<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ----------
Commission file number: 33-11062-D
UNITED SHIELDS CORPORATION
----------------------------------------------
(Name of small business issuer in its charter)
Colorado 84-1049047
- ------------------------------- ------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
655 Eden Park Drive, Cincinnati, Ohio 45202
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(513) 241-7470
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---- ----
As of August 13, 1997, 10,590,100 shares of common stock, no par value per
share, were outstanding.
Transitional Small Business Disclosure Format: Yes No X
---- ----
<PAGE> 2
UNITED SHIELDS CORPORATION
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Financial Statements: Page
Consolidated Balance Sheets as of 3
June 30, 1997 and December 31, 1996
Consolidated Statements of Operations for 4
the Quarters Ended June 30, 1997 and
1996 and for the period from October 22, 1986
(Date of Inception) through June 30, 1997
Consolidated Statements of Operations for 5
the Six Months Ended June 30, 1997 and
1996 and for the period from October 22, 1986
(Date of Inception) through June 30, 1997
Consolidated Statements of Cash 6
Flows for the Six Months Ended June 30,
1997 and 1996 and for the period from October 22,
1986 (Date of Inception) through June 30, 1997
Notes to Consolidated Financial Statements 7
Item 2. Management's Plan of Operation 8
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security 10
Holders
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 14
2
<PAGE> 3
[INSERT BALANCE SHEET]
3
<PAGE> 4
[INSERT STATEMENTS OF OPERATIONS]
4
<PAGE> 5
[INSERT STATEMENTS OF OPERATIONS]
5
<PAGE> 6
[INSERT STATEMENTS OF CASH FLOWS]
6
<PAGE> 7
UNITED SHIELDS CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Notes to Financial Statements
June 30, 1997 (Unaudited)
(1) Condensed Financial Statements
The financial statements included herein have been prepared by United
Shields Corporation without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted as
allowed by such rules and regulations, and United Shields Corporation believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the December 31, 1996 audited financial statements and the
accompanying notes thereto. While management believes the procedures followed in
preparing these financial statements are reasonable, the accuracy of the amounts
are in some respects dependent upon the facts that will exist, and the
procedures that will be accomplished by United Shields Corporation later in the
year.
The management of United Shields Corporation believes that the
accompanying unaudited condensed financial statements contain all adjustments
(including normal recurring adjustments) necessary to present fairly the
operations and cash flows for the periods presented.
(2) Change in Control of The Company
Effective February 12, 1997, the Company acquired all of the outstanding
shares of United Shields Corporation ("USC") in exchange for restricted shares
of Common Stock (the "Exchange") pursuant to a Share Exchange Agreement between
the Company and USC. In connection with the Exchange, the directors and officers
of USC became the directors and officers of the Company. After the Exchange,
USC's shareholders own approximately 90% of the outstanding Common Stock.
Subsequently, the Company changed its name to United Shields Corporation from
Capital 2000, Inc.
(3) Issuance of Shares by Subsidiary
In January 1997, USC completed a private offering of 204,000 shares of its
common stock at $2.00 per share. Total proceeds of $408,000 were used to fund
operations.
(4) New Accounting Pronouncement
In February 1997 the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share". The Company will implement the statement in the
fourth quarter of 1997, the effect of which has not yet been determined.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
The principal focus of United Shields Corporation (formerly known as
Capital 2000, Inc. and hereinafter referred to as the "Company") is to make one
or more acquisitions. The Company believes that acquisitions are a means of
establishing and building its asset and revenue base, adding expertise and
diversifying its product offerings. The consummation of one or more acquisitions
would likely have the effect of significantly increasing the number of employees
of the Company. The success of any acquisition requires that the Company be able
to successfully integrate the operations of the acquired company with its
operations without substantial costs, delays or other problems and to manage
each acquired company profitably or achieve levels of profitability that justify
the investment made by the Company in such acquired company. Acquisitions may
also involve a number of other risks some of which could have a material adverse
effect on the Company's operations and financial results including, without
limitation: the ability to successfully integrate several acquisitions at the
same time (if the Company is able to acquire several companies within a short
period of time) including integrating businesses which may be diverse as to type
of business, geographic area, or customer base and the diversion of management's
attention among acquired businesses; dependence on retaining, hiring and
training key personnel; and adverse short-term effects on operating results and
amortization of acquired intangible assets. There can be no assurance that the
Company will be successful in consummating the acquisition of candidates or in
integrating acquired businesses.
On August 7, 1997, the Company signed a definitive agreement (the
"Agreement") to acquire all of the assets and assume all of the liabilities 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 Agreement provides
for payments to Master Molders' shareholders of 140,000 shares (the "Shares") of
the Company's common stock and cash in the amount of $840,000. The Agreement
requires that the Shares be issued and that $25,000 of the total cash be paid
effective upon execution of the Agreement. The Company is in the process of
issuing the Shares and the $25,000 was paid on August 8, 1997. The issuance of
the Shares and the $25,000 payment are non-refundable if the Company voluntarily
terminates, or defaults in its obligations under, the Agreement. The remaining
$815,000 is to be paid on or before November 30, 1997, the closing date of the
Merger (the "Closing Date"). The Agreement provides that Master Molders, which
has elected to be taxed as a subchapter S corporation, will distribute its
earnings and profits from the period of January 1, 1997 through the Closing Date
to its shareholders. The Agreement further provides that Master Molders will
transfer to each shareholder the automobile owned by it and used by the
shareholder. The Company's obligation to consummate the Merger is contingent
upon approval by holders of 90% of Master Molder's common stock of the Merger.
The Merger is expected to be consummated in the fourth quarter of fiscal 1997.
Master Molders had annual revenues of $764,000 in 1996, and revenues of
approximately $700,000 for the first five months of 1997.
In connection with the Agreement, the Company entered into a Management
Agreement (the "Management Agreement") with Master Molders for the period from
the execution of the Agreement to the Closing Date, unless terminated earlier as
provided in the Management Agreement. The Management Agreement provides that
management of Master Molders will continue to conduct the day-to-day operations
of the business. However, the Company's prior written consent is required prior
to Master Molders taking any certain specified actions such as payment of
dividends; certain increases in compensation of employees and various other
actions which would be outside the ordinary course of business of Master
Molders. Furthermore, Master Molders must notify the
8
<PAGE> 9
Company of certain significant events as defined in the Management Agreement and
is required to provide monthly financial statements to the Company and submit to
an audit, upon the Company's request and at the Company's expense, by the
Company's independent auditor. In the event of a breach of the Management
Agreement by Master Molders, the Company, upon 5 days' notice, has the right to
terminate the Management Agreement and the Agreement.
The Company has also entered into a letter of intent to acquire an
Ohio-based manufacturer and packager of electrochemical heaters and packaged
food products with annual revenues for 1996 of approximately $4.8 million. The
Company is currently in negotiations to enter into a definitive agreement with
this company.
The Company is currently engaged in negotiations to acquire six other
manufacturers of plastic containers and products and anticipates that letters of
intent may be signed during the third quarter of fiscal 1997. The Company
intends to continue to identify and evaluate other potential acquisition
candidates whose product or product lines could benefit 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.
As previously reported, the Company, through its wholly owned subsidiary,
a Nevada corporation formerly known as United Shields Corporation
("Subsidiary"), acquired from In-Flo North America Limited ("In-Flo") the
exclusive world-wide marketing rights for a patented collapsible plastic bottle
(the "Bottle") for use in the retail/consumer sale of water and other water
based beverages and pre-packed powdered instant drink mixes. Management is
conducting internal studies to arrive at cost figures for such a marketing
program.
Subsidiary borrowed from Ramsay-Hughes, Inc. the principal amount of
$85,000 on December 12, 1995, and the principal amount of $66,568.70 on December
1, 1996, pursuant to two promissory notes. As of June 30, 1997, the remaining
principal balance of the two notes was $98,918.70. The $85,000 note bears
interest at a rate of 8% per annum; both notes were due and payable on March 31,
1997. The unpaid balance is now due on demand and to date, Ramsay-Hughes, Inc.
has not made a demand for payment of the balance due. In addition,
Ramsay-Hughes, Inc. agreed to loan the Company up to $3,000,000 pursuant to the
terms of a promissory note dated May 22, 1997, which is payable on or before
September 24, 1997. This note bears interest at a rate of 12% per annum. The
$3,000,000 promissory note is secured by pledges of 3,000,000 shares of the
Company's common stock owned by T. J. Tully, the Chairman, CEO and a director of
the Company, and his spouse and brother. As of June 30, 1997, the Company had
borrowed $114,400.00 under this promissory note. As of June 30, 1997, the total
amount of the Company's indebtedness to Ramsay-Hughes under the three promissory
notes was $213,318.70. Ramsay-Hughes, Inc. owns beneficially approximately 16.5%
of the outstanding common stock of the Company (including approximately 2.2%
which is owned individually by the directors and executive officers of
Ramsay-Hughes, Inc.).
The Company believes that it will be required to seek additional equity
financing in order to fulfill its plan of operations as described above.
Management is currently investigating the possibility of a securities offering
to raise additional equity financing.
9
<PAGE> 10
The preceding description of "Management's Plan of Operation" constitutes
forward-looking statements for purposes of the Securities Act of 1933 and the
Securities Exchange Act of 1934, as amended, and as such involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. Important factors that could cause the actual
results, performance or achievement of the Company to differ materially from the
Company's expectations include the factors discussed in connection with the
particular statements contained in the Plan of Operations and the following
factors: 1) the Company's inability to obtain financing for acquisitions and for
general operations including the marketing of the Bottle; 2) the Company's
inability to establish a successful alliance with a major marketer to the
supermarket and convenience store markets; 3) the Company's inability to obtain
significant shelf space in supermarkets and convenience stores due to
competition for space by all food products, requirements to sell through
specific distributors, commission or other rate structures which prevent the
Company from achieving adequate profit margins and other similar factors; 4)
non-acceptance of one or more products of the Company in the marketplace due to
costs or other reasons; 5) the Company's inability to supply any product to meet
market demand; 6) generally unfavorable economic conditions which would
adversely affect purchasing decisions by retailers or consumers; 7) development
of a similar competing product which is not an infringement of the patent on the
Bottle; 8) inability of the owner of the patent for the Bottle to protect
against infringement; and 9) the Company's inability to successfully complete
and integrate acquisitions. All forward-looking statements attributable to the
Company are expressly qualified in their entirety by such factors.
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 19, 1997, the Company held a special meeting of shareholders to
vote upon a change in the Company's name from Capital 2000, Inc. to United
Shields Corporation. The name change become effective on May 21, 1997. As a
result of the name change, Subsidiary's name is expected to be changed in the
third quarter of fiscal 1997. 6,171,198 shares were voted for the name change,
no shares were voted against the name change, and no shares were withheld.
On May 30, 1997, the Company held its annual meeting of shareholders to
elect three directors and to ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for the fiscal year ending December 31, 1997. The
voting by shareholders was as follows:
<TABLE>
<CAPTION>
Matter For Against Abstain
- ------ --- ------- -------
Election of Directors
- ---------------------
<S> <C> <C> <C>
T. J. Tully 9,398,381 0 15,900
James J. Carroll 9,398,381 0 15,900
Anthony Covatta 9,398,381 0 15,900
Ratification of Auditors 9,398,381 0 15,900
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<S> <C> <C>
(a) Exhibits Filed Herewith
(Page #) or
Incorporated by
Reference to:
2 Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession
(1) Share Exchange Agreement between the Exhibit 10.1 to the
Company and Subsidiary dated February Company's Form 8-K
12, 1997 filed on April 1, 1997
3(a)
(1) Articles of Incorporation Exhibit 3.1 to the
Company's Registration
Statement
(No. 33-11062-D)
(2) Articles of Amendment to the Articles of Exhibit 3.1(a) to the
Incorporation dated March 15, 1995 Company's Form 10-KSB
for the year ended
December 31, 1995
(3) Articles of Amendment to the Articles of Exhibit 3.1(b) to the
Incorporation dated February 26, 1996 Company's Form 10-K
SB for the year ended
December 31, 1995
(4) Articles of Amendment to the Articles of E-1
Incorporation dated May 21, 1997
3(b) Bylaws of the Company Exhibit 3.2 to the
Company's Registration
Statement
(No. 33-11062-D)
10(i) Material Agreements
(a)(1) Sales Agreement between In-Flo Liquid Exhibit 10(i)(a)(1) to the
Dispensing Corporation and Diverse Products Company's Form 10-K
Incorporated dated May 5, 1995 SB for the year ended
December 31, 1996
(a)(2) Assignment of Sales Agreement between Exhibit 10(i)(a)(2) to the
Diverse Products Incorporated and Health Company's Form 10-K
Shields Corporation dated May 9, 1995 SB for the year ended
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
Filed Herewith
(Page #) or
Incorporated by
Reference to:
December 31, 1996
<S> <C> <C>
(a)(3) Assignment of Sales Agreement between Exhibit 10(i)(a)(3) to the
In-Flo Liquid Dispensing Corporation and In-Flo Company's Form 10-K
North America Limited dated January 22, 1996 SB for the year ended
December 31, 1996
(a)(4) Addendum to Assignment of Sales Agreement Exhibit 10(i)(a)(4) to the
between Diverse Products Incorporated and Company's Form 10-K
Health Shields Corporation dated August 8, 1996 SB for the year ended
December 31, 1996
(a)(5) Amending Agreement between In-Flo North Exhibit 10(i)(a)(5) to the
America Limited and Health Shields Company's Form 10-
KSB for the year
ended December 31,
1996
(a)(6) Second Addendum to Assignment of Sales Exhibit 10(i)(a)(6) to the
Agreement between Diverse Products Incorp- Company's Form 10-K
orated and Subsidiary dated April 10, 1997 SB for the year ended
December 31, 1996
(a)(7) Promissory Note of Subsidiary dated December Exhibit 10(i)(a)(7) to
12, 1995 in favor of Ramsay-Hughes, Inc. Company's Form 10-K
SB for the year ended
December 31, 1996
(a)(8) Letter of Ramsay-Hughes, Inc. dated Exhibit 10(i)(a)(8) to the
December 1, 1996 extending Promissory Company's Form 10-K
Note dated December 12, 1995 SB for the year ended
December 31, 1996
(a)(9) Promissory Note of Subsidiary dated December Exhibit 10(i)(a)(9) to the
1, 1996 in favor of Ramsay-Hughes, Inc. Company's Form 10-K
SB for the year ended
December 31, 1996
(a)(10) Promissory Note of the Company dated May 22, E-2 - E-3
1997 in favor of Ramsay-Hughes, Inc.
(a)(11) Stock Pledge Agreement dated May 29, 1997 E-4 - E-5
between T. J. Tully and Ramsay-Hughes, Inc.
</TABLE>
12
<PAGE> 13
Filed Herewith
(Page #) or
Incorporated by
Reference to:
(a)(12) Stock Pledge Agreement dated May 29, 1997 E-6 - E-7
between James F. Tully and Ramsay-Hughes, Inc.
(a)(13) Stock Pledge Agreement dated May 29, 1997 E-8 - E-9
between Gay N. Tully and Ramsay-Hughes, Inc.
(a)(14) Agreement dated August 7, 1997 between Master E-10 - E-28
Molders, Inc. and the Company
(a)(15) Management Agreement dated August 7, 1997 E-29 - E-34
between Master Molders, Inc. and the Company
27 Financial Data Schedule E-35
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated June 5, 1997 reporting that
the Company dismissed its former auditor, Schumacher and Associates, Inc.,
located in Denver, Colorado, and selected Grant Thornton LLP, located in
Cincinnati, Ohio, as the auditor for the Company for the fiscal year ending
December 31, 1997.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNITED SHIELDS CORPORATION
By: /s/ T. J. Tully
----------------------------------------
T. J. Tully, Chairman of the Board and
Chief Executive Officer
/s/ Beverley R. Gill
-------------------------------------------
Beverley R. Gill, Chief Financial Officer
Dated: August 13, 1997
14
<PAGE> 15
UNITED SHIELDS CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash $ - $ 107
Prepaid expense $ 19,000
Accounts receivable - officer 6,955 6,955
--------- ---------
Total current assets 25,955 7,062
FURNITURE AND FIXTURES, net 13,656 --
OTHER ASSETS
Deposits 6,333 --
Goodwill, net 48,888
Marketing agreement, net 71,667 81,667
--------- ---------
$ 166,499 $ 88,729
========= =========
LIABILITIES
CURRENT LIABILITIES
Notes payable - stockholders $ 213,319 $ 79,919
Accounts payable 8,410 213,368
Accrued liabilities - interest 17,975 11,831
Payable to related party -- --
--------- ---------
Total current liabilities 239,704 305,118
COMMITMENTS -- --
DEFICIT IN STOCKHOLDERS' EQUITY
Common stock - authorized 500,000,000 shares without
par value; issued and outstanding 10,590,100 at
June 30, 1997 and 9,405,840 at December 31, 1996 471,066 63,102
Stock subscribed, not yet issued -- 133,000
Additional paid-in capital -- --
Deficit accumulated (544,271) (412,491)
--------- ---------
(73,205) (216,389)
--------- ---------
$ 166,499 $ 88,729
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-1
<PAGE> 16
UNITES SHIELDS CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended From October 22, 1986
June 30, (Date of Inception) to
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
REVENUE:
Interest income $ 50 $ - $ 78
EXPENSES:
Advertising 2,509 2,509
Amortization 5,556 5,000 44,445
Depreciation 505 505
Interest 6,144 2,175 17,975
Office 3,927 6,825
Payroll taxes 280 280
Professional fees 34,008 - 68,453
Public relations 17,500 - 17,500
Rent 1,680 1,680
Salaries 10,000 10,000
Telephone 2,164 2,164
Travel 3,761 - 3,761
Start-up costs 1,451 106,864
Bottle purchase requirements - - 232,363
Payments to related parties - - -
Stock issued for services - - 28,100
Other 925 - 925
---------- ------------ -----------
88,959 8,626 544,349
---------- ------------ -----------
NET LOSS $ (88,909) $ (8,626) $ (544,271)
========== ============ ==========
NET LOSS PER COMMON SHARE (0.01) (0.01) (0.08)
========== ============ ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 10,590,100 10,590,100 10,590,100
========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE> 17
UNITED SHIELDS CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended From October 22, 1986
June 30, (Date of Inception) to
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
REVENUE:
Interest income $ 78 $ - $ 78
EXPENSES:
Advertising 2,509 2,509
Amortization 11,112 10,000 44,445
Depreciation 505 505
Interest 6,144 4,350 17,975
Office 6,825 6,825
Payroll taxes 280 280
Professional fees 68,453 - 68,453
Public relations 17,500 - 17,500
Rent 1,680 1,680
Salaries 10,000 10,000
Telephone 2,164 2,164
Travel 3,761 - 3,761
Start-up costs - 6,534 106,864
Bottle purchase requirements - - 232,363
Payments to related parties - - -
Stock issued for services - - 28,100
Other 925 - 925
---------- ---------- ----------
131,858 20,884 544,349
---------- ---------- ----------
NET LOSS $ (131,780) $ (20,884) $(544,271)
========== ========== ==========
NET LOSS PER COMMON SHARE (0.01) (0.01) (0.08)
========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 10,590,100 10,590,100 10,590,100
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 18
UNITED SHIELDS CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended From October 22, 1986
June 30, (Date of Inception) to
1997 1996 June 30, 1997
---- ---- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (131,780) $ (20,884) $(544,271)
Stock issued for services - - 28,100
Amortization 11,112 10,000 44,445
Depreciation 505 - 505
(Increase) in prepaid expense (19,000) (19,000)
(Increase) in accounts receivable - - (6,955)
(Increase) in deposits (6,333) - (6,333)
Increase(decrease) in accounts payable (204,958) - 8,410
Increase in accrued expenses 6,144 4,350 17,975
Increase(decrease) in accounts payable stockholder - - -
---------- ----------- --------
Net operating activities (344,310) (6,534) (477,124)
CASH FLOWS FROM INVESTING ACTIVITIES
Goodwill - purchase of Capital 2000, Inc. (50,000) (50,000)
Purchase of furniture and fixtures (14,161) - (14,161)
Acquisition of marketing agreement - - (115,000)
---------- ----------- --------
Net investing activities (64,161) - (179,161)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on notes payable stockholders 133,400 3,486 331,278
Payments on notes payable stockholders - - (117,959)
Proceeds from issuance of stock 407,964 - 442,966
Proceeds from stock subscribed (133,000) - -
Company accounts payable assumed
by stockholder - - -
---------- ----------- --------
Net financing activities 408,364 3,486 656,285
---------- ----------- --------
NET DECREASE IN CASH (107) (3,048) -
Cash at beginning of period 107 11,966 -
---------- ----------- --------
Cash at end of period $ - $ 8,918 $ -
========== ============ =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 1
EXHIBIT 3(a)(4)
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
CAPITAL 2000, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the Corporation is Capital 2000, Inc.
SECOND: The following amendments were adopted on May 19, 1997 by the Board
of Directors and by a vote of the Shareholders of the Corporation in the manner
prescribed by the Colorado Business Corporation Act. The number of shares voted
for the amendments were sufficient for approval.
FIRST ARTICLE: The name of the Corporation is "United Shields
Corporation."
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows: Not applicable.
CAPITAL 2000, INC.
Dated: May 19, 1997 By: /s/ T.J. Tully
------------------------------
T.J. Tully, President
E-1
<PAGE> 1
EXHIBIT 10(i)(a)(10)
PROMISSORY NOTE
$3,000,000 Cincinnati, Ohio
May 22, 1997
For value received, Capital 2000, Inc., to be renamed United Shields
Corporation, a Colorado corporation, Maker, promises to pay to the order of
Ramsay-Hughes, Inc., the principal sum of up to $3,000,000 on or before
September 24, 1997, with interest at the rate of 12% per annum.
Ramsay-Hughes shall disburse the principal sum to Maker in whole or in
part at its discretion as will be memorialized in letters of transmittal to be
sent to Maker with each discretionary disbursement. Such letters shall be
incorporated into this Promissory Note by reference.
The principal amount shall be collateralized by the pledge of stock in the
number of 3,000,000 shares of stock of Maker to be pledged by T.J. Tully, Gay N.
Tully, Nola E. Tully, Andrew T. Tully and/or James F. Tully by and through Stock
Pledge Agreements of even date herewith.
If Maker defaults in any of the terms of this Note and the default is not
cured within five days, the full amount of unpaid principal and interest shall
become immediately due and payable. Ramsay-Hughes shall have the option of
offsetting the proceeds of the sale of the pledged shares in partial or full
satisfaction of the defaulted obligation at its discretion. Maker agrees that in
any action on this Note or any instrument which provides security for this Note
and waives to the fullest extent allowed by law all requirements of diligence
and collection, presentment, notice of nonpayment, protest, notice of protest,
suit and all other conditions precedent in connection with the collection and
enforcement of this Note or any security for this Note.
E-2
<PAGE> 2
This Note shall be governed by and interpreted in accordance with Ohio
law.
UNITED SHIELDS CORPORATION
By: /s/ T.J. Tully
---------------------------
T.J. Tully, President
E-3
<PAGE> 1
EXHIBIT 10(i)(a)(11)
STOCK PLEDGE
THIS AGREEMENT is made this 29 day of May, 1997 between T.J. Tully
("Pledgor") and RAMSAY-HUGHES, INC., an Ohio corporation ("Pledgee"), of 602
Main Street, Suite 210, Cincinnati, Ohio 45202.
RECITALS
At the time of the execution of this Agreement, the Pledgee had agreed to
lend Capital 2000, Inc., to be renamed United Shields Corporation, a Colorado
corporation ("USC"), an affiliate of Pledgor, up to $3,000,000, on the terms and
conditions evidenced in the Promissory Note ("Note") of USC, a copy of which is
attached hereto and which is incorporated herein by reference.
To induce the Pledgee to make the loan to USC, the Pledgor has agreed to
pledge certain stock to the Pledgee as security for the repayment of the loan.
It is therefore agreed:
1. Pledge. In consideration of the maximum amount of $3,000,000 to be lent
to USC by Pledgee, in its sole discretion, the Pledgor grants a security
interest to the Pledgee in instruments of the following description: 1,000,000
Shares of the no par common stock of USC, endorsed in blank and either delivered
to the Pledgee or deposited in a Pledged Collateral Account in the name of
Pledgee, at Pledgee's election, with this Agreement. The Pledgor appoints the
Pledgee his attorney to arrange for the transfer of the pledged shares on the
books of the issuer to the name of the Pledgee upon his default in payment of
the Note. The Pledgee shall hold the pledged shares as security for the
repayment of the loan, and shall not encumber or dispose of the shares except in
accordance with the provisions of Paragraph 8 of this Agreement.
2. Dividends. During the term of this pledge, all dividends and other
amounts received by virtue of ownership of the stock shall be the property of
Pledgor. Upon default in payment of the Note, all dividends and other amounts
received by the Pledgee as a result of the Pledgee's record ownership of the
pledged shares shall be applied to the payment of the principal and interest on
the loan.
3. Voting Rights. During the term of this pledge, and as long as Pledgor
and USC are not in default in the performance of any of the terms of this
Agreement or in the payment of the principal or interest of the loan, as the
case may be, the Pledgor shall have the right to vote the pledged shares on all
corporate questions.
4. Representations. The Pledgor warrants and represents that there are no
restrictions on this transfer of the pledged shares, other than may appear on
the face of the certificates, and that the Pledgor has the right to transfer the
shares free of any encumbrances and without obtaining the consent of USC or of
the other shareholders.
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5. Adjustments. In the event that, during the term of this pledge, any
share dividend, reclassification, merger, readjustment, or other change is
declared or made in the capital structure of the company that has issued the
pledged shares, all new, substituted, and additional shares or other securities
issued by reason of any change shall be held by the Pledgee in the same manner
as the shares originally pledged under this Agreement.
6. Warrants and Rights. If any subscription warrants or any other rights
or options are issued in connection with the pledged shares, during the term of
this pledge, and are exercised during such period by the Pledgor, all new shares
or other securities so acquired by the Pledgor shall be immediately assigned to
the Pledgee to be held in the same manner as the shares originally pledged under
this Agreement.
7. Payment of Loan. On payment at maturity of the principal and interest
of the loan, less amounts received and applied by the Pledgee in reduction of
the loan, Pledgee shall deliver the pledged shares and all rights thereto
received by the Pledgee to Pledgor.
8. Default. In the event that Pledgor or USC default in the performance of
any of the terms of this Agreement, or in the payment at maturity of the
principal or interest of the loan, the Pledgee shall have the rights and
remedies provided in the Uniform Commercial Code in force in the State of Ohio.
In this connection, the Pledgee may, on five days' notice to the Pledgor sent by
certified mail, return receipt requested, and without liability for any
diminution in price that may have occurred, sell all the pledged shares in the
manner and for the price that the Pledgee may determine. At any bona fide public
sale, the Pledgee shall be free to purchase all or any part of the pledged
shares. Out of the proceeds of any sale, the Pledgee may retain an amount equal
to the principal and interest then due on the loan, plus the amount of the
expenses of the sale, and shall pay any balance of the proceeds of any sale to
the Pledgor. If the proceeds of the sale are insufficient to cover the principal
and interest of the loan plus expenses of the sale, USC shall remain liable to
the Pledgee for any deficiency.
PLEDGOR
/s/ T.J. Tully
------------------------------------
PLEDGEE
RAMSAY-HUGHES, INC.
By: /s/ Rick E. Hughes
---------------------------------
Rick E. Hughes, CEO
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EXHIBIT 10(i)(a)(12)
STOCK PLEDGE
THIS AGREEMENT is made this 29 day of May, 1997 between James F. Tully
("Pledgor") and RAMSAY-HUGHES, INC., an Ohio corporation ("Pledgee"), of 602
Main Street, Suite 210, Cincinnati, Ohio 45202.
RECITALS
At the time of the execution of this Agreement, the Pledgee had agreed to
lend Capital 2000, Inc., to be renamed United Shields Corporation, a Colorado
corporation ("USC"), an affiliate of Pledgor, up to $3,000,000, on the terms and
conditions evidenced in the Promissory Note ("Note") of USC, a copy of which is
attached hereto and which is incorporated herein by reference.
To induce the Pledgee to make the loan to USC, the Pledgor has agreed to
pledge certain stock to the Pledgee as security for the repayment of the loan.
It is therefore agreed:
1. Pledge. In consideration of the maximum amount of $3,000,000 to be lent
to USC by Pledgee, in its sole discretion, the Pledgor grants a security
interest to the Pledgee in instruments of the following description: 1,500,000
Shares of the no par common stock of USC, endorsed in blank and either delivered
to the Pledgee or deposited in a Pledged Collateral Account in the name of
Pledgee, at Pledgee's election, with this Agreement. The Pledgor appoints the
Pledgee his attorney to arrange for the transfer of the pledged shares on the
books of the issuer to the name of the Pledgee upon his default in payment of
the Note. The Pledgee shall hold the pledged shares as security for the
repayment of the loan, and shall not encumber or dispose of the shares except in
accordance with the provisions of Paragraph 8 of this Agreement.
2. Dividends. During the term of this pledge, all dividends and other
amounts received by virtue of ownership of the stock shall be the property of
Pledgor. Upon default in payment of the Note, all dividends and other amounts
received by the Pledgee as a result of the Pledgee's record ownership of the
pledged shares shall be applied to the payment of the principal and interest on
the loan.
3. Voting Rights. During the term of this pledge, and as long as Pledgor
and USC are not in default in the performance of any of the terms of this
Agreement or in the payment of the principal or interest of the loan, as the
case may be, the Pledgor shall have the right to vote the pledged shares on all
corporate questions.
4. Representations. The Pledgor warrants and represents that there are no
restrictions on this transfer of the pledged shares, other than may appear on
the face of the certificates, and that the Pledgor has the right to transfer the
shares free of any encumbrances and without obtaining the consent of USC or of
the other shareholders.
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5. Adjustments. In the event that, during the term of this pledge, any
share dividend, reclassification, merger, readjustment, or other change is
declared or made in the capital structure of the company that has issued the
pledged shares, all new, substituted, and additional shares or other securities
issued by reason of any change shall be held by the Pledgee in the same manner
as the shares originally pledged under this Agreement.
6. Warrants and Rights. If any subscription warrants or any other rights
or options are issued in connection with the pledged shares, during the term of
this pledge, and are exercised during such period by the Pledgor, all new shares
or other securities so acquired by the Pledgor shall be immediately assigned to
the Pledgee to be held in the same manner as the shares originally pledged under
this Agreement.
7. Payment of Loan. On payment at maturity of the principal and interest
of the loan, less amounts received and applied by the Pledgee in reduction of
the loan, Pledgee shall deliver the pledged shares and all rights thereto
received by the Pledgee to Pledgor.
8. Default. In the event that Pledgor or USC default in the performance of
any of the terms of this Agreement, or in the payment at maturity of the
principal or interest of the loan, the Pledgee shall have the rights and
remedies provided in the Uniform Commercial Code in force in the State of Ohio.
In this connection, the Pledgee may, on five days' notice to the Pledgor sent by
certified mail, return receipt requested, and without liability for any
diminution in price that may have occurred, sell all the pledged shares in the
manner and for the price that the Pledgee may determine. At any bona fide public
sale, the Pledgee shall be free to purchase all or any part of the pledged
shares. Out of the proceeds of any sale, the Pledgee may retain an amount equal
to the principal and interest then due on the loan, plus the amount of the
expenses of the sale, and shall pay any balance of the proceeds of any sale to
the Pledgor. If the proceeds of the sale are insufficient to cover the principal
and interest of the loan plus expenses of the sale, USC shall remain liable to
the Pledgee for any deficiency.
PLEDGOR
/s/ James F. Tully
----------------------------------
PLEDGEE
RAMSAY-HUGHES, INC.
By: /s/ Rick E. Hughes
-------------------------------
Rick E. Hughes, CEO
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<PAGE> 1
EXHIBIT 10(i)(a)(13)
STOCK PLEDGE
THIS AGREEMENT is made this 29 day of May, 1997 between Gay N. Tully
("Pledgor") and RAMSAY-HUGHES, INC., an Ohio corporation ("Pledgee"), of 602
Main Street, Suite 210, Cincinnati, Ohio 45202.
At the time of the execution of this Agreement, the Pledgee had agreed to
lend Capital 2000, Inc., to be renamed United Shields Corporation, a Colorado
corporation ("USC"), an affiliate of Pledgor, up to $3,000,000, on the terms and
conditions evidenced in the Promissory Note ("Note") of USC, a copy of which is
attached hereto and which is incorporated herein by reference.
To induce the Pledgee to make the loan to USC, the Pledgor has agreed to
pledge certain stock to the Pledgee as security for the repayment of the loan.
It is therefore agreed:
1. Pledge. In consideration of the maximum amount of $3,000,000 to be lent
to USC by Pledgee, in its sole discretion, the Pledgor grants a security
interest to the Pledgee in instruments of the following description: 500,000
Shares of the no par common stock of USC, endorsed in blank and either delivered
to the Pledgee or deposited in a Pledged Collateral Account in the name of
Pledgee, at Pledgee's election, with this Agreement. The Pledgor appoints the
Pledgee his attorney to arrange for the transfer of the pledged shares on the
books of the issuer to the name of the Pledgee upon his default in payment of
the Note. The Pledgee shall hold the pledged shares as security for the
repayment of the loan, and shall not encumber or dispose of the shares except in
accordance with the provisions of Paragraph 8 of this Agreement.
2. Dividends. During the term of this pledge, all dividends and other
amounts received by virtue of ownership of the stock shall be the property of
Pledgor. Upon default in payment of the Note, all dividends and other amounts
received by the Pledgee as a result of the Pledgee's record ownership of the
pledged shares shall be applied to the payment of the principal and interest on
the loan.
3. Voting Rights. During the term of this pledge, and as long as Pledgor
and USC are not in default in the performance of any of the terms of this
Agreement or in the payment of the principal or interest of the loan, as the
case may be, the Pledgor shall have the right to vote the pledged shares on all
corporate questions.
4. Representations. The Pledgor warrants and represents that there are no
restrictions on this transfer of the pledged shares, other than may appear on
the face of the certificates, and that the Pledgor has the right to transfer the
shares free of any encumbrances and without obtaining the consent of USC or of
the other shareholders.
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<PAGE> 2
5. Adjustments. In the event that, during the term of this pledge, any
share dividend, reclassification, merger, readjustment, or other change is
declared or made in the capital structure of the company that has issued the
pledged shares, all new, substituted, and additional shares or other securities
issued by reason of any change shall be held by the Pledgee in the same manner
as the shares originally pledged under this Agreement.
6. Warrants and Rights. If any subscription warrants or any other rights
or options are issued in connection with the pledged shares, during the term of
this pledge, and are exercised during such period by the Pledgor, all new shares
or other securities so acquired by the Pledgor shall be immediately assigned to
the Pledgee to be held in the same manner as the shares originally pledged under
this Agreement.
7. Payment of Loan. On payment at maturity of the principal and interest
of the loan, less amounts received and applied by the Pledgee in reduction of
the loan, Pledgee shall deliver the pledged shares and all rights thereto
received by the Pledgee to Pledgor.
8. Default. In the event that Pledgor or USC default in the performance of
any of the terms of this Agreement, or in the payment at maturity of the
principal or interest of the loan, the Pledgee shall have the rights and
remedies provided in the Uniform Commercial Code in force in the State of Ohio.
In this connection, the Pledgee may, on five days' notice to the Pledgor sent by
certified mail, return receipt requested, and without liability for any
diminution in price that may have occurred, sell all the pledged shares in the
manner and for the price that the Pledgee may determine. At any bona fide public
sale, the Pledgee shall be free to purchase all or any part of the pledged
shares. Out of the proceeds of any sale, the Pledgee may retain an amount equal
to the principal and interest then due on the loan, plus the amount of the
expenses of the sale, and shall pay any balance of the proceeds of any sale to
the Pledgor. If the proceeds of the sale are insufficient to cover the principal
and interest of the loan plus expenses of the sale, USC shall remain liable to
the Pledgee for any deficiency.
PLEDGOR
/s/ Gay N. Tully
-----------------------------------------------
PLEDGEE
RAMSAY-HUGHES, INC.
By: /s/ Rick E. Hughes
--------------------------------------------
Rick E. Hughes, CEO
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<PAGE> 1
EXHIBIT 10(i)(a)(14)
AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 7 day of August 1997, by and
between MASTER MOLDERS, INC., a South Carolina corporation ("the Company"), and
UNITED SHIELDS CORPORATION, a Colorado, corporation and its wholly owned
subsidiary to be designated later ("USC").
WHEREAS, USC desires to cause its wholly owned subsidiary to acquire the
Business of Company in exchange for an aggregate total of 140,000 authorized but
unissued restricted shares of the common stock, no par value, of USC (the
"Common Stock") valued at $560,000 and cash in the amount of $840,000, for a
total of $1,400,000 (the "Offer"); and
WHEREAS, the parties will achieve the statutory merger contemplated
hereunder through Company transferring all of its assets and liabilities,
tangible and intangible, real and personal (the "Business"), to a subsidiary of
USC (the "Subsidiary") in exchange for Common Stock of USC and other
consideration, which the parties hereto intend to treat as a qualified
reorganization under Internal Revenue Code ("IRC") Sections 368(a)(1)(A) and
368(a)(2)(D).
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
THE MERGER
1.1 ACQUISITION OF BUSINESS. For the consideration set forth below in
Section 1.9, USC shall acquire the Business of Company, which Business will be
transferred at Closing directly by Company to a subsidiary of USC to be
designated for that purpose.
1.2 INTERIM MEASURES. During the period after execution of this Agreement
and before Closing as provided in Article 7:
(a) Company has elected treatment as a Small Business Corporation
(Sub-S). The Company will calculate its earnings and profits
for the period, beginning with the current fiscal year
(January 1, 1997) through the date of Closing, consistent with
the current principals and practices of the Company. Cash
distributions equal to the earnings and profits for the
period, January 1, 1997 through date of Closing, have or shall
be made to the current shareholders of Company.
(b) Company and USC shall have entered into a Management Contract
simultaneously with execution of this Agreement that provides
USC access to Company's financial data and authority over
substantial expenditures and material management decisions.
This Management Agreement will terminate on the Closing Date.
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<PAGE> 2
1.3 THE MERGER. In accordance with the general corporation law of the
state of Subsidiary's organization, at the Effective Date, defined below,
Company shall be merged with and into the Subsidiary. As a result of the Merger,
the separate corporate existence of Company shall cease and the Subsidiary shall
continue as the surviving corporation and shall succeed to and assume all of the
rights and obligations of Company.
1.4 CONSUMMATION OF MERGER. The Merger shall become effective, after
Closing, when all state law merger requirements on the state of Subsidiary's
organization have been met ("Effective Date").
1.5 ARTICLES OF INCORPORATION; CODE OF REGULATIONS. The Articles of
Incorporation and Code of Regulations of the Subsidiary shall be restated in
their entirety as attached to the Certificate of Merger and shall continue in
effect until amended as provided therein and by law.
1.6 CANCELLATION OF STOCK. As of the Effective Date of the Merger, all
common stock of Company shall automatically be canceled and retired and shall
cease to exist. Each holder of a certificate representing shares of such common
stock of Company shall cease to have any rights with respect thereto, except the
right to receive such holder's appropriate portion of USC Common Stock set forth
in Section 1.9.
1.7 TREASURY STOCK. Each share of common stock held in the treasury of
Company shall be canceled and extinguished at the Effective Date without any
conversion thereof and no payment shall be made with respect thereto.
1.8 WARRANTS AND OTHER SECURITIES. All warrants, options, phantom stock,
convertible securities or any other rights to acquire shares of common stock of
Company, if any such rights exist, shall be canceled and extinguished at the
Effective Date without any conversion thereof and no payment shall be made with
respect thereto.
1.9 CONSIDERATION. Subject to all of the terms and conditions of this
Agreement, USC agrees to issue the pro rata number of shares of USC's Common
Stock, 140,000 in the aggregate directly to participating shareholders of
Company upon execution of this Agreement. Additionally, USC will pay directly to
the participating shareholders of Company their pro rata portion of a total of
$840,000 cash; $25,000 upon execution of this Agreement and $815,000 at closing.
The $25,000 cash payment and 140,000 shares of USC common stock are
nonrefundable in the event of default by USC.
1.10 EXEMPTION FROM REGISTRATION. The parties hereto intend that the
Common Stock to be issued by USC to Company shareholders shall be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Section 4(2) of the Act and its rules and regulations.
1.11 INVESTMENT INTENT. Prior to the consummation of the Offer, the
shareholders of Company accepting the Offer shall execute Letters of Acceptance
and such other documents relating to investment intent and investor status,
restrictions on transferability and restrictive legends as shall
satisfy counsel for USC that the statutory merger contemplated by this Agreement
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<PAGE> 3
shall be exempt from the registration requirements of the Act and any applicable
state blue sky laws.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMPANY
Including the disclosures made on Schedule 2 which is attached hereto and
incorporated herein by reference, Company hereby represents and warrants to USC
that:
2.1 ORGANIZATION. Company is a corporation duly organized, validly
existing, and in good standing under the laws of South Carolina, 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 Company consists of
100,000 shares of $0.00 (no) par value common stock, and -0- shares preferred
stock, of which 1,000 common shares are currently issued and outstanding. All of
the issued and outstanding shares of Company are duly authorized, validly
issued, fully paid, and nonassessable. Other than disclosed on Schedule 2, there
are no outstanding subscriptions, options, rights, warrants, debentures,
instruments, convertible securities, or other agreements or commitments
obligating Company to issue or to transfer from treasury any additional shares
of its capital stock of any class.
2.3 SUBSIDIARIES. Company owns the subsidiaries listed on Schedule 2 and
no others.
2.4 DIRECTORS AND OFFICERS. Schedule 2 contains the names and titles of
all directors and officers of Company as of the date of this Agreement.
2.5 DISPOSITION OF COMMON STOCK. There is no plan or intention by the
shareholders of Company who own 1 percent or more of its stock, and to the best
of the knowledge of the management of Company, there is no plan or intention on
the part of the remaining shareholders of Company to sell, exchange or otherwise
dispose of a number of shares of the Common Stock received in this transaction
that would reduce the Company shareholders' ownership of USC stock to a number
of shares having a value, as of the date of the transaction, of less than 40
percent of the value of all of the formerly outstanding stock of Company as of
the same date. For the purposes of this representation, shares of Company stock
exchanged for cash or other property or surrendered by dissenters will be
treated as outstanding Company stock on the date of the transaction. Moreover,
shares of Company stock and shares of USC stock held by Company shareholders and
otherwise sold, redeemed, or disposed of prior or subsequent to the transaction
will be considered in making this representation.
2.6 NO INVESTMENT COMPANY. Company is not an investment company as defined
in IRC Section 368(a)(2)(F)(iii) and (iv).
2.7 NO COURT JURISDICTION. Company is not under the jurisdiction of a
court in a Title 11 or similar case within the meaning of IRC Section
368(a)(3)(A).
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2.8 FINANCIAL STATEMENTS. Company has delivered to USC its balance sheets
and related statements of income as of December 31, 1996 and 1995 (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 December 31, 1996. The debt reflected
thereon was all incurred for business purposes.
2.9 ABSENCE OF CHANGES. Since December 31, 1996, except for changes in the
ordinary course of business which have not in the aggregate been materially
adverse, to the best of Companys' knowledge, Company 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.
2.10 ABSENCE OF UNDISCLOSED LIABILITIES. Neither Company 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 to become due, that are not reflected in the financial statements presented
to USC or have otherwise been disclosed to USC.
2.11 THRESHOLD VALUES. Company will transfer to USC's subsidiary at least
90 percent of the fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets held by Company immediately prior to
the transaction, except as provided in Section 4.2 hereof. For purposes of this
representation, amounts paid by Company to dissenters, amounts paid by Company
to shareholders who receive cash or other property, Company assets used to pay
its reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Company immediately preceding the transfer,
will be included as assets of Company held immediately prior to the transaction.
2.12 ASSETS OVER LIABILITIES. The fair market value of the assets of
Company transferred to the Subsidiary will equal or exceed the sum of the
liabilities assumed by the subsidiary, plus the amount of liabilities, if any,
to which the transferred assets are subject.
2.13 TAX RETURNS. Within the times and in the manner prescribed by law,
Company 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.
2.14 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, USC and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of Company, which shall make available to USC
and/or its attorneys all books and records of Company.
2.15 INTELLECTUAL PROPERTY. Schedule 2 sets forth a complete and accurate
schedule containing all of Companys' (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
Company; (ii) all registered copyrights; and (iii) patents and patent rights.
Except as set forth in the schedule, to Companys' knowledge, no third party has
asserted, or threatened to
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<PAGE> 5
assert against Company or any of its officers or directors any conflicting
rights to any such intellectual property and Company has no knowledge of facts
that Company believes could reasonably be expected to give rise to such a claim.
2.16 ENVIRONMENTAL COMPLIANCE. To the best of Company's knowledge and
belief, Company is not in violation of any judgment, or law, or a potentially
responsible party in any matter pertaining to environmental matters including,
without limitation, those arising under the Resource Conversation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Water Pollution Control Act,
the Federal Clean Air Act and the Toxic Substances Control Act, and similar
state statutes, or any federal, state or local health, safety or environmental
law.
2.17 EMPLOYEE PLANS. The Company has been and is in compliance with any
and all requirements of ERISA with respect to all its retirement and welfare
plans which are subject to such requirements. There are no liabilities with
respect to terminated plans and there have been no withdrawals of funds from any
such plan except payments to participants and beneficiaries which were required
by such plans.
2.18 COMPLIANCE WITH LAWS. Company 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 Company or its properties.
2.19 LITIGATION. Company is not a party to any litigation, arbitration or
other dispute or proceeding, nor is any governmental investigation pending or,
to its best knowledge, threatened against Company which would affect Company or
its business, assets or financial condition, except for matters which would not
have a material affect on Company or its properties. Company 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.
Company is not engaged in any lawsuit to recover any material amount of monies
due to it.
2.20 AUTHORITY. Company has full corporate power and authority to enter
into this Agreement. The board of directors of Company has taken all action
required to authorize the execution and delivery of this Agreement by or on its
behalf and the performance of its obligations under this Agreement. No other
corporate proceedings are necessary to authorize Company to execute and deliver
this Agreement. This Agreement is, and when executed and delivered by Company,
will be a valid and binding agreement of Company, 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 creditors' rights generally.
2.21 ABILITY TO CARRY OUT OBLIGATIONS. Neither the execution and delivery
of this Agreement, the performance by Company of its obligations under this
Agreement, nor the consummation of the transactions contemplated under this
Agreement will to the best of Company knowledge: (a) materially violate any
provision of Company' articles of incorporation or bylaws; (b) violate, or be in
conflict with, or constitute a material default under, or cause or permit the
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<PAGE> 6
termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of Company, 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
material property or assets of Company; or (e) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority.
2.22 FULL DISCLOSURE. Company' 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 at execution of
this Agreement and will be true and materially complete at Closing.
2.23 GOOD TITLE. Company has good and marketable title to the Business
free of material liens or encumbrances other than as disclosed on Schedule 2.
2.24 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto on Schedule 2 is
a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which Company 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 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.
2.25 CONSENTS AND APPROVALS. 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 Company in connection with: (a)
execution and delivery; (b) performance of obligations; or (c) the consummation
of the transactions contemplated by and under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF USC
Including the disclosures made on Schedule 3 which is attached hereto and
incorporated herein by reference, USC represents and warrants to Company 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 CAPITALIZATION. The authorized capital stock of USC consists of
500,000,000 shares of no par value Common Stock of which 10,590,100 shares of
Common Stock are currently issued and outstanding. USC has no plan or intention
to reacquire any of the stock it issues in this transaction. The common stock of
USC currently trades on the Nasdaq Bulletin Board under the symbol UNSC. Recent
bid and asked prices for USC stock are detailed on Schedule 3. All of the
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issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable.
3.3 SUBSIDIARIES. USC wholly owns the subsidiary listed on Schedule 3 and
will continue to wholly own it after this transaction if the Business of Company
is merged into this subsidiary. USC reserves the right to designate the
subsidiary listed on Schedule 3 as the Subsidiary for this purpose or another
formed specifically therefor. No stock of the Subsidiary will be issued in this
transaction. Prior to the transaction, USC will control the Subsidiary within
the meaning of IRC Section 368(c). Following the transaction, the Subsidiary
will not issue additional shares of its stock that would result in USC losing
control of the Subsidiary within the meaning of IRC Section 368(c). At the
consummation of this transaction, the Subsidiary will be a corporation duly
organized, validly existing and in good standing under the laws of a selected
jurisdiction, having all necessary corporate powers to own properties and to
carry on business. The Subsidiary will not be merged into USC for at least two
years after consummation of this transaction. No plan exists under which USC
would own less than 80% of Subsidiary.
3.4 NO DISPOSITION. USC has no plan or intention to liquidate Subsidiary;
to merge it with and into another corporation; to sell or otherwise dispose of
the stock of Subsidiary; or to cause it to sell or otherwise dispose of any of
the assets of Company acquired in the transaction, except for dispositions made
in the ordinary course of business or transfers described in IRC Section
368(a)(2)(C).
3.5 FINANCIAL STATEMENTS. USC has delivered to Company its audited balance
sheet and related statement of earnings and cash flows as of and for the period
ended December 31, 1996 (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 and operating results of the Company as
of the dates, and for the periods, indicated therein.
3.6 ABSENCE OF CHANGES. Since December 31, 1996, except for changes in the
ordinary course of business which have not in the aggregate been materially
adverse, to the best of USC's knowledge, USC has not experienced or suffered any
material adverse change in its condition (financial or otherwise), results of
operations, properties, business or prospects or waived or surrendered any claim
or right of material value.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. To the best of USC's knowledge,
neither it nor any of its properties or assets are subject to any liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, that are not reflected in the financial
statements presented to Company.
3.8 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing
or otherwise mitigating the representations contained herein, Company shall have
the opportunity to meet with USC's accountants and attorneys to discuss the
financial condition of USC. USC shall make available to Company all its books
and records.
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3.9 EQUIVALENCE OF VALUE. The fair market value of the stock and other
consideration received by each Company shareholder will be approximately equal
to the fair market value of the Company stock surrendered in the exchange.
3.10 CONTINUITY. Following the transaction, Subsidiary will continue the
historic business of Company.
3.11 NO INTERCORPORATE INDEBTEDNESS. There is no intercorporate
indebtedness existing between USC and Company or between Subsidiary and Company
that was issued, acquired, or will be settled at a discount.
3.12 NO INVESTMENT COMPANY. Neither USC nor Subsidiary is an investment
company as defined in IRC Section 368(a)(2)(F)(iii) and (iv).
3.13 COMPLIANCE WITH LAWS. To the best of USC's knowledge, it has complied
with, and is not in violation of, applicable federal, state or local statutes,
laws and regulations affecting its properties or the operation of its business.
3.14 LITIGATION. USC is not a party to any litigation, arbitration, or
other dispute proceeding, nor is any governmental investigation pending or, to
the best knowledge of USC, threatened against USC which would affect USC or its
business, assets, or financial condition. USC is not in default with respect to
any order, of any federal, state, local, or foreign court, department agency, or
instrumentality.
3.15 AUTHORITY. USC has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by 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 behalf of USC,
the performance of the obligations of USC under this Agreement and the
consummation by USC of the transactions contemplated under this Agreement. No
other corporate proceedings on the part of USC are necessary to authorize USC to
execute and deliver this Agreement. This Agreement is, and when executed and
delivered by USC, will be a valid and binding agreement of USC, enforceable
against USC 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 creditors rights generally.
3.16 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.
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3.17 VALIDITY OF USC SHARES. The shares of USC Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
3.18 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.
3.19 CONSENTS AND APPROVALS. 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)
execution and delivery of its obligations; (b) performance; or (c) consummation
by USC of the transactions contemplated by and under this Agreement.
ARTICLE 4
COVENANTS
4.1 INVESTIGATIVE RIGHTS. From the date of this Agreement until the
Closing Date, 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 same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to the
public, 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 such information to unauthorized third parties.
4.2 CONDUCT OF BUSINESS. Prior to the Closing, Company 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. The
parties hereby understand and agree that the Company: has or will provide to the
current shareholders of the Company cash distributions equal to the earnings and
profits for the period, January 1, 1997 through the date of Closing as set forth
in Section 1.2(a) above; and shall sell, convey, distribute or dividend to
Messrs. Smetana and Bonin the automobiles currently owned by the Company and
used by them.
ARTICLE 5
CONDITIONS PRECEDENT TO COMPANY'S PERFORMANCE
5.1 CONDITIONS. The obligations of Company hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set forth in
this Article 5. Company may waive any or all of these conditions in whole or in
part without prior notice; provided
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however, that no such waiver of a condition shall constitute a waiver by Company
of any other condition of or any of Company' 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.
5.2 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 Company by USC under this Agreement
shall be true and accurate on and as of the Closing Date as though made at that
time.
5.3 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 Closing Date.
5.4 OFFICER'S CERTIFICATE. USC shall have delivered to Company a
certificate, dated the Closing Date, and signed by the Chief Executive Officer
of USC, certifying that each of the conditions specified in Sections 5.2 and 5.3
hereof have been fulfilled.
ARTICLE 6
CONDITIONS PRECEDENT TO USC'S PERFORMANCE
6.1 CONDITIONS. USC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, 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 Company shall be in default of any
of its representations, warranties, or covenants under this Agreement.
6.2 ACCURACY OF REPRESENTATIONS/RIGHT TO TERMINATE. Except as otherwise
permitted by this Agreement, all representations and warranties by Company in
this Agreement or in any written statement that shall be delivered by Company to
USC under this Agreement shall be true and accurate on and as of the Closing
Date as though made at that time. Further, the parties understand and agree that
USC is entering into this Agreement with the expectation that the Business has a
fair market value commensurate with the consideration to be paid by USC and that
the investigation contemplated by paragraph 2.14 will confirm such expectation.
However, the parties agree that in USC's sole discretion, USC may terminate this
Agreement at any time prior to the Closing Date if USC determines for any reason
it is not in its best interest to consummate the transaction contemplated
hereby. Further provided, however, that the parties agree that in the event of
USC's termination of this Agreement, $25,000 and 140,000 shares of USC common
stock, as set forth in Section 1.9 shall be retained by the Company and/or the
participating shareholders as their interest may appear.
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<PAGE> 11
6.3 PERFORMANCE. Company shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by them, on or before the Closing Date.
6.4 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 to its consummation, shall have been
instituted or threatened against Company on or before the Closing Date.
6.5 ACCEPTANCE BY COMPANY SHAREHOLDERS. The holders of an aggregate of not
less than 90% of the issued and outstanding shares of common stock of Company
shall have agreed to accept the offer made in this Agreement.
6.6 OFFICERS' CERTIFICATE. Company shall have delivered to USC a
certificate, dated the Closing Date and signed by the President of Company
certifying that each of the conditions specified in Sections 6.2 through 6.5
have been fulfilled.
ARTICLE 7
CLOSING
7.1 CLOSING. The Closing of this transaction shall be held at the offices
of Cors & Bassett, 441 Vine Street, Suite 1200, Cincinnati, Ohio 45202, or such
other place as shall be mutually agreed upon, on or before November 30, 1997
(the "Closing Date") or on such other date as shall be mutually agreed upon by
the parties. At the Closing:
(a) Company shall deliver Letters of Acceptance by its shareholders
accepting the Offer ("Accepting Shareholders") to USC.
(b) Each Accepting Shareholder shall receive a certificate or
certificates representing the number of shares of USC Common Stock as well as
the pro rata amount of cash and notes to which he/she is entitled.
(c) Company shall deliver the officer's certificate, described in
Section 6.6 hereof, dated the Closing Date.
(d) Company shall deliver a signed Consent and/or Minutes of its
Directors approving this Agreement and each matter to be approved by its
Directors under this Agreement.
(e) USC shall deliver an officer's certificate, as described in
Section 5.4 hereof, dated the Closing Date.
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<PAGE> 12
(f) USC shall deliver a signed Consent or Minutes of the Directors of
USC approving this Agreement and each matter to be approved by the Directors of
USC under this Agreement.
(g) USC shall deliver a check or wire payable to Cors & Bassett Trust
Account in an amount sufficient to pay the cash consideration described in
Section 7.1(b) above.
ARTICLE 8
MISCELLANEOUS
8.1 CAPTIONS AND HEADINGS. The Article and paragraph headings 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.
8.2 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.
8.3 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.
8.4 ENTIRE AGREEMENT. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
8.5 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.
8.6 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 to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
The Company: with a copy to:
Master Molders, Inc. Robert R. Horger, Esq.
P. O. Box 2409 Horger, Barnwell & Reid, L.P.A.
Rt. 301 South 1459 Amelia Street
Orangeburg, South Carolina 29115 Orangeburg, South Carolina 29116-0329
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USC: with a copy to:
United Shields Corporation James J. Carroll, Esq.
602 Main Street, Suite 1102 Cors & Bassett
Cincinnati, Ohio 45202 441 Vine Street, Suite 1200
Cincinnati, Ohio 45202
8.7 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.
8.8 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.
8.9 ANNOUNCEMENTS. Company and USC will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby.
8.10 EXPENSES. Company and USC will each pay its own legal, accounting and
any other out-of-pocket expenses reasonably incurred in connection with this
transaction, whether or not the transaction contemplated hereby is consummated.
8.11 EXHIBITS. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for hereinabove, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
AGREED TO AND ACCEPTED as of the date first above written.
MASTER MOLDERS, INC. UNITED SHIELDS CORPORATION
By: /s/ Willard Smetana By: /s/ T.J. Tully
-------------------------- -----------------------------------
Willard Smetana, President T.J. Tully, Chief Executive Officer
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<PAGE> 14
SCHEDULE 2
MASTER MOLDERS, INC.
("COMPANY")
Will Smetana President
Ed Bonin Vice President
Bank Loan
Note # 1012743
Balance Due $94,138.85
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<PAGE> 15
SCHEDULE 3
UNITED SHIELDS CORPORATION
("USC")
3.2 Capitalization. [Recent prices to be supplied.]
3.3 Subsidiaries. USC, Inc., a Nevada corporation is wholly owned
by USC.
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<PAGE> 16
UNITED SHIELDS CORPORATION
MASTER MOLDERS, INC.
LETTER OF ACCEPTANCE
Shares of United Shields Corporation
Common Stock offered for your shares of
Name(s) of Shareholder(s) Master Molders, Inc. Common Stock
- --------------------------------------------------------------------------------
THIS FORM MUST BE COMPLETED AND DELIVERED ON OR BEFORE 5:00 P.M. E.D.T. TIME,
________________, 1997, TO UNITED SHIELDS CORPORATION ("USC"), C/O JAMES J.
CARROLL, ESQ., CORS & BASSETT, 441 VINE STREET, SUITE 1200, CINCINNATI, OHIO
45202. THIS FORM MAY BE FAXED TO JAMES J. CARROLL AT (513)
852-8222 AND THEN MAILED.
APPROVAL OR NONAPPROVAL OF OFFER
The undersigned /X/ accepts / / rejects the Offer of USC for the
Business of Company, as specified above subject to the terms and conditions set
forth in the Agreement to be executed between United Shields Corporation and
Company.
The undersigned understands that this approval of the Offer constitutes
his or her acceptance of the terms and conditions of the Offer, and surrender
all of his or her shares of Company common stock signifies his or her
acknowledgment and agreement that the shares of common stock of USC, and cash
paid will be full payment for all of his or her shares.
Date: 8-7-97 /s/ Willard Smetana
------------------------------
/s/ Edward L. Bonin
------------------------------
Signature(s) of Shareholder(s)
(NOTE: IF YOU ACCEPT THE OFFER, YOU MUST ALSO SIGN ON PAGE ______ OF THIS LETTER
OF ACCEPTANCE.)
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<PAGE> 17
REPRESENTATIONS AND WARRANTIES
1. The undersigned understands and acknowledges that the shares
of Common Stock ("Shares") of United Shields Corporation (the "Company"), are
being offered in reliance upon the exemptions provided in Section 4(2) and/or
3(b) of the Securities Act of 1933 as amended (the "Act") and the Rules and
Regulations adopted thereunder relating to nonpublic offerings; and the
undersigned makes the following representations and warranties with the intent
that the same may be relied upon in determining the suitability of the
undersigned as a purchaser of securities:
(a) The Shares will be acquired solely for the account of
the undersigned, for investment purposes only, and not with a view to, or for
sale in connection with, any distribution thereof and with no present intention
of distributing or reselling any part of the Shares.
(b) The undersigned agrees not to dispose of his or her
Shares or any portion thereof unless and until counsel for the Company shall
have determined that the intended disposition is permissible and does not
violate the Securities Act or any applicable state securities laws, or the rules
and regulations thereunder.
(c) The undersigned acknowledges that the Company has
made all documentation pertaining to all aspects of the Offer available to him
or her and has offered such person or persons an opportunity to discuss the
Offer with the officers of the Company. The undersigned further acknowledges and
represents to the Company that he or she is a knowledgeable, sophisticated
investor who can fend for himself or herself and has adequate means to make the
investment contemplated herein; and that, in connection with this investment, he
or she has obtained the necessary investment advice from appropriate outside
sources, and had available to the undersigned all information with respect to
the Company which was deemed necessary by himself or herself and his or her
respective advisors.
2. The undersigned represents that the shares of Company being
surrendered are owned free and clear of any liens or encumbrances and have not
been pledged or optioned to any person.
3. The undersigned understands that he or she must bear the
economic risk of an investment in the Shares to be acquired pursuant to the
Offer for an indefinite period of time because the Shares have not been
registered under the Securities Act or any state securities laws and, therefore,
cannot be sold unless they are subsequently registered under the Securities Act
and any applicable state securities laws or unless exemptions from such
registrations are available. The current holding period requirement of Rule 144
is one year from the date this transaction is closed.
4. The undersigned agrees that the certificate evidencing the
Shares he or she acquires pursuant to the Offer will have a legend placed
thereon stating that the Shares have not been registered under the Securities
Act or any state securities laws and setting forth or referring to the
restrictions on transferability and sale of the Shares.
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<PAGE> 18
5. (a) The undersigned is, or is not, an "accredited investor,"
as that term is defined in Regulation D under the Securities Act of 1933, as
amended (the Act ), as checked below:
/X/ YES / / NO
(b) If Yes, I come within the following category of that
definition (check as applicable):
1. /X/ I am a natural person whose present net worth (or whose
joint net worth with my spouse) exceeds $1,000,000.
2. / / I am a natural person who had individual income in excess
of $200,000 in each of the last two years or joint income with my spouse in
excess of $300,000 during such two years, and I reasonably expect to have the
same income level in the current year.
3. / / I am an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust or
partnership not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.
4. / / I am an entity, all of whose equity owners are accredited
investors under paragraph 1, 2 and 3, above.
(c) If I have answered yes to (5)(a) above, I understand
that Regulation D requires that you have information which causes you to have a
reasonable belief that the foregoing statement is correct. Thus, if you care to
do so, you may contact my bank, my accountant or other persons whom I designate
below to corroborate the above. The name and telephone number of:
(i) My banker is Bruce Rheney___________
803-534-2175________________________;
(ii) My accountant is Lee Maginnis______
803-854-3130________________________; and
(iii) Other person is_____________________
___________________________________.
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6. The undersigned hereby covenants and agrees to protect,
indemnify and hold the Company, and each of its officers, directors and
shareholders, harmless from and against any and all claims, demands, causes of
action, judgments, orders, decrees, damages, liabilities, court or other costs,
attorney fees, reasonable costs of investigation and other costs and expenses
whatsoever (i) arising out of or attributable to any breach or violation of, or
the falsity, inaccuracy or failure of, any representation, warranty or covenant
made by the undersigned in this letter, and (ii) arising from or related to the
acquisition, ownership or disposition by the undersigned of any or all the
Shares.
7. The undersigned's jurisdiction of residence is South Carolina.
###-##-#### /s/ Willard Smetana
- ------------------------------------ -------------------------------
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
###-##-#### /s/ Edward L. Bonin
- ------------------------------------ -------------------------------
(Social Security or Tax I.D. Number) Signature(s) of Shareholder(s)
PO Box 2409
- ------------------------------------
(Mailing Address)
Orangeburg SC 29116 Date:
- ------------------------------------ -------------------------------
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<PAGE> 1
EXHIBIT 10(i)(a)(15)
MANAGEMENT AGREEMENT
THIS AGREEMENT ("Management Agreement") is made this 7th day of July,
1997 by and between MASTER MOLDERS, INC., a South Carolina corporation (the
"Company") and UNITED SHIELDS CORPORATION, a Colorado Corporation and its wholly
owned subsidiary, such subsidiary to be designated later, ("USC").
WHEREAS, the Company and USC have entered into an agreement of merger
("Merger Agreement") of even date herewith whereby the Company will merge into
and with the USC subsidiary; and
WHEREAS, the Merger Agreement provides that the Company and USC will
enter into an agreement for management of the Company by USC from the date of
execution of the Merger Agreement through the Closing Date provided for in the
Merger Agreement; and
WHEREAS, the parties desire to set forth their understandings as to
their rights and duties with respect to the operations and management of the
Company during the term of this Management Agreement.
NOW THEREFORE, in consideration of entering into the Merger Agreement
and for the mutual promises contained herein, the parties agree as follows:
ARTICLE I
OPERATIONS OF THE COMPANY
1.1 DAY TO DAY OPERATIONS/IN GENERAL. During the term of this
Management Agreement, the Company's management shall conduct the day to day
operations of the Company in accordance with past practices, in a manner which
is in the best interest of the Company, and with the degree of skill and care
necessary to meet the fiduciary obligations of officers as prescribed by the law
of the State of South Carolina.
1.2 USC AUTHORIZATION. Notwithstanding paragraph 1.1, it is the
parties' understanding and intention that USC shall have management control and
final authority over all transactions contained in Exhibit A. Therefore, the
Company shall not cause or allow to be caused any transaction listed in Exhibit
A prior to notifying USC and obtaining written authorization from USC to
complete the proposed transaction.
1.3 NOTIFICATION OF SIGNIFICANT EVENTS. The Company shall promptly
notify USC of all events listed in Exhibit B of which any of its directors,
officers, employees or agents have knowledge.
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<PAGE> 2
ARTICLE 2
FINANCIAL INFORMATION
2.1 FINANCIAL INFORMATION. Company management shall prepare, or cause
to be prepared, monthly financial statements, prepared in accordance with the
Company's method of accounting, showing a detailed statement of earnings and
expenses for the month, and submit such financial information to USC by the 15th
day of the following month.
2.2 INTERIM FINANCIAL STATEMENTS. At USC's request, Company management
shall retain USC's outside accounting firm to audit the Company and prepare
interim financial statements as of a date specified by USC, including a balance
sheet and related statements of income in accordance with generally accepted
accounting principles. The cost of such audit shall be borne by USC.
ARTICLE 3
TERMINATION PROVISIONS
3.1 TERMINATION. This Management Agreement shall terminate upon the
earliest of:
a. Termination of the Merger Agreement;
b. The Closing Date as specified in the Merger
Agreement;
c. The written agreement of both parties;
d. At the option of USC, upon breach of any of the terms
or conditions of this Management Agreement by the
Company.
3.2 REMEDIES UPON BREACH. In the event of a breach by the Company of
the terms of this Management Agreement, USC may, in its sole discretion,
terminate this Management Agreement and the Merger Agreement upon 5 days notice
to the Company. Further, USC shall be entitled, if it shall so elect, to
institute legal proceedings to obtain damages for any such breach, or to enforce
the specific performance of this Management Agreement by the Company and to
enjoin the Company from any further violation of this Management Agreement, and
to exercise such remedies cumulatively or in conjunction with all other rights
and remedies provided by law.
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<PAGE> 3
ARTICLE IV
MISCELLANEOUS
4.1 POSTPONEMENT AND WAIVER. No failure or delay on the part of a party
in exercising a right or privilege under this Management Agreement shall operate
as a waiver thereof and a single or partial exercise of any right or privilege
shall not prevent further exercise of such right or privilege.
4.2 OHIO LAW. This Management Agreement shall be governed by, and
construed in accordance with, the laws of the state of Ohio.
4.3 TIME IS OF THE ESSENCE. This parties understand and agree that time
of the essence with respect to all obligations hereunder.
4.4 ENTIRE AGREEMENT. This Management Agreement constitutes the entire
agreement of the parties regarding management of the Company prior to the
Closing Date and all previous negotiations and oral understandings are hereby
merged into this agreement.
Signed this 7th day of August, 1997.
UNITED SHIELDS CORPORATION
By: /s/ T.J. Tully
_______________________________
MASTER MOLDERS, INC.
By: /s/ Willard Smetana
_______________________________
E-31
<PAGE> 4
EXHIBIT A
TRANSACTIONS REQUIRING
PRIOR AUTHORIZATION FROM USC
1. Payment, accrual or declaration of any dividend.
2. Increase in officers' salaries or directors' fees or other compensation
or benefits for officers or directors.
3. Any cash outlay, whether an expense item or a capital improvement, and
whether one expenditure or group of related expenditures, in excess of
$10,000.00, other than inventory/raw materials or monthly contract labor
expenses.
4. Borrowing by the Company, other than short term accounts payable
incurred in the normal course of business.
5. Lending or other extension of credit by the Company, including employee
advances, other than accounts receivable incurred in the ordinary course of
business.
6. The disposition, acquisition, lease or pledge of any fixed asset.
7. The sale, pledge or other disposition of intellectual property.
8. An additional cash outlay for the cost of labor in excess of 15% from
the previous month.
9. Material changes to current equipment lease and real estate rental
agreements.
10. Material changes to current banking relationships.
E-32
<PAGE> 5
11. The hiring or firing of any officer or other key employee.
12. Entering into contracts, oral or written, other than in the ordinary
course of business, and any contract which obligates the Company for in excess
of $10,000.00.
13. Changes to Company employment policies, including employee benefits.
14. Changes to Articles, Code of Regulations or any other governing
documents of the Company.
E-33
<PAGE> 6
EXHIBIT B
EVENTS REQUIRING THE COMPANY TO NOTIFY USC
1. Any event in the market which might significantly change business
operations, including but not limited to, destruction of Company property by an
act of God, the loss of a major supplier or customer for any reason, changes in
source or substantial increase in raw materials for production, and changes to
local, state or federal laws or regulations significantly affecting the
Company's ability to conduct business.
2. Any suit or complaint filed against the Company, and any circumstance
which would foreseeably lead to a suit or complaint being filed against the
Company.
3. Any notice of audit, deficiency, or request for significant information
by any federal or state regulatory agency, including but not limited to the IRS,
DOL, OSHA and the EPA.
4. Any material work stoppage, labor or employment dispute.
E-34
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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