UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 8-K
PURSUANT OF SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 10, 1997
OMNI USA, INC.
(Exact name of registrant as specified in its Charter)
NEVADA 0-17493 88-0237223
(State of Incorporation) (Commission File No.) (IRS Identification No.)
7502 MESA ROAD, HOUSTON, TEXAS 77028
(Address of Principal Executive Offices)
Registrant's Telephone Number: 713-635-6331
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OMNI USA, INC.
Item 1. Changes in Control of Registrant.
None.
Item 2. Acquisitions or Disposition of Assets.
None.
Item 3. Bankruptcy or Receivership.
None.
Item 4. Changes in Registrant's Certifying Accountants.
None.
Item 5. Other Events.
Attached Press Release.
Item 6. Resignation of Directors.
None.
Item 7. Financial Statements and Exhibits.
Attached:
10.10 Mutual Release and Settlement Agreement effective
June 30, 1997;
10.11 Registration Rights Agreement effective June 30, 1997;
10.12 Amendment to Lease Agreement dated August 1, 1997;
10.13 Assignment Agreement dated August 15, 1997.
99.1 Press Release dated September 10, 1997.
2
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OMNI USA, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMNI USA, INC.
(Registrant)
Date: September 10, 1997 By: /S/ MICHAEL A. ZAHORIK
Michael A. Zahorik
Executive Vice President &
Chief Operating Officer
3
EXHIBIT 10.10
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT (this "AGREEMENT") is dated
as of this ____ day of August, 1997 to be effective as of June 30, 1997, and is
by and among OMNI U.S.A., INC., a Nevada corporation ("Company"), and its wholly
owned subsidiary, OMNI USA, Inc., a Washington corporation ( "SUB"), EDWARD L.
DANIEL ("MR. DANIEL") and JOAN J. DANIEL ("MRS. DANIEL"), each individuals
resident in Texas (collectively referred to from time to time herein as the
("DANIELS"), and DANIEL DEVELOPMENT COMPANY, a Washington general partnership
("DDC").
RECITALS:
WHEREAS, the Company has issued to Mr. and Mrs. Daniel the following
capital stock of the Company: (i) Ten thousand (10,000) shares of the Company's
Class B Preferred Stock (the "DANIEL CLASS B PREFERRED STOCK"); (ii) Class A
Warrants to purchase 656,101 shares of Common Stock of the Company at $4.00 per
share (the "DANIEL CLASS A WARRANTS"); and (iii) Class B Warrants to purchase
656,101 shares of Common Stock of the Company at $6.00 per share (the "DANIEL
CLASS B WARRANTS"; together with the Daniel Class B Preferred Stock and the
Daniel Class A Warrants, the "DANIEL PREFERRED STOCK AND WARRANTS"); and
WHEREAS, pursuant to that certain Lease Agreement dated January 1, 1988
with DDC, as amended (the "HOUSTON LEASE"), the Company and Sub lease from DDC
certain facilities located in Houston, Texas, which lease provides for a term to
expire April 1, 1999 and monthly lease payments of $10,000; and
WHEREAS, the Company and Sub, on the one hand, and DDC and the Daniels on
the other hand, wish to enter into certain arrangements for the settlement of
matters related to the Houston Lease and the Company and the Daniels wish to
enter into certain arrangements for the settlement of matters related the Daniel
Preferred Stock and Warrants, and the parties hereto wish to enter into a
general settlement and release of their disputes and claims; and
WHEREAS, the Company's board of directors, including a majority of its
disinterested directors, has approved the Company's entering into this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, covenants and releases made herein, the parties hereto agree as
follows:
1. CASH AT CLOSING. At the Closing the Company or Sub shall pay to each of
Joan Daniel and Ed Daniel the sum of $32,500 and shall pay to DDC $10,000, which
$10,000 payment represents the rent payment under the Houston Lease for July
1997.
2. SERVICES AGREEMENT TERMINATION. In consideration for Mr. Daniel's
agreement to terminate and cancel all prior agreements to provide services to
the Company, the enforceability of which are in dispute, the Company and Sub
agree to pay Mr. Daniel $20,000 per month, payable in $10,000 portions on the
1st and 15th days of each month and beginning on the 1st day of the month
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immediately following Closing and continuing on the 1st of each month thereafter
for a total of 12 months. The Daniels hereby irrevocably direct payment of the
$10,000 amount payable on the 1st day of each month to Joan Daniel and payment
of the amount payable on the 15th day of each month to Ed Daniel. Mr. Daniel
shall be accorded, and the Company or Sub shall pay for, normal COBRA health
insurance benefits for a period of twelve (12) months beginning on the date of
this Agreement. Additional COBRA benefits after such period shall be at the
expense of Mr. Daniel.
3. COMMON STOCK.
(a) At the Closing, the Company shall deliver to each of Joan Daniel and
Ed Daniel certificates representing 375,000 shares of the Company's Common Stock
(the "SETTLEMENT SHARES"), for a total of 750,000 shares. The Settlement Shares
have been issued in exchange for the Daniel Class B Preferred Stock.
(b) The Daniels each agree that the Settlement Shares will be non-voting
shares for the first two (2) years such shares are held by either of them or any
of their successors, assigns or transferees; provided, however, that (i) the
purchaser of any of such shares in normal market transactions, so long as such
party is identified and is unaffiliated with either of the Daniels shall be
entitled to vote such shares free from the provisions of this paragraph and (ii)
the holder of the Settlement Shares may vote such shares in any vote taken for
the purpose of approving a merger or consolidation in which the Company is not a
surviving corporation, the surviving corporation's shares are publicly held
after the merger or consolidation, and the shareholders of the Company after
such merger or consolidation will own less that 50% of the stock of the
surviving entity; a sale of all or substantially all of the assets; or the sale
of Company stock in a manner that results in a change in control of the Company.
Each of Joan Daniel and Ed Daniel agrees that on the certificates representing
the Settlement Shares there shall appear the following legend:
PURSUANT TO THAT CERTAIN MUTUAL RELEASE AND SETTLEMENT AGREEMENT DATED
AUGUST ___, 1997 BETWEEN OMNI USA, INC., EDWARD L. DANIEL, JOAN DANIEL,
AND CERTAIN OTHER PARTIES MORE PARTICULARLY DESCRIBED THEREIN, THE SHARES
REPRESENTED HEREBY MAY NOT BE VOTED UNTIL TWO (2) YEARS AFTER THE DATE OF
SUCH SETTLEMENT AGREEMENT; PROVIDED, HOWEVER, THAT THE SHARES MAY BE VOTED
IN ANY VOTE TAKEN FOR THE PURPOSE OF APPROVING CERTAIN MERGERS, SALES OF
ALL OR SUBSTANTIALLY ALL OF THE ASSETS, OR SALES OF COMPANY STOCK THAT
RESULTS IN A CHANGE IN CONTROL OF THE COMPANY.
The Company will remove such legend upon demand after such two (2) year period
has expired or at such earlier time that the other conditions for the removal of
such legend have been satisfied.
(c) Simultaneously with the execution hereof, the Company and the Daniels
shall enter into a Registration Rights Agreement in the form attached hereto as
EXHIBIT 1 (the "Registration Rights Agreement").
4. HOUSTON LEASE; CERTAIN RELEASES. DDC and the Company have
simultaneously executed an amendment of the Houston Lease, such amendment to be
effective as of the date hereof, and containing the following terms:
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(a) the term is for a period of five (5) years from the effective date of
such amendment; provided, however, that DDC may terminate the lease at any time
upon 6 months' written notice to the Company;
(b) the monthly rental amount shall be $8,000 per month; and
(c) the Company shall have the right to sublease any part or all of the
leased premises upon notice to DDC to any tenant whose use could not be expected
to expose the premises to wear and tear or damage beyond that permitted by the
lease or to environmental risks (but any such sublease shall not relieve the
Company of its obligations under the Houston Lease).
DDC and the Daniels hereby waive any default by the Company that may have
occurred under the Houston Lease prior to the date hereof and any claim either
may have against the Company for rental or other payments accruing prior to the
date hereof, except in both cases any default or right of payment arising out of
Tenant's violation of its covenants contained in Paragraphs 5, 6 or the first
sentence of Paragraph 8 of the Houston Lease. DDC and the Daniels acknowledge
and agree that no rental payments are due for any periods prior to July 31,
1997.
5. DANIEL PREFERRED STOCK AND WARRANTS. The Daniels hereby convey,
transfer and deliver to the Company the Daniel Preferred Stock and Warrants and
have executed appropriate stock powers to that effect.
6. ASSIGNMENT AGREEMENT. Conditioned upon entry into this Agreement but
effective immediately prior thereto, the parties and others have entered an
Assignment Agreement transferring (i) liabilities for payment of certain
obligations and liabilities of the Company to the Daniels under that certain
Equity Contract Note of the Company and for accrued but unpaid dividends and
(ii) liabilities for payment of certain liabilities and obligations (a) of
Daniel Development Company, a general partnership of which Mr. and Mrs. Daniel
are the sole general partners ("DDC") to the Company under a certain note of DDC
(including payment of accrued interest) payable to the Company and (b) of
LaPlante Compressor, Ltd. ("LaPlante"), to the Company for obligations of
payment and performance under its lease with an affiliate of Omni and for
payment of other amounts due to Omni and its affiliates. Upon its vacating the
leased premises as provided herein, LaPlante shall have the right to obtain a
release from all liabilities under such lease or otherwise from the Company.
<PAGE>
7. RELEASES.
(a) In consideration for the payment and consideration described above,
and except for the amended Houston Lease and the obligations of the Company
stated herein as continuing after the execution hereof, DDC and each of the
Daniels release the Company, its subsidiaries, and all of its agents, officers,
directors, attorneys, insurers, and employees, of and from any past, present, or
future actions, causes of action, claims, demands, obligations (including any
dividend obligations), debts, or other financial obligations, controversies,
liabilities, suits, damages, costs, attorneys' fees, expenses, compensation, and
claims of any kind whatsoever. Notwithstanding the foregoing, neither Ed Daniel
or Joan Daniel intend to release, or do release, the Company or Sub from any
existing obligation to indemnify either of them from unaffiliated third parties
for his or her actions as an employee, officer or director prior to this date
under applicable state law or the bylaws of the Company or of Sub. Mr. Daniel
acknowledges that any and all agreements relating to his employment or to his
being a consultant for the Company or any subsidiary are terminated and
canceled; each of the Daniels and DDC agree that all debts, payables and
obligations of the Company and Sub have been canceled.
(b) In consideration for the payment and consideration described above,
and except for the amended Houston Lease and the obligations of Mr. Daniel
stated herein as continuing after the execution hereof (including the agreement
not to vote the Settlement Shares), the Company and Sub release DDC, each of the
Daniels (individually and in their capacity as partners of DDC) and all of their
agents, attorneys, insurers, and employees, of and from any past, present, or
future actions, causes of action, claims, demands, obligations, debts, or other
financial obligations, controversies, liabilities, suits, damages, costs,
attorneys' fees, expenses, compensation, and claims of any kind whatsoever. The
Company agrees that all debts, payables and obligations of the Daniels and DDC
have been canceled.
8. REPRESENTATIONS AND WARRANTIES OF DDC AND THE DANIELS.
(a) DDC represents and warrants to the Company that each of the following
is true and correct:
(1) DDC has the authority to enter into this Agreement.
(2) The execution and delivery by DDC of this Agreement and the
performance of the transactions contemplated hereby do not contravene any
law, order, decree, or any contractual restriction contained in any
agreement or instrument binding on DDC.
(3) This Agreement is the legal, valid, and binding obligation of
DDC and enforceable against DDC in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, arrangement, moratorium or other similar laws from time to
time in effect that affect creditors' rights generally.
(b) Mr. and Mrs. Daniel, jointly and severally, represent and warrant to
the Company that each of the following is true and correct:
(1) The Daniels are the lawful owners, beneficially and of record,
of the Daniel
<PAGE>
Preferred Stock and Warrants free and clear of any liens, claims,
encumbrances, pledges, other security interests, or any other rights of
third parties of any kind, and no presently effective Uniform Commercial
Code financing statement covering any of the Daniel Preferred Stock and
Warrants is on file in any public office. The Daniels are conveying good
and marketable title to the Daniel Preferred Stock and to the Warrants,
free and clear of any liens, claims, encumbrances, pledges, other security
interests, or any other rights of third parties of any kind, including any
claims of Mrs. Daniel.
(2) The execution, delivery and performance by DDC and by each of
Mr. and Mrs. Daniel of this Agreement do not contravene any law, order,
decree, or any contractual restriction contained in any agreement or
instrument binding on such Daniel.
(3) This Agreement is the legal, valid, and binding obligation of
each Daniel and enforceable against such Daniel in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, arrangement, moratorium or other similar laws
from time to time in effect that affect creditors' rights generally.
(4) Other than the securities set forth on EXHIBIT 2, the Settlement
Shares, the Daniel Preferred Stock and Warrants constitute all of each
Daniel's interest in the Company, whether in the form of
equity, debt, or otherwise.
(5) The Daniels represent and covenant that LaPlante Compression,
Inc. will vacate the premises it occupies under a lease with an affiliate
of the Company by September 30, 1997.
(6) Each Daniel has been fully advised by its respective counsel
concerning the effect of the sale, conveyance, transfer, and delivery of
the Daniel Preferred Stock and Warrants to the Company.
(7) Each Daniel is sophisticated with respect to the business
affairs of the Company and has received adequate information concerning
the Company from public filings and otherwise and from the opportunity to
ask questions of the management of the Company.
(8) Each Daniel is further sophisticated generally with business and
financial matters and particularly with respect to investments such as the
investment in the Common Stock.
(9) Each Daniel is receiving the Settlement Shares for his or her
account for investment and not with a view to the distribution of such
shares as defined by applicable federal securities laws. Each Daniel
consents to the placement of a further legend on the certificates
representing the Settlement Shares that the Settlement Shares have not
been registered under the Securities Act of 1933, as amended, and may not
be resold without compliance with such act.
(c) Mr. Daniel hereby represents to the Company that he is an adult
competent to enter this Agreement. Mr. Daniel understands that this is a
complete and final release of his claims against the Company. Mr. Daniel is
entering into this Agreement freely and voluntarily, upon the advice of his
attorney. No promises, representations, or statements of the Company, other than
those contained
<PAGE>
herein, have influenced Mr. Daniel in the making of this Agreement. Mr. Daniel
intends this Agreement to be the final and conclusive settlement of all of his
claims against the Company.
(d) Mrs. Daniel hereby represents to the Company that she is an adult
competent to enter this Agreement. Mrs. Daniel understands that this is a
complete and final release of her claims against the Company. Mrs. Daniel is
entering into this Agreement freely and voluntarily, upon the advice of her
attorney. No promises, representations, or statements of the Company or Sub
other than those contained herein, have influenced Mrs. Daniel in the making of
this Agreement. Mrs. Daniel intends this Agreement to be the final and
conclusive settlement of her claims against the Company.
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company and Sub represent and warrant to DDC and the Daniels,
jointly and severally, that each of the following is true and correct:
(1) The Company and Sub are each duly organized and validly existing
under the laws of the state of its incorporation, with adequate corporate
authority to enter into this Agreement.
(2) The execution, delivery and performance of this Agreement, the
Assignment Agreement and that certain Registration Rights Agreement have
been duly authorized by all necessary corporate action, including a vote
by the board of directors of each such corporation and the approval of a
disinterested majority of the board of directors of the Company.
(3) The execution, delivery and performance by the Company and Sub
of this Agreement and the Registration Rights Agreement do not contravene
any law, order, decree, or any contractual restriction contained in any
agreement or instrument binding on either of such corporations.
(4) This Agreement and the Registration Rights Agreement (as to the
Company and not the Sub) are the legal, valid, and binding obligations of
the Company and Sub, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, arrangement, moratorium or other similar laws
from time to time in effect that affect creditors' rights generally.
(5) The Settlement Shares have been duly authorized and issued and
are fully paid and non-assessable.
(6) The Company and Sub each understand that this Agreement, along
with the Assignment Agreement, is a complete and final release of their
claims against DDC and the Daniels. The Company and Sub are entering into
this Agreement freely and voluntarily, upon the advice of their attorneys.
No promises, representations, or statements of the Company or Sub, other
than those contained herein, have influenced the Company or Sub in the
making of this Agreement. The Company and Sub each intend this Agreement,
along with the Assignment Agreement, to be the final and conclusive
settlement of their claims against DDC and the Daniels.
<PAGE>
10. MISCELLANEOUS.
(a) This Agreement may be executed in multiple original counterparts, each
of which shall be an original, but which taken together shall constitute one
instrument.
(b) In the event of a dispute arising under this Agreement, such dispute
shall be arbitrated under the rules of the American Arbitration Association in
Houston, Texas. The reasonable travel costs of the prevailing party in any
arbitration (along with the travel costs of such prevailing party's counsel)
shall be reimbursed by the party or parties not prevailing.
(c) The parties expressly warrant that no promise or inducement has been
offered except as herein set forth and that this Agreement is executed without
reliance upon any statement or representation concerning the nature or extent of
injuries, damages, or legal liability.
(d) The parties fully understand the sum of money mentioned above is all
the money ever to be paid by anyone concerning any claims released hereby. The
parties hereby expressly waive and assume the risk, through mutual mistake or
otherwise, of any claims that exist as of this date but of which they do not
know or suspect to exist, whether through ignorance, oversight, error,
negligence, or otherwise, and which, if known, would materially affect their
decision to enter into this Agreement. The parties assume the risk that any fact
or law may be otherwise than they believe.
(e) This Agreement shall be binding upon and inure to the benefit of the
parties' respective representatives, successors, heirs, and assigns.
(f) Except as otherwise expressly stipulated herein, it is expressly
understood that this Agreement involves a general release of all possible claims
and causes of action of every kind and character and is to be construed and
interpreted liberally to effectuate the maximum protection against liability for
the parties. It is the express intention of the parties to release the other
from any causes of action and claims so that the parties shall not hereafter be
subject to or exposed to any liability whatsoever for contribution, indemnity,
or otherwise to any other person or entity for any damages concerning the
claims.
(g) This Agreement and the consideration herein transferred are purely to
compromise doubtful and disputed claims, avoid litigation and expense, and buy
peace, and no payments made nor any releases or other provision in this
Agreement are in any way an admission of guilt, wrongdoing, fault, or liability,
all guilt, wrongdoing, fault, and liability have been at all times and remain
expressly denied.
(h) No amendment, modification, or alteration of this Agreement shall be
binding unless the same is in writing, dated subsequent to the date of this
Agreement, and duly executed by the parties.
(i) All attorney fees and costs are to be borne by the party incurring
same.
(j) The parties agree to cooperate fully and execute any supplementary
documents and to take any additional actions that may be necessary or
appropriate to give full force and effect to the basic terms and intent of this
Agreement.
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(k) All notices authorized or required hereunder shall be given by
registered or certified mail, return receipt requested and postage prepaid, or
by hand delivery or telecopy, in each case addressed to the party to whom the
notice is given at the address shown opposite such party's signature below.
(l) This Agreement supersedes all prior negotiations, statements and
agreements of the parties hereto and sets forth the entire agreement among the
parties hereto with respect to the subject matter herein.
(m) This Agreement shall be construed under and in accordance with the
laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
OMNI U.S.A., INC.,
A NEVADA CORPORATION
By: _________________________
Name: ______________________
Title: _____________________
OMNI U.S.A., INC.,
A WASHINGTON CORPORATION
By: _________________________
Name: ______________________
Title: _____________________
DANIEL DEVELOPMENT COMPANY
By: _________________________
Name: ______________________
Title: _____________________
_____________________________
EDWARD L. DANIEL
_____________________________
JOAN J. DANIEL
<PAGE>
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
President of OMNI USA, Inc., a Nevada corporation, who, being by me duly sworn,
on his oath stated that he has read the above and foregoing Mutual Release and
Settlement Agreement, that he understands it, and that he executed it for the
purposes and consideration stated in it on behalf of OMNI USA, Inc.
SWORN TO AND SUBSCRIBED BEFORE ME this ______ day of
_______________, 1997.
_____________________________
Notary Public, State of TEXAS
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
President of OMNI USA, Inc., a Washington corporation, who, being by me duly
sworn, on his oath stated that he has read the above and foregoing Mutual
Release and Settlement Agreement, that he understands it, and that he executed
it for the purposes and consideration stated in it on behalf of OMNI USA, Inc.
SWORN TO AND SUBSCRIBED BEFORE ME this ______ day of
_______________, 1997.
_____________________________
Notary Public, State of TEXAS
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
President of Daniel Development Company, who, being by me duly sworn, on his
oath stated that he has read the above and foregoing Mutual Release and
Settlement Agreement, that he understands it, and that he executed it for the
purposes and consideration stated in it on behalf of OMNI USA, Inc.
SWORN TO AND SUBSCRIBED BEFORE ME this ______ day of
_______________, 1997.
_____________________________
Notary Public, State of TEXAS
<PAGE>
STATE OF __________ ss.
ss.
COUNTY OF __________ ss.
BEFORE ME, the undersigned authority, on this day personally appeared
Edward L. Daniel who being by me duly sworn, on his oath stated that he has read
the above and foregoing Mutual Release and Settlement Agreement, that he
understands it, and that he executed it for the purposes and consideration
stated in it.
SWORN TO AND SUBSCRIBED BEFORE ME this ______ day of
_______________, 1997.
_____________________________
Notary Public, State of TEXAS
STATE OF __________ ss.
ss.
COUNTY OF __________ ss.
BEFORE ME, the undersigned authority, on this day personally appeared Joan
J. Daniel who being by me duly sworn, on her oath stated that she has read the
above and foregoing Mutual Release and Settlement Agreement, that she
understands it, and that she executed it for the purposes and consideration
stated in it.
SWORN TO AND SUBSCRIBED BEFORE ME this ______ day of
_______________, 1997.
_____________________________
Notary Public, State of TEXAS
I hereby certify that I have fully and completely explained the foregoing
Mutual Release and Settlement Agreement to my client, Edward L. Daniel, and that
he has read and signed it in my presence.
By: _________________________
[____________________]
Attorney for Mr. Daniel
I hereby certify that I have fully and completely explained the foregoing
Mutual Release and Settlement Agreement to my client, Joan J. Daniel, and that
she has read and signed it in my presence.
By: _________________________
[____________________]
Attorney for Mrs. Daniel
EXHIBIT 10.11
OMNI USA, INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of _________________, 1997, by and among OMNI
USA, INC., a Nevada corporation (the "Company"), and Edward L. Daniel and Joan
Daniel (the "Holders"), who are all parties to that certain Mutual Release and
Settlement Agreement of even date herewith (the "Settlement Agreement").
PREAMBLE
The Company wishes to extend registration rights to the Holders pursuant
to the Settlement Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein, the Company and the Holders agree as follows:
SECTION I. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "COMMISSION" shall mean the Securities and Exchange Commission,
or any other Federal agency at the time administering the Securities Act.
(b) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar Federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(c) "HOLDER" shall mean Edward L. Daniel or Joan Daniel or anyone
who holds outstanding Registrable Securities to whom the registration rights
conferred by this Agreement have been transferred in compliance with this
Agreement.
(d) "INITIATING HOLDER" shall mean any Holder or Holders of at least
300,000 of the Registrable Securities originally issued to the Holders.
(e) "REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws of such states in which Holders notify the Company of
their intention to offer Registrable Securities.
(f) "REGISTRABLE SECURITIES" shall mean (i) the Settlement Shares as
defined in the Settlement Agreement, to the extent that such shares have not
been sold to the public; or (ii) stock issued in respect of stock referred to in
(i) above in any reorganization; or (iii) stock issued in respect of the stock
referred to in (i) or (ii) as a result of a stock split, stock dividend,
recapitalization or combination. Notwithstanding the foregoing, Registrable
Securities shall not include otherwise Registrable Securities (i) sold by a
person in a transaction in which his rights under this Agreement are not
properly assigned; or (ii) (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the
<PAGE>
consummation of such sale or (C) the registration rights associated with such
securities have been terminated pursuant to Section 12 of this Agreement.
(g) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
SECTION 2. RESTRICTIONS ON TRANSFERABILITY. The Registrable Securities (as
defined herein) shall not be sold, assigned, transferred or pledged except upon
the conditions specified in this Agreement, which conditions are intended to
ensure compliance with the provisions of the Securities Act. Each Holder will
cause any proposed purchaser, assignee, transferee, or pledgee of the
Registrable Securities held by a Holder to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
SECTION 3. RESTRICTIVE LEGEND. Each certificate representing Registrable
Securities shall (unless other permitted by the provisions of Section 4 below)
be stamped or otherwise imprinted with a legend substantially in the following
form (in addition to any legend required under applicable state securities laws
or otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENTS COVERING THE PURCHASE OF THESE SHARES AND RIGHTS TO REGISTER
THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Holder consents to the Company making a notation on its records and
giving instructions to any transfer agent of the Registrable Securities in order
to implement the restrictions on transfer established in this Agreement.
SECTION 4. NOTICE OF PROPOSED TRANSFER. The Holder of each certificate
representing Registrable Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 4. Each such Holder agrees not
to make any disposition of all or any portion of any Registrable Securities
unless and until:
(a) There is in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
<PAGE>
(b) (i) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with
a detailed statement of the circumstances surrounding the
proposed disposition, and
(ii) If reasonably requested by the Company, such Holder shall
furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company that such disposition shall not
require registration of such shares under the Securities Act.
SECTION 5. DEMAND REGISTRATION.
(a) If the Company shall receive from Initiating Holders a written
request that the Company effect any registration with respect to all or at least
300,000 of the Registrable Securities held by the Holders or their permitted
successors and assigns, the Company shall:
i. promptly give written notice of the proposed registration
to all other Holders; and
ii. as soon as practicable use its best efforts to register
(including, without limitation, the execution of an
undertaking to file post-effective amendments and any other
governmental requirements) all Registrable Securities which
the Initiating Holders request to be registered within twenty
(20) days after receipt of such written notice from the
Company; provided, that the Company shall not be obligated to
file a registration statement pursuant to this Section 5:
(A) prior to August 1, 1998 or after written
notification to the Holders that the Company intends to
effect a registration of its shares (but in such latter
case the registration statement applicable thereto must
be filed within ninety (90) days;
(B) in any particular state in which the Company would
be required to execute a general consent to service of
process in effecting such registration;
(C) within 180 days following the effective date of any
registered offering of the Company's securities to the
general public;
(D) in any registration having an aggregate offering
price (before deduction of underwriting discounts and
expenses of sale) of less than $1,000,000; or
(E) after the Company has effected one such registration
pursuant to this Section 4 and such registration has
been declared or ordered effective.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within ninety (90) days after
receipt of the request or requests of the Initiating Holders and shall use
reasonable best efforts to have such registration statement promptly declared
effective by the
<PAGE>
Commission whether or not all Registrable Securities requested to be registered
can be included; provided, however, that if the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company and its shareholders for such registration statement to be filed
within such ninety-day (90-day) period and it is therefore essential to defer
the filing of such registration statement, the Company shall have an additional
period of not more than ninety (90) days after the expiration of the initial
ninety-day (90-day) period within which to file such registration statement;
provided, that during such time the Company may not file a registration
statement for securities to be issued and sold for its own account.
(b) The Initiating Holders shall distribute the Registrable
Securities covered by their request by means of an "firm commitment"
underwriting, and shall include the identity of the underwriter and information
concerning the terms of the underwriting in the written notice referred to in
subsection 5(a). The right of any Holder to registration pursuant to Section 5
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. The Company shall
(together with all Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 5, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, the Company shall so advise all Holders,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders; provided, however, that securities to be
included in such registration statement as a result of piggyback registration
rights as well as any securities to be offered by the Company, its officers and
employees shall be excluded from the registration statement prior to the
exclusion of any Registrable Securities held by the Holders. If any Holder
disapproves of the terms of the underwriting, he may elect to withdraw therefrom
by written notice to the Company, the managing underwriter and the Initiating
Holders. If, by the withdrawal of such Registrable Securities, a greater number
of Registrable Securities held by other Holders may be included in such
registration (up to the limit imposed by the underwriters) the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities in the same
proportion used in determining the limitation as set forth above. Any
Registrable Securities which are excluded from the underwriting by reason of the
underwriter's marketing limitation or withdrawn from such underwriting shall be
withdrawn from such registration.
SECTION 6. PIGGYBACK REGISTRATION.
(a) If at any time or from time to time, the Company shall determine
to register any of its securities, for its own account or the account of any of
its shareholders, other than a registration relating solely to employee benefit
plans, or a registration relating solely to an SEC Rule 145 transaction, a
transaction relating solely to the sale of debt or convertible debt instruments
or a registration on any form (other than Form S-1, S-2 or S-3, or their
successor forms) which does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of Registrable Securities, the Company will:
(i) give to each Holder written notice thereof as soon as
practicable prior to filing the registration statement; and
<PAGE>
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Securities specified in
a written request or requests, made within fifteen (15) days
after receipt of such written notice from the Company, by any
Holder or Holders, except as set forth in subsection (b)
below.
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to subsection 6(a)(i). In such event, the
right of any Holder to registration pursuant to this Section 6 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, or may exclude
Registrable Securities entirely from such registration. The Company shall so
advise all Holders and the other Holders distributing their securities through
such underwriting pursuant to piggy-back registration rights similar to this
Section 6, and the number of shares of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
allocated among all Holders and other holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders and other securities held by other holders at the time of filing the
registration statement. If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. If, by the withdrawal of such Registrable
Securities, a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the limit imposed by the underwriters),
the Company shall offer to all Holders who have included Registrable Securities
in the registration the right to include additional Registrable Securities. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
SECTION 7. EXPENSES OF REGISTRATION. One half of all expenses incurred in
connection with registrations pursuant to Section 5 hereof and all expenses
incurred in connection with registrations pursuant to Section 6 hereof,
including without limitation all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Company and
expenses of any special audits of the Company's financial statements incidental
to or required by such registration, shall be borne by the Company, except that
the Company shall not be required to pay underwriters' fees, discounts or
commissions relating to Registrable Securities or fees of a separate legal
counsel of a Holder. The remaining one half of the other expenses incurred in
connection with registrations pursuant to Section 5 hereof shall be borne by the
Initiating Holders whose shares are being registered, pro rata.
SECTION 8. REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder participating therein advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense the Company will:
(a) keep such registration pursuant to Section 5 or 6 continuously
effective for a
<PAGE>
period ninety (90) days, or, in each case, such reasonable period necessary to
permit the Holder or Holders to complete the distribution described in the
registration statement relating thereto, whichever first occurs;
(b) promptly prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act; and to keep such registration statement effective for that
period of time specified in Section 8(a) above;
(c) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(d) use reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment;
(e) use commercially reasonable efforts to register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions as any Holder or underwriter reasonably requires, and keep
such registration or qualification effective during the period set forth in
Section 8(a) above;
(f) cause all Registrable Securities covered by such registrations
to be listed on each securities exchange, including NASDAQ, on which similar
securities issued by the Company are then listed; and
(g) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(h) notify each Holder, at any time a prospectus covered by such
registration statement is required to be delivered under the Securities Act, of
the happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(i) take such other actions as shall be reasonably requested by any
Holder.
SECTION 9. INDEMNIFICATION.
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Section 5 or Section 6, the
Company will indemnify and hold harmless each Holder of such Registrable
Securities thereunder against any losses, claims, damages or liabilities, joint
or several, to which such Holder may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material
<PAGE>
fact required to be stated therein or necessary to make the statements therein
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act or any state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, and will reimburse each such Holder for
any reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company in writing by such Holder specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable
to such Holder are included in the securities as to which such registration is
being effected, indemnify and hold harmless the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company and each
underwriter within the meaning of the Securities Act, and each other such
Holder, each of its officers, directors and partners and each person controlling
such Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or 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, and will reimburse
the Company, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the 'extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder specifically for use therein.
(c) Each party entitled to indemnification under this Section 9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claims as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
(d) Notwithstanding the foregoing, to the extent that the provisions
on indemnification contained in the underwriting agreements entered into among
the selling Holders, the Company and the underwriters in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall be controlling as to the
Registrable Securities included in the public offering.
<PAGE>
(e) If the indemnification provided for in this Section 9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other hand in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to this Section 9(e) shall be limited to an amount equal to
the proceeds to such Holder of the Restricted Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action or any
substantially similar loss, claim, damage, liability or action arising from the
sale of such Restricted Securities).
(f) Survival of Indemnity. The indemnification provided by this
Section 9 shall be a continuing right to indemnification and shall survive the
registration and sale of any securities by any Person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
SECTION 10. LOCKUP AGREEMENT. In consideration for the Company agreeing to
its obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's securities (except for any registration which the
Initial Holders have been excluded from reasonably participating) upon the
reasonable request of the Company and the underwriters managing any underwritten
offering of the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Registrable
Securities (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time not to exceed 180 days from the effective date of such
registration as the Company and the underwriters may specify, so long as all
Holders or stockholders holding more than one percent of the outstanding common
stock and all officers and directors of the Company are bound by a comparable
obligation provided, however, that nothing herein shall prevent any Holder that
is a partnership or corporation from making a distribution of Registrable
Securities to the partners or shareholders thereof that is otherwise in
compliance with applicable securities laws, so long as such distributees agree
to be so bound.
SECTION 11. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration referred to herein.
<PAGE>
SECTION 12. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities of a Holder and keep information
available granted to a Holder by the Company under Sections 5 and 6 may be
assigned by a Holder to a transferee or assignee who receives at least 350,000
shares of Registrable Securities (as adjusted for stock splits and the like);
provided, that the Company is given written notice by the Holder at the time of
or within a reasonable time after said transfer, stating the name and address of
said transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned. Nothwithstanding the foregoing, a
holder may assign his or her rights hereunder to any financial institution in
connection with a pledge of Registrable Securities.
SECTION 13. TERMINATION OF RIGHTS. The rights of any particular Holder to
cause the Company to register securities under Section 5 or Section 6 shall
terminate with respect to such Holder shall terminate at 5:00 p.m.
Houston time four (4) years after the date hereof.
SECTION 14. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Holders as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other
agency of government, the Articles of Organization or By-laws of the
Company or any provision of any indenture, agreement or other instrument
to which it or any or its properties or assets is bound, conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument or
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance
and moratorium laws and other laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies as such remedies may be limited by equitable principles
of general applicability (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 15. MISCELLANEOUS.
(a) Amendments. This Agreement may be amended only by a writing
signed by the Holders of more than fifty percent (50%) of the Registrable
Securities, as constituted from time to time. The Holders hereby consent to
future amendments to this Agreement that permit future investors, other than
employees, officers or directors of the Company, to be made parties hereto and
to become Holders of Registrable Securities; provided, however, that no such
future amendment may materially impair the rights of the Holders hereunder
without obtaining the requisite consent of the Holders, as set forth above.
(b) Counterparts. This Agreement may be executed in any number
of counterparts, all of which shall constitute a single instrument.
<PAGE>
(c) Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and may be sent initially by facsimile
transmission and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to a
Holder, at such Holder's address set forth on the books of the Company, or at
such other address as such Holder shall have furnished to the Company in
writing, or (b) if to any other holder of any Registrable Securities, at such
address as such holder shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such securities who has so furnished an address to
the Company, or (c) if to the Company, one copy should be sent to the Company's
current address at 7502 Mesa Road, Houston Texas 77028, or at such other address
as the Company shall have furnished to the Holders. Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
or having been given when delivered if delivered personally, or, if sent by
first class, postage pre-paid mail, at the earlier of its receipt or seventy-two
(72) hours after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and mailed as
aforesaid.
(d) Non public information. Any other provisions of this agreement
to the contrary notwithstanding, the Company's obligation to file a registration
statement, or cause such registration statement to become and remain effective,
shall be suspended for a period not to exceed thirty (30) days (and for periods
not exceeding, in the aggregate, sixty (60) days in any 24-month period) if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
(e) Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(f) Dilution. If, and as often as, there is any change in the Common
Stock by way of a stock split, stock dividend, combination or reclassification,
or through a merger, consolidation, reorganization or recapitalization, or by
any other means, appropriate adjustment shall be made in the provisions hereof
so that the rights and privileges granted hereby shall continue with respect to
the Common Stock as so changed.
(g) Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Texas without regard to principles of conflict of
law.
OMNI USA, INC.
By: _________________________
Name: _______________________
Title: ______________________
_____________________________
EDWARD L. DANIEL
_____________________________
JOAN DANIEL
EXHIBIT 10.12
AMENDMENT TO LEASE AGREEMENT
This Amendment is dated this _____ day of ____________________, and
effective August 1, 1997, by and between Omni USA, Inc. (the "Tenant") and
Daniel Development Company ("DDC" or "Landlord").
WHEREAS, Tenant and Landlord entered into a Lease Agreement dated January
1, 1988 (the "Lease"), a copy of which is attached hereto as Exhibit A;
WHEREAS, the parties desire to amend certain provision of the Lease;
WHEREAS, All capitalized terms used herein shall have the meanings set
forth in the Lease.
1. AMENDMENTS. Each of the undersigned parties hereby agree that the
following sections of the Lease shall be amended as follows:
A. SECTION 2 shall be amended in its entirety to read as follows:
Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, on the terms and conditions hereafter set forth, that
certain real property, an the building and all other improvements
thereon, situated in the City of Houston, State of Texas, commonly
known as 7502 Mesa Drive and described in Schedule "A" attached
hereto and made a part hereof for all purposes (said real property,
building and improvements hereinafter being referred to as the
"Premises").
B. SECTION 3 shall be amended in its entirety to read as follows:
The term of this Lease shall be for a period of five (5) years from
the effective date of this Amendment, provided, however that
Landlord may terminate the Lease at any time upon six month's
written notice to Tenant.
C. SECTION 4 shall be amended in its entirety to read as follows:
The lease payment for the term of the Lease shall be $8,000 per
month "Triple Net," that is, Tenant shall be responsible for payment
of all taxes, insurance and utilities. Lease payments shall be made
in advance on the first day of each month during the term hereof
beginning August 1, 1997. Rent shall be payable without notice or
demand and without any deduction, off-set, or abatement in lawful
money of the United States to Landlord at the address provided in
writing to Tenant by Landlord.
<PAGE>
D. SECTION 9 shall be deleted in its entirety, and shall be replaced
with the following:
[Intentionally deleted]
E. SECTION 10 shall be amended in its entirety to read as follows:
RIGHT TO SUBLEASE. Tenant shall have the right to sublease any part
or all for the leased premises upon notice to Landlord to any
sub-tenant whose use could not be expected to expose the premises to
wear and tear or damage or to environmental risks beyond that
permitted by the Lease (but any such sublease shall not relieve
Tenant of its obligations under the Lease).
2. CONFIRMATION. The parties represent that there are no other executed
amendments to the Lease. Except as expressly amended herein, all other
terms and conditions of the Lease shall remain unchanged and are in full
force and effect in accordance with its terms.
Executed and to be effective as of the date first set forth above.
Daniel Development Company
By: ______________________
Name: Edward L. Daniel
Title: Managing Partner
Omni USA, Inc., a Nevada corporation
By: ______________________
Name: Jeffrey K. Daniel
Title: President
Omni USA, Inc., a Washington corporation
By: ______________________
Name: Jeffrey K. Daniel
Title: President
2
<PAGE>
STATE OF HAWAII ss.
ss.
COUNTY OF ____________ ss.
BEFORE ME, the undersigned authority, on this day personally appeared
Managing Partner of Daniel Development Company, a California General
Partnership, who, being by me duly sworn, on his oath stated that he has read
the above and foregoing Amendment to Lease Agreement, that he understands it,
and that he executed it on behalf of Daniel Development Company.
SWORN TO AND SUBSCRIBED BEFORE ME this _____ day of ____________, 1997.
------------------------------------
Notary Public, State of Texas
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
President of Omni USA, Inc., a Washington corporation, who, being by me duly
sworn, on his oath stated that he has read the above and foregoing Amendment to
Lease Agreement, that he understands it, and that he executed it on behalf of
Omni USA, Inc.
SWORN TO AND SUBSCRIBED BEFORE ME this _____ day of ____________, 1997.
-------------------------------------
Notary Public, State of Texas
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
President of Omni USA, Inc., a Nevada corporation, who, being by me duly sworn,
on his oath stated that he has read the above and foregoing Amendment to Lease
Agreement, that he understands it, and that he executed it on behalf of Omni
USA, Inc.
SWORN TO AND SUBSCRIBED BEFORE ME this _____ day of ____________, 1997.
-------------------------------------
Notary Public, State of Texas
3
EXHIBIT 10.13
ASSIGNMENT AGREEMENT
This Assignment Agreement (the "Agreement") has been entered this ____ day
of ________________, 1997, by and among OMNI USA, INC., a Washington corporation
("Omni-Washington"); OMNI USA, Inc., a Nevada corporation ("Omni-Nevada";
together, OMNI-Washington and OMNI-Nevada are referred to herein as "Omni";
DANIEL DEVELOPMENT COMPANY, a general partnership ("DDC"), EDWARD L. DANIEL, and
JOAN DANIEL (Edward L. Daniel and Joan Daniel are referred to herein as the
"Daniels", and the Daniels and DDC are referred to as "DDC/Daniel"); and Asean
Machinery Resources, Ltd., a British Virgin Islands corporation ("Asean
Machinery"):
R E C I T A L S:
A. Omni-Nevada is a corporation registered under the Securities Exchange
Act and its wholly-owned subsidiary, Omni-Washington operates several businesses
from its headquarters in Houston, Texas.
B. DDC is a general partnership whose general partners are Edward L.
Daniel and Joan Daniel operating a real property rental business and in
connection therewith leases the improved real property occupied by Omni in
Houston, Texas, as its headquarters and its manufacturing and distribution
facility.
C. Edward L. Daniel and Joan Daniel are each shareholders of Omni
USA-Nevada; together the are the holders of an equity contract note from
Omni-Nevada, upon which there is currently owed principal of approximately
$918,304 and interest of approximately $222,516 (the "Equity Contract Note").
D. Omni-Nevada is also indebted to the Daniels in the approximate amount
of $46,408 for certain accrued dividends (the "Omni Dividend Obligation)".
E. DDC is indebted to Omni pursuant to a note issued by DDC to Omni (the
"DDC Note"), in the approximate principal amount of $853,397, with interest
accrued of approximately $ 208,310.
F. LaPlante Compressor, Ltd., a Hong Kong company associated with DDC, is
obligated to Omni on open account in the approximate amount of $64,635 for back
rents and facility charges (the "LaPlante Obligations"), which the Daniels have
jointly assumed.
G. Disputes have arisen between Omni and DDC/Daniel relative to the
validity, enforceability and performance of their various contractual
obligations which have resulted in the scheduling of an arbitration and
ultimately in the negotiation of a settlement of which this Agreement is a part.
H. Asean Machinery has agreed to assume all obligations of payment due
from Omni to DDC/Daniel which have arisen or accrued under the Equity Contract
Note and the Omni
<PAGE>
Dividend Obligation in consideration of Omni's assignment or negotiation to it
of all of the obligations for payment due from DDC/Daniel to Omni under the DDC
Note and the LaPlante Obligations.
In consideration of the mutual obligations herein contained and other
consideration contained in the Mutual Settlement and Release Agreement executed
simultaneously between all the parties hereto except Asean Machinery (the
"Release Agreement"), the parties agree as follows:
I. For the benefit of Asean Machinery, effective June 29, 1997, Omni and
DDC/Daniel modify the Equity Contract Note to cancel all rights (a) to convert
any amount thereof into the stock of Omni-Nevada or to acquire any stock or
other securities of Omni either in consideration of the exercise of any
conversion right therein contained or of any warrants attached thereto, (b) to
eliminate all provisions thereof which subordinate any amount thereof to any
general creditor of Omni, and (c) to state a fixed sum owing thereon as of June
29, 1997, of One Million One Hundred Forty Thousand Eight Hundred Twenty Dollars
($1,140,820.00) (including accrued interest).
2. Also for the benefit of Asean Machinery, effective June 29, 1997, Omni
and DDC/Daniel hereby confirm that the amounts due on the Omni Dividend
Obligation and the DDC Note are as recited above, and fix the amounts of those
obligations at those sums effective June 29, 1997.
3. For the benefit of Asean Machinery, effective June 29, 1997, DDC/Daniel
and Omni confirm that the LaPlante Obligations has been assumed by Edward L.
Daniel and Joan Daniel, jointly, and that the amount due thereon is as recited
above.
4. Omni hereby represent and warrant, jointly and severally, that:
(a) Omni owns the DDC Note (including payment of accrued interest)
and the LaPlante Obligations free and clear of liens and encumbrances;
(b) Omni-Washington is a validly existing corporation in good
standing in the State of Washington, with the right to own its assets and
perform its obligations and with the power to perform this Agreement;
(c) Omni USA-Nevada is a validly existing corporation in good
standing in the State of Nevada, with the right to own its assets and perform
its obligations and with the power to perform this Agreement; and
(d) Omni-Washington and Omni-Nevada have each duly authorized the
execution, delivery and performance of this Agreement by proper corporate
action, and upon execution and delivery; this Agreement is valid, binding, and
enforceable against Omni-Washington and Omni-Nevada in accordance with its
terms, subject to applicable bankruptcy and insolvency laws and laws involving
equitable remedies; and the execution, delivery and
2
<PAGE>
performance of this agreement do not violate any law applicable to, or contract
obligation of, Omni.
5. DDC hereby represent and warrant, jointly and severally, that:
(a) The Daniels own the Equity Contract Note and Omni Dividend
Obligation free and clear of liens and encumbrances;
(b) DDC is a general partnership which operates its business in
Washington and Texas, is validly existing and in good standing, and has the
right to own its assets and perform its obligations and with the power to
perform this Agreement;
(c) Edward L. Daniel and Joan Daniel are natural persons, currently
husband and wife, who each have the legal capacity to enter into the obligations
set forth in the Agreement and perform same;
(d) DDC has duly authorized the performance of this Agreement by the
proper partnership and individual action; and
(e) Upon execution and delivery, this Agreement is valid, binding,
and enforceable against DDC in accordance with its terms, subject to applicable
bankruptcy and insolvency laws and laws involving equitable remedies, and the
execution, delivery and performance of this agreement do not violate any law
applicable to, or contract obligation of, either DDC or either of the Daniels.
6. Asean Machinery hereby represents and warrants that:
(a) Asean Machinery is a company validly formed and existing in
accordance with the laws of the British Virgin Islands, operates its business
solely outside the United States of America, has the right to own its assets and
perform its obligations, has the power and authority to enter into and perform
this Agreement, and is a solvent company capable of performing the obligations
assumed hereunder;
(b) Asean Machinery has duly authorized the performance of this
Agreement by proper company action;
(c) Upon execution and delivery, this Agreement is valid, binding,
and enforceable against Asean Machinery in accordance with its terms; and
(d) The execution, delivery and performance of this agreement do not
violate any law applicable to, or contract obligation of, Asean Machinery.
7. Effective as of June 29, 1997, immediately after the confirmations and
modifications to which Sections 1 and 4 hereof provide or recite, Asean
Machinery hereby assumes Omni's obligations to make payments, including
principal and interest, on the Equity
3
<PAGE>
Contract Note and on the Omni Dividend Obligation and Omni and DDC/Daniel
consent to such assumption.
8. Effective as of June 29, 1997, immediately after the confirmations and
modifications to which Sections 1 through 4 hereof provide or recite, Omni
hereby assigns and sets over to Asean Machinery all of its right, title, and
interest in and to the DDC Note and the LaPlante Obligations, Asean Machinery
accepts such assignment, and DDC consents to such assignment.
9. Effective simultaneously as of June 30, 1997: (a) Omni releases
DDC/Daniel from any and all liability for payment or performance of the DDC Note
(and payment of accrued interest) and releases DDC and LaPlante Compressor, Ltd.
from any and all liability for payment or performance of the LaPlante
Obligations, (b) DDC/Daniel releases Omni from any and all liability for payment
or performance of the Equity Contract Note and the Omni Dividend Obligation, (c)
Asean Machinery releases Omni from any and all claims, liabilities or causes of
action of any kind or nature whatsoever, whether known or unknown, including any
liability for payment or performance of any obligation of Omni recited herein or
in the Release Agreement, and (d) Omni releases Asean Machinery from any and all
claims, liabilities or causes of action of any kind or nature whatsoever
relating to the payment or performance of DDC Note and the LaPlante Obligations.
Each releasing party warrants to the other and to Asean Machinery, that the
release provided herein is effective against any claim by the releasing party
and all third parties for payment or performance of the respective obligation.
Asean Machinery, immediately after the satisfaction of the condition stipulated
in Section 11 will provide to DDC/Daniel a replacement obligation evidencing the
obligations of Omni assumed hereby and will return to Omni the Equity Contract
Note marked "Canceled". DDC, immediately after the satisfaction of the condition
stipulated in Section 11 will provide to Asean Machinery a replacement
obligation evidencing the obligations of DDC to Asean Machinery rather than Omni
and will return to DDC the DDC Note marked "Canceled". The releases provided
herein shall not release the obligation for payment or performance of DDC/Daniel
to Asean Machinery or of Asean Machinery to DDC/Daniel with respect to any
obligation for payment or performance which is assumed by or assigned to Asean
Machinery pursuant to this Agreement or of any other covenant or warranty due by
any party hereto to any other party hereto.
10. Except as provided herein neither this agreement nor any of the duties
or obligations stated hereunder may be assigned by any party hereto without the
written consent of all other signatories hereto. Any such assignment shall be
null and without legal effect but shall constitute a breach hereof.
11. The effectiveness of this Agreement is further conditioned upon the
execution and delivery of the Release Agreement.
12. Notice by one party to the other shall be delivered in person, by
certified mail, return receipt requested, or by fax followed by such a mailing
and shall be effective when first delivered, certified, or faxed, as the case
may be at the addresses recited in the Release Agreement. The address of Asean
Machinery is :__________________________________.
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<PAGE>
13. Disputes and questions of interpretation shall be submitted to binding
arbitration under the commercial rules of the American Arbitration Association.
IN WITNESS WHEREOF, the parties have set forth their hands or attached
their seals effective as of the date above indicated.
______________________________
Edward L. Daniel
______________________________
Joan Daniel
DANIEL DEVELOPMENT COMPANY
By: __________________________
Name: _______________________
A Partner
By: __________________________
Name: _______________________
A Partner
OMNI USA, INC., a Nevada corporation
By: __________________________
Name: _______________________
Title: President
OMNI USA, INC., a Washington
corporation
By: __________________________
Title: President
ASEAN MACHINERY RESOURCES, LTD.
By: _________________________
Title: Managing Director
5
EXHIBIT 99.1
[LETTERHEAD OF OMNI USA, INC.]
Company Contact:
Michael A. Zahorik
Executive Vice President
713-635-6331
Immediate Release
OMNI USA, INC. REPORTS AGREEMENT WITH DANIEL AND AFFILIATES
Houston, TX.--September 10, 1997--Omni USA, Inc. (NASDAQ: OUSA) today announced
the completion of an agreement effective June 30, 1997 (the "Agreement") that
finalizes all relationships and potential obligations between and among former
Company Chairman, Edward L. Daniel, his wife, Joan J. Daniel, their affiliates
(collectively "Daniel") and the Company. Under the terms of the Agreement,
Daniel's involvement in the Company will be comprised solely of ownership of
Common Stock. The resulting capital structure of the Company will consist of
outstanding Common Stock and warrants.
Under the Agreement, the Company redeemed all securities, including warrants,
held by Daniel, except Common Stock of the Company. The Company issued 750,000
shares of Common Stock to Daniel (non-voting by Daniel for two years) and agreed
to pay Edward Daniel $20,000 per month for twelve months in consideration of
terminating all prior agreements to provide services to the Company.
"The simplification of the capital structure of the Company is a crucial step in
Omni's long-range business plan. Omni is now in position to take advantage of
the internal and external growth opportunities available and to enhance
shareholder values," commented Michael A. Zahorik, Executive Vice President of
Omni USA, Inc. "Following the completion of this Agreement, the Company will
have approximately 3,600,000 shares of Common Stock outstanding, and 936,565 A
Warrants and 686,372 B Warrants outstanding."
Headquartered in Houston, Texas, Omni USA, Inc. designs, manufactures and
distributes planetary and other gearboxes as well as a line of trailer and
towing products, for agricultural and industrial applications in domestic and
foreign markets. It operates manufacturing facilities in Houston Texas, Butler
Kentucky and Shanghai, China. The Company's common stock is traded on NASDAQ
under the symbol "OUSA".
FORWARD-LOOKING STATEMENTS IN THIS RELEASE ARE MADE PURSUANT TO THE "SAFE
HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION ACT OF 1995. INVESTORS
ARE CAUTIONED THAT ACTUAL RESULTS MAY DIFFER SUBSTANTIALLY FROM SUCH
FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, CONTINUED ACCEPTANCE OF THE
COMPANY'S PRODUCTS IN THE MARKETPLACE, COMPETITIVE FACTORS, NEW PRODUCTS AND
TECHNOLOGICAL CHANGES, THE COMPANY'S DEPENDENCE UPON THIRD- PARTY SUPPLIERS,
POLITICAL AND ECONOMIC CIRCUMSTANCES IN CHINA, AND OTHER RISKS DETAILED FROM
TIME TO TIME IN THE COMPANY'S PERIODIC REPORT FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION.
