THIS DOCUMENT IS A COPY OF THE STOCK PURCHASE AND REDEMPTION AGREEMENT
(EXHIBIT TO FORM 8-K) FILED ON JANUARY 4, 1996, PURSUANT TO A RULE
201 TEMPORARY HARDSHIP EXEMPTION.
FORM 8-K WAS FILED ELECTRONICALLY JANUARY 4, 1996, THIS EXHIBIT--STOCK
PURCHASE AND REDEMPTION AGREEMEN--WAS FILED WITH FORM SE PURSUANT TO
A RULE 201 TEMPORARY HARDSHIP EXEMPTION ON JANUARY 4, 1996.
STOCK PURCHASE AND REDEMPTION AGREEMENT
This Agreement entered into as of the 21st day of
December, 1995 by and between Corporacion Inmobiliaria Textil
(CINTEX), a Puerto Rico corporation ("Cintex"), Fideicomiso
Hispamer, a Puerto Rico trust ("Hispamer"), Estampados
Deportivos, Inc., a Delaware corporation ("Estampados"), and
Olympic Holding Corp., a Puerto Rico corporation ("Holding")
(all said entities hereinafter sometimes from time to time
collectively referred to as "Sellers"); and Coachman
Incorporated, a Delaware corporation (hereinafter referred to
as "Purchaser").
WITNESSETH
WHEREAS, Estampados owns all of the issued and
outstanding shares of common stock of Olympic Mills
Corporation (the "Olympic Common Shares"), a corporation duly
organized, validly existing and in good standing under and by
virtue of the laws of the State of Delaware ("Olympic"); and
WHEREAS, Cintex and Hispamer own all of the issued and
outstanding shares of Class A preferred stock of Olympic (the
"Olympic Preferred Shares"); and
WHEREAS, Olympic is the owner of all the issued and
outstanding shares of common stock of Yabucoa Industries, Inc.
(the "Yabucoa Common Shares"), a corporation duly organized,
validly existing and in good standing under and by virtue of
the laws of the Commonwealth of Puerto Rico; and
WHEREAS, Olympic is indebted to Cintex and Hispamer each
in the amount of One Million Seven Hundred Eighty Five
Thousand Two Hundred Dollars ($1,785,200.00) for an aggregate
liability of Three Million Five Hundred Seventy Thousand Four
Hundred Dollars ($3,570,400.00) (such debt(s) and evidence
thereto together with any and all existing rights, liens or
collateral held by Cintex and Hispamer in connection thereto
are hereinafter collectively referred to as the
"Indebtedness"); and
WHEREAS, Holding owns all of the issued and outstanding
shares of common stock of Lutania Mills, Inc. (the "Lutania
Shares"), a corporation duly organized, validly existing and
in good standing under and by virtue of the laws of the
Commonwealth of Puerto Rico ("Lutania"); and
WHEREAS, Sellers and Purchaser entered into a certain
agreement dated as of June 27, 1995, as amended (the "Contract
to Acquire"), pursuant to which Sellers granted to Purchaser
the exclusive and irrevocable right to purchase the Olympic
Common Shares, the Lutania Shares, the Olympic Preferred
Shares and the Indebtedness free and clear of Liens (as
defined hereinafter); and
WHEREAS, Purchaser has notified Sellers of its intention
to purchase from Estampados the Olympic Common Shares and from
Holding the Lutania Shares and to cause Olympic to acquire
from Cintex and Hispamer the Indebtedness and the Olympic
Preferred Shares, and Sellers agree to effect such
transactions, all under the terms and conditions herein
stated; and
NOW THEREFORE, in consideration of the mutual covenants,
representations and agreements set forth herein, intending to
be legally bound hereby, the parties hereto agree as follows:
1. SALE AND PURCHASE OF THE OLYMPIC COMMON SHARES AND
THE LUTANIA SHARES:
a. Agreement to Sell and to Purchase the Olympic
Common Shares and the Lutania Shares.
Upon the terms and conditions set forth in this
Agreement:
(1) Estampados hereby sells, assigns and
transfers to Purchaser and, in reliance on all of the
representations and warranties and the covenants of Sellers
and of Olympic, Yabucoa and Lutania made herein, Purchaser
acquires and accepts from Estampados, for the purchase price
of ONE THOUSAND DOLLARS, the Olympic Shares.
(2) Holding hereby sells, assigns and
transfers to Purchaser and, in reliance on all of the
representations and warranties and the covenants of Sellers
and of Olympic, Yabucoa and Lutania made herein, Purchaser
acquires and accepts from Holding, for the purchase price of
ONE THOUSAND DOLLARS, the Lutania Shares.
b. Delivery of Share Certificates.
Estampados and Holding hereby deliver to Purchaser
the certificates representing all the issued and outstanding
Olympic Common Shares and Lutania Shares, respectively, free
and clear of any and all liens, charges, encumbrances, claims,
options, rights of first refusal, rights of first offer,
agreements, security interests, restrictions of any kind and
rights of others of any description (collectively "Liens").
c. Delivery of Purchase Price.
Purchaser hereby delivers and pays to Estampados and
Holding, respectively, the full amount of the purchase price
for the Olympic Common Shares and the Lutania Shares.
2. CONTRIBUTION BY PURCHASER TO THE CAPITAL OF
OLYMPIC:
a. Capital contribution.
Upon the terms and conditions set forth in this
Agreement, Purchaser hereby contributes to the capital of
Olympic as additional paid-in capital the following:
(1) Cash in the amount of TWO MILLION DOLLARS
($2,000,000.00);
(2) Six million (6,000,000) shares of common
stock of Purchaser (the Purchaser's Common Stock") and its
commitment to issue additional common stock as provided in
paragraph 4(b)(1) hereof;
(3) A promissory note issued for the principal
amount of FOUR MILLION FOUR HUNDRED FORTY EIGHT THOUSAND EIGHT
HUNDRED TWENTY SIX DOLLARS ($4,448,826.00) (the "Bridge Note")
which is subject to the following terms and conditions:
(i) The Bridge Note shall mature and thus
be due and payable on July 15, 1996 (the "Bridge Note Maturity
Date").
(ii) No interest will accrue on the
principal amount under the Bridge Note paid during the first
thirty (30) days after issuance.
(iii) Payments of principal made after
thirty (30) days of issuance up to and including the Bridge
Note Maturity Date shall bear interest from the date of
issuance until payment at the rate of eight percent (8%) per
annum.
(iv) Any principal outstanding under the
Bridge Note on the Bridge Note Maturity Date not paid on such
date shall bear interest from the date of issuance until full
payment thereof at the rate of twelve percent (12%) per annum.
(v) While there is any balance
outstanding under the Bridge Note, Purchaser will apply the
net proceeds from any issuance of shares of Purchaser's stock
issued up to or after the Bridge Note Maturity Date to the
payment of principal and interest due under the Bridge Note.
(vi) As long as there are any amounts due
under the Bridge Note and the Availability Note, (i) Mr.
Francisco Carvajal will be Chairman of Olympic and if he
ceases to be Chairman, Hispamer shall have the right to
appoint one member to the Board of Directors of Olympic until
such notes are paid in full, (ii) Olympic, without the prior
consent of Mr. Carvajal, will not enter into any transaction,
agreement, contract, commitment, lease, understanding or
arrangement requiring, or which could result in payments by
the company with an overall value in excess of ONE HUNDRED
THOUSAND DOLLARS ($100,000.00), or incur in or assume any
obligation or liability in an amount in excess of ONE HUNDRED
THOUSAND DOLLARS ($100,000.00), and (iii) Mr. Carvajal will be
held harmless when acting in such capacities through a Hold
Harmless Agreement and applicable contractual liability
insurance coverage from decisions made by Purchaser and
Olympic in course of the transaction.
3. PAYMENT OF INDEBTEDNESS.
a. Indebtedness to Cintex.
Olympic hereby delivers to Cintex the sum of
ONE MILLION SEVEN HUNDRED EIGHTY FIVE THOUSAND TWO HUNDRED
DOLLARS ($1,785,200.00) in full payment and satisfaction of
the Indebtedness to Cintex.
b. Indebtedness to Hispamer.
Olympic hereby delivers to Hispamer in full
payment and satisfaction of the Indebtedness to Hispamer a
promissory note issued by Olympic in the amount of ONE MILLION
SEVEN HUNDRED EIGHTY FIVE THOUSAND TWO HUNDRED DOLLARS
($1,785,200.00) (referred to herein as the Availability Note)
due and payable on July 15, 1996 (the Availability Note
Maturity Date) and bearing interest from the date of issue
until full payment at the annual rate of 12% payable monthly
on the last day of each calendar month after the date of
issue, provided however that if the principal amount on the
Availability Note is paid on or before the Availability Note
Maturity Date, interest payable on the outstanding balances
under the Availability Note shall be recomputed so that the
effective interest rate paid on such outstanding balances
shall be equivalent to an annual interest rate of 8% payable
monthly and the sum equivalent of an annual interest rate of
4% paid monthly shall be determined and applied as payment
against the principal of the Availability Note then
outstanding. Payment of the Availability is guaranteed by a
pledge by Purchaser of the common stock of Olympic acquired by
Purchaser pursuant to this Stock Purchase Agreement pursuant
to a Pledge Agreement executed between the Purchaser and
Hispamer.
Payment of the principal amount of the Availability Note
shall be accelerated by (i) the available amount under the
Congress Credit line of credit, in excess over and above the
minimum availability requirement thereunder, which results
from the difference between the total value of eligible
inventory of the Corporations determined by Congress Credit as
of December 31, 1995 and the total value of eligible inventory
of $6,591,000 used to determine net availability under the
line of credit of Congress Credit as of the date hereof, and
(ii) any additional amount available under such credit line
which is authorized by Congress Credit, at its sole
discretion, provided that such acceleration or payment on the
Availability Note shall not exceed the amount of $1,500,000
and provided further, that any payment under this note shall
not place Olympic in default under a certain Loan and Security
Agreement entered into with Congress Credit Corporation of
even date hereof.
c. Release of Olympic.
Cintex hereby releases and discharges Olympic
from all obligations under the promissory notes evidencing the
Indebtedness and simultaneously herewith deliver to Olympic
all documents necessary to cancel the Chattel Mortgage lien in
all sections of the Registry of Property of Puerto Rico where
it is recorded that encumbers certain personal property of
Olympic. A notation has been made in the promissory note
evidencing the Indebtedness releasing Olympic from any further
liability under such notes.
4. REDEMPTION OF OLYMPIC PREFERRED SHARES.
a. Redemption of Olympic Preferred Shares held by
Cintex.
Upon the terms and conditions set forth in this
Agreement, Olympic redeems the 39,276 Olympic Preferred Shares
owned and held by Cintex for the following consideration:
(1) cash in the amount of THREE MILLION SIX
HUNDRED SEVENTY THREE THOUSAND TWO HUNDRED SIXTY DOLLARS
($3,673,260.00);
(2) delivery of a receivable from American
Mills C. por A. in the amount of ONE MILLION SEVEN HUNDRED
SIXTEEN THOUSAND THREE HUNDRED NINETY TWO DOLLARS
($1,716,392.00); and
(3) a promissory note issued by Olympic in the
amount of SIX HUNDRED FIVE THOUSAND FIVE HUNDRED FOURTEEN
DOLLARS ($605,514.00) (the "PRIDCO Note") in favor of Cintex,
due and payable upon receipt by the Corporations of the sums
due to the Corporations by PRIDCO as of the date hereof under
the Special Incentives for Infrastructure Contract dated June
19, 1992. No interest will accrue on the principal amounts
under the PRIDCO Note repaid during the first thirty (30) days
after issuance. Repayments of principal under the PRIDCO Note
made after thirty (30) days of issuance up to and including
the date of its payment in full shall bear interest at the
rate of eight percent (8%) per annum.
(4) A promissory note issued by Olympic in the
amount of ONE MILLION DOLLARS ($1,000,000) (referred to in the
Agreement of June 27, 1995 as the Defense Contract Note) due
and payable on the fifth anniversary date from the date of
issue and bearing interest from the date of issue until full
payment at the annual rate of seven percent (7%) payable
quarterly on the last day of each calendar quarter after the
date of issue.
(5) A promissory note issued by Olympic in the
amount of THREE HUNDRED SEVENTY THOUSAND DOLLARS ($370,000.00)
(referred to as the Congress Excess Note) due and payable
ninety (90) days from the date of issue, bearing interest on
the outstanding principal balance thereof at the rate of
eleven hundredths of one percent (0.11%) per day from the date
of issue until its full payment.
(6) FIVE HUNDRED THOUSAND (500,000) shares of
Common Stock of Purchaser and its proportionate share of the
commitment by Purchaser to issue additional common stock as
provided in paragraph 4(b)(1) hereof.
Cintex hereby delivers to Olympic all certificates
evidencing the Olympic Preferred Shares owned by Cintex duly
endorsed for redemption and cancellation by an authorized
representative.
b. Upon the terms and conditions set forth in this
Agreement, Olympic redeems the 57,129 Olympic Preferred Shares
owned and held by Hispamer for the following consideration:
(1) FIVE MILLION FIVE HUNDRED (5,500,000)
shares of Common Stock of Purchaser and its proportionate
share of the commitment by Purchaser to issue and deliver to
Hispamer additional common stock of Purchaser subject to the
following conditions:
If (i) Hispamer and Cintex do not
voluntarily sell or dispose of (other than to the other
Sellers or affiliates thereof and employees of Olympic and
Cintex) any or all of the Purchaser's Common Stock and
continue to hold such stock or its equivalent on the second
anniversary of the date hereof; and (ii) the average price of
the Purchaser's Common Stock as quoted on NASDAQ or a national
or regional securities exchange for any 30-day period between
the date hereof and the date of such second anniversary date
is never at least FIFTEEN MILLION DOLLARS ($15,000,000.00);
then, in addition to the Purchaser's Common Stock, Purchaser
hereby agrees to and shall deliver to Hispamer and Cintex in
proportion to their holding, additional shares of common stock
of the Purchaser sufficient for Hispamer and Cintex in the
aggregate to own shares of common stock of Purchaser as of
said second anniversary date having an average price for the
30-day period preceding said second anniversary date of
FIFTEEN MILLION DOLLARS ($15,000,000.00). Provided, however,
that Purchaser shall not be obliged to deliver to Hispamer and
Cintex such additional shares of its own common stock if: (i)
Hispamer, Cintex or any one of Sellers or affiliates thereof,
as the case may be, voluntarily sell, on or before the second
anniversary of the date hereof, any or all of Purchaser's
Common Stock to any person, other than among themselves or to
an affiliate; or (ii) the actual price of Purchaser's Common
Stock as quoted on NASDAQ or a national or regional securities
exchange is at least FIFTEEN MILLION DOLLARS ($15,000,000.00)
for any 30-day period between the date hereof and the date of
such second anniversary date. In case of a voluntary sale or
disposition by any of the Sellers or affiliates of any or all
of the Purchaser's Common Stock to any person other than among
themselves or an affiliate during the two (2) year period
ending on the second anniversary of the date hereof, Purchaser
shall have the right of first refusal to acquire such shares
for the same price such third party is willing to pay in
writing for the shares. Purchaser shall exercise this right
of first refusal within a period of ten days from the date
Sellers or the affiliate notify Purchaser of the proposed sale
of the Purchaser's Common Stock.
(2) The Bridge Note in the principal amount of
FOUR MILLION FOUR HUNDRED FORTY EIGHT THOUSAND EIGHT HUNDRED
TWENTY SIX DOLLARS ($4,448,826.00), the payment of which is
secured by a Pledge Agreement executed between the Purchaser
and Hispamer.
(3) The obligation to issue one or more
promissory Notes (the Grant Notes) in an aggregate amount
equal to the grants granted to Olympic, Yabucoa and/or Lutania
after the date hereof, other than grants under a wage
incentive program, which were requested as of the date hereof,
up to a maximum amount of ONE MILLION DOLLARS ($1,000,000).
The Grant Notes shall be due and payable on the fifth
anniversary date from the date of issue and bearing interest
from the date of issue until full payment at the annual rate
of seven percent (7%) payable quarterly on the last day of
each calendar quarter after the date of issue and shall be
subordinated to the indebtedness to Congress Credit
Corporation under the Loan and Security Agreement of even date
herewith.
(4) The obligation to pay Hispamer the
proportionate amount of the net after tax earnings of the
Corporations (including their subsidiaries) for the calendar
year ending on December 31, 1995 attributable to the period
commencing on January 1, 1995 and ending on the date hereof,
excluding any reversal of the loss contingency reserve
recorded in the books for the payment of excise taxes (the
"Proportionate Net Earnings Amount"). The Proportionate Net
Earnings Amount shall be paid within ten days after audited
financial statements of the Corporations for the calendar year
ending on December 31, 1995 are issued but in no event such
amount shall be paid after April 30, 1996. The Proportionate
Net Earnings Amount shall be determined by dividing the
combined net after tax earnings of the Corporations (including
subsidiaries) for the year ended on December 31, 1995
(determined under generally acceptable accounting principles
but excluding any reversal of the loss contingency reserve
recorded in the books for the payment of excise taxes) by 365
and multiplying the result thereof by the number of days
elapsed since January 1, 1995 to the date hereof. No payment
for this amount will result if the combined operations of the
Corporations (including subsidiaries) for the year ended
December 31, 1995 does not reflect any net after tax earnings
(determined under generally acceptable accounting principles).
Hispamer hereby delivers to Olympic all certificates
evidencing the Olympic Preferred Shares owned by Hispamer duly
endorsed for redemption and cancellation by an authorized
representative.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLERS:
Sellers, jointly and severally, represent, warrant and
covenant to the Purchaser as follows:
a. Title.
Estampados is the lawful, registered and beneficial
exclusive owner of the Olympic Common Shares; Holding is the
lawful, registered and beneficial exclusive owner of the
Lutania Shares; and Cintex and Hispamer are the lawful,
registered and beneficial exclusive owners and creditors of
the Indebtedness and the lawful, registered and beneficial
exclusive owners of the Olympic Preferred Shares. The Shares
and the Indebtedness are free and clear of any and all Liens.
Each Seller has good and marketable title to the shares set
forth opposite such Seller's name in Exhibit 5(a) and has the
right to sell, assign, convey, transfer and deliver the same
to Purchaser (or surrender the same for redemption in case of
the Olympic Preferred Shares) pursuant to this Agreement, free
and clear of any and all Liens. Upon delivery of certificates
representing the Shares and of the notes evidencing the
Indebtedness in accordance with the terms of this Agreement,
the Purchaser and Olympic shall have good and marketable title
to and will own such Shares and Indebtedness free and clear of
any and all Liens. Sellers are not a party to or bound by any
contract or commitment relating to the sale, assignment,
conveyance, transfer, delivery, right of first refusal, option
or limitations on transfer of any shares or securities of the
Corporations, except with respect to the transactions herein
contemplated. The Shares constitute on the date hereof all of
the issued and outstanding capital stock of each of the
Corporations.
b. Authority:
Each Seller has the unconditional right to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. All actions required to be taken by each
Seller to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken,
including action by stockholders or fiduciaries.
c. Violation of Law or Conflict:
The execution and delivery of this Agreement by each
Seller, the performance of its obligations under this
Agreement, the consummation of the transaction contemplated
hereby and the compliance with the terms hereof by each Seller
will not (i) violate or conflict with any provision of law or
of the Certificate of Incorporation or By-Laws of each Seller
or any judgment, order or decree, or statute, law, ordinance,
rule or regulation applicable to any Seller or to its
properties or assets; or (ii) result in any breach of, or
constitute a default under, or result in the creation of a
lien, encumbrance or claim on any of the properties or assets
of any of the Sellers. Except as provided in Exhibit 5(c)
hereof with respect to the transactions herein contemplated,
no approval is necessary pursuant to any corporate charter,
by-law or regulation or any mortgage, lease, license or
contract to which any of the Sellers is a party or by which
any of the Sellers or any Seller's property or assets are or
may be bound or affected.
d. Permits and Approvals:
All actions, approvals, orders, permits,
consents, licenses and authorization required to be taken,
given or obtained, as the case may be, by or from any
governmental authority or agency of the United States or any
political subdivision thereof, or of the Commonwealth of
Puerto Rico or any political subdivision thereof or any other
party in connection with the transactions contemplated by this
Agreement shall have been duly taken, given or obtained, as
the case may be, shall be in full force and effect on the date
hereof, and shall be satisfactory in form and in substance to
the Purchaser for Purchaser to be able to continue to carry
out the respective businesses of the Corporations.
e. Enforceability:
This Agreement has been duly executed and delivered
by each of the Sellers and constitutes the valid and legally
binding obligation of each of the Sellers enforceable against
each of them in accordance with its terms.
f. Organization, Corporate Power and Good
Standing.
Each of Olympic, Yabucoa and Lutania is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and the
Commonwealth of Puerto Rico (as to Lutania and Yabucoa),
respectively; possesses full corporate power and authority and
all governmental franchises, licenses, permits, authorizations
and approvals necessary to use its corporate name, to own,
lease or otherwise hold its properties and other assets and to
carry on its business as currently conducted. Each of
Olympic, Yabucoa and Lutania is qualified to do business in
any jurisdiction in which such qualification is necessary in
order to enable each of said corporations to carry on its
business as now conducted or to own, lease or hold its
properties and assets as now owned, leased or held. All the
minutes of the meetings of the Board of Directors and/or the
Shareholders of each of said corporations are contained in
their respective minute books, which have been furnished to
Purchaser for examination. True and complete copies of the
Certificate of Incorporation, as amended to date, and the By-
Laws, as in effect on the date hereof of each of said
corporations have been delivered to Purchaser.
g. Capitalization of Olympic.
The authorized capital stock of Olympic consists of
100 shares of common stock, of which 100 shares are issued and
outstanding, and 96,405 shares of preferred stock of which
96,405 shares are issued and outstanding. All outstanding
shares of capital stock of Olympic were duly authorized for
issuance, are validly issued and fully paid and non-assessable
and were not issued in violation of, and are not subject to
any pre-emptive subscription or similar rights. All the
issued and outstanding shares of common stock of Olympic are
registered in the name of Estampados and all the issued and
outstanding shares of preferred stock of Olympic are
registered, 39,276 shares in the name of Cintex and 57,129
shares in the name of Hispamer. Except as set forth above, no
shares of capital stock or other equity securities of Olympic
are outstanding and no outstanding contracts, warrants,
options, calls, convertible or exchangeable securities or
other rights or commitments of any nature are outstanding or
in existence that give any person or entity any right
(beneficial or otherwise) to receive, purchase or otherwise
acquire or hold any equity or other security of Olympic or any
dispositive rights, voting rights or dividend rights in any
equity or other security of Olympic other than by virtue of
the Contract to Acquire and this Agreement relating to any of
the authorized shares of common stock or preferred stock of
Olympic.
h. Capitalization of Lutania.
The authorized capital stock of Lutania consists of
1,000,000 shares of common stock, of which 1,000 shares are
issued and outstanding. All outstanding shares of capital
stock of Lutania were duly authorized for issuance, are
validly issued and fully paid and non-assessable and were not
issued in violation of, and are not subject to any pre-emptive
subscription or similar rights. All the issued and
outstanding shares of common stock of Lutania are registered
in the name of Holding. Except as set forth above, no shares
of capital stock or other equity securities of Lutania are
outstanding and no outstanding contracts, warrants, options,
calls, convertible or exchangeable securities or other rights
or commitments of any nature are outstanding or in existence
that give any person or entity any right (beneficial or
otherwise) to receive, purchase or otherwise acquire or hold
any equity or other security of Lutania or any dispositive
rights, voting rights or dividend rights in any equity or
other security of Lutania other than by virtue of the Contract
to Acquire and this Agreement relating to any of the
authorized shares of common stock or preferred stock of
Lutania.
i. Capitalization of Yabucoa:
The authorized capital stock of Yabucoa consists of
2,000 shares of common stock, all of which shares are issued
and outstanding. All outstanding shares of capital stock of
Yabucoa were duly authorized for issuance, are validly issued
and fully paid and non-assessable and were not issued in
violation of, and are not subject to any pre-emptive
subscription or similar rights. All the issued and
outstanding shares of common stock of Yabucoa are registered
in the name of Olympic. Except as set forth above, no shares
of capital stock or other equity securities of Yabucoa are
outstanding and no outstanding contracts, warrants, options,
calls, convertible or exchangeable securities or other rights
or commitments of any nature are outstanding or in existence
that give any person or entity any right (beneficial or
otherwise) to receive, purchase or otherwise acquire or hold
any equity or other security of Yabucoa or any dispositive
rights, voting rights or dividend rights in any equity or
other security of Yabucoa.
j. Equity Interest.
Except for the Yabucoa Common Shares owned by
Olympic, Olympic, Yabucoa and/or Lutania has no subsidiaries,
nor do they directly or indirectly own any capital stock of or
other equity interest in any corporation, business trust,
firm, partnership or entity.
k. Financial Statements.
The copies of: (i) Olympic's balance sheets as
of December 31, 1994 and 1993 and the related statements of
operations and retained earnings and cash flows for the years
then ended (including its investment in Yabucoa), all
certified without qualifications or exceptions by KPMG Peat
Marwick, LLP, and (ii) the unaudited balance sheet of Lutania
as of March 25, 1995, all heretofore furnished by Sellers to
Purchaser and copies of which are attached hereto as Exhibit
5(k) (all of said financial statements, including the notes,
exhibits and schedules thereto, collectively referred to as
the "Financial Statements"), have been prepared in accordance
with generally accepted accounting principles, are true,
correct and complete and the respective balance sheets present
fairly the assets and liabilities and the financial condition
and the results of the operations of Olympic (and its
subsidiary Yabucoa) and of Lutania as of the date of same and
for the period indicated in said Financial Statements.
Such Financial Statements reflect all claims
against and all debts or obligations of Olympic (including
Yabucoa) and Lutania (fixed or contingent). To the best
knowledge and belief of Sellers, there is no liability or
obligation of any nature not fully reflected or reserved in
the Financial Statements. Since the date of the Financial
Statements, neither Olympic, Yabucoa or Lutania has suffered
any material adverse change in its business operations, its
obligations (whether absolute, accrued, contingent or
otherwise), assets, earnings or working capital, nor have they
incurred any obligations or liabilities of any nature, except
in the ordinary course of business, or paid, satisfied or
discharged any claim, lien, encumbrances or obligation other
than in the ordinary course of business, or permitted, allowed
or suffered any of its properties or assets to be subjected to
any mortgage, pledge, charge or restriction other than those
which are listed in Exhibit 5(o) hereof.
l. Payment of Taxes.
Each of Olympic, Yabucoa and Lutania has filed
or caused to be filed in a timely manner all Federal, state,
Puerto Rico, local, municipal and foreign income, sale, use,
payroll, employment, withholding, excise, property and other
taxes and social security returns, reports, notices,
declarations, and forms required to be filed by each of them
by applicable laws, regulations and municipal ordinances
governing such matters and the amount of tax liability and
social security payments shown in such returns, reports,
notices, declarations and forms are correct in all material
respects.
Olympic, Yabucoa and Lutania each has paid in
full or accrued on its financial statements all taxes and
social security obligations which have become due pursuant to
such returns or pursuant to any assessment or levy received by
either of them. The amounts set forth as liabilities for all
taxes on the unaudited financial statements of each of said
entities as of the date hereof are sufficient for the payment
of all accrued and unpaid Federal, state, Puerto Rico, local,
municipal and foreign income, withholding, excise, property
and other taxes (and any related penalties and interest) of or
due by each of said entities. No tax liens have been filed
and no claims are being threatened or asserted against either
of such entities for additional taxes of any kind with respect
to any year or the portion of the year ending as of the date
hereof for the taxable period that includes (but does not end
on) such day. Neither of such entities is the subject of any
tax audit or other proceeding that could result in the
assessment of additional taxes or is aware of any threat or
notification that such an audit will or may be performed.
m. Licenses and Authorizations.
Exhibit 5(m) sets forth a complete list and
brief description of all licenses, permits, consents,
franchises, certificates of compliance, or other
authorizations from, or pending applications to, any person or
governmental authority held by Olympic, Yabucoa and Lutania on
the date hereof. The licenses, permits, consents,
certificates of compliance, authorizations and applications
listed in such Exhibit 5(m) are presently in effect and
constitute the only licenses, permits, consents, certificates
of compliance, authorizations and applications for any of the
foregoing necessary to conduct the businesses of Olympic,
Yabucoa and Lutania as now conducted.
n. Absence of Certain Changes.
Since the date of the Financial Statements, the
business of each Olympic, Yabucoa and Lutania has been
conducted in the ordinary and usual course of business and
none of said entities has:
(i) Suffered any material adverse change in
its business, operations, conditions (financial or otherwise),
liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due), assets, earnings,
working capital or prospects, nor has there been any event
which has had or will have a materially adverse effect on any
of the foregoing;
(ii) Incurred in or assumed any obligation,
indebtedness or liability of any nature (whether absolute,
accrued, contingent or otherwise and whether due or to become
due) other than items incurred in the ordinary course of
business, or increased, or experienced, any change, in any
assumptions underlying or methods of calculating, any bad
debt, contingency or other reserves;
(iii) Paid, discharged or satisfied or agreed
to pay, discharge or satisfy, any claim, lien, encumbrance,
obligation or liability (whether absolute, accrued, contingent
or otherwise and whether due or to become due) other than the
payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of claims, liens,
encumbrances, obligations or liabilities which are reflected
or reserved against in the Financial Statements or which were
incurred since the date of the Financial Statements in the
ordinary course of business;
(iv) Permitted, allowed or suffered any of
their properties or assets to be subjected to any mortgage,
pledge, lien, encumbrance, restriction or charge of any kind
other than liens and encumbrances specifically set forth in
the Financial Statements and/or disclosed to the Purchaser in
writing;
(v) Written down or written up the value of
any inventory (including write-downs by reason of shrinkage or
mark-downs), determined as collectable any notes or accounts
receivable or any portion thereof which were previously
considered uncollectible, or written off as uncollectible any
notes or accounts receivable or any portion thereof, except
for write-downs, write-up and write-offs in the ordinary
course of business;
(vi) Cancelled any debts or waived any claims
or rights of substantial value, except in the ordinary course
of business;
(vii) Sold, transferred or otherwise disposed
of any of its properties or assets (personal, permits,
tangible or intangible), except in the ordinary course of
business;
(viii) Cancelled, disposed of, voluntarily
relinquished or permitted to lapse any right to use any of its
trademarks, assumed names, trade names, licenses or
applications therefore or disposed of, or disclosed to any
person not authorized to have such information, any trade
secret, formulae, process or know-how not theretofore a matter
of public knowledge or existing in the public domain;
(ix) Granted any increase in the compensation
of officers or employees or any increase in the compensation
payable or to become payable to any officer or employee that
is inconsistent with past practice;
(x) Made any change in any material method of
accounting principles, practice or policy other than those
required by GAAP;
(xi) Paid, loaned or advanced any amounts due
to, or sold, transferred or leased any property or assets
(personal or mixed tangible or intangible) to, or entered into
any agreement or arrangement with, any of its stockholders,
affiliated entities, employees, officers or directors except
for directors' fees;
(xii) Entered into any collective bargaining
or labor agreement, or experienced any labor dispute or
difficulty;
(xiii) Redeemed or otherwise acquired any
shares of its capital stock or entered into any agreement,
contract or instrument relating to the issuance or sale of its
capital stock other than the Agreement providing for the Right
to Acquire Shares of Stock and Indebtedness dated June 27,
1995 (the Agreement to Acquire);
(xiv) Declared, paid or set aside for payment
any dividend or distribution whether in cash or in kind;
(xv) Entered into any lease agreement or any
agreement modifying or amending any existing lease agreement
with respect to any real estate property used in the conduct
of its business;
(xvi) Made or agreed to any change or
modification in the terms of any contract or instrument to
which it is a party which may have a material adverse effect
on its properties or businesses.
(xvii) Entered into any agreement, the terms
of which would be violated by the consummation of the
transactions contemplated hereby;
(xviii) Suffered any material destruction,
damage or loss related to the assets or properties of its
business, whether or not covered by insurance;
(xix) Committed, suffered, permitted or
incurred in any default, liability or obligation which has,
had or will have any adverse effect on its assets or business;
(xx) Amended or modified its Certificate of
Incorporation or By-Laws.
o. Title to Properties; Encumbrances.
Each of Olympic, Yabucoa and Lutania has good,
valid and marketable title to all properties and assets
(personal and mixed, tangible and intangible) which are used
in, with or are related to its business and which it
represents Purchaser to own, including, without limitation,
all the properties and assets reflected in the Financial
Statements, except for those properties and assets which it
has since sold or disposed of in the ordinary course of
business. Except as set forth in Exhibit 5(o), said
properties, rights and assets are free and clear of mortgages,
liens, claims, charges, pledges, security interests or other
encumbrances.
p. Inventory.
All inventory of each Olympic, Yabucoa and
Lutania consist of items that are merchantable, in good
conditions, usable and saleable in its ordinary course of
business and is reflected in its books and records in
accordance with GAAP.
q. Accounts Receivable.
All accounts receivable of each Olympic,
Yabucoa and Lutania, whether reflected in the Financial
Statements or subsequently created, represent sales actually
made or services actually performed in the ordinary course of
business and are collectable in accordance with their terms.
r. Leases.
Exhibit 5(r) contains an accurate and complete
list of all leases pursuant to which Olympic, Yabucoa and
Lutania lease real or personal property. All such leases are
valid, binding and enforceable in accordance with their terms,
and are in full force and effect and have not been modified or
amended except as set forth in such Exhibit; no event has
occurred which (whether with or without notice, lapse of time
or the happening or occurrence of any other event) constitute
a default thereunder. No written consents from Landlords
under the leases are required by reason or as a result of the
transactions contemplated herein.
s. Conduct of Business.
Since the date of the Financial Statements,
each of Olympic, Yabucoa and Lutania has used its best efforts
to preserve intact its business operations and maintained
satisfactory relationship with licensors, suppliers,
distributors, clients and others with whom it had business
relationship. Neither of said entities has engaged since that
date in any transaction not in the ordinary course of
business.
t. Legal Proceedings.
Except as set forth and described in Exhibit
5(t), there are no actions, suits, claims, proceedings or
investigations, pending or threatened against or affecting
Olympic, Yabucoa and/or Lutania or any of their assets,
properties or operations, at law or in equity, before any
Federal, local, Puerto Rico, municipal, foreign or other
governmental department, commission, board, bureau, agency or
instrumentality, which might result in any material adverse
change in the businesses, operations, prospects, properties,
assets or conditions, financial or otherwise of Olympic,
Yabucoa or Lutania or affect the transactions contemplated in
this Agreement. Sellers, Olympic, Yabucoa and Lutania are not
in default with respect to any order, writ, injunction or
decree of any Federal, Puerto Rico, municipal or other
governmental department in any case, domestic or foreign.
u. Insurance.
Exhibit 5(u) contains an accurate and complete
list of all insurance policies presently in effect with
respect to the businesses, properties and employees of
Olympic, Yabucoa and Lutania. All such policies are in full
force and effect and to the best of Sellers' knowledge or that
of any of said entities, no event has occurred which would
give any insurance carrier a right to terminate any of such
policies. All premiums due and payable with respect thereto
have been paid, and no notice of cancellation or termination
have been received with respect to any such policy.
v. ERISA Plans.
Except as set forth in Exhibit 5(v), or as may
be required by local statute, Olympic, Yabucoa and Lutania are
not and have not been a party to, or are not and have not been
bound by, nor contributed to any bonus, deferred compensation,
hospitalization, medical, dental, vacation, sick pay,
disability or severance plan or policy, pension, profit-
sharing or retirement plan or arrangement, stock purchase,
stock option or group insurance plans or programs or any other
fringe benefit plan, contract or arrangement providing
benefits to its employees, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") whether qualified or non-qualified under ERISA,
formal or informal and whether legally binding or not
(hereinafter collectively, the "Plans"). No liability has
been or is expected to be incurred by any of said entities in
connection to any such Plans or their respective terminations,
under or pursuant to any provision of law or regulation,
including but not limited to Title I or IV of ERISA that
could, following the closing on the date hereof, become or
remain a liability of any of them or the Purchaser or become
a liability to any of their respective successors and/or
assigns.
w. Bank Accounts.
Exhibit 5(w) sets forth the names and locations
of all banks, savings and loan association and other financial
institutions at which Olympic, Yabucoa and/or Lutania
maintains accounts or safe deposit boxes and the name of all
persons authorized to draw thereon or to have access thereto.
x. No Condemnation or Expropriation.
To the best knowledge of Sellers and the
Corporations, neither the whole nor any portion of the
leaseholds or any other assets of Olympic, Yabucoa and
Lutania, are subject to any governmental decree or order to be
sold or is being condemned, expropriated or otherwise taken by
any public authority with or without payment or compensation
therefor, nor any such condemnation, expropriation or taking
has been proposed.
y. Personnel and Employment Matters.
Each of Olympic, Yabucoa and Lutania has
conducted its business in compliance with all Federal and
local laws, rules and regulations related to or affecting
employment and employment practices, including terms and
conditions of employment and wages and hours. Neither of said
entities has engaged in any unfair labor practice; there are
no complaints against any of the Corporations pending or
threatened before the National Labor Relations Board,
Department of Labor of the Commonwealth of Puerto Rico or any
similar federal or local labor agency; there are no labor
strikes, slow-downs or stoppages pending or to its best
knowledge threatened, with respect to its employees; there are
no charges pending before the Equal Employment Opportunity
Commission or any Commonwealth or local agency responsible for
the prevention of unlawful employment practices nor any notice
has been received indicating the intentions of any Federal,
Commonwealth or local agency responsible for the enforcement
of employment and labor laws to conduct an investigation.
Each of said entities has complied with all laws and
regulations of, and have timely paid all workmen's
compensation insurance premiums to the State Insurance Fund
Administration. They have also made in full all payments
corresponding to their employees for wages, salaries,
commissions, bonuses, benefits, payroll withholding taxes and
any other salary withholding obligation, vacation time, leave
of absence, disability, Christmas bonus, severance and any
other payment due and payable to their employees as of the
date hereof or such amounts have been accrued pursuant to the
law or otherwise, for or related to the period comprised
between the date of employment of such employees and the date
hereof.
z. Brokers.
Neither Sellers nor Olympic, Yabucoa or Lutania
has retained or employed a broker, finder or other person as
such, nor taken any action which would give any person any
valid claim against any of them hereto for a commission or
brokerage in connection with the transactions contemplated
hereby.
aa. Property Used by Olympic, Yabucoa and Lutania.
There is no defect, deficiency or other
condition of the property, equipment or premises used by
either Olympic, Yabucoa and Lutania in the conduct of their
respective businesses that has been alleged and notified to
Sellers, by any governmental authority or third party as
constituting a violation of any Fire, Plumbing, Electrical
Safety or Building Code or Environmental Protection Law, or
governmental regulation of any similar import, or any
applicable zoning or other land use regulation of any
governmental authority, nor to the best of Sellers' knowledge
or that of the Corporations, there is any basis for such an
allegation, or any proposed or contemplated amendment or
modification thereto, which, if in effect on the date hereof,
would characterize any condition of any such property,
equipment or premises, as a material violation thereof.
bb. Compliance with the Law.
Olympic, Yabucoa and Lutania has each conducted
its business in compliance in all material respect with all
applicable statutes, ordinances, laws, rules, orders and
regulations of any governmental authority or instrumentality,
domestic or foreign (including without limitation, those
related to Hazardous Substances (as defined herein). Except
as set forth in Exhibit 5(bb), none of such entities has
received any notice from a governmental authority that alleges
that they are not in compliance, in all material respects with
any such federal, commonwealth, local or foreign law,
ordinance, rule or regulation.
cc. Intellectual Property.
Exhibit 5(cc) sets forth a true and complete
list of all patents, trademarks (registered or unregistered),
trade names, service marks, copyrights and similar rights and
applications therefor owned by, licensed to or used or filed
by either Olympic, Yabucoa and Lutania (collectively the
"Intellectual Property"), and contains a list of all
jurisdictions in which all registered trademarks are
registered or registration has been applied for and all
registration and application numbers. Each of Olympic,
Yabucoa and Lutania owns or has the right to use, without
payment to or need of consent by, any other party, the
Intellectual Property and the consummation of the transactions
contemplated hereby will not alter or impair such rights. The
use by either of said entities of the Intellectual Property
does not infringe upon the rights of any third party. Neither
the Sellers nor any of said entities has granted to any person
or entity any right or license to use any such name and/or any
variation thereof nor any other Intellectual Property. To the
best knowledge of Sellers and the Corporations, no
shareholder, officer, director or employee of the
Corporations, has an interest or right of any nature
whatsoever in any of the Intellectual Property. There is no
actual or, to the best knowledge of Sellers and the
Corporations, threatened or asserted claim that challenge the
rights of either of the entities in any respect in and to, or
restrict their rights to use, or charges any of said entities
with infringement of, or make any other claim with respect to,
any of the Intellectual Property.
dd. Contracts and Commitments.
Exhibit 5(dd) lists all agreements, contracts,
commitments, understandings, arrangements or restrictions
(collectively the "Contracts") to which Olympic, Yabucoa
and/or Lutania are a party or by which either of them is bound
and which are individually or in the aggregate material to
their respective business operations. The Contracts are
valid, binding and in full force and effect and are
enforceable by each of Olympic, Yabucoa and/or Lutania, as the
case may be, in accordance with their terms. Each entity
which is a party to the Contracts has performed all material
obligations required to be performed by it under the contracts
and is not in breach or default in any respect thereunder
(with or without the lapse of time or the giving of notice, or
both). To the best of Sellers' and each of said entities
knowledge, no other party to any of the Contracts is in breach
or default in any respect thereunder. True, correct and
complete copies of each Contract have been delivered by
Sellers or any of the Corporations to Purchaser before the
date hereof.
ee. Customers and Suppliers.
Exhibit 5(ee) lists the five largest customers
and the five largest suppliers of Olympic, Yabucoa and
Lutania. None of the customers in the list has notified
Sellers or any of the entities that it intends to terminate
its business relationship with or decrease its purchases from
the Corporations. None of the suppliers has notified any of
the Corporations that it intends to change its terms of sale
to or its relationship with any of the Corporations in a
manner adverse thereto.
ff. Environmental Matters.
Except as set forth in Exhibit 5(ff), each of
the Corporations has complied and is in compliance with all
applicable federal, Commonwealth of Puerto Rico and local
laws, ordinances, regulations, policies, orders or decrees
relating to pollution control and environmental contamination,
including but not limited to, the generation, use, collection,
treatments, storage, transportation, recovery, removal,
discharge or disposal of Regulated Substances (as defined
hereafter), as well as those regarding record-keeping,
notification and reporting requirements respecting Regulated
Substances.
No real property now or previously used or
leased by any of the Corporations (the "Property") has been
used by it or any other party for the handling, treatment,
storage or disposal of Regulated Substances. No release,
discharge or spillage of any Regulated Substance and no soil,
water or air contamination by any Regulated Substance has
occurred or is occurring in, from or on the Property.
Each of the Corporations has all permits,
approvals and consents under all applicable environmental
statutes and regulations to operate lawfully the business
which it currently conducts and currently expects to conduct.
There are no Enforcement Notices in effect and
the Sellers and the Corporations do not know and have no
reason to know of any facts which might result in the issuance
of any Enforcement Notice with respect to the Corporations.
Except as described in Exhibit 5(ff), there are
no claims, actions, suits, proceedings or investigations
related to the presence, release, production, handling,
discharge, spillage, transportation or disposal of Regulated
Substance or contamination of soil, water or air by Regulated
Substance pending or threatened with respect to the Property
or otherwise against any of the Corporations in any court or
before any federal, state, Commonwealth of Puerto Rico or
other local government agency or private arbitration panel.
For purposes of this Agreement, "Regulated
Substance" shall mean any pollutant, chemical substance,
hazardous or toxic wastes, or contaminants regulated under,
defined in or pursuant to any applicable federal, state,
Commonwealth of Puerto Rico or local law, ordinance,
regulation, order or decree, including, without limitation,
the Solid Waste Disposal Act, as amended (42 U.S.C. 6901 et
seq.), the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA") (42 U.S.C. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. 1801 et
seq.), the Toxic Substance Control Act, as amended (15 U.S.C.
2601 et seq.), the Clean Air Act, as amended (42 U.S.C. 7401
et seq.), and the Clean Water Act, as amended (33 U.S.C. 1251
et seq.).
gg. Disclosure of Material Facts.
All representations, warranties, covenants or
statement of Sellers and each of Olympic, Yabucoa and Lutania
contained herein or in any certificate, schedule, list,
exhibit or other information delivered to Purchaser pursuant
to or in connection with this Agreement, are and will be true,
complete and correct in all respects and do not contain or
will contain any untrue statement of any material fact or omit
or will omit to state a material fact necessary in order to
avoid making the statements contained herein or therein
misleading when considered in light of the circumstances in
which made or delivered.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
PURCHASER.
The Purchaser represents, warrants and covenants to
the Sellers as follows:
a. Organization, Corporate Power and Good
Standing.
Purchaser is a corporation duly organized,
validly existing and in good standing under the State of
Delaware, U.S.A., jurisdiction of its incorporation, and has
the corporate power and authority to own or lease its
properties, to carry on its business and to perform its
undertakings and obligations herein provided.
b. Authorization, Execution and Delivery.
All corporate acts and/or other proceedings
required to be taken by or on the part of the Purchaser to
authorize it to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby have
been duly taken and are valid and binding obligations of
Purchaser enforceable in accordance with its terms; except
that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditor's rights.
c. Brokers.
Purchaser has not retained or employed any
broker, finder or other person as such, nor taken any action
which would give any person any valid claim against any party
hereto for such a commission or brokerage in connection with
the transactions contemplated hereby, except for AGA &
Associates, Inc. and RK Grace & Co. which are acting as
financial advisors on behalf of Purchaser who will be solely
responsible for their fees.
d. Violation of Law or Conflict.
The execution and delivery of this Agreement by
Purchaser, the performance of its obligations under this
Agreement, the consummation of the transaction contemplated
hereby and the compliance with the terms hereof by Purchaser
will not (i) violate or conflict with any provision of law or
of the Certificate of Incorporation or By-Laws of Purchaser or
any judgment, order or decree, or statute, law, ordinance,
rule or regulation applicable to Purchaser or to its
properties or assets; or (ii) result in any breach of, or
constitute a default under, or result in the creation of a
lien, encumbrance or claim on any of the properties or assets
of any of Purchaser. Except as provided in Exhibit 6(d)
hereof with respect to the transactions herein contemplated,
no approval is necessary pursuant to any corporate charter,
by-law or regulation or any mortgage, lease, license or
contract to which the Purchaser is a party to or by which the
Purchaser or Purchaser's property or assets are or may be
bound or affected.
e. Compliance with Securities Laws.
Purchaser has filed or caused to be filed as of
the date thereof, all reports required to be filed by it with
respect to the transactions contemplated in this Agreement
pursuant to the Securities Act of 1933 and the Securities
Exchange Act of 1934.
7. ADDITIONAL DOCUMENTS DELIVERED BY PARTIES.
In connection with the transactions herein
contemplated, the parties have delivered or caused to be
delivered the following documents:
a. Resignation of Directors.
The Purchaser received the signed resignations
dated the as of the date hereof of all the Directors and
Corporate Officers of Olympic, Yabucoa and Lutania.
b. Execution of Lease Agreement and Pledge
Agreement.
Olympic executed with Cintex a Lease Agreement
with respect to the Guaynabo facilities under mutually
acceptable terms and conditions and Purchaser shall have
executed a Pledge Agreement with Hispamer to secure the
payment of the Bridge Note and the Availability Note.
c. Opinion of Counsel to Seller.
Purchaser shall have received an opinion from
Jose R. Cestero-Calzada, counsel for Sellers, dated as of the
date hereof, which opinion shall be in form and substance
acceptable to Purchaser.
d. Hispamer Note.
Purchaser shall have caused Olympic or its
successor to issue a promissory note to Hispamer for the
principal amount of Four Hundred Sixty-Five Thousand Dollars
($465,000.00) (the "Hispamer Note") representing the interest
amount owed by Olympic to Hispamer on the portion of the
Indebtedness. The Hispamer Note will be due and payable on
the fifth anniversary of the Closing Date and shall bear
interest from the date of issue to its full payment at an
annual rate of seven percent (7%) payable quarterly on the
last day of each calendar quarter. Upon repayment in full of
the Bridge Note, any additional equity raised by the
Purchaser, Olympic or its subsidiary, shall be used to prepay
the then outstanding balance of the Hispamer Note.
e. Release of Guarantees.
Sellers shall provide Purchaser with the
release of a guarantee issued by Olympic to the Development
Fund of Puerto Rico, a subsidiary of the Government
Development Bank of Puerto Rico in connection with a loan
granted by the fund to America Mills C. por A. Sellers
represent that there are no other guarantee issued by any of
the Corporations with respect to liabilities or obligations of
any entity other than the Corporations.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
a. Survival of Representations and Warranties of
the Sellers.
All representations, warranties, agreements,
covenants and obligations made or undertaken by the Sellers in
this Agreement or in any document or instrument executed and
delivered pursuant hereto are material, have been relied upon
by Purchaser, shall survive the Closing hereunder and shall
not merge in the performance of any obligation by any party
hereto. The Sellers, jointly and severally, agree to
indemnify and hold Purchaser and its officers, directors and
agents harmless from and against all claims, liability,
deficiency, loss, damage, or injury and all reasonable costs
and expenses (including reasonable counsel fees and costs of
any suit related thereto) suffered or incurred by any such
indemnified party arising from (i) any misrepresentation, or
breach of any covenant or warranty of the Sellers contained in
this Agreement or any exhibit, certificate, document or other
instrument furnished or to be furnished by the Corporations or
the Sellers pursuant hereto; (ii) any claim or cause of action
by any third party (regardless of whether the claimant is
ultimately successful) arising out of any action, inaction,
event, condition, liability or obligation of or by any of the
Corporations or the Sellers occurring or existing on or prior
to the date hereof not otherwise accrued in the financial
statements; and (iii) any matter regarding Regulated
Substances on any Property or regarding any applicable
federal, state, Commonwealth of Puerto Rico or local
environmental laws or permits pertaining to the Property or
the business or assets of any of the Corporations existing on
or prior to the date hereof not otherwise accrued in the
financial statements.
Any examination, inspection by audit of the
Property, financial condition or other matters of the
Corporations and their businesses and operations conducted by
Purchaser pursuant to this Agreement shall in no way limit,
affect or impair the ability of Purchaser to rely upon the
representations, warranties, covenants and obligations of the
Sellers and the Corporations set forth herein.
b. Survival of Representations and Warranties of
Purchaser.
All representations, warranties, agreements,
covenants and obligations made or undertaken by Purchaser in
this Agreement or in any document or instrument executed and
delivered pursuant hereto, have been relied upon by the
Sellers, shall survive the Closing hereunder, and shall not
merge in the performance of any obligation by any party
hereto. Purchaser agrees to indemnify and hold the Sellers
and their officers, directors and agents harmless from and
against all liability, claim, loss, damage or injury and all
reasonable costs and expenses (including reasonable counsel
fees and costs of any suit related thereto) suffered or
incurred by the Sellers arising from (i) any
misrepresentation, or breach of any covenant or warranty or
Purchaser contained in this Agreement or any certificate or
other instrument furnished or to be furnished by Purchaser
hereunder; and (ii) any claim or cause of action by any third
party arising out of any action, inaction, event, condition,
liability or obligation of or by any of the Corporations or
Purchaser occurring after the date of this Agreement.
c. Sellers' Indemnification to Purchaser of
Olympic's Excise Taxes.
Sellers agrees to indemnify and hold Purchaser
and/or Olympic harmless for any excise taxes on taxable sales
made by Olympic of products manufactured by it, which excise
taxes are included as accrued expenses in the Financial
Statements. Sellers shall have the right to present any
objection with the corresponding government authorities for
the imposition and/or collection of such excise taxes.
Purchaser shall be obliged to notify Sellers of any such
actions by the government authorities.
d. Remedies Cumulative.
Except as herein expressly provided, the
remedies provided herein shall be cumulative and shall not
preclude assertion by any party hereto of any other rights or
the seeking of any other remedies against any other party
hereto.
9. COVENANT NOT TO COMPETE.
Sellers and Francisco Carvajal agree that for a
period of five (5) years commencing on the date hereof, they,
or any of them, directly or indirectly, within the
Commonwealth of Puerto Rico shall not engage in, or become an
officer, director, employee, consultant or stockholder,
partner, joint venturer or proprietor (as applicable) in any
entity, concern, store or business engaged in the textile,
apparel, clothing and/or garment business, neither as a
manufacturer, wholesaler or retailer, in competition with
Purchaser or any subsidiary or affiliate of Purchaser.
Excepted from this covenant not to compete are the operations
listed in Exhibit 9 hereof.
Sellers and Carvajal acknowledge that this covenant
not to compete constitutes an important and essential element
in Purchaser's decision to enter into this Agreement. In the
event that a court of competent jurisdiction should find and
hold that any of the restrictive provisions of this covenant
not to compete are in any way unreasonable and contrary to
applicable law, the parties hereto authorize the court to
reform such provisions and to impose such restrictions as
reformed and the remaining provisions as it may deem
reasonable.
10. COST AND EXPENSES.
The parties hereto shall each pay all of their own
expenses relating to the transactions contemplated by this
Agreement, including without limitation, the fees and expenses
of their respective counsel, accountants, financial advisers
and any other.
11. APPLICABLE LAW.
This Agreement and its Exhibits, Schedules and
Attachments shall be governed by and construed in accordance
with the laws of the Commonwealth of Puerto Rico.
12. ASSIGNABILITY.
This Agreement, including its exhibits and
attachments thereto and the rights and obligations thereunder
shall not be assignable or transferable by any of the parties
hereto without the express prior written consent of the other
parties hereto, and any attempted assignment, without such
consent, shall be null and void. 13. THIRD PARTIES
BENEFICIARIES AND SUCCESSORS.
This Agreement, Exhibits and Attachments are for the
sole benefit of the parties hereto and nothing herein
expressed or implied shall create any rights, claims or
benefits inuring to any person or entity that is not a party
hereto nor create or establish any third party beneficiary
hereto. This Agreement and its Exhibits and Attachments shall
be binding on and inure to the benefit of the respective
successors and permitted assigns of the parties hereto.
14. CAPTIONS, EXHIBITS, ATTACHMENTS.
Captions appearing herein and in the Exhibits and
Attachments are for the convenience of the parties only, and
shall not be construed to affect the meaning of the provisions
of this Agreement. All Exhibits and Attachments referred to
in this Agreement shall be attached hereto, unless otherwise
indicated by the context, and in any case shall be deemed to
be incorporated in and to form a part of this Agreement.
15. ENTIRE AGREEMENT.
This Agreement, together with its Exhibits and
Attachments, set forth the entire understanding and agreement
of the parties with respect to its subject matter, and unless
otherwise agreed to by the parties in writing, supersedes any
prior agreement(s) among them. No amendment to this Agreement
shall be effective unless it shall be in writing and signed by
all parties hereto.
16. NOTICE.
All notices and communications required or permitted
to be given hereunder shall be in writing and shall be deemed
to have been duly given when delivered personally or sent by
registered or certified mail, postage prepaid, return receipt
requested, addressed to the respective parties to the
following addresses:
If to Purchaser:
Mr. Dennis D. Bradford
Chairman
Coachman Incorporated
301 N.C. 63rd St., Suite 500
Oklahoma City, OK 73116
Fax: (405) 842-3299
With copy to:
Rogelio Munoz, Jr., Esq.
1800 Popular Center
Hato Rey, PR 00918-1052
Fax: (809) 751-0910
If to Sellers:
Mr. Francisco Carvajal
PO Box 1669
Guaynabo, PR 00651-1669
Fax: (809) 720-5166
With copy to:
Jose R. Cestero-Calzada, Esq.
PO Box 364962
San Juan, PR 00936
Fax: (809) 759-7309
or to such other address as a party shall designate by a
written notice to the other party. Notices given by facsimile
shall be deemed to be in writing, provided there is
confirmation of receipt of transmission and further provided
that any notice period shall start running with the
transmission of the facsimile. Either party shall notify in
writing the other in case of any change to their respective
address(es) or name of legal representative set forth above.
Any notice of change of address or change of party to
receive notice shall not be deemed received or delivered until
actual receipt or delivery.
17. WAIVER.
Any waiver of any terms, conditions, obligations or
covenant on this Agreement must be in writing and signed by
the party against whom enforcement is sought. A waiver of any
breach or failure to enforce any of the terms, conditions,
obligations or covenants of this Agreement shall not in any
way affect, limit or waive a party's rights hereunder at any
time to enforce strict compliance thereafter with every term
, condition, obligation or covenant herein.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an
original, but all of which together will constitute one and
the same instrument.
19. EXECUTION OF FURTHER DOCUMENTS.
The parties hereto agree that from time to time upon
the reasonable written request by any party hereto, the other
party or parties shall execute and deliver or cause to be
executed and delivered any additional document or instrument
and shall take or cause to be taken, all such further actions
as such other party may reasonably deem necessary to
consummate the transactions contemplated herein, and/or to
comply fully with the terms and conditions of this Agreement.
20. SEVERABILITY.
If any provision of this Agreement or the
application thereof to any person or circumstances shall be
held void, illegal or unenforceable in any respect by a court
of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect the remaining terms and
provisions hereof.
21. COVENANT OF PURCHASER.
Purchaser hereby covenants to Hispamer to cause
Lutania to become a subsidiary of Olympic or, in the
alternative, at its sole option, to deliver in pledge to
Hispamer the Lutania Shares to also guarantee the payment of
the Bridge Note and the Availability Note under the same terms
as the Pledge Agreement of even date herewith.
22. DEFINITION.
For the purposes of this Agreement, the term
"Affiliate" shall mean with respect to any person (i) each
person that, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary,
fifty percent (50%) or
more of the stock having ordinary voting power in the election
of directors of such person; (ii) each person that controls,
is controlled by or is under common control with such person
or any affiliate of such person; or (iii) each of such
person's officers, directors, joint venturers and partners.
For purposes of this definition control of a person shall mean
the possession, directly or indirectly of the power to direct
or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or
otherwise.
<PAGE>
IN WITNESS WHEREOF, the parties hereto execute this
Agreement at San Juan, Puerto Rico on the date stated
hereinabove.
SELLERS PURCHASER
CORPORACION INMOBILIARIA TEXTIL COACHMAN INCORPORATED
By: _________________________ By:
_________________________
Francisco Carvajal Dennis D. Bradford
President Chairman
FIDEICOMISO HISPAMER
By: Fundacion Francisco Carvajal, Inc.
Trustee
By: ___________________________
Francisco Pedraza
Director
ESTAMPADOS DEPORTIVOS, INC.
By: ___________________________
Francisco Carvajal
President
OLYMPIC HOLDING CORP.
By: _____________________________
Francisco Carvajal
President
Affidavit No. _________
Acknowledged and subscribed before me by Dennis D.
Bradford, of legal age, married, business executive and
resident of Clearwater, Florida, U. S. A., as Chairman of
Coachman Incorporated; and by Francisco Carvajal, of legal
age, married, business executive and resident of San Juan,
Puerto Rico as President of Corporacion Inmobiliaria Textil
(CINTEX), Estampados Deportivos, Inc. and Olympic Holding
Corp., and Francisco Pedraza, of legal age, married, business
executive and resident of San Juan, Puerto Rico, as Director
of Fundacion Francisco Carvajal, Inc., Trustee of Fideicomiso
Hispamer; all personally known to me. At San Juan, Puerto
Rico this 21st day of December, 1995.
NOTARY PUBLIC
ACKNOWLEDGMENT, CONSENT AND RATIFICATION
Mr. Francisco Carvajal ("Carvajal"), as majority
shareholder, director and executive officer of Cintex,
Estampados and Holding and Settlor of Hispamer, acknowledges
and confirms (i) to have had the opportunity to thoroughly
read the contents of this Agreement and any related
agreements, documents, exhibits, attachments, and
certificates; (ii) to have had the same carefully explained
and translated when he so needed; (iii) to be in agreement
with the terms and conditions thereof; and (iv) that, in
consideration of the economic benefits derived and to be
derived, directly or indirectly, by Sellers and Carvajal
personally, Carvajal consents and agrees to perform and
comply, and becomes hereby obligated to cause each of the
Sellers to perform and comply with, all of Carvajal's and
Sellers' obligations under this Agreement and the related
agreements, documents, schedules and certificates, including,
but in no way limited to Sellers' and Carvajal's covenant not
to compete.
__________________________
Francisco Carvajal
Affidavit No. _______
Acknowledged and subscribed to before me in his personal
capacity by Francisco Carvajal, who is of legal age, married,
executive and resident of San Juan, Puerto Rico and to me
personally known. At San Juan, Puerto Rico, this _____ day of
December, 1995.
NOTARY PUBLIC
ACKNOWLEDGMENT, CONSENT AND RATIFICATION
Olympic Mills Corporation acknowledges and confirms to
have read the contents of this Agreement and any related
agreements, documents, exhibits, attachments and certificates
and agrees to comply with and take all steps required under
this Agreement to be performed by it, all in accordance to its
terms and conditions.
OLYMPIC MILLS CORPORATION
By:_______________________
