SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 31, 1998
LOCKHART CARIBBEAN CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
U.S. Virgin Islands
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(State or Other Jurisdiction of Incorporation or Organization)
333-35105 65-0491618
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(Commission File Number) (I.R.S. Employer Identification Number)
No. 44 Estate Thomas
St. Thomas, U.S. Virgin Islands 00802
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(Address of Principal Executive Officers) (Zip Code)
Registrant's telephone number, including area code (340) 776-1900
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Item 2. Acquisition or Disposition of Assets.
On December 31, 1998, Lockhart Caribbean Corporation (the "Company")
completed the acquisition of Guardian Insurance Company, Inc. ("Guardian") and
of Heritage Insurance Company (Caribbean), Limited ("Heritage"). The Company
issued a press release on January 4, 1999, regarding the acquisition of Guardian
and Heritage. A copy of the Company's press release has been filed as Exhibit
99.1 to this report.
Guardian is authorized to write personal and commercial lines of insurance
in the U.S. Virgin Islands and has offices in St. Thomas and St. Croix.
Guardian's primary lines of business include automobile physical damage and
automobile liability coverage. The Company acquired all of Guardian's
outstanding common stock for 467,997 shares of the Company's Class A common
stock. Of the 467,997 shares, 184,931 shares have been transferred to the
sellers on the Company's books and 283,066 shares are subject to transfer
pending resolution of certain unresolved claims related to Hurricane Marilyn in
September, 1995. The Guardian stock purchase agreement also provides that, if
the Company issues shares of its Class A common stock for a price less than
$6.50 per share at any time prior to January 1, 2000, the number of shares of
Class A common stock issued in connection with the Guardian acquisition will be
proportionally increased. In addition, the sellers have the right to require
that the Company redeem the shares issued in this transaction at a price of
$8.30 per share for a 180-day period commencing on December 31, 2001. Guardian
now operates as an indirect wholly-owned subsidiary of the Company.
Heritage is organized under the laws of the British Virgin Islands as a
property and casualty insurer authorized to originate risks located in the
British Virgin Islands, the Turks and Caicos Islands, and Anguilla, West Indies.
Heritage has offices in the British Virgin Islands and the Turks and Caicos
Islands. The Company acquired all of Heritage's outstanding common stock for
approximately $1.25 million. The Company paid $125,000 in cash at closing and
issued a note payable for $1.125 million. The note is due on March 31, 1999, and
it bears interest at the prime rate published in the Wall Street Journal. The
note is also secured by the stock of Guardian and Heritage. The Company expects
to repay the note with bank borrowings. Heritage now operates as an indirect
wholly-owned subsidiary of the Company.
All of the employees of both Guardian and Heritage (27 in the aggregate)
are now employees of the Company. In addition, Raymond L. Fournier, President of
both Guardian and Heritage, now serves as a member of the Company's Board of
Directors.
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
It is impracticable to provide financial statements at this time.
In accordance with Item 7(a)(4), the Company will file the
required financial statements as an amendment to this Form 8-K as
soon as practicable, but not later than.
(b) Pro forma financial information.
It is impracticable to provide pro forma financial statements at
this time. In accordance with Item 7(a)(4), the Company will file
the required financial statements as an amendment to this Form
8-K as soon as practicable, but not later than March 15, 1999.
(c) Exhibits.
10.1 Stock Purchase Agreement, dated as of July 31, 1998 (the
"Guardian Purchase Agreement"), by and between Unlimited
Holdings, Inc., Lockhart Caribbean Corporation and Guardian
Insurance Company, Inc.
10.2 First Addendum to the Guardian Purchase Agreement, dated as
of December 31, 1998.
10.3 Stock Purchase Agreement, dated as of July 31, 1998 (the
"Heritage Purchase Agreement"), by and between Walter R.
Fournier, as Trustee of the Fournier Ruiz Trust, and Alba
E. Del Valle, as trustee of the Fournier Del Valle Trust,
Lockhart Caribbean Corporation and Heritage Insurance
Company (Caribbean), Limited.
10.4 First Amendment to the Heritage Purchase Agreement, dated
as of December 31, 1998.
99.1 January 4, 1999 Press Release
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 15, 1999 LOCKHART CARIBBEAN CORPORATION
By: /s/John P. deJongh, Jr.
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John P. deJongh, Jr.
President and Chief Operating
Officer
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LOCKHART CARIBBEAN CORPORATION
Index to Exhibits to Form 8-K dated March 31, 1998
Exhibit Description
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10.1 Stock Purchase Agreement, dated as of July 31, 1998 (the
"Guardian Purchase Agreement"), by and between Unlimited
Holdings, Inc., Lockhart Caribbean Corporation and Guardian
Insurance Company, Inc.
10.2 First Addendum to the Guardian Purchase Agreement, dated as of
December 31, 1998.
10.3 Stock Purchase Agreement, dated as of July 31, 1998 (the
"Heritage Purchase Agreement"), by and between Walter R.
Fournier, as Trustee of the Fournier Ruiz Trust, and Alba E. Del
Valle, as trustee of the Fournier Del Valle Trust, Lockhart
Caribbean Corporation and Heritage Insurance Company (Caribbean),
Limited.
10.4 First Amendment to the Heritage Purchase Agreement, dated as of
December 31, 1998.
99.1 January 4, 1999 Press Release
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Exhibit 10.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of July 31, 1998 by and between
UNLIMITED HOLDINGS, INC. (hereinafter referred to as "Seller"), LOCKHART
CARIBBEAN CORPORATION (hereinafter referred to as "Buyer") and GUARDIAN
INSURANCE COMPANY, INC. (hereinafter referred to as the "Corporation").
WITNESSETH:
IN CONSIDERATION of the promises and mutual covenants herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. SUPERSEDING EFFECT
This Stock Purchase Agreement (the "Agreement") supersedes all oral or
written agreements between the parties and constitutes the entire agreement
between the parties, except for paragraphs 6, 7 and 8 of a Preliminary
Acquisition Agreement dated June 4, 1998 between the parties hereto respecting
this transaction (the "Preliminary Acquisition Agreement").
2. STOCK TO BE PURCHASED
The Buyer shall purchase from the Seller all the issued and outstanding
capital stock of the Corporation, consisting of Fifteen Thousand Five Hundred
Fifty-Six (15,556) shares of common stock (the "Corporation's Stock"), thus
transferring every asset reflected on the Corporation's financial statements and
all other off-balance sheet assets, including all of the Corporation's right,
title and interest in and to all tangible and intangible assets of the
Corporation excluding only such assets as are set forth in Exhibit "A", entitled
"Non-Transferred Assets of the Corporation", dated July 31, 1998.
Notwithstanding anything to the contrary in this agreement, Buyer shall not
assume any liabilities or obligations of the Corporation not disclosed in the
Corporation's unaudited financial statements for the quarter ending June 30,
1998, or specifically assumed and provided for in this Agreement.
3. ACQUISITION PRICE
The total purchase price for the Corporation's Stock will be equal to
1.5 times the Net Aggregate Stated Capital and Surplus (as hereinafter defined)
as appearing on the Closing Financial Statements (as hereinafter defined),
subject to adjustment as stated in Subsections 3A and 3B (the "Acquisition
Price"). The "Closing Financial Statements" means those financial statements to
be provided by Seller to Buyer, as set forth in Subsection 6Q , consisting of a
statement of profit and loss of the Corporation for the period from January 1,
1997 ending December 31, 1997, and a balance sheet for the Corporation as at
December 31, 1997, provided that the Closing (as hereinafter defined) shall
occur on or before October 31, 1998. Said Closing Financial Statements shall be
certified by a certified public accountant satisfactory to Buyer and shall
contain an unqualified expression of opinion that, after an audit conducted by
said accountant in accordance with generally accepted auditing standards, the
financial statements
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have been prepared in accordance with generally accepted accounting principles
consistently applied.
A. Eagle Star Account Receivable
In determining the Acquisition Price, the aggregate stated capital and
surplus appearing on the Closing Financial Statements shall be reduced by the
amount stated on said statements as the value of the Eagle Star account
receivable (the "Eagle Star Adjustment").
B. Marilyn Claims Adjustment
In determining the Acquisition Price, the aggregate stated capital and
surplus appearing on the Closing Financial Statements shall be reduced further
(the "Marilyn Claims Adjustment") by an amount equal to the reserve (the
"Marilyn Claims Reserve") established by agreement of the parties to fund
payment of the pending disputed insurance claims (including litigation costs and
expenses) that arose out of casualty losses that occurred during Hurricane
Marilyn (a list of said claims are attached hereto as Exhibit "B"). After
Closing, during the pendency of the Marilyn Claims Reserve, to the extent that
the Corporation shall be able to off-set future net revenues against the net
loss carryforward appearing on the Closing Financial Statements, the Marilyn
Claims Reserve shall be reduced by an amount equal to each such off-set and the
Seller shall receive additional Acquisition Shares (as hereafter defined)
determined as provided in Section 3 on the basis of the value of each such
off-set. The balance of the aggregate stated capital and surplus appearing on
the Closing Financial Statements remaining after the Eagle Star Adjustment and
the Marilyn Claims Adjustment is referred to herein as the "Net Aggregate Stated
Capital and Surplus."
C. Further Adjustment.
The Acquisition Price may be reduced further with the consent of the
Seller, based on developments or events that have a materially adverse effect on
the Corporation or its Business prior to Closing.
4. PAYMENT
The Acquisition Price shall be paid by delivery to Seller at Closing of
such number of shares of Class A Common Stock of Buyer valued at $6.50 per share
as are necessary to equal the Acquisition Price (the "Acquisition Shares");
provided, however, that in the event Buyer issues Class A Common Stock of Buyer
for a price less than $6.50 per share at any time prior to January 1, 2000, the
number of Acquisition Shares shall be proportionately increased and provided,
further, that Seller shall have the right for a 180-day period commencing three
(3) years from the Closing, to require Buyer to redeem from Seller the
Acquisition Shares at a price of $8.30 per share (prorated by any subsequent
increase in the number of shares delivered to Seller resulting from a reduction
in the issue price per share below $6.50). Seller acknowledges that (i) Buyer is
in the process of becoming a publicly held company under the Securities Act of
1933, as amended (the "Securities Act"), and as such the Acquisition Shares held
by Seller will be subject to the provisions of Rule 144 of the Securities Act
regarding the disposal of such shares to third parties; and (ii) the Class A
Common Stock currently is not listed or traded on any stock exchange or other
quotation system, and there can be no assurance that the initial public
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offering will be completed or that an active public market for Buyer's Class A
Common Stock will develop or be sustained in the event of a successful
completion of the initial public offering.
5. CLOSING
The Closing of the transaction contemplated by the Agreement shall
occur in accordance with the following (the "Closing"):
A. Place
The Closing shall take place at the offices of Dudley, Topper and
Feuerzeig, 1A Frederiksberg Gade, St. Thomas, U.S. Virgin Islands. The Closing
date will be scheduled within thirty (30) days of (i) completion of due
diligence to the satisfaction of Buyer and (ii) the receipt of regulatory
consents from applicable governmental authorities, including the specific
approval of this transaction by the insurance regulatory authorities for the
U.S. Virgin Islands (the "Closing Date"); provided, however, that the Closing
shall in all events be held by no later than October 31, 1998. If for any reason
the Closing shall not take place on or before October 31, 1998, and the deadline
date has not been extended by mutual agreement, by written notice to the other
party, either party may cancel the transaction after any such deadline date and
neither party shall have any further obligation to the other.
B. Deliveries and Payment
(1) At the Closing the Seller shall deliver to the Buyer (or to a
designated wholly-owned subsidiary of the Buyer) those items set forth in
Section 6, and Buyer shall deliver to Seller the Acquisition Shares as set forth
in Section 4.
(2) At the Closing the Seller shall deliver to the Buyer (or to a
designated wholly-owned subsidiary of the Buyer) a certificate signed by the
President and Secretary of the Corporation and guaranteed by the Seller to the
effect that there has been no material adverse change in the financial condition
or business of the Corporation as of the Closing Date.
C. Memorandum of Closing
On the Closing Date, the parties shall execute a Memorandum of Closing
which shall state the events that occurred at the Closing. All transactions at
the Closing shall be considered to take place simultaneously. No delivery shall
be considered to be made until all transactions are completed.
6. DOCUMENTS TO BE DELIVERED BY SELLER AT CLOSING
The originals of all documents set forth below shall be delivered by
the Seller or the Corporation to Buyer (or to a designated wholly-owned
subsidiary of the Buyer) at the Closing except for items B, C, D, G, H, K, O and
Q, which shall be provided at least ten (10) business days before the Closing:
A. The Corporation Stock Certificates, free and clear of all
encumbrances, fully paid, non-assessable, and duly endorsed in blank.
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B. All leases to which the Corporation is a party, together with the
written consent of any landlord as may be required under such leases.
C. The Corporation's license(s) to do business in the jurisdictions in
which it operates.
D. Broker/Agent Agreements to which the Corporation is a party.
E Contracts requiring performance after the Closing and contracts
with warranties which shall remain in effect after the Closing.
F. Warranties on the Corporation's equipment assets.
G. Opinion letter of the Corporation's and Seller's counsel, as
described in Section 13 and Section 14 hereof.
H. Certificates of good standing of the Seller and of the Corporation
(and of any subsidiaries thereof) certified by the Office of the Lieutenant
Governor of the Virgin Islands or any other appropriate official, as of no more
than four weeks prior to the Closing Date.
I. Resignations of all present directors and officers of the
Corporation effective on the Closing Date.
J. Minute book(s), stock transfer book(s), stock certificate book and
corporate seal(s) of the Corporation.
K. Noncompetition Agreements as described in Section 11 of this
Agreement.
L. Documentation that the Corporation's insurance contract forms have
been filed and approved pursuant to 22 V.I.C. ss.810.
M. Resolutions of the Board of Directors of Seller unanimously
approving the sale of the stock and unanimously approving the guaranty and
indemnities given to Buyer by Seller as set forth in Subsection 5B(2) and
Section 15 hereof.
N. Written approval of the sale of the Corporation by the Shareholders
of Seller.
O. Annual reports filed by the Corporation under 22 V.I.C.ss.222 and
22 V.I.C.ss.602.
P. A paid receipt from the law firm of Hodge & Francois, indicating
that all attorney's fees, costs and expenses incurred by the Corporation in the
pursuit of the Eagle Star Claim have been paid in full, through the month
immediately preceding Closing.
Q. The Closing Financial Statements (as defined in Section 3). These
shall be provided to Buyer as soon as they are available.
R. The certificate specified in Subsection 5B(2) above.
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S. Any other instruments and documents which are required to fulfill
the obligations of the Seller under this Contract.
7. CONDITIONS TO THE OBLIGATIONS OF THE BUYER
The obligations of Buyer to proceed with the Closing are subject to the
satisfaction on or before the Closing Date of all of the following conditions:
A. Seller shall have complied with each of its covenants and agreements
contained herein, and each of Seller's representations and warranties contained
in Section 9 shall be true on and as of the Closing Date.
B. Delivery of the items required to be delivered by Seller pursuant to
Section 6.
C. Approval by the insurance authorities for the U.S. Virgin Islands
and by any other regulatory authority as may be required for the lawful transfer
of ownership or control of the Corporation by any jurisdiction in which the
Corporation does business.
D. Completion of due diligence to the reasonable satisfaction of Buyer
in accordance with the terms of Section 20 of this Agreement.
E. No material adverse change in the financial condition of the
Corporation from that stated in the Closing Financial Statements, or in the
relationships with the insurance agents or reinsurers with whom the Corporation
does business.
F. No material change in the conduct of the Corporation's business
pending Closing, in accordance with the terms of Section 18 of this Agreement.
G. The Corporation and Seller shall have entered into an agreement
satisfactory to the Buyer modifying the rent provisions of the lease agreement
for the Corporation's occupancy of its offices in the Guardian Building located
at 14A Estate Thomas, St. Thomas, V.I., to take effet not later than thirty (30)
months from the Closing Date.
8. CONDITIONS TO OBLIGATIONS OF SELLER AND THE CORPORATION.
The conditions of Seller and the Corporation to proceed with the
Closing are subject to the satisfaction on or before the Closing Date of all of
the following conditions.
A. Buyer shall have complied with each of its covenants and agreements
contained herein and each of Buyer's representations and warranties contained in
Section 10 of this Agreement shall be true on and as of the Closing Date.
B. Delivery of the items required to be delivered by Buyer pursuant to
Section 5B of the Agreement.
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C. Approval by the insurance authorities for the U.S. Virgin Islands
and by any other regulatory authority as may be required for the lawful transfer
of ownership or control of the Corporation by any jurisdiction in which the
Corporation does business.
D. Buyer shall have executed the employment agreements with Raymond
Fournier and Octavio Estrada as provided in Section 19B of this Agreement.
E. Buyer and/or the Corporation shall have executed an agreement
satisfactory to Seller assigning to Seller the RMS and the Eagle Star Claims as
provided in Sections 32A and B of this Agreement.
F. Buyer shall have delivered to Seller a resolution of the Board of
Directors of Buyer approving the purchase of the Corporation's Stock, the
issuance and delivery of the Acquisition Shares and the execution and delivery
of any other documents required to be delivered by Buyer under this Agreement.
G. Buyer shall have simultaneously closed the transaction pursuant to
which it acquires the shares of stock of Heritage Insurance Company (Carribean),
Ltd. from the Fournier-Ruiz Trust and the Fournier-del Valle Trust pursuant to
the terms of a stock purchase agreement of even date executed by and between the
Buyer and said trusts.
9. REPRESENTATIONS OF CORPORATION AND SELLER
The Corporation and Seller warrant and represent as follows, which
representations shall survive the Closing for five (5) years except those
dealing with taxes that will survive for the applicable statute of limitations
period:
A. Right to Sell
Seller and the Corporation have the full power and right to execute
this Contract and Seller has the full right and power to sell the Corporation's
Stock. The Seller and the Corporation will present directors' resolutions
approving the sale of the Corporation's Stock, certificates of good standing,
certificates of incumbency as to officers and directors and any other corporate
documentation reasonably requested by Buyer.
B. Stock Ownership
Seller is the owner, free and clear of any lien or encumbrance, of the
Corporation's Stock. Said Corporation Stock constitutes all of the issued and
outstanding shares of the Corporation. The Seller has not issued or granted any
options or other rights to purchase the Corporation's Stock; neither is there
any contract or other obligation on the part of the Seller or the Corporation to
issue any stock of the Corporation to any third party.
C. Capitalization
The entire authorized capital stock of the Corporation consists of
fifty thousand (50,000) shares of common stock, of which presently fifteen
thousand five hundred fifty-six (15,556) are issued and outstanding, fully paid
and non-assessable.
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D. Subsidiaries, Cross-Guarantees and Inter-Company Transfers
The Corporation does not have any subsidiaries. The Corporation has not
guaranteed or agreed to guarantee any debts of its shareholders, or of any of
its officers, directors or employees, or any other person or entity whatsoever.
There are no accounts receivable or transfers between the Seller or affiliates
of the Seller (including any related corporation or director, officer or
employee of Seller) and the Corporation that are being questioned from an
accounting standpoint or by any regulatory body. Notwithstanding the foregoing,
the parties acknowledge that accounts receivables due from Unlimited Holdings in
the amount of Four Thousand Dollars ($4,000.00) and Heritage Holdings in the
amount of One Hundred Thirty-Five Thousand ($135,000.00) appearing on the
Closing Financial Statements shall, in consideration of the results of
operations subsequent to December 31, 1997, be deemed settled at Closing.
E. Organization and Standing of the Corporation and the Seller
(1) The Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the U.S. Virgin Islands. A copy of the
Corporation's Articles of Incorporation and all amendments thereto as of the
date of this Agreement, duly certified by the Office of the Lieutenant Governor,
is attached hereto as Exhibit "C". A copy of the Corporation's By-Laws,
certified by the Corporation's Secretary, and all amendments thereto as of the
date of this Agreement is attached hereto as Exhibit "D". Said copies of the
Articles of Incorporation and the Bylaws are complete and correct as of the date
of this Agreement. The Corporation is qualified to do business and is doing
business in the United States Virgin Islands and the British Virgin Islands, and
is qualified to operate and is in good standing in the U.S. Virgin Islands, the
British Virgin Islands and any other jurisdiction in which the nature of the
business conducted by it and the property owned by it makes such qualification
necessary.
(2) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the U.S. Virgin Islands. The execution of this
Agreement and Seller's performance thereunder has been duly authorized under the
terms of its corporate charter and governing documents and the Closing shall not
result in the breach of any contract or other obligation by which the Seller is
bound.
F. Title
The Corporation is the owner of and has good and marketable title, free
from any and all encumbrances, to all assets of the Corporation except as set
forth in Exhibit "E", entitled "Encumbered Assets of the Corporation", dated
July 31, 1998.
G. Financial Statements
The financial statements referenced in Subsections 9G (1) and (2) below
which have been delivered to Buyer and attached hereto as Exhibit "F", together
with the Closing Financial Statements (as defined in Section 3), once they are
delivered to Buyer in accordance with Subsection 6Q, (the "Financial
Statements") accurately set forth the results of operations of the Corporation
for the applicable periods, and such balance sheets present a true and complete
statement of the financial condition, assets and liabilities of the Corporation
for the applicable periods. There has not been any material adverse change in
the financial condition of the
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Corporation from that stated in the Financial Statements, or in the
relationships with the insurance agents or reinsurers with whom the Corporation
does business. The foregoing notwithstanding, the parties acknowledge the sale
of the Corporation portfolio held by C.E. Brathwaite & Associates, Inc. to
Marshall & Sterling, Inc. and, further, the pending negotiations by the
Corporation for the acquisition of the insurance portfolio owned by J.C. Morton
and Associates, Inc.
(1) Statements of profit and loss of the Corporation for the calendar
years 1995 through 1997, inclusive, and balance sheets for the Corporation as of
December 31 for each of said three (3) years were certified by Price Waterhouse,
LLP, a certified public accountant and contain an unqualified expression of
opinion that said statements have been prepared in accordance with generally
accepted accounting principles consistently applied; and
(2) A statement of profit and loss of the Corporation for the calendar
quarter ending June 30, 1998, unaudited and verified by the Corporation's
President and Treasurer;
(3) In the event that Buyer determines that it is required to provide
financial statements of the Corporation in order to comply with federal or state
securities law requirements, Seller shall provide, or shall cause the
Corporation to provide, to Buyer audited financial statements (including a
balance sheet and statements of income and cash flows) for the Corporation for
the Corporation's most recent fiscal year and unaudited financial statements for
all interim periods specified in Rules 3-01 and 3-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC"). In addition,
Sellers shall direct, or shall cause the Corporation to direct, the
Corporation's independent certified public accountants to cooperate with the
Buyer for purposes of developing and compiling the financial information desired
by Buyer in order to comply with federal or state securities law requirements.
H. Compliance with Laws
To the best of Seller's knowledge and belief, the Corporation has
complied with all federal, state, territorial and other local laws, rules and
regulations applicable in the jurisdictions in which it operates and has the
following licenses: Certificate of Authority dated_____________ issued by the
Lieutenant Governor of the Virgin Islands with an expiration date of December
31, 1998 authorizing the Corporation to engage in the business of an insurance
company pursuant to Title 22 of the Virgin Islands Code, and specific authority
to write automobile insurance.
I. Contracts to Sell or Mortgage Assets or Stock
Other than as set forth in the Preliminary Acquisition Agreement,
neither the Corporation nor the Seller has entered into any contract to sell,
assign, pledge or mortgage all or any part of the Corporation's Stock or its
assets or Seller's interest in either.
J. Contracts
(1) All contracts material to the operation of the business of the
Corporation -- a full and complete list of which is attached hereto as Exhibit
"F.1" -- are in good standing, valid and binding on the parties thereto, free of
material default by any party thereto, and will continue to
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be the valid and binding obligation of the parties thereto in accordance with
their respective terms after Closing;
(2) prior to the Closing Date Seller shall have caused the Corporation
to deliver to Buyer correct and complete copies of all material contracts; and
(3) to the extent that the transaction contemplated by this Agreement
shall constitute an assignment of any material contract, which shall require the
consent of any party to such contract, such consent shall have been obtained in
writing on or before the Closing Date.
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K. Taxes
The Corporation shall not on the Closing Date be in default for payment
of federal, state, territorial or other local taxes including withholding,
insurance premium, gross receipts, personal or real property, sales, use, social
security and unemployment taxes, fees and obligations.
L. Litigation
(1) Except as set forth in Exhibit "G" attached hereto, there
are no suits, claims, consent decrees or other proceedings in law or equity
pending, nor are there regulatory proceedings of any kind pending, or threatened
against the Corporation or, with respect to the Corporation's Stock, against the
Seller.
(2) Except as set forth in Exhibit "G" attached hereto, there
are no suits, claims consent decrees or other proceedings in law or equity
pending or contemplated in which the Corporation or, with respect to the
Corporation's Stock, in which the Seller is plaintiff or petitioner.
M. Judgments
There is not now nor shall there be at the time of Closing any
judgments, liens or other encumbrances outstanding against the Corporation
generally, or, with respect to the Corporation's Stock, against the Seller.
N. Investigations
We are not aware of any pending or anticipated federal, state,
territorial or local investigations with respect to the Corporation generally,
or, with respect to the Corporation's Stock, the Seller, including
investigations by regulatory officials by regulatory officials, except for the
1993 and 1994 audits being performed by the Division of Banking and Insurance,
which are still pending final report.
O. Power of Attorney
Neither Seller nor the Corporation have a power of attorney outstanding
with respect to Corporation's Stock or the Corporation's business.
P. Directors, Officers and Bank Accounts
The Corporation has delivered to the Buyer a true and complete list,
attached hereto as Exhibit "H" as of the date of this Agreement, certified by an
authorized officer of the Corporation, setting forth the following:
(1) The names and addresses of all the Corporation's
directors and officers; and
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(2) The name, address and account number of each bank in which
the Corporation has an account or safe deposit box and the names and addresses
of all persons authorized to draw thereon or to have access thereto.
Q. Government and Other Consents
Other than the approval of the Lieutenant Governor of the U.S. Virgin
Islands, no consent, authorization, license, permit, registration or approval
of, or exemption or other action by, any governmental or public body, commission
or authority is required in connection with (a) the execution, delivery and
performance by the Corporation or Seller of this Agreement, and (b) the sale and
delivery of the Corporation's Stock.
R. Maintain Business as a Going Concern
The Seller and the Corporation will use their best efforts to maintain
the Corporation as a going concern operating in its normal course of business as
a licensed Virgin Islands insurance company .
S. Minute Books
The minute books of the Corporation accurately reflect all material
corporate action of its shareholders and Board of Directors.
T. Disclosures
The Buyer has been informed of all matters concerning or relating to
the Corporation or its affairs, assets, and business which are or could be
deemed material to making an informed judgment as to whether to enter into and,
at Closing, to consummate this Agreement.
U. Employee Benefit Plans
Except as set forth in Exhibit I the Corporation is not bound by or
liable under any "employee benefit plan" or "pension plan" as such terms are
defined in the Employment Retirement Income Security Act of 1974 ("ERISA"), as
amended. In addition, any such plan by which the Corporation is bound is (i)
fully funded , (ii) current in all respects, and (iii) qualified under ERISA and
the United States Internal Revenue Code of 1984, as amended.
V. Business Records
The books and records of the Corporation, including but not limited to
all of the books and records made available to Buyer for inspection during the
course of its due diligence investigation pursuant to Section 20 of this
Agreement, are maintained at the Corporation's principal place of business
located at Guardian Insurance Company, Guardian Building, 14A Estate Thomas,
P.O. Box 9109, St. Thomas, Virgin Islands 00801, and are intact, complete, true
and accurate.
W. Year 2000 Compliance
<PAGE>
The status of the Corporation's software and related hardware used in
connection with the Corporation's business with respect to their ability to
handle date information before, during, and after January 1, 2000, including,
but not limited to accepting date-sensitive input, performing date- sensitive
calculations, and providing date-sensitive output is reflected in the letter
attached hereto as Exhibit K.
10. REPRESENTATION OF BUYER
Buyer warrants and represents as follows, which representations shall
Survive the Closing for a period of five (5) years:
A. Right to Buy
Buyer has the full power and right to execute this Agreement and has
the full right and power to acquire the Corporation's Stock and to issue the
Acquisition Shares provided herein. Buyer will present directors' resolutions
approving the purchase of the Corporation's Stock and any other corporate
documentation reasonably requested by Seller.
B. Organization and Standing of the Buyer
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the U.S. Virgin Islands. The execution of this
Agreement and Buyer's performance thereunder has been duly authorized under the
terms of its corporate charter and governing documents and the Closing shall not
result in the breach of any contract or other obligations by which the Buyer is
bound.
11. COVENANT NOT TO COMPETE
A. At Closing the Seller shall cause Walter R. Fournier, Raymond L.
Fournier, Octavio Estrada and W. Ricardo Fournier to enter into the appropriate
covenants not to compete with the Corporation, which covenants not to compete
shall provide that the individual executing said agreement will not directly or
indirectly, either as an employee, partner, stockholder, officer, director,
proprietor, owner or otherwise, engage or become interested financially or
otherwise in any business in competition with the Corporation for five (5) years
in jurisdictions in which the Corporation is licensed or qualified or otherwise
conducts the business of insurance, specifically excepting, however, from the
scope of the agreement the Commonwealth of Puerto Rico.
B. If the Buyer sells the Corporation, its stock or all of its assets,
the Buyer shall have the right to assign the covenants set forth above. The
individuals executing said covenants shall remain bound by the terms of said
covenants to any and all subsequent purchasers of the Corporation, its stock or
all of its assets.
12. DAMAGE OR DESTRUCTION OF CORPORATION'S ASSETS
A. The Corporation shall maintain its assets in the condition as they
existed at the time of Buyer's inspection, ordinary wear and tear excepted.
<PAGE>
B. However, if the Corporation's assets are damaged or destroyed, to
the extent of Twenty Percent (20%) or more of the value of such assets as set
forth in the Closing Financial Statements, or the Corporation loses insurance
accounts to the extent of Fifty Percent (50%) or more of such accounts prior to
Closing, Buyer's sole remedy shall be the right to terminate this Agreement
without any liability on either Buyer or Seller.
13. OPINION OF CORPORATION'S COUNSEL
On the Closing Date, the Corporation shall deliver an opinion of the
Corporation's counsel dated the Closing Date, which shall opine that:
A. The Corporation's existence, good standing and authorized and issued
stock are as stated in Section 9.
B. This Agreement has been duly and validly authorized, executed and
delivered by the Corporation and constitutes the valid, binding and enforceable
obligation of the Corporation.
C. The Corporation has good and marketable title to all of its property
and assets covered by this Agreement.
D. Counsel does not know or have reasonable cause to know of any claim,
litigation, administrative proceeding, regulatory proceeding or governmental
investigation pending or threatened against the Corporation or its assets other
than those disclosed on Exhibits B and G.
14. OPINION OF THE SELLER'S COUNSEL
On the Closing Date, the Seller shall deliver an opinion of the
Seller's counsel dated the Closing Date, which shall opine that:
A. The Seller's existence and good standing are as stated in Section 9.
B. This Agreement has been duly and validly authorized, executed and
delivered by the Seller, and constitutes the valid, binding and enforceable
obligation of the Seller.
15 INDEMNIFICATION BY THE PARTIES
A. Indemnification by Seller
The Seller hereby agrees to indemnify and hold the Buyer and its
successors and assigns harmless in respect of any and all liabilities and
expenses (including, without limitation, settlement costs and legal, accounting,
and other expenses in connection therewith) incurred by the Buyer and its
successors and assigns in connection with any breach of the representations and
warranties by Seller set forth in Section 9, of this Agreement, notice of which
have been received by Seller within a period of three (3) years from the Closing
date. These provisions shall survive the Closing.
B. Indemnification by Buyer
<PAGE>
Buyer hereby agrees to indemnify and hold the Seller and its successors
and assigns harmless in respect of any and all liabilities and expenses
(including, without limitation settlement costs and legal, accounting and other
expenses in connection therewith) incurred by the Seller and its successors and
assigns in connection with any breach of the representations and warranties of
Buyer set forth in Section 10 of this Agreement, notice of which have been
received by Buyer within a period of three (3) years from the Closing Date.
These provisions shall survive the Closing.
C. Procedure for Indemnification
(i) The party claiming indemnification (the "Claimant"), shall give
reasonably prompt notice to the party from whom identification is claimed (the
"Indemnifying Party") of any claim whether between the parties or brought by a
third party, specifying: (a) the factual basis for such claim and (b) the amount
of the claim. If the claim relates to an action, suit or proceeding filed by a
third party against Claimant, such notice shall be given by Claimant within ten
(10) days after written notice of such action, suit or proceeding is received by
Claimant.
(ii) Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have 20 days (or such shorter period of time as it
required to respond to the subject litigation or proceeding) to make such
investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party or its authorized representative(s) the
information relied upon the Claimant to substantiate the claim. If the Claimant
and the Indemnifying Party agree at or prior to the expiration of said 20-day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, the Indemnifying Party shall immediately pay tot he
Claimant the full amount of the claim. If the Claimant and the Indemnifying
Party do not agree, the parties shall use their reasonable efforts to negotiate
a resolution of such dispute within said period (or any mutually agreed upon
extension thereof.) If the parties fail to agree within said period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate legal
remedy.
(v) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnifying Party shall have the
right at its own expense, to participate in or assume control of the defense of
such claim, and the Claimant shall cooperate fully with the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any third
party claim, the Claimant shall have the right to participate in the defense of
such claim and retain separate co-counsel at its own expense; provided (a) if
requested to participate at Indemnifying Party's request, (b) if the Claimant
reasonably believes that a conflict of interest exists between Claimant and the
Indemnifying Party, (c) if the Indemnifying Party does not admit to Claimant
right to reimbursement or (d) if the Indemnifying Party fails to promptly assume
and prosecute the defense of such third party claim, then the Claimant will be
reimbursed for reasonable expenses of its own counsel. The indemnifying Party
will select counsel reasonably satisfactory to the Claimant. The Indemnifying
Party will not consent to an entry of judgment or settlement without release of
liability and, with respect to nonmonetary terms, the Claimant's consent (not to
be unreasonably withheld or delayed).
<PAGE>
(iv) If a claim, whether between the parties or by a third party,
requires immediate action the parties will make every effort to reach a decision
with respect thereto as expeditiously as possible.
(v) If the Indemnifying party does not elect control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to such claim.
16. FURTHER ASSURANCES
Buyer and Seller shall execute any and all documents, prior to and
after the Closing Date, that are required to implement or confirm the terms and
intent of this Agreement.
17. DEFAULT BY THE SELLER
If the Seller shall fail, refuse or be incapable of delivering any of
the Corporation's Stock to be sold hereunder, such failure, refusal or
incapacity shall not relieve the Seller of any obligation under this Agreement.
In such event, the Buyer, at its option, may either purchase the remaining stock
which it is entitled to purchase hereunder, or refuse to make such purchase and
terminate all of its obligations under this Agreement.
18. CONDUCT OF THE CORPORATION'S BUSINESS PENDING CLOSING
The Corporation and Seller warrant and represent that, until the
Closing:
A. The business of the Corporation shall be conducted in its ordinary
course.
B. Without the written consent of the Buyer, the Corporation shall not
enter into any contract -- other than insurance contracts issued in the ordinary
course of business -- that shall (i) commit the Corporation to an expenditure in
excess of Two Thousand Five Hundred ($2,500.00) Dollars, or (ii) be for a term
lasting more than ninety (90) days after the Closing Date .
C. The Corporation shall comply with all laws, rules and regulations of
Federal, State, Territorial, Commonwealth, City, and Local Governments
applicable in any jurisdiction in which it operates.
D. The Corporation shall not knowingly violate or default under the
terms of any lease or contract used or useful in the conduct of the business of
the Corporation.
E. The Corporation shall not sell, exchange or otherwise encumber any
of the assets of the Corporation in any way whatsoever.
F. The Corporation shall not dispose of any of its assets except those
consumed in the regular conduct of the business.
G. The Corporation shall not increase the compensation payable to any
of the employees, officers, directors or consultants of the business, excepting
only those specifically agreed by the Buyer to take effect August 1, 1998.
<PAGE>
H. The Corporation shall not hire additional permanent employees for
use in the business or discharge any present employees of the business without
prior written notification to the Buyer.
I. The Seller and Corporation shall preserve the goodwill of the
Corporation's customers and accounts and others having business relations with
the Corporation.
J. There shall be no modifications in the financial condition of the
Corporation as set forth in the Closing Financial Statements, except as will
occur in the ordinary and regular conduct of the Corporation's business.
K. There will not be any changes in the legal structure of the
Corporation, or its Articles of Incorporation, or its By-Laws.
L. No dividends will be declared or paid on the stock of the
Corporation.
M. The Corporation shall not enter into or renew any employment
contracts without the Buyer' s prior written consent (which shall not be
unreasonably withheld).
N. The Corporation shall not modify the fringe benefits offered to its
employees without the Buyer's prior written consent (which shall not be
unreasonably withheld).
O. The Corporation shall not grant any bonuses other than routine cash
bonuses to employees in accordance with past practice and in a commensurate
amount.
P. The Corporation shall not engage in any transaction regarding its
stock or options with respect thereto different in character or scale than those
in which it has customarily engaged without the Buyer's prior written consent
(which shall not be unreasonably withheld).
Q. The Corporation shall not issue stock or cash dividends on the
Corporation's shares.
19. EMPLOYEES OF THE CORPORATION
A. The Seller and Corporation warrant and represent that:
(1) The employees of the Corporation do not have any interest
in any of the Corporation's property, real or personal or tangible or
intangible.
(2) The attached Exhibit J, entitled, "Employees of the
Corporation", dated July 31, 1998 sets forth all employees of the Corporation,
their compensation, vacations, holidays and other fringe benefits, and attaches
a true and complete copy of any employment contract with respect to said
employees (or any of them) by which the Corporation is bound.
B. As a condition precedent to Seller's obligation to close, Buyer and
Raymond Fournier, and Buyer and Octavio Estrada shall have reached agreements on
satisfactory employment arrangements for said individuals with the Corporation.
This condition may be waived by Seller for any reason in its sole and absolute
discretion, and it is specifically
<PAGE>
acknowledged that Raymond Fournier and Octavio Estrada are not third party
beneficiaries of this Agreement; except to the extent that either may have a
beneficial interest in the Seller.
20. DUE DILIGENCE AND INSPECTION OF RECORDS
The Buyer has the right to inspect, or have inspected by a Certified
Public Accountant or other appropriately qualified consultant or advisor
appointed by the Buyer and at Buyer's expense, the books and records of the
Corporation and the operations of the Corporation. Seller and the Corporation
will make available to Buyer, Buyer's counsel, accountants, and other
representatives access to such information and documents regarding the
Corporation's business operations and financial records as Buyer may reasonably
request including a review of all insurance contracts, accounts, material
contracts, licenses, bonds, reports to regulatory authorities, agency
agreements, reinsurance agreements, litigation files (including environmental
cases, and other run-offs on previous property and casualty coverages) and all
regulatory files as to administrative proceedings involving the Corporation and
the status of any orders or consent decrees issued in connection therewith, and
any audit or other review of the Corporation's financial records. Seller and the
Corporation will authorize the Corporation's attorneys and accountants to
discuss freely the affairs of the Corporation with the Buyer and its counsel,
accountants or other representatives. In accordance with the Preliminary
Acquisition Agreement, Buyer shall keep confidential and cause its agents,
attorneys and accountants to keep confidential the information reviewed during
due diligence.
21. LABOR RELATIONS
The Corporation warrants and represents that there is no employment
discrimination, wrongful discharge or other employment complaint or litigation
pending and no work stoppage pending or threatened with respect to the business
of the Corporation and no applications for certification of a collective
bargaining agent or other union organization activity with respect to the
Corporation or its employees are pending or anticipated.
22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Buyer, Seller and the
Corporation herein shall survive the Closing.
23. BINDING ON SUCCESSORS
Subject to Section 31, this Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the Buyer and Seller.
24. BROKERS AND EXPENSES
A. Buyer, Seller and the Corporation warrant and represent to each
other that neither has employed any broker, finder or other person or entity in
connection with matters contemplated by this Agreement.
B. Buyer and Seller shall indemnify each other from any claim and any
costs associated therewith by any such broker, finder, person or entity.
<PAGE>
C. Each of the parties hereto shall pay all expenses and disbursements
incurred by it, its officers, employees, attorneys, accountants, financial
advisers and other agents and representatives in connection with this Agreement
and the performance of its obligations hereunder.
25. CHANGES TO SELLER'S WARRANTIES AND REPRESENTATIONS
If there are any changes to the Seller' s and the Corporation's
warranties or representations set forth in this Agreement, the Seller or the
Corporation, as the case may be, shall notify the Buyer immediately in writing
of such changes by certified or registered mail, return receipt requested or by
delivery to Buyer's President in person of such writing.
<PAGE>
26. SECTION HEADINGS
The heading or subheadings of sections contained herein are used for
convenience and ease of reference and shall not limit the scope or intent of the
section.
27. ARBITRATION AND APPLICABLE LAW
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration to be held in St. Thomas,
U.S. Virgin Islands in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrators shall be final and may be entered in any court having jurisdiction
thereof. This Agreement shall be governed by the laws of the U.S. Virgin
Islands.
28. DOCUMENTS INCORPORATED BY REFERENCE
The following documents are hereby incorporated by reference:
A. Exhibit A entitled, "Non-Transferred Assets of the Corporation",
dated July 31,1998.
B. Exhibit B entitled, "Marilyn Claims List", dated July 31, 1998.
C. Exhibit C. entitled, "Articles of Incorporation of the
Corporation", dated July 31, 1998.
D. Exhibit D entitled, "Bylaws of the Corporation", dated July 31,
1998.
E. Exhibit E entitled, "Encumbered Assets of the Corporation",
dated July 31, 1998.
F. Exhibit F entitled, "Financial Statements of the Corporation",
dated July 31, 1998.
G Exhibit F.1 entitled, "Material Contracts of the Corporation",
dated July 31, 1998.
H. Exhibit G entitled, "Litigation of the Corporation and/or Seller"
, dated July 31, 1998.
I. Exhibit H entitled, "Officers, Directors, Bank Accounts and
Safe Deposit Boxes of the Corporation," dated July 31, 1998.
J. Exhibit I entitled, "Employees Benefit Plans of the Corporation,
dated July 31, 1998.
K Exhibit J entitled, "Employees of the Corporation," dated July
31, 1998.
L. Exhibit K entitled, "Status of Corporation's Software and
Related Hardware", dated July 31, 1998.
29. NOTICES AND CORRESPONDENCE
<PAGE>
All notices and correspondence shall be sent by either party to the
other in all matters dealing with this Agreement to the following addresses:
(a) To the Seller Sue Boland
President
UNLIMITED HOLDINGS, INC.
P.O. Box 9109
St. Thomas, U.S. Virgin
Islands 00801
(b) To the Corporation: Raymond L. Fournier
President
GUARDIAN INSURANCE COMPANY,
INC.
P.O. Box 9109
St. Thomas, U.S. Virgin
Islands 00801
with a copy to: Maria T. Hodge, Esq.
HODGE & FRANCOIS
1340 Taarneberg
St. Thomas, U.S. Virgin
Islands 00802
(c) To the Buyer: John P. de Jongh, Jr.,
President
LOCKHART CARIBBEAN CORPORATION
No. 44 Estate Thomas
P.O. Box 7020
Charlotte Amalie St. Thomas
U.S. Virgin Islands 00801
with a copy to: Thomas C. O'Keefe, Esq.
DUDLEY, TOPPER AND FEUERZEIG
1A Frederiksberg Gade
St. Thomas, U.S. Virgin
Islands 00802
or any other address provided prior written notice is given to the other party.
30. NOTICES AND CORRESPONDENCE
The Seller acknowledges that it has used as its counsel for the
negotiation of this Agreement the attorneys also used by the Corporation in the
conduct of the Corporation's business: nevertheless, Seller is satisfied that it
has received proper legal advice in connection with the execution of this
Agreement.
31. ASSIGNMENT
This Agreement is personal in nature and none of the parties hereto
shall, without the written consent of the others, assign or transfer its rights
or obligations hereunder to another company or person, except that the Buyer may
transfer all or any portion of its rights or
<PAGE>
obligations hereunder(excluding its guaranty under Section 32) to any of its
wholly-owned subsidiaries without such prior written consent.
32. EAGLE STAR AND RMS ACCOUNTS RECEIVABLE CLAIMS
The Corporation currently is the plaintiff in two separate, pending
lawsuits, the "RMS Claim" (_________ v. ________) ( )and the "Eagle Star Claim"
(________ v. _______)( ). The Buyer agrees to cause the Corporation to continue
to pursue these lawsuits following Closing, under the terms and conditions
hereinafter set forth.
A. In the event that the Corporation still is pursuing the RMS Claim as
of the Closing Date, Buyer agrees to cause the Corporation to continue to pursue
the RMS Claim, subject to the conditions set forth herein. However, if, at any
time, the lawsuit causes a materially adverse financial effect on the conduct of
the Corporation's business, the Corporation may discontinue pursuing the claim
with consent of the Seller. The proceeds of any judgement obtained in favor of
the Corporation on the RMS Claim shall be paid to Seller, after deduction for
contingent attorney's fees, any expenses incurred by the Corporation in pursuing
the RMS Claim after the Closing Date and after allowance for a reserve for any
taxes associated with the recovery incurred by the Corporation. In the event
that the funds recovered are payable in installments over time, the full amount
of the expenses, attorney's fees, and taxes shall be reimbursed to the
Corporation before any payment is made to the Seller.
B. In the event that the Corporation still is pursuing the Eagle Star
Claim as of the Closing Date, Buyer agrees to cause the Corporation to continue
to pursue the Eagle Star Claim, subject to the conditions set forth herein.
Seller shall present, at Closing, a paid receipt from the law firm of Hodge &
Francois, indicating that all attorney's fees, costs and expenses incurred by
the Corporation in the pursuit of the Eagle Star Claim have been paid in full,
through the month immediately preceding the Closing Date. Following Closing, the
Corporation shall continue to pursue, and shall pay the costs of continuing to
pursue the Eagle Star Claim. However, if, at any time, the lawsuit causes a
materially adverse effect on the conduct of the Corporation's business, the
Corporation may discontinue pursuing the Eagle Star Claim upon delivery by the
Buyer to Seller of such number of additional shares of the corporate stock of
Buyer as shall equal One Million Three Hundred Fifty Thousand Dollars
($1,350,000.00) at the time of delivery. In the event that the Eagle Star Claim
is settled, or a judgment in favor of the Corporation is rendered, the "net
proceeds" (as hereinafter defined), paid to the Corporation shall be paid to
Seller. The "net proceeds" shall be the funds recovered on the case, reduced by
(a) all costs and expenses, including, but not limited to, attorney's fees, paid
by the Corporation from and after the Closing Date; (b) interest, at the legal
rate (currently 9%), on said costs and expenses, from the date the costs and
expenses were incurred, until the date of payment of the proceeds to the
Corporation; and (c) any taxes associated with the receipt or disbursement of
the funds recovered. In the event that the funds recovered are payable in
installments over time, the full amount of the expenses, attorney's fees,
interest, and taxes shall be reimbursed to the Corporation before any payment is
made to the Seller. The foregoing notwithstanding, should the Eagle Star Claim
still be pending three (3) years from the Closing Date, fifty percent (50%) of
all legal fees and other costs of the litigation thereafter incurred by the
Corporation shall be reimbursed by the Seller on a current basis upon
presentation of evidence of the expenses incurred. Further, should the Seller
exercise its right to have the Buyer redeem the Acquisition shares as provided
in Section 4
<PAGE>
hereof, from and after the date of said redemption all legal fees and other
costs of the litigation shall be borne by the Seller on a current basis.
C. The payment obligations of the Corporation arising pursuant to the
foregoing subsections shall be unconditionally guaranteed by the Buyer from and
after the Closing. The provisions of this Section 32 shall survive the Closing.
33. TERMINATION
This Agreement may be terminated by either Seller of Buyer, if the
terminating party is not then in breach of any material obligation under this
Agreement, on written notice to the other at any time prior to Closing as
follows:
(i) By Buyer or Seller, as the case may be, if the other shall be in
material breach of any of the provisions applicable to it hereunder and provided
that such material breach shall not have been cured within 30 days of receipt of
the breaching party of written notice describing in detail such breach;
(ii) By mutual agreement of Buyer and Seller at any time, set forth in
writing executed by other party;
(iii) By Buyer or Seller, if any of the conditions to their respective
performance obligations under Sections 7 and 8 are not satisfied on or before
October 31, 1998; or
(iv) By Buyer or Seller by written notice to the other, if a court of
competent jurisdiction or other governmental authority shall have issued an
order, decree or ruling or taken any other action (which order, decree or ruling
the parties hereto shall use their best efforts to lift), in each case
permanently restraining, permanently enjoining or otherwise such order, decree,
ruling or other action shall have become final and nonappealable.
In the case of termination of this Agreement pursuant to this Section
33, each party will pay all of its costs and expenses and neither will have any
further liability or obligation of any nature to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
which is effective as of July 31, 1998.
CORPORATION:
WITNESSES: GUARDIAN INSURANCE COMPANY, INC.
/s/ J. Summer Westman By: /s/ Raymond L. Fournier
- ------------------------- -----------------------------------
Raymond L. Fournier, President
[Seal]
/s/ Lisa N. Sweet Attest: /s/ Octavio Estrada
- ------------------------- -----------------------------------
Octavio Estrada , Secretary
<PAGE>
SELLER:
UNLIMITED HOLDINGS, INC.
/s/ Warner L. Bowers, Jr. By: /s/ Sue Boland
- ------------------------- -----------------------------------
Sue Boland, President
[Seal]
Attest: /s/ Raymond L. Fournier
- ------------------------- -----------------------------------
Raymond L. Fournier, Secretary
BUYER:
LOCKHART CARIBBEAN CORPORATION
/s/ J. Summer Westman By: /s/ John P. deJongh, Jr.
- ------------------------- -----------------------------------
John P. de Jongh, Jr., President
[Seal]
/s/ Lisa N. Sweet Attest: /s/ Christine O'Keefe
- ------------------------- -----------------------------------
Christine O'Keefe, Secretary
Exhibit 10.2
FIRST ADDENDUM TO STOCK PURCHASE AGREEMENT
FIRST ADDENDUM TO STOCK PURCHASE AGREEMENT dated December 31, 1998 by
and between UNLIMITED HOLDINGS, INC. (hereinafter referred to as "Seller"),
LOCKHART CARIBBEAN CORPORATION (hereinafter referred to as "Buyer") and GUARDIAN
INSURANCE COMPANY, INC. (hereinafter referred to as the "Corporation") WALTER R.
FOURNIER, AS TRUSTEE OF THE FOURNIER RUIZ TRUST, and ALBA E. DEL VALLE, AS
TRUSTEE OF THE FOURNIER DEL VALLE TRUST (hereinafter collectively referred to as
the "Shareholders").
C. The above parties entered into a Stock Purchase Agreement dated as of
July 31, 1998 (the "Stock Purchase Agreement") in which the Seller
agreed to sell and the Buyer agreed to purchase all the issued and
outstanding capital stock of the Corporation in return for shares of
Class A Common Stock of Buyer.
D. The Stock Purchase Agreement provides that in determining the
Acquisition Price, the aggregate stated capital and surplus appearing
on the Closing Financial Statements shall be reduced by certain
adjustments, including the Marilyn Claims Adjustment, to be equal to
the Marilyn Claims Reserve, which was to be established by agreement of
the parties to be reserved by Buyer to fund payment of pending disputed
insurance claims (including litigation costs and expenses) that arose
out of property losses that occurred during Hurricane Marilyn.
E. Buyer and Seller have agreed on the amount of the Marilyn Claims
Reserve, and the procedure for distributing the Marilyn Claims Reserve.
F. The Stock Purchase Agreement provides for the assignment of two
lawsuits, the RMS Claim and the Eagle Star Claim. Defendants in the
Eagle Star Claim (as defined in the Stock Purchase Agreement) have
obtained a judgment for costs and expenses in the amount of
Li.206,897.28 against the Corporation, in a lawsuit from the High
Court of Justice, Queen's Bench Division, Commercial Court between HIB
Limited and Guardian Insurance Company, Inc., et al (1996 Folio No.
1703, April 21, 1997) (the "English Judgment"). In addition, an
"Interim Award" against Guardian was made in the course of an
Arbitration between Eagle Star Reinsurance Company and Guardian
Insurance Company, that reserved a possible award of costs of the
arbitration against the Corporation (the "English Arbitration").
G. In view of the existence of the English Judgment and the English
Arbitration, Buyer and Seller have agreed on amendments to the
provisions of the Stock Purchase Agreement governing the disposition
of the Eagle Star Claim and the RMS Claim, including indemnity
obligations on the part of Seller and the Shareholders.
<PAGE>
H. Buyer and Seller have agreed to other amendments to the Stock Purchase
Agreement. Capitalized terms used and not otherwise defined herein have
the meanings ascribed to them in the Stock Purchase Agreement.
Now, therefore, in consideration of the premises and the mutual promises made
herein, the Stock Purchase Agreement is hereby amended as follows.
I. Section 3B of the Stock Purchase Agreement shall be designated as
Section 3 (B) (1), amended as follows, and the following new
subparagraphs Section 3 (B) (2) through (B)(8) shall be added:
B. Marilyn Claims Adjustment
(1) In determining the Acquisition Price, the aggregate stated capital
and surplus appearing on the Closing Financial Statements shall be reduced
further (the "Marilyn Claims Adjustment") by an amount equal to the reserve (the
"Marilyn Claims Reserve") established by agreement of the parties to fund
payment of the pending disputed insurance claims (including litigation costs and
expenses incurred after the Closing Date) that arose out of property losses that
occurred during Hurricane Marilyn. A list of said claims are attached hereto as
Exhibit "B"; any such claim is hereinafter/referred to as a "Marilyn Claim".
After Closing, during the pendency of the Marilyn Claims Reserve, to the extent
that the Corporation shall be able to off-set future net revenues against the
net loss carryforwards as defined herein in Section I.B.(5), the Marilyn Claims
Reserve shall be reduced by an amount equal to the net income tax benefit of
each such offset and the Seller shall receive additional Acquisition Shares (as
hereafter defined) determined as provided in Section 3 on the basis of the value
of each such off-set. The balance of the aggregate stated capital and surplus
appearing on the Closing Financial Statements remaining after the Eagle Star
Adjustment (as defined at Subsection 3A), the Marilyn Claims Adjustment and any
further adjustment under Section 3(C) hereof is referred to herein as the "Net
Aggregate Stated Capital and Surplus."
(2) A dollar amount representing an estimate of the cost (including
litigation costs and expenses to be incurred after the Closing Date) to resolve
each Marilyn Claim has been designated on Exhibit B. (For each Marilyn Claim,
the dollar figure assigned to it is hereinafter referred to as a "Claim
Reserve".) Buyer and Seller agree that solely for purposes of designating the
amount of the Marilyn Claims Reserve, the sum of all the Claim Reserves shall
equal the amount of the Marilyn Claims Reserve. Accordingly, the Marilyn Claims
Reserve is established as $1,226,618. The amount of each Claim Reserve has been
determined by a third party, and does not necessarily represent the amount that
either the Buyer or the Seller believes to be the actual cost to resolve any
specific Marilyn Claim.
(3) The Corporation shall be responsible for negotiating the terms of
any settlement of a Marilyn Claim which shall be funded by the Corporation
and/or the Buyer to the extent necessary to effect settlement. The Corporation's
President, Raymond L. Fournier, will have the final say with respect to the
resolution of each Marilyn claim, based upon its merits, and in accordance with
his fiduciary duty as an officer and director of the Corporation.
(4) If and when the Corporation resolves any Marilyn Claim for an
amount less than the Claim Reserve assigned to said claim, the Seller shall be
entitled to receive upon notification from
<PAGE>
Corporation to Buyer, on a case-by-case basis, such number of shares of the
Buyer's Class A Common Stock as shall equal 1.5 times the difference between the
Claim Reserve and the actual cost of resolution of the Marilyn Claim (including
the associated expenses of litigation incurred after the Closing Date). For
purpose of this Agreement, the value of each share of Buyer's Class A Common
Stock shall at all times be deemed to be $6.50 per share. If a Marilyn Claim is
resolved for an amount equal or more than the Claim Reserve assigned to said
claim, Seller shall not be entitled to any such stock.
(5) The Corporation has a net operating loss carryforward to 1998 of
$1,560,071 and a capital loss carryforward to 1998 of $546,196. To the extent
that the Corporation realizes net operating income or capital gains during the
pendency of the Marilyn Claims Reserve, the Corporation's independent
accountants shall determine the net income tax benefit that the Corporation
realizes as a result of the aforementioned carryforwards and the Buyer shall
upon notification deliver to Seller such number of shares of its Class A Common
Stock as shall equal 1.5 times the amount of said income tax benefit
attributable to the Corporation's use of such carryforwards, provided, however,
that at no time shall Seller be entitled to be credited for or receive Class A
Common Stock under this Section 3 that exceeds the value of $1,839,927, whether
derived from settlements of Marilyn Claims or from net operating loss and
capital loss carryforwards or any combination thereof.
(6) Any Class A Common Stock received as a consequence of the Marilyn
Claims Adjustment or the income tax benefit resulting from the use of the net
operating loss or capital loss carry forward provided under Subsections 3(B)(4)
and (5) above shall be redeemable in accordance with Section 4 of the Stock
Purchase Agreement, and any dividends declared on such stock after being
credited to Seller shall be paid to Seller.
(7) Termination. The provisions of Section 3(B)(4) and (5) shall
terminate when all of the Marilyn Claims have been resolved.
(8) Subject to the terms of this Agreement, the right of Seller to
receive additional Class A Common Stock constitutes a contractual right that is
not assignable and will not be evidenced by any negotiable certificate of any
kind.
II. A new Section 3(D) of the Stock Purchase Agreement shall be added as
follows:
D. Guaranty.
Repayment of the reinsurance recovery in the amount of $247,915 owed by
Heritage Holdings, Inc. to the Corporation pursuant to certain Auto Share and
Excess of Loss policies for claims with a date of occurrence prior to June 30,
1994, shall be unconditionally guaranteed by the Shareholders from and after the
Closing, and the Shareholders shall execute an instrument of Guaranty to that
effect.
III. Subsection 32 is hereby deleted and a new Subsection 32 is
inserted in its place as follows:
The Corporation currently is the plaintiff in two separate, pending
lawsuits, the "RMS Claim" (Guardian Insurance Company v. Risk Management
Solutions, Inc. a/k/a RMS) (1997-0073, D.V.I.) and the "Eagle Star Claim"
(Guardian Insurance Company v. Bain Hogg International Limited and Eagle
Star Reinsurance Company Limited) (Civ. No. 1996/180F, D.V.I.). The Buyer
agrees to cause the Corporation to continue to pursue these lawsuits
following Closing, under the terms and conditions hereinafter set forth.
<PAGE>
A. In the event that the Corporation still is pursuing the RMS Claim as
of the Closing Date, Buyer agrees to cause the Corporation to continue to pursue
the RMS Claim, subject to the conditions set forth herein. The Corporation shall
pay the current bill for expenses incurred in pursuing the RMS Claim in the
amount of $9,733.26. Thereafter, the Seller shall pay any fees, costs and
expenses incurred on or after the Closing Date, except those payable on a
contingency basis. All costs, fees, and expenses of the lawsuit that are not
payable on a contingency basis will be paid by Seller on a current basis, and
the Corporation shall have no liability whatsoever for such fees, costs and
expenses. However, if, at any time, the lawsuit causes a materially adverse
financial effect on the conduct of the Corporation's business, the Corporation
may discontinue pursuing the claim with consent of the Seller. The proceeds of
any judgment obtained in favor of the Corporation on the RMS Claim shall be paid
to Seller, after deduction for contingent attorney's fees, any expenses incurred
by the Corporation in pursuing the RMS Claim after the Closing Date and after
allowance for a reserve for any taxes associated with the recovery incurred by
the Corporation.
B. In the event that the Corporation still is pursuing the Eagle Star
Claim as of the Closing Date, Buyer agrees to cause the Corporation to continue
to pursue the Eagle Star Claim, subject to the conditions set forth herein.
Seller shall present, at Closing, a paid receipt from the law firm of Hodge &
Francois, indicating that all attorney's fees, costs and expenses incurred by
the Corporation in the pursuit of the Eagle Star Claim have been paid in full,
through the month immediately preceding the Closing Date. Following Closing, the
Corporation shall continue to pursue the Eagle Star Claim. However, if, at any
time, the lawsuit causes a materially adverse effect on the conduct of the
Corporation's business, the Corporation may discontinue pursuing the Eagle Star
Claim upon delivery by the Buyer to Seller of such number of additional shares
of the corporate stock of Buyer as shall equal One Million Three Hundred Fifty
Thousand Dollars ($1,350,000.00) at the time of delivery. Subject to
reimbursement pursuant to this Subsection 32(B), or Subsection 32 (D), until
payment in full of the note of even date herewith to be delivered by Buyer to
the Shareholders (the "Note"), the Corporation shall pay, on a current basis,
the full cost of the legal fees and other costs incurred pursuing the Eagle Star
Claim from the date of Closing. Following payment in full of the Note, fifty
percent (50%) of such fees and costs, thereafter incurred shall be reimbursed by
the Seller on a current basis upon presentation of evidence of the expenses
incurred. Should the Seller exercise its right to have the Buyer redeem the
Acquisition shares as provided in Section 4 hereof, from and after the date of
said redemption all legal fees and other costs of the litigation shall be borne
by the Seller on a current basis. In the event that the Eagle Star Claim is
settled, or a judgment in favor of the Corporation is rendered, the "net
proceeds" (as hereinafter defined), paid to the Corporation shall be paid to
Seller. The "net proceeds" shall be the funds recovered on the case, reduced by
(a) all costs and expenses, including, but not limited to, attorney's fees, paid
by the Corporation and not reimbursed by Seller from and after the Closing Date;
(b) interest, at the prime rate as published in the Wall Street Journal on the
Closing Date, on said costs and expenses, from the date the costs and expenses
were paid, until the date of payment of the proceeds to the Corporation; (c) any
taxes associated with the receipt or disbursement of the funds recovered; and
(d) any amounts deducted pursuant to Subsection 32(D) hereof. In the event that
the funds recovered are payable in installments over time, the full amount of
the expenses,
<PAGE>
attorney's fees, interest, and taxes shall be reimbursed to the Corporation
before any payment is made to the Seller.
C. The payment obligations of the Corporation arising pursuant to the
foregoing subsections shall be unconditionally guaranteed by the Buyer from and
after the Closing.
D. The Seller hereby agrees to indemnify and to hold the Corporation
and its successors and assigns harmless in respect of any and all liabilities
and expenses (including, without limitation, settlement costs and legal,
accounting, and other expenses in connection therewith incurred after the
Closing Date) incurred by the Corporation in connection with any judgment
rendered against the Corporation, or order taxing the costs of the parties
against the Corporation, or settlement or other final disposition of claims,
with as a result of the Eagle Star Claim, the RMS Claim, the English Judgment,
the English Arbitration or any other proceeding involving the claims asserted in
said proceedings. Notwithstanding anything in this Section 32 to the contrary,
in the event a judgment is rendered against the Corporation in the course of the
Eagle Star Claim, any expense incurred therein (whether or not attributable to
the defense of a claim against the Corporation), including, but not limited to,
any judgment, award, cost or attorney's fee, shall be deducted from the proceeds
of any simultaneously rendered judgment in favor of the Corporation, after
deduction for the other items set forth in Subsection 32(B); in the event such
an expense cannot be deducted in full from the proceeds of a simultaneously
rendered judgment in favor of the Corporation, all such undeducted expenses
incurred by the Corporation through the earlier of the date the judgment is
satisfied or the date upon which the Seller satisfies its indemnity obligations
hereunder, shall be paid to the Corporation pursuant to this Subsection 32(D).
The indemnity obligations of the Seller arising pursuant to this subsection
32(D) with respect to the English Judgment and the English Arbitration only,
shall be conditionally guaranteed by the Shareholders from and after the
Closing, and the Shareholders shall execute an instrument of Guaranty to that
effect. The indemnity obligations of the Seller arising pursuant to this
subsection 32(D) shall be secured by a pledge of all of the Lockhart Caribbean
Corporation stock being transferred to Seller pursuant to this Stock Purchase
Agreement, and the Seller shall execute a pledge agreement and irrevocable
assignment of stock powers to that effect.
E. The Corporation shall have the right, with the consent of the Seller
which shall not be unreasonably withheld, to pay the English Judgment, or an
award in the English Arbitration against the Corporation, at any time, and to be
reimbursed therefore pursuant to the provisions of Subsection 32D above, if, in
the judgment of the Corporation, failure to do so causes a materially adverse
effect on the conduct of the Corporation's business. The Corporation shall, upon
request of the Seller, settle the English Judgment, the English Abritration, the
Eagle Star Claim or the RMS Claim, upon such terms and conditions as Seller
requests, subject to Seller's reimbursement and indemnity obligations set forth
in this Section 32. The provisions of this Section 32 shall survive the Closing
until the RMS Claim, the Eagle Star Claim, the English Judgment, the English
Arbitration and any cross claims, counter claims or other claims asserted in
those or related proceedings have been finally determined by an unappealable
order of a court or settled, and the Seller has satisfied all its obligations to
the Corporation pursuant to the Stock Purchase Agreement to indemnify it with
respect to the judgment(s) or settlement(s) reached, and the fees, costs and
expenses incurred in pursuing and defending such claims.
V. Section 4 of the Stock Purchase Agreement is designated Section 4(A)
and a new Section 4(B) is added as follows:
<PAGE>
4(B) Recission of Transactions.
As provided in Section 8G hereof, Seller's obligation to close is
conditioned upon Buyer having simultaneously closed the transaction pursuant to
which it acquires the shares of stock (the "Heritage Stock") of Heritage
Insurance Company (Caribbean), Ltd. ("Heritage"). The stock purchase agreement
for the acquisition of the Heritage Stock (the "Heritage Stock Purchase
Agreement") has been amended to provided for the deferred payment of the
purchase price of the Heritage Stock. As a result thereof, the parties herein
will execute an escrow agreement as of the Closing Date with Paul Hoffman, P.C.
acting as escrow agent, whereby the Corporation's Stock and the Heritage Stock
are delivered to the escrow agent until payment of the deferred purchase price
of the Heritage Stock. The deferred purchase price of the Heritage Stock is
evidenced by a promissory note (the "Note").
The parties herein agree as follows:
(a) Upon payment of the Note by Buyer, Seller shall provide notice of
such fact immediately to the escrow agent and the escrow agent shall immediately
transfer the Corporation's stock and the Heritage Stock to Buyer;
(b) If Buyer defaults under the Note, Seller shall give written notice
of the default to the escrow agent and to Buyer. Buyer shall have thirty (30)
days to provide the escrow agent with notice that it disputes the existence of
the default, or that the default has been remedied. If Buyer fails to provide
such notice, then: (i) the transactions contemplated pursuant to this Stock
Purchase Agreement and the Heritage Stock Purchase Agreement shall be deemed
rescinded; (ii) the escrow agent will transfer the ownership of the
Corporation's Stock to Seller and of the Heritage Stock to the Shareholders;
(iii) the pledge agreement concerning Lockhart Caribbean Corporations Stock
referred to in Section 32D shall be terminated and the pledged Lockhart
Caribbean Corporation's Stock shall be delivered to Buyer; (iv) the Shareholders
will retain the $125,000 payment received at closing of the Heritage Stock
Purchase Agreement; and (v) the parties herein shall be released of any further
liability or obligation of any nature to each other under this Stock Purchase
Agreement and/or under the Heritage Stock Purchase Agreement.
VI. Except as herein amended, all other terms and conditions of the
Stock Purchase Agreement remain in full force and effect according to their
terms.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First Addendum to
Stock Purchase Agreement on the date set forth above.
CORPORATION:
WITNESSES: GUARDIAN INSURANCE COMPANY, INC.
_________________________ By: /s/ Raymond L. Fournier
-----------------------------------
Raymond L. Fournier, President
_________________________ [Seal]
Attest: /s/ Octavio Estrada
-----------------------------------
Octavio Estrada , Secretary
SELLER:
UNLIMITED HOLDINGS, INC.
_________________________ By: /s/ Sue Boland
-----------------------------------
Sue Boland, President
_________________________ [Seal]
Attest: /s/ Raymond L. Fournier
-----------------------------------
Raymond L. Fournier, Secretary
BUYER:
LOCKHART CARIBBEAN CORPORATION
/s/ William McConnell By: /s/ John P. deJoghn, Jr.
- ------------------------- -----------------------------------
John P. de Jongh, Jr., President
[Seal]
/s/ Thomas C. O'Keefe Attest: /s/ Christine O' Keefe
- ------------------------- -----------------------------------
Christine O'Keefe, Secretary
<PAGE>
SHAREHOLDERS:
THE FOURNIER DEL VALLE TRUST
_________________________ By: /s/ Alba E. Del Valle
------------------------------------
Alba E. Del Valle, Trustee
[Seal]
THE FOURNIER RUIZ TRUST
_________________________ By: /s/ Walter R. Fournier
-----------------------------------
Walter R. Fournier, Trustee
Exhibit 10.3
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of July 31, 1998 by and between
WALTER R. FOURNIER, AS TRUSTEE OF THE FOURNIER RUIZ TRUST AND ALBA E. DEL VALLE,
AS TRUSTEE OF THE FOURNIER DEL VALLE TRUST (hereinafter collectively referred to
as "Sellers"), LOCKHART CARIBBEAN CORPORATION (hereinafter referred to as
"Buyer") and HERITAGE INSURANCE COMPANY (CARIBBEAN), LIMITED (hereinafter
referred to as the "Corporation").
WITNESSETH:
IN CONSIDERATION of the promises and mutual covenants herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. SUPERSEDING EFFECT
This Stock Purchase Agreement (the "Agreement") supersedes all oral or
written agreements between the parties and constitutes the entire agreement
between the parties, except for paragraphs 6, 7 and 8 of a Preliminary
Acquisition Agreement dated June 4, 1998 between the parties hereto respecting
this transaction (the "Preliminary Acquisition Agreement").
2. STOCK TO BE PURCHASED
The Buyer shall purchase from the Sellers all the issued and
outstanding capital stock of the Corporation, consisting of two hundred fifty
thousand (250,000) shares of common stock, two hundred thousand (200,000) of
which are owned by the Fournier Ruiz Trust and forty-nine thousand nine hundred
ninety-nine (49,999) of which are owned by the Fournier Del Valle Trust (the
"Corporation's Stock"), thus transferring every asset reflected on the
Corporation's financial statements and all other off-balance sheet assets,
including all of the Corporation's right, title and interest in and to all
tangible and intangible assets of the Corporation. Notwithstanding anything to
the contrary in this agreement, Buyer shall not assume any liabilities or
obligations of the Corporation not disclosed in the Corporation's unaudited
financial statements for the quarter ending June 30, 1998, or specifically
assumed and provided for in this Agreement.
3. ACQUISITION PRICE
The total purchase price for the Corporation's Stock will be equal to
1.5 times the net aggregate stated capital and surplus as appearing on the
Closing Financial Statements (as hereinafter defined), subject to adjustment as
stated below (the "Acquisition Price"). The "Closing Financial Statements" means
those financial statements to be provided by Sellers to Buyer, for the period
from January 1, 1997 ending December 31, 1997, and a balance sheet for the
Corporation as at December 31, 1997, provided that the Closing (as hereinafter
defined) shall occur on or before October 31, 1998. Said Closing Financial
Statements shall be certified by a certified public accountant satisfactory to
Buyer and shall contain an unqualified expression of opinion that, after an
audit conducted by said accountant in accordance with generally accepted United
States auditing
<PAGE>
standards, the financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied.
The Acquisition Price may be reduced with the consent of the Seller,
based on developments or events that have a materially adverse effect on the
Corporation or its Business prior to Closing.
4. PAYMENT
A. At Closing Buyer shall pay the Sellers One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00) by certified check or other immediately
available funds or wire transfer.
B. The balance of the Acquisition Price shall be paid by delivery to
Sellers at Closing of such number of shares of Class A Common Stock of Buyer
valued at $6.50 per share as are necessary to equal the Acquisition Price (the
"Acquisition Shares"); provided, however, that in the event Buyer issues Class A
Common Stock of Buyer for a price less than $6.50 per share at any time prior to
January 1, 2000, the number of Acquisition Shares shall be proportionately
increased and provided, further, that Sellers shall have the right for a 180-day
period commencing three (3) years from the Closing, to require Buyer to redeem
from Sellers the Acquisition Shares at a price of $8.30 per share (prorated by
any subsequent increase in the number of shares delivered to Sellers resulting
from a reduction in the issue price per share below $6.50). Sellers acknowledge
that (i) Buyer is in the process of becoming a publicly held company under the
Securities Act of 1933 of the United States, as amended (the "Securities Act"),
and as such the Acquisition Shares held by Sellers will be subject to the
provisions of Rule 144 of the Securities Act regarding the disposal of such
shares to third parties; and (ii) the Class A Common Stock currently is not
listed or traded on any stock exchange or other quotation system, and there can
be no assurance that the initial public offering will be completed or that an
active public market for Buyer's Class A Common Stock will develop or be
sustained in the event of a successful completion of the initial public
offering.
5. CLOSING
The Closing of the transaction contemplated by the Agreement shall
occur in accordance with the following (the "Closing"):
A. Place
The Closing shall take place at the offices of Dudley, Topper and
Feuerzeig, 1A Frederiksberg Gade, St. Thomas, U.S. Virgin Islands. The Closing
date will be scheduled to coincide with Buyer's acquisition of Guardian
Insurance Company, Inc. but only after (i) completion of due diligence to the
satisfaction of Buyer and (ii) the receipt of regulatory consents from
applicable governmental authorities, including the specific approval of this
transaction by the insurance regulatory authorities for the British Virgin
Islands (the "Closing Date"); provided, however, that the Closing shall in all
events be held by no later than October 31, 1998. If for any reason the Closing
shall not take place on or before October 31, 1998, and the deadline date has
not been extended by mutual agreement, by written notice to the other party,
either party may cancel the transaction after any such deadline date and neither
party shall have any further obligation to the other.
<PAGE>
B. Deliveries and Payment
(1) At the Closing the Sellers shall deliver to the Buyer (or to a
designated wholly-owned subsidiary of the Buyer) those items set forth in
Section 6, and Buyer shall deliver to Sellers the Acquisition Shares as set
forth in Section 4.
(2) At the Closing the Sellers shall deliver to the Buyer (or to a
designated wholly-owned subsidiary of the Buyer) a certificate signed by the
President and Secretary of the Corporation and guaranteed by the Sellers to the
effect that there has been no material adverse change in the financial condition
or business of the Corporation as of the Closing Date.
C. Memorandum of Closing
On the Closing Date, the parties shall execute a Memorandum of Closing
which shall state the events that occurred at the Closing. All transactions at
the Closing shall be considered to take place simultaneously. No delivery shall
be considered to be made until all transactions are completed.
6. DOCUMENTS TO BE DELIVERED BY SELLERS AT CLOSING
The originals of all documents set forth below shall be delivered by
the Sellers or the Corporation to Buyer (or to a designated wholly-owned
subsidiary of the Buyer) at the Closing except for items B, C, D, G, H, K, O and
P, which shall be provided at least ten (10) business days before the Closing:
A. The Corporation Stock Certificates, free and clear of all
encumbrances, fully paid, non-assessable, and duly endorsed in blank.
B. All leases to which the Corporation is a party, together with the
written consent of any landlord as may be required under such leases.
E. The Corporation's license(s) to do business in the
jurisdictions in which it operates.
D. Broker/Agent Agreements to which the Corporation is a party.
E Contracts requiring performance after the Closing and contracts with
warranties which shall remain in effect after the Closing.
F. Warranties on the Corporation's equipment assets.
G. Opinion letters of the Corporation's counsel and the counsel for the
Sellers, as described in Section 14 and Section 15.
H. Certificate of good standing of the Corporation (and of any
subsidiaries thereof) certified by the Registrar of Companies or any other
appropriate official in the British Virgin Islands, as of no more than four
weeks prior to the Closing Date.
<PAGE>
I. Resignations of all present directors and officers of the
Corporation effective on the Closing Date.
J. Minute book(s), stock transfer book(s), stock certificate book
and corporate seal(s) of the Corporation.
K. Noncompetition Agreements as described in Section 12 of this
Agreement.
L. Documentation that the Corporation's insurance contract forms have
been filed and approved as required pursuant to British Virgin Islands law.
M. Written approval of the sale of the Corporation by the beneficiaries
(or their guardians) of the Fournier Ruiz Trust and the Fournier Del Valle Trust
in a form satisfactory to Buyer.
N. Annual or other reports filed by the Corporation under British
Virgin Islands law.
O. The Closing Financial Statements (as defined in Section 3). These
shall be provided to Buyer as soon as they are available.
P. The certificate specified in Subsection 5B(2) above.
Q. Any other instruments and documents that are required to fulfill the
obligations of the Sellers under this Contract.
7. CONDITIONS TO THE OBLIGATIONS OF THE BUYER
The obligations of Buyer to proceed with the Closing are subject to the
satisfaction on or before the Closing Date of all of the following conditions:
A. Sellers shall have complied with each of their covenants and
agreements contained herein, and each of Sellers' representations and warranties
contained in Section 9 shall be true on and as of the Closing Date.
B. Delivery of the items required to be delivered by Sellers pursuant
to Section 6.
C. Approval by the insurance authorities for the British Virgin Islands
and by any other regulatory authority as may be required for the lawful transfer
of ownership or control of the Corporation by any jurisdiction in which the
Corporation does business.
D. Completion of due diligence to the reasonable satisfaction of Buyer
in accordance with the terms of Section 21 of this Agreement.
E. No material adverse change in the financial condition of the
Corporation from that stated in the Closing Financial Statements, or in the
relationships with the insurance agents or reinsurers with whom the Corporation
does business.
<PAGE>
F. No material change in the conduct of the Corporation's business
pending Closing, in accordance with the terms of Section 19 of this Agreement.
8. CONDITIONS TO THE OBLIGATIONS OF SELLER AND THE CORPORATION
The conditions of Seller and Corporation to proceed with the Closing
are subject to the satisfaction on or before the Closing Date of all of the
following conditions:
A. Buyer shall have complied with each of their covenants and
agreements contained herein, and each of Buyer's representations and warranties
contained in Section 11 of this Agreement shall be true on and as of the Closing
Date.
B. Delivery of the items required to be delivered by Buyer pursuant to
Section 5B of the Agreement.
C. Approval by the insurance authorities for the British Virgin Islands
and by any other regulatory authority as may be required for the lawful transfer
of ownership or control of the Corporation by any jurisdiction in which the
Corporation does business.
D. Buyer shall have executed the employment agreements with Raymond
Fournier and Octavio Estrada.
E. Buyer shall have delivered to Seller a resolution of the Board of
Directors of Buyer approving the purchase of the Corporation's Stock, the
issuance and delivery of the Acquisition Shares and the execution and delivery
of any other documents required to be delivered by Buyer under this Agreement.
F. Buyer shall have simultaneously closed the transaction pursuant to
which it acquires the shares of stock of Guardian Insurance Company from
Unlimited Holdings, Inc. pursuant to the terms of a stock purchase agreement of
even date executed by and between the Buyer and said company.
9. REPRESENTATIONS OF CORPORATION AND SELLERS
The Corporation and Sellers warrant and represent as follows, which
representations shall survive the Closing for five (5) years except those
dealing with taxes that will survive for the applicable statute of limitations
period:
A. Corporation's Right to Be Sold
The Corporation has the full power and right to execute this Contract.
The Corporation will present a director's resolution approving the sale of the
Corporation's Stock, a certificate of good standing, a certificate of incumbency
as to officers and directors and any other corporate documentation reasonably
requested by Buyer.
<PAGE>
B. Stock Ownership
Sellers are the owners, free and clear of any lien or encumbrance, of
the Corporation's Stock. Said Corporation Stock constitutes all of the issued
and outstanding shares of the Corporation. The Sellers have not issued or
granted any options or other rights to purchase the Corporation's Stock; neither
is there any contract or other obligation on the part of the Sellers or the
Corporation to issue any stock of the Corporation to any third party.
C. Capitalization
The entire authorized capital stock of the Corporation consists of two
hundred fifty thousand (250,000) shares of common stock, of which presently two
hundred forty-nine thousand nine hundred ninety-nine (249,999) are issued and
outstanding, fully paid and non-assessable.
D. Subsidiaries, Cross-Guarantees and Inter-Company Transfers
The Corporation does not have any subsidiaries. The Corporation has not
guaranteed or agreed to guarantee any debts of its shareholders, or of any of
its officers, directors or employees, or any other person or entity whatsoever.
There are no accounts receivable or transfers between the Sellers and the
Corporation that are being questioned from an accounting standpoint or by any
regulatory body. Notwithstanding the foregoing, the parties acknowledge that
accounts receivable due from Unlimited Holdings in the amount of $36,000.00
appearing on the closing Financial Statements shall, in consideration of the
results of operations subsequent to December 31, 1997, be deemed settled at
Closing.
E. Organization and Standing of the Corporation
The Corporation is a corporation duly organized, validly existing and
in good standing under the laws of the British Virgin Islands. A copy of the
Corporation's Articles of Association and Memorandum of Association and all
amendments thereto as of the date of this Agreement, duly certified by the
Registrar of Companies, is attached hereto as Exhibit "A". A copy of the
Corporation's By-Laws, certified by the Corporation's Secretary, and all
amendments thereto as of the date of this Agreement is attached hereto as
Exhibit "B". Said copies of the Articles of Association and the Memorandum of
Association, and the Bylaws are complete and correct as of the date of this
Agreement. The Corporation is qualified to do business and is doing business in
the British Virgin Islands, and is qualified to operate and is in good standing
in the British Virgin Islands and any other jurisdiction in which the nature of
the business conducted by it and the property owned by it makes such
qualification necessary.
F. Title
The Corporation is the owner of and has good and marketable title, free
from any and all encumbrances, to all assets of the Corporation except as set
forth in Exhibit "C", entitled "Encumbered Assets of the Corporation", dated
July 31, 1998.
G. Financial Statements
<PAGE>
The financial statements referenced in Subsections 9G (1) and (2) below
which have been delivered to Buyer and attached hereto as Exhibit "D", together
with the Closing Financial Statements (as defined in Section 3), once they are
delivered to Buyer in accordance with Subsection 6O, (the "Financial
Statements") accurately set forth the results of operations of the Corporation
for the applicable periods, and such balance sheets present a true and complete
statement of the financial condition, assets and liabilities of the Corporation
for the applicable periods. There has not been any material adverse change in
the financial condition of the Corporation from that stated in the Financial
Statements, or in the relationships with the insurance agents or reinsurers with
whom the Corporation does business.
(1) Statements of profit and loss of the Corporation for the calendar
years 1995 through 1997, inclusive, and balance sheets for the Corporation as of
December 31 for each of said three (3) years were certified by Price Waterhouse,
LLP, a certified public accountant and contain an unqualified expression of
opinion that said statements have been prepared in accordance with generally
accepted accounting principles consistently applied; and
(2) A statement of profit and loss of the Corporation for the calendar
quarter ending June 31, 1998, unaudited and verified by the Corporation's
President and Treasurer;
(3) In the event that Buyer determines that it is required to provide
financial statements of the Company in order to comply with federal or state
securities law requirements, Seller shall provide, or shall cause the
Corporation to provide, to Buyer audited financial statements (including a
balance sheet and statements of income and cash flows) for the Corporation for
the Corporation's most recent fiscal year and unaudited financial statements for
all interim periods specified in Rules 3-01 and 3-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC"). In addition,
Sellers shall direct, or shall cause the Corporation to direct, the
Corporation's independent certified public accountants to cooperate with the
Buyer for purposes of developing and compiling the financial information desired
by Buyer in order to comply with federal or state securities law requirements;
H. Compliance with Laws
To the best of Seller's knowledge and belief, the Corporation has
complied with all applicable laws of the British Virgin Islands and all laws,
rules and regulations applicable in the jurisdictions in which it operates and
has the following licenses: License dated_____________ issued by the Supervisor
of Insurance of the British Virgin Islands with an expiration date of
___________ authorizing the Corporation to engage in the business of an
insurance company pursuant to Insurance Business (Special Provisions) Act 1991
of the Laws of the British Virgin Islands, and specific authority to write the
following kinds of insurance:
-----------------
I. Contracts to Sell or Mortgage Assets or Stock
Other than as set forth in the Preliminary Acquisition Agreement,
neither the Corporation nor the Sellers have entered into any contract to sell,
assign, pledge or mortgage all or any part of the Corporation's Stock or its
assets or Sellers' interest in either.
J. Contracts
<PAGE>
(1) All contracts material to the operation of the business of the
Corporation -- a full and complete list of which is attached hereto as Exhibit
"D.1" -- are in good standing, valid and binding on the parties thereto, free of
material default by any party thereto, and will continue to be the valid and
binding obligation of the parties thereto in accordance with their respective
terms after Closing;
(2) prior to the Closing Date Sellers shall have caused the Corporation
to deliver to Buyer correct and complete copies of all material contracts; and
(3) to the extent that the transaction contemplated by this Agreement
shall constitute an assignment of any material contract, which shall require the
consent of any party to such contract, such consent shall have been obtained in
writing on or before the Closing Date.
K. Taxes
The Corporation is not and shall not on the Closing Date be in default
for the payment of any tax accrued, imposed or assessed by the British Virgin
Islands, or any other jurisdiction in which the Corporation does business,
including withholding, insurance premium, gross receipts, personal or real
property, sales, use, social security and unemployment taxes, fees and
obligations.
L. Litigation
(1) Except as set forth in Exhibit "E" attached hereto, there
are no suits, claims, consent decrees or other proceedings in law or equity
pending, nor are there regulatory proceedings of any kind pending, or threatened
against the Corporation or, with respect to the Corporation's Stock, against the
Sellers.
(2) Except as set forth in Exhibit "E" attached hereto, there
are no suits, claims consent decrees or other proceedings in law or equity
pending or contemplated in which the Corporation or, with respect to the
Corporation's Stock, in which either of the Sellers is plaintiff or petitioner.
M. Judgments
There is not now nor shall there be at the time of Closing any
judgments, liens or other encumbrances outstanding against the Corporation
generally, or, with respect to the Corporation's Stock, against the Sellers.
N. Investigations
There are no investigations or other regulatory proceedings pending or
anticipated against the Corporation in the British Virgin Islands, or in any
other jurisdiction in which the Corporation does business, or, with respect to
the Corporation's Stock, pending or anticipated against the Sellers.
O. Power of Attorney
Neither Sellers nor the Corporation have a power of attorney
outstanding with respect to the Corporation's Stock or the Corporation's
business.
<PAGE>
P. Directors, Officers and Bank Accounts
The Corporation has delivered to the Buyer a true and complete list,
attached hereto as Exhibit F as of the date of this Agreement, certified by an
authorized officer of the Corporation, setting forth the following:
(1) The names and addresses of all the Corporation's
directors and officers; and
(2) The name, address and account number of each bank in which
the Corporation has an account or safe deposit box and the names and addresses
of all persons authorized to draw thereon or to have access thereto.
Q. Government and Other Consents
No consent, authorization, license, permit, registration or approval
of, or exemption or other action by, any governmental or public body, commission
or authority is required in connection with (a) the execution, delivery and
performance by the Corporation or Sellers of this Agreement, or (b) the sale and
delivery of the Corporation's Stock to the Buyer.
R. Maintain Business as a Going Concern
The Sellers and the Corporation will use their best efforts to maintain
the Corporation as a going concern operating in its normal course of business as
a licensed British Virgin Islands insurance company .
S. Minute Books
The minute books of the Corporation accurately reflect all material
corporate action of its shareholders and Board of Directors.
T. Disclosures
The Buyer has been informed of all matters concerning or relating to
the Corporation or its affairs, assets, and business which are or could be
deemed material to making an informed judgment as to whether to enter into and,
at Closing, to consummate this Agreement.
U. Employee Benefit Plans
The Corporation is not bound by or liable under any "employee benefit
plan" or "pension plan" as such terms are defined in the United States
Employment Retirement Income Security Act of 1974 ("ERISA"), as amended, or
under any similar law in any jurisdiction in which the Corporation does
business.
V. Business Records
The books and records of the Corporation, including but not limited to all
of the books and records made available to Buyer for inspection during the
course of its due diligence investigation pursuant to Section 21 of this
Agreement, are maintained at the Corporation's principal place of business
located at Heritage Insurance Company, Jackson Building, P.O. Box 3442,
Roadtown, Tortola, BVI, and are intact, complete, true and accurate.
<PAGE>
W. Year 2000 Compliance
The status of the Corporation's software and related hardware used in
connection with the Corporation's business with respect to their ability to
handle date information before, during, and after January 1, 2000, including,
but not limited to accepting date-sensitive input, performing date-sensitive
calculations, and providing date-sensitive output is reflected in the letter
attached hereto as Exhibit H.
10. THE TRUSTS
The Sellers warrant and represent as follows, which representations
shall survive the Closing for five (5) years:
A. Each Seller is a validly formed and existing inter vivos trust under
the laws of the Commonwealth of Puerto Rico.
B. Walter R. Fournier is the duly appointed, qualified and serving
trustee of the Fournier Ruiz Trust, and Alba E. del Valle is the duly appointed,
qualified and serving trustee of the Fournier del Valle Trust.
C. Each trustee has full authority to act in his/her individual
capacity as trustee and to bind his/her respective trust to this Agreement.
D. Each trustee has full power and authority under their respective
trust instruments to sell the Corporation's Stock and to execute and deliver on
behalf of the trust and the beneficiaries thereof all documents and instruments
necessary in connection therewith.
11. REPRESENTATION OF BUYER
Buyer warrants and represents as follows, which representations shall
survive the Closing for five (5) years:
A. Right to Buy
Buyer has the full power and right to execute this Agreement and has
the full right and power to acquire the Corporation's Stock and to issue the
Acquisition Shares provided herein. Buyer will present directors' resolutions
approving the purchase of the Corporation's Stock and any other corporate
documentation reasonably requested by Seller.
B. Organization and Standing of the Buyer
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the British Virgin Islands. The execution of this
Agreement and Buyer's performance thereunder has been duly authorized under the
terms of its corporate charter and governing documents and the Closing shall not
result in the breach of any contract or other obligations by which the Buyer
is bound.
<PAGE>
12. COVENANT NOT TO COMPETE
A. At Closing the Sellers shall cause Walter R. Fournier, Raymond L.
Fournier, Octavio Estrada and W. Ricardo Fournier to enter into appropriate
covenants not to compete with the Corporation, which covenants not to compete
shall provide that the individual executing said agreement will not directly or
indirectly, either as an employee, partner, stockholder, officer, director,
proprietor, owner or otherwise, engage or become interested financially or
otherwise in any business in competition with the Corporation for five (5) years
in jurisdictions in which the Corporation is licensed or qualified or otherwise
conducts the business of insurance, specifically excepting, however, from the
scope of the agreement the Commonwealth of Puerto Rico.
B. If the Buyer sells the Corporation, its stock or all of its assets,
the Buyer shall have the right to assign the covenants set forth above. The
individuals executing said covenants shall remain bound by the terms of said
covenants to any and all subsequent purchasers of the Corporation, its stock or
all of its assets.
13. DAMAGE OR DESTRUCTION OF CORPORATION'S ASSETS
A. The Corporation shall maintain its assets in the condition as they
existed at the time of Buyer's inspection, ordinary wear and tear excepted.
B. However, if the Corporation's assets are damaged or destroyed, to
the extent of Twenty Percent (20%) or more of the value of such assets as set
forth in the Closing Financial Statements, or the Corporation loses insurance
accounts to the extent of Fifty Percent (50%) or more of such accounts prior to
Closing, Buyer's sole remedy shall be the right to terminate this Agreement
without any liability on either Buyer or Sellers.
14. OPINION OF CORPORATION'S COUNSEL
On the Closing Date, the Corporation shall deliver an opinion of the
Corporation's counsel dated the Closing Date, which shall opine that:
A. The Corporation's existence, good standing and authorized and
issued stock are as stated in Section 9.
B. This Agreement has been duly and validly authorized, executed and
delivered by the Corporation and constitutes the valid, binding and enforceable
obligation of the Corporation.
C. The Corporation has good and marketable title to all of its property
and assets covered by this Agreement.
D. Counsel does not know or have reasonable cause to know of any claim,
litigation, administrative proceeding, regulatory proceeding or governmental
investigation pending or threatened against the Corporation or its assets other
than those disclosed on Exhibit E.
15. OPINION OF SELLERS' COUNSEL
<PAGE>
On the Closing Date, the Sellers shall deliver an opinion of the
Sellers' counsel dated the Closing Date, which shall opine that:
A. Each Seller is a validly formed and existing inter vivos trust under
the laws of the Commonwealth of Puerto Rico.
B. Walter R. Fournier has full authority to act in his/her individual
capacity as trustee of the Fournier Ruiz Trust, and to bind the trust to this
Agreement.
C. Alba E. del Valle has full authority to act in his/her individual
capacity as trustee of the Fournier Del Valle Trust, and to bind the trust to
this Agreement.
D. The trustees have been duly authorized, and have the legal capacity,
to convey the Corporation's Stock and otherwise to perform according to the
terms of this Agreement.
16. INDEMNIFICATION OF BUYER BY THE PARTIES
A. Indemnification by Seller
The Seller hereby agrees to indemnify and hold the Buyer and its
successors and assigns harmless in respect of any and all liabilities and
expenses (including, without limitation, settlement costs and legal, accounting,
and other expenses in connection therewith) incurred by the Buyer and its
successors and assigns in connection with any breach of the representations and
warranties by Seller set forth in Section 9, of this Agreement, notice of which
have been received by Seller within a period of three (3) years from the Closing
date. These provisions shall survive the Closing.
B. Indemnification by Buyer
Buyer hereby agrees to indemnify and hold the Seller and its successors
and assigns harmless in respect of any and all liabilities and expenses
(including, without limitation settlement costs and legal, accounting and other
expenses in connection therewith) incurred by the Seller and its successors and
assigns in connection with any breach of the representations and warranties of
Buyer set forth in Section 10 of this Agreement, notice of which have been
received by Buyer within a period of three (3) years from the Closing Date.
These provisions shall survive the Closing.
C. Procedure for Indemnification
(i) The party claiming indemnification (the "Claimant"), shall give
reasonably prompt notice to the party from whom identification is claimed (the
"Indemnifying Party") of any claim whether between the parties or brought by a
third party, specifying: (a) the factual basis for such claim and (b) the amount
of the claim. If the claim relates to an action, suit or proceeding filed by a
third party against Claimant, such notice shall be given by Claimant within ten
(10) days after written notice of such action, suit or proceeding is received by
Claimant.
(ii) Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have 20 days (or such shorter period of time as it
required to respond to the subject litigation or proceeding) to make such
investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the
<PAGE>
Indemnifying Party or its authorized representative(s) the information relied
upon the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said 20-day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay tot he Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree,
the parties shall use their reasonable efforts to negotiate a resolution of such
dispute within said period (or any mutually agreed upon extension thereof.) If
the parties fail to agree within said period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate legal remedy.
(iii) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party. If the Indemnifying Party elects to assume control of the
defense of any third party claim, the Claimant shall have the right to
participate in the defense of such claim and retain separate co-counsel at its
own expense; provided (a) if requested to participate at Indemnifying Party's
request, (b) if the Claimant reasonably believes that a conflict of interest
exists between Claimant and the Indemnifying Party, (c) if the Indemnifying
Party does not admit to Claimant right to reimbursement or (d) if the
Indemnifying Party fails to promptly assume and prosecute the defense of such
third party claim, then the Claimant will be reimbursed for reasonable expenses
of its own counsel. The indemnifying Party will select counsel reasonably
satisfactory to the Claimant. The Indemnifying Party will not consent to an
entry of judgment or settlement without release of liability and, with respect
to nonmonetary terms, the Claimant's consent (not to be unreasonably withheld or
delayed).
(iv) If a claim, whether between the parties or by a third party,
requires immediate action the parties will make every effort to reach a decision
with respect thereto as expeditiously as possible.
(v) If the Indemnifying party does not elect control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to such claim.
17. FURTHER ASSURANCES
Buyer and Sellers shall execute any and all documents, prior to and
after the Closing Date, that are required to implement or confirm the terms and
intent of this Agreement.
18. DEFAULT BY THE SELLERS
If either Seller shall fail, refuse or be incapable of delivering any
of the Corporation's Stock to be sold hereunder, such failure, refusal or
incapacity shall not relieve either Seller of any obligation under this
Agreement. In such event, the Buyer, at its option, may either purchase the
remaining stock which it is entitled to purchase hereunder, or refuse to make
such purchase and terminate all of its obligations under this Agreement.
19. CONDUCT OF THE CORPORATION'S BUSINESS PENDING CLOSING
The Corporation and Sellers warrant and represent that, until the
Closing:
<PAGE>
A. The business of the Corporation shall be conducted in its
ordinary course.
B. Without the written consent of the Buyer, the Corporation shall not
enter into any contract -- other than insurance contracts issued in the ordinary
course of business -- that shall (i) commit the Corporation to an expenditure in
excess of Two Thousand Five Hundred ($2,500.00) Dollars, or (ii) be for a term
lasting more than ninety (90) days after the Closing Date .
C. The Corporation shall comply with all laws, rules and regulations of
British Virgin Islands and federal, state, territorial, commonwealth, city, and
local governments applicable in any jurisdiction in which it operates.
D. The Corporation shall not knowingly violate or default under the
terms of any lease or contract used or useful in the conduct of the business of
the Corporation.
E. The Corporation shall not sell, exchange or otherwise encumber any
of the assets of the Corporation in any way whatsoever.
F. The Corporation shall not dispose of any of its assets except those
consumed in the regular conduct of the business.
G. The Corporation shall not increase the compensation payable to any
of the employees, officers, directors or consultants of the business, except
those specifically agreed by the Buyer to take effect August 1, 1998.
H. The Corporation shall not hire additional permanent employees for
use in the business or discharge any present employees of the business without
prior written notification to the Buyer.
I. The Sellers and Corporation shall preserve the goodwill of the
Corporation's customers and accounts and others having business relations with
the Corporation.
J. There shall be no modifications in the financial condition of the
Corporation as set forth in the Closing Financial Statements, except as will
occur in the ordinary and regular conduct of the Corporation's business.
K. There will not be any changes in the legal structure of the
Corporation, or its Articles of Association, Memorandum of Association or
By-Laws.
L. No dividends will be declared or paid on the stock of the
Corporation.
M. The Corporation shall not enter into or renew any employment
contracts without the Buyer' s prior written consent (which shall not be
unreasonably withheld).
N. The Corporation shall not modify the fringe benefits offered to its
employees without the Buyer's prior written consent (which shall not be
unreasonably withheld).
O. The Corporation shall not grant any bonuses other than routine cash
bonuses to employees in accordance with past practice and in a commensurate
amount.
DC01/210351-1
<PAGE>
P. The Corporation shall not engage in any transaction regarding its
stock or options with respect thereto different in character or scale than those
in which it has customarily engaged without the Buyer's prior written consent
(which shall not be unreasonably withheld).
Q. The Corporation shall not issue stock or cash dividends on the
Corporation's shares.
20. EMPLOYEES OF THE CORPORATION
The Sellers and Corporation warrant and represent that:
A. The employees of the Corporation do not have any interest in any of
the Corporation's property, real or personal or tangible or intangible.
B. The attached Exhibit G, entitled, "Employees of the Corporation",
dated July 31, 1998 sets forth all employees of the Corporation, their
compensation, vacations, holidays and other fringe benefits, and attaches a true
and complete copy of any employment contract with respect to said employees (or
any of them) by which the Corporation is bound.
21. DUE DILIGENCE AND INSPECTION OF RECORDS
The Buyer has the right to inspect, or have inspected by a Certified
Public Accountant or other appropriately qualified consultant or advisor
appointed by the Buyer and at Buyer's expense, the books and records of the
Corporation and the operations of the Corporation. Sellers and the Corporation
will make available to Buyer, Buyer's counsel, accountants, and other
representatives access to such information and documents regarding the
Corporation's business operations and financial records as Buyer may reasonably
request including a review of all insurance contracts, accounts, material
contracts, licenses, bonds, reports to regulatory authorities, agency
agreements, reinsurance agreements, litigation files (including environmental
cases, and other run-offs on previous property and casualty coverages) and all
regulatory files as to administrative proceedings involving the Corporation and
the status of any orders or consent decrees issued in connection therewith, and
any audit or other review of the Corporation's financial records. Sellers and
the Corporation will authorize the Corporation's attorneys and accountants to
discuss freely the affairs of the Corporation with the Buyer and its counsel,
accountants or other representatives. In accordance with the Preliminary
Acquisition Agreement, Buyer shall keep confidential and cause its agents,
attorneys and accountants to keep confidential the information reviewed during
due diligence.
22. LABOR RELATIONS
The Corporation warrants and represents that there is no employment
discrimination, wrongful discharge or other employment complaint or litigation
pending and no work stoppage pending or threatened with respect to the business
of the Corporation and no applications for certification of a collective
bargaining agent or other union organization activity with respect to the
Corporation or its employees are pending or anticipated.
23. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
<PAGE>
The representations and warranties of the Buyer, Sellers and the
Corporation herein shall survive the Closing.
24. BINDING ON SUCCESSORS
Subject to Section 32, this Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the Buyer and Sellers.
25. BROKERS AND EXPENSES
A. Buyer, Sellers and the Corporation warrant and represent to each
other that neither has employed any broker, finder or other person or entity in
connection with matters contemplated by this Agreement.
B. Buyer and Sellers shall indemnify each other from any claim and any
costs associated therewith by any such broker, finder, person or entity.
C. Each of the parties hereto shall pay all expenses and disbursements
incurred by it, its officers, employees, attorneys, accountants, financial
advisers and other agents and representatives in connection with this Agreement
and the performance of its obligations hereunder.
26. CHANGES TO SELLERS' WARRANTIES AND REPRESENTATIONS
If there are any changes to the Sellers' and the Corporation's
warranties or representations set forth in this Agreement, the Sellers or the
Corporation, as the case may be, shall notify the Buyer immediately in writing
of such changes by certified or registered mail, return receipt requested or by
delivery to Buyer's President in person of such writing.
27. SECTION HEADINGS
The heading or subheadings of sections contained herein are used for
convenience and ease of reference and shall not limit the scope or intent of the
section.
28. ARBITRATION AND APPLICABLE LAW
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof, shall be settled by arbitration to be held in St. Thomas,
U.S. Virgin Islands in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrators shall be final and may be entered in any court having jurisdiction
thereof. This Agreement shall be governed by the laws of the U.S. Virgin
Islands.
29. DOCUMENTS INCORPORATED BY REFERENCE
The following documents are hereby incorporated by reference:
A. Exhibit A entitled, "Articles of Association of the Corporation",
dated July 31, 1998.
<PAGE>
B. Exhibit B entitled, "Bylaws of the Corporation", dated July 31,
1998.
C. Exhibit C entitled "Encumbered Assets of the Corporation", dated
July 31, 1998.
D. Exhibit D entitled "Financial Statements of the Corporation", dated
July 31, 1998.
E. Exhibit D.1 entitled "Material Contracts of the Corporation", dated
July 31, 1998.
F. Exhibit E entitled, "Litigation of the Corporation and/or Sellers",
dated July 31, 1998.
G. Exhibit F entitled "Officers, Directors, Bank Accounts and Safe
Deposit Boxes of the Corporation," dated July 31, 1998.
H. Exhibit G entitled "Employees of the Corporation," dated July 31,
1998.
I. Exhibit H entitled "Status of Corporation's Software and Related
Hardware", dated July 31, 1998.
30. NOTICES AND CORRESPONDENCE
All notices and correspondence shall be sent by either party to the
other in all matters dealing with this Agreement to the following addresses:
(a) To the Sellers: FOURNIER RUIZ TRUST
c/o Walter R. Fournier
P.O. Box 9022992
Old San Juan Station
San Juan, PR 00902
FOURNIER DEL VALLE TRUST
c/o Alba E. Del Valle
P.O. Box 9021342
Old San Juan Station
San Juan, PR 00902
(b) To the Corporation: Raymond L. Fournier
President
HERITAGE INSURANCE COMPANY
(CARIBBEAN), LIMITED
P.O. Box 3442
Roadtown, Tortola
British Virgin Islands
with a copy to: Maria T. Hodge
HODGE & FRANCOIS
1340 Taarneberg
St. Thomas, U.S. Virgin
Islands 00802
<PAGE>
(c) To the Buyer: John P. de Jongh, Jr.,
President
LOCKHART CARIBBEAN CORPORATION
No. 44 Estate Thomas
P.O. Box 7020
Charlotte Amalie St. Thomas
U.S. Virgin Islands 00801
with a copy to: Thomas C. O'Keefe
DUDLEY, TOPPER AND FEUERZEIG
1A Frederiksberg Gade
St. Thomas, U.S. Virgin
Islands 00802
or any other address provided prior written notice is given to the other party.
31. INDEPENDENT COUNSEL
The Sellers acknowledge that they have used as their counsel for the
negotiation of this Agreement the attorneys also used by the Corporation in the
conduct of the Corporation's U.S. Virgin Islands business nevertheless, Sellers
are satisfied that they have received proper legal advice in connection with the
execution of this Agreement.
32. ASSIGNMENT
This Agreement is personal in nature and none of the parties hereto
shall, without the written consent of the others, assign or transfer its rights
or obligations hereunder to another company or person, except that the Buyer may
transfer all or any portion of its rights or obligations hereunder to any of its
wholly-owned subsidiaries without such prior written consent.
33. TERMINATION
This Agreement may be terminated by either Seller of Buyer, if the
terminating party is not then in breach of any material obligation under this
Agreement, on written notice to the other at any time prior to Closing as
follows:
(i) By Buyer or Seller, as the case may be, if the other shall be in
material breach of any of the provisions applicable to it hereunder and provided
that such material breach shall not have been cured within 30 days of receipt of
the breaching party of written notice describing in detail such breach;
(ii) By mutual agreement of Buyer and Seller at any time, set forth in
writing executed by other party;
(iii) By Buyer or Seller, if any of the conditions to their respective
performance obligations under Section 7 and 8 are not satisfied on or before
October 31, 1998; or
<PAGE>
(iv) By Buyer or Seller by written notice to the other, if a court of
competent jurisdiction or other governmental authority shall have issued an
order, decree or ruling or taken any other action (which order, decree or ruling
the parties hereto shall use their best efforts to lift), in each case
permanently restraining, permanently enjoining or otherwise such order, decree,
ruling or other action shall have become final and nonappealable.
In the case of termination of this Agreement pursuant to this Section
33, each party will pay all of its costs and expenses and neither will have any
further liability or obligation of any nature to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
which is effective as of July 31, 1998.
CORPORATION:
WITNESSES: HERITAGE INSURANCE COMPANY
(CARIBBEAN), LIMITED
/s/ J. Summer Westman By: /s/ Raymond L. Fournier
- ------------------------- ----------------------------------
Raymond L. Fournier, President
[Seal]
/s/ Lisa N. Sweet
_________________________ Attest: _________________________________,
Secretary
SELLERS:
THE FOURNIER DEL VALLE TRUST
_________________________ By: /s/ Alba E. Del Valle
----------------------------------
Alba E. Del Valle, Trustee
_________________________ [Seal]
THE FOURNIER RUIZ TRUST
_________________________ By: /s/ Walter R. Fournier
---------------------------------
Walter R. Fournier, Trustee
- -------------------------
BUYER:
LOCKHART CARIBBEAN CORPORATION
/s/ J. Summer Westman By: /s/ John P. de Jongh, Jr.
- ------------------------- --------------------------------
John P. de Jongh, Jr., President
[Seal]
/s/ Lisa N. Sweet Attest: /s/ Christine O'Keefe
- ------------------------- --------------------------------
Christine O'Keefe, Secretary
Exhibit 10.4
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT dated December 31, 1998 by
and between WALTER R. FOURNIER, AS TRUSTEE OF THE FOURNIER RUIZ TRUST, and ALBA
E. DEL VALLE, AS TRUSTEE OF THE FOURNIER DEL VALLE TRUST (hereinafter referred
to as "Seller"), LOCKHART CARIBBEAN CORPORATION (hereinafter referred to as
"Buyer") and HERITAGE INSURANCE COMPANY(CARIBBEAN), LIMITED (hereinafter
referred to as the "Corporation").
In consideration of the mutual promises made herein, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the Stock Purchase
Agreement dated as of July 31, 1998 among the aforesaid parties is hereby
amended as follows.
I. Subsection 4(A) is hereby deleted and a new Subsection 4(A) and 4(B) is
nserted in its place as follows:
A. Buyer shall pay the Sellers One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00) as follows: (a) One Hundred Twenty-five Thousand Dollars
($125,000.00) to be paid by certified check or other immediately available funds
or wire transfer, at Closing; and (b) One Million One Hundred Twenty-five
Thousand Dollars ($1,125,000.00) to be paid no later than March 31, 1999, , with
interest thereon at the prime rate published in the Wall Street Journal on the
Closing Date. The payment due March 31, 1999 shall be evidenced by a note made
payable to Seller, dated the Closing Date, and shall be secured by a security
interest in favor of the Seller on all of the stock of the Corporation and
Guardian Insurance Company, Inc. The stock of the Corporation shall be held in
escrow by Paul Hoffman, Esq. pursuant to the terms of an escrow agreement
satisfactory to Buyer and Seller, until payment in full of the note.
II. Subsection 5(B)(1) is hereby deleted and a new Subsection 5(B)(1) is
inserted in its place as follows:
(1) At the Closing the Seller shall deliver to Paul Hoffman, Esq., the
Corporation Stock Certificates, and to the Buyer (or to the designated
wholly-owned subsidiary of the Buyer) all other items set forth in Section 6 and
Buyer shall deliver to Seller the Acquisition Shares as set forth in Section 4.
III. The first sentence of Section 6 is hereby deleted and a new first sentence
of Section 6 is inserted in its place as follows: The originals of all documents
set forth below shall be delivered by the Sellers or the Corporation to Buyer
(or to a designated wholly-owned subsidiary of Buyer) at the Closing except for
items B, C, D, G, H, K, O, and P, which shall be provided to Buyer at least ten
(10) business days before the Closing, and except for item A which shall be
delivered in escrow to Paul Hoffman, Esq. at the Closing.
<PAGE>
IV. Except as herein amended, all other terms and conditions of the Stock
Purchase Agreement remain in full force and effect according to their terms.
B. Recission of Transactions.
As provided in Section 8F hereof, Seller's obligation to close is
conditioned upon Buyer having simultaneously closed the transaction pursuant to
which it acquires the shares of stock (the "Guardian Stock") of Guardian
Insurance Company, Inc . ("Guardian").
The parties herein agree as follows:
(a) Upon payment of the Note by Buyer, Seller shall provide notice of
such fact immediately to the escrow agent and the escrow agent shall immediately
transfer the Corporation's stock and the Guardian Stock to Buyer;
(b) If Buyer defaults under the Note, Seller shall give written notice
of the default to the escrow agent and to Buyer. Buyer shall have thirty (30)
days to provide the escrow agent with notice that it disputes the existence of
the default, or that the default has been remedied. If Buyer fails to provide
such notice, then: (i) the transactions contemplated pursuant to this Stock
Purchase Agreement and the Guardian Stock Purchase Agreement shall be deemed
rescinded; (ii) the escrow agent will transfer the ownership of the
Corporation's Stock to Seller and of the Guardian Stock to Unlimited Holdings,
Inc.; (iii) the pledge agreement concerning Lockhart Caribbean Corporations
Stock referred to in Section 32D of the Guardian Stock Purchase Agreement shall
be terminated and the pledged Lockhart Caribbean Corporation's Stock shall be
delivered to Buyer; (iv) the Shareholders will retain the $125,000 payment
received at closing of the Heritage Stock Purchase Agreement; and (v) the
parties herein shall be released of any further liability or obligation of any
nature to each other under this Stock Purchase Agreement and/or under the
Heritage Stock Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to
Stock Purchase Agreement on the date set forth above.
CORPORATION:
WITNESSES: HERITAGE INSURANCE COMPANY
(CARIBBEAN), LIMITED
/s/ Thomas C. O'Keefe By: /s/ Raymond L. Fournier
- ------------------------- --------------------------------
Raymond L. Fournier, President
[Seal]
/s/ William McConnell Attest: /s/ Ocavid Estrada,
_________________________ Secretary
<PAGE>
SELLERS:
THE FOURNIER DEL VALLE TRUST
/s/ Angela Hoban By: /s/ Alba E. Del Valle
- ------------------------- ---------------------------------
Alba E. Del Valle, Trustee
/s/ Barbara Mignon Weatherly [Seal]
- -------------------------
THE FOURNIER RUIZ TRUST
/s/ Angela Hoban By: /s/ Walter R. Fournier
- ------------------------- --------------------------------
Walter R. Fournier, Trustee
/s/ Barbara Mignon Weatherly
- -------------------------
BUYER:
LOCKHART CARIBBEAN CORPORATION
/s/ Willaim McConnell By: /s / John P. de Jongh, Jr.
- ------------------------- ------------------------------
John P. de Jongh, Jr., President
/s/ Thomas C. O'Keefe [Seal]
_________________________
Attest: /s/ Christine O'Keefe
--------------------------------
Christine O'Keefe, Secretary
Exhibit 99.1
January 4, 1999
LOCKHART CARIBBEAN CORPORATION
No. 44 Estate Thomas, P.O. Box 7020
St. Thomas, U.S. Virgin Islands 00801
phone (340) 776-1900 fax (340) 776-1940
www.lockhart.com
Contact: Christine O'Keefe
email: [email protected]
FOR IMMEDIATE RELEASE:
LOCKHART CARIBBEAN EXPANDS
ITS FINANCIAL SERVICES
BY ACQUIRING TWO INSURANCE COMPANIES
(St. Thomas, USVI) John P. de Jongh, Jr., President and Chief Operating Officer
of Lockhart Caribbean Corporation ("Lockhart Caribbean"), announced today that
Lockhart Caribbean completed its acquisitions of all the outstanding common
stock of Guardian Insurance Company, Inc. ("Guardian"), a U.S. Virgin
Islands-based insurance company, and of Heritage Insurance (Caribbean) Limited
("Heritage"), a British Virgin Islands incorporated company, on December 31,
1998. The two companies were acquired for a combination of cash and stock of
Lockhart Caribbean.
"The purchase of Guardian and Heritage is another important step in
Lockhart Caribbean's diversification into the financial services business in the
U.S.V.I. and throughout the Eastern Caribbean" stated John P. de Jongh, Jr.
"These acquisitions achieve several objectives for Lockhart Caribbean. First and
most important, Lockhart Caribbean has substantially increased its financial
services arm, supplementing its historic real estate business. This addition,
from the start, is expected to more than double our revenues on an annualized
basis, with a significant contribution to net income as well. Second, the
acquisition of Heritage significantly advances our geographic diversification
into the Eastern Caribbean, which continues to be a key part of Lockhart
Caribbean's long-term strategy. Third, Guardian and Heritage, as part of
Lockhart Caribbean, will work in tandem with Premium Finance Company (Caribbean)
Limited and Premium Finance Company (E.C.) Limited, the insurance premium
finance companies we acquired in 1998, serving the U.S. Virgin Islands, the
British Virgin Islands and various other islands in the Eastern Caribbean,"
continued Mr. de Jongh. Mr. de Jongh noted that Guardian and Heritage are now
wholly-owned subsidiaries of Lockhart Caribbean Insurance Corporation, the newly
formed insurance division of Lockhart Caribbean.
<PAGE>
"Lockhart Caribbean is one of the oldest and largest real estate
owner/developer businesses in the U.S. Virgin Islands. Joining our company's 115
year old history and success with the impressive records of Guardian and
Heritage firmly establishes Lockhart Caribbean as what we, its management team,
envision it to be in the 21st century," stated Wesley S. Williams, Jr., Esq.,
Co- Chairman of the Board and Co-Chief Executive Officer of Lockhart Caribbean.
"We plan to grow Guardian and Heritage, to expand the range of insurance
products that they offer, and to increase significantly the number of markets in
which they operate. In this way, Lockhart Caribbean will continue in the next
century as a strong diversified company, with large and valuable holdings of
real estate, with strong revenue growth generated through its financial services
businesses," continued Mr. Williams.
George H. T. Dudley, Esq., Co-Chairman of the Board and Co-Chief Executive
Officer of Lockhart Caribbean, stated that Lockhart Caribbean will continue to
maintain its commercial property ownership and development business in the U.S.
Virgin Islands. Mr. Dudley noted that the management of the two insurance
companies would remain in place following the acquisitions: "We look forward to
working with the senior management of Guardian and Heritage - Raymond L.
Fournier, Octavio Estrada, Warner Bowers, Karen John and Celso Vargas. We see
great potential in the merging of the Lockhart Caribbean management team's
expertise in law, banking and insurance, and our real property assets, with the
lifelong careers and expertise of Guardian's and Heritage's team in the
insurance field, including their potential for addressing the large,
under-served markets of the U.S. Virgin Islands and beyond - markets
encompassing both English and Spanish speaking populations," continued Mr.
Dudley.
<PAGE>
The Board of Directors of Lockhart Caribbean Insurance Corporation will be
comprised of Messrs. Williams, Dudley, and de Jongh, as well as Mr. Raymond L.
Fournier, Ms. Nancy S. Brodie, and Mr. Donald R. Weisberg, Executive Vice
President of Lockhart Caribbean since 1998.
Mr. Williams, a partner in Covington and Burling in Washington, D.C., has
an advanced degree in insurance law from Columbia University in New York City,
was an adjunct professor of finance and financial services at Georgetown Law,
and is senior member of the Board of Penn Mutual Life Insurance Company, for
which he has served as trustee and consultant for 20 years.
Mr. Dudley is the founder of the U.S. Virgin Islands' largest law firm,
Dudley, Topper and Feuerzeig, and his personal practice focuses on consumer
finance and banking.
Prior to joining Lockhart Caribbean, Mr. de Jongh served as Commissioner of
Finance for the Government of the Virgin Islands, as Executive Assistant to the
Governor of the U.S. Virgin Islands and was a Vice President with Chase
Manhattan Bank.
Mr. Raymond L. Fournier has been President of Guardian since 1996, and has
been President and Chairman of the Board of Directors of Heritage since 1993,
and has served as a member of the board of Directors of Unlimited Holdings, Inc.
since 1994. Mr. Fournier, who is a native of Puerto Rico, received a BA Degree
in economics and finance from Clark University, and trained in reinsurance at
Cologne Reinsurance Company, Cologne, Germany, and D.G. Durham Ltd., at Lloyd's
of London.
Ms. Brodie has been employed by Penn Mutual Life Insurance Company since
1975, and has served as its Executive Vice President and Chief Financial Officer
since 1994. Ms. Brodie is a Certified Public Accountant, a Member of the
Pennsylvania Institute of Certified Public Accountants, a Series 7 licensed NYSE
General Securities Representative, a Fellow of Life Insurance Management
Institute (FLMI), and is currently enrolled in Certified Life Underwriter (CLU)
studies at The American College. Ms. Brodie holds a BBA degree in accounting,
having attended the University of Dayton and Cleveland State University, and
also an MBA degree earned in the Executive MBA program of Columbia University.
<PAGE>
Mr. Weisberg has specialized in investing, investment banking and capital
markets, with extensive experience in financial services and real estate. Mr.
Weisberg has served as a Director of Salomon Brothers Inc and a Vice President
of Goldman, Sachs & Co. He has been a member of the boards of GMM Investors,
Petroleum Industry Research Foundation, Inc., Presidio Capital Corp., Rhode
Island Investment Acquisition Corporation, Inc. and Sovlink-American Corporation
and has been a member of the Investment Committee of New York UJA Federation.
Mr. Weisberg received an A.B. degree from Wesleyan University and a J.D. degree
from Harvard University.
Guardian was formed in 1984, and is authorized to write personal and
commercial lines of insurance in the U.S. Virgin Islands. "This is an exciting
time for our companies, and we couldn't be more pleased or optimistic about the
futures of Guardian and Heritage" noted Mr. Fournier. "We believe that now we
can become a greater asset to the Virgin Islands' community, offering better and
more comprehensive insurance products, and more choice and competitive prices to
the people of these islands," continued Mr. Fournier. Guardian's primary lines
of business include automobile physical damage and automobile liability
coverage. Guardian has offices in St. Thomas and St. Croix, and is one of the
oldest domestic insurance companies in the U.S. Virgin Islands.
Heritage was formed in 1992, and is organized under the laws of the British
Virgin Islands, as a property and casualty insurer authorized to originate risks
located in the British Virgin Islands, the Turks and Caicos Islands, and
Anguilla, W.I. Heritage has offices in the British Virgin Islands and the Turks
and Caicos Islands. Guardian and Heritage have 27 employees in the aggregate.
* * * *
Lockhart Caribbean, headquartered on St. Thomas, is the largest owner of
shopping centers in the U.S. Virgin Islands, and is one of the largest owners of
undeveloped land on St. Thomas, variously zoned for commercial and residential
development. Lockhart Caribbean, through various wholly-owned subsidiaries,
owns, operates, and develops shopping centers and other commercial real estate,
primarily on the islands of St. Thomas and St. Croix. Lockhart Caribbean
currently owns and operates seven shopping centers and three commercial parks,
and has additional projects in various stages of development. Lockhart Caribbean
also owns Premium Finance Company (Caribbean) Limited and its wholly-owned
subsidiary, PFC-EC, which, together, engage in insurance premium financing in
the U.S. and British Virgin Islands and throughout the Eastern Caribbean.
<PAGE>
Information about Lockhart Caribbean - its history, properties, current
operations, plans for the future, and its management team - can be found on the
company's website: www.lockhart.com.
Inquiries can be made directly to Lockhart Caribbean's Vice President for
Investor Relations, Christine O'Keefe, at Lockhart Caribbean's offices,
telephone no. 340-776-1900, facsimile no. 340- 776-1940, email
lockhart@lockhart. com.
* * * *
This press release contains forward-looking statements that are subject to risks
and uncertainties. Lockhart Caribbean's actual results could differ materially
from those discussed in such forward- looking statements, due to various factors
which are outside the company's control. Factors that could affect performance
include our ability to successfully integrate Guardian and Heritage into
Lockhart Caribbean, our ability to finance growth and expansion, risks
associated with operations and investments outside the United States and its
territories and the risk of unforeseen adverse economic developments generally.
