporting obligation under Item 2 of Form 8-K, has not occurred. The
Company will file the required financial statements and pro forma financial
information on or before 75 days after the closing of the Merger occurs.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial Statements of Business Acquired
It is not practical to file the required financial statements
at this time. The required financial statements will be filed
on or before 75 days after the Effective Date.
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(b) Pro Forma Financial Information
It is not practical to file the required pro form financial
information at this time. The required pro forma information
will be filed on or before 75 days after the Effective Date.
(c) Exhibits Filed Herewith
(Page No.)
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2.1 Agreement and Plan of Share
Exchange by and between
The HeaterMeals Company and
United Shields Corporation
dated September 12, 1997 E-1 - E-11
10.1 Letter of Intent between R.P.
Industries, Inc. and United
Shields Corporation dated
September 22, 1997 E-12 - E-16
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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, thereunto duly authorized.
UNITED SHIELDS CORPORATION
By: /s/ T. J. Tully
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T. J. Tully, Chairman of the Board and CEO
Date: September 25, 1997
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Exhibit 2.1
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") is made
this 12th day of September, 1997, by and between THE HEATERMEALS COMPANY, a
Colorado corporation ("HeaterMeals" or the "Company"), and UNITED SHIELDS
CORPORATION, a Colorado corporation ("USC").
WHEREAS, USC desires to acquire all of the issued and outstanding
common shares of HeaterMeals pursuant to the terms of this Agreement (the
"Exchange"); and
WHEREAS, the Board of Directors of HeaterMeals has determined that it
would be in the best interests of HeaterMeals and its shareholders for the
Exchange to be accomplished.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, HEATERMEALS AND USC AGREE AS FOLLOWS:
ARTICLE 1
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THE EXCHANGE
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1.1 SHAREHOLDER APPROVAL. This Agreement shall be submitted to the
shareholders of HeaterMeals for their approval and adoption at a meeting
thereof, duly held in accordance with the Colorado Business Corporation Act on
or before the date provided for in Section 4.3 hereof. Upon such approval and
adoption, the officers of HeaterMeals and USC, subject to the satisfaction of
the terms and conditions contained in and subject to the further provisions of
this Agreement, shall take all steps necessary in order to make the Exchange
effective as provided for in this Agreement.
1.2 CONDITIONS. The Exchange shall become effective when all of the
following actions shall have been taken:
(a) This Agreement shall be approved and adopted on
behalf of HeaterMeals and USC in accordance with the Colorado
Business Corporation Act;
(b) The conditions and obligations of HeaterMeals and
USC hereunder shall have been satisfied or waived as provided
herein; and
(c) In accordance with the provisions of the Colorado
Business Corporation Act, a Certificate of Share Exchange
containing the statements required by, and executed in
accordance with, said law, shall be filed with the office of
the Secretary of State of Colorado (the time and date of such
filing are herein referred to as the "Effective Time of the
Exchange").
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1.3 FILING OF CERTIFICATE OF SHARE EXCHANGE. The Exchange shall be
effected by filing a Certificate of Share Exchange with respect to the Exchange
with the Secretary of State of the State of Colorado. Such filing shall be made
at such time as is determined by the Board of Directors of USC, after the
approval of this Agreement by the shareholders of HeaterMeals at the meeting of
such shareholders referred to in Sections 1.1 and 4.3 hereof. If the Effective
Time of the Exchange does not occur on or before October 15, 1997 (or such later
date as is agreed to in writing by the Company and USC, but no later than
November 15, 1997), this Agreement shall terminate and be of no further effect.
1.4 EXCHANGE OF SHARES FOR EXCHANGE PRICE. At the Effective Time of the
Exchange, each outstanding HeaterMeals common share, par value $.01 (in the
singular, a "Share," and, in the plural, "Shares"), shall be, by operation of
law, deemed exchanged with USC for its pro rata share of $2,000,000 cash (the
"Exchange Price"); provided that any HeaterMeals Shares as to which appraisal
rights have been duly perfected in accordance with the laws of the State of
Colorado shall be deemed exchanged for the rights of appraisal and payment as
are provided by such law. In computing a Share's pro rata share of the Exchange
Price, the Exchange Price shall be divided by the number of Shares outstanding
at the Effective Time of the Exchange, regardless of whether or not appraisal
rights are later perfected for any such Shares.
1.5 ISSUANCE OF NEW STOCK CERTIFICATE. Immediately after the Effective
Time of the Exchange, HeaterMeals shall issue a stock certificate to USC for the
number of Shares so exchanged at the Effective Time of the Exchange.
1.6 OLD HEATERMEALS STOCK CERTIFICATES. After the Effective Time of the
Exchange, each outstanding certificate which immediately prior to the Effective
Time of the Exchange represented HeaterMeals Shares shall thereupon represent
the right to receive the pro rata portion of the Exchange Price to which the
Shares represented by such certificate are entitled. As soon as possible after
the Effective time of the Exchange, USC shall send a notice and transmittal form
to each record owner of Shares immediately prior to the Effective Time of the
Exchange advising each record owner of the date and applicable terms of the
Exchange, the pro rata share of the Exchange Price to which each Share is
entitled as a result of the Exchange, the procedure for surrendering to the
Exchange Agent (as defined in Section 5.4 hereof) or to USC their HeaterMeals
stock certificates in order to receive the pro rata share of the Exchange Price
to which the Shares represented thereby are entitled, and any and all
information required by Article 113 of the Colorado Business Corporation Act
relating to appraisal rights. Until so surrendered, each such outstanding
HeaterMeals stock certificate shall be deemed for all corporate purposes to
evidence the ownership either (i) of the right to receive the pro rata share of
the Exchange Price to which the shares represented by such HeaterMeals stock
certificate became entitled at the Effective Time or (ii) the rights of
appraisal and payment as are provided by Article 113 of the Colorado Business
Corporation Act. HeaterMeals may deem and treat the registered holder of any
such outstanding HeaterMeals' stock certificates as the absolute owner thereof,
unless and until surrendered in accordance with the instructions issued pursuant
to this Section 1.6.
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ARTICLE 2
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REPRESENTATIONS AND WARRANTIES OF HEATERMEALS
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Except as set forth in the Disclosure Schedule, dated the date of this
Agreement and delivered by HeaterMeals to USC prior to the execution of this
Agreement, HeaterMeals hereby represents and warrants to USC that:
2.1 ORGANIZATION. HeaterMeals is a corporation duly organized, validly
existing, and in good standing under the laws of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the jurisdictions where its business requires qualification.
2.2 CAPITALIZATION. The authorized capital stock of HeaterMeals
consists of 10,000,000 common shares, par value $.01 per share, and 2,000,000
preferred shares, par value $.10 per share, of which 1,943,420 common shares and
no preferred shares are currently issued and outstanding. All of the issued and
outstanding shares of HeaterMeals are duly authorized, validly issued, fully
paid, and nonassessable. Other than disclosed on the Disclosure Schedule, there
are no outstanding subscriptions, options, rights, warrants, debentures,
instruments, convertible securities, or other agreements or commitments
obligating HeaterMeals to issue or transfer from treasury any additional shares
of its capital stock of any class.
2.3 SUBSIDIARIES. HeaterMeals owns the subsidiaries listed on the
Disclosure Schedule and no others.
2.4 DIRECTORS AND OFFICERS. The Disclosure Schedule contains the names
and titles of all directors and officers of HeaterMeals as of the date of this
Agreement.
2.5 FINANCIAL STATEMENTS. HeaterMeals has delivered to USC its audited
consolidated balance sheets and related statements of income as of December 31,
1996 and December 31, 1995, and its unaudited consolidated balance sheets and
related statements of income as of July 31, 1997 (the "Financial Statements").
The Financial Statements are complete and correct in all material respects and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated. The Financial
Statements accurately set out and describe the financial condition of the
Company as of the dates and for the periods to which they relate.
2.6 ABSENCE OF CHANGES. Except as set forth in the Disclosure Schedule,
since July 31, 1997, to the best of HeaterMeals' knowledge, HeaterMeals has
conducted its business only in the ordinary course and has not experienced or
suffered any material adverse change in the condition (financial or otherwise),
results of operations, properties, business or prospects or waived or
surrendered any claim or right of material value.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Disclosure Schedule, neither HeaterMeals nor any of its properties or assets are
subject to any material liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or
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to become due, that are not reflected in the financial statements presented to
USC or have otherwise been disclosed to USC or are in public records.
2.8 TAX RETURNS. Within the times and in the manner prescribed by law,
HeaterMeals has filed all federal, state and local tax returns required by law,
or has filed extensions which have not yet expired, and has paid all taxes,
assessments and penalties due and payable.
2.9 INTELLECTUAL PROPERTY. The Disclosure Schedule sets forth a
complete and accurate list of all of HeaterMeals' (i) registered trademarks and
service marks, and trademark and service mark applications, including county of
filing, filing number, date of issue and expiration date used in the business of
HeaterMeals; (ii) all registered copyrights; and (iii) patents and patent
rights. Except as set forth in the Disclosure Schedule, to HeaterMeals'
knowledge, no third party has asserted, or threatened to assert against
HeaterMeals or any of its officers or directors any conflicting right to any
such intellectual property and HeaterMeals has no knowledge of facts that
HeaterMeals believes could reasonably be expected to give rise to such a claim.
2.10 COMPLIANCE WITH LAWS. To the best of HeaterMeals' knowledge,
HeaterMeals has complied with, and is not in violation of, applicable federal,
state or local statutes, laws, regulations or ordinances affecting its
properties or the operation of its business, except for matters which would not
have a material affect on HeaterMeals or its properties.
2.11 LITIGATION. HeaterMeals is not a party to any litigation,
arbitration or other dispute or proceeding, or is any governmental investigation
pending or, to its best knowledge, threatened against HeaterMeals which would
affect HeaterMeals or its business, assets or financial condition, except for
matters which would not have a material affect on HeaterMeals or its properties.
HeaterMeals is not in default with respect to any order, writ, injunction or
decree of any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. HeaterMeals is not engaged in any lawsuit to
recover any material amount of monies due to it.
2.12 AUTHORITY. Subject to receipt of the approval of HeaterMeals
shareholders, HeaterMeals has full corporate power and authority to enter into
this Agreement. The Board of Directors of HeaterMeals has approved the Agreement
and the transactions contemplated thereby; and, upon receipt of the requisite
approval thereof by the shareholders of HeaterMeals as contemplated by Section
5.2 hereof, (i) all corporate action by HeaterMeals for the execution, delivery
and performance of this Agreement by HeaterMeals will have been duly taken and
(ii) this Agreement will be a valid and binding agreement of HeaterMeals,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditor's rights generally.
2.13 ABILITY TO CARRY OUT OBLIGATIONS. Except as set forth in the
Disclosure Schedule, neither the execution and delivery of this Agreement, the
performance by HeaterMeals of its obligations under this Agreement, nor the
consummation of the transactions contemplated under this Agreement will, to the
best of HeaterMeals' knowledge: (a) violate any provision of HeaterMeals'
articles of incorporation or bylaws; (b) violate, or be in conflict with, or
constitute a default under, or cause or permit the termination or the
acceleration of the maturity of, any debt, contract, agreement or obligation of
HeaterMeals, or require the payment of any prepayment or other
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penalties; (c) require notice to, or the consent of, any party to any agreement,
commitment, lease or license; (d) result in the creation or imposition of any
security interest, lien, or other encumbrance upon any material property or
assets of HeaterMeals; or (e) violate any statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority.
2.14 FULL DISCLOSURE. HeaterMeals' representations and warranties made
herein, and in any schedule, exhibit or certificate furnished or to be furnished
in connection with this Agreement, are true and materially complete.
2.15 GOOD TITLE. HeaterMeals has good and marketable title to its
assets, tangible and intangible, free of material liens or encumbrances other
than as disclosed on the Disclosure Schedule or in public records.
2.16 MATERIAL CONTRACTS AND OBLIGATIONS. Set forth on the Disclosure
Schedule is a list of all agreements, contracts, indebtedness, known liabilities
and other known obligations to which HeaterMeals is a party or by which it is
bound that are material to the conduct and operations of its business and
properties, which provide for payments to or by the Company in excess of
$50,000, or which involve transactions or proposed transactions between the
Company and its officers and directors. Copies of such agreements and contracts
and documentation evidencing such liabilities and other obligations have been or
will be made available for inspection by USC and its counsel. All of such
agreements and contracts are valid, binding and in full force and effect in all
material respects, assuming due execution by the other parties to such
agreements and contracts.
2.17 GOVERNMENTAL/REGULATORY CONSENTS AND APPROVALS. Except for the
execution and filing of a Certificate of Share Exchange with the Colorado
Secretary of State, no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required to be made or obtained by HeaterMeals in connection with (a) the
execution and delivery; (b) the performance of obligations; or (c) the
consummations of the transactions contemplated by and under this Agreement.
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF USC
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USC hereby represents and warrants to HeaterMeals that:
3.1 ORGANIZATION. USC is a corporation duly organized, validly
existing, and in good standing under the laws of Colorado, having all necessary
corporate powers to own properties and to carry on business.
3.2. AUTHORITY. USC has full corporate power and authority to enter
into this Agreement. The Board of Directors of USC has taken all action required
to authorize the execution and delivery of this Agreement by or on its behalf
and no other proceedings are necessary to authorize the execution and deliver
this Agreement. This Agreement, when executed and delivered by USC, will be a
valid and binding agreement of USC, enforceable against it in accordance with
its terms, except
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as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
material value.
3.3. ABILITY TO CARRY OUT OBLIGATIONS. Neither the execution and
delivery of this Agreement, the performance by USC of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will, to the best of USC's knowledge: (a) violate any provision of
USC's articles of incorporation or bylaws; (b) violate, or be in conflict with
or constitute a default under, or cause or permit the termination or the
acceleration of the maturity of, any debt, contract, agreement or obligation of
USC, or require the payment of any prepayment or other penalties; (c) require
notice to, or the consent of, any party to any agreement or commitment, lease or
license; (d) result in the creation or imposition of any security interest, lien
or other encumbrance upon any property or assets of USC; or (e) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority.
3.4. FULL DISCLOSURE. USC's representations and warranties made herein,
or in any exhibit, certificate or memorandum furnished or to be furnished by
USC, or on its behalf, are true and materially complete.
3.5. CONSENTS AND APPROVALS. Except for the execution and filing of a
Certificate of Share Exchange with the Colorado Secretary of State, no consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required to be made or obtained by USC
in connection with: (a) the execution and delivery of its obligations; (b) the
performance; or (c) the consummation by USC of the transactions contemplated by
and under this Agreement.
ARTICLE 4
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COVENANTS
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4.1. INVESTIGATIVE RIGHTS. From the date of this Agreement until the
Effective Time of the Exchange, each party shall provide to the other party, and
such other party's counsel, accountants, auditors, and other authorized
representatives, full access during normal business hours and upon reasonable
advance written notice to all of each party's properties, books, contracts,
commitments, and records for the purpose of examining the same. Each party shall
furnish the other party with all information concerning each party's affairs as
the other party may reasonably request. If the transaction contemplated hereby
is not completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided such documents. Each of the parties hereto, its
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to the
public, and will not use, and will not knowingly permit others to use, any such
information in a manner detrimental to the other party, in any such case without
the prior written consent of the party to which the confidential information
pertains. Each party shall take such steps as are necessary to prevent
disclosure of, or use of, such information to or by unauthorized third parties.
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4.2. CONDUCT OF BUSINESS. Prior to the Effective Time of the Exchange,
HeaterMeals and USC shall each conduct its business only in the normal course,
and shall not sell, pledge, assign or distribute any assets, except in the
regular course of business; provided, however, that each party may perform such
actions and execute and deliver such documents as are intended to facilitate the
consummation of the transactions contemplated by this Agreement.
4.3 SHAREHOLDERS' MEETING. HeaterMeals agrees to call a meeting of its
shareholders to be held on or before October 1, 1997, or such other date as
shall be mutually agreed upon in writing by the parties hereto for the purpose
of submitting to its shareholders for their approval of this Agreement and the
transactions contemplated hereby.
4.4 USC'S NEGOTIATIONS WITH LENDER. USC shall have the right to
negotiate directly with Bank One, NA to obtain Bank One, NA's waiver which is a
condition precedent under Sections 5.3 and 6.3 hereof. HeaterMeals shall
authorize Bank One, NA, to negotiate directly with USC concerning said waiver.
ARTICLE 5
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CONDITIONS PRECEDENT TO HEATERMEALS' PERFORMANCE.
-------------------------------------------------
The obligations of HeaterMeals hereunder shall be subject to the
satisfaction, at or before the Effective Time of the Exchange, of all the
conditions set forth in this Article 5. HeaterMeals may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by HeaterMeals of
any other condition of or any of HeaterMeals' other rights or remedies, at law
or in equity, if USC shall be in default of any of its representations,
warranties, or covenants under this Agreement.
5.1. ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by USC in this Agreement or in any
written statement that shall be delivered to HeaterMeals by USC under this
Agreement shall be true and accurate on and as of the Effective Time of the
Exchange as though made at that time.
5.2 SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated thereby shall have been approved by the shareholders of HeaterMeals
as required by law and any applicable provisions of HeaterMeals' Certificate of
Incorporation or bylaws.
5.3. LENDER APPROVAL AND FORBEARANCE. This Agreement shall have been
reviewed by Bank One, NA; and Bank One, NA shall have agreed to waive any breach
under its agreements and loan documents with HeaterMeals caused by the
consummation of the Exchange and its rights to accelerate payment on any of its
loans to HeaterMeals occasioned by said Exchange.
5.4. ESCROW OF EXCHANGE PRICE. USC shall have placed $2,000,000 in cash
with Wood & Lamping, LLP (the "Exchange Agent") under an Escrow and Exchange
Agreement mutually satisfactory to the parties hereto for the payment of the
proper amount of the Exchange Price to each shareholder of HeaterMeals who
surrenders his or her HeaterMeals stock certificate to the Exchange Agent with
duly endorsed stock powers to USC with signature guarantees by December 31,
1997.
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5.5 PERFORMANCE. USC shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Effective Time of the
Exchange.
5.6. ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or its consummation, shall have been instituted
or threatened against HeaterMeals or USC on or before the Effective Time of the
Exchange.
5.7 OFFICER'S CERTIFICATE. USC shall have delivered to HeaterMeals a
certificate, dated the day of the Effective Time of the Exchange, and signed by
the Chief Executive Officer of USC, certifying that each of the conditions
specified in Sections 5.1 and 5.3 through 5.6 hereof has been fulfilled.
ARTICLE 6
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CONDITIONS PRECEDENT TO USC'S PERFORMANCE
-----------------------------------------
USC's obligations hereunder shall be subject to the satisfaction, at or
before the Effective Time of the Exchange, of all the conditions set forth in
this Article 6. USC may waive any or all of these conditions, in whole or in
part, without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by USC of any other condition of or any of
USC's rights or remedies, at law or in equity, if HeaterMeals shall be in
default of any of its representations, warranties, or covenants under this
Agreement.
6.1. ACCURACY OF REPRESENTATIONS/RIGHT TO TERMINATE. Except as
otherwise permitted by this Agreement, all representations and warranties by
HeaterMeals in this Agreement or in any written statement that shall be
delivered by HeaterMeals to USC under this Agreement shall be true and accurate
on and as of the Effective Time of the Exchange as though made at that time. The
parties agree that, in USC's sole discretion, USC may terminate this Agreement
at any time prior to the Effective Time of the Exchange if USC determines for
any reason it is not in its best interest to consummate the transaction
contemplated hereby, subject to HeaterMeals' rights to reimbursement of expenses
under Section 7.9 hereof.
6.2 SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the holders of two-thirds of the
outstanding Shares and as required by law and any applicable provisions of
HeaterMeals' Certificate of Incorporation or bylaws.
6.3 LENDER APPROVAL AND FORBEARANCE. This Agreement shall have been
reviewed by Bank One, NA; and Bank One, NA shall have agreed to waive any breach
under its agreements and loan documents with HeaterMeals caused by the
consummation of the Exchange and its rights to accelerate payment on any of its
loans to HeaterMeals occasioned by said Exchange.
6.4 OPTIONS AND WARRANTS. Immediately prior to the Effective Time of
the Exchange, there shall be no outstanding options or warrants to acquire
shares of HeaterMeals' capital stock or to acquire securities convertible into
shares of HeaterMeals' capital stock which have not been
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<PAGE> 9
surrendered to HeaterMeals for cancellation; provided, however, that such
surrenders may be conditioned upon the Exchange being effected by November 16,
1997.
6.5 PERFORMANCE. HeaterMeals shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Effective
Time of the Exchange.
6.6 ABSENCE OF LITIGATION. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or its consummation, shall have been instituted
or threatened against HeaterMeals or USC on or before the Effective Time of the
Exchange.
6.7 OFFICER'S CERTIFICATE. HeaterMeals shall have delivered to USC a
certificate, dated the day of the Effective Time of the Exchange, and signed by
a Vice President of HeaterMeals certifying that each of the conditions specified
in Sections 6.1 through 6.7 hereof have been fulfilled.
ARTICLE 7
---------
MISCELLANEOUS
-------------
7.1. CAPTIONS AND HEADINGS. The Article and paragraph sections
throughout this Agreement are for convenience and reference only, and shall in
no way define, limit, or add to the meaning of any provision of this Agreement.
7.2. NO ORAL CHANGE. This Agreement and any provision hereof may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
7.3. NON-WAIVER. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver with
respect to any other or subsequent breach.
7.4. ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
7.5. CHOICE OF LAW. This Agreement and its application shall be
governed by the laws of the State of Ohio, except to the extent that Ohio's
conflict of laws provisions would apply the laws of another jurisdiction.
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<PAGE> 10
7.6. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third day after mailing if mailed to the party upon whom
notice is being given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
The HeaterMeals Company: with a copy to:
------------------------ ---------------
The HeaterMeals Company James B. Harrison, Esq.
311 Northland Boulevard Wood & Lamping
Cincinnati, Ohio 45246 2500 Cincinnati Commerce Center
600 Vine Street
Cincinnati, Ohio 45202
USC: with a copy to
---- --------------
United Shields Corporation Anthony G. Covatta, Esq.
Grand Baldwin Building Drew & Ward Co., LPA
655 Eden Park Drive One West Fourth Street, Suite 2400
Suite 260 Cincinnati, Ohio 45202
Cincinnati, Ohio 45202
7.7 BINDING EFFECT. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
7.8 MUTUAL COOPERATION. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents, including statutory merger documents required by governing
jurisdictions, and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
7.9. EXPENSES. Except for the $30,000.00 which USC has paid to Wood &
Lamping, LLP, attorneys for HeaterMeals, as a retainer (the "Retainer") for the
payment of HeaterMeals' legal, consulting, and audit fees and related expenses
incurred in connection with the transactions contemplated by this Agreement
(which fees and expenses, individually and in the aggregate, are hereinafter
referred to as "Costs"), HeaterMeals and USC will each pay its own legal,
accounting and any other out of pocket expenses reasonably incurred in
connection with the transactions contemplated by this Agreement including, but
not limited to, those incurred in connection with (i) the negotiation of this
Agreement and the Letter of Intent dated July 22, 1997 between the parties, (ii)
the due diligence examination performed by each party on the other party and its
principals, and (iii) the calling and holding a meeting of HeaterMeals
shareholders. However, if USC decides not to consummate the Exchange for any
reason other than failure to obtain the necessary approval of this Agreement and
the transactions contemplated hereby by the shareholders of HeaterMeals, then
USC agrees to pay the HeaterMeals Costs after the Retainer has been exhausted up
to $30,000 over the Retainer.
7.10 EXHIBITS. As of the execution hereof, the parties hereto have
provided each other with the Schedules and Exhibits provided for hereinabove,
including any items referenced therein
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<PAGE> 11
or required to be attached thereto. Any material changes to the Schedules or
Exhibits shall be immediately disclosed to the other party.
AGREED TO AND ACCEPTED as of the date first above written.
THE HEATERMEALS COMPANY UNITED SHIELDS CORPORATION
By: /s/ David K. Holwadel By: /s/ T.J. Tully
--------------------------- ------------------------------
David K. Holwadel T.J. Tully
Senior Vice President Chief Executive Officer
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<PAGE> 1
Exhibit 10.1
[UNITED SHIELDS CORPORATION LETTERHEAD]
September 22, 1997
Mr. Granville G. Valentine, III
President and CEO
R.P. Industries, Inc.
7400 Beaufont Springs Drive, Suite 325
Richmond, VA 23225
Dear Mr. Valentine:
The purpose of this letter is to set forth the terms of the proposed acquisition
by United Shields Corporation ("USC") or its designee (in either case, the
"Buyer") of the outstanding common stock (the "Stock") of R.P. Industries, Inc.
(the "Company"), from the shareholders of the Company (collectively, the
"Seller"), or of a merger of the Company into an affiliate of the Buyer.
1. PURCHASE OF THE STOCK OF THE COMPANY
Subject to the terms and conditions set forth herein, on the Closing Date (as
defined below), the Buyer will purchase all of the Stock of the Company for the
purchase price described in Section 2, below.
2. PURCHASE PRICE
The Purchase Price shall be $9,300,000.00, payable as follows:
(i) $100,000.00 in cash upon execution of this Letter of Intent;
(ii) 800,000 shares of the common stock of USC (having an estimated
value of $3,200,000.00) upon execution of a definitive
Purchase and Sale Agreement (the "Agreement"), which shall
take place no later than thirty (30) days following the date
hereof;
(iii) $6,000,000.00 payable upon the consummation of the transaction
(the "Closing"), which Closing shall take place on a date no
more than ninety (90) days following the date hereof (the
"Closing Date"), in cash or by assumption of indebtedness of
the Company, or through a combination of cash and assumption
of all of the Company's outstanding indebtedness.
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<PAGE> 2
Mr. Granville G. Valentine, III
September 24, 1997
Page 2
Buyer hereby agrees and acknowledges that, in the event that, through no fault
or failure of the Seller, either (i) the Agreement has not been executed within
thirty (30) days following the execution of this Letter of Intent, or (ii) the
proposed transaction is not consummated within ninety (90) days following the
execution of this Letter of Intent, or by such date as may be mutually agreed by
the parties hereto, Seller will be entitled to terminate this Letter of Intent
and retain any amounts of cash or stock which may have been paid by Buyer in
accordance with the terms of this Section 2.
3. REPRESENTATIONS AND WARRANTIES
The Agreement will contain such representations and warranties by Buyer and
Seller as are customary in such agreements and which shall survive the Closing
for a period of one (1) year. The Agreement shall provide that the each of
Seller and Buyer will indemnify and hold harmless the other party from and
against any and all damages, expenses or losses resulting from breach of any of
the representations and warranties, or of failure to fulfill any covenant,
obligation or agreement, to the extent that such damages, expenses or losses
exceed $50,000.00.
4. ACCESS TO BUSINESS RECORDS
From the date hereof, the Company and the Seller shall grant to Buyer and its
attorneys, accountants and agents, the right to inspect and copy any books,
records, minute books, contracts, agreements, receivables and properties of the
Company and to consult with the officers and current shareholders of the
Company, attorneys and agents of the Company for the purpose of investigating
the business of the Company and determining the accuracy of the representations
and warranties to be made in the Agreement.
Buyer hereby acknowledges that, during the course of its due diligence
investigation, it will continue to be bound by the terms of the confidentiality
agreement executed by Buyer on August 12, 1997, except to the extent that Buyer
is required by applicable securities laws to make disclosures concerning the
proposed transaction.
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<PAGE> 3
Mr. Granville G. Valentine, III
September 24, 1997
Page 3
5. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
In addition to other customary conditions to the obligations of the Buyer and
the Seller to close the proposed transaction, such obligation of Buyer to close
the transaction shall be contingent upon all of the following:
(i) Buyer's obtaining satisfactory arrangements for the continued
employment of the Company's key employees (such condition to
be dependent upon employees' express desire to continue or to
join the Company following the Closing);
(ii) the satisfactory completion of a "due diligence" investigation
of the business and assets of the Company, including
satisfactory appraisals, environmental reports and engineering
reports from persons regularly engaged in rendering such
appraisals and reports;
(iii) Seller's obtaining all consents, permits and waivers
(governmental or other) required as a result of the change of
ownership of the Company to all leases, contracts, agreements
or other matters material to the operation of the business of
the Company as such business is now conducted;
(iv) the absence of any event or condition which would have a
material adverse effect on the business, operation or
financial condition of the Company;
(v) review satisfactory to the Buyer of the Company's financial
statements, books, records, accounts receivable, inventories
and actual and potential liabilities, which may be performed
by Buyer's representatives; and
(vi) maintenance by the Company of net worth of no less than
$4,500,000.00;
(vii) such other conditions as are stated in the Agreement.
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<PAGE> 4
Mr. Granville G. Valentine, III
September 24, 1997
Page 4
6. CLOSING
The Closing of the transaction shall occur at a location mutually agreeable to
the parties not later than ninety (90) days following the date of acceptance of
this Letter of Intent, unless such period is extended by mutual agreement of the
parties.
7. DEFINITIVE PURCHASE AND SALE AGREEMENT
Within 30 days hereof and subject to the terms and conditions of this Letter of
Intent, Buyer and Seller will negotiate in good faith a formal Purchase and Sale
Agreement. This Letter of Intent is intended to provide a basis for the
preparation of the Agreement. Until the Agreement has been prepared and duly
authorized and executed by each of the parties, only Sections 2(i), 4, 7 and 9
hereto shall be legally binding upon the parties. Nothing herein shall preclude
modification of, or insertion of additional provisions to, this Agreement by
either party in keeping with the intent of the parties, the financial terms of
the proposed transaction and any information which may be discovered in the due
diligence process.
Seller agrees that for a period of ninety (90) days following the date of this
letter, Buyer shall have the exclusive right to consummate an acquisition of or
merger with the Company, and that Seller will maintain confidentiality with
respect to both the terms of the proposed transaction and the identity of the
Buyer.
8. EXPENSES
Each party hereto shall pay its own expenses incurred in connection with the
negotiation, due diligence investigation and closing of the proposed
transaction, including, but not limited to, legal, accounting, appraisal and
brokerage expenses.
9. CONFIDENTIALITY
Seller and Buyer hereby mutually agree that they will not divulge to any party
other than their respective representatives, advisors, investment bankers or
lenders any information concerning the proposed transaction or the identity of,
or nature of the negotiations with, the other party, other than information
which is required to be disclosed under applicable securities laws.
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<PAGE> 5
Mr. Granville G. Valentine, III
September 24, 1997
Page 5
If the foregoing meets with your approval, please so indicated by signing the
enclosed copy of this Letter of Intent and returning it to the undersigned.
Very Truly Yours,
UNITED SHIELDS CORPORATION
By: /s/ T. J. Tully
----------------------------
T. J. Tully, CEO
Agreed and Acknowledged this
22th day of September, 1997
R.P. INDUSTRIES
By: /s/ Granville G. Valentine, III
----------------------------------------------
Granville G. Valentine, III, President and CEO
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