SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No._______)*
DRYPERS CORPORATION
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
0002624971
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(CUSIP Number)
Barry M. Davis, Davis Venture Partners,
320 South Boston, Tulsa, Oklahoma, 74103-3703
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 23, 1996
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(Date of Event Which Requires Filing of this Statement)
If the person has previously filed a statement on Schedule 13G to report the
acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 23 Pages
Exhibit Index on Page
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CUSIP NO. 0002624971 13 D Page 2 of 23 Pages
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1 NAME OF REPORTING PERSON
SS OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Davis Venture Partners, L.P. ("DVP")
Tax ID Number:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC of DVP
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,514,000 shares of Common Stock of
BENEFICIALLY which 1,100,000 shares are Common
OWNED BY EACH Stock issuable upon conversion of
REPORTING Preferred Stock.
PERSON
WITH
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8 SHARED VOTING POWER
Please see response to row 7.
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9 SOLE DISPOSITIVE POWER
1,514,000 shares of Common Stock of
which 1,100,000 shares are Common
Stock issuable upon conversion of
Preferred Stock.
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10 SHARED DISPOSITIVE POWER
Please see response to row 9.
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,514,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
18.29%
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14 TYPE OR REPORTING PERSON*
PN
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<FN>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</FN>
</TABLE>
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<TABLE>
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CUSIP NO. 0002624971 13 D Page 3 of 23 Pages
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1 NAME OF REPORTING PERSON
SS OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Davis Venture Group, L.P. ("DVG")
Tax ID Number:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ] (b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,514,000 shares of Common Stock of which 1,100,000 shares are Common
BENEFICIALLY Stock issuable upon conversion of Preferred Stock, all of which are
OWNED BY EACH directly owned by DVP. DVG is the general
REPORTING partner of DVP and may be deemed to have shared voting
PERSON power with respect to such shares.
WITH
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8 SHARED VOTING POWER
0 shares
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9 SOLE DISPOSITIVE POWER
1,514,000 shares of Common Stock of
which 1,100,000 shares are Common
Stock issuable upon conversion of
Preferred Stock, all of which are
directly owned by DVP. DVG is the
general partner of DVP and may be
deemed to have shared dispositive
power with respect to such shares.
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10 SHARED DISPOSITIVE POWER
0 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,514,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
18.29%
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14 TYPE OR REPORTING PERSON*
PN
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<FN>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</FN>
</TABLE>
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Page 4 of 23 Pages
The event requiring the filing of this Statement on 13(D) was the
acquisition on February 23, 1996 by DVP of 11,000 shares of Sr. Convertible
Cumulative 7.5% Preferred Stock, at $100 per share, directly from the issuer.
Prior to such acquisition, ownership of issuer Common Stock was reported
annually on Schedule 13(G) pursuant to Section 13(d)(6)(B) of the Securities
Exchange Act of 1934, as amended.
ITEM 1. SECURITY AND ISSUER.
Common Stock
Drypers Corporation
1415 West Loop North
Houston, Texas 77055
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by Davis Venture Partners, L.P., a
Delaware limited partnership ("DVP") and Davis Venture Group,
L.P., a Delaware limited partnership ("DVG"). DVG is the
general partner of DVP, and may be deemed to have indirect
beneficial ownership of shares of the issuer directly owned by
DVP. The foregoing entities are collectively referred to as
the "Reporting Persons."
DVP is a venture capital investment partnership and DVG serves
as its general partner. The principal business address for DVP
and DVG is 320 South Boston, Tulsa, Oklahoma 74103-3703.
Pursuant to General Instruction C for Schedule 13D, set forth
below is certain information regarding each general partner of
DVG.
The general partners of DVG are Barry Davis, Philip Tuttle,
Michael Stone and Elmer Wilkening. Each is a US citizen and
each of their principal occupation is to serve as a general
partner of DVG. The principal business address for Messrs.
Davis and Wilkening is 320 South Boston, Tulsa, Oklahoma
74103-3703. The principal business address for Mr. Tuttle, is
Suite 12 Greenway Plaza, Suite 600, Houston, Texas 77046, and
the principal business address for Mr. Stone is 2121 San
Jacinto St. Suite 250, Dallas, Texas 75201.
During the last five years, none of DVG, DVP nor any of the
individuals listed in response to Instruction C, has been (i)
convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was
or is subject to a judgment, decree or final order enjoing
future violations of, or prohibiting or mandating activities
subject to, Federal or State securities laws or finding any
violation with respect to such laws.
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Page 5 of 23 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The aggregate amount of funds used by DVP to purchase 11,000
shares of 7.5% Sr. Convertible Cumulative 7.5% Preferred Stock
was $1,100,000. The source of such funds was the working
capital of DVP and no part of the purchase price for the
securities consisted of borrowed funds.
ITEM 4. PURPOSE OF TRANSACTION
General venture capital investment. The 11,000 shares of 7.5%
Senior Convertible Preferred Stock is convertible at DVP's
option at any time into 1,100,000 shares of Common Stock. DVP
intends to review continuously its equity position in the
issuer. Depending upon future evaluations of the business
prospects of the issuer and upon other developments,
including, but not limited to, general economic and business
conditions and money market and stock market conditions, DVP
may determine to increase or decrease its equity interest in
the issuer by acquiring additional shares of Preferred Stock
or Common Stock or by disposing of all or a portion of its
holdings of Preferred Stock or Common Stock, but to any
applicable legal and contractual restrictions on its ability
to do so. Except as set forth herein, DVP does not have any
plans or proposals which would relate to or result in any of
the matters described in Items 4(a)-(j).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) See cover pages, row 11 for each Reporting Person.
(b) See cover pages, rows 7-10 for each Reporting Person.
(c) There have been no transactions by any Reporting Person in
the last 60 days from the date of this Statement (or
within 60 days of the event requiring the filing of
Statement).Under certain circumstances set forth in the
limited partnership agreement of DVG and DVP, the general
and limited partners of each of such entities may be
deemed to have the right to receive dividends from, or the
proceeds from, the sale of shares of the issuer owned by
each such entity of which they are a partner.
None of the individuals named in response to Instruction C for
Item 2 own securities of the issuer other than Mr. Tuttle, who
has been issued options to purchase 6,000 shares of Common
Stock at $5.875 per share and 16,000 shares of Common Stock at
$3.75 per share, and Mr. Wilkening, who owns 7,000 shares of
Common Stock, constituting less than .01% of outstanding
shares, over which he has sole voting and dispositive power.
Mr. Wilkening used personal funds (none of which were
borrowed) to purchase such shares. None of the individuals
named in response to Instruction C for Item 2 have had
transactions in the securities of the issuer within the last
60 days or within 60 days of the event requiring the filing of
this Schedule 13D.
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Page 6 of 23 Pages
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Mr. Tuttle is a member of the Drypers Corporation Board of
Directors.
DVP, together with the other purchasers of 7.5% Senior
Convertible Preferred Stock, was given certain registration
rights with respect to the Common Stock issuable upon
conversion of the Preferred Stock. See Exhibit B--Registration
Rights Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A-1 Joint Filing Agreement
Exhibit A-2 Registration Rights Agreement dated as of February
23, 1996.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: October 23, 1997
DAVIS VENTURE GROUP, L.P.
By: /S/ Barry M. Davis
--------------------------------
Barry M. Davis, General Partner
DAVIS VENTURE PARTNERS, L.P.
By DAVIS VENTURE GROUP, L.P.
By: /S/ Barry M. Davis
--------------------------------
Barry M. Davis, General Partner
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Page 7 of 23 Pages
EXHIBIT INDEX
Found on
Sequentially
Exhibit Numbered Page
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Exhibit A: Agreement of Joint Filing Page 9
Exhibit B: Registration Rights Agreement Page 10
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Page 8 of 23 Pages
EXHIBIT A
Agreement of Joint Filing
The undersigned hereby agree that a single Schedule 13D (or
any amendment thereto) relating to the Common Stock of Drypers Corporation shall
be filed on behalf of each of the undersigned and that this Agreement shall be
filed as an exhibit to such Schedule 13D.
Date: October 23, 1997
/S/ Barry M. Davis
----------------------------------------
Barry M. Davis, on behalf of Davis
Venture Partners, L.P., in his capacity
as a general partner of Davis Venture
Group L.P., the general partner of Davis
Venture Partners, L.P., and on behalf of
Davis Venture Group, L.P., in his
capacity as a general partner thereof.
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Page 9 of 23 Pages
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of February __, 1996, by and between Drypers Corporation. a Delaware
corporation (the "Company"), and Equus 1I Incorporated, Davis Venture Partners,
Triad Ventures Limited II, L.P., Heartland Advisors, Inc., Antar & Co., Meridian
Fund, Ltd., T. Jack Gainer, Jr. and Joe D. Tanner (collectively, the
"Investors");
WITNESSETH:
WHEREAS, the Company and the Investors are entering into a
stock purchase agreement of even date herewith (the "Stock Purchase Agreement")
relating to the purchase by the Investors of an aggregate of 90,000 shares of
Senior Convertible Cumulative 7.5% Preferred Stock, par value $.01 per share, of
the Company (the "Senior Convertible Cumulative 7.5% Preferred Stock"); and
WHEREAS, the Certificate of Designations relating to the
Senior Cumulative 7.5% Preferred Stock provides that each share of such stock
shall be convertible, at the option of the holder, into 100 shares (as may be
adjusted from time to time in accordance with the Certificate of Designations)
of Common Stock of the Company, par value $.001 per share (the "Common Stock");
and
WHEREAS, in order to induce the Investors to enter into the
Stock Purchase Agreement, the Company desires to grant certain registration
rights to the Investors for the shares of Common Stock into which the Senior
Cumulative 7.5% Preferred Stock may be converted;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
As used herein, the following terms have the indicated
meanings, unless the context otherwise requires:
"Act" means the Securities Act of 1933, as amended.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means an investor or any transferee thereof.
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Page 10 of 23 Pages
"Registrable Securities" means the shares of Common Stock and
other securities issued or issuable by the Company to the Holders upon
conversion of or payment of dividends on the Senior Cumulative 7.5% Preferred
Stock, any other securities issued or issuable by the Company with respect to
such shares by way of a stock dividend or other distribution or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or reorganization. Any Registrable Securities will cease to be
such when (i) a registration statement covering such Registrable Securities has
been declared effective by the Securities and Exchange Commission and such
Registrable Securities have been disposed of pursuant to such effective
registration statement, (ii) such Registrable Securities are distributed to the
public pursuant to Rule 144 (or any similar provision then in force) under the
Act or (iii) the Company has delivered a new certificate or other evidence of
ownership for such Registrable Securities not bearing the legend required
pursuant to the Purchase Agreement and such Registrable Securities may be resold
to the public without restriction under the Act in accordance with Rule 144(k).
"Selling Holder" means an Investor or transferee thereof who
is selling Registrable Securities pursuant to a registration statement.
2. Piggy-Back Registration.
(a) If the Company proposes to file a registration
statement under the Act with respect to an offering by the Company for its own
account or for the account of any other person or entity of any class of equity
security, including any security convertible into or exchangeable for any equity
securities (other than (i) a registration statement on Form S-4 or S-8 (or any
substitute form for comparable purposes that may be adopted by the Commission),
(ii) any amendment to the Company's registration statement No. 33-70098, (iii) a
registration statement filed in connection with an exchange offer or an offering
of securities solely to the Company's existing security holders), or (iv) in
connection with the registration statement that is on a form pursuant to which
an offering of the Registrable Securities cannot be registered), then the
Company shall in each case give written notice of such proposed filing to the
Holders of Registrable Securities at least twenty (20) days before the
anticipated filing date, and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each such
Holder may request. Upon the written request of any Holder received by the
Company within 10 business days after the date of the Company's delivery of its
notice to the Holder of its intention to file such a registration statement,
subject to the conditions and in accordance with the procedures set forth
herein, the Company shall use its best efforts to cause the managing underwriter
or underwriters of a proposed underwritten offering to permit the Registrable
Securities requested by the Holder to be included in the registration statement
for such offering on the same terms and conditions as any similar securities of
the Company included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering indicates in writing to the Holders
its reasonable belief that because of the size of the offering intended to be
made, the inclusion of the Registrable Securities requested to be included might
reasonably be expected to jeopardize the success of the offering of the
securities of the Company to be offered and sold by the Company for its own
account, then the amount of securities to be offered for the account of the
Holder shall be reduced on a pro rata basis with all sellers (whether or not
such sellers are Holders) other than the Company, to the extent necessary to
reduce the total amount of securities to be included in such offering to the
amount recommended by such
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Page 11 of 23 Pages
managing underwriter or underwriters. The Company will bear all Registration
Expenses (as hereinafter defined) in connection with a piggy-back registration.
(b) If the Company at any time files a registration
statement pursuant to the requirements of Section 3 hereof, the Company shall be
entitled to include, in accordance with the proposed method of distribution,
shares of Common Stock, subject to Section 3(b) hereof and such conditions as
may be determined by the managing underwriter if such sale of shares of Common
Stock by the Selling Holders is proposed to be an underwritten offering.
Notwithstanding the foregoing, with respect to an underwritten offering, the
Company shall be entitled to include in such registration statement only that
number of shares of Common Stock that, in the judgment of the managing
underwriter, will not adversely affect the proposed public offering of the
Registrable Securities.
(a) The Company may, without the consent of any
Selling Holder, withdraw any registration statement and abandon any proposed
offering initiated by the Company, notwithstanding the request of a Holder to
participate therein in accordance with this Section 2, if the Company determines
that such action is in the best interests of the Company.
3. Demand Registration Rights.
(a) Upon the written request by one or more Holders
of the Registrable Securities that the Company effect the registration of such
Registrable Securities under the Act specifying the aggregate number of shares
of Registrable Securities requested to be registered and the intended method or
methods of disposition thereof, including the name of the selected managing
underwriter, if any, the Company will use its best efforts to file a
registration statement covering such Registrable Securities of such Holder or
Holders within 30 days after receipt of such request (but in no event later than
45 days after such receipt) and to have such registration statement declared
effective within 30 days of filing, for disposition in accordance with the
intended method or methods of disposition stated in such request provide,
however, that the Company shall not be required to take any action pursuant to
this Section 3:
(i) if, prior to the date of such request,
the Company shall have effected two registrations pursuant to this Section 3 in
which the Selling Holders are able to sell all of the Registrable Securities
included in the registration request of such Holders;
(ii) within a period of 60 days after the
effective date of any other registration statement relating to the Common Stock
(other than registration statements on Form S-4 or S-8 or similar forms); or
(iii) if the Registrable Securities which
the Company shall have been requested to register shall have a then current
market value of less than $1,000,000, unless such registration request is for
all remaining Registrable Securities;
provided further, however, that the Company shall be permitted to satisfy its
obligations under this Section 3(a) by amending (to the extent permitted by
applicable law) any registration statement (including any "shelf" registration
statement) previously filed by the Company under the Act so that such
registration statement, as amended, shall permit the disposition (in
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Page 12 of 23 Pages
accordance with the intended methods of disposition specified as aforesaid) of
the Registrable Securities for which a demand for registration has been made
under this Section 3(a).
(b) The Company will not include any securities which
are not Registrable Securities in any registration statement without the prior
written consent of the Holders of a majority in number of the Registrable
Securities covered by such Registration Statement.
(c) If any offering pursuant to a registration
statement is an underwritten offering, the Company will select a managing
underwriter or underwriters to administer the offering, which managing
underwriter or underwriters shall be reasonably satisfactory to the Holders of a
majority in number of the Registrable Securities to be included in the
registration statement.
(d) The Company shall be permitted to delay the
filing of any registration statement or delay its effectiveness for a reasonable
period of time (not to exceed 120 days) if, in the good faith judgment of the
Company, such delay is necessary in light of pending financing transactions,
corporate reorganizations or other events involving the Company. The Company
shall not be obligated to prepare and file any registration statement pursuant
to this Section 3 at any time when the Company, in its good faith judgment,
reasonably believes that the filing thereof at the time requested, or the
offering of Registrable Securities pursuant thereto, would materially adversely
affect a pending or scheduled public offering of securities of the Company or an
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations or discussions of pending proposals with respect
thereto or might materially adversely affect the business or prospects of the
Company in view of disclosures that may be required thereby involving any
threatened litigation, claim, assessment or governmental investigation or any
facts or circumstances relating thereto. Once the cause of such delay is
eliminated, the Company shall promptly notify the Holders, and as soon as the
Holders request the Company to proceed, the Company shall use its best efforts
to cause such offering to be registered under the Act and qualify under the
securities laws of such states that may be required.
(e) The Company shall not be required to furnish or
have prepared any audited financial statements, except audited financial
statements prepared in the ordinary course of its business. Any request by a
Holder pursuant to this Agreement for registration of the offering, sale and
delivery of Registrable Securities shall provide that the Holder: (i) has a
present intention to sell such Registrable Securities; (ii) agrees to execute
all consents, powers of attorney, registration statements and other documents
required in order to cause such registration statement to become effective;
(iii) agrees, if the offering is at the market, to give the Company written
notice of the first bona fide offering of such Registrable Securities and to use
the prospectus forming a part of such registration statement for only a period
of 90 days; and (iv) subject to adverse events regarding the selling price of
the Registrable Securities, agrees to utilize the proposed method of
distribution of the Registrable Securities. The Holders agree that, in disposing
of the Registrable Securities owned by them, each of them will comply with
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Page 13 of 23 Pages
Rules 10b-2, 10b-6 and 10b-7 and any other applicable rules promulgated by the
Commission under the Exchange Act.
4. Restrictions on Public Sale by Holder of Registrable
Securities.
To the extent not inconsistent with applicable law, the Holder
agrees not to effect any public sale or distribution of the security being
registered or a similar security of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, including a sale
pursuant to Rule 144 under the Act, during the 90-day period (or such shorter
period as may be required by the Company or the managing underwriter or
underwriters with respect to the Company or any officer or director or
shareholder of the Company) beginning on the effective date of a registration
statement other than a shelf registration statement (except, in each case, as
part of such registration), if and to the extent requested by the Company in the
case of a non-underwritten public offering or if and to the extent requested by
the managing underwriter or underwriters in the case of an underwritten public
offering.
5. Registration Procedures.
Whenever the Holder has requested that any Registrable
Securities be included in a registration pursuant to Section 2 or 3 hereof, the
Company shall (unless such registration statement is not filed or is withdrawn)
use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as soon
as reasonably practicable, and in connection with any such request, the Company
shall (unless such registration statement is not filed or is withdrawn):
(a) (i) prior to filing a registration statement or
prospectus or any amendments or supplements thereto, furnish to each Selling
Holder and counsel selected by each Holder copies of all such documents proposed
to be filed, which documents will be subject to the review of such counsel, (ii)
furnish to the Selling Holder, prior to filing a registration statement, copies
of such registration statement as proposed to be filed, and thereafter furnish
to the Selling Holder such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as the Selling Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Selling Holder, and (iii) after the filing of the
registration statement, promptly notify the Selling Holder of Registrable
Securities covered by such registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(b) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as the Selling Holder reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable the
Selling Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by the Selling Holder; provided, however, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (b), (ii) subject itself to taxation in any
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Page 14 of 23 Pages
such jurisdiction where it is not then so subject or (iii) consent to general
service of process in any such jurisdiction;
(c) use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holder thereof to consummate the disposition
of such Registrable Securities;
(d) notify the Selling Holder, at any time when a
prospectus relating thereto is required to be delivered under the Act, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to the Selling Holder any such supplement or amendment;
(e) enter into or arrange for the furnishing of
customary agreements and documents (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Securities;
(f) make available for inspection by the Selling
Holder, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other professional
retained by the Selling Holder or underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement. The Selling
Holder agrees that information obtained by it as a result of such inspections
which is material and deemed confidential shall not be used by it as the basis
for any market transactions in securities of the Company unless and until such
is made generally available to the public. The Selling Holder further agrees
that it will, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the Company, at
the Company's expense, to undertake appropriate action to prevent disclosure of
the Records deemed confidential;
(g) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act; and
(h) use its best efforts to cause all such
Registrable Securities to be quoted on the Nasdaq SmallCap Market System or to
be listed on any securities exchange on which the Common Stock is then listed.
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Page 15 of 23 Pages
The Company may require the Selling Holder as to which any
registration is being effected to furnish to the Company such information
regarding the Selling Holder and the distribution of such Registrable Securities
as the Company may from time to time reasonably request in writing and such
other information as may be legally required in connection with such
registration.
The Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5(d) hereof, the Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until the Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(d) hereof, and, if
so directed by the Company, the Selling Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in the
Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. The Selling Holder
also agrees to notify the Company of any event relating to the Selling Holder
that occurs that would require the preparation of a supplement or amendment to
the prospectus so that such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
6. Registration Expenses.
All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on the Nasdaq SmallCap Market
System and all securities exchanges on which similar securities issued by the
Company are then quoted or listed, and fees and disbursements of counsel for the
Company and its independent public accountants (including the expenses of any
special audit or comfort letters required by or incident to such performance),
securities act liability insurance (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the Company
in connection with such registration, and fees and expenses of other persons
retained by the Company, in connection with each registration hereunder (but not
including any underwriting discounts or commissions attributable to the sale of
Registrable Securities or the fees and expenses of counsel for the Selling
Holder) (collectively, the "Registration Expenses") will be borne by the
Company.
7. Indemnification; Contribution.
(a) Indemnification by the Company. To the extent
permitted by applicable law, the Company agrees to indemnify and hold harmless
each Selling Holder, its officers, directors, partners, attorneys and agents and
each person, if any, who controls a Selling Holder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages (whether in contract, tort or otherwise), liabilities
and expenses (including reasonable costs of investigation) whatsoever (as
incurred or suffered)
<PAGE>
Page 16 of 23 Pages
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus relating
to the Registrable Securities or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Selling Holder or on
behalf of such Selling Holder expressly for use therein and provided, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, the indemnity agreement contained
in this paragraph shall not apply to the extent that any such loss, claim,
damage, liability or expense results from the fact that a current copy of the
prospectus was not sent or given to the person asserting any such loss, claim,
damage, liability or expense at or prior to the written confirmation of the sale
of the Registrable Securities concerned to such person if it is determined that
the Company had previously provided such Selling Holder with such current copy
of the prospectus, it was the responsibility of such Selling Holder to provide
such person with such current copy of the prospectus and such current copy of
the prospectus would have cured the defect giving rise to such loss, claim,
damage, liability or expense. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers, partners and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Selling Holder provided in this
Section 7 or such other indemnification customarily obtained by underwriters at
the time of offering.
(b) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental investigation) shall be brought
or asserted against a Selling Holder (or its officers, directors, partners,
attorneys or agents) or any person controlling such Selling Holder in respect of
which indemnity may be sought from the Company, the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Selling Holder, and shall assume the payment of all expenses. Each Selling
Holder or any controlling person of a Selling Holder shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Selling Holder or such controlling person unless (i) the Company has agreed
to pay such fees and expenses or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include both the Selling Holder or
such controlling person and the Company, and the Selling Holder or such
controlling person shall have been advised by counsel that there may be one or
more legal defenses available to such Selling Holder or such controlling person
which are different from or additional to those available to the Company (in
which case, if such Selling Holder or such controlling person notifies the
Company in writing that it elects to employ separate counsel at the expense of
the Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of such Selling Holder or such controlling
person; it being understood, however, that the Company shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for each Selling Holder, which firm shall be designated in
writing by such Selling Holder). The Company
<PAGE>
Page 17 of 23 Pages
shall not be liable for any settlement of any such action or proceeding effected
without the Company's written consent, but if settled with its written consent,
or if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless each Selling
Holder and controlling person from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
(c) Indemnification by Holder of Registrable
Securities. The Selling Holder agrees to indemnify and hold harmless the
Company, its directors and officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Selling Holder, but only with respect to information furnished in writing by
the Selling Holder or on the Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its directors or
officers, or any such controlling person, in respect of which indemnity may be
sought against a Selling Holder, such Selling Holder shall have the rights and
duties given to the Company, and the Company or its directors or officers or
such controlling person shall have the rights and duties given to a Selling
Holder, by the preceding paragraph. The Selling Holder also agrees that it will
enter into an indemnity agreement to indemnify and hold harmless underwriters of
the Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 7(c). Notwithstanding
the foregoing, the liability of a Selling Holder for all claims pursuant to this
Section 7(c) shall not exceed the amount of the aggregate proceeds to the
Selling Holder from such offering.
(d) Contributions. If the indemnification provided
for in this Section 7 is unavailable to the Company, a Selling Holder or the
underwriters in respect of any losses, claims, damages, liabilities or judgments
referred to herein, then each such indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) as between the Company and such Selling Holder on the one hand and
the underwriters on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Company and a Selling Holder on the one
hand and the underwriters on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and such Selling Holder on the one hand and of
the underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations and (ii) as between the
Company, on the one hand, and a Selling Holder on the other, in such proportion
as is appropriate to reflect the relative fault of the Company and of such
Selling Holder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and a Selling Holder on the one hand and the underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and such Selling Holder bear to the total
underwriting discounts and commissions received by the underwriters, in each
case as set forth in the table on
<PAGE>
Page 18 of 23 Pages
the cover page of the prospectus. The relative fault of the Company and such
Selling Holder on the one hand and of the underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such Selling
Holder or by the underwriters. The relative fault of the Company on the one hand
and of such Selling Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and each Selling Holder agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities, or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(d), no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, and
a Selling Holder shall not be required to contribute any amount in excess of the
amount of the total proceeds to the Selling Holder from such offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) Indemnification Payments. The indemnification and
contribution required by this Section 7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability are incurred.
8. Participation in Underwritten Registrations.
No person may participate in any underwritten registration
hereunder unless such person (a) agrees to sell such person's securities on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
<PAGE>
Page 19 of 23 Pages
9. Rule 144 and Reports.
The Company covenants that, upon any registration statement
covering Company securities becoming effective, it will file the reports
required to be filed by it under the Act and the Exchange Act, and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales under Rule 144 under the Act), and it will take such
other action as any Holder of Registrable Securities may reasonably request, all
to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Act within the limitation
of the exemptions provided by (a) Rule 144 under the Act, as such Rule may be
amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements. Additionally, the Company will
make generally available to its security holders an earning statement satisfying
the provisions of Section 11(a) of the Act no later than 45 days after the end
of the 12-month period beginning with the first day of the Company's first
fiscal quarter commencing after the effective date of any registration statement
including Registrable Securities.
10. Miscellaneous.
(a) Binding Effect. Unless otherwise provided herein,
the provisions of this Agreement shall be binding upon and accrue to the benefit
of the parties hereto and their respective heirs, legal representatives,
transferees, successors and assigns. Without limitation of the foregoing, the
rights and obligations of a Holder hereunder shall be freely transferable and
assignable, without any action of the Company, to any transferee of the
Registrable Securities.
(b) Amendment. This Agreement may be amended or
terminated only by a written instrument signed by the Company and each of the
Holders.
(c) Applicable Law. The internal laws of the State of
Texas (without regard to choice of law provisions thereof) shall govern the
interpretation, validity and performance of the terms of this Agreement.
(d) Notices. All notices provided for herein shall be
in writing and shall be deemed to have been duly given if delivered personally,
sent via overnight delivery or sent by registered or certified mail, postage
prepaid:
(i) if to the Company, to:
Drypers Corporation
1415 West Loop North
Houston, Texas 77055
Attention: Mr. Walter V. Klemp
<PAGE>
Page 20 of 23 Pages
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney Suite 5100
Houston, Texas 77010
Attention: Mr. Robert F. Gray, Jr.
(ii) if to the Investors, to each of:
Equus II Incorporated
2929 Allen Parkway, 25th Floor
Houston, Texas 77019
Attention: Mr. Nolan Lehmann
Davis Venture Partners
12 Greenway Plaza, 6th Floor
Houston, Texas 77054
Attention: Mr. Phillip A. Tuttle
Triad Ventures Limited II, L.P.
4600 Post Oak Place, Suite 100
Houston, Texas 77027
Attention: Ms. Mary D. Bass
Heartland Advisors
7990 Milwaukee Street
Milwaukee, Wisconsin 53202
Attention: Mr. Kevin Clark
Antar & Co.
600 Jefferson, Suite 350
Houston, Texas 77002
Attention: Mr. Edward R. Naumes
Meridian Fund, Ltd.
601 Jefferson, Suite 4000
Houston, Texas 77002
Attention: Mr. Robert T. Arnold
Mr. T. Jack Gainer, Jr.
8216 Davington Drive
Dublin, Ohio 430017
Mr. Joe D. Tanner
17507 N.E. 33rd Avenue
Ridgefield, Washington 98642
<PAGE>
Page 21 of 23 Pages
with a copy to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, Texas 77002-4995
Attention: Mr. Charles Szalkowski
(e) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one instrument.
(f) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement shall remain in full force and
effect.
<PAGE>
Page 22 of 23 Pages
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
DRYPERS CORPORATION
By:_________________________________________
Name:
Title:
EQUUS II INCORPORATED
By:_________________________________________
Name:
Title:
DAVIS VENTURE PARTNERS
By:_________________________________________
Name:
Title:
TRIAD VENTURES LIMITED II, L.P.
By:_________________________________________
Name:
Title:
HEARTLAND ADVISORS
By:_________________________________________
Name:
Title:
<PAGE>
Page 23 of 23 Pages
ANTAR & CO.
By:_________________________________________
Name:
Title
MERIDIAN FUND, LTD.
By: Meridian Advisors, Ltd., as General
Partner of Meridian Fund, Ltd.
By: Meridian, Inc., as General
Partner of Meridian Advisors, Ltd.
By:_________________________________________
Name:
Title:
/s/ T. Jack Gainer, Jr.
____________________________________________
T. Jack Gainer, Jr.
/s/ Joe D. Tanner
____________________________________________
Joe D. Tanner
