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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 26, 1997
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OROAMERICA, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-21862 94-2385342
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
443 NORTH VARNEY STREET
BURBANK, CALIFORNIA 91502
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 848-5555
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 26, 1997, OroAmerica, Inc. entered into a Purchase-Sale
Agreement with Ravel Inc., a manufacturer of gold jewelry, for the purchase of
Ravel's entire gold in-house inventory and consignment inventory held by certain
Ravel consignment customers. The purchase price for these inventories was based
on the number of fine gold ounces contained in such inventories multiplied by
the value of gold, based on the Second London Gold Fixing on the date of
transfer, less a transfer fee approximating $435,000. The purchase price
approximated $8.1 million. The value of inventories acquired was payable in fine
gold ounces. OroAmerica, Inc. increased the amount of gold outstanding under
existing gold consignment agreements to pay for the acquired inventories. Ravel
Inc. paid the transfer fee to OroAmerica, Inc. in cash.
This transaction does not involve a purchase or "take over" of Ravel's
jewelry business or the assumption of any of Ravel's indebtedness and
liabilities by OroAmerica.
ITEM 7. EXHIBITS
99.1 Purchase and Sale Agreement between Ravel, Inc. and OroAmerica, Inc.
dated August 26, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf buy the
undersigned hereunto duly authorized.
Date: September 9, 1997 OROAMERICA, INC.
By: Shiu Shao
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Shiu Shao, Vice President and
Chief Financial Officer
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PURCHASE-SALE AGREEMENT
This PURCHASE-SALE AGREEMENT (the "Agreement") is made and entered into
this 26th day of August, 1997, by and between OROAMERICA, INC., a Delaware
corporation ("Buyer"), and RAVEL INC., a Delaware corporation ("Seller"), with
reference to the following facts:
A. Buyer and Seller are each engaged in the manufacture and sale of
gold jewelry (the "Jewelry Business").
B. The parties agree that, with certain exceptions, Buyer shall
purchase from Seller, and Seller shall sell to Buyer, all of the gold jewelry,
completed and in process, gold findings and similar items owned by Seller
(collectively, including Seller's Jewelry Business and the goodwill related
thereto, the "Gold Assets").
NOW THEREFORE, for and in consideration of the mutual promises,
agreements, representations, and warranties contained herein, Buyer and Seller
hereby agree as follows:
1. Transfer of Gold Assets
1.1 Transfer of Specified Assets. Subject to the terms
hereof, for the consideration herein after provided, Seller will sell, transfer,
and assign to Buyer on the date and at the same time the gold is transferred
from Buyer to Seller, the following assets, which constitute the Gold Assets:
(a) Seller's entire in-house inventory as of the
Closing Date of gold jewelry, work in process, findings and other gold items
located at Seller's facility in Clearwater, Florida, a list of which as of
August 27, 1997 is attached to this Agreement as Exhibit 1.1A, estimated to
contain the equivalent of approximately 17,000 ounces of fine gold (the
"In-House Inventory");
(b) Subject to Paragraph 1.3(c) hereof, all gold
jewelry and similar items that are (i) owned by Seller and (ii) held on
"memorandum" (i.e., consignment) as of the Transfer Dates (as hereinafter
defined in Paragraph 1.3(c)(viii)) by Seller's consignment customers other than
Barry's Jewelers, Inc. ("Barry's"), and Montgomery Ward (with such exceptions,
the "Memo Customers," a list of which, including the number of ounces of fine
gold held by each as of the date of the most recent reconciliation, as shown
thereon, is attached to this Agreement as Exhibit 1.1B), estimated to contain
the equivalent of approximately 12,000 ounces of fine gold ("Memo Balances");
(c) All of Seller's right, title, and interest
under its agreements with the Memo Customers (the "Memo Contracts"), subject to
Paragraph 2.4 hereof. (Attached hereto, incorporated herein, and marked as
Exhibit 1.1C is a true and correct copy of the "Assignment and Assumption of
Consignment Sales Agreement and
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Security Interest.") Any assignment of a consignment or security agreement by
Seller to Buyer will be made with the reservation by Seller that Seller may
pursue its rights under the consignment or security agreement against any former
consignee for the purpose of pursuing any rights Seller may have against a
consignment customer which accrued prior to the Transfer of the respective
consignment agreement to Buyer;
(d) All rights, titles, and interests in and to
any and all trademarks, designs, patents, copyrights, know-how, and other
intellectual property owned by Seller or which Seller has the right to license
which are or have been used in connection with the Jewelry Business (the
"Intangibles") and the appurtenant goodwill of said Intangibles (a complete list
of all Intangibles owned by Seller as of the Closing Date is set forth in
Exhibit 1.1D attached to this Agreement); and
(e) All goodwill associated with Seller's
Jewelry Business.
Seller will transfer, and Buyer will obtain, good title to the Gold
Assets, free and clear of all liens, charges, security interests, encumbrances,
leases, covenants, conditions, restrictions and rights and claims of Seller's
creditors or lenders, or both.
1.2 Transfer Fee. Subject to the other terms and
conditions contained in this Agreement, Seller will pay to Buyer at the times
determined herein, by wire transfer of immediately available funds, a transfer
fee in the aggregate amount of $435,000.00 (the "Transfer Fee"). Whenever, on
the Closing Date and thereafter, Buyer and Seller complete the transfer of the
In-House Inventory and the Memo Balances, or Seller retains refined gold as
contemplated by Paragraph 2.2(b) or retains Memo Balances as contemplated by
Paragraphs 1.3(c), Seller shall immediately pay to Buyer by wire transfer of
immediately available funds, an amount determined by multiplying $435,000.00 by
a fraction of which the numerator is the number of ounces of fine gold whose
possession has been transferred to Buyer or so retained by Seller and the
denominator is the total number of ounces of fine gold included in the Gold
Assets.
1.3 Transfer of Title and Possession.
Subject to Paragraph 1.3(b), title to and
possession of the In-House Inventory will be transferred to Buyer by Seller on
Seller's premises in Clearwater, Florida, on the Closing Date, following Buyer's
completion of the last physical inventory or reconciliation of perpetual
inventory (see Paragraph 1.1(a)) concurrently with Buyer's transfer of fine gold
ounces equal to the amount of fine gold ounces in Seller's In-House Inventory to
Seller for Seller's benefit. The parties hereto agree that Fleet Precious Metals
shall act, on behalf of both parties, as escrow agent with regard to the
In-House Inventory and Memo merchandise being transferred in accordance with
this Agreement. Buyer will pay the cost and expense of delivering the In-House
Inventory to a destination or destinations designated by Buyer.
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(b) The parties hereto shall use their best
efforts to reconcile the amount of gold ounces in the In-House Inventory. If,
however, the parties are unable to reconcile this gold amount within three (3)
weeks from the Closing Date, then the Agreement and any related documents,
including, but not limited to the Noncompetition Agreement may be terminated by
either party, and if terminated, said Agreements shall be of no further force
and effect and neither party shall have any liability to the other as it relates
to this Agreement.
(c) (i) With respect to Memo Balances held by
each Memo Customer, and immediately upon Closing, Seller and Buyer shall jointly
prepare, sign, and send a letter to each Memo Customer requesting said Memo
Customer's written consent to the assignment of the respective Consignment
Agreement from Seller to Buyer. Each Memo Customer shall be given one (1) week
within which to provide such consent to Seller. Upon the receipt of said written
consent from each Memo Customer, Buyer can begin shipping and selling
merchandise bearing the "RVL" trademark and Buyer shall be entitled to the
accounts receivable for the merchandise shipped by Buyer to such Memo Customer.
Buyer shall have no recourse to Seller for any merchandise shipped to such Memo
Customer pursuant to this Paragraph.
(ii) The Memo Customers that provided their
consent as set forth above, shall be requested to provide Seller with a
reconciliation statement by September 12, 1997. Such reconciliation statement
shall be requested in writing by Seller to be as of such Memo Customer's regular
August 1997 cutoff date. In the event a Memo Customer cannot or does not supply
a reconciliation statement as of the August 1997 cutoff date, such Memo Customer
shall be requested, in writing, by Seller, to provide a reconciliation statement
as of its regular July 1997 cutoff date. The Memo Customer and Seller must
reconcile the Memo Customer's account within one (1) week of receipt of such
Memo Customer's records, or, no later than September 19, 1997. In the event an
account is not reconciled by September 19, 1997, Seller and Buyer shall attempt
to reconcile such Memo Customer's account by October 17, 1997. If the account
cannot be reconciled by October 17, 1997, Seller, at its discretion, may
terminate such Memo Customer's Consignment Agreement.
In the event a reconciliation of Memo
Customer's account and transfer of said account to Buyer occurs for a given Memo
Customer prior to October 17, 1997, Buyer shall be entitled to the account
receivables attributable to that Memo Customer's consignment account as of the
August 1997 cutoff date, if that is the cutoff date used by said Memo Customer,
or, as of September 1, 1997 if that Memo Customer used a July 1997 cutoff date.
Seller will bill the Memo Customer and, if the reconciliation and transfer
occurs by October 17, 1997, Seller will assign the Memo Customer's account
receivables to Buyer discounted to the fine gold content of the account
receivables. In the
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event Memo Customer pays Seller subsequent to the above-referenced cutoff date
and billing by Seller, and the reconciliation and transfer occurs by October 17,
1997, Seller will pay to Buyer the non fine gold content of the account
receivables collected by Seller for the above-referenced period of time. In the
event, no reconciliation and transfer for any given Memo Customer occurs by
October 17, 1997, Buyer shall not be entitled to any of said Memo Customer's
account receivables.
(iii) In order to effect such
reconciliation, said Memo Customer shall confirm the number of pieces of karat
gold jewelry contained in the Memo Balance held by it on consignment as of the
Closing Date and Seller shall provide to Buyer duplicate pieces of karat gold
jewelry from Seller's physical inventory and/or documentation for Buyer to test
the validity and correctness of the standard and average weight of each piece of
the karat gold jewelry pieces to determine the fine gold content thereof. If,
for a given product number, the amount of gold per piece determined by Seller in
Seller's physical inventory is five percent (5%) or lower than the average
weight per piece, according to Seller's perpetual inventory records, Buyer shall
be required to transfer to Seller an amount of gold equal to the fine gold
content of the lower weight per piece multiplied by the amount of pieces as a
result of the reconciliation between Seller and the Memo Customer. If, for a
given product number, the amount of gold per piece determined by Seller in
Seller's physical inventory is not five percent (5%) or lower than the average
weight per piece, according to Seller's perpetual inventory records, Buyer shall
be required to transfer to Seller an amount of gold equal to the fine gold
content of the average weight per piece multiplied by the amount of pieces as a
result of the reconciliation between Seller and the respective Memo Customer.
(iv) Upon such transfer of gold by Buyer,
Seller shall concurrently assign to Buyer title to such Memo Balances,
consignment agreements, and security agreements (See Exhibit 1.1C). Further,
Buyer shall be entitled to receive immediately from Seller a pro rated amount of
the $435,000.00 Transfer Fee equal in amount to the numerator being the lowest
amount of ounces of fine gold figured between Seller and Memo Customer, and the
denominator being the total number of ounces contained in Seller's In-House
Inventory and all consignment programs with the exception of Montgomery Ward and
Barry's on the Closing Date according to Seller's records less any picked, but
not shipped customer's orders.
(v) If the discrepancy between the amount
reconciled by the Memo Customer and the amount reconciled by Seller is greater
than five percent (5%), or, in the event a terminated Memo Customer returns any
merchandise outside the time such Memo Customer has to return such merchandise
pursuant to the consignment agreement between such Memo Customer and Seller,
Seller may refuse to transfer to Buyer up to a maximum of 1,300 ounces of fine
gold. In that event, Buyer will not be entitled to its pro rata portion of the
$435,000 Transfer Fee for any of the 1,300 ounces not transferred to Buyer.
(vi) With regard to Seller's Fred Meyer
consignment
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account, only, any gold returned by Fred Meyer to Seller shall be transferred by
Seller to Buyer concurrently upon the Buyer's transfer of the equivalent amount
of fine gold to Seller for Seller's benefit. If Fred Meyer returns the
consignment account to Seller, any amounts of gold returned by Fred Meyer to
Seller will not be considered a part of the 1,300 ounces described in Paragraph
1.3(c)(v) herein.
(vii) With regard to Friedman's Jewelers,
Inc. ("Friedman's"), only, if the discrepancy between Friedman's reconciliation
statement and Seller's reconciliation statement is greater than five percent
(5%), Seller will use its best efforts to reconcile with Friedman's for a period
of up to November 12, 1997. If, after November 12, 1997, the difference between
Friedman's figures and Seller's figures cannot be reconciled to within five
percent (5%), Seller may terminate its consignment account with Freidman's.
Commencing with sales reports from September 1, 1997, Seller shall invoice
Friedman's in accordance with Seller's consignment agreement with Friedman's.
Seller shall sell and assign Friedman's account receivables to Buyer discounted
to the value of the fine gold content of the receivables. Such sale shall be
evidenced by appropriate documentation. Should there be a discrepancy with
regard to Seller and Friedman's relating to "shrinkage" (as defined
hereinafter), Seller shall invoice Friedman's for the shrinkage amount. Seller
may sell and assign to Buyer said shrinkage if the shrinkage amount is confirmed
by Friedman's. Upon such transfer, Buyer shall be entitled to its pro rata
portion of the Transfer Fee. Shrinkage shall be defined as the difference
between the amount of gold that Seller has determined should be in the Memo
Customer's possession and the amount that the Memo Customer claims is in its
possession. Upon reconciliation between Friedman's and Seller prior to November
12, 1997, Seller and Buyer shall transfer gold as contemplated herein.
(viii) The term "Transfer Date" means, with
respect to each Memo Customer, on a Memo Customer by Memo Customer basis, the
date on which Seller assigns to Buyer its Memo Balance, consignment agreement,
and security agreement with said Memo Customer and Buyer concurrently transfers
for Seller's benefit the number of ounces of fine gold determined in accordance
with Paragraph 1.3(c) with respect to the Memo Balance of said Memo Customer.
(d) Buyer shall not be responsible to Seller's
Asset Customers for any returns of any products already in the possession of
Seller's Asset Customers at or before the Closing Date. The term "Asset
Customer," as defined herein, means all other customers besides the Memo
Customer's to which there are direct sales of goods from Seller on an open
account. In addition, Buyer can ship merchandise bearing the "RVL" trademark to
Walmart as soon as the In-House Inventory is transferred pursuant to this
Agreement. Nevertheless, Buyer will be responsible for any returned merchandise
from Walmart up to the quantity of the products sold under the "RVL" trademark
by Buyer. Seller is responsible only for any and all merchandise that is
returned directly from Walmart.
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1.4 Sales by Memo Customers. From and after the
Transfer Date, all amounts to which Seller is entitled under the Memo Contract
for which the gold was transferred as a result of sales of said Memo Balances
made by said Memo Customers described in Paragraph 1.3(c) above shall be for the
account of Buyer and said amounts shall be assigned pursuant to the Assignment
Agreement to be executed between the parties.
1.5 Noncompetition Agreements. On the Closing Date,
Seller will and will cause Kuwayama Kikinzoku Corporation and Itochu's Precious
Metals Department/Division (both of which are Japanese corporations) to execute
and deliver to Buyer a noncompetition agreement substantially as set forth in
Exhibit 1.5 attached to this ("Noncompetition Agreements"). The execution and
delivery of the Noncompetition Agreement are conditions precedent to Buyer's
obligation to purchase the Gold Assets and goodwill of Seller's business on the
Closing Date.
1.6 Consultation and Support Services. For a period of
sixty (60) days after the Closing Date, Steven Frazier, Vice President and Chief
Financial Officer of Seller, ("Frazier") shall provide and render on Buyer's
behalf and for Buyer's benefit free professional and expert consulting and
support services at Buyer's request regarding any matters related to or arising
from this Agreement. In consideration for such consulting and support services,
Buyer shall only be required to reimburse Frazier for any reasonable
out-of-pocket costs and expenses (i.e., travel, lodging, and airfare). Frazier
shall not be required under this Paragraph to travel on weekends. The total
services rendered and travel away from Seller's place of business by Frazier of
Buyer's behalf under this Paragraph shall not exceed ten (10) business days
within this period of sixty (60) days.
2. Consideration for Gold Assets.
2.1 Purchase Price. The purchase price for the Gold
Assets shall be a number of ounces of fine gold equal to the number of ounces of
fine gold contained in the In-House Inventory and the Memo Balances which,
except as otherwise provided herein, shall be transferred from Buyer to Seller
by an entry in the books and records of Seller's gold lessor, Fleet Precious
Metals, without physical delivery. Seller will immediately reimburse Buyer for
any reasonable transfer fee imposed on Buyer in effecting such transfer. Said
reasonable transfer fee shall not exceed $ 0.35 per ounce. Seller, upon written
request to Buyer, shall be entitled to receive a copy of any invoice issued to
Buyer for said transfer fee prior to Seller's reimbursement to Buyer of Buyer's
transfer fees.
2.2 Payment for In-House Inventory.
(a) On the Closing Date (or as soon thereafter
as the fine gold content of the In-House Inventory is determined) Buyer shall
transfer to Seller a number of ounces of fine gold equal to the fine gold
content of the In-House Inventory, which shall be
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determined by a physical inventory and sample assay to be conducted jointly by
Buyer and Seller a short time before the Closing Date; fine gold content shall
be based on assay results, subject to the following: 10K gold, not to exceed
41.66% fine gold; 14K gold, not to exceed 58.33% fine gold; and 18K gold not to
exceed 75% fine gold. Pursuant to Buyer's instructions, Seller, at its own
expense, will transport some of the In-House Inventory to a refinery for testing
to determine the gold content thereof.
(b) Buyer, in its discretion, may require Seller
to scrap jewelry containing up to 3,000 ounces of fine gold, to be refined by
Seller and restored to the form of fine gold. Seller agrees to accept payment
for up to 3,000 ounces of fine gold included in the Gold Assets by accepting
physical possession of such refined gold. Seller will pay all costs incurred in
connection with such refining, and Buyer will pay Seller a refining fee of
one-half percent (0.5%) of the value of the gold refined by Seller in accordance
with Buyer's instructions. Buyer shall be entitled to a pro rata portion of the
Transfer Fee in accordance with Paragraph 1.3 hereof.
2.3 Payment for Memo Balances. Payment for the Memo
Balances shall be made pursuant to Paragraphs 1.3 and 2.1 above.
2.4 Agreements with Memo Customers. Buyer shall
execute an Assignment and Assumption Agreement for each Memo Customer upon the
transfer of gold to such Memo Customer, and thereafter, Buyer, in its
discretion, on a customer by customer basis, may (a) assume Seller's obligations
arising after the Transfer Date(s) either (i) according to their terms or (ii)
with such changes therein as Buyer may request and such Memo Customers may agree
to, or (b) negotiate new consignment agreements with such Memo Customers, or (c)
refuse to do either (a) or (b).
2.5. Additional Consideration. Good and valuable
consideration in the amount of One Dollar ($1.00) for the goodwill associated
with Seller's business. No separate consideration is allocated towards the
Noncompetition Agreement and the Noncompetition Agreement is entered into as an
incident to the entire transaction.
3. No Assumption of Liabilities.
Other than the assumption of any liability of Seller under
the Consignment and Security Agreements assigned to Buyer under this Agreement,
Buyer is not assuming any liabilities or obligations of Seller arising from any
act, conduct, duty, omission, or the like concerning Seller prior to the
Transfer Date. Any assumption by Buyer shall relate only to obligations arising
after the Transfer Date in accordance with Paragraph 2.4. Seller is not assuming
any liabilities or obligations of Buyer arising after the Transfer Date.
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4. Representations and Warranties of Seller.
As an inducement to Buyer to execute, deliver and perform
the Agreement, Seller hereby represents and warrants the following (the truth
and accuracy of which on and as of the Closing Date are conditions precedent to
Buyer's obligation to purchase the Gold Assets from Seller):
4.1 Organization and Good Standing of Seller. Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has full corporate power and authority to carry
on its business as now conducted by it and is entitled to own or lease and
operate its properties and assets now owned or leased and operated by it.
4.2 Authority of Seller. The execution of this
Agreement, its delivery to Buyer and its performance have been duly authorized
by the Board of Directors of Seller and duly approved by the required vote of
its stockholders. No further corporate or stockholder action is necessary to
make this Agreement valid and binding upon Seller in accordance with its terms,
subject to the "Bankruptcy Exception" (as defined in Paragraph 15). The
execution, delivery and performance of this Agreement by Seller are not contrary
to the Certificate of Incorporation or By-Laws of Seller and will not result in
a violation or breach of any term or provision or constitute a default or give
any party a right to accelerate the due date of any indebtedness under any
indenture, mortgage, deed of trust or other contract or agreement related to or
affecting the Gold Assets.
4.3 Title to the Gold Assets. Seller has good title to
those assets which, if the Closing were to occur on the date hereof, would
constitute the Gold Assets and, on the Closing Date, will have good title to all
of the Gold Assets, free and clear of all liens, charges, security interests,
encumbrances, leases, covenants, conditions, restrictions and rights and claims
of Seller's creditors.
4.4 Inventory. To the best of Seller's knowledge and
belief, the finished goods that comprise part of the In-House Inventory are of a
kind, quality and quantity usable and salable to Memo Customers in the ordinary
course of business. The fine gold content of the In-House Inventory and the Memo
Balances will conform to the fine gold content of the items assayed in arriving
at the In-House Inventory amount and the Memo Balances.
4.5 Intangibles. Seller solely owns and/or has the
sole and entire right to transfer and assign to Buyer all of the Intangibles.
The Intangibles include all of the proprietary products and formulations
developed by Seller and used by it in connection with its Jewelry Business.
Seller is not, and Buyer will not be, obligated to pay any royalty or other fee
to any licensor or other third party with respect to any Intangibles, and Seller
has
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not received any claim alleging any conflict between any aspect of its Jewelry
Business and any intangible assets claimed to be owned by others which, if
determined adversely to Seller, would have a Material Adverse Effect on such
business. To the best of Seller's knowledge and belief, no "Person" has any
interest in any Intangibles which are presently used by Seller in connection
with its Jewelry Business or which infringe upon, conflict with or relate to
improvements or modifications of any Intangibles.
4.6 Memo Contracts. Exhibit 1.1B contains a list of
all of the Memo Customers, with the Memo Balances held by each, and Seller has
furnished to Buyer a true copy of the Memo Contract, including all amendments
thereof, with each Memo Customer. Each Memo Contract is a valid and binding
obligation of Seller and the Memo Customer that is a party thereto in accordance
with its terms, subject to the Bankruptcy Exception; there have been no
amendments to or modifications to any Memo Contract (except as set forth in the
copies furnished to Buyer); no event has occurred which is, or, following any
grace period or required notice, would become a material default by Seller under
the terms of any Memo Contract; and Seller has not waived any material rights
under any Memo Contract. Notwithstanding any language contained in this
Paragraph 4.6, this Purchase-Sale Agreement or any related documentation to the
contrary, Seller, to the best of its knowledge and belief, has obtained valid
and perfected security interests in the Memo merchandise assigned herein.
Notwithstanding, Seller makes no representation or warranty to Buyer about the
enforceability of any security interest in the Memo merchandise assigned herein.
4.7 Consents. No authorizations, approvals or consents
of any Person, other than the consent of Memo Customers to the assignment of the
Memo Contracts to Buyer, are required for consummation of the transactions
contemplated by this Agreement.
4.8 No Litigation. There is no suit or action
(equitable, legal or administrative), arbitration or other proceeding pending
or, to Seller's knowledge, threatened against Seller or any Affiliate, which
materially relates to Seller's Jewelry Business, the Gold Assets or this
Agreement. There is no suit or action (equitable, legal or administrative),
arbitration or other proceeding pending or threatened by Seller or any Affiliate
of Seller, which relates to Seller's Jewelry Business.
4.9 Brokerage and Finder's Fees. Neither Seller nor
any Affiliate has incurred any liability to any broker, finder or agent for any
brokerage fees, finder's fees or commissions for which Buyer could be liable
with respect to the transactions contemplated by this Agreement.
4.10 No Material Misstatements or Omissions. No
representation or warranty by Seller in this Agreement, and no document, exhibit
or schedule furnished or to be furnished to Buyer pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact or omits or will omit
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to state a material fact required to be stated therein or necessary in order to
make the statements or facts therein, in the light of the circumstances under
which they were made, not misleading.
5. Representations and Warranties of Buyer. As an inducement
to Seller to execute, deliver and perform the Agreement, Buyer hereby represents
and warrants the following (the truth and accuracy of which on and as of the
Closing Date are conditions precedent to Seller's obligation to sell the Gold
Assets to Buyer):
5.1 Organization and Good Standing. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to carry on
its business as now conducted by it and is entitled to own or lease and operate
its properties and assets now owned or leased and operated by it.
5.2 Authority. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Buyer. This Agreement has
been duly executed and delivered to Seller, and no vote of the stockholders of
Buyer or further corporate action is necessary on the part of Buyer to make this
Agreement valid and binding upon Buyer in accordance with its terms, subject to
the Bankruptcy Exception. The execution, delivery and performance of this
Agreement by Buyer are not contrary to the Certificate of Incorporation or
By-Laws of Buyer and will not result in a violation or breach of any term or
provision or constitute a default or give any party a right to accelerate the
due date of any indebtedness under any indenture, mortgage, deed of trust or
other contract or agreement to which Buyer is a party or by which Buyer is
bound.
5.3 No Material Misstatements or Omissions. No
representation or warranty by Buyer in this Agreement, and no document, exhibit
or schedule furnished or to be furnished to Seller pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact required to be stated therein or necessary to make the statements
or facts contained therein not misleading.
6. Additional Covenants of Seller.
Seller hereby covenants and agrees with Buyer as follows
(the fulfillment of each such covenant and agreement being a condition precedent
to the obligation of Buyer to purchase the Gold Assets):
6.1 Conduct of Business. Between the Closing Date and
the Transfer Date, Seller will use reasonable efforts to maintain Seller's
relationships with its Memo Customers. Except for merchandise picked for open
customer purchase orders, but
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not yet shipped prior to the Closing Dates, and except for merchandise
designated for Montgomery Ward and/or Barry's, Seller will not sell or dispose
of any In-House Inventory or Memo Balances except for sales of inventory at fair
value in the ordinary course of business.
6.2 No Shopping. Seller will refrain from all
discussions, negotiations, and transactions with Persons other than Buyer
relating to sale of Seller's Jewelry Business or the Gold Assets if this
Agreement closes.
6.3 Bookings on Closing Date. Seller will refer to
Buyer all orders for jewelry products that it receives at any time on or after
the Closing Date with the exception of orders given to Seller by Montgomery Ward
and/or Barry's.
7. The Closing. The closing ("Closing") of the transactions
covered by this Agreement shall take place on August 26, 1997, at the offices of
Seller, 11525 53rd Street North, Clearwater, Florida 34620. In the event that
the conditions specified in this Agreement have not been fulfilled by that date,
the parties hereto may mutually agree, in writing, to postpone the closing for a
reasonable period of time. The term "Closing Date" herein shall mean the last
date fixed by mutual agreement or otherwise under this Paragraph. The parties
contemplate that the purchase and sale of the Gold Assets will occur after the
Closing Date.
8. Risk of Loss. All risk of loss with respect to the
In-House Inventory and Memo Balances of which Seller takes possession as
described in Paragraph 1.3 shall remain with Seller so long as such items remain
on Seller's premises, whether or not title thereto has passed to Buyer. All risk
of loss with respect to Memo Balances that are transferred to Buyer pursuant to
clause Paragraph 1.3 shall be borne by Seller prior to the Transfer Date and by
Buyer subsequent to the Transfer Date. If before risk of loss passes to Buyer,
any In-House Inventory or Memo Balance shall have suffered loss or damage on
account of theft, fire, flood, accident, act of war, civil commotion, or any
other cause or event beyond the reasonable power and control of Seller (whether
or not similar to the foregoing) to an extent which materially affects the value
to Buyer of the Gold Assets, if all such In-House Inventory has suffered such
loss or damage, then the portion of this Purchase and Sale Agreement that
relates to the In-House Inventory shall be terminated and this Purchase and Sale
Agreement shall continue to with regard to the Memo Balances as describe herein.
If a portion of the In-House Inventory has suffer such loss or damage, then, the
remaining portion of the In-House Inventory and the Memo Balances shall be
transferred to Buyer upon the terms and conditions contained herein.
9. Survival of Representations. All representations,
warranties and indemnifications made by Seller or Buyer under or in connection
with this Agreement shall survive the consummation of the sale and purchase of
the Gold Assets.
<PAGE> 12
10. Indemnifications.
10.1 Indemnification by Seller. Seller hereby agrees
to indemnify, defend, protect and hold harmless Buyer against (a) all damages,
losses, liabilities, costs and expenses, including reasonable attorney's fees,
resulting from any breach of any warranty or representation made by it under or
in connection with this Agreement and (b) all liabilities and/or obligations of
Seller prior to the Transfer Date or resulting and/or arising from any act,
omission, conduct, or the like, committed by Seller prior to the Transfer Date.
10.2 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend, protect and hold harmless Seller against all damages, losses,
liabilities, costs and expenses, including reasonable attorney's fees, resulting
from any breach of any warranty or representation made by Buyer under or in
connection with this Agreement and resulting from any and all liabilities and
obligations assumed by Buyer under any of the assigned Consignment Agreements
and Security Agreements.
11. Indemnification Procedures and Limitations. The following
provisions shall apply to all indemnification and hold harmless provisions of
this Agreement:
11.1 No party shall be required to indemnify another
pursuant hereto unless the party seeking indemnification (the "Indemnitee")
shall, with reasonable promptness, provide the other party (the "Indemnitor")
with copies of any claims or other documents received and shall otherwise make
available to the Indemnitor all material relevant information. The Indemnitor
shall have the right to defend any such claim at its expense, with counsel of
its choosing, and the Indemnitee shall have the right, at its expense, using
counsel of its choosing, to join in the defense of any such claim. The
Indemnitee's failure to give prompt notice or to provide copies of documents or
to furnish relevant data shall not constitute a defense in whole or in part to
any claim by the Indemnitee against the Indemnitor except to the extent that
such failure by the Indemnitee shall result in prejudice to the Indemnitor.
11.2 Except as hereinafter provided, neither party shall
settle or compromise any such claim unless it shall first obtain the written
consent of the other, which shall not be unreasonably withheld. The foregoing
notwithstanding, if suit shall have been instituted against the Indemnitee and
the Indemnitor shall have failed, after the lapse of a reasonable time after
written notice to it of such suit, to take action to defend the same, the
Indemnitee shall have the right to defend the claim (without limiting the right
of the Indemnitor to participate in the defense) and to charge the Indemnitor
with the reasonable cost of any such defense, including reasonable attorneys'
fees, and the Indemnitee shall have the right, after notifying but without
consulting the Indemnitor, to settle or compromise such claim on any terms
reasonably approved by the Indemnitee.
<PAGE> 13
12. Termination.
In addition to any party's right to terminate this Agreement if
any condition precedent to its obligations is not satisfied at or before the
Closing, either Buyer or Seller may forthwith terminate this Agreement: (a)
subject to clause (b) below, without liability to the other of them if a bona
fide action or proceeding (by and at the sole instance of a party or parties not
an Affiliate or Affiliates of Buyer or Seller) shall be pending against either
party on the date hereof wherein an unfavorable judgment, decree or order would
prevent or make unlawful the carrying out of the transactions contemplated by
this Agreement; or (b) without prejudice to other rights and remedies which
either party may have, if a material default shall be made by the other of them
in the observance or in the due and timely performance of its covenants and
agreements herein contained, or if there shall have been a material breach of
the warranties and representations herein contained.
13. Notices. Any and all notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed duly given when
personally delivered to or transmitted by overnight express delivery or by
facsimile to and received by the party to whom such notice is intended, or in
lieu of such personal delivery or overnight express delivery or facsimile
transmission, 48 hours after deposit in the United States mail, first-class,
certified or registered, postage prepaid, return receipt requested, addressed to
the applicable party at the address provided below. The parties may change their
respective addresses for the purpose of this Paragraph 13 by giving notice of
such change to the other party in the manner that is provided in this Paragraph
13.
If to Seller: Ravel, Inc.
11525 53rd Street North
Clearwater, FL 34620
Attention: Steven Frazier, Vice President
Facsimile No.: (813) 572-6360
With a copy to: Aaron Gold, Esq.
Gold & Resnick, P.A.
704 West Bay Street
Tampa, FL 33606
Facsimile No.: (813) 251-0616
If to Buyer: OroAmerica, Inc.
443 North Varney Street
Burbank, CA 91502
Attention: Shiu Shao, Vice President
Facsimile No.: (818) 841-4342
<PAGE> 14
With a copy to: Bertram K. Massing, Esq.
Ervin, Cohen & Jessup LLP
9401 Wilshire Boulevard, 9th Floor
Beverly Hills, CA 90212
Facsimile No.: (310) 859-2325
14. Successors and Assigns. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of the parties, their respective heirs, personal
representatives and permitted successors and assigns. Nothing contained in or
implied from this Agreement is intended to confer any rights or remedies upon
any Person other than the parties hereto and their successors in interest and
assignees.
15. Certain Definitions. As used herein, the following terms
(whether used in the singular or the plural) have the following meanings:
"Affiliate" or "affiliate" means, with respect to any
Person, any other Person directly or indirectly controlling, controlled by or
under common control with such Person and, without limiting the generality of
the foregoing, includes (a) any director or officer of such Person or of any
Affiliate of such Person, (b) any such director's or officer's Family Members,
(c) any group, acting in concert, of one or more of such directors, officers or
Family Members, and (d) any Person controlled by any such director, officer,
Family Member or group which beneficially owns or holds 25% or more of any class
of equity securities or profits interest. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
"Bankruptcy Exception" means the limitation on
enforceability imposed by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, whether
enforcement is sought in equity or at law.
"Family Member" means, in the case of a Person who is an
individual, any parent, spouse or lineal descendant (including legally adopted
descendants) of such Person, or the spouse of any such descendant.
"Material Adverse Effect" means a material adverse effect
on the financial condition, results of operations, business or prospects of the
entity referred to (i.e., Seller, with respect to Seller's Jewelry Business, or
Buyer and its subsidiaries taken as a whole.)
"Person" or "person" means an individual, a corporation,
a partnership, an association, a trust or any other entity or organization,
including any governmental organization.
<PAGE> 15
16. Disputes Between Parties. If any action at law or
inequity is brought to enforce or interpret the provisions of this Agreement,
the prevailing party shall be entitled to all cost, including reasonable
attorney's fees in addition to any other relief to which it may be entitled.
17. Confidentiality. Except as may be required by court order
or applicable state or federal securities laws or pursuant to any federal or
state audit, neither Buyer nor Seller nor any Person acting by, through or in
concert with either or both of them shall represent, state or otherwise
accurately or inaccurately disclose the terms of this Agreement or the letter of
intent which preceded it other than one or more of the following: (a) to state
that an agreement has been entered into and whether or not it has been
consummated; (b) to disclose to Memo Customers and Asset Customers that the
customer's account has been assigned to Buyer; (c) to discuss with Memo
Customers whether they desire to continue doing business with Buyer with respect
to their Memo Accounts; and (d) to disclose the terms of this Agreement to
Persons who need to know such information in connection with their business
relationships with Seller or Buyer, including but not limited to lenders,
employees and other representatives, officers and directors.
18. Applicable Law; Jurisdiction. The transfer of title to
the Gold Assets and Buyer's right thereto shall be governed by the internal laws
of the State of Florida applicable to contracts made and to be wholly performed
within said State. In all other respects, this Agreement and all rights and
obligations hereunder and under all documents, instruments and agreements
executed under or in connection with this Agreement shall be governed and
construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and to be wholly performed within said State.
19. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Headings; Severability. Captions and section headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing it. The provisions of this Agreement are
severable, and, if any one or more provisions may be determined to be judicially
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provisions, to the extent enforceable, shall nevertheless be
binding and enforceable upon the parties hereto.
21. Amendments. No provision or term of this Agreement or any
agreement contemplated herein between the parties hereto may be supplemented,
amended, modified, waived or terminated except in a writing duly executed by the
party to be charged.
<PAGE> 16
22. Execution of Agreement by Facsimile. A copy of this
Agreement containing either facsimile and/or original true copies of the
signatures of all the parties listed below shall be deemed a valid and binding
agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
Seller:
RAVEL, INC.
Dated: August 26, 1997 By: Kevin Tanaka
-----------------------------------
President
Buyer:
OROAMERICA, INC.
Dated: August 26, 1997 By: Shiu Shao
-----------------------------------
Chief Financial Officer
