SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
ITEQ, Inc.
(Name of Issuer)
Common Stock, par value $.001 per share
(Title of Class of Securities)
450430 10 3
(CUSIP Number)
Sjaak Schouten
International Mezzanine Capital, B.V.
Herengracht 424
1017 BZ Amsterdam
The Netherlands
31-4222943
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 18, 1996
(Date of Event which Requires Filing of this Statement)
If the filing 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 should 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).
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CUSIP No. 450430 10 3
(1) Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
International Mezzanine Capital, B.V.
(2) Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [x]
(3) SEC Use Only
(4) Source of Funds
WC
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
(6) Citizenship or Place of Organization
United States of America
Number of (7) Sole Voting Power 1,525,333 Shares
Shares Bene-
ficially (8) Shared Voting Power -0-
Owned by
Each Report- (9) Sole Dispositive Power 1,525,333 Shares
ing Person
With (10) Shared Dispositive Power -0- Shares
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,525,333 Shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
[ ]
(13) Percent of Class Represented by Amount in Row (11)
8.6%
(14) Type of Reporting Person (See Instructions) OO
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ITEM 1. SECURITY AND ISSUER
The class of securities to which this statement relates is common
stock, par value $.001 per share (the "Common Stock"), of ITEQ, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 2727 Allen Parkway, Suite 760, Houston, Texas 77019.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by International Mezzanine Capital, B.V.,
a Netherlands company ("IMC"). IMC's principal business is commercial lending
and investing, with an emphasis on mezzanine financing. The address of IMC's
principal business and principal office is Herengracht 424, 1017 BZ Amsterdam,
The Netherlands. Certain information with respect to the executive officers,
directors and controlling persons of ICC (the "Scheduled Parties") is listed on
the schedule attached hereto as Schedule I, which is incorporated in this
Schedule 13D by reference. During the last five years, neither IMC or, to the
best of IMC's knowledge, the Scheduled Parties, has been convicted in any
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has 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 enjoining 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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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Company's securities reported herein as acquired by IMC were
acquired in the transaction described in Item 4, Purpose of Transaction. The
amounts paid by IMC in that transaction came from IMC's working capital, and IMC
anticipates using its working capital to fund any amounts necessary to exercise
the IMC Warrants (as defined below). See Item 4, Purpose of Transaction.
ITEM 4. PURPOSE OF TRANSACTION
On November 18, 1996 the Company issued in a private placement of
Warrants (the "IMC Warrants") granting IMC the right to acquire 1,525,333 shares
of Common Stock pursuant to a Subordinated Note and Warrant Purchase Agreement
dated as of November 18, 1996 (the "Note and Warrant Purchase Agreement") among
the Company, IMC and First Commerce Corporation, a Louisiana corporation
("FCC"). FCC was also granted similar warrants for a lesser number of shares of
Common Stock (the "FCC Warrants," and together with the IMC Warrants, the
"Warrants"). Subject to the terms and conditions of the IMC Warrants, the IMC
Warrants are exercisable at any time after November 18, 1996 and prior to 5:00
p.m. on November 18, 2003 at an exercise price of $5.10 per share of Common
Stock (subject to adjustment in certain events).
Pursuant to the Note and Warrant Purchase Agreement and under the
terms and conditions set forth therein, IMC paid the Company $13 million cash in
exchange for (i) the IMC Warrants, (ii) a promissory note made by the Company in
favor of IMC for an aggregate principal amount of $13 million (the "IMC Note's"
and together with the subordinated note issued to FCC in the transaction, the
"Subordinated Notes") and (iii) the Company and certain key stockholders
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of the ompany entering into certain related arrangements contemplated therein
(including the Registration Rights Agreement and Participation Rights Agreement
described below).
The Note and Warrant Purchase Agreement also grants IMC and FCC
certain rights to jointly designate each year one person to be nominated for
election as a member of the Board of Directors of the Company for so long as the
Subordinated Notes are outstanding or, if longer, for so long as the aggregate
number of shares of Common Stock issued and outstanding as a result of the
exercise of the Warrants plus the number of shares of Common Stock then
purchasable upon exercise of the Warrants (subject to certain adjustments) held
by IMC and FCC (or certain permitted transferees) is equal or greater than 5% of
the total number of then issued and outstanding shares of Common Stock.
In connection with this transaction, the Company, IMC and FCC
entered into a Registration Rights Agreement (the "Registration Rights
Agreement") dated as of November 18, 1996. Under the Registration Rights
Agreement and upon the terms and conditions set forth therein, the Company is
obligated to use its best efforts to (i) effect the registration under the
Securities Act of 1933, as amended (the "1933 Act"), of the shares of Common
Stock of the Company underlying or acquired by the exercise of the Warrants, to
the extent such shares are restricted securities (the "Registrable Securities"),
if holders of 51% or more of the Registrable Securities so request and so long
as the registration will cover at least 880,000 shares (subject to adjustment in
certain events) of Registrable Securities (a "Demand Registration") and (ii)
include any Registrable Securities in any registration (with certain exceptions)
of the Company's securities under the 1933 Act requested to be so included by
the holders thereof (an "Incidental Registration"). In a Demand Registration
involving an underwritten offering, if the managing underwriter determines that
the number of
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Registrable Securities and all other securities to be included in the offering
is more than can be sold in the offering (the "Maximum Number of Shares"), (i)
the number of securities other than Registrable Securities (the "Other
Securities") proposed to be included in the offering shall be reduced so that
the offering will include as nearly as possible the Maximum Number of Shares and
(ii) to the extent any additional reduction in the number of securities is
necessary after eliminating the Other Securities from the offering, the number
of Registrable Securities to be included in the offering shall be reduced pro
rata in the manner set forth in the Registration Rights Agreement so that the
offering will include only the Maximum Number of Shares. Pro Rata reductions in
the number of shares of Registrable Securities to be included in an underwritten
offering in an Incidental Registration may also be made to the extent deemed
necessary by the managing underwriter. Subject to certain exceptions, the
Company agreed to not effect any public sale or distribution of any of its
equity securities during the seven days prior to and 90 days after any
underwritten registration of Registrable Securities made pursuant to the
Registration Rights Agreement.
In connection with this transaction, two significant stockholders
of the Company (Mark Johnson and Pierre Melcher), IMC and FCC also entered into
a Participation Rights Agreement (the "Participation Rights Agreement") dated as
of November 18, 1996. With certain exceptions and subject to the terms and
conditions set forth therein, the Participation Rights Agreement grants IMC and
FCC the right to include a specified percentage of the shares of Common Stock of
the Company issued through the exercise or issuable upon exercise of the
Warrants (the "Tagalong Eligible Securities") in certain dispositions by Mr.
Johnson or Mr. Melcher (the "Transferors") of shares of Common Stock of the
Company held by them. The participation
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rights are only triggered in dispositions that include shares of Common Stock of
the Company held by that Transferor on November 18, 1996 (the "November 18
Holdings"), and only to the extent the disposition would result in the
Transferor holding less than 50% of his November 18 Holdings. The number of
shares that IMC and FCC may elect to include in a proposed disposition in which
participation rights are triggered is equal to the product of (i) the aggregate
number of shares of Common Stock to be disposed of by the Transferor to the
proposed transferee to the extent such shares are (a) part of the Transferor's
November 18 Holdings and (b) not part of the first 50% of the Transferor's
November 18 Holdings disposed of by the Transferor and (ii) a fraction, the
numerator of which is the number of shares of fully diluted Common Stock then
held by the Reporting Person and the denominator of which is the number equal to
the sum of the shares of fully diluted Common Stock then held by the Transferor
that are part of the November 18 Holdings and the Reporting Persons. The
participation rights terminate upon the earlier to occur of (i) the death or
resignation from the management of the Company of Mr. Johnson or Mr. Melcher
(or, if only one of them dies or resigns, such participation rights will expire
only with respect to that individual), (ii) a change of control of the Company
or (iii) the payment in full of and performance of all obligations by the
Company under the Subordinated Notes.
Except as contemplated by the Note and Warrant Purchase
Agreement, the Participation Rights Agreement and the Registration Rights
Agreement, IMC has no current intention of acquiring or disposing of securities
of the Company. IMC will review on a continuous basis its investment in the
Company's securities and the Company's business affairs and financial condition,
as well as conditions in the securities markets and general economic and
industry conditions. IMC may in the future take such actions in respect of its
investment in the securities of
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the Company as it deems appropriate in light of the circumstances existing from
time to time.Currently, these actions include continuing to hold the securities
it now beneficially owns (whether in the form of the IMC Warrants, or, should it
determine to exercise all or part of the IMCWarrants, the shares of Common Stock
issued upon exercise of the Warrants) or disposing of such securities.
Except as set forth in this Schedule 13D, IMC has no present
plans or proposals which relate to or would result in any of the actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
The foregoing responses to this Item 4 are qualified in their
entirety by reference to the Note and Warrant Purchase Agreement, the IMC
Warrant, the IMC Subordinated Note, the Registration Rights Agreement and the
Participation Rights Agreement, the full text of each of which is filed as an
Exhibit hereto and incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As of June 16, 1997, IMC beneficially owned an aggregate of
1,525,333 shares of Common Stock (approximately 8.6% of the 16,195,793 shares
outstanding, determined by reference to the approximately 16,195,793 shares of
Common Stock the Company reported in the Company's final prospectus (the
"Prospectus") filed with the Securities and Exchange Commission on May 21, 1997
(relating to the Company's Registration Statement on Form S-2, Registration
Number 333-23245) would be outstanding following the consummation of the
offering of securities contemplated therein, assuming no exercise of the
underwriters' overallotment option).
IMC has sole voting and dispositive power with respect to the
1,525,333 shares of Common Stock beneficially owned by it.
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Except as set forth in this Schedule 13D, to the best of each of
the Reporting Parties' knowledge, none of IMC or the Scheduled Parties have
effected any transaction in securities of the Company during the past sixty
days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Except as described in Item 4 to this Schedule 13D or in the
documents referred to therein (including, without limitation, the Note and
Warrant Purchase Agreement, the Registration Rights Agreement and the
Participation Rights Agreement), there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 of this Schedule 13D or between such persons and any person with respect
to any securities of the Company.
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Schedule I
DIRECTORS, EXECUTIVE OFFICERS AND
CONTROLLING PERSONS OF INTERNATIONAL
MEZZANINE CAPITAL, B.V.
A. For each director and executive officer of IMC, the following table sets
forth the name and citizenship, business address and present principal
occupation or employment and the organization in which such employment
is conducted.
PRESENT PRINCIPAL OCCUPATION OR
NAME AND CITIZENSHIP EMPLOYMENT; BUSINESS ADDRESS
Muneef Othman/United Arab Emirates Mr. Othman, a Director of IMC,
is an Executive director of Abu
Dhabi Investment Authority. His
business address is Abu Dhabi
Investment Authority, Abu Dhabi,
United Arab Emirates.
Tim Kelly/United States of America Mr. Kelly, an Advisor
to IMC, is an Investment
Manager at Allstate Insurance
Company at 2725 Sanders Road,
Northbrook, Illinois
60062-6127, USA.
Franz Horbager/Austria Mr. Horbager, a Director of IMC,
is also a Director of the
Bank of Austria AG at Am Hof
2, 1010 Vienna, Austria.
Ian Cotterill/England Mr. Cotterill, a Director of IMC,
is a Finance Director of HSBC
Investment Bank plc at Thames
Exchange, 10 Queen Street
Place, London EC4R 1BL, UK.
Thomas Abbott/United States of America Mr. Abbott, a
Director of IMC, is the
Chairman of Meespierson
International AG at
Gothardstrasse 20, CH 6300
Zug, Switzerland.
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Charles Symington/United States of America Mr. Symington, A Director of
IMC, is a Vice President of
Metropolitan Life Investment
Company at 334 Madison Avenue,
Morris Town, New Jersey 07961,
USA.
A. Kipp Koester/United States of America Mr. Koester, a Director of IMC,
is a Vice President of
Northwestern Mutual Life
Insurance Company at 720 East
Wisconsin Avenue, Milwaukee,
Wisconsin 53202-4797, USA.
Steve Weber/England Mr. Weber, a Director of IMC, is
an Investment Manager of
Norwich Union Life Insurance
Society at Sentinel House,
37 Surrey Street, Norwich
NR1 3UZ, UK.
Nick Walker/England Mr. Walker, an
Advisor to IMC, is an
Investment Manager of
Rabobank at 108 Cannon
Street, London EC4N 6RN, UK.
Teddy Tulloch/Scotland Mr. Tulloch,
an Advisor to IMC, is an
Investment Manager of The
Scottish American Investment
Company at 45 Charlotte
Square, Edinburgh E112 411W,
Scotland.
Hamish Mair/Scotland Mr. Mair, a Director of IMC, is
an Investment Manager of Scottish
Eastern Investment Trust at
20 Castle Terrace, Edinburgh
E111 2ES, Scotland.
Jacobus Schouten/The Netherlands Mr. Schouten is a Director of IMC
and has an address of
Arondeusstraat 1, 1063 GB
Amsterdam, The Netherlands.
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B. IMC is wholly-owned by International Mezzanine Investment N.V., a
Netherlands Antilles company ("IMI"). IMI's principal business is an
investment company, acting primarily through its subsidiaries, and the
address of its principal business and its principal office is Willemstad
Curacao, Netherlands Antilles, Attention John B. Gorsirnweg. IMI has the
same directors and executive officers as IMC with the exception of Mr.
Schouten (see Item A to this Schedule I).
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A. Subordinated Note and Warrant Purchase Agreement
dated as of November 18, 1996 among IMC, FCC and
the Company (Incorporated by reference to Exhibit
4.9 to the Company's Form 8-K dated December 5,
1996).
Exhibit B. Warrant Agreement dated as of November 18, 1996
between IMC and the Company (Incorporated by
reference to Exhibit 4.2 to the Company's Form 8-K
dated December 5, 1996).
Exhibit C. Senior Subordinated Note dated as of November
18, 1996 between IMC and the Company (Incorporated
by reference to Exhibit 4.5 to the Company's Form
8-K dated December 5, 1996).
Exhibit D. Participation Rights Agreement dated as of
November 18, 1996 among IMC, FCC and Mark Johnson
and Pierre Melcher.
Exhibit E. Registration Rights Agreement dated as of
November 18, 1996 among IMC, FCC and the Company
(Incorporated by reference to Exhibit 4.1 to the
Company's Form 8-K dated December 5, 1996).
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After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: June 25, 1997.
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By: /s/ JACOBUS SCHOUTEN
Jacobus Schouten
Director
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EXHIBIT D
PARTICIPATION RIGHTS AGREEMENT
PARTICIPATION RIGHTS AGREEMENT, dated as of November 18, 1996, by
and among INTERNATIONAL MEZZANINE CAPITAL, B.V. ("IMC"), FIRST COMMERCE
CORPORATION (together with IMC, collectively the "PURCHASERS") and Mark Johnson
and Pierre Melcher (the "STOCKHOLDERS").
1. BACKGROUND. AIR-CURE TECHNOLOGIES, INC., a Delaware corporation (the
"COMPANY"), and the Purchasers have entered into a Subordinated Note and Warrant
Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of November 18, 1996,
pursuant to which the Company has agreed, among other things, to issue and sell
its Common Stock Purchase Warrants Expiring November 18, 2003 (the "WARRANTS"),
evidencing rights to purchase an aggregate of 1,760,000 shares (subject to
adjustment as provided therein) of the Company's Common Stock, par value $0.001
per share (the "COMMON STOCK"). This Agreement shall become effective upon the
issuance of such Warrants.
2. TRANSFERS OF COMMON STOCK BY STOCKHOLDERS.
2.1 RIGHTS OF PARTICIPATION. If a Stockholder proposes to make a
disposition (such Stockholder sometimes being referred herein as a "TRANSFEROR")
of any shares of such Stockholder's Common Stock that is part of such
Stockholder's November 18 Holdings (as hereinafter defined), and if immediately
after such transaction such Stockholder will hold less than fifty percent (50%)
of the shares comprising such Stockholder's November 18 Holdings, such
Stockholder shall be required to offer (a "PARTICIPATION OFFER") to include in
such disposition shares of Common Stock held by or issuable upon exercise of any
Warrants to all Tagalong Holders (as hereinafter defined) (such securities held
by or issuable to the Tagalong Holders sometimes hereinafter referred to as
"TAGALONG ELIGIBLE SECURITIES") in accordance with this Section. The
Participation Offer shall entitle each Tagalong Holder to include in the
proposed disposition a number of Tagalong Eligible Securities designated by the
holder thereof equal to the product of (i) the aggregate number of shares of
Common Stock to be disposed of by the Transferor to the proposed transferee to
the extent such shares are (a) part of the Transferor's November 18 Holdings and
(b) not part of the first fifty percent (50%) of the Transferor's November 18
Holdings disposed of by the Transferor and (ii) a fraction, the numerator of
which shall be the number of shares of Fully Diluted Common Stock held by such
Tagalong Holder and the denominator of which shall be the number equal to the
sum of the shares of Fully Diluted Common Stock then held by the Transferor that
are part of the November 18 Holdings and all Tagalong Holders. The Transferor
shall give written notice to each Tagalong Holder of the Participation Offer
(the "PARTICIPATION OFFER NOTICE") at least 30 days prior to the proposed
disposition. The Participation Offer Notice shall specify the proposed
transferee, the number of shares of Common Stock or Common Stock
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Equivalents to be disposed of to such transferee, the amount and type of
consideration to be received therefor, and the place and date on which the
disposition is to be consummated. Each Tagalong Holder who wishes to include any
Tagalong Eligible Securities in the proposed disposition in accordance with this
Section 2.1 shall so notify the Transferor not more than 15 days after the date
of receipt of the Participation Offer Notice. The Participation Offer shall be
conditioned upon the Transferor's disposition of shares pursuant to the
transactions contemplated in the Participation Offer Notice with the transferee
named therein. If any other Tagalong Holders have accepted the Participation
Offer, the Transferor shall reduce to the extent necessary the number of shares
it otherwise would have disposed of in the proposed disposition so as to permit
such other Tagalong Holders to dispose of the number of shares that they are
entitled to dispose of under this Section 2.1, and the Transferor and such other
Tagalong Holders shall dispose of the number of shares specified in the
Participation Offer to the proposed transferee in accordance with the terms of
such disposition set forth in the Participation Offer Notice.
2.2 CERTAIN TRANSFERS TO AFFILIATED TRANSFEREES. Notwithstanding
Section 2.1 hereof; no Participation Offer is required to be made with respect
to a sale, gift or other transfer of securities of a Stockholder by such
Stockholder to any Affiliated Transferee (as hereinafter defined) of such
Stockholder, if prior to such disposition such Affiliated Transferee delivers to
the Tagalong Holders a written agreement which provides that (x) such Affiliated
Transferee is to become a party to and be bound by the provisions of this
Agreement and (y) such Affiliated Transferee and such Stockholder shall be
considered one entity as a single "Stockholder" under this Agreement. In the
event of a disposition to an Affiliated Transferee permitted under of the
immediately preceding sentence, the shares so disposed of comprising all or part
of such transferring Stockholder's November 18 Holdings shall remain subject to
this Agreement and shall be deemed to not have been disposed of by such
Stockholder for purposes of determining whether fifty percent (50%) of such
Stockholder's November 18 Holdings have been disposed of under this Agreement.
2.3 ADJUSTMENTS TO NOVEMBER 18 HOLDINGS. The Stockholders
acknowledge that the Common Stock listed opposite their names in SCHEDULE I
attached hereto is all of the Common Stock held by them respectively as of
November 18, 1996 (the "NOVEMBER 18 HOLDINGS"), and neither Stockholder holds
any Common Stock Equivalents on such date. For purposes hereof, including,
without limitation, for purposes of determining when the initial Participation
Offer must be given by a Stockholder, in the event of any subdivision or
consolidation of Common Stock or a declaration of a dividend payable in shares
of Common Stock or capital reorganization or reclassification or other similar
events subsequent to November 18, 1996, the November 18 Holdings shall be
appropriately adjusted prior to each sale of Common Stock to reflect all such
events in order to give full effect to the tenor and purpose of this Agreement
and to fairly protect the participation rights intended to be granted to the
Purchasers and the Tagalong Holders pursuant to this Agreement.
2.4 COMPLIANCE WITH STOCK DISTRIBUTION AGREEMENTS. The
Stockholders agree that they will comply in all respects with and perform all of
their respective obligations under the Stock Distribution Agreements dated as of
December 28, 1995 between the Company and each Stockholder as in effect on
November 18, 1996, as may be amended thereafter from time to time;
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provided, however, that any amendment, waiver or early termination of such Stock
Distribution Agreements entered into subsequent to November 18, 1996 shall
require the written consent of the Purchasers to be effective hereunder.
2.5 COPIES OF CERTAIN SEC FILINGS. Each Stockholder agrees that
he will deliver to each Purchaser a copy of each filing made with the Securities
and Exchange Commission (the "Commission") after November 18, 1996 by or on
behalf of such Stockholder of a Form 4, Form 5, Schedule 13D or Schedule 13G (or
any successor forms or schedules that may be adopted by the Commission) with
respect to ownership of securities of the Company, and all amendments thereto.
The copies of said Forms 4, Forms 5, Schedules 13D, Schedules 13G and amendments
thereto shall be delivered to the Purchasers concurrently with the filing
thereof with the Commission.
2.6 EFFECT OF VIOLATION. Any purported transfer of Common Stock
or Common Stock Equivalents which is in violation of this Agreement shall be
void and of no force and effect whatsoever.
3. TERMINATION OF PARTICIPATION RIGHTS. The participation rights and
related rights provided in Section 2 shall terminate upon the earlier to occur
of (i) the death and/or voluntary or involuntary resignation from the management
of the Company of each of Mark Johnson and Pierre Melcher (or, if only one of
such individual dies or resigns from the management of the Company, such
participation and related rights shall expire only with respect to that
Stockholder), (ii) a Change in Control of the Company or (iii) the payment in
full of all amounts to be paid under the Notes and the performance of all
obligations of the Company thereunder (whether by prepayment of the Notes or
otherwise).
4. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
AFFILIATED TRANSFEREE: With respect to any Stockholder, means any
Affiliate (as defined in the Warrants) of such Stockholder, and any
member of such Stockholder's family or a trust for the benefit of any of
the foregoing. For purposes hereof "family" shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and shall include adoptive
relationships.
AGREEMENT: This Participation Rights Agreement, as the same may
be amended from time to time.
COMMON STOCK: As defined in the introductory paragraph of this
Agreement.
CHANGE IN CONTROL: As defined in the Warrants.
COMMON STOCK EQUIVALENTS: All options, rights or warrants to
purchase shares of Common Stock, all securities convertible into or
exchangeable for shares of Common Stock
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and all shares of Common Stock into which shares of Common Stock of
another class have been converted.
COMPANY: As defined in the introductory paragraph of this
Agreement.
FULLY DILUTED COMMON STOCK: At any time, the then outstanding
Common Stock plus (without duplication) all shares of Common Stock
issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the exercise, conversion or exchange
of all then outstanding options, rights or warrants (including, without
limitation, the Warrants) or securities convertible into or exchangeable
for Common Stock.
NOTES: As defined in the Purchase Agreement.
NOVEMBER 18 HOLDINGS: As defined in Section 2.3.
PARTICIPATION OFFER: As defined in Section 2.1.
PARTICIPATION OFFER NOTICE: As defined in Section 2.1.
PERSON: An individual, a partnership, an association, a joint
venture, a corporation, a trust, a limited liability company, an
unincorporated organization and a government of any department or agency
thereof.
PURCHASE AGREEMENT: As defined in Section 1.
PURCHASERS: As defined in the introductory paragraph of this
Agreement.
REQUIRED HOLDERS: Any holder or holders of 51% (by number of
shares of Common Stock issued or issuable) of the Warrants or of Common
Stock issued upon the exercise of Warrants.
SECURITIES ACT: The Securities Act of 1933, as amended, or any
successor statute thereto.
STOCKHOLDERS: As defined in the introductory paragraph of this
Agreement.
TAGALONG ELIGIBLE SECURITIES: As defined in Section 2.1.
TAGALONG HOLDER. Any holder of (i) Warrants or (ii) Common Stock
issued upon the exercise of Warrants.
TRANSFEROR: As defined in Section 2.1.
WARRANTS: As defined in Section 1.
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5. AGREEMENT. A copy of this Agreement shall be filed with the permanent
records of the Company and shall be kept at all times at the principal place of
business of the Company.
6. FURTHER ASSURANCES. Each party agrees to do, or cause to be done,
such further acts and to execute and deliver, or to cause to be executed and
delivered, such further agreements, instruments, certificates and other
documents as may be necessary or appropriate to effectuate and carry out the
purposes of this Agreement.
7. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Stockholders and the Company may take any action herein prohibited or omit to
perform any act herein required to be performed, only if the prior written
consent of the Required Holders to such amendment, action or omission to act
shall have been obtained.
8. NOTICES. All communications provided for hereunder shall be sent by
first-class mail and (a) if addressed to a Tagalong Holder, addressed to such
Tagalong Holder in the manner set forth in the Purchase Agreement, or at such
other address as such Tagalong Holder shall have furnished to the other parties
hereto in writing, (b) if addressed to the Company, at 2727 Allen Parkway, Suite
760, Houston, Texas 77019, Attention: Chief Financial Officer, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to the other parties hereto in writing or (c) if to any Stockholder,
addressed to such Stockholder at its address set forth in SCHEDULE I hereto, or
at such other address as such party shall have furnished to the other parties
hereto in writing.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the Purchasers shall also be for the benefit of and enforceable by any
subsequent Tagalong Holder.
10. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
11. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that
money damages may be insufficient to compensate the Tagalong Holders for
breaches by the Company or the Stockholders of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
13. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, or
caused this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, as of the date first above written.
PURCHASERS:
INTERNATIONAL MEZZANINE CAPITAL, B.V.
By: /s/ SJAAK SCHOUTEN
Sjaak Schouten
Authorized Officer
FIRST COMMERCE CORPORATION
By: /s/ ASHTON J. RYAN, JR.
Ashton J. Ryan, Jr.
Senior Executive Vice
President
STOCKHOLDERS:
/s/ MARK JOHNSON
Mark Johnson
/s/ PIERRE MELCHER
Pierre Melcher
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<PAGE>
SCHEDULE I
STOCKHOLDERS
OWNER CERTIFICATE NUMBER(S) NUMBER OF SHARES
----- --------------------- ----------------
Mark Johnson AC5222, AC5203, 1,667,062
2727 Allen Parkway, Suite 760 AC5204 (and 3,000 of
Houston, Texas 77019 the shares included in
Mr. Johnson's
November 18 Holdings
are uncertificated)
Pierre Melcher
2727 Allen Parkway, Suite 760
Houston, Texas 77019 AC5202 2,028,539
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