UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended March 31, 1998
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File No. 0-18222
COSTA RICA INTERNATIONAL, INC. AND SUBSIDIARY
-----------------------------------------------------
(Exact name of Company as specified in its charter)
Nevada 87-0432572
------ ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
95 Merrick Way, Suite 507, Coral Gables, Fl, 33134
--------------------------------------------------
(Address of principal executive offices)(Zip Code)
(305) 476-1757 or (305) 476-1758
(Company's telephone number including area code)
Indicate by check mark whether the Company (1) had filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of Company's common stock, par value $0.001 per
share, as of May 17, 1998 was 22,256,454 shares.
<PAGE>
COSTA RICA INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
as of March 31, 1998 and September 30, 1997
Consolidated Condensed Statements of Income For the three
months and six months ended March 31, 1998 and 1997.
Consolidated Condensed Statements of Cash Flows For the six
months ended March 31, 1998 and 1997
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
<PAGE>
COSTA RICA INTERNATIONAL INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1998 AND SEPTEMBER 30, 1997
UNAUDITED AUDITED
MARCH 1998 SEPTEMBER 1997
---------- --------------
ASSETS
Current assets
Cash and cash equivalents $ 3,137,986 $ 1,388,290
Shot term investment 953,257 1,935,671
Notes and accounts recievable-net 9,825,298 5,818,760
Due from related parties 219,934 76,243
Inventories-net(2) 12,896,301 7,106,214
Prepaid expenses 667,231 130,088
----------- -----------
Total Current Assets 27,700,007 16,455,266
----------- -----------
Long term notes recievable - trade 149,620 176,520
Property, plant and eq. - net 26,108,756 14,350,427
Long-term investment 4,182,860 4,385,197
Other assets 2,126,399 1,187,128
Goodwill(6) 2,629,163 -
----------- -----------
Total Assets $62,896,805 $36,554,538
=========== ===========
LIABILITY STOCKHOLDERS' EQUITY
Current liabilities
Notes payable(3) $ 5,656,675 $10,126,947
Due to related party 218,275 36,870
Current and installment of long
term debt(4) 1,103,600 1,251,127
Accounts payable 10,062,410 5,191,923
Accrued expenses 2,232,753 2,137,237
----------- -----------
Total Current Liabilities 19,273,713 18,744,104
----------- -----------
Long-term debt, excluding current
installments(4) 23,657,057 5,252,149
Due to stockholders 684,544 20,489
Deferred tax liability 2,079,242
----------- -----------
Total liabilities 45,694,556 24,016,742
----------- -----------
Minority itnerest 6,821,894 5,248,362
Stockholders' Equity
Common Stock $ 22,257 $ 19,810
Preferred Stock - 2,216,072 2,216,072
Additional paid-in capital 11,972,556 9,375,002
Foreign currency translation adjustment (5,153,396) (4,675,549)
Retained earnings 3,255,709 2,122,542
----------- -----------
12,313,198 9,057,877
Less:
Due from stockholders (1,084,876) (920,476)
Treasury stock at cost (847,967) (847,967)
----------- -----------
Total Stockholders' Equity 10,380,355 7,289,434
----------- -----------
Total Liabilities and
Stockholders' Equity $62,896,805 $36,554,538
=========== ===========
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
COSTA RICA INTERNATIONAL
CONSOLIDATED CCONDENSED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $22,607,527 $15,704,188 $43,433,554 $32,643,629
Cost of sales 17,082,899 11,788,398 32,692,997 24,496,065
----------- ----------- ----------- -----------
5,524,628 3,915,790 10,740,557 8,147,564
----------- ----------- ----------- -----------
Operating expenses
Selling 2,453,376 1,628,158 4,312,787 3,229,461
General and administrative 1,772,183 1,399,574 3,239,176 2,701,950
Goodwill amortization 22,094 - 22,094 -
----------- ----------- ----------- -----------
Total operating expenses 4,247,653 3,027,732 7,574,057 5,931,411
----------- ----------- ----------- -----------
Operating Income 1,276,975 888,058 3,166,500 2,216,153
Interest expense 549,813 566,468 1,297,015 1,104,240
Interest income (181,081) (238,587) (423,840) (457,618)
Exchange losses(gains)-net 218,948 21,166 267,711 59,522
Miscellaneous-net (421,096) (165,160) (490,261) (231,777)
----------- ----------- ----------- -----------
Other expenses, net 166,584 173,887 650,625 474,367
Income before income taxes and
minority interest 1,110,391 714,171 2,515,075 1,741,786
Income taxes 160,040 96,852 408,236 237,512
----------- ----------- ----------- -----------
Income before minority interest 950,351 617,319 2,107,639 1,504,274
Minority interest 434,709 304,216 931,305 682,044
----------- ----------- ----------- -----------
Net income $ 515,642 $ 313,103 $ 1,176,034 $ 822,230
Preferred Stock Dividend 37,295 57,051 72,664 133,682
----------- ----------- ----------- -----------
Net income applicable to
common stock 478,347 256,052 1,103,670 688,548
=========== =========== =========== ===========
BASIC EPS(5)
Weighted average number of
common shares outstanding 20,625,082 20,217,239 19,809,396 19,742,729
Earnings per share 0.023 0.013 0.055 0.035
=========== =========== =========== ===========
DILUTED EPS(5)
Increment shares from
assumed conversions of Warrants 77,867 180,494 73,664 177,742
----------- ----------- ----------- -----------
Adjusted Weighted average shares 20,702,949 19,990,390 20,290,903 19,920,471
Diluted earnings per share 0.023 0.013 0.054 0.035
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
COSTA RICA INTERNATIONAL INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,176,334 $ 822,230
Adjustments to reconcile net income to
net cash provided by operation activities,
net of effect of acquisition of a subsidiary
(As de Oros)
Depreciation and amortization 870,708 706,041
Allowance for doubtful accounts 91,500 47,051
Allowance for production poultry 558,053 482,473
Amortization of goodwill 22,094 -
Gain on sale of productive assets (62,662) -
Deferred income tax benefit (17,473) (60,300)
Minority interest net income 931,305 682,044
Cash provided by (used for) changes in:
Notes and accounts recievable (1,373,591) (3,288,398)
Due from related party (1,672,343) (374,914)
Inventories (1,886,145) (720,609)
Prepaid expenses 577,238 (109,863)
Accounts payable 445,061 393,098
Accrued Expenses (408,118) 126,779
Long term receivable - trade 33,216 (71,054)
----------- -----------
NET CASH USED FOR OPERATING ACTIVITIES (714,823) (1,365,422)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITES:
Short-term investment 914,191 (1,762,328)
Initial cash balance from subsidiary acquired 1,147,472 -
Increase in long term investment (245,000) (125,622)
Additions to property, plant and equipment (982,067) (404,732)
Proceeds from sale of productive assets 270,202 60,300
Other assets (631,767) (195,902)
----------- -----------
NET CASH PROVIED BY (USED FOR) INVESTING ACTIVITIES 473,031 (2,428,284)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Short-term financing increase (decrease)
in notes payable (4,027,084) 1,495,144
Cash dividends - RICA (43,168) (79,578)
Cash dividends - Minority interest (29,497) (54,104)
Long term financing:
New loans 9,799,254 18,307
Payments (3,644,343) (556,899)
Issuance of common stock 5,000
Due to related party (35,999) (1,271,542)
Due from shareholders (211,757) -
----------- -----------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 1,807,406 (443,672)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 184,082 (155,166)
Net Increase (Decrease) in Cash 1,749,696 (4,392,544)
Cash Balance at beginning of period 1,388,290 5,129,312
----------- -----------
Cash Balance at endof period $ 3,137,986 $ 736,768
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for the period for
Interest $ 1,047,320 $ 1,126,744
=========== ===========
Income Taxes $ 64,354 $ 55,172
=========== ===========
See accompanying notes to consolidated condensed financial statements.
<PAGE>
COSTA RICA INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Accounting Policies
Management is responsible for preparing Costa Rica International, Inc.'s (the
"Company's") financial statements and related information that appears in this
report. Management believes that the financial statements fairly reflect the
form and substance of transactions and reasonably present the Company's
financial condition and results of operations in conformity with Generally
Accepted Accounting Principles in the United States.
Although Management believes that the disclosures are adequate to make the
information presented not misleading, these consolidated condensed financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form
10-KSB (as amended on May 8, 1998 on Form 10-KSB/A) for the fiscal year ended
September 30, 1997.
2. Inventories
Inventories are stated at the lower of market cost and are determined using the
weighted-average method, except for inventories in transit which are valued at
specific cost. Inventories are as follows:
MARCH 31,1998 SEP 30, 1997
------------- ------------
Finished products $ 1,688,716 $ 686,423
Poultry 2,542,484 2,269,993
Production poultry 4,018,067 1,708,071
Materials and Supplies 1,755,057 1,134,115
Raw materials 2,342,412 1,639,527
In transit 1,296,736 131,188
----------- ----------
$13,643,472 $7,569,317
----------- ----------
Allowance for Renewal of production poultry (733,586) (463,103)
Allowance for obsolescence (13,585) -
----------- ----------
$12,896,301 7,106,214
=========== ==========
<PAGE>
3. Short-Term Notes Payable
Short-Term Notes payable consist of the following:
MARCH 31, 1998 SEP 30, 1997
-------------- ------------
Loans payable $ 1,271,120 $ 6,188,036
Bank overdrafts 1,552,924 371,193
Commercial paper 2,832,631 3,562,721
Other - 4,997
---------- -----------
$ 5,656,675 $10,126,947
========== ===========
4. Long-term Debt
Long-term debt is as follows:
MARCH 31, 1998 SEP 30, 1997
-------------- ------------
Bank loans $24,517,494 $ 5,395,152
Commercial paper-unsecured 44,543 46,698
Other 198,620 1,061,426
----------- -----------
$24,760,657 $ 6,503,276
Less current installments 1,103,600 1,251,127
----------- -----------
$23,657,057 $ 5,252,149
=========== ===========
The Company has completed a private placement (the "Private Placement") of US
$20 million in notes payable bearing interest at 11.71% per annum, comprised of
US $8 million in Series A Senior Notes and US $12 million in Series B Senior
Notes, all due upon maturity on January 15, 2005. Among others, the Private
Placement includes the following terms:
-- The Series A Senior Notes and the Series B Senior Notes (collectively,
the "Notes") shall be payable annually in five consecutive principal
installments amounting to US $4,000,000 each (from the aggregate
amount). The Notes have a two-year grace period beginning on January
15, 2001.
-- The Company has guaranteed there will be no significant organizational
changes and that all federal and local laws and regulations will be
complied with.
-- Financial and business information for the Company and its subsidiaries
will be remitted periodically, as stipulated in the agreement.
-- The Company is committed to comply with several financial and
operational covenants, as well as to review the relevant terms included
in the agreement to prevent the existence of default or event of
default.
<PAGE>
5. Earnings per Share
Earnings per share is computed on the basis of the weighted-average number of
common shares outstanding plus the effect of outstanding warrants using the
treasury stock method according to SFAS No. 128. Earnings per share pertaining
to 1997 results of operations, have been restated to comply with this standard.
Following is a reconciliation of the weighted average number of shares actually
outstanding with the number of shares used in the computations of fully diluted
earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- ------------------------------------
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Weighted average number of common shares
used in basic EPS 20,625,082 19,809,396 20,217239 19,742,729
Effect of dilutive securities:
Warrants 77,867 180,944 73,664 177,742
Weighted average number of common shares
and dilutive warrants used
in diluted EPS 20,702,949 19,990,390 20,290,903 19,920,471
</TABLE>
6. Acquisition of As de Oros
On February, 26, 1998, the Company acquired 51% of Corporacion As de Oros, S.A.
and subsidiaries ("As de Oros") of As de Oros' outstanding voting shares or
56.38% of its total common stock in a business combination accounted for as a
purchase method. The excess purchase price over the fair market value of the net
assets acquired is being amortized on the straight-line basis over a ten-year
period.
7. New Accounting Pronouncements
DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE. In February 1997, the
Financial Accounting Standards Board issued SFAS No.129, Disclosure about
Capital Structure, which requires companies to present additional information
about securities, preferred stock, and redeemable stock and is effective for
fiscal years ending after December 15, 1997.
REPORTING COMPREHENSIVE INCOME. In June 1997, the Financial Accounting Standards
Board issued SFAS No.130, Reporting Comprehensive Income. SFAS No.130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements and is
effective for fiscal years
<PAGE>
beginning after December 15, 1997. Management of the Company believes that
adoption of SFAS No.130 will result primarily in including the difference
between net income and the annual changes in cumulative translation adjustment
in the statement of comprehensive income.
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. In June
1997, the Financial Accounting Standards Board issued SFAS No.131, Disclosures
about Segments of an Enterprise and Related Information. SFAS No.131 requires
that public businesses report certain information in the financial statements
about their products, services, geographic areas in which they operate, and
their major customers, related to the operating segments of a company. The
statement is effective for fiscal years beginning after December 15, 1997.
Management of the Company does not expect that adoption of SFAS No.131 will have
a material impact on the Company's financial position, results of operations or
liquidity.
DEVELOPING SOFTWARE FOR INTERNAL USE. In April 1998, the AICPA, issued SOP 98-1.
This SOP established accounting standards when a company is developing or
obtaining software which is for internal-use purposes. Management of the Company
does not expect that adoption of SFAS No.131 will have a material impact on the
Company's financial position, results of operations or liquidity.
8. Pro Forma Financial Information
Following is proforma financial information which presents results of operations
for the year ending September 1997, and the six months ended March 31, 1998, as
if the acquisition of As de Oros, had taken place on October 1, 1996.
FOR THE SEMESTER FOR THE YEAR
ENDED ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------- ------------------
Revenues $ 63,075,570 116,613,665
Income (loss) before
extraordinary items 755,190 (2,839,628)
Net Income 755,190 (2,839,628)
BASIC EPS
Weighted average
number of common
shares outstanding 20,217,239 19,776,063
Earnings (losses) per share $ 0,037 $ (0,144)
=============== =================
DILUTED EPS
Incremental shares from
assumed conversions of
warrants 73,664 141,163
Adjusted weighted average
shares 20,290,903 19,917,226
Diluted earnings (losses)
per share $ 0,037 $ (0,143)
=============== =================
9. Reclassifications
Certain accounts in the March 31, 1997 Consolidated Condensed statement of Cash
Flows, have been reclassified to conform to the March 31, 1998 presentation.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This management discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's report on Form
10-KSB dated December 31, 1997 and amendended on May 8, 1998 on Form 10-KSB/A.
The most significant events that took place during the second quarter of fiscal
year 1998 for the Company were (i) the negotiation to refinance part of its
subsidiaries' short-term debt, with the private placement of US $20 million of
the Company's 11.71% Series A Senior Notes and Series B Senior Notes, both due
January 15, 2005 (the "Offering"), placed by Citicorp Securities, Inc., and (ii)
the acquisition of a new subsidiary, Corporacion As de Oros, S.A. and its
subsidiaries ("As de Oros"), a Costa Rican poultry and animal feed producer with
a significant share of the domestic and commercial animal feed market in Costa
Rica.
As perhaps the most significant event in the second quarter of 1998, the Company
reached an agreement (the "Stock Purchase Agreement") to acquire 56.38% of the
total outstanding common stock of As de Oros and its wholly-owned subsidiaries,
Restaurantes As, S.A. and Corasa Estudiantes S.A., from Comercial Angui, S.A.
("Angui"), a Costa Rican privately-owned company and the majority shareholder of
As de Oros and subsidiaries, for US $2.4 million, in cash upon the maturity of a
promissory note due January 2000 and US $2.6 million in Company stock,
represented by 2,447,058 shares.
As de Oros is the second largest poultry producer in Costa Rica, with total
annual sales of $48,445,183, and assets totaling $15,204,683 as of September 30,
1997.
A. As de Oros' Overview
As de Oros was first founded in 1954 by Otoniel Aguilar. In 1970, Mr. Otoniel
Aguilar focused As de Oros' operations towards the animal feed business and
developed its poultry activities a few years thereafter. As de Oros has
subsequently become the second largest poultry company in Costa Rica, (second to
the Company's principal subsidiary Corporacion Pipasa, S.A. ("Pipasa"))
generating approximately US $48 million in sales per year. Like Pipasa, As de
Oros has businesses in chicken production, derivatives, meat products and animal
concentrates. It sells over 80 different chicken and sausage products,
commercial eggs and 70 different formulas for poultry, hogs and cattle. As de
Oros has been in the poultry business segments for more than 35 years and has an
approximately 19% share of the Costa Rican chicken production market. As de
Oros' strength is in animal feed concentrates, where it has approximately 21%
market share of the business. As de Oros also operates one of the largest fast
food chains in the country, "Restaurants As," which is comprised of 29
restaurants operating in the metropolitan area. As de Oros currently employs
approximately 1,300 people. It has a distribution network of more than 80
vehicles, and owns 12 urban and rural outlets.
<PAGE>
B. Main Business Segments and Markets
The animal feed business, including processed feed and concentrates, represents
approximately 40% of total 1997 sales (concentrates are used to feed birds, pigs
and horses, while processed feed are for dogs and shrimp). In terms of
profitability, the gross profit margin in 1997 for concentrates, extruders and
hog feed as a percentage of sales for each of the segments was 15.9%, 20.9% and
36.2%, respectively. The Company expects to increase As de Oros' gross margins.
Currently, As de Oros has an approximately 21% share of the Costa Rican animal
feed business. This segment represents the bulk of As de Oros activities. The
marketing and administrative costs associated with the animal feed business are
considerably lower than those associated with selling broiler chicken and meat
by-products. This segment is less price-sensitive than the chicken meat market,
as sales are driven largely by quality of the meat. Quality of the feed is what
ultimately determines the size and weight of the hog, chicken or cow. Prices in
this segment are heavily influenced by the market leader, Pipasa.
The broiler chicken segment represents approximately 40% of As de Oros' total
sales and roughly 21% of gross margin as a percent of chicken sales.
As de Oros defines its target market for broiler chicken by areas within Costa
Rica: urban areas and rural areas. Urban areas are found the country's central
plateau region and customers in this market have certain characteristics and
buying patterns. Distribution in urban areas tends to be daily, compared to
distribution in rural areas. The chicken is sold through the typical conduits
like supermarkets, retail traders and restaurants, including "Restaurants As."
Management is analyzing the possibility of selling Restaurantes As. As of the
date of this Report, a selling price have not been established by the Company.
If such sale takes place, purchase accounting could change.
OTHER MATTERS
The Company completed a private placement of US $20 million 11.71% notes,
comprised of US $8 million of Series A Senior Notes (the "Series A Notes"), and
U.S. $ 12 million of Series B Senior Notes ( the "Series B Notes" ), both due
January 15, 2005. The Series A Notes have been used to partially refinance the
outstanding debt of the Company's subsidiary Pipasa. The Series B Notes have
been used to refinance substantially all of the outstanding debt of As de Oros.
The refinancing of the debt of the subsidiaries improves the financial position
of Pipasa and As de Oros.
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE
THREE MONTHS ENDED MARCH 31,1997
For matters of comparison, results of operations are presented in an separate
format to show the companies results without the effect of the As de Oros
acquisition. Consolidated results are presented in a separate column of each
table all through the Management Discussion and Analysis section.
The following tables present information related to the Company's operation:
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 % INCREASE
-------------- -------------- ----------
Net Sales $18,956,973 $15,704,188 20.71%
Operational Profit 1,088,899 888,058 22.62%
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
(With As de Oros)
MARCH 31, 1998 MARCH 31, 1997 % INCREASE
-------------- -------------- ----------
Net Sales $22,607,527 $15,704,188 43.96%
Operational Profit $1,254,881 888,058 41.30%
The following table presents certain items as a percentage of net sales for the
period indicated:
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
(With As de Oros)
MARCH 31, 1998 MARCH 31, 1997 INCREASE/DECREASE
-------------- -------------- -----------------
Net Sales 100% 100%
Cost of Sales 75.55% 75.07% 0.48%
Gross Profit 24.45% 24.93% -0.48%
Sales Expenses 10.85% 10.37% 0.57%
General and Adm. 8.03% 8.91% -0.85%
Net income before
minority interest 4.10% 3.93% 0.26%
<PAGE>
NET SALES
General. Net sales generated by the Company's operation for the quarters ended
March 31, 1998 and 1997 were $22,607,527 and $15,704,188 respectively, an
increase of $6,903,339 or 43.96%. After eliminating the effect of the As de Oros
acquisition, sales by segment are detailed as follows:
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
- ------------------------------------------------------------------------
SEGMENT MAR 31,1998 MAR 31,1997 % INCREASE/DECREASE
- ------------------------------------------------------------------------
Broiler Chicken $12,377,771 10,054,398 23.11%
By- Products 2,234,050 1,761,756 26.81%
Animal Feed 1,459,810 1,511,738 -3.44%
Exports 597,282 503,014 18.74%
Others 2,288,060 1,873,282 22.14%
- ------------------------------------------------------------------------
Total $18,956,973 $15,704,188 20.71%
- ------------------------------------------------------------------------
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
(With As de Oros)
- ------------------------------------------------------------------------
SEGMENT MAR 31,1998 MAR 31,1997 % INCREASE
- ------------------------------------------------------------------------
Broiler Chicken $13,584,688 10,054,398 35.11%
By- Products 2,340,017 1,761,756 32.82%
Animal Feed 3,064,764 1,511,738 102.73%
Exports 591,074 503,014 17.51%
Restaurants 718,319 0.00 100%
Others 2,308,665 1,873,282 23.24%
- ------------------------------------------------------------------------
Total $22,607,527 $15,704,188 43.96%
- ------------------------------------------------------------------------
Broiler chicken. Sales of broiler chicken were $13,584,688 and $10,054,398
during the three months ended March 31, 1998 and 1997, respectively. The
increase of 35.11% primarily is due to a 40.47% increase in tonnage which was
offset by a 5.36% net effect of discounts to special customers and exchange rate
variations.
By-products are the most profitable products of the Company. Total sales for
this segment were of $2,340,017 and $1,761,756 for the three months ended March
31, 1998 and 1997, respectively. The increase of $578,261 or 32.82% is due to a
13.74% increase in tonnage and the remaining 19.09% is due to price increases
among the products within this segment (patties, sausages, further-processed
products, and processing done for others) and sales mix.
<PAGE>
Animal Feed. Sales for commercial animal feed were $3,064,764 and $1,511,738 for
the quarters ended March 31, 1998 and 1997, represents an increase of $1,553,026
or 102.73%. Importantly, As de Oros' core business is among this segment, and
without the acquisition, tonnage would have increased only 0.33%. Total sales
increase corresponds to a 113.59% increase in tonnage, offset by price
adjustments due to exchange rate variations and sales mix.
Exports. The Company's exports were $591,074 and $503,014 during the quarters
ended March 31, 1998 and 1997, respectively, an increase of $88,060 or 17.51%.
This increase in exports was due to the combined result major exports of pet
food and chicken by-products. Broiler chicken tonnage decreased during the three
months ended March 31, 1998, because this was the same period that the
extraordinary export to Honduras occurred in fiscal year 1997. Nevertheless, the
introduction of the Company's exports to El Salvador has strengthen sales and
met expectations. Management intends to continue emphasizing exports to the
Central American area, with its traditional export products and with products
from the recently acquired subsidiary.
Restaurants. Sales were of $718,319 for the one month ended to March 31, 1998
due to the acquisition of As de Oros.
Others. Sales of "Others", which include animal feed and baby chicks to
integrated producers, and commercial eggs, raw materials and baby chicks to
third parties, increased 23.24% for the three months ended March 31, 1998
compared to the same period of fiscal year 1997 .
The following table displays the Company's sales distribution, for the quarters
ended March 31, 1998 and 1997:
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
- ------------------------------------------------------------------------
SEGMENT MARCH 31, 1998 MARCH 31, 1997
- ------------------------------------------------------------------------
Broiler Chicken 60.09% 64.02%
By- Products 10.35% 11.22%
Animal Feed 13.56% 9.61%
Exports 2.61% 3.20%
Restaurants 3.18% 0.00%
Other 10.21% 11.93%
- ------------------------------------------------------------------------
Total 100.00% 100.00%
- ------------------------------------------------------------------------
Cost of sales:
General. Cost of sales amounted to $17,082,899 and $11,788,398 for the quarters
ended March 31, 1998 and 1997 respectively, an increase of 44.91%. This increase
in cost of sales was due mainly to volume increase, the acquisition of As de
Oros and the combination of factors such as the adaptation process of the
reproduction hen breed and imports of fertile eggs, offset by the effect of the
lower cost of raw materials, such as imported grains and the advantage of higher
efficiency due to increase in volume. As a percentage of sales, cost of sales
was 75.56% for the three months ended March 31, 1998 compared to 75.07% for the
three months ended March 31, 1997, a net increase of 0.49%.
<PAGE>
During the three months ended March 31, 1998, the weather phenomenon "El Nino"
had a similar effect on the technical yields as during the three months ended
December 31, 1997. High temperatures were offset by temperature regulating
devices, but there were still high mortality rates due to this weather
phenomenon, combined with mortality due to pathologies. The production divisions
mostly affected were incubation and reproduction. As of the date of this filing,
temperatures have decreased and the rainy season has started in Costa Rica. This
is expected to improve the mortality yields and average weight. As disclosed in
previous reports files with the United States Securities and Exchange Commission
(the "SEC"), the Company has taken measures to mitigate the pervasive effect of
these high temperatures and pathologies but cannot assure that this weather
phenomenon will not affect other important technical yields such as weight,
conversion (pounds of feed per ponds of meat) or pathologies. The Company has
continued to import fertile eggs and chicken parts throughout the analyzed
period to meet uncovered demand. The cost of these imports is higher than
internal production. The Company intends to continue with egg imports until the
reproduction division is self-sufficient. Management expects to reach self-
sufficiency during the month of September 1998, when a substantial number of
reproduction hens are at hatching age.
The following factors have affected total cost of sales as a percentage of net
sales:
/bullet/ Average prices for imported soybean increased 8% during the first
quarter of fiscal 1998 when compared to average prices in the same
period of fiscal 1997
/bullet/ Inventory reprocess
/bullet/ Low fertility in imported eggs
/bullet/ Return to the high energetic diet formulation, with the purpose of
weight increase during January 1998
Gross profit:
Gross profit for the three months ended March 31, 1998 and 1997 was $5,524,628
and $3,915,790, respectively, an increase of $1,608,838 or 41.08%. As a
percentage of net sales, gross profit was 24.44% and 24.93% for the second
quarters of fiscal years 1998 and 1997, respectively, due to the issues
discussed above. The following table shows gross profit as a percentage of net
sales of each segment for the quarters ended March 31, 1998 and 1997:
<PAGE>
COSTA RICA INTERNATIONAL, INC.
THREE MONTHS ENDED
----------------------------------------------------
SEGMENT MARCH 31, 1998 MARCH 31, 1997 INCREASE/DECREASE
----------------------------------------------------
Animal feed 21.84% 21.84% 0.00%
Chicken By Products 42.44% 18.18% 24.26%
Exports 32.19% 28.53% 3.66%
Others 4.08% -0.33% 4.42%
Restaurants 54.16% -- 100%
Broiler Chicken 23.49% 28.15% -4.66%
-----------------------------------------------------
General and administrative expenses:
General and administrative expenses increased 26.52% during the three months
ended March 31, 1998, compared to the three months ended March 31, 1997. As a
percentage of net sales, this item decreased from 8.03% during the second
quarter of fiscal year 1997 to 7.82% during the same period of fiscal year
1998. The significant sales increase, due to the acquisition of a new
subsidiary, and the Company's policy to try to reach efficiencies among its
subsidiaries, has benefited the Company with this 0.21% decrease of
general and administrative expenses as a percentage of net sales.
Sales expenses
Sales expenses increased 50.68% during the first quarter of fiscal year 1998,
compared with the same period of fiscal year 1997. This increase is a result of
the incorporation of all selling expenses of As de Oros. Analysis should be made
on the percentage of sales expense over net sales, which was stable and only
varied from 10.37% to 10.85% in the quarters ended March 31, 1997 and 1998,
respectively.
Other income/expenses (net)
Other income and expenses (net) decreased by $7,303, or -4.20% when comparing
the three months ended March 31, 1998 to the same period of fiscal year 1997.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1998
COMPARED TO THE SIX MONTHS ENDED MARCH 31, 1997
Total net sales for the six months ended March 31, 1998 increased 33.05% when
compared to the same period in fiscal year 1997. The following tables present
information related to the Company's operation. For purpose of comparison this
table does not include the recently acquired subsidiary, As de Oros:
<PAGE>
COSTA RICA INTERNATIONAL, INC.
SIX MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 % INCREASE
-------------- --------------- ----------
Net Sales $39,783,001 $32,643,629 21.87%
Operational Profit 2,976,709 2,216,153 34.32%
COSTA RICA INTERNATIONAL, INC.,
(With As de Oros)
SIX MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 % INCREASE
-------------- -------------- ----------
Net Sales $43,433,554 $32,643,629 33.05%
Operational Profit
3,144,406 2,216,153 41.88%
The following table presents certain items as a percentage of net sales for the
period indicated:
COSTA RICA INTERNATIONAL, INC.
SIX MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
Net Sales 100% 100%
Cost of Sales 75.27% 75.04%
Gross Profit 24.73% 24.96%
Sales Expenses 9.93% 9.89%
General/Administrative 7.56% 8.28%
Net income before minority interest 4.80% 4.61%
NET SALES:
General. Net sales generated by the Company's operation for the six months ended
March 31, 1998 and 1997 were $43,433,554 and $32,643,629 respectively, an
increase of $10,789,925 or 33.05%. The following table displays sales amounts by
segment for each quarter:
COSTA RICA INTERNATIONAL, INC.
SIX MONTHS ENDED
- --------------------------------------------------------------
SEGMENT MARCH 31,1998 MARCH 31, 1997 % INCREASE
- --------------------------------------------------------------
Broiler Chicken 26,782,395 20,899,650 28.15%
By- Products 4,928,035 3,662,087 34.57%
Animal Feed 4,749,436 3,142,387 51.14%
Exports 1,129,064 1,045,593 7.98%
Restaurants 729,762 0 100%
Others 5,114,862 3,893,912 31.36
- --------------------------------------------------------------
Total $43,433,554 $32,643,629 33.05%
- --------------------------------------------------------------
<PAGE>
Broiler chicken. Sales of broiler chicken increased 28.15% for the six months
ended March 31, 1998 compared to the six months ended March 31, 1997. The
increase is primarily due to a 29.62% increase in tonnage offset by a -1.47%
decrease in prices. Excluding As de Oros sales, tonnage increased 22.81%.
By-products improved profitability during this period. Total sales for this
segment increased 34.57% during the six months ended March 31, 1998 compared to
the same period of 1997. The increase of $1,265,948 is due to a 14.37% increase
in tonnage and the remaining 20.20% is due to price increases among the products
within this segment (patties, sausages, further-processed products, and
processing done for others) and sales mix. Of the tonnage increase, 2.61%
results from the As de Oros acquisition.
Animal Feed. Sales for commercial animal feed increased 51.14% during the six
months ended March 31, 1998 compared to the same period of fiscal year 1997.
This sales increase corresponds to a 60.13% increase in tonnage, offset by a
8.99% decrease due to exchange rate variations. Importantly, commercial animal
feed is As de Oros' core business and has an important market share among the
Costa Rican market. Without this new subsidiary, animal feed tonnage increased
4.59%.
Exports. The company's exports increased 7.98% during the six months ended March
31, 1998 compared to the same period of fiscal year 1997. This increase in
exports was due to the combined result of a 2.98% increase in tonnage and a 5%
price increase.
Others. Sales of "Others", which include animal feed and baby chicks to
integrated producers, and commercial eggs, raw materials and baby chicks to
third parties, increased 31.36% during the six months ended March 31, 1998
compared to the same period in fiscal year 1997.
The following table displays the Company's sales distribution, for the six
months ended March 31, 1998 and 1997:
COSTA RICA INTERNATIONAL, INC.
SALES DISTRIBUTION
SIX MONTHS ENDED
- --------------------------------------------------------------------------------
SEGMENT MARCH 31, 1998 MARCH 31,1997 NET INCREASE/DECREASE
- --------------------------------------------------------------------------------
Broiler Chicken 61.66% 64.02% -2.36%
By- Products 11.35% 11.22% 0.13%
Animal Feed 10.93% 9.63% 1.30%
Restaurants 1.68% 0.00% 1.68%
Exports 2.60% 3.20% -0.60%
Other 11.78% 11.93% -0.15%
- --------------------------------------------------------------------------------
<PAGE>
Note: In April of 1997, the Company's then only subsidiary, Pipasa, completed
the acquisition of the poultry division and animal feed business of
Coopemontecillos R.L. for approximately $2,700,000. Pipasa acquired the assets,
including plant, equipment, vehicle fleet, inventory, hens and raw materials and
some accounts receivable. Coopemontecillos had a 6% market share of the Costa
Rican poultry market, but this was not a significant factor in the animal feed
market.
COST OF SALES:
General. Cost of sales was $32,692,997 and $24,496,065 for the six months ended
March 31, 1998 and 1997, respectively, an increase of 33.46%. This increase in
the cost of sales was due primarily to a 46.39% increase in tonnage offset by
the effect of lower cost of raw materials, such as imported grains and the
advantage of higher efficiency due to increase in volume. As a percentage of
sales, cost of sales was 75.27% for the six months ended March 31, 1998 compared
to 75.04% in the same period of fiscal year 1997, for a net decrease of 0.22%.
The "El Nino" weather phenomenon was not as harsh on the technical yields as it
was during the six months ended March 31, 1997. Nevertheless, weather
forecasters predict high temperatures during the months of March to September
1998, which may again negatively affect the incubation, reproduction and growing
yields of the Company. As disclosed in previous reports filed with the SEC, the
Company's subsidiaries have taken measures to mitigate the pervasive effect of
these high temperatures but cannot assure that this weather phenomenon will not
affect other important technical yields such as weight, conversion (pounds of
feed per ponds of meat) or pathologies. The Company has continued to import
fertile eggs throughout the analyzed period and intends to continue with these
imports until the reproduction division is self-sufficient. Management expects
to reach self- sufficiency during the month of September 1998, when a
substantial number of reproduction hens reach hatching age.
The following factors contributed in maintaining cost of sales as a percentage
of net sales at a stable level:
/bullet/ Average prices for imported soybean meal decreased 8% during the first
half of fiscal year 1998 when compared to average prices in the same
period of fiscal year 1997.
/bullet/ Sales price increased in November 1997 and January 1998, in the by-
product segment.
/bullet/ Whole and chicken parts imports
/bullet/ Low fertility in imported eggs
/bullet/ Higher volume, with the consequent advantage of higher capacity
utilization
<PAGE>
/bullet/ Return to the standard diet formulation in November 1998. However, in
January 1998, Management decided to go switch to a high-energy diet
formulation to increase weight.
The following table presents cost of sales information by segment, with the
correspondent increase percentage, impact of volume and unit cost variations.
COSTA RICA INTERNATIONAL, INC.
SIX MONTHS ENDED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SEGMENT MAR 31, 1998 MAR 31, 1997 INCREASE VOLUME VARIATION HIGHER (LOWER) COST
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Animal feed $3,741,025 $2,651,396 41.10% 60.13% -19.04%
By Products 2,662,666 2,261,079 17.76% 14.37% 3.39%
Exports 787,867 752,044 4.76% 2.98% 1.78%
Others 4,871,454 3,760,744 29.53% 54.93% -25.40%
Broiler Chicken 20,295,168 15,070,802 34.67% 29.62% 5.04%
Restaurant 334,817 - -- 100.00% 0.00%
- ---------------------------------------------------------------------------------------------------
Total $32,692,997 24,496,065 33.46% 46.40% -12.94%
</TABLE>
Gross profit:
Gross profit for the six months ended March 31, 1998 and 1997 was $10,743,558
and $8,147,564, respectively, an increase of $2,595,994 or 31.86%. As a
percentage of net sales, gross profit was 24.74% and 24.96%, respectively for
the first half of fiscal year 1998 and 1997, due to the issues discussed above.
The following table shows gross profit for each segment for the six months ended
March 31, 1998 and 1997:
COSTA RICA INTERNATIONAL, INC.
SIX MONTHS ENDED
- --------------------------------------------------------------------------
SEGMENT MAR 31, 1998 MAR 31, 1997 DIFFERENCE
- --------------------------------------------------------------------------
Animal feed 21.23% 15.62% 5.61%
Chicken By Products 45.97% 38.26% 7.71%
Exports 30.22% 28.07% 2.15%
Others 4.76% 3.42% 1.39%
Broiler Chicken 24.22% 27.89% -3.67%
Restaurants 54.12% -- -54.12%
- --------------------------------------------------------------------------
GROSS PROFIT 24.73% 24.96% -0.23%
- --------------------------------------------------------------------------
General and administrative expenses:
General and administrative expenses increased 19.88% for the six months ended
March 31, 1998 compared to the same period of fiscal year 1997. As a percentage
of net sales, this item decreased from 8.28% during the first half of fiscal
year 1997 to 7.45% during the same period in fiscal year 1998.
<PAGE>
Sales expenses:
Sales expenses increased by $1,081,437 or 33.49% during the first half of fiscal
year 1998, compared with the same period of fiscal year 1997. As a percentage of
net sales, sales expenses increased from 9.89% during the first half of fiscal
year 1997 to 9.93% during the same period of fiscal year 1998.
Other income/expenses (net):
Other income and expenses (net) increased by $176,258 or 37.16% when comparing
the six months ended March 31, 1998 and 1997. The Company's interest expense
increased by 17.46% when compared to the same period of fiscal year 1997,
interest income decreased 7.38% respectively, and exchange rate losses (gains)
increased 349.77% when compared to the first half of fiscal year 1997. Exchange
rate losses increased as a result of the debt restructuring.
FINANCIAL CONDITION
Liquidity and capital resources.
The Company's cash and cash equivalents totaled $3,137,986 as of March 31, 1998
and $1,388,290 at the end of fiscal year 1997, an increase of $1,749,696.
Operating activities:
For the six months ended March 31, 1998 and 1997 net cash used by operating
activities was ($714,823) and ($1,365,422), respectively. These variations are
explained mainly by a combined increase in notes and accounts receivable, due
from related party and inventories. Accounts receivables increased because of
the net sales increment in both subsidiaries. Inventories increased principally
due to an increment in raw materials and in process inventories, that were
increased this period to reach safe inventory levels.
Investing activities:
Cash used in investing activities was $473,031 and ($2,428,284) for the six
months ended March 31, 1998 and 1997, respectively. The variation in investing
activities during the six months ended March 31, 1998 compared to the same
period of fiscal year 1997 is explained mainly by a significant increase in
short-term investments during the first half of fiscal year 1997. The Company
invested $982,067 and $404,732 in property, plant and equipment during the first
half of fiscal year 1998 and fiscal year 1997 respectively. Among the most
significant investment were assets used for the normal course of operation.
Additionally, the Company acquired 56.38% of common stock of As de Oros. This
acquisition was financed through the issuance of parent company shares and long
term debt.
<PAGE>
Financing activities:
During the period under analysis, the Company financed its operations mainly
through its own funds and a new long-term loan that improved its liability
structure (see note 4). On January 23, 1998, Management concluded a negotiation
to refinance part of its subsidiary Pipasa's short-term debt, with the private
placement of US $8 million of the Company's 11.71% Series A Senior Notes due
January 15, 2005 ("the Offering"), agented by Citicorp Securities, Inc.
Additionally, on February 26, 1998 Management concluded another negotiation to
refinance most of its recently acquired subsidiary, As de Oros' debt, with the
private placement of US $12 million of the Company's 11.71% Series B Senior
Notes due January 15, 2005 ("the Offering"), agented by Citicorp Securities,
Inc. The most important effects in the Company's financial position as a result
of the Offering are:
AS OF MARCH 31, 1998 AS OF SEPTEMBER 30, 1997
-------------------------------------------------------
Working Capital $8,426,295 ($2,288,838)
Current Ratio 1.44 0.88
- ---------------------------------------------------------------------------
Future amortization payments of this private placement, are as follows:
YEAR AMORTIZATION
---- ------------
January 15, 2001 $ 4,000,000
January 15, 2002 $ 4,000,000
January 15, 2003 $ 4,000,000
January 15, 2004 $ 4,000,000
January 15, 2005 $ 4,000,000
Working Capital:
As of March 31, 1998, working capital was $8,426,295 compared to working capital
as of September 30, 1997 of $(2,288,838), an increase of $10,715,133. The effect
of the Offering in both subsidiaries substantially improved the Company's
liquidity. The current ratios were 1.44 and 0.88 as of March 31, 1998 and
September 30, 1997 respectively.
Leverage ratio:
Leverage as of March 31, 1998 and 1997 was 4.41, compared to 3.29 respectively.
This ratio increased mainly due to the 41.93% increase in stockholders' equity.
This increase in equity is explained mainly by operations income and issuance of
stock to acquire As de Oros, combined with an 89% increase in total liabilities,
that are a result of the acquired subsidiary's consolidation.
<PAGE>
OTHER MATTERS
Environmental Compliance:
The Company is not subject to any material costs for compliance with any
environmental laws in any jurisdiction in which it operates. However, in the
future, the Company could become subject to material costs to comply with
environmental laws in jurisdictions in which it does not now do business. At the
present time, the Company cannot assess the potential impact of any such
potential environmental regulation on cash flow, results of operations and
financial condition. The Company practices sustainable environmental policies
such as reforestation, processes and recycles its waste, produces of organic
fertilizer, and is currently improving its oxidation lagoons and sewage
treatment plants.
Year 2000 Issue:
The Company established a formal Year 2000 oversight committee in December 1997.
Along with this committee, the Company has a written certificate stating that
its Information Systems tools, developed by Oracle, are "FULLY COMPLIANT" with
the Year 2000 changes. The Company has begun the conversion, testing and
implementation stages of the entity's Year 2000 plan, which includes vendors,
customers and intermediaries. Testing of software, hardware and electronic
devices is being documented. Management expects to complete its Year 2000 plan
during fiscal year 1998 and fiscal year 1999. As de Oros was incorporated in
this committee since the date of the acquisition. To the extent that the Company
can not effectively implement the plan, adverse results could arise.
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company and its representatives may from time to time make written or oral
forward-looking statements with respect to their current views and estimates of
future economic circumstances, industry conditions, company performance and
financial results. These forward-looking statements are subject to a number of
factors and uncertainties, which could cause the Company's actual results and
experiences to differ materially from the anticipated results and expectations,
expressed in such forward-looking statements. The Company wishes to caution
readers not to place undue reliance on any forward-looking statements, which
speak only as of the date made. Among the factors that may affect the operating
results of the Company are the following: (i) fluctuations in the cost and
availability of raw materials, such as feed grain costs in relation to
historical levels; (ii) market conditions for finished products, including the
supply and pricing of alternative proteins, all of which may impact the
Company's pricing power; (iii) risks associated with leverage, including cost
increases due to rising interest rates; (iv) changes in regulations and laws,
including changes in accounting standards, environmental laws, occupational,
health and safety; currency fluctuations; and (v) the effect of, or changes in,
general economic conditions.
<PAGE>
This management discussion and analysis of financial condition and results of
operations may include certain forward-looking statements, within the meaning of
Section 27E of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including (without limitations)
statements with respect to anticipated future operations and financial
performance, growth and acquisition opportunity and other similar forecast and
statements of expectation. Words such as expects, anticipates, intends, plans,
believes, seeks, estimates and should and various of those words and similar
expressions are intended to identify these forward-looking statements.
Forward-looking statements made by the Company and its management are based on
estimates, projections, beliefs and assumptions of management at the time of
such statements and are not guarantees of future performance. The Company
disclaims any obligations to update or review any forward-looking statements
based on occurrence of future events, the receipt of new information or
otherwise.
Actual future performance outcomes and results may differ materially from those
expressed in forward-looking statements made by the Company and its management
as a result of numbers of risks, uncertainties and assumptions. Representative
examples of these factors include (without limitations) general industrial and
economic conditions; cost of capital and capital requirements; shifts in
customer demands; changes in the continued availability of financial amounts and
at the terms necessary to support the Company's future business.
PART II - OTHER INFORMATION
ITEM 2. Changes in securities and use of proceeds: Issuance of 2,447,508
Common Stock to acquire new subsidiary.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed with this report:
EXHIBIT NO. DESCRIPTION
- -------------------------------------------------------------------------------
10.1 Note Purchase Agreement
- -------------------------------------------------------------------------------
10.2 Stock Purchase Agreement
- -------------------------------------------------------------------------------
27 Financial Data Schedule
- -------------------------------------------------------------------------------
(b) Report on Form 8-K. One report on Form 8-K was filed by the Company
on March 11, 1998, disclosing the Company's acquisition of 51% of
the voting shares of As de Oros, or, 56.38% of its total common
stock.
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company that duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
COSTA RICA INTERNATIONAL, INC.
Dated: May 20, 1998 /s/ CALIXTO CAVES
------------------------------
Calixto Chaves
Chief Executive Officer
Dated: May 20, 1998 /s/ JORGE M. QUESADA
------------------------------
Jorge M. Quesada
Chief Financial Officer
Dated: May 20, 1998 /s/ MONICA CHAVES
------------------------------
Monica Chaves
Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Note Purchase Agreement
10.2 Stock Purchase Agreement
27 Financial Data Schedule
EXHIBIT 10.1
CONFORMED COPY
===============================================================================
COSTA RICA INTERNATIONAL, INC.
$8,000,000 (U.S. DOLLARS) PRINCIPAL AMOUNT
11.71% SERIES A SENIOR NOTES DUE JANUARY 15, 2005
$12,000,000 (U.S. DOLLARS) PRINCIPAL AMOUNT
11.71% SERIES B SENIOR NOTES DUE JANUARY 15, 2005
--------------------
NOTE PURCHASE AGREEMENT
--------------------
DATED AS OF JANUARY 1, 1998
===============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. AUTHORIZATION OF NOTES...............................................1
1.1. Description of Notes........................................1
1.2. Guaranty....................................................1
2. SALE AND PURCHASE OF NOTES...........................................2
3. CLOSINGS.............................................................2
4. CONDITIONS TO EACH CLOSING...........................................3
4.1. Representations and Warranties..............................3
4.2. Performance; No Default.....................................3
4.3. Compliance Certificates.....................................3
4.4. Opinions of Counsel.........................................3
4.5. Purchase Permitted By Applicable Law, etc...................4
4.6. Sale of Other Notes.........................................4
4.7. Payment of Special Counsel Fees.............................4
4.8. Private Placement Number....................................4
4.9. Changes in Corporate Structure..............................4
4.10. Proceedings and Documents...................................4
4.11. Rating......................................................5
4.12. Stock Purchase Agreement....................................5
4.13. Special Conditions to Closing of Series B Notes.............5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................6
5.1. Organization; Power and Authority...........................6
5.2. Authorization, etc..........................................6
5.3. Disclosure..................................................6
5.4. Organization and Ownership of Shares of Subsidiaries........7
5.5. Financial Statements........................................8
5.6. Compliance with Laws, Other Instruments, etc................8
5.7. Governmental Authorizations, etc............................8
5.8. Litigation; Observance of Statutes and Orders...............8
5.9. Taxes.......................................................9
5.10. Title to Property; Leases...................................9
5.11. Licenses, Permits, etc......................................9
5.12. Compliance with ERISA......................................10
5.13. Private Offering by the Company............................11
5.14. Use of Proceeds; Margin Regulations........................11
5.15. Existing Debt..............................................11
5.16. Foreign Assets Control Regulations, etc....................12
i
<PAGE>
5.17. Status under Certain Statutes..............................12
5.18. Environmental Matters......................................12
6. REPRESENTATIONS OF THE PURCHASER....................................13
6.1. Purchase for Investment....................................13
6.2. Source of Funds............................................13
7. INFORMATION AS TO COMPANY...........................................15
7.1. Financial and Business Information.........................15
7.2. Officer's Certificate......................................18
7.3. Inspection.................................................18
8. PREPAYMENT OF THE NOTES.............................................19
8.1. Required Prepayments.......................................19
8.2. Optional Prepayments with Make-Whole Amount................19
8.3. Change of Control..........................................19
8.4. Allocation of Partial Prepayments..........................21
8.5. Maturity; Surrender, etc...................................21
8.6. Purchase of Notes..........................................21
8.7. Make-Whole Amount..........................................21
9. AFFIRMATIVE COVENANTS...............................................23
9.1. Compliance with Law........................................23
9.2. Insurance..................................................23
9.3. Maintenance of Properties..................................23
9.4. Payment of Taxes...........................................24
9.5. Corporate Existence, etc...................................24
9.6. Subsidiary Acknowledgment..................................24
9.7. As de Oros Acquisition and Guaranty........................24
10. NEGATIVE COVENANTS..................................................25
10.1. Transactions with Affiliates...............................25
10.2. Merger, Consolidation, etc.................................25
10.3. Consolidated Net Worth.....................................25
10.4. Limitation on Debt.........................................26
10.5. Interest Coverage Ratio....................................26
10.6. Limitation on Liens........................................26
10.7. Restricted Payments........................................28
10.8. Sale of Assets.............................................28
10.9. Restricted Investments.....................................28
10.10. Nature of Business.........................................29
10.11. Pari Passu Position........................................29
10.12. Intercreditor Agreement....................................29
11. EVENTS OF DEFAULT...................................................29
ii
<PAGE>
12. REMEDIES ON DEFAULT, ETC............................................31
12.1. Acceleration...............................................31
12.2. Other Remedies.............................................32
12.3. Rescission.................................................32
12.4. No Waivers or Election of Remedies, Expenses, etc..........33
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................33
13.1. Registration of Notes......................................33
13.2. Transfer and Exchange of Notes.............................33
13.3. Replacement of Notes.......................................34
14. PAYMENTS ON NOTES...................................................34
14.1. Place of Payment...........................................34
14.2. Home Office Payment........................................35
15. EXPENSES, ETC.......................................................35
15.1. Transaction Expenses.......................................35
15.2. Indemnification by the Company.............................36
15.3. Survival...................................................36
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........36
17. AMENDMENT AND WAIVER................................................37
17.1. Requirements...............................................37
17.2. Solicitation of Holders of Notes...........................37
17.3. Binding Effect, etc........................................37
17.4. Notes held by Company, etc.................................38
18. NOTICES.............................................................38
19. REPRODUCTION OF DOCUMENTS...........................................39
20. CONFIDENTIAL INFORMATION............................................39
21. SUBSTITUTION OF PURCHASER...........................................40
22. INCREASED COSTS; TAXES; INDEMNIFICATION.............................40
22.1. Tax Indemnification........................................40
22.2. Currency and Judgment Currency.............................41
23. MISCELLANEOUS.......................................................42
23.1. Successors and Assigns.....................................42
23.2. Payments Due on Non-Business Days..........................42
23.3. Severability...............................................42
23.4. Construction...............................................43
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23.5. Counterparts...............................................43
23.6. Law Governing; Consent to Jurisdiction.....................43
23.7. Service of Process.........................................44
23.8. Knowledge..................................................44
23.9. Currency...................................................44
23.10. Federal....................................................44
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stocks
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Litigation
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt and Liens
SCHEDULE 5.18 -- Environmental Disclosure
SCHEDULE 10.4 -- Limitation on Debt
SCHEDULE 10.6 -- Existing Liens
SCHEDULE B-1 -- Chaves Family Members
SCHEDULE B-2 -- Existing Investments
EXHIBIT A-1 -- Form of 11.71% Series A Senior Note due January 15, 2005
EXHIBIT A-2 -- Form of 11.71% Series B Senior Note due January 15, 2005
EXHIBIT B -- Form of Note Guaranty
EXHIBIT C -- Form of Intercreditor Agreement
EXHIBIT 4.4 -- Forms of Opinions
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COSTA RICA INTERNATIONAL, INC.
$8,000,000 (U.S. DOLLARS) PRINCIPAL AMOUNT
11.71% SERIES A SENIOR NOTES DUE JANUARY 15, 2005
$12,000,000 (U.S. DOLLARS) PRINCIPAL AMOUNT
11.71% SERIES B SENIOR NOTES DUE JANUARY 15, 2005
Dated as of January 1, 1998
TO EACH OF THE PURCHASERS LISTED IN THE
ATTACHED SCHEDULE A (the "PURCHASERS"):
Ladies and Gentlemen:
COSTA RICA INTERNATIONAL, INC., a Nevada corporation (the
"COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
1.1. DESCRIPTION OF NOTES.
The Company will authorize the issue and sale of (a)
$8,000,000 (U.S. Dollars) aggregate principal amount of its 11.71% Series A
Senior Notes to be dated January 23, 1998 and due January 15, 2005 (the "SERIES
A NOTES") and (b) $12,000,000 (U.S. Dollars) aggregate principal amount of its
11.71% Series B Senior Notes to be dated no later than April 30, 1998 (see
Section 4.13 hereof) and due January 15, 2005 (the "SERIES B NOTES") (together,
the Series A Notes and the Series B Notes and each Series A and Series B Notes
delivered in substitution therefor shall be referred to herein as the "NOTES").
The Notes shall be substantially in the forms set out in Exhibits A-1 and A-2,
with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
1.2. GUARANTY.
The Notes will be guaranteed by the Note Guarantors pursuant
to the Note Guaranty.
<PAGE>
2. SALE AND PURCHASE OF NOTES.
(a) Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the Company, at
the Closings provided for in Section 3, Notes in the principal amount and series
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Your obligation hereunder and the obligations of the
other Purchasers are several and not joint obligations and you shall have no
obligation hereunder and no liability to any Person for the performance or
non-performance by any other Purchaser hereunder.
(b) The Company agrees that if the Second Closing does not
occur on or prior to April 30, 1998, the Company shall pay to the Noteholders a
termination fee of $200,000 (U.S. Dollars) (the "TERMINATION Fee") which the
Company agrees to pay no later than May 5, 1998.
3. CLOSINGS.
The sale and purchase of the Notes to be purchased by you and
the other Purchasers shall occur at the offices of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131, at
9:00 a.m., Eastern time, (a) at a closing with respect to the Series A Notes on
January 23, 1998 (the "FIRST CLOSING") and (b) with respect to the Series B
Notes on a date no later than April 30, 1998 (see Section 4.13 hereof) (the
"SECOND CLOSING") (together, the "CLOSINGS"), or on such other Business Day with
respect to each Closing as may be agreed upon by the Company and the Purchasers.
At each Closing the Company will deliver to you in the form of a single Note
(or, in the case of the Series A Notes, such greater number of Notes in
denominations of at least $200,000 (U.S. Dollars) or, in the case of the Series
B Notes, such greater number of Notes in denominations of at least $500,000
(U.S. Dollars) as you may request) dated the date of each Closing and registered
in your name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in U.S. Dollars in the
amount of the purchase price therefor by wire transfer for the account of
Citibank (Costa Rica) S.A. at Citibank, N.A., Account Number 10957981, ABA
Number: 021000089, for credit to the Company's account at Citibank (Costa Rica)
S.A.; provided, however, that with respect to the Second Closing, the Purchasers
retain the right to wire the purchase price of the Series B Notes directly to
the holders of the As de Oros Debt, as further described in Section 4.13. If at
each Closing the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment.
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4. CONDITIONS TO EACH CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at each Closing is subject to the fulfillment to your satisfaction, prior
to or at each Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of each Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at each Closing and after
giving effect to the issue and sale of the Notes no Default or Event of Default
shall have occurred and be continuing as of each Closing. Neither the Company
nor any Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Sections 10.1, 10.4, 10.7 or 10.8
hereof had such Sections applied since such date.
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to
you Officer's Certificates, dated the date of each Closing certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have delivered
to you a certificate dated the date of each Closing certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes, the Agreement and the Note
Guaranty.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of each Closing (a) from Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., special United States counsel for the
Company and Pipasa, as Note Guarantor, and from Consultores Juridicos
Especializados, Costa Rica special counsel for the Company and the Note
Guarantor, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to the transactions contemplated hereby as you or
your counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you), and (b) from Gardner, Carton & Douglas,
your special counsel in connection with such transactions, substantially in the
form set forth in Exhibit 4.4(a) and covering such other matters incident to
such transactions as you may reasonably request.
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4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of each Closing, your purchase of the Notes shall
(i) be permitted by the laws and regulations of each jurisdiction to which you
are subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
4.6. SALE OF OTHER NOTES.
Contemporaneously with each Closing the Company shall sell to
each Purchaser and each Purchaser shall purchase the Notes to be purchased by
them as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before each Closing the reasonable fees, charges and
disbursements of your special counsel referred to in Section 4.4 and of Facio &
Canas, your special Costa Rica counsel, to the extent reflected in a statement
of such counsel rendered to the Company at least one Business Day prior to each
Closing.
4.8. PRIVATE PLACEMENT NUMBER.
Private placement numbers issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.9, as of the date of each
Closing, neither the Company nor the Note Guarantor shall have changed its
jurisdiction of incorporation or been a party to any merger or consolidation or
shall have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.10. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions (including, without limitation, the Note Guaranty)
shall be reasonably satisfactory to you and
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your special counsel, and you and your special counsel shall have received all
such counterpart originals or certified or other copies of such documents as you
or they may reasonably request.
4.11. RATING.
The Company shall provide written evidence that Notes are
rated no lower than "BB" by Duff & Phelps Rating Agency on the date of each
Closing.
4.12. STOCK PURCHASE AGREEMENT.
The Company shall have executed a stock purchase agreement
dated as of January 22, 1998 pursuant to which the Company will directly (and
not through any holding company or otherwise) acquire 51% of the Voting Stock of
As de Oros, which Voting Stock shall not be encumbered by any Liens (the "STOCK
PURCHASE AGREEMENT").
4.13. SPECIAL CONDITIONS TO CLOSING OF SERIES B NOTES.
(a) The Purchasers' obligations to purchase the Notes pursuant
to this Agreement will terminate if the Second Closing does not occur prior to
or on April 30, 1998.
(b) The Company shall provide the Purchasers with 20 days
prior written notice of the date of the Second Closing, which notice will
include a schedule of the As de Oros Debt (including names of lenders and
outstanding principal amounts to be prepaid with proceeds of the Series B
Notes).
(c) As a condition to the purchase of the Series B Notes, the
Purchasers shall have received the following (which receipt, in the case of
clauses (i), (ii), (iii) (iv) and (vii), may occur contemporaneously with the
purchase of the Notes): (i) evidence, in form satisfactory to the Purchasers,
that the As de Oros Acquisition has been consummated pursuant to the terms of
the Stock Purchase Agreement, (ii) copies of all of the endorsed share
certificates of As de Oros which will be in the possession of the Company,
indicating a transfer to the Company of ownership of 51% of the Voting Stock of
As de Oros unencumbered by any Lien; (iii) a copy of the stockholder ledger of
As de Oros, reflecting the ownership by the Company of 51% of the Voting Stock
of As de Oros; (iv) an opinion of United States counsel to the Company
acceptable to the Purchasers stating that the As de Oros Acquisition has been
consummated on substantially the same terms and for substantially the same
purchase price as set forth in the Stock Purchase Agreement and that all
consents and approvals required under the Stock Purchase Agreement have been
obtained; (v) pay-off letters and releases from those holders of As de Oros Debt
(the "AS DE OROS DEBT") which will be paid in full with the proceeds of the
Series B Notes, setting forth the amounts necessary to pay in full such As de
Oros Debt and providing wire transfer information (the "PAY-OFF LETTERS"); (vi)
evidence in a form satisfactory to the Purchasers and their counsel, that Angui
has directed the trust in which certain Voting Stock of As de Oros is held to
distribute 51% of the Voting Stock of As de Oros to the Company immediately upon
the repayment of the As de Oros Debt, and that all conditions necessary for the
transfer of such Voting Stock to the Company, free and clear of all
encumbrances, have been met, (vii) the Note
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Guaranty executed and delivered by As de Oros and (viii) such other documents
and instruments as the Purchasers may reasonably require.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers as of
each Closing that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and authority to
own or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof. The Note Guarantor has the corporate power under its jurisdiction of
incorporation to execute and deliver the Note Guaranty and to perform the
provisions thereof.
5.2. AUTHORIZATION, ETC.
(a) This Agreement and the Notes have been duly authorized by
all necessary action on the part of the Company, and this Agreement constitutes,
and upon execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) The Note Guaranty has been duly authorized by all
necessary action on the part of the Note Guarantor, and upon execution and
delivery thereof the Note Guaranty will constitute a legal, valid and binding
obligation of the Note Guarantor enforceable against each Note Guarantor in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3. DISCLOSURE.
The Company, through its agent, Citicorp Securities, Inc., has
delivered to you and each other Purchaser a copy of a Private Placement
Memorandum dated November 1997, as supplemented January 23, 1998 (the
"MEMORANDUM"), relating to the transactions contemplated hereby and to the As de
Oros Acquisition. Except as disclosed in Schedule 5.3, this Agreement,
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<PAGE>
the Memorandum, the documents, certificates or other writings furnished to the
Purchasers and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in
the Memorandum or as expressly described in one of the documents, certificates
or other writings identified therein or in the financial statements listed in
Schedule 5.5, since September 30, 1997, there has been no change in the
financial condition, operations, business or properties of the Company or any of
its Subsidiaries except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of
the Company specifically for use in connection with the transactions
contemplated hereby.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) Schedule 5.4 is (except as noted therein) a complete and
correct list (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of capital stock or similar
equity interests of such Subsidiary.
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5.5. FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance (a) by the Company of
this Agreement and the Notes and (b) by the Note Guarantor of the Note Guaranty
will not (i) contravene, result in any breach of, or constitute a default under,
or result in the creation of any Lien in respect of any property of the Company
or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase
or credit agreement, lease, corporate charter or by-laws, or any other agreement
or instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
Except for the filing of the "Relevant Events Report" with the
Costa Rican Securities and Exchange Commission (Comision Nacional de Valores),
which the Note Guarantor agrees to file promptly (but in any event within 10
Business Days), no consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes or by the Note Guarantor of the Note Guaranty.
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) Except as disclosed on Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened in
writing against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed on Schedule 5.8, neither the Company
nor any Subsidiary is in default under any term of any agreement or instrument
to which it is a party or
8
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by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation Environmental Laws)
of any Governmental Authority, which default or violation, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, including social
security payments, sales tax returns and municipal taxes of the Subsidiaries,
and have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties, assets, income
or franchises payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which is not individually or in the
aggregate Material or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of U.S. and Costa Rican state or
other taxes for all fiscal periods are adequate in all material respects. The
U.S. and Costa Rican federal income tax liabilities of the Company and its
Subsidiaries have been audited by the U.S. Internal Revenue Service and by
Direccion General de la Tributacion Directa (Ministerio de Hacienda), and paid
for all fiscal years up to and including the fiscal year ended September 30,
1997.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement. All inventory and accounts receivable of the
Company and its Subsidiaries are free and clear of all Liens. All leases that,
individually or in the aggregate, are Material leases are valid and subsisting
and are in full force and effect in all material respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the
9
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rights of others, except for those conflicts that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
(a) The Company, each Subsidiary and each ERISA Affiliate have
operated and administered each Plan and Foreign Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities
under each of the Plans and Foreign Plans (other than Multiemployer Plans),
determined as of the end of such Plan's or Foreign Plan's most recently ended
plan year on the basis of the actuarial assumptions specified for funding
purposes in such Plan's or Foreign Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan or
Foreign Plan allocable to such benefit liabilities. The term "BENEFIT
LIABILITIES" has the meaning specified in section 4001 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B of the Code) of the Company and its Subsidiaries is not Material.
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(e) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Company in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of your representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by you.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you, the other Purchasers and not more than
8 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale of
the Notes to the registration requirements of Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of (a) the
Series A Notes to the prepayment of Debt of the Company or its Subsidiaries and
for general corporate purposes and (b) the Series B Notes to the prepayment of
the As de Oros Debt upon the consummation of the As de Oros Acquisition. No part
of the proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR Part 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR Part 224) or to involve any broker or dealer
in a violation of Regulation T of said Board (12 CFR Part 220). Margin stock
does not constitute more than 1% of the value of the consolidated assets of the
Company and its Subsidiaries and the Company does not have any present intention
that margin stock will constitute more than 1% of the value of such assets. As
used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR
CARRYING" shall have the meanings assigned to them in said Regulation G.
5.15. EXISTING DEBT.
(a) Except as described therein, Schedule 5.15 sets forth (i)
a complete and correct list of all outstanding Debt of the Company and its
Subsidiaries and of As de Oros as of January 16, 1998, since which date there
has been no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company or its
Subsidiaries or of As de Oros and (ii) a list of which Debt of the Company and
its Subsidiaries is to be prepaid with the proceeds of the Notes. Neither the
Company nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Debt of the
Company or such Subsidiary and no event or condition exists with respect to
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any Debt of the Company or any Subsidiary that would permit (or that with notice
or the lapse of time, or both, would permit) one or more Persons to cause such
Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.6.
(c) No Subsidiary is the Guarantor of Debt of the Company or
any other Subsidiary (except with respect to the Note Guaranty).
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
Except as disclosed in Schedule 5.18, neither the Company nor
any Subsidiary has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real properties
now or, to the best knowledge of the Company, formerly owned, leased or operated
by the Company or any Subsidiary or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in Schedule 5.18,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in
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each case in any manner that could reasonably be expected to result in a
Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, PROVIDED that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(b) the Source is either (I) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (II) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
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(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA; or
(g) the Source is an "insurance company general account,"
within the meaning of Section V(e) of the Department of Labor
Prohibited Transaction Class Exemption ("PTE") 95-60 (issued July 12,
1995), and as of the date hereof, the amount of reserves and
liabilities (as defined in the annual statement for life insurance
companies approved by the National Association of Insurance
Commissioners ("NAIC ANNUAL STATEMENT") and before reduction for
credits on account of any reinsurance ceded on a coinsurance basis (the
"RESERVES AND LIABILITIES") for such insurance company general
account's contract(s) held by or on behalf of any ERISA Plan, together
with the amount of Reserves and Liabilities for such insurance company
general account's contract(s) held by or on behalf of any other ERISA
Plans maintained by the same employer (or any "affiliate" thereof,
within the meaning of Section V(a)(I) of PTE 95-60) or by the same
employee organization, do not exceed 10% of the total Reserves and
Liabilities of such insurance company general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurance
company maintaining such general account, and the Company is not an
"affiliate," within the meaning of Section V(a) of PTE 95-60, of the
insurance company maintaining such general account.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
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7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and
stockholders' equity and consolidated statements of cash flows
of the Company and its Subsidiaries for the portion of the
fiscal year ending with such quarter,
setting forth, in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial statements
generally, and certified by a certified public accountant and a Senior Financial
Officer as fairly presenting, in all material respects, the financial position
of the companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, PROVIDED that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10-QSB, if any, prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) ANNUAL STATEMENTS -- within 120 days after the end
of each fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income and
stockholders' equity and consolidated statements of cash flows
of the Company and its Subsidiaries, for such year, setting
forth, in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied,
(A) by an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion shall state that such financial
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statements present fairly, in all material respects, the
financial position of the companies being reported upon and
their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for
such opinion in the circumstances, and
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether,
in making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or
event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants
shall not be liable, directly or indirectly, for any failure
to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
PROVIDED that the delivery within the time period specified above of
the Company's Annual Report on Form 10-KSB for such fiscal year, if
any, (together with the Company's annual report to stockholders, if
any, prepared pursuant to Rule 14a 3 under the Exchange Act) prepared
in accordance with the requirements therefor, and filed with the
Securities and Exchange Commission, together with the accountant's
certificate described in clause (B) above, shall be deemed to satisfy
the requirements of this Section 7.1(b);
(c) SEC AND OTHER REPORTS -- if the Company is registered
under the Exchange Act or the Securities Act, promptly upon their becoming
available, and if applicable, one copy of (i) each financial statement, report,
notice or proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic report, each
registration statement that shall have become effective (without exhibits except
as expressly requested by such holder), and each final prospectus and all
amendments thereto filed by the Company or any Subsidiary with the Securities
and Exchange Commission;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in
any event within five Business Days after a Responsible Officer becomes aware
(i) of the existence of any Default or Event of Default, (ii) that any Person
has given any notice or taken any action with respect to a claimed default
hereunder or (iii) that any Person has given any notice or taken any action with
respect to a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within ten
days after a Responsible Officer becomes aware of any of the following, a
written notice setting forth the
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nature thereof and the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(c) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date hereof;
or
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, would reasonably be expected to have a Material
Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to the Company
or any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) RULE 144A INFORMATION. -- except at such times as the
Company is a reporting company under Section 13 or 15(d) of the Exchange Act or
has complied with the requirements for the exemption from registration under the
Exchange Act set forth in Rule 12g3-2(b), such financial or other information as
any holder of the Notes may determine is required to permit such holder to
comply with the requirements of Rule 144A under the Securities Act in connection
with the resale by it of the Notes;
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes.
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7.2. OFFICER'S CERTIFICATE.
Each set of consolidated financial statements delivered to a
holder of Notes pursuant to Section (a) or Section (b) of Section 7.1 shall be
accompanied by certificates of a certified public accountant and a Senior
Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.2 through Section 10.10
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such Senior Financial
Officer has reviewed the relevant terms hereof and is knowledgeable
concerning transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that during such period no condition or event existed
or exists that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and, to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists,
at the expense of the Company to visit and inspect any of the offices
or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
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8. PREPAYMENT OF THE NOTES.
8.1. REQUIRED PREPAYMENTS.
On January 15, 2001 and on each January 15 thereafter to and
including January 15, 2004 the Company will prepay $4,000,000 (U.S. Dollars)
principal amount (or such lesser principal amount as shall be outstanding) of
the Notes, with the remaining principal payable at maturity on January 15, 2005.
Each such prepayment shall be at a price of 100% of the principal amount
prepaid, together with interest accrued thereon to the date of prepayment and
without payment of the Make-Whole Amount or any premium.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes in an amount
not less than $1,000,000 (U. S. Dollars) of the aggregate principal amount of
the Notes then outstanding in the case of a partial prepayment, at 100% of the
principal amount so prepaid, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
certificates of a certified public accountant and a Senior Financial Officer as
to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes certificates of a
certified public accountant and a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date.
8.3. CHANGE OF CONTROL.
(a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company
will, within three Business Days after any Responsible Officer has knowledge of
the occurrence of any Change in Control or Control Event, give written notice of
such Change in Control or Control Event to each holder of Notes unless notice in
respect of such Change in Control (or the Change in Control contemplated by such
Control Event) shall have been given pursuant to subparagraph (b) of this
Section 8.3. If a Change in Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in subparagraph (c) of this
Section 8.3 and shall be accompanied by the certificate described in
subparagraph (g) of this Section 8.3.
(b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless (i) at least 45
days prior to such action it shall have given to each holder of Notes written
notice containing and constituting an offer to prepay Notes as accompanied by
the certificate described in subparagraph (g) of this Section 8.3,
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and (ii) subject to the provisions of paragraph (d) below, contemporaneously
with such action, it prepays all Notes required to be prepaid in accordance with
this Section 8.3.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by subparagraphs (a) and (b) of this Section 8.3 shall be an offer
to prepay, in accordance with and subject to this Section 8.3, all, but not less
than all, the Notes held by each holder (in this case only, "holder" in respect
of any Note registered in the name of a nominee for a disclosed beneficial owner
shall mean such beneficial owner) on a date specified in such offer (the
"PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection
with an offer contemplated by subparagraph (a) of this Section 8.3, such date
shall be not less than 20 days and not more than 60 days after the date of such
offer.
(d) ACCEPTANCE. A holder of Notes may accept the offer to
prepay made pursuant to this Section 8.3 by causing a notice of such acceptance
to be delivered to the Company at least 10 days prior to the Proposed Prepayment
Date. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3 shall be deemed to constitute an acceptance of such
offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant
to this Section 8.3 shall be at 100% of the principal amount of such Notes, plus
the Make-Whole Amount determined for the date of prepayment with respect to such
principal amount, together with interest on such Notes accrued to the date of
prepayment. Two Business Days preceding the date of prepayment, the Company
shall deliver to each holder of Notes being prepaid a statement showing the
Make-Whole Amount in connection with such prepayment and setting forth the
details of the computation of such amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph (f) of this Section
8.3.
(f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
Company to prepay Notes pursuant to the offers required by subparagraphs (a) and
(b) and accepted in accordance with subparagraph (d) of this Section 8.3 is
subject to the occurrence of the Change in Control in respect of which such
offers and acceptances shall have been made. In the event that such Change in
Control does not occur on the Proposed Prepayment Date in respect thereof, the
prepayment shall be deferred until and shall be made on the date on which such
Change in Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of (i) any such deferral of the date of prepayment, (ii) the
date on which such Change in Control and the prepayment are expected to occur,
and (iii) any determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and acceptances
made pursuant to this Section 8.3 in respect of such Change in Control shall be
deemed rescinded).
(g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 8.3 shall be accompanied by a certificate, executed by
a certified public accountant and a Senior Financial Officer of the Company and
dated the date of such offer, specifying: (i) the Proposed Prepayment Date, (ii)
that such offer is made pursuant to this Section 8.3, (iii) the principal amount
of each Note offered to be prepaid, (iv) the estimated Make-Whole Amount due
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in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation,
(v) the interest that would be due on each Note offered to be prepaid, accrued
to the Proposed Prepayment Date, (vi) that the conditions of this Section 8.3
have been fulfilled and (vii) in reasonable detail, the nature and date or
proposed date of the Change in Control.
(h) EFFECT ON REQUIRED PAYMENTS. The amount of each payment of
the principal of the Notes made pursuant to this Section 8.3 shall be applied
against and reduce each of the then remaining principal payments due pursuant to
Section 8.1 on the Notes (allocated as set forth in Section 8.4) by a percentage
equal to the aggregate principal amount of the Notes so paid divided by the
aggregate principal amount of the Notes outstanding immediately prior to such
payment.
8.4. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Note, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes (regardless of series) at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
8.5. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and canceled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.
8.6. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.7. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, PROVIDED
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that the Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Make-Whole Amount, the following terms have the following
meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Sections 8.2
or 8.3 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, the yield to maturity implied by (I) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate
Access Service (or such other display as may replace Page 678 on
Telerate Access Service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, PLUS.50% or (II) if such yields
are not reported as of such time or the yields reported as of such time
are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, PLUS.50%. Such implied yield will be determined, if
necessary, by (A) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice
and (B) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury
security with the duration closest to and less than the Remaining
Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such
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Called Principal were made prior to its scheduled due date, PROVIDED
that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the
next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be
paid on such Settlement Date pursuant to Sections 8.2, 8.3 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or 8.3 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, Environmental Laws, and
will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to
maintain under a program of self-insurance or, with financially sound and
reputable insurers, insurance with respect to their respective properties and
businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations engaged in the same
or a similar business and similarly situated in the same jurisdiction.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, PROVIDED that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its
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properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance would not, individually
or in the aggregate, have a Material Adverse Effect.
9.4. PAYMENT OF TAXES.
The Company will and will cause each of its Subsidiaries to
file all income tax or similar tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any
such tax or assessment if (I) the amount, applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (II) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
9.5. CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.2 and 10.8, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the Company
or a Subsidiary) and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise would not, individually or in the aggregate, have
a Material Adverse Effect.
9.6. SUBSIDIARY ACKNOWLEDGMENT.
The Company will within three Business Days following the
consummation of any future acquisition of any Subsidiary take the necessary
actions to hold shareholder meetings and Board of Directors meetings to make
appropriate acknowledgment of this Agreement and, in particular, of those
provisions that may obligate such Subsidiary to take certain actions or to limit
its ability to perform certain actions, especially those provisions included in
Sections 8, 9 and 10 of this Agreement.
9.7. AS DE OROS ACQUISITION AND GUARANTY.
The Company will, within three Business Days following the
consummation of the As de Oros Acquisition, (a) cause As de Oros to execute and
deliver the Note Guaranty and the Guaranty Endorsements to the Notes and deliver
to the Noteholders an opinion of independent counsel satisfactory to the
Required Holders with respect to the validity and enforceability of such
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Note Guaranty and such other matters as the Required Holders may require and (b)
deliver to the Noteholders an updated Schedule 5.4 revised to reflect As de Oros
as a new Subsidiary.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to
enter into directly or indirectly any Material transaction or arrangement or
Material group of related transactions or arrangements (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
10.2. MERGER, CONSOLIDATION, ETC.
The Company shall not, and shall not permit any Subsidiary to,
consolidate with or merge with any other Person, PROVIDED however that: (a) any
Subsidiary may merge with the Company or another Wholly-Owned Subsidiary; and
(b) the Company may merge with any other Person if (i) the surviving entity is a
solvent entity organized in the U.S., (ii) the surviving entity expressly
assumes in writing the Company's obligation under the Notes and furnishes the
holders of the Notes with an opinion of independent counsel satisfactory to the
Required Holders to the effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
contract and agreement of the surviving corporation enforceable in accordance
with its terms, subject to such qualifications as may be satisfactory to the
Required Holders, (iii) immediately after giving effect to such transaction no
Default or Event of Default shall exist and (iv) the surviving entity could
incur $1 of additional Funded Debt pursuant to Section 10.4(a).
10.3. CONSOLIDATED NET WORTH.
(a) For any period during which the As de Oros Acquisition has
not been consummated, the Company shall not permit Consolidated Net Worth,
measured as of the last day of any fiscal quarter, to be less than the sum of
(i) $5,500,000 (the "Base Figure") plus (ii) 50% of Consolidated Net Income (but
only if a positive number) earned on a cumulative basis for each of the elapsed
fiscal quarters ending after December 31, 1997; provided, that revaluation of
the Company's consolidated balance sheet resulting from changes in currency
exchange rates shall not be included in calculating compliance with this Section
10.3.
(b) On the date of consummation of the As de Oros Acquisition,
clause (i) of paragraph (a) of this Section 10.3 shall be amended to change the
Base Figure to an amount
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equal to 75% of Consolidated Net Worth as of the date of the consummation of the
As de Oros Acquisition, after giving effect to the As de Oros Acquisition. The
Company shall provide the Holders of the Notes with certificates of a certified
public accountant and a Senior Financial Officer specifying the Base Figure
within three Business Days of the date of the consummation of the As de Oros
Acquisition.
10.4. LIMITATION ON DEBT.
(a) The Company shall not, and shall not permit any Subsidiary
to permit there to be outstanding Debt except: (i) the Notes and all existing
Consolidated Funded Debt as of the Closing Date and described on Schedule 10.4
hereof; (ii) Funded Debt of a Subsidiary owed to the Company or to another
Wholly-Owned Subsidiary; and (iii) additional Debt, provided that the ratio of
Consolidated Total Debt to Consolidated EBITDA shall at no time exceed (A) 4.25
to 1.00 for the period from the First Closing Date through March 31, 1998, (B)
3.75 to 1.00 for the period from April 1, 1998 through June 30, 1998, (C) 3.50
to 1.00 for the period from July 1, 1998 through September 30, 1998 and (D) 3.00
to 1.00 after September 30, 1998.
(b) The Company shall not permit its Subsidiaries to permit
there to be outstanding Debt, other than (i) Consolidated Funded Debt of
Subsidiaries as of the First Closing Date and described on Schedule 10.4 hereof,
(ii) Debt owed to the Company or another Wholly-Owned Subsidiary, (iii)
Permitted Subsidiary Guaranties; (iv) additional Debt provided that the sum of
(1) Total Debt outstanding of all Subsidiaries plus (2) Debt secured by Liens
permitted under Section 10.6(j) will at no time exceed (A) 1.00 times
Consolidated EBITDA from the First Closing Date through December 31, 1998 and
(B).50 times Consolidated EBITDA after December 31, 1998; provided that such
Debt must also be permitted to be incurred pursuant to paragraph (a) of this
Section 10.4.
(c) The Company may renew, extend, substitute, refinance or
replace any Consolidated Funded Debt permitted pursuant to paragraphs (a) and
(b) above (except (a)(ii) and (b)(ii)); provided that the principal amount of
Consolidated Funded Debt resulting from such renewal, extension, substitution,
refinancing or replacement shall not exceed the original principal amount of
such Consolidated Funded Debt and that no additional security shall be granted
to secure such Consolidated Funded Debt.
10.5. INTEREST COVERAGE RATIO.
The Company will not, as of the end of any fiscal quarter,
permit the Interest Coverage Ratio for the four preceding consecutive fiscal
quarters to be (a) less than 2.00 to 1.00 for the period from the First Closing
Date through March 31, 1998 and (b) less than 2.50 to 1.00 after March 31, 1998.
10.6. LIMITATION ON LIENS.
The Company shall not, and shall not permit its Subsidiaries
to create or incur, or permit to exist any Lien on its property except for:
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(a) Liens for property taxes, assessments or other
governmental charges which are not yet due and payable;
(b) Liens securing landlords, carriers, warehousemen,
mechanics, materialmen and other similar Liens;
(c) Liens incidental to the normal conduct of the business of
the Company or any Subsidiary including Liens in connection with workers'
compensation, unemployment insurance, and other governmental insurance or
benefits, excluding Liens incurred in connection with the borrowing of money;
(d) Liens to secure the performance of bids, tenders or trade
contracts or to secure statutory obligations, surety or appeal bonds or other
Liens of a similar value incurred in the ordinary course of business and not in
connection with the borrowing of money;
(e) Liens resulting from judgments which the Company or a
Subsidiary is protesting in good faith and which are effectively stayed,
provided that adequate reserves shall have been made for such judgment in
accordance with GAAP;
(f) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the Company
and its Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair their use in the operation of the business of the
Company and its Subsidiaries.
(g) Liens securing Debt of the Company or a Subsidiary to the
Company or to another Wholly-Owned Subsidiary;
(h) Liens in existence as of the First Closing Date and
described in Schedule 10.6 hereof;
(i) Liens, mortgages or purchase money interests securing
payment of the purchase price of assets provided (i) any such Liens attach
solely to property acquired, constructed or improved within 180 days of the date
of acquisition or commencement of construction; (ii) the principal amount of the
Debt secured by any such Lien shall not exceed the lesser of (A) the cost to the
Company or the Subsidiary of such property or (B) the fair market value of such
property (as determined in good faith by senior management of the Company); and
(iii) Debt secured by such Lien shall have been incurred within the limitations
set forth in Section 10.4; and
(j) other Liens securing Consolidated Total Debt, provided
that the sum of (i) Debt secured by such Liens and (ii) Debt of Subsidiaries
incurred pursuant to Section 10.4(b) will not exceed (A) 1.00 times Consolidated
EBITDA from the First Closing Date through
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December 31, 1998 and (B).50 times Consolidated EBITDA after December 31, 1998;
and provided, further, that such Debt could be incurred pursuant to Section
10.4(a).
10.7. RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its
Subsidiaries to, at any time, declare or make or incur any liability to declare
or make, any Restricted Payment unless immediately after giving effect to such
action:
(a) the aggregate amount of Restricted Payments of the Company
and its Subsidiaries declared or made during the period from and after the First
Closing Date to and including the date of the Restricted Payment in question
would not exceed the sum of (i) $1,000,000 (U.S. Dollars); plus (ii) 50% of
Consolidated Net Income (but only if a positive number) calculated on a
cumulative basis for the entire period from December 31, 1997 to and including
the date of making a Restricted Payment); plus (iii) the net proceeds from the
sale or issuance after the First Closing Date (and other than to the Company or
a Subsidiary) of the Company's capital stock; and
(b) no Default or Event of Default would exist.
The Company will not declare any dividend which constitutes a Restricted Payment
payable more than 60 days after the date of its date of declaration.
10.8. SALE OF ASSETS.
The Company shall not, and shall not permit its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any assets (a "Disposition")
during any single fiscal year, other than in the ordinary course of business if
(i) the aggregate book value of assets associated with Dispositions made in any
fiscal year would exceed 10% of Consolidated Net Worth determined as of the end
of the immediately preceding fiscal quarter, or (ii) the aggregate net proceeds
of all such Dispositions made after the First Closing Date would exceed 25% of
Consolidated Net Assets, and PROVIDED that, immediately after the consummation
of the Disposition and after giving effect thereto, (A) no Default or Event of
Default would exist and (B) the Company would be permitted to incur at least
$1.00 of additional Debt pursuant to Section 10.4(a); PROVIDED, further however,
that any Disposition is permitted without compliance with clauses (i) and (ii)
of this Section 10.8 if the proceeds therefrom are used within 12 months to (B)
acquire assets related to the Company's business of comparable value or (C)
reduce Senior Debt (on a pro rata basis among holders of Senior Debt), subject,
as to the Notes, to the prepayment requirements and at the price set forth in
Section 8.2; provided, however, that any holder of Notes may, in its sole
discretion, decline to have its Notes so prepaid.
10.9. RESTRICTED INVESTMENTS.
The Company shall not, and shall not permit any Subsidiary to
make any Investments which are Restricted Investments.
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10.10. NATURE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to,
engage in any business if, as a result thereof, (a) less than 95% of the assets
of the Company and its Subsidiaries, taken as a whole, would be used in, and (b)
less than 95% of the assets of the Company and its Subsidiaries, taken as a
whole, would be derived from, the production and sale of chickens and their
by-products or the raw materials used in connection with the production and sale
of chickens including, but not limited to, animal feed.
10.11. PARI PASSU POSITION.
The Company agrees that it will not grant or provide, and at
no time will it allow to exist, be created or granted, any Guaranties by
Subsidiaries for the benefit of, any of the bank lenders or other senior lenders
to the Company or its Subsidiaries, unless in the case of the giving of any
Guaranties by Subsidiaries, the Noteholders shall simultaneously be provided
with such Guaranties.
10.12. INTERCREDITOR AGREEMENT.
The Company shall not permit any Subsidiary to issue a
Guaranty (other than a Note Guaranty issued to the Noteholders) to any Person in
connection with the incurrence of Debt by the Company or another Subsidiary
without requiring that the beneficiary of such Guaranty execute the
Intercreditor Agreement at the time of the issuance of such Guaranty.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal,
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any
Note or the Termination Fee for more than five Business Days after the same
becomes due and payable; or
(c) the Company or any Subsidiary defaults in the performance
of or compliance with any term contained in Sections 10.1 through 10.12 and
Section 9.6; or
(d) the Company or any Subsidiary defaults in the performance
of or compliance with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of such
default from any holder of a Note (any such written notice to be identified as a
"notice of default" and to refer specifically to this paragraph (d) of Section
11); or
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(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement or by a
Note Guarantor or any officer of a Note Guarantor in the Note Guaranty or in any
writing furnished by the Company or any Note Guaranty in connection with the
transactions contemplated hereby or in the Note Guaranty proves to have been
false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Debt that is outstanding in an
aggregate principal amount of at least $3,500,000 beyond any period of grace
provided with respect thereto, or (ii) the Company or any Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Debt in an aggregate outstanding principal amount of at least $3,500,000 or of
any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such Debt
has become, or has been declared (or one or more Persons are entitled to declare
such Debt to be), due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), (x) the Company or any Subsidiary has become obligated to purchase
or repay Debt before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at least
$3,500,000, or (y) one or more Persons have the right to require the Company or
any Subsidiary so to purchase or repay such Debt; or
(g) the Company or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief, reorganization, judicial management or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company or any
of its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of
its Subsidiaries and such petition shall not be dismissed within 60 days; or
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(i) a final judgment or judgments for the payment of money
aggregating in excess of $3,500,000 (U.S. Dollars) or the equivalent thereof in
another currency are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $1,000,000, (iv) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect; or
(k) any Note Guarantor defaults in the performance of or
compliance with any term of the Note Guaranty; or
(l) (i) the Note Guaranty ceases to be in full force and
effect for any reason whatsoever, including, without limitation, determination
by any Governmental Authority or court of any jurisdiction that the Guaranty is
invalid, void or unenforceable or (ii) a Note Guarantor shall deny or disclaim
in writing the validity or enforceability of the Note Guaranty.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company
described in paragraph (h) of Section 11 has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 51% in principal amount of the
Notes at the time outstanding may at any
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time at its or their option, by notice or notices to the Company, declare all
the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law) and (z)
if applicable, the Termination Fee, shall all be immediately due and payable, in
each and every case without presentment, demand, protest or further notice, all
of which are hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 51%
in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal or
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, all interest on such overdue principal
Make-Whole Amount, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate, and, if
applicable, the Termination Fee, (b) all Events of Default and Defaults, other
than non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the
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Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note or by the Note
Guaranty upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the Company
under Section 15, the Company will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all reasonable costs and expenses
of such holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp
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tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $500,000 (U. S.
Dollars), PROVIDED that (i) Notes issued on the First or Second Closing Dates in
denominations of less than $500,000 may be subsequently transferred in such
lesser denominations and (ii) if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $500,000 (U. S. Dollars). Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $100,000,000 (U. S. Dollars),
such Person's own unsecured agreement of indemnity shall be deemed to
be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
at the address of the Purchasers set forth in Schedule A hereto. The Company may
at any time, by notice to each holder of a Note, change the place of payment of
the Notes so long as such place of payment shall be either the principal office
of the Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction, provided however, that such place of payment is in
the United States of America.
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14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the presentation
or surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all reasonable costs and expenses (including
reasonable attorneys' fees of a special counsel and Costa Rican or other
counsel) incurred by you and each other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement, the Notes, the Note Guaranty
or the Intercreditor Agreement (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the reasonable costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement, the Notes, the Note Guaranty
or the Intercreditor Agreement or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement, the Notes, the Note Guaranty or the Intercreditor Agreement, or by
reason of being a holder of any Note, and (b) the reasonable costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes, the Note Guaranty or the Intercreditor Agreement, and (c) all costs and
expenses incurred in connection with the registration by the Purchaser with the
Costa Rican Central Bank for the purposes stated in Section 59, Paragraph 7 of
the Costa Rican Income Tax Law (Ley de Impuesto Sobre la Renta No. 7092), as
amended, and the appropriate resolutions of the Direccion General de la
Tributacion Directa del Ministerio de Hacienda de Costa Rica. The Company will
pay, and will save you and each other holder of a Note harmless from, all claims
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in respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2. INDEMNIFICATION BY THE COMPANY
The Company shall defend and indemnify the Noteholders (and
their officers, directors and employees) and hold the Noteholders (and their
officers, directors and employees) wholly harmless from and against any and all
losses, liabilities, damages, costs (including, without limitation, court costs
and costs of appeal in any U.S. or foreign jurisdiction) and expenses whatsoever
(including, without limitation, attorneys' fees and expenses) that the
Noteholders (and their officers, directors and employees) incur as a result of
(a) the Noteholders' (and their officers, directors and employees) registration
with the Costa Rican Central Bank referred to in Section 15.1 herein or (b) the
method of payment of interest or Make-Whole Amount by the Company or any
Subsidiary hereunder or (iii) any tax consequences to the Company or any
Subsidiary deriving from such registration or payments of interest or Make-Whole
Amount.
15.3. SURVIVAL.
The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes or the Note Guaranty or
the Intercreditor Agreement, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein and in the
Note Guaranty shall survive the execution and delivery of this Agreement, the
Notes and the Note Guaranty, the purchase or transfer by you of any Note or
portion thereof or interest therein and the partial payment of the Notes, and
may be relied upon as true and correct as of the date hereof by any subsequent
holder of a Note, regardless of any investigation made at any time by or on
behalf of you or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement,
the Notes and the Note Guaranty embody the entire agreement and understanding
between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof. Notwithstanding the
foregoing, except as otherwise expressly set forth herein, all such
representations, warranties and statements are made only as of the date hereof
and as of the each Closing Date and at no time subsequent thereto.
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17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement, the Notes and the Note Guaranty may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you unless
consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount or Rating Make Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the holders of
which are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with reasonable
information (which shall include, but not be limited to, information necessary
to make covenant compliance calculations), not less than five Business Days in
advance of the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof or of the Notes or of the
Note Guaranty. The Company will pay all reasonable attorney fees and expenses
incurred by each holder of the Notes in connection with the review, evaluation
and documentation of any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes or of the Note Guaranty. The Company
will deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
(b) PAYMENT. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder of
Notes as consideration for or as an inducement to the entering into by any
holder of Notes or any waiver or amendment of any of the terms and provisions
hereof or of the Note Guaranty unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder of
Notes then outstanding even if such holder did not consent to such waiver or
amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note
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and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein, the term "THIS AGREEMENT"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Subsidiaries or Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be
in writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the attention of Calixto Chaves or
Jorge M.L. Quesada, or at such other address as the Company shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
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19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at each Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means any of the financial statements or other financial
information that has been or may in the future be delivered to you by the
Company or any other information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary,
PROVIDED that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, PROVIDED that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates, (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance
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Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about your investment portfolio, or
(viii) any other Person to which such delivery or disclosure may, in the opinion
of your counsel, be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.
22. INCREASED COSTS; TAXES; INDEMNIFICATION
22.1. TAX INDEMNIFICATION.
(a) The Company agrees that in the event any payments made by
the Company or any Subsidiary or other Person hereunder or under the Notes or by
any Note Guarantor under the Note Guaranty to any holder of a Note are subject
to any income, stamp or other taxes, levies, imposts, duties, charges, fees,
set-offs, deductions, withholdings, restrictions or conditions of whatever
nature, now or hereafter imposed, levied, collected, withheld or assessed by or
within Costa Rica or any political subdivision, taxing or other governmental
authority thereof or therein or by the government of any other country or
jurisdiction or any authority therein or thereof (other than the United States)
from or through which payment is
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made or deemed to be made (such taxes are collectively referred to as "Taxes"),
then amounts payable hereunder shall be increased to such amount as is necessary
so that the holder of any Note shall receive net after Taxes (whether withheld
from amounts due the holder or assessed against the holder), the sum of (i) the
same amount that it would have received had no Taxes applied and (ii) any Taxes
imposed on the amounts by which the payments hereunder are increased. The
Company shall pay (or if the Company shall fail to pay, the Note Guarantor shall
pay) all Taxes at the time and in the manner prescribed by applicable law. If
the Company or any Subsidiary fails to withhold any Taxes as required by
applicable law and if such amounts are assessed against the holder of a Note,
the Company shall (or the Note Guarantor shall, if the Company fails) also
indemnify the holder of a Note for any interest and penalties assessed against
such holder. The Company shall furnish to each holder of a Note a receipt of Tax
withheld at the time and in the manner prescribed by applicable law; provided,
however, that in the event neither time nor manner is prescribed by applicable
law, then the Company shall furnish such information within five (5) Business
Days after such information is received by the Company.
(b) Payment under the indemnification described in this
Section 22.1 shall be made (i) in the case of any Taxes which the Company or a
Subsidiary is required to withhold or deduct from any payment hereunder or under
the Note Guaranty, by increasing the payment as may be necessary so that after
all such Taxes (including Taxes required in respect of the amount by which the
payment is increased) the holders of the Notes shall receive such amounts as
they would have received had no such Taxes been required to be withheld,
deducted, collected or assessed; and (ii) in any other case, within 30 days from
the date any holder entitled to the benefit of such indemnity makes written
demand therefor. A certificate as to the amount required to be indemnified
hereunder and the calculation thereof (if determinable), submitted to the
Company by such holder shall be conclusive and binding for all purposes, absent
manifest error and subject to the final determination of any amounts in respect
thereof as a result of a decision of the competent taxing authority and courts
of appeal therefrom.
(c) Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the Company
contained in this Section 22.1 shall survive the payment in full or principal of
and the interest on the Notes and all other amounts payable to the holders or
any of them hereunder or under or in respect of the Notes.
22.2. CURRENCY AND JUDGMENT CURRENCY.
The Company agrees to indemnify the Noteholders (or if the Company
fails to so indemnify, the Note Guarantor shall indemnify) against any loss
incurred by such holder as a result of any judgment or order being given or made
against the Company or any Subsidiary for any judgment or order being expressed
and paid in a currency other than United States Dollars in the manner set forth
below in (a), (b) and (c):
(a) All payments to be made by the Company or any of its
Subsidiaries pursuant to the Agreement, the Notes, or the Guaranty, including
but not limited to principal,
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interest, and Make-Whole Amounts, shall be in immediately available funds in
United States dollars, the currency of legal tender in the United States of
America
(b) If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder to the holder of a Note in one
currency into another currency, the Company and each holder agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures such holder
could purchase the first currency with such other currency in the city which is
the principal financial center of the country of issue of the first currency on
the day on which final judgment is given.
(c) The obligation of the Company in respect of any sum
payable by it to the holder of a Note shall, notwithstanding any judgment in a
currency (the "judgment currency") other than that in which such sum is
denominated in accordance with the applicable provisions herein (the "Note
currency") be discharged only to the extent that on the Business Day following
receipt by such holder of the Note of any sum adjudged to be so due in the
judgment currency, such holder of the Note may in accordance with normal banking
procedures purchase the Note currency with the judgment currency. If the amount
of the Note currency so purchased is less than the sum originally due to the
holder of the Note in the Note currency (determined in the manner set forth in
the preceding paragraph), the Company agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the holder of the Note against
such loss.
23. MISCELLANEOUS.
23.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
23.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
23.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition
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or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
23.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
23.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6. LAW GOVERNING; CONSENT TO JURISDICTION.
This Agreement shall be governed by and construed in
accordance with the laws of Florida. No provision of this Agreement may be
waived, changed or modified, or the discharge thereof acknowledged, orally,
except by an agreement in writing signed by the party against whom the
enforcement of any waiver, change, modification or discharge is sought. THE
COMPANY IRREVOCABLY AGREES THAT, SUBJECT TO THE NOTEHOLDER'S SOLE AND ABSOLUTE
CONSENT TO A CONTRARY JURISDICTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR THE
NOTES SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE COUNTY OF DADE,
STATE OF FLORIDA. THE COMPANY AND THE NOTEHOLDERS HEREBY IRREVOCABLY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE AGREEMENT, THE
NOTES, THE NOTE GUARANTY, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS
OF THE NOTEHOLDERS AND THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF. THE COMPANY HEREBY CONSENTS AND SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY,
COUNTY AND STATE. THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR
CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE COMPANY BY THE
NOTEHOLDERS IN ACCORDANCE WITH THIS PARAGRAPH.
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23.7. SERVICE OF PROCESS.
The Company, for the benefit of the holders from time to time
of the Notes, hereby irrevocably appoints CT Corporation Systems, Inc.,
Plantation, Florida as the authorized agent of the Company upon whom process may
be served in any suit or proceeding instituted in any state of federal court in
Florida arising out of or based upon this Agreement. The Company agrees that
service of process as aforementioned shall be deemed in every respect effective
service of process on the Company in any such suit or proceeding and that the
failure of any such designee, appointee and agent to give any notice of such
service to it shall not impair or affect in any way the validity of such service
or any judgment rendered in any action or proceeding based thereon. Nothing
herein shall in any way be deemed to limit the ability of the holders of the
Notes to serve any such legal process, summons, notices and documents in any
other manner permitted by applicable law or to obtain jurisdiction over the
Company or bring actions, suits or proceedings against the Company in such other
jurisdictions, and in such manner, as may be permitted by applicable law. The
Company agrees to take any and all action, including the execution and filing of
all such documents and instruments, as may be necessary to effect and continue
the appointment by the Company of said agent in full force and effect so long as
any of the Notes shall be outstanding.
23.8. KNOWLEDGE.
As used herein, "knowledge of the Company," "to the Company's
knowledge," "to the best of Company's knowledge" and all other similar words and
phrases mean the actual knowledge of any Responsible Officer.
23.9. CURRENCY.
All references to "U. S. Dollars" or the sign "$" shall denote
the lawful currency of the United States of America.
23.10. FEDERAL.
All references to "federal" shall refer to the United States
of America or to Costa Rica or to both of such countries as the context may
require or permit.
* * * * *
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If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
COSTA RICA INTERNATIONAL, INC.
By: /s/ Calixto Chaves
Its: President
45
<PAGE>
The foregoing is hereby agreed to as of the date hereof.
PACIFIC LIFE INSURANCE COMPANY
By: /s/ Ronn Cornelius
Its: Assistant Vice President
By: /s/ Diane W. Dales
Its: Assistant Secretary
PACIFIC LIFE INSURANCE COMPANY, as agent for Pacific Life CBO 1998-1 LTD.
By: /s/ Ronn Cornelius
Its: Assistant Vice President
By: /s/ Diane W. Dales
Its: Assistant Secretary
PM GROUP LIFE INSURANCE COMPANY
By: /s/ Peter S. Fiek
Its: Vice President
By: /s/ Diane W. Dales
Its: Assistant Secretary
46
<PAGE>
SCHEDULE A-1
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
- ----------------------------- ---------------------
Pacific Life Insurance Company, $5,000,000 (Series A)
as agent for Pacific Life CBO 1998-1 Ltd
700 Newport Center Drive
Newport Beach, California 92660-6397
Attention: Securities Administration
THE NOTE SHOULD BE REGISTERED IN THE NOMINEE NAME OF: LINCHMEN & CO.
WIRE INSTRUCTIONS
State Street Bank and Trust company
ABA #011-00-0028
Corporate Trust Department
DDA A/C #99039422
Ref: EW1200
PHYSICAL SETTLEMENTS
NEW YORK DELIVERY
Chase Manhattan Bank
a/c State Street Bank & Trust Co.
4 New York Plaza
Ground Floor/Receive Window
New York, New York 10004
Attention: Mike Jones
Telephone: 212-623-1023
Reference: Pacific Life CBO1998-1 Ltd.
General Tax ID #04-3126900
<PAGE>
SCHEDULE A-2
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
- ----------------------------- ---------------------
Pacific Life Insurance Company (1) $1,000,000 (Series A)
700 Newport Center Drive (2) $1,000,000 (Series A)
Newport Beach, California 92660-6397 (3) $ 800,000 (Series A)
Attention: Securities Administration (4) $4,000,000 (Series B)
(5) $4,000,000 (Series B)
(6) $3,200,000 (Series B)
ALL THE NOTES SHOULD BE REGISTERED IN THE NOMINEE NAME OF: ATWELL & CO.
For Physical Delivery of Certificates:
The Chase Manhattan Bank
4 New York Plaza
11th Floor Window
New York, NY 10004
Attn: Dave Calderon
212/623-8122/8199
A/C Name: Pacific Life General Acct
A/C #89930705
For Payment of Principal and Interest:
BBK=Chase Manhattan Bank/SSTO
ABA #0210-0002-1
A/C 900-9-002206
A/C Name: Pacific Life General Account
Sub A/C Number: 47363300
Re: [Security Description]
PPN: 221595 A* 2 (Series A)
221595 A@ 0 (Series B)
<PAGE>
All notices of payments and written confirmations of such wire
transfers:
The Chase Manhattan Bank
P.O. Box 456
Wall Street Station
New York, NY 10005
All other communications to the addressed listed above.
General Tax ID #: 95-1079000
<PAGE>
SCHEDULE A-3
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER NOTES TO BE PURCHASED
- ----------------------------- ---------------------
PM Group Life Insurance Company, (1) $200,000 (Series A)
700 Newport Center Drive (2) $800,000 (Series B)
Newport Beach, California 92660-6397
Attention: Securities Administration
ALL THE NOTES SHOULD BE REGISTERED IN THE NOMINEE NAME OF: ATWELL & CO.
For Physical Delivery of Certificates:
The Chase Manhattan Bank
4 New York Plaza
11th Floor Window
New York, NY 10004
Attn: Dave Calderon
212/623-8122/8199
A/C Name: PM Group
A/C #89930753
For Payment of Principal and Interest:
BBK=Chase Manhattan Bank/SSTO
ABA #0210-0002-1
A/C 900-9-002206
A/C Name: PM Group
Sub A/C Number: 47363300
Re: [Security Description]
PPN: 221595 A* 2 (Series A)
221595 A@ 0 (Series B)
<PAGE>
All notices of payments and written confirmations of such wire
transfers:
The Chase Manhattan Bank
P.O. Box 456
Wall Street Station
New York, NY 10005
All other communications to:
Pacific Life Insurance Company
Attn: Securities Administration
700 Newport Center Drive
Newport Beach, CA 92660-6397
General Tax ID #: 95-3769814
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
"AFFILIATE" means any other Person (other than a Subsidiary)
(i) which directly or indirectly through one or more intermediaries controls, or
is controlled by, or is in common control with, the Company; (ii) which
beneficially owns or holds 5% or more of the Voting Stock of the Company; or
(iii) 5% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held by the Company or a Subsidiary. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"AGREEMENT" is defined in Section 17.3.
"ANGUI" means Comercial Angui, S.A., a corporation organized
under the laws of Costa Rica.
"AS DE OROS" means Corporacion As de Oros, S.A., a corporation
organized under the laws of Costa Rica.
"AS DE OROS ACQUISITION" means the acquisition by the Company
of 51% of the Voting Stock of As de Oros, S.A., a corporation organized under
the laws of Costa Rica. This Acquisition will be consummated for purposes of
Sections 4.13 and 8.1(a) at such time as title to 51% of the Voting Stock of As
de Oros, S.A. (which stock will not be encumbered by any Liens) has been
conveyed directly (and not through any holding company or otherwise) to the
Company.
"BASE FIGURE" shall have the meaning assigned to such term in
Section 10.3 hereof.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York, New York are required or
authorized to be closed.
"CAPITALIZED LEASE" means any lease the obligation for Rentals
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
"CAPITALIZED RENTALS" means as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under
<PAGE>
which such Person is a lessee would be reflected as a liability on a
consolidated balance sheet of such Person.
"CHANGE IN CONTROL" means, (a) with respect to the Company, a
failure by the Company to maintain more than a 50% ownership of the Voting Stock
of Corporacion Pipasa or failure by the Company to maintain more than a 50%
ownership of the Voting Stock of As de Oros following the As de Oros Acquisition
or (b) failure by Calixto Chaves and/or the Chaves Family to maintain at least a
30% ownership of the Voting Stock of Corporacion Pipasa, S.A., directly, or
indirectly, through the holding company La Ribera, a corporation organized and
existing under the laws of Costa Rica.
"CHAVES FAMILY" means (a) any Person who is a lineal ascendant
or descendent or a relative or in-law, even in the third degree, of Calixto
Chaves or (b) the spouse, children or grandchildren or grandchildren of such
Person described in clause (a) or (c) the holding company Inversiones La Ribera,
S.A., a corporation organized and existing in accordance with the laws of Costa
Rica, with an indemnification card number of 3-101-17556 provided that such
holding companies shall only constitute Chaves Family members pursuant to this
definition if Calixto Chaves or members of the Chaves Family described in
clauses (a) or (b) hereof own in more than 50% of the Voting Stock of
Inversiones La Ribera, S.A. A schedule (i) showing Persons which currently are
included in the definition of Chaves Family and (ii) indicating the percentage
ownership of the Voting Stock of Inversiones La Ribera, S.A. held by Chaves
Family members pursuant to clauses (a) and (b) of this definition is set forth
as Schedule B-1.
"CLOSING" is defined in Section 3.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
"COMPANY" means Costa Rica International, Inc., a Nevada
corporation.
"CONSOLIDATED CURRENT DEBT" means all Current Debt of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED EBITDA" means, for a period ending at the last
day of any fiscal quarter, the sum of: (a) Consolidated Net Income for such
period, plus (b) to the extent deducted in determining Consolidated Net Income,
consolidated interest expense, consolidated depreciation expense, consolidated
amortization expense, minority interests and U.S. Federal, state and foreign
income taxes of the Company and its Subsidiaries, on a consolidated basis, all
as determined in accordance with GAAP.
"CONSOLIDATED FUNDED DEBT" means all Funded Debt of the
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
2
<PAGE>
"CONSOLIDATED INTEREST CHARGES" of the Company and its
Subsidiaries with respect to any Debt thereof (including, without limitation,
Capitalized Rentals) for any period means all interest charges and all
amortization of debt discount and expense on any particular Debt (including,
without limitation, payment-in-kind, zero coupon and other like securities) for
which such calculations are being made.
"CONSOLIDATED INTEREST COVERAGE RATIO" means, for the Company
and its Subsidiaries, the ratio of (a) Consolidated EBITDA for the four fiscal
quarters immediately preceding the determination date, to (b) Consolidated
Interest Charges for the four fiscal quarters (including interest with respect
to Capitalized Lease obligations and exclusive of deferred financing fees), in
accordance with GAAP.
"CONSOLIDATED NET INCOME" means consolidated net income and
net losses of the Company and its Subsidiaries, determined in accordance with
GAAP, after excluding the sum of (i) any net loss or any undistributed net
income of any Person in which the Company has an ownership interest other than a
Subsidiary; (ii) any net loss or any undistributed net income of any Subsidiary
prior to the date it becomes a Subsidiary; (iii) any gain or loss (net of tax
effect) resulting from the sale of any capital assets by the Company or
Subsidiary other than in the ordinary course of business; (iv) extraordinary,
unusual, or nonrecurring gains or losses; (v) gains resulting from the write-up
of assets; (vi) any earnings of any Subsidiary legally unavailable for payment
to the Company; and (vii) proceeds of any life insurance policy.
"CONSOLIDATED NET WORTH" of any Person means shareholder's
equity of such Person as set forth in the Company's consolidated balance sheet,
determined in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means the total assets of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means as of the date of
any determination thereof the sum of (a) Consolidated Net Worth and (b)
Consolidated Total Debt
"CONSOLIDATED TOTAL DEBT" means Consolidated Funded Debt plus
Consolidated Current Debt.
"CONTROL EVENT" means:
(a) the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or letter of intent with
respect to any proposed transaction or event or series of transactions
or events which, individually or in the aggregate, may reasonably be
expected to result in a Change in Control,
(b) the execution of any written agreement which,
when fully performed by the parties thereto, would result in a Change
in Control, or
3
<PAGE>
(c) the making of any written offer by any person (as
such term is used in section 13(d) and section 14(d)(2) of the Exchange
Act as in effect on the date of the Closing) or related persons
constituting a group (as such term is used in Rule 13d-5 under the
Exchange Act as in effect on the date of each Closing) to the holders
of the common stock of the Company, which offer, if accepted by the
requisite number of holders, would result in a Change in Control.
"CORPORACION PIPASA" means Corporacion Pipasa, S.A., a
corporation organized under the laws of Costa Rica.
"CURRENT DEBT" of any Person means as of the date of any
determination thereof (a) all Debt of such Person other than Funded Debt of such
Person and (b) Guaranties by such Person of all Debt other than Funded Debt of
others.
"DEBT" of any Person means, at any time, without duplication,
(i) obligations for borrowed money, (ii) obligations representing the deferred
purchase price of property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (iii) Capitalized Rentals, (iv) all reimbursement or payment obligations
with respect to letters of credit, (v) all liabilities for borrowed money
secured by a Lien with respect to any property owned by such Person (whether or
not it has assumed or otherwise become liable for such liabilities), and (vi)
any Guaranty, letter of credit or endorsement of such Person (other than of
notes, bills and checks presented to banks in the ordinary course of business),
in each case to support Debt of other Persons (but only in the amount of any
such Debt actually outstanding).
"DEFAULT" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"DEFAULT RATE" means 15%.
"DISPOSITION" is defined in Section 10.8.
"DISTRIBUTION" means, in respect of any Person: (i) dividends
either in cash or property or other distributions on shares of capital stock or
other equity interest of such Person (except distributions made payable solely
in such stock or other equity interest); and (ii) the redemption, retirement or
acquisition of such stock or other equity interests or of warrants, rights or
other options to purchase such stock or other equity interests (except when
solely in exchange of such stock or other equity interests) unless made,
contemporaneously, from the net proceeds of a sale or such stock or other equity
interests.
"ENVIRONMENTAL LAW" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by any
Governmental Authority concerning the protection of, or regulation of the
discharge of substances into, the environment or concerning the health or safety
of persons and animals; or the health or safety of consumers purchasing products
manufactured,
4
<PAGE>
processed or distributed by the Company and its Subsidiaries, with respect to
environmental hazards, in the United States or Costa Rica (including, without
limitation, the Ministries of Agriculture, Health and Environment and Energy)
and includes, without limitation, the Hazardous Materials Transportation Act,
U.S.C. s1801 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss9601 et seq., the Solid Waste Disposal
Act as amended by the Resource Conservation and Recovery Act of 1976 and the
Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. ss6901 et seq., the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. ss1251 et seq., the Clean Air Act of 1966, as amended, 42 U.S.C.
ss7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. ss2601 et
seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C., s7401
et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
ss651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986,
42 U.S.C. ss11001 et seq., the National Environmental Policy Act of 1975, 42
U.S.C. ss4321 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. ss300(f) et seq., and any similar or implementing state law, and all
amendments, rules and regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FIRST CLOSING" is defined in Section 3.
"FIRST CLOSING DATE" means the date of the First Closing.
"FOREIGN PLAN" means any employee benefit plan of the Company
or any Subsidiary governed by the laws of a jurisdiction other than the United
States of America.
"FUNDED DEBT" means all Debt having a final maturity of more
than one year, including current maturities thereof.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
5
<PAGE>
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) Costa Rica or any other political subdivision
thereof, or
(iii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any debt, dividend or other repayment obligation of any other
Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or otherwise,
by such Person:
(a) to purchase such debt or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such debt or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such debt or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such debt or
obligation of the ability of any other Person to make payment of the
debt or obligation; or
(d) otherwise to assure the owner of such debt or obligation
against loss in respect thereof.
In any computation of the debt or other liabilities of the obligor under any
Guaranty, the debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.
"HAZARDOUS SUBSTANCE" means any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any U.S. or Costa Rican local,
state, regional or federal authority having jurisdiction over the property of
the Company and its Subsidiaries or its use, including but not limited to any
material, substance or waste which is: (a) defined as a hazardous substance
under Section 311 of the Federal Water Pollution Control Act (33 U.S.C.
ss.1317), as amended; (b)
6
<PAGE>
regulated as a hazardous waste under Section 1004 or Section 3001 of the Federal
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act (42 U.S.C. ss.6901 et seq.), as amended; (c) defined as a hazardous
substance under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss.9601 et seq.), as amended, or (d)
defined or regulated as a hazardous substance or hazardous waste under any rules
or regulations promulgated under any of the foregoing statutes.
"HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.
"INFORMATION" is defined in Section 5.3.
"INSTITUTIONAL INVESTOR" means (A) any original purchaser of a
Note and (B) any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial institution or
entity, regardless of legal form that qualifies as an "Accredited Investor"
within the meaning of Rule 501 promulgated under the Securities Act.
"INTERCREDITOR AGREEMENT" means that Intercreditor Agreement
between the holders of the Notes and bank and other senior lenders the Debt of
which is Guarantied by Subsidiaries substantially in the form attached as
Exhibit C.
"INTEREST COVERAGE RATIO" means as of the date of any
determination the ratio of Consolidated EBIDTA to Consolidated Interest.
"INVESTMENTS" means all investments made, in cash or by
delivery of property, directly or indirectly in any Person whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise, but excluding
routine investments in property to be used in the ordinary course of business.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, or properties of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(A) the business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries taken as a whole, or (B) the ability of the
Company to perform its obligations under this
7
<PAGE>
Agreement and the Notes, (C) the ability of the Note Guarantors to perform their
respective obligations under the Note Guaranty or (D) the validity or
enforceability of this Agreement, the Notes or the Note Guaranty.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NAIC ANNUAL STATEMENT" is defined in Section 6.2(g).
"NOTE GUARANTOR(S)" means each of Corporacion Pipasa, As de
Oros (at such time as it becomes a Subsidiary) and each Subsidiary which is
required to issue a Guaranty pursuant to Section 9.6.
"NOTE GUARANTY" means the Guaranty substantially in the form
attached as Exhibit 1-C hereto executed by each Note Guarantor.
"NOTEHOLDER" shall have the same meaning as "holder."
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"PERMITTED SUBSIDIARY GUARANTIES" means those Guaranties
delivered by any Note Guarantor which guaranty Debt of the Company the
beneficiaries of which are or become a party to, and thereby agree to undertake
and perform the duties, rights and obligations of a party under the
Intercreditor Agreement.
"PERSON" means an individual, partnership, corporation,
limited liability company, joint venture, association, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.
"PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.
8
<PAGE>
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.
"RENTALS" means and includes as of the date of any
determination thereof all fixed payments (including as such all payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the property) payable by the Company or a Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive of
any amounts required to be paid by the Company or a Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any so-called
"PERCENTAGE LEASES" shall be computed solely on the basis of the minimum rents,
if any, required to be paid by the lessee regardless of sales volume or gross
revenues.
"REQUIRED HOLDERS" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.
"RESTRICTED PAYMENTS" means any Distribution in respect of the
Company or any Subsidiary including, without limitation, any Distribution
resulting in the acquisition by the company of securities which would constitute
treasury stock.
"RESTRICTED INVESTMENTS" means all investments except (i)
property used by the Company or any Subsidiary in the ordinary course of
business; (ii) assets arising from the sale of goods and services by the Company
or any Subsidiary in the ordinary course of business; (iii) Investments in, and
advances to, Subsidiaries, or Investment in any corporation, which after giving
effect to such Investment, will become a Subsidiary (in each case whether by
contributions to capital, loans, advances, or guarantees); (iv) Investments in
securities maturing within three years, guaranteed by the full faith and credit
of the United States of America or an agency thereof; (v) Investments in
municipal securities issued by governmental entities located in the United
States, maturing within three years, which are rated in one of the top two
rating classifications by at least one nationally recognized U.S. rating agency;
(iv) Investments in commercial paper unless rated at least "A-1" by Standard &
Poor's Corporation and "P-1" by Moody's Investors Service, and maturing within
270 days; (vii) certificates of deposit, Eurodollar deposits or banker's
acceptances issued by a bank or trust company domiciled in the United States and
rated in one of the top two rating classifications by at least one nationally
recognized U.S. rating agency; (viii) Investments in money market instrument
funds registered under the Securities Act and classified as current assets in
accordance with GAAP; (ix) any short-term asset management account (or demand
note option), comprised of investments rated at least "A-1" by Standard & Poor's
Corporation and "P-1" by Moody's Investors Service, and which is administered by
(or under the custody of), a registered securities broker, a bank or a trust
company located in the United States; (x) Debt instruments issued by the
Ministry of
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<PAGE>
Finance of Costa Rica, the Central Bank of Costa Rica, or direct investments in
instruments issued by any of the state-owned banks of Costa Rica (currently, but
not limited to, Banco Nacional de Costa Rica, Banco de Costa Rica and Banco
Credito Agricola de Cartago) (the "PUBLIC SECTOR"); (xi) Debt or equity
investments in instruments having a rating, by a recognized Costa Rican rating
agency, of "AA" and issued by Persons listed on any of the two existing stock
exchanges in Costa Rica; (xii) Investments in funds, mutual or not, or pool of
funds or portfolios of temporary investments (typically on-demand investments),
such funds or pool of funds to be backed by negotiable instruments issued by the
Public Sector (as defined above in clause (x)); or (xiii) other Investments
existing at the First Closing and set forth in Schedule B-1 hereto.
"SECOND CLOSING" is defined in Section 3.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"SENIOR DEBT" means any Debt of the Company or its
Subsidiaries that is at least pari passu with the Notes.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"STOCK PURCHASE AGREEMENT" is defined in Section 4.12.
"SUBSIDIARY" means a corporation with respect to which more
than 50% of the Voting Stock (other than stock having such power only by reason
of the happening of a contingency) is at the time owned by the Company or by one
or more Subsidiaries of the Company.
"TERMINATION FEE" is defined in Section 2(b).
"TOTAL DEBT" means Funded Debt plus Current Debt of the
Company and its Subsidiaries.
"VOTING STOCK" means securities of any class or classes, the
holders of which are (a) entitled to participate in all ordinary and
extraordinary shareholders meetings and vote therein without any restriction, in
connection with any corporate matter including the election of a majority of the
corporate directors (or Persons performing similar functions) and (b) entitled
to participate in all ordinary and/or extraordinary shareholders meetings.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except directors'
qualifying shares), voting interests and any debt of which are owned by any one
or more of the Company and the Company's other Wholly-Owned Subsidiaries at such
time.
10
<PAGE>
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
1. On or about January 22, 1998, the Company expects to enter into a stock
purchase agreement with Comercial Angui, S.A. ("Angui") to purchase 51%
of the voting stock ("Acquisition") of Corporacion As de Oros, S.A.
("As de Oros"). As de Oros is a wholly-owned subsidiary of Angui. The
Acquisition is expected to be consummated on or about April 30, 1998.
After consummation of the Acquisition, the remaining 49% of the voting
stock of As de Oros will remain in the control of Angui.
<PAGE>
SCHEDULE 5.3
DISCLOSURE
None.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5.4
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCKS
- ------------------------------------------------------------------------------------------------------------
CORPORATION'S NAME JURISDICTION OF INCORPORATION % OF OWNERSHIP
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORACION PIPASA, S.A. ("PIPASA") COSTA RICA 59.56%
CORPORACION AS DE OROS, S.A. ("OROS") COSTA RICA 51% voting stock
(to be acquired)
- ------------------------------------------------------------------------------------------------------------
AFFILIATES OF OROS OTHER
THAN THE SUBSIDIARIES
---------------------
RESTAURANTES AS, S.A.
RESTAURANTES AMADO, S.A.
- ------------------------------------------------------------------------------------------------------------------
DIRECTORS:
----------
PIPASA OROS
- ------------------------------------------------------------------------------------------------------------------
Calixto Chaves Z. President Antonio Echeverria President
Jorge Ml. Quesada Ch. General Vice President Carlos Zamora V. Vice President
Jose Zamora V. Treasurer Miguel A. Campos S. Secretary
Teresa Chaves Z. Secretary Renato Morera C. Treasurer
Francisco Vargas P. Director Danilo Chaverri Director
Jorge Monge Aguero Director
Oscar Barahona S. Comptroler Juan Fco. Antillon F. Comptroller
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 5.5
FINANCIAL STATEMENTS
ATTACHED HERETO AND MADE A PART HEREOF.
<PAGE>
SCHEDULE 5.8
LITIGATION
None.
<PAGE>
SCHEDULE 5.11
LICENSES, PERMITS, ETC.
None.
<PAGE>
SCHEDULE 5.14
USE OF PROCEEDS
The Notes will be used for the following purposes:
(i) a loan from the Company to the Guarantor for approximately
US $8 million to refinance all existing debt of the Guarantor
for general corporate purposes; and
(ii) a loan from the Company to As de Oros, S.A. ("As de Oros") for
approximately US $12 million to refinance all existing debt of
As de Oros for general corporate purposes (assuming at least
51% of the Voting Stock of As de Oros is acquired by the
Company).
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 5.15
EXISTING DEBT
CORPORACION PIPASA, S.A.
AMOUNTS NOT TO BE PAID WITH THE SERIES A NOTES. $6,222,676.99
---
C.R. COLONES
U.S. DOLLARS (US$1 = (CENT)246.00)
--------------- ---------------------
<S> <C> <C>
Balances Due:
Certificates of Deposit (Annex 1) (Unsecured) 3,625,073.59 891,768,102.31
Corporacion Alimentos El Rey (Unsecured) 495,934.96 122,000,000.00
Citibank - Letter of credit (Unsecured) 279,597.04 68,780,871.84
Southtrust Bank (Unsecured)............................... 589,441.40 145,002,584.40
Trust for Coopemontecillos (Secured) 1,232,630.00 303,226,980.00
--------------- ----------------------
TOTAL..................................................... US$6,222,676.99 (cent)1,530,778,538.55
=============== ======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION PIPASA, S.A.
DEBT TO BE PAID WITH THE SERIES A NOTES: $4,437,595.72
COMMERCIAL LOANS FROM PRIVATELY-OWNED COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN ORIGINAL MATURITY PRINCIPAL INTEREST BALANCE
BANK NUMBER AMOUNT DATE OUTSTANDING OUTSTANDING DUE SECURED
- --------------------------------- --------- ----------- -------- ----------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial International Bank
& Trust Co. 41-301539 $525,000.00 15/04/98 $425,000.00 $4,208.65 $429,208.65 Yes
Commercial International Bank
& Trust Co. 41-301599 46,887.60 28/07/98 31,887.34 310.00 32,197.34 Yes
Commercial International Bank
& Trust Co. 41-301592 100,000.00 01/01/98 100,000.00 1,169.45 101,169.45 Yes
----------- ------------- ----------- --------------
Subtotal Commercial International
Bank & Trust Co.
$671,887.60 $556,887.34 $5,688.10 $562,575.44
----------- ------------- ----------- --------------
Citibank (Costa Rica), S.A. 20272 $250,000.00 19/03/98 $250,000.00 $1,597.22 $251,597.22 No
Citibank (Costa Rica), S.A. 8297120004 700,000.00 01/04/99 420,402.96 1,818.65 422,221.61 Yes
----------- ------------- ----------- --------------
Subtotal Citibank $950,000.00 $670,402.96 $3,415.87 $673,818.83
----------- ------------- ----------- --------------
Banco Elca, S.A. 300407 $239,820.85 10/02/98 $72,562.66 $2,418.10 $74,980.76 Yes
----------- ------------- ----------- --------------
Banco Elca, S.A. 300756 49,540.40 04/05/98 49,540.40 772.01 50,312.41 Yes
----------- ------------- ----------- --------------
Subtotal Banco Elca, S.A. $289,361.25 $122,103.06 $3,190.11 $125,293.17
----------- ------------- ----------- --------------
Total Loans in Dollars $1,911,248.80 $1,369,393.37 $12,294.08 $1,361,687.44
=========== ============= =========== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION PIPASA, S.A.
COMMERCIAL LOANS FROM PUBLIC SECTOR COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN ORIGINAL MATURITY PRINCIPAL INTEREST BALANCE
BANK NUMBER AMOUNT DATE OUTSTANDING OUTSTANDING DUE SECURED
- -------------------------------- ----------- -------- ----------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Banco de Costa Rica 400341 (cent)30,000,000.00 28/06/98 (cent)5,859,587.07 (cent)74,001.88 (cent)5,933,588.95 Yes
Banco de Costa Rica 400784 10,000,000.00 13/12/00 7,397,562.85 14,949.25 7,412,512.10 Yes
Banco de Costa Rica 400103 50,000,000.00 20/05/99 18,552,599.30 18,552,599.30 Yes
Banco de Costa Rica 400754 100,000,000.00 31/08/00 68,201,199.45 68,201,199.45 Yes
Banco de Costa Rica 400783 20,000,000.00 13/12/00 14,524,442.80 26,620.15 14,551,070.95 Yes
Subtotal Banco
de Costa Rica (cent)210,000,000.00 01/04/99 (cent)114,535,391.47 (cent)115,579.28 (cent)114,650,970.75
Banco Nacional
de Costa Rica 301-00003 (cent)6,906,000.00 08/05/99 (cent)828,368.85 (cent)828,368.85 Yes
Banco Nacional
de Costa Rica -307-00742 14,000,000.00 15/06/01 5,883,378.97 193,319.57 6,076,698.54 Yes
Subtotal Banco
Nacional de
Costa Rica (cent)20,906,000.00 (cent)6,711,747.82 (cent)193,319.57 (cent)6,905,067.39
Banco Credito Agriola
de Cartago -65016-8 (cent)200,000,000.00 25/04/99 (cent)93,830,385.60(cent)1,318,982.75 (cent)95,149,368.35 Yes
Subtotal Banco Credito
Agricola de Cartago (cent)200,000,000.00 (cent)93,830,385.60(cent)1,318,982.75 (cent)95,149,368.35
Total Loans by
Public Sector Banks (cent)430,906,000.00 (cent)215,077,524.89(cent)1,627,881.60 (cent)216,705,406.49
Total in U. S. Dollars $1,751,650.41 $874,298.88 $6,617.40 $880,916.29
============= =========== ========= ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION PIPASA, S.A.
COMMERCIAL LOANS FROM PRIVATELY-OWNED COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN ORIGINAL MATURITY PRINCIPAL INTEREST BALANCE
BANK NUMBER AMOUNT DATE OUTSTANDING OUTSTANDING DUE
- ---------------------------- --------- ----------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Banco de Fomento
Agricola ("B.F.A")......... 20006 (cent)17,458,265.00 12/04/03 (cent)10,345,908.85 (cent)211,347.00 (cent)10,557,255.85
B.F.A. ..................... 20007 10,450,000.00 12/04/03 6,192,721.80 126,505.40 6,319,227.20
B.F.A....................... 20008 1,948,180.05 12/04/03 1,154,507.50 23,584.40 1,178,091.90
B.F.A....................... 20009 11,643,761.05 12/04/03 6,900,186.75 140,957.55 7,041,144.30
B.F.A....................... 20010 1,926,219.40 12/04/03 1,159,329.60 23,435.45 1,182,765.05
B.F.A....................... 20011 997,999.95 12/04/03 538,088.90 10,877.65 548,966.55
B.F.A....................... 20012 2,206,857.60 12/04/03 1,307,210.30 26,425.65 1,333,635.95
B.F.A....................... 20013 3,700,000.00 12/04/03 2,192,619.35 47,582.50 2,240,201.85
B.F.A....................... 20015 1,659,716.05 12/04/03 982,675.34 20,283.25 1,002,958.59
B.F.A....................... 301451 138,000,000.00 11/06/01 117,209,343.40 2,560,036.50 119,769,379.90
Subtotal B.F.A........... (cent)189,900,999.10 (cent)147,982,591.79 (cent)3,191,035.35 (cent)151,173,627.14
BICSA....................... 5258-8 (cent)119,490,806.90 21/07/99 (cent)52,772,592.27 (cent)756,407.16 (cent)53,528,999.43
Subtotal BICSA.............. (cent)119,490,806.90 (cent)52,772,592.27 (cent)756,407.16 (cent)53,528,999.43
Financiera Belen 09-020-001 (cent)9,000,000.00 19/09/98 (cent)8,766,996.33 (cent)198,718.59 (cent)8,965,714.92
Subtotal Financiera Belen (cent)9,000,000.00 (cent)8,766,996.33 (cent)198,718.59 (cent)8,965,714.92
Citibank (Costa Rica), S.A. 8297237001 (cent)70,000,000.00 23/02/98 (cent)70,000,000.00 (cent)1,252,222.22 (cent)71,252,222.22
Citibank (Costa Rica), S. A.8297238001 130,000,000.00 23/02/98 130,000,000.00 2,325,555.56 132,325,555.56
Citibank (Costa Rica), S.A. 8127336002 121,400,000.00 15/01/98 121,400,000.00 1,321,911.11 122,721,911.11
Subtotal Citibank (cent)321,400,000.00 (cent)321,400,000.00 (cent)4,899,688.89 (cent)326,299,688.89
Total in U.S. Dollars $2,600,779.70 $2,158,220.25 $36,771.75 $2,194,991.99
============= ============= ========== =============
SECURE
- ------
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
No
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION PIPASA, S.A.
OUTSTANDING LETTERS OF CREDIT (CORN SHIPMENTS)
AS OF JANUARY 16, 1998
LETTER OF NAME OF MATURITY AMOUNT IN AMOUNT IN INTEREST OUTSTANDING
BANK CREDIT NO. VESSEL ISSUE DATE DATE U.S. DOLLARS C.R. COLONES IN C.R. COLONES
- -------------------------- ---------- ------- ---------- -------- ------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Citibank (Costa Rica), S.A. 34309 Samos 05/06/97 05/03/98 $167,073.03 (cent)41,999,958.00 (cent)114,166.55
Citibank (Costa Rica), S.A. 970037 Ark 21/11/97 28/03/98 907,361.63 223,210,069.98 62,003.04
------------- -------------------- ------------------
Total Citibank $1,974,134.63 (cent)264,310,918.98 (cent)176,169.59
------------- -------------------- ------------------
Transamerica 15135 Agri 02/07/97 31/01/98 $181,167.12 (cent)44,690,111.52 (cent)694,922.14
------------- -------------------- ------------------
Transamerica 15534 Pella 08/10/97 05/02/98 951,802.88 234,143,510.94 2,304,818.59
------------- -------------------- ------------------
Total Transamerica $1,133,470.00 (cent)278,833,622.46 (cent)2,999,740.72
------------- -------------------- ------------------
B.F.A. 301598 Manila Angus 28/07/97 01/05/99 $1,060,748.51 (cent)260,944,133.46 (cent)2,521,640.69
------------- -------------------- ------------------
Totals $3,301,746.00 (cent)804,088,674.90 (cent)5,697,551.01
============= ==================== ==================
BALANCE DUE IN INTEREST
C.R. COLONES RATE
-------------- ---------
(cent)41,214,124.55 10.00%
223,272,964.02 10.00%
--------------------
(cent)264,487,088.57 10.00%
--------------------
(cent)45,385,033.66 11.54%
--------------------
236,448,329.53 11.50%
--------------------
(cent)281,833,303.18 11.50%
--------------------
(cent)263,465,774.15 11.50%
--------------------
(cent)809,786,225.91
====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION AS DE OROS, S.A.
DEBT TO BE PAID WITH SERIES B NOTES: $12,233,108.48
COMMERCIAL LOANS FROM PRIVATELY-OWNED COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN PRINCIPAL BALANCE
BANK NUMBER AMOUNT INTEREST DUE SECURED
- ------------------------------------ ------ ----------- -------- ----------- -------
<S> <C> <C> <C> <C> <C>
Banco de Fomento Agricola ("B.F.A"). 110012 $497,939.00 $4,401.80 $502,340.80 No
------------- ----------- --------------
Subtotal B.F.A................. $497,939.00 $4,401.80 $502,340.80
------------- ----------- --------------
Banco de San Jose.............. 200100187 $462,961.24 $2,407.96 $465,369.20 No
------------- ----------- --------------
Subtotal Banco de San Jose $462,961.24 $2,407.96 $463,369.20
------------- ----------- --------------
Banex.......................... B-1133 $2,298,226.08 $20,173.30 $2,318,399.38 Yes
------------- ----------- --------------
Subtotal Banex, S.A. $2,298,226.08 $20,173.30 $2,318,399.38
------------- ----------- --------------
Los Gansos, S.A................ N/A $1,000,000.00 $4,442.16 $1,004,442.16 No
------------- ----------- --------------
Banco Interfin, S.A. 14004 698,621.64 3,570.73 702,192.37 No
------------- ----------- --------------
Banco Interfin, S.A. 14134 729,962.67 3,730.90 733,693.57 No
------------- ----------- --------------
Subtotal Interfin.............. $2,428,584.31 $11,743.79 $2,440,328.10
------------- ----------- --------------
Banco Continental, S.A. 51-97-517-3 $211,537.44 $1,466.27 $213,003.71 Yes
------------- ----------- --------------
Subtotal Continental $211,537.44 $1,466.27 $213,003.71
------------- ----------- --------------
Bancrecen, S.A................. 960016823 $79,029.00 $79,029.00 No
------------- ----------- --------------
Subtotal Bancrecen $79,029.00 $0.00 $79,029.00
------------- ----------- --------------
Total Loans in US Dollars $5,978,277.07 $40,193.12 $6,018,470.19
====================== ================== ======================
In Colones
(Exchange Rate US$1 =(cent)246.00) (cent)1,470,656,159.22 (cent)9,887,507.52 (cent)1,480,543,666.74
====================== ================== ======================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION AS DE OROS S.A.
COMMERCIAL LOANS FROM PUBLIC SECTOR COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN PRINCIPAL BALANCE
BANK NUMBER AMOUNT INTEREST DUE SECURED
- ----------------------------- -------- ------------ ---------- ----------- -------
<S> <C> <C> <C> <C> <C>
Banco de Costa Rica 2-400321 (cent)18,191,954.35 (cent)332,887.50 (cent)18,524,841.85 Yes
Banco de Costa Rica 2-400076 66,011,930.85 1,364,246.60 67,376,177.45 Yes
Banco de Costa Rica 2-400766 168,175,671.75 3,222,199.15 171,397,870.90 Yes
Banco de Costa Rica 2-400767 42,955,648.30 823,018.30 43,778,666.60 Yes
-------------------- ------------------ --------------------
Subtotal Banco de Costa Rica (cent)295,335,205.25 (cent)5,742,351.55 (cent)301,077,556.80
-------------------- ------------------ --------------------
Subtotal in U.S. Dollars $1,200,549.61 $23,342.89 $1,223,892.51
==================== ================== ====================
Letter of Credit 14004 $734,685.44 $734,685.44 No
-------------------- ------------------ --------------------
Others 14134 $94,505.06 N/A $94,505.06 No
-------------------- ------------------ --------------------
Total Others In Dollars $829,190.50 N/A $829,190.50
-------------------- ------------------ --------------------
Southtrust Bank of Alabama
(EximBank loan)
51-97-517-3 $30,791.37 N/A $30,791.37 No
-------------------- ------------------ --------------------
Subtotal Southtrust Bank
of Alabama (EximBank loan)
$30,791.37 N/A $30,791.37 No
-------------------- ------------------ --------------------
Total in C.R. Colones (cent)302,909,882.27 N/A (cent)308,852,882.27
==================== ================== ====================
Total in U.S. Dollars $2,060,531.48 N/A $2,083,874.37
==================== ================== ====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION AS DE OROS, S.A.
COMMERCIAL LOANS FROM PUBLIC SECTOR COMMERCIAL BANKS
AS OF JANUARY 16, 1998
LOAN PRINCIPAL BALANCE
BANK NUMBER AMOUNT INTEREST DUE SECURED
- ------------------------------------- ----------- -------------------- -------------- ------------------- -------
<S> <C> <C> <C> <C> <C>
Banco Nacional de Costa Rica 37-1-56763 (cent)25,560,077.00 (cent)80,531.75 (cent)25,640,608.75 Yes
Banco Nacional de Costa Rica 37-1-7567 137,947,000.07 173,851.01 138,120,851.08 Yes
Banco Nacional de Costa Rica Registration AB 17,928,871.84 17,928,871.84 Yes
-------------------- ---------------- --------------------
Subtotal Banco Nacional de Costa Rica
(cent)181,435,948.91 (cent)254,382.76 (cent)181,690,331.67
-------------------- ---------------- --------------------
Total in C.R. Colones (cent)181,435,948.91 (cent)254,382.76 (cent)181,690,331.67
==================== ================ ====================
Total in U.S. Dollars $737,544.51 $1,034.08 $738,578.50
==================== ================ ====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CORPORACION AS DE OROS, S.A.
COMMERCIAL LOANS FROM PRIVATELY-OWNED COMMERCIAL BANKS
AS OF JANUARY 16, 1998
OPERATION PRINCIPAL BALANCE
BANK NUMBER AMOUNT INTEREST DUE SECURED
- --------------------------- ---------- --------- ---------- -------- -------
<S> <C> <C> <C> <C> <C>
Banco de San Jose 200100188 (cent)28,149,188.77 (cent)333,674.59 (cent)28,482,863.36 No
-------------------- ------------------- --------------------
Subtotal Banco de San Jose (cent)28,149,188.77 (cent)333,674.59 (cent)28,482,863.36
-------------------- ------------------- --------------------
Citibank (Costa Rica), S.A. 829734001 (cent)233,000,000.00 (cent)4,530,555.56 (cent)237,530,599.56 No
-------------------- ------------------- --------------------
Subtotal Citibank (cent)233,000,000.00 (cent)4,530,555.56 (cent)237,530,555.56
-------------------- ------------------- --------------------
Banex 2-26 (cent)64,826,724.01 (cent)433,528.72 (cent)65,260,252.73 Yes
-------------------- ------------------- --------------------
Subtotal Banex (cent)64,826,724.01 (cent)433,528.72 (cent)65,260,252.73
-------------------- ------------------- --------------------
Continental 01-97-587-1 (cent)64,242,380.53 (cent)11,055,599.12 (cent)75,297,979.65 No
-------------------- ------------------- --------------------
Subtotal Continental (cent)64,242,380.53 (cent)11,055,599.12 (cent)75,297,979.65
-------------------- ------------------- --------------------
Promerica 4041 (cent)52,860,143.11 (cent)640,838.70 (cent)53,500,981.81 No
-------------------- ------------------- --------------------
Subtotal Promerica (cent)52,860,143.11 (cent)640,838.70 (cent)53,500,981.81
-------------------- ------------------- --------------------
Banco Interfin, S.A. 22646 (cent)369,705,166.98 (cent)4,699,813.62 (cent)374,404,980.60 No
-------------------- ------------------- --------------------
Subtotal Interfin (cent)369,705,166.98 (cent)4,699,813.62 (cent)374,404,980.60
-------------------- ------------------- --------------------
Total in C.R. Colones (cent)812,783,603.40 (cent)21,694,010.31 (cent)834,477,613.71
==================== =================== ====================
Total in U.S. Dollars $3,303,998.39 $88,187.03 $3,392,185.42
==================== =================== ====================
</TABLE>
<PAGE>
SCHEDULE 5.18
ENVIRONMENTAL DISCLOSURE
None.
<PAGE>
SCHEDULE 10.4
LIMITATION ON DEBT
See Schedule 5.15
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 10.6
EXISTING LIENS ON REAL PROPERTY
COSTA RICA INTERNATIONAL, INC.
None.
CORPORACION PIPASA, S.A.
- -----------------------------------------------------------------------------------------------------------------------------------
REGISTRATION NO. PROVINCE SIZE MORTGAGE LIEN AMOUNT (IN COLONES
(IN SQUARE METERS) UNLESS OTHERWISE INDICATED)
US$1=(CENT)245 D)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. 095301-000 Guanacaste 415.94 Yes 2,000,000 10/29/96
- -----------------------------------------------------------------------------------------------------------------------------------
2. 176338-000 San Jose 13,599 Yes 7,500,000 05/21/87
1,000,000 06/30/89
- -----------------------------------------------------------------------------------------------------------------------------------
3. 185726-000 San Jose 13,977 Yes 7,058,410 05/18/84
- -----------------------------------------------------------------------------------------------------------------------------------
4. 309134-000 San Jose 78,845 No 40,000,000 12/14/89
7,000,000 04/09/98
- -----------------------------------------------------------------------------------------------------------------------------------
5. 140356-000 Alajuela 22,774 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
6. 162274-000 Alajuela 15,285.54 Yes 23,500,000 05/19/87
15,000,000 04/09/92
10,000,000 08/01/95*
- -----------------------------------------------------------------------------------------------------------------------------------
7. 169918-000 Alajuela 19,106.35 Yes 5,000,000 09/01/83
- -----------------------------------------------------------------------------------------------------------------------------------
8. 175010-000 Alajuela 26,644.34 Yes 6,000,000 12/16/83
- -----------------------------------------------------------------------------------------------------------------------------------
9. 129314-000 Alajuela 2,663.22 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
10. 179447-000 Alajuela 5,586.09 Yes 15,000,000 06/30/97*
- -----------------------------------------------------------------------------------------------------------------------------------
11. 033526-000 Alajuela 7,862.58 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
12. 011043-000 Alajuela 19,219.12 Yes 15,000,000 04/28/87
15,000,000 05/31/96*
- -----------------------------------------------------------------------------------------------------------------------------------
13. 098306-000 Alajuela 18,830.43 Yes 100,000 10/17/77
5,000,000 05/13/87
20,000,000 05/31/96*
5,000,000 08/10/97*
- -----------------------------------------------------------------------------------------------------------------------------------
14. 104438-000 Alajuela 113,356.36 Yes 65,000,000 02/06/89
100,000,000 02/27/95*
US$600,000 08/18/95*
- -----------------------------------------------------------------------------------------------------------------------------------
15. 106586-000 Alajuela 12,130.63 Yes US$400,000 03/22/97*
- -----------------------------------------------------------------------------------------------------------------------------------
16. 109095-000 Alajuela 19,071.79 Yes 2,716,714 10/4/89
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
17. 123627-000 Alajuela 18,201.46 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
18. 243969-000 Alajuela 11,205.25 Yes US$ 600,000 03/22/97*
- -----------------------------------------------------------------------------------------------------------------------------------
19. 244170-000 Alajuela 188.21 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
20. 244171-000 Alajuela 188.71 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
21. 181395-000 Alajuela 91,495.55 Yes 40,000,000 01/31/91
- -----------------------------------------------------------------------------------------------------------------------------------
22. 131327-000 Alajuela 24,157.79 Yes 9,262,190 10/04/89
- -----------------------------------------------------------------------------------------------------------------------------------
23. 110781-000 Heredia 79,662.49 Yes 30,000,000 04/28/87
30,000,000 04/28/87
60,000,000 01/31/91
9,500,000 04/09/92
45,000,000 08/01/95*
- -----------------------------------------------------------------------------------------------------------------------------------
24. 039552-000 Heredia 39,942.08 Yes 25,000,000 10/17/94*
- -----------------------------------------------------------------------------------------------------------------------------------
25. 041437-000 Heredia 12,297.74 Yes 10,000,000 04/06/94
- -----------------------------------------------------------------------------------------------------------------------------------
26. 033438-000 Heredia 5,521.27 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
27. 039553-000 Heredia 32,782.08 Yes 20,000,000 04/28/87
- -----------------------------------------------------------------------------------------------------------------------------------
28. F000694 Heredia 25.00 Yes 45,375 10/27/78
- -----------------------------------------------------------------------------------------------------------------------------------
29. F000695 Heredia 25.00 No 45,375 10/27/78
- -----------------------------------------------------------------------------------------------------------------------------------
30. 004149-000 Heredia 3,494.48 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
31. 006430-000 Heredia 7,118.80 Yes 1,067,820 06/18/84
- -----------------------------------------------------------------------------------------------------------------------------------
32. 010765-000 Heredia 3,494.48 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
33. 021045-000 Heredia 3,494.48 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
34. 053867-000 Heredia 47,175.48 Yes 6,000,000 11/28/89
4,000,000 03/23/90
1,500,000 05/23/90
- -----------------------------------------------------------------------------------------------------------------------------------
35. 041020-000 Heredia 21,585.80 Yes 10,000,000 05/24/89
- -----------------------------------------------------------------------------------------------------------------------------------
36. 070293-000 Heredia 20,397.00 Yes 20,000,000 12/15/89
15,000,000 06/30/97*
- -----------------------------------------------------------------------------------------------------------------------------------
37. 074827-000 Heredia 1,559.99 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
38. 074829-000 Heredia 3,494.68 Yes 524,202 06/18/84
- -----------------------------------------------------------------------------------------------------------------------------------
39. 088415-000 Heredia 578.84 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
40. 108594-000 Heredia 10,653.21 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
41. 120790-000 Heredia 41,933.66 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
42. 131442-000 Heredia 64,566.41 Yes 10,000,000 01/31/91
- -----------------------------------------------------------------------------------------------------------------------------------
43. 077716-000 Heredia 2,995.62 Yes 24,000,000 11/28/89
1,000,000 03/23/90
5,000,000 05/23/90
- -----------------------------------------------------------------------------------------------------------------------------------
44. 074825-000 Heredia 76,145.37 Yes 17,100,575 06/18/84
- -----------------------------------------------------------------------------------------------------------------------------------
45. 070297-000 Heredia 19.096.83 Yes 10,000,000 07/02/92
15,000,000 07/01/92
43,000,000 09/20/96*
- -----------------------------------------------------------------------------------------------------------------------------------
46. 070295-000 Heredia 17,739.71 Yes 47,000,000 09/20/96*
12,000,000 07/01/92
- -----------------------------------------------------------------------------------------------------------------------------------
47. 029425-000 Heredia 1,397.79 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
48. 016982-000 Puntarenas 502,356.63 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
49. 027319-000 Puntarenas 340,814.18 Yes 170,000,000 04/29/96*
- -----------------------------------------------------------------------------------------------------------------------------------
50. 005883-000 Puntarenas 291.34 Yes 2,500,000 10/19/87
- -----------------------------------------------------------------------------------------------------------------------------------
50. 005883-000 Puntarenas 291.34 Yes 2,500,000 10/25/87
- -----------------------------------------------------------------------------------------------------------------------------------
51. 095300-000 Guanacaste 436.94 Yes 2,000,000 10/29/96
- -----------------------------------------------------------------------------------------------------------------------------------
52. 016079-000 Limon 349.18 Yes 5,000,000 03/18/88
10,000,000 07/01/92
- -----------------------------------------------------------------------------------------------------------------------------------
53. 383027-000 San Jose 3,000.00 No 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Items that contain an asterisk ("*") pertain to the date of expiration
of the mortgage because information regarding the date of mortgage
inception was not available. These items still appear on the Costa Rica
Public Registry ("Registry") due to: (i) an extension of the payment
date; or (ii) the debtor has not taken steps to eliminate this mortgage
from the Registry after complete payment.
2. No real property from the above list will be outstanding after the
proceeds of the Private Placement are distributed to restructure
Pipasa's debt. Outstanding debt for Pipasa is not guaranteed by any of
the above-listed real properties.
<PAGE>
EXISTING LIENS ON PERSONAL PROPERTY
((CENT) = COLONES)
($1 = (CENT)246)
COSTA RICA INTERNATIONAL, INC.
None.
<TABLE>
<CAPTION>
CORPORACION PIPASA, S.A.
- ------------------------------------------------------------------------------------------------------------------------------
NUMBER OF ITEMS REGISTERED
DESCRIPTION AMOUNT NUMBER
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
1 CHICKEN DEBONER CDM (cent)18.395.525 1499
- ------------------------------------------------------------------------------------------------------------------------------
1 CHILLER 13.793.757 1106
- ------------------------------------------------------------------------------------------------------------------------------
1 CHILLER 9.956.966 1104
- ------------------------------------------------------------------------------------------------------------------------------
1 BOILER 17.165.699 1184
- ------------------------------------------------------------------------------------------------------------------------------
1 MACHINE TO CONDENSE AND EVAPORATE 11.113.746 1160-1161
- ------------------------------------------------------------------------------------------------------------------------------
2 AMMONIA RECIRCULATOR 7.054.423 1155-1156
- ------------------------------------------------------------------------------------------------------------------------------
1 DIGESTOR 5.054.012 1044
- ------------------------------------------------------------------------------------------------------------------------------
3 SILOS 13.438.668 3647
- ------------------------------------------------------------------------------------------------------------------------------
1 CHICKEN SHOCKING DEVICE 1.832.590 25366
- ------------------------------------------------------------------------------------------------------------------------------
1 AUTOMATIC SLAUGHTER 3.155.831 25367
- ------------------------------------------------------------------------------------------------------------------------------
1 COMPRESOR 8.211.115 1152
- ------------------------------------------------------------------------------------------------------------------------------
1 COMPRESSOR 8.211.115 1151
- ------------------------------------------------------------------------------------------------------------------------------
1 COMPRESSOR 5.957.395 1153
- ------------------------------------------------------------------------------------------------------------------------------
1 COMPRESSOR 5.957.395 1154
- ------------------------------------------------------------------------------------------------------------------------------
1 OVEN 6.100.313 1338
- ------------------------------------------------------------------------------------------------------------------------------
1 OVEN 6.100.313 1339
- ------------------------------------------------------------------------------------------------------------------------------
1 CUTER 6.961.886 1362
- ------------------------------------------------------------------------------------------------------------------------------
1 MACHINE TO MAKE CROQUETTES 13.415.397 1329
- ------------------------------------------------------------------------------------------------------------------------------
<PAGE>
1 PACKING MACHINE 8.089.001 1421
- ------------------------------------------------------------------------------------------------------------------------------
1 FURTHER PROCESSING MACHINE 9.490.720 2139
- ------------------------------------------------------------------------------------------------------------------------------
1 AUTOMATIC MACHINE FOR BATH WITH BOILING WATER 3.042.321 1004
- ------------------------------------------------------------------------------------------------------------------------------
1 FURTHER PROCESSING MACHINE 3.418.802 1367
- ------------------------------------------------------------------------------------------------------------------------------
1 TEMPURA MACHINE 3.115.298 4091
- ------------------------------------------------------------------------------------------------------------------------------
1 COOLER 5.089.293 SERIE 9536P
- ------------------------------------------------------------------------------------------------------------------------------
1 SEWING MACHINE 6.364.189 1043
- ------------------------------------------------------------------------------------------------------------------------------
2 MACHINE TO COOL CHICKENS 9.683.956 1104-1106
- ------------------------------------------------------------------------------------------------------------------------------
1 DOBLE KDC-NL 3.838.170 MODELO 1560
- ------------------------------------------------------------------------------------------------------------------------------
1 CENTRAL TELEPHONE 6.115.876 8027
- ------------------------------------------------------------------------------------------------------------------------------
1 AVION COMPUTER 11.109.246 SERIE 96436
- ------------------------------------------------------------------------------------------------------------------------------
1 AVION COMPUTER 10.865.364 25688
- ------------------------------------------------------------------------------------------------------------------------------
1 RED NOVELL ETHERNET 4.143.162 8634
- ------------------------------------------------------------------------------------------------------------------------------
CLARION DISK 15.773.094 26393A26395
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL 262.014.638
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISUZU NKR58E/1990 (cent)2.500.000 C.111536
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111507
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR58E/1990 2.500.000 C111503
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111537
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111504
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111848
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISUZU NKR 1989 2.000.000 C.105613
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105611
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105610
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 58E/1990 2.500.000 C.111850
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR 1989 2.000.000 C.105231
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR 1989 2.000.000 C.105441
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR 1989 2.000.000 C.105230
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR 1989 2.000.000 C.105232
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L 3.000.000 C.116945
- ---------------------------------------------------------------------------------------------------------------------------
CHEVROLET LUV 1989 2.000.000 C.105223
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105210
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105609
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105612
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NKR 1989 2.000.000 C.105211
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR 1989 2.000.000 C.105233
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116947
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.118354
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116622
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116948
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116105
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116946
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116106
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116944
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116916
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU NPR59L/1992 3.000.000 C.117090
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISUZU KB2500/1992 3.000.000 C.116610
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26031
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26161
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26268
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26032
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26682
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26243
- ---------------------------------------------------------------------------------------------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26048
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL (cent)107.500.000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DAIHATSU-FURGON/1991 $6,638.00 C.112882
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1991 7,965.00 C.115650
- ---------------------------------------------------------------------------------------------------------------------------
MITSUBISHI-FURGON/1990 8,850.00 C.112872
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1990 5,089.00 C.111391
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1993 8,629.00 C.119132
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1990 4,868.00 C.111392
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1990 7,965.00 C.116677
- ---------------------------------------------------------------------------------------------------------------------------
NISSAN-FURGON/1993 8,408.00 C.119137
- ---------------------------------------------------------------------------------------------------------------------------
TOYOTA-FURGON/1989 5,753.00 C.108486
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $64,165.00
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE B-1
CHAVES FAMILY MEMBERS
NAME RELATIONSHIP
- ---- ------------
A. IMMEDIATE FAMILY OF CALIXTO CHAVES
Calixto Chaves Self
Rosalidia Zamora Spouse
Monica Chaves Daughter
Jose Pablo Chaves Son
B. SIBLINGS OF CALIXTO CHAVES
Manuel Angel Chaves Brother
Jose Joaquin Chaves Brother
Fidel Chaves Brother
Carlos Luis Chaves Brother
Gerardo Chaves Brother
Teresa Maria Chaves Sister
Julia Chaves Sister
Beatriz Chaves Sister
Ana Rosa Chaves Sister
Gema Chaves Sister
Francisco Chaves C. Uncle
C. AUNTS AND UNCLES OF CALIXTO CHAVES
Victor Zamora Uncle
Jose Cruz Zamora Uncle
Teresa Zamora Aunt
<PAGE>
NAME RELATIONSHIP
- ---- ------------
D. RELATED BY MARRIAGE
Beatriz de Chaves Sister-in-law
Luis Guillermo Zamora Brother-in-law & Second Cousin
Jose Angel Zamora Brother-in-law & Second Cousin
Hernan Zamora Brother-in-law & Second Cousin
Carlos Zamora Brother-in-law & Second Cousin
Emilia Zamora Sister-in-law & Second Cousin
Ana Virginia Zamora Sister-in-law & Second Cousin
Flor Zamora Sister-in-law & Second Cousin
Jorge Viquez First Uncle-in-law
Alba Viquez First Aunt-in-law
Carlos Viquez First Uncle-in-law
Cecilia Viquez First Aunt-in-law
Javier Viquez First Uncle-in-law
Fernando Viquez First Uncle-in-law
Ines Gonzalez Sister-in-law
Beatriz Rodriguez Sister-in-law
Ilse Fernandez Sister-in-law
William Alvarez Brother-in-law
Isaias Gomez Brother-in-law
Jorge ML. Quesada Brother-in-law
Luis Altamirano Brother-in-law
Leda Sauma In-laws
Maribel Aguilar In-laws
Teresa Murillo Soto In-laws
Jorge Feldman In-laws
Eduardo Vargas Gonzalez In-laws
<PAGE>
NAME RELATIONSHIP
- ---- ------------
E. NIECES AND NEPHEWS OF CALIXTO CHAVES
Marcela Chaves Niece
Oscar E. Chaves Nephew
Francisco J. Chaves Nephew
Marianella Chaves Niece
Gabriella Chaves Niece
Katia Chaves Niece
Juan Carlos Chaves Nephew
Alejandro Chaves Nephew
Romulo Chaves R. Nephew
Federico Chaves R Nephew
Esteban Chaves Nephew
Nestor Chaves Nephew
Zeneida Chaves Niece
Maria Adela Chaves Niece
Roxana Chaves Niece
Karla Chaves Niece
Magaly Chaves Niece
Minor Solis Nephew
Isaias Gomez Nephew
Natalia Gomez Niece
Lucia Gomez Niece
Jorge E. Quesada Nephew
Christian Quesada Nephew
Alejandro Quesada Nephew
Vanessa Quesada Niece
Brian Altamirano Nephew
<PAGE>
NAME RELATIONSHIP
- ---- ------------
Francisco Javier Chaves Nephew
Sinai Chaves Niece
F. COUSINS OF CALIXTO CHAVES
Marco Chaves First Cousin
Ana Chaves First Cousin
Gliceria Chaves First Cousin
Marta Chaves First Cousin
Elida Chaves First Cousin
Francisco Chaves First Cousin
Maylle Chaves First Cousin
Juan Chaves First Cousin
Rosa Emilia Chaves First Cousin
Alvaro Zamora Cousin
Martin Zamora Cousin
Vinicio Zamora Cousin
Maximino Zamora Cousin
Cecilia Zamora Cousin
Luisa Zamora Cousin
Rosario Zamora Cousin
Carlos Zamora Cousin
Angel Zamora Cousin
Alfredo Zamora Cousin
Ignacio Zamora Cousin
G. SHAREHOLDERS OF INVERSIONES LA RIBERA, S.A. % OF OWNERSHIP
------------------------------------------- --------------
Calixto Chaves Self (75%)
Rosalidia Zamora Spouse (25%)
<PAGE>
SCHEDULE B-2
CORPORACION PIPASA, S.A.
EXISTING INVESTMENTS
AS OF NOVEMBER 30, 1997
ACCOUNT
NUMBER DESCRIPTION OF INVESTMENT AMOUNT IN U.S. DOLLARS
- ------- ------------------------- ----------------------
LONG-TERM INVESTMENTS
---------------------
SHARES
30101001 Club Campestre Espanol $975.61
30101002 LACSA 567.02
30101003 Romulo & Adela 536.58
30101004 Hotel Fiesta De Playa 18,292.76
30101005 Inolasa Group 4,225,711.53
30101006 Shares Pipasa Salvador, S.A. 21,805.36
30103001 Prod. Agropecuarios 6,887.19
30103002 Serv. Bursatil Del Agro 3,344.30
Total: $4,278,128.37
=============
SHORT-TERM INVESTMENTS
----------------------
CERTIFICATES OF DEPOSIT
Certificado de Abono Tributario $7,463.67
502003 Banco Interfin, S.A. 15,463.42
502005 Citi Valores 14,282.81
502006 Corporacion Privada de Inversiones 155,910.01
502008 Citibank (Costa Rica), S.A. 490,409.18
502012 Financiera Belen 40,650.41
502014 Corporacion Privada de Inversiones 66,351.25
502015 Commercial International Bank & Trust Co. 1,609,684.68
<PAGE>
ACCOUNT
NUMBER DESCRIPTION OF INVESTMENT AMOUNT IN U.S. DOLLARS
- ------- ------------------------- ----------------------
Operacion de Administracion Bursatil ("OPAB") 368,258.28
503001 Mercado de Valores 2,697.09
503002 B.F.A. Valores 408.21
503004 Metro Valores 40,485.35
503008 Banco Interfin, S.A. 324,660.35
503011 Univalores 7,28
SHARES (EXPECTED TO BE SOLD BEFORE JANUARY 1, 1999)
504001 Costa Rica International, Inc. 147,280.55
504002 Titulos Valores Renta Variable 680,169.35
504101 Allowance to Reduce Investment to Fair
Market Value (11,834.02)
Total: $3,584,090.81
=============
<PAGE>
SCHEDULE 4.9
(SECOND CLOSING)
CHANGES IN CORPORATE STRUCTURE
1. On January 22, 1998, the Company entered into a stock purchase
agreement with Comercial Angui, S.A. ("Angui") to purchase 51% of the
voting stock ("Acquisition") of Corporacion As de Oros, S.A. ("As de
Oros"). The Acquisition is expected to be consummated on or before
February 26, 1998. After consummation of the Acquisition, the remaining
49% of the voting stock of As de Oros will remain in the control of
Angui.
<PAGE>
SCHEDULE 5.3
(Second Closing)
DISCLOSURE
None.
<PAGE>
SCHEDULE 5.4
(Second Closing)
SUBSIDIARIES OF THE COMPANY AND
OWNERSHIP OF SUBSIDIARY STOCKS
- -------------------------------------------------------------------------------
JURISDICTION OF
CORPORATION'S NAME INCORPORATION % OF OWNERSHIP
- -------------------------------------------------------------------------------
CORPORACION PIPASA, S.A. ("PIPASA") COSTA RICA 59.56% of the voting stock
CORPORACION AS DE OROS, S.A. COSTA RICA 51% of the voting stock
("OROS")
- -------------------------------------------------------------------------------
AFFILIATES OF OROS OTHER
THAN THE SUBSIDIARIES
---------------------
RESTAURANTES AS, S.A.
RESTAURANTES AMADO, S.A.
- -------------------------------------------------------------------------------
DIRECTORS:
PIPASA OROS
- -------------------------------------------------------------------------------
Calixto Chaves Z. PRESIDENT Antonio Echeverria M. PRESIDENT
Jorge Ml. Quesada Ch. GENERAL VICE Carlos Zamora V. VICE PRESIDENT
PRESIDENT
Jose Zamora V. TREASURER Miguel A. Campos S. SECRETARY
Teresa Chaves Z. SECRETARY Renato Morera C. TREASURER
Federico Vargas P. DIRECTOR Danilo Chaverri S. DIRECTOR
Jorge Monge Aguero DIRECTOR
Oscar Barahona S. COMPTROLLER Juan Fco. Antillon F. COMPTROLLER
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 5.5
(Second Closing)
FINANCIAL STATEMENTS
Attached hereto and made a part hereof.
<PAGE>
SCHEDULE 5.8
(Second Closing)
LITIGATION
None.
<PAGE>
SCHEDULE 5.11
(Second Closing)
LICENSES, PERMITS, ETC.
None.
<PAGE>
SCHEDULE 5.14
(Second Closing)
USE OF PROCEEDS
The proceeds of the Notes will be used for the following purposes:
(i) a loan from the Company to the Guarantor for approximately
US$8 million to refinance existing debt of the Guarantor, and
for general corporate purposes; and
(ii) a loan from the Company to Corporacion As de Oros, S.A. ("As
de Oros") for approximately US$12 million to refinance
substantially all existing debt of As de Oros, and for general
corporate purposes.
<PAGE>
SCHEDULE 5.15
(Second Closing)
EXISTING DEBT
CORPORACION PIPASA, S.A.
(Attached hereto)
CORPORACION AS DE OROS, S.A.
(Attached hereto)
<PAGE>
SCHEDULE 5.18
(Second Closing)
ENVIRONMENTAL DISCLOSURE
None.
<PAGE>
SCHEDULE 10.4
(Second Closing)
LIMITATION ON DEBT
See Schedule 5.15
<PAGE>
SCHEDULE 10.6
(Second Closing)
EXISTING LIENS ON REAL PROPERTY
Costa Rica International, Inc.
None.
Corporacion Pipasa, S.A.
<TABLE>
<CAPTION>
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
Registration Province Size Mortgage Amount Date of
No. (in square meters) Lien (in Colones Lien
unless otherwise
indicated)
US$1=(cent)245
<S> <C> <C> <C> <C> <C> <C>
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
1. 095301-000 Guanacaste 415.94 Yes 2,000,000 10/29/96
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
2. 176338-000 San Jose 13,599 Yes 7,500,000 05/21/87
1,000,000 06/30/89
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
3. 185726-000 San Jose 13,977 Yes 7,058,410 05/18/84
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
4. 309134-000 San Jose 78,845 No 40,000,000 12/14/89
7,000,000 04/09/98
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
5. 140356-000 Alajuela 22,774 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
6. 162274-000 Alajuela 15,285.54 Yes 23,500,000 05/19/87
15,000,000 04/09/92
10,000,000 08/01/95*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
7. 169918-000 Alajuela 19,106.35 Yes 5,000,000 09/01/83
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
8. 175010-000 Alajuela 26,644.34 Yes 6,000,000 12/16/83
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
9. 129314-000 Alajuela 2,663.22 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
10. 179447-000 Alajuela 5,586.09 Yes 15,000,000 06/30/97*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
11. 033526-000 Alajuela 7,862.58 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
12. 011043-000 Alajuela 19,219.12 Yes 15,000,000 04/28/87
15,000,000 05/31/96*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
13. 098306-000 Alajuela 18,830.43 Yes 100,000 10/17/77
5,000,000 05/13/87
20,000,000 05/31/96*
5,000,000 08/10/97*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
14. 104438-000 Alajuela 113,356.36 Yes 65,000,000 02/06/89
100,000,000 02/27/95*
US$600,000 08/18/95*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
15. 106586-000 Alajuela 12,130.63 Yes US$400,000 03/22/97*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
<PAGE>
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
16. 109095-000 Alajuela 19,071.79 Yes 2,716,714 10/4/89
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
17. 123627-000 Alajuela 18,201.46 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
18. 243969-000 Alajuela 11,205.25 Yes US$ 600,000 03/22/97*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
19. 244170-000 Alajuela 188.21 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
20. 244171-000 Alajuela 188.71 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
21. 181395-000 Alajuela 91,495.55 Yes 40,000,000 01/31/91
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
22. 131327-000 Alajuela 24,157.79 Yes 9,262,190 10/04/89
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
23. 110781-000 Heredia 79,662.49 Yes 30,000,000 04/28/87
30,000,000 04/28/87
60,000,000 01/31/91
9,500,000 04/09/92
45,000,000 08/01/95*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
24. 039552-000 Heredia 39,942.08 Yes 25,000,000 10/17/94*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
25. 041437-000 Heredia 12,297.74 Yes 10,000,000 04/06/94
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
26. 033438-000 Heredia 5,521.27 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
27. 039553-000 Heredia 32,782.08 Yes 20,000,000 04/28/87
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
28. F000694 Heredia 25.00 Yes 45,375 10/27/78
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
29. F000695 Heredia 25.00 No 45,375 10/27/78
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
30. 004149-000 Heredia 3,494.48 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
31. 006430-000 Heredia 7,118.80 Yes 1,067,820 06/18/84
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
32. 010765-000 Heredia 3,494.48 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
33. 021045-000 Heredia 3,494.48 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
34. 053867-000 Heredia 47,175.48 Yes 6,000,000 11/28/89
4,000,000 03/23/90
1,500,000 05/23/90
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
35. 041020-000 Heredia 21,585.80 Yes 10,000,000 05/24/89
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
36. 070293-000 Heredia 20,397.00 Yes 20,000,000 12/15/89
15,000,000 06/30/97*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
37. 074827-000 Heredia 1,559.99 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
38. 074829-000 Heredia 3,494.68 Yes 524,202 06/18/84
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
39. 088415-000 Heredia 578.84 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
40. 108594-000 Heredia 10,653.21 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
41. 120790-000 Heredia 41,933.66 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
42. 131442-000 Heredia 64,566.41 Yes 10,000,000 01/31/91
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
43. 077716-000 Heredia 2,995.62 Yes 24,000,000 11/28/89
1,000,000 03/23/90
5,000,000 05/23/90
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
44. 074825-000 Heredia 76,145.37 Yes 17,100,575 06/18/84
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
45. 070297-000 Heredia 19.096.83 Yes 10,000,000 07/02/92
15,000,000 07/01/92
43,000,000 09/20/96*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
46. 070295-000 Heredia 17,739.71 Yes 47,000,000 09/20/96*
12,000,000 07/01/92
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
47. 029425-000 Heredia 1,397.79 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
<PAGE>
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
48. 016982-000 Puntarenas 502,356.63 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
49. 027319-000 Puntarenas 340,814.18 Yes 170,000,000 04/29/96*
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
50. 005883-000 Puntarenas 291.34 Yes 2,500,000 10/19/87
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
50. 005883-000 Puntarenas 291.34 Yes 2,500,000 10/25/87
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
51. 095300-000 Guanacaste 436.94 Yes 2,000,000 10/29/96
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
52. 016079-000 Limon 349.18 Yes 5,000,000 03/18/88
10,000,000 07/01/92
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
53. 383027-000 San Jose 3,000.00 No 0
- ------- -------------------- ----------------- -------------------- ------------------ ------------------- ---------------
</TABLE>
1. Items that contain an asterisk ("*") pertain to the date of expiration
of the mortgage because information regarding the date of mortgage
inception was not available. These items still appear on the Costa Rica
Public Registry ("Registry") due to: (i) an extension of the payment
date; or (ii) the debtor has not taken steps to eliminate this mortgage
from the Registry after complete payment.
2. No mortgage debt from the above list will be outstanding after the
proceeds of the Private Placement are distributed to restructure
Pipasa's debt. Outstanding debt for Pipasa is not guaranteed by any of
the above-listed real properties.
Corporacion As de Oros, S.A.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
REGISTRATION PROVINCE SIZE MORTGAGE AMOUNT DATE OF
NO. (IN SQUARE METERS) LIEN (IN COLONES UNLESS LIEN
OTHERWISE INDICATED)
US$1=(cent)245
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 40859-000 HEREDIA 6,387.17 MORTGAGE (C.H.) $101,393,000.00 30/10/95
- ------------------------------------------------------------------------------------------------------------------------------
2 186575-000 ALAJUELA 210,246.56 MORTGAGE (C.H.) $20,000,000.00 06/05/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $61,000,000.00 06/05/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $100,000,000.00 06/05/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $73,028,000.00 30/10/95
- ------------------------------------------------------------------------------------------------------------------------------
3 249696-000 ALAJUELA 14,166.43 MORTGAGE (C.H.) $168,000.00 19/01/97
- ------------------------------------------------------------------------------------------------------------------------------
4 347958-000 ALAJUELA 26,856.15 MORTGAGE (C.H.) $50,000,000.00 21/09/92
- ------------------------------------------------------------------------------------------------------------------------------
5 245816-000 ALAJUELA 585,120.93 MORTGAGE $215,000,000.00 14/07/95
- ------------------------------------------------------------------------------------------------------------------------------
6 222681-000 ALAJUELA 2,894.30 MORTGAGE (C.H.) $22,000,000.00 30/09/96
- ------------------------------------------------------------------------------------------------------------------------------
7 204999-000 ALAJUELA 139,921.87 MORTGAGE (C.H.) $60,000,000.00 04/06/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $103,000,000.00 30/09/96
- ------------------------------------------------------------------------------------------------------------------------------
8 F000944-000 SAN JOSE 15.15 NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------------
9 186577-000 ALAJUELA 126,116.33 MORTGAGE (C.H.) $17,500,000.00 04/06/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $42,000,000.00 30/09/96
- ------------------------------------------------------------------------------------------------------------------------------
10 140264-000 ALAJUELA 20,721.50 MORTGAGE (C.H.) $20,000,000.00 04/10/90
- ------------------------------------------------------------------------------------------------------------------------------
11 146664-000 ALAJUELA 17,471.92 MORTGAGE (C.H.) $50,000,000.00 21/09/92
- ------------------------------------------------------------------------------------------------------------------------------
12 150151-000 ALAJUELA 23,060.39 MORTGAGE (C.H.) $30,000,000.00 07/03/91
- ------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------
REGISTRATION PROVINCE SIZE MORTGAGE AMOUNT DATE OF
NO. (IN SQUARE METERS) LIEN (IN COLONES UNLESS LIEN
OTHERWISE INDICATED)
US$1=(cent)245
- ------------------------------------------------------------------------------------------------------------------------------
13 123628-000 HEREDIA 3,153.10 MORTGAGE $6,515,167.00 21/08/91
- ------------------------------------------------------------------------------------------------------------------------------
14 149085-000 ALAJUELA 111,823.36 MORTGAGE (C.H.) $27,500,000.00 04/06/93
- ------------------------------------------------------------------------------------------------------------------------------
MORTGAGE (C.H.) $46,000,000.00 30/09/96
- ------------------------------------------------------------------------------------------------------------------------------
15 F013792-000 SAN JOSE 680.00 MORTGAGE $2,409,000.00 19/12/96
- ------------------------------------------------------------------------------------------------------------------------------
16 F018755-000 HEREDIA 38.85
- ------------------------------------------------------------------------------------------------------------------------------
17 F013229-000 HEREDIA 73.36 MORTGAGE $2,409,000.00 19/12/96
- ------------------------------------------------------------------------------------------------------------------------------
18 399734-000 SAN JOSE 1,216.55 MORTGAGE (C.H.) $280,000.00 19/01/97
- ------------------------------------------------------------------------------------------------------------------------------
19 F014691-000 SAN JOSE 56.07 MORTGAGE $2,409,000.00 19/12/96
- ------------------------------------------------------------------------------------------------------------------------------
20 00101-000 SAN JOSE 291.07 MORTGAGE (C.H.) $112,000.00 19/01/97
- ------------------------------------------------------------------------------------------------------------------------------
21 3222-000 SAN JOSE 376.54 MORTGAGE (C.H.) $129,000.00 19/01/97
- ------------------------------------------------------------------------------------------------------------------------------
22 106628-000 HEREDIA 5,004.28 MORTGAGE (C.H.) $96,500.00 19/01/97
- ------------------------------------------------------------------------------------------------------------------------------
23 F12000-000 SAN JOSE 61.85 NONE NONE N/A
- ------------------------------------------------------------------------------------------------------------------------------
24 F000666-000 SAN JOSE 46.29 NONE NONE N/A
- ------------------------------------------------------------------------------------------------------------------------------
25 F000665-000 SAN JOSE 45.93 NONE NONE N/A
- ------------------------------------------------------------------------------------------------------------------------------
26 F139791-000 SAN JOSE 85 NONE NONE N/A
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXISTING LIENS ON PERSONAL PROPERTY
((cent) = Colones)
($1 = (cent)246)
Costa Rica International, Inc.
None.
<TABLE>
<CAPTION>
Corporacion Pipasa, S.A.
- ------------ ------------------------------------------------ ------------------------- ----------------------------
NUMBER OF REGISTERED
ITEMS DESCRIPTION AMOUNT NUMBER
- ------------ ------------------------------------------------ ------------------------- ----------------------------
<S> <C> <C> <C>
1 CHICKEN DEBONER CDM (cent)18.395.525 1499
- ----------- ------------------------------------------------ ------------------------- ----------------------------
1 CHILLER 13.793.757 1106
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 CHILLER 9.956.966 1104
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 BOILER 17.165.699 1184
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 MACHINE TO CONDENSE AND EVAPORATE 11.113.746 1160-1161
- ------------ ------------------------------------------------ ------------------------- ----------------------------
2 AMMONIA RECIRCULATOR 7.054.423 1155-1156
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 DIGESTOR 5.054.012 1044
- ------------ ------------------------------------------------ ------------------------- ----------------------------
3 SILOS 13.438.668 3647
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 CHICKEN SHOCKING DEVICE 1.832.590 25366
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 AUTOMATIC SLAUGHTER 3.155.831 25367
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 COMPRESOR 8.211.115 1152
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 COMPRESSOR 8.211.115 1151
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 COMPRESSOR 5.957.395 1153
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 COMPRESSOR 5.957.395 1154
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 OVEN 6.100.313 1338
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 OVEN 6.100.313 1339
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 CUTER 6.961.886 1362
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 MACHINE TO MAKE CROQUETTES 13.415.397 1329
- ------------ ------------------------------------------------ ------------------------- ----------------------------
<PAGE>
- ------------ ------------------------------------------------ ------------------------- ----------------------------
NUMBER OF REGISTERED
ITEMS DESCRIPTION AMOUNT NUMBER
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 PACKING MACHINE 8.089.001 1421
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 FURTHER PROCESSING MACHINE 9.490.720 2139
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 AUTOMATIC MACHINE FOR BATH WITH BOILING WATER 3.042.321 1004
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 FURTHER PROCESSING MACHINE 3.418.802 1367
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 TEMPURA MACHINE 3.115.298 4091
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 COOLER 5.089.293 SERIE 9536P
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 SEWING MACHINE 6.364.189 1043
- ------------ ------------------------------------------------ ------------------------- ----------------------------
2 MACHINE TO COOL CHICKENS 9.683.956 1104-1106
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 DOBLE KDC-NL 3.838.170 MODELO 1560
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 CENTRAL TELEPHONE 6.115.876 8027
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 AVION COMPUTER 11.109.246 SERIE 96436
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 AVION COMPUTER 10.865.364 25688
- ------------ ------------------------------------------------ ------------------------- ----------------------------
1 RED NOVELL ETHERNET 4.143.162 8634
- ------------ ------------------------------------------------ ------------------------- ----------------------------
CLARION DISK 15.773.094 26393A26395
- ------------ ------------------------------------------------ ------------------------- ----------------------------
TOTAL 262.014.638
- ------------ ------------------------------------------------ ------------------------- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- -------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- --------------------------------------- -------------------------------------- -------------------------------------
<S> <C> <C>
ISUZU NKR58E/1990 (cent)2.500.000 C.111536
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111507
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR58E/1990 2.500.000 C111503
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111537
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111504
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR58E/1990 2.500.000 C.111848
- --------------------------------------- -------------------------------------- -------------------------------------
<PAGE>
- --------------------------------------- -------------------------------------- -------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105613
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105611
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105610
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 58E/1990 2.500.000 C.111850
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR 1989 2.000.000 C.105231
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR 1989 2.000.000 C.105441
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR 1989 2.000.000 C.105230
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR 1989 2.000.000 C.105232
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L 3.000.000 C.116945
- --------------------------------------- -------------------------------------- -------------------------------------
CHEVROLET LUV 1989 2.000.000 C.105223
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105210
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105609
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105612
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NKR 1989 2.000.000 C.105211
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR 1989 2.000.000 C.105233
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116947
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.118354
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116622
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116948
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116105
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116946
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116106
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116944
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.116916
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU NPR59L/1992 3.000.000 C.117090
- --------------------------------------- -------------------------------------- -------------------------------------
<PAGE>
- --------------------------------------- -------------------------------------- -------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU KB2500/1992 3.000.000 C.116610
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26031
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26161
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26268
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26032
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26682
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26243
- --------------------------------------- -------------------------------------- -------------------------------------
ISUZU FTR11L/1992 4.000.000 C.26048
- --------------------------------------- -------------------------------------- -------------------------------------
TOTAL (cent)107.500.000
- --------------------------------------- -------------------------------------- -------------------------------------
- --------------------------------------- -------------------------------------- -------------------------------------
AUTOMOBILES AMOUNT LICENSE PLATE
- --------------------------------------- -------------------------------------- -------------------------------------
DAIHATSU-FURGON/1991 $6,638.00 C.112882
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1991 7,965.00 C.115650
- --------------------------------------- -------------------------------------- -------------------------------------
MITSUBISHI-FURGON/1990 8,850.00 C.112872
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1990 5,089.00 C.111391
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1993 8,629.00 C.119132
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1990 4,868.00 C.111392
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1990 7,965.00 C.116677
- --------------------------------------- -------------------------------------- -------------------------------------
NISSAN-FURGON/1993 8,408.00 C.119137
- --------------------------------------- -------------------------------------- -------------------------------------
TOYOTA-FURGON/1989 5,753.00 C.108486
- --------------------------------------- -------------------------------------- -------------------------------------
TOTAL $64,165.00
- --------------------------------------- -------------------------------------- -------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Corporacion As de Oros, S.A.
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORACION AS DE OROS, S.A. AND SUBSIDIARIES
VEHICLES AND MOTORCYLES
(all in colones unless otherwise indicated)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LICENSE MAIN PLEDGE CON- PLEDGE PLEDGE PLEDGE
PLATE CHARACTERISTICS CESSION DATE (INSCRIPTION DUE DATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 CL 130579 Brand: Toyota April 1st, 1998 Volume: 79 April 1, 2000 USD$ 137,500.00
Engine No.: 4Y0393847 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
2 C 012692 Brand: Hino August 14, 1992 Volume: 0253 August 14, 1997 (cent) 11.000.000.00
Engine No.: EH700168300 Entry: 7273
Year: 1986
- ----------------------------------------------------------------------------------------------------------------------------------
3 C 013840 Brand: Hino August 14, 1992 Volume: 0253 August 14, 1997 (cent) 11.000.000.00
Engine No.: EH700171567 Entry: 7273
Year: 1986
- ----------------------------------------------------------------------------------------------------------------------------------
4 C 103318 Brand: Mitsubishi August 1, 1988 Volume: 222 August 1, 1996 (cent) 11,785,500.00
Engine No.: 4D31-79716 Entry: 518
Year: 1988
- ----------------------------------------------------------------------------------------------------------------------------------
5 C 026555 Brand: Hino October 6, 1992 Volume: 25 October 6, 1995 (cent) 5.300.000.00
Engine No.: H07CB20022 Entry: 3552
Year: 1986
- ----------------------------------------------------------------------------------------------------------------------------------
6 230313 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1,2000 USD $137,500.00
Engine No.: 4G32HL9629 Entry 9236
Year: 1992
- ----------------------------------------------------------------------------------------------------------------------------------
7 CL 126690 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 4D31B14490 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
8 CL 128111 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 4D56GB1421 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
9 CL 128800 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD $137,500.00
Engine No. 4D56GB2103 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
LICENSE MAIN PLEDGE CON- PLEDGE PLEDGE PLEDGE
PLATE CHARACTERISTICS CESSION DATE (INSCRIPTION DUE DATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
10 CL 124840 Brand: Isuzu April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 745528 Entry: 9236
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
11 CL 128371 Brand: Toyota April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 1325519 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
12 CL 130785 Brand: Toyota April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 1322764 Entry: 9236
Year: 1994
- ----------------------------------------------------------------------------------------------------------------------------------
13 CL 142481 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD $137,500.00
Engine No.: 4D31B79852 Entry: 9236
Year: 1996
- ----------------------------------------------------------------------------------------------------------------------------------
14 CL 142483 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 4D31B79855 Entry: 9236
Year: 1996
- ----------------------------------------------------------------------------------------------------------------------------------
15 C 111233 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 190598 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
16 C 111260 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 443924 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
17 C 111262 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 443976 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
18 C 110689 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 813067 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
19 C 111263 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 443640 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
20 C 118596 Brand: Isuzu July 14, 1992 Volume: 0250 July 21, 1995 (cent) 1,400,000.00
Engine No.: 615808 Entry: 3728
Year: 1992
- ----------------------------------------------------------------------------------------------------------------------------------
21 C 111261 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 2000 (cent) 9,013,425.00
Engine No.: 443956 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
LICENSE MAIN PLEDGE CON- PLEDGE PLEDGE PLEDGE
PLATE CHARACTERISTICS CESSION DATE (INSCRIPTION DUE DATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
22 C 111230 Brand: Isuzu July 14, 1995 Volume: 45 July 14, 1996 (cent) 9,013,425.00
Engine No.: 190527 Entry: 3762
Year: 1990
- ----------------------------------------------------------------------------------------------------------------------------------
23 C 121105 Brand: Isuzu July 21, 1993 Volume: 255 July 21, 1996 (cent) 12,024,880.00
Engine No.: 683170 Entry: 3474
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
24 C 122650 Brand: Isuzu July 21, 1993 Volume: 255 July 21, 1996 (cent) 12,024,880.00
Engine No.: 685365 Entry: 3474
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
25 C 1207001 Brand: Isuzu July 21, 1993 Volume: 255 July 21, 1993 (cent) 12,024,800.00
Engine No.: 683506 Entry: 3474
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
26 C120786 Brand: Isuzu July 21, 1993 Volume: 255 July 21, 1998 (cent) 12,024,880.00
Engine No.: 684630 Entry: 3474
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
27 C 119332 Brand: Mitsubishi April 1, 1997 Volume: 78 April 1, 2000 USD$ 137,500.00
Engine No.: 4D56EV7411 Entry: 9236
Year: 1993
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE B-1
(Second Closing)
CHAVES FAMILY MEMBERS
NAME RELATIONSHIP
- ---- ------------
A. Immediate Family of Calixto Chaves
Calixto Chaves Self
Rosalidia Zamora Spouse
Monica Chaves Daughter
Jose Pablo Chaves Son
B. Siblings of Calixto Chaves
Manuel Angel Chaves Brother
Jose Joaquin Chaves Brother
Fidel Chaves Brother
Carlos Luis Chaves Brother
Gerardo Chaves Brother
Teresa Maria Chaves Sister
Julia Chaves Sister
Beatriz Chaves Sister
Ana Rosa Chaves Sister
Gema Chaves Sister
Francisco Chaves C. Uncle
C. Aunts and Uncles of Calixto Chaves
Victor Zamora Uncle
Jose Cruz Zamora Uncle
Teresa Zamora Aunt
<PAGE>
NAME RELATIONSHIP
- ---- ------------
D. Related by Marriage
Beatriz de Chaves Sister-in-law
Luis Guillermo Zamora Brother-in-law & Second Cousin
Jose Angel Zamora Brother-in-law & Second Cousin
Hernan Zamora Brother-in-law & Second Cousin
Carlos Zamora Brother-in-law & Second Cousin
Emilia Zamora Sister-in-law & Second Cousin
Ana Virginia Zamora Sister-in-law & Second Cousin
Flor Zamora Sister-in-law & Second Cousin
Jorge Viquez First Uncle-in-law
Alba Viquez First Aunt-in-law
Carlos Viquez First Uncle-in-law
Cecilia Viquez First Aunt-in-law
Javier Viquez First Uncle-in-law
Fernando Viquez First Uncle-in-law
Ines Gonzalez Sister-in-law
Beatriz Rodriguez Sister-in-law
Ilse Fernandez Sister-in-law
William Alvarez Brother-in-law
Isaias Gomez Brother-in-law
Jorge ML. Quesada Brother-in-law
Luis Altamirano Brother-in-law
Leda Sauma In-laws
Maribel Aguilar In-laws
Teresa Murillo Soto In-laws
Jorge Feldman In-laws
Eduardo Vargas Gonzalez In-laws
<PAGE>
NAME RELATIONSHIP
- ---- ------------
E. Nieces and Nephews of Calixto Chaves
Marcela Chaves Niece
Oscar E. Chaves Nephew
Francisco J. Chaves Nephew
Marianella Chaves Niece
Gabriella Chaves Niece
Katia Chaves Niece
Juan Carlos Chaves Nephew
Alejandro Chaves Nephew
Romulo Chaves R. Nephew
Federico Chaves R. Nephew
Esteban Chaves Nephew
Nestor Chaves Nephew
Zeneida Chaves Niece
Maria Adela Chaves Niece
Roxana Chaves Niece
Karla Chaves Niece
Magaly Chaves Niece
Minor Solis Nephew
Isaias Gomez Nephew
Natalia Gomez Niece
Lucia Gomez Niece
Jorge E. Quesada Nephew
Christian Quesada Nephew
Alejandro Quesada Nephew
Vanessa Quesada Niece
Brian Altamirano Nephew
<PAGE>
NAME RELATIONSHIP
- ---- ------------
Francisco Javier Chaves Nephew
Sinai Chaves Niece
F. Cousins of Calixto Chaves
Marco Chaves First Cousin
Ana Chaves First Cousin
Gliceria Chaves First Cousin
Marta Chaves First Cousin
Elida Chaves First Cousin
Francisco Chaves First Cousin
Maylle Chaves First Cousin
Juan Chaves First Cousin
Rosa Emilia Chaves First Cousin
Alvaro Zamora Cousin
Martin Zamora Cousin
Vinicio Zamora Cousin
Maximino Zamora Cousin
Cecilia Zamora Cousin
Luisa Zamora Cousin
Rosario Zamora Cousin
Carlos Zamora Cousin
Angel Zamora Cousin
Alfredo Zamora Cousin
Ignacio Zamora Cousin
G. Shareholders of Inversiones La Ribera, S.A. % of Ownership
------------------------------------------- --------------
Calixto Chaves Self (75%)
Rosalidia Zamora Spouse (25%)
<PAGE>
SCHEDULE B-2
(Second Closing)
CORPORACION PIPASA, S.A.
EXISTING INVESTMENTS
As of January 31, 1998
DESCRIPTION OF INVESTMENT AMOUNT IN U.S. DOLLARS
- ------------------------- ----------------------
Long-Term Investments
- ---------------------
Shares
Club Campestre Espanol $975.61
LACSA 567.02
Romulo & Adela 536.59
Hotel Fiesta De Playa 18,292.80
Inolasa Group 4,225,719.43
Shares Pipasa Salvador, S.A. 21,805.40
Prod. Agropecuarios 6,887.21
Serv. Bursatil Del Agro 3,344.31
Total: $4,278,128.37
=============
Short-Term Investments
- ----------------------
Certificates of Deposit
Banco Interfin, S.A. 15,941.14
Citi Valores 14,569.81
Corporacion Privada de Inversiones 158,562.39
Citibank (Costa Rica), S.A. 490,410.10
Financiera Belen, S.A. 40,650.48
Corporacion Privada de Inversiones 67,479.69
<PAGE>
DESCRIPTION OF INVESTMENT AMOUNT IN U.S. DOLLARS
- ------------------------- ----------------------
Commercial International Bank & Trust Co. 405,659.30
Operacion de Administracion Bursatil ("OPAB")
Mercado de Valores 12,024.02
B.F.A. Valores 530,838.87
Metro Valores 0.00
Banco Interfin, S.A. 182,927.17
Univalores 7.42
Citivalores 30,755.66
52,227.36
Boncentro Certificate
14,969.82
Lafise Certificate
Shares (expected to be sold before January 1, 1999)
Costa Rica International, Inc. 147,505.73
Titulos Valores Renta Variable 684,022.95
Allowance to Reduce Investment to Fair Market Value (195,231.17)
Total: $2,655,320.74
=============
<PAGE>
(Second Closing)
CORPORACION AS DE OROS, S.A.
EXISTING INVESTMENTS
As of February 4, 1998
DESCRIPTION OF INVESTMENT AMOUNT IN U.S. DOLLARS
- ------------------------- ----------------------
Long-Term Investments
Stocks
Astel $4,065.04
Bolpro 7,954.67
Club Campestre Expanol 1,524.39
Restaurantes As 1,088,516.26
Total: $1,102,060.37
=============
Short-Term Investments
- ----------------------
Certificates of Deposit
Bancrecen, S.A. 47,096.65
Banco Nacional de Costa Rica 813.01
Banco Banex, S.A. 15,106.00
Total: $1,165,076.33
=============
Exhibit 10.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement') is made and entered into as
of January 22, 1998, by and between Costa Rica International, Inc., a
corporation organized under the laws of the State of Nevada (the "Buyer"),
Comercial Angui, S.A. a corporation, organized under the laws of the Republic of
Costa Rica, corporate identification card number 3-101-049922 (the "Seller").
WITNESSETH:
WHEREAS, the Seller owns approximately ninety-five percent (95%) of the
issued and outstanding shares of Corporacion As de Oros, S.A. (the "Company"),
and seventy-five percent (75%) of the total issued and outstanding voting stock
of the Company is held in a trust ("Trust");
WHEREAS, the Company has authorized a total of two million (2,000,000)
shares of common stock, par value one thousand Colones (Colones 1,000) per
share, of which one million, five hundred thousand (1,500,000) shares are issued
and outstanding, and has authorized a total of one million, seven hundred
thousand (1,700,000) shares of preferred stock, par value one thousand Colones
(Colones 1,000) per share, of which one hundred fifty-eight thousand, three
hundred (158,300) shares are issued and outstanding; and
WHEREAS, the Seller desires to sell, convey, transfer, assign and
deliver to the Buyer the issued and outstanding shares of common and preferred
stock of the Company, which represent fifty one percent (51%) of the issued and
outstanding voting shares of common stock of the Company, all of which are owned
by the Seller (collectively, the "Shares"), upon and subject to the terms,
covenants and conditions herein set forth;
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby conclusively acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
1.1 SALE AND PURCHASE OF SHARES: Subject to the terms of this
Agreement, the Seller agrees to sell, assign, transfer and convey the Shares to
the Buyer, free and clear of any liens, security interests, encumbrances and
restrictions of any kind whatsoever, and the Buyer agrees to purchase the Shares
from the Seller. The sale, assignment, transfer and conveyance of the Shares by
the Seller to the Buyer shall be effected on or before April 30, 1998 by the
Seller's delivery to the Buyer of the certificates therefore duly endorsed for
transfer or accompanied by stock powers duly executed in blank, as necessary to
effectively vest in the Buyer all of the right, title and interest of the Seller
in and to the Shares and by the execution of a firm entry in the Shareholders
Registry Book of the Company.
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1.2 PURCHASE PRICE AND PAYMENT: In consideration of the sale,
assignment, transfer, conveyance and delivery of the Shares by the Seller to the
Buyer, and in reliance upon the representations, warranties and covenants made
herein by the Seller, as consideration in the aggregate of five million dollars
(US$5,000,000.00) (the "Purchase Price"), the Buyer shall deliver to the Seller
at the Closing (as such term is defined herein): (i) an amount equal to two
million four hundred thousand dollars (US$2,400,000.00) payable in an
interest-free promissory note to mature on January 22, 2000 executed by the
Buyer in favor of the Seller in the aggregate principal amount of
US$2,400,000.00 (the "Note"); and (ii) 2,477,058 shares of Costa Rica
International, Inc. at a price of US$1.0625 per share, once the United States
Securities and Exchange Commission ("SEC") approves the issuance of such shares,
or as the parties may agree in writing.
ARTICLE II
2.1 The transfer and delivery to be made pursuant to this Agreement
(the "Closing") shall take place in Nassau, Bahamas on April 30, 1998, or such
other time and date as may be mutually agreed upon by the Seller and the Buyer
(the "Closing Date").
2.2 OBLIGATIONS OF THE SELLER AT THE CLOSING: At the Closing, the
Seller shall: (i) deliver to the Buyer certificates representing the Shares,
duly endorsed for transfer in blank, or accompanied by stock powers duly
executed in blank, and (ii) a shareholders' corporate book entry reflecting the
transfer of the Shares to the Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby makes the following representations and warranties to
the Buyer, each of which shall be deemed material (and the Buyer, in executing,
delivering and consummating this Agreement, has relied and will rely upon the
correctness and completeness of each such representations and warranties
notwithstanding any independent investigation by the Buyer and/or the Buyer's
officers, directors, employees, representatives, agents and/or advisors):
3.1 ORGANIZATION AND EXISTENCE; AUTHORIZATION; ENFORCEABILITY.
(a) ORGANIZATION OF THE COMPANY, GOOD STANDING. The
Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the
Republic of Costa Rica with full corporate power and
authority to own, lease and operate its properties
and assets. The Seller has delivered to the Buyer
true, correct and complete copies of the Articles of
Incorporation and By-laws of the Company.
(b) AUTHORIZATION. The Company has full corporate power,
authority and capacity to enter into this Agreement
and the agreements, documents and instruments
contemplated hereby and perform its obligations
hereunder and thereunder. The execution, delivery and
performance of this
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Agreement and all other agreements and transactions
contemplated hereby have been duly authorized by the
Board of Directors and the shareholders of the
Company if necessary, and no other corporate
proceedings on its part are necessary to authorize
this Agreement and the transactions contemplated
hereby.
(c) NO CONFLICTS. The execution, delivery and performance
of this Agreement by the Seller will not contravene,
conflict with, or result in a violation or breach of
any provision of, or give any person or entity the
right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance
of, or to cancel, terminate or modify any contract to
which the Seller or the Company is a party or by
which the assets of the Company are bound, including
that certain trust agreement executed between the
Company and its creditors..
3.2 LITIGATION. To the best of the Seller's knowledge, there is no
litigation or other actions, suits, proceedings or investigations pending, at
law or in equity, or before any governmental department, commission, board,
agency or instrumentality, or, to the best of the Seller's knowledge,
threatened, in connection with respect to the transactions contemplated hereby.
To the best of the Seller's knowledge, no event has occurred or circumstance
exists that may give rise or serve as the basis for commencement of any such
action, suit, investigation or other proceeding.
3.3 FINANCIAL STATEMENTS. The Seller has presented or will present to
the Buyer within forty (40) days of the date first written above the balance
sheets of the Company at December 31, 1997 the related unaudited income
statements, unaudited statements of stockholder's equity and statements of
changes in financial position for the fiscal years ended 1997, in each case
including the notes thereto, if any (collectively, the "Financial Statements").
The Company's balance sheets (including the notes thereto) fairly present the
financial position of the Company as of the respective dates thereof, and the
other financial statements referred to herein (including the notes thereto)
fairly present the results of operations and the financial position of the
Company for the respective fiscal periods or as of the respective dated therein
set forth. Each of such statements (including the notes thereto) has been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, and do not and will not fail to disclose any
material, extraordinary or out-of-period items. The books and records of the
Company have been and are being, maintained in all material respects in
accordance with applicable legal and accounting requirements and reflect only
actual transactions, and the Financial Statement been prepared in accordance
with such books and records.
3.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. There has not been any
adverse change in the business, operations, properties, assets or financial
condition of the Company from that described in the Financial Statements as of
April 30, 1998. No fact or condition of any character exists or will exist on
the Closing Date that the Seller believes will cause such an adverse change in
the future as a result of occurrences, acts or omissions prior to the Closing
Date.
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3.5 TAX MATTERS. The Company has duly filed all information returns,
tax returns and reports required by any jurisdiction to be filed by it on or
prior to the date hereof (including without limitation estimated tax returns and
returns with respect to employee or employment-related taxes). Such returns are
accurate and complete in all respects. The Company has duly paid all tax
assessments, fees, penalties, interest and other governmental charges that have
been incurred or are due or claimed to be due from it by any municipal, state,
local, foreign or other taxing authorities on or prior to the date of this
Agreement (including without limitation those due in respect to its properties,
income, business, capital stock, distribution on dividends, deposits, licenses,
sales, payroll, unemployment insurance, retirement, social security and
occupational disability, as applicable). To the extent that any taxes may be due
from the Company for any period prior to the Closing, such taxes will have been
paid prior to the Closing Date. There are no tax liens of any kind or nature
upon the properties or assets of the Company, and there are no disputes pending
or claims asserted for taxes upon the Company or with respect to any of the
assets of the Company. No income, excise, sales and/or municipal, state, local,
foreign or other tax returns are currently being audited by the appropriate
taxing authorities, and all prior audits have been concluded and resolved.
3.6 PROPERTY-TITLE AND LEASES. The Company has good, valid and
marketable title, free and clear of any and all Liens, claims, encumbrances,
charges, defaults, equities, asements, rights of way, building or use
restrictions, exceptions, variances or other limitations of whatever kind or
character to all of the real property and all other property owned by it, except
property and assets disposed of in the ordinary course of business in accordance
with the terms of this Agreement and for no less than fair market value. All
buildings, fixtures, equipment and other property and assets held under leases
or subleases by the Company with third parties are held under valid instruments
enforceable in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy Laws. The Company is the lessee or sublessee in
possession under each lease or sublease to which it is a lessee or sublessee.
All rentals due by the Company under each such lease or sublease have been paid,
and there is no default or any event or condition which, with the giving of
notice, lapse of time or occurrence or any further event or condition, would
become a default under any such lease or sublease, and the Company is entitled
to possession and quiet enjoyment of all such leased properties in accordance
with the terms of such instruments. All operating facilities, buildings,
furniture, equipment and other tangible property owned or used by the Company
are in good operating condition and repair. Such tangible properties and all
fixtures and improvements to real property owned or leased by the Company, and
the use thereof, conform in all respects with all applicable building, zoning,
environmental and other requirements, and do not materially encroach in any
respect on property of others. All necessary occupancy and other certificates
and permits for the occupancy and lawful use thereof and of the equipment and
furnishings therein have been issued and are in full force and effect and no
current use of any assets of the Company is dependent on a nonconforining use or
other permit which materially limit the Company's use thereof.
3.7 RECEIVABLES. The Company shall not have accounts payable in
excess of an amount to be determined subsequent to the Buyer's due diligence and
satisfactory to the Buyer. All accounts and notes receivables reflected in, or
arising since the date of the most recent balance sheet, are included in the
financial Statements, all of which are owned by the Company
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free and clear of all Liens and have either been collected or are collectible
and will be collected in the ordinary course of business, except for bad debt
duly noted and approved by the Company.
3.8 INSURANCE. The Company maintains insurance policies and bonds in
force in such amounts and against such liabilities and hazards as are
customarily maintained by companies engaged in a business similar to its
Business. The Company is not liable for any material retroactive premium
adjustments. All premiums due on such policies have been paid and all such
policies are enforceable and in full force and effect, and the Company has not
received any notice of premium increases or cancellations.
3.9 INTANGIBLE PERSONAL PROPERTY. The Company validly holds and
possesses all patents, trademarks, service marks, copyrights, trade or corporate
names and licenses (collectively, "Intangible Rights") which are required and
necessary for the Company to conduct its business as presently conducted. The
Company is the sole and exclusive owner of and has the unrestricted right to
use, each of the Intangible Rights. No claims or demands have been asserted
against the Company with respect to any of the Intangible rights and no
proceedings have been instituted, are pending or have been threatened which
challenge the rights of any of the Companies with respect thereto.
3.10 COMPLIANCE WITH LAWS. The Company has conducted and is conducting
its business in compliance with all applicable legal requirements. Additionally,
the Company has not been and is not in violation of any permit, authorization,
concession, agreement, contract, corporate document or other legally enforceable
obligation.
3.11 NO MISREPRESENTATIONS. None of the information contained in the
representations and warranties set forth in this Agreement, or in any of the
documents, certificates or instruments delivered or to be delivered to any other
party prior to or after the execution hereof as required or permitted by any
provision of this Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading as of the date hereof
and as of the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
To induce the Seller to enter into this Agreement and to consummate the
sale of the shares, the Buyer represents, warrants, covenants and agrees as
follows:
4.1 1 ORGANIZATION AND EXISTENCE; AUTHORIZATION; ENFORCEABILITY.
(a) ORGANIZATION OF THE COMPANY; GOOD STANDING. The Buyer
is a corporation duly organized, validly existing and
in good standing under the laws of the State of
Nevada, with full corporate power and authority to
own, lease or operate its properties and assets. The
Buyer has the corporate power and authority, has
taken all action necessary and has obtained all
necessary
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permits in order to execute and deliver this
Agreement and to consummate the transactions
contemplated hereby.
(b) AUTHORIZATION, ETC. The Buyer has full corporate
power, authority and capacity to enter into this
Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of the
Buyer has duly authorized the execution, delivery and
performance of this Agreement, and the other
agreements and transactions contemplated hereby, and
on or before the closing date, the Company shall have
held stockholders' meetings whereby such stockholders
approved the consummation of the transaction
contemplated herein.
(c) ENFORCEMENT, ETC. This Agreement is a valid and
binding agreement of the Buyer enforceable in
accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, fraudulent
transfer, reorganization moratorium and similar laws
of general applicability relating to or affecting
creditor's rights and to general equity principles.
This Agreement and ail of the provisions hereof shall
be binding upon and inure to the benefit of the Buyer
and any successor of the Buyer by way of
reorganization, merger, or consolidation and any
assignee of all or substantially all of its business
and assets.
(d) NO CONFLICT. The execution, delivery and performance
of this Agreement by the Buyer does not and will not
violate or constitute a breach of or default under
any legal requirement or order of any governmental
entity to which the Buyer is subject or under any
agreement or instrument of the Buyer, or to which the
Buyer is subject or is a party or by which the Buyer
is otherwise bound.
(e) LITIGATION. There is no litigation or other actions,
suits, proceedings or investigations pending, or, to
the Buyer's knowledge, threatened, at law or in
equity, or before any governmental entity, against
the Buyer that challenge, or may have the effect of
interfering with, any of the transactions
contemplated hereby.
ARTICLE V
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
Each and every obligation of the Buyer under this Agreement shall be
subject to the satisfaction by the Seller, on or before the Closing Date, of
each of the following conditions unless waived in writing by the Buyer:
5.1 ORDINARY COURSE. From the date hereof until April 30, 1998, unless
the prior written consent of the Buyer is first obtained, the Seller will use
his best efforts to preserve the value of the Company's assets and the business
organizations of the Company intact, to preserve
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the goodwill of customers and others having business relations with the Company,
to maintain its properties in good repair, working order and condition, to
comply with all laws applicable to it and the conduct of its business, to keep
in force all licenses, permits and authorizations held by the Company necessary
or desirable for the conduct of the Company's business, to keep in force at not
less than their present limits, all policies of insurance, and to make no
material change in the customary terms and conditions.
5.2 NOTICE; REPRESENTATIVE. Seller will promptly give written notice to
Buyer upon becoming aware of any event or the impending or threatened occurrence
of any event which would cause or constitute a breach of any of its
representations and warranties contained or referred to in this Agreement, and
will use its best efforts to prevent the same or remedy the same promptly. The
Seller shall promptly notify the Buyer of any material change in the normal
course of business, operation or properties of the Company, or of any
governmental complaints, investigations or hearings (or communications
indication that the same may be contemplated), or the institution or threat of
litigation, and shall keep the Buyer fully informed of any and all such events.
5.3 ACTIONS; FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, the Seller undertakes and agrees to (i) in good faith, take all
steps that are within its power to cause to be fulfilled those of the conditions
precedent to Buyer's obligations to consummate the transactions contemplated
hereby that are dependent upon Seller's actions and (ii) use his best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws to consummate and
make effective the transactions contemplated by this Agreement and not to take
any actions which would be inimical to such result. In case at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of any such agreements, Seller or the proper agents of Seller shall
take all such necessary action. In addition, the Seller shall at all times
cooperate with the Buyer and the Company to assists them in obtaining refunds,
due the Company as a result of any tax benefits granted to the Company.
5.4 NON-SOLICITATION. The Seller shall not take any actions to seek,
encourage, solicit or support any inquiry, proposal, expression of interest or
offer from any other person or entity in connection with or with respect to an
acquisition, combination or similar transaction, involving the Company and/or
the Shares or a substantial portion o the assets of the Company, and the Seller
will promptly inform the Buyer of the existence of any such inquiry, proposal,
expression of interest or offer and shall not, without the prior written consent
of the Buyer furnish any information to or participate in any discussions or
negotiations with, any other entity, person or group (other than the Buyer and
its agents and representatives) regarding same. Neither the Seller nor the
Company shall accept any inquiry, proposal, expression of interest or offer,
execute any agreement, or enter into or consummate any transaction with respect
to any of the foregoing and the Seller shall take all actions necessary to
ensure that the company does not take any such action.
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ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE BUYER
Each and every obligation of the Buyer under this Agreement shall be
subject to the satisfaction by the Seller, on or before the Closing Date, of
each of the following conditions unless waived in writing by the Buyer:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Seller contained in Article III and elsewhere in this Agreement and all
information contained in any exhibit, certificate, schedule or attachment hereto
or in any writing delivered by or on behalf of, the Seller or the Company to the
Buyer, shall be true and correct when made, and shall be true in all material
respect at and as of the Closing Date. The Seller and the Company shall have
performed and complied with all agreements, covenants and conditions and shall
have made all deliveries required by this Agreement to be performed delivered
and complied with by them prior to the closing Date.
6.2 NO PENDING OR THREATENED LEGAL CLAIM. No (i) litigation of any kind
shall be pending or threatened; (ii) preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or by any federal or
state governmental or regulatory body; or (iii) statute, rule, regulation or
executive order promulgated or enacted by any federal or state governmental
authority after the date of this Agreement, which has or could have a material
adverse effect on the business, properties, prospects or condition, financial or
otherwise, of the Company, prohibits the consummation of the transactions
contemplated by this Agreement, or affects in any way the Seller's title to the
Shares or the Seller's ability to transfer the Shares to the Buyer in accordance
with the terms of this Agreement, shall be in effect pending or threatened.
6.3 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
operations, the business, the financial condition or prospects of the Company
shall have occurred, no fact shall have arisen which has or reasonably could be
expected to have a material adverse effect on the Company, or its properties,
assets or the consummation of the transactions contemplated hereby, in each case
in the sole discretion of the Buyer.
6.4 DUE DILIGENCE. The Seller shall have provided the Buyer under the
terms and conditions of the letter of intent and confidentiality agreement, both
dated September 18, 1997 (the "Agreements") with access to the Company's
business, records and any information which the Buyer deemed necessary, in its
sole discretion, to conduct a satisfactory due diligence examination, pursuant
to which the Buyer may, among other things has, (i) evaluated the Company, its
assets and liabilities, (ii) satisfied itself, in its sole and absolute
discretion, that the Company's Assets were free of all Liens except as disclosed
to the Buyer, (iii) satisfied itself, in its sole and absolute discretion, that
the Company does not have any debt, liabilities or other obligations, whether
absolute, contingent or otherwise which has not been disclosed in writing by the
Seller and (iv) satisfied itself, in its sole and absolute discretion, that the
Company's licenses, permits and authorizations required for the Company to
operate its business. Such due diligence
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was completed by the Buyer fifteen (15) days before the execution of this
Agreement (the "Due Diligence Period").
6.5 SHARE CERTIFICATES AND OTHER DOCUMENTS. The Seller shall have
delivered to the Buyer certificates evidencing the shares duly endorsed for
transfer or accompanied by stock powers duty executed in blank. The Buyer shall
have received from the Seller, an executed entry in the Shareholders Registry
Book and evidence of having complied with, or obtained a waiver from, the terms
of the above-mentioned trust agreement, and any and all such other documents and
instruments, duly executed where required or appropriate, as it may reasonably
request in connection with the transaction contemplated by this Agreement.
6.6 OPINION OF SELLER'S COUNSEL. The Sellers shall have delivered an
opinion of counsel in a form reasonably satisfactory to the Buyer in the form of
Exhibit B hereto.
6.7 CORPORATE ACTION. The Company's Board of Directors shall have
approved the transactions contemplated by this Agreement if such approval is
necessary under the Company's Articles of Incorporation or By-laws.
ARTICLES VII
CONDITIONS TO THE OBLIGATION OF THE SELLER
Each and every obligation of the Seller under this Agreement shall be
subject to the satisfaction by the Buyer, on or before April 30, 1998 of the
following conditions, unless waived in writing by the Seller:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Buyer contained in Article IV and elsewhere in this Agreement and all
information contained in any exhibit certificate, schedule or attachment hereto
or in any writing delivered by or on behalf of the Buyer to the Seller shall be
true and correct when made, and shall be true in all material respects at and as
of April 30, 1998. The Buyer shall have performed and complied with all
agreements, covenants, and conditions and shall have made all deliveries
required by this Agreement to be performed, delivered and complied with by them
prior to the Closing Date.
7.2 COVENANTS PERFORMED. All of the covenants, terms and conditions of
this Agreement to be complied with and performed by the Buyer on or before the
Closing Date shall have been duly complied and performed.
7.3 PURCHASE PRICE. The Buyer shall have delivered to the Seller the
Purchase Price in accordance with Section 2.1 of this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 OBLIGATIONS OF THE BUYER. The Buyer agrees to defend, indemnify and
hold harmless the Seller from, against and in respect of any and all demands,
claims, actions or causes
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of actions, losses, liabilities, damages, assessments, deficiencies, taxes, cost
and expenses, including without limitation interest, penalties and reasonable
attorney's fees and expenses (collectively "Claims"), asserted against, imposed
upon or paid, incurred or suffered by the Seller as a result of arising from, in
connection with or incident to any material breach or material inaccuracy of any
representation, warranty, covenant or agreement of the Buyer in this Agreement
or in any document, certificate or other instrument related hereto.
8.2 OBLIGATIONS OF THE SELLER. The Seller agrees to defend, indemnify
and hold harmless the Buyer from, against and in respect of any and all claims
asserted against, imposed upon or paid, incurred or suffered by the Buyer as a
result of, arising from, in connection with or incident to (i) any breach or
inaccuracy of any representation, warranty, covenant or agreement of the Seller
in this Agreement, or in any document, certificate or other instrument related
hereto, (ii) the inability, failure or refusal of Seller to act in good faith in
respect of this Agreement, or the transactions, agreements, documents and
instruments delivered herewith or contemplated hereby, at any time from the date
of this Agreement until the later in time of (a) the Closing Date or (b) the end
of the Due Diligence Period and (iii) any which as of the Closing Date have not
been undisclosed to the Buyer in writing.
8.3 INDEMNIFICATION PROCEDURE. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnification hereunder is referred to as the "Indemnified Party". An
Indemnified Party under this Agreement shall give prompt written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement. As to any Claim by a third party, the
Indemnified Party, to participate in the defense, compromise or settlement of
any such matter through the Indemnified Party's own attorneys and at the
Indemnifying Party's own expense; each of the indemnifying and the Indemnified
Party shall provide such cooperation and such reasonable access to its books,
records and properties as the other party shall reasonable request with respect
to any such matter; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof. The Buyer may setoff
against the amount of any other payments due to Seller hereunder or otherwise,
including, without limitation the Note, any al all amounts, due to the Buyer
pursuant to any and all Claims that the Buyer may have against the Seller
hereunder including without limitation with respect to the indemnification of
the Buyer hereunder by the Seller.
An Indemnifying Party shall not make any settlement of any Claims
without the written consent of the Indemnified Party which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a settlement involving
injunctive or other equitable relief against the Indemnified Party or its
assets, employees or business.
In a case where responsibility for a matter giving rise to a Claim for
indemnification is shares by the parties, any of the parties may elect to
relieve the other of its obligations of indemnification with respect to such
matter and, subject to the provisions of this section, such
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electing party may thereupon assume full control of the resolution of such
matter. if such election is not made, control shall also be shared.
ARTICLE IX
SURVIVAL OF TERMS, REPRESENTATIONS
9.1 SURVIVAL. The representations and warranties contained herein shall
be true at and as of April 30, 1998, as though such representations and
warranties were made at and as of the Closing Date. All of these representations
and warranties shall survive the consummation of all of the transactions
contemplated by this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 BINDING AGREEMENT. This Agreement may not be transferred,
assigned, pledged or hypothecated all or in part by any party hereto without the
prior written consent of all the other
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parties hereto. This Agreement is binding upon and shall inure to the benefit of
the parties hereto and their respective herein, executors, administrators,
representatives and successors. No other person shall acquire or have any right
under or by virtue of this Agreement.
10.2 GOVERNING LAW. This Agreement, the rights and obligations of the
parties, and any other claims or disputes relating in anyway thereto will be
governed by and construed in accordance with the laws of the State of Florida,
without regard to its choice of law principles.
10.3 COUNTERPARTS, HEADINGS, ETC. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which shall be deemed an original, but all of which shall
constitute one and the same instrument. The headings herein are for convenience
of reference only and shall not be deemed a part of this Agreement.
10.4 NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be deemed validly given, made or served if in
writing and if delivered in person or sent by facsimile transmission or
registered or certified mail to the intended recipient at the following address
or to such other address or number as shall be furnished in writing by any such
party to the other:
If to the Seller: Antonio Echeverria
Ternerina
Hatillo, Centro, de la
Unidad Sanitaria 500
metros al este
If to the Buyer: Calixto Chaves
95 Merrick Way,
Suite 507,
Coral Gables, Florida, 33134
10.5 AMENDMENT; SEVERABILITY: This Agreement may be amended only by an
agreement in writing signed by the parties hereto. In case any provision of this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions will not be affected or
impaired thereby.
10.6 ARBITRATION. Any dispute arising in connection with this Agreement
shall be exclusively settled by binding arbitration in the Spanish language in
Miami, Florida, in accordance with the Rules of Arbitration and Conciliation of
the International Chamber of Commerce. Notwithstanding any provision in these
rules, the arbitration panel at any such arbitration proceeding shall consist of
three arbitrators. One arbitrator will be designated by the Buyer, another
arbitrator will be designated by the Seller and the third arbitrator will be a
person mutually agreed upon by the Buyer and the Seller. The arbitration panel
shall render its decision in writing, and such written decision and conclusions
with respect to the disputes so settled shall be final and binding on the
parties to the arbitration proceeding and confirmation and enforcement of the
awards so on the parties to the arbitration proceeding and confirmation and
enforcement of the awards so rendered may be obtained and entered in any court
having
12
<PAGE>
jurisdiction thereof. Each of the Buyer and the Seller hereby irrevocably
submits to the jurisdiction of any such court for purposes of enforcement of the
arbitration panel's decision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER:
By:______________________________________
Antonio Echeverria
President
Comercial Angui, S.A.
BUYER:
By:______________________________________
Calixto Chaves
President
Costa Rica International, Inc.
13
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<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> DEC-31-1997
<PERIOD-END> MAR-31-1998
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<SECURITIES> 953,257
<RECEIVABLES> 10,825,755
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0
2,216,072
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